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casting light on central bank digital currency β, imf staff discussion note no. 18 / 08, november. barriers ( such as a lack of access to the required technologies, a strong resistance to adopt them or simply a strong preference for cash ) may leave individuals out of the financial and payments system. although carefully - designed and rightly - implemented cbdcs reduce its likelihood, the materialization of operational risks remains a possibility. this could translate into a burden for the reputation ( and credibility ) of the central bank. striking a right balance between the anonymity and traceability of transactions using cbdcs may prove elusive. at one extreme, full anonymity, while protecting user privacy, may facilitate the execution of illegal activities. at the other end, perfect traceability may hinder interest in cbdcs from users who, for personal and perhaps completely legitimate reasons, prefer to keep part of their transactions unrecorded. should the adoption of cbdcs be successful and not, at least to a significant extent, offset by a commensurate decline in physical coins and banknotes in circulation, the central bank β s balance sheet would be expanded. this could imply additional financial risks for the monetary authority as its exposure to the banking system and other security issuers increases while, depending on the size of the expansion, distortions akin to those observed in financial markets linked to the quantitative easing programs of recent may not be ruled out. the issuance of cbdcs is not free of legal uncertainties either. further to the legislative reforms that would be required to equip central banks with the authority to issue this sort of money in the vast majority of jurisdictions, 7 it remains unclear how much of a burden account - based cbdcs would imply for these institutions should they become bound by law to comply with existing regulations ( such as those related to anti - money laundering and combating the financing of terrorism, or aml / cft ). in addition, given cbdcs legal tender status, difficulties may arise regarding its enforcement, as not necessarily every agent in the economy will have available the means to accept it at all times. lastly, there is a broad consensus in the community regarding the need for further research on, and careful consideration of, the potential implications of cbdcs for interest rates, exchange rates and other asset prices in general, including the relative price between the digital and physical versions of a given currency. 8 beyond the above - noted issues, there
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desire to learn about cbdcs and their implications at this stage, central bank interest in these instruments has been kindled by a combination of factors. one of the most important, particularly among some advanced economies, is the protracted decline in the use of cash and the consequent need to adapt to this situation. 5 in addition, the possibility that privatelyprovided electronic means of payment take place in a context of poor competition, has in some cases stimulated central banks β interest in cbdcs. further to the above, a number of other possible advantages of cbdcs have been identified. the potential to enhance the safety of the payments system through a back - up given mounting operational risks in some segments, or its cost effectiveness, by saving on the distribution of cash, are included among them. in other instances, particularly amongst emerging market and in what follows, these remarks will concentrate on the case of general - purpose cbdcs, with use aimed primarily at retail operations by the public at large. while restricted - access cbdcs intended for wholesale payment and settlement transactions are also being explored, it should be noted that they have yet to be proven as a superior alternative to existing technologies and infrastructures. also worth mentioning is the case of ecuador, whose cbdc was issued between 2015 and 2018, although with muted success due to low acceptance rates from users in a highly dollarized economy. see khiaonarong, t. and d. humphrey ( 2019 ) : β cash use across countries and the demand for central bank digital currency β, imf working paper no. 19 / 46, march. developing economies, cbdcs are seen as a means to ameliorate outstanding gaps in financial inclusion of important segments of their populations. moreover, depending on their specific design, such as the level of transaction traceability ( or, conversely, anonymity ), cbdcs could also help counter the proliferation of illegal activities. notwithstanding the appeal that cbdcs may gather on the basis of these and other favorable attributes, important negative implications must be acknowledged as well. in general, these relate to the potential effects on the role that central banks play in a wide array of activities, some of them closely related to their core functions in the economy. in particular, the issuance of cbdcs could lead these institutions to operate directly in the intermediation of financial resources with the public. naturally, such abrupt deviations from the traditional role of central banks carry important risks
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began to recover and volatilities to decline. in fact, in both the united states and the euro area, some market valuation measures, such as p / e ratios, have returned to historical highs, potentially indicating a certain disconnect between the recent rapid and significant recovery in financial markets and the more moderate behaviour of macroeconomic data and the concerns over corporate sector weakness. in this respect, despite the slowdown in recent months in the rate of credit rating downgrades, following the sharp increase between march and may, the spreads on highyield corporate debt ( i. e. with a rating below bbb ) ceased to rise in june in europe and in the united states, and thus, in contrast to those on investment - grade corporate debt ( bbb or higher rating ), have remained below their pre - crisis levels. this deterioration in corporate credit quality is a further element of vulnerability for financial stability. past experience shows that extensive rating downgrades in the corporate sector can generate adverse second - round effects that exacerbate the crisis. the mechanism is as follows : since investment and pension funds, along with other institutional holders of corporate debt instruments, usually have restrictions in their mandates on their holdings of non - investment - grade assets, if many of these securities become high - yield they have to be sold by these investors, leading to a further decline in value and thus greater losses for all holders. the importance of this vulnerability is illustrated by a recent analysis conducted by the esrb. 10 specifically, it was estimated that, in europe, almost half of corporate bonds with a bbb rating are held by investment funds, around a third by insurance companies, almost a quarter by credit institutions and the rest by pension funds. investment funds and insurance companies are thus precisely the institutional investors that hold most of the bbbrated corporate debt, a third of which is associated with sectors considered as sensitive to covid - 19. a large - scale downgrading of this debt, to below investment - grade status, would entail considerable potential losses for the financial system of the european union ( eu ) as a whole, a significant part of which would correspond to indirect losses attributable to the forced selling mentioned above. the role of rating agencies in this process is fundamental. when making their assessments, these institutions need to take into account the long - term outlook for the corporation concerned and avoid excessively pro - cyclical behaviour. indeed, this time round, rating agencies appear to
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central bankers β speeches it is important that the positive effects of our measures have also reached small firms because this means that they have been felt by a large audience and not just by specific economic and social groups, as is sometimes claimed. we must not forget that small and medium - sized enterprises make up 99 % of the total number of firms in europe and, more importantly, provide jobs for two - thirds of all those in employment. why were our monetary policy measures effective? one of the reasons that lending rates to firms were high in the past is that, given the weakness of economic conditions, banks particularly feared the risk of enterprises becoming insolvent, and for this reason raised their risk premia. however, these higher rates also caused the demand for credit from healthy firms to fall, thus worsening the conditions of the economy and justifying, ex post, the higher risk premia. and so a vicious circle was created. by reducing borrowing costs for new loans, our measures, especially the targeted longerterm refinancing operations, have encouraged banks to resume lending. the increased competition in credit markets has in turn compressed rates, driving lending and improving the macroeconomic picture. we have thus succeeded in breaking the vicious circle. the public and private sector purchase programme has also fuelled competition in credit markets by driving down the yields on sovereign bonds and thus reducing their appeal with respect to loans, ensuring that a growing volume of banking activity is directed towards the real economy. in addition to the direct impact of targeted longer - term refinancing operations, analyses conducted by the ecb show that the asset purchase programme has had an indirect effect on credit supply conditions, by also improving the macroeconomic outlook and further reducing risk premia. and these measures have not damaged the banks. far from it. although they may sometimes have led to a contraction in interest income, our measures have also led to capital gains in banks β assets, and higher volumes and quality of credit. considering all of these effects, the staff of the ecb estimate that the impact of our measures on the profitability of the banking sector has been essentially nil for the euro area as a whole. the role of other policies the effectiveness of our monetary policy shows that the ecb has all the appropriate tools to achieve our price stability objective and thus to support demand. and within our mandate we are unconstrained in our choice of instruments and the way we deploy them. we can always bring inflation to our objective ; we
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we were that last december congress amended the statutory provision that had prevented us from raising the threshold for application of our small bank holding company policy statement. i will not repeat here the purpose and history of this statement, which i described in advocating this change last fall. 6 i will note that earlier this month, the board issued a final rule implementing the statutory change. 7 the rule expands the scope of application of the statement from bank holding companies with less than $ 500 million in total consolidated assets to those with less than $ 1 billion, and adds savings and loan holding companies. as a result, our statement now covers nearly 90 percent of bank holding companies. we had already taken steps to relieve the regulatory reporting burden for the impacted firms β specifically, by eliminating quarterly and more complex consolidated financial reporting requirements for all of these institutions and eliminating certain regulatory reporting requirements entirely for savings and loan holding companies with less than $ 500 million in assets. 8 second, i want to reiterate my view that a few dodd - frank act provisions might usefully be amended to exclude community banks entirely from their coverage. as i have said before, the concerns addressed by provisions such as the volcker rule and the incentive compensation requirements of section 956 are substantially greater at larger institutions. in the unusual case in which a small bank is engaged in proprietary trading that could pose a risk to the deposit insurance fund or has in place a compensation system that incentivizes excessive risk, the supervisory process would remain available to address these risks. i recognize that statutory revisions of this sort would not be a major reduction in compliance burden. but they would reflect the fact that, absent a change in this regard, community banks see daniel k. tarullo ( 2014 ), β a tiered approach to regulation and supervision of community banks, β speech delivered at the community bankers symposium, chicago, november 14. 80 fed. reg. 20153 ( april 15, 2015 ). 80 fed. reg. 5666 ( february 3, 2015 ). bis central bankers β speeches must expend scarce compliance resources to conform to the requirements of such regulations. there is, in my view, no need to make particularized prudential requirements of this sort applicable on a mandatory basis to thousands of community banks. indeed, the volcker rule and the dodd - frank act incentive compensation provisions present almost prototypical cases in which minimal potential safety and soundness benefits are outweighed by the compliance costs faced by those thousands of banks. it would
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tiering. the two most important characteristics of community banks for purposes of establishing regulatory objectives and supervisory practices are their size and their business model. my reference to size is obviously a bit tautological, but size is worth emphasizing precisely because of what it says about the risks community banks do not pose. the possible failure of a community bank self - evidently poses no risks to the financial system. and while individual community banks in smaller communities provide sources of credit that would be hard to replace, their limited size means their failures would not result in credit contraction in significant swaths of the country. see, e. g., daniel k. tarullo ( 2015 ), β application of enhanced prudential standards to bank holding companies, β testimony before the committee on banking, housing, and urban affairs, u. s. senate, washington, march 19 ; daniel k. tarullo ( 2014 ), β a tiered approach to regulation and supervision of community banks, β speech delivered at the community bankers symposium, chicago, november 14 ; and daniel k. tarullo ( 2014 ), β rethinking the aims of prudential regulation, β speech delivered at the federal reserve bank of chicago bank structure conference, chicago, may 8. bis central bankers β speeches the business model of nearly all community banks is grounded in the most traditional form of commercial banking β lending to businesses and households with funds predominantly obtained from deposit accounts. and, as this audience well knows, lending by community banks is built substantially on relationship banking. while community banks over the years have found it increasingly difficult to compete with larger banks in the types of lending that can be efficiently scaled through larger volumes and standardized credit models, they maintain a competitive advantage relative to larger banks through knowledge of their local communities and their individual borrowers. as a result, community banks play a unique role in their local economies, particularly with regard to lending to small - and medium - sized businesses. the relationships these institutions have with their customers oftentimes mean they can look beyond traditional credit factors to consider unique borrower characteristics when making credit decisions and to reduce information failures about borrowers β willingness and capacity to repay loans. numerous studies have documented these advantages and their value to economic development. one recent study found that loans extended by rural community banks to small businesses default less frequently than similar loans granted by their urban counterparts, and that the performance advantage is greater when the bank and the borrower are located in the same county. 2 the traditional inter
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developed a new vision, strategies and objectives for the namibian nps. bis central bankers β speeches allow me to spend few minutes to highlight a few points about what is contained in the vision document. the nps vision 2015 document provides a high - level strategic direction for the namibian payment system up to 2015. the nps vision 2015 contains six strategic focus areas, i will highlight a few. access and participation in the nps the first objective under this focus area is to increase the accessibility of the payment system by providing for new types of participants, but at the same time maintaining the safety and efficiency of the payment system by adhering to sound internationally accepted payment system principles. increased accessibility by new participants will facilitate wider usage of the payment system by the public and will further enhance access to financial services and payment system. the second objective, close to many people β s hearts, is to set standards for fees and charges in the interest of efficiency in the nps. the payment system fees and charges have often been identified as one of the key supply side barriers to financial services. the recent amendments to the payment system management act give the bank of namibia power to act if the market fails to ensure that fees and charges are transparent, competitive and commensurate with input costs. over the next few years ending in 2015, the bank will be targeting products, fees and charges that have hindered namibia from moving towards a more financially inclusive economy : these are : cash deposit fees, the lack of a low cost basic bank account, penalty fees, dormant account fees, non - transparent pricing such as tiered pricing structures, and interchange fees an implementation plan with a time table on how to address these issues has been agreed with banks recently and is in the process of being rolled out. interoperability and standards in the nps in order to ensure that the namibian payment system remains safe and efficient we need to adopt international best practice. namibia has in the past few years experienced a significant increase in card fraud. therefore we need to strengthen our risk mitigation measures. in this regard, i am pleased to inform you that the banking industry has agreed on a roadmap for rolling out europay, mastercard and visa ( emv ) standards in namibia. these standards will be fully complied with on the post machines side by 2012 and on the cards side by 2015. once implemented, emv compliance will go a long way to reducing card fraud in namibia. nps infrastructure and technology namibia can
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future is not a place we go to, it is a place we create. the paths are not to be found, but made. ", therefore let us create the future we want as a nation, by doing all that we can do, as far as humanly possible. i thank you. 4 / 4 bis - central bankers'speeches
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##ure, finding a particularly important role for declining house prices ( gerardi, shapiro, and willen, 2007 ). the federal reserve bank of philadelphia is conducting a five - year study of pre - purchase homeownership counseling. that study will provide important information on the benefits of counseling services in fostering sustainable homeownership and help us understand the long - term effects of financial - management skills on the credit worthiness of low - and moderate - income homebuyers. in addition to this ongoing research, the federal reserve is supporting efforts to reach troubled borrowers and to raise awareness in communities about ways to prevent foreclosures. since july, the community affairs offices across the federal reserve system have sponsored or cosponsored more than fifty events related to foreclosures, reaching more than 4, 000 attendees including lenders, counselors, community development specialists, and policymakers. there is also work to be done in mitigating the impact of unavoidable foreclosures on consumers and communities. families who cannot sustain homeownership will need to find new places to live, highlighting the critical need for an adequate supply of affordable rental housing. consumers going through foreclosure typically will see their credit scores drop, raising longer - term questions about their ability to rebound financially and perhaps pursue a more sustainable home purchase at some later point. high numbers of foreclosed homes in some communities also raise challenges, and perhaps opportunities. because vacant homes, in particular, impose real costs on neighborhood and communities, forward - looking strategies to keep these homes occupied are important ( apgar and duda, 2005 ). some efforts are underway to prevent vacancies, as well as return vacant properties to active use ; some of these efforts may also help preserve the supply of affordable housing in areas that have experienced shortages. 7 the federal reserve has recently undertaken a joint effort with neighborworks america to help communities develop strategies for neighborhood stabilization. conclusion it is clear that rising home foreclosures and delinquencies significantly challenge many consumers and communities, and i hope i have conveyed today that the federal reserve is strongly committed to fully employing our authority, expertise, and resources to help alleviate their distress. we will continue to collaborate at the national, regional, and local levels with other stakeholders in the public, private, and nonprofit sectors to help to avoid preventable foreclosures and to address the consequences of the foreclosures that occur. in
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ben s bernanke : fostering sustainable homeownership speech of mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the national community reinvestment coalition annual meeting, washington dc, 14 march 2008. * * * this audience, the national community reinvestment coalition, is certainly aware that mortgage delinquency and foreclosure rates have increased substantially over the past year and a half. this increase reflects significantly, though not exclusively, a sharp deterioration in the performance of subprime mortgages, particularly those with adjustable - rate features. at the end of last year, more than one in five of the roughly 3. 6 million outstanding subprime adjustable - rate mortgages ( arms ) were seriously delinquent, meaning they were either in foreclosure or ninety days or more past due. 1 that rate is about four times higher than it was in mid - 2005. lenders initiated roughly 1 - 1 / 2 million foreclosures last year, up from an average of 950, 000 in the preceding two years. more than one - half of the foreclosure starts in 2007 were on subprime mortgages. behind these disturbing statistics are families facing personal and financial hardship and neighborhoods that may be destabilized by clusters of foreclosures. these realities challenge us to find ways to prevent unnecessary foreclosures. and, looking toward the future, they challenge us to ensure a regulatory environment that promotes responsible lending and sustainable homeownership. i would like to briefly discuss how we arrived at where we are today. then i would like to share with you what the federal reserve is doing to reduce foreclosures, to protect aspiring homeowners from unfair and deceptive practices, and to equip them to choose wisely from among the often confusing array of mortgage options. in particular, i would like to highlight the new regulations we have proposed under the home ownership and equity protection act ( hoepa ). origins of the subprime mortgage turmoil over the past quarter century, advances in information technology, the development of credit - scoring techniques, and the emergence of a large secondary market, among other factors, have significantly increased access to mortgage credit. from 1994 to 2006, subprime lending increased from an estimated $ 35 billion, or 4. 5 percent of all one - to - four family mortgage originations, to $ 600 billion, or
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david dodge : low and predictable inflation and the performance of canadian labour markets1 lecture by david dodge, governor of the bank of canada, to the memorial university of newfoundland, st. john β s, newfoundland and labrador, 20 november 2003. the references can be found at the end of the speech on the bank of canada β s website : www. bankofcanada. ca. * * * the goal of canadian monetary policy is to contribute to solid economic performance and rising living standards. the best way we can do this is by keeping inflation low, stable, and predictable. this has important implications for labour market performance. although inflation is now low, stable, and predictable, this has not always been the case. indeed, in the 1970s, inflation was high, unstable, and unpredictable. this led to the establishment of the anti - inflation board ( aib ) in 1975, where i worked as research director. tonight, i would like to reflect on what we have learned since the aib closed its doors almost 25 years ago to the day. i β ll begin with a brief discussion of the theoretical foundation for the role that inflation expectations play. expectations are important for both price - and wage - setting, but i will concentrate on the wage - setting aspects. i would next like to discuss the bank of canada β s inflation - targeting framework, which serves to anchor inflation expectations. i will also address the issue that our inflation target may be too low because nominal wages are downwardly rigid. and i will discuss canada β s labour market performance and how it has improved substantially with the change in our monetary policy framework since 1991. finally, i will say a few words about the conduct of monetary policy today, and offer some brief concluding remarks. 1. inflation and the role of inflation expectations let me begin by going back to the 1970s. when we started that decade, the inflation rate was around 3 per cent. but it quickly rose to over 12 per cent in the span of three years. not only was inflation rising, it had become more variable, creating uncertainty over the future rate of inflation. 2 this made it difficult for workers and employers to decide on the appropriate rate of inflation to incorporate into wage settlements. in this environment, it was not surprising that some workers demanded wage increases, both as compensation for past inflation and as a precaution against future inflation. and many employers granted them. when they did not, workers often went on strike. on average, in the 1970s, over
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participants take on. despite the risks, we can easily imagine a world in which p2p finance thrives. it has already begun to spread to a wide variety of new sectors, such as student loans, real estate, hedging, auto loans, equipment finance, medical loans, business - to - business lending, and so on. over time, we could see p2p finance become more global, and could also see the development of a deep secondary market in securitized p2p loans. if i am right that there will be less credit available from traditional banks, it β s not a stretch to think that the young, the small and the medium, and the risky companies, will begin to tap into this p2p finance channel to meet their credit needs. bis central bankers β speeches this evolution could be key to an eventual return to sustainable economic growth, as i am convinced that a return to natural growth β as opposed to policy - induced growth β will require a resumption of new firm creation, sustained by innovative financial intermediation. will a surge in p2p finance mean new risks to the financial system? perhaps. will those risks be systemic in nature? we don β t have a clear answer yet, but with the increasing participation of institutional investors in this space and increasing market shares of p2p finance, there could be financial stability implications. and what if mother nature does not fix all the imperfections in our financial system through market - based or private finance? the third channel that we might expect to play an enhanced role in a credit - constrained world is public finance. public financial intermediaries are active in such areas as lending to small and medium - sized enterprises and trade finance, and these demands could rise in the years ahead. but the bigger need for a public sector solution is more likely to be in the area of infrastructure investment. so - called β green infrastructure β is particularly susceptible to market failure, as it suffers from both the basic free - rider problem and societal mispricing β a double market failure, if you will. public - private partnerships ( or p3s ) have proven to be an increasingly effective tool for funding these investments, but they have not been a panacea. the p3 space is not exempt from our call for more financial innovation. innovative ways of risk - sharing in investment projects β for example, governments offering innovative guarantee structures where they take on a contingent fiscal risk as opposed to laying out large expenditures
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ΓΈystein olsen : management of the government pension fund global ( gpfg ) introductory statement by mr ΓΈystein olsen, governor of the norges bank ( central bank of norway ), before the storting β s standing committee on finance and economic affairs, oslo, 30 april 2013. * * * please note that the text below may differ from the actual presentation. charts in pdf i would like to thank the chairman and thank you for giving norges bank the opportunity again this year to report on the management of the government pension fund global ( gpfg ). chart : changing the regional allocation the investment strategy of the gpfg builds on its specific features, purpose and our perception of the functioning of financial markets. the gpfg is a large fund and features a long investment horizon. the objective of investment management is to preserve the longterm international purchasing power of the gpfg. in 2012, the investment strategy was changed. as a result, investments in emerging markets have increased. just over 10 percent of the overall portfolio is now invested in these markets. chart : increasing investments in real assets the allocation to equities was increased to 60 percent between 2007 and 2009. when the allocation to real estate reaches 5 percent further ahead, the gpfg's allocation to real assets will make up two - thirds of the overall portfolio. the long - term expected return on real assets is higher than on nominal bonds. the risk is also higher, but the long - term investment horizon puts us in a solid position to carry that risk. the key to realising the higher return is to adhere to the strategy also in times of heightened uncertainty, as we did through the financial crisis in 2008 and 2009. an official framework for rebalancing back to a set allocation to equities has now been established. this will help ensure that this strategy is carried out during the next period of high volatility in financial markets. chart : lower costs management costs for equities are higher than for fixed - income securities. the cost of managing many small shareholdings is higher than managing a few large ones, as is the cost of managing investments in emerging markets in relation to developed markets. overall management costs as a percentage of the gpfg have nonetheless fallen over time. we have exploited its size to realise economies of scale. in the past few years, costs have been reduced also in krone terms. this is partly due to reduced use of external managers. costs
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, 0 11, 0 10, 0 iceland 9, 0 8, 0 9, 0 8, 0 norway 7, 0 6, 0 5, 0 7, 0 6, 0 5, 0 denmark 4, 0 3, 0 sweden 2, 0 finland ( emu ) 4, 0 3, 0 2, 0 sg 240802 nominal effective exchange rates january 1990 = 100 appreciation iceland ( january 1997 = 100 ) denmark norway sweden finland depreciation source : bank of england and central bank of iceland sg 240802 norway : effective exchange rate and 12 - month interest rate differential against trading partners 4, 0 3, 5 3, 0 interest rate differential ( 12 months ) ( left - hand scale ) 2, 5 2, 0 effective exchange rate ( right - hand scale ) 1, 5 1, 0 jan. 99 jul. 99 jan. 00 jul. 00 jan. 01 jul. 01 jan. 02 jul. 02 source : norges bank sg 240802 norway : effective exchange rate forward exchange rate ( uip ) source : norges bank sg 240802
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largest holdings of reserves. since 2005, the reserve holdings in a sample of emerging markets referred to earlier ( excluding china ) increased by 178 % by the year 2017. it is generally agreed that the primary motive for reserve accumulation is precautionary, as insurance against speculative attacks in times of crisis. according to research conducted by the international monetary fund 8, there is strong empirical evidence that reserves reduce the likelihood of balance - of - payments pressures in the emerging markets. reserves could provide the means to respond to exogenous shocks, and could calm or even prevent disorderly markets. central banks have, however, tended to accumulate rather than to use reserves β a phenomenon sometimes referred to as β the fear of losing reserves β. du, w and schregger, j. 2016. β local currency sovereign risk β. journal of finance 71 ( 3 ). hassan, s. 2015. β speculative flows, exchange rate volatility and monetary policy : the south african experience β. south african reserve bank working paper series wp / 15 / 02. international monetary fund. 2014. assessing reserve adequacy β specific proposals. page 10 of 11 while higher levels of reserves may create the perception of resilience, simply having reserves on their own is not an effective buffer against speculative attacks or crises. reserves do not eliminate vulnerabilities. they are not a substitute for sound policies and strong, well - regulated financial sectors. conclusion in conclusion, it would appear that, at long last, the recovery from the global financial crisis is on track. it has been a difficult path, with a number of false starts and disappointments. no doubt, the road going forward will not be without its difficulties. the recovery itself is expected to bring about new challenges, for the emerging markets in particular. it is inevitable that monetary - policy normalization in the advanced economies will happen, and that the era of high global liquidity will come to an end. the impact on capital flows and global financial markets will create particular challenges for central banks at a time when political independence is being questioned. while vulnerabilities differ from country to country, the emerging markets in general appear to be more resilient in the face of the recent market volatility. their macroeconomic fundamentals and policies have improved, making them better - placed to weather the storm than was the case five years ago. thank you. page 11 of 11
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and low interest rates in the advanced economies and an absence of inflation pressures. for some time now, the world has been anticipating interest - rate normalization in the united states ( us ) in particular. to date, this has been happening at a very slow and measured pace, and has been well communicated. over the past few weeks, global financial markets have reacted to the prospect of tighter - than - expected monetary - policy settings in the us. there was a widespread market reaction to the sharp drop in us equity prices and a large spike in the vix. after the initial bout of volatility, the markets appear to have stabilised somewhat, but they remain vulnerable to further changes in sentiment and perceptions of risk. it does seem, however, that the prolonged period of easy money and highly liquid markets may be coming to an end, raising concerns about spillovers to the emerging markets who, as usual, are the innocent bystanders. the current turbulence in global financial markets coupled with the return of volatility is in some ways reminiscent of the so - called β taper tantrum β of 2013. after a number of years of interest rates at the zero bound and quantitative easing, the world suddenly faced the prospect of a withdrawal of stimulus. the mere suggestion that the federal reserve system ( fed ) was considering a reduction in quantitative easing hit the financial markets hard. long bond yields ratcheted up in the us, raising fears that the nascent growth recovery would be reversed. in the event, the fed had to allay fears of an excessively tight policy cycle and, in reality, what tightening has occurred since then has been very moderate and well communicated. but while there are similarities to the taper tantrum, there are important differences as well. at that stage, it was only the us that was looking to tighten policy. today, the cycle is more synchronised. there are expectations for a more aggressive tightening cycle in the us than had previously been priced in, and further interest - rate increases page 5 of 11 are expected in the united kingdom. in addition, the european central bank is beginning a gradual withdrawal of stimulus. monetary policy in japan is, however, expected to remain highly accommodative. a further important difference between then and now is that, after a number of false starts, the growth recovery in the advanced economies appears to be more entrenched and broad - based. this will be positive for the emerging markets. there are also tentative
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while our measures have clearly played a decisive role in keeping inflation expectations anchored and have contributed to an improved inflation outlook, an ample degree of monetary accommodation therefore remains necessary to secure a return of inflation rates towards levels that are below, but close to, 2 % over the medium term. how is our monetary policy likely to evolve in the foreseeable future? our monetary policy stance is currently determined by the combination and mutual interaction of the asset purchase programme ( app ), our policy rates and our forward guidance on each of these tools. additional stimulus is provided by the targeted longer - term refinancing operations ( tltros ), which will remain outstanding for the next three years. once our key interest rates had reached exceptionally low levels, the app became for all practical purposes the primary policy tool for calibrating our monetary policy stance. this is why, 1 / 3 bis central bankers'speeches since january 2015, we have been signalling the traditionally tight connection between the ecb β s monetary policy and the price stability objective by linking an assessment of the medium - term outlook for inflation to the size and duration of our net asset purchases. accordingly, we have consistently communicated our intention to continue with our chosen pace of monthly net purchases until we see β a sustained adjustment in the path of inflation consistent with our inflation aim β. in addition, the pledge to reinvest the proceeds from the principal payments that accrue from the maturing securities in our portfolio should be seen as a necessary complement to the net asset purchases. forward guidance on both policy rates and the app plays a key role in determining our monetary policy stance. its function has evolved significantly over time. in july 2013, when we announced for the first time that we expected our β key interest rates to remain at present or lower levels for an extended period of time β, forward guidance on interest rates was intended as a protective measure to insulate the euro area money market from the global financial turmoil that had followed the β taper tantrum β a few weeks earlier. as the macroeconomic environment deteriorated in late 2013 and early 2014, our policy needed to become distinctly more accommodative, and forward guidance turned into a vehicle for easing the monetary policy stance. forward guidance has not taken the same form across all major economies, differing in terms of both its degree of conditionality and the instruments to which it is attached in the euro area, since the app has been in place, forward guidance has been extended to key parameters of our
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mr duisenberg discusses the ongoing dialogue on monetary policy, the overall economic situation and other activities of the eurosystem introductory statement by dr willem f duisenberg, president of the european central bank, at the hearing before the committee on economic and monetary affairs of the european parliament, brussels, on 20 march 2000. * * * it is my pleasure to continue today our ongoing dialogue on monetary policy, the overall economic situation and other activities of the eurosystem. since our previous hearing in november, the european economic outlook has brightened further, while, at the same time, the balance of risks to price stability has shifted upwards owing, in particular, to external factors. against this background, the decisions of the governing council of the ecb to raise interest rates in early february and last week, as well as the reasoning behind these steps, are at the centre of my presentation today. moreover, i should like to touch upon the overall european economic environment. finally, i shall briefly turn to some other activities of the eurosystem which might be of particular interest to you. 1. current economic developments and prospects as you are aware, the governing council of the ecb decided on 3 february and 16 march 2000 to increase the three main ecb interest rates. these two decisions followed the interest rate decision taken on 4 november 1999. whereas the interest rates were increased by 50 basis points in november 1999, on the past two occasions the main refinancing rate and the rates on the marginal lending facility and on the deposit facility were each increased by 25 basis points, so that they now stand at 3. 50 %, 4. 50 % and 2. 50 % respectively. all three decisions were taken in the context of the monetary policy strategy of the eurosystem to address upside risks to future price stability in the euro area. both pillars of the monetary policy strategy indicated that the balance of risks to price stability in the medium term had been shifting upward in late 1999 and early 2000. starting with monetary developments in the context of the first pillar, the three - month average of annual m3 growth exceeded the reference value throughout 1999 and in january 2000. together with the continued strong expansion, at annual rates of around 10 %, of credit granted to the private sector, this signalled that liquidity in the euro area is ample, contributing to upside risks to price stability in the medium term. in the context of the first pillar, let me briefly take up the issue of the reference value for monetary growth
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##es. last year, the primary surplus was 4. 2 % of gdp, outperforming the target of 0. 5 %. the current account during the last two years had effectively been in balance from a 15 % deficit eight years ago. at the same time, sweeping structural reforms have been implemented, covering the pensions system, the health system, labour markets, product markets, the business environment, public administration, etc. recapitalisation and restructuring have taken place in the banking system and significant institutional reforms have been initiated aiming at reducing the volume of npls. moreover, there is evidence that the economy has been undergoing a rebalancing towards tradable, export - oriented sector : the share of exports of goods and services in gdp increased from 19 % in 2009 to 28. 2 % in 2016, with most of the increase coming from exports of goods. 2. 3 recent economic and financial developments see appendix for an update on the macroeconomy and the banking sector. 3. bog proposal - a mild debt relief exercise see appendix for details. 4. major pending issues two quotes from the latest eurogroup statement ( 15. 06. 2017 ) : i ) β the eurogroup stands ready to implement, without prejudice to the final dsa, extensions of the weighted average maturities ( wam ) and a further deferral of efsf interest and amortization by between 0 and 15 years. as agreed in may 2016, these measures shall not lead to additional costs for other beneficiary member states β. ii ) β in view of the ending of the current programme in august 2018, the eurogroup commits to 2 / 4 bis central bankers'speeches provide support for greece β s return to the market : the eurogroup agrees that future disbursements should cater not only for the need to clear arrears, but also to further build up cash buffers to support investor's confidence and facilitate market access β. 4. 1 getting greece into qe the person speaking before you was the first greek economist to talk about the modalities and the benefits of getting greece into ecb β s qe programme, in october 2015 talking to international investors in new york, and the programme β let me remind you that the qe programme started in march 2015. president draghi, when asked about the eventuality of greece β s participation in the ecb β s qe programme [ on many occasions in fact, right after many governing
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are reaping the benefits of that credibility. long term interest rates stand at a historically low level, around 100 basis points below the level in the united states. so, even after the recent increases in short term rates, monetary and financial conditions remain extremely favourable for investment and growth. and indeed, we might be witnessing in europe the start of period of sustained and stable growth, at least if current projections and surveys are proven to be right in the coming months. a third benefit of the euro is the boost it gives to financial integration in europe. in many segments, european financial markets have reached the depth and liquidity which, up to now, were the preserve of dollar markets. this stimulates productive investment, helps in restructuring ( as witnessed by the current wave of m & as ) and, more generally, allows a better allocation of savings and sharing of risks. as a consequence, the euro is becoming extremely attractive, as a vehicle, a transaction, an investment and a reserve currency. as you may know, as central bankers, we remain neutral as far as the internationalisation of the euro is concerned. we are neither encouraging, nor discouraging the process. but, as a citizen, i cannot help and feel proud of having one the two main currencies in the world. long term prospects looking into the future, i would like to try and answer four questions : is monetary integration sustainable in the long run? what are the prospects for the enlargement of the euro area? can the euro serve as a model for other regions in the world? and finally, is monetary union going to lead to further political integration in europe? solidity of the euro area i am aware that there still is, on this side of the atlantic, a lot of skepticism about the future for the euro. four years ago, one of your leading academics, ( martin feldstein ) wrote a piece in foreign affairs arguing that monetary union would reignite conflicts and war in europe. this is, of course, the extreme form of a basic argument : that there are too many divergences between european states for them to withstand the pressures of monetary unification. put in simple economic terms, it boils down to the argument that the euro is not an optimum currency area. in my view, this is less and less true. while european labor markets are not β and will never be β as integrated as in the united states, goods, services, and capital markets are now fully unified,
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fehmi mehmeti : the central bank of the republic of kosovo continues to support and push the financial sector to increase support to the economy, especially export businesses speech by mr fehmi mehmeti, governor of the central bank of the republic of kosovo, at the launch of the " export window ", pristina, 15 december 2022. * * * dear ms. minister, the honourable mr. mike, the honourable mr. berisha dear attendees it is a special pleasure to be part of this ceremony which marks a very important step of the launch of the export window. allow me, on behalf of the central bank of the republic of kosovo, to congratulate the kosovo credit guarantee fund and usaid ( kosovo compete activity ) for launching a new window for financial facilitating called the " export window ". the kosovo credit guarantee fund, with the support of our international friends, within a relatively short period of time has managed to transform into a very important institution, playing a very important role in increasing and facilitating financing for the country's economy. bank lending continues to be a very important and stable source of private sector financing in kosovo. the value of banking sector loans until october 2022 has reached 4. 3 billion euros, marking an annual increase of 17. 9 %. however, despite the satisfactory trend of the growth of bank lending, it is considered that the level of financial intermediation in kosovo should increase even further, and that in relation to the size of the economy, there is further room for expansion of the lending activity. an important role in filling this space is played by the kosovo credit guarantee fund, which, through its guarantee mechanism, will enable the increase in credit and ease the conditions of access to credit even for the extremely important sectors that ensure the economic development of the country. the new export window, which aims to issue new guarantees to partner financial institutions for the benefit of micro, small and medium enterprises, especially for exportfocused businesses, is good news for businesses and the economy of the country. in this period where our economy, and not only, has had negative impacts, firstly from the pandemic and recently also from the russian aggression in ukraine, it is very important to help our enterprises, to increase the export as much as possible. 1 / 2 bis - central bankers'speeches until october of this year, the value of exports reached the amount of 774. 4 million euros. this amount represents an increase of over 160 million
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, where in december 2022 the level of total deposits was 5. 55 billion euros, an increase of 2. 19 billion euros or 65. 1 percent in the 2022 time horizon compared to 2018. the banking sector throughout this period, despite the continuous double - digit growth of lending, has continued to be well capitalized and liquid. the liquidity ratio of the banking sector continues to be high and above the regulatory requirements of the cbk. the banking sector had the highest level of liquidity during the pandemic period, in 2020, which was 39. 8 percent, while in december 2022 this ratio was 36. 5 percent, higher than the required regulatory minimum of 25 percent. the 2 / 5 bis - central bankers'speeches liquidity coverage ratio ( lcr - liquidity coverage ratio ) is at the level of 212. 1 percent, which is much higher than the required level of 100 percent ( in the third quarter of 2022, this indicator in the eurozone countries was at the level of 162 percent ). the banks'own capital has continued to increase, despite the approval of the distribution of dividends individually for the banks during the last 5 years. as of december 31, 2022, the capital value of the banking sector is 699 million euros from 497 million euros at the end of 2018. while the capital adequacy indicator continues to be above the required regulatory minimum throughout this period, or about 14. 8 percent in end of 2022. in addition to the banking sector, the mfi - nbfi have also recorded a stable performance, where at the end of 2022 the value of the assets of this sector was 387. 7 million euros, an increase of 146. 1 million euros, or 60. 5 percent compared to 2018. as in banks, the main item also among mfi - nbfi are loans that in december 2022 marked the value of 351 million euros, or an increase of 128. 9 million euros or 58. 0 percent, compared to 2018. the stable and qualitative growth of loans is also confirmed by the level of non - performing loans in relation to total loans that at the end of 2022 was 1. 8 percent, lower compared to 2018 when it was 2. 2 %. in relation to this sector, in 2019 the cbk withdrew the registration ( license ) of two institutions, iutecredit and monego. both of these institutions have made numerous court appeals
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markets have had very limited effects on the chilean economy ( figure 6 ). figure 6 : exchange rates ( local currency units per us dollar, percent change ) may 2006 argentina australia brazil chile eurozone hungary indonesia japan malaysia mexico new zealand philippines poland russia south africa south korea turkey united kingdom 1, 5 5, 8 8, 0 7, 3 1, 6 7, 0 6, 6 5, 2 2, 9 5, 4 3, 3 4, 0 6, 1 0, 1 20, 3 3, 2 20, 3 2, 3 february 2007 august 2007 0, 0 3, 0 2, 6 1, 0 0, 7 0, 7 2, 0 - 4, 2 0, 7 1, 0 5, 2 1, 0 0, 6 0, 4 5, 9 1, 2 5, 1 2, 2 1, 7 argentina 10, 3 australia 8, 8 brazil 1, 9 chile 2, 4 eurozone 5, 1 hungary 3, 3 indonesia - 6, 3 japan 2, 3 malaysia 3, 1 mexico 13, 6 new zealand 4, 1 philippines 1, 8 poland 1, 4 russia 6, 8 south africa 2, 9 south korea 7, 0 turkey 3, 4 united kingdom ( 1 ) shows variation between 10 may and 27 june. ( 2 ) shows variation between 26 february and 5 march. ( 3 ) shows variation between 19 july and 17 august. source : bloomberg. long - term interest rates ( variation in basis points ) may 2006 argentina australia brazil chile eurozone hungary indonesia japan malaysia mexico new zealand philippines poland russia south africa south korea turkey united kingdom usa february 2007 - 4 - 9 - 72 - 11 - 679 - - 18 - 7 - 8 - 4 - 3 - 6 - 12 - - 5 - 75 - 9 - 13 august 2007 382 argentina - 36 australia 90 brazil - 8 chile - 26 eurozone 53 hungary 112 indonesia - 33 japan 23 malaysia 27 mexico - 60 new zealand - - philippines 12 poland 26 russia 3 south africa - - south korea 161 turkey - 34 united kingdom - 33 usa ( 1 ) shows variation between 10 may and 27 june. ( 2 ) shows variation between 26 february and 5 march. ( 3 ) shows variation between 19 july and 17 august. source : bloomberg. something very simple reflects the proper functioning of our economy : in a moment where the world has seen a major retraction of credit operations, in chile companies have continued to place long - term bonds in the private market.
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. it also the efficacy of this monetary policy over the 2000s is evident ( figure 3 ). figure 3 : deviation of inflation from its target source : central bank of chile. the international financial turmoil regarding recent developments in world financial markets, the first thing to do is recognize that the adjustment they are undergoing is part of an overdue normalization process in credit risk spreads for a large variety of securities, and volatility levels of the riskier assets prices ( figure 4 ). in fact, for some time our financial stability and monetary policy reports have stated that a correction in risk premiums and an increase in market volatility were to be expected, because the good conditions would not last indefinitely, in particular given the monetary policy normalization period in the main economies that was already prolonging for some years. it is very likely that today we are witnessing precisely that correction in risk valuation and volatility. figure 4 : sovereign risk premiums and volatility ( basis points ) ( 1 ) risk premium on developed market corporate bonds with less than investment grade risk ratings ( ccc to bb ), according to standard and poor β s. ( 2 ) considers implicit volatility on option from us s & p 500 index. sources : bloomberg and jp morgan chase. however, even if this is a normalization process, the dynamics, deepness and extension of market adjustment are difficult to foresee. as with earlier episodes of sharp increases in risk premiums and market volatility, some market segments and specific agents have found themselves unexpectedly in weaker financial positions, which generate tensions and doubts about particular entities β risk vis - a - vis their counterparties. in this sense, beyond the slow recovery of the past week, the risk remains being a worsening of the international financial scenario if this correction deepens, with more severe implications on the functioning of the principal markets and global financial intermediaries and, ultimately, on world economic activity. although this correction was triggered by the deterioration of sub - prime mortgage debtors β payment capacity in the us, what is surprising is that the exposure to such deterioration has spread to financial entities elsewhere, causing tension in the trade securities market and even in the global interbank market. these mortgages were originated by companies specializing in mortgage loans ; then they were sold to institutions that packed them as bonds collateralized by payment flows associated to these mortgages, to higher quality mortgages and to other credits. these bonds are known as abs. with the increase
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risks to the inflation outlook as well. in particular, the current high levels of consumption expenditure, balance of payments imbalances and higher than expected producer prices pose an even greater threat to the low inflationary environment we have been enjoying in south africa. these developments demand vigilance on the part of the bank if the hard - fought economic gains are to be sustained. the bank β s continued contribution to the growth process, therefore, is to maintain a low inflation environment and contribute towards a sound financial system. although some maintain that the recent interest rate increase will undermine growth, we are of the considered view essential for the maintenance of the stable framework for growth. but low inflation or macroeconomic stability on its own does not guarantee higher growth. the government β s accelerated shared growth initiative of south africa ( asgisa ) plans to achieve and sustain a higher growth rate through an ambitious investment programme which focuses on improving and expanding the infrastructure of the economy. the government has highlighted the shortage of skilled labour as one of the binding constraints to achieving the desired levels of economic growth. both government and the private sector have an important role to play in meeting the skills shortage of the economy. though it may seem modest, this fundraising dinner furthers empowerment through granting learning opportunities to the disadvantaged, thus adding to the skills base and increasing economic opportunity and upliftment in areas around st mark β s. initiatives such as this one, if sustained and replicated across the country, will make a meaningful contribution to the ultimate objective of a better life for all. ladies and gentlemen, the time, effort and money donated towards making this evening such a resounding success, is an eloquent expression of passion for extending educational benefits to the least well - off and most vulnerable. no cause can be worthier. i thank you all for listening to your hearts and opening your purses to make a difference. thank you.
