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at https : / / www. afiglobal. org / sites / default / files / publications / 2018 - 08 / maya _ fs _ 18 _ aw _ digital. pdf see press release : the central bank of the bahamas joins the alliance for financial inclusion & commits to the maya declaration, https : / / www. centralbankbahamas. com / news. php? id = 16452 & cmd = view the sochi accord : fintech for financial inclusion ( https : / / www. afiglobal. org / publications / 2851 / sochi - accord - fintech - for - financial - inclusion ) 9 | page box 3 : central bank of the bahamas commitments under the maya declaration under the maya declaration of the alliance for financial inclusion the central bank has committed to : i ) support the development of a national financial inclusion strategy by 2020. ii ) increase access to banking and payment services by reinforcing our newly revised customer due diligence ( cdd ) requirements. iii ) introduce a digital version of the bahamian currency by 2020, to ensure minimum levels of access to banking and payments services in geographically remote parts of the bahamas. iv ) collaborate with the government on improved national identity infrastructure to enhance the know your customer ( kyc ) procedures in our supervised financial institutions ( sfis ). v ) conclude the development and start - up of a credit bureau in the bahamas by 2020 to foster trust and accountability between our sfis and their customers. vi ) in partnership with relevant stakeholders, pursue the creation of the office of the financial services ombudsman ( ofso ) by 2020. vii ) promote public awareness of consumer rights and responsibilities through our recently deployed financial literacy program, get money smart bahamas. 10 | p a g e
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www. bis. org / cpmi / publ / d174. htm ). this preserves the level playing field that prevents payment services providers from paying interest on stored value products. it also avoids any expanded mandate for the central bank to intermediate savings at direct costs to the bank or in competition with other financial institutions. 5 | page conclusion and the way forward the near - term actions for the central bank is to complete the contractual on - boarding of our technology solutions provider, and then to deepen the preparation and outreach process for the pilot. the government is a lead stakeholder and critical sponsor of national initiatives that will help transform the domestic financial services sector and the payments system. the central bank will stay actively engaged with the government to ensure that the legal framework evolves in step with payments system needs ; that the bahamas achieves the financial inclusion outcomes that are desirable for our archipelago and to ensure that the commercial sector benefits from a more efficient and secure infrastructure. the other key stakeholders, with whom engagement and outreach will intensify over the remainder of this year are the local financial institutions and public and private enterprises of all sizes. there will be much more to reveal about project sand dollar. 6 | page appendix of tables and boxes. box 1 : profile of the bahamian payments system the bahamian payment system is continually evolving, showing shifts towards greater use of electronic transactions, and out of branch access to banking services. both consumers and business firms are using these electronic options in increasing numbers. in 2017, 56. 8 % of commercial banking branches were located in the capital, while the remaining 43. 2 % were in found in grand bahamas and the family islands. this was still a shrunken access from as many as 88 branches in 2008 to 74 outlets at the end of 2017. as to access to atm terminals, 71. 5 % were in new providence, 13. 8 % in grand bahama and the remaining 14. 6 % were in the family islands. under electronic payments, between 2013 and 2017, payment card usage rose by 138 % and 203. 2 % l respectively, with equally impressive growth in the number of merchant terminals able to process such payments. there has also been a significant increase in the use of online banking by both consumers and businesses. selected payment systems data new providence grand bahama family islands total debit cards 1, 352, 857 1, 196, 012 2, 013, 084 2, 771, 071 3, 221
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. this proposal is not novel ; it is, in fact, the strategy that we have followed successfully for most of the past century and a strategy that we now should embrace with renewed commitment. over the long sweep of american generations and waves of economic change, we simply have not experienced a net drain of jobs to advancing technology or to other nations. since the end of world war ii, the unemployment rate in the united states has averaged less than 6 percent with no apparent trend ; and as recently as 2000, it dipped below 4 percent. moreover, real earnings of the average worker have continued to rise. over the past century, per capita real income has risen at an average rate of more than 2 percent per year, declining notably only during the great depression of the 1930s and immediately following world war ii. incomes trended higher whether we had a trade deficit or a trade surplus and whether international outsourcing was large or small. the reason for this positive long - run trend in living standards appears to be that more fundamental economic forces are determining real incomes, irrespective of the specific jobs in which they are earned and irrespective of the proportion of domestic consumption met by imports. intensive research in recent years into the sources of economic growth among both developing and developed nations generally point to a number of important factors : the state of knowledge and skill of a population ; the degree of control over indigenous natural resources ; the quality of a country β s legal system, particularly a strong commitment to a rule of law and protection of property rights ; and yes, the extent of a country β s openness to trade with the rest of the world. for the united states, arguably the most important factor is the type of rule of law under which economic activity takes place. when asked abroad why the united states has become the most prosperous large economy in the world, i respond, with only mild exaggeration, that our forefathers wrote a constitution and set in motion a system of laws that protects individual rights, especially the right to own property. nonetheless, the degree of state protection is sometimes in dispute. but by and large, secure property rights are almost universally accepted by americans as a critical pillar of our economy. while the right of property in the abstract is generally uncontested in all societies embracing democratic market capitalism, different degrees of property protection do apparently foster different economic incentives and outcomes. someone who owns a piece of land, but is restricted to a specific use, does not have unequi
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between stock, bond and foreign exchange markets. 6. finally, ever more research is devoted to non - fundamental causes of exchange rate instability. the β overshooting hypothesis β helps explain why unstable foreign exchange markets can be efficient. yet, looking at the microstructure of foreign exchange markets, individually rational behavior might generate complex dynamics in which bubbles and crashes can occur. so far the debate on determinants of currencies seems to be far from being conclusive. alan greenspan 1 once noted that β forecasting exchange rates has a success rate no better than that of forecasting the outcome of a coin toss β. i wonder whether we can derive valuable insights from hindsight. getting answers about the consequences of exchange rate movements for the economy seems to be by no means easier. the impact of the exchange rates changes depends on a set of interrelated transmission channels, of which 1. the trade channel probably is the most obvious way in which currency developments can impact the economy. an appreciation is likely to entail a negative trade balance, as the prices of foreign currency - denominated exports increase while import prices fall. 2. apart from that, there are financial market channels through which currency movements have an impact on the economy : a trend increase in the exchange rate raises the relative attractiveness of assets denominated in that currency while it results in the loss of value of investment abroad. 3. currency fluctuations are also transmitted through the consumer prices channel, according to which exchange rate appreciation would lower consumer prices. in this sense the β strong euro β has cushioned our economies from recent crude oil shocks. 4. finally, the confidence channel completes the list. however, consumers and firms can react asymmetrically, since appreciation dampens inflation pressure on the one side but challenges the competitiveness of firms on the other. if exchange rates and their impact on the economy are apparently so difficult to explain, let alone predict, should monetary policy interfere? as for the euro area, the ecb has no exchange rate target. a key implication of flexible exchange rate system is that the external value of the currency is determined by financial markets and hence cannot be an instrument of economic policy. the primary objective of the eurosystem, that is the ecb and the national central banks of the euro area, is to maintain price stability in the medium term. however, when analyzing the economic situation and taking monetary policy decisions the governor council of the ecb considers all parameters β including exchange rates
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framework by taking into account, the local banks β state of readiness, local conditions and practices consistent with the nature, complexity and materiality of the local institution β s activities. this is also the reason for providing a breathing space for thrift and rural banks in implementing basel ii. the bsp has lined up certain projects which involve the study of the applicability of certain basel ii requirements to local conditions. these projects are expected to culminate in a set of comprehensive guidelines for banks which we plan to release not later than end - 2006, for implementation in 2007. as you may be aware, pillar 1 of basel ii proposes standard and advance approaches to credit and operational risks. universal / commercial banks are expected to implement the standardized approaches to basel ii by 2007. however, implementation of the more advanced approaches is not expected to occur until perhaps 2010 to allow banks time to build - up reliable historical database to estimate default probabilities and other variables as important inputs to the advanced models. foreign banks whose head offices are using the advanced approaches, will be allowed to use them provided that they can show that their models are suited to domestic conditions. with regard to pillar 2, we will continue to push banks to improve their risk management practices and risk assessment capabilities and corporate governance. with respect to pillar 3, the appropriate disclosure requirements under basel 2 are targeted by 2007. bsp β s view of the importance of risk management and sound risk management practices on the topic of the importance of the risk profession and risk management practices in the philippines, i believe this could be best approached by presenting our views on the significance of risk management and our expectations from risk managers. β’ risk management is more than a regulatory reporting and compliance exercise ; it is a necessary risk - reducing tool to promote long - term profitability and stability of the firm and enhance the competitive advantage of firms. we encourage banks to have the flexibility to use their internalmodels not merely for computing the level of capital needed to absorb possible losses inherent in their activities, but to encourage them to make rational decisions on the basis of risk and return considerations. good internal models provide timely information on how much risk the bank is taking in order to achieve specific business objectives. internal models must also allow banks to compare and select, on a timely basis, from among the alternative business opportunities or strategies not solely from the profit angle but also from a risk standpoint. the philippine adoption of basel ii will certainly obligate banks to cover more types of risks and
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s confidence and establish the independence necessary to serve our vast and diverse country of bakers and bankers, farmers and financiers, and manufacturers and merchants. it took congress nearly 80 years to try again to establish a central bank. this time congress and president wilson agreed upon a uniquely american governance structure β a decentralized, central bank. to balance political, economic, and geographic interests, congress created the federal reserve system made up of regional reserve banks with oversight provided by a board of governors in washington, d. c. this structure helped to overcome political and public opposition stemming from fears that a central bank would be dominated either by political interests in washington or by financial interests on wall street. bis central bankers β speeches the federal reserve act formed a reserve bank organization committee to divide the country into no fewer than eight and no more than 12 federal reserve districts. almost immediately after the law was enacted, the committee started receiving letters and telegrams from local business owners, bankers, farmers, and others, who were all making a case for where they wanted a reserve bank to be located. the committee held meetings in 18 cities before submitting a report to congress in april 1914, naming the final 12 cities and districts. the federal reserve bank of philadelphia was designated as the regional reserve bank for the third district, an area that includes delaware, the eastern two - thirds of pennsylvania, and the southern half of new jersey. these reserve banks distribute currency, act as a bankers β bank, and generally perform the functions of a central bank, which includes serving as the bank for the u. s. treasury. the 12 regional reserve banks are deeply rooted in our nation β s communities, which ensure that the federal reserve stays in touch with main street. the reserve banks all have boards of directors, many also have branch boards, and all have advisory councils and other mechanisms to keep abreast of conditions in their regional economies. this rich array of information and the diverse views from around the country contribute to a mosaic of the economy that is essential as we formulate national monetary policy. of course, most people associate the fed with the determination of monetary policy. within the federal reserve, the body that makes monetary policy decisions is the federal open market committee, or the fomc. here again, congress has designed the system with a number of checks and balances. since 1935, the composition of the fomc has included the seven governors in washington, the president of the new york fed, and the presidents
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they move in a less volatile manner. as a result of smooth economic adjustments in the early 1980s after the second oil crisis, japan's economy followed a higher trend growth path than the u. s. economy while it moved in a less volatile manner thereafter. this situation, however, was reversed after the bursting of the asset price bubble in the early 1990s, and japan's economy experienced a decline in the trend growth path while moving in a volatile manner. japan's economy is now emerging from the prolonged stagnation that was an aftermath of the bursting of the asset price bubble, and is heading toward a sustainable growth path under price stability. in order to ensure this development, it is important, through the appropriate conduct of monetary policy, to minimize the volatility of business cycles and maintain a stable economic environment. viii. conduct of monetary policy before concluding my speech today, i will talk about the bank's conduct of monetary policy based on the assessment of economic activity and prices mentioned so far. the bank has been reducing the outstanding balance of current accounts at the bank by paying due attention to the stability of the money market under the guideline for money market operations that encourages the uncollateralized overnight call rate to remain at effectively zero percent. through this process, the uncollateralized overnight call rate has been stable at around zero percent, despite small temporary increases. in the call market, interest rates have shown some fluctuations reflecting market conditions and the volume of transactions has been gradually increasing. under these circumstances, the bank no longer finds it difficult to control the uncollateralized overnight call rate in its day - to - day operations. in this sense, the reduction of the outstanding balance of current accounts has virtually been completed. with regard to the future course of monetary policy, the bank will conduct monetary policy in line with the thinking described in the outlook report as long as developments in economic activity and prices follow the bank's projection presented also in the outlook report. in other words, it seems probable that the accommodative financial conditions ensuing from very low interest rates will be maintained for some time following a period in which the uncollateralized overnight call rate is at effectively zero percent. through and beyond this stage, the bank will adjust the level of interest rates gradually in the light of developments in economic activity and prices. the timing of a policy change depends on developments in economic activity and prices from this time on, and there is no prede
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haruhiko kuroda : recent developments in japan β s economy, and observations on the european situation given japan β s experience during the 1990s financial crisis remarks by mr haruhiko kuroda, governor of the bank of japan, at the paris europlace financial forum, tokyo, 25 november 2013. * * * introduction i am honored to have this opportunity to speak before the paris europlace financial forum today. in the following few minutes, after briefly touching on the recent developments in japan β s economy, i would like to go over what we can say about the european authorities β various initiatives from our experience of japan β s financial crisis in the 1990s, bearing in mind the recent european situation. the developments in japan β s economy and prices i would like to start off with the recent developments in japan β s economic activity and prices. the bank of japan introduced quantitative and qualitative monetary easing ( qqe ) in april this year with a view to bringing japan β s economy out of deflation, which has lasted for nearly 15 years. in the subsequent eight months, the bank has been steadily pursuing this policy. positive developments have been spreading in financial markets and the real economy, as well as in people β s mindset and expectations. the qqe has steadily been exerting its intended effects. japan β s economy is recovering moderately, with a positive spillover from income to expenditure in the household and corporate sectors taking course. looking ahead, a virtuous circle among production, income, and spending is expected to continue, and japan β s economy is projected to grow, as a trend, at a pace above its potential. on the price front, the year - on - year rate of increase in the consumer price index ( cpi ) for all items less fresh food has recently been accelerating to a range between 0. 5 and 1. 0 percent. with the prospect of an improvement in the aggregate supply and demand balance and a rise in medium - to long - term inflation expectations, the year - on - year rate of change in the cpi is likely to follow a rising trend. therefore, japan β s economy has been following a path toward achieving the 2 percent price stability target as expected. european situation now, let me briefly refer to the european situation. while details will be provided by governor noyer, our recognition is that the european economy is bottoming out and there are signs of a pick - up. as a recovery in the european economy is
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such a development. that doesn β t change the fact that we would all have to make a concerted effort to botch things in order to prevent the exchange rate from being considerably higher in a few years β time than it is today. but then we will have to remember to buy back the foreign exchange that we have used to support the krona in 2008 and 2009. if we do that, then we might profit on the whole arrangement. i expect this spurs questions about whether we need all of the loans that we have negotiated as a part of the imf programme. in my opinion, this is an eminently justifiable question. first of all, we need the loans in order to ensure that we have sufficient foreign exchange at all times to enable us to pay amortisation and interest on the foreign debt of the treasury and treasury - guaranteed entities. as far as the treasury is concerned, there will be little activity until late in 2011, when a loan of one billion euros, taken in 2006 to reinforce the foreign exchange reserves, will mature. but we can also use the loans to buy the bonds from this series and others offered in the secondary market at low prices, thereby easing the debt service burden and profiting on the whole arrangement. furthermore, we will need reserves in order to engage in moderate foreign exchange market intervention, with the aim of supporting the krona and reducing volatility. and last β but certainly not least β we need reserves in order to create confidence in the krona and fend off those who would attack it. but such an arsenal, which is only to be used in an emergency, is extremely expensive because it is impossible to invest the reserves at rates comparable to those on the loans themselves without taking an unacceptable amount of risk. thus it is important to avoid borrowing more than necessary and to emerge as soon as possible from our current state of imbalance. before i turn to the economic outlook and the monetary policy committee β s most recent interest rate decision, i consider it necessary to say a few words about the nature of the adjustment the icelandic economy is currently undergoing. first of all, it should be borne in mind that the year 2009 would have been extremely difficult in any case, no matter whether the banks had collapsed or not. this is because of the huge macroeconomic imbalances that developed in the icelandic economy in 2005 - 2007 and had to subside in one way or another. second, the collapse of the banking system called unavoidably
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##rona and a slightly smaller output slack than previously projected. β’ inflation will subside quickly in 2010, however, and underlying inflation will be at or near target in the latter half of the year. as regards the current economic situation, the outlook i have described here, and indicators that private sector balance sheets are somewhat less exposed to exchange rate risk than previously thought, the monetary policy committee decided to make changes in central bank interest rates that entail an unchanged or slightly more relaxed monetary policy stance. the main change, however, involves adapting the central bank interest corridor to the effective level of monetary restraint, which is currently determined primarily by interest on the bank β s current accounts and certificates of deposit. if the krona remains stable or appreciates, and if inflation falls as forecast, then the preconditions for further monetary easing should soon be in place. available forecasts assume that the icelandic economy will recover in the next few years. we also hope we will be quick to escape the fetters of the capital controls and the predicament faced by monetary policy as a result of the debt crisis and the large proportion of foreigndenominated debt. it will then be time to determine a new monetary policy framework. joining the european monetary union could be an option in due time, but it is not a certainty, and in any event, it will take some time to materialise. the most obvious choice is therefore to adopt some sort of inflation target and floating exchange rate. that is a topic for another speech, but for the moment, suffice it to say that the experience of the past several years, both in iceland and elsewhere, indicates that such an inflation - targeting regime would have to be somewhat different than the pre - crisis regime. it must be much better supported by fiscal policy, macroprudential financial market regulation, and effective financial supervision. it would have to be an β inflation target - plus β framework, which would specifically include accumulating foreign exchange reserves during upswings in the exchange rate cycle and using them in times of need. thank you.
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stronger growth in our competitiveness. regardless of their structure, capital inflows have complicated the life of a policy maker in many ways. on a macroeconomic level, the reliance on foreign savings, especially when channeled into consumption, manifested in large current account deficits. they reached as much as 18 % of gdp before the crisis and their long - term viability was rightly questioned. the influx of capital into nascent financial markets with a low absorption capacity has led to periods of sharp appreciation and contributed to unnecessary large exchange rate volatility. such appreciation spells β such as the one in 2006 β also encouraged excessive foreign currency borrowing. but these macroeconomic phenomena were not the major problems per se. after all, exchange rate volatility is a key element of the inflation targeting regime, it prompts the development of hedging instruments, and facilitates de - euroization of the financial system. the moderate current account deficits could be partly just a flip side of high investment ratios that are needed for our catch - up process. there is no doubt large capital inflows are needed for growth to resume in the coming period. if the inflows are used wisely to increase the productive capacity β and especially so in manufacturing, the current account deficits should be self - corrective over long horizons, as many examples β also from the eastern europe β attest. investments in infrastructure are an example of how capital inflows can help increase the productivity capacity and raise long - term growth prospects. before the crisis, the major problem with capital inflows in serbia was the unbalanced risk sharing and mismatches involved, potentially jeopardizing the stability of our financial system. the catch - up potential is a long - term process requiring long - term financing. but a part of the financing was short - term, requiring a regular roll - over. furthermore, most of the financing came in a foreign currency, while most revenues are denominated in the local currency. unlike the popular wisdom, it is not a reckless risk behavior of foreign investors that put our economy at risk β it is the lack of it. the risks involved in the currency and maturity mismatches were not born by foreign investors, but by domestic businesses and partly by households. they suffered the most, when the capital flows dried up and the currency depreciated. many blame the fragility of the financial systems in emerging europe on the β so called β speculation or carry traders
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jorgovanka tabakovic : annual financial stability report for 2015 speech given by dr jorgovanka tabakovic, governor of the national bank of serbia at the presentation of the annual financial stability report for 2015, belgrade, 27 july 2016. * * * ladies and gentlemen, esteemed members of the press and fellow economists, welcome to the presentation of the annual financial stability report for 2015. if we call last year β s presentation of this report history or our firstborn, then today β s press conference can be regarded as the start of tradition and continuation of good international practice. macroprudential policy or the policy of safeguarding financial stability has been the focus of almost all economic discussions since the outbreak of the global financial crisis. the national bank of serbia does not lag behind other central banks in this respect. quite to the contrary, we are keeping up with them. the depth of our analyses and the expert approach place us among the most efficient central banks in terms of achieving the financial stability mandate. we have been witnesses to turbulences in the international environment for quite some time already. the ripple effects of these turbulences did not by - pass serbia as an open and small economy. however, we did not stand by and wring our hands, waiting to be hit by the waves of uncertainty from different continents. in coordination with the government of the republic of serbia, we responded with timely action, carefully assessing the intensity of all influences. through synchronisation of monetary easing and consistent fiscal consolidation, we have maintained price stability, reduced external and internal imbalances significantly and improved further the conditions for sustainable economic growth. as a result, the key policy rate is at its historical low since the introduction of the inflation targeting regime and the fiscal deficit is at its lowest level since 2008. i will take the liberty of saying that the monetary policy easing of the national bank of serbia has paved the way for a sharp drop in interest rates on dinar loans in the last three years. to put this into numbers β from may 2013 until today, the key policy rate was cut 17 times by a total of 7. 75 pp to 4 %. that the interest rate channel is working in the dinar segment of the market is confirmed by the concurrent decline in interest rates on dinar loans to households and corporates by almost 10 pp to the lowest levels on record. interest rates on government dinar securities also declined. since november 2014 we have also reduced the fx required reserve ratios
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requires its consistency in practice, as well. it is crucial that the importance of this agreement be fully comprehended by the staff of both institutions. its commitment is essential, in order for our co - operation to be part of our daily job and add to the efficiency of both institutions and not to remain solely on paper. the bank of albania considers the conclusion of this memorandum as a cornerstone which will overwhelmingly affect the enhancement of real competition conditions, in which the banking and financial activity are currently being conducted. it is worth underlining that fair competition promotes the efficiency in the banking business and refines the composition and the functioning of the banking market. the bank of albania will make its utmost efforts to make the co - operation deriving from this agreement as concrete as possible and with direct impact on achieving a real, fair and efficient market competition. i take this opportunity to express the bank of albania commitment to carry out all the responsibilities deriving from the law and from this agreement. in addition, allow me to express my appreciation to the competition authority and to ms. lati for the support granted in the conclusion of this agreement. thank you.
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gent sejko : bank of albania's achievements in 2022 and challenges for 2023 address by mr gent sejko, governor of the bank of albania, at the end - of - year meeting with journalists, analysts and media representatives and the governor's award ceremony, tirana, 20 december 2022. * * * dear ladies and gentlemen, i feel honoured and privileged to welcome in the historical hall of the bank of albania, media representatives and talented students who are brave in competing for " governor's award for the best diploma theses ". in the last year event, i emphasised that we experienced an unusual 3 - year period, with the hope that 2022 would be different, more vivid and more optimistic. nevertheless, the end of 2022 is proving a really challenging one, mainly due to the huge shock on commodity prices of energy, oil and gas, in particular. the increased prices - mainly engendered from the outbreak of the russia's war in ukraine - has generated strong inflationary pressures worldwide, triggering a difficult time for consumption and economic growth globally. albania is facing the same challenges as well. in november, inflation stood at 7. 9 %, somewhat lower than in the previous month, though a high level which is the main threat to both the macroeconomic stability and to the sustainable and long - term growth of albania. in this context, i would like to point out that the latest forecasts at the bank of albania show that inflation is expected to progressively reduce during 2023, and return to target in the middle of 2024. in view of an increased inflationary pressures environment, we have embarked on a gradual process of monetary policy normalisation, aimed at timely returning inflation to the target and at a rather low costs to the economic activity. nevertheless, the sound balance sheets of households and enterprises, the further expanded albanian exports, and the decreased uncertainty in response to the expected reduced inflation will continue to feed the economic growth, in turn the latter is expected to remain in positive territory. the sound position of banking system is an added guarantee for the expansion of the economic activity. the healthy and liquid financial balance sheets of the banking sector guarantee that the latter will continue to funding the albanian households and enterprises, by supporting the expansion of both consumption and investments as well as meeting the temporary needs for liquidity. the coverage and transmission in an objective manner of news to public is an important factor in meeting our objectives for a stable economic and financial environment
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frankfurt european banking congress, 22 november 2024 central banks and the unleashing of european growth speech by francois villeroy de galhau, governor of the banque de france press contact : delphine cuny ( delphine. cuny @ banque - france. fr ) ladies and gentlemen, liebe freunde, i am delighted to be with you today at the 2024 frankfurt european banking congress, especially for this joint session with my bundesbank colleague and friend joachim nagel. europe obviously has a growth problem. recent trends were already set to widen the gap i while since 1999, gdp per capita growth has been slower in the euro area ( + 26 % vs + 39 % in the us ). a significant part of the gap is due to the last five years : since 2019 and covid, gdp per capita only increased by 2. 5 % in the euro area compared with 7. 9 % in the us. the outcome of the us election must obviously serve as another wake - up call. the future us economic policy is still uncertain in its details, but not in its probable direction : more tariffs, more fiscal deficits, less regulation including in finance. and this could mean more risks for the global economy : more inflation β especially in the us β, more financial volatility, less trade and hence less growth including for europe. joachim and i nevertheless believe that europe still has the levers to master its economic destiny and strengthen its growth : this is why we will issue today a common call. but let me first dispel three common misconceptions regarding central banks and growth. 1 ) β central banks don β t care about growth β true, our primary objective is and should remain price stability. we are clearly in the process of reining in inflation, which stood at 1. 7 % in september and 2. 0 % in october in the euro area, down from a peak of 10. 6 % two years earlier. this sharp decrease clearly warranted the third rate cut in october. ii despite possible ups and downs over coming months, we are very confident that we will sustainably reach our 2 % target. we should even get there earlier than expected in 2025 compared with our september forecasts. iii our past monetary tightening has neither caused a recession in the euro area as a whole, nor substantially raised unemployment which remains at its historical low ( 6. 3 % for the euro area ). in short, the european economy is achieving
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rules and practices governing bank supervision, financial accounting principles, payment systems and policies and standards on statistics. a number of national laws are also being harmonised. however, there have been delays in realising targets set out in the eamu road map and that there are several challenges that could further impede the full implementation of eamu protocol. it is therefore imperative that we assess the realism in the timelines embedded in the eamu road map and do things right. going forward, i want to re - iterate bou β s full support to the eamu process. i fully believe that there are huge pay - offs for our economies if we harmonise and integrate our monetary, financial and payments systems, even before we actualize a single currency system for the community. may we work steadily towards the realization of the eamu. thank you for your attention. page 2 of 3
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of retail space. almost 1, 000 high street chain stores closed in the first half of the year. lower asset values have left debt levels looking too high. households, businesses and, especially, banks are all deleveraging. nowhere is the overhang of debt more obvious than in the banking sector where deleveraging is holding back the flow of new lending. during the crisis central banks have provided liquidity to banks on a truly extraordinary scale, so much so that there were no takers for additional liquidity in our latest auction. it is still useful to keep that auction facility as an insurance policy. but banks are now overflowing with liquid assets. their problem remains insufficient capital. just as in 2008, there is a deep reluctance to admit the extent of the undercapitalisation of the banking system in many parts of the industrialised world. the bis central bankers β speeches verdict of the market is clear β without central bank support banks still find it expensive to borrow. so the bank of england, together with the government, has set up the funding for lending scheme ( fls ) which provides banks with access to finance for up to four years at below prevailing market rates for term funding. crucially, the more banks lend to uk households and businesses, the more they can borrow from the scheme and the cheaper is that funding. that provides a powerful financial incentive for banks to supply more credit. more than 20 banking groups, including the five largest lenders to the uk real economy and covering nearly 80 % of all such lending, have so far signed up. since the scheme was announced bank funding costs have fallen by around 100 basis points ( see chart 1 ). not all of this is attributable to the fls β the announcement by the ecb of outright monetary transactions has also played an important role. but it is noteworthy that uk bank funding costs have fallen by more since june than have european bank funding costs ( see chart 2 ). the effect of the fls will be seen in the lending data only after some months because of the time it takes for banks to change their lending strategies and for data to be collected and published. the fls can be only a temporary scheme. the window of opportunity which it provides must be used to restore the capital position of the uk banking system. i am not sure that advanced economies in general will find it easy to get out of their current predicament without creditors acknowledging further likely losses, a significant writing down of asset values
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and recapitalisation of their financial systems. only then will it be possible to return to a more normal provision of the vital banking services so crucial to an economic recovery. in the 1930s, faced with problems of sovereign and other debt similar to those of today, the pretence that debts could be repaid was maintained for far too long. we must not repeat that mistake. over the past three years, the bank of england has bought Β£375 billion of government bonds β gilts β from the private sector to create a lot of new money. many β perhaps some of you β are understandably concerned about the use of such an unusual and unfamiliar policy. some people talk about the dangers of money creation. i want to explain why it is important to distinguish between β good β and β bad β money creation. in essence, the argument is very simple. β good β money creation is where an independent central bank creates enough money in the economy to achieve price stability. β bad β money creation is where the government chooses the amount of money that is created in order to finance its expenditure. insufficient money creation can lead to a contraction of the money supply and a depression. we saw that in the united states during the great depression and we see it today in greece. excessive money creation leads to accelerating inflation and ultimately the collapse of the currency. the role of the bank of england is to create the right amount of money, neither too much, nor too little, to support sustainable growth at the target rate of inflation. we are not doing it at the behest of the government to help finance its spending. it is the independence of the bank that allows us to create money without raising doubts about our motives. but just as it is crucial that governments do not control the printing of money, so too the unelected central bank must not determine the levels of taxes and public spending. fiscal policy is a matter for elected governments. there has been some talk about the possibility that money created by the bank could be used directly to finance additional government spending, or even that money could be given away. abstracting from the colourful metaphor of β helicopter money β, such operations would combine monetary and fiscal policies. there is no need to combine them because, as now, once the bank has decided how much money should be created to meet the inflation target, the case for the government to increase spending or cut taxes to counter a downturn stands or falls on its own merits. what determines the interest rate at
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period, banks are permitted to issue guarantees favouring other lending institutions in respect of infrastructure projects provided the bank issuing the guarantee takes a funded share in the project at least to the extent of five per cent of the project cost and undertakes normal credit appraisal, monitoring and follow up of the project. financing promoters β equity banks have been permitted to extend finance for funding promoter β s equity in cases where the proposal involves acquisition of share in an existing company engaged in implementing or operating an infrastructure project in india, subject to certain conditions. relaxation from capital market exposure in order to encourage lending by banks to the infrastructure, the promoters β shares in the spv of an infrastructure project pledged to the lending bank is permitted to be excluded from the banks β capital market exposure. permission to invest in unrated bonds in order to encourage banks to increase the flow of credit to infrastructure sector, banks are allowed to invest in unrated bonds of companies engaged in infrastructure activities within the ceiling of 10 per cent for unlisted non slr securities. relaxation in the classification of investments investment by banks in the long - term bonds issued by companies engaged in executing infrastructure projects and having a minimum residual maturity of seven years are allowed to be classified under the htm category, which means they need not be marked to market. relaxations relating to asset classification with effect from march 31, 2008, the infrastructure project accounts of banks were permitted to be classified as sub - standard if the date of commencement of commercial production extended beyond a period of two years ( as against 6 months in the case of other projects ) after the date of completion of the project, as originally envisaged. with effect from march 31, 2010, if an infrastructure project loan classified as β standard asset β is restructured any time during the above period of two years, it can be retained as a standard asset if the fresh date of commencement of operations is fixed within certain limits prescribed by the reserve bank, and provided the account continues to be serviced as per the restructured terms. bis central bankers β speeches certain relaxations as far as conditions specified for deriving asset classification benefits under our restructuring guidelines are made in respect of infrastructure exposure of banks i. e. in respect of repayment period of restructured advances and regarding tangible security. infrastructure debt funds realizing the potential of infrastructure debt funds in enhancing financing to the sector, reserve bank of india has, as a special case, permitted several prudential relaxations. sponsor bank of idf β nbfc has
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with regard to an infrastructure project, it will greatly facilitate flow of funds to the projects and help in maintaining asset quality to the comfort of the lenders. we also need to develop new financial markets for municipal bonds to enable infrastructure financing at the grass root levels. we need to create depth, liquidity and vibrancy in the g - sec and corporate bond market so as to enable raising of finance and reduce dependence on the banking system. at the same time, there is a need to widen our investor base and offer adequate risk mitigating financial products, such as, cds. market players should also actively participate in such markets after the products have been introduced. a working group has been set up by the reserve bank recently to examine the issues and recommend measures to further improve the depth and breadth of the g - sec market. a vibrant g - sec market would facilitate growth of the corporate debt market. we also need to revisit the existing provisions of stamp duty governed by separate state government acts in respect of corporate bond transactions. concluding observations in conclusion i would like to mention that infrastructure projects in developing countries like india are perceived as highly vulnerable to risks which constrains financing. some of the notable risks that need to be reckoned are risks arising during the period of construction leading to time and cost over - runs, operational risks, market risks, interest rate risks, foreign exchange risks, payment risks, regulatory risks and political risks. at times, in the absence of proper risk mitigation mechanism, the costs of the projects tend to increase and such high level of risks cannot be traded off against high returns. the aim of the policy makers should be to reduce perceived risks by introducing greater policy clarity and, at the same time, providing an environment that will reassure investors. i am sure exciting times are ahead of us for infrastructure development in our country as we enter the year 2012 which promises to open more avenues for innovative planning, projects, policies, products and partnerships. i hope this international conference, which has several participants from within and outside the country, would throw up ideas and suggestions that would go a long way in addressing the issues confronting the financing of infrastructure in india. bis central bankers β speeches
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deal with any concern of a financial stability nature that might arise in the future. i may add that, in the current environment, we have had more extensive dialogue with financial institutions to ensure that we and they are cognisant of the main risks and challenges in financial markets at this time. i hope that the comprehensive analysis in our financial stability report conveys the importance of a stable financial system and that it may stimulate discussion of the current financial stability climate in ireland among financial market participants and the wider public. to conclude, i am pleased to report that, notwithstanding some significant vulnerabilities and downside risks noted earlier, our overall conclusion is that the irish financial system continues to be in a good state of health. frank browne will now make a short presentation on some of the most pertinent points in the financial stability review. we will then be available to answer questions and hear any comments that you may have.
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liquidity framework within the eurosystem and the significant volumes of collateral held means that irish banks are well positioned to access eurosystem liquidity. also, a fuller assessment of the funding patterns of irish banks indicates that there is a significant medium - term element to much of their funding, as well as a relatively wide range of funding options available to them. finally, our stress - testing of the banking system and our extensive financial stability analysis indicate that irish banks are solidly profitable and well - capitalised. in this context, it is worth noting that they have one of the lowest rates of non - performing loans among banks in all eu countries. lessons from the current episode of financial market turbulence as the evolution and duration of the current episode is uncertain, it is difficult to draw firm conclusions at this early stage. nevertheless, eu finance ministers have looked at recent events and have set out a roadmap of issues to address, to help avoid a repeat of recent events. a number of areas would seem to require attention in the near future : there is a need to improve transparency about where financial risks lie. the lack of accurate and timely information on exposures and underlying risks has been an important factor in triggering the loss of investor confidence in recent months ; while securitisation and financial innovation have significantly enhanced credit risk transfer, they have had other, less benign β effects. in particular, the β originate and distribute β model behind securitisation has changed the incentives for lenders regarding the monitoring of risk and we probably need some more checks and balances here ; clearly, rating agencies play a very important role and should continue to do so. however, there are some potential conflicts of interest and how these are handled needs to be thought through, as does the question of whether a more differentiated scale of ratings for structured credit products is appropriate ; the issue of how to value complex products, many of which are not traded on markets with genuine liquidity, also needs further consideration. conclusion the publication of this report is one way in which the central bank & financial services authority of ireland fulfils its financial stability mandate. in addition, we maintain an active dialogue with the domestic credit institutions in order to highlight issues for the financial system, and the central bank works in close co - operation with the financial regulator to help maintain financial stability in ireland. the financial regulator conducts regular on - site inspections and monitors banks β exposures on a regular basis. finally, we continue to develop procedures to assess and
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to establish the new groups. the participating banks must begin to operate in harmony, under the guidance of the parent company, well before the groups have been formally established. the asset quality review will need to be thoroughly updated to take account of the necessary value adjustments and write - downs already entered in this year β s balance sheets. the bank of italy is committed to strengthening the other banks under its direct supervision in order to increase their efficiency and productivity, promote the supply of innovative services for households and firms, and diversify their sources of income. for their part, banks are being called on to undertake wide - ranging action, including mergers to facilitate investment, economies of scale and, where necessary, access to capital markets. a first step towards greater integration could be recourse to consortiums to provide services and the pooling of data for internal models to compute capital requirements. in line with other countries, a more decisive step would be to introduce institutional protection schemes ( ips ), which do not remove the autonomy of individual banks but give rise to mutual support agreements that can be activated in the event of capital or liquidity needs. expenses, income and structural changes in the banking industry the significant progress made in overcoming the grave difficulties of some banks and the gradual improvement in balance sheet conditions throughout the banking industry are undoubtedly positive developments. several factors, however, are altering the context in which banks operate : changes in demand for financial services, technological progress and the digital revolution, and the regulatory reforms introduced in the wake of the financial crisis. the profitability of european banks has diminished considerably over the last ten years. the global financial crisis first hit the large merchant banks, who earn much of their income on the capital market. the recession and sovereign debt crises then took their toll on the balance sheets of banks whose core business is lending. italy β s banking sector suffered a particularly sharp fall in profits ; the return on capital, which was about 10 per cent in the middle of the previous decade, has been virtually nil for the last five years, exceptional factors aside. at the same time, the profits of italian banks have been eroded by heavier losses on loans and a drop in income. because of corporate crises in particular, from 2008 to 2016 write - downs on loans absorbed 80 per cent of operating profit. interest income is now one third lower in relation to total assets than in the middle of the last decade ; other income has also diminished. as the economic recovery gains strength, the outlook for the banking industry
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on examination standards and discuss and agree on reporting requirements that apply to smaller banks. with a growing divergence in the approach of state and federal regulators to the examination process, we need to ask how the ffiec can better accomplish its goals. we also need to ask whether the other important work of the ffiec, like establishing reporting requirements, is being conducted in an appropriate way. the opportunities for input, review, and oversight of this important work are very limited, with only the board representative on the ffiec participating. notwithstanding these structural impediments, i have prioritized rationalizing the call report, an effort that i revived when i joined the board. these types of overly broad requirements pose their own risks to community banks, and we should remember to focus on the unglamorous work of making sure we are not collecting more data than is necessary and appropriate for supervisory purposes, and that we are efficient in the collection of that data, for example, by leveraging data previously collected instead of requiring further collection of the same data. - 16 regulators also tend to be very proprietary about the development of regulatory and supervisory proposals. often, policies are far along in the development process before they are published for public comment in the rulemaking process, and state banking regulators rarely provide feedback on proposals before or after they are put out for comment. while regulators tasked with implementing regulations, supervision, and guidance bear the ultimate responsibility for those policy choices, this process can greatly benefit from more interaction among federal regulators and our state bank regulatory counterparts. more extensive dialogue with state regulators can improve proposals in the formulation stage by sharing practical, real - world perspectives, including observations on the impacts of intended and unintended consequences. while it is challenging to anticipate the unintended consequences of reforms, casting a wide net for views can lead to better, less disruptive, and better - informed policy choices. the importance of enhancing coordination between state regulators and the federal reserve cannot be overstated. at a recent meeting of the board β s subcommittee on smaller regional and community banking, my colleagues and i were delighted to welcome representatives of the conference of state bank supervisors and four of their state bank commissioner members. we learned firsthand about the successes, frustrations, concerns, and areas for improvement in the coordination between state and federal regulators. there is simply no substitute for these direct conversations and building upon and improving these important intergovernmental relationships. collaborative approach to reform historically, one of the many virtues of
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that rates were raised. i have often stressed that monetary policy has to be set taking into account the average of all the parts of the economy, not to what is happening in one sector. of course, if a sector is overheated, it may push up the average for the economy, and in that way exert a disproportionate influence. it is also true that, historically, borrowing for housing purposes has been one of the more interest - sensitive sectors, and so it may have been more affected than other sectors by the previous low level of interest rates and it may respond more than other sectors to the recent increases. but that does not mean we singled it out. we have also been accused of setting monetary policy in relation to the sydney and melbourne housing markets, and ignoring the rest of the country. this clearly cannot be true in the case of the recent tightenings, as house prices in sydney and melbourne are growing less quickly than in other states ; in fact, housing prices in some parts of these cities are already falling. in australia we have conducted monetary policy by using an inflation - targeting regime for about a decade now. it has been a very successful regime in that it has delivered ( along with various other reforms ) the longest period of uninterrupted good economic growth in the post war period, at a rate exceeding that of all other significant developed economies. it has concentrated our minds at the reserve bank in that we have been very conscious of our need to deliver the results to which we have committed. over the 10 - year period, inflation has averaged 2. 4 per cent. by acting early on monetary policy to keep inflation in check, we have avoided large swings in interest rates and thereby allowed the economy to prosper. as you are aware, our target is a relatively flexible one in that we aim to achieve an average rate of somewhere between 2 and 3 per cent. it is that average by which we should be judged, or made accountable. but there are some observers who think that the system should be more prescriptive than this and there should be some strict rule which should determine our actions. for example, a few people still think we should aim to keep inflation between 2 and 3 per cent at all times. this is a clear misinterpretation of our system because it fails to realise that it is the average we are interested in. on a number of occasions, inflation has been above 3 per cent and below 2 per cent.
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pre - tax wages ) and reduce the returns to capital. 5 the pressures on the labour supply will be felt more acutely by industries that rely more heavily on labour. most notably, this includes services industries, such as aged care and health care ( graph 2 ). there is, however, likely to be scope for labour to be reallocated across services industries. in particular, an older population will require relatively fewer workers to care for and educate children. graph 2 more demand for services at the same time as labour will tend to be in shorter supply, larger shares of the population will need a degree of assistance and care. indeed, demand can be expected to shift towards services ( away from goods ) given that services constitute a larger share of total consumption for older people than for the rest of the population ( graph 3 ). 6 much of this reflects spending on health care. this extra demand for services will be in addition to that associated with rising wealth. people tend to spend an increasing share of their rising incomes on services in part because there are ultimately limits to the consumption of food, wearing of clothes and use of other goods. this discussion ignores the role of international capital mobility, but given that population ageing is a global phenomenon, the qualitative results of closed and open economy models will be comparable. to gauge the true extent of this we need to account for goods and services that people purchase for themselves directly, as well as those they obtain through the public provision of goods and services, which is what graph 3 has done. bis central bankers β speeches graph 3 so, we can expect that ageing will lead to extra demand for services at the same time that it weighs on the supply of services ( via declining labour force participation ). more demand and less supply will push up the prices of services, relative to the prices of goods. this rise in the relative price of services has long been apparent for other reasons. one reason for this is that productivity growth has tended to be greater for goods than for services. that is, we β ve got better at producing more goods for a given level of inputs, more so than has been the case for services. another reason is that the global integration of much of asia over recent decades has brought large numbers of workers into the production of traded goods, increasing their supply and therefore pushing down the relative prices of goods. it is important for stronger wage growth, and an increase in the relative prices of services to occur. such signals will encourage higher labour
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first area concerns monetary policy sometimes having unexpected effects, the second concerns it having much less effect than normal and the third concerns monetary policy receiving support from, but sometimes possibly also being counteracted by, measures that are primarily aimed at maintaining financial stability. i will run through these areas one by one and explain in more detail what i mean. but first i would like to clarify something. the fact that i am raising these issues should not be interpreted as my trying to make a point about how the world looks with certainty. although some of the ideas are in line with my own reasoning in the monetary policy discussion, others are relevant from a more general perspective. these are simply issues i think are of current interest and which i believe will be discussed in the coming period. can expansionary monetary policy increase risk taking in the economy? a central component in the financial crisis was what has sometimes been called a north atlantic property bubble. 1 in the united states and a number of other countries, such as ireland, spain and the united kingdom, property prices had increased substantially over a number of years, accompanied by a large expansion in credit. property prices then fell drastically in the crisis. there is no individual explanation for this development β it is due to a number of interacting factors. i have already mentioned that there were deficiencies in the regulations and supervision, but these perhaps mainly contributed to the failure to slow down a process that had already begun and was driven by other forces. one factor that some people consider played a role in this is the expansionary monetary policy with very low interest rates conducted by the us central bank, the federal reserve, and others during the years before the crisis. 2 although monetary policy was hardly the main reason for the crisis, it may have contributed to problems building up. a risk - taking channel β¦ recently, there has been increasing interest in a special channel through which monetary policy may have influenced events β what is known as the β risk - taking channel β. the idea that there is a special risk - taking channel that should be regarded as an independent, previously - ignored part of the transmission mechanism is fairly new. 3 the idea is that low policy rates can in various ways get the banks to take greater risks. when the central bank holds the policy rate low because the outlook for inflation and the economy appears to motivate this, the policy may actually have the undesired and unforeseen effect that risks increase in the banks and in the financial system as a whole. in
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quarterly journal of economics, 129 ( 1 ), 61 β 103. king, m, low, d, ( 2014 ) β measuring the β world β real interest rate β, nber working paper no. 19887. kryvtsov, o, mendes, r ( 2015 ) β the optimal level of the inflation target : a selective review of the literature and outstanding issues β, bank of canada, discussion paper 2015 β 8. piketty, t & zucman, g ( 2014 ) β capital is back : wealth - income ratios in rich countries 1700 β 2010 β, quarterly journal of economics, 129 ( 3 ), 1255 β 1310. rogoff, k ( 2015 ). β debt supercycle, not secular stagnation β, vox, cepr β s policy portal. summers, l. β reflections on the new β secular stagnation hypothesis β β, vox, cepr β s policy portal, 30 october 2014. waldenstrom, d ( 2015 ) β wealth - income ratios in a small, late - industrializing, welfare - state economy : sweden, 1810 β 2014 β department of economics, uppsala university, working paper 2015 : 4, october. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches
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innovation labs in 2015, the singaporean share in jobs created at these labs was just 40 %. with more labs set up over the years and more singaporeans exposed to innovation work, singaporeans now make up about 60 % of the 180 high value jobs created at these labs. two, imda partners financial institutions through the techskills accelerator ( tesa ) initiative to train and place fresh and mid - career professionals into tech roles. since 2016, more than 500 professionals have been placed into tech roles in the financial sector, such as so ware developers and data analysts, through company - led training and tesa mid - career advance. three, mas works with financial institutions to support individuals from outside the financial sector transit into tech roles in the sector. through the technology in finance immersion programme ( tfip ), mas has been working with ibf and workforce singapore to support individuals with stem capabilities through industry - curated training in specific tech skills followed by a work attachment with a financial institution from 70 trainees in 2019, we now have 190 participants. 1 out of 3 are from the mature age group or were unemployed when they enrolled in tfip. this year, under the refreshed tfip, there is indicative [UNK] of around 400 traineeships across more than 20 financial institutions. there will be 10 specialist tracks [UNK] in this run, twice the number as before. there are at least 80 positions in so ware engineering alone. it is a far cry from the 300 so ware engineers the industry needs each year. but it is a good start. conclusion let me conclude. our financial sector has shown that technology creates far more jobs than it displaces. during the last 5 years, the financial sector created 21, 000 net jobs. we estimate that about 1 out of 4 of these net jobs were in technology. while singaporeans took up 75 % of the total net jobs, they accounted for only 35 % of the tech jobs. there are simply not enough singaporeans applying for tech roles. the problem is not jobs ; it is skills. the financial sector is on track to create many good jobs in technology over the next few years. they present a great opportunity for singaporeans β provided we acquire the skills necessary to take on these jobs. the answer does not lie in restricting the inflow of foreign tech expertise. on the contrary, it is by attracting the best tech talents from around the world that we can anchor new tech capabilities and functions that expand job opportunities for
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range of functions β from risk management, business analytics to customer service. we are now among the most tech - enabled financial centres in the world, supported by a vibrant fintech ecosystem and strong foundational digital infrastructures. singaporeans have benefitted significantly from digital financial services. we can : see our financial data across financial institutions and government agencies in one single portal to enable comprehensive financial planning ; trade securities and buy insurance on the go ; and pay for almost anything with just a mobile phone. can we imagine what life would have been like during last year β s β circuit breaker β lockdown if we did not have paynow or fast? many of these digital finance services would not have been possible without the strong technology workforce in the financial sector. take for example sgfindex, which provides a 360 - degree view of our personal finances through a mobile application ( app ). the front - end of the app is simple and intuitive, a delight to use. many of us have seen it. but to develop and manage such an app, a bank has to assemble a highly skilled and diverse technology team : product owners β who create the vision for the app and work with business and tech teams to deliver it ; business analysts β who work with customers to understand their requirements ; system and security architects β who design the app based on its security, data, and infrastructure requirements ; api designers β who develop apis that provide and pull data from various financial institutions onto the app, taking into consideration data security ; ui / ux designers β who design the look and feel of the app to provide a good user experience, such as minimising the number of clicks to perform an action ; so ware developers β who write the programmes that underpin the functionalities of the app and seamless integration across its [UNK] components ; testers β who ensure that the app performs according to the requirements ; production supporters β who monitor the performance of the app, manage incidents, and ensure timely resolution of issues ; and data analysts β who analyse app usage statistics and customer feedback, in order to recommend improvements to the app. let me catch my breath here. the multitude of technology talent needed to develop and manage just this one single product is staggering. the technology workforce in our financial sector is an estimated 25, 000 ; 30 % more than in 2014. singaporeans make up just over one - third of this workforce. many of the tech skills required to do the jobs i have described earlier are in short supply locally.
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amando m tetangco, jr : a responsive capital market β a step on the road beyond investment grade speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the philippines investment forum, organised by euromoney, manila, 18 february 2014. * * * i am pleased to join you for this philippines investment forum. events such as this organized by euromoney bring together the main stakeholders of our economy. through the various panel sessions, we are able to hear and exchange views, giving us a good sense of where the market pulse lies. it was certainly a privilege for all of us to have listened to no less than the president deliver the official keynote address. this shows you how serious the country β s policy makers are in reaching out to you who are among our economy β s main stakeholders. your work is central in enabling the public sector to effect true, broad - based and lasting change that supports the country β s continued development. the president β s address and the session before this one laid the groundwork for us to set our sights β beyond investment grade β. investment grade β how did we get here? indeed, we have seen that the road to investment grade was not easy... it was long and marked by reforms. reforms which include, first, a critical diversification of our growth sources and drivers to exploit and take advantage of our favourable demographics... second, a purposeful shoring up of our external position and strengthening of our banking system β¦ knowing that a robust external position and strong bank balance sheets would allow us to ride out the turbulence from external financial shocks... and third, a resolute management of our fiscal house by steadily reducing our external debt, maintaining a healthy government debt profile, and firmly committing to reforms that would allow us to meet our intergenerational needs. investment grade β the near - term challenges our current operating environment continues to be very sensitive to global developments. of late, we have witnessed what some analysts called the β rout β in emerging markets, following uncertainty in the next steps of the fed. since the beginning of the year, investors have indiscriminately sold em debt, and the philippines was not spared. we saw the peso decline, the stock market index drop and government securities yields rise in the secondary market. alongside the fear of contagion from em sell -
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benjamin e diokno : sustainable solutions for southeast asia β s recovery opening remarks by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), for adb β s southeast asia development symposium ( seads ) 2022 β sustainable solutions for southeast asia β s recovery β, manila, 15 march 2022. * * * good day to all. i am honored to join you today for the southeast asia development symposium 2022. before the pandemic, the philippine economy grew at an average of 6. 4 percent annually. poverty incidence dropped from 23. 5 percent in 2015 to 16. 7 percent in 2018. while the pandemic may have set us back on some of our goals, i am confident that we are on our way to regaining our pre - pandemic growth trajectory. there are two things fueling my optimism : first is the continued confidence in the philippine economy. the country continues to have a favorable medium - term growth prospects based on the stable outlook affirmed by majority of major credit rating agencies. second, we didn β t sit idly by during the pandemic but pursued game - changing structural reforms, from amendments to the retail trade liberalization act, public service act, and foreign investments act. we are also pushing for amendments to the implementing rules and regulations ( irr ) of republic act no. 10000 or the agri - agra credit act of 2009, which allows banks to lend to more types of farming communities and classify more loans as compliant with the law β s quotas. we are positive that the senate and house will reach a consensus and ratify the bill once session resumes on may 2022. i am confident that, with these game - changing reforms, we can achieve real change in the lives of ordinary filipinos through more and better jobs and more competitive economy. also, our financial digitalization initiatives, under the digital payments transformation roadmap, are enabling better payments processes and financial inclusion. moreover, the philippine central bank β s policies on sustainable finance are harnessing the ability of banks to drive a more sustainable future. aided in part by the bsp β s measures, the economy is showing signs of solid recovery, as shown by the 5. 6 - percent gdp growth last year. this year, we expect the economy to grow by 7. 0 - 9. 0 percent. looking ahead, the philippine central bank is laying the foundation for
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jean - claude trichet : interview in bild interview with mr jean - claude trichet, president of the european central bank, in bild, germany, conducted by mr oliver santen and published on 15 january 2011. * * * mr trichet, in one word, how would you describe the state of the euro today? if you allow me two words : credible and stable. will the euro crisis get worse this year? let me be very clear : this is not a crisis of the euro. rather, what we have is a crisis related to the public finances of a number of euro area countries. all governments have to put their finances in order, and above all those governments and countries which have lived well beyond their means in the past. how are the euro area countries ever to reduce the debt, now totalling β¬7 trillion? this year, the budget deficit in the euro area will be half as high as that in the united states or japan. virtually all advanced economies face acute fiscal problems. this is something that is often forgotten. that being said, this is no time for any complacency. let me repeat : the ecb expects the governments in the euro area to make enormous efforts to bring down their debt. some countries have to get their debt under control again. can you understand that many germans are afraid of inflation? the germans are right to be fiercely against inflation. inflation hurts in particular the poorest. price stability is a precondition for growth. but the germans and the european citizens do not need to be afraid : we have delivered and we will deliver price stability. inflation in europe rose to 2. 2 % in december, the highest rate for two years. we are always concerned if inflation rises and are following developments very closely. but the figures for december can be accounted for, above all, by rising energy prices. let me say something about the longer - term figures. in the last 12 years the average rate of inflation in the euro area has been 1. 97 %, and in germany only 1. 5 %. those are better figures than at any time in the 50 years before the euro was introduced. in germany, inflation was 2. 2 % in the 1990s, 2. 8 % in the 1980s and even higher in the 1970s. these figures speak for themselves. but why does nearly everybody have the impression that the euro has made life more expensive? that may have been the case ten years ago. i do not believe that this
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rules incapable of promoting prudent fiscal policies in times of favourable economic conditions ; second, the absence of a mechanism to prevent and correct macroeconomic imbalances within the eu ; third, insufficient coordination of macro and micro - prudential supervision of financial sectors at the eu level ; and finally, the absence of a crisis management framework to avoid contagion between countries and sectors. in response to these problems, policy - makers have set in motion ambitious reforms to strengthen economic governance at the eu level, and many national governments have committed to ambitious fiscal and structural reforms. all these measures should contribute to addressing the underlying causes of the crisis, thereby also supporting the smooth functioning of emu in the future. but let me first explain, in more detail, the ecb β s policy since the start of the current crisis. bis central bankers β speeches 3. the ecb β s response to the financial and sovereign debt crisis β measures and guiding principles since the intensification of the financial crisis in september 2008, and against the background of rapidly receding inflationary pressures, the ecb has implemented monetary policy measures that are unprecedented in nature and scope. this has included a swift reduction in our key interest rates to historical lows, with the rate on the main refinancing operations now standing at 1 % as compared with 4. 25 % in summer 2008. these steps are often referred to as β standard β policy measures, since changes in short - term interest rates are the main tool adopted by the ecb to achieve its price stability objective. however, besides triggering a sharp fall in global economic activity, the crisis severely affected the monetary transmission channels. in particular, central banks around the world were confronted with repeated waves of market turbulence, in which liquidity in overnight and longer - term money markets was sharply falling, in view of heightened uncertainty about counterparty risk between banks. as consequence, the functioning of the interbank market was seriously hampered and the ability of banks to provide credit to the real economy was at risk. these developments severely jeopardised the ecb β s ability to affect economic magnitudes and ultimately to contain downside risks to price stability. in response, the ecb embarked on a series of β non - standard β measures with the aim of relieving liquidity and funding constraints in the banking sector and mitigating impairments to the monetary policy transmission channels. in particular, they have taken the form of : provision to euro area banks of unlimited liquidity
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ewart s williams : trinidad and tobago β s secondary market for government securities opening remarks by mr ewart s williams, governor of the central bank of trinidad and tobago, at the launch of secondary market for government securities, port - of - spain, 28 january 2008. * * * an important aspect of the mandate of any central bank and particularly a central bank of a developing country is the development of an active capital market. why? because an efficient capital market is an indispensable requirement for sustainable economic transformation. the reasons for this are well - known to you, i am sure, but let me simply re - iterate a few of them. an efficient capital market : β’ supports the mobilization of domestic savings by providing investors with alternatives for investment and risk diversification. β’ permits companies and governments to raise long term resources at lower cost. β’ promotes efficiency and competition in the financial system. β’ creates an avenue for the population to participate in the corporate sector and share in its wealth. there is a more or less widely recognized sequencing for capital market development and it goes like this : β’ it usually starts with treasury bill issues, to fund government β s short term financing needs and the formation of some kind of money market in which there is the trading of short term funds β a good example is the inter - bank money market. β’ the second stage is usually a primary government securities market where government issues bonds to help finance capital projects. in the early stages, government securities may be issued to a captive market β for instance to pension funds and insurance companies to help them meet statutory requirements. during this stage, the distribution process tends to be non - transparent and, in a seller β s market, at below - market interest rates. β’ as the economic transformation process evolves, governments seek to promote a third stage β that is the development of a rudimentary equities market. with these basic structures in place efforts are focused on refining and improving the infrastructure related to the government securities and equities market β¦ until, there is a move to the third stage, that is : β’ the development of a secondary market in government securities and a bit later, a market for corporate securities and a derivatives market. these stages very often overlap and small developing countries seldom move beyond the state of primary government bond issuance and illiquid equity markets. we in trinidad and tobago are trying to move beyond the limitations dictated by small size to create a diversified capital market to facilitate the process of economic transformation and
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, catastrophic and next to impossible to forecast. it was a black swan. renowned economist nouriel roubini, who was ahead of the curve in predicting the financial meltdown in the united states, and stephen mihm, a journalist and professor of economic history, in their new york times bestseller β crisis economics β, argue otherwise. far from being the exception, crises are the norm. crises follow consistent trajectories and yield predictable results. all crises end, but their aftershocks can linger on for years, if not decades. like the americans, trinidadians experienced their own black swan event on january 30, 2009. by lunch time, the central bank had announced its intervention in clico, the largest local insurance company and one of the largest in the caribbean, clico investment bank ( cib ), and british american insurance company ( trinidad ) limited ( bat ), all subsidiaries of the cl financial conglomerate. large scale government intervention was needed to support these subsidiaries and to prevent the eruption of systemic risks. bis central bankers β speeches so, this morning, i want to talk about three things : β’ first, some of the key risks and challenges to global financial stability occupying the world β s attention four years after the free fall of the u. s. financial system ; β’ second, current financial stability issues in trinidad and tobago, in the aftermath of our own clico crisis ; and β’ third, the role of the central bank of trinidad and tobago in strengthening financial stability, enhancing economic confidence and staying ahead of the curve. risks to global financial stability let me begin with a brief overview of risks to global financial stability. sadly, the news is not so good. the global financial system is facing a period of elevated uncertainty which is the achilles β heel to an economic recovery that was not strong from the start. the sovereign debt crisis currently unravelling in europe has renewed financial turbulence, weakened investor confidence and may also threaten the fragile world recovery. the markets need the assurance that the european central bank and key partners in europe will take bold and continued policy actions to avert a deeper crisis. the actions of the ecb at its meeting today will signal the outlook for the euro in the months ahead. there is little doubt that the euro area β s crisis remains the most immediate and most serious threat to global financial stability, and there is the fear that conditions could worsen, with many now contemplating the consequences of a black swan scenario in which greece exits the euro zone. in
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##s β. in such an environment, traditional checks and balances may become inadequate and easily lead to excessive risk 4. we have seen numerous examples where periods of exuberance were accommodated by the financial system, reflected by increasing leverage and asset price inflation, followed by a correction. without any doubt, the best example in dutch financial history is the tulip mania, which took place around 1635. this episode is especially known for its incredible price increases. at the peak, 14 thousand guilders were paid for a single tulip bulb β more than a workman earned in his entire life those days. less known is that the speculative bubble was largely driven by financial innovation. in the years before the tulip mania, new financial markets evolved in the netherlands, including a stock exchange and futures markets. sophisticated trading techniques were developed, allowing short selling and the use of put and call options. derivative contracts allowed massive trading in tulips that were not even planted yet β a genuine financial innovation at the time. many investors did not realise that these new instruments were inflating a speculative bubble on an unprecedented scale and lost all their money when the market collapsed after two years. the tulip mania illustrates how imbalances can develop when previous constraints are lifted β in this case by new financial tools allowing investors to take large speculative positions. but it also illustrates the role of naive optimism and even greed. 5. misguided incentives are often also at the root of growing imbalances, because of conflicting micro and macro perspectives. this is because at the micro level, market participants tend to take the environment in which they operate as given, for instance prices and the behaviour of other market participants. but factors that are considered exogenous at the micro level may become endogenous for the financial system as a whole. at the macro level, this easily leads to fallacies of composition. for example, for an individual investor, increasing leverage is a way to boost returns. but if everybody does this, without sufficient profitable investment opportunities, it can only be counterproductive by reducing long - term yields and raising risks. pro - cyclicality 6. a closely related issue is the financial system β s inherent pro - cyclicality. we all know that with a favourable economic outlook and upbeat financial markets, balance sheets look strong for both financial firms and their counterparts in the real economy. in such an environment, it is understandable that banks β lending criteria become looser and, for instance, pension contributions are
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to bring together the industry practitioners, issuers and investors, the regulators, scholars as well as those in related services, including the it services, legal, accounting and auditing professionals and those in human resource development. it is our hope that the deliberations today will play a catalytic role in building greater collective efforts through multistakeholder dialogues and network - building activities whilst discovering opportunities and also improving our understanding on important areas in islamic finance. ladies and gentlemen, as we know today, there are already clusters of cross - border collaborative activities taking place on several fronts that serve to contribute towards increasing the international integration process of islamic finance. these activities have taken many forms ranging from equity and non - equity business collaboration, regulatory cooperation in setting the global development blueprint, information exchange and building consensus on issues for international prudential standards development, to intergovernmental memorandums of understanding for collaborative developmental initiatives in islamic finance, and many others. ladies and gentlemen, as islamic finance continues to make significant inroads in the international financial markets with expanding scale, growing magnitude and greater sophistication, a critical need emerges for an expanded discourse on the developments and emerging issues with its global relevance and impact, of interest to all its major stakeholders. this is the first time that bank negara malaysia has organized a full - scale, multi - disciplinary, international event of this nature on islamic finance. these sessions include the annual investors & issuers forum, and financial regulators forum and the biannual banking and financial law school. it is our hope that participants will benefit from any of the parallel sessions of their interests and have increased opportunities for network building among the widening groups of stakeholders participation in the forum. these forums have been designed to provide dynamic and interactive formats to encouraging open and inclusive dialogues that foster a greater collective understanding in islamic finance. let me record our appreciation to the many distinguished speakers from various international institutions, financial practitioners, legal fraternity, regulatory bodies and other prominent thought leaders in islamic finance. it is our sincere hope that this global forum will be rewarding and may the collective wisdom derived from the deliberations lead to more collective actions that will be to our increased mutual benefits. let me once again express our appreciation to yang amat berhormat dato'seri abdullah badawi for his presence here this afternoon and for accepting to deliver the keynote address at our forum today. thank you.
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r basant roi : present challenges of monetary policy in mauritius address by mr r basant roi, governor of the bank of mauritius, at the annual dinner with major economic stakeholders, sugar beach resort, 28 november 2003. * * * ladies and gentlemen good evening i am pleased to welcome you to the bank of mauritius annual dinner. right from the year i set the tradition of holding an annual dinner with the major economic stakeholders in the country i focused mostly on regulatory and supervisory issues in my addresses. intentionally, i chose certain regulatory and supervisory issues as the leading themes of my addresses for reasons that i strongly believe should be clearer by now. tonight i shall briefly outline the present challenges of our monetary policy in the context of an external environment characterized by uncertainties. before i proceed with the main theme of my address let me reiterate a few remarks i made in the post february 2003 months this year. the perceptions that emerged in the wake of the discovery of a fraud at the mauritius commercial bank ( mcb ) inevitably make it compelling that i should re - emphasize some of the remarks. the guiding principle of any regulatory and supervisory authority in any economic and financial system is to first and foremost attempt to save troubled financial institutions. the legal frameworks of regulatory and supervisory authorities are designed to promote financial stability rather than to jeopardize financial stability. this is what is envisioned in the bank of mauritius and the banking acts. the acts are an instrument that empowers the bank of mauritius to promote and sustain monetary and financial stability. regulatory and supervisory authorities the world over do not use any of the provisions of their laws to defeat the very objective of the laws. arbitrary decisions motivated by emotional or even personal considerations should be set aside in favour of a genuinely professional approach of sustaining the soundness of banks in situations similar to the one the mauritius commercial bank found itself in. the regulatory and supervisory authority cannot but exercise its independence of mind. without being presumptuous the mcb / npf case was handled by the bank of mauritius in a manner that best serves the interests of our financial sector and of our economy. i should like to re - underline that supervision of banks is control and procedure oriented and not transaction oriented. viewed in the light of determined steps taken by the mcb in the realm of risk management along with a number of other prudential measures taken in the months after the discovery of the fraud, the mcb / npf case is expected to be over soon as far as
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the years ahead. in an uncertain external environment the bank has so far charted the best possible course to support non - inflationary growth. the bank will pursue the course in the same spirit. may i on behalf of the board of directors of the bank of mauritius and on my own behalf wish you and your family merry xmas and a happy new year.