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in generating financial resources for institutions, fundraising is not their raison d β etre. we can also think of β fun β raising, i. e. entertaining and exciting ways of building alumni relationships. various projects, too numerous to mention, can be undertaken. also, benefits of staying connected to one β s alma mater, other alumni and peers are immeasurable. networking is developed through strong alumni associations. this includes circulating information on internship, employment and other opportunities available in the various areas of enterprise alumni are engaged in. to my mind the benefits seem to outweigh the costs. your effort as we gather here tonight dovetails with one of the government β s key programmes. as you may be aware, the government has set itself the goals of halving poverty and unemployment by 2014. to meet these challenges, the government seeks an annual average growth rate of 4, 5 per cent or higher between 2005 and 2009, and an average growth rate of at least 6 per cent between 2010 and 2014. there are strong indications that the south african economy has reached a higher growth path. the growth rate averaged 3 per cent per annum between 1994 and 2003 as compared to 1 per cent during the decade preceding the country β s advent to democracy. however, growth rates in 2004 and 2005 have averaged 4, 5 per cent and 4, 9 per cent respectively. while growth is expected to decelerate somewhat this year, it is still expected to exceed 4 per cent. there is thus little doubt that the sustained application of prudent macroeconomic policies is bearing fruits. monetary policy has played its part by contributing to a low inflationary environment - inflation has been within the target range of 3 - 6 per cent for cpix for the past 34 months - which in turn has been supportive of economic growth. the maintenance of price stability, however, is not without its challenges. the globalisation of the south african economy is well documented. there is no escaping the impact of global influences on the sa economy. the recent volatility in our financial markets following the increased risk aversion of global investors towards emerging countries is an example in this regard. in addition, the recent successive monthly increases in the price of petrol as a result of the sustained increase in international oil prices bear further testimony to the sensitivity of the south african economy to global developments. as is the case internationally, the high oil price, if sustained, poses a significant threat to inflation and economic growth in south africa. there are domestically generated
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provided and lower costs. ladies and gentlemen we can and need to start somewhere and make the change necessary to empower our communities and providing a chance to the otherwise β commercially undeserved β. this will also require a change of mindset on our part. like all changes, there is always resistance. but in small island economies like ours, co - operation and co - ordination is vital amongst all the players in society to allow us to realize our potential and improve the living standards of our people. government agencies, the private sector, donors and civil society organizations all have a responsibility in this regard. as stakeholders in the microfinance or financial inclusion segment of our society, this workshop provides you with the ideal opportunity to make a difference. without the right financial structure and accessibility to appropriate financial services our rural sector will not grow. as i mentioned previously, banks are the most ideal institutions that can assist by providing financial services to micro & small business enterprises given their vast resources and experience. it is our duty in the financial sector to assist the other sectors of our economy by making accessible the tools and the means to work in our rural areas. i am confident that together we can deliver. furthermore, the reserve bank has been approached by a number of telecommunication operators to offer basic banking service through mobile phones at very affordable prices. these types of services will further enhance the promotion of financial inclusion in fiji, especially in terms of mobilising the savings and easy access to remittances. in addition, this will provide increased choice of financial services available to people in geographically isolated and remote areas of fiji. concluding remarks let me wrap up by informing you ladies and gentlemen, that fiji, like any other developing country, is currently reviewing and reforming its financial sector to make it a locomotive for growth and development. the reviews are aimed at strengthening policies to improve the regulatory environment and set the right platform for our economy to grow. the reserve bank of fiji has in the last few months taken on a more active role in terms of defining a more strategic approach for various sectors of the economy. we believe that much more can be done to improve accessibility of financial services to the unbanked in our communities. studies have shown that there are many opportunities for commercial banks in banking the commercially underserved. there are many success stories that have been documented in fiji evident from the fdb β s small business award which highlight that low income markets can be served on a sustainable level. this role is not limited to banks
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barry whiteside : bank south pacific group expansion in fiji opening address by mr barry whiteside, governor of the reserve bank of fiji, on the occasion of the rebranding of dominion house to bsp life centre, the opening of the bsp life β s customer service centre, and the opening of the bsp β s thomson street branch, suva, 4 october 2012. * * * his excellency, the president, rau epeli nailatikau the first lady, adi koila nailatikau mr kevin mccarthy, bsp fiji country manager mr malakai naiyaga, managing director, bsp life limited board members of bsp life limited and bank south pacific management and staff distinguished guests ladies and gentlemen introductory comments bula vinaka and a very good evening to you all. i wish to thank kevin and malakai for their kind invitation to yet another significant event in the relatively short history of bsp β s operations in fiji. it is indeed a privilege to be here to support your development initiatives and i welcome your ongoing rebranding & refurbishment programme in fiji. it definitely is another sign of the bsp group wishing to further stamp its mark as a major player in the market and is a real vote of confidence for fiji β s economy and our domestic financial system. the bsp fiji group we are actually here today to celebrate three different milestones : ( i ) the re - branding of this dominion house complex to bsp life centre ; ( ii ) the opening of bsp life β s customer service centre ; and ( iii ) the renaming of the refurbished bank operations to bsp thomson street branch. the bsp fiji arm of the group has an impressive pedigree. it is a union of two prominent fijian financial institutions, colonial fiji life limited and colonial national bank, which were acquired by bsp in december 2009. colonial fiji life limited, which used to be known as colonial mutual life assurance society ( or more simply as just cmla to us older folk ), was founded in melbourne in 1873, and almost simultaneously opened offices in several other centers in australia. a branch office was opened in fiji in 1876 and i understand that this was the first overseas branch of colonial mutual, before the company opened up in new zealand and south africa in 1883, and expanded into great britain and ireland in 1886. the company officially demutualised in 1996 after acquiring blue shield ( pacific ) limited in 1991. the colonial business was domesticated in
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, central banks cut off the negative loop between financial markets and the real economy. we have certainly made full use of our experience in the global financial crisis. the second feature is the coordination of fiscal and monetary policies. while central banks provided liquidity lifelines, governments strengthened safety nets such as income - support and job - retention measures. the division of labor between fiscal and monetary policies has generated synergy effects and contributed to preventing the economy from sliding into a free - fall. looking to the future, the challenges facing policymakers will likely change. the initial phase has been liquidity support. this will likely change to solvency and corporate viability problems, and then to resource re - allocation in response to structural changes in the economy. at the same time, policymakers face the additional challenges of the economic inequality that has become even more apparent during this health crisis, and the response to increasing worldwide concerns over climate change. likewise, the nature of the policy responses will also shift from temporary first aid measures to medium - to long - term structural policies. to one degree or another, this set of challenges is related to the stability of inflation, the real economy, and the financial system. in this sense, we are seeing a widening in the scope of issues that central banks should take into account. iv. adapting to the new normal so far, i have touched on the economic perspectives and on policy challenges. these factors will in part shape the post - pandemic new normal, although exactly how remains to be seen. one thing for certain, however, is that the world we live in will not be the same as that before the pandemic. after more than a year of living with the pandemic, we have seen a drastic change in the way our society works. in particular, the expansion of digital technology has led to a fundamental transformation in society, in ways that we could not have imagined. as i noted earlier, the shift from in - person to online activities has taken place in all aspects, such as of work, business, education, and health. expansion in the areas of remote working, online shopping, remote learning, and telemedicine is just a few examples. i myself have participated in many online 2 / 3 bis central bankers'speeches international meetings over the past year. i have benefited considerably from digital technology that allows me to reach people in different places all over the world, all at the same time. indeed, it is thanks to the online format of
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negative influence may spread across the board. the bangladesh bank heist in the beginning of this year was the case that abovementioned risk was materialized. for the sound development of fintech, information security is a key. fintech has various characteristics, such as advanced information processing utilizing big data and ai. additionally, fintech is characterized by an β openness β of networks, with the expansion of new media and instruments, including internet and smartphones, enabling ready access to financial services. this enhanced accessibility to financial services benefits customers and adds to their convenience. on the other hand, as financial networks become increasingly β open, β potential target points for cyber - attacks also tend to increase. therefore, how to simultaneously manage β openness of financial networks β and β information security β is a big challenge for fintech. financial services can be regarded as the processing of information for creating value in the linkages between economic entities over time and space. this is demonstrated in the payments and financial intermediation that connect various entities, such as senders / receivers and lenders / borrowers. in this sense, such activities must always be supported by people's β trust. β since fintech is illustrated as a technologically advanced form of financial services, the importance of trust also applies to fintech. for the development of fintech, it is imperative to firmly maintain people's trust in financial services while facilitating the creativity and innovation needed to meet the needs of people. if information security problems were to repeatedly occur in a part of fintech services, public trust toward fintech in general would be eroded even though such problems are caused by a limited number of entities. people β s anxiety for new services would hinder the sound development of fintech overall. bis central bankers β speeches the information technology behind fintech, if properly applied, should and can also contribute to enhancing information security and the safety of financial transactions. for example, seal stamps and pins, which are traditional measures for verification in financial transactions, are accompanied by certain risks, such as theft and identity theft. in this regard, biometric authentication utilizing new technology may contribute to reducing these risks and strengthening the security in financial transactions. thus, it is critical for relevant parties to make utmost efforts to use technological innovation for enhancing security in financial transactions. fintech will thrive and grow when users associate it not only with convenience but also with safety and trust. iv. initiatives at the bank of japan fintech has various implications for central banking.
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bostjan vasle : bank of slovenia's 30th anniversary address by mr bostjan vasle, governor of bank of slovenia, at the celebration of bank of slovenia's 30th anniversary, ljubljana, 7 october 2021. * * * mr president, honourable guests, ladies and gentlemen, it is a great honour and pleasure to be able to welcome you to the celebration of our anniversary in this house, so full of milestones in our recent history and culture. thirty years ago, the day that slovenia declared independence also saw the birth of banka slovenije, the central bank of the newly established state, and a cornerstone of slovenian sovereignty. since that june day it has been our mission to ensure price stability, thereby helping to create the conditions for slovenia to develop and for the wellbeing of its citizens. anniversaries are a time for reflecting on what good was done in the past, what we can learn from it, and how best to set out the path moving forward. usually away from the media spotlight, banka slovenije has so far made a significant and lasting contribution on the path to slovenia's stability and progress. in its very first year it introduced payment notes and then the tolar as the first official currency of independent slovenia. soon after slovenia became a full member of the imf and the world bank, with whom we continue to work closely today. after a decade of sustained improvement in the stability of the currency, in 2002 banka slovenije was granted the additional power of overseeing the legality and proper functioning of payment systems in the country. two years later, when slovenia joined the eu, banka slovenije also became a member of the european system of central banks, and put itself on the pathway for joining the euro by joining the erm ii system. slovenia eventually succeeded in becoming the first of the ten new eu member states to join the euro, at the beginning of 2007. coins featuring preseren, trubar and triglav, to name just a few designs, have since been faithful ambassadors for our country, our culture and our way of life, and together with other european symbols have been a valued currency around the world. after slovenia joined the euro area β which then enjoyed and still to this day enjoys one of the highest levels of public support in the entire monetary union β the series of historical milestones was followed by a time of economic and financial crisis, which in slovenia was reflected
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pleasant celebration of your
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##ised economies in the west. the direct real economic effects via foreign trade will probably be relatively small. for economic activity and inflation in sweden, the effects that could arise from decreased general confidence are more important. share prices in sweden have gone on falling since the september report was published, wiping out not just the gains during 1998 but also a part of last year β s increase. since the high in july, the stockholm exchange1 has dropped nearly 30 per cent, giving a fall of about 8 per cent from the level at the beginning of the year. since the inflation report was published, share prices have fallen nearly 6 per cent. affarsvarlden β s general index. - 6continued unrest and falling asset values would affect the behaviour of firms and consumers. if households and firms postpone investment and consumption decisions, economic activity will be lower. some signs of this can be discerned ; the latest figures suggest a minor blow to households β expectations of sweden β s economy, though this has not yet affected their personal economic expectations. there has been some fall in the growth of business credits. another channel for effects on the real economy is the banking system. a more cautious supply of bank credits could dampen economic activity. in this respect the international turbulence gives cause for concern. the tendency in the late summer for investors to move to assets that were regarded as generally secure - a flight to quality - has developed into a general aversion to holding risk, with investors fleeing instead to assets that are more liquid. the economic fundamentals in particular countries are currently playing little part in investment decisions. this has hit some third world countries very hard. the financial system in sweden is monitored very closely by the riksbank. the available statistics suggest that, compared with many international banks, swedish banks are in a better position, with lower exposures to countries hit by the crisis. the picture also seems to be relatively good as regards exposures to hedge funds. this low exposure is probably a consequence of the bank crisis in sweden in the early 1990s. so the risk of a domestically generated credit crunch should be small. weak currency besides increased uncertainty and greater risks of weaker economic activity, developments since the september report was written have involved downward pressure on the swedish krona. since september 28th the krona has weakened almost 2 per cent in terms of the tcw - index, while since the depreciation began last may the exchange rate has fallen about 9 per cent. just as on previous
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assessment of how they work to promote a sustainable climate. indicators of this could be, for instance, their greenhouse gas emissions. this is how we are now beginning to give consideration to sustainability in our new risk and investment policy. we will not invest in assets issued by issuers with a large climate footprint when we are choosing other assets than those best corresponding to our policy need. this has some consequences for the holdings in our foreign exchange reserves. the riksbank has invested around 8 per cent of the foreign exchange reserves in australian and canadian central and federal government bonds, as they give relatively high yield and a good diversification of risk, at the same time as being traded on liquid markets. but australia and canada are countries that are not known for good climate work. greenhouse gas emissions per capita are among the highest in the world, but vary considerably between the different states. for instance, greenhouse gas intensity is more than three times higher in production in alberta than in ontario and quebec. as a result of the new investment policy, we sold our holdings of bonds issued by alberta in the spring. for the same reason, we have recently sold our holdings in bonds issued by the australian states of queensland and western australia. the riksbank needs to develop its work on how to take climate change into consideration in asset management. for instance, we need broader and deeper analysis of the issuers β climate footprint. at the same time, one must remember that the foreign exchange reserves are unavoidably dominated by us and german government bonds. the riksbank's contribution to a better development of the climate will therefore remain small. this is entirely natural. the important decisions on how climate change should be counteracted in sweden are political and should be taken by the government and the riksdag ( parliament ). 6 references bank for international settlements ( 2014 ), β re - thinking the lender of last resort β, bis papers no 79, monetary and economic department, september 2014. bartsch, elga, jean boivin, stanley fischer, philipp hildebrand ( 2019 ), β dealing with the next downturn : from unconventional monetary policy to unprecedented policy coordination β, macro and market perspectives, august 2019, blackrock investment institute. bernanke, ben s. ( 2016 ), β what tools does the fed have left? part 3 : helicopter money β, blog post, brookings. bernanke, ben s. ( 2019 ), β monetary policy in a
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##ractive. however, following the introduction of the broad - based interbank foreign exchange system ( ifes ) in july 2003, the exchange rate of the kwacha against major foreign currencies, particularly the us dollar, has been relatively stable. the kwacha appreciated by 2. 6 % against the us dollar in 2004, after depreciating by 7. 2 % in 2003. other factors contributing to the relative stability of the kwacha include strong performance of the external sector, prudent fiscal management, and the broad weakness of the us dollar in the international market. from the behaviour of the exchange rate of the kwacha against major currencies, it is clear that, supported by effective supervision, foreign exchange market participants are able to police themselves and instil discipline in the market. ladies and gentlemen allow me, at this juncture, to turn to the other function of the bank of zambia β that of ensuring financial system stability. as you may be aware, financial system stability is very critical to the maintenance of macroeconomic stability. as a matter of fact, monetary policy would not be effective in pursuing the inflation objective if the financial system were not stable, for monetary policy actions are transmitted through financial institutions. in this regard, a stable financial system plays a catalytic role for financial institutions to provide the financial products that will contribute to the development of the real estate business. therefore, to enhance the capacity of the financial institutions to meet the challenges of financing, among others, the real estate sector, the bank has undertaken a lot of reforms. for instance, the bank β s legislative and supervisory powers have been strengthened to conform to a liberalised financial sector. however, the development of a more active secondary financial market to enhance efficiency in the financial system remains a key challenge to us. to address these and other challenges, the government approved the financial sector development plan ( fsdp ) in 2004. in coming up with the fsdp, the government recognised, among other weaknesses, that public financial institutions that were established to facilitate the provision of various financial services to the majority of the people in the country were insolvent, and therefore ineffective, or have closed down. e. g., mortgages ( znbs ) ; agriculture lending ( lima bank, co - operative bank and exim bank in the past ) and ; banking services for the rural populace ( nscb ). in addition, long - term project finance has remained difficult to access for
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caleb m fundanga : barclays bank home loan product vote of thanks by dr caleb m fundanga, governor of the bank of zambia, at the official launch of the barclays bank home loan product, lusaka, 25 january 2006. * * * β’ the minister of finance and national planning, hon. ng β andu peter magande m. p. β’ the board chairman of barclays bank zambia plc, mr hakainde hichilema and board members present here today β’ the acting managing director barclays bank zambia plc mr daniel nel, β’ barclays bank zambia plc staff, β’ distinguished invited guests, ladies and gentlemen i feel greatly honoured to be invited to give a vote of thanks to the honourable minister β s speech at the launch of the barclays bank home loan product. on behalf of bank of zambia and indeed on my own behalf, i would like to congratulate barclays bank plc zambia for leading the way in establishing long - term finance for the real estate sector. distinguished invited guests, its just a few months ago that i was invited to talk to an audience on the theme, β investment opportunities in the zambia real estate business : the role of bank of zambia β at a workshop on investment opportunities in zambia β integrating african property markets. i remember telling the audience then that although the share of the real estate sector in gdp has been increasing over the years, it could perform even better if certain issues were addressed. i particularly mentioned the following as impediments to real estate sector development : 1. lack of long term finance 2. high interest rates necessitated by among other things high inflation levels in zambia 3. poor credit culture among our people. 4. lack of a more active secondary financial market the picture was not promising for the real estate sector and the only positive economic variable i remember mentioning as helping the real estate sector was the exchange rate of the kwacha that has been stable against major currencies since july 2003 when the bank of zambia introduced the broadbased inter - bank foreign exchange system ( ifes ). distinguished guests, today i feel honoured to tell you that most of the issues i raised a few months ago as impending real estate sector development are now being addressed. first, the exchange rate of the kwacha against major international currencies has continued to improve drastically. second, the issue of lack of long - term finance, an issue a few months ago has been resolved today with the announcement by barclays bank to
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abs markets. abs are an important means to achieve our policy objectives in a prudent manner, which could be achieved either by ensuring the applicable haircuts or by outright purchases in this market. our decision to intensify the preparations could help to catalyse new securitisation activity. but for a virtuous circle to take hold, the regulatory and market barriers that are preventing the revitalisation of european abs markets need to come down in tandem. much work is already on - going to improve the environment for abs issuance. what i have tried to outline today is several practical steps that can be taken to take this work forward. i believe that a holistic and coordinated approach among eu policy - makers, as well as greater standardisation and more methodological transparency by rating agencies, could help encourage the revival of the abs market that we all want to see. thank you for your attention. bis central bankers β speeches
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closing remarks fourth annual joint conference of the deutsche bundesbank, european central bank and federal reserve bank of chicago on ccp risk management 22. 03. 2022 | virtual | burkhard balz 1 introduction 2 challenges for ccps in the face of amid turbulent financial markets 3 farewell 1 introduction ladies and gentlemen, on behalf of the deutsche bundesbank, the european central bank and the federal reserve bank of chicago, i would like to thank you for participating in the fourth joint conference on ccp ( central counterparty ) risk management. a very interesting conference day with lively debates on current and future challenges in ccp ( central counterparty ) risk management is coming to an end. i now have the honour of concluding today β s conference. 2 challenges for ccps ( central counterparties ) in the face of amid turbulent financial markets although we can look back on what has certainly been an eventful year for ccps ( central counterparties ), recent developments surrounding russia β s invasion of ukraine overshadow everything. who could ever have imagined that we would see another war in europe? for most of us, that was a very distant and absurd idea. while the eu ( european union ), the us ( united states ) and other states are adopting a raft of unprecedented sanctions against russia, the humanitarian crisis in ukraine is taking its course. my thoughts are with the ukrainian people and their immeasurable suffering. and indeed, this crisis comes immediately in the wake of the pandemic, with its risks, challenges and unexpected workload, such as the development of new vaccines within a very short space of time. now geopolitical complexities have gained the upper hand, bringing with them economic consequences. for instance, energy prices, which were already strained, are continuing to rise, producing high volatility in financial markets. in uncertain times, calls for reliability and stability become louder still. robust crisis and risk management appears to be more important than ever β this applies in particular to ccps ( central counterparties ), which play a key role in keeping the financial system safe and steady. for this reason, we also came together today to discuss the right way to handle ccps ( central counterparties ) β risk management. recent developments confirm and demonstrate once again the importance of working and standing together. and we should not forget : our current focus on the war should not distract us from another challenge that is already at our doorstep β global heating. with this in mind, allow me to
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universita cattolica del sacro cuore a future for europe. conference in memory of giacomo vaciago monetary policy in the euro area : past, present and near future speech by the deputy governor of the bank of italy fabio panetta milan, 6 april 2018 1. introduction 1 the figure of giacomo vaciago is part of our country β s recent history. following his studies at the catholic university of milan and at oxford, giacomo was a professor of economics at ancona and then professor of political economy and monetary economics at the catholic university of milan. in 2016 the catholic university awarded him the title of emeritus professor, closing the circle that began with his graduation in 1964. the strength of giacomo β s commitment to society and its institutions is well - known : columnist for the newspaper il sole 24 ore from 1983 ; advisor to the minister for the treasury ( 1987 - 1989 ) and to the prime minister ( 1992 - 1993 ) ; mayor of piacenza ( 1994 - 1998 ) ; advisor to the ministry of art and culture ( 2003 - 2005 ) and to the minister of labour and social policies ( 2014 - 2016 ). giacomo was a committed european. his last book, un β anima per l β europa ( a soul for europe ), posed some key questions about the future of the union. 2 four years ago he urged europeans to β pool their virtues rather than their vices β β something they had often done in the past β and his words still hold true today. but first and foremost, giacomo was a friend i had the good fortune to work with on several occasions. our conversations were an opportunity to look more closely at problems and analyse them rigorously, but also a way to defuse situations, tongue - in - cheek. the page commemorating giacomo on the catholic university β s website opens by noting that β students who attended giacomo vaciago β s lessons on monetary economics and political economy were very fortunate, because they learned things that are not in the textbooks β. indeed, the monetary policy of recent years can certainly not be found in a textbook : it is no coincidence that giacomo observed it carefully and was a strong supporter. 3 in a speech i gave in april 2016 my starting point was the observation that in the decade following the collapse of lehman brothers central banks have been more creative and i would like to thank piergiorgio alessandri, marco casiraghi, pietro rizza, stefano siviero, emilio vadala and
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is growing. in particular, young customers ( e. g. the millennials and generations y and z ) require progressively more customized and integrated services usable through apps and β super - apps β. digitalization can increase the financial inclusion of previously underserved groups of consumers, easing their access to financial services. public institutions and authorities are leveraging digital innovations to fulfil their mandates, including combating money laundering and terrorism financing and preserving financial and monetary stability. alongside important opportunities, digitalization poses considerable challenges for traditional intermediaries and for regulatory and supervisory authorities. the former need to keep up with the increased competition, as mentioned before, and with new kinds of risks, as well as the evolution of the traditional ones, such as cyber and operational risks, associated with the digitalization of financial services. i am also thinking about governance, profitability, capital adequacy, compliance and financial stability in a broader perspective. moreover, many of these risks are cross β sectoral in nature, and they therefore require coordination and cooperation with other international fora and standard - setting bodies. one example is how digitalization makes financial and payment services more efficient, but increases their vulnerability to operational risk and in particular to cyber β attacks on the critical infrastructures powering payment systems and financial markets, including up β and β coming dlt - based infrastructures. the vulnerability of financial and payment systems to hacking and theft increases financial crimes, such as money laundering and other illegal activities, at cross - border level as well. the authorities need to reconcile the promotion of innovation with the need to safeguard consumers and investors, avoid the exclusion of or discrimination against less digitalized users, ensure the proper functioning of market infrastructures and payment systems, and preserve the safety and stability of the financial system and the economy as a whole. over the next few years, these challenges may call for a profound reshaping of our supervisory methodologies and toolkit and for substantial investments in new skills. it is extremely important that supervisors develop proper competencies to understand the risks ( it, operational, reputational, but also in terms of strategic / business model risk ) that may arise for the supervised entities. 2. intermediaries looking for a balance between resilience and adaptability : in this challenging environment, reaching a balance between adaptability and resilience is becoming an extremely important task for the financial system as a whole. in preparing this speech and reflecting on the terms β resilience β and β adapt
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policy is transmitted. understanding how businesses make investment decisions informs our understanding of the monetary transmission mechanism. on the financial stability side, our aim is a resilient financial sector that can support the economy even in times of stress. diversity and robustness in the channels of finance to the real economy increases resilience. that is why we are interested in the way firms finance investments and the constraints they may face. and, of course, we have a secondary objective to support the economic policy of the government. the work i have been drawing on today is part of our work to support the government β s productivity agenda and will i hope be helpful in developing policy responses that go wider than the bank β s primary objectives. so while the bank of england may not be as directly β or reluctantly β involved in the provision of liquidity and finance to the midlands economy as we were in geach β s day we remain very much engaged in these issues. all speeches are available online at www. bankofengland. co. uk / speeches th our birmingham office, which celebrated its 190 birthday this year, no longer discounts bills of exchange in competition with the midland bank, which is itself soon to return to birmingham. rather it is our eyes and ears in the region. along with our network of agents'offices in other parts of the country it helps us to understand what is going on, on the ground, in the economy. indeed, the large and representative survey i have drawn on so heavily today, was only possible through our agents'network using their contacts with firms. i hope charles geach would have been pleased. thank you. all speeches are available online at www. bankofengland. co. uk / speeches
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the economy. but on the other hand, the main business surveys suggest that there is little spare capacity within businesses ( chart 10 ). moreover, the expansion in output since the trough has been met by an increase in employment, rather than by productivity growth. coming to a judgment about the degree of spare capacity in the economy is therefore difficult β but at the same time crucial. given the scale of the numbers involved, small differences in the judgment about the relative roles of cyclical and structural explanations for the recent path of productivity can have enormous implications for one β s views of the risks to inflation. chart 9 chart 10 whole economy labour productivity per hour ( a ) survey measures of capacity utilisation by sector indices : 2006 = 100 path implied by a continuation of pre - recession trend whole economy productivity per hour ( a ) the pre - recession trend is calculated by projecting forward labour productivity from 2008q2 using the average quarterly growth rate between 1996q1 and 2008q1. sources : bank of england, bcc, cbi, cbi / pwc and ons. ( a ) includes measures of services capacity utilisation from the bank β s agents, bcc and cbi. the cbi measure weights together financial services, business / consumer services and distributive trades surveys using shares in nominal value added. the bcc data are non seasonally adjusted. ( b ) includes measures of manufacturing capacity utilisation from the bank β s agents and cbi, and a measure of non - services capacity utilisation from bcc. the bcc data are non seasonally adjusted. personally, i believe that there is a significant margin of slack in the economy β you need only look to the labour market for evidence of that. but it is also likely that there is less slack in the economy than implied by the deviation of productivity from its pre - crisis trend. looking ahead, the degree to which the margin of slack is eroded will depend on the outlook for demand. if demand recovers strongly, that would close up the degree of slack in the economy. but if demand stays weak, then potential supply will gradually respond downwards, also closing the margin of slack ( although that process would probably be slower than if it was faster demand growth doing the work ). bis central bankers β speeches the risks from inflation expectations are also difficult to assess, principally because we do not have good data on the true expectations of businesses and wage bargainers, only what they record in surveys
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glenn stevens : overview of the australian economy and future challenges opening statement by mr glenn stevens, governor of the reserve bank of australia, to the house of representatives standing committee on economics, canberra, 19 february 2010. * * * since we last met the global economy has continued an expansion that started around the middle of 2009. it appears that world gdp grew at an annualised pace of about 4 per cent in the second half of last year. many forecasters now expect a similar result in 2010. international financial markets have generally continued to thaw, with most capital markets functioning again and the use by banks of exceptional support from central banks and government guarantees being wound down. these are, needless to say, very welcome developments. having said that, the situation is not without some challenges. i will mention just two. the first is the two - speed nature of the global recovery. normally after a sharp downturn, the ensuing upswing is correspondingly strong. this has been the case among a number of asia - pacific economies, which take half of australia β s exports. the strength is not confined to china : india, korea, singapore, taiwan and others have all seen a significant pick - up in production and trade. in several of these instances the term β v - shaped recovery β would be apt. around the region, secularly rising incomes, generally healthy banking systems and relatively low public debt levels allow considerable room for confidence of a sustained expansion in demand. in fact in some cases the issue of overheating is arising and the authorities in both china and india have begun to tighten their policy settings. in the large industrial countries, on the other hand, the rebound has been more tentative, and driven more by the turn in the inventory cycle and temporary policy measures than a strong pick - up in private demand. it is not unusual, at this point of the recovery, for the inventory dynamics to be playing a prominent role in pushing up output. nonetheless, the question is the extent to which a durable upswing in private final demand in the various countries will become established. most observers expect this to be a fairly gradual process, given the lingering effect of the strain on banking systems and ongoing de - leveraging, not to mention the need, at some point, to begin the process of fiscal consolidation. growth in these cases is therefore expected to remain modest and, as a result, these economies are likely to be characterised by a lot of spare capacity and ongoing high unemployment. so the historic shift
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monetary policy. having said that, the mid - march package is providing material help now and it will continue to do so. interest rates are lower than they have ever been before and the financial system is flush with liquidity. also helping is the fact that the australian financial system is in good shape. we went into the pandemic with strong balance sheets and high levels of capital in the australian banking system. this means that our financial institutions are well placed to provide the credit that the economy will need. one monetary policy option that has been the subject of public discussion over recent months is the possibility of the rba creating money to directly finance government spending. for some, this offers the possibility of a β free lunch β. the reality, though, is that there is no free lunch. there is no magic pudding. there is no way of putting aside the government β s budget constraint permanently. as i spoke about in a talk last month, it is certainly possible for a central bank to use monetary financing to affect when and how government spending is paid for. depending upon how things are managed, it can be paid for through the inflation tax, by implicit taxes on the banking system and / or higher general taxes in the future. but it does have to be paid for at some point. 3 / 5 bis central bankers'speeches i want to make it clear that monetary financing of the budget is not on the agenda in australia. the separation of monetary policy and fiscal financing is part of australia β s strong institutional framework and has served the country well. the australian government and the states and territories have ready access to the capital markets and they can borrow at historically low rates of interest. at a more practical level, i would like to mention a couple of other areas where the rba has been providing assistance with australia β s covid - 19 response. the first is as transactional banker for the australian government. over recent months the rba β s banking systems have been used to make record numbers of payments, processing the government β s income support to households and businesses. we have done this with around 90 per cent of our staff working from home and it has been a great effort by the rba β s banking and payments teams. the second is meeting the increased demand for banknotes. while covid - 19 has accelerated the shift to electronic payments, there has, paradoxically, also been record demand for banknotes. some people seem to be wanting to keep some extra money at home. the
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a century now is due to its efficient way of dealing with sovereign debt restructuring by combining pragmatism with a strict set of principles to be implemented when working out agreements on debt restructuring. first, making decisions on a case - by - case basis allows paris club creditors to tailor their actions to the individual situation in each debtor country. such an approach reflects a spirit of permanent adaptation to new financial problems and difficulties faced by rescheduling countries. second, paris club treatments are agreed by consensus by all participating creditor countries. third, creditor countries apply the principle of conditionality, whereby debt treatments are granted to countries only if they need debt relief and implement appropriate reforms to resolve their payment difficulties in the context of an imf programme. fourth, the principle of solidarity commits every paris club creditor, in its conclusion of individual bilateral agreements, to respect the terms agreed upon in the joint negotiation. last but not least, the paris club attaches great value to comparability of treatment of all creditors. by insisting that a debtor country should not accept less favourable terms from another creditor than those agreed by consensus within the paris club, it is ensured that its taxpayers β claims are not subordinated to those of other creditors and that their financial interests are preserved. moreover, applying such a clause provides a guarantee that the agreed debt treatment reaches its intended goal of putting debtor countries β debt burdens on a sustainable footing. keeping these principles in mind, what have been the main concrete achievements of the paris club? the first paris club restructuring took place, as mentioned, in 1956, when argentina and its official creditors agreed to reschedule payments due on officially supported credits. at that time, the club had no formal rules or procedures and was only intended to provide pragmatic responses to specific problems. until 1980, paris club creditors on average signed no more than four agreements per year, applying the standard β classic terms β, whereby credits were rescheduled at the appropriate market rate. during these early years of the paris club, negotiations and agreements were more and more standardised, preparing this forum for the busy times that were to come. i remember well those years of intense negotiations and the overall activities of the club. i remember well the members of the club at the time and i see some of them here in this room. to you i would like to express all my friendship and gratitude. we had intense discussions but it was always possible to find solutions because the members of the
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it is true that, when the euro was introduced, a few sectors in some european economies tried to take advantage of the changeover to increase certain prices abnormally. this led to an average rise of around 0. 2 % at the time of the changeover. in the case of france, christian noyer explained this phenomenon, which is insignificant in the life of the euro thus far, outstandingly well. it has become clear that we have done what has been necessary to guarantee price stability in the euro area. we will have very low inflation for some months in the course of 2009, and i already predict some people saying to us that it will be too low! this is a result of the fall in oil prices, as it was the high inflation in 2008 which resulted from their rise. le figaro magazine : the euro celebrated its ten - year anniversary on 1 january 2009. without it, where would we be? jean - claude trichet : the euro is evidently an advantage for those democracies that have chosen to adopt it. it has proven its stability, its resistance to shocks and its resilience in the face of financial and economic turmoil. once again, i would say, as we have faced many tests over the last ten years : the bursting of the internet bubble, the asian crisis, the raw materials and oil price shock... in ten years, the euro has been a key factor in achieving the single european market and has provided a shield against international turmoil. le figaro magazine : is the euro, therefore, a total success? jean - claude trichet : it is a big success. we have given european citizens a single currency which is in line with what was promised : a currency which retains its value, which inspires confidence, a stable currency, at least as stable as the legacy currencies. ten years ago, many believed this promise could not be fulfilled. le figaro magazine : in terms of job creation, has the euro kept its promise? jean - claude trichet : it is not correct to say, as some have done, that the euro has acted against job creation. on the contrary, in the first ten years of the euro, the number of people in work increased by approximately 16 million, which is at least 3 million more than in the usa in the same period. we have also created many more jobs than we did in the decades preceding the euro, in europe as well as in france. le figaro magazine : can
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economy β is the huge number of non - performing loans. there is an ongoing debate in cyprus about how the country will handle this problem, a debate which practically β freezes β the last review of the cypriot economic adjustment programme. do you see any signs of a derailment of the cypriot programme? what might be the effects on the banking system? cyprus has a remarkable track record in implementing the conditionality of the programme. one of the key objectives of the programme is to reduce the high level of non - performing loans and restructure the excessive indebtedness of the private sector. this is a key condition for the banking system to be in a position to finance economic growth and job creation. in this respect, a swift adoption of the insolvency framework and application of the foreclosure framework are not only key elements to guarantee compliance of cyprus with the programme, but also essential to support the economic recovery. bis central bankers β speeches the main political goal of the government is to conclude the programme and the financial assistance provided by the troika earlier, probably before the end of this year. the ecb is part of the troika. as such, does it consider this goal achievable? whether or not there should be a follow - up arrangement is for the cypriot government to decide. what matters to the ecb is to establish the conditions for sustainable growth and for a lasting return of cyprus to market funding when the programme ends, i. e. in the spring of 2016. to this end, it will be essential that the banking sector has turned the corner and the non - performing assets have been addressed. the ecb is starting its programme of quantitative easing ( qe ). how and when can cyprus benefit from that? cyprus should and will benefit from our asset purchase programme. this will be possible whenever the review is successfully concluded. many analysts interpret qe as europe β s first step away from austerity programmes and towards more growth - friendly policies. i also read that inflation is the safest way for european countries to reduce their debts and the ecb will help them move in that direction with its qe. in that respect, is qe a programme created as a result of economic need, of political pressure, or as a result of fear for the future of the euro? the ecb β s sole mandate is to maintain price stability for the euro area as a whole, which we define as consumer price inflation being below
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the country has and will have specific financing needs over the next 18 months. is a new programme for greece a scenario that β s being considered? the eurogroup has outlined a clear sequence. when the current review is concluded successfully, and if the greek authorities so wish, a follow - up arrangement will be discussed with the eurogroup. but it is first and foremost the responsibility of the greek government to create growth and regain financial independence. this requires in my view a clear resolve to boost economic reforms, a prudent fiscal path and an unequivocal confirmation that greece will honour its international commitments. doubts about the country β s creditworthiness will then recede and foreign investors will return to greece. the new government is negotiating with the european commission, the ecb and the imf in full awareness of the fundamental hypothesis that in the end no one would want a grexit. if that is true, why didn β t europe realise earlier that the greek programme was not working effectively? the recession and unemployment in greece cannot be compared with the recession and unemployment in cyprus, ireland, portugal and spain. my question is : would a failure of the programme eventually undermine the future of the euro area? from a very difficult starting position, and through painful efforts, greece has made good progress in restoring fiscal and external sustainability, as well as in putting banks on a sound footing and strengthening the basis for growth and job creation. by the end of 2014, economic indicators were clearly pointing to positive growth and better prospects ahead. indeed, in its forecast released one month ago, the european commission expected greece to grow by 2. 5 % in 2015 and 3. 6 % in 2016, one of the highest growth rates in the euro area. and the arduous efforts of the greek people need to be recognised here. but let β s not fool ourselves : adjustment was inevitable and, believe me, it would have been much worse without european and international support. that said, we should always learn from the past. for instance, i believe that the programme should have put more emphasis, at an earlier stage, on reducing rents β in the economic sense β and fighting vested interests in the greek economy, to allow for a fairer sharing of the adjustment burden. also, in its crisis - fighting toolbox, europe did not have at its disposal instruments available to institutions such as the world bank, which supports social safety nets when countries undertake structural adjustment. according to some rumours, the ecb played a
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yves mersch : legal aspects of the european central bank β s response to the coronavirus ( covid - 19 ) pandemic β an exclusive but narrow competence keynote speech by mr yves mersch, member of the executive board of the european central bank and vice - chair of the supervisory board of the european central bank, at the escb legal conference, frankfurt am main, 2 november 2020. * * * exploring the legal framework governing the ecb β s actions β scope and general legal principles when exploring the scope of our actions we are cognisant that the ecb has exclusive but narrow competence to define the european union monetary policy for the purpose of maintaining price stability. moreover, the european court of justice has consistently held that the ecb enjoys broad discretion in defining monetary policy within its mandate to pursue the objective of price stability. discretion without limits increases the risk of arbitrariness. therefore the court has insisted on being able to control this discretion on the basis of the criteria that some refer to as the self - imposed constraints. furthermore, we are bound to respect certain established legal principles. our measures must be proportionate to the ecb β s legitimate objectives. they must not undermine the spirit of the β no bailout clause β and must also comply with the prohibition of monetary financing, which is its monetary policy counterpart. last of all, the principle of an open market economy in which resources are allocated efficiently must also be respected. these are the constitutional red lines for our actions. our bold monetary policy response to the pandemic provides ample liquidity and acts as a backstop : the liquidity provided via the targeted longer - term refinancing operations ( tltros ) and the pandemic emergency longer - term refinancing operations ( peltros ) both of which are supported by collateral easing measures, in addition to asset purchases through the continuation of our asset purchase programme ( app ) and the launch of our pandemic emergency purchase programme ( pepp ). these measures endeavour to respect the principles i have just mentioned in order to be legally sound. first, all the instruments deployed in response to the pandemic are provided for in primary eu law ( article 18. 1 of the statute of the escb ) : to achieve its objectives, the ecb may operate in the financial markets by buying and selling marketable instruments outright, and may conduct credit operations based on adequate collateral. second, the crisis measures taken pursue monetary policy objectives with due respect
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david dodge : adjusting to a changing economic world remarks by mr david dodge, governor of the bank of canada, to the board of trade of metropolitan montreal, montreal, 11 february 2004. * * * good afternoon, ladies and gentlemen. it β s a pleasure to be with you here in montreal today. these are turbulent times, not just for business people, but for all canadians. we have come through a very difficult year, a year filled with surprises that have challenged us all. at times like these, it is easy to focus on the near - term issues and problems. but by doing that, we risk losing sight of the big picture. the bank of canada had plenty to say about the near - term outlook in its monetary policy report update a few weeks ago. so today, i want to talk about the longer - term trends at work in the economy. in doing so, i want to take a quick look back at some of the major economic events of recent decades, and examine how we approached the issues of adjustment at the time. then, i will discuss the adjustments that are needed now and in the future. in this way, i hope to draw on the lessons learned from the past. i will frame this discussion in terms of structural economic policies, macroeconomic policies, and the role of the exchange rate in facilitating adjustments. previous adjustment policies i will start by going back to the 1970s. there were at least two forces at play that highlighted the need for economic adjustments. the first was a significant drop in the rate of productivity growth. canada, like the united states, had become accustomed to productivity rising at a rapid pace during the 1950s and 1960s. with this growth in productivity came steady advances in real incomes. but the trend towards higher productivity slowed abruptly in the early 1970s. at the time, policy - makers, business, and labour assumed that the slowdown was cyclical. it wasn β t. economists still don β t have a complete explanation for it. but what we now understand more clearly is that the productivity increases of the 1950s and 1960s had a lot to do with the application throughout the economy of earlier advances in general - purpose technology. businesses took advantage of various technological advances in many diverse fields, enabling them to realize significant productivity gains. when productivity growth slowed in the 1970s, many people assumed that the slowdown was temporary and that rapid growth would resume on its own. this was a mistake. without solid productivity gains, the economy was unable to deliver the increases in
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review takes into account the combined impact of ongoing buoyancy in domestic demand on the one hand and the possible deterioration in external demand from a global slowdown, on the other hand. however, i can say that the economic growth for this year is expected to be close to the earlier forecast. despite the increasing global uncertainty, our monetary policy objectives remain at comfortable levels. inflation continues on a general downward trend registering 3. 7 percent in september and is forecast to fall further to 3. 5 percent by year - end, driven by lower prices for food and stability in oil prices. foreign reserves are currently around $ 1. 6 billion, sufficient to cover 5. 0 months of retained imports of goods and non - factor services. turning to fiji β s financial system, i am pleased to confirm that this continues to be sound. developments in the various sectors have been reflective of the growth in the total assets of our financial institutions. the key prudential indicators of our banking system also remain favorable. the satisfactory performance of the banking system is attributed to : β’ strong levels of capital ; β’ satisfactory asset quality ; bis central bankers β speeches β’ adequate liquidity ; β’ good management ; β’ sound profitability ; and β’ revived lending trends after a sustained period of benign growth there has also been a rapid development of innovation in the domestic financial sector with growth in areas of mobile banking, electronic banking initiatives and atm and eftpos interconnectivity, to name a few. with such favorable indicators, the entrance of bred bank is considered timely, and it is expected that customers will benefit from healthy competition within the industry. bred bank is also optimistic that, with its co - operative style and approach, it will deliver a banking experience for fiji that compares favorably with any other. overall operations with a capital injection of approximately $ 40. 0 million, bred bank opens its first branch at this mhcc complex, with plans to open other branches around fiji. from our discussions it has been noted that the bank also has plans to establish satellite branches in close proximity to large residential and industrial / commercial areas, as well as kiosks in shopping centers. one of the other key strengths of the institution is its 100 percent local management and staff. concluding remarks ladies and gentlemen, investments like bred bank ( fiji ) limited serve to fuel and drive the increasing positive sentiment in our economy. i would like to once again thank satish for his kind invitation. i reiterate my appreciation to the board, management
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trading barriers and forced small nations to compete for a market for their goods and services internationally. β’ weather and environment problems, beyond our control, hinder economic performances as disaster recoveries are costly. rising sea levels, a result of global pollution, is a major issue that are already forcing islanders from their homes. β’ capacity constraints in pacific islands include a lack of skills and resources, necessary for economic development. the migration of skilled workers, exacerbate these problems. β’ political stability is required to ensure an environment conducive for investment. 5. what is the single major challenge for pacific islands? β’ pacific islands need to lift their economic growth levels. β’ growth must be sustainable and inclusive driven by private sector investment. β’ long - term sustainable growth is the only way to create jobs, improve living standards and reduce poverty. β’ millennium developments goals must be pursued actively. 6. how can we raise growth sustainably? β’ private sector development is needed to become the engine for growth. there is currently too much reliance on governments for direct investment and employment creation. β’ private sector development can give our small island economies the sustainable platform that we need. β’ such development can also in the long term ease the burden on governments. β’ private sector development continues to be a challenge because of good governance issues, uncertainty of policy consistency by the government, poor infrastructure and the need for law and order. 7. role of the state β’ the role of state is to create an environment that encourages private sector development through appropriate policies, services and infrastructure. β’ they are responsible for the provision of public goods and social services. β’ β the best government is the least government β. it is ideal when employment is created by the private sector, not governments. 8. lesson from asia β what else is needed? β’ investment is the greatest hurdle. raising investment by seeking out its impediments and removing them. to reach the average level of investment of developing countries, that is, 25 percent of gdp, fiji needs an additional $ 400m in investment. β’ economic growth cannot be lifted sustainably without reforms. the benefits of reforms include improved delivery of service, better allocation of resources and reduced tax payers β burden. β’ a few challenges remain for fiji given its smallness and vulnerability. a. improving our exports level and base through diversification b. improve our competitiveness through greater capacity utilisation and resource allocation c. raising our productivity in order to improve our competitiveness d. political stability has to
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##factory growth. it β s like blaming the thermometer when you β ve got the flu! the real problem of the last ten years has been the lack of clarity on the level of policy responsibility between national and european decision - making. this has created confusion for the citizens of europe. that, in fact, is the main challenge of the next decade. too frequently β europe β has been blamed for decisions taken by the member states. for example, only a few months after signing the stability and growth pact, some declared it β stupid β. others blamed that same pact for obliging them to adopt tough budgetary policies, rather than explaining that these policies were for the good of their countries and of future generations. people inevitably asked : if the pact is stupid, why did we sign it? and if it is indeed stupid, why do we have policies that comply with it? too frequently the european union has been asked to act on specific issues by the national authorities, but the latter have not given the eu the means and powers to do so. how many times have there been calls for a common energy policy by the very same authorities who were at the same time negotiating bilateral agreements with energy producers? of course, there have been other cases of similarly inconsistent or even contradictory behaviour. too frequently the institutional set - up of the european union has been criticised openly, and sometimes severely, by some national authorities or even other european institutions. how can the people of europe grow to trust the eu if the decision - makers at various levels question each others β competencies? the obvious example for me in this context is the ecb, whose independence and mandate have been repeatedly β and pointlessly β called into question over the past ten years. we can β t take up the challenges of the next ten years if we don β t build on the assets achieved over the past ten years. calling for more cooperation at european level, for more procedures, more initiatives threatens to compound the confusion that already exists in the minds of both ordinary people and policy - makers. for instance, in its emu @ 10 communication, the commission proposes that the eurogroup should strengthen its monitoring of the implementation of structural reforms. closer monitoring may help shore up a commitment to reform, but there is a real risk of further blurring the delineation of responsibilities. i do not want to suggest that everything is going fine as it is in the allocation of responsibilities and that only a clarification is needed. i just want
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past as some member states opposed it. can it be revitalised in light of more recent developments? a choice has to be made, and it should be clear. ladies and gentlemen, let me conclude. economic and monetary union has recently celebrated its tenth anniversary. as a ten - yearold, emu is becoming less of a child and more of an adolescent. the trials of childhood were manifold : the creation of a credible central bank, the design of an effective and transparent monetary strategy, the distribution of new banknotes and coins, and the shaping of sound economic policies. getting any of these basics wrong would have had catastrophic consequences. yet emu has successfully overcome the challenges of its childhood, while withstanding the many external shocks of the last decade. the trials of adolescence are lurking ahead and will prove equally demanding. the continued success of emu will depend on how effectively these new challenges are addressed. thank you for your attention.