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october, up from 0. 1 % in september. despite these improvements, developments in loans to enterprises continue to reflect the lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and bis central bankers β speeches non - financial sector balance sheets. the annual growth rate of loans to households ( adjusted for loan sales and securitisation ) increased to 1. 2 % in october, compared with 1. 1 % in september. overall, the monetary policy measures in place since june 2014 have clearly improved borrowing conditions for both firms and households and credit flows across the euro area. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need for further monetary stimulus in order to secure a return of inflation rates towards levels that are below, but close to, 2 %. monetary policy is focused on maintaining price stability over the medium term and its accommodative stance supports economic activity. however, in order to reap the full benefits from our monetary policy measures, other policy areas must contribute decisively. given continued high structural unemployment and low potential output growth in the euro area, the ongoing cyclical recovery should be supported by effective structural policies. in particular, actions to improve the business environment, including the provision of an adequate public infrastructure, are vital to increase productive investment, boost job creation and raise productivity. the swift and effective implementation of structural reforms, in an environment of accommodative monetary policy, will not only lead to higher sustainable economic growth in the euro area but will also raise expectations of permanently higher incomes and accelerate the beneficial effects of reforms, thereby making the euro area more resilient to global shocks. fiscal policies should support the economic recovery, while remaining in compliance with the fiscal rules of the european union. full and consistent implementation of the stability and growth pact is crucial for confidence in our fiscal framework. at the same time, all countries should strive for a more growth - friendly composition of fiscal policies. we are now at your disposal for questions. bis central bankers β speeches
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particularly hard hit. risk premia for both long - term and short - term government bonds of some member states reached unusually high levels. in july 2012, the yield on spanish government bonds with a two - year maturity was 6. 6 % at times ; for italian ones it was 5. 1 %. some of these spreads reflected the economic fundamentals of the respective member states. however, the rapid rise in spreads in the first half of 2012 was also an expression of the fear, an unfounded one, that the euro area could break up. model calculations β with all their uncertainties and weaknesses both inside and outside the ecb β show that spreads for two - year spanish and italian government bonds that cannot be explained by fundamentals were up to 2 percentage points in july 2012. the prices of government bonds affect the pricing of other securities, such as bank or corporate bonds β key variables in the functioning of monetary policy. disruptions on the bis central bankers β speeches government bond market therefore also have an impact on the effectiveness of our monetary policy. in summer 2012, our monetary policy signals were reaching some euro area countries in only a limited way. sometimes they did not even reach the real economy. our key interest rate had lost its guiding role. it was in these circumstances that we announced the omts as an option on 6 september 2012. we wanted to be certain that we can live up to our monetary policy mandate for the entire euro area even in times of crisis. at that time, we clearly stipulated three conditions for omts : first, we will take them into consideration only to ensure that our monetary policy signals reach the real economy β in the whole of the euro area, as our mandate requires. second, omts will only be considered provided they are not undermined by short - term national interests, that is, if the member state concerned strictly complies with an adjustment programme of the european financial stability facility ( efsf ) or the european stability mechanism ( esm ) and implements the corresponding macroeconomic, structural and budgetary reforms. third, the member state must have access to the bond market or be about to have access to it in order not to unduly interfere with the market price mechanism ( article 2 of our statute ). just as long as these three conditions are met, the ecb may consider purchasing government bonds of the eligible member states on the secondary market, if this should be necessary from a monetary policy perspective. these three conditions β disrupted transmission of monetary
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peter praet : europe β s economic recovery and implications for monetary policy remarks by mr peter praet, member of the executive board of the european central bank, at the international conference of commercial bank economists ( iccbe ) in france, paris, 6 july 2017. * * * since june 2014, the ecb has introduced a range of unconventional measures, alongside our conventional ones, in pursuit of its price stability objective. together, these measures have proved to be extremely effective in preventing a period of disinflation from spiralling into one of deflation. nearly three years on, the risks of deflation have vanished and the transmission of our policy measures to the real economy is clearly evidenced by the recovery, which has gathered some further momentum recently. before turning to price developments and monetary policy, let me say a bit more about the latest economic developments in the euro area. the solid upswing continues to broaden across sectors and countries. real gdp in the euro area has expanded for 16 consecutive quarters, growing by 1. 9 % year - on - year during the first quarter of 2017, according to eurostat. this compares with the latest potential growth estimates for the euro area of just over 1 %. 1 moreover, recent survey data point to a strong start to the second quarter. for example, the composite output purchasing managers β index β which is strongly correlated with growth in the euro area β remains close to six - year highs in june. the forward - looking components of the survey continue to point to growth in the quarters ahead. moreover, economic sentiment is at its highest level in nearly a decade and has increased notably from may to june 2017. 2 unemployment is at its lowest level in eight years. looking ahead, the latest eurosystem staff macroeconomic projections point to a continued economic expansion at a somewhat faster pace than previously expected. the breadth of the economic recovery is also notable. the dispersion of growth rates across both countries and sectors is at its lowest level in two decades, reflecting a convergence of growth rates around higher levels. this is reassuring for the growth outlook because recoveries tend to be firmer and more robust when they are broad - based. it β s a similar picture for employment, with dispersion of employment growth rates across euro area countries at its lowest level on record. the increasingly solid cyclical recovery reflects the success of our monetary policy measures, which have worked their way through the financial system and led to a significant easing of financing conditions for consumers
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purpose does not include repayment of interest or principal on the newly underwritten securities. notably, even if these firewalls were lifted, a bank would still be required to hold capital against all credit enhancements and credit extended to customers of its section 20 affiliate. section 23b of the federal reserve act would require that such credit and credit enhancements be on an arm β s - length basis. similarly, the federal anti - tying statute would prohibit a bank from offering discounted credit enhancements on the condition that an issuer obtain investment banking services from a section 20 affiliate. thus, for example, a bank could not offer such credit enhancements below market prices, or to customers who were poor credit risks, in order to generate underwriting business for a section 20 affiliate. the firewall prohibiting lending to retail customers for securities purchases during the underwriting period addresses one of the most important potential conflicts of interests arising from the affiliation of commercial and investment banking : the possibility that a bank would extend credit at below - market rates in order to induce consumers to purchase securities underwritten by its section 20 affiliate. the concern here is not only safety and soundness but customer protection. the securities exchange act of 1934 already prohibits a broker - dealer ( including a section 20 affiliate ) from extending or arranging for credit to its customers during the underwriting period. still, we recognize the act would not apply in the absence of arranging and, unlike the firewall, would not cover loans to purchase a security in which a section 20 affiliate makes a market. section 23b of the federal reserve act, and to some extent section 23a, would address some of these remaining concerns, but perhaps not all. the board will be reviewing the comments on this firewall carefully. capital requirements the next group of firewalls i will discuss imposes capital requirements on a bank holding company and its section 20 subsidiary. these firewalls require a bank holding company to deduct from its capital any investment in a section 20 subsidiary and most unsecured extensions of credit to a section 20 subsidiary engaged in debt and equity underwriting ; they also require the section 20 subsidiary to maintain its own capital in keeping with industry norms. these requirements apply only to section 20 subsidiaries and not to any other nonbank subsidiary of a bank holding company. the board proposed to eliminate the capital deductions for investments in, or credit extended to, a section 20 subsidiary. the original purpose of the deduction was to ensure that the holding company
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turn of 2021, this shortage grew further, partly affected by natural disasters and a fire accident at a semiconductor factory in japan. then, through the summer, although the supply shortage that stemmed from the adverse incidents i just mentioned was being alleviated, the surge in covid - 19 cases in southeast asian countries in particular caused factory shutdowns ; thus, production not only of semiconductors but also of other automobile - related parts was suspended, resulting in the materialization of other types of supply - side constraints. the constraints not only have been seen in the automobile industry but also have begun to feed into the industries of other products, such as white goods, and this in turn has pushed down firms'exports and production ( charts 5 and 6 ). indeed, it was the unexpected surge in demand that severely tightened the supply - side constraints ; however, the contributing factors to the constraints are complex, including the stagnation of maritime logistics that stemmed from the malfunctioning of ports due to the spread of covid - 19 among longshore workers. moreover, it appears to me that there are growing uncertainties regarding prospects for the removal of supply - side constraints, as they depend on the future course of covid - 19. for now, i maintain the view that these supply - side constraints are temporary ; that said, i will carefully monitor future developments. b. prices 1. price developments abroad let me now turn to prices. inflation rates in the united states and european countries have been kept above 2 percent, the level at which their central banks aim ( chart 7 ). these upswings in inflation rates seem to be largely attributable to the increase in energy prices such as for crude oil and natural gas, in addition to the global supply - side constraints, which i just explained. moreover, particularly in the united states, those who had been temporarily out of the labor market following the outbreak of covid - 19 have been returning at a slower pace than expected ; therefore, labor supply has been lagging behind increased labor demand, and this in turn has been increasing the upward pressure on wages. nevertheless, regarding these rises in inflation rates in the united states and european countries, the current dominant view among their respective authorities is that, in terms of both the demand and supply sides, the rises reflect temporary factors associated with the pandemic, and thus the high inflation rates are quite unlikely to feed into medium - to longterm inflationary pressure, such as an increase in
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time being prioritize stabilizing the entire yield curve at a low level under the continuing impact of covid β 19 in particular etf and j β reit purchases category i category * etfs οΌ about 12 tril. yen j β reits οΌ about 180 bil. yen category ii iii financial system and bank examination dept. staff will make a briefing at the mpms when the outlook report is decided ( four times a year ). eligible fund β provisioning measure β’ special operations in response to covid β 19, when funds are provided against loans made by financial institutions on their own β’ special operations in response to covid β 19, when funds are provided against loans other than those for category i and against private debt pledged as collateral β’ β’ loan support program operation to support financial institutions in disaster areas higher than the rate for category ii 0. 1 % purchase as necessary with upper limits * on the annual paces of increase, and maintain these limits even after covid β 19 subsides purchase only etfs tracking the tokyo stock price index ( topix ) 0. 2 % absolute value of the short β term policy interest rate 0 % lower than the rate for category ii β enable the bank to cut short β and long β term interest rates more nimbly while considering the impact on the functioning of financial intermediation in addition, adjustments to the complementary deposit facility will be made to narrow the gap between the actual policy β rate balances and the " hypothetical " policy β rate balances.
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it is part of the strength of the monetary policy regulations that there has sometimes been rather lively discussion, without this having an effect on confidence in our main objectives. another advantage of openness is that it gives forecasters, both inside and outside the riksbank, the opportunity to make comparisons that help to sharpen our forecasting. we must not forget that inflation forecasts are made under great uncertainty and that inflation is affected by unpredictable factors. nevertheless, during the 10 years we have employed inflation targeting, the average inflation rate has remained very close to the target level. to summarise, we can observe that the growth rate for 2003 was weaker than we had expected in 2002. the inflation rate, however, was more or less as expected. it is possible that we became slightly too pessimistic with regard to economic activity in 2003. when we made our monetary policy decision in december the international upturn appeared to have been confirmed, and there were also signs that the swedish economy was strengthening. inflation had developed roughly as we had calculated in earlier forecasts. although energy prices did not fall as far as we had calculated, domestic inflationary pressure excluding energy prices proved to be lower than expected, probably because of the weak labour market development and good productivity growth. the falling import prices had an even more significant effect on inflation. we assumed in our inflation forecast for the coming years that import prices would cease falling and instead begin to rise gently as international economic activity improved. the forecast for domestic cost pressure was adjusted slightly downwards as this was expected to show only a slight increase during the forecast period. the conclusion was that underlying inflation excluding energy, which was assessed as the best mirror of cyclically - related inflationary pressure, was expected to be in line with the target 1 - 2 years ahead, and this was why the repo rate was left unchanged. the information received so far since december does not appear to significantly alter the picture of a recovery in economic growth. however, there may be a risk that the weak labour market situation will last longer than anticipated and have repercussions for growth and inflation through weaker private consumption. now that we are in the midst of compiling the data on which to base our decision at the february meeting, it looks as though the new information received since december gives scope for a further slight downward adjustment to the forecast of domestic cost pressure. this is because it seems that labour market growth will be somewhat weaker than expected, and thereby also the rate of wage increases,
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. however, if demand nevertheless falls and inflation beyond the forecast horizon is below the two per cent level, the conclusion is not so obvious. then it may be time to discuss lowering the interest rate. extending the forecast horizon may in some situations explain why increased flexibility is needed in monetary policy. these are some reflections on the time aspect and the monetary policy operational framework. however, there are also other important factors indicating that the inflation target and the policy rule must be interpreted with a measure of flexibility. it is easy to have a blind faith in monetary policy β s scope for economic fine tuning, but we should be sceptical of this for at least two reasons. one is that our forecasts and other reports on which the interest rate decisions are based contain a large measure of uncertainty, because of gaps in statistics, information lags regarding economic trends, incomplete knowledge of how companies and households will react and structural changes, such as increased globalisation. reactions to monetary policy may also vary considerably over time, partly, but not completely, due to economic activity. our knowledge is quite simply too brittle to enable us to lead the economy exactly by fine tuning monetary policy at perfectly chosen moments. the second reason why fine tuning of monetary policy is doomed to failure is that the repo rate is only one of the factors affecting the economy. the most important economic decisions in our society, such as house purchases and corporate investment, are mainly due to developments in long - term interest rates, and monetary policy decision - makers can only have an indirect and very limited effect on these. this reasoning therefore comes to the conclusion that we should not have overly high expectations of what the riksbank can achieve to influence real economy developments, as has been the focus of recent debate. there is in actual fact every reason to be humble with regard to what we can actually achieve. but if we can keep inflation within our target area of 1 - 3 per cent and clearly anchor inflation expectations around two per cent, this will have great significance for growth and employment in the long term. monetary policy is not an exact science. sometimes monetary policy is described as a car, where gentle acceleration or easing on the gas adjusts the speed of the journey down a winding road. this is a very misleading image. it is not possible to see the road ahead clearly and nor is it possible to know exactly what will happen if one puts one β s foot down on the accelerator pedal β only that the effect will come after a fairly long period of time
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come cheaply but it is the price that people know that they have to pay for the protection of their physical properties. 3. in the cyber world, just like the real world, there are plenty of risks and dangers. financial crimes will occur whenever there is money to be made and for sure criminals and hackers alike will use their best endeavours to penetrate the defence of the cyber world to rob or steal. the strength of the cyber world also lies its main weakness. hackers can choose to attack customers and financial firms any time and anywhere because the virtual world is highly interconnected. cyber attacks can take many different forms. a frequently used method is to make phishing attempts to trick customers into divulging their account information and passwords, or to plant malwares into customers β computers and mobile phones to steal their access credentials. then the hackers transfer moneys from the victims β accounts. sometimes the hackers would do something unusual, such as the recent example in bis central bankers β speeches hong kong in which some customers β bank accounts had been used by hackers to conduct unauthorized stock trading without stealing money from the victims β accounts. at the bank level, the usual form of attacks would be distributed denial of services ( ddos ), whether they are motivated by blackmail, revenge or activism of some sort. there is a worrying trend that this form of attacks is rising very fast in recent years. cybersecurity fortification initiative 4. rather than harbouring the hope that you are lucky enough not to be targeted, it is more prudent and productive to take the necessary pre - emptive steps to protect yourself or your customers from cyber attacks. cybersecurity is the very foundation of modern banking and without it there is no point for us to boast hong kong as a world class international financial centre. while banks in hong kong have so far had very few incidents of serious cyber attacks, there is no place for complacency if we wish to maintain hong kong β s competitive edge as the preferred financial hub in asia. in this connection, the hkma has earlier this year set up a new fintech facilitation office, which has taken cybersecurity as its top priority mission. having worked very closely with the banking industry and other stakeholders, i am very pleased to announce today that the hkma has decided to launch for the banking system a β cybersecurity fortification initiative β, which is known as β cfi β in
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the chinese language. the platform would also ensure that users would feel comfortable with providing intelligence on cyber attacks without compromising proprietary information. needless to say, access to the platform will be through secure channels with robust encryption and on a need - to - know basis. way forward 10. ladies and gentlemen, having announced the launch of the cfi, the hkma will move full steam ahead in collaboration with our partners and the stakeholders to roll out the programmes i just mentioned with the following timeline : bis central bankers β speeches 11. ( a ) the hkma will issue a formal circular to all banks next week, stating clearly that it is a supervisory requirement for banks to implement the cfi ; ( b ) we will at the same time conduct a three - month consultation with the banking industry on our detailed proposals on the risk - based cyber resilience assessment framework ; ( c ) we will work with the hkib and astri to roll out the first training courses for cybersecurity practitioners by the end of this year ; and ( d ) we will work with the hkab and astri to set up the cyber intelligence sharing platform by the end of this year. i understand that the timeline for rolling out the cfi programmes is very tight. however, if we wish to raise the cybersecurity resilience of our banking system to a level commensurate with hong kong β s position as the leading international financial centre in asia, we cannot afford to go slow or lose any time. in a spirit of cooperation to achieve this common goal, the hkma, the banking industry and our partners will work closely together to implement this ambitious but necessary cfi according to plan. in closing, i would like to emphasise that in the physical world, there are very few, if any, of the defences of the strongest forts that ever existed can prove to be totally impenetrable by attackers. that is why i believe that, in the cyber world, by the same token the fortification initiative against cyber attacks that we are pursuing is not going to be a one - off exercise. it will be an ongoing battle or a fact of life that any successful financial centre must contend with and win if we wish to stay ahead of the game. thank you! bis central bankers β speeches
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it is likely to persist and what policy should seek to do about it. but before turning to those topics, let me say a few words about the headwinds that still confront us on the demand side of the economy. to begin with, this was not a typical downturn and we should not anticipate a typical recovery. after normal cyclical downturns, economies typically return to the previous trend growth path within a few years. but after financial crises, economies often take much longer to recover. indeed, the evidence suggests that output typically stays well below a continuation of the previous growth path for many years thereafter. for instance, a study by the imf 2 found that across 88 past crises, output per head was, on average about 10 % below such a path fully seven years after the onset of the crisis, though there is considerable heterogeneity in the experience of individual countries ( chart 1 ). unless crises are also associated with an equivalent impairment of supply capacity, that implies an increase in the margin of unused resources. http : / / www. bankofengland. co. uk / publications / speeches / 2008 / speech342. pdf imf world economic outlook, october 2009. bis central bankers β speeches the primary reason for such a slow recovery is that the unwinding of earlier financial excesses takes time. moreover, banking crises are also frequently associated with a subsequent deterioration of the public finances, as governments provide support to vulnerable financial institutions and tax revenues drop back. both these features are, of course, present today in many of the advanced economies, including in the united kingdom. uk banks have made considerable progress over the past year in improving their balance sheet positions, but funding costs remain elevated and over the next two years they face the challenge of replacing around Β£400 billion of maturing wholesale funding. credit availability to larger corporates has improved significantly, but small and medium - sized enterprises still face difficulties in securing affordable credit. as a result, conditions in the banking sector are likely to continue to act as a brake on the recovery. as far as the public finances go, the public deficit widened sharply in the wake of the recession, reaching more than 11 % of gdp in 2009 / 10, in large part reflecting the endogenous response of spending and revenues to the downturn in activity. action would be needed to address such an unsustainable deficit, unless an early resumption of the pre - crisis growth path is expected. as
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to 13 percentage points. since the β excess β inflation relative to the 2 % target is a little over 5 percentage points, that suggests that, in practice, we have ended up accommodating around half the impact of the shocks on inflation. in terms of the outlook, a key issue that the committee faces in deciding the appropriate stance of policy is the extent to which the current elevated levels of inflation will persist into the medium term. our most recent projections, conditioned on market interest rates, existing fiscal plans and the futures prices of commodities, are shown in chart 10. the central view is for inflation is to rise further in the near term as recent commodity price increases pass through, but then to fall back, particularly in 2012 as the rise in vat to 20 % drops out of the twelve - month comparison. it then continues to ease back, reflecting the continuing β though uncertain β drag from the margin of spare capacity in the economy. a number of factors will determine the rapidity of that return to target. profit margins have been squeezed during the recession and businesses are likely to want to rebuild these as the recovery proceeds. but the real purchasing power of wages has also been severely squeezed and employees may also seek to recoup some of that. ultimately this is about how the costs of the recession and the deterioration in the terms of trade associated with higher real import costs are shared out 7, but during the adjustment phase it may be manifested in temporarily higher wage and price inflation. consistently above - target inflation, whatever its cause, may also lead people to believe that it will remain high in the future. that in turn may lead them to set higher wages and prices to compensate and thus to the elevated level of inflation persisting. measures of inflation expectations for the year ahead, for both households and businesses, have moved upwards, though no more than one would expect given the outlook for inflation ( chart 11 ). measures of inflation expectations further ahead, which might be more indicative of a fundamental shift in perceptions of the inflation climate, have though mostly remained well anchored ( chart 12 ). but this is something we are watching closely, in particular for any signs that higher inflation expectations are leading businesses to raise pay and prices. there are elements of all these mechanisms present in our latest projections, but there is a risk that they will turn out to be more powerful than in our central view. and, as noted earlier, there is the risk of further increases in the prices of commodities, especially that of oil
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had been under pressure since 1996. here in washington, intense discussion revolved around the question of whether the imf should sell gold. moreover, the gold policy of the future european monetary area had been subject to intense speculations. the market feared that once the european monetary union came into force, the participating central banks or governments would lose their inhibition about selling off parts of their 12 β 000 tonnes of total reserves. in may 1999, the announcement by the uk treasury that it planned to sell 415 tonnes set a new wave of producers hedging activity and front running speculation. the gold price dropped by 10 % to 252 usd / oz, a 20 year record low ( see figure 3 ). it is against this background of heightened speculation about wide - ranging central bank gold sales and corresponding market anxiety that the joint statement on gold was signed at the imf meeting in washington on september 26, 1999. the participating central banks undertook to sell a total amount of no more than 2, 000 tonnes of gold in the next five years, with annual sales limited to approximately 400 tonnes. the fifteen central banks furthermore agreed not to expand their gold lending and gold forward transactions during this period. while the u. s. and japan were not part of the joint statement, they declared that they had no intention of changing their β passive β gold policy. furthermore, the imf announced that it would abandon its plan to sell some of its gold reserves in the market. these declarations had a big impact on the market for two reasons : first, they removed the uncertainty about the behaviour of the holders of 85 % of the world β s official gold reserves. second, the planned annual total sales ( 400 tonnes ) compared favourably with the sales and increases of gold lending activity of the previous years ( 700 tonnes ). the idea of a swiss foundation of solidarity was suggested to the president of the swiss confederation by the then president of the governing board of the snb. the washington joint statement on gold was a coordinated effort aiming at clarifying the intentions of the participants in a market prone to rumours and secrecy. of the 1, 300 tonnes of gold which the swiss national bank intended to sell, 1170 tonnes were included in the 2000 - tonne total sales quota of the washington agreement. in other words, the snb ended up being the main beneficiary of the agreement. formally, the initiative for the washington agreement did not come from the snb. nonetheless, the snb β s unilatera
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jean - pierre roth : switzerland - a financial centre in the heart of the euro area summary of a speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the belgian financial forum, brussels, 16 february 2004. the complete speech can be found in french on the swiss national bank β s website ( www. snb. ch ). * * * switzerland is not a fortress. in relation to the rest of europe in particular, it is an economy that is very much open to mutual exchanges - notably with regard to trade and finance. it is not by chance that switzerland has become a major financial centre. this can be ascribed to a number of positive factors, including specialist knowledge, a long - established banking tradition, the quality of the financial infrastructure, and customers β confidence in the soundness of the country β s financial institutions. switzerland β s political stability, its high level of savings and the international standing of the swiss franc have also enhanced the appeal of its financial system. increasingly, however, switzerland is not alone in offering such advantages. moreover, the swiss financial centre - like all the others - has to face the challenges of globalisation and the fight against financial crime. as banking secrecy does not afford any protection to funds of dubious origin, the swiss authorities are able to combat money - laundering with a reasonable degree of efficacy. in this area, switzerland has implemented measures that have received international recognition. the introduction of the euro has profoundly changed the environment in which the swiss economy operates. since 1999, the swiss franc has coexisted quite harmoniously with the euro. in fact, the franc has been more stable against the euro than it was against the d mark. this is good news for swiss companies exporting to the european market. on the other hand, such companies have to contend with a greater concentration of foreign - exchange risks. they are responding to this challenge with hedging policies that are more active than those pursued in the past. pegging the franc to the euro in order to eliminate exchange - rate risks would entail more problems than advantages, as it would inevitably push up the level of interest rates in switzerland. against this backdrop, the national bank is continuing to pursue an independent monetary policy that takes account not only of economic trends and inflation forecasts but also of the situation on the foreign exchange markets.
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can rely on the enormous strengths of this institution : excellent leadership on the board and in the reserve banks and unmatched expertise and experience in the staff. mr. president, as you know, on september 11, 2001, and the days that followed, vice chairman roger w. ferguson, jr., who just swore me in, and many members of the federal reserve staff - - here, in new york and around the country - - worked inexhaustibly to ensure the continued functioning and recovery of the american financial system. the dedication and knowledge demonstrated that day by so many people exemplifies why the federal reserve as an institution is far more than any single individual. to my board colleagues and to the staff here today, i would like to say thank you for your service to your country and to the world. i am happy to be back among you and look forward to working with you in the days and years ahead. together i am confident that we will meet whatever challenges the future may bring. thank you all for coming.
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challenges. assessments of the appropriateness of a transaction for a client traditionally have required firms to determine if the transaction is consistent with the financial sophistication, financial condition, and investment policies of the customer. given recent events, it is appropriate to raise the bar on appropriateness assessments in the approval process for complex structured transactions by taking into account the business purpose and economic substance of the transaction. when firms provide advice on, arrange, or actively participate in a complex structured finance transaction, they may assume legal and reputational risks if the end - user enters into the transaction for improper purposes. firms should have effective and consistent policies and procedures that require a thorough review of the business purposes and economic substance of the transaction by all relevant functional areas and an assessment of any legal or reputational risks posed by the transaction. in instances that present heightened legal or reputational risk, the policies and procedures should require a review, by appropriate senior management, of the customer β s business relationship with the firm. of course, these policies and procedures need to be supported and enforced by a strong tone at the top and a firm - wide culture of compliance. conclusion the evolution of the financial markets and the number of significant governance issues recently faced by complex financial firms clearly underscore the need to view risk management on an enterprise - wide basis. an integral part of a robust legal and reputational risk - management function is a strong compliance program. for such programs to be effective in complex financial institutions, compliance must be addressed on an enterprise - wide basis.
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francois groepe : the expanded research opportunities for students in economics address by mr francois groepe, deputy governor of the south african reserve bank, to the economics department of the north west university, potchefstroom, 15 august 2013. * * * introduction prof. waldo krugell, director of the school of economics, staff members of the faculty of commerce, students, ladies and gentlemen. i wish to thank you for the opportunity to address you at your seminar series. global economic developments despite some positive developments recently, the global economic crisis continues and the recovery is best described as hesitant and fragile. in the past, the bank has referred to the mutating nature of the crisis, with the crisis starting out as a sub - prime crisis which mutated into a systemic banking crisis, a liquidity, fiscal deficit and sovereign debt crisis, and more recently in some countries a youth unemployment crisis. the altered patterns of capital flows and the rising long - term bond and mortgage interest rates that may follow the tapering of the asset purchases programme by the us federal reserve and the eventual exit of quantitative easing by monetary authorities in advanced economies could well result in a further mutation of the global financial crisis. six years into the crisis, most of the major advanced economies continue to grow below potential and unemployment, particularly in the eurozone area has remained elevated. the level of youth unemployment is of particular concern with possibly significant long - term implications for social stability in the worse affected countries. while there are signs of positive economic growth and rising employment in the us, this growth is still too low to significantly close their output gap. the haphazard fiscal contraction and the potential headwinds that may flow from this are likely to pose a risk to the robustness and sustainability of the recovery. the anticipated exiting of quantitative easing by the advanced economies is likely to contribute to rising long - term bond and mortgage interest rates. this could bring pressure to bear on the housing recovery in the us, but will furthermore have a pronounced impact on emerging market economies, particularly their financial market asset prices and currencies may prove vulnerable. the eurozone, after six quarters of contraction has finally emerged out of its recession in the second quarter of 2013, and recorded a growth rate of 0. 3 per cent, which was slightly ahead of the median forecast of 0. 2 per cent growth. this growth performance appears to be broad based on the economic outcome in core countries such as germany and france, as well as certain of
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the poorer households who, unlike the wealthier ones, do not have the possibility of β hedging themselves β from the consequences of a downgrade by diversifying their assets. there are five major channels through which the recent rating downgrades can undermine the well - being of poorer households, which i will discuss more in detail. page 2 of 10 the ratings of a listed entity ( be it a government or a corporation ) are meant to reflect its β credit quality β. hence, they are used by international investors to gauge the risk of buying the bonds issued by that entity. in theory, therefore, these investors will β subsequent to a downgrade β require a premium in the form of a higher interest rate, or they will shun these bonds altogether. south africa requires foreign investors to finance its external deficit ( as its imports regularly exceed its exports ). a rating downgrade therefore means that financial markets will move to a new equilibrium where the interest rates on bonds are higher and the exchange rate of the rand is weaker than before the downgrade. obviously, the recent empirical evidence is clouded by the fact that many other factors, bar sovereign ratings, influence the price of south african financial assets. nonetheless, a standard measure of sovereign credit risk for south africa, namely the credit default swap ( cds ) spread, has underperformed compared to its emerging - market peers in recent years, and is now trading at similar levels to non - investment - grade countries. this is clear evidence that investors are requiring a higher risk premium, if only in relative terms, on south african government debt. the increase in the yield on inflation - linked bonds issued by national treasury, over the past two to three years, is another such indication. even after being fully protected against inflation, bond investors require a higher return β even as global economic factors have continued to depress risk - free, real interest rates all over the world. these higher yields on south african bonds will, over time, negatively affect the poor. as the south african government faces a higher cost of borrowing, it will have to devote a larger share of its ( finite ) resources to page 3 of 10 servicing debt. already, estimates by national treasury indicate that government debt - servicing costs are expected to represent 10. 4 % of total budget spending ( and 3. 5 % of gdp1 ) in 2017 / 18, up from a low of 7. 0 % in 2009 / 10. this stands in contrast to the years prior to the global financial
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monitored framework for risk appetite and highly assertive risk management. search for yield has intensified competition in the market for leveraged finance. the result is that the terms for borrowers have become more favourable β ultimately, that increases the risks for the lender. we as supervisors take a close look at the credit quality of borrowers as measured by their level of leverage. lending to highly leveraged counterparts may entail significant risks. and in the euro area, we observe that the leverage of corporate borrowers has increased. in 2014, 35 % of transactions arranged by significant institutions actually refinanced borrowers at an increased level of leverage. moreover, we as supervisors are not always impressed by the quality of loan contracts. some loans contain only limited obligations for borrowers, for instance with regard to payment terms. particularly when refinancing or renewing commitments, banks might be inclined to accept the removal of covenants in order to preserve existing commercial relationships. we as supervisors also care about returns. banks are taking on risks ; but do they gain adequate returns? well, over the entire credit cycle, they may not necessarily earn more returns because there are other factors at play. today, fierce competition is one of the factors that depress returns despite the increase in risks ; it might prompt some banks to reduce fees in order to increase their market share. and tomorrow, the credit cycle might reverse and bis central bankers β speeches default rates surge. such a scenario ultimately raises the issue of default - recognition methodologies. and last but not least, there is also the reputational perspective. by acting as underwriters in leveraged - finance deals, banks also distribute a certain amount of exposure. in 2014, around β¬50 billion of leveraged - loan exposures were distributed. nevertheless, from a reputational perspective and to avoid potential mis - selling practices, the quality of the distributed assets is of the essence. and currently, 21 % of exposures retained by banks are covenant - lite, against 74 % of those that they distribute. to sum up : banks appear to be increasing their exposure to the growing market for leveraged finance. the leverage levels of borrowers are increasing, while constraints on loan contracts are being removed. as i said earlier on, there is no such thing as a free lunch, and ultimately, it is the task of risk managers to ensure that the price is adequate β risk and return have to remain in balance. among other things, this requires forward - looking risk
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european central bank : press conference - introductory statement introductory statement by mr willem f duisenberg, president of the european central bank, and mr christian noyer, vice - president of the european central bank, at the press conference, held in paris, on 19 october 2000. * * * today, the governing council met for the second time outside frankfurt. therefore, let me first of all thank our host, governor trichet, for inviting us to meet in paris and for the generous hospitality offered to us. our meeting was also attended by the president of the eu council, mr fabius, and european commissioner solbes. as usual, we conducted our regular examination of recent monetary, financial and economic developments and their implications for a monetary policy aiming to maintain price stability in the medium term. following this review, the governing council decided to leave the ecb interest rates unchanged. moreover, we exchanged views on achievements so far and the challenges ahead. let me briefly report on developments since the last meeting of the governing council before turning to our more general assessment. as regards the first pillar of our monetary policy strategy, no new data on monetary developments have become available since 5 october. turning to the second pillar, oil prices and exchange rates remained two important factors under examination. before coming down somewhat, oil prices had surged again as markets were concerned about the impact of political tensions in the middle east. meanwhile, real gdp growth over the four quarters up to mid - 2000 has proved to have been very strong. as mentioned at our last meeting, some uncertainty about short - term growth dynamics stems from oil price developments, as is reflected in survey or confidence data. while these indicators have weakened somewhat in recent months, overall they remain at high levels and underlying forces for continued robust growth remain favourable. this is also reflected in little changed bond market developments. as foreseen at the time of the governing council meeting two weeks ago, energy price developments have had a strong impact on inflation rates ; in september the hicp rate of inflation rose further to 2. 8 %, compared with 2. 3 % in august and 2. 4 % in july. this development did not come as a surprise and was already taken into account in our considerations on monetary policy action on 5 october. overall, latest developments underpin the message we stressed on 5 october, namely that monetary policy continuously needs to ensure that expectations remain firmly anchored in the maintenance of price stability, despite current inflation rates. in addition to commenting on more recent developments,
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speeches foreign exchange reserve management managing our country β s foreign currency assets and gold reserves is another responsibility of the reserve bank. today, our foreign exchange reserves stand at nearly us $ 300 billion, up from just a few billion in 1991. an adequate level of foreign exchange reserves is important for several reasons. in particular, it protects us against external shocks and inspires the confidence of foreign investors. in investing our foreign exchange reserves, we are guided by three principles : safety, liquidity, and return. in our investment policy and practice, we exercise utmost care and caution to maintain a high degree of quality of foreign currency assets. in november 2009, we bought 200 metric tonnes of gold from the international monetary fund. this triggered a lot of public and media interest on the rationale of the transaction. in recent years, although there has been significant accretion to our reserves, our gold holdings have remained stagnant. this purchase from the imf helped in raising the proportion of gold in our reserves. secondly, you will recall how, at the height of the balance of payments crisis in 1991, we had to pledge gold to raise resources. in view of the strategic importance of gold as a reserve asset, we exploited the opportunity that came our way to buy a sizeable quantity of gold from a reliable, multilateral financial institution at market prices in a single deal. financial inclusion in recent years, financial inclusion has become one of the top priorities of the reserve bank. we all know that economic opportunity is strongly intertwined with financial access. such access is especially powerful for the poor as it provides them opportunities to build savings, make investments and avail credit. importantly, access to financial services also helps the poor insure themselves against income shocks and equips them to meet emergencies such as illness, death in the family or loss of employment. financial inclusion is good for the poor. but it is also good for the economy as it channels the savings of the poor for productive use. let me just say this : till financial inclusion becomes a reality, we have not conquered the final frontier of development. despite all the progress we have made in other spheres, our performance on the financial inclusion front is disappointing. more than half the households in the country do not have a bank account, and a larger number of those that do, do not use the banks account in any meaningful sense. of the 600, 000 habitations in the country, only 30, 000, or just 5 % have access to a bank
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, i am going to visit a village in orissa, and will go to a village in kerala in march. conclusion i have tried to give you an idea of the reserve bank β s main responsibilities and the challenges that we address. i hope this has given you a fair perspective of how the reserve bank makes a difference to your life in both direct and indirect ways β even if most of the time you are not perceptive to it. in the best traditions of convocation speeches, let me conclude by giving you some advice. all of us, all the time, are complaining about all the things that are wrong in our community, in our society and in our country. we want things to change. just β wanting β is not good enough. we, each of us needs to be a change agent. and as mahatma gandhi said, we need to be the change that we desire. all i can say, as you go out as degree holders, is to go and make a difference in the real world and in the process make a name for sambalpur university. bis central bankers β speeches
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put forward by national treasury in 2011 page 5 of 8 and i am sure everyone here is aware of what the plan is going forward. nonetheless, let me remind you that, among other things, the proposed conduct authority will have a mandate to enhance and support the integrity and efficiency of the domestic financial system. this mandate will be provided for in the financial sector regulation bill which is expected to confer powers on the sarb ( as the prudential authority ) and the financial services board ( as the financial sector conduct regulator ) to preserve and enhance financial stability and to improve market conduct in order to protect financial customers. codes of conduct in the wake of the recent scandals of market manipulation, south africa has been very active in the development of codes of conduct, starting with the jibar1 code of conduct in 2012, the code of conduct for authorised over - the - counter ( otc ) derivative providers is in the process of being finalised and, most recently, the code of conduct for wholesale otc financial markets ( otc code ) which is still in a developmental phase, having had the benefit of input from relevant financial market stakeholders. it is envisaged that a number of other specialist codes of conduct will be developed for different segments of the wholesale financial markets, with the otc code serving as a general code for those market participants who are not covered by a specific code of conduct pertaining to their market segment. as regards the foreign exchange market, many of you will be aware that the bis foreign exchange working group released the global foreign exchange code ( the global code ) last week, which addresses, in a comprehensive manner, best practice covering areas such as market ethics and information sharing, but also tackles complex issues such as electronic trading and algorithmic trading. this is the first time that a single, unified, global code was established, providing guidance and principles that can apply across many jurisdictions and market segments. the sarb was afforded the opportunity to participate in the development of the global code. south africa has become a member of an expanded and formalised global foreign exchange committee, whose objectives are to promote collaboration among local foreign exchange committees, to exchange views on trends and developments in 1 johannesburg interbank agreed rate page 6 of 8 global foreign exchange markets, and to promote, maintain and update the global code on a regular basis to ensure its continued relevance. each member foreign exchange committee designates a central bank and private sector representative for the global foreign exchange committee. following consultations with the financial markets liaison
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global goldilocks meets the three bears. " the reasoning behind this is that β goldilocks - - a. k. a. the world economy - - has been enjoying a not - too - hot, not - toocold 4 - per - cent plus growth rate over the past four years thanks to steady prices β, robust u. s. growth and the new wealth experienced by emerging markets countries. however the journal goes on to identify the three growling bears that are threatening to spoil the fairy tale. mama bear is the β increasing energy insecurity, a beast spawned by rising oil prices but made more dangerous by escalating political risk afflicting almost all the major producers : iran, iraq, nigeria, venezuela, russia and saudi arabia. papa bear comes in the form of deflating housing prices in several countries. the lost wealth effect of inflated property values, whether gradual or sudden, could unsettle not only β american consumers - - but also hit other countries with similar problems of high debt ratios and low savings. β baby bear is inflation, whose sudden growth in some countries β has spooked the global market and sparked the recent sell - off on the expectation that higher interest rates could slow corporate growth and consumer spending. the important question is whether recent significant market corrections were short - term in nature or whether they were the β sort of overdue awakening to risk β that many economists have been predicting. some are even convinced that markets are finally responding to " unsustainable global imbalances " - - symbolised by record u. s. deficits and asian surpluses. but as we are all, too aware, markets do over - react from time to time. we hope that calm will soon return for there is a lot of value out there. oil prices, property prices and inflation do not only pose dangers to the us economy but certainly pose significant dangers to many other countries including our own. although economic doomsayers often have been proven wrong in the past few years by the remarkable resilience and flexibility of the u. s. and other leading economies, the threatening nature of these bears is something to keep a close eye on. consumers are more likely to reduce their spending the longer energy prices stay high and the more they worry about asset values. although some may argue that this is not much of a threat given that oil prices have risen to $ 70 a barrel without slowing global growth or igniting second - round inflation, geopolitical risks
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, useful and relevant to the sector. third, encouraging effective business models. continued resilience of banks can only be realised when banks ensure that their business models are sound. the business models should be strengthened to accommodate new business lines and innovations rolled out by the banks. this informs the drive by cbk to ensure that they maintain sufficient capital to cater for existing and potential risks they are exposed to and their market niche. this informed the introduction of a 2. 5 percent capital conservation buffer effective january 2015. cbk also required banks effective 2013 to develop internal capital adequacy processes ( icaap ) to inform their capital management. though most of the banks have embraced the requirement, we have noted that there is wide disparity on the icaap documents submitted to cbk. to this end, cbk will shortly be issuing a proposed icaap guidance note for comments. the guidance note is expected to strengthen icaap management with capital holdings that are aligned to banks β risk profiles and business requirements. as i conclude, it is also worth touching on brexit. while the economic impact thus far has been muted, brexit has created a lot of uncertainty in the financial markets globally. we are also aware of the likely impact on trade, since countries such as kenya may be required to negotiate new bilateral agreements with the united kingdom once it exits the eu. this may have an impact over the medium term, with reduced foreign direct investments as well as export earnings from the uk and eu. cbk is keenly following these developments and is ready to take appropriate actions to safeguard the stability of our economy and the banking sector in particular. with these remarks, ladies and gentlemen, it is now my distinct honour to invite the cabinet secretary, national treasury, mr. henry rotich to officially open the workshop. karibu bwana waziri! bis central bankers β speeches
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patrick njoroge : instilling confidence in the financial sector remarks by dr patrick njoroge, governor of the central bank of kenya, at the stakeholders workshop on deposit insurance β instilling confidence in the financial sector β, nairobi, 20 july 2016. * * * good morning! it gives me great pleasure to be here with you this morning to take stock on the role of the kenya deposit insurance corporation ( kdic ) in the financial sector. at the outset, i am very grateful to kdic for organizing this workshop. i also thank the cabinet secretary, national treasury, for finding time to be with us this morning. i also acknowledge each one of you for your attendance. the role of the financial sector in every economy need not be overemphasized. it performs a lubricating role in every economic activity just as oil does in machinery. a critical ingredient for the financial sector to effectively perform its roles is financial stability, which also underpins public confidence in the sector. this brings me to the role played by kdic in the financial sector. by being an insurer of bank deposits, its existence encourages depositors entrust their hard - earned savings to the deposit - taking institutions. unlike the traditional deposit protection fund, kdic as currently constituted has an additional mandate of ensuring the going concern of its premium payers, the banks. this explains the close working relationship between cbk and kdic. they both have complementary mandates of financial stability. kenya β s financial sector remains sound and resilient, supported by strong macroeconomic fundamentals. this is evident from the positive trend in key performance indicators of the banking system : β’ the net assets grew by 5. 6 percent from ksh. 3. 6 trillion in june 2015 to ksh. 3. 8 trillion in june 2016. this has been driven by increased lending. β’ the total capital to total risk weighted assets ratio for the banking system stood at 18. 1 percent as at the end june 2016, above the statutory minimum of 14. 5 percent. β’ the liquidity ratio for the sector has improved to 40. 4 percent as at the end of june 2016 from 38. 7 percent in june 2015. this is above the statutory minimum limit of 20 percent. β’ the sector β s profit before tax increased by 2. 1 percent from ksh. 76. 9 billion in june 2015 to ksh. 78. 5 billion in june 2016. nevertheless, despite the sector β s resilience,
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mr. macfarlane discusses australia β s position in light of recent events in asia speech delivered by the governor of the reserve bank of australia, mr. i. j. macfarlane, before the australian stock exchange, the australian institute of company directors and the securities institute of australia in brisbane on 26 / 3 / 98. it is a pleasure to be here in brisbane addressing the australian stock exchange, the australian institute of company directors and the securities institute of australia at their combined bull and bear luncheon. i do not know whether i should nominate myself as a bull or a bear. members of this audience will be able to make up their own minds after they have heard my story today. 1. introduction in the period since the collapse of asian currencies - roughly since the floating of the thai baht on 2 july 1997 - i have spent a fair amount of time, as have many others, trying to understand the reasons for that collapse. it has been a salutary experience, and it has caused many of us to re - examine some cherished views. i have already spoken twice on this subject, so i do not intend to cover the same material today. what i hope to do, however, is to draw some lessons from it, and to apply them to australia. in a previous speech1, i tried to identify the list of economic characteristics that would make a country vulnerable to a currency crisis or, worse, to a full - blown economic crisis. as you probably know, there is no definitive list that enables us to forecast these events with any precision, but there are about a dozen factors that seem to increase a country β s vulnerability. if a country scores a very low mark on all of these factors, or at least most of these factors, there is a good chance that it would be subject to an international loss of confidence and ensuing economic problems. you will not be surprised to hear that australia is not in this category ; indeed, australia scores a very high mark on most of these factors and thus should be in a very secure position. but we can never be complacent. like all countries, we do not achieve a perfect score, and therefore it is worthwhile to go through a systematic examination of our strengths and weaknesses in light of the recent events. 2. criteria for vulnerability the list of factors identified from our research2 on the asian crisis that pointed to the likelihood of a currency crisis or a wider economic crisis was as follows : 1. does the
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is recognised internationally as having had one of the best growth records among oecd countries this decade. ( only ireland and norway - two very small economies - have done better. ) i will delay discussion of the current account, the balance of payments and foreign debt until after i have completed the list of positive factors for the australian economy. the next factor on my list was whether the country was in the midst of an asset price boom. the problem with asset price booms is that they are usually followed by asset price busts, which can give rise to company insolvencies and banking problems. clearly, this is not the case in australia at present, although we do have fresh in our memories the events of the late eighties and so cannot be too censorious of recent asian events. while the australian share market has risen over recent years, it has done so by a smaller amount than the united states or most of europe. commercial property prices have also been relatively restrained, and while house prices are rising, the large rises have been confined mainly to inner sydney and melbourne. i think we can be confident that our system of bank supervision is at world best practice, and the ratio of bad debts to total loans, at 0. 9 per cent, is at its lowest level since statistics have been collected ( admittedly, the collection only dates back to 1991 ). of course, what currently seems to be a good loan can become a bad debt if circumstances change. even so, i have a lot of confidence that our figures are a good guide to the health of our banking system. 4 i think it is true to say that there has not been a lot of unhedged foreign currency borrowing occurring among australian corporates since the days of the " swiss franc loans " of the mid - eighties, but i will postpone discussion of that topic until i deal with foreign debt in the second half of this talk. accounting standards, disclosure requirements and bankruptcy procedures are what might be termed financial infrastructure. so is the existence of a large group of equity analysts and financial journalists, the asc and stock market listing 4 in many developing countries, official statistics on bad loans are thought to greatly under - estimate the true figure. even so, mexico and thailand reported ratios of 10. 5 per cent and 7. 7 per cent in the year before their economic crises. requirements. we tend to take a lot of this for granted, but it is very important that they be up to best international practice.
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will skip these slides. concluding thoughts let me end by saying that times are indeed very challenging. this is, to say the least, probably the most difficult time i have observed since i joined the monetary board. it is not a difficult time for me ; the difficult time is when my wife says, " do not eat this. do not eat that. " that is the problem when you are married to a nutritionist. but i am confident that, with your help, we can navigate through these challenges. as we make our way out of the pandemic, the bsp will continue to rely on the collective efforts of banks in achieving our primary objectives. rest assured that we at the bsp will continue to foster an enabling environment for the financial institutions under our supervision. this year and beyond, i trust the bap will continue to be a reliable and excellent partner in nation - building and the more difficult task of rebuilding. beyond the numbers and business targets, i hope we can count on your support to bring more filipinos into the fold of the formal financial institution and help them move up in life. by casting a wider net, more filipinos will be able to leverage the benefits of financial products and services. in turn, more filipinos will be able to contribute to economic growth. maraming salamat na inimbita niyo kami dito. 6 / 6 bis - central bankers'speeches
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in reduced imports in the coming months. in turn, final domestic demand β excluding inventories β was somewhat lower than expected, and continued to account for the dissimilar behavior of consumption and investment ( figure 3 ). consumption shows a somewhat stronger growth, with improvements in several of its fundamentals. one important concern about the economy early in the year was the deterioration of the labor market, in particular the salaried employment drop in annual terms. this was one of the risk factors that led us to accelerate the mpr reduction at the beginning of the year. this risk has faded in recent months. indeed, in the last few months salaried employment has resumed its positive annual variation rates and some of its quality indicators have ceased to deteriorate. among them, an increase in private employment under contract and a decrease in involuntary part - time work are worth singling out. self - employment, although growing at a higher rate than its salaried counterpart, has slowed down and the unemployment rate is now near its levels of a year ago, slightly higher than at the end of the first quarter ( figure 4 ). nominal wages'annual growth rate stopped falling. in june they expanded between 4. 4 % and 5. 0 %, compared with rates of 5. 5 % and 6. 0 % in june of 2016. real wages increased their annual variation, mainly due to low inflation. all this contributed to real incomes, measured by the real wage bill, slightly increasing their annual growth rate, to 3 %. add to this that consumer expectations have improved systematically in the last five months, although they are still in pessimistic territory. moreover, the cost of credit is at record lows, consistent with the expansionary instance of monetary policy ( figure 5 ). unlike consumption, investment remains weak, especially its construction and works component, which has steepened its annual fall from mid - 2016, hand in hand with a drop in housing investment and reduced public investment. investment in machinery and equipment, despite some annual deceleration from the previous quarter, continues to outperform recent years, especially after discounting the non - regular transportation item, thus accumulating a nine - month string of positive growth rates ( figure 6 ). on the external side, a more favorable scenario for the emerging world and chile has been strengthening. the terms of trade have improved, with copper prices above $ 3 per pound in recent weeks. this, in a context in which the price
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capital run its course, and the supply and demand for capital goods return to balance? this question is not answerable with certainty. there are reasons to be hopeful and reasons to be cautious. just as firms might tend to overestimate their longer - term capital requirements when times are good, there likely is some tendency to underestimate longer - term needs when the economy is soft. thus, it could well be that stocks of capital will not seem so excessive once the economy picks up. moreover, as a number of observers have suggested, the fact that a capital stock overhang might be concentrated most heavily in the high - tech industries has one important silver lining. this advantage is that, on average, a good deal of high - tech equipment probably depreciates more rapidly than most other types of equipment. consequently, with other things equal, the shorter life of some of the capital currently held in excess amounts would seem to imply that the overhang can be worked off more quickly than otherwise. there is much to be said for this point of view, and undoubtedly the adjustment process may progress more quickly than if the overhang were concentrated in other types of equipment or structures. nonetheless, in the interest of exploring more fully the potential dynamics of high - tech capital investment, i would like to take a few minutes to examine why an overhang might take longer to work off than we might like or expect. and i have to emphasize here that i am focusing on some parts of the high - tech sector, not the sector as a whole, and certainly not the economy as a whole. one reason an overhang could persist is that some types of high - tech capital do not depreciate rapidly. for instance, unlike the equipment that sends signals down the optical fiber, the fiber itself probably has a useful lifetime that is reasonably long. optical fiber today is not greatly different in quality from the fiber of a few years ago, and there is little physical deterioration once the fiber is in the ground. all this suggests that the excess capacity of total fiber could take quite some time to work off. and presumably other types of equipment and structures are similar in this respect to fiber. second, depreciation rates are partly a reflection of economic obsolescence ; that is, capital often loses value because of the expectation that it will soon be replaced by newer, more advanced equipment. however, the replacement decision is, to some degree, at the discretion of the firm that owns the capital. in the
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to be good plumbers and electricians rather than unemployable low - skilled engineers. in fact, teaching our citizens can be a stepping stone to teaching the world. india can be at the forefront of providing mass technology - enabled education with our professors providing appropriate human inputs to achieve the best mix of automation and customisation for learning. 3 ) we need better business regulation. this does not always mean less regulation but it means regulation that is appropriate to the objective and, that is enforced. entrepreneurs tell me about boiler inspectors showing up at software outfits, asking for the location of the boiler. the lack of change may be sheer inertia, but it may be more sinister rent - seeking. all too often, we have too much regulation on the books and too little regulation in practice, with the worst of the regulated finding unscrupulous ways around the regulation while the honest are stymied. even opening a business legitimately requires an enormous number of clearances and paperwork. in the same way as we have saral form for filing income tax, could we have a saral one page disclosure for opening a small business, with a single authority giving all necessary permissions? bis central bankers β speeches 4 ) and finally, we need a better financial system, which will finance the needed infrastructure and the expansion of every producer ranging from the kirana shop owner to the industrialist. but finance is not only about credit. equally important is for households to be able to save safely with positive real returns, insure themselves against health emergencies or old age costs, and borrow at low cost to finance consumption. they should be able to make remittances cheaply and pay at low cost. importantly, the financial system should not require constant subsidies to bail it out. in the rest of this talk, i want to focus on what we, at the reserve bank, are doing to improve the financial system. we plan to build the reserve bank β s developmental measures over the next few quarters on five pillars. these are : 1. clarifying and strengthening the monetary policy framework. 2. strengthening banking structure through new entry, branch expansion, encouraging new varieties of banks, and moving foreign banks into better regulated organizational forms. 3. broadening and deepening financial markets and increasing their liquidity and resilience so that they can help allocate and absorb the risks entailed in financing india β s growth. 4. expanding access to finance for small and medium enterprises, the uno
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reserve bank not to overreact to exchange rate weakness. too quick a tightening of monetary policy could endanger the growth prospects of south africa and encourage an outflow of capital. this would put greater and more lasting pressure on the exchange rate of the rand with important consequences for inflation. besides, if the factors responsible for the weakness in the exchange rate are taken into consideration it seems unlikely that a tightening of monetary policy would have the desired effect of more stability in the foreign exchange market. the policy stance adopted by the authorities does not imply that the value of the exchange rate is regarded as unimportant when setting monetary policy. on the contrary, the impact of exchange rate changes on inflation is carefully taken into account when managing domestic liquidity and determining the repo rate. if signs do emerge of increased inflationary pressures arising from a depreciation of the exchange rate of the rand, the reserve bank will not hesitate to take appropriate measures. 6. conclusion the domestic financial markets have adjusted in a mature manner to the rise in oil prices, adverse developments in other parts of sub - saharan africa, the strength of the dollar and heightened volatility in international financial markets during the first four months of 2000. had the reserve bank attempted to intervene in the currency market in order to slow the process of adjustment to these events, the success of the intervention would have probably been thwarted if only by the strength of the dollar. moreover, such intervention may well have exacerbated the downward pressure on the value of the rand. the bank accordingly has rather attempted to maintain stability in the domestic money market. in view of the sound underlying economic conditions in the country, we are of the opinion that this is the correct approach to follow and should eventually lead to stable market conditions at the least cost to the country. the bank will nevertheless carefully monitor any further developments in the financial markets. β we are indeed living in challenging times! β
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continue to firmly support economic activity. if the outlook presented in the july outlook report will be realized, the bank will accordingly continue to raise the policy interest rate and adjust the degree of monetary accommodation.
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0 percentage points and there are prospects of further interest rate hikes. the shortest money market rates are determined by the central bank via the key policy rate. but private - sector consumption and investment decisions depend more on expectations regarding future developments in the key rate. to be successful, monetary policy must be able to influence these expectations. the public must therefore understand the central bank β s intentions in interest - rate setting. transparency regarding norges bank β s monetary policy assessments improves the predictability and effectiveness of monetary policy. in recent years, we have endeavoured to facilitate the public understanding of our actions. the background material for the executive board β s monetary policy meetings is published and the assessments underlying interest rate decisions are explained. when i addressed this assembly in sanderstΓΈlen last year, norges bank had just started publishing its own interest rate forecast. from using technical assumptions or others β assessments, we have now taken ownership of the interest rate path in our projections. in the inflation report, norges bank publishes the interest rate path that in the bank β s view provides a reasonable trade - off between stabilising inflation at target and stabilising developments in output and employment. so far, the experience of publishing our own interest rate forecasts has been positive. it seems that most economic agents have understood the content of the forecasts. at the same time, i want to stress the uncertainty surrounding the interest rate path, which is why we present fan charts with uncertainty intervals around the forecasts. in addition, the inflation report contains several different sensitivity analyses to illustrate alternative interest rate paths that may come about should economic developments deviate from the baseline scenario. at the same time, we present " interest rate accounts " where we explain any changes in the interest rate path since the previous report. the specific interest rate path cannot and must not be looked upon as a guarantee and a path to which we unconditionally have committed ourselves. should economic developments deviate from the projected path, the interest rate path will also shift. instead, it can be said that through our communication we commit ourselves to a pattern of behaviour, a response pattern. if interest rate expectations can be influenced, it will in many cases be useful for a central bank to commit itself to a predictable response pattern. this kind of commitment can, if it is perceived as credible, have a positive effect on the economy β s functioning and enhance the effectiveness of monetary policy. i will revert to this theme shortly. a relevant question is the
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extent to which our communication actually influences interest rate expectations. forward interest rates derived from yields at various maturities will in the absence of term premia and other risk premia normally reflect the market β s short - term interest rate expectations. 1 when inflation report 3 / 06 was published in the beginning of november last year, the forward interest rate was on a par with our forecast for the next six months, but considerably lower thereafter. it is now almost three months since the previous inflation report was published. since that time forward rates have increased and approached norges bank β s interest rate path. forward rates somewhat further out are still lower than our forecast. the reason may be that market participants have a different perception of the interest rate path that is necessary to stabilise inflation at target and to achieve stable developments in output and employment. alternatively, the market may have the same short - term interest rate expectations as norges bank, but because of extraordinary conditions long - term bond prices are being pushed up and, consequently, long - term bond yields are being pushed down. forward interest rates - often referred to as implied interest rates - are calculated so that a short - term bond, when rolled over and reinvested at the implied interest rates, generates the same yield as a long - term bond. for example, if we observe today β s one - and two - year interest rates ( β short - term β and β long - term β interest rate respectively ), the implied forward interest rate one year ahead will be expressed by the equation, where is the two - year interest rate, is the one - year interest rate and is the implied one - year rate one year ahead. the expectations hypothesis holds that the implied interest rate is equal to the market β s interest rate expectations and the expected return from rolling over short - term bonds is equal to the return on a long - term bond. however, if term premia exist, the expected return from rolling over shortterm bonds is different from the return on a long - term bond. if the term premium is positive, forward interest rates will overestimate expected future short - term interest rates, while they will be underestimated if the term premia are negative. long - term bond yields have been at historically low levels in recent years. from lying in a broad range around 10 per cent at the end of the 1980s, they have fallen to around 4 per cent in the past few years. developments in nominal interest rates must be seen in
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the same document, the imf also warned that risks to the global outlook remained β tilted to the downside [UNK] and related to β ongoing adjustments in the global economy [UNK]. fears of disorderly adjustment were indeed numerous, including in the us1 β the major country which had recovered relatively fast from the global financial crisis even though it had been at its epicentre. indeed, because the imbalances created by the global crisis had healed earlier than in other jurisdictions, the us was also the first advanced economy to raise its interest rates from the zero - lower bound. this process was initially very gradual. however, the us federal reserve system ( fed ) then signalled a likely acceleration in the pace of interest - rate increases ( and and that it would embark on the process of reducing in its balance sheet ) as it had become increasingly confident of meeting its mediumterm growth and inflation goals. in light of the earlier key influence that low us interest rates had exerted on boosting risk appetite and compressing term premiums in global financial markets, investors became concerned about a reversal of these earlier favourable market developments. united states page 2 of 12 the election of a new us administration in november 2016, which pledged largescale tax cuts and an β america first [UNK] approach to external trade, compounded market fears of a disruptive rise in us interest rates and an appreciation of the dollar. in fact, many observers viewed the 2016 presidential election result in the us as one of many examples β albeit a key one β depicting a general shift of voters in advanced economies towards populist politics and policies, including a rejection of several key tenets of the wave of globalisation over the past few decades. the growing hostility towards these tenets β including free trade, free capital flows, and easier crossborder movement of labour β was seen at its strongest in continental europe. with key elections scheduled throughout 2017, not least in france and germany, observers feared a move towards populism that had the potential to torpedo the already delayed eurozone economic recovery. at the same time, at the other end of the eurasian continent, economic observers noted some stabilization in the chinese economy and capital markets, yet doubted whether this pattern would be durable in light of the continued growth in imbalances that it seemed to involve, not least of which was the ongoing build - up of corporate debt, especially in state - owned enterprises. in turn, investors feared that china would continue to suffer capital outflows, which might
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. first, we will introduce new institutional investors, by approving the establishment of more wealth management subsidiaries of banks and insurance asset management companies and allowing foreign specialized institutions to establish foreigncontrolled wealth management companies. second, we will step up the issuance of equity asset management products by supporting wealth management subsidiaries to increase the proportion 2 / 5 bis central bankers'speeches of equity products, trust companies to issue securities investment trust products and insurers to issue portfolio products. third, we will promote in - depth cooperation between banks and fund companies as well as between banks and insurers. banks and their wealth management subsidiaries will be encouraged to enlist more eligible managers of public funds as partners. research will be conducted on introducing policies concerning insurers β investment in privately offered wealth management products and private equity funds. fourth, we will guide commercial banks to advance the orderly disposal of non - standard non - performing assets, and encourage newly - established wealth management subsidiaries to increase securities investment. fifth, we will support insurers to ramp up investment in the capital market through direct investment, entrusted investment, public funds and other channels, particularly the equity investment in listed quality enterprises. sixth, we will practice differentiated and proportion - based regulation on insurers β allocations of equity assets and guide insurers to allocate more funds to equity assets. fifth, diversified financial instruments will be employed to smooth and restore the global supply chain. efforts should be made to increase financing support for enterprises in the international industrial chain, so as to help them expand domestic and overseas markets and raise the proportion of domestic sale of export products. export enterprises should be bolstered to resume business and trade exchanges with foreign partners at an early date, to stabilize export orders through funding measures such as buyer β s credit financing, and to leverage export credit insurance share risk losses. significant steps should be taken to vigorously advance the supply chain finance, to give priority to the financial needs of leading enterprises and key links, and to smooth and stabilize the upstream and downstream supply chains. the covid - 19 pandemic has not only seriously impacted china, but also taken a great toll on most other countries across the world. according to the forecasts of some international organizations, the developed economies will plunge into the worst recession since world war ii and the emerging markets will contract for the first time in nearly 60 years. in the face of such a calamity, all countries in the world should shelve differences for close cooperation.
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luis de guindos : banking union - achievements and challenges speech by mr luis de guindos, vice - president of the european central bank, at the highlevel conference on β strengthening the eu β s central bank crisis management and deposit insurance framework : for a more resilient and efficient banking union β organized by the european commission, 18 march 2021. * * * setting up the banking union was a crucial step in ensuring the stability of the euro area financial system and strengthening economic and monetary union ( emu ). the global financial crisis and sovereign debt crisis highlighted the need to make faster progress towards completing emu. more than a decade on, now is a good time to take stock of where we stand in the banking union : what we have achieved and what works, but also what remains to be done. with ecb banking supervision at the heart of the single supervisory mechanism, we have an authority responsible for ensuring the safety and soundness of the european banking system, promoting financial integration, and ensuring consistent supervision by fostering harmonised practices based on high supervisory standards. the single resolution mechanism continues to be strengthened, both through the build - up of the single resolution fund, which will reach its target by the end of 20231, and through the recent agreement on a backstop provided by the european stability mechanism. the implementation of these two pillars represents a milestone in european integration and a major success for financial stability. but in terms of completing the banking union we are not there yet. today, i will focus on three areas for improvement. first, the final pillar : the european deposit insurance scheme ( edis ). second, in the field of crisis management, the tools for dealing with the failure of smaller and deposit - funded banks. and third, the role of macroprudential policy and how it can help us deal with shocks to the financial system. almost six years on from the european commission β s first proposal on edis, deposit insurance is still at the national level and there has been little ambition to change it. this is problematic as the level of confidence in the safety of bank deposits may differ across member states. so long as deposit insurance remains at the national level, the link between a bank and its home sovereign persists. the ecb has been a staunch supporter of edis from the beginning and supports pursuing a fully fledged edis as a key priority. but we have not yet seen sufficient political will to implement this third pillar of the banking union. member
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states are currently discussing a model for the transition period, a β hybrid model β that offers liquidity support to national schemes as a first step. in my view, this hybrid model could be a possible compromise way forward, as long as an edis with full risk - sharing, covering both liquidity needs and losses in the steady state, remains the end goal. turning to my second point, in our quest to address some banks being β too big to fail β we have created a dedicated architecture for the crisis management of larger and cross - border banks. but less attention has been devoted to the tools for managing crises in small and medium - sized banks. the assumption was that the failure of such banks would not raise financial stability concerns and could be dealt with under national liquidation procedures. unfortunately, experience has shown that this assumption is not completely accurate. smaller and medium - sized banks, in particular deposit - funded banks, have less dedicated loss absorption capacity. the failure of such banks can lead to losses for depositors, which is 1 / 2 bis central bankers'speeches challenging for depositor confidence and financial stability. the significant differences in national legal regimes for the liquidation of banks make the issue even more challenging. in one member state, depositors may find on a monday morning that their deposits were transferred to an acquiring bank over the weekend and they can continue to access their deposits as if nothing had happened. in another member state, this type of best practice transfer tool may not be available. covered depositors must wait for a pay - out by their national deposit guarantee scheme. and uncovered depositors may have to bear losses. these differences create an uneven playing field for bank customers and can prevent failing banks from exiting the market smoothly. a solution would be to create a common european liquidation tool, following the best practice example of the federal deposit insurance corporation ( fdic ) in the united states. addressing crisis situations is not only about failing banks and deposit insurance. it is also about the financial system β s ability to absorb shocks and avoid excessive deleveraging when losses materialise which exacerbate the negative shocks to the real economy. this brings me to my third and final point : the need for a more effective and centralised macroprudential policy in the euro area. let me explain. macroprudential policy and monetary policy strongly complement each other. for instance, during phases of risk build - up, effective macroprudential policy can remove the burden from monetary policy with respect to financial
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a whole, in order to attempt to prevent serious shocks. persistent inflation is the result of lax monetary stance there are good reasons for assigning central banks a single main objective, namely to promote price stability. inflation is primarily a monetary phenomenon. short - lived inflation can have many causes, but persistent inflation is the consequence of a lax monetary stance. in the long run, monetary policy therefore primarily has an effect on prices. under normal conditions it only has a temporary impact on economic growth and employment. since central banks broadly speaking have only one instrument, i. e. interest rates, and can therefore only achieve a single long - term macroeconomic goal, it is natural to set price stability as the ultimate monetary goal. this is not to say that price stability is a more important goal than, say, full employment, but simply that monetary policy instruments are inherently better suited to impacting prices. it is pointless to set objectives for monetary policy which it cannot achieve. through price stability, a forward - orientated monetary policy can contribute towards creating a stable economic environment on which the long - term growth potential of the economy, namely growth and prosperity, is based. the reason that central banks can have a widespread effect on interest rate formation in the markets through their interest rate decisions is that they have the exclusive right to issue money in the economy, i. e. base money. by controlling the price of base money, i. e. the interest terms at which financial institutions can borrow short - term capital from them, central banks can influence the volume and price of liquidity in the financial system. central bank interest rate decisions have an impact on short - and long - term interest rates, financial system liquidity, money in circulation and bank lending, exchange rates of currencies, other asset prices and, last but not least, market participants β expectations about the future development of all these factors. all this, in turn, influences consumption and investment decisions of individuals and businesses, and thereby aggregate demand. the impact in individual areas can vary greatly from one time to the next. the new central bank act the previous central bank act dated from 1986 and was drafted over the period 1981 to 1984. it was a product of its time and did not reflect the perspectives that later established themselves. in the early 1990s the then minister of commerce appointed a committee to review the central bank act, chaired by professor agust einarsson, the current dean of the faculty of economics and business administration. following the committee β s
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work the minister of commerce proposed a bill to parliament for a new central bank act which entailed sweeping changes from the 1986 act, including what are now considered to be many of the necessary elements of central bank legislation. however, the bill was not adopted by parliament. in may this year parliament passed a new central bank act with the approval of all 56 members who were present for voting on the bill. a detailed account of the main changes from earlier legislation has been given in the central bank β s publications. see i. a. the central bank of iceland β s monetary bulletin 2001 / 3 i shall only mention here that a single target was set for the central bank, i. e. to promote price stability. with the prime minister β s approval, the bank was also authorised to specify a numerical inflationary target. the bank was granted full independence to apply its instruments in order to achieve its main objective. its financial independence was increased by precluding in law treasury access to short - term funding with the central bank, which had previously been precluded with an agreement between the minister of finance and the bank. provisions on transparency and accountability towards the government and general public were made more focused. as i mentioned before, one of the central bank β s main objectives is to contribute towards an active and secure financial system, or financial stability as it is often known. in recent years central banks in many countries have been increasingly devoting themselves to monitoring financial stability. this development is partly the product of financial market liberalisation and the deregulation of capital movements, and partly a response to shocks which have struck many countries, both currency shocks and banking system setbacks. examples include the troubles encountered by banks in finland, norway and sweden a decade ago and the crises that hit asia and latin america in the latter part of the 1990s. the central bank of iceland has now built up a new organisational department, the financial stability department, which has the main role of monitoring factors affecting financial stability. twice a year the bank publishes articles on this topic in its quarterly monetary bulletin, an annual main study in may and a shorter account in november. in addition, the central bank and financial supervisory authority maintain close and productive cooperation, each seeking to ensure the security of the icelandic financial system in its respective way. inflation targeting to return to monetary policy itself, we should recall the joint declaration on the inflation target and changed monetary policy which was issued on march 27 by the government and the central bank of iceland.