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the recovery in the services and tourism sectors ensures a rebalancing in the composition of demand in the third quarter in terms of goods and services. in fact, sectoral confidence indices also suggest a significant improvement in recent months particularly in the services and retail sectors. when talking about the recent developments, i would like to place a special emphasis on investments. data for the second quarter indicate that investments, particularly in machinery - equipment, contributed significantly to growth. the cbrt β s research shows that our firms have a high investment appetite. in the recent surveys, firms operating in all sectors excluding construction have reported that the weight of financial constraints among factors limiting activity / production has declined. we see that the weight of this factor is even below the historical averages currently. moreover, investment and employment tendencies of firms have reached very high levels compared to previous years. we are pleased to see that the improvement in the employment expectation of firms also continues in the third quarter while the investment tendency remains strong across main sectors. we envisage that as the improvement in macro indicators continues in the upcoming period, as the risk premium declines and volatility decreases on the back of improving current account and inflation outlook, the credit channel will function effectively and stabilize the positive outlook regarding the investment appetite. although there seems no obvious problem in accessing credit, high loan rates limit the access to credit. we are closely monitoring the progressive increase in the demand for loans for investment, operating capital and stock enhancement, and the gradual decrease in demand for debt rollover. high - frequency data also signal a recovery in the labor market on the back of the reopening. although employment in the services sector has been recovering more slowly amid pandemic - related restrictions and is still slightly below its prepandemic level, employment growth in the industry and construction sectors as well as the non - farm employment has exceeded pre - pandemic levels. we consider that the services employment will also exceed its pre - pandemic levels in the upcoming period. in the last couple of years, our economy suffered a variety of shocks, with the pandemic in the lead. the central bank has adopted a policy that curbs the lasting effects of these shocks, safeguards domestic and external balances and prioritizes price stability as the ultimate goal. we are closely monitoring the current account and external financing data. currently, the upward trend in exports, the recovery in tourism and the significant decline in gold imports support the ongoing improvement in the external
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speeding up the improvement in employment and credit conditions. accordingly, the low bis central bankers β speeches level of interest rates in advanced economies was maintained, and monetary easing continued in 2010 as well. 11. ample liquidity as a result of low interest rates and the ongoing quantitative easing in advanced economies encouraged global investors to seek higher returns and demand risky assets. consequently, emerging economies experienced a surge of capital flows. the divergence between the pace of recovery in advanced and emerging economies in favor of emerging economies, as well as the permanent improvement of the risk sentiment for emerging economies in the post - crisis period also supported these capital inflows. indeed, the fact that the risk premium indicators in many emerging economies including turkey are below pre - crisis levels, and the consequent upgrades by credit rating agencies indicate the permanent change in risk sentiment for these countries. 12. as a result of capital inflows, emerging market currencies appreciated and asset prices rose sharply. furthermore, capital inflows in emerging economies raised concerns over financial stability by fuelling domestic demand and thus causing rapid credit growth. 13. under these circumstances, central banks of emerging economies focused on containing upside risks on inflation amid the strong rise in domestic demand as well as limiting financial risks due to massive capital flows. accordingly, many central banks of emerging economies withdrew the liquidity measures adopted during the crisis and embarked on monetary tightening in 2010. meanwhile, central banks of emerging economies took additional measures against financial and macro financial risks such as excessive credit growth due to accelerated capital inflows, widening current account deficits and the short maturity of the foreign capital. accordingly, in addition to using policy rates, they opted for a tighter monetary policy stance through the active use of alternative instruments such as required reserve ratios, reserve accumulation and capital controls. bis central bankers β speeches 14. the monetary tightening in emerging economies through policy rates and alternative instruments is expected to continue in the upcoming period. meanwhile, advanced economies are expected to end their easing measures in 2011 and to start normalizing policy. in fact, the european central bank took the first major step in this regard by raising the policy rate to 1. 25 percent in april by 25 basis points. 15. however, as i mentioned previously, it is impossible to claim that downside risks on the global economy have completely faded away. as a matter of fact, recently mounting concerns over debt sustainability in peripheral euro area countries indicate that these risks still remain, albeit to a lower degree. furthermore, the
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particularly if households retrench further. rather, my vote to raise rates was driven by a concern that β despite a relatively weak outlook for growth β the risks to the inflation target in the medium - term were to the upside. in particular, the risks from continuing global price pressures and the effects of the prolonged period of above target inflation meant that the level of demand consistent with achieving the inflation target had probably fallen. nasty reasons rather than nice ones. 15 i should stress that i β m not at all certain that this will turn out to have been the right policy decision. a key lesson i learnt from the financial crisis is that economists know a lot less about the economy and how the economy works than many would like to believe. policymakers need to approach their task with humility and pragmatism. if growth turns out to be materially weaker than i anticipate or other medium - term pressures on inflation ease unexpectedly, i will reverse my decision. but with growth expected to be around its average historical rate, inflation likely to remain above 4 % for the rest of this year and bank rate at record low levels, some withdrawal of policy stimulus seems sensible. the juxtaposition of high inflation and loose monetary policy means that there is an onus on the mpc to explain its actions. the case for the defence needs to be made. and we have a good story to tell. we can explain why inflation has been above target for much of the past few years. we think we understand β albeit with the benefit of hindsight β why we have been surprised by the strength of inflation. and we have learnt from those episodes. i can β t say that monetary policy will perfectly anticipate every twist and turn of the economy. we will continue to be surprised by events and need to adjust policy accordingly. but i can assure you that the mpc remains as committed and as focused as ever in our determination to hit the inflation target. this distinction between nice and not nice reasons for raising bank rate was made in an interview by charlie bean with the western mail on 1 february 2011. bis central bankers β speeches bis central bankers β speeches references batini, n, and e. nelson ( 2005 ), β the u. k. β s rocky road to stability β, working paper no. 2005 β 020a, federal reserve bank of st. louis. bean, c ( 2011 ), β the mpc β s policy dilemma β. speech at abi β s
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doing business throughout the eu under passporting arrangements, as well as uk banks doing likewise, and branches of institutions from other eu states operating here in london. the main purpose of this letter is to ensure that all firms are making, and stand ready to execute in good time should the need arise, contingency plans for the full range of possible scenarios. the fpc will oversee this process of contingency planning to mitigate risks to financial stability. asking firms to plan thoroughly is the hallmark of the prepared and professional approach we take to promote financial stability. the statement is available at http : / / www. bankofengland. co. uk / publications / documents / news / 2017 / 008. pdf. all speeches are available online at www. bankofengland. co. uk / speeches vii. conclusion the uk has been at the forefront of efforts to make the global financial system safer, simpler and fairer. recognising our role as guardians of the leading international financial centre, we have gone further than these minimum global standards. these efforts ensure that the world β s largest international financial centre both protects and serves the uk economy. and they mean that others can rely on us as a pillar of strength for the international monetary and financial system. as the fpc has made clear, we won β t turn our backs on these hard won gains. there should be no bonfire of financial regulation. but we will be dynamic β learning by doing and making adjustments, as necessary, to optimise our efforts without compromising on the level of resilience the world β s leading international financial centre demands. we will ring fence our banks to protect the core retail financial services they provide to households and companies. we won β t allow undercapitalised, opaque financial institutions to operate freely within our borders. but, while we won β t hesitate to do what β s necessary to protect the uk real economy, we will also work tirelessly for a responsible and open financial system that benefits all. a decade of hard fought financial reform creates enormous opportunities. it is all too easy to give into protectionism, but the road less taken is often the most rewarding. all the conditions are in place for following the high road of mutual recognition and cooperation both with europe and across the g20. the uk has the expertise, the temperament and the will to take this path, one that will make all the difference to all our citizens. all speeches are available online at www.
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have curbed debt growth and demand pressures in the norwegian economy. but in an environment of persistently low external interest rates, such a policy would likely have led to a sharp appreciation of the krone, resulting in too low levels of inflation and economic activity. thus, the crisis in europe and weak growth in the us are also contributing to keeping interest rates in norway at a low level. the main objective of monetary policy in norway is low and stable inflation. this objective provides the economy with a nominal anchor. with firmly anchored inflation expectations, monetary policy can contribute to stable developments in the real economy. chart 6 the operational target of monetary policy is annual consumer price inflation of close to 2. 5 percent over time. over the past ten years, average inflation has been somewhat below, but close to, 2. 5 percent. a credible and firmly anchored monetary policy can contribute to curb the impacts of external shocks. this increases the resilience of the norwegian economy. more resilient banking sector the financial crisis provided us with some important insights. first, the crisis illustrated that low and stable inflation is not sufficient to secure financial stability. second, the crisis revealed severe shortcomings in banking regulation. banking and financial sector regulation is now being reformed in many countries. norwegian banks have become more solid in recent years. this is a positive development. banks β capital, in particular that of the largest banks, should be increased further in order to satisfy the new regulations. bis central bankers β speeches the forthcoming regulatory framework for banks in the eea includes a countercyclical buffer β a capital requirement that can be increased in upturns and turned off in downturns. when banks are required to build up an additional buffer, they are better equipped to cope with periods of rising losses. the buffer will strengthen the resilience of the banking sector during an upturn. it may also counteract the build - up of financial imbalances, although the effect is uncertain. thus, norges bank cannot disregard taking financial imbalances into consideration when setting the key policy rate. the criteria for the conduct of monetary policy remain firm, also after the introduction of a countercyclical capital buffer. later this year, norges bank will provide advice to the ministry of finance on the size of the countercyclical buffer. an integrated analysis and set of forecasts form a common basis, both for this advice, and for the bank β s monetary policy decisions. the norwegian economy is also
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##to branch of stanbic bank zambia limited officially open. i thank you for your attention. bis central bankers β speeches
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accounts. community development activities are another point of emphasis, including financing for affordable housing and other needs, or volunteer activities, such as financial counseling, and providing clearer and stronger incentives to invest in the areas of need that lie outside of existing branch - based assessment areas. another key objective is to provide greater certainty ; tailor regulations based on local community needs, bank size, and business model ; and minimize burden. ultimately, we hope that our proposal provides a foundation for the three banking agencies to converge on a consistent approach that has broad support among stakeholders. the next step for us is to continue to gather feedback on our proposal from a wide range of stakeholders, including local communities. in addition to participating in conversations like this one today, we hope to receive as many comments as possible through our formal comment process, which has a deadline of february 16, 2021. we value this feedback tremendously, and our proposal includes specific questions where we are especially interested in input. given the expertise and leadership of the trust on racial equity, we will be particularly interested in your comments on the second question in our proposal : β in considering how the cra β s history and purpose relate to the nation β s current challenges, how can we strengthen the cra to address ongoing systemic inequity in credit access for minority individuals and communities? " i thank you for your valuable engagement in this process thus far and look forward to hearing your ideas today and in the months to come. with your continued engagement, i am confident we can come together on a stronger approach to the cra that will benefit communities across the country. 1 i am grateful to taz george of the federal reserve bank of chicago for his assistance in preparing this text. these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. return to text 2 for more information, see the chicago community trust β s webpage β chicago community covid - 19 response fund. " return to text 3 recent research indicates that the government β s response offset what could have been a surge in income poverty. han, meyer, and sullivan ( 2020 ) found that income poverty declined about 1. 5 percentage points, and that government programs, including the regular unemployment insurance program, the expanded unemployment insurance programs, and the economic impact payments, account for more than the entire decline in poverty, which would have risen over 2. 5 percentage points in the absence of these programs. see jeehoon han, bruce d
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proved most relevant for the success of emu in europe : through the irrevocable fixing of exchange rates countries are no longer exposed to harmful intra - european exchange rate tensions and are also better protected from negative external shocks. indeed, major global developments in recent years, like the bursting of the equity bubble, the repercussions of the terrorist attacks and the substantial depreciation of the u. s. dollar might otherwise have led to phases of instability within the european economy. yet emu provided a stable framework for weathering these turbulences. upon entering the european union, the ten new member states also become members of the economic and monetary union. while they will not yet take part in emu to the full extent, as they cannot adopt the euro immediately, they are already required to observe a number of obligations embodied in the stability architecture of emu : they generally have to bring into line their economic and monetary policies with the overall goals of emu. their central banks will be represented in the general council of the ecb, which supports the ecb in its advisory and coordinating functions. the new member states will participate in the coordination of economic and monetary policies and in the multilateral fiscal surveillance. moreover, they shall treat exchange rate policies as a matter of common interest, as the functioning of the single market must not be weakened by real exchange rate misalignments or excessive nominal exchange rate fluctuations. from the point of view of a country that already enjoys the benefits of the common currency, it is essential that the next step of european integration, the adoption of the euro in the acceding countries, is as well prepared as all past integration steps. i am convinced that each of the new eu member states is a good potential candidate for the single monetary policy as defined by the economic theory on optimal currency areas : they can all be characterized as open economies with strong economic linkages with the euro area, a steadily increasing degree of business cycle synchronization with the euro area and a high level of flexibility to adjust to new economic circumstances. while in general most of the advantages of monetary integration will increase with the scale of the euro area, it is crucial that countries are sufficiently prepared for this intensified integration before they adopt the euro. the treaty with its convergence criteria provides the appropriate framework to assess whether a country shows a record of stability - oriented monetary and fiscal policy and therefore can be regarded as ready for monetary integration. let me at this point recall some of the convergence criteria to evaluate
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international monetary fund, april 2007. which emerging economies start, and their size, in terms of population, the adjustment resulting from their current process of growth could take a very long time and could be of considerable magnitude. take emerging asia ( excluding japan ), for example, which represents over 50 % of the global population and 21 % of gdp. the third exception to the conditions specified in the international trade theory relates to the high savings rate of some emerging economies, in particular those in asia. such savings, which are in part precautionary, stem from the lack of a system of social shock absorbers and a developed financial system. income growth in these countries does not translate into comparable increases in consumption, and thus in imports. the fourth exception concerns protectionist practices, explicit or implicit, which are applied in many of these countries and discourage imports. the fifth exception involves the exchange rate policies implemented by various emerging economies, which favour an undervaluation of the currency, creating a competitive advantage in favour of their own products and net savings vis - a - vis the rest of the world. finally, the strong growth of emerging economies puts pressure on the world β s scarce resources, increasing their prices and thus resulting in a loss of terms of trade for importing countries. the case of raw materials, the global demand for which increases at a higher rate than supply, is well - known. but there are other, less obvious examples, such as that of secondary and tertiary education. in this sector too, supply has grown less than global demand, leading to greater competition and higher costs for attending the best universities in the world. the experience of recent years suggests that each of these exceptions to the assumptions on which the theory of international trade is based is plausible. this would perhaps explain why the past decade was characterised, at least until the outbreak of the crisis, by a sustained rate of growth among emerging economies but a decreasing rate for advanced economies. it also explains the increase in income dispersion among the latter. if economic policies ignore such developments and continue to aim for unchanged income and consumption dynamics, they will create internal and external imbalances in the economy which will build up over time. such imbalances may also exist for a prolonged period of time, owing to the financial system and the ability to issue debt securities in the national currency. but, by definition, what is not sustainable will sooner or later generate instability, with negative repercussions for the whole economy. the way out
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a unique policy stance for the entire world. coordinated policy action is not a surrogate for domestic macroeconomic prudence. we are all convinced that monetary policies geared towards domestic price stability, sound public finances and flexible economic structures create the conditions for an international financial architecture that can last. are there areas in which policy cooperation can help strengthen domestic macroeconomic policies? my short answer is β yes, there are β. before giving you concrete examples of beneficial cooperation, let me take a brief theoretical detour, which will make clear why aiming for a globally unified policy stance is undesirable, whereas other types of cooperation are more promising. in an influential paper a few years ago obstfeld and rogoff questioned the conventional wisdom that increased integration of goods and financial markets strengthens the case for policy stance coordination. 1, 2 their theoretical results even suggest that the need for policy stance coordination decreases with the level of international integration. the basic intuition is that integrated goods and financial markets provide a powerful risk - pooling mechanism, leaving policymakers free to focus on minimising the distortions that might hamstring their respective domestic economies. as i noted on previous occasions, the path of policy over the business cycle in the euro area relative to the united states has differed for a number of reasons β and this despite the common conviction that maintaining price stability is the prerequisite for sustainable job creation and economic success. the most important reasons for different policy paths are differences in underlying economic structures and differences in the timing, nature and duration of economic shocks. 3 this being said, there is an interesting sideline in obstfeld and rogoff β s paper, which seems to me to be very relevant for the current situation and which would be a fruitful area for future research. the result i mentioned earlier β that tight international linkages do not necessarily strengthen the case for international policy coordination β holds for what i would define as β normal times β. in obstfeld and rogoff β s words it holds β unless risk aversion is very high β. 4 in the current generation of theoretical models, risk aversion is generally considered a constant parameter. i think that recent years and months have taught us an important lesson : attitudes toward risk not only vary over time β for example, following long - term trends β but they do so by waves and oscillations around trends. phases of excessive risk taking can be followed by sudden reversals driven by abrupt global confidence shocks such
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the public opinion. the market disclosure rules foreseen by the new legislative framework will really allow everybody interested to have access to the financial bis central bankers β speeches position of an insurer with an unprecedented level of detail. the inherent sophistication and complexity of solvency ii, however, raise issues that need to be addressed. it is essential that such informative treasure be of high quality, that could be easily understood and used. a possible complication stems, at least in our country, from the coexistence of the solvency ii informative approach with financial statements based on accounting standards not matching the former. it may be a source of confusion and misunderstandings, possibly endangering the reputation of both supervisors and companies. it will be interesting to exchange views on that today. let me conclude, ladies and gentlemen, with a word of caution. solvency ii is just a regulatory framework. it designs the urban map, it imposes one - way streets and speed limits, it deploys traffic lights and traffic officers. all this infrastructure has just been changed, and today we are going to discuss how to ease the transition towards the new regime. but the traffic itself, the thousands of cars and drivers in a modern city, well, that is the market. and the insurance market, all over the world, is now facing a bigger challenge than the one posed by a change in the rules of the game, though radical. the challenge is twofold. a structural one : technological innovation. the other one is apparently of a conjunctural nature, but it is actually persisting almost like a structural feature : that is the environment of low and volatile financial returns in which we have been living for years now. i said low, i could have said negative, in the short - term segment of financial markets. how fast will the new technologies disrupt the traditional way of conducting the insurance business? how long will monetary policies keep interest rates at the present unprecedented levels, or even lower? nobody knows, and every opinion is legitimate. but the whole business is rocked by these developments. understanding the trends and the challenges behind the current state of affairs in the insurance market should be a common endeavor for regulators / supervisors and the industry. for the time being, we have to work together in order to make the implementation of solvency ii as smooth and effective as possible, also for the purpose of strengthening the insurance sector and make it capable of resisting the present headwinds and catch the
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. it is expected that the stance of monetary policy will continue to remain accommodative while maintaining price stability. in respect of public finances, contingent fiscal pressures on the government are relatively benign as outstanding guarantees for state owned enterprises are low. however, public finances would be impacted by expenditure cutbacks on account of implementation capacity constraints, notwithstanding higher external and non - bank financing. the estimated budget deficit for 2009 β 10 is placed at 4. 5 percent of gdp as against the projected level of 5. 0 percent. efficient and expeditious implementation of development programme projects can create conditions for crowding in private sector investments and together with monetary policy, can support broad - based, inclusive and environmentally sustainable growth. bhutan 33. bhutan β s economic performance has been strong in the recent past anchored in political stability and prudent economic policies. the country is well on its way to achieving it millennium development goals with the 10th five year plan ( 2008 β 13 ) outlining a wideranging development agenda. the impact of the financial crisis very limited and confined to the tourism sector. growth is expected to be close to 7 per cent throughout the medium term supported by the punatsangchhu - i and mangdechhu hydropower projects. average inflation was lower in 2009, at about 4 percent but following inflation developments in india, inflation has risen in the first quarter of 2010. government revenue and expenditure both rose strongly in 2008 / 09, with revenue rising to 39 percent of gdp from 33 percent, and expenditure to 41 percent from 33 per cent. in the external sector, convertible currency reserves remain high, while rupee reserves have increased sharply in recent months. in the financial sector, credit growth is still strong but slowing somewhat in the private sector. the focus of the financial sector liberalisation policy is on increasing competition and efficiency in the sector and three new private sector banks have been licensed and external commercial borrowing was also permitted for selected private sector entities. concluding observations concerted and decisive actions by both advanced and emerging and developing countries helped the world to deal with an unprecedented financial and economic crisis. our response has strengthened international cooperation and instilled confidence that together we can secure the financial stability of the world and achieve sustainable economic growth. towards this objective, a number of significant and concrete steps have been taken, an important one being the substantial strengthening of the fund, including refinements in its surveillance, the expansion of resources and the improvement of lending facilities. looking ahead, the fund will
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β both at european as well as at national level β is enshrined as the first and fundamental objective of any intervention. 3. let me conclude. what we have achieved in terms of the architecture of the bu is astonishing but the entire project remains fragile. europe has stopped moving and currently stands in the middle of a very sensitive and unstable β bridge β. if, realistically, sufficient progress cannot be expected in the medium term to establish edis and fine - tune the existing framework, then let β s concentrate on preserving the great value of the project. 2 / 2 bis central bankers'speeches
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abdul - nashiru issahaku : effectively communicating economic and financial developments in ghana during 2016 remarks by dr abdul - nashiru issahaku, governor of the bank of ghana, at a press soiree, held at the bank of ghana to commemorate the end of the year, accra, 28 december 2016. * * * good afternoon. 1. on behalf of the board of directors and management, l would like to express our profound gratitude to you members of the press for the collaboration we have had during the year. as effective communication is necessary to ensure that the monetary policy transmission is not unduly impaired, we are very grateful for your support. 2. as you are aware, the inflation targeting framework involves expectation management to ensure that inflation is anchored. hence, the effectiveness of monetary policy has become more and more dependent on steering expectations of future interest rate policy. and no other policy tool plays this role better than effectively communicating the policy decision and the considerable efforts made in arriving at that decision. it is for this reason that we try to be clear and open about our actions and operations. 3. on the policy front, our efforts at sustaining macroeconomic stability continue to yield dividends. thanks to continued fiscal restraint and the tight monetary policy stance, we have been largely able to anchor 2 inflation expectations while the economy is becoming more resilient to external shocks. 4. as you are aware, the ghana cedi has remained broadly stable during the year and we are optimistic that the cumulative depreciation for the year will remain in the single digits. this stability in the ghana cedi has reduced the pass - through to domestic inflation, although inflation is still above target. we therefore need to sustain the macroeconomic stability to anchor expectations and to build shock absorbers in the face of continued volatility in the global economic and financial environments. 5. let me mention the establishment of our new communications department, which has assumed such a strategic role in our communication functions. as a department within the bank, the goal is to proactively support the mandate of the bank in ensuring price stability and ultimately contributing to economic growth. therefore, the work of the department is to promote monetary policy communication as well as economic development communication. i want to urge you to continue to work with them in seeking feedbacks on the various aspects of our operations. 6. in an effort to further promote effective public accountability, we have just introduced a 24 - hour contact centre. this offers the general
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in europe, asia and the americas and, as a result, the region rather than the nation state is gaining pre - eminence as the locus for policy - making in the political sphere and for investment in the economic sphere. regional integration is, therefore, rapidly becoming a key vehicle for gaining access to world markets and for attracting foreign investment. there is a growing realization that countries which remain outside of regional alliances are likely to become increasingly marginalized. the external dimension of the economic imperative is further reinforced by domestic considerations. these arise mainly out of the small size of the economy and its lack of natural resources, which translate into a high degree of openness. malta depends heavily on imports for its consumption and investment needs, and equally critically on exports to generate the foreign exchange required to service its import bill. imports and exports each account for around 100 % of gdp. such dependence on international trade is clearly a source of vulnerability. most business activities in malta are thus inevitably exposed to the full force of international competition. producers for the domestic market face import competition while export - oriented firms face an ever - tougher competitive environment as new countries enter the global market - place. in the export - oriented sector, there is a predominance of foreign direct investment that often provides the technical and marketing expertise which is a prerequisite for success. a loss of competitiveness would thus be doubly damaging. in the first instance, there would be a drop in domestic output in favour of imports and a contraction in export revenues. in the longer term, as malta became a less profitable location, there would be a decline in new foreign investment and a consequently negative impact on growth prospects. apart from these structural factors, the need for competitiveness is accentuated by the current phase of the economic cycle. for most of this year the world economy has been on the brink of a recession. following the recent tragic events in the united states, recessionary pressures are likely to intensify. some analysts are predicting that growth this year may be as low as 2. 2 %, with recovery likely to take over a year. against this backdrop of slowing global demand growth, competition will become even more intense, as buyers will be better able to pass the burden of cost reductions on to sellers, while investors will be ever more cautious about the risks they face and about securing reasonable rates of return. indeed, there have already been widespread job losses in many countries as companies retrench and economise on costs.