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ardian fullani : overview of albania β s latest economic and financial developments speech by mr ardian fullani, governor of the bank of albania, on the monetary policy decision - making of the bank of albania β s supervisory council, tirana, 30 april 2013. * * * today, on 30 april 2013, the supervisory council of the bank of albania reviewed and approved the quarterly monetary policy report. based on the most recent monetary and economic developments in albania, and following the discussions on their outlook, the supervisory council of the bank of albania decided to keep the key interest rate unchanged, at 3. 75 %. the supervisory council deems that the current monetary conditions are adequate to meet bank of albania's inflation target in the medium term. the present interest rates and liquidity situation in the economy provide simultaneously the necessary monetary stimulus to boost domestic demand. let me now proceed with an overview of the economic developments and key issues discussed at today β s meeting. * * * according to instat data, economic activity in albania increased 1. 6 % in 2012. the albanian economy showed signs of weakness during the past year, reflecting an overall uncertainty in the internal and external environment. nonetheless, against the backdrop of unfavourable developments, the main indicators of domestic and external balances remained within healthy parameters. during this period, inflation ranged within the bank of albania target band and indicators of banking system soundness improved. maintaining these balances provides the right macroeconomic premises for sustainable and long - term growth. referring back to the performance of inflation, instat data reveal that consumer prices rose on average 2. 5 % in the first quarter of 2013. inflation continues to be determined by food prices ; their contribution accounts for about 90 % of headline inflation. moreover, food inflation was offset by the lower inflation of non - food consumer goods. inflation of this category reflected the downward oil price, following its decline in international markets. also, the price fall of long - term consumer goods provided downward effects, whereas prices of other consumer goods did not change significantly. from the macroeconomic perspective, inflation continues to reflect the weak pressures from the aggregate demand - side and the absence of supply - side shocks. below - potential growth of aggregate demand leads to underutilisation of production capacities and generates weak pressures on increasing wages, producer prices and profit margins. under these circumstances, internal pressures on consumer prices appear weak, as reflected by the low core inflation. on the other hand, imported inflation was subdued due to
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##lity around the world. notwithstanding the turbulence of the global economy, asian economies had proven to be resilient in the face of negative external developments, with favourable macroeconomic performance and well - maintained stability during the past period, thanks to the region β s flexible policy framework, robust financial system, and improved risk management as lessons had been learned from the crisis of 1997. making headway towards sustainable growth ladies and gentlemen, the success of asian economies in weathering the global financial crisis is certainly commendable. but it would be a mistake to be lulled into complacency by this success of short - term volatility management. in particular, there remain important long - term challenges to the sustainability of growth in asia. indeed, latest economic indicators already pointed to a bis central bankers β speeches less upbeat growth trajectory of the asian region including china. the apparent slowdown in asia, despite gradual improvement of the advanced economies, lends support to the idea that asia also has its own structural bottleneck issues to deal with. the time is ripe for all parties involved to look beyond short - term fluctuations and give serious consideration to longer - term structural issues that are holding back asian potential growth. this is the second topic of my talk today : what can asia do to sustain its high pace of growth in the post - crisis world? since the onset of the global financial crisis, most policy responses in emerging markets have been focused on demand - side management, through monetary or fiscal policy stimulus. but boosting demand alone could only get us thus far. the real lift of potential growth of the economy must essentially come from supply - side progress. this refers to either the more abundance or the better use of capital and labor inputs in the economy. although asia β s potential growth remains higher than in other regions, recent studies pointed to a possible reduction in trend growth since the 2008 financial crisis. 1 in my reading of anecdotal evidence and through policy discussions, two common drags to long - term growth among emerging asia are the labor shortage and the decline in productivity growth. let me explain the labor market issue using the case of thailand as an example. the problem of labor shortage has been deep rooted in thailand for many years but has not received much attention until recently. this could be partly due to favorable economic expansion during the past years that has masked this problem and also because of the ability on the part of firms to employ immigrant workers. but now with protracted external demand slowdown coinci
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in developing asia projected to exceed global growth at 6. 7 % in 2012 and 7. 2 % in 2013. 5 secondly, both demand and supply side factors in asia are relatively positive. corporate and government balance sheets are generally healthy. households are not overly levered, savings rates are high and unemployment is comparatively low. the rising middle class, highly educated workforce and favourable demographics are also plus points for asia. these factors, coupled with asia β s strong commitment to economic openness and free trade, are important in creating a business friendly and conducive environment for its financial sector to continue to thrive and grow. thirdly, with asia β s relatively strong economic growth and favourable demographics, investible assets from the institutional and private wealth segments are set to grow. in a 2011 report published by cerulli associates, institutional investable assets from asia ex - japan are expected to triple from us $ 4. 3 trillion in 2006 to us $ 13. 6 trillion by 2015. total wealth from the private wealth segment is also expected to increase. in its recent wealth report, 6 julius baer expects the number of high net worth individuals in asia to more than double over the risk roadmap : hedge funds and investors β evolving approach to risk ( 2012 ). imf : world economic outlook, october 2012. julius baer wealth report 2012. bis central bankers β speeches next three years to almost 3 million. as asia grows in wealth, there will be more capital requiring active and customised fund management expertise to take advantage of the investment opportunities in asia. asia β s strong fundamentals will support the valuations of asian assets, which will draw a growing interest from institutional investors around the world looking to diversify and generate returns. according to preqin, 7 46 % of asia - pacific hedge fund investors intend to invest opportunistically in asia - pacific hedge funds, whilst 31 % of asia - pacific hedge fund investors are looking to increase their longer - term allocations to asia - pacific. deutsche bank also noted in its 2012 alternative investment survey that north america and asia are currently the most sought after investment regions, with investors planning to allocate approximately 26 % of assets to asia. conclusion as a source as well as a destination for investments, asia presents compelling prospects for the hedge fund industry. singapore β s strategic location makes us well - placed to serve as a hub with strong physical connectivity, trade and financial linkages to the rest of asia. together with our strong
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have lengthened and failure rates have increased. hedge funds now require larger assets under management to breakeven and remain economically viable. managers without a strong track record will be in for a hard time. against this backdrop, some consolidation of the global hedge fund industry is to be expected. mas : recent economic developments in singapore β sep 2012 imf : world economic outlook, october 2012. hennessee hedge fund indices. bis central bankers β speeches long term prospects for the hedge fund industry remains positive nonetheless, if we look beyond the immediate economic challenges, the long term prospects for the alternative investment industry remain positive. a number of studies have identified a growing interest from institutional investors for yields in the alternative space. in the 2012 towers watson global pension asset study, asset allocation to alternatives in the seven largest pension fund markets has increased from 5 % in 1995 to 20 % in 2011. in another recent study, mckinsey estimates that global alternative investments across the retail and institutional segments doubled in assets under management between 2005 and 2011, to reach us $ 6. 5 trillion. this represents a compound annual growth rate of 14 % over this period, exceeding the growth of the traditional asset classes. specifically in the hedge fund space, institutional investors have increased allocations to hedge funds significantly over the last decade, from only us $ 125 billion in 2002 to approximately us $ 1. 5 trillion as of end 2011. looking forward, institutional investors in the major markets have indicated their intent to increase allocations to almost all alternative classes, including hedge funds. increased institutional participation will drive growth as hedge funds become an important part of the investment landscape. to meet the demands of institutional investors and global regulatory standards, hedge funds have taken steps to beef up their risk management and compliance functions. in a recent study by the managed funds association, bny mellon and hedgemark, 4 it was found that 79 % of global hedge funds now separate the roles of the risk manager and fund manager, with 60 % of the larger hedge funds having a dedicated risk management function. this augurs well for the hedge fund industry, as it allows the industry to grow in a more sustainable manner with strong internal control systems and risk management oversight. asia is well placed to provide capital and investment opportunities as global institutions and investors seek to address challenges resulting from structural shifts in the global economy, many are turning to asia to harness opportunities and to generate higher returns. this is due to a few reasons. firstly, asia has been leading the global recovery with growth expectations
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to the global financial crisis and the changing world around us. our responsibilities are heavily intertwined. the breadth of our mandate gives us both strength and insight, enabling the bank to harness its collective, wide - ranging and deep policy and technical expertise to tackle complex issues. most of the areas we are responsible for β whether consumer protection ; prudential regulation ; payments, settlements and currency ; or providing economic analysis and statistics β have complex interactions with each other. i see our job, along with other members of the central bank commission, to ensure this is all brought together. i also have personal responsibility to the eurosystem in terms of our primary mandate of price 1 / 5 bis central bankers'speeches stability, which β at its heart β is essential to intergenerational wellbeing, enabling governments, business and citizens to plan, invest and make provision for the future. aligned to that is the eurosystem β s secondary mandate of supporting β the general economic policies in the union with a view to contributing to the achievement of the objectives of the union β. the european and euro area post - crisis institutional architecture for economic policy and financial regulation and supervision has changed and continues to change. the ongoing evolution will continue to require us to be closely engaged and influential in eu and international fora. i have been struck by how committed the staff in the central bank are to working in the public interest. this resonates with my own values and i am confident that we have a strong basis on which to deliver our mission. but as well as building on our strengths, we also need to maintain a sense of humility and an openness to be challenged : the financial system is changing rapidly and future challenges and crises will be different to what went before. from a delivery perspective, we must ensure we are using our resources effectively and efficiently. as the world around us changes, we need to evolve and strengthen as an organisation, consistently seeking to be best - in - class. that means regularly assessing and examining our policies, frameworks and approaches to ensure they are fit - for - purpose. diversity of thought is a critical component in this, in order to give us the capacity for deeper insights and make us more resilient. more generally, from my early engagements with various stakeholders, and in preparing for this hearing, i recognise a desire in some quarters for the central bank to move faster on certain issues. i understand that. i certainly want us to be on the front - foot in our
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and less room for manoeuvre. in the last three years the crisis has increased the government budget deficit for the advanced countries as a group by over 6 percentage points of gdp and the public debt by almost 25 points to almost 100 per cent of gdp. in the united states and japan fiscal consolidation can hardly be put off any longer : the oecd considers that just stabilizing the debt ratio of these two countries within the next fifteen years would require a correction of the primary budget balance on the order of 8 β 9 percentage points of gdp. in europe we are already working to reduce the imbalances in the public finances. the strains that affected the bis central bankers β speeches sovereign debt of some of the euro - area countries have focused attention on the risks of prolonged imbalances. the euro area β s budget deficit is expected to improve sharply this year from 6. 3 to 4. 6 per cent of gdp according to the european commission β s latest estimates. the debt ratio is likely to rise further, but much more slowly than in the last two years. in italy the ratio of public debt to gdp, close to 120 per cent, should begin to decline next year, when the government intends to bring the deficit down to below 3 per cent of gdp. in the ten years preceding the crisis, current expenditure, net of interest on the public debt, grew by 4 per cent per year in nominal terms, far outpacing gdp. last september β s public finance decision forecasts that its increase will be limited to 1 per cent per year in 2011 β 12. this trend must continue beyond 2012 and the composition of primary expenditure must be geared to growth. there is no other way to reduce the deficit, since the burden of taxes and social security contributions is already 3 points above the euro - area average. additional revenue that comes in as a result of the reduction of tax evasion should be used to ease the burden on the taxpayers who already pay what is due. it may also be necessary to offset at the central government level any increases in decentralized taxation caused by fiscal federalism. the financial aid that greece and ireland received last year from the european union and the imf was conditional on their enacting strict fiscal consolidation plans and incisive economic and institutional reforms. a major contribution to preventing new sovereign debt crises should come from the reform of european governance now under discussion, which aims to strengthen multilateral surveillance of national economic policies. it is important that semi -
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that a small improvement in the birth rate also has been achieved. chart 4 shows the unemployment rate, the marriage rate, and the birth rate for the population of 20 - to 39 - year - olds. it is a well - known fact that the marriage rate and the birth rate are correlated, as is more or less evident from the chart. chart 4 rates of unemployment, marriage, and birth 100 thous. persons ( live births ) ; persons ( birth rate ) ; cases ( marriage rate ) % 1968 71 80 83 86 89 92 95 98 01 04 07 10 13 16 number of live births birth rate ( per 1, 000 population aged 20 to 39 ) marriage rate ( per 1, 000 population aged 20 to 39 ) unemployment rate ( aged 20 to 39, right scale ) note : for 1975 onward, the birth rate is calculated as the number of live births to mothers aged 20 to 39 divided by the population aged 20 to 39. for 1974 and earlier, the birth rate is calculated as the total number of live births divided by the population aged 20 to 39. the marriage rate is calculated as the total number of marriages divided by the population aged 20 to 39. sources : ministry of internal affairs and communications, " labour force survey " ; ministry of health, labour and welfare, " vital statistics. " let us take a closer look at this. the birth rate per 1, 000 population aged 20 to 39 ( hereafter birth rate ), which previously had been on a declining trend, has been rising since 2005 along with the decline in the unemployment rate. the bar graph in the chart illustrates this trend in terms of live births per population ( hereafter live births ). note how, when comparing two age groups with the same birth rate, the number of live births increases for the age group with a greater number of constituents. given that second - generation baby boomers ( children of baby boomers born between 1947 and 1949 ) reached their average marriage age sometime between 1995 and 2000 or, if we take the rise in the average marriage age into account, sometime between 2000 and 2005, the number of live births subsequently would have increased had there been a reversal in the birth rate around this time. there turned out to be no such increase, however. the reason is that, during the approximate period from 1995 to 2005 and in the few years after the outbreak of the global financial crisis in 2008, young people of this generation were not able to find stable employment due to the so -
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federal reserve. it is different from the hierarchical or lexicographic ranking of the ecb which attaches overriding importance to maintaining price stability ( papademos ( 2006 ) ). quantitative easing policy 4. despite the dual mandate, under the quantitative easing policy regime of the period covering march 2001 to february 2006, the primary objective was focused on the restoration of price stability or the exit from the deflation which had persisted since late 1998. the other important objective was to stabilize the financial system. the bank of japan made a commitment to continue the zero interest rate policy unless the rate of change in consumer prices moved above zero in a stable manner. more precisely, the monetary policy committee in october 2003 made the conditions for exit more transparent. namely, the following three conditions must be satisfied before ending the quantitative easing policy : ( 1 ) the current rate of change in consumer prices moves up above zero ( 2 ) the rate of change in consumer prices does not return to negative territory, ( 3 ) there may be a case that the boj will judge it appropriate to continue the zero interest rate policy, even though the first two conditions are satisfied. the explicit commitment on the duration of zero interest rate policy worked to lower longerterm interest rates. increasing bank reserve targets strengthened the " time duration effect " which relied solely on market expectations of future developments in policy rates in the absence of any actual change in policy rates ( iwata ( 2005 ) ). new policy framework 5. after confirming the development of an above - zero inflation rate, the boj exited from the quantitative easing policy in march 2006. at the time of the exit, the bank announced a new policy framework. in this framework we provided the " understanding of medium - to long - term price stability " in a numerical form conceived by the board members. it ranges from 0 % to 2 % with the distribution above and below the median value of 1 %. this longer - run price stability concept can be regarded as a natural consequence arising from the second condition under the quantitative easing policy. this " understanding of medium - to long - term price stability " is common knowledge among the board members. it is not only shared knowledge, but also everybody knows that the others know it. provision of common knowledge serves as a focal point to coordinate human action. 6. thomas schelling ( 1960 ) illustrated the role of focal points using the following situation as a whimsical example : " when husband and wife, separated in a department store,
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political situations, and their regulatory and corporate environments. they will surely compete amongst themselves to gain market share and critical mass, and anchor in asia some of business which presently goes to london and new york. but in my view they also have considerable scope for co - operation, as each will occupy a distinct market niche and none can dominate in all aspects of finance. singapore will never have the advantage of tokyo's large economic base. nor do we have hong kong's physical proximity to china. but we seek to provide a world - class regulatory environment that responds to the needs of global markets and global institutions, and the most efficient infrastructure for businesses to use as a platform for all of asia. singapore plays host to some 6, 000 multinational corporations and the financial institutions that are their global advisers, many of which use singapore as their regional headquarters. and our strategic location at the heart of southeast asia and within 7 hours of key markets in northeast asia, south asia, and australia positions us well to serve as a financial centre for all of asia. singapore while the external environment is not within singapore's control, our strategies and policies are. we believe that the right strategies and policies will help us to capitalise on opportunities and overcome disadvantages arising from our size. there are no secrets to the strategies, because the factors for success are not unique to singapore. the challenge is in their execution and implementation. here are five things that we have set out to do in order to excel as a financial centre in the new economy. enhance business environment first, we are seeking to further enhance our conducive pro - business environment. economic and political stability, an efficient and impartial legal system, comprehensive and up - to - date market infrastructure, and fiscal discipline that allows low taxes are key preconditions, more important than special incentives for the financial sector. singapore has established a reputation for delivering these preconditions, which we will maintain and improve upon in future. build talent pool second, we are building up our talent pool. in a knowledge - intensive industry like financial services, singapore will not get anywhere without world - class talent. we are making a concerted effort to attract foreign talent who can make a contribution to singapore, and to integrate them into our economy and society. we are also nurturing home talent to its full potential through a good education system for the young and ongoing training opportunities for those in the workforce. as asian companies begin to use more complex strategies and products
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believe a lot of this frustration is entirely justified. the greek public was unprepared for the sacrifices that it now has to make because successive greek governments gave the impression to the greek citizens that they could be living a lifestyle that they should have known was beyond the means of the country. frustration, i think, is entirely justified. at the same time i trust that now the situation is clear ; there is much better information about the necessary adjustment and the greek people will persevere. q. what can the ecb do to help greece? is there anything else to do apart from eased collateral requirements for greek government debt? if i may correct you, i would not say that we have eased collateral requirements. what we have done is eased the reliance on credit rating agencies for evaluating the collateral for a very specific reason. this is because our assessment of the sustainability of the greek debt situation and the path of the greek economy is different from what is reflected in credit ratings. we have made our own assessment in the case of greece. in terms of your question on how the ecb can help, as you know the ecb is helping by providing advice and by being present in the discussions that are associated with the programme that involves the imf and the european commission in liaison with the ecb. but beyond that, it is not the ecb β s role to have additional involvement. what we have in the case of the european union is additional responsibilities for crisis management, which are responsibilities of the governments in the euro area, not the responsibility of the ecb. q. the irish central bank has an emergency liquidity assistance programme. do you think there could be a similar one for greece or is there actually already one in place? i would not comment on emergency liquidity assistance. this is a national responsibility that each national central bank in the euro area may apply as is necessary in their own context. q. cypriot banks hold a sizeable quantity of greek debt. how damaging or potentially damaging could that exposure be? could the central bank have taken any steps to limit banks exposure to a single borrower? with respect to the exposure of cypriot banks to greek debt, we have examined the situation and we have come to the conclusion that even though there is exposure in our banking system, that exposure is manageable because our banks are very well capitalized. bis central bankers β speeches so even in the highly unlikely situation, if you wanted to run the counter factual, for example, of imposing losses
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situations, especially liquidity provision and the supportive legal framework. these four pillars, in my view, are the key minimums for implementing an effective financial - stability orientation policy. thank you.
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the role of chairman. this is a simple point, but quite often overlooked, that is during the meeting, the chairman should always try to create an atmosphere conducive for independent participation of all board members. it is also much more effective if the positions of chairman and ceo are not held by one and the same person. if one individual performs both roles simultaneously, then other board members cannot fully perform their duties of providing a check - and - balance. this is inevitable in the context of our culture which tries to avoid being disrespectful to others. moreover, if the ceo acts as chairman, he can easily influence the agenda and delay bringing certain issues to the attention of the board. eighth, on the appointment of an independent director, an independent director should not conduct any business relating to banking operations. by doing so, it may give rise to the problem of conflict of interests. an independent director should be one who is willing to stake out an independent view honestly. however, to expect a suitable individual to have no business background or business connection at all may be somewhat too ambitious. such requirement will screen out individuals with understanding of banking businesses to assume the duty of bank directors. the requirement about business affiliation is merely a broad and general guideline. all in all, i want to focus on certain qualities which are more imperative to achieving good governance. this must start from personal qualities, such as an affinity to be independent, individualistic with high moral grounds and integrity ; and a desire to express his opinion independently and honestly. ninth, is the issue i raised last year on β the remuneration of board members β which has been added to the principles of good directorship. i would like to propose that board remuneration not be tied to the future stock price of the bank nor solely linked to profits alone. the point is that if the bonus of board members is tied to the future stock price, it might critically affect the bank in the way that occurred in the cases of enron or world com. when management proposes any project that might raise the company β s stock price, although a high risk project, board member might give less weight to the risk aspect. thus, the check - and - balance of management power will automatically decline. moreover, the increased price of stock may not only result from the specific bank operation, but also attributed to general improvement in economic conditions and favourable stock market environment. if the remuneration of board members varies solely with the profits of
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hike. we can see it from retail sales figures. the rise in consumer activity does not exert pressure on prices. this, among other things, is an important reason of a moderate vat pass - through to prices. the fourth factor is external conditions. a number of changes which only started to emerge in december, intensified at the beginning of this year. the us fed and the european central bank eased their rhetoric as regards the monetary policy outlook. improvements were seen in markets β expectations regarding the negotiations of international trade restrictions. these factors supported emerging market currencies and reduced their risk premiums. we may say that external risks declined in this part. at the same time, geopolitical risks remain in place. oil prices in the first quarter were higher than projected in the baseline scenario. however, risks are high that oil production will exceed consumption this year. finally, overall monetary conditions have changed little if at all since the start of the year. deposit rates have edged higher, while loan rates have stabilised. ofz yields dipped on the back of improving conditions in global financial markets, as well as a result of reviewed expectations of market participants as to the future key rate path. these ofz yield movements, while working to constrain the potential of loan and deposit rate growth, are laying the groundwork for their subsequent decrease. with due account for the totality of factors i have mentioned, we have downgraded our inflation forecast for the end of this year to 4. 7 - 5. 2 %. at this point in time, it is with a certain degree of confidence that we can say : provided that the situation unfolds according to our baseline scenario, the preventive steps we have made so far to increase the key rate last year are most likely to be sufficient to ensure annual inflation returns to 4 % in the first half of 2020. i will now proceed to speak on the risks, as usual. despite the reduction in short - term risks, the overall balance of medium - term risks remains tilted towards proinflationary ones. as before, we should approach the assessment of external conditions with great caution. the risks related to geopolitical factors remain high. we continue to observe manifold sources of uncertainly in the global economic outlook. investor sentiment is subject to rapid change in this environment, which is set to impact on ofz yields and the exchange rate. certainly, elevated and unanchored inflation expectations, as i have said, also remain a material
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this way supervisors and central banks could approximate the potential systemic impact of the scenario selected. banks would benefit as well from such an exercise through benchmarking and learning effects. cooperation between central banks and supervisors let me then turn to the last topic i would like to touch upon, namely the cooperation between central banks and supervisors. i will consider three areas where i see major scope for improvement, namely financial stability assessments, liquidity and crisis management. the periodic monitoring and assessment of financial stability conducted by central banks would benefit from an enhanced cooperation between central banks and supervisors. in that context, i recall that the fsf stressed in its april report the need to improve the interaction between central banks and supervisors in the early detection of risks to the financial system. this entails that the supervision of individual institutions should be enhanced with central banks β financial stability assessments, which in turn should benefit more from supervisory insights. i am fully supportive of this recommendation. in their financial stability assessments, central banks take a β top down β approach by focussing on the main macro - prudential risks. supervisors, by contrast, take typically a Β« bottom up Β» approach by looking at the risks of individual institutions. somewhere these two approaches have to meet and influence each other for the better. for central banks this may mean that they have to communicate their financial stability assessment in a way that is directly relevant for supervisors, while supervisors have to bring to the attention of central banks developments in individual institutions that are important for the financial system as a whole. this recommendation is clearly relevant not only at the national level but also at a crossborder level. concerning the eu in particular, this presupposes an effective interaction between the assessment of risks faced by the eu banking sector made by central banks and supervisors, as reflected in the analyses of the bsc and cebs respectively. an important aspect of the cooperation between central banks and supervisors in periodically assessing the financial stability conditions is central banks β access to supervisory information. in normal times, the assessment of risks for the financial system as a whole needs to rely on a large set of information sources, including those from banking supervisors. an immediate example is represented by the data on the solvency and profitability of the banking sector, as well as ad hoc information on specific exposures of the banking sector. while it is fair to say that there exists already extensive access by central banks to supervisory information there is certainly room for improvement in terms of timeliness, frequency and detail. take the example again
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of deliberative democracy. it essentially involves allowing the public to play a greater role in political decision - making processes. ireland provides an instructive example of how this can work. in ireland 99 randomly selected members of the public are brought together to discuss and deliberate on various issues, such as global warming, the challenges arising from demographic change or the law on abortion. the topic of abortion, for example, was for many years a very controversial topic in ireland, and one that polarised society. and so, before a referendum on abortion was held, a citizens β assembly was brought together to discuss the issue. the results of the conversations were published in a report and debated in parliament. and while public reaction had initially been divided on the matter, the result of the referendum ultimately largely reflected the outcome of the citizens β assembly, which supported the right to abortion. many participants reported that the citizens β assembly had brought logic and structure to the discussion and allowed important facts to emerge. it had also shifted what had initially been a very emotional debate to a more rational plane and helped people to understand complex issues. in the end, the referendum did not lead to a massive divide in society, as had initially been thought. it was instead a process that gave rise to a clear result and social consensus. a similar kind of model for exchanging views and participating in political discussions on european matters could also serve europe well. citizens β assemblies could be a helpful way of bringing together citizens in a given country to talk about european issues. the example of ireland shows that citizens β assemblies are particularly effective when they discuss a concrete topic. but it could also be helpful to have european citizens β assemblies, which would allow citizens of different countries to exchange ideas. it is particularly important that, within europe, we develop additional methods and tools which establish shared values that transcend national borders and cultural differences and give rise to a sense of shared objectives. assemblies like these could also strengthen the dialogue between the people and the eu institutions. eu politicians and civil servants would be better able to understand the concerns of citizens, and thus better able to represent them. and the eu would be brought closer to the people and enjoy greater trust. all of this requires hard work, commitment and perseverance, since diversity can slow down the decisionmaking process. yes, discussions at the european level take longer than those at the corresponding national level. after all, the many different interests and approaches that often have their roots in national traditions need to be thoroughly discussed
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aspects of our lives. the eu brings together the shared features of the 28 member states, but also their many differences. successful cooperation requires us to work on the basis of shared values, objectives and cooperation principles, of course. we need to observe the principles of subsidiarity and proportionality that have always governed the eu β s powers. these principles help us to ensure that cultural diversity and national identities are recognised and respected. in other words, that we are β united in diversity β. this is an approach that has proved its worth and we should continue to build on it in the future, ensuring that political decisions are made as close to the public as possible. and despite all the benefits and the motto β united in diversity β, there is growing scepticism about europe. one of the frequent complaints is that the eu always operates on the basis of rigid legal principles, making it seem often technocratic and somehow remote. this criticism applies to all european institutions and we shouldn β t just brush it aside. i firmly believe that the time has come for us to redefine the way in which we work and, in particular, the way in which we communicate. and this applies to the european central bank too. the ecb needs to address all citizens, not just an expert audience β without ever becoming political, of course - but only in order to bring facts and explanations to economic issues. β do good and talk about it β β in simple and accessible language β should be the motto here. the people of europe need to be given much more information about what the eu and its institutions are doing on their behalf β and that information should be coming not just from the eu institutions themselves but most of all from national governments and institutions. only then will we be able to tackle people β s fear and disorientation. only then will we be able to counter the growing polarisation among the people of europe. so we should not be communicating through complex facts, coefficients and rules. this only reinforces the impression that the eu is an arrogant elite that already knows all the answers. we will also need to work fundamentally on our understanding of politics and our culture of debate. communication between the public and institutions needs to involve a great deal of commitment and to flow in both directions. the people need to be included so that we can regain their trust and convince them that the eu works for them and takes their concerns seriously. a concept that has worked well in a number of countries is that
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protecting consumers while ensuring that creditors continue to provide credit responsibly. an important part of my research as an economics professor at the university of chicago, and my practical policy work as a member of the council of economic advisers, was devoted to banking and financial regulation as well as banking and financial crises. the safety and soundness of the u. s. banking and payments systems is critical to achieving economic growth, maximum employment, and general economic stability, and the federal reserve works closely with other regulators to achieve this goal. the federal reserve also has an important role to play in responding to and mitigating the impact of financial crises and shocks. if confirmed, i would continue to work vigorously to protect and promote the safety and soundness of the system. thank you once again for holding this hearing, and i look forward to your questions.
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, the 3 % maastricht level. for example, the target in the czech republic is not to exceed 4 % of gdp in 2006. nonetheless, it has not yet been fully appreciated that upon eu accession, the stability and growth pact will become relevant to the new member states. admittedly, the application of sanctions will be postponed until a country becomes a member of the eurozone. but even if a country is not a subject to sanctions, as a member of the eu club it should have in place at least a credible programme towards achieving its objectives. moreover, if a country targets relatively early eurozone entry, it should first create a sufficient safety margin above the 3 % deficit limit to be insured against distress - i. e. it should avoid the mistake that has been made by some of the current eurozone members concerning the s & g pact. i hope that the uncertainty surrounding the pact β s future would not be viewed as an excuse for delaying necessary fiscal and structural adjustments. even if redefined in a more flexible way, it is quite clear that the structural deficits currently observed in many of the cecs will not be tolerable under the pact, as they will not pass the sustainability and policy mix tests. therefore, the existence of the s & g pact makes the case for fiscal consolidation even more appealing than it might look at first sight. to conclude, let me wish you a very fruitful discussion during this conference, as well as a very pleasant stay in prague. thank you for your attention.
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250 billion transactions per year in 2008. of this growth, card payments were the strongest driver. 4 in the european union, card payments reached a total of over 29 billion transactions in 2008, also growing at a rate of almost 9 %. 5 this shows the immense potential of this means of payment to generate revenue for the financial industry through growth, even at a time when interchange fees are under pressure. in my view, sepa offers tremendous opportunities for further harmonisation of the use of cards, making them an even more attractive means of payment. but, besides the harmonization of card standards, more competition in the european cards market can bring additional benefits to consumers. therefore, the eurosystem remains convinced that an additional european card scheme is needed. three initiatives are under way : payfair, eaps and β monnet β. the eurosystem has maintained close contacts with all these initiatives to create an additional european card scheme. we are pleased to see that one of the initiatives has recently started a pilot with a large merchant, and that another initiative is operational among some of its constituent schemes, especially for atm withdrawals. we are hopeful that these initiatives, whether separately or jointly, will come to fruition in the near future. in essence, for sepa for cards to become a success, card payments need to be positioned as a real alternative to cash : efficient, fast and guaranteed. this could and should be delivered by the already existing card schemes and the foreseen additional ones. however, this will not be enough. a successful sepa for cards also needs the harmonisation of technical standards, basic business rules and certification practices across schemes. only this will bring an integrated cards market into effect. sepa by its nature of harmonizing the retail payments market will promote more competition and hence will be a key driver of innovation in the market. new developments have already taken off in the field of esepa. esepa means the provision of various retail payment services by means of electronic channels β such as internet β in order to offer benefits to payment service users in the form of easier access, better functionality and a more attractive user experience. more and more companies and consumers operate online. hence, the market needs to create european e - payment β or online β solutions, which will bring even more efficient and transparent trading at the retail level. for example, an β e - payment β is an internet banking payment. the web - merchant receives a payment guarantee confirmation in real -
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further adjustments to the fair values of these assets become necessary, thereby perpetuating the β downward dynamics β. 1 these dynamics may in the end have adverse implications for the β real economy β, e. g. banks may further curb their lending to the economy. in this context, the potential impact of fair value accounting on behaviour, asset price dynamics and subsequently on financial stability should not be underestimated. pre - crisis provisioning practices delayed the recognition of credit losses inherent in loans. accounting rules require a specific trigger event, such as a default in payment to take place before allowing an entity to create provisions for credit losses. as a result, major write - offs usually accumulate during severe downturns when the inherent credit losses actually materialise, adding further stress to the financial system. hence, a more forward - looking provisioning methodology should be developed. this has also been a recommendation of the g20 leaders. in this context, the ecb welcomes the recent iasb proposal for an expected cash flow approach. despite some operational challenges that need to be resolved before its final adoption, this approach allows for a timelier recognition of expected credit losses, thereby contributing to mitigating pro - cyclicality. in this context, it should be noted that the basel committee has recently developed an approach which aims at reducing the complexity of the iasb β s approach. the ecb urges the iasb to work together with the basel committee with a view to developing a workable solution to a more forward - looking provisioning approach. this is also a good example of where the objectives of high quality accounting and safeguarding financial stability complement each other. on that note, let me finally underline that the ecb acknowledges the work of the iasb and welcomes the progress that has been achieved in the accounting framework. we look forward to continuing the intense dialogue with the iasb on the remaining phases of the financial instruments β project, as well as other accounting areas that may be of importance from a regulatory perspective. it should be mentioned that the same dynamics may apply in a boom, albeit in the opposite direction, resulting in increasingly β optimistic valuations β and thereby fuelling additional lending. as regards the convergence between the american implementation and the ifrs rules, which is your general view? more precisely, on which technical / conceptual points europe will not give up? one of the key lessons to be learnt from this crisis is the need for international accounting convergence. towards this aim, g20 leaders have
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s decision to transition from consumption credit to a more productive credit as the later will help contribute to the production capacity of our economy and contribute to the stability of your bank and ultimately sustainable economic development in namibia. 16. ladies and gentleman 17. on 28 october 2010, i ended my speech with the chinese adage β a journey of thousand miles begins with the first step β i believe we have taken the first step toward financial inclusion. we have travelled about 500 miles of that journey, we still have some more miles to get there, but getting there we shall. getting there, however, requires that all of us should continue to work hard as a team to create a sustainable and an inclusive financial sector for our children and their children β s future. i believe, letshego is one of the trailblazers on this journey, we look forward to continue travelling with you. i thank you for your kind attention iipumbu shiimi.
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of some 22 % over the last five years, is quite substantial. this has given vent to the fears in certain quarters that this expansion might not be in the long - run interest of the economy, particularly if it crowds out private sector role. chart development in income and demand 1990 - 99 de ve l op me nt s in income and de mand 1990 - 99 - 2 - 4 real gdp real grossnational income the trends in income and demand developments have not been encouraging either. gross national income lagged behind gdp for a greater part of the 1990 β s reflecting a decline in the country β s terms of trade. chart private and public consumption gr owt h in p r ivat e and p ub l ic cons ump t ion - 5 - 10 - 15 - 20 govornment conummption private consumption real gdp ) the incomes of households followed the developments in gross national income, as the share of wage income remained relatively stable. private consumption suffered for a greater part of the 1990 β s under the weight of falling real incomes and rising real interest rates. on the other hand government consumption represented a disproportionate share of gdp. it has been observed that among developing countries, the share of government consumption in gdp, which is currently put at about 30 %, is the highest. unemployment trends the labour market in namibia is characterised by an excess supply of unskilled labour and, at the same time, a lack of skilled labour. available data suggest that the unemployment rate rose from 33 % in 1994 to 35 % in 1997. lack of data precludes us from making sufficient observations on the unemployment trends in the economy since then, but whatever little evidence there is, points to the fact that the unemployment situation has worsened. government remains the main employer of labour. this has resulted in a burgeoning public sector wage bill. although available statistics show that sectors such as finance and transport are making necessary efforts, the overall situation remains difficult and requires a structural policy thrust. 4. factors that impacted on growth and development in attempting to reduce the reliance of the economy on primary exports, the government objective has been to promote sustainable economic growth through a strategy of diversification since independence. the promotion of manufacturing activities, development of the agricultural sector, the fishing industry and tourism have been identified as having the most potential to provide impetus for the diversification strategy under the first national development plan. the government introduced specific measures targeted at promoting growth, development and job creation
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address the threat to the information systems. the forums such as this provide great opportunity to interact bis central bankers β speeches and understand the role that each one of us has to play and to also ensure that our actions and plans are complementary and not at cross purposes. cyber security preparedness β five commandments for safety in banking 14. let me start with a most common requirement. thou shall know your customer β which is my first commandment. all of us are aware of the requirements relating to know your customer or kyc as commonly referred to. much has been said, discussed and detailed about kyc that i shall not repeat all of them ; suffice to say now that it is essential to know our customer well or else we shall have to face the consequences which may be detrimental to our business objectives. 15. the second commandment of mine states that thou shall know your employee. most of the cyber frauds have some direct or indirect role of an insider, who generally happens to be an employee of the organisation which has been the target of the cyber security attack. there is an urgent need for an organisation to not only perform the antecedent verification of an employee at the time of recruitment, but also continuously monitor employee behaviour, trends in operational usage of the organisational resources, interaction levels with peers and subordinates and the like. today, it tools provide a lot of information on employee behaviour and patterns ; it is essential that organisations ascribe adequate importance to these aspects. 16. the third commandment reads as follows : thou shall keep your it systems up - to - date and free of all risky components such as viruses, spams, malware, spoofing software and so on. today, there are centralised it system facilities which can ensure that the updates are implemented centrally and also monitored centrally. 17. the fourth commandment is thou shall provide for maximum it governance. the broad requirement in this area relates to the need for ensuring good it practices such as β maker and checker β for financial transaction processing, a four - eyes principle for it based operations, regular monitoring of system and operational logs, conduct of regular, periodical and well defined it system audit followed by suitable corrective action wherever required, and a separate distinct ciso ( chief information security officer ) who would continuously monitor the quality and efficacy of it and is security in the organisation. 18. my final commandment is thou shall ensure continued cyber security awareness amongst all players in the chain. the world of
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for safe, secure, sound, efficient, accessible and authorized payment systems in the country. in this context, i would briefly outline the developments taking place in this space. 10. at the heart of payment market infrastructures ( pmis ) is the one owned by central banks which the world over is a real - time gross settlement ( rtgs ) system. as the world moves closer to real time everything, including payments and the inflection on innovation, better governance and wider access, the role of the rtgs system is evolving. this places new demands on the business and technology architectures of pmis and rtgs systems in particular. to move closer to providing access to the rtgs for longer durations, the customer timings have been recently extended. there has been a growing demand for providing wider access to the rtgs system and allow participation of non - banks. the highlevel committee on deepening of digital payments ( cddp ) recommended that nonbanking entities should be included as associate members of payment systems and 4 / 5 bis central bankers'speeches become an active player in enhancing acceptance infrastructure in the country. the recommendations are under examination. 11. another development in the markets is related to implementation of legal entity identifier ( lei ). in view of the financial crises across the world, lei has provided a way to identify financial connections so that regulators and firms can better understand the true nature of risk exposures across the financial system. in india, lei has been mandated across various sectors in the financial markets including derivatives and non - derivatives market and also for large corporate borrowers. this is being implemented in a phased manner. since it has been made mandatory for large corporate borrowers to obtain lei, banks should, apart from advising such borrowers to obtain lei, encourage such borrowers to obtain lei for their parent entity as well as all subsidiaries and associates. implementation of lei for large borrowers may help banks in better monitoring of transactions and hence, exposure of such borrowers across nations. 8. let me now conclude. the role of financial sector in a growing economy cannot be overemphasized. as the most important segment, the fixed income market in india has to grow to cater to the investment needs of an economy that aspires to become a usd 5 trillion economy in near future. while the rbi and other sister regulators will continue to draw the contours of growth with financial stability in mind, the market needs more activity, innovation and enterprise from
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jean - claude trichet : interview with postimees, hospodarske noviny and delo interview with mr jean - claude trichet, president of the european central bank, in postimees, hospodarske noviny and delo, conducted by ms laura raus ( postimees, estonia ), mr jan kovac ( hospodarske noviny, slovakia ) and mr miha jenko ( delo, slovenia ) on 13 july 2011 and published on 19 july 2011. * * * question : what will happen if the us politicians fail to agree on lifting the country β s debt ceiling? what would the implications be for the euro area? trichet : i have no doubt that the us authorities will find an appropriate way to cope with the present difficulties and that they will succeed. if not, it would create a problem of great magnitude for the entire world. but i β m sure that they β ll find a solution. question : after the past bad experience with united states - based rating agencies, would you now be in favour of the creation of a european rating agency? trichet : the present framework of a very small number of global rating agencies is pro - cyclical, amplifying the booms and busts. this β oligopolistic β structure is not optimal. in any case, we encourage all initiatives that go in the direction of eliminating conflicts of interests ( where they exist ), improving surveillance and oversight and permitting more competition in this industry. everything that goes in this direction is correct. question : despite the continuing debt crisis in the euro area, the ecb has raised interest rates by 25 basis points recently. it could be the beginning of a series of increases to occur during the year, as economists forecast. disparities between countries are strong in the area and higher rates may be especially detrimental to the weak economies ( greece and portugal, for example ). what is your answer to this criticism? trichet : throughout the crisis we have always applied the separation principle between the β standard β measures of monetary policy on the one hand and the β non - standard β measures on the other hand. standard measures are the interest rates. non - standard measures are designed to help restore a more correct transmission mechanism of our monetary policy when financial markets or segments of markets are disrupted. the interest rates must be decided upon with a view to delivering price stability to the euro area as a whole in line with our definition of price
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lorenzo bini smaghi : on the occasion of the inauguration of the euro exhibition in rome speech by mr lorenzo bini smaghi, member of the executive board of the european central bank, at the inauguration of the euro exhibition, rome, 3 april 2009. * * * dear fabrizio, ladies and gentlemen, it is a pleasure for me to be here in these wonderful premises of banca d β italia in rome to celebrate with you the occasion of the 10th anniversary of stage three of the economic and monetary union ( emu ) and of the adoption of the euro. we are also here to inaugurate β the euro exhibition β, presenting the euro banknotes and coins through a range of innovative features, which we hope will be appreciated by the public in rome. 1. first 10 years of the euro on 1 january 1999 the third stage of emu began with the irrevocable fixing of the exchange rates of the currencies of the 11 member states initially forming the euro area. monetary authority for the new currency was transferred to the governing council of the european central bank. the euro became the currency of over 300 million citizens of europe. the number of countries participating in the emu grew over the years. today, euro banknotes and coins are legal tender in 16 of the 27 member states of the european union, and used by almost 330 million citizens in the euro area. slovakia has recently become the 16th member of the euro area. following a two - week dual circulation period during which payments could be made using either euro or slovak koruna, the euro became the sole legal tender in slovakia from 17 january 2009 and the changeover was very smooth. today, the single currency is used in an area that stretches from cyprus to ireland and from portugal to finland. as you know, the euro cash did not enter into circulation until 1 january 2002, when it replaced the banknotes and coins of the national currencies like, in the case of italy, the lira. to support the cash changeover, which was one of the largest logistical operations undertaken in europe, extensive information campaigns were successfully run to acquaint citizens with the visual appearance of the euro banknotes and coins. the euro is widely recognised as a currency of major significance on the international level. some 12 billion banknotes circulate in europe and beyond, representing a face value of more than eur 700 billion. the number of euro banknotes in circulation continued to grow since the
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, may continue to collapse, hurting all open economies dependent on exports. the second are the negative effects that we are already witnessing in emerging market economies ( emes ). in fact, significant capital outflows and exchange rate depreciations already underway can hinder future growth. protectionist measures directed particularly against large emerging economies may further decelerate world economic growth and create instability in foreign exchange markets. the third factor concerns europe. in this first wave, europe apparently benefited from positive contagion with some increase in equity prices and a steepening of the yield curve, favouring financial institutions. as concerns equities, the low starting point seems favourable for european markets. share price levels are relatively subdued in europe with, for instance, a cyclically adjusted price earnings ( cape ) shiller index of just 14 against 27 in the u. s. this means that european shares, including those of banks, are undervalued with respect to other parts of the world and could thus attract investors. however, we already observed a slight drop in european share prices last friday. according to market analysts, this was explained by fears concerning 1 / 4 bis central bankers'speeches protectionism and emes β growth prospects as well as the possible resulting decline in global trade. besides these external concerns, europe β s internal problems may deter it from fully reaping the benefits from the expected expansion in the u. s. indeed, a range of political risks may induce economic shocks. to face heightened world uncertainty, europe would need to deepen its unity and integration, relying more on its domestic market to underpin higher growth. in turn, this implies that europe needs more expansionary macroeconomic policies and more reforms in the regulatory and competition policy fields, in order to improve the economy β s supply side. without higher real and nominal economic growth, europe will have greater difficulty in overcoming its challenges. euro area outlook so far, monetary policy has been the only expansionary macroeconomic policy in support of the recovery. yet, securing sustained economic growth and employment cannot be dependent on monetary policy alone. at the national and european levels, a much more comprehensive policy response, than has been the case to date, is needed. mainly, structural reforms and fiscal policy have yet to deliver their share to support economic activity and counteract the β low growth trap β dynamics faced by advanced economies at present. the euro area recovery is continuing its moderate but steady pace, supported by the ecb β s policies.
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of the programme. if the programme did fail to restore market confidence, that would have to be dealt with when the time came : holding out for better terms at the outset would have been self - defeating. as the programme proceeded, the severity of the three risk factors that i mentioned dissipated. the interest rate was sharply reduced ; the tail risk on bank losses did not materialise as much as many feared, and the additional cost of rapid deleveraging turned out to be less severe than it might have been. the two successive irish governments β firm adherence to the programmed fiscal adjustment was a key element : without it, external official and market confidence in the policy path would not have been restored. ( it is worth recalling that fiscal adjustment was already well under way for more than a couple of years when the programme began. ) close attention to the details of implementation and a solid record of working closely with troika officials to tweak programme conditionality in order to avoid self - defeating actions also helped in delivering this outcome. ( examples relating to the banking sector included small but important operational adjustments to the deleveraging path and the timing of stress tests ). while the programme β s aggregate story thus ends well, it is instructive to consider in some detail how it might have been better designed. i will focus on some of the financial aspects, which, after the fiscal component, were indeed the programme β s centre - piece. the bank bond issue much has been made of the issue of β burning bondholders β, and rightly so. just as the scope of the two - year blanket guarantee of september 2008 had been criticised, the idea that the newly - unguaranteed remaining bondholders in the failed banks anglo and inbs might now receive government largesse was rightly repugnant to many observers at home and abroad. the irish government was very interested in seeking some form of bail - in to undo some of the damage caused by the original guarantee, especially if done as part of an international assistance programme. it was unclear how much burden - sharing could in practice be this is especially true, given the prevailing reluctance in official europe to rely to a greater extent on keynesian reasoning which, in the interests of maintaining higher levels of economic activity and employment, might have tolerated a more gradual fiscal correction path in the post - crisis adjustment phase. bis central bankers β speeches achieved for the going - concern banks ( discussions in the corridors around during the negotiations included suggestions that some form of
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entire financial system. we definitely cannot afford to find ourselves in a situation like 2008 again. with your question, you seem to doubt that there is the political will. it is the task of independent institutions, such as the ecb, to tell politicians that they have to adopt a responsible financial policy. i do not underestimate the difficulties that democracies face in taking painful decisions. but it is obvious that several industrialised countries have been living on credit. the richest countries in the world have made the less rich and poorer ones finance them, which is not sustainable and, in the end, will not be sustained! that applies to a number of industrialised countries on both sides of the atlantic.
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jean - claude trichet : interview in frankfurter allgemeine zeitung ( faz ) interview with mr jean - claude trichet, president of the european central bank, in frankfurter allgemeine zeitung, germany, conducted by messrs gerald braunberger and stefan ruhkamp on 19 may 2010 and published on 21 may 2010. * * * faz : mr president, many germans are asking themselves whether our money is still safe. what do you have to say to them? trichet : the european central bank has a track record of successfully meeting its objective of keeping inflation below, but close to, 2 % over the medium term. for over 11 years since its establishment β including the current period β the ecb has succeeded in doing just that. over this entire period, we have achieved an average annual inflation rate of less than 2 %, but close to 2 %, in the euro area. and in germany it is even significantly lower. the facts speak for themselves. no central bank in europe β not even the deutsche bundesbank β has achieved such a low rate of inflation over such a long period of time. faz : but the fear is that the ecb is getting itself into a situation where it no longer has complete freedom to act. trichet : we have full freedom to act, and we will never shy away from our responsibility for delivering medium - term price stability, also in difficult circumstances. in france i was at times called the β ayatollah of franc fort β ( a play on words on β strong franc β ) or a β clone β of the president of the deutsche bundesbank at the time, hans tietmeyer. in 2004 the german and french governments tried to pressure us into cutting interest rates. i said on behalf of the governing council that the ecb refused to do this. in december 2005 we increased rates against the publicly expressed sentiment of ten governments! in 2008 we did not hesitate to raise interest rates, even in a period of financial turbulence. we don β t allow ourselves to be influenced by any government, any social partner or any kind of pressure group. we act always fully in line with our own responsibilities. and that is the reason why we have delivered price stability. faz : but by purchasing government bonds, you β ve crossed a red line. has the credibility of the ecb suffered as a result? trichet : there has been no crossing of any line. our line
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allowance rather than spending it all ; β’ making a budget and planning ahead for something you want to buy ; β’ getting your parents to open bank and credit union accounts for you ; β’ understanding that interest accumulates and the money grows ; β’ life is about choices β ( very often it is about the video game or the pair of sneakers but not both ) ; and β’ you need to understand clearly that borrowing has a cost and that too much borrowing could lead to problems. for you, teachers and principals, i have seen the programme and i promise you that it is designed to teach the kids good habits about spending, saving and other money matters in an exciting, creative and interactive way. the sessions will be facilitated by the junior achievement body of trinidad & tobago ( ja ) and the consulting interface limited ( tcil ), organizations with very good track records in both the primary and secondary schools in trinidad and tobago. in the first phase of implementation, ja and tcil will present their material to a total of 96 primary schools with an estimated 5, 000 standard 2 students from the eight educational districts of trinidad and tobago. this phase is considered a pilot and will run for the current school term. at the end of this phase, the programme will be evaluated and changes made as necessary to enhance its effectiveness. it will then be rolled out to other primary schools. it is our hope that over time, the programme will form part of the school curriculum of all primary schools in the country. similar programmes are being planned for secondary and tertiary level students as well in the medium term. the financing for the programme will come primarily from the central bank and subventions from the government. however, because of its national dimension and to make the programme all - inclusive, we plan to ask the financial firms and other private corporations to collaborate with us in this worthwhile initiative. let me take this opportunity to thank you the principals, teachers, students present today for your implicit support of the programme. you are pioneers in an exciting journey directed towards improving the financial capability of the nation. let me also thank senator the honourable hazel manning and the ministry of education for enthusiastically approving this initiative. i would also like to recognize the commitment and hard work of the management committee of the financial literacy programme whose unstinting volunteer efforts are contributing to make all this possible. kids, as i said earlier, we in the bank are excited about this programme. we hope that we can get you even more excited and that you can spread this excitement
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to your friends and parents. if this happens, we are confident that these efforts will redound to the benefit of the population as a whole.
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. the indian economy was vulnerable due to the then prevailing high inflation of around 10 per cent and large current account deficit at 4. 7 per cent of gdp. the reserve bank resorted to a host of policy measures including monetary tightening, restriction on gold import, special dollar swap window for public sector oil companies, special concessional swap window for banks for attracting foreign currency non - resident ( bank ) deposits, increase in overseas 2 / 5 bis central bankers'speeches borrowing limit of banks, and raising fii investment limit in government debt. what do we learn? 12. though there is no unique solution to these policy issues confronting the global economy, we could clearly draw three broad inferences : 1. first, as we have discussed earlier, central banks β role is important, both during normal as well as crisis times. while mandates for central banks broadly remain the same during both normal and stress periods, the weightage attached to competing objectives and the choice of policy instruments become crucial in the crisis periods. 2. second, communication by central banks is very important which may be different in crisis times than in normal times. not only it helps convey decisions in a more transparent way, it also signals the present and future policy stance of central banks. in fact, unconventional monetary policy measures undertaken by central banks during the crisis period worked mainly through the confidence and signaling channels. the us federal reserve β s statement on december 16, 2008 provided a clear forward guidance for the markets. on the other hand, only a mere hint of monetary policy normalisation by the us fed ( popularly known as taper tantrum ) in may 2013 triggered portfolio outflows from some emerging market economies ( emes ) 4. this led to high volatility in equity, debt and currency markets. in fact, such market volatilities in emes could have been avoided through clear advance communication on calibrated withdrawal of monetary policy accommodation. in the indian context, the reserve bank communicates its monetary policy decisions in terms of changes in the β policy repo rate β and β stance β based on an assessment of the current and evolving macroeconomic situation. the stance of the monetary policy is communicated as neutral, accommodative or calibrated tightening in consonance with the mandate of achieving the medium - term inflation target of 4 per cent Β± 2 per cent, while keeping in mind the objective of growth. the reserve bank β s approach to communicate the policy stance is to explain it with rationale,
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of emergency liquidity assistance framework for the chilean financial sector. looking ahead, it is also important to bear in mind the challenges associated to digitalization and new business models in the financial sector. modernizing financial regulation and risk management also entails identifying potential risks and defining a regulatory perimeter that addresses the increasing pressure of digital developments ( such as those of new business models developed by fintechs, stablecoins, central bank digital currencies, decentralized finance, among others ). linked to it, operational resilience and cybersecurity have become a relevant issue for the financial industry. in this sense, regulation aim to set minimum standards that can guarantee the adequate functioning of financial services when it comes to face operational and cyber risks. lastly, it is also key to assess the risks posed to and by financial institutions data infrastructure and data use. at the central bank we are following closely these new developments in the financial sector locally and globally to understand potential benefits and to identify potential risks that need to be mitigated. we will keep monitoring these developments, to incorporate them in the regulation issued by the central bank on payments, as well as in the analysis of emerging risks in the financial sector that we provide in our financial stability report as well as in the new report on payments and infrastructures that we started publishing this year. challenges ahead i started this presentation explaining the measures taken by the central bank to reduce macroeconomic imbalances in pursue of its mandate of price stability and the main elements of the financial regulatory agenda which certainly has contributed to financial stability and will continue to do so in the next years. before concluding, i would like to refer to some of the challenges that lie ahead for our financial sector. a deep capital market is critical to support economic recovery and a play a relevant role to the resilience of the financial system and its ability to accommodate external financial pressure. therefore, it is imperative to recover our capital market. pension funds withdrawals affected this capacity and brought back our capital market some years in terms of size and depth. getting back on track is not an easy task and it requires a shared effort from the public and private sectors. in our latest financial stability report and monetary policy report we conveyed clear messages, as to the need to prioritize initiatives that contribute to strengthening the functioning of the financial system and avoid those that could harm it. the chilean economy is in the process of resolving macroeconomic imbalances and has the task of repairing the buffers that
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with the fiscal policy, without losing its independence. incorporating this understanding in the central bank theory and practice requires some adjustments and flexibility but, at the same time, requires that central banks preserve their focus and independence and acknowledge their limitations. altogether these changes will allow the central bank and its inflation targeting regime to become a useful tool at the hand of the monetary authorities to preserve economic and financial stability in the post - global financial crisis period. thank you very much for your attention! bis central bankers β speeches
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asset prices and financial frictions. under the current conditions, the largest central banks in developed countries have stretched central banking theory and practice beyond traditional activities. their balance sheets have increased beyond imagination and, in some cases, include private assets ; they have accepted a much broader role and have assumed more responsibility. this all new and untested type of central banking will have a strong impact not only on the nature of monetary policy and its interaction with other central bank objectives but also on the independence and credibility of the central bank itself. the nature of future monetary policy will largely depend on the success of the largest central banks to get out of this situation in a controlled and timely manner, without causing excess inflation and damaging central banks hard - earned credibility. these developments will affect monetary policy in the emerging markets through interest and exchange rates, but most importantly in the way central banks conduct their monetary policy. influenced by current practices of leading central banks, some other central banks have reoriented their objectives and engaged in activities which are traditional for development banks and governments. we have been careful to stay away from adopting and targeting such objectives not only in monetary policy but also in our macro - prudential policy. the bank of albania has traditionally based its policy on two important pillars. our first focus has been to achieve our inflation target and manage inflation expectations to preserve the purchasing power of our currency. this policy has simultaneously provided necessary stimulus to economic activity. second, our focus on banking supervision and financial stability has enhanced the confidence on our financial system and therefore increased the efficiency and credibility of our monetary policy. as i have said in april of 2008, during the annual conference with the banking system in albania, β every investment we make today in financial stability yields increased efficiency in our monetary policy β. bis central bankers β speeches recently, the bank of albania has introduced financial literacy as a third pillar of our policy and independence. this objective is founded on my belief that the first two pillars gain sustainability only if the public understand the role of the central bank, its independence and its policy. last but equally important, i would like to emphasise the need of cooperation and coordination with the fiscal policy. fiscal policy and its impact are facts of life which can β t be ignored. therefore, monetary and macro - prudential policies have to be designed and implemented in full awareness of its existence. a central bank does not live in an isolated island ; its success will, among others, depend on its ability to act in coordination and cooperation
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longer needs to be as restrictive. in other words, it is appropriate to lower our policy interest rate. if inflation continues to ease, and our confidence that inflation is headed sustainably to the 2 % target continues to increase, it is reasonable to expect further cuts to our policy interest rate. but we are taking our interest rate decisions one meeting at a time. we don't want monetary policy to be more restrictive than it needs to be to get inflation back to target. but if we lower our policy interest rate too quickly, we could jeopardize the progress we've made. further progress in bringing down inflation is likely to be uneven and risks remain. inflation could be higher if global tensions escalate, if house prices in canada rise faster than expected, or if wage growth remains high relative to productivity. in assessing where inflation is headed, we will continue to closely watch the evolution of core inflation. we remain focused on the balance between demand and supply in the economy, inflation expectations, wage growth and corporate pricing behaviour. with that summary, the senior deputy governor and i would be pleased to take your questions. 2 / 2 bis - central bankers'speeches
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to be appropriate for firms of all sizes, while providing appropriate protection for investors. j. allen, w. engert, and y. liu. " are canadian banks efficient? a canada - u. s. comparison. " financial system review. ( december 2006 ), p. 61. the need for improved enforcement let me turn now to enforcement. markets work more efficiently when they operate under clear, transparent, and reasonable rules and principles. but even the best rules won't help if they are not enforced. while we have seen some first steps to strengthen enforcement over the past couple of years, there still is a perception, both in canada and abroad, that canadian authorities aren't consistent in their efforts to enforce the rules against insider trading and other offences, nor tough enough in rooting out and punishing fraud. the investment dealers association's task force to modernize securities legislation, chaired by tom allen, has recently argued that information should be made more readily available to - and shared more readily by - investigators and prosecutors, and that training for these groups should be improved. a federal - provincial working group was recently formed to address these issues. but we cannot lose any momentum in this area. it's vital that we move quickly and forcefully to strengthen enforcement, so that investors and firms are confident that everyone is playing by the rules. i recognize that improving enforcement will require considerable effort and extensive co - operation among prosecutors, the police, securities commissions, and industry groups. but we can't lose sight of the fact that this will pay off in the long run. for example, at the bank, we've put a great deal of effort into co - operating with law - enforcement agencies, and the justice system, to fight counterfeit currency. and while levels of counterfeits are still higher than we would like, we have seen a steady decline in the number of counterfeits detected since the beginning of 2004. thanks to increased effort and co - operation, we're moving in the right direction. pension regulation pension regulation is another important issue for the efficiency of canada's capital markets. there is a crucial need for a framework that provides the appropriate incentives for employers to establish and maintain pension plans, so that the vast pools of capital in these plans can make their maximum contribution to the efficiency of the canadian economy. but our current regulatory framework instead provides a number of disincentives for firms to establish or maintain defined - benefit ( db ) pension plans.
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holiday this summer in peace? i never plan my holidays ahead and i only ever go away for a few days. one thing is certain : i will not be going to polynesia. it β s too far. so is the euro still in danger? no, absolutely not. from the outside, analysts are seen to be imagining scenarios in which there is an explosion of the euro area. that underestimates the political capital that our leaders have invested in this union, as well as the support of european citizens. the euro is irrevocable! having formerly worked for goldman sachs, what do you think of the libor scandal? it undermines trust in one of the cornerstones of the world financial system. just think that hundreds of trillions of euro of financial operations are based on the libor and that in many countries all over the world people buy their homes with mortgages indexed to the libor. the unspeakable personal behaviour and design flaws have shown once again a faulty governance of the process. two inquiries are under way in the united kingdom and in the united states, as well as an inquiry about the euribor. they must shine a light on these matters. does your time at goldman sachs make you uncomfortable? no, indeed, i value this experience of the world of finance and of the private sector. obviously, there is much to do to rebuild the financial services industry after the crisis. much bis central bankers β speeches has been done by the governments, by the regulators and by the industry itself, but much still remains to be done. heads of state and government want to place the ecb at the heart of bank supervision. are you in favour of this? the european commission is responsible for preparing proposals on this in consultation with the ecb and the european parliament. the fact that the central bank plays a role in banking supervision has worked well at national level, particularly in france and italy. if this role fell to the ecb, it would work with national supervisors, counting on their considerable experience and abilities. do you not fear a conflict of interest between monetary policy and this supervisory role? monetary policy must be kept separate from banking supervision so that the former is not contaminated by the latter. you can build an independent structure, and at the same time benefit usefully from information provided by supervision. would such a system have enabled the banking crisis in spain to be avoided? a centralised system is preferable to take account of the very high degree of
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emu. in running this relay race, we need to discuss the optimal allocation of responsibilities between the national and european level. but for this not to happen through the back door, we need to open it up to public debate. the yearly european parliamentary week offers a perfect forum in which to bring it forward. thank you very much and i look forward to today β s debate. 1 see β the evolution of the ecb β s accountability practices during the crisis β, economic bulletin, issue 5, ecb, 2018. 3 / 3 bis central bankers'speeches
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these issues. the second pillar in the proposed new capital adequacy framework has to do with the supervisory review of capital, a critical complement to minimum capital requirements. the consultative paper calls on supervisors to ensure that each bank has sound internal processes in place to assess the adequacy of its capital based on a thorough evaluation of its risks and capital structure, thus moving the accord beyond a ratio - driven minimum capital standard to a comprehensive approach for assessing capital adequacy. in general, supervisors have expected and continue to expect banks to hold more than the regulatory minimum amount of capital. in proposing this supervisory review of capital, the basel committee intends to foster a more active dialogue between banks and their supervisors with respect to the actual level of capital banks choose to hold. i want to stress, however, that this proposed approach to assessing capital adequacy in no way intends to replace the judgment and expertise of bank management. nor is this approach meant to shift ultimate responsibility for the adequacy of bank capital to the supervisors. on the contrary, i believe that managers are the ones with the most complete understanding of the risks that their institutions face and it is they who must have the primary responsibility for overseeing these risks. the task for supervisors in this framework is to evaluate how well banks are assessing their own capital needs relative to their risks, including whether banks are appropriately addressing the relationship between different types of risks. to this end, the basel committee is currently developing guidance to help supervisors evaluate internal capital assessments conducted by banks. in the event that a bank β s internal capital adequacy process is lacking, supervisors must have the knowledge and authority to take corrective action. there can be no doubt that implementing the supervisory review of capital will require considerable insight and flexibility on the part of supervisors because they will have to tailor their efforts to the unique risk profiles of particular institutions. at the same time, this approach should allow supervisors to draw on their cross - institutional knowledge as they assess the strengths and weaknesses of a bank β s risk management and capital allocation processes relative to those of its peers. the g10 supervisors recognize the obvious implications that this approach will have for supervisory resources. in order to keep pace with industry innovation, it is clear that we will have to step up our training and consider effective ways for making the most use of our limited resources. the basel committee also recognizes the importance of these issues for the non - g10 countries and is working toward providing the training and other types
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than the national average - and hispanic families have been affected the most. 2 this is largely because on average, hispanic households spend a larger share of their budgets on items most affected by the recent high inflation. 1 / 5 bis - central bankers'speeches the inflation onion the sources of high inflation are many and complex, and they stretch across the globe. nearly all economies are experiencing unusually high rates of inflation. to better understand how that happened and what it portends, it is useful to think of inflation in terms of three distinct layers of an onion. in this analogy, the onion's outer layer consists of prices of globally traded commoditiessuch as lumber, steel, grains, and oil. they have experienced a surge in demand as the global economy has rebounded from the pandemic downturn. in addition, russia's war on ukraine and the resulting actions have caused energy prices to soar. these higher costs get passed on as higher prices for consumers. i am sure everyone in this room has been forced to manage skyrocketing costs on important supplies over the past two years. the middle layer of the inflation onion is made up of products - especially durable goods like appliances, furniture, and autos - that have been affected by severe supply - chain disruptions. many of you have also had first - hand experience with the impact of shutdowns and supply - chain bottlenecks. there haven't been enough inputs to produce products, and not enough products to sell - all at a time when demand has been skyhigh. many of you have also had customers lining up at your doors - but not enough products in stock. this imbalance between supply and demand has contributed to large price increases. to give some examples, prices for furniture rose over 13 percent last year, new cars were up nearly 12 percent, and used vehicles skyrocketed an astounding 50 percent. the innermost layer of the onion consists of underlying inflation, which reflects the overall balance between supply and demand in the economy. therein lies our biggest challenge. prices for services have been rising at a fast rate as the economy has recovered from the recession. in particular, rents for new leases have climbed rapidly. and labor shortages are everywhere, leading to higher labor costs. indeed, inflation pressures have become broad - based across a wide range of goods and services. good news and bad news what does the future hold? i will start with some good news. first, prices of many commodities
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aspx? prid = 1693907 support the businesses and individuals during the turbulence. the rbi's measures to provide liquidity support to the economy helped ease the funding constraints faced by financial markets and enabled them to continue their operations and meet their financial obligations, thereby supporting economic activity. the government β s push for providing relief to weaker sections and hardest hit sectors of the economy ensured that their immediate concerns were addressed. the following year, i. e., in fy22, the indian economy started to recover despite the omicron wave of january 2022. consequently, output in fy22 went past its pre - pandemic level in fy20 7, with the indian economy staging an impressive recovery. just as india and the world were expecting to recover from the pandemic, the geopolitical upheavals in europe exacerbated existing pandemic related stress disrupting the commodities markets in particular. the turmoil led to increased prices and volatility in fuel, food grains, fertilizers, natural gas and metal prices, leading to a worldwide surge in inflation. the impact on commodities market can be gauged from the fact that the year - on - year growth in the prices as of march 2022, was 400 % for natural gas, 250 % for coal, 76 % for crude, 30 % for food and approximately 120 % for fertilizers 8. these increased prices led to multi - decade high inflation in many advanced economies. the inflation reached 10 % in euro area, germany, and uk 9. in india also, inflation reached 7. 8 % in april 2022, before easing to 5. 7 % in december 2022 10. central banks across economies led by us fed reserve responded with synchronised policy rate hikes to curb high inflation. since may 2022, us has hiked policy rates by 450 bps, while uk and the eu have increased rates by 300 bps. the conflict in europe necessitated a revision in expectations for economic growth and inflation in fy23. despite the downward revision, the growth estimate for fy23 for india is higher than for almost all major economies. imf estimates india to be one of the top two fast - growing significant economies in 2022. despite protracted global headwinds and tighter monetary conditions, india is still expected to display a healthy data from ministry of statistics and programme implementation, available at https : / / www. mosp
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##i. gov. in / data economic survey 2022 - 23 imf, economic survey 2022 - 23 minutes of monetary policy committee dec - 22, feb - 23 growth and it is a testament to india β s underlying economic resilience and of our ability to recoup, renew and re - energise the growth drivers of the economy. the first advance estimates ( fae ) released by the national statistical office ( nso ) on january 6, 2023, placed india β s real gross domestic product ( gdp ) growth at 7. 0 per cent year - on - year ( y - o - y ) for 2022 - 23, driven by private consumption and investment. bank credit growth ( y - o - y ) stood at 16. 8 per cent in december 2022 as compared with 8. 4 per cent a year ago. aggregate deposits increased by 10. 3 per cent ( y - o - y ) in december 2022 as compared with 9. 6 per cent a year ago, led by 13. 2 per cent growth in term deposits 11. the government has continued on the path of fiscal consolidation in the union budget 2023 - 24 by reprioritising expenditure mix. the fiscal deficit is estimated to be 6. 4 % for the current fiscal and is likely to fall to 5. 9 % in the next fiscal. tax revenues have remained buoyant with monthly gst collections crossing βΉ1. 5 lakh crore in january 2023 12. this makes india the fastest - growing economy in the world and today we are referred to as β bright spot on a dark horizon β. to conclude the first part of my talk, i would say that, indeed, amidst the challenges and uncertainties prevailing over the past three years, indian economy and financial system has shown remarkable resilience and strength. new horizons, partnerships and priorities moving on, let me focus on the transformative journey of indian banking sector during past few years and specially during covid period and how it is poised for supporting the indian growth story. the last decade has witnessed significant penetration of banking in the country. under pradhan mantri jan dhan yojana ( pmjdy ), 48. 20 crore beneficiary accounts have been opened so far with outstanding balance of βΉ1. 89 lakh crore in these accounts 13. as of june 2022, there are more than 1. 6 lakh bank branches translating to approximately 15 branches per 1 lakh of
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zeti akhtar aziz : unlocking finance, expanding impact keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia ( bank negara malaysia ), at the responsible finance summit β unlocking finance, expanding impact β, sasana kijang, kuala lumpur, 30 march 2016. * * * it is my distinct honour and pleasure to welcome you to malaysia and to this responsible finance summit for 2016, with the theme " unlocking finance, expanding impact ". the theme gives strong recognition to the essential role of finance in driving sustainable development and growth in the world today. it is now almost a decade since the eruption of the global financial crisis. despite the challenges, much progress has been made to forge a vision for a stronger post - crisis world. whilst having to strike a balance between pursuing financial stability and the potential increased costs to financial intermediation, efforts have been made through the global financial reforms towards more sustainable financial systems. this includes the recalibration of financial regulations to curb tendencies for excessive leveraging, strengthened regulatory and supervisory systems that are forward looking and responsive to risk, as well as provisioning standards that reduce procyclicality and that restrain the build - up of risks. in addition, advancing consumer protection, furthering financial education and literacy as well as improving access to financial services have remained important long - term items on the agenda. in tandem with these efforts to strengthen financial stability, the role of finance is also being re - examined to enhance its positive impact. this entails focusing our sights on the path ahead, towards re - building a global financial architecture that will facilitate and secure our economic prospects. with the considerable benefit of hindsight, we now know that finance, if not anchored to the aim of creating sustainable value in the real economy, will become inherently unstable and destabilising to the ultimate goals of greater shared prosperity. there is thus a compelling need for finance to have a greater role in shaping responsible behaviour that underpins a stable and well - functioning economy, and advances the goals of a progressive society and sustainable environment. this is the underlying objective of responsible finance. of significance, aligning business practices towards responsible finance entails a paradigm shift away from the conventional thinking of finance - the most important distinction being the need to recognise and appreciate that responsible finance delivers value by focusing on its ultimate outcomes, rather than its immediate returns. responsible finance at its core strives to serve wider objectives that is consistent with,
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seated differences. 1 / 4 bis - central bankers'speeches the digital revolution is expected to increase our labour productivity by 30 % and create up to 500, 000 jobs by 2025. however, the reconfiguration also poses challenges. the need for specialised skills can lead to a widening talent gap, if left unaddressed. already, 51 % of firms surveyed by bnm faced difficulty in hiring workers, largely due to mismatches of skills for the mid and high - skilled segments1. what does this mean for us? looking ahead, the local and global outlook means organisations need to embrace the'new normal'by adopting new business models to address overall productivity and challenges at work. at its core, attracting and nurturing the right talent is crucial for any organisation of the future. thus, it is critical to begin thinking beyond policies for short - term recovery and start the task of building a future of work that is safer, fairer and greener. " building back better " calls for increased policy coherence, particularly between economic employment and social policies, and a whole - of - society approach. my remarks today seek to explore three strategies on how we may futureproof our talent workforce : 1 ) equipping the workforce with the right skills ; 2 ) employing a " good jobs strategy " ; and 3 ) strengthening collaboration among ecosystem partners. equipping the workforce with new skillsets that are relevant and practical for future needs with greater adoption of technology, in - demand skills across jobs in malaysia will shift over the next few years. the skills gaps will continue to widen. by 2025, half of all employees will need reskilling. even for workers who remain in existing roles, 40 % of core skills will need to change to remain relevant. a sizeable number of jobs will be replaced or become obsolete. this means individuals need to continuously learn new skills to be indispensable and grasp new opportunities. this means access to comprehensive upskilling and learning infrastructures are essential, whether at an individual, organisation or industry - wide level. and this means, lifelong learning is a must for everyone in the workforce. in the financial sector, we too face this challenge. recognising the importance of equipping talents with relevant skillsets, the bank and the financial industry are pursuing several initiatives on this front. they include : the development of an industry - driven framework that serves as a single point of reference on future skills and career development pathways
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peter praet : the european central bank's monetary policy - past and present speech by mr peter praet, member of the executive board of the european central bank, at the febelfin connect event, brussels / londerzeel, 16 march 2017. * * * in recent years it has been often said that the ecb has become the β only game in town β for stabilising the euro area economy. as governments have had to consolidate their fiscal positions, there has been an unprecedented onus on monetary policy to support aggregate demand. the ecb has responded to this challenge and acted decisively to secure price stability in face of an economic and financial crisis unparalleled in post - war history. but this role, and the unconventional measures we have adopted to execute it, has inevitably put monetary policy more in the spotlight. we are facing intense scrutiny as to how our policy works, its necessity and the side effects it causes. so what i would like to do in my remarks is, first, to explain the current monetary policy of the ecb and its evolution during the crisis. the unconventional measures we have deployed, such as negative rates and asset purchases, are the outcome of a protracted crisis that has unfolded in multiple waves β one that has both worsened the economic situation facing monetary policy and constrained the instruments we have available to respond to it. i will then go on to describe how these unconventional measures are working to ease financing conditions for firms and households, especially through the bank lending channel, and ensure a sustained recovery for the euro area economy. finally, i will touch on the side effects of our measures on the banking sector, and how they can be addressed to ensure a continued, robust transmission of our monetary policy. while my focus will be on what monetary policy has achieved during the crisis, it is also important to underline what we cannot do : central banks cannot remain the β only game in town β indefinitely. monetary policy can bring output back to its potential level, and it may even be able to affect that potential by unwinding hysteresis effects, but it cannot durably raise long - term growth β which was on a declining trend even before the crisis. that requires further, determined progress with structural and institutional reforms. the phases of the crisis in 2008 the global economy faced a crisis caused by the coincidence of two trends. the first was the bout of over - optimistic expectations which took hold in several advanced economies in the pre -
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where further research is required. i will conclude by reiterating one aspect of the low interest rate and low productivity growth problems that i have mentioned previously β the fact that, for several years, the fed has been close to being β the only game in town, β as mohamed el - erian described it in his recent book. 5 but macroeconomic policy does not have to be confined to monetary policy. certain fiscal policies, particularly those that increase productivity, can increase the potential of the economy and help confront some of our longer - term economic challenges. while there is disagreement about what the most effective policies would be, some combination of improved public infrastructure, better education, more encouragement for private investment, and more effective regulation all likely have a role to play in promoting faster growth of productivity and living standards. by raising equilibrium interest rates, such policies may also reduce the probability that the economy, and the federal reserve, will have to contend more than is necessary with the effective lower bound on interest rates. 1 views expressed are mine and are not necessarily those of the federal reserve board or the federal open market committee. 2 see stanley fischer ( 2016 ), β why are interest rates so low? causes and implications, β speech delivered at the economic club of new york, new york, october 17. 3 see janet l. yellen ( 2016 ), β macroeconomic research after the crisis, β speech delivered at β the elusive β great β recovery : causes and implications for future business cycle dynamics, β 60th annual economic conference, held at the federal reserve bank of boston, boston, october 14. 4 see, for example, olivier blanchard, eugenio cerutti, and lawrence summers ( 2015 ), β inflation and activity β two explorations and their monetary policy implications ( pdf ), " imf working paper wp / 15 / 230 ( washington : international monetary fund, november ) ; and dave reifschneider, william wascher, and david wilcox ( 2015 ), β aggregate supply in the united states : recent developments and implications for the conduct of monetary policy, " imf economic review, vol. 63 ( march ), pp. 71 β 109. 5 see mohamed a. el - erian ( 2016 ), the only game in town : central banks, instability, and avoiding the next collapse ( new york : random house ). 2 / 2 bis central bankers'speeches
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may 2009 the board hosted a community development finance summit to discuss promising strategies for cdfis facing challenges in the current crisis. the federal reserve bank of san francisco has conducted research on these topics through its center for community development investments, and the federal reserve bank of boston has worked with key partners to identify and promote best practices. are purchasing homes, which might otherwise sit vacant, from loan servicers who take possession of foreclosed properties. these homes are repaired and then sold or rented to families. because foreclosures and resulting vacancies impose costs on neighborhoods and local governments, facilitating occupancy can help maintain neighborhood stability. 16 these efforts are difficult, time consuming, and challenging to finance β exactly the kind of thing in which cdfis specialize. cdfis and other groups across the country are working hard to stabilize neighborhoods because they do not want to lose the progress attained by years, and sometimes decades, of investment in low - and moderate - income communities. indeed, this community stabilization work is important for the overall economic recovery. healthy and vibrant neighborhoods are a source of economic growth and social stability. cdfis and other community groups are already responding to the evident needs, but they will require many willing partners to ensure success in the long run, including governments, mortgage servicers, and mainstream lenders. strong community organizations can accomplish a great deal, but their capacity will be severely limited without the willing partnership of many other institutions. conclusion as the effects of the financial crisis and the resulting economic downturn have spread, there has been increased focus on preserving the gains made in low - and moderate - income communities over recent decades. accomplishing that objective requires preserving the institutions that helped build these communities. without strong cdfis, attracting investments and capital to rebuild and revitalize communities would be even more difficult. economic recovery, like economic development, is a bottom - up as well as a top - down process. through their work at the community level, cdfis, together with other community development organizations, can help build a sustainable recovery for all of us. in particular, recent research points to the adverse spillover effects of foreclosures on local property values. see, for example, zhenguo lin, eric rosenblatt, and vincent w. yao ( 2009 ), " spillover effects of foreclosures on neighborhood property values, " journal of real estate finance and economics, vol. 38 ( 4 ), pp. 387
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have certainly been important. another factor is the special international status of the u. s. dollar. because the dollar is the leading international reserve currency, and because some emergingmarket countries use the dollar as a reference point when managing the values of their own currencies, the saving flowing out of the developing world has been directed relatively more into dollardenominated assets, such as u. s. treasury securities. the effects of the saving outflow may thus have been felt disproportionately on u. s. interest rates and the dollar. for example, the dollar probably strengthened more in the latter 1990s than it would have if it had not been the principal reserve currency, enhancing the effect on the u. s. current account. most interesting, however, is that the experience of the united states in recent years is not so nearly unique among industrial countries as one might think initially. as shown in table 1, a number of key industrial countries other than the united states have seen their current accounts move substantially toward deficit since 1996, including france, italy, spain, australia, and the united kingdom. the principal exceptions to this trend among the major industrial countries are germany and japan, both of which saw substantial increases in their current account balances between 1996 and 2003 ( and significant further increases in 2004 ). a key difference between the two groups of countries is that the in pointing out the possible effects of strong global saving on real interest rates, i do not mean to rule out other factors. for example, a lowering of risk premiums resulting from increased macroeconomic and monetary stability has likely played some role. greenspan ( 2005 ) notes a strong correlation between u. s. mortgage debt and the u. s. current account deficit. countries whose current accounts have moved toward deficit have generally experienced substantial housing appreciation and increases in household wealth, while germany and japan - whose economies have been growing slowly despite very low interest rates - have not. for example, wealthto - income ratios have risen since 1996 by 14 percent in france, 12 percent in italy, and 27 percent in the united kingdom ; each of these countries has seen their current account move toward deficit, as already noted. by contrast, wealth - to - income ratios in germany and japan have remained flat. the evident link between rising household wealth and a tendency for the current account to shift toward deficit is consistent with the mechanism that i have described today. economic and policy implications i have presented today a somewhat unconventional explanation of the high and
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##ages appear to be in a continual state of flux. rules by their nature are simple, and when significant and shifting uncertainties exist in the economic environment, they cannot substitute for risk - management paradigms, which are far better suited to policymaking. were we to introduce an interest rate rule, how would we judge the meaning of a rule that posits a rate far above or below the current rate? should policymakers adjust the current rate to that suggested by the rule? should we conclude that this deviation is normal variance and disregard the signal? or should we assume that the parameters of the rule are misspecified and adjust them to fit the current rate? given errors in our underlying data, coupled with normal variance, we might not know the correct course of action for a considerable time. partly for these reasons, the prescriptions of formal interest rate rules are best viewed only as helpful adjuncts to policy, as indeed many proponents of policy rules have suggested. * * * in summary then, monetary policy based on risk management appears to be the most useful regime by which to conduct policy. the increasingly intricate economic and financial linkages in our global economy, in my judgment, compel such a conclusion. over the next couple of days, we will have the opportunity to consider in greater detail some important changes in our economic and financial systems and their implications for the conduct of monetary policy. as always, i look forward to an engaging discussion.