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financial authority naturally prompts the question of where that authority should reside. this is now the subject of intense debate in quite a number of countries. and where such entities have been created, they mostly exist outside the central bank. this can be seen to have a number of advantages : given the blurring of distinctions between different types of financial institutions, the retention of supervisory responsibilities within the central bank may give rise to perceptions that the lender of last resort function is being extended, with consequent risks of moral hazard. there could also be a conflict of interest with monetary policy, if central banks were induced to be excessively expansionary in order to head off weaknesses at individual financial institutions. there is also the issue of reputational risk. finally, the central bank may be perceived as too powerful if it is both independent and endowed with a broad range of functions. there are, however, arguments for retaining at least some supervisory functions within the central bank. the central bank will have easier access to market information in the case of a crisis, and it will be easier to co - ordinate monetary and prudential policy actions. it will be easier to assess and respond to the build - up of systemic risk if the supervisory authority also has responsibilities, and hence specific know - how, in other areas of the financial system ( e. g. market functioning and the operation of clearing and settlement systems ), as do central banks. and, access to supervisory information can help the central bank better calibrate monetary policy ( e. g. the case of the β headwinds β that confronted the us economy during the recovery of the early 1990s ). in these terms, there is no obviously β right β answer to this debate. individual observers may have their own preferences, but at the end of the day, the answer probably depends on country - specific circumstances. for example, how independent from political and industry pressure can a separate supervisor be? how scarce are the relevant skills? and how blurred have the distinctions between * different types of financial intermediary become? some, such as charles goodhart, have argued that these considerations lead to the conclusion that the case for combining supervisory and monetary policy responsibilities in the central bank will generally be stronger in emerging markets. but whatever is the answer to the question β who should supervise? β, it is necessary to define tasks clearly and in such a way that the tools are available to discharge them. one risk in the present trend to remove supervision from the
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aspects, will be able to open up a series of medium to longer term opportunities to export to other countries. as such, securing a suitable financial solution to upgrade and upscale production to meet the demand and requirements, would be an important prerequisite for businesses. recognising these key success factors, recent announcement by government to introduce the halal industry strategic development programme, or β be - halal β β under the national halal council secretariat to drive the growth of the halal industry is timely. under β be - halal β, participants will be developed further through programmes run by experts in various fields to enable them to be more innovative and progressive as they face various global challenges and ultimately contribute to the nation β s halal industry. islamic finance has become part of the mainstream with offerings of competitive financial solutions malaysia has an islamic financial system that operates alongside the conventional system. our unique experience with a dual financial system has been effective on many fronts β effective in 1 / 3 bis central bankers'speeches bringing segments of the society to access the services of the formal financial system ; effective in enabling and facilitating businesses, especially the small and medium - sized entrepreneurs, to expand their businesses ; and effective in steering development of the country. we have a comprehensive islamic financial system comprising the core components of banking, takaful and capital markets. the islamic finance system have matured and are as competitive with the conventional system, thus providing better choices and options. a robust financial infrastructure is also in place to support development of this system, alongside a responsive regulatory and supervisory framework whilst achieving the high standards of best practice in corporate governance and in financial transparency and disclosure. the islamic financial system consistently reinforces its position as a viable and effective means of intermediation that contributes to the overall economic development. today, islamic banking accounts for 33 percent of malaysia β s total banking assets while takaful market share stands at 11 percent for family takaful and 10. 1 percent for general takaful. the islamic financial system continues to grow β at a pace faster than the conventional system. as at end - june 2019, financing outstanding of islamic banks expanded at 8. 6 percent compared to 2. 1 percent for the conventional. meanwhile, new general takaful contributions grew at 16. 4 percent compared to 6. 2 percent for the insurance premium. however, new family takaful contributions grew at 10 percent, slightly lower to life insurance premium of 15. 4 percent. this brings me to the point
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elizabeth a duke : stabilizing the housing market β next steps speech by ms elizabeth a duke, member of the board of governors of the us federal reserve system, at the global association of risk professionals β risk management convention, new york, 11 february 2009. the original speech, which contains various links to the documents mentioned, can be found on the us federal reserve system β s website. * * * in the summer of 2007, the u. s. and global economies entered a period of unprecedented financial turmoil, which has since led to a significant slump in macroeconomic activity. problems in both the housing sector and the housing finance sector played a central role in precipitating the crisis, and ongoing weakness in housing activity, along with persistent strains in mortgage markets, continue to inhibit a broader recovery. in particular, we have entered a cycle where high levels of default on mortgage debt have led to a reduction in the availability of mortgage debt as well as a tightening of terms for it. this situation has led to lower levels of home sales and prices paid for homes, which, in turn, contributes to yet more defaults by borrowers. as financial risk managers, i am sure you are aware of the important steps that have already been taken to try to break this cycle, but that you also recognize the need to do more. my remarks today will focus on the next steps β efforts to increase demand for homes, efforts aimed at further reducing preventable foreclosures, and efforts aimed at limiting the costs imposed on households and communities by foreclosures that cannot be avoided. both the government and the private sector have important roles in these efforts. these suggestions and recommendations are my opinion alone and do not reflect the views of other members of the federal reserve board or any other government entity. the current weakness in housing markets housing activity remains extraordinarily weak. sales of new and existing homes have been running at a pace that is 60 percent of that seen at the peak in 2005. single - family housing starts are now less than one - quarter of their peak level. with the cutbacks in construction, inventories of unsold new homes have declined, but the months'supply β that is, inventories relative to sales β is still very high by historical standards. the inventory of existing homes for sale is also quite elevated β and it would be even higher if not for would - be sellers that have withheld or withdrawn their homes from the market amid poor selling conditions. we
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target of 3. 0 percent Β± 1. 0 percentage point for 2021. based on latest data, we expect point inflation for november to range from 3. 3 to 4. 1 percent. the latest cpi outturn is consistent with the bsp projections that while inflation could remain elevated in the near term, it would start to fall within the target range by the end of the year. meanwhile, inflation expectations remain firmly aligned with the baseline projection path for 20222023. results of the bsp β s survey of private sector economists for november 2021 showed an elevated mean inflation forecast of 4. 4 percent for 2021, 3. 5 percent for 2022 and 3. 2 percent for 2023. liquidity in the financial system remains ample, expanding by 8. 2 percent year - on - year in september 2021. this was faster than the 6. 9 - percent growth recorded in august on a monthon - month seasonally adjusted basis, m3 rose by 1. 3 percent. credit activity increased 2. 7 percent in september 2021, faster than the 1. 3 - percent expansion in august. the continued growth for the second month in outstanding loans of universal and commercial banks reflects the modest recovery in banks β overall lending attitudes along with 1 / 4 bis central bankers'speeches improved economic prospects. as of end - september 2021, gross non - performing loan ratio of the philippine banking system ( pbs ) stood at 4. 4 percent, higher compared to 3. 5 percent a year ago. the uptick, however, was accompanied by loan - loss provisioning with a non - performing loans coverage ratio of 84. 4 percent. the philippine banking system remains well - capitalized. as of the second quarter of 2021, its capital adequacy ratio is at 17. 2 percent, well above the 10 percent minimum threshold set by the bsp and the 8 percent set by the bank for international settlements. on the external front. the sustained rebound in key economies has spurred external demand. the country β s exports and imports of goods increased by 21. 3 percent and 31. 6 percent, respectively. cash remittances from overseas filipinos grew by 5. 6 percent in january to september 2021, from a 1. 4 percent contraction in the same period in 2020. meanwhile, business process outsourcing services in the first half of 2021 remained strong despite the disruption in business activities around the world. net foreign direct investments for the first eight months of 2021 increased due to positive foreign investor sentiment
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benjamin e diokno : economic and financial developments and bangko sentral ng pilipinas β policy responses speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the joint foreign chambers of the philippines 10th anniversary forum β arangkada philippines ; pathways to a better future β, virtual, 30 november 2021. * * * officers and members of amcham philippines and the joint foreign chambers of the philippines, my fellow speakers, everyone who are with us virtually, good morning. thank you for inviting me to deliver a keynote address in your tenth anniversary forum entitled β arangkada philippines : pathways to a better future. β arangkada comes from the spanish word arrancada which means accelerate. my talk will focus on economic and financial developments and bsp policy responses to ensure that the philippine economy will continue to accelerate towards a better future. after five quarters of economic contractions, the country β s real gdp grew by 12 percent in the second quarter of 2021 followed by a 7. 1 percent growth in the third quarter. for the first three quarters of 2021, the philippines β economic growth averaged at 4. 9 percent, within the government β s target of 4 to 5 percent for the year. in september 2021, however, the country β s unemployment rate increased further to 8. 9 percent from 8. 1 percent in the previous month. this result is not surprising, given the extension of strict lockdown measures during the month. what is notable here, however, is that some of the jobs lost at the start of the pandemic have been gradually recovered, with the number of workers employed in september exceeding that of pre - pandemic level. the re - imposition of stricter lockdown measures, particularly in the national capital region, contributed to lower business confidence in the third quarter survey, although businesses are more optimistic for the last quarter of the year and in the next 12 months. on the other hand, consumer sentiment continues to improve due to expectations of availability of more jobs, additional or higher income, and effective government policies and programs, particularly in addressing covid - 19 - related concerns. the country β s year - on - year headline inflation decreased further to 4. 6 percent in october 2021 from 4. 8 percent in september, bringing the year - to - date average inflation to 4. 5 percent. this is above the government β s inflation
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64 ) exceeds that of the total population. 1 in other words, the youth and elderly dependency ratio ( hereafter called the β total dependency ratio β ) β defined as the ratio of the combined population of the youth and the elderly ( aged 65 and over ) to the working - age population β tends to decline. during this period, the high growth rate of the labor force directly stimulates economic growth. moreover, the working - age population tends to save more than other generations and these higher savings indirectly contribute to economic growth through supporting infrastructure and productive investment activities. considering these positive the ratio of the working - age population to the total population tends to rise as well. bis central bankers β speeches effects of demographic change, this period is often called β the period of the demographic dividend. β 2 eventually, the demographic dividend period ends and a country enters a new stage of demographic change. in this new stage, a country faces a growing number of elderly retirees. as the growth rate of the working - age population lags that of the total population, the total dependency ratio rises. during this period, the decline in the working - age population is likely to directly depress the economic growth rate. the economic growth rate may also decline as lower national savings reduce the available support for investment activities. because of these possible adverse effects, this period could be called β the period of the demographic burden. β 3 b. japan in the stage of the demographic burden summarizing the points made so far, the demographic dividend period starts when the total dependency ratio begins to decline, and the demographic burden period starts when this ratio begins to rise ( after averaging out fluctuations driven by baby boom periods ). chart 1 reports the general conditions and outlook for demographic changes. japan has already entered the demographic burden period, based on united nations data since 1950. since the second half of the 1950s, the total fertility rate has almost always declined, and reached 1. 39 in 2011 ( chart 2 ). 4 over the same period, life expectancy at birth increased rapidly. male life expectancy increased from 50. 1 years in 1947 to 79. 6 years in 2010, and female life expectancy increased from 54. 0 years to 86. 4 years over the same period. in 1970 the ratio of the elderly population to total population exceeded 7 percent ( the threshold used to define an β aging β society ), and in 1995 it exceeded 14 percent ( the threshold used to define an β aged β society )
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jean - claude trichet : a rich variety of cultures at the heart of europe interview with mr jean - claude trichet, president of the european central bank, in the frankfurter allgemeine zeitung special supplement of the ecb cultural days, published on 4 october 2009. * * * 1. the ecb cultural days have been held seven times since their launch. on three occasions, they have featured countries from eastern europe. what does eastern europe bring to europe and to frankfurt, in particular? it is very important for the ecb β with our staff coming from all 27 eu member states β to discover or rediscover the wealth of european culture in the international environment of frankfurt and its surrounding area. as you say, it has always been our aim to embrace the whole of europe, both the old and new members of the european union. it is no accident that we have welcomed three central and eastern european and three western european countries. last year, on the occasion of the tenth anniversary of the ecb, the events involved all 27 eu member states in order to underline the diversity of european culture. this year, the 20th anniversary of the fall of the iron curtain, the event takes place against the unique backdrop of the reunification of europe. 2. you made a speech on european culture in frankfurt this spring, which explored the link between the concepts of roots, diversity and identity. did you have the ecb cultural days in mind? of course. i was very keen to deliver this speech upon the invitation of my friend, professor otmar issing. i profoundly believe that culture is at the heart of the european project. the cultural unity of europe is based on the recognition of, and an openness to, its cultural diversity. europe benefits greatly from the mix of cultures. this is the core concept of the ecb cultural days. 3. in times of crisis, culture can be seen as a luxury, a remedy or a refuge. the past two years must have been very difficult for you, presenting you with many challenges and a very heavy workload. what works of art helped you to unwind during this period? particularly in very demanding and challenging crises, it is important to remain composed, to be able to stand back from immediate events and to develop as sound and as lucid a judgement as possible. i think that, in times like these, it helps more than ever to read a good ismail kadare book or a beautiful heine poem,
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the principles of international financial reporting standards. thus, the implementation of these standards at individual level by credit institutions in romania has taken a graduated approach. at consolidated level, i. e. banking groups, the international financial reporting standards have been transposed via a seamless approach ; the nbr exerted its national options embedded in the acquis, but included all credit institutions, not only the listed ones, in the scope of applicability. in 2010, the national bank of romania adopted the strategy for ifrs implementation by credit institutions starting with the 2012 financial year. for its implementation, the updating of the accounting regulatory framework was completed and steps were taken to ensure bis central bankers β speeches transition towards the new standards. thus, credit institutions will prepare and present action plans whose implementation will be monitored by the central bank throughout the remainder of this year. also in the first half of 2011, the financial reporting framework suiting the needs of the supervisory authority was updated. the national bank of romania, in its capacity as an authority responsible for prudential supervision of the banking system, has recently prepared and sent for public consultation the bills needed to elicit accounting figures reported by banks so that they match the banks β prudential objectives. i trust this endeavour aimed at broadening the scope of applicability of such standards, serving as the basis for accounting and for preparing individual financial statements by credit institutions in romania, should be seen as a sine qua non condition to secure effective supervision of the romanian banking system. let me stress that the importance of implementing the international financial reporting standards by credit institutions in romania is also reflected by the new financing agreements signed with international institutions ( the european commission, the international monetary fund, the world bank ). i am confident that you experts have now a good opportunity for an in - depth analysis of the evolution of the international accounting system and the problems arising in the implementation of international financial reporting standards, as well as for a useful projection of the major challenges to implementing the new accounting standards by the banking sector in romania, given its importance in achieving a modern and efficient accounting system. let me reiterate on this occasion our institution β s willingness to cooperate with stakeholders in the implementation of international financial reporting standards by the banking sector. i trust that any problems relating to the introduction of the new accounting rules will be resolved in a timely manner so that the current transition ends successfully. last but not least, my appreciation goes to the representatives of the institute of chartered
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. by contrast, adopting a currency board more than two decades ago, during a crisis, bulgaria shifted to a fixed exchange rate regime, out of which the only exit strategy is joining the euro area. what we need in order to move forward on the convergence path towards euro adoption is, first of all, to understand there is no substitute for a coherent economic policy mix, which should remain so even in election years. we need economic convergence, but the process should be a balanced one, so as to preserve macroeconomic equilibria and safeguard competitiveness. it is important that europe remains united. therefore, i want to pay homage to baron snoy, who has been instrumental in promoting romania β s and bulgaria β s further integration into the economic and monetary union. i have known him since the first event we hosted in june 2011, and have always found in him not only a wise man, dedicated to the european project, but also a friend of romania, with a vast knowledge of our history and culture. he has also played an important role in bringing together europhile experts that are trying to find solutions to the daunting issues facing europe nowadays. allow me to also extend a word of gratitude to radu deac, the chairman of elec romania since its establishment, for his steady contribution to promote romania in europe and europe in romania. it is not that the eurozone does not have its own problems, yet the strengthening of its governance framework is what one may call β work in progress β. it is our duty, i think, to keep believing in the european project, as the only valid one for securing peace and prosperity on our continent. as i have previously stated, whenever obstacles emerge, i cannot help recalling the words of jean monnet, one of the eu founding fathers : β europe will be forged in crises and will be the sum of the solutions adopted for those crises β. i trust that this conference, which has a lot of outstanding panellists, will address those problems as well. among the speakers, i am particularly pleased to see jeffrey franks, another old friend of romania, with whom we had a fruitful co - operation in the past. on this note, allow me to finish and wish every success to the works of this conference. thank you. 2 / 2 bis central bankers'speeches
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that liquidity may be less resilient than it had been previously. but this evidence is not particularly robust, and, given the limitations of the existing data, it is difficult to know the extent to which liquidity resilience may have declined. as we continue to investigate quantitative evidence of the deterioration in the resilience of liquidity in some of the financial markets, we are also trying to tease out the various drivers of liquidity conditions, such as changes in regulation, trading strategies, and market structure. regulatory changes are often cited as a contributing factor. trading financial assets is a balance - sheet - intensive activity, and the dodd - frank act, has created incentives for institutions to carefully assess the risks of such activity through stricter requirements on leverage, liquidity, and proprietary trading, raising the cost of market making and possibly affecting market liquidity. indeed, there is evidence of reductions in broker - dealer bond inventories in recent years. nonetheless, since not all broker - dealer inventories are used for market - making activities, the extent to which lower inventories are affecting liquidity is unclear. moreover, reductions in broker - dealer inventories occurred prior to the passage of the dodd - frank act, suggesting that factors other than regulation may also be contributing. in assessing the role of regulation as a possible contributor to reduced liquidity, it is important to recognize that those regulations were put in place to reduce the concentration of liquidity risk on the balance sheets of the large, highly interconnected institutions that proved to be a major amplifier of financial instability at the height of the crisis. a second possible contributor may be the growing role of electronic execution of trades across equity, treasury, and foreign exchange markets and the associated increasing role of high - frequency trading. competition from high - frequency trading in a particular market may reduce the attractiveness of that market for traditional ( manual ) traders or slower automated traders, leading to a progressive shift in the composition of market participants toward highfrequency traders ( hfts ) over time. this shift could be important to the extent that hfts may have more limited capacity to support liquidity resilience since, on average, hfts appear to trade with smaller inventories and lower capital than traditional traders. although having less inventory and capital reduces the cost of trading, it also means that markets increasingly dominated by hfts may be less able to absorb large shocks. thus, liquidity may be sufficient and relatively cheap on normal trading days
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data ] 12. see https : / / www. bundesbank. de / en / statistics / time - series - databases [ https : / / www. bundesbank. de / en / statistics / time - series - databases ] 13. see https : / / www. fsb. org / work - of - the - fsb / market - and - institutional - resilience / post2008 - financial - crisis - reforms / ending - too - big - to - fail [ https : / / www. fsb. org / work - of - the - fsb / market - and - institutional - resilience / post - 2008financial - crisis - reforms / ending - too - big - to - fail ] 14. see fsb ( financial stability board ) ( 2021 ). 15. see https : / / www. core - econ. org / insights / too - big - to - fail / text / 01. html [ https : / / www. core - econ. org / insights / too - big - to - fail / text / 01. html ] 16. see fsb ( financial stability board ) ( 2020 ) and https : / / www. fsb. org / work - of - thefsb / assessing - the - effects - of - reforms [ https : / / www. fsb. org / work - of - the - fsb / assessing - the - effects - of - reforms ] 17. see https : / / www. bis. org / frame [ https : / / www. bis. org / frame ] 18. see deutscher bundestag ( 2020 ) and deutsches aktieninstitut ( 2021 ). 19. see https : / / www. bundesbank. de / en / service / media - library / videos / why - financialstability - isn - t ( tonne ) - boring - 622844 [ https : / / www. bundesbank. de / en / service / media - library / videos / why - financial - stabilityisn - t - boring - 622844 ]
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##bit of traditional monetary policy. 4 / 5 bis central bankers'speeches i am talking about the need to support inclusive growth. the bsp β s effective pursuit of our primary mandate of maintaining price stability puts the country in a better position to attain inclusive growth. we foster a macroeconomic environment conducive for investments and supportive of job generation and employment. however, maximizing the impact of the bsp β s policies on the lives of filipinos entails that we tackle the inclusive growth advocacy directly. i am heartened by the thought that the recent banking sector outlook survey showed that most thrift banks believe that business growth may be maintained by developing new capabilities and by expanding market reach, digitally or through new products and services. this is what i refer to as the bsp multiplier or the bsp β s ability to improve every single juan and maria β s quality of life. towards this end, you can expect the bsp to continue to focus on this goal and integrate our financial inclusion advocacy with our traditional objectives. the bsp is working hard to bring central banking operations to the people, of course with your help. we are committed to advancing our financial inclusion, financial education, and consumer protection agenda to ensure that everybody is given the opportunity to ride in this economic growth. a bsp that is closer to the people for us to be able to succeed in a transitioning global environment, we need to build our strengths, be more responsive, and sometimes go beyond conventions. the bsp is aware that our efforts cannot stand alone. to keep the engine running, both the public and private sectors must share in the responsibility of making sure that no filipino is left behind. i therefore thank the ctb and the thrift bank community for supporting the bsp and its thrust on financial inclusion. rest assured, you can count on the bsp to walk closely with you in our country β s journey towards inclusive growth. thank you and mabuhay tayong lahat! 5 / 5 bis central bankers'speeches
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β β with the economy also gaining reputation as one of the fastest growing in asia. indeed, the economy has been resilient, exhibiting both price and financial stability. inflation has been kept low and stable. for 5 consecutive years, inflation has been kept well - within our target due to timely and responsive monetary policies. at the same time, the banking system remains sound and stable with assets continuing to expand, funded mainly by a healthy growth in deposits. moreover, banks are well - capitalized while asset quality continues to improve, with banks β non - performing loan ratios at all - time lows. another source of strength is our strong external position... supported by the continued surplus in our current account. our gross international reserves as of june 2014 reached 80. 7 billion dollars, enough to cover 11 months β worth of imports of goods and payments of services. in other words, we have enough buffers against possible external shocks. this is not to say the road ahead will be smooth. there are bound to be surprises, bumps and risks ahead ; but we have also shown remarkable strength and resilience in meeting tough challenges. i am confident therefore... that as we benefit from even better and stronger support from you... our stakeholders... we will be able to sustain our growth objectives and achieve more inclusive growth across our country. muli, maraming salamat sa inyong lahat.... and congratulations... to all our awardees! mabuhay ang ating mahal na bansang pilipinas! mabuhay po tayong lahat! bis central bankers β speeches
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significant step toward overcoming deflation and achieving sustainable economic growth. the bank introduced a β price stability target β of 2 percent in terms of the year - on - year rate of change in the cpi, and decided that under the price stability target it would pursue monetary easing and aim to achieve this target at the earliest possible time. the bank believes that the achievement of this target, without delay, is its mission of utmost importance. so far the bank β with a view to overcoming deflation β has been purchasing a variety of assets such as sovereign debt as well as corporate bonds, cp, exchange - traded funds ( etfs ), and real estate investment trusts ( reits ). while such purchases go beyond the domain of traditional central bank operations, the scale and type of assets to be purchased have not been sufficient to materialize a strong commitment to achieving 2 percent inflation at the earliest possible time. we need to pursue bold monetary easing both in terms of quantity and quality. moreover, given that there is little room for the interest rate to decline, it is imperative to work on market expectations in the conduct of monetary policy. through communication with the market, we need to make clear that we have adopted the uncompromising stance that we will do whatever is necessary to overcome deflation. furthermore, ensuring cooperation with the government is also important. the effect of monetary policy will be reinforced by maintaining consistency with the government β s economic policies. according to the joint statement released by the government and the bank, they will strengthen their policy coordination and work together in order to overcome deflation early and achieve sustainable economic growth with price stability. the government will flexibly manage fiscal policy, formulate measures to strengthen the growth potential and competitiveness of japan β s economy, and promote measures aimed at achieving fiscal consolidation in the medium to long term. for its part, the bank will on its own responsibility pursue monetary easing with a view to achieving the price stability target at the earliest possible time. parallel to monetary easing, if the government can take initiatives to create real demand and improve wages and employment through the expansion of consumption and investment, this is expected to contribute to generating a virtuous cycle that will eventually lead to price increases. to avoid an increase in interest rates on the back of declining confidence in fiscal management, it is also important to take measures aimed at achieving fiscal consolidation in the medium to long term. we expect the government to take appropriate actions in line with the joint statement. for the future conduct of monetary policy
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october 10, 2019 bank of japan development of asia's capital markets : roles and challenges keynote speech at the asifma annual conference 2019 masayoshi amamiya deputy governor of the bank of japan introduction good morning everyone. it is my great pleasure to be here at the asia securities industry and financial markets association ( asifma ) annual conference 2019. i am honored to address this distinguished audience comprised of representatives from the securities and asset management industries, institutional investors, policy makers, and regulators in asia and other important regions. asia's capital markets have experienced remarkable growth since the asian financial crisis in the late 1990s. asia's share of global stock market capitalization1 soared from 1 percent in 2000 to 15 percent in 2017. notably, the amount outstanding in local currency bond markets in asia as a share of gdp2 in 2018 increased to more than double that in 2000 ( chart 1 ). obviously, the rapid expansion of asian economies has driven the growth of the capital markets in the region. at the same time, the collective efforts of market participants, policy makers, and regulators both at national and regional levels have contributed to market liberalization and enhancement of market infrastructures in asia. typical examples of such regional cooperation include the asian bond markets initiative ( abmi ), launched by the asean + 3, as well as the asian bond fund ( abf ) initiative3 of the executives'meeting of east asia - pacific central banks ( emeap ), which is a group of 11 central banks and monetary authorities in the region. financial industry associations, such as the asifma, have also played a vital role by facilitating dialogue between market participants, promoting regional coordination, and providing necessary recommendations based on figures for " east asia & pacific " ( a country and region grouping employed in the world bank's world development indicators ) excluding high - income countries and regions ( australia, hong kong, japan, south korea, new zealand, and singapore ). 2 based on the aggregated amount outstanding in local currency bond markets in china, hong kong, india, south korea, malaysia, the philippines, singapore, thailand, and vietnam. 3 the asian bond fund ( abf ), established in 2003, is an index bond fund with a two - phase framework, namely, " abf1, " which invested in u. s. dollar bonds, and " abf2, " which invests in local currency bonds and is open to private sector investors. in 2016, because the em
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case 6 / 64, costa v e. n. e. l., judgment of the court of 15 july 1964, p. 594 ; case 314 / 85, foto - frost v hauptzollamt lubeck - ost, judgment of the court of 22 october 1987, paragraphs 15 β 16. [ 37 ] habermas, j. ( 2008 repr. ), between facts and norms : contributions to a discourse theory of law and democracy, translated by william rehg, mit press, p. 144 et seq. ; luhmann, n. ( 1993 ), das recht der gesellschaft, suhrkamp, pp. 150 β 3. [ 38 ] sermon at st. winfried church, bonn, 26th november 1981. 10 / 10 bis central bankers'speeches
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in three key areas to counter systemic risk more effectively : better analytical tools, new instruments that counter the development of risk outside the banking sector and a clearer framework to govern policy actions. the past decade has seen a sustained improvement in the tools available to assess risks to financial stability. better data and better modelling techniques have revealed important insights. developing the analytical toolkit to adequately monitor interconnectedness and contagion requires granular datasets, and the ability to map and link data across entities and markets. the sub - prime crisis in the us banking sector spread to european banks through their direct exposures, but it also spread to insurers through the use of credit default swaps. 10 only a holistic view of the system will allow potential contagion channels to be identified and modelled. and that requires investing in new technologies for data analytics and enhancing the capacity for authorities to link and share data and technical knowledge. the second area of improvement for the macroprudential framework in europe involves keeping pace with developments in the financial system. that requires broadening the range of macroprudential instruments beyond those currently available, which focus almost exclusively on the banking sector. for the insurance sector, the contours of such instruments are taking shape. they include solvency instruments such as symmetric capital requirements for cyclical risks ; liquidity instruments for insurers with a vulnerable liquidity profile ; and instruments to target bank - like activities to ensure macroprudential policy is consistent across sectors. 11 the third area for improvement in macroprudential policy involves establishing a clearer conceptual framework to govern policy discussions and interventions. such a framework would facilitate communication with market participants and the general public, as well as help mitigate any risk of inaction bias. 2 / 4 bis central bankers'speeches for monetary policy the framework is well known and the reaction function of central banks is normally well understood by markets. by contrast, the framework that governs macroprudential policy interventions is much less developed, due in no small part to our limited experience of using these tools. the objective of financial stability is broader than the objective of price stability, so is less easily defined by a single numerical measure. developing the policy framework is challenging and will take time. the esrb approach uses the concept of residual risk, which is the difference between the level of risk and the current resilience of the financial system. 12 in setting up the framework, policymakers need to establish the level of residual risk that
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, who, according to the reserve bank of india guidelines, are those who do not repay deliberately despite having sufficient funds and a solid net worth. the public sector banks have even started publishing photographs of the borrowers in newspapers. maybe it is high time that we start considering to bring amendments to our own law to disclose the name of the top defaulters. or even consider the coordinated efforts of the four banks, with or without the blessing of the central bank so as to ensure a favourable and rapid outcome. the bad experience of our bankers sheds light on the fact that however meticulous they may have been, banking remains a risky business. the bank has lately been considering a system of information - sharing on cross - border loans although we do recognize the difficulty of accessing information on foreign clients. a good reputation requires conscientious regulatory compliance. the rapidly evolving financial landscape is keeping the regulator on its toes to ensure that we are up to the mark bis central bankers β speeches when it comes to international best practice. we champion a proactive and thorough approach to fraud risk management which includes among other things, putting in place a whistleblowing procedure and where it already exists to review it, and educating staff about fraud. we need to be alert to the growing impact of the prevalence of gambling in our country for it is l β appat du gain which motivated the public to invest in placements that offered unrealistically high returns. over the years, the bank of mauritius and the mauritius bankers association have developed a strong partnership. more than ever, we need to consolidate this partnership and live up to the four rs of a sound banking sector β regulation, reputation, results and resilience. together we can continue facing the daunting challenges that await the financial sector when it comes to the next - generation regulation. thank you. bis central bankers β speeches
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##ious combination of two measures. first, we raised the cash reserve ratio from 6. 0 to 7. 0 per cent in february 2011 and increased the minimum daily cash ratio from 4. 5 per cent to 5. 0 per cent. second, we stepped up the issuance of bom paper to nearly rs10 billion. to cope with persistent problems of liquidity overhang in different parts of the maturity spectrum, we extended the tenor of our paper well beyond the usual maturity of central bank paper of up to one year, and continued with the practice of issuing bom notes with maturities of 2, 3 and 4 years, which we started in august 2010. the operation was successful and was favourably commented by the january 2012 article iv consultation mission of the imf. ( more on this issue ) another interesting development in the money market that occurred during the year is the daily publication of the port louis interbank offered rate ( plibor ) as from 26 august 2011 on the reuters page at 12 00 hours. the plibor, which is an average interbank rate, is computed and published for four tenors, namely overnight, one week, one month and three months. these rates will be also available on the bank β s website in early 2012. ( more on this issue ) domestic foreign exchange market the tumultuous conditions prevailing in international currency markets prompted us to take steps to prevent contagion from seeping into our small, but completely open, domestic foreign exchange market. the bank intervened actively to smooth out excessive rupee volatility β while taking extra care to remain broadly neutral and avoid any unnecessary and dangerous balance - sheet risks β with total foreign currency purchases equivalent to us $ 533 million nearly matched by foreign currency sales equivalent to us $ 512 million. we continued to provide the state trading corporation, at their request, with their foreign exchange requirements to pay for food and fuel imports. we maintained the foreign currency swap facility, introduced at the beginning of the crisis in december 2009. we, however, decided to withdraw the special foreign currency line of credit that had been made available to banks for trade financing since december 2008. i am pleased to note that, as a result of our vigilance, liquidity conditions on the foreign exchange market stayed comfortable throughout 2011, with a roughly similar total turnover of foreign exchange transactions as the previous year, and the rupee behaved fairly well during the year, contributing enormously to maintain price stability and real incomes in our import
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recent weakness in investment, β feds notes ( washington : board of governors of the federal reserve system, november 21 ). their analysis indicates that investment growth over the expansion has been consistent with a model using business output growth and the user cost of capital. in a second model, they show that the modest increases in the capital stock are consistent with the increase in labor supply and tfp. over long periods of time total factor productivity is primarily driven by innovation, knowledge and the efficiency with which inputs are put to use owing to the evolution of business practices as well as the influences of public capital stock, government regulations and other factors. over shorter periods of time tfp will also capture the variations in the intensity of utilization of inputs, such as capacity utilization and hours per worker. disentangling tfp from capital deepening and hours worked can be challenging. see, for example, ryan decker, john haltiwanger, ron jarmin, and javier miranda ( 2014 ), β the role of entrepreneurship in u. s. job creation and economic dynamism, β journal of economic perspectives, vol. 28 ( summer ), pp. 3 β 24. see john fernald ( 2014 ), β productivity and potential output before, during, and after the great recession, β nber macroeconomics annual, vol. 29, no. 1 ( cambridge, mass. : national bureau of economic research ). some have argued that part of the tfp slowdown may actually be a measurement problem, owing to the difficulty in measuring the productivity of health care, information technology, and other services. others see the evidence for that claim as weak. for example, a recent paper finds little evidence that the slowdown arises from growing mismeasurement in information - technology - related goods and services. see david m. byrne, john g. fernald, and marshall b. reinsdorf ( 2016 ), β does the united states have a productivity slowdown or a measurement problem? β brookings papers on economic activity, march 4. on the pessimistic end of the spectrum are analysts such as robert gordon ; among the optimists are erik brynjolfsson and andrew mcafee. see robert j. gordon ( 2016 ), the rise and fall of american growth : the u. s. standard of living since the civil war ( princeton, n. j. : princeton university press ) ; and erik brynjolfsson and andrew mcafee ( 2014
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. federalreserve. gov / monetarypolicy / fomcminutes20130918ep. htm on the board β s website. bis central bankers β speeches committee β s two objectives of maximum employment and price stability are complementary. when they are not, the fomc has stated that it will pursue a balanced approach in the pursuit of its dual mandate, working to ensure that both inflation and employment are close to their desired values in the longer term. in short, the federal reserve, like many central banks around the world, has made significant progress in recent years in clarifying its goals and policy approach, and in providing regular information about the future path of policy that it views as most likely to attain its objectives. this increased transparency about the framework of policy has aided the public in forming policy expectations, reduced uncertainty, and made policy more effective. the financial crisis and its aftermath, however, have raised even greater challenges for, and demands on, the federal reserve β s communication. we have had to contend with the persistent effects of the seizing - up of the financial system, the collapse of housing prices and construction, new financial shocks in europe and elsewhere, restrictive fiscal policies at all levels of government, and, of course, the enormous blows to output and employment associated with the worst u. s. recession since the great depression. moreover, for the first time since the fomc began using the federal funds rate as its policy interest rate, that rate is effectively at zero and thus cannot be lowered meaningfully further. consequently, to provide needed support to the economic recovery and minimize the risk of deflation, the federal reserve has had to adopt new policy tools, which bring their own communication challenges. in the remainder of my talk, i will discuss how the federal reserve has used communication to try to further inform the public β s expectations about how the fomc will employ what are currently its two principal policy tools : its plans regarding its short - term policy interest rate and its large - scale purchases of securities. forward guidance about policy interest rates as the economy weakened over 2008, the fomc repeatedly cut its target for the federal funds rate, its short - term policy rate. in december of that year, the target for the funds rate was reduced to a range of zero to 1 / 4 percent, and money market rates declined nearly to zero. thus, using the standard means of further easing monetary policy β cutting the target interest rate β was no
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growth track. trends we continue to expect a soft landing for the housing market and canada β s household debtto - income ratio to stabilize. nevertheless, the imbalances in the housing sector remain elevated and would pose a significant risk should economic conditions deteriorate. we are observing, anecdotally at least, an increased awareness of this risk. consumers are showing responsibility ; for example, homebuyers who opt to buy less house than they qualify for so they don β t find themselves overextended if interest rates rise. banks, as well, are underwriting loans more carefully, ensuring that people can service their debts if rates go up. so, while the risk could be significant, we are comfortable that it is not outsized. to sum up, the bank continues to see a gradual strengthening in the fundamental drivers of growth and inflation in canada. but this view depends largely on the projected upturn in exports and investment. there is a growing consensus that when we do get home, interest rates will still be lower than we were accustomed to in the past β both because of our shifting demographics and bis central bankers β speeches because, after such a long period at such unusually low levels, interest rates won β t need to move as much to have the same impact on the economy. with underlying inflation expected to remain below target for some time, the downside risks to inflation are important, as are the risks associated with household imbalances. the bank judges that the balance of these risks remains within the zone for which the current stance of monetary policy is appropriate and, as you know, we decided on 16 april to maintain the target for the overnight rate at 1 per cent. the timing and direction of the next change to the policy rate will depend on how new information influences the balance of risks. conclusion before tiff and i respond to your questions, i would like to take just a moment to say a few words about the man sitting next to me. tiff β s contributions at the bank started long ago as a new recruit with a fresh master β s degree in hand. his contributions throughout his career have been significant. at the bank, we will miss him for his intellect and management skills. but we will also miss a great friend to many, myself included. we can rest assured that tiff β s contributions to the financial welfare of canada will continue as the dean of the rotman school of business, where he will be busy ensuring that the next generation of economists
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##rated to the systemic importance of the firm. options under consideration in this area include requiring systemically important institutions to hold aggregate levels of capital above current regulatory norms or to maintain a greater share of capital in the form of common equity or instruments with similar loss - absorbing attributes, such as " contingent " capital that converts to common equity when necessary to mitigate systemic risk. the financial crisis also highlighted weaknesses in liquidity risk management at major financial institutions, including an overreliance on short - term funding. to address these issues, the federal reserve helped lead the development of revised international principles for sound liquidity risk management, which have been incorporated into new interagency guidance now out for public comment. 2 in the supervisory arena, the recently completed supervisory capital assessment program ( scap ), popularly known as the stress test, was quite instructive for our efforts to strengthen our prudential oversight of the largest banking organizations. 3 this unprecedented see bank for international settlements ( 2009 ), " basel ii capital framework enhancements announced by the basel committee, " press release, july 13 ; and basel committee on banking supervision ( 2009 ), enhancements to the basel ii framework ( basel : basel committee, july ). see basel committee on banking supervision ( 2008 ), principles for sound liquidity risk management and supervision ( basel : basel committee, september ). information about the proposed guidance is available at board of governors of the federal reserve system, office of the comptroller of the currency, federal deposit insurance corporation, office of thrift supervision, and national credit union administration ( 2009 ), " agencies seek comment on proposed interagency guidance on funding and liquidity risk management, " joint press release, june 30. for more information about the scap, see ben s. bernanke ( 2009 ), " the supervisory capital assessment program, " speech delivered at the federal reserve bank of atlanta 2009 financial markets conference, held in jekyll island, ga., may 11. interagency process, which was led by the federal reserve, incorporated forward - looking, cross - firm, aggregate analyses of 19 of the largest bank holding companies, which together control a majority of the assets and loans within the u. s. banking system. drawing on the scap experience, we have increased our emphasis on horizontal examinations, which focus on particular risks or activities across a group of banking organizations, and we have broadened the scope of the resources we bring to bear on these reviews. we also
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njuguna ndung β u : enhancing the quality of financial inclusion in kenya remarks by professor njuguna ndung β u, governor of the central bank of kenya, at the launch of mpesa moneygram partnership, nairobi, 5 november 2014. * * * mr. bob collymore β ceo safaricom ; ms. pam patsley ceo β moneygram international ; mr. herve chomel β vice president moneygram africa ; h. e. robert godec β us ambassador to kenya ; dignitaries ; distinguished guests ; ladies and gentlemen : i am pleased to join you today on this auspicious launch of safaricom mpesa and moneygram international money transfer partnership. it is a great honour to be here with you this morning. i thank the ceo and management of safaricom for inviting me to this occasion. ladies and gentlemen : i recall with pleasure back in 2009 when i witnessed the first partnership in international money remittance between safaricom and western union. this created a much needed avenue for the safety of remittances and efficiency through easily accessible channels. and today, we are gathered here to celebrate another milestone in the deepening of kenya β s financial sector. the partnership between safaricom and moneygram international is not only an opportunity for safaricom to satisfy the needs of its customers but also to contribute in enhancing the quality of financial inclusion. i commend the board, management and staff of safaricom and moneygram international for their decision to operationalise this partnership. this partnership will benefit both parties through expansion of network of outlets. as i continually to encourage and advocate, it is such partnerships that discover market opportunities and allow further competition to enlarge the space. as everyone attending this launch is aware, kenyans have spread their reach worldwide in both business and in practising their professions. kenya being a small open economy, it has liberalised its markets to promote and enhance growth. these professional and business people within and outside kenya send substantial shares of their earnings to family members back home perhaps for consumption smoothing and investment. ladies and gentlemen, the mobile phone financial services sector in kenya has experienced phenomenal growth since its inception in 2007. this sector is served by over 120, 000 agents handling more than 2. 5 million transactions daily valued at ksh. 6. 3 billion. this partnership will expand opportunities for business and increase the global outreach to more than 90 countries and interlink more than 20 million customers in those countries already served by moneygram
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patrick njoroge : improving financial services for the kenyan population speech by dr patrick njoroge, governor of the central bank of kenya, at the launch of the finaccess geospatial mapping survey, 2015, nairobi, 29 october 2015. * * * i am delighted to join you today, to launch the key findings of the finaccess geospatial mapping survey, 2015. the survey was conducted by the finaccess management team, comprising of the central bank of kenya ( cbk ), financial sector deepening trust ( fsd ), and the kenya national bureau of statistics ( knbs ), with funding from the bill & melinda gates foundation ( b & mgf ). the fieldwork was conducted by brand fusion limited, a research house contracted by b & mgf. i wish to thank the bill and melinda gates foundation for funding this survey and all those who, in one way or another, participated and made this survey a success. 1. policy goal : one of the goals of kenya β s vision 2030 is to foster greater efficiency and delivery of financial services to a wider population. in order to achieve this, all stakeholders and associated financial sector players, both in the private and public sectors, have been working towards increasing financial inclusion through offering appropriate and affordable financial products and services. there is more focus on low - income households and micro -, small -, and medium - sized enterprises, who are, as a whole, benefitting from these positive and significant endeavours. the cbk in collaboration with fsd kenya, knbs, and other key stakeholders has taken a leading role in fostering kenya β s financial inclusion agenda. it has also taken the lead in improving the measurement of financial inclusion and tracking its dynamics, thereby identifying evidence - based strategies to promote an inclusive and stable financial system. 2. existing financial inclusion landscape : the promotion of financial inclusion has been an area of focus of the government over the past decade. recent finaccess surveys indicated that kenya has made significant progress in fostering financial inclusion since the first baseline survey in 2006. the three national finaccess household surveys of 2006, 2009 and 2013 and the finaccess geospatial mapping survey, 2013 have clearly demonstrated that kenya β s financial inclusion landscape has changed considerably over the period 2006 β 2013. the proportion of adult population using formal financial services rose to 66. 7 percent in 2013, from 27. 4 percent in 2006,
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s long - term nature. following the changeover to a flexible exchange rate in 1992, monetary policy in sweden was directed towards an explicit and quantified inflation target. the decision rule by which our monetary policy is usually guided is in fact quite simple. it states that if the forecast rate of inflation 1 - 2 years ahead is above 2 per cent, then normally the repo rate should be raised and vice versa. the reason why we chose this target horizon is that an adjustment of the monetary stance takes time to exert its full impact on inflation and the macro economy in general. although we are also able to influence inflation in the shorter run, doing so is normally inappropriate because it is liable to result in large fluctuations in production and employment. of course the rule is not applied mechanically. the basic intention is to stabilise inflation around the target and at the same time avoid unduly large fluctuations in production and employment. we tend to disregard economic shocks with effects on inflation that can be assumed to be only transitory. moreover, there may be grounds for heeding the expected course of events beyond the regular target horizon. there may be a case for adjusting the repo rate immediately if there are already strong reasons for expecting a marked increase or decrease in inflation directly after the two - year horizon. another point to remember is the riksbank's mandate to promote a safe and efficient payment system ; problems in this context may call for interest rate adjustments even though the inflation target is not threatened. such adjustments may be needed both to prevent potential risks from building up in the payment system and to moderate effects of problems that have already arisen. however, departures of this type from the normal decision rule should be made restrictively. moreover, deviations should be stated clearly, and carefully justified. favourable economic development over several years under the new regime the swedish economy has experienced several years of strong growth. since the upturn began in the summer of 1993, the annual gdp growth rate has averaged around 3 per cent. not since the period in the late 1960s and early'70s has our economy experienced growth figures like this. the favourable trend has contributed to rapidly rising employment and decreased unemployment. a look at the statistics shows that this expansion of employment is the strongest sweden has experienced since the labour force surveys were first published in the early'60s. the markedly favourable trend is not confined to growth, employment and unemployment. both the current account and the public finances are generating surpluses. another aspect of
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all the time, there will be a constant need for sizeable repo rate adjustments, with the attendant marked fluctuations in market interest rates, output and employment. if temporary deviations from the central bank β s target are tolerated, on the other hand, monetary policy can be implemented more smoothly. a gradual adjustment of output and employment ultimately brings inflation back into line with the target. both these routes have their drawbacks. negative effects on employment and output from major changes in the repo rate are liable to erode public confidence in the central bank and the monetary policy regime. at the same time, undue acceptance of large deviations from the inflation target may weaken the target β s credibility and lead both to rising inflation expectations and to high costs for ultimately bringing inflation back on target. as a result, central banks tend to prefer a monetary policy strategy that lies somewhere between these two extremes, avoiding excessively large interest rate adjustments but not hesitating to adjust when this is called for. the riksbank normally formulates monetary policy with a view to inflation one to two years ahead. this unfortunately means that the repo rate has to be set with the aid of forecasts and forecasts can err. moreover, there is always the possibility of price shocks that are a - cyclical but still affect the rate of inflation. a forward - looking policy has the advantage, however, of permitting an implementation that is smoother yet firm. the riksbank reacts to the inflation forecasts in a determined manner but as the forecasts include an assessment of the extent to which inflationary impulses are transient, over - reactions are avoided. the supply shocks i referred to earlier as having occurred during the past year are examples of price fluctuations that, with the monetary policy strategy the riksbank has chosen, can occasion deviations from the inflation target. this is not the first time inflation has been affected by occasional factors. in the late 1990s, for example, successive deregulations of electricity and telecom markets resulted in deviations from the target, the difference being that at that time the gap was on the downside. what has happened now is the opposite. with our monetary policy strategy, this is a natural case of striking a reasonable balance between maintaining the fixed value of money and avoiding excessively large fluctuations in economic activity. it cannot be stressed too strongly that although the riksbank β s sights are consistently on the target, inflation will always tend to hover around the bull β s
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amongst other things, firms change their price - setting behaviour. in an environment of persistently high inflation rates, business owners pay comparatively less attention to current demand and more to expected future inflation when it comes to setting prices. taken in isolation, this can reduce the effectiveness of conventional interest rate moves, as the central bank mainly influences demand by means of changes in interest rates. in order to nonetheless tame inflation, the central bank therefore needs to act more decisively when tackling persistently high inflation β in other words, it needs to respond more strongly to a deviation of the inflation rate from its target. given the substantial uncertainty, it is not yet possible, in my view, to say how high the key ecb ( european central bank ) interest rates will increase. what is clear, though, is that if inflation becomes entrenched at a high level, there is ultimately a greater risk of a monetary policy response that would have sufficed in an environment of low inflation rates now no longer being enough to ensure that inflation expectations remain firmly anchored. and, as i explained earlier, unanchored inflation expectations stand out as one of the root causes of the great inflation in the united states in the 1970s. back then, the fed ( federal reserve system ) β in the face of persistently high inflation rates in particular β for a long time failed to tighten its monetary policy aggressively enough to anchor inflation expectations and stabilise price developments. it was only fed ( federal reserve system ) chair paul volcker who managed to cut the gordian knot of inflation. he did so by allowing short - term interest rates to rise to almost 20 % at the beginning of the 1980s. however, this came at a high price : the us ( united states ) economy slipped into two recessions in quick succession. to prevent an unanchoring of inflation expectations, the eurosystem should therefore not allow any doubts whatsoever to emerge in the first place over its determination to combat inflation. central banks could repeat the mistakes the fed ( federal reserve system ) made in the 1970s, above all in a situation where their response to inflation pressures is too little, too late. 5 concluding remarks ladies and gentlemen, in 2004, paul volcker, the β slayer β of inflation in the 1970s and beyond, was asked what he considered to be the most important legacy of the great inflation. he answered : β don β t ( tonne ) let inflation get ingrained. once that happens, there β s too much
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market forces. however, in my view, these calls for more of the former or more of the latter are in any case often misguided. periods of deregulation, ie more of the market, often culminate in a crisis. by the same token, periods of reregulation, ie more of the state, often lead to economic stagnation. this amounts to a choice between overheating on the hand and ossification on the other. poorly considered instinctive reactions are thus likely to take us down the wrong path. it is precisely for this reason that we should regard the simultaneous loss of confidence in the market and state as an opportunity to be grasped. an opportunity to move forward in our efforts to achieve stability. bis central bankers β speeches 2. more market orientation in the financial market financial stability is not a matter of choosing between the market and the state. rather, it is a case of finding the right relationship between the two. here, we can turn to the tried and tested principle of letting governments lay down the regulations while the market is allowed to function freely. the state defines the perimeter fence while the invisible hand of the market guides events on the playing field. upon first consideration this would seem to be a relatively simple construct. but is it really that straightforward in practice? clearly, it is not. especially with regard to the financial markets, the task is far from simple. there is a β grey area β in which the boundary between the market and the state becomes blurred. this grey area arises from the problem of systemic importance. participants in the financial sector are highly interconnected. these links start with the banks which lend money to one another and finish with complex derivative vehicles in which many players are involved. if a bank runs into trouble, this will also impact on all its counterparties. and if the bank in question is particularly large or has dealings with an especially large number of counterparties, its troubles can upset the balance of the entire financial system. we saw where this scenario led in 2008 when lehman brothers became insolvent. in cases like these, the state may have no choice but to rescue the bank concerned in order to prevent an escalation of the crisis. such rescue efforts are of course extremely costly ; in 2010, ireland was obliged to spend more than 30 % of its annual economic output on supporting irish banks. and these costs are ultimately borne by the taxpayer. but this policy not only comes at a cost to the taxpayer ;
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the 2008 - 09 global recession with a slight delay, but more or less at the same time as most of the world β s largest economies. such cyclical patterns are largely unavoidable, and the best that macroeconomic policy can do is to limit their magnitude and hence their potential distortionary effects. what is worrying, however, is that while the gap between south african and world growth hovered at around zero just before and during the global recession, this growth gap has gradually widened ever since. it has averaged 1. 8 percentage points in the last five years, stood at 2. 9 in 2016, and β based on the imf β s and the sarb β s forecasts β could increase to 3. 0 in the current year. a similar observation arises when page 3 of 11 comparing south africa to its upper - middle - income peers4 : in 2002 - 07, domestic growth was, on average, 0. 4 percentage points below this group β s median ; last year, the gap had widened to 2. 5 percentage points. not β a traditional recession β but β a slow grind to a halt β how can we explain this lacklustre performance of the south african economy? and how can we explain its underperformance versus its peers? in many ways, the downturn of the past few years does not display the traditional characteristics of a recession. for example, there was no build - up of inflationary pressures that necessitated the shift to a restrictive, demand - constraining monetary policy. inflation has displayed a rising trend since 2011, resulting in the monetary policy committee of the sarb raising the repurchase rate by 200 basis points between january 2014 and march 2016. but by our own, admittedly imprecise, calculations, the real interest rate remained below its neutral level for most of that period. this would suggest that while monetary policy provided less stimulus, it did not turn outright restrictive. equally, we did not see the kind of asset - price bubbles or the build - up of other financial vulnerabilities which typically precede a recession, as the unwinding of such imbalances generally results in lower private - sector appetite for borrowing, tighter lending standards by banks, and a rise in precautionary savings by households. in recent years, in part thanks to the generally accommodative stance of monetary policy, banks β non - performing loans have declined, the number of home repossessions has equally fallen to
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in contrast to many of its peers, has failed to get much traction in the first half of 2017. after all, the end of the drought, together with the improving global environment and the recovery 5 for example, the consumer financial vulnerability index ( computed by the bureau of market research, the university of south africa, and momentum ) showed a significant deterioration in the second quarter of 2017. 6 organisation for economic co - operation and development 7 the oecd calculates export market growth for a specific country as the weighted average of import growth in its trading partners, with the shares of these partners in the country β s total exports as weights. page 5 of 11 in south africa β s terms of trade from the second quarter of 2016 onwards, was expected to engineer at least some economic rebound β but so far it is missing. most likely, the key to this lack of growth resides in a self - reinforcing β negative feedback loop β of policy uncertainties, low private - sector confidence, subdued investment in productive capacities, and poor competitive performance. causality implications between growth and confidence go both ways. attempts by our in - house research to identify the possible causes of the ever - widening gap between south african and world growth have found that the negative impact of low confidence has increased in recent years, explaining as much as 1. 15 percentage points of that gap in 2016. in turn, weak business confidence amid disappointing demand performance has depressed private - sector fixed investment. last year, it contracted by 6. 8 %. as of the second quarter of 2017, it was down by 2. 7 % year on year and stood at 11. 8 % of gdp compared to a high of more than 15 % at the start of the global recession β its lowest level since 2004. in an environment of low consumer confidence and a lack of property price growth in real terms, the housing sector does not remain immune to such subdued performance. because of such softness in capital formation, as well as subdued productivity growth, the potential pace of gdp growth has slowed to an estimated 1. 1 % in both 2016 and 2017 from more than 3 % at the start of the decade. weak private - sector investment, currently focusing mostly on replacing obsolete capital rather than creating new capacities, coupled with a shortage of skilled labour and, possibly, product market rigidities, appears to be weighing on external competitiveness and export performance. south african firms may be slow to adjust to changes in global demand patterns ; they may lack the innovative edge
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can result from the fact that they are aware of their systemic relevance. this, and the externality illustrated above, would justify ad hoc regulation to ensure that sifis are extrasafe. at first sight, there should be little interaction between additional requirements for sifis and monetary policy. during a crisis, however, sifis would be prime candidates for liquidity injections by the central bank. 10 in the second category of macro - prudential measures that increase the resilience of the financial system, we have market reforms such as a drive towards centralising exchanges wherever possible at central clearing counterparties ( ccps ), and structural reforms aimed at separating commercial banking from other activities. centralising transactions should reduce counterparty risk and allow a better monitoring of financial flows, especially of derivatives, for which little data is available in general. the extra information should be useful for calibrating monetary policy. the concentration of transactions should reduce uncertainty about who holds what β an uncertainty which, during a crisis, can end up freezing entire markets and forcing central banks to intervene. therefore the development of ccps seems beneficial to the conduct of monetary policy. the separation of commercial banking from other activities helps to protect deposit holders by insulating them from excessive risk - taking activities by banks. it can take the form of a carve - out of some form of narrow bank, 11 or by limiting trading with own funds ( something similar to the volcker rule adopted by the united states ). it is unclear whether this separation reduces the overall amount of risk in the financial sector, or simply shifts it to institutions that are not deemed systemic. i would argue that if it is a mere redistribution it might be dangerous : how do we know that we won β t have a repeat of 2007, when we saw that vast pockets of risk had gone undetected and had grown to such an extent that they threatened the stability of the whole financial system? the whole point of such a separation should be to change the incentives for risktaking. by separating two fundamentally different business cultures, investment and client services, it should be easier to redesign incentives to make the client part a safer place. 12 at the moment, however, this second part of the structural reforms seems missing. such a separation would reshape the financial industry and affect the transmission channels of monetary policy in ways that are hard to predict. on the one hand, commercial banks would function in a more traditional way, reinforcing the lending channel ;
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whole range of objectives. from the central bank perspective the overwhelming objective is to safeguard financial stability and restore the flow of credit from banks to the private sector. in addition, the measures taken will need to be implemented in a way so as to maintain a level playing field in the eu financial market and minimising the burden to public finances. in line with these objectives, the eurosystem has issued a set of guiding principles for the design and implementation of asset support schemes to address the most critical issues. apart from guidance on the types of assets and institutions that would be eligible to support, these guiding principles call for an adequate degree of risk sharing as a necessary element to limit the cost to the government, to provide the right incentives to the participating institutions and to maintain a level playing field across these institutions. they also mention that schemes with well - defined exit strategies should be favoured and that conditionality may be attached to such schemes. conclusion let me conclude. we face unprecedented challenges. at the ecb we have demonstrated a willingness and capacity to react rapidly to exceptional circumstances. we have cut interest rates sharply to forestall the emergence of downside risks to price stability. we have provided unlimited liquidity support to the banking system so as ensure that liquidity risk does not lead to a systemic crisis. but, ultimately, we alone as central bankers cannot resolve the current financial crisis. the onus is now on governments, supervisory and regulatory authorities, and the financial industry itself, to cooperate to act resolutely to restructure, recapitalise and consolidate the banking system. such government measures are under way. on our side we will continue to do whatever we judge to be necessary and appropriate to maintain price stability and contribute to financial stability. and in doing so we will stick to the principles that have served us well in the pursuit of price stability. we will safeguard our financial independence. we will be transparent and accountable for our actions. most importantly, we will remain faithful to our mandate and provide an anchor of confidence and stability in difficult times.