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nor shamsiah mohd yunus : value based intermediation - beyond profit keynote address by ms nor shamsiah mohd yunus, governor of the central bank of malaysia ( bank negara malaysia ), at the global islamic finance forum 2018 ( giff ) " value based intermediation - beyond profit ", kuala lumpur, 3 october 2018. * * * henry ford, credited with revolutionising the american transportation industry in the 20th century, once remarked that β business must be run at a profit, else it will die. but when anyone attempts to run a business solely for profit and thinks not at all of the service to the community, then also the business must die, for it no longer has a reason for existence β. nearly a hundred years since, these words of wisdom remain true. perhaps, even more so now than ever. indeed, we have witnessed time and again, episodes of excessiveness, and the sole and unchecked pursuit of profits, that have led to global financial crises. the theme of this conference, β value based intermediation β beyond profit β, is therefore a fitting reminder of the role of finance, and islamic finance in particular, in helping build a more resilient and sustainable future. in the past half century, the world economy expanded sixfold, despite experiencing the worst and most expensive financial crisis. average per capita income more than doubled to about usd11, 000, compared to only about usd5, 000 in 1967. people are living longer, with better quality of life, greater access to basic necessities, improved health and medical care, and better education. despite such progress, we are faced with daunting challenges. these include harmful effects of environmental degradation and climate change that threaten global prosperity, stability and sustainable living. socioeconomic challenges such as rising inequality and lack of affordable housing are affecting the well - being of many communities. at around 225 % of global gdp, global debt is at a record high level and may leave a heavy burden for future generations to bear. it is increasingly clear that economic prosperity in the long run cannot exist without social equity and environmental responsibility. while the governments of 150 countries are committed to realising the united nation β s 17 sustainable development goals ( sdgs ) by 2030, this must be a shared responsibility. the private sector has a key role to play β a role, with finance at its centre, that has yet to live up to its full potential. with much at stake,
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duvvuri subbarao : financial literacy and financial inclusion are integral to each other inaugural remarks by dr duvvuri subbarao, governor of the reserve bank of india, at the india - oecd - world bank regional conference on β financial education β, new delhi, 4 march 2013. * * * rbi partnership with oecd and world bank 1. rbi is delighted to have this opportunity to partner with two premiere international institutions β the oecd and the world bank β on this very important conference on financial education. 2. hearty welcome to all the delegates from around the world and across india. rbi and financial literacy 3. why is the reserve bank β a central bank, whose core concern is maintaining price stability and supporting growth β in the forefront on a quintessentially development issue like financial literacy? β’ because of 2 reasons β’ first reason β’ rbi has a wider mandate than a typical central bank. β’ historically rbi has played an important developmental role in the financial sector. β’ the lead bank scheme initiated in 1969 whereby a bank is designated in every district of the country as the lead bank to coordinate the flow of credit from all banks in the district consistent with a district credit plan. β’ priority sector lending β whereby banks are mandated to lend a minimum prescribed portion of their total lending to designated priority sectors. rbi has provided innovative leadership on financial inclusion initiatives. the reserve bank is in the forefront of financial inclusion and financial literacy campaigns because we believe that a banking regulator, particularly in a large developing economy like india, has a unique advantage and opportunity as also a distinct obligation to further these goals. goi and rbi work together. financial literacy and financial stability why is rbi in the forefront? ( second reason ) there is another important reason why central banks, not only in emdes, but even in advanced economies, are getting to play a role in financial literacy. this reason stems from the experience of the 2008 / 09 global financial crisis. β’ many root causes and many proximate causes for the crisis. β’ one of the root causes is the lack of understanding of financial matters that led sub - prime borrowers into contracting teaser rate loans. β’ it is indeed possible to argue that the sub - prime problem would not have grown to explosive proportions that it did if people had been more financial literate. bis central bankers β speeches β’ bernanke : β helping people better understand how to borrow and save wisely and how to build personal wealth is one of
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presently enjoying may not be sustained in the future when the interest rate cycle reverses, whenever that happens in future. external benchmark linked loans will be repriced much faster than deposits contracted during the peak of the interest rate cycle resulting in pressure on nims and eventually profitability. therefore, apart from interest rate risk in the trading book, banks must be mindful of the interest rate risk in the banking book as well. on the liabilities side, banks must endeavour to proactively manage the pricing and duration of their deposits while trying to diversify the sources and optimising the product mix of deposits. excessive reliance on bulk deposits should be avoided as these are more sensitive to interest rate movements and perpetuate concentration risk while also eroding earnings. business models 2 / 5 bis - central bankers'speeches as recent global events have demonstrated, sometimes, even business models once perceived as safe can fail. therefore, banks need to remain alert to the risks inherent in their business models and mitigate them in a timely manner. in good times like this, financial institutions must review their growth plans while putting in place adequate risk management systems to handle the emerging risks. it is imperative for boards of banks and nbfcs to fix suitable sectoral and sub sectoral exposure limits and monitor them closely to avoid any sectoral concentration, adverse selection or dilution of underwriting standards. the growing collaboration between banks, nbfcs, and fintechs is driving innovation in products, services, and business models. an important consideration is the cautious adoption of model - based lending through analytics. banks and nbfcs should exercise caution in relying solely on preset algorithms, ensuring that these models are robust, regularly tested, and recalibrated as needed to maintain robust underwriting standards. operational resilience in view of the ever - increasing adoption and usage of digital channels by members of public, it has become imperative for banks and payment system participants to ensure uninterrupted availability of various online and mobile banking channels at all times. recently, there have been a few incidents of unscheduled downtimes inconveniencing several customers. it is also observed that many banks have not been spending fully, the budget earmarked for procurement of it systems and it security systems. banks have to proactively commit adequate resources for augmenting their it infrastructure, commensurate with their business plans and also monitor them for their continued availability and stability. banks and
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and no less important aim of this project is building a network which includes experts from many developed and developing countries. the exchange of experiences can be beneficial for improving statistical capacity in household surveys and fostering convergence towards common standards. let me conclude with the words of luigi einaudi which have often been quoted by those who have succeeded him as governors of the bank of italy. all policymakers, all institutions should base their modus operandi on the principle β conoscere per deliberare β ( know, then decide ). 1 it expresses the need for a policy based both on knowledge and data, as can be derived from microsimulation model estimations when analysing alternative scenarios and policy measures. 2 einaudi would certainly have approved the efforts we are all making in pursuing this current project. he would also have appreciated the presence of a number of important italian institutions here today. it is important that the bank of italy is not alone in this endeavour. cooperation with the italian ministry of foreign affairs and international cooperation, the italian agency for development cooperation, the italian national institute of statistics and the italian national institute of health means fostering dialogue among different disciplines and recognizing the multidimensional nature of human well - being, the measurement of which is the aim of household surveys. yet it also testifies to the commitment of leading italian public institutions to working together to strengthen our cooperation with developing countries. l. einaudi, prediche inutili, opere di luigi einaudi, volume ii, einaudi, turin, 1964 ( first edition 1956 ). see for example ando and nicoletti altimari, β a microsimulation model of demographic development and households β economic behaviour in italy β, temi di discussione ( working papers ), 533, 2004, and michelangeli and pietrunti, β a microsimulation model to evaluate italian households'financial vulnerability β, questioni di economia e finanza ( occasional papers ), 225, 2014.
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partnership for capacity development in household surveys for welfare analysis launch event remarks by valeria sannucci, deputy governor of the bank of italy rome, june 19 2017 good morning ladies and gentlemen, on behalf of governor visco, i am pleased to welcome you all to the bank of italy in rome. it is indeed an honour today for the bank of italy to host the distinguished representatives of the world bank and of all the institutions involved in this important memorandum of understanding ( mou ). as part of its legal mandate, the bank of italy currently promotes technical cooperation with central banks and other institutions in the emerging countries. through staff training activities and consultancy, the bank aims at helping to improve the institutional capacities of the beneficiary institutions, establishing relationships that strengthen reciprocal ties. moreover, the bank is italy β s representative in numerous international organizations and institutions, such as the world bank, cooperating with them in various ways, with the ultimate purpose of promoting international financial stability and a smooth functioning of the payment system. the partnership we are launching today is thus an integral part of this more general context. the cooperation between the world bank and the bank of italy in the field of statistics was not born today. in october 2015 another mou between these two institutions was entered into. on that occasion, several areas of collaboration were pointed out : improving the availability, quality and cost - effectiveness of data production to inform policy making in low and middle income countries ; engaging in research on subjects of common interest ; promoting the harmonization of household surveys ; and engaging other entities, such as research institutions and local academia, to give additional support to the abovementioned activities. in this framework, our institutions co - founded the center for development data ( c4d2 ) in rome, with which we have been working for the past 2 years. let me now share with you my personal satisfaction in having contributed to launching a project that has organized such a wide and knowledgeable team of institutions which can significantly improve the statistical data for welfare analysis in developing countries and in our countries too. contributing to the achievement of a world free of poverty is the ultimate goal for which all economists should bear responsibility. to this end, economic growth, although necessary, may not be a sufficient condition for everyone to make progress. nowadays there is great concern about the possible effects of technical progress and globalization on inequality. both in developed and developing countries, political institutions must constantly monitor the different segments of their populations to ensure that no one is left behind
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a long - awaited pickup in the growth of labor productivity began to show through more strongly in the data ; and this accelerated increase in output per hour has enabled firms to raise workers β real wages while holding the line on price increases. gains in productivity usually vary with the strength of the economy, and the favorable results that we have observed during the past two years or so, when the economy has been growing more rapidly, almost certainly overstate the degree of structural improvement. but evidence continues to mount that the trend of productivity has accelerated, even if the extent of that pickup is as yet unclear. signs of major technological improvements are all around us, and the benefits are evident not only in high - tech industries but also in production processes that have long been part of our industrial economy. those technological innovations and the rapidly declining cost of capital equipment that embodies them in turn seem to be a major factor behind the recent enlarged gains in productivity. evidently, plant managers who were involved in planning capital investments anticipated that a significant increase in the real rates of return on facilities could be achieved by exploiting emerging new technologies. if that had been a mistake on their part, one would have expected capital investment to run up briefly and then start down again when the lower - than - anticipated rates of return developed. but we - 5have instead seen sustained gains in investment, indicating that hoped - for rates of return apparently have been realized. notwithstanding a reasonably optimistic interpretation of the recent productivity numbers, it would not be prudent to assume that even strongly rising productivity, by itself, can ensure a non - inflationary future. certainly wage increases, per se, are not inflationary, unless they exceed productivity growth, thereby creating pressure for inflationary price increases that can eventually undermine economic growth and employment. because the level of productivity is tied to an important degree to the stock of capital, which turns over only gradually, increases in the trend growth of productivity probably also occur rather gradually. by contrast, the potential for abrupt acceleration of nominal hourly compensation is surely greater. as i have noted in previous appearances before congress, economic growth at rates experienced on average over the past several years would eventually run into constraints as the reservoir of unemployed people available to work is drawn down. the annual increase in the working - age population ( from 16 to 64 years of age ), including immigrants, has been approximately 1 percent a year in recent years. yet employment, measured by the count of persons who are working rather than by the count of
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core inflation ) has softened by around 130 basis points from its recent peak in january 2023. although it is still elevated at 4. 9 per cent, this steady easing of core inflation over the last five months is indicative of the ongoing transmission of monetary policy. 14. looking ahead, the spike in vegetable prices in july is starting to see a correction, led by tomato prices. new arrivals of tomatoes in mandis are already softening prices, coupled with proactive supply management in the case of onions. we expect to see an appreciable slowdown in vegetable inflation from september. meanwhile, the prospects for kharif crops have improved, thanks to the progress of the monsoon in july, although the cumulative rainfall has again moved into the deficit territory. 6 the outlook for cereal prices has accordingly brightened, supported by active supply side interventions. sudden weather events, el nino conditions and renewed geopolitical tensions, however, impart uncertainty to the food prices outlook. as i noted in my monetary policy statement on august 10, 2023, given the likely shortterm nature of the vegetable price shocks, monetary policy can await the dissipation of the first - round effects of such shocks that may produce short - lived spikes in headline inflation. we will remain on guard to ensure that second order effects in the form of generalisation and persistence are not allowed to take hold. the frequent incidences of recurring food price shocks pose a risk to anchoring of inflation expectations, which has been underway since september 2022. we will remain watchful of this also. the role of continued and timely supply side interventions assumes criticality in limiting the severity and duration of such shocks. in these circumstances, it is necessary to be watchful of any risk to price stability and act appropriately and in time. we remain firmly focused on aligning inflation to the target of 4. 0 per cent. 6 the cumulative south - west rainfall 7 per cent below normal as on august 21, 2023. building blocks for a sustainable future 15. having provided a snapshot of the current context, i would now like to turn to the certain thrust areas that can propel india forward over the next 25 years. the potential is huge for india to raise its growth trajectory and improve the general well - being of the people. in this context, i would like to focus on six key areas that can provide the required growth momentum. they are ( i ) agriculture ; ( ii ) manufacturing ; ( iii ) services ; (
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ewart s williams : economic outlook 2011 address by mr ewart s williams, governor of the central bank of trinidad and tobago, on the occasion of a panel discussion at the trinidad and tobago chamber of industry and commerce, port - of - spain, 14 january 2011. * * * salutations : the honourable stephen cadiz members of the head table distinguished ladies and gentlemen first, thanks for the invitation. 1. before talking about the 2011 outlook, a brief word on 2010. notwithstanding a slight pick - up in the last quarter, for the year as a whole the preliminary data shows that the economy was flat β no growth. this follows a decline of some 3 per cent in 2009. what this means is that while many economies recovered from the global recession of 2008 β 2009, the caribbean, including trinidad and tobago was not so fortunate. 2. the energy sector continued to register positive growth but activity in the nonenergy sector declined for the second consecutive year. for the period 2009 β 2010, activity in the non - energy sector declined by a cumulative 10 per cent. now, the non - energy sector accounts for 97 per cent of total employment. if these estimates are correct, therefore, it is more than likely that there is a significant increase in unemployment. 3. the economy and the population cannot afford a third year of economic stagnation and therefore, in my brief statement, i have opted not to present a passive analytical outlook but to identify the many positive characteristics that we could exploit to ensure that we break the current economic malaise. 4. it is now generally accepted that the global recovery in 2011 will be stronger than last year. this is good news for our energy sector which could expect an increase in demand and in prices for oil and petro - chemicals, in particular. the outlook with respect to gas is less clear β although gas prices faced a sudden jump recently. unfortunately, the short term outlook is for continued reduction of oil production which has now fallen below 100, 000 barrels per day. there is, however, scope for some growth in petro - chemical output following the addition of new productive capacity. we therefore project that energy sector value added would increase by 3. 2 per cent in 2011, slightly more than last year. 5. as noted above, a recovery in the non - energy sector is urgently needed ; and while any pick - up in regional demand will help, that is not assured, the jolt must come from domestic demand. in my view, many of
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##r / crd4 ). where the primary responsibility for national macroprudential policy rests with the designated national authorities, the ssm regulation allows the ecb to call for stricter national measures based on its own independent analysis. as with micro - prudential supervision, the benefit of ecb β s oversight role is not only in the enhanced credibility, but also in the broader cross - country perspective inherent in the ssm β s decision - making. this helps ensure that macroprudential policies are implemented in a consistent manner, thereby safeguarding the integrity of the eu β s single rule - book. at the same time, the additional oversight by the ecb limits the risk of the so - called inaction bias to ensure that systemic risks, where identified, are addressed in a timely fashion. furthermore, the macro - prudential tools allow targeted attenuation of national credit cycles, thereby also limiting heterogeneity in economic cycles within the euro area. this, in turn, helps support more balanced growth in the region and helps monetary policy to remain focused on the euro area aggregates. finally, let me admit that i have mainly focused on the banking union β s impact largely from the perspective of a euro - area member state. the benefits of financial stability in the euro area will certainly be felt also outside its borders, but the overall balance of the banking union β s costs and benefits may differ between its members and non - members. and having the banking supervisory and resolution regime fully effective only in the euroarea β at least in the very beginning β would mean that the institutional arrangements do not fully correspond to the reality that banks can operate across national borders in europe. the banking union is open to members outside the euro area, but so far none have opted to join in. should this remain so, the borders of the banking union would slice across our current, closely integrated financial markets in the nordic countries. this raises the question how this level of financial integration can be sustained if the institutional supervisory and crisis resolution arrangements remain separate? although our current institutional set - up may not be optimal, we also have in the nordic region long traditions of cooperation in financial supervision. if anything, the banking union should give us incentives to strengthen this cooperation and find collaborative working arrangements that help us to make the most of the banking union β s benefits also at its borders. the fact that most of us share the same eu - wide regulatory rule book ( crr / crd
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the primary responsibility to ( a ) provide security β internal and external to its citizens ( b ) maintain law and order ( c ) dispense quick and fair justice and enforce contracts ( d ) build physical infrastructure ( e ) provide basic social services such as education, health and water supply ( f ) implement good governance ( g ) maintain macro economic stability, ( h ) regulate the markets where there are monopolies, externalities, economies of scale ( i ) build social safety nets for the poorest and vulnerable segments of the population. markets need government and government needs markets. the state is not a substitute for the market but a critical complement and that government action is essential to ensure that development process is inclusive and the benefits of growth are not pre - empted by a small class of elite in the country. private sector, on the other hand, has the capacity and ability to produce, distribute and trade goods and services in the economy efficiently and at least cost. there is hardly any justification for the government or the bureaucrats to be running businesses. the record of public sector enterprises and nationalized commercial banks in pakistan for the last 30 years speaks volume of the damage that has been inflicted on our economy. to just give you one example, if 50 percent of the allocation of rs. 100 billion which was made last year to bear the losses of the public sector corporations and enterprises was diverted to education, health and other social services, imagine how much it would have helped the common man in this country. profit making is not dirty provided it is made through competition, hard work, entrepreneurship, in an environment where there is a level playing field for all economic sectors, where the rules of game are applicable to every one, where implementation of policies and regulations take place across board, where taxes and other government dues are paid on time and loans are repaid without any write off. under such circumstances private enterprises generate production, employment, opportunities and create income in the economy. this will only happen when they make profits and invest those profits in expansion of their existing businesses or creating new businesses. economic growth takes place through this investment, incomes rise and the countries get prosperous. those of you who still believe in old socialistic ways of thinking in which profits were condemned as socially exploitative should shed this thinking as this is flawed and empirically incorrect. privatization, deregulation and liberalization are the key instruments through which private sector can flourish and thrive. those of you who believe that governments should create jobs
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zeti akhtar aziz : vision of asia speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the official monetary and financial institutions forum ( omfif ) β β vision of asia award acceptance speech β, london, 30 june 2010. * * * it is my great honour to be here today to receive this vision of asia award from the official monetary and financial institutions forum ( omfif ). i would like to thank lord desai, for his generous introduction and the advisory board of omfif for this recognition. as a policy maker from an emerging economy in asia β for almost three decades β it has been both exhilarating and most rewarding. while being challenged to the limit, in particular, during the asian financial crisis, the asian economies have now emerged stronger and more resilient. this decade has seen a dramatic change in the nature of the globalisation process. as this process intensifies, asian economies have demonstrated their flexibility to adjust and respond to the opportunities and challenges that have emerged. the initial wave of globalisation was in the form of trade. this was followed by the globalisation of corporations and more recently by the globalisation of financial flows. the recent global financial and economic crisis has called for the globalisation of policy given the limits for policy at the national level and the need to address cross border developments that have implications on the domestic financial system and hence the domestic economy. the global economy and the international financial system have entered a new era. a fundamental transformation of the global landscape is taking place. arising from the growing disparity in growth performance between the developed and emerging world, increasingly the economic power in the global economy is becoming more dispersed. the organisation for economic cooperation and development ( oecd ) estimates the emerging economies β share of global economic output will exceed that of the developed world by 2011. by 2030, the emerging economies are expected to account for 60 % of total world output. the benefits of globalisation are thus becoming more balanced. in 2000, the emerging economies accounted for 80 % of the world population but only generated 40 % of global income. by 2030, it is estimated that 85 % of the world population from the emerging economies will generate 60 % of the income. this is reinforced by increased trade between emerging economies. while world trade has quadrupled between 1990 to 2008, trade flows between emerging economies increased ten - fold. asia is very much part of this global shift
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agustin carstens : interview in central banking journal interview with mr agustin carstens, governor of the bank of mexico, in central banking journal, united kingdom, conducted by ms claire jones on 8 october 2010, washington dc. this article was originally published in : central banking journal, volume 21, number 2. for more information contact : claire jones, deputy editor ( cjones @ centralbanking. co. uk ) or visit : http : / / www. centralbanking. com / static / central - banking. * * * the governor of the bank of mexico tells claire jones about how the central bank is improving its capacity to safeguard financial stability. you have had several spells working at the bank of mexico. i was wondering if you could tell me about how the central bank has changed over your career. it has changed dramatically. i started in the early 1980s. then the concept of the central bank was to be a kind of black box where there was little communication with the market. we only published data on reserves three times a year, for instance. there was a view that the markets didn β t know how to administer the information. the central bank was also fully dependent on the government. we had virtually no independence. now it β s almost the opposite. we have complete autonomy. we β ve moved from being a very interventionist central bank, in terms of the way we conducted monetary policy, to a market - orientated monetary policy with a fully fledged flexible exchange rate regime. and a very important component of this is having a precise communications strategy. since you β ve taken over what has changed? going back to communications, we β ve tried to be clearer in expressing the motivations for our policy decisions. we β ve tended to keep rates on hold this year, but still we β ve tried to be more precise in saying why that β s been the case. we β ve also tried to express the issues that are concerning us. the market has appreciated this, judging by the feedback we β ve had from analysts and commentators. we β ve also done an internal restructuring, the most important feature of which is the creation of a department which will concentrate fully on financial stability. we β ve increased our resources there. can you tell me a little bit more about the new department? the department will have around 60 or 70 people and a very important part of its work will be to gather information and organise this in a way that will better enable us to see whether firms are comply
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a negative output gap is observed. it is reasonable to expect that the expansion of economic activity will continue during the remainder of this year and in 2017. in fact, the anticipated upturn of industrial output in the united states, if materialized, would contribute to a more balanced economic recovery in mexico through its impact on manufacturing output and exports. in this respect, it is worth noting that there are some early signs of a revival of production in the manufacturing industry, and that this sector β s external sales, though still sluggish, seem to have stopped declining. on the other hand, the expansion of gdp is likely to remain below potential and downside risks persist. it is true that economic growth in mexico has been low vis - a - vis the population β s needs. however, the shocks which have affected the economy have to be taken into consideration for an objective assessment of its performance. in particular, it is important to take into account that the industrial sector in the united states has been in recession since early 2015, and that gdp annual growth in that country has decelerated continuously since the second quarter of that year. notwithstanding the close long - term correlation between these two aggregates and economic activity in mexico, the latter has shown resilience to this shock. the efforts of structural reform carried out in mexico in recent years are clearly an important factor behind this result. as noted previously, general inflation has shown a favorable performance. it stands at 2. 97 percent as of september of this year, thus accumulating 17 months below the 3 percent target, including 8 consecutive historical minima in 2015. the importance of these results is underlined when it is taken into consideration that since early september 2014 the peso has depreciated by some 45 percent with respect to the u. s. dollar. although depreciation of the exchange rate has had some effect on inflation, so far, the pass - through has been concentrated on the prices of merchandise, with no second round effects. general inflation is projected to increase gradually during the rest of this year towards levels slightly above 3 percent, and to fluctuate around this figure in 2017, but it should be noted that the latter is subject to some uncertainty, since the proposal to liberalize gasoline prices starting in 2017, which may affect the evolution of inflation, is still under consideration by congress. going further forward into the medium to long terms, survey - based inflation expectations remain well anchored, although still a tad above the target. while
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risks entered into and the capital adequacy of the banking sector. to complete our analysis, we use newly developed models that quantify both the stress to which the banking sector is subjected and its correlation with the macroeconomic environment. the main characteristics and conclusions drawn from these models are published for the first time today. the models will be presented in detail in a series of snb publications. the analysis presented in the financial stability report indicates that the banking sector is stable. in 2003 it was able to raise its profits substantially in spite of a mixed macroeconomic and financial environment. thanks to these profits, banks were able to bolster their capital significantly, thus enhancing their capacity to absorb shocks. the resulting capital ratios in the banking sector are high both in historical terms and by international standards. this impression of pronounced robustness in the swiss banking sector is corroborated by the relatively low level ( in historical terms ) of the stress indicator. this is a new indicator calculated as a synthesis of different stress symptoms. the indicator considers in particular the capital ratios, profits, share prices and risk premiums on bonds in the swiss banking sector. as far as the outlook is concerned, we believe that the macroeconomic environment and the financial markets do not present any significant threat to the stability of the swiss banking system. the forecasts for 2004 point to a rebound in economic growth in switzerland and the european union along with a continuing upswing in the united states. moreover, the rise in prices on the swiss real estate market has remained moderate by both historical and international standards. it is thus unlikely that this market will see any abrupt downward adjustment - traditionally a major stress factor for the banking sector. and finally, the available indicators suggest that the major global banking sectors are also relatively robust. at present, therefore, the risk of contagion - i. e. of a crisis having repercussions on switzerland - is remote. two sources of potential stress should, however, be mentioned. first, a slowdown in the economy which, though unlikely, is still conceivable - could have negative repercussions on the quality of loan portfolios and on stockmarket prices. second, in the more likely event of a sustained economic upswing, a sharper - than - expected rise in interest rates could also worsen the quality of loan portfolios by increasing the interest burden on households and companies more than expected. analysis of the various scenarios suggests that sufficient capital is available in the swiss banking
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speech embargo 26 october 2020, 4. 30 pm the importance of good framework conditions for the swiss financial centre lugano banking day thomas j. jordanβ chairman of the governing board swiss national bank lugano, 26 october 2020 Β© swiss national bank, zurich, 2020 β the speaker would like to thank christoph hirter for his support in preparing this speech. he also thanks simone auer and alexander perruchoud, as well as snb language services. page 1 / 5 ladies and gentlemen, i am pleased that this important event can go ahead at the second attempt, despite the continuing exceptional circumstances. of course, i regret very much that the audience cannot be physically present. despite all the digital possibilities available to us now, direct contact with the general public and with business remains very important for the swiss national bank. coronavirus has not only impeded the holding of this centenary celebration, it has also had a far - reaching impact on the economy and our social interaction. i am therefore particularly pleased to have this opportunity to congratulate the ticino banking association in person on its 100th anniversary. as chairman of the snb β s governing board, i visit ticino often and have meetings with representatives of the ticino banking association on an annual basis β under normal circumstances. the snb has had good relations with your association for many years. this is not surprising, since the ticino financial centre has a long history, as this centenary anniversary proves. however, recent years have left their mark on banks and insurance companies in ticino, as elsewhere. the financial crisis, the end of banking secrecy, the tax treaty with italy and now the coronavirus pandemic have posed major challenges for many institutions. nevertheless, the ticino financial centre continues to be vitally important for employment and value added in the italian - speaking region of switzerland. i will use my speech today to focus on aspects that i believe are important for the current and future potential not only of the ticino financial centre, but of the swiss financial centre as a whole. but first, i want to talk about why a well - functioning financial centre is of value to our economy. i will start with insurance companies. insurance companies bundle risks that households or companies would otherwise have to bear themselves, or would even be unable to take in the first place. and then, there are the banks. they perform a key economic role with their core business of collecting deposits and granting loans. in doing so, they enable, for
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will support this process by cooperating with the banking industry and improving the regulatory and supervisory framework. for the supervisory authorities of the financial system, the recommendations relate to strengthening the preventive and management framework of risks and, in this regard, improvement of the legal, operational and inter - institutional cooperation infrastructure is recommended. concluding, i would like to reiterate our message : the prospects for albania β s development remain positive. the economic and financial stability, geographical position and natural resources, and integration with the european union make us optimistic about albania β s future development. i invite you all to share in this vision and work together to make it a reality. i assure you that the bank of albania, as the supervisory authority, will undertake all the necessary actions, under its scope of activity, to support the industry to successfully overcome these challenges and ensure that the sector remains well capitalised and liquid. thank you! bis central bankers β speeches
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michael c bonello : nexus of basel ii and financial stability speech by mr michael c bonello, governor of the central bank of malta, at the annual seminar of the institute of financial services ( ifs ), floriana, 14 may 2010. * * * i would first like to thank the institute for inviting me to their annual seminar, which this year focuses on the topical, but complex subject of risk, capital and financial stability after the financial crisis. my remarks will concentrate on the lessons learned and on some open questions being addressed by international standard setters. in the introduction to his recent book β good value β, stephen green, the group chairman of hsbc holdings plc, recalls his thoughts one day in april 2008 on the shores of lake como against the background of an unfolding global financial crisis. he describes that time as one of those moments in history when it seems as if the tectonic plates are shifting, striking at the roots of what we had taken for granted for a quarter of a century. in his words, β there has been a massive breakdown of trust : trust in the financial system, trust in bankers, trust in business, trust in business leaders, trust in politicians, trust in the media, trust in the whole process of globalization β all have been severely damaged, in rich countries and in poor countries alike. β when i had addressed your annual dinner in november of that same year i expressed the view that the crisis would not be over until confidence and trust were restored and the credit channel started to function again. we are not there yet. we are still confronted by the farreaching consequences of the sub - prime episode, which now include a full - blown sovereign debt crisis. it is now clear that risks had been building up over a number of years. some derived from the fact that corporate governance, risk management, market infrastructures for derivative products as well as supervisory practices and regulatory frameworks had not kept pace with the process of financial innovation. others have been associated with an overly accommodative monetary policy at the global level, particularly in the united states. there is no doubt, however, that financial regulation and supervision proved inadequate. the initial trigger of the crisis was the securitisation of sub - prime mortgages and the associated originate and distribute model. these products found ready buyers, but there were significant misaligned incentives underlying the model. there were manifest conflicts of interest, originators and brokers had limited interest in ensuring continued monitoring