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of our modus operandi. the bank tries to work with markets, rather than against them, to avoid surprising them with unexpected actions. greater transparency facilitates the policy - transmission the economic council of canada had also recommended that canada adopt inflation targets in its 1990 report. economic council of canada ( 1990 ) : transition for the 90s. twenty - seventh annual review, supply and services canada, ottawa. thiessen, g ( 1998 ) : β the canadian experience with targets for inflation control β, the 1998 gibson lecture, queen β s university, kingston, ontario, 15 october. process by conditioning market expectations and helps avoid unnecessary confusion about the reasons for our actions. various techniques for manipulating domestic credit conditions and the external value of the currency by means of direct controls, moral suasion and active foreign exchange market intervention are no longer used. globalization and market liberalization have eliminated many of the barriers that used to separate different segments of the domestic financial system and have subjected them to increased international competition. as a result, these techniques became both less effective and more costly in terms of their impact on market efficiency. monetary authorities now have a clearer understanding of the limitations of alternative policy measures, as well as more sympathy for indirect, market - based solutions. monetary policy is now implemented in a more straightforward manner. today, policy adjustments are effected and signalled to the market mainly through announced changes in the bank rate and the target band for the overnight interest rate. private agents are then free to determine how these changes will be transmitted through the rest of the financial system and the economy in general. the bank simply issues a press release indicating what the new bank rate is, and this in turn anchors the short - term end of the yield curve. central bank independence and accountability have also been more clearly defined. as i explained earlier, the 1967 amendments to the bank of canada act allow the minister of finance, acting on behalf of the government, to issue a directive to the governor if serious differences arise on the conduct of monetary policy that cannot be resolved. the directive must indicate the specific policy changes that the bank is supposed to undertake. ultimate responsibility for monetary policy, therefore, rests where it should in a democratic society - with the elected government. but because of the consequences of issuing a directive, it is likely to be used only in unusual circumstances. thus, a high degree of operational independence has, nevertheless, been preserved to allow the bank to maintain its medium - term focus for monetary policy without the short - run
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, m ( 1953 ) : β the case for flexible exchange rates β, in essays in positive economics, university of chicago press, chicago, pp 157 - 203. see, for example, β a method of combining a free exchange rate with the present system of exchange control in canada β, memorandum, 31 january 1949, bank of canada archives. domestic rate of inflation. canada had experienced a sharp escalation in consumer prices during the korean war, and inflationary pressures had persisted for some time after. while domestic spending had faltered in 1954, the subsequent recovery pushed inflation well above the level that the bank implicitly associated with price stability. coyne was convinced that the solution to both problems - low savings and high inflation - was a tighter monetary policy. higher interest rates would reduce domestic demand and help raise national savings. although a rudimentary money market had started to form in canada, with the active encouragement of the bank, it was not well developed. popular wisdom, in any case, suggested that traditional monetary policy mechanisms were unlikely to be effective, even when they involved tightening monetary policy. 10 as a result, coyne decided to combine reductions in the supply of bank reserves with healthy doses of moral suasion, much as his predecessor had done in earlier periods. the bank continued with this restrictive monetary policy stance through most of the late 1950s and into the early 1960s. in the face of rising unemployment and weakening economic activity, inflation dipped below 1 % by the spring of 1961. relations between the bank and the minister of finance had deteriorated sharply, and numerous government ministers had demanded a change in policy direction. however, any desire to remove james coyne and replace him with a more sympathetic governor ran up against the ambiguous nature of the legislation regarding the government β s powers vis - a - vis the bank. the academic community also became involved in the dispute and circulated a pamphlet entitled β the economists versus the bank of canada β. 11 a w phillips had just published his famous paper on unemployment and the growth of money wages in the united kingdom, and shown how higher ( wage ) inflation was typically associated with lower rates of unemployment. 12 not surprisingly, phillips β work found a receptive audience in canada, and researchers soon replicated his results with north american data. much of the commentary in the popular press during this period was also critical of the bank β s policies, and reflected the widespread view that a little more inflation was not such a bad thing - provided it could bring higher employment and stronger
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since mid 2007 ; despite the significantly larger volume that has been brought to market ( graph 7 ). graph 7 deal structures have continued to evolve with further issuance of bullet tranches to manage prepayment risk. one recent deal was structured without a serial pay trigger, which has been the norm in recent years, apparently in anticipation of the changes to the apra β s prudential standard on securitisations outlined late last year. 7 2013 saw the first australian cmbs issue since 2011, and although volumes have remained low this has been followed by a further two transactions. issuance of other abs has remained strong, with 2013 recording the highest level of gross issuance on record with a sizable pick - up in australian dollar issuance. for an outline of apra β s proposed reforms to aps 120 see littrell c ( 2013 ), prudential reform in securitisation, presentation to the australian securitisation forum, sydney, 11 november. available at < http : / / www. apra. gov. au / speeches / documents / charleslittrell - australian - securitisation - forum11november2013. pdf >. one of the major thrusts of the proposed changes is the introduction in the prudential standards of the so called β skin in the game β for adi issued rmbs. rmbs issued since mid 2007 have typically included a serial pay trigger which after certain conditions are met, mainly satisfactory deal performance for several years after issuance, switch the principal payment order from paying tranches in order of seniority to paying all, or most tranches, proportionately to their outstanding amount. this feature was introduced in the market to address the higher cost on junior tranches in the wake of the global financial crisis and for adi sponsored rmbs, where the sponsor has been limited to hold no more than 20 per cent of the deal to qualify for capital relief, to cap the share of the rmbs held by the adi. bis central bankers β speeches corporates australian corporates have continued to have good access to bond markets both domestically and offshore, raising a total of $ 35. 1 billion of new bonds since the start of 2013 ( graph 8 ). while the amount issued has been less than in 2012, issuance that year was underpinned by significant bond issuance by the large australian miners. part of the reason for that strong issuance was that the miners were able to access the market at least
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guy debelle : the australian bond market address by mr guy debelle, assistant governor ( financial markets ) of the reserve bank of australia, to the economic society of australia, canberra, 15 april 2014. * * * i would like to thank ivailo arsov, mathew brooks and karl stacey for their assistance in preparing this speech. thank you for inviting me to talk at the economic society here in canberra. today i am going to walk you through the current state of the australian bond market. the bond market plays an important role in the financial structure of the australian economy and it is timely to examine its structure and functioning with the financial system inquiry underway. i will start today by providing an overview of the composition of the australian bond market and how this has changed in recent years. then, i will discuss more recent developments in the market since the start of 2013, focusing particularly on two trends that emerged last year : the nascent signs of deepening of the domestic corporate bond market and the pick - up in securitised issuance. i will also talk a little about the prospect for market - based finance, of which bond issuance is an important part, playing a larger role in the future than it currently does. shape of the australian bond market the evolution of the australian bond market over the past several years has been shaped to a large extent by the fallout from the global financial crisis. prior to the crisis, the market comprised mainly bonds issued by the australian banks and asset - backed securities. together these accounted for just over half of the outstanding stock of australian bonds in june 2007. bonds issued by the public sector were a relatively small share of the market, at 16 per cent of the total outstanding ( table 1 ). overall, the size of the bond market in mid 2007 was equivalent to around 84 per cent of australia β s annual gdp. in the subsequent seven years the stock of australian bonds on issue has increased to reach the equivalent of nearly 100 per cent of gdp. the increase has mainly been the result of debt issuance by the commonwealth and state governments to finance their budget deficits as they sought to support economic growth through the crisis. bank bond issuance has slowed down in the last couple of years as australian banks have sought to shift towards more deposit funding. however, the stock of bank bonds on issue is significantly higher than it was just before the start of the global financial crisis, reflecting the strong issuance of bank bonds in 2008 and 2009 as the financial system was
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can be for the better β and by future - proofing our banks and perhaps also our personal choices β we can create not a grave but a braver new world, which is more inclusive, more responsible, more sustainable, and more prosperous. technology will provide the means, but a more liveable, sustainable planet will provide the purpose. thank you. 8 / 8 bis central bankers'speeches
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setting of monetary policy while the labour market strengthens and inflation increases. looking forward, there are scenarios where the next move in the cash rate is up and other scenarios where it is down. over the past year, the next - move - is - up scenarios were more likely than the next - move - is - down scenarios. today, the probabilities appear to be more evenly balanced. we will be monitoring developments in the labour market closely. if australians are finding jobs and their wages are rising more quickly, it is reasonable to expect that inflation will rise and that it will be appropriate to lift the cash rate at some point. on the other hand, given the uncertainties, it is possible that the economy is softer than we expect, and that income and consumption growth disappoint. in the event of a sustained increase in the unemployment rate and a lack of further progress towards the inflation objective, lower interest rates might be appropriate at some point. we have the flexibility to do this if needed. the board will continue to assess the outlook carefully. it does not see a strong case for a nearterm change in the cash rate. we are in the position of being able to maintain the current policy setting while we assess the shifts in the global economy and the strength of household spending. it has long been the board's approach to avoid reacting to the high - frequency ebb and flow of news. instead, we have sought to keep our eye on the medium term and put in place a setting of monetary policy that helps deliver on our objectives of full employment, an inflation rate that averages between 2 and 3 per cent, and financial stability. thank you for listening. i look forward to answering your questions. 1 forecasts will be published online for the various expenditure components of gdp as well as selected other variables. 13 / 13 bis central bankers'speeches
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new zealand β s changing payments landscape and potential responses to it β a regulator β s view a speech delivered to payments nz β s the point 2022 conference in auckland on 9 november 2022 by karen silk, assistant governor and general manager for economics, financial markets and banking ref # x909373 v3. 0 kia ora koutou katoa, greetings to you all, thank you for this opportunity to present a β regulator β s view of the changing payments landscape in new zealand and potential responses to it β. at six months in to my role this is possibly the last time i can claim to be a recent joiner at the reserve bank of new zealand - te putea matua where it β s my privilege to be an assistant governor and the general manager of economics, financial markets and banking. in my career to date i have spent significantly greater time being regulated than regulating, but i β m enjoying the opportunity to reassess many familiar issues from new perspectives and in particular giving thought to how these may impact the prosperity and wellbeing of all new zealanders. we are all working and living in a period of substantive change my focus today will be on some of the challenges we see impacting new zealanders β ability to benefit from reliable and efficient money and payment systems supporting innovation and inclusion, and on some of the work at the reserve bank to directly address and support others in overcoming these challenges. my overarching message is that we are all working and living in a period of substantive change one that offers enormous opportunity if embraced, and potentially greater risk if it is not. payments are the ebb and flow of money. increasing attention is being given to both the global evolution in payment and money forms, to which new zealand is not immune, and to our increasing demand for better, smarter and faster forms of payments. this is not only the realm of advanced economies. emerging economies are embracing new technologies supporting greater financial accessibility and inclusion - in some cases leapfrogging those more advanced still clinging to aged infrastructure and payment practices. without greater ambition and innovation new zealand will not avail itself of the opportunity that technological change is creating. we oversee, operate, regulate, and supervise core payment systems β and steward money and cash the reserve bank β s role in money and payments is a multi - faceted one. first, we oversee, operate, regulate, and supervise core payment systems1. secondly, as a steward of money and cash our responsibilities lie not
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sharia - compliant institutions to have a real asset to back their financial assets. nonetheless, these exposures also have a downside, as the experience of the past few years has reminded us. like conventional financial institutions, some islamic financial institutions have suffered losses resulting from their exposure to real estate markets around the world. moreover, because they are frequently the direct owners and developers of real estate projects, islamic financial institutions have been exposed to wider range of risks than conventional ones. as the ifsb argued in a recent paper, the events of the past few years should have given the industry a clear signal that it must reduce its reliance on real estate as an asset class. the requirement for a real asset to back financial assets can be met in many other ways than by financing the construction of office buildings, shopping malls or luxury apartments. the industry should look instead at the scope for increasing the finance it provides for productive assets such as factories, ports, mines, and oil processing facilities. financing these activities may appear less profitable in the short - term, but may be a better proposition on a riskadjusted basis. diversification is also needed of product offerings that will allow islamic financial institutions to serve their customers better and to generate more stable revenues. surveys of the islamic financial industry tend to show that firms have a comparatively narrow range of financial products to offer their clients. developing a greater product range will not only benefit consumers. it will also create new sources of revenue that tend to be more stable than those generated by cyclical industries such as real estate. as i said at the beginning of my remarks, it is in the interests of all involved in the industry β regulators, standard setters and above all practitioners β to ensure that it rests on secure foundations. in other words, the industry must be prepared constantly to subject itself to the sort of intellectually rigorous analysis that has been the hallmark of the work of professor simon archer whose contribution to the industry we celebrate this evening. throughout his long and distinguished involvement with the islamic financial industry professor archer has assessed its prospects both sympathetically and honestly. while aiming to encourage the growth and development of the industry, he has also recognised that its long - term potential can only be realized if it rests on strong foundations. the long - run objective of a sound and stable industry should not be sacrificed to short - term gain. these sound principles are exemplified by the work that professor archer has done over the years, both with aaoifi and with the ifsb. he has
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monetary policy, bank of albania today thinks that inflation targeting is the way to take. better highways will bring us more quickly from tirana to the airport. likewise, the better monetary policy is able to maintain price stability, the quicker albania can take the road and reach the levels of neighboring europe with their higher welfare levels. we are fully aware that adopting fully fledged inflation targeting is a process that requires hard work with several preconditions in place, as these two days have underlined. getting to inflation targeting is more of a marathon than a steeplechase. our two days here have shown that it is not a discrete onetime decision that resolves all problems. it should also be a smooth process. this holds in particular for a transitioning country like albania. our country faces different challenges and virtues compared with developed countries. now, how is our working agenda set? i want to distinguish between the working areas within and outside the central bank. and the working area outside the central bank can be split into albania and the international environment. i see the further building of the central bank as a recognized and respected institution as one of my primary tasks. qualified young and ambitious people need to help us bringing our internal discussions and work to higher levels. cutting - edge discussions and fundamental studies are needed to make the central bank choosing the best policies, on monetary policy as well as on supervision and financial stability ( in a broad sense ). the human resources capacities need to be secured. inflation targeting is to be further scrutinized in all respects. econometric models need further development for forecasting inflation and analyzing transmission channels. more statistical work needs to be done, in particular on micro information from the real side of the economy. a specialized unit should concentrate on all areas that cover the consumer price index. a clear and professional communication strategy is to be developed. information on monetary policy is to be translated into a language for the different population groups in our country. next to all these activities, we need to continue our discussions on the monetary decision making arrangements that are deemed essential for inflation targeting. these activities within bank of albania are on my agenda for tomorrow. outside the central bank in albania we need to take all efforts for a further development of the financial markets and other transmission channels. we cannot do this on our own. in this respect we should establish a deeper constructive collaboration with other national institutions. we should elaborate with the ministry of finance and the parliament on the legal issues for strengthening the central bank β s
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been extended to other areas, such as the review of the basel committee core principles for effective supervision, in which hong kong is heavily involved. successful implementation of basel ii depends not just on the standard - setters and the regulators, but also on the banks themselves. the enthusiasm with which the hong kong banking community has taken to basel ii has been impressive. as a senior member of this community, our discussant today is particularly well equipped to provide the perspective from the banks. we are fortunate in having secured david eldon β s presence today. after more than 40 years in banking, many of them in hong kong, he is about to retire from the field. he is thus currently much in demand among his many friends within the financial community, who wish to fete him on his retirement. he is also receiving bookings in his new, risk - taking career as popular singer and entertainer β a field in which we wish him every success. i take this opportunity to pay tribute to david for his outstanding contributions to hong kong during difficult and challenging times, not just in the financial sphere, but also in the many community and charitable activities in which he is involved. ladies and gentlemen, it is an honour to welcome governor jaime caruana as speaker, and mr david eldon as discussant. i now have much pleasure in inviting governor caruana to deliver the seventh hkma distinguished lecture.
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##ing including through arrangements for independent audits, and a robust taxonomy for the market and bonds. the announcement in this year β s union budget referring to mobilisation of resources via β green bonds β is also expected to enable a price anchor for esg bonds in due course. 27. there is a limited investor base for capital bonds issued by banks in india. this has resulted in indian banks accessing global markets for raising capital. while any issuer, including banks, will naturally search for the market where they can most efficiently raise funds, there is a need perhaps to look at factors which are impeding domestic appetite for such bonds and whether the factors are aligned to international norms / standards. e. price transparency 28. the importance of high - quality and timely information on financial markets is basic to the development of the market. most of you will be aware that in the domestic government securities market, information about every single trade is disseminated in near - real time ensuing the highest standards of transparency. there has been feedback from market participants about the need for improving the timeliness and integrity of data on primary and secondary market transactions in the corporate bond market. this is arguably a low hanging fruit which we can aspire for. it has also been highlighted that there is a need for adoption of uniform valuation methodology across investors. valuation by an independent benchmark administrator would be ideal. conclusion 29. let me conclude now. we have made impressive progress in the development of the corporate bond markets - the market is large and growing ; the issuer base is expanding ; product diversity and sophistication are developing ; secondary volumes are low but growing ; and market infrastructure is the best in the world. efforts need to focus on improving complementary β repo and derivative β markets, diversify the investor base, both domestic and global, and improve access of borrowers at the lower end of the credit spectrum. beyond this, market development and improvements will remain a continuous exercise. as much as we need to take these steps, it will serve us well to temper our expectations on the degree of liquidity in secondary corporate bond markets. if international experience is anything to go by, the best we can achieve may be well short of the liquidity we are used to in government bond markets or equity markets. thank you.
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delighted to have you with us and look forward to hearing you. bis central bankers β speeches
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to real estate credit only. it covers all the financing modes utilized for the development of the real estate industry such as equity financing, bond financing, credit financing and trust financing. like the development of other commodity markets, the development of china β s housing market must resolve the problems of final effective market demands and the demand for capital in the process of commodity production. the availability of working capital in the process of commodity production depends on whether the final effective demands exist. in my opinion, the problems of the current real estate finance in china do not mainly revolve on the credit policy for the real estate industry, instead they include the following 2 issues : first, there is not a risk separation mechanism in shape for the financing modes of the real estate industry. most of the risks are concentrated in banks ; second, the housing monetarization reform has not been completed yet. we are still lacking an appropriate solution that shall properly deal with the relationship between carrying out the housing monetarization reform and ensuring the basic living standard of the general public. this leads to some problems yet to be resolved in respect of income allocation, which shall have a negative impact on the effective demands for housing commodities. the former belongs to financial policy issues, while the latter belongs to housing policy and income allocation policy issues, but the latter has great impact on the safety of financial activities. we shall analyze the effective demands in the market as well as the effectiveness of various financing modes given the status quo of income allocation. we shall make research on the real estate finance in terms of the match between risk and return. the real estate industry is a capital intensive industry. prior to world war ii in the 20th century, the real estate market in various european and american countries were dominated by house leasing and tenancy. after world war ii, the purchase of houses was on rise and gradually became the predominant trade form in the market. however, nowadays tenancy and selling of houses still co - exist in the market in these countries. thanks to the promotion of housing mortgage loans, ordinary residents are now able to have access to the house purchase market. however, if the mortgage loans are improperly dealt with, they could bring about financial crises such as the crisis of the thrift and loan institutions in 1980s in the united states. maintaining the co - existence of house tenancy and selling is not only a method to satisfy the housing needs of the low - income people, but also a prerequisite to maintain the free mobility of the workforce.
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in a tightening phase of the interest rate cycle. while price stability remains the primary focus of monetary policy, the bank has indicated that this objective will be pursued in a manner so that economic growth outcomes are not unduly undermined. as we explained in the july mpc statement, monetary policy is on a β gradual normalisation path β, which will be highly data - dependent. the sarb remains committed to its mandate of maintaining price stability in the interest of balanced and sustainable economic growth in south africa. in this regard, it is important to note that despite the 75 basis point increase in the repo rate since the beginning of the year, the real repurchase rate is still marginally negative thus ensuring that monetary policy remains supportive of the domestic economy. 3. the new financial services regulatory regime in south africa the great recession, which began in 2008 has shown that imbalances between the real and financial sectors of the economy could increase the vulnerability of the financial system. in addition, with hindsight, we now know that such vulnerabilities may not become evident solely through the supervision of individual institutions. for this reason, macro - prudential aspects of financial stability have gained traction in policy circles around the globe. south african policymakers have also engaged in a process of reviewing and revamping the regulation of the financial sector. in february 2011, the minister of finance announced that south africa would be shifting to a β twin peaks β model of financial regulation. at the end of last year, the national treasury published the draft financial sector regulation bill ( twin peaks bill ), which provides some detail around the architecture of the twin peaks model. in terms of the twin peaks model, a prudential authority ( pa ) will be established within the sarb to oversee the safety and soundness of banks, insurers, financial conglomerates and key financial market infrastructures. the fsb will become the market conduct authority ( mca ) and will promote integrity and efficiency of financial markets in order to safeguard the interests of south african consumers of financial services. it goes without saying that co - ordination between the two regulators will be crucial to ensure the overall stability and robustness of the south african financial system. the exact date of twin peaks implementation will be finalised once the necessary legislative processes have taken place. it is envisaged that the twin peaks model of regulation will come into effect by the end of 2014 although this is dependent on the parliamentary process and the final enactment of the bill
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now i β d like to end by reaching out and passing the baton on to you. with a five - point call to action : 1. cooperate β only together we can make a difference 2. manage the risks 3. seize the opportunity 4. be inspired by the sustainable development goals 5. start now!, and now that this is a room full of individuals that have already started : continue! thank you.
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the risks and opportunities related to sustainability, it is less clear how it should go about this. usually, the first thing companies want is a strategy. now, if we want to combat climate change, if we want a sustainable economy. wouldn β t it be wonderful if individual companies β strategies would somehow be aligned with a much broader world strategy? wouldn β t it be wonderful if such a strategy for the world existed? if we are all in the pursuit of happiness, if all men are created equal, not just those of us living today, but all men and women that will come after us, shouldn β t we urgently formulate a strategy for the world? fortunately, the world does already has such a strategy : the sustainable development goals of the united nations. and, keeping that in mind, a suggestion i would give to companies is : innovate, while using what β s already there. join a platform, cooperate, form strategic alliances ; get an overview of what β s happening ; connect with others. today is a great example of just that. for example, the netherlands banking association has recently launched a public consultation document proposing how the dutch banking sector can support a number of the un sustainable development goals. businesses could follow suit by launching a similar initiative. we cooperate on this matter as well : the dutch central bank is part of the g20 green finance study group and of the european high level expert group on sustainable finance. this expert group is mandated by the european commission to come up by the end of this year with nothing less than a comprehensive strategy to turn eu financial regulation green. it will publish its interim report by means of public consultation by the end of next month. if you want to directly influence eu green finance strategy and policy please don β t hesitate to send in your comments. using our convening power on a national level, the dutch central bank created a national cross - sectoral platform for sustainable finance, bringing together representatives from all over the financial sector as well as the relevant ministeries, and stimulating the creation of working groups that take on a range of sustainable finance issues. one of these working groups works on sdg impact measurement and consists of a several dutch insurers, pension funds and banks together with major multinationals such as philips and unilever. their goal is to develop a methodology that will allow them to assess the impact on the sdgs of any investments they make. if investors around the world start doing this on a large scale, you can
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enough to trigger credit restructuring events. 2 in particular, the paper found that several countries in the region had debt levels above the limits of what could be deemed β tolerable β. the authors also provided evidence of how countries β in latin america and elsewhere β have historically used deleveraging to regain a sustainable path for their external debt. their conclusion is clear : β for debt - intolerant countries, sustaining access to capital markets can be problematic unless debt ratios are quickly brought down to safer levels. to assess how such β deleveraging β might be accomplished, we examine how, historically, emerging market economies with substantial external debts have managed to work them down. to our knowledge, this is a phenomenon that has previously received very little, if any, attention. we analyze episodes of large debt reversals, where countries β external debt fell by more than 25 percentage points of gnp over a three - year period. of the twenty - two such reversals that we identify for a broad group of middle - income countries since 1970, two - thirds involved some form of default or restructuring. only in one case β swaziland in 1985 β was a country sources : world bank, moody β s and imf ( weo, april 2012 ). reinhart, c., m. savastano and k. rogoff, ( 2003 ), β debt intolerance β, brookings papers on economic activity 1. bis central bankers β speeches able to bring down a high ratio of external debt to gnp solely as a result of rapid output growth. β thus, in the early 2000s, there were widespread expectations that a default would occur. overall, the history of latin america in the 2000s did not go as expected. during the first decade of the twenty - first century, latin american countries succeeded in lowering their levels of external debt by nearly 20 percent of gdp. the current - account balance, which had exhibited a secular deficit during the 1980s and 1990s, posted a surplus of nearly 2 % of gdp during the 2000s. a review of the fiscal ledgers yields similar numbers. what happened? what was the miracle? in a word : china. china β s strong growth began to permeate international commodity markets early in the decade, leading to an enormous increase in the region β s terms of trade beginning around 2004. this major increase in income enabled the economies to deleverage without having to make large adjustments to expenditure or output. also, the real exchange rate appreciated
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cyprus amongst the most liquid banking sectors in the union, where the average lcr amounts to 175 %. at the european level, including cyprus of course, the banking sector faces a number of challenges. the profitability prospects of banking both in cyprus as well as across the eu remain challenging. but why is profitability an area of interest for regulators? a sustainably profitable banking sector is necessary to build buffers to absorb unexpected losses, like the ones we have seen recently due to the pandemic. it also enhances further the ability to provide viable lending to businesses and households alike, contributing to the efficient functioning of the real economy. 1 / 5 bis - central bankers'speeches under this light, banks'profitability is high on the agenda from a regulatory perspective. the level of return on equity of european banks is shy on their cost of capital and below the respective level of other jurisdictions, like banks in the united states. a low return on equity compared to the cost of capital is a european structural issue and raises the need for formulating appropriate action plans, both by regulators and banks alike. if we want these actions to have an impact, we must first understand the factors that drive this weak performance. overcapacity of the banking sector is a dominant factor. according to most indicators there are too many banks in europe relative to the size of the market. this implies that there is significant scope to benefit from consolidation without exacerbating the problem of " too big to fail " through the creation of mega banks. moreover, the banking union which has ended a prolonged supervisory divergence enhances the capability of reaping these benefits in a more efficient manner. credit risk is inherent in banking and is considered a major challenge for the european banking sector. for countries that have a high level of legacy non - performing loans like cyprus, this risk requires particular attention, despite the tangible improvement achieved in the last years. a weaker than expected economic environment may result in deterioration of asset quality. it is therefore important for our banks to continue the enhancement of the quality of the asset side of their balance sheets, bridging the gap with our european peers. european banks are also facing emerging risks beyond the traditional business model risks i just mentioned. i will focus on the three i consider as the most prominent ones. the first one is the exposure to climate - related and environmental risks, which will be one of the main concerns for both supervisors and banks in the years to come. the transition to
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. the banking system continues to be well capitalised, with sound financial parameters. but, the banking system β s lending continues to reflect the private sector β s weak demand for funds, resulting from the downward credit demand and added prudence by banks when lending. * * * new available data support our assessment for gradual growth of the economy in the quarters ahead. the transmission of the monetary stimulus, payment of arrears by the government to businesses, and improvement of confidence are expected to boost consumption and investments in albania. also, the steady recovery of the global economy is expected to boost foreign demand and its contribution to aggregate demand. the albanian economy, however, is expected to operate below its potential in the period ahead. below - potential economic growth and low inflationary pressures from the foreign sector are expected to be reflected in low inflation rates, in the short - term period. at the end of discussions, the supervisory council decided to keep the key interest rate unchanged, at 2. 75 %. this policy will help provide the requisites for complying with the inflation target and is consistent with our projections for inflation rates returning within the target band in the medium term. in this context, i avail myself of this opportunity to underline that the bank of albania expects a better response by the banking system with regard to lending. this response should take into account, among others, the positive prospective of economic development in albania and the stimulating policies applied by the bank of albania. based on the available information, the bank of albania deems that expected economic and financial development requires maintaining the easing monetary policy stance in the quarters ahead. bis central bankers β speeches
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ardian fullani : preconditions for inflation targeting in albania ( closing speech ) farewell speech by mr ardian fullani, governor of the bank of albania, at the open forum β preconditions for inflation targeting in albania β, tirana, 1 - 2 december 2005. * * * ladies and gentlemen, i want to conclude this forum by saying first and foremost that we have had two very productive days! it was a great pleasure for me to listen to your views, constructive suggestions and fruitful ideas concerning monetary policy in albania. i thank you very much for all your contributions! at the end of this forum i would like to give my personal views on the road ahead for bank of albania. but i will first put some developments in perspective. since 1990 and until today in 2005, the albanian economy has been transformed from an isolated centrally planned to an open market economy. before 1990 there use to be only a state mono - bank. nowadays, there is a central bank with a network of commercial banks and other financial institutions. in 2000, the central bank began to fully rely on indirect instruments for conducting its monetary policy. as you can see, bank of albania has a relatively short history of central banking. in my opinion, the central bank is moving in the right direction. but time has come to decide how to proceed in the near to further future. this has been the main reason for organizing this open forum. for our country, an ultimate objective is the accession to the european union. accession to the european union implies a full membership. as a consequence, it implies eventually the adoption of the euro after the accession date. eu accession will ultimately induce entering into erm ii, and thereafter adopting the full legal tender of the euro. there will be an automatic adherence to the monetary policy of the european central bank. however, these developments still belong to the future. having this eu - time path in mind, we are aware of the changing world surrounding us. albania as a small and open economy is part of this dynamic world. today, we observe a rapid globalization, liberalization, continuous financial deepening and broadening, with new financial innovations in a always more interconnected world. albania is influenced by these developments on a day to day basis. albania therefore, needs a daily monitoring of new developments and it needs to cope with these international challenges. before reaching the ultimate eu - accession objective in this constantly changing world, there is still a long distance to cross. as it concerns
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toshihiko fukui : growth, integration and monetary policy in east asia opening speech by mr toshihiko fukui, governor of the bank of japan, at the 14th international conference hosted by the institute for monetary and economic studies, bank of japan, tokyo, 30 may 2007. * i. * * introduction good morning, ladies and gentlemen. it is my great honor to address the 14th international conference hosted by the institute for monetary and economic studies. on behalf of my colleagues at the bank of japan, i welcome all the distinguished guests from central banks, international organizations, and academia. the theme of this year β s conference is β growth, integration and monetary policy in east asia. β ii. east asia β s growing integration into the global economy over the past decades, east asia has been one of the most rapidly growing regions in the world economy. although the region suffered from a temporary setback owing to the financial crisis of the late 1990s, it has exhibited an impressive economic recovery. the average annual growth rate of east asian emerging economies since 2000 reached 7 percent, substantially exceeding that of industrialized economies. since the crisis, there has been a considerable improvement in economic fundamentals in the region. large stocks of foreign exchange reserves have accumulated, balance sheets of both the corporate and banking sectors have improved, and structural reforms in various areas have proceeded, all of which have contributed to making east asia more resilient to external shocks. it is highly likely that east asia will continue to play a major part in the sustained growth of the world economy. east asia β s high growth has been accompanied by its deepening economic integration with the world. the integration is taking place at both the inter - regional and intra - regional levels. it is reported that asia β s share of world trade more than doubled during the past three decades. intra - regional trade in east asia also increased considerably. the share of east asia β s intra - regional trade is comparable with the nafta, although it is slightly lower than that of the eu. the increasing trade is a reflection of developments in the supply chain wherein each country specializes in the optimal parts of the global production network based on its resource endowment and comparative advantages. meanwhile, it is notable that the rapid emergence of china is adding further momentum to the growth dynamism of the world economy in various ways. first, china β s buoyant domestic demand provides more business opportunities for the rest of the world. china β s role in the
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market economies, many countries, such as thailand, korea, russia and brazil, suffered quintessential foreign currency funding problems. meanwhile, we saw another type of crisis : if a classic financial crisis is precipitated by bank runs, the new type of crisis results from impairment of market functioning and such crisis could be termed a β market run. β when long term capital management ( ltcm ) almost collapsed last autumn, liquidity dried up in many markets of the developed countries as many market participants dumped their assets in β fire sales β and flight to quality became ever more pronounced. if we recognize that an important function of financial markets is to price financial assets and transfer risks at that price, i. e. β price discovery, β the impairment of such a function is threatening to market participants. why are international crises becoming more pronounced? having said that the four features of recent international financial crises are the interactions between macroeconomic imbalances and the functioning of the financial system, the volatility of short - term capital flows, international contagion, and diversity in the manifestation of crises, i would like to spend some time to discuss why these changes might have occurred. i do not have a definite answer, but i agree with many experts who point out that financial innovation and globalization, enabled by advances in information technology, had a role. for example, cross - border flows of capital have increased more than threefold in the last ten years. what strikes us more is that the cross - border transfer of risks increased rapidly through derivatives transactions. as a hypothetical case, if we think of an investment in a bond denominated in thai baht issued by a thai firm, the investor faces various risks : foreign exchange risk, credit risk of the firm, interest rate risk, etc. derivatives enable investors to unbundle these risks packaged in a bond into component risks β e. g. the risk that the credit standing of the issuing firm or the thai baht exchange rate falls below a certain threshold β and transfer and / or assume them at will. financial innovation has enabled market participants to engage in these operations at significantly lower costs, and this has resulted in an expansion of transaction volumes. the expansion in transaction volumes draws the attention of market participants to the need of more harmonized rules underlying financial transactions β payment and settlement systems and accounting standards β and encourages reforms therein. these reforms push the rules in the direction of standardization, which in turn, lower the costs of transactions and leads
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β quantum leap β, the radical improvement that i would like. europe, as an historic construction, has often been able to make radical progress during times of difficulty and crisis. the governing council of the ecb is ready β within the scope of its responsibilities β to help europe to make essential, new progress. this supposes of course that each of the european partners takes all its responsibilities which are, today, fully of a historic nature. would you like to be able to inspect member states β budgets prior to their adoption by national parliaments as the commission proposes to do? each institution has its own responsibilities. the ecb is very closely involved in the work of the commission and the eurogroup. i support the commission β s proposal, which i consider to be perfectly aligned with the goal of improving governance in the euro area. i have noticed some negative reactions, in particular in france, and i don β t understand this, especially in a country that has a tradition of favouring a strong β economic governance β. can non - democratically elected bodies grant themselves a supranational inspection right? the governments of the eurogroup all stem from a democratic process! they are the ones who, following any clarifications from the commission β and where necessary from the ecb β take the decisions. economic and monetary union includes a very close supervision and, when necessary, injunctions and sanctions imposed collectively by the governments participating in the union. we are interdependent, which means that bad management on the part of a single member leads to problems for all of the others. austerity plans are multiplying in europe but certain economists are warning against an overzealousness that could jeopardise growth. what is your view on this? when a household systematically spends more than it earns, so that its debt rises exponentially, its situation is clearly untenable. correcting this situation demonstrates both wise and sound judgment. it is also wise and sound judgment for a country to return to a sustainable fiscal situation in the medium term. there is a semantic issue here. what you call austerity plans i call plans for a progressive return to a sound fiscal situation. in any case these wise policies are favourable to growth since they increase the confidence of households, businesses and investors. today this confidence is β as i have said β essential for the recovery. the oecd has just raised its growth estimates for 2010 and 2011. do you share this view
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expansion are clearly on the downside. in particular, heightened geopolitical tensions could dampen business and consumer confidence. risks of insufficient structural reforms could weigh on the business environment. from a high of 3. 0 % toward the end of 2011, inflation in the euro area has been on a downward path for a considerable period of time. in august, inflation was estimated to have reached a low of 0. 3 % but has been revised later to 0. 4 %. we expect inflation to remain at low levels over the coming months, before increasing gradually during 2015 and 2016. given the prolonged period of low inflation that we have already experienced, we will closely monitor risks to price developments looking forward. we will focus in particular on the bis central bankers β speeches possible repercussions of dampened growth dynamics, geopolitical developments, exchange rate developments and the pass - through of our monetary policy measures. tltros, the september measures, and the transmission mechanism before turning to our latest monetary policy decisions, let me stress that the ecb has done a lot over the past three years to safeguard price stability. we successfully fought the confidence crisis in the euro that raised interest rates to abnormal levels. we provided the euro area banking system with unprecedented funding. we have continuously lowered our policy rates. yet, against the backdrop of a persistently weak inflation outlook, a slowing growth momentum, and subdued monetary and credit dynamics, we decided in early september to adopt a number of additional monetary policy initiatives which will complete and complement the measures already announced in june. first, we lowered the key ecb interest rates by 10 basis points to their effective lower bound. the main refinancing rate now stands at 0. 05 %, and the deposit facility rate at β 0. 20 %. second, we announced further measures to enhance the functioning of monetary policy transmission, support lending to the real economy and provide further monetary accommodation given that we have now reached the lower bound. restoring a functioning transmission, notably in bank lending, is instrumental in ensuring that the monetary policy stimulus that has been introduced reaches the final borrowers and thereby supports real incomes, spending and price formation. following this announcement, under our abs purchase programme ( abspp ) we will soon start purchasing simple and transparent securities with underlying assets consisting of claims against the euro area non - financial private sector. we will also start purchasing covered bonds issued by euro area mfis under a new covered bond purchase programme ( cbpp3 ). these measures
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targets can be met. but if growth is slower, the government will have to decide whether to cut the growth rate of government spending, or rather forgo some of the planned tax rate decreases, or to do some of both. this will be a difficult decision. in making it the government will have to weigh the benefits of maintaining government programs in a variety of areas, including education, against the benefits of cutting taxes. in international comparisons, israel is typically somewhere around 25 β 30 in the country rankings as a place in which to do business. we seem to be unusual in the variance of the rankings of the individual components of the indices : we do well on the ease of financing and the openness of the economy ; we do not well on the complexities of the tax system ; and we do very badly on bureaucracy. i fear also that in years to come we will do much worse on the corruption index. if we are to sustain growth, we need to reduce bureaucracy and fight the corruption that so often accompanies it. these too are not easy tasks, but they are essential for the wellbeing of israeli society. israel β s economic record is all the more remarkable for having been achieved despite our not being at peace with all our neighbors. even in the last five years, we have twice fought limited wars against neighbors. this economy, with its dynamism and creativity, could grow much faster if we were to achieve peace with our neighbors β and there are of course much better reasons than economic growth to hope and work for peace with our neighbors. this is an ambitious agenda. if we were to achieve it, we could within one or two decades find ourselves living in one of the most advanced economies in the world. is it possible? yes, entirely. if you wish it, it is no legend β but it will take extremely hard work and determination to turn the wish into reality. thank you.
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on society. i see and hear publications that those with the main adverse impacts are youth and students. in actuality, the reality is more complicated. the coronavirus of unemployment negatively impacted the entire economy! it did so without distinguishing between age, geographic location, the self - employed, wage earners, women, men, arabs, ultraorthodox, and essentially everyone. i see in this a very important issue, from the economic as well as the social perspectives. let me give 2 examples on which to focus : the population aged 55 and older still have 10 β 15 years of work ahead, and a considerable percentage of them have not yet returned to the labor market. it should be remembered that this is a population for whom it is often the peak of their lives and the peak of their careers. there is a real concern that without government assistance in training they will not be able to return to the labor market in the years remaining in their career. we are liable to lose here 15 years of work and productivity of tens of thousands of workers. another point worth remembering is that unemployment has reached the center of the country, and can be seen today from hadera to gadera, an area that was less exposed to unemployment β the middle of the country, which contains 41 percent of israel β s population, today contains 55 percent of the unemployed in israel. therefore it is important to us, that beyond holding training, we should increase the flexibility of the ability to return to the labor market. the mechanism for that exists today, and it should be maintained and even developed further. thus, for example, an employee who wants to, and can, return to work on a part - time basis will be able to collect partial unemployment benefits. the worker β s economic status will improve and the burden on the government and the budget will decline. it is clear to us that there are more than a few employers who will not immediately return to 100 percent activity and these abilities to increase flexibility are very important. in addition, it is also important to stick to a model of maintaining employment, which has already been discussed a lot, and with it to increase the ability to incentivize employers to retain employees. there is a concern that even after the vaccine we will remain for some time with a considerable amount of uncertainty in the labor market, and it is not impossible that demand for workers will still be low. the range of these steps and the focus on the populations that need assistance will help to
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. second, it established a new arrangement for loans of 500 billion yen for small - lot investments and loans ( 1 million yen or more but less than 10 million yen ). third, the bank raised the ceiling for the outstanding balance of loans under the existing arrangement from 3 trillion yen to 3. 5 trillion yen. and fourth, with a view to support financial institutions β efforts also from the side of foreign currency funds provisioning, the bank established a new arrangement for providing loans in u. s. dollars to the equivalent of 1 trillion yen, using the u. s. dollar reserves held by the bank. details of the measures will be examined at the next monetary policy meeting to be held on april 9 and 10, 2012. as a result of the measures, the outstanding balance of loans under the arrangements will increase from 3. 5 trillion yen to 5. 5 trillion yen. up to now, i have described the bank β s efforts to overcome deflation and discussed things to keep in mind by focusing on the policy decisions made recently. in the actual conduct of monetary policy, based on the outlook for economic activity and prices, it is necessary to respond carefully and decisively by identifying the timing and measures while monitoring a range of conditions and possibilities. the bank will continue to do its utmost as the central bank by pursuing powerful monetary easing to overcome deflation, ensure financial market stability, and provide support to strengthen the foundations for economic growth. concluding remarks : the economy of chiba prefecture in my conclusion, let me touch on the economy of chiba prefecture. the great east japan earthquake in march 2011 caused tremendous damage to the region, including fires, tsunami, and soil liquefaction. one year has passed since the disaster occurred. let me express once again my heartfelt condolences to the victims of the disaster and their families. i also salute the local citizens, firms, and governments for their efforts to achieve restoration and reconstruction. bis central bankers β speeches chiba prefecture is bounded by water on three sides, and it is blessed with mild weather and rich natural surroundings. it has a strong agricultural sector with an array of crops that rank first nationwide in terms of output, including peanuts, japanese radishes, green soybeans, and japanese pears, and its agricultural output as a whole ranks third in the nation. chiba prefecture also ranks high in terms of fisheries, with plenty of fishing ports, including the nation β s largest, in the city of choshi. the coastal area contains the
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macroprudential perspective is indispensable for maintaining financial stability while allowing for capital mobility. the chiang mai initiative β a multilateral currency swap arrangement among asian countries β and cross - border usage of collateral assets, which are eligible instruments for central banks, are notable examples of regional financial coordination to complement macroprudential policy of each country. in addition to global financial coordination, when considering macroprudential policy, global financial regulation is also a key factor. if the financial intermediation function of internationally active banks subject to macroprudential regulation is stable, then financing for development is also expected to be stable in emerging countries. during the asian financial crisis, u. s. and european banks filled lending gaps that japanese banks had left as a result of their withdrawal from the cross - border lending arena, whereas during the recent global financial crisis, these roles were reversed. this kind of substitution dirk schoenmaker ( 2011 ), β the financial trilemma, β economic letters, 111, 57 β 59. bis central bankers β speeches by internationally active banks may have somewhat mitigated the shortfall in financing for development in emerging countries. however, it β s not beyond the realms of possibility that all internationally active banks might cut lending simultaneously in the next crisis. it is desirable that as many internationally active banks as possible constantly maintain their lending without severe disruptions. to this end, global regulations are expected to play a crucial role from a longer - term perspective. finally, in relation to global regulation, let me share my views on an ongoing issue. last december, the bcbs ( the basel committee on banking supervision ) published a consultation document entitled β revisions to the standardised approach for credit risk β. in this document, it is proposed that the risk weight for corporate exposures, project finance, and equities be heightened. not a few market participants have sent comment letters to the bcbs, pointing out that a significant increase in risk weight leads to a decrease in banks β capital ratios, and the potential impact on financing for development can be huge. while i understand that the revisions proposed by the bcbs were made to reflect the experience of the last global financial crisis, a thorough cost - benefit analysis including an examination of the impact on financing for development is necessary. conclusion as the japanese case shows, the productivity effect of social capital is significant, and stable development finance supported by price stability contributes to an improvement in potential economic growth. in order for emerging countries to
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the speed of technological change and a growing reliance on third - party, technology - based services is increasingly introducing new risks and vulnerabilities to the sector. to begin to address this, the fsb is focused on achieving greater convergence in areas such as regulatory reporting of cyber incidents, and we will deliver those recommendations to the g20 in october. banking reforms β an assessment to date next month, the fsb will release the final report of its most ambitious evaluation of the effects of post - gfc banking reforms. the report on too - big - to - fail ( tbtf ) reforms is the fsb β s most analytically rigorous evaluation carried out to date. when looking at these reforms, indicators of systemic risk and moral hazard moved in the right direction, and effective tbtf reforms seem to have brought net benefits. in fact, at the beginning of the covid event, we observed a far more resilient banking sector than that which entered the 2008 crisis. yet, if the benefits of tbtf reforms are to be fully realized, there remains further work to do. the fsb outlines this work in its forthcoming evaluation. further analysis of such reforms, international financial standards, agreed g20 and fsb commitments, recommendations, and other initiatives will provide us with better insights into whether the reforms are working as intended or conflict with one another, are structured efficiently, and if they are in need of refinement. transitioning away from london interbank offered rate ( libor ) - 10 one last particular item to mention : libor. transitioning away from libor is a significant undertaking that the fsb has been engaged in for almost a decade. the fsb set forth a roadmap for clear actions that financial firms and their clients can take to ensure a smooth transition away from libor. 3 this year, the fsb will report to the g20 on ongoing progress and issues related to the libor transition, including supervisory issues related to the benchmark transition. conclusion we faced a confluence of events over the past year that demanded international coordination in several key areas, and that is precisely why the fsb was created more than ten years ago ; a beacon at the end of another fateful march. the span of territory and topics covered can admittedly seem bewildering at times β i β ve covered only a few of them today. yet as the fsb builds its agenda for each coming year, the process is much like a pointillist painting.
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the recent softness in consumption suggests that this net wealth erosion has continued to weigh on household spending. that said, it is important to recognize that the extraction of equity from homes has been a significant support to consumption during a period when other asset prices were declining sharply. were it not for this phenomenon, economic activity would have been notably weaker in the wake of the decline in the value of household financial assets. in the business sector, there have been few signs of any appreciable vigor. uncertainty about the economic outlook and heightened geopolitical risks have made companies reluctant to expand their operations, hire workers, or buy new equipment. executives consistently report that in today β s intensely competitive global marketplace it is no longer feasible to raise prices in order to improve profitability. there are many alternatives for most products, and with technology driving down the cost of acquiring information, buyers today can ( and do ) easily shift to the low - price seller. in such a setting, firms must focus on the cost side of their operations if they are to generate greater returns for their shareholders. negotiations with their suppliers are aimed at reducing the costs of materials and services. some companies have also eschewed the traditional annual pay increment in favor of compensation packages for their rank - and - file workers that are linked to individual performance goals. and, most important, businesses have revamped their operations to achieve substantial reductions in costs. on a consolidated basis for the corporate sector as a whole, lowered costs are generally associated with increased output per hour. much of the recent reported improvements in cost control doubtless have reflected the paring of so - called " fat " in corporate operations - - fat that accumulated during the long expansion of the 1990s, when management focused attention primarily on the perceived profitability of expansion and less on the increments to profitability that derive from cost savings. managers, now refocused, are pressing hard to identify and eliminate those redundant or nonessential activities that accumulated in the boom years. with margins under pressure, businesses have also been reallocating their capital so as to use it more productively. moreover, for equipment with active secondary markets, such as computers and networking gear, productivity may also have been boosted by a reallocation to firms that could use the equipment more efficiently. for example, healthy firms reportedly have been buying equipment from failed dot - coms. businesses may also have managed to eke out increases in output per hour by employing their existing workforce more intensively
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fadilj bajrami : continued cooperation with central banks of the western balkans address by mr fadilj bajrami, vice governor of the national bank of the republic of macedonia, on the occasion of the first programme steering committee meeting of the ecb regional cooperation programme with central banks in the western balkans, tirana, 17 april 2014. * * * honorable governor fullani, honorable governor hamza, dear mr. sturm, dear mr. rumbold, representatives of central banks, ladies and gentlemen, it is my honor and pleasure to be here with you in tirana on the occasion of the first meeting of the steering committee for the joint cooperation project between the european central bank and the national central banks of the eurosystem, and the central banks of the western balkans. as my colleagues have already noted, most of the activities of the project will be devoted to identifying the needs of the central banks of albania and kosovo in the process of their joining the european system of central banks, by strengthening their capacities and compliance with the standards of the central banking in the eu. last year, the national bank of the republic of macedonia successfully implemented such a project in cooperation with the ecb and the eurosystem. the project implementation has clearly identified the changes that the nbrm should focus on during its preparations for accession to the european system of central banks. namely, the final report on the needs analysis programme for the national bank of the republic of macedonia contained 138 recommendations addressing the gaps in terms of the eu benchmarks established in 11 areas of central banking. it is my pleasure to point out that some of them have already been implemented, and some of them have been incorporated in the strategic plan of the nbrm, that is in the national bank β s plan of activities for this year. however, the overall implementation of the recommendations will require additional technical assistance in terms of experience and knowledge of the ecb and the national central banks of the eu. therefore, the inclusion of the nbrm in this regional project, which aims to facilitate the preparations for the implementation of the recommendations we received in the report on the needs analysis programme for the nbrm, by establishing a plan for their implementation, is very important. it will be the basis for the preparation and the implementation of a subsequent project, as well as the basis for further planning and promotion of the bilateral cooperation with the central banks with which the nbrm already has a traditional cooperation, but also for
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bank of japan β s july report of recent economic and financial developments1 bank of japan, communication, 19 july 2000. * * * the bank β s view2 japan β s economy is recovering gradually, with corporate profits and business fixed investment continuing to increase. with regard to exogenous demand, net exports ( real exports minus real imports ) continue to follow a moderate upward trend due to steady developments in overseas economies, and public investment is picking up reflecting the progress in the implementation of the supplementary budget for fiscal 1999. as regards domestic private demand, business fixed investment is increasing. the recovery in private consumption continues to be weak as a whole through lack of notable improvements in employment and income conditions, although there are somewhat positive signs in some indicators. housing investment is mostly unchanged. reflecting such developments in final demand, industrial production is increasing. corporate profits and sentiment continue to improve, and the number of firms that take positive action, such as increasing the amount of fixed investment, is increasing, especially in high - growth sectors. income conditions of households still remain severe, but the decreases in the number of employees and in wages are slowing, while regular and overtime payments as well as new job offers are increasing in line with the recovery in corporate activities. as for the outlook, public investment is likely to start decreasing in the near future, but net exports are expected to continue increasing gradually, reflecting the expansion in overseas economies. in the corporate sector, firms still strongly feel that they have excess equipment and that they should reduce their debts to restore financial soundness. however, it is very likely that fixed investment in highgrowth sectors, including those related with information technology services, will increase as corporate profits continue to recover. moreover, an improvement in corporate profits will increase household income and this in turn is expected to boost private consumption. however, the pace of recovery in household income will be modest for the time being, since firms β perceptions of excess employment still persist, and thus significant changes have not been observed in their efforts to reduce personnel expenses. overall, the economy is likely to recover gradually led mainly by business fixed investment, unless there are major adverse external shocks. in addition, the favourable financial environment created partly by the bank β s monetary easing is expected to continue underpinning the economy. with regard to prices, import prices are decreasing slightly, reflecting a temporary decline in international commodity prices such as crude oil prices. domestic wholesale prices, notwithstanding the fall in prices of electric machinery, are unchanged mainly due to the rise
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triggered liquidity stress in related derivatives markets. an increase in initial margin requirements has greatly increased firms β liquidity needs, making it more difficult for some firms to hedge. this recent episode raises the question of whether margining practices, including those between the clearing member and their clients, may be too procyclical. financial markets remain vulnerable to further corrections that could potentially be triggered by an escalation of the war, or a faster - than - expected pace of monetary policy normalisation. conclusion let me conclude. sound financial regulation and greater resilience have helped the european financial system navigate both the pandemic and the economic fallout stemming from the russia - ukraine war. yet sizeable challenges remain. to address financial stability risks, we need to implement targeted macroprudential policy instruments. at the same time, amid global inflationary pressures and risks to growth, we are walking on a narrow path as we strive to deliver on our price stability mandate. but rest assured, we remain fully committed to stabilising inflation at our 2 % target over the medium - term.
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have been more cautious than in the global financial crisis and, to date, phenomena comparable to those seen in the past have not occurred. in any event, the results of this exercise serve to show the systemic importance of this vulnerability and the need to be prepared to provide a sufficient, internationally coordinated response, depending on how the pandemic develops at international level. the impact on general government a system - wide scenario analysis of large - scale corporate bond downgrades, esrb technical note, 23 july 2020. during the current crisis, the activation of automatic fiscal stabilisers associated with lower tax receipts and increased cyclical expenditure ( for instance, on unemployment benefit ), along with the effect of the discretionary measures adopted by the authorities to mitigate the impact of the crisis, is leading to very significant increases in budget deficits and public debt in all countries. initially, there were also tensions in european public debt markets, which led to a sharp rise in sovereign spreads. however, the decisions of the ecb and the reiteration by its governing council of the commitment to do everything necessary to support all citizens of the euro area through this extremely challenging time, ensuring that its monetary policy is transmitted to all parts of the economy and to every country, have alleviated these tensions. likewise, the response of the european union, which has resolved to make significant public funds available to member states with which to mitigate the impact of the crisis and reactivate their economies, has also been crucial. in the case of spain, the pandemic has struck the economy at a time when the general government accounts still displayed certain elements of vulnerability. in particular, despite uninterrupted robust growth in recent years, at the end of 2019 the public sector structural deficit stood above 3 % of gdp and the public debt ratio above 95 % of gdp. moreover, according to banco de espana projections, in the next few years the budget deficit may exceed 10 %, while the public debt - to - gdp ratio may stand at around 120 %. following its initial increase, ecb and european monetary policy decisions have kept the risk premium well contained in recent months. however, looking ahead, persistently high levels of public debt would reduce the scope for countercyclical fiscal measures in response to adverse macroeconomic shocks and might even limit the economy β s growth capacity ; in any case, they would expose the spanish economy to a situation of chronic vulnerability to changes in investor sentiment on the financial markets. for all
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monetary policy. having said that, the mid - march package is providing material help now and it will continue to do so. interest rates are lower than they have ever been before and the financial system is flush with liquidity. also helping is the fact that the australian financial system is in good shape. we went into the pandemic with strong balance sheets and high levels of capital in the australian banking system. this means that our financial institutions are well placed to provide the credit that the economy will need. one monetary policy option that has been the subject of public discussion over recent months is the possibility of the rba creating money to directly finance government spending. for some, this offers the possibility of a β free lunch β. the reality, though, is that there is no free lunch. there is no magic pudding. there is no way of putting aside the government β s budget constraint permanently. as i spoke about in a talk last month, it is certainly possible for a central bank to use monetary financing to affect when and how government spending is paid for. depending upon how things are managed, it can be paid for through the inflation tax, by implicit taxes on the banking system and / or higher general taxes in the future. but it does have to be paid for at some point. 3 / 5 bis central bankers'speeches i want to make it clear that monetary financing of the budget is not on the agenda in australia. the separation of monetary policy and fiscal financing is part of australia β s strong institutional framework and has served the country well. the australian government and the states and territories have ready access to the capital markets and they can borrow at historically low rates of interest. at a more practical level, i would like to mention a couple of other areas where the rba has been providing assistance with australia β s covid - 19 response. the first is as transactional banker for the australian government. over recent months the rba β s banking systems have been used to make record numbers of payments, processing the government β s income support to households and businesses. we have done this with around 90 per cent of our staff working from home and it has been a great effort by the rba β s banking and payments teams. the second is meeting the increased demand for banknotes. while covid - 19 has accelerated the shift to electronic payments, there has, paradoxically, also been record demand for banknotes. some people seem to be wanting to keep some extra money at home. the
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10 - year yields. in announcing our yield target, the bank indicated that we are prepared to buy bonds in the secondary market in whatever quantity was needed to achieve the target. to date, overall bond purchases have totalled around $ 55 billion, with most of these bonds bought in march and april. these purchases have had the desired effect, lowering yields and they eased the market dislocation at the time. in the past week or so, we have again purchased bonds, buying around $ 6 billion. we have done this following a few weeks in which the yield on three - year bonds had been trading consistently a little above 25 basis points. the yield is now closer to 25 basis points and we are committed to maintaining the target. in taking the decision in march to target the three - year yield, the board considered the possibility of instead undertaking a regular program of bond purchases β say buying a set dollar amount of bonds each week β as a number of other central banks have done. we chose the yield target for a couple of reasons. the first is that it is a more direct way of achieving our objective of low funding costs. a bond purchasing program would have also lowered bond yields, but it would have done this indirectly, and there would have been challenges in calibrating the required size of these purchases. directly targeting a longer - term risk - free interest rate is also a natural extension of our target for the cash rate, which is the risk - free interest rate at the very start of the yield curve. the second reason is that this target reinforces the forward guidance regarding the cash rate. the board has clearly indicated that it will not increase the cash rate until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2 β 3 per cent target range. given the outlook i discussed earlier, these conditions are not likely to be met for at least three years. so it is highly likely that the cash rate will be at this level for some years and having a target for three - year yields of 25 basis points reinforces this message. so that is our rationale. we have not ruled out a separate bond buying program, or other adjustments to the mid - march package. but for the time being, the board β s view is that the best course of action is to continue with the current package. the board recognises that in the unique circumstances in which the country finds itself, the solutions to the challenges we face lie in areas other than
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currency had been pegged to the au dollar, new zealand β s exchange rate to the rest of the world would have been higher, interest rates would have risen three times already, and our recession would probably have been deeper. the argument is even stronger for other currencies, such as the us dollar. australia and new zealand are not the same, but we are far more similar to each other than to europe or the us. if our currency had been pegged to the us dollar over the past decade, interest rates would have been lower for longer in 2003 and 2004, exacerbating the housing boom ( figure 3 ). some of the challenges of a currency union can now be seen in euro area economies such as ireland, greece and spain, where monetary policy settings have been unable to lean against unsustainable domestic booms, or against the deep recessions that followed. figure 3 policy interest rates in nz, the us, and australia source : bloomberg figure 4 gdp growth in euro area economies source : datastream singapore β s monetary policy regime is sometimes pointed to as an alternative to inflation targeting that has maintained stability in the currency while achieving a track record of low and stable inflation. over the past two years, of course, this has not been the case, with inflation approaching 8 percent in 2008 and prices falling in 2009. over a longer period, it does appear that singapore has generally managed to guide its exchange rate to keep inflation stable. but a range of special factors made this possible β singapore β s extraordinarily high trade ratio, its large stock of domestic savings and foreign exchange reserves, and a range of supplementary stabilisation instruments and capital controls. in particular, in new zealand, with its much larger non - traded sector, a singaporean regime might potentially have required greater swings in the exchange rate than we actually saw to achieve similar inflation outcomes. global policies, the tax system and financial stability also matter a lesson from this period is that while monetary policy can always achieve price stability, whether this occurs in the context of balanced growth also depends on other factors. as the housing boom has shown, these factors include global policy settings and the structure of the tax system. looking back over two years of crisis, perhaps the key lesson is that financial stability cannot be ignored when thinking about macroeconomic stability and the conduct of monetary policy. we β ve been reminded that financial system developments have the potential to complicate monetary policy enormously, and that stable prices do not
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in information technology, where energy prices were low and the costs of a wide range of manufactured goods were falling rapidly ; a challenging period of sharply rising commodity and asset prices in the past few years ; and the extreme ructions of the global financial crisis. this can be seen from figure 1, which shows new zealand cpi inflation since 1980, as well as a survey measure of 2 - year ahead inflation expectations. in particular, while inflation expectations crept up in the boom years, and fell back sharply in late 2008 as the financial crisis hit, they have remained well - anchored across that time period. figure 1 new zealand inflation and surveyed inflation expectations source : statistics nz, rbnz inflation targeting has supported, but not guaranteed, macroeconomic stability in taming inflation expectations, the inflation targeting framework has removed a major source of economic volatility. it has also allowed for active macroeconomic stabilisation in a broader sense. most notably, once the global financial crisis hit, we were able to respond with significant policy easing swiftly, cutting the ocr by more than 5 percentage points and providing banks with emergency liquidity at rates consistent with the ocr, at a time when the international wholesale funding markets were severely impaired. we were able to provide this degree of support because the inflation targeting framework allowed for a flexible response, and inflation expectations were well anchored. however, the extent of the financial crisis makes it clear that inflation targeting monetary policy has not been sufficient to guarantee comprehensive macroeconomic stability. recall the decade or so from the second half of the 1990s to the late 2000s that many commentators called the β great moderation β or the β goldilocks β economy, when many economies experienced an extraordinarily long stretch of unbroken strong growth. even then, we continued to see large movements in commodity prices, house prices, interest rates, and exchange rates. there were also significant shifts in the composition of growth, from the traded to the non - traded sector, and big increases in household and external indebtedness. some of these changes were structural, such as the rise in the global demand for agricultural and other commodities from the late 1990s onward, or the surge in migration to new zealand in the early 2000s. some of the price movements were beneficial in helping the new zealand economy adjust to those changing conditions. but we also saw growing economic imbalances, and the commodity and asset price rises in the years leading up to the financial crisis were among the hardest challenges faced by central banks over the past 20
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dramatic demographic change is certain to place enormous demands on our nation β s resources - demands we almost surely will be unable to meet unless action is taken. for a variety of reasons, that action is better taken as soon as possible. the budget scenarios considered by the cbo in its december assessment of the long - term budget outlook offer a vivid - and sobering - illustration of the challenges we face as we prepare for the retirement of the baby - boom generation. these scenarios suggest that, under a range of reasonably plausible assumptions about spending and taxes, we could be in a situation in the decades ahead in which rapid increases in the unified budget deficit set in motion a dynamic in which large deficits result in ever - growing interest payments that augment deficits in future years. the resulting rise in the federal debt could drain funds away from private capital formation and thus over time slow the growth of living standards. favorable productivity developments, of course, can help to alleviate the impending budgetary strains, but no one should expect productivity growth to be sufficient to bail us out. indeed, productivity would have to grow at a rate far above its historical average to fully resolve the long - term financing problems of social security and medicare. higher productivity, of course, buoys expected revenues to the system, but it also raises social security obligations. 1 moreover, although productivity has no direct link to medicare spending, historical experience suggests that the demand for medical services increases with real income, which over time rises in line with productivity. today, federal outlays under social security and medicare amount to less than 7 percent of gdp. in december, the cbo projected that these outlays would increase to 12 percent of gdp by 2030 under current law, using assumptions about the growth of health - care costs similar to the intermediate assumptions of the medicare trustees ; when spending on medicaid is added in, the rise in the ratio is even steeper. to be sure, the rise in these outlays relative to gdp could be financed by tax increases, but the cbo results suggest that, even if other non - interest spending is constrained fairly tightly, ensuring fiscal stability would require an overall federal tax burden well above its long - term average. most experts believe that the best baseline for planning purposes is to assume that the demographic shift associated with the retirement of the baby - boom generation will be permanent - that is, it will not reverse when that cohort passes away. indeed, so long as longevity continues to increase -
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dear minister bytyqi, dear mr. marco mantovanelli, director of the world bank for kosovo and north macedonia, dear mr. patrick etienne aβ¬ β country director, swiss state secretariat for economic affairs ( seco ) dear ms. lori michealson, representative of the us embassy dear president of the board mr. mrasori, dear representatives of financial institutions, dear students and teachers, dear representatives of media ladies and gentlemen, it is my pleasure to welcome you to this event marking the global money week in the function of financial education, with our main affiliates, the ministry of education, the world bank, the swiss state secretariat for economic affairs ( seco ) and the european fund for south east europe, who i would like to take this opportunity to thank for the unreserved support to advance developments in the financial sector in kosovo in general and financial education in particular. this year, global money week is especially important for two reasons : firstly, for the fact that with the activities that we will organize this week, we have brought the republic of kosovo to the attention of the international arena, where the activities that we will organize this week can be followed internationally through " live streams " from central banks, regulators and international organizations dealing with financial education issues ; secondly, for the fact already announced by the cbk that 2019 will be the year of consumer protection and the activities that we will organize in the field of financial education will be in the function of consumer protection. in the present environment, where we are all witnessing the financial stability that kosovo enjoys, placing kosovo's financial system at a level that is comparable not only with the countries of the region but also those of the european union, the financial education has occupied a specific place on our development agenda. moreover, the financial services sector has a strong share in economic growth, job creation, building of vital infrastructure and sustainable development for kosovo. services and products of the financial sector affect the life of every citizen of kosovo. therefore, we are grateful, to all our associates, some of whom are here with us today, for the support they have provided to the central bank and other relevant institutions in building a financial market that treats consumers fairly, encourages financial involvement and helps citizens to make effective use of financial services. one of cbk's strategic goals is to encourage the development of a sound financial system in the republic of kosovo and to further develop the financial education function with a view to creating a sound financial culture that helps all stakeholders
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environment such as bank lending or the degree of uncertainty about the future, and dealt a major blow to production in the japanese manufacturing industry, which supplies such goods globally. second, the impact of the adjustment of excesses and balance - sheet adjustment also tended to become significant. up to the mid - 2000s when the global economy enjoyed high growth supported by the credit bubble, there was a worldwide boom in spending on consumer durables. the japanese manufacturing industry, which had established a comparative advantage in these areas, greatly benefited from this boom. however, in retrospect, and setting emerging economies aside, the boom in the united states and europe was based on overly optimistic expectations and was unsustainable. and the balance - sheet adjustments in the united states and europe, which ensued with the unwinding of the boom, directly hit japanese manufacturing industry. and third, there was a reaction to the considerable depreciation of the yen from the mid2000s. to determine the effects of changes in exchange rates on export competitiveness, it is necessary to take into account differences in price fluctuations at home and abroad as well as the weights of trade. looking at the real effective exchange rate of the yen, adjusted for these factors, we see that from around 2005 to mid - 2007 it depreciated by more than 20 percent, and remained at its lowest level in the past 20 years, which supported a considerable increase in japan β s exports. however, since the outbreak of the global financial crisis in the autumn of 2008, the yen appreciated rapidly and has recently been trading around its level in the early 2000s. this suggests that the portion of exports supported by the depreciation of the yen since the second half of the 2000s has been eliminated. based on these observations, the lesson that can be learned from the experience of the global financial crisis is not that japan β s economy needs to make a full - fledged shift from being external demand - dependent to being domestic demand - driven, but that it is important that the global economy aims to achieve sustainable growth. given that globalization is irreversible, it is not appropriate to see external demand and domestic demand as opposing concepts. i would emphasize that, for japan β s economy, it is both important to reap the fruits of global economic growth and to lay the groundwork for expanding domestic demand. v. five challenges based on the lessons learned from the recent crisis and looking at the prospects for japan β s economy from next year onward, various challenges
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as they were significantly affected by political events, and, even though we were expecting rapid us monetary policy tightening and a strong dollar well in advance, the change in the dot plots in the september fomc meeting was more than we expected. on top of that, the fact that two major central banks in japan and china are the two exceptional cases of loose monetary policies made our currency depreciate much more than expected in september before it started to stabilize recently. 1 / 2 bis - central bankers'speeches more recently, prices and our exchange rate have somewhat stabilized and the speed of us interest rate hikes is expected to be less rapid as indicated by the recent press conference by chairman powell. ensuring price stability and reducing inflation through tight monetary policy are still our priority. at the same time, as the recent interest rate increase has been fast by any historical standard in korea, there are growing signs of stress in various sectors, and maintaining financial stability, especially in non - banking financial sectors, is becoming an important issue. in fact, we are seeing signs of money move from non - banking sectors to the banking sector after deposit rates in banks significantly increased following policy rate hikes. how to recycle those flows back to non - banking sectors is an important policy issue for the bok to manage financial market stability in this period of high inflation and tight monetary policy. now, back to long - term challenges facing the korean economy. among many challenges, the risk of economic and geopolitical fragmentation stands out to me the most. in fact, it is a short term challenge, too. the escalating us - china tensions and further deterioration of the russia - ukraine war are likey to lead to financial and trade fragmentation and consequently, the contraction of global growth and trade. it will be structural headwind limiting long run growth of the korean economy, which is heavily dependent on exports. in this respect, global cooperation at the economic and political levels is more urgently needed than ever. countries responsible for global leadership, among others, need to promote collaboration and cooperative competition, since the weakening of trade and global growth stemming from fragmentation can have negative impacts on all countries. in retrospect, china's rapid growth over the last two decades allowed the korean economy to delay painful restructuring, while reaping the benefits of trade expansion with china. we no longer have that luxury. korea cannot any more avoid restructuring reforms, even though painful, in diversifying its supply chains and concentration of key industries
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earlier materialize, we have ample policy space to respond. there is enough room for monetary policy to support the economy. consider, for example, the prospects of monetary policy in the midst of us fed normalization. the present and future stance of domestic monetary policy remain data - dependent. we will therefore act on ( global ) developments only to the extent that it alters the domestic inflation path. our assessment now is that the current policy settings remain appropriate. thus, we do not need to adjust in sync with the fed β s rate hikes. the bsp also has a deeper policy toolkit now. this includes : ( i ) macroprudential regulations that can be targeted to specific sources of risks, ( ii ) contingency measures such as liquidityenhancing facilities, and ( iii ) rediscounting windows and regional firewalls that boost the flexibility 3 / 4 bis central bankers'speeches and effectiveness of our actions. we intend to further refine these tools as appropriate. in terms of supervision, we continue to review and align our financial regulations and policies with international standards to improve risk management as well as ensure the competitiveness of our banks in view of asean integration. we intend to further enhance our macro - financial surveillance capability by, among others, improving coordination and cooperation with other government agencies and regulators. there is also elbowroom for fiscal authorities to further boost public spending and accelerate aggregate demand and productivity growth. concluding remarks : strength in cooperation in sum, ladies and gentlemen, the global operating environment today is certainly challenging. but we have built buffers over time. in addition, the bsp remains committed to its mandate of price and financial stability. i am sure that with a good appreciation of risks and the right amount of vigilance, the partnership between the public sector and private stakeholders ( such as yourselves ) would push the economy upward and forward even in the face of the downside risks. at the beginning of my remarks i mentioned that this is the 12th consecutive year we are doing this together. the number 12 has different meanings in various cultures and religions. but more universally, 12 is a number that is used to mark time. there are 12 hours on a traditional clock, and there are 12 months in a traditional calendar year. as we begin a new year, i wish to encourage everyone to mark time judiciously. time is an equalizer. whether you are rich or poor, in public or private sector, each of us has been given
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on the more specific issue of brexit, the direct exposure of the philippines to the uk is relatively limited. the bigger concern, however, is whether the other eu economies will follow the uk β s lead ; given that our trade exposure to the eu is larger at around 12pct. as for the trump election, we will need to see how his campaign rhetoric translates to actual policy. our eyes and ears are tuned to january 20, when he actually takes over the white house. the second risk comes from the us fed β s future policy rate actions. at its meeting in december 2016, when the fed raised its target rate for the first time for the year, the fed indicated that it would raise rates three more times in 2017. if the fed veers from this, volatility in both the global and domestic fx and fixed income markets could rise. a steeper than expected hike in us interest rates could lead to a faster rise in domestic commercial and government securities interest rates also, as well as stronger depreciation pressures on eme currencies, including the peso. such price movements may adversely affect the balance sheets of domestic corporates and banks, especially of those that have fx and floating - interest rate obligations. this adverse result would be magnified if the markets panic, overreact, and thus amplify the initial increases in interest rates and weakness of the peso. moreover, a tightening in domestic financial market conditions could also dampen domestic credit activities in the near - term. however, if the reason for fed tightness is that the underlying us economic growth has become stronger, then that may offset some of the near - term negative impact of the fed tightening and lead to over - all support for global growth in the medium - term. on the other hand, if the fed turns dovish ( i. e., fewer or no further hikes in 2017 ), then that could encourage β risk on β market behavior, stall domestic interest rate increases and dampen depreciation pressures in emerging markets. but such result is unlikely, as trumponomics, which is reported to focus on increased fiscal spending, is widely expected to be inflationary. third. in addition to these external risks, we also have risks emanating from the domestic front such as political noise and adverse weather disturbances. moreover, while the administration has committed to ramp infrastructure spending, they could be forced to cut back on this, should 2 / 4 bis central bankers '
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david opiokello : basel ii and its impact on financial services in uganda address by mr david opiokello, acting deputy governor of the bank of uganda, at the opening of the 6th east african banking school, kampala, 3 july 2006. * * * background i am pleased to speak to you this morning at the 6th east african banking school annual seminar. since launching the banking school, the annual school is increasingly becoming a prestigious regional event for bankers and all other key players in the financial services sector. this is yet another commendable contribution towards capacity building and harmonization efforts within the financial sector of the east african sub - region. it is incumbent upon all of us stakeholders to continuously review the standards set by the school to ensure that we not only maintain but strive to improve them going forward. on behalf of governor e. t. mutebile, the patron of the uganda institute f bankers, i would like to formerly welcome the invited resource persons in their respective capacities and all distinguished participants. the subject i was asked to speak on namely β basel ii and its impact on financial services is a complex one and i wish to state from the outset that the implementation of basel ii remains very much β work in progress β. briefly, the basel committee on banking supervision ( β the committee β ) issued a revised capital adequacy framework which is widely called basel ii in june 2004. this framework has been endorsed by the central bank governors and heads of banking supervision of the g - 10 countries. the group of ten ( g - 10 ) is made up of eleven ( 11 ) industrial countries namely ; ( belgium, canada, france, germany, italy, japan, the netherlands, sweden, switzerland, united kingdom and united states ). the committee believes that the revised framework will promote the adoption of stronger risk management practices by the banking industry worldwide. the new accord is designed mainly for internationally active banks and is to be implemented as of year end 2006. however one year of impact studies or parallel calculations has been allowed for the most advanced approaches to be implemented as of year end 2007. the committee recognizes that the adoption of basel ii may not be the first priority for the nong10 countries. furthermore the imf and world bank are of the view that future financial sector assessments will not be conducted on the basis of adoption of or compliance with the revised capital framework. rather, assessments will be based on the countries performance relative to the requirements of the committee β s core principles for effective banking
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integration in the equity markets is less advanced but shows signs of improvement. between 1997 and 2006, euro area investors doubled their holdings of equity issued in other euro area countries to 29 % of their total portfolio of euro area equity assets. the retail banking segment has remained more fragmented. in particular, the euro area cross - country dispersion of bank interest rates, especially of interest rates on consumer loans, has remained relatively high. this reflects different conditions in national economies ( e. g. credit and interest rate risk, size of firms, industrial structure and degree of capital market development ), institutional factors ( e. g. taxation, regulation, supervision and consumer protection ) and financial structures ( e. g. degree of bank / capital market financing and competitiveness ). it was probably overoptimistic to expect a faster convergence in this segment. the creation of the euro also gave rise to expectations of a broad based convergence of underlying economic developments. these expectations were quite varied, in fact. some people expected greater divergence as a consequence of specialisation. others expected greater convergence. the result is mixed. some convergence has been observed, in particular in terms of business cycle and dispersion across countries, which is comparable with that among the us states. the degree of business cycle synchronisation has remained at the same levels reached in the second half of the 1990s. 1 on the other hand, some underlying variables have diverged, in particular cost and price competitiveness, leading to an accumulation of payments imbalances within the euro area. some countries have accumulated large current account deficits, while others have growing surpluses. you could argue that imbalances do not matter in a monetary union, because they are automatically financed. but such imbalances might make countries more vulnerable to external shocks and their financing might become more difficult in the midst of a financial crisis, even within a monetary union. one of the disappointing aspects of the last ten years has been the lisbon process and the slow pace of structural reform. what does this have to do with the euro? the lisbon process is an eu initiative. it is voluntary, it imposes no constraints, and rightly so, since it involves policies which follow the principle of subsidiarity and remain in the hands of the member states. would the lisbon process have been more effective without the euro? i seriously doubt it. overall, i believe that the euro has largely fulfilled the expectations. maybe with one exception : the cash change
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, although credible sanctions for breaking those rules are hard to develop. 26 there is an obvious tension between using robust fiscal rules to solve this problem, and allowing national fiscal policy to act as a shock absorber. this reinforces the need for fiscal risk sharing between nations. as the presidents of the european council, european commission, eurogroup and european central bank argued in their report, european monetary union, which has so far relied on fiscal rules, will not be complete until it builds mechanisms to share fiscal sovereignty. 27 possible kenen ( 1969 ). this refers to a fall in output relative to potential output. see chamberlin et al ( 2013 ). these estimates are reported in melitz and zumer ( 2002 ). the delors committee ( 1989 ) report, which provided the foundation for monetary union in europe, recognised that market discipline would not be sufficient to ensure that participating countries followed sound fiscal policies, and that fiscal constraints would therefore be required. beetsma and uhlig ( 1999 ) provide a formal motivation for the resulting stability and growth pact as a device to internalise the costs of inflation that might otherwise result from imprudent fiscal policies. see also chari and kehoe ( 2007 ). recent experience demonstrates that overindebtedness can also have costly spillovers through financial crises. see barroso et al ( 2012 ). bis central bankers β speeches options range from a transfer union to a pooled employment insurance mechanism. whatever is ultimately chosen, the degree of fiscal risk sharing will likely have to be significant. similarly, in a monetary union between an independent scotland and the rest of the uk the two parliaments would have to agree on whether fiscal rules were sufficient or whether similar risksharing mechanisms were necessary. conclusion the scottish government has stated that in the event of independence it would seek to retain sterling as part of a formal currency union. all aspects of any such arrangement would be a matter for the scottish and uk parliaments. if such deliberations ever were to happen, they would need to consider carefully what the economics of currency unions suggest are the necessary foundations for a durable union, particularly given the clear risks if these foundations are not in place. those risks have been demonstrated clearly in the euro area over recent years, with sovereign debt crises, financial fragmentation and large divergences in economic performance. the euro area is now beginning to rectify its institutional shortcomings, but further, very significant steps must be taken to expand the sharing of risks and pool
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recession. it became clear that the lack of regulation did not really support lending over the longer term. in fact, banks were forced to start rebuilding capital in the middle of a slump, which amplified the credit crunch facing the economy and prolonged the recovery from the crisis. europe learnt the lesson. it undertook a swathe of regulatory reforms targeted at banks and nonbanks alike. since 2011, european banks have nearly doubled their core capital ratios to over 14 %. 1 we also saw the creation of european banking supervision to give us a broad european view of risks to financial stability. this meant that, when the pandemic hit, the financial sector could play a fundamentally different role. instead of being a source of instability, banks could be mobilised to enhance our response to the pandemic, rapidly funnelling liquidity to the economy. from march to may last year, bank lending to companies in the euro area rose by almost β¬250 billion, the largest jump on record in a 1 / 4 bis central bankers'speeches three - month period. the increase in bank capital before the crisis meant that supervisors could free up β¬120 billion of additional capital for new lending. and thanks to european banking supervision this decision was taken quickly and collectively, rather than in a drawn - out negotiation between multiple national supervisors. this joint european action also averted the risk of stigma that we had previously feared. what the financial crisis taught us, essentially, is that there is no trade - off between effective regulation and supporting growth. a robust financial sector is an asset during a crisis. and our experience during the pandemic has proven the wisdom of this lesson beyond doubt. the importance of credible commitment but the financial crisis also had a more profound impact on europe, morphing into the euro area sovereign debt crisis. i had a unique perspective on this event, witnessing its start when i was a finance minister and seeing it continue to unfold during my time as imf managing director. this crisis produced the second lesson i would like to highlight, which was possibly easier to see when one was looking from the outside. it was clear early on that our monetary union was lacking a full set of institutions and needed to be strengthened. we became painfully aware that the euro area was particularly vulnerable to self - fulfilling panics. what became evident is that the perceived commitment of policymakers was a crucial variable in effective policymaking. initially, we perhaps underestimated how important those perceptions are. it took time to realise