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. " 18 also, to repeat myself, policies to boost productivity growth and the longer - run potential of the economy are more likely to be found in effective fiscal and regulatory measures than in central bank actions. this statement is true not only in the united states, but also around the globe. but it is not to say that monetary policy is irrelevant to the growth rate of the economy. references bernanke, ben s. ( 2005 ). β the global saving glut and the u. s. current account deficit, β speech delivered at the homer jones lecture, st. louis, april 14. β β β β ( 2012 ). β u. s. monetary policy and international implications, β speech delivered at β challenges of the global financial system : risks and governance under evolving globalization, β a high - level seminar sponsored by the bank of japan - international monetary fund, tokyo, october 14. β β β β ( 2015 ). β why are interest rates so low, part 3 : the global savings glut, " ben bernanke β s blog, april 1. clarida, richard h. ( 2017 ). β the global factor in neutral policy rates : some implications for exchange rates, monetary policy, and policy coordination, β nber working paper series 23562. cambridge, mass. : national bureau of economic research, june. dottling, robin, german gutierrez, and thomas philippon ( 2017 ). β is there an investment gap in advanced economies? if so, why? ( pdf ) β paper presented at the fourth annual ecb forum on central banking, sintra, portugal, june 27. fernald, john g. ( 2015 ). β productivity and potential output before, during, and after the great recession, β in jonathan a. parker and michael woodford, eds., nber macroeconomics annual 2014, vol. 29. chicago : university of chicago press, pp. 1 - 51. fernald, john g., robert e. hall, james h. stock, and mark w. watson ( 2017 ). β the disappointing recovery of output after 2009, β nber working paper series 23543. cambridge, mass. : national bureau of economic research, june. fischer, stanley ( 2016a ). β low interest rates, β speech delivered at the 40th annual central banking seminar, sponsored by the federal reserve bank of new york, new york, october 5. β β β β ( 2016b
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first, they can require disclosures by lenders that help consumers make informed choices. second, they can prohibit clearly abusive practices through appropriate rules. third, they can offer principles - based guidance combined with supervisory oversight. finally, regulators can take less formal steps, such as working with industry participants to establish and encourage best practices or supporting counseling and financial education for potential borrowers. in the area of disclosure, the federal reserve is responsible for writing the regulation that implements the truth in lending act ( tila ), known as regulation z. the purpose of regulation z is to ensure that lenders provide borrowers or potential borrowers with clear, accurate, and timely information about the terms and conditions of loans. the federal reserve is also authorized to write rules ; notably, the home ownership equity protection act ( hoepa ) gives the board the power to prohibit acts and practices in mortgage lending deemed " unfair " or " deceptive. " 6 both the disclosures required by tila and the rules developed under hoepa ( which is part of tila ) apply to all lenders, not just banks. in cooperation with the other federal banking regulators, the board can also draft supervisory guidance and back it up with regular examinations. supervisory guidance applies only to banks and thrift institutions, although state regulators of nonbank lenders can and sometimes do adopt guidance written by the federal regulators. in my judgment, effective disclosures should be the first line of defense against improper lending. if consumers are well informed, they are in a much better position to make decisions in their own best interest. however, combating bad lending practices, including deliberate fraud or abuse, may require additional measures. rules are useful if they can be drawn sharply, with bright lines, and address practices that are never, or almost never, legitimate. sometimes, however, specific lending practices that may be viewed as inappropriate in some circumstances are appropriate in others, and the conditions under which those practices are appropriate cannot be sharply delineated in advance. in such cases, supervisory guidance that establishes principles or guidelines is, when applicable, probably the better approach. guidance can be modified as needed to apply to different situations, and thus can be a more flexible tool than rules for accomplishing regulators β goals. as i noted, markets are adjusting to the problems in the subprime market, but the regulatory agencies must consider what additional steps might be needed. the federal reserve is currently undertaking a thorough review of all its options under the law. under
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this regard, i refer the term liquidity as central bank β s reserve money. this is also reflected in the volume of bank indonesia β s open market operation β banks β liquidity that bank indonesia absorb, as part of bank indonesia β s monetary policy implementation to maintain short - term money market ( overnight puab ) stable around bi rate. this is cash alike in banks β assets. this is actually a rather common phenomenon in countries that experienced financial crisis and had to bail - out the financial industry. for example, in the us, the central bank balance sheet has ballooned from around usd 800 billion before crises into around usd 2. 2 trillion recently. this data also reflected in the us commercial banks or other financial institutions β placement β usually in overnight basis as excess reserve and now remunerated at 25 bps β in the federal reserve. thus, in essence similar to bank placement in bank indonesia β s omo instrument ( sbis. fasbi, ftk ). the situation i just described was needed to facilitate the domestic banking sector consolidation process in the post 1997 / 98 crisis. however, if this continue to exist too long, will lead to a mislead incentives. it will not encourage banks to have a more efficient asset and liabilities management. also, banks will tend to be less aware to liquidity risk, as there will be a perception that there will always be a huge supply of liquidity in inter - bank money market. this can be seen during the peak of global financial turmoil at the end quarter of last year, where our domestic money market also experienced a significant β perception β of tightening liquidity, despite that there was a large number of liquidity stock in the money market. there was more than rp. 150 trillion of banks β cash, placed into bank indonesia β s omo instruments. yet, the inter - bank money market indicators showed that the flow of liquidity in inter - bank money market has squeezed. the volume of inter - bank money market has declined from its normal level of around rp. 10 trillion to below rp. 5 trillion. the interest rate spread has also widened significantly. the jibor 1 month spread over bi rate jumped from its normal level of around 50 bps to around 220 bps. further, there was also indication of unhealthy competition among banks, to maintain third party β s fund by offering higher deposit rate. second, there is large number of government bonds ( sun ) in banks
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and more liberal capital account policies do not solve all the exchange rate problems. despite the sound policies in place, we frequently witness sharp volatility which is due to speculative capital flows and not justified by its fundamentals. at the same time we have progressed quite liberally in terms of our capital and current account policies. the adoption of these policies was endorsed by multilateral agencies, including the imf, during the height of the asian crisis. it is therefore my hope that all of us in this symposium come up with a set of viable policy options to address this issue of speculative flows in asia. in particular, i would appreciate views from the imf. fellow governors, on that final note i would like to end my speech. those developments in the aftermath of the crisis that i have mentioned will certainly influence the economic dynamism and prospects of east asia in general and asean in particular. i am looking forward to fruitful discussions in this symposium. going forward, it is my hope that we can engage in greater policy cooperation and coordination in east asia.
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the regulatory foundations of international competitiveness and growth β speech by vicky saporta given at the bank of england published on 27 february 2023 in her speech β the regulatory foundations of international competitiveness and growth β, vicky saporta talks about what a new secondary competitiveness and growth objective will mean for how the pra makes rules. speech introduction parliament is debating a financial services and markets bill that will redefine the pra β s powers and responsibilities. the bill would give the pra a new secondary objective. this will require us to act when we can to facilitate the uk economy β s international competitiveness and its growth over the medium to long term, subject to alignment with international standards. let me be clear. i β and the pra as a whole β know that this is a very important change. i β m going to talk today about what this change will mean for how the pra makes rules. it β s easy for me to sum that up. this is a big deal. it will make a big difference. we take the new objective seriously. we will make rules differently as a result. let me tell you how. i β ll start by sharing my ideas about how the financial sector supports competitiveness and growth, and about how good prudential regulation provides foundations for success. i will then tell you what the pra will do to strengthen those foundations. our plan is to deliver responsible openness that harnesses the uk β s strengths as a global financial centre. we will tailor rules to uk circumstances when that is appropriate and when we can do so in ways that maintain trust. we are working hard to deliver this plan. that is why i am able to use this occasion to announce the publication of two consultation papers proposing tailored liquidity, disclosure, reporting and remuneration rules for small banks and building societies. these proposals show how we can use our rule making powers in ways that are good for competitiveness and growth. we are also today publishing analysis of the impacts of previously announced proposals. this analysis is about how our proposals will narrow the gap between capital requirements faced by large and small mortgage lenders. this analysis will feed into policy development work to simplify capital requirements for smaller banks and building societies. i β ll conclude by launching a conference we will hold in september to deepen our understanding of the links between prudential regulation, international competitiveness, and growth. at that conference we will share ideas about how we can provide information ( including
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for capital requirements for exposures to smes. in general, we will always listen to arguments when people disagree with us, and we will always take into account new evidence. this includes tailoring rules that are already in place in response to our own evaluations or to evidence from industry, broader civil society and other stakeholders. this is what we did when we implemented an earlier basel regulatory package known as crr2. in that case, we implemented a new standard for banks β long term funding after tailoring it to be more risk sensitive for activities that are important for the uk. that was a change we made in response to evidence - based arguments we received during the consultation. we are now taking the same approach to work on solvency ii rules for insurers. debates between us and the government have got a lot of public attention. but there are many areas where we fully agree about the benefits from simplifying the regime to better reflect the needs of the uk. and with the high - level policy decisions now clear, we are focused on implementation and on delivering detailed proposals for consultation. my colleague sam woods recently set out what we are committed to doing. all of this will be on top of what we are already doing to remove unnecessary rules we inherited from our time in the eu. we have so far deleted 13 guidelines issued by eu regulators, five superseded supervisory statements and 26 technical standards onshored from the eu. this work will continue. so too will our work simplifying rules about reporting. growth and competition one of the benefits of tailoring rules to uk circumstances is that it helps to facilitate effective competition in markets we regulate. i see connections between that objective, which we already have, and our new competitiveness and growth objective. that β s because an efficient market is one that allocates resources to their best use, including by ensuring that there aren β t parts of the economy struggling to access finance that they should be able to secure. i don β t want to be too simplistic about it β but in general terms what is good for competition is broadly good for growth. the importance of competition means that we need to act when rules that are proportionate for large firms are not proportionate for small ones. doing so removes barriers to entry. that is why we have invested in the strong and simple project to create a simplified regime for small banks and building societies. today we are publishing our first set of policy proposals for this simpler regime. these are set
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around the world in the past. sooner or later, society would find itself regretting that it had not put in place the necessary resolution regime to cope with the failure of systemically important financial institutions. in short, there is no alternative to submitting banking and its investors to the disciplines of capitalism β failure as well as success. we cannot afford to have banking, so central to the allocation of capital in market economies, semi socialised. moreover, we need to harness the energies of bond holders to monitoring and helping to contain the tendency to excess characteristic of bankers, over the generations, in the upswing of the credit cycle. that is not see insol international ( 2000 ), statement of principles for a global approach to multi - creditor workouts. that strategy was initially set out by the financial stability board in 2010, reducing the moral hazard posed by systemically important financial institutions, available at http : / / www. financialstabilityboard. org / publications / r _ 101111a. pdf bis central bankers β speeches in and of itself a guarantee of stability, but i would rather give asset managers incentives to help the objectives of prudential supervisors than incentives to rely on a fiscal backstop. second, effective resolution regimes, capable of operating across national borders, are necessary for a healthy international monetary and financial system ( imfs ). as mervyn king has said, the large financial groups have been β international in life, but national in death β. without effective cross - border resolution arrangements, domestic authorities are left with a clear incentive to take steps to cap the contingent exposure of local taxpayers, who are local voters. that is surely part of the backdrop to the series of measures taken by national and regional authorities to restrict the range of activities or structure of banking. those measures need to be taken without the world slipping into a hard - to - reverse balkanisation of the international financial system. were that to happen, the breakdown in cooperation between sovereign states could all too easily give encouragement to those around the world who would like to use protectionist measures to shield their countries from the winds of global trade. if the international monetary and financial system relies, as it has since at least the collapse of bretton woods forty odd years ago, on the private banking system to supply the cross - border liquidity needed to underpin expansion of world trade, then we must ensure that the international banking system is safe and sound. that cannot rest solely on prophylactic prudential supervision.
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is possible that the effect of productivity improvements, especially the temporary boost to profits, was obscured by the impact of the rise in sterling since 1996 and by global competition which have lowered prices and compressed margins. so it is too soon to dismiss the possibility of an acceleration in productivity similar to that experienced in the united states. indeed, productivity growth has increased to more than 4 % over the past year. revisions to the official data and the volatility of measured productivity - reflecting the business cycle - make it extremely difficult to infer changes to long - term growth rates. the absence of any compelling evidence for a rise in underlying productivity growth suggests that this is an unlikely explanation for consistently low inflation over the past decade. third, the new monetary policy framework - a symmetric inflation target and the transfer of interest rate decisions to an independent bank of england - has helped to anchor inflation expectations to the target. it is less likely now that a shock to inflation would lead to a further and persistent deviation of inflation from target. there is a belief that inflation will soon return to target. as a result, a surprise movement in inflation is expected to be temporary and so less likely to lead employers and employees to adjust their desired prices and wages. and there is convincing evidence that changes to inflation are much less persistent under the new monetary policy arrangements. so there you have it : three possible explanations for the recent low and stable level of inflation despite falling unemployment and rapid output growth. but this is no time for complacency or hubris. part of the improved short - run trade - off between growth and inflation may reflect temporary factors. inflation may have been close to target because of one - off explanations, such as increased competition that temporarily depressed retail prices relative to costs, or larger flows of migrant workers that have temporarily held down wage inflation. and even if inflation expectations are well anchored to the target they will remain so only if interest rates continue to be set to keep inflation close to the target. the 1980s provided a stark example of a rapid acceleration of prices with few early warning signs. from 1983 onwards, rpix inflation was stable - relative to recent experience at that time - with most of the outturns in the 3. 5 % to 5. 5 % range until mid - 1989, and wage inflation was high but not on any clear upward path. within a year, and despite a 6 percentage point increase in interest rates between 1988 and 1989, rpix inflation reached 9 % and wage inflation exceeded 10
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free trade agreements are spreading throughout asia. in addition, asean is accelerating the process for building the asean economic community ( aec ) by 2015. it will be interesting to see how the present banking and other financial services change when a single market for goods and services is formulated in asean. i hope the governors can provide us with insights into developments of the aec. with the globalization of the world's financial markets, large capital flows will continue to have a strong impact on open economies. this holds true for most of the asian economies including the asean. it is, and will surely be, the most difficult task for any monetary authorities to maintain the stability of foreign exchange rates, the free flow of capital, and the independence of monetary policy simultaneously. the answer to this proposition probably lies in the resilience of markets. in order to increase the ability to absorb external shocks from massive capital flows, the priority seems to strengthen the function of foreign exchange and financial markets in the region as a whole. in this regard, frequent exchange of information, deep analysis and concerted efforts by the emeap central banks will contribute to addressing risks and vulnerabilities in the markets. such collaborative actions may cover the roles of the imf, which commits itself to extensive reform to meet new challenges under the leadership of rodrigo. conclusion it is often said that asia is highly diverse in culture, social framework and the stage of economic development. since the asian economies are in many respects very different from the european, we will probably follow our own process for economic integration. in that process, the better functioning of markets through regional cooperation will help provide a better business environment for industries and financial institutions, and lead to more efficient resource allocation. the more - than - ten - year history of emeap itself proves that cooperation based on mutual understanding and respect is possible in any circumstances. i am sure the guest speakers have various opinions on today's topics, and we will be able to appreciate their visions through our stimulating discussions. i would be delighted if this symposium helps you build insights into the dynamism of asian economies and central bank cooperation in the region for the decade to come. thank you.
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ten years later, everything is different : the foreign exchange and financial markets are much more stable and the currencies sometimes face upward rather than downward pressure ; foreign direct investment and other capital inflow continues to grow with the accumulation of foreign reserves ; the banking system has been strengthened through restructuring ; and the economies have grown at a steady and sustainable pace of 5 % on average since 2000. while there were indescribable difficulties to overcome the adverse effects of the crisis, the present performance clearly demonstrates the success of policy efforts and the underlying dynamism of the economies. i hope the speeches by the governors will enlighten us about the changes in economies and dynamism after the crisis. 3. regional cooperation turning to policy coordination, the crisis became the starting point for various initiatives in the region. exposed to the weakness in the international financial architecture, the ministries of finance and central banks became aware of the importance of regional cooperation and began to address the source of weakness. the chiang mai initiative, as a complement to the imf facilities, was agreed upon among asean + 3 to build a framework of emergency liquidity support through a network of bilateral foreign exchange swap arrangements. based on the analysis of the crisis, efforts have been made to reduce over - reliance on the banking sector for financial intermediation. the asian bond markets initiatives ( abmi ) is another regional cooperation by asean + 3 to foster local capital markets. sharing the same objective with the abmi, the executives'meetings of east asia and pacific central banks, or emeap, consisting of eleven central banks and monetary authorities in the region, started the asian bond fund project. by utilizing some foreign reserves of member central banks collectively, the emeap launched two investment funds ; one for investing in us dollar - denominated public bonds issued by the member countries, and the other for investing in local currency - denominated public bonds, to help not only to provide a convenient and low - cost instrument for market participants but also to identify and remove impediments to the respective local markets. 4. future challenges for the asian economies and financial markets in line with the good performance of regional economies and the progress in policy coordination among central banks and monetary authorities, economic integration in the region is gradually taking root. it is reported that intra - regional trade in east asia has recently reached around half of the total, which is comparable to that of nafta and slightly less than that of the eu. bilateral and regional
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##ridge. this referred to the phenomenon of high growth without any signs of overheating. later there was talk of a β new economy β where investment in new technology and growing use of the internet were the primary factors behind a more efficient performance with rising productivity. firms that utilised the new technology functioned better and competition increased, partly because the internet made price comparisons easier, stocks could be slimmed and distribution became more efficient. in my view, however, the technical innovations are not the only explanation. the deregulations that began in the 1980s, as well as the consolidation of the federal budget during the 1990s, should also be mentioned as major factors. the deregulations have helped to strengthen america β s corporate sector and the improvement in the federal finances led to increased confidence among households and firms as well as somewhat lower long bond rates. low interest rates and higher productivity growth then paved the way for the massive wave of investment. the u. s. economy β s growth rate shot up and unemployment dropped to levels that hardly anyone believed could be combined with low, stable inflation. as outcomes proved earlier forecasts wrong, assessments of how strong demand β s long - term growth could be without generating rising inflation were adjusted gradually upwards. turning then to share prices in the united states, in the first place the nasdaq exchange with its predominance of high - tech companies, we can see that expectations of corporate profits rose rapidly to levels that had not been seen since the 1930s. the trend peaked last year with share prices at record levels and a gdp growth rate above five per cent, in some quarters even higher. the reverse side of the medal lies in the imbalances that have built up during this period. the united states has been living on borrowed money ; even though the federal budget was first consolidated and then generated a growing surplus, investment exceeded aggregate saving. investment was still able to reach record levels because the additional capital could be borrowed from investors abroad who willingly placed their money in u. s. securities in the expectation that the good times would continue. that explains why the u. s. current account has been able to run up a gigantic deficit, currently equivalent to almost 5 per cent of gdp, at the same time as the dollar has appreciated strongly. even with rapidly rising productivity, the rate of economic growth became incompatible with long - term stability. in order to dampen activity, the federal reserve started to apply the brakes in summer 1999, raising the instrumental rate in
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too far from the target and if inflation expectations are firmly anchored. 1 however, macroprudential policy also has links to microprudential policy and fiscal policy. all these policy areas may need to be involved in order to curb systemic risks in the most effective way. what instrument to choose in a specific situation should depend on the problem at hand and the purpose of the policy action. the most effective tool may not always be in the hands of the macroprudential supervisor. finally, in the past few years, macroprudential tools have been developed to tackle risk stemming from the traditional banking sector. macroprudential policy has thus mainly been implemented as a form of banking regulation. as a consequence, resilience in that sector has increased. but, on the other hand, the non - banking sector is increasing rapidly and so, most likely, is risks related to it. this being my third and final issue, i think it is most important that we increase our understanding of these changing trends and the risks they entail, and that we start developing macroprudential instruments that can counteract these risks. in order not to fall behind the curve, work on developing new tools should start promptly, as it will take years before such instruments can be in place at national levels. see also skingsley, c., ( 2015 ), inflation - targeting policy after the financial crisis, speech at almega, stockholm 2015. bis central bankers β speeches
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##ute in its commitment to price stability. with that, let me stop and turn to you for questions.
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compensation stays moderate and inflation expectations remain well anchored. given the recent drop in gasoline prices and with futures prices suggesting persistently lower oil prices, the bank expects total cpi inflation to remain noticeably below the 2 per cent target over the coming year before returning to target around mid - 2013. the inflation outlook in canada is subject to significant risks. bis central bankers β speeches the three main upside risks to inflation in canada relate to the possibility of higher global inflationary pressures, stronger canadian exports and stronger momentum in canadian household spending. the three main downside risks to inflation in canada relate to the european crisis, weaker global momentum and the possibility that growth in canadian household spending could be weaker. overall, the bank judges that the risks to the inflation outlook in canada are roughly balanced over the projection period. reflecting all of these factors, the bank yesterday maintained the target for the overnight rate at 1 per cent. to the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the 2 per cent inflation target over the medium term. the timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments. with that, tiff and i would be pleased to take your questions. bis central bankers β speeches
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careful planning of growth and funding needs is a key aspect of sound management and requires the appropriate degree of management attention. conclusion the past year was a good year for the industry, one in which banks were able to adapt to a changing environment and still generate record profits. community banks once again demonstrated their value to the marketplace and the prominent and vibrant position they rightly occupy in the industry. the industry is strong and resilient, but we should not gauge the industry's ability to withstand and adapt to challenges solely on the basis of what happened in 2003. as we reflect on this banner year, it will serve us well to bear in mind that the credit and business challenges the industry faced in recent years were certainly not as difficult as they might have been - and indeed may yet be at some point in the future. asset quality certainly was an issue in this credit cycle, but never approached the levels experienced in the early 1990s. similarly, a low - interest rate environment, together with a steep yield curve, can provide a forgiving setting for bankers, at least in the near term. to paraphrase the old adage, those who do not learn all of the lessons of history are destined to repeat them. once again, the fundamental management challenge is to balance the opportunities of the present with the prospects for the future.
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, touch on the ethical dimensions of rbi β s mandate. the reserve bank has a broad mandate. as central banks go, i believe we are a β full service β central bank. we are the monetary authority, we issue currency, we are the regulator of banks and non - bank finance companies and much of the financial markets. we regulate also the payment and settlement system. we are the debt manager for the central and state governments and the gatekeeper for the external sector. what guides us in fulfilling this broad mandate is a sense of institutional values and professional integrity. let me give a few examples. one of the core aims of monetary policy is to maintain price stability. if we fail in that regard, there would be inflation. and inflation, as we know, is a perniciously regressive tax that hurts the poor the most. so, by maintaining price stability, we are safeguarding the well being of the poor in society. we take our regulation responsibility seriously. an important guideline for regulation is to protect the interests of depositors. we therefore ensure that banks are well capitalized, prudently managed and that they have adequate and appropriate internal controls. our regulatory responsibility also casts an obligation on us of protecting the interests of the borrowers. we need to ensure that borrowers get credit at remunerative rates of interest and that they are not disadvantaged by information asymmetries. we advise banks not to charge excessive / usurious rates of interest on non - priority sector personal loans and credit card dues. we have asked that banks should communicate publically information on the maximum interest chargeable to any type of loan or advance. we have mandated that service charges should be reasonable and have some relation to the cost of rendering the services. we have a system of banking ombudsman to address the grievances of customers. i cannot claim that we are the best practice in dispute resolution, but i can claim with pride that we try our best to be the best practice. in recent years, we have been focussing on financial inclusion and financial literacy. the aim of the financial inclusion campaign is to provide access to financial services to people in remote and rural areas and poorer segments of the society. our stress is on expanding the reach of financial services to ensure that every household has a bank account. but the aspiration extends, beyond merely chasing a target, to the quality of financial inclusion. not only should the poor have an account, but they should also be
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and information problems mentioned above ( although it could have ended the great moderation with a deep recession and deflation ). lessons for monetary policy what conclusions can we draw so far from the financial crisis about the conduct of monetary policy and any need to modify the framework of flexible inflation targeting? one obvious conclusion is that price stability is not enough to achieve financial stability ( carney 2009, white 2006 ). good flexible inflation targeting by itself does not achieve financial stability, if anyone ever thought it did. specific policies and instruments are needed to ensure financial stability. another conclusion is that interest - rate policy is not enough to achieve financial stability. the policy rate is an ineffective instrument for influencing financial stability, and policy rates high enough to have a noticeable effect on credit growth and house prices will have a strong negative effect on inflation and resource utilisation, even in sectors that are not experiencing any speculative activity. the use of the policy rate to prevent an unsustainable boom in house prices and credit growth poses major problems for the timely identification of such an unsustainable development, as well as for the assessment of whether policy - rate adjustment would have any noticeable impact on the development, and of whether, in the longer run, the development of inflation and resource utilisation would be better ( bean et al. 2010, kohn 2008, 2009 ). other instruments like supervision and regulation, including appropriate bank resolution regimes, should be the first choice for financial stability. preventing a financial crisis requires not only improvements in the supervision of financial institutions, but also a greater emphasis on the supervision of the financial system as a whole. as regards the regulatory framework, generally, to the extent that financial instability depends on specific distortions, good regulation should aim to attack these distortions as close to the source as possible. macro - see svensson ( 2003 ) for a discussion of policy options before and in a liquidity trap. see assenmacher - wesche and gerlach ( 2009 ), bean ( 2009 ), bean et al. ( 2010 ), bernanke ( 2010 ), dokko et al. ( 2009 ), imf ( 2009 ). prudential regulation that is contingent on the business cycle and financial indicators may need to be introduced to induce better financial stability. possible macro - prudential regulation includes variable capital, margin, and equity / loan requirements. however, one important lesson from the financial crisis is that financial conditions may have a very strong and deteriorating effect on
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the transmission mechanism, making standard interest - rate policy much less effective. this motivates more research on how to incorporate financial conditions and financial intermediation into the standard models of the transmission mechanism used by central banks. much progress has already been made in understanding these effects ( see adrian and shin 2010, gertler and kiyotaki 2010 and woodford 2010a ). however, even with much better analytical foundations concerning the role of financial conditions in the transmission mechanism, there will of course, as always, be considerable scope for the application of good judgment in monetary policy. what about β leaning against the wind β, the idea that central banks should raise the interest rate more than what appears to be warranted by inflation and resource utilisation to counter rapid credit growth and rising asset prices? it has sometimes not been entirely clear to me whether advocates of the leaning against the wind policy mean that credit growth and asset prices should be considered targets and entered into the explicit or implicit loss functions alongside inflation and resource utilisation. or whether they mean that credit growth and asset prices should still be considered just indicators, and that they emphasise them merely because credit growth and asset prices may have potential negative effects on inflation and resource utilisation at a longer horizon. in the latter case, leaning against the wind is a way to improve the stability of inflation and resource utilisation in the longer run. then it is completely consistent with my interpretation of flexible inflation targeting. more precisely, flexible inflation targeting aims at stabilising inflation around the inflation target and resource utilisation around a normal level. monetary policy then boils down to β forecast targeting β, choosing a policy - rate path such that the corresponding forecasts of inflation and resource utilisation best stabilise inflation around the target and the resource utilisation around a normal level. if the central bank uses all relevant information in constructing these forecasts, including the impact of changes in financial conditions on inflation and resource utilisation at any horizon, monetary policy will automatically respond in the best possible way to changing financial conditions ( woodford 2007, 2010a ). taking financial conditions into account becomes a special case of the general rule of β filtering all information through the forecast β. only information that affects the forecast should be responded to, whereas information that does not affect the forecast can be disregarded. however, suppose that, for some reason, the appropriate and effective instruments to ensure financial stability are not available, for instance, because
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looked like it was building, it had not strengthened sufficiently by the time of the july meeting to warrant action. in august the case got weaker, and it got weaker again by early september. essentially what happened was that the risks to growth from abroad abated, while those posed by the rapid rise in debt did not. this recent experience, and the one a year earlier, is instructive in the discussion about central bank communication. what it shows is that, while it is natural for market participants and the media to want central banks to say more and more about their intentions, people need to keep very much in mind that our assessment of what we might need to do is, of necessity, highly conditional on a view of the future. and the future often turns up the unexpected - to which we need to respond by revising our intentions. so it is important that observers not only listen to the central bank β s words, but also continue to look closely at the actual information coming in. i know the majority of you do. secondly, because the future cannot be known, and because things can change quickly, people need some understanding of the principles which guide central bank behaviour. so there is probably more to be gained by continued efforts at articulating how our framework for policy works, than by providing ever more frequent commentary on events. such information hopefully provides interested observers with a device to filter, in real time, the information becoming available. this, combined with a periodic account, after the event, of how we filtered it, is the most helpful form of transparency - describing how we think about things and, within that framework, why we did what we did. the most recent statement on monetary policy, in fact, goes a good deal further down this track than most of its predecessors. conclusion the world economy is still not entirely in the clear, but is better than it was, and a fair bit better than it might have been. it is sensible at present to look for further improvement, while keeping in mind the possibility of regression. if things work out acceptably well abroad, the australian economy will next year have a better chance of balanced growth than we have had for a few years. we will continue to assess the evolving balance of risks and will respond, in a measured fashion, as needed - and we β ll do our best to keep you informed.
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. 4 % of gdp in 2016, bringing down the share of public debt in gdp. this helped achieve the three - year objectives of the fiscal consolidation programme, a year earlier than planned. at the same time, fully covered by foreign direct investment for the second year in a row, the current account deficit declined from 6. 0 % in 2014 to 4. 0 % of gdp in 2016. the influence of external factors and the increased resilience of our economy are also evident in the fx market β through maintenance of relative stability of the dinar exchange rate, which is no longer news for anyone. depreciation pressures, emerging late last and early this year, were in part generated by uncertainties in the international financial market and in part by the seasonally higher demand in foreign currency for the purchase of energy products. in an effort to ease excessive shortterm volatility of the exchange rate, the national bank of serbia intervenes in the fx market and will continue to do so, regardless of the direction of pressures. this means intervening on both sides. in so doing, we do not target any particular level of the exchange rate nor do we intend to influence its trend. ladies and gentlemen, dear colleagues, as is well known to you, the task of the national bank of serbia is to preserve not only price, but financial stability as well. the bank has been striving to strengthen the capacity of banks to resolve the npl issue and to encourage the development of the npl market. as a result of measures taken under the npl resolution strategy, the share of npls in total loans declined significantly β according to preliminary data, from 21. 6 % at end - 