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barry whiteside : brief update on fiji β s economy address by mr barry whiteside, governor of the reserve bank of fiji, at the opening of bank south pacific β s lautoka branch, lautoka, 10 november 2011. * * * mr kevin mccarthy, bsp fiji country manager management and staff of bank south pacific distinguished guests ladies and gentlemen introductory comments let me start by thanking mr. mccarthy for his kind invitation to come to lautoka this evening to open bank south pacific β s newest branch. it is an honour for me to be here. i must say that i have many fond memories of our second city, as i spent some of my most formative years here when my dad served as postmaster back in the 1960s. i can clearly remember my drasa avenue school days, and the homes we lived in on kadavu street, valima hill and tagimoucia street β stretching from one end of town to the other. i also remember the great abundance and sweet smells of sugar cane and mangoes, and the sound of the regular sirens to signal the change of shift at the then csr mill. i remember tasting β burnt β sugar for the first time many years ago and taking early morning rides to saweni on the free train. as you may have guessed i have many fond memories of this city. ladies and gentlemen, the opening of your new lautoka westfield branch is another milestone to check off in bsp fiji β s relatively short history in our country. this pacific bank continues to expand its operations and make its presence known in our market. not long ago, when it opened its doors in december 2006, bsp was regarded by some as a small operator with a niche market inherited from habib bank, the bank whose single branch fiji operations bsp had purchased. we of course know that bsp is the largest bank and major player in its home country of papua & new guinea with more than fjd9 billion in assets. ( note : k10. 972 billion as at june 2011 ) however, bsp has come to our country with a specific purpose to grow its international footprint. i can say that in the short span of time since its inception here, it has certainly worked hard to make its presence felt. my staff inform me that bsp fiji operations now includes representation points through 20 branches ( including your westfield branch ), 48 agencies, 97 atms, 171 eftpos merchants and 568 eftpo
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##s terminals. the recent advent of sms banking has further widened bsp β s in - country reach currently recording 64, 000 registered users. bsp has also expanded in terms of its deposit base which now stands at more than 200, 000 deposit accounts valued at more than $ 688m. staff numbers have also increased to 565 compared to 11 that started with the branch in december 2006. during these challenging times, it is always encouraging to see businesses expand their operations to better serve their customers β needs. i wish to congratulate bsp for its commitment to fiji and also for the confidence it has shown in the fiji economy. the bsp westfield branch ladies and gentlemen, many people would place lautoka outside the circle of fast developing urban centers in fiji, by these i mean suva and nadi. your city has, bis central bankers β speeches unfortunately, not really enjoyed the growth seen in these two centers over the last two decades. however, i do know that you have in your presence, business men and women who have maintained their links over the years and have the community of lautoka in their collective hearts. they continue to have faith and run their operations here. i do, however, look forward to seeing changes and more bright spots emerging with the longed for resurgence of sugar, an industry on which your city had been founded. i also read with interest just last week of additional prospects in regard to a fish processing business that is being established here. the generation of much needed new employment and activity can only mean good things for your community and fiji. ladies and gentlemen, i find the decision by kevin and his team to open this new branch in lautoka, a very strategic one. it is no secret that we have come through a period of extremely sluggish growth. it is also no secret that during such times commercial banks will work hard to ensure that their clients continue to remain with them. they will also need to work harder to acquire new clients. it can be a time of great competition. with all banks in fiji of reputable names and brands, customer service and convenience will play a major role in maintaining banking relationships. the opening of this new westfield branch will provide bsp with a platform to maintain its customer base and also get new stable and quality customers. i have been told that this new westfield branch will have general banking facilities on the ground floor, while the lending and international sections will be based on the first floor, with management. i
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ardian fullani : achievements and challenges of the albanian banking system speech by mr ardian fullani, governor of the bank of albania, at the reception for the bankers and representatives of banks operating in albania, organized by the albanian association of banks, on the occasion of the closing year 2008, tirana, 18 december 2008. * * * dear chairman of the albanian association of banks, dear managers of the albanian banking system, thanking you for this invitation, i avail myself of this opportunity to provide some considerations of the path we have been through during 2008 and the challenges ahead us. what we have been through during this fall sounds unreal and somewhat unbelievable. many taboos have overturned and the list of news enlarges day after day, including also schemes of financial mega - fraud. i commenced my speech this way so as not to overlook this unusual global event, to provide an outline of the general economic and financial setting surrounding our environment and above all, to underline an immense truth : that the albanian banking system has shown admirable resilience and that the immunity shown has not only been a matter of luck. the year 2008 has been an intensive year of ceaseless changes, at the centre of which were the safeguard and consolidation of macroeconomic stability at home and the banking system β s financial stability. taking a quick glance at the albanian economy over the present years, i can state that it has maintained the projected growth for year 2008, under stable consumer prices and domestic currency exchange rate. monetary policy has been throughout the year 2008 cautious and has kept the key policy rate unchanged at 6. 25 percent. in addition, fiscal policy has been characterized by the collection of budget revenues beyond the government β s projections and by the concentration of expenditures in mainly infrastructure - related projects. as in the recent years, the banking system has sustained the economic activity and consumer demand with loans, hence providing numerous incentives for a stable economic growth. the positive performance of the economy and of certain economic sectors β in particular trade and construction β has been propelled by the positive rates of domestic demand at home. lending has maintained its high annual growth rates of 42 percent. as a share of gdp and the system β s assets, loans have recorded further growth to 36 percent and 41 percent, respectively. businesses were the main banking loans β users, accounting for 66 percent of loan portfolio growth. this positive performance was associated with a favourable macroeconomic and financial setting. during the second half of the year, the cpi has recorded an
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ardian fullani : improving the performance of albania β s banking sector speech by mr ardian fullani, governor of the bank of albania, at the year - end event with the albanian association of banks, tirana, 17 december 2013. * * * dear bank executives, your excellency ambassador sequi, dear mr. ilahi, dear mr. pencabligil, it is a pleasure for me to participate in this year - end meeting, as we reflect about the challenges we faced and the objectives we accomplished in this year, and endeavour to identify issues that may arise over the next year. given the celebrations time and the spirit of this meeting, i would rather not dwell upon all the issues i would have liked to. however, i will share with you my opinion on two issues i consider as important for a good performance of the banking sector over 2014. before moving on, we should acknowledge that the year we are leaving behind was a difficult one for the banking sector. in its development cycle for over more than one decade, this year, the banking sector β s growth slowed down sharply and annual lending levels contracted. deteriorated asset quality, dictated by credit, has led to lower financial profit due to higher provisions needed. these developments have reflected the overall economic slowdown and domestic demand drop resulting from lower private consumption and investments. however, other developments highlighted the banking sector β s capacity to properly respond to and cope with these challenges. the banking sector has maintained ample liquidity and capital levels thanks to the further rise in public deposits and added capital by parent banks. in terms of non - performing loans, obvious efforts have been made to restructure credit and sell off non - performing loans to non - bank financial institutions. the albanian association of banks has played an active role in discussing the problems with relevant authorities and identifying solutions through the regulatory treatment of nonperforming loans, notably, the legal amendments to collateral execution process, which entered into force in september 2013. through its activity, the banking industry may transform 2014 into a better year for both the banking industry and the albanian economy. i think that this may be achieved through harder work in the following aspects : the first aspect pertains to restoring lending to adequate levels in albania. this objective may be achieved by interlinking these three elements : a ) cleaning up balance sheets from non - performing loans. it is indispensible that you should mark evident progress during 2014 to write off loss loans from their balance sheets
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guy debelle : the fx global code speech by mr guy debelle, deputy governor of the reserve bank of australia, at tradetech fx eu, hybrid conference, 8 september 2021. * * * thanks to matt boge for his incredible assistance over my term as chair, as well as grigoria christodoulou and the other members of the gfxc secretariat. tonight i will talk about the recently completed review and update of the fx global code. the updated code was released on 15 july. 1 tonight i will remind you about the important role the code plays in the foreign exchange ( fx ) market. i will summarise the parts of the code that have been updated and talk about the accompanying papers on pre - hedging and last look. fx global code the fx global code was launched in may 2017. it was a direct and important response to the lack of trust the foreign exchange industry had been suffering on the back of a number of instances of misconduct in the market and the associated multi - billion dollar fines. this lack of trust was evident both between participants in the market and, at least as importantly, between the public and the market. the lack of trust was impairing market functioning. the market needed to move towards a more favourable and desirable location, and allow participants to have much greater confidence that the market is functioning appropriately. it is also important to remember what the alternative was in the aftermath of the scandals. there was a decent chance authorities could conclude that a substantial regulatory response was necessary to generate the desired improvement in market structure and conduct. but the code provided the opportunity for the fx market to address the lack of trust and market dysfunction. the code was developed through a public sector β private sector partnership. it was a joint effort of central banks and market participants drawn from all parts of the markets : from the buy side, including corporates and asset managers, and the sell side, along with trading platforms, ecns and non - bank participants. the membership was also from all around the world, drawing from the various foreign exchange committees ( fxcs ) across the globe comprising all the top 15 fx markets by turnover, both advanced and emerging markets. the global foreign exchange committee ( gfxc ) that maintains the code has since expanded to 20 members. the code set out global principles of good practice in the fx market to provide acommon set of guidance to the market. the 55 principles in the code cover ethics, information sharing, aspects of
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opportunity to provide greater consistency and usability in disclosures. over the past 18 months, various working groups of the gfxc, drawing on a diverse group of market participants and central banks, have been working on the review. the proposed updates to the code have been through a number of rounds of feedback with market participants through the fxcs round the world, as well as a public feedback process. i would like to thank the broad range of market participants who provided us with feedback. i would particularly like to thank the working groups for their hard work, especially given the challenging environment of the pandemic. the review of the code following this process of review and consultation with industry, the gfxc has published the updated version of the code. the july 2021 version of the code replaces the earlier, august 2018 version. in total, 11 of the code β s 55 principles have been amended. the gfxc has also developed disclosure cover sheets and templates for algo due diligence and transaction cost analysis ( tca ) to assist market participants in meeting the code β s principles for disclosure and transparency. additionally, the gfxc has published guidance papers on the practices of pre - hedging and last look to support market participants in applying the code β s principles in these areas. one area that reflects the development of the market is the role played by anonymous trading. the code has been amended to encourage greater disclosure by those operating anonymous platforms, including of their policies for managing the unique identifiers ( β tags β ) of their users. anonymous trading platforms are also encouraged to make available the code signatory status of their users. recognising the value that data related to trading activity holds for market participants, the code now states that fx e - trading platforms ( including anonymous platforms ) should be transparent about their market data policies, including which user types such data is made available to and at what frequency and latency. platforms are also encouraged to disclose the mechanisms and controls by which they are managing or monitoring the credit limits of their users. the risks associated with fx settlement are potentially very significant and have come back into view again following the publication of the previous triennial survey of fx turnover by the 2 / 6 bis central bankers'speeches bis. 4 consequently, the gfxc identified a need to strengthen the code β s guidance on settlement risk. amendments have been made to place greater emphasis on the usage of payment versus payment ( pvp )
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great majority of firms. after some adjustments, to take into account these concerns, the reduction in capital charges for small and medium enterprises ( exposures below β¬ 1 million ) and well - provisioned past - due loans as well as the recognition of credit risk mitigants, such as collateral and guarantees, render the new framework much more favourable than the existing one. generally the capital requirements for loans to corporate are likely to fall significantly ( up to 80 % in some cases ) for excellent credit quality with credit risk mitigants, such as eligible collaterals. in the qis it was found that corporate, non - sme lending would benefit in a pan - european level from a reduction of capital requirements of 2. 5 %. the reductions would be more for corporate smes i. e. corporates with annual sales lower than β¬50m, and would amount to 4 %. enterprises with exposure of less than β¬ 1 m can be treated as retail customers, resulting to a further decrease by a significant amount of capital requirements, eventually passing the benefit onto companies themselves. under the advanced approaches, the capital requirements for a loan to a corporate with pd = 1. 5 % and lgd = 45 % would be as much as 8. 9 %, whereas if the customer was an sme treated as retail would be only 4. 52 % of course the requirement for reliable data on the basis of which the banks would be able to judge the creditworthiness of their customers, may create an additional burden to smes to produce timely and accurate accounting and other financial information. however the availability of such information might also lead to more efficient management of such companies based on more informed and less intuitive decisions. what is more important is the fact that the meaningful differentiation of risk will lead to a more efficient allocation of capital. banks will be able to identify companies of high creditworthiness and offer them credit, at preferential terms, supporting thus their growth. this would benefit, not only healthy companies, including smes, which will find it easier and less costly to borrow from banks, but also the economy as a whole. however, starts - up may find some difficulties in raising loans and, therefore, other means of finance have to be further developed. especially for new technologies, where europe is lagging, venture capital is not readily available : the sums raised in 2003 were 1 / 3 below of those raised in the us and the average technology investment almost 1 / 10 of the us, thus
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greek big banks ( with a market share of 70 % ) are gradually introducing irb methods, so that when the new framework will be introduced, they will be able to reduce their credit risk charges. all the more so, that mortgage credit and consumer credit, as well lending to small business, which have under the new accord a preferential treatment in relation to capital requirements, are growing much faster than the rate of growth of total credit. this, in combination with the starting high level indicates that the capital adequacy ratio in greece should remain on average above 12 %. of course the individual banks β capital requirements reductions depend not only on the type of approach used but also on the composition of the portfolio and its quality. banks with a larger proportion of retail credit, including credits to small & medium sized enterprises ( smes ) will experience a larger reduction of their capital requirements. also banks with collateralized exposures or with customers having a better, external or internal, rating, which, of course, reflects better quality, will have a larger reduction. the largest reduction will of course be for banks with good quality portfolios that use the most advanced approaches for the calculation of capital requirements. it is only natural and fair that banks using the more advanced approaches will benefit most. after all, the new framework is intended to provide incentives for the upgrading of the banks β risk management systems. however, the reduction of capital charges for credit risk should not be expected by itself to motivate banks to adopt the more advanced methods. the high costs for the implementation of the more advanced systems will discourage a number of banks. in a study conducted by pricewaterhousecoopers for the european commission, the implementation cost in europe was estimated at about β¬ 20 - 30bn, with individual banks spending β¬ 30 - 150 m, depending on their size, sophistication and approach used. although one cannot deny that a significant amount of these costs result from the need for regulatory compliance to the new framework, an equally large part are the result of improvements in credit risk and operational risk management systems that would have been introduced even in the absence of basel ii. basel ii has accelerated the process and should, with time, both increase shareholder value and strengthen the financial systems worldwide. in a globalised world, without many financial frontiers, the competition driven need for improved risk management systems are motivating banks to move more and more to the more advanced approaches. and this because the better measurement of credit risk would allow
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evolve and pursue new strategies, supervisors need to understand those changes and assess firms accordingly. we must constantly evaluate the strategic focus of the firms we supervise and assess whether our approach and perspective are appropriate for the new activities. in a world with a core of diversified firms that are more similar, for example, cross - firm exams and horizontal analysis increase in value and supervisors might require broader skills. moving beyond individual firms, there is the potential for microprudential risks to transform into macroprudential ones. if firms expand, diversify and become more similar, each might become safer individually. the industry as a whole, however, might not be any safer or more resilient. if all firms are effectively the same, they could become β systemic as a herd β and susceptible to the same shocks in a way that leaves the aggregate provision of financial services more volatile. 9 the propagation mechanisms for an industry with a set of similar firms with a wider range of activities may be very different from one where firm heterogeneity can offset and smooth the impact of shocks. this suggests that supervisors and regulators should be concerned not just with the firm as an entity, but with the industry as a portfolio of firms where aggregate outcomes reflect both each firm β s individual contribution and correlation properties across firms. finally, supervisors are concerned about the efficient provision of financial services and the ability of the financial industry to support the real economy. if firms β mix of activities is overly determined by the regulatory environment, firms will have incentives to expand into activities where they do not have a comparative advantage. as a result, the potential gains of specialization would be lost. this could make the provision of financial services less efficient overall. judging the cumulative impact of these changes in a comprehensive way that includes an assessment of costs, benefits, and risks is challenging, but seems an important goal for optimal policy design. 4 / 5 bis central bankers'speeches conclusion a fundamental challenge for effective supervision is that the landscape is constantly evolving and adapting in response to a wide range of regulatory, financial, and technological forces. this type of dynamism is normal and inherently productive for the industry as firms continue to optimize in order to serve customers efficiently and satisfy investors, but it does raise issues that supervisors must consider. as i β ve discussed, one recent type of evolution is the trend toward greater similarity of the largest financial firms in the u. s. in response, supervisors and regulators must continue their focus on taking a broad perspective on supervision
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the june tankan also showed that private firms β fixed investment was starting to pick up as evidenced by reasonably upbeat business fixed investment plans, which were revised upward from the march tankan, particularly in the manufacturing sector. with supply - side constraints easing further and production regaining traction, japan β s economy is expected to return to a moderate recovery path from the second half of fiscal 2011, backed by an increase in exports reflecting the improvement in overseas economic conditions and by a rise in demand for rebuilding. as for financial conditions, the overnight call rate has remained at an extremely low level, and the levels of firms β funding costs have also continued to be low. firms have continued to see financial institutions β lending attitudes as being on an improving trend. issuing conditions bis central bankers β speeches for cp have continued to be favorable. in the corporate bond market, although the views of issuers and investors continue to diverge on the terms of issuance of electric power company bonds, issuing conditions have been favorable as a whole, leading to an increased variety of corporate bond issuers. in these circumstances, firms have retained their recovered financial positions on the whole, albeit with the observed weakness at some firms, mainly small ones. on the price front, the year - on - year rate of change in the cpi ( excluding fresh food ) marked 0. 6 percent in april and may. the rate turned positive in april for the first time in two years and four months since december 2008. as for the outlook, the year - on - year rate of change in the cpi is expected to remain slightly positive. however, the bank recognizes that the yearon - year rate of increase in the cpi is likely to be revised downward with the base - year change scheduled for august 2011. based on these assessments, japan β s economy is expected to return to a sustainable growth path with price stability in the longer run. let me turn to risks to the outlook i have mentioned. regarding risks to the economic outlook, although concern over supply chains has subsided, the impact of the earthquake disaster on japan β s economy, especially through changes in household sentiment, still requires due attention. moreover, uncertainty has increased somewhat with regard to the longer - term outlook for electricity supply constraints beyond this summer. with regard to risks to overseas economies, the effects of balance - sheet adjustments on the u. s. economy and the possible consequences of the sovereign risk problems in europe continue to warrant attention. as for emerging and commodity - exporting economies, although many economies
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to be predictable and consistent in delivering low and stable inflation in the medium term. as the key risks in the monetary policy pursuit still emanate from the international environment, the nbs will continue to closely monitor and analyse movements in the international financial and commodity markets and assess their impact on economic developments in serbia. allow me to conclude by saying that our economic policy has made the economy more vital and capable of addressing the market challenges we had faced in the past and those that lie ahead. serbia is now a country where doing business and finding a job is easier and the living standard is rising on sustainable grounds. of course, further improvements are still possible, first and foremost by means of structural reforms which will sustain a further rise in investment, competitiveness, profitability and employment. this will enable us to preserve the achieved results and respond to future challenges. i will end my introductory address here and give the floor to my colleagues from the department for economic research and statistics to present a detailed analysis of the current developments and our latest macroeconomic projections.
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. according to preliminary data of the serbian statistical office, gdp growth in the first quarter this year equalled 2. 3 % y - o - y. excluding the seasonal effect, quarterly gdp growth equalled 0. 9 %, meaning that economic activity has upheld the upward trajectory for 18 consecutive months. though growth in external demand slowed down as of mid - 2018, according to our estimate, the achieved gdp growth is attributable to domestic factors. a key contribution to growth came from fixed investments, which posted an s - a growth of 7. 4 % in the first quarter β namely, private investment by 8. 0 %, and government by 4. 7 %. serbia β s economy has become more attractive to investors mainly owing to the improved business climate and favourable financial conditions, while the implementation of infrastructure projects has also accelerated. in regard to this, we should note the increased profitability of the economy, which ended the previous year with a net profit of rsd 500 bn. this is an important source of investment and indicates that investment in our economy pays off. our growth forecast for this year has been retained at 3. 5 %, and we expect it to pick up to around 4 % in the coming years, with growth resting on firm grounds, primarily owing to the preserved macroeconomic stability. chart 7 contributions to y - o - y gdp grow th rate β expenditure side ( in pp ) chart 8 fixed investment ( s - a, in pp. ) - 3 - 2 - 6 - 4 - 9 - 6 - 12 2009 2011 2011 2012 2013 2014 2015 2016 2017 2018 net exports government consumption and investment private sector investment household consumption gdp ( in % ) sources : sors and nbs calculation. * nbs estimate for q1 2019. Ρ1 - 8 - 10 2019 * government investment private investment fixed investment ( in % ) sources : sors and nbs calculation * nbs estimate for q1 2019. growth sustainability is also confirmed by the greater integration of our economy in the global economic flows β both trade and capital, since fdi inflows are on the rise. although affected by the slack in external demand and steel quotas, the export of goods recorded a 7. 9 % y - o - y increase in q1 2019, owing to the expansion of supply on account of earlier investments and accelerated sale of the surplus of agricultural commodities carried over from 2018. on the other hand, the expansion of output and investment boosted the import of equipment and intermediate
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susan schmidt bies : us - eu regulatory dialogue testimony of ms susan schmidt bies, member of the board of governors of the us federal reserve system, before the committee on financial services, us house of representatives, washington, dc, 13 may 2004. * * * thank you, mr. chairman, for the opportunity to speak today on matters relating to the informal u. s. - eu financial markets regulatory dialogue. i would like to focus my remarks on the dialogue β s role in helping us to monitor european - wide regulatory developments in financial services and understand the effects on u. s. banking organizations operating in the european union. background to the dialogue as has been noted, the dialogue was initiated by the treasury department in 2002, at a time of significant regulatory developments in both the european union and in the united states. at that time, the european union was continuing its efforts, begun in 1999, to establish a single market in financial services by implementing the β financial services action plan β ( fsap ). the fsap consists of a number of regulatory and legislative measures designed to achieve, among other things, a single wholesale european market ; open and secure retail markets ; and state - of - the - art prudential rules and supervision. on our side of the atlantic, u. s. regulators were continuing to implement provisions of the gramm - leach - bliley act and congress was considering reforms that led to the adoption of the sarbanes - oxley act. these developments, which affected european financial services firms with u. s. operations, naturally were of interest to staff of the european commission. from the outset, the dialogue β s purpose has been to foster a better mutual understanding of u. s. and eu regulatory approaches and to identify potential substantive conflicts in approach as early in the regulatory process as possible. the dialogue consists of an informal discussion or explanation of regulatory approaches, developments, and timetables, conducted at an experts level. this format has served us well during the past two years. although the federal reserve has regular contact with staff of the european commission in other groups on a range of issues, the dialogue is the only venue dedicated specifically to u. s. - eu regulatory issues. federal reserve β s interest in monitoring foreign regulatory developments as the umbrella supervisor of u. s. bank holding companies and financial holding companies, the federal reserve has a strong interest in the regulatory environments in which these firms operate outside the united states. we have an established program
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survey indicated that, on average, filipino adults correctly answered only three out of seven financial literacy - related questions. the same survey also found that filipinos lack specific knowledge required to make informed saving and borrowing decisions. 2 clearly, there is a need for effective financial education interventions. the bsp economic and financial learning program the bsp has long recognized the importance of economic and financial education and its potential to help improve people β s lives. in 2010, we consolidated all bsp learning events under one umbrella β the economic and financial learning program ( eflp ) to ensure consistency of 1 / 3 bis central bankers'speeches messages, synergy of activities, and efficient use of resources. we focused on current economic issues, the role of the bsp in the economy, good money habits, personal finance management and financial consumer protection. eflp now consists of more than 10 component programs designed for specific audiences : the children, college students, the working sector, investors, overseas filipinos, and selected unbanked sectors. this is a nationwide program that involves seven departments within the bsp, as well as our regional offices and branches. 3 eflp participants have rated the programs with an average of 4. 5, with 5 as highest possible score. having said this, we know a lot more needs to be done. in this connection, we will continue to enhance, innovate and diversify our outreach programs to determine the most effective and efficient ways to reach our target audience and attain our education objectives. financial education, a key component of consumer protection at the bsp, financial education is not just an advocacy β it is integral to the financial consumer protection framework. this is a set of regulations that promotes consumer welfare and upholds β within bsp - supervised institutions β a culture of transparent, fair and responsible treatment of consumers. this means that financial institutions under bsp supervision will be held accountable for ensuring that consumers are : 1. provided with correct and understandable information about their financial transactions ; 2. protected from mis - use or abuse of their personal data through risk - based data handling procedures ; 3. treated fairly and professionally, with the consumer β s well - being in mind ; 4. given access to an objective and efficient mechanism for complaint resolution and redress ; and 5. assisted to make sound decisions through objective financial education and awarenessraising methods. indeed, we remind our institutions that a customer - centric approach to any business, including banking and finance, works well
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to carefully assess the appropriate timing of the unwinding of all these measures. doing it too late or too early may have serious repercussions on the economy. in addition, i am pleased to inform you that last september, the bsp started issuing its own securities, as allowed under our recently amended charter. this new instrument will help us better manage liquidity moving forward. let me now provide brief updates on the monetary, external and banking sectors : 1 / 2 bis central bankers'speeches on the monetary front, inflation remains manageable. we expect inflation to settle within the target range of 1. 75 β 2. 75 percent this year, and 2. 0 β 4. 0 percent in 2021 and 2022. low inflation gives us room for monetary easing when needed. on the external front, we continue to have a comfortable external payments position with gross international reserves at an all - time high of around us $ 100bn. external debt ratio / gdp remained low at 23. 7 percent at end - june 2020, even with the recent increase in external borrowing to fund additional government spending to address the pandemic. both our current account and bop remained in surplus in the first semester. we project a current account surplus equivalent to 1. 6 percent of gdp this year, up from a deficit of 0. 5 percent of gdp as of may 2020. we expect bop to post a surplus of around 2. 2 percent of gdp, up from 0. 2 percent of gdp as of may 2020. overseas filipino remittances have started to recover in recent months. we expect of remittances to expand by 4 percent next year from a contraction of 2 percent this year. year to date, of remittances have contracted by 2. 4 percent. the philippine peso has been an outperformer this year, appreciating 4. 7 % against the usd, year - to - date, to its highest level since late - 2016. the appreciation is due mainly to the country β s external position, itself driven by a narrowing in the trade deficit and a rebound in remittances in recent months. the philippines β banking system remains fundamentally sound and resilient despite the health crisis. the regulatory measures mandated by the bsp through the years have prepared banks to build enough buffers going into this crisis. banks are well capitalized with high capital adequacy ratio, well above both the bsp and bis regulatory requirements. asset quality remains
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benjamin e diokno : measures implemented by bsp in response to the covid 19 pandemic and outlook of economy speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at moody β s credit rating call, 13 october 2020. * * * good afternoon to those joining us from the uk, and good evening to the moody β s team in asia and also to the rest of my colleagues in government here in manila. in the interest of time, i will briefly discuss first, the measures implemented by bsp in response to the covid 19 pandemic and second, the performance and outlook of the monetary, external and banking sectors. the bsp has responded to the crisis in a timely and decisive manner. we acted quickly by providing ample monetary stimulus to mitigate tightening liquidity conditions, boost business and consumer confidence, and ensure the continued orderly functioning of the financial system. the bsp was among the first central banks in the world to respond to the crisis before it became full - blown. we cut policy rates by 25 basis points as early as february as a pre - emptive move against the impact of the pandemic. to date, we have cut policy rates by a cumulative 175 basis points. in addition, we cut reserve requirements by 200 basis points. aside from the traditional monetary tools, the bsp has implemented other extraordinary measures, to the extent that our charter and other enabling laws allow, befitting this once in a life time crisis. last october 1, the monetary board approved the short - term provisional advance to the national government worth php540 billon ( approximately us $ 11. 1 b ) in order to beef up national government finances after the initial php300 billon ( approximately us $ 6. 2 b ) repurchase agreement which was settled last september. besides these monetary measures, we also implemented a long list of time - bound regulatory and operational relief measures to help bsp supervised financial institutions withstand the crisis. in turn, we expect them to support businesses and households by giving them access to credit. with the measures we have deployed, the bsp has so far injected p1. 9 trillion ( about usd 39. 2 billion ) in liquidity to the financial system, equivalent to 9. 6 percent of the country β s gdp. with the huge amount of liquidity injected into the system, we are fully aware of the need
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move away from the chf 1. 20 level until january 2013, in other words, after many months of declining risk premia. second, the swiss franc has not weakened fundamentally against the euro during the course of this year, although risk premia have declined further. nevertheless, many market participants expect a renewed depreciation in the swiss franc in view of the progress in the euro area. the value of the swiss franc is still high at present. as can be seen in chart 2, the trade - weighted, inflationadjusted exchange rate for the swiss franc, for instance, is currently about 10 % above its long - term average. the minimum exchange rate continues to prevent an undesired tightening of monetary conditions should the upward pressure on the swiss franc intensify once again in view of the current uncertainty. exceptional circumstances still apply for monetary policy clearly, exceptional circumstances still apply for monetary policy. this is the case not only for switzerland and the euro area, but also for the us, japan and the uk. as you know, the ecb reduced its refinancing rate by a further 25 basis points two weeks ago. in the us and japan, current quantitative easing measures are giving rise to a further expansion in central bank balance sheets. the fact that monetary policy in the advanced economies is likely to remain exceptionally expansionary for some time to come can be seen in market expectations for reference rates ( cf. chart 3 ). at the moment, the markets are assuming that the federal reserve will increase its key interest rate in the second quarter of 2015, the ecb in the fourth quarter of 2015 and the snb in the first quarter of 2016. last year, a number of central banks introduced the principle of forward guidance, in order to further increase the effectiveness of their expansionary monetary policy. forward guidance involves the provision of information on the expected movement of short - term interest rates. to some extent, information of this kind has already been provided by central banks in the past. what is new with forward guidance is that some central banks give an explicit indication of how long they expect low interest rates to continue. for instance, the federal reserve and the bank of england have tied the assessment of their respective reference rates to a threshold for the unemployment rate. at the moment, an intense debate is raging as to whether forward guidance can actually increase the effectiveness of monetary policy in a zero interest rate environment. what is crucial for the effectiveness of forward guidance is that
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the models that underline that, you don β t take into account climate change. you β re missing a big chunk of the risks that are looming on the horizon and that will be upon us much quicker than we think. so if only in respect of that work, we must take climate change into account. added to that, when we invest, we have to be mindful as well and how we do that is being debated in our strategy review. plus when we do supervision and when we look at how banks are valuing their liabilities and their assets, we need to ask them whether they take climate change risk into account as well. so there are multiple ramifications where we need to ask ourselves : do i need to change? is climate change really part of my thinking? i will insist on that. at this moment, the british people are voting. how important is the outcome for europe? i think the outcome that will close the loop of uncertainty that we have lived with for the last couple of years is very important. business people and any economic actor, whether you β re in a family or whether you β re in enterprise, will tell you : β i need to know where i stand and what is the environment where i will invest, operate in? if we don β t know, then we don β t invest. then we don β t create jobs, then we don β t trade β. and that β s what has happened a little bit with the uk, because we didn β t know and we still don β t know to this day, what is the likely outcome. at the end of today we might know a little bit more. it won β t be final because we still have probably a transition period which needs to be gone through, but at least some clarity will emerge out of tonight, i hope. if boris johnson wins, brexit will happen. what will be the effect on the european economy? there will be negative consequences in the short term for all economies, predominantly the uk, and within the european union some countries will be more at risk than others. ireland is a case in point which will be sort of first affected. the netherlands might be affected as well because it has a close relationship with the uk. germany as well, the automotive industry. but clearly the major impact will be on the uk. mario draghi will go into history as the man who saved the euro. what would you like your legacy to be? i β m
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of domestic goods and services. meanwhile, domestic output expansion remains robust on account of the expansion in capital formation and household consumption, as well as strong performance of the services and industry sectors. recent high - frequency sector indicators of economic activity also continue to point to firm growth prospects in the near term. the growth momentum was also supported by a strong and stable philippine banking system. during the review quarter, banks β balance sheets exhibited sustained growth in assets and deposits. furthermore, asset quality indicators remained healthy while capital adequacy ratios continued to be above international standards. domestic liquidity also remained ample, driven by robust credit growth. however, amid this resilience, the philippine economy is being tested by external headwinds emanating from the recent and planned interest rate hikes by the us fed and brewing trade tensions among key economies. these are exerting depreciation pressures on the peso. the country β s current account deficit and higher inflation also dampened investor sentiment during the quarter. 1 / 2 bis central bankers'speeches these developments formed the backdrop for the bsp β s policy decisions during the second quarter of 2018. in brief, the bsp raised its policy rate by 25 basis points each in may and june, bringing the overnight reverse repurchase ( rrp ) rate to 3. 50 percent from 3. 0 percent a quarter ago. the interest rates on the overnight lending and deposit facilities were likewise raised accordingly. in deciding to hike the policy rate during the quarter, the monetary board noted that the increase in inflation expectations and in the risks of possible second - round effects argued for timely and decisive monetary policy actions from the bsp. although inflation expectations remain within the target range for 2019, elevated expectations for 2018 highlighted the risk posed by sustained price pressures on future wage and price outcomes. equally important, upside risks continued to dominate the inflation outlook, as various measures of core inflation continued to rise. meanwhile, the bsp kept a close eye on developments in the foreign exchange market and noted their potential impact on inflation in the coming months. the bsp believes that its monetary policy actions during the quarter signal its strong commitment to safeguard macroeconomic stability in an environment of rising commodity prices and ongoing normalization of monetary policy in advanced economies. the bsp likewise reiterates its support for carefully coordinated efforts with other government agencies in implementing non - monetary measures to help mitigate the impact of supply - side factors on inflation and social welfare. accordingly, the bsp will sustain
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its utmost vigilance. in particular, we are taking into account the potential price pressures of excessive volatility in the foreign exchange market. while we believe that our fundamentals remain solid and healthy, sustained pressures on the peso could adversely affect inflation expectations. further, some demand side pressure may also be already feeding into inflation. all of these warrant a firm and timely monetary response. therefore, let me say that the bsp is considering strong follow - through monetary adjustment at the next meeting of the monetary board in august. the pace and magnitude of policy tightening will necessarily be dependent on our comprehensive and rigorous assessment of all relevant data and forecasts. this is consistent with our long - standing disciplined approach to inflation targeting. we stand by our primary mandate of promoting price stability conducive to a balanced and sustainable growth of the economy. in a moment, we will provide you with a more detailed discussion of the factors behind the monetary board β s recent decisions and its assessment of price and output conditions. also, we will have a brief discussion of the results of the bsp β s latest quarterly loan officers β survey. we look forward to your questions at the end of these two presentations. thank you and good morning. 2 / 2 bis central bankers'speeches
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greece demonstrated an ability to adapt to changing circumstances, often playing a leading role in providing solutions to the main economic problems of the day. let me use the occasion of the bank β s 75th anniversary to elaborate briefly. following a period of monetary instability, in march 1927, the greek government sought the assistance of the league of nations to improve the health of the economy, to secure monetary stability and to help the greek banking system function better. negotiations with the league followed and a stabilisation plan was hammered out. among the terms of the so - called geneva protocol, signed in september 1927, was the establishment of a central bank, exclusively responsible for issuing banknotes. until that time, the national bank of greece, a private institution, had the privilege of issuing banknotes, which it waived in favour of the newly established central bank. the bank of greece commenced its operations in may 1928. the two main tasks assigned to the bank, as specified in its statute, were to ensure a stable currency and to regulate currency circulation. to this end, the statute provided for the bank to have reserve assets ; it also set a strict limit on the financing of budgetary deficits by the central bank. the bank of greece could not have begun operating at a more difficult time. this was a time when the international monetary system was operating primarily under the gold - exchange standard. effectively, the gold standard aimed at securing the stability of a currency by tying money supply to the gold reserves of the central bank, thus leaving little room for conducting an independent monetary policy. the gold standard has been described as nailing the domestic economy to a β cross of gold β. today, many historians blame the gold standard for helping precipitate the great depression that began in 1929. regardless, the global stock market crash of 1929 and the ensuing global financial crisis of september 1931 saw many countries driven off the gold standard. the new international environment was hardly a favorable one for a fledging central bank. concerned about the instability that might follow in the absence of the gold standard - and with the recent period of monetary instability entrenched in their memories - the greek authorities attempted to maintain the link to gold. the drachma, however, came under heavy selling pressures, and, in april 1932, greece had to leave the gold standard. leaving the gold standard made monetary policy a matter of the discretionary judgement of the authorities at the bank of greece. the new monetary regime opened up the possibility of the bank playing a more
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for release on delivery 9 : 05 a. m. est march 1, 2021 some preliminary financial stability lessons from the covid - 19 shock remarks by lael brainard member board of governors of the federal reserve system at the 2021 annual washington conference institute of international bankers ( via webcast ) march 1, 2021 it has now been one year since the devastating effects of the first wave of the covid - 19 pandemic hit our shores, a year marked by heartbreak and hardship. 1 we look forward to a brighter time ahead, when vaccinations are widespread, the recovery is broad based and inclusive, and the economy fully springs back to life. but we should not miss the opportunity to distill lessons from the covid shock and institute reforms so our system is more resilient and better able to withstand a variety of possible shocks in the future, including those emanating from outside the financial system. the dash for cash investor sentiment shifted dramatically in the early days of march 2020 with the realization that covid would disrupt the entire global economy. short - term funding markets became severely stressed as market participants reacted to the advent of this low - probability catastrophic event. the abrupt repositioning and repricing of portfolios led to a dash for cash, as even relatively safe treasury holdings were liquidated, volatility spiked, and spreads in treasury and offshore dollar funding markets widened sharply. forceful and timely action by the federal reserve and other financial authorities was vital to stabilize markets and restore orderly market functioning. although some parts of the financial system that had undergone significant reform in the wake of the global financial crisis remained resilient, the covid stress test highlighted significant financial vulnerabilities that suggest an agenda for further financial reform. i will briefly comment on these areas of vulnerability as well as areas where earlier reforms led to greater resilience. i am grateful to namirembe mukasa and filip zikes, as well as david bowman, marta chaffee, sally davies, kurt lewis, jennifer lucier, patrick mccabe, travis nesmith, and nancy riley, for their assistance in preparing these remarks. these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. - 2short - term funding market vulnerabilities the covid shock brought to the fore important vulnerabilities in the systemically important short - term funding markets that had previously surfaced in the global financial
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makes little sense. the two situations are completely dissimilar. spain is competitive. paradoxically, with the crisis, it is even more competitive than a year ago as the growth of its exports shows. it has serious problems to manage such as the situation of its banks, of its property developers and the indebtedness of its autonomous regions. but spain is taking the necessary measures : it is pushing through impressive reforms and reinventing its growth model. in your opinion, how did the euro area get into this situation? the euro area is not simply confronted with a financial crisis. it is facing a challenge : it must complete its construction. during the setting up of the euro area and subsequently during its first years of existence, governments acted with an inadequate sense of responsibility. its construction was incomplete. fiscal rules were not sufficiently strict and, moreover, they were often ignored. there was a form of cowardliness. governments preferred to close their eyes rather than to consolidate the edifice. none of the member states listened to the warning bells that were regularly sounded, notably by the ecb. at the same time, the markets also closed their eyes to the widening gaps within the euro area. once the single currency was in place, everyone found it convenient to disregard the area β s economic divergences and differences in competitiveness. the result is that today we have a monetary union zone, but the heterogeneity of its different economies has increased. what a mea culpa! it is not a mea culpa. the ecb and the governing council, of which i am a member, have never contributed to this indifference. on the contrary, over the last ten years we have signalled and highlighted these risks. however, neither markets nor governments took any notice. everyone benefited from what i would describe as an β incredible β decade, with interest rates decreasing for everyone across the board and certain countries posting exceptionally dynamic growth rates in an essentially inflation free environment. in that context, everyone got access to cheap debt financing relatively easily. the wake - up call is all the more painful today as a result. the financial crisis obliges us to completely rethink the european social model that is substantially state - financed. was europe ready for the single currency? the founding fathers of the euro, and particularly francois mitterrand and helmut kohl, imagined the euro as a major stimulus for greater european integration. they knew that it would require stronger european governance and the
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and thus the output gap, we also look at alternative indicators of pressures in the economy. the wage gap measures the difference between actual wage growth and the growth that over time is consistent with the inflation target, and is an indicator of labour market tightness. with an estimate of 2 per cent productivity growth, wage growth of 4. 5 per cent over time will be consistent with an inflation target of 2. 5 per cent. in the chart, the wage gap up to 2000, i. e. before the introduction of the inflation target, is defined as the difference between wage growth in norway and in other countries. as we see from the chart, there appears to be a close relationship between this wage gap and the output gap as it is measured by norges bank. if we look at developments in employment in relation to trend growth ( measured as a percent of the population in employable age groups ), we get a similar path. norges bank has chosen, in keeping with ordinary practice, to use a smoothing parameter,? = 100 in the annual data. we also consider credit growth to be an indicator of public demand. growth in credit which over time deviates from growth in nominal gdp may indicate that the level of activity in the economy is higher or lower than normal. in addition, we monitor various cyclical indicators and acquire information from our regional network. 6 there is uncertainty associated with the estimation of both trend growth and the output gap, but the correspondence that seems to exist between the different methods of indicating pressures in the economy makes us confidant that the output gap, as we calculate it, provides useful information. the output gap provides an overview of the overall pressures in the real economy. if there are no substantial economic disturbances - or shocks - there will be no conflict between stabilising inflation and stabilising output and employment. a positive output gap will over time result in inflation that is above target, while a negative output gap will result in inflation that is too low. nor will demand shocks in a closed economy result in a conflict in the short term between price stability and stability in the real economy. a positive demand shock will result in higher inflation, and an appropriate monetary policy response would be to increase the interest rate as much as is necessary for output to return rapidly to its potential level. in an open economy, however, a conflict of objectives could arise in the short term following a demand shock. although a higher interest rate would contribute to stabilising both output and inflation
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by a fierce determination to start afresh, to avoid the reappearance of the misleading thinking that had led to pre - war protectionism, and to reconstruct the economies that lay in ruins. a phase of intensive work began, with the aim of reorganising the international monetary order. still isolated, both economically and politically, switzerland participated in the efforts without becoming a member of the bretton woods institutions. the gradual liberalisation of payments and trade rapidly led to a period of prosperity but also to a situation of disequilibrium in the operation of the international monetary system. inflation and speculative movements of funds became common features during the 1960s and the monetary arena was disturbed by multiple devaluations, particularly in europe. suspension of gold convertibility for the dollar, in 1971, hailed the collapse of the system of fixed exchange rates that had been put into place after the war. faced with a massive flow of speculative funds, the snb was forced to abandon stabilisation of the swiss franc in 1973. the transition to sustained floating for the swiss franc was definitely the most important change of direction in the monetary policy strategy pursued by our bank in its hundred years of existence. since then, the snb has had to learn to operate with floating, and to conduct an independent monetary policy. this has not always been easy, since the international environment has often been extremely instable with the result that the swiss franc has, at times, been heavily overvalued. during the 1980s, a greater degree of monetary discipline emerged and the fight against inflation became gradually more widespread. however, the world monetary order only achieved a certain level of calm towards the end of the 1990s, when the european monetary integration project took form and monetary policies were geared towards the defence of price stability. * * * * * in sketching this rapid portrait of the hundred years of our history, we see how much circumstances have differed from one period to another. it is therefore fitting that we pay tribute to all of our predecessors who β often in difficult circumstances β gave of their best in order that the swiss national bank might fulfil its mandate. it was their prudent management of the country's business that sheltered us from the numerous monetary crises that battered so many other european states. it was they, too, whose determination made it possible for the snb to conduct a monetary policy resolutely geared to stability. our generation is deriving immense benefit from this
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of maintaining price stability in the euro area? obviously i think there are grounds for concern, for the reasons i just mentioned. but i also don β t want to exaggerate. we should not be alarmist. we should maintain a reasonable perspective. following the ecofin decision of last november, many observers promptly proclaimed the pact to be dead. i do not agree with this fatalistic view. the ecofin council did not kill the pact or even suspend its basic rules last november. what it did do was to give france and germany an extra year to adjust their fiscal policies in view of the commitments made by these countries. and in order to do so it decided to put one step of the excessive deficit procedures for these countries on hold pending the fulfilment of their commitments. if the pact is dead, then why have so many people been talking about it so much in recent weeks and months? to paraphrase one of ireland β s famous literary geniuses, oscar wilde, i would say that β reports of the death of the pact are wildly exaggerated β. the pact is not dead. it is growing up. it is making the transition from being a set of rules on paper to a set of rules applied in the real world. as is often the case when growing up, there are growing pains from time to time. moreover, while the pact may be experiencing a few growing pains, it still represents an improvement on the past. at present the euro area fiscal deficit stands at just under 3 % of gdp. ten years ago, at a similar point in the economic cycle, it was around 6 %. the pact may not be working as well as we would like, but this does not mean that it has been a failure. by being there, it has had some impact. we should give the rules and procedures of the maastricht treaty and the pact due credit for this. we should also be reassured by the fact that the euro area has a strong monetary constitution. it has an independent central bank with a clear objective to maintain price stability. monetary financing of budget deficits and the bailing - out of insolvent governments are prohibited. in short, monetary policy in the euro area is protected more than any other against the possible negative implications of unsound fiscal policies. i say this because i want to make one point clear. if the governing council of the ecb expresses its concern about fiscal developments and the implementation of the stability and growth pact, it
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with other large public investment funds. an example is the singapore government investment corporation ( gic ), where the country β s finance ministry also formulates a mandate with a benchmark portfolio and investment limits, but the board of the gic has greater responsibility for actual asset allocation than norges bank β s executive board. another example is the canada pension plan investment board. the governance structure of this fund differs even more from our own in that the board itself draws up the investment strategy pursuant to a statutory objective. chart : asset allocation in the gpfg, gic and cppib. at the same time, there are considerable differences between the asset allocation in the gpfg and that in the canadian and singaporean funds. this probably reflects the differences in governance structure as governance structure and organisation set a framework for the investment strategy to be pursued. in the consultation response to the central bank law commission β s recommendations, we place emphasis on the relationship between governance, organisation and strategy. i shall return to this shortly. first, however, remember that in addition to defining the investment strategy, the mandate from the ministry of finance contains specific reporting requirements. thanks to its extensive reporting, the gpfg enjoys a reputation of being one of the world β s most transparent sovereign wealth funds. for a fund with the entire population as actual owners, transparency is vital for ensuring democratic control and confidence in investment management. both the fund β s investment strategy and investment management have tolerated substantial return volatility over the past 20 years, partly owing to transparency about the consequences of strategic choices and performance. regardless of how the gpfg is organised in the future, it is essential to maintain the established confidence in and legitimacy of the fund. transparency about investment management will continue to be important in this regard. the investment strategy and organisation have evolved in parallel the investment strategy for the fund has evolved gradually since the beginning in 1996, with decisive changes along the way. the initial capital in the fund was invested exclusively in government bonds. already in 1997, it became clear that the fund would grow larger than assumed and the saving horizon longer. it was therefore decided that 40 percent should be invested in equities to attain a higher long - term real return. from 1998, the fund therefore went from being a lender to just a handful of countries to becoming part owner of a wide range of private companies. chart : evolution of strategy and governance structure over time from 2002, fixed income investments were expanded to include bonds issued
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, and has doubled since the trough in december 2008. metals prices have also risen. the increase in oil prices reflects low growth in oil production, more positive expectations as to the world economy and a weaker us dollar. on the other hand, oecd oil inventories are still ample and opec spare production capacity is higher than in the preceding years, while oil demand remains weak. key rates are close to zero in many countries. several central banks have signalled that key rates will be kept low for a long period, and key rate expectations abroad have fallen. pricing in the market indicates an expected rise in key rates in a number of countries after the turn of the year. the krone depreciated considerably in the second half of 2008, but has since appreciated again. stronger risk appetite and market expectations of a somewhat earlier rise in interest rates in norway have probably contributed to the krone appreciation. lower capital outflows from the government pension fund β global have probably also made a contribution. trading in nok has picked up since summer and foreign exchange market liquidity has improved. the projections are based on the assumption that the krone will depreciate somewhat from the current level. it is for example assumed that the real krone exchange rate will gradually revert to its historical average. the krone is floating and fluctuates somewhat. it has shown a tendency to appreciate in favourable times and fall in value in response to negative shocks in the norwegian economy. nonetheless, budgetary policy and the petroleum fund mechanism contribute to stability in the krone, as is clearly reflected in the movements in the krone in recent years compared with the currencies of other open economies with substantial exports of raw materials, such as australia and new zealand. the outlook for the norwegian economy is better than for most other advanced economies. the rebound in activity will probably occur more rapidly, with inflation maintaining a somewhat higher level than in many other countries. monetary policy measures, combined with petroleum investment and growth in public spending, have boosted activity. the downturn in the norwegian economy may be relatively mild. the norwegian authorities implemented a range of measures to mitigate the impact of the crisis on the norwegian economy. as a result, the liquidity crisis did not turn into a bank solvency crisis or a crisis in the real economy. norges bank reduced the key policy rate considerably last autumn. the key policy rate has been reduced further in 2009 to 1. 25 per cent. norges bank
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specifications, which will be ready by the end of 2009. it will be followed by the development phase and subsequently the testing and migration phase. the envisaged go - live of the system is 2013. in parallel to the target2 securities project, the eurosystem launched the ccbm2 project ( correspondent central banking model ). ccbm2 will be a common platform for managing eurosystem collateral, i. e. the assets pledged to the eurosystem as security for its central figure of january 2009. bank credit operations, both on a national and pan - european basis. ccbm2 will be fully compatible with target2 and target2 securities. this creates synergies in the settlement of collateral for eurosystem credit operations and the release of the related credit to the financial institutions. 3. conclusion european financial markets have come a long way in the integration process. the progress achieved so far, however, leaves no room for complacency, as the recent disruptions caused by the financial crisis clearly warn us. the forthcoming ecb report on financial integration β which has a special focus on the effects of the 2007 - 2008 financial turmoil on the state of financial integration in the euro area β provides clear evidence that the financial turmoil has considerably affected the latest observations of the integration indicators. the usual indicators of financial integration β such as the cross - country standard deviations of money market rates, or government bond spreads β deteriorated gradually over the past year, with a dramatic acceleration in the last months of 2008. when comparing the available indicators for cross - country data with those built on national data, we see that interbank rates shows signs of divergence for all transactions, but more pronounced for cross - border ones. this suggests the presence of heightened credit and liquidity risks everywhere, but possibly larger for cross - border counterparties. given the impact of the current financial turmoil on the functioning of the financial market, it is of utmost importance to act in a concerted and co - ordinated manner to restore the proper functioning of the financial system. the competent authorities need to be vigilant that instability does not stop or even reverse the financial integration process. the eurosystem is following market developments very closely and it has been particularly proactive in money markets. it played an essential re - intermediation role, which was instrumental to support the functioning and integration of the money markets during the crisis period. payment and settlement systems have shown a remarkable resilience to the shocks that
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which are necessary to understand historical change. the first level was the longue duree : the deep processes over long periods that shape the structures of economy and society. such a long term perspective is important to assess emu because a key objective is to further the historic project of european integration. the second level of time was the epoque : the trends that define a particular period of history. this medium - term perspective is also relevant because the treaty has set aims for emu which are best assessed over the medium - term β most notably ensuring price stability. the third level was l β histoire evenementielle : the events of the day that shaped the course of current affairs. this near term perspective is significant because the litmus test of any union is how it responds to unforeseen stresses and challenges β and emu has experienced just such circumstances together with all advanced economies since 2007. such a textured approach may give a more comprehensive picture of economic and monetary union. i will discuss each level in turn. bis central bankers β speeches the longue duree let me start with the long - term perspective, the longue duree. for braudel the longue duree concerned the slow and subtle effects of deep social and economic changes. it is an important perspective because emu is part of a historical process to deepen economic integration in europe, and thereby, as montesquieu famously argued, to make the countries of europe β reciprocally dependent ; and their union is founded on mutual necessities. β it would be fair to say that this ambitious aim has been achieved. the ideas for the start of a european community, presented as early as in the speech of robert schumann in 1950, for an economic and monetary union laid out in the werner report in 1971 and then in the delors report in 1988 have become reality. going further back, a single market with a single currency represents β to various degrees β the fulfillment of the visions of thinkers like victor hugo in the 19th century, immanuel kant in the 18th century, hugo grotius in the 17th century, and erasmus in the 16th century. emu has brought economic gains and thereby help lay the foundations for β perpetual peace β in europe. this wish for deeper integration is not only a philosophical pretension but also evident in the attitudes of european citizens. surveys indicate that, on average in euro area countries, more than 80 per cent of euro area citizens are in favour of greater policy coordination between
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up house prices even further, with mortgage interest tax relief the clearest example of this. schemes that were introduced to give first - time buyers greater opportunities in the housing market are unfortunately mainly having an adverse effect. altogether, this causes spiralling higher house prices and increasing debt levels. lending behaviour developments are generating risks for households and financial institutions. banks, however, do not yet take sufficient account of the systemic risk inherent in the housing market. they are vulnerable to the impact that a price correction on the housing market would have on economic activity, and thus on the quality of their loan portfolios. in order to increase their resilience, we will introduce the previously announced floor for risk weighting of mortgages on 1 january 2022. final remarks now the recovery of the dutch economy is gaining traction, it is important to refocus on structural vulnerabilities. on the housing market, but of course also when it comes to the energy transition and the problem. the formation of a new coalition government offers the perfect opportunity to set out appropriate policies in these areas. this concludes my introductory statement. i would be happy to answer any questions you may have. 2 / 2 bis central bankers'speeches
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klaas knot : banks going bankrupt speech by mr klaas knot, president of the netherlands bank, at the flairs conference, amsterdam, 29 september 2023. * * * thank you. and what an uplifting topic you have asked me to talk about! as president of an organisation that is responsible for banking supervision, having to talk about banks going bankrupt feels a bit like giving a speech about your most spectacular failures. but the sober fact is that we can never rule out the possibility of banks going bankrupt. in fact, the very words bank and bankruptcy are closely related. the word bankruptcy is derived from the italian'banca rotta ', literally meaning'broken bank '. the story goes that in renaissance italy there was a tradition of smashing a banker's bench if he defaulted on payment. so that the public could see that the banker, the owner of the bench, was no longer in a position to continue his business. despite strong buffers, despite supervision, banks can go bankrupt. that's all part of a healthy, dynamic, competitive banking sector. and in fact, at the current juncture, with interest rates having gone up β while justified to keep inflation in check β the risk of accidents is increasing. as the americans say'whenever the fed hits the brakes, someone goes through the windshield.'the problem is of course that a bank failure may threaten financial stability. because of contagion, because banks are interconnected, and because of the vital role banks play in the economy. so one of the lessons from the global financial crisis is that we β that is central banks, supervisors and the banks themselves β should be thoroughly prepared for a failure, if one happens. so that the bank can be laid to rest in an orderly way, and essential public functions can continue. to illustrate what happens when you are insufficiently prepared, let me tell you one or two stories about fortis, the former belgian - dutch financial conglomerate. in september and october 2008, i participated, as senior aide to the previous governor, in the crisis management meetings in brussels to prevent the imminent collapse of fortis. at the time, we still had to rely on general bankruptcy laws and insolvency liquidation that were completely unsuitable for financial institutions. particularly for those institutions that provide critical economic functions. functions that need to be maintained. so we had to improvise a lot. for example, we did not have the legal instruments to impose losses on shareholders while
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the u. s. dollar, or being de facto dollarized, as some have claimed. recent research conducted at the bank of canada shows clearly that, if anything, canada is now less dollarized than it was two decades ago. we are not drifting towards dollarization. if we go down that road, it will be a deliberate choice. when choosing an exchange rate regime, it is crucial to remember that monetary policy needs to have a nominal anchor. in canada, monetary policy is anchored by our use of an explicit inflation target. if a country chooses not to float its currency, it essentially adopts the monetary policy of the country to which it is tied. this may, or may not, provide an effective nominal anchor. let me briefly explain how the floating exchange rate fits into canada β s monetary framework. our monetary policy aims to keep inflation at the 2 per cent midpoint of a 1 to 3 per cent target range. we protect the domestic purchasing power of our currency by keeping inflation low, stable, and predictable. by doing so, we support the conditions necessary for strong, sustainable economic growth. with a floating currency, our exchange rate acts as a mechanism that allows the canadian economy to adjust to important economic changes, or what economists call β shocks. β these can include movements in relative world prices, changes in capital flows, or divergent economic conditions across countries. consider commodity prices, for example. as you know very well, canada is an important producer of commodities such as metals, paper, and chemicals. when the world prices of these goods rise, it means that canadian producers receive more income. this rise provides a boost to the canadian economy. when commodity prices fall, it means less income for canadian producers. this has a negative impact on the economy. changes in these sorts of relative prices are a signal to shift real resources out of some sectors and into others. the canadian economy needs to respond to such signals. under a floating - rate regime, movements in the currency help to smooth that process and attenuate the adjustments in output, employment, wages, and prices. without a floating currency, the canadian economy would still need to absorb the effect of changes in relative prices. but the burden would fall initially on output and employment and, eventually, on all wages and prices. this would be a far more difficult and costly process for many. there will always be economic shocks that require adjustments. but because the structures of the u. s. and canadian economies are so different,
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david dodge : dollarization and north american integration remarks by mr david dodge, governor of the bank of canada, to the chambre du commerce du quebec, sherbrooke, quebec, 5 october 2002. * * * good morning, ladies and gentlemen. thank you for inviting me to this congress, and for choosing to spend part of your weekend listening to the discussion on this important topic. the question before us sounds straightforward : β should canada adopt the u. s. dollar? β but the issues are complicated. i will not pretend that i can cover all the nuances of this topic in my allotted time. so i am running the risk that i may oversimplify matters. i should also say that i want to stick to economic facts and arguments. there is, of course, a big political dimension to the question, but i will leave that to the politicians. i want to confine my arguments today to the field of economics. choosing an exchange rate regime in the years following world war ii, many countries operated under an exchange rate regime that one might call β fixed until further notice. β this system, known as the bretton woods system, saw most countries peg the external value of their currencies to some other currency, most often the u. s. dollar. but for a number of reasons, this system of β fixed until further notice β exchange rates proved unstable. it has been abandoned by many countries in favour of one of two options - either a floating - rate regime or the use of another currency. most have chosen a floating - rate regime. a few countries have decided to join some kind of monetary union or to use a foreign currency to replace their own. canada was one of the first countries to adopt a floating - rate regime. it did so at the beginning of the 1950s and, generally, this regime has served us well. but with increasing integration of the canadian and u. s. economies, the question now being asked is whether canada might be better off giving up the canadian dollar, either through dollarization or by entering into a monetary union with the united states. what i want to do today is to discuss the benefits and costs of a floating exchange rate versus dollarization at the present time, given the current degree of integration of the u. s. and canadian economies. then i will talk briefly about the implications for our floating exchange rate should the two economies become more integrated. let me just add here that canada is not being inevitably drawn into adopting
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, a market in derivatives also developed, originally as an over - the - counter market, but since the establishment of the south african futures exchange ( safex ) in 1990, on a more formal basis. these reforms, together with the other socio - politico - economic changes in the country, boosted turnovers in the financial markets. in 1996, the total turnover in equities on the johannesburg stock exchange exceeded us $ 27 billion ; total turnover in the bond market amounted to us $ 703 billion, and 4. 1 million contracts were traded through safex. major changes also took place in the south african market for foreign exchange, particularly in the light of the gradual removal of exchange controls. south africa has a floating exchange rate system in which about 30 authorised dealers in foreign exchange ( banking institutions ) make prices on a competitive basis, for foreign currencies ( mostly us dollar ). the exchange rate is therefore determined by underlying forces of demand and supply, influenced to a diminishing extent by reserve bank intervention ( through exchange controls and direct active participation ). the reserve bank is gradually reducing its participation in the market, and is now in the process of encouraging the development of a more active market in forward foreign exchange outside of the central bank. the average daily turnover in the south african market for foreign exchange over the past six months amounted to us $ 6. 1 billion. the policy of the reserve bank is to continue to encourage the development of the financial markets, and to monitor these markets on a regular basis. the central bank itself, however, is reducing its own direct participation in the market - making processes. this applies to the market for foreign exchange and also the capital market. negotiations for the transfer to the private sector of responsibility for the primary funding of government and for market - making in government bonds have reached an advanced stage. the reserve bank will eventually confine its participation in these markets to transactions ( such as open - market operations ) aimed at the achievement of defined monetary policy objectives. 2. 5 the national payment, clearing and settlement system up to now, the national payment, clearing and settlement system was vested in a joint venture between the reserve bank and the major commercial banks in the country. clearing takes place on a daily basis through an electronic data process in a communal banking service facility known as the automated clearing bureau ( acb ). the acb is, however, no longer able to stand up to the emerging pressures of the expanded activity in the financial markets. the
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speeches to use your training in economics, banking and finance. thank you and congratulations in advance to the winners who will later emerge. again, just by making it this far β¦ you are all # lodis. a pleasant day and to everyone! 3 / 3 bis central bankers'speeches
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regulatory provisions for capital requirements, shareholder limits, credit operations, provisioning requirements, consolidation, acquisition and mergers, suspension, winding up of banking companies, etc. sri lanka β s banking sector is currently operating on basel i, but getting ready to implement basel ii capital adequacy ratios from early 2008. basel ii is basically risk mitigation in banking operations and, it allows supervisors and regulators to encourage or require banks to build up capital buffers in good times. financial regulations have thus been set taking into consideration the cyclical situation which banking firms face in home and host countries. in addition to the provisions in the banking act, the monetary law act which governs the operations of the central bank, also provide for regulation of banking companies. however, in recent times, through various amendments, most of the provisions of the monetary law act have been incorporated in the banking act. their stock market operations come under the purview of the sec act. in addition to the banks, the central bank regulates the finance companies under finance companies act and the leasing companies under the leasing act. the primary dealers who deal in the government securities market irrespective of whether they are banks or not, are under the supervision of the central bank. the sec regulates the investment companies, merchant banks, venture capital companies, unit trusts and the rating agencies. under the provisions of the act, the sec issues financial regulations to ensure that companies listed in the stock exchange operate in an orderly manner preserving the stability of the capital markets and, as a whole, the financial system. the registered insurance companies, the insurance broking companies and ancillary service providers are regulated by the ibsl to safeguard public interest. the insurance policies consist of long - term savings of the public and, therefore, the sustainability of insurance companies is important for longterm savers. all financial institutions operating in sri lanka are required to comply with the recently enacted money laundering legislation, countering the terrorist financing legislation and the financial transaction reporting act. relevant regulations will be issued shortly. the recently introduced payments and settlements act provides wide powers to the central bank to regulate the national payments system. despite these legislation and financial regulations, there are many operations by the financial intermediaries which cannot be captured by one or more financial regulation. one such category is financial conglomerates, which engage in banking and finance, insurance and stock market transactions. they still have a leeway to take advantage over others. regulating these conglomerates is a real challenge.
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ranee jayamaha : glimpse of current financial regulations inaugural speech by dr ranee jayamaha, deputy governor of the central bank of sri lanka, at the client seminar on international trade, organized by hnb ( hatton national bank ), colombo, 13 november 2006. * * * mr theagarajah, officials of hnb, mr richard lightbound from wachovia bank, distinguished participants, ladies and gentlemen. thank you for the invitation extended to me to be present at the client seminar on trends in international trade. let me congratulate hnb for taking the corporate social responsibility seriously and arranging a forum to exchange stakeholder views on an important subject. generally, regulations are not liked by anybody. same goes with the financial community in sri lanka. however, the common factor is that even regulators do not like to rule by regulation. for a better appreciation of the past and present financial regulatory environment, let me first set out the key elements underlying financial regulations. in summary : ( a ) regulations are mainly a reaction to an action by the financial community, although there may be instances in which regulations are brought in on hindsight with a forward - looking approach, but they are a few ; ( b ) there is a clear difference between the objectives of regulators and market participants ; ( c ) regulations are not necessarily a oneway street. they are not there only to tighten markets. many instances can be quoted where regulations have been relaxed depending on the circumstances and environment ; ( d ) regulators should be proactive and work towards the development of markets rather than impeding their growth ; and ( f ) the institutions and markets that are subjected to regulations should not try to find loopholes to circumvent regulations. unless there is a conscious decision by the shareholders, the director boards, the senior management and officials of financial institutions, regulations by themselves do not bring in decided results. let me first deal with the world financial regulatory environment with a brief background of attempts made to stabilise financial systems. over the last 2 decades or so, the financial sector witnessed a radical reform process. the focus of the reforms was on deregulation and liberalization of the financial sector. the volume and value of transactions have increased many times, the speed with which transactions are initiated and completed has accelerated ; new markets have opened up ; there has been a significant expansion in the range of financial instruments ; financial firms have grown bigger and bigger and international businesses have become increasingly concentrated in the hands of a
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high swiss franc, the minimum exchange rate is still the key monetary policy instrument for the snb. our monetary policy decisions have caused the snb balance sheet to increase considerably. due to the size of the balance sheet and the uncertainty on the capital markets, annual results are expected to be volatile in the foreseeable future. that is why we cannot provide you with any forecasts of the snb β s future annual results. we are certainly very aware that the lack of a dividend is painful for many shareholders. however, as you know, the snb is obliged by constitution and statute to act in accordance with the interests of the country as a whole. its primary goal is to ensure price stability, while taking due account of the development of the economy. the snb is required to gear its overall, illiquid assets totalling usd 38. 7 billion were taken over. the funding was as follows : the snb granted a loan of usd 25. 8 billion and ubs provided 10 % or usd 3. 9 billion in the form of the purchase price for the option to repurchase the stabilisation fund at a later date. the difference between the funds paid into the stabilisation fund and the total sum of transferred assets was made up of contingent liabilities which, at that point, did not require any financing. in 2009, the confederation sold the equities arising out of the conversion of these notes to institutional investors, thereby ceasing its involvement. bis central bankers β speeches monetary policy to this goal alone, and not to making profits. i would therefore like to thank you, our shareholders, also on behalf of my colleagues, jean - pierre danthine and fritz zurbrugg, for your loyal support of and understanding for the activities of the snb. the governing board thanks the snb staff for their untiring service to our institution. thank you all for your attention. bis central bankers β speeches
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monetary policy easing measures, the single currency came under downward pressure. by the beginning of december, the expectations of financial market participants had not been fulfilled and the euro gained in value again. by comparison with its mid - year level, the euro has appreciated only marginally on a trade - weighted basis. demand for secure investments remained high worldwide. on the bond markets, yields on longer - term government bonds declined further. chart 1 shows that the decline in yields in the euro area was somewhat greater than in the us. the yields on ten - year german government bonds have fallen by almost 20 basis points since the end of june. in france and italy, the decline in yields was more pronounced. meanwhile, yields on ten - year us treasury bonds have changed relatively little. on the swiss capital market, almost the entire yield curve has shifted downwards again since mid - year. yields on confederation bonds with terms of up to 13 years are currently in negative territory. this corresponds to three - quarters of the outstanding volume. at the beginning of december, the yield on ten - year confederation bonds reached a new low of β 0. 4 %. most recently, it was trading at β 0. 25 % or about 40 basis points lower than mid - year. bis central bankers β speeches how negative interest works in the second part of my remarks today, i will talk about the way in which negative interest works. since january, the swiss national bank ( snb ) has been charging negative interest of β 0. 75 % on sight deposits held by banks and other financial market participants at the snb. negative interest is a key instrument in our monetary policy. together with our willingness to intervene on the foreign exchange market, it counteracts the overvaluation of the swiss franc. when calculating negative interest, the snb grants the banks exemptions so that the banking system does not have to carry the full burden resulting from the high level of sight deposits. for banks subject to minimum reserve requirements, the exemption threshold is calculated as 20 times the minimum reserve requirement, based on a reference period. for sight deposit account holders not subject to any minimum reserve requirements, the exemption threshold has been set at a minimum of chf 10 million. by applying negative interest universally to all account holders, we are adhering to the principle of equal treatment. it therefore makes sense that banks with above - average sight deposits in proportion to their minimum reserves pay higher interest than other banks. in this respect, negative interest is no different to
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consolidation apply to all the size classes of banks, given the extensive list of new or enhanced requirements created by dodd β frank and their associated compliance costs. as it affects community banking, my concerns are tempered somewhat, though not completely alleviated, by the small - bank exceptions that have been granted to several of the new law β s more costly requirements. see β that which is seen, and that which is not seen, β in essays on political economy, by m. frederic bastiat, london : provost & co., 1872. bis central bankers β speeches unfortunately, the same cannot yet be said for the case of regional banks. the act indicates that all banking organizations with more than $ 50 billion in assets should be subject to enhanced supervision. some of the related regulatory proposals have already been distributed for comment. still other proposals for new, stricter β enhanced supervision β rules for these banks will be unveiled soon. yet, few really believe a $ 50 billion bank poses a systemic threat to our $ 17 trillion banking system. nor is a $ 50 billion bank qualitatively similar along risk dimensions to the very largest ones that exceed $ 2 trillion in size. the top 10 banking organizations have a cutoff point of $ 300 billion. i posit that this group should constitute the primary target for enhanced supervision. interestingly, despite its large share of industry assets, this group holds only about 20 percent of the small - business loans on bank books. clearly, these institutions are engaged in substantial activities outside the traditional banking role. it is within these very largest banks, and perhaps a few slightly smaller yet highly complex or interconnected ones, that systemic risk is concentrated. if the enhanced - supervision requirements are not highly graduated and imposed primarily on the very largest banks, it is not difficult to imagine how the costs associated with such supervision could lead mid - tier banks that exceed the $ 50 billion threshold β yet fall well short of megabank status β to seek merger partners in order to achieve sufficient scale by which to help cover the cost of regulation. this would compound the problem rather than alleviate it. with regard to enhanced standards for such important factors as capital and liquidity requirements, leverage limits and risk management, dodd β frank instructs regulators to differentiate among these banks. enhanced supervision can be implemented on a graduated scale, based on the extent of assets beyond $ 50 billion and possibly other factors. let us do that fully, then, applying these measures along a highly graduated scale, with only minimal
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fail poses for the effective conduct of monetary policy. in looking at regulatory reform and implementing dodd β frank, i think a key point worth repeating is that the distinction between β commercial banks β and β the shadow banking system β is a false one. the two became intertwined beginning with the bypassing of glass β steagall strictures by sandy weill and citicorp and the deregulatory initiative of gramm β leach β bliley. the fact is that the largest commercial banks played a major role in many of the more problematic phenomena of the recent credit boom and ensuing crisis, including the spread of what i have previously referred to as financial stds, or securitization transmitted diseases. in the aftermath of the panic, these viruses linger. last week, the new york times printed an interesting article by joe nocera, who drew upon the observations of a highly regarded regional banker from buffalo, robert wilmers of m & t bank. 10 wilmers claimed that of the see the dodd β frank wall street reform and consumer protection act, http : / / frwebgate. access. gpo. gov / cgibin / getdoc. cgi? dbname = 111 _ cong _ bills & docid = f : h4173enr. txt. pdf. see β restoring american financial stability, β a summary of the bill, http : / / banking. senate. gov / public / _ files / financialreformsummaryasfiled. pdf. see β paradise lost : addressing β too big to fail, β β speech by richard w. fisher at the cato institute β s 27th annual monetary conference, nov. 19, 2009, and β minsky moments and financial regulatory reform, β speech by richard w. fisher before the 19th hyman p. minsky conference, april 14, 2010. also see note 5 and β the blob that ate monetary policy, β by richard w. fisher and harvey rosenblum, wall street journal, sept. 28, 2009. see β the good banker, β by joe nocera, the new york times, may 30, 2011. bis central bankers β speeches $ 75 billion made by the six largest bank - holding companies last year, $ 56 billion derived from trading revenues. nocera noted that β in 2007, the chief executives of the too big to fail banks made, on average, $ 26 million β¦ more than double the compensation of the top
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##isation. the applicants intend to sell directly to irish customers or sell from ireland into the european union. the potential activities range from : banks ; investment firms ; trading venues ; electronic money institutions ; commercial insurance ; and retail insurance. 6 / 7 bis central bankers'speeches our approach in assessing the plans of existing firms and new authorisations is focused on ensuring we deliver our important gatekeeper and supervisory role in a proactive, predictable, transparent and consistent way. while there has been some focus on potential attractiveness of ireland for firms choosing to relocate and on the numbers of firms coming to ireland, the bank β s clear objective is to deliver financial stability through assertive risk - based supervision. we have engaged effectively with our colleagues across the european ecosystem to ensure that we are operating to, and influencing, the european norms of authorisation and supervision. in doing so, we are mitigating the risks of regulatory arbitrage being a basis for firms β relocation decisions. in summary, the central bank has a number of key objectives as we look towards 2019 and beyond. in line with the fundamental regulatory overhaul since the crisis, we will continue to focus on strengthening the resilience of the financial system, so that it is better able to withstand external shocks and future crises. we will seek to mitigate the risks posed to the economy, financial system and consumers by brexit. and, building on sustained work over the last decade, we will seek to further strengthen our approach to financial conduct regulation, in order to protect consumers and investors from a systemic perspective. i hope the above has been useful in terms of the topics that the committee wishes to discuss. 7 / 7 bis central bankers'speeches
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systemic implications, we revert to financial stability. i firmly believe that the first and most important job for a central bank is to ensure the integrity of money and the banking system. 2. joint supervision and crisis response mechanisms building bridges of continuous communication with local bank managers, home supervisors and headquarters of the mother institutions has proved to be critical in dealing with the problems before they get out of hand. while communication is an advice that is frequently used, we made a good use of that beyond mere courtesy. we acknowledged that financial development was following a certain pattern. financial institutions like all other businesses adopt marketing strategies and stick to such strategies in all markets. what this means for us is that once new product are developed and tested in other markets, they will follow the same pattern of marketing in other markets as well. in the years that preceded the crisis, financial institutions started the practice of lending in exotic currencies, offering very low interest rates and being without any economic relation with the borrower activity. being aware of these developments, from previous communication with other central banks in the region, we were alerted to spot the first sign of such behavior in our economy. therefore at the first signs of such credits, we discussed with the management of our banks and stopped administratively lending in these currencies for all unhedged borrowers. on a systemic level, i do believe the recent experience highlighted some issues that need to be looked more carefully in the future. i will highlight here only three of them. the policies that facilitated the capital inflows into economies of the region were not followed by actions which could have provided the needed liquidity when these flows reversed or stopped. countries of the region did not benefit from the swap agreements or similar arrangements that would allow us access to short term liquidity. one can certainly say that in normal times that could be resolved at group level. however, this didn β t necessarily prove to be the case in the recent experience. because our financial systems are inter - connected, i think this issue deserves more attention in the future. a crucial step in alleviating the financial crisis in cee countries was the vienna initiative, which stabilized both the balance sheets of the big banking groups operating in the region and the trust of our public in them. i think such a facility needs to be permanent, at least in the case of global or european potential financial financial regulation and regulatory arbitrage was a serious issue before and throughout the crisis. before the crisis, banking groups would play
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klaus liebscher : the european integration : policies towards stability, growth and employment speech by dr klaus liebscher, governor of the austrian national bank, to the bertelsmann foundation, european forum alpbach, institute for public affairs, and the bruno kreisky forum for international dialogue, baden, 29 june 2001. * * * ladies and gentlemen, it is a great pleasure for me being with you this evening and let me first congratulate the organisers of this conference for having chosen a combination of two very important issues for discussion on european integration β labour markets and enlargement. i am pleased to share some thoughts with you from the view of monetary policy. the two elements of your conference title touch upon both the deepening and the widening of european integration. i may recall that, in the wake of the fall of the berlin wall, those two dimensions were often discussed as alternative strategies. however, today it seems clear to almost everybody that european integration has to proceed in both directions. the deepening of european institutions and the widening of europe's geographical extension are not mutually exclusive but rather dependent on each other. progress in one area does certainly give momentum to the other. the most important step in the deepening process of european integration β at least to my mind β has been the creation of economic and monetary union ( emu ). from a governor of one of the euro area central banks this statement will certainly not come as a surprise to you. although there was some scepticism or even criticism in the run - up to emu, not only european officials but also many observers outside the area have since confirmed that the transition to emu was taken successfully β including those observers who were originally very sceptical about the ambitious aims lined out in the maastricht treaty. and indeed, the list of preconditions for monetary union met in recent years is impressive. let me single out just a few of those points, without attempting to gloss over the challenges that lie ahead : Β· first and foremost, while inflation has come down to historically low levels we cannot be satisfied with the current inflation performance. at this point it has to be stressed that price stability was not only a precondition of monetary union but β even more importantly β is the prime objective of the independent eurosystem. thus, the european central bank will ensure that medium - term inflation is in line with price stability. we are confident that such a conduct of monetary policy will
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an abstract notion to most of the citizens since it does not yet exist as a tangible transaction currency. the euro project will receive much more support once the common coins and banknotes have been introduced at the start of next year. the single currency will enhance price transparency and reduce transaction costs, both of which are likely to promote competition and full implementation of the single market for goods and services. but the euro will only be able to fulfil this expectations if it is a stable currency strengthened by a determined monetary policy, structural reform and wage moderation. last but not least, the introduction of a single currency is not just an economic project. it also carries a political, symbolic and psychological dimension of european integration. while the replacement of national currencies by a pan - european symbol is hardly changing the national identities of the member states, it certainly helps to promote pan - european thinking. perhaps one should recall at this point that integration is not only an objective by itself. what is at stake is sustainable economic and social development and ultimately political stability and β without sounding pretentious β peace. european integration will only be truly successful if it reaches out to the whole of europe. again it is the concept of stability orientation that urges us to complete european unification. according to the underlying rationale of enlargement, either we export stability to the accession countries, or we stand to import instability. if we manage the enlargement process successfully, this will also be conducive to our endeavour to guarantee stability for the whole euro area. such a mutual improvement is desirable in a very broad sense : political stability, financial market stability, macroeconomic and β in the particular interest of the eurosystem β price stability. the enlargement of the european union to central and eastern europe has arrived at a critical juncture. accession negotiations with ten central and eastern european countries and with malta and cyprus have advanced dynamically, especially during the past half year. difficult chapters β like " freedom of movement for persons ", " free movement of capital " or " environment " β have been provisionally closed with some applicants. furthermore, some of the six " helsinki group " countries ( which started negotiations only in early 2000 ) have made good progress in catching up, in the accession negotiations, to the " luxembourg group " countries. the european council in nice opened the door for a widening of the union, even if it did not fulfil all expectations. ratification of the new treaty is proving more difficult than
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is a financial literacy session for microfinance clients and beneficiaries of the government β s conditional cash transfer ( cct ) program, many of whom are unbanked. the sessions are designed to enhance their capacity to manage resources and make wise financial decisions that would eventually benefit their household, their community, and eventually the larger economy. these sessions are conducted in partnership with our department of social welfare and development, the lead administrator of our cct program. indeed, we continue to view multi - stakeholder partnership as an important strategy to facilitate the expansion and deepening of our financial system. moving forward, we see the value of collecting evidence and data that conclusively affirms what we believe to be true : β’ that access to financial services empowers households to better manage their resources and improve the quality of their lives ; and β’ that broad - based access to finance and financial inclusion support financial stability and facilitate inclusive growth. aside from anecdotal evidence, it would be ideal to have metrics that will give us solid data on how we are doing and how we can make things even better. to implement this commitment, we will engage various institutions in further consultations... to develop a national financial inclusion strategy. with a unified vision, synergy of action and complementarity of initiatives, we should make financial inclusion a reality across our country. our ultimate goal is to provide every filipino the opportunity to benefit from having access to appropriate financial services. ladies and gentlemen. we are here because we share the same vision : to fight poverty and improve lives across the world. let us therefore leverage on each others β competencies and expertise by forging effective partnerships, and moving in unison toward our common goal of poverty reduction, financial inclusion and inclusive growth. together, we can cover a lot of ground. once again, i welcome all of you to the philippines for the 2013 microcredit summit on partnerships against poverty. thank you! and as we say in the philippines : mabuhay! bis central bankers β speeches
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amando m tetangco, jr : partnerships against poverty speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the 2013 microcredit summit β partnerships against poverty β, manila, 9 october 2013. * * * good morning! the philippines is pleased to welcome all of you to the 2013 microcredit summit : partnerships against poverty. that the summit is being held in this part of the world at this time is deeply appreciated. according to the asian development bank, two - thirds of the world β s poor are in asia and the pacific. indeed, while economic growth has improved lives by the millions, many still live in poverty. clearly, there is a need for intervention to accelerate the process of bringing down the benefits of growth to the grassroots. organized broad - based programs... such as this summit address this need. this is where stakeholders across the world can learn from each other and benchmark with international best practices. empowering people to get out of poverty by giving them access to microcredit from formal financial service providers is a winning strategy. how to reach out to the teeming millions who live in poverty is the challenge before us. this is where partnerships against poverty come in. we are fortunate therefore that we have hundreds of participants here at the summit who will share what they have learned : in challenging times as well as in good times. in particular, we are honored that we have with us leading champions and enablers of microfinance, led by : nobel laureate professor muhammad yunus ; minister syarief hasan of indonesia, ambassador jorge domecq fernandez of spain, director larry reed of the microcredit summit campaign ; chair of the microfinance council of the philippines mila mercado - bunker ; and no less than philippine budget secretary florencio abad. here in the philippines, the bangko sentral ng pilipinas, which is the central bank of the philippines, plays a key role in the development of the microfinance sector. as a central bank, our principal mandate is to ensure the stability of prices and the banking sector. in this connection, one of our principal thrusts is to develop a financial system that is inclusive and reaches out to the unbanked. to us, an inclusive financial system makes for a more stable financial system ; equally important, it enables us to help improve the lives of
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encourage regulatory arbitrage and thus tend to heighten systemic vulnerability. therefore, the bundesbank is very much involved in the work of the fsb. i would like to restrict myself to highlighting just two aspects which enjoy a very broad consensus in the international debate. first, there is consensus on one of the points mentioned earlier, namely the need to strengthen financial institutions β resilience ; the capital and liquidity buffers for weathering crises have to be increased. more robust capital and liquidity requirements as well as an improved measurement of exposures to risks are also necessary so that risks arising from excessive leverage can be better controlled in the future. due account should be taken when devising and implementing rules of the particularities and peculiarities of national financial systems. this is especially important with regard to the aspired improvement in the quality of banks β capital base. here it is essential to focus on the targeted function β the ability to absorb losses β rather than on legal form. in view of the ongoing difficult economic environment, it is also evident that appropriate transition periods have to be granted. overhasty implementation would pave the way for a likely capital - induced credit supply failure. second, we must ensure that the incentive structures of participants in the financial system are aligned with the objective of fostering a sustainable development. this will be facilitated by enhanced transparency, which strengthens market discipline, even though it is obviously not sufficient on its own. this applies especially to the securitisation process. significantly improved standards of quality and integrity are a key precondition for reviving the securitisation market. originators should have a direct interest in ensuring that all risks ( including those of correlated defaults ) are captured adequately β for instance by retaining a vertical slice of securitisations. provided the instruments are designed in a way which makes microeconomic risk - taking compatible with sound macroeconomic outcomes, they can play an effective role as a source of funding for the banking sector. they will thereby also contribute to reliable and properly priced lending to enterprises β which is the most important aspect from an economic perspective. in a nutshell, the internationally coordinated reforms should substantially increase the stability of the financial system. on balance, they will probably imply more moderate earnings prospects in the financial sector. however, earnings are also likely to be less volatile and therefore more robust. given the considerable negative externalities that may arise if financial institutions run into distress, that seems a price worth paying to safeguard financial stability
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fail β. second, europe β s banks have substantially increased their investments in sovereign bonds. over the last few years they have invested increasingly in bonds of their home governments and their home regions. the links between bank risks and sovereign risks have become much stronger, not looser, in recent years. nonetheless, the reasons for this development are more nuanced than simply the outright public ownership of banks. in any case, it is critical from a financial stability perspective, especially for those countries hit by the european debt crisis, and indirectly for the entire financial system. bis central bankers β speeches so the links between the state and the banks, between the public and the financial sector have become a challenge for financial stability β despite the fact that they are partly a result of measures needed to ensure financial stability. in his book β our wealth and its enemies β, the german journalist gabor steingart describes the blurring of lines between banks and the state as follows : β precisely in the centre [ β¦ ] of our market economy a mutation took place. the close connection between risk - taking and responsibility, a constitutive element of the market economy, was decoupled [ β¦ ]. an economic hybrid came into the world, which skipped over the border between the state and the private economy. β journalists are, of course, entitled to use a more controversial tone, but in my view there is some truth in this argument. blurring the lines between the state and banks risks deforming our market economy and our thinking about it. sometimes it seems as if we are witnessing a transformation of values and a redefinition of fundamental concepts. the close connection between risk - taking and liability, which is an important element of a market economy, has weakened. conservative and risk - averse business models have become somewhat old - fashioned. if the state is bearing a significant part of the losses in the case of a default of a bank, banks are encouraged to take on more risks. high capital buffers which were originally viewed as a sign of a sound bank became an obstacle for maximising the return on equity. and those banks that nonetheless followed a sustainable strategy ran the risk of being punished by the markets. long termism has been increasingly replaced by short termism. bonuses are another example of transformation and redefinition. in the past, bonuses were seen as additional income for those working better and harder. nowadays, they are generally regarded suspiciously as an instrument of inappropriate enrichment. i believe that
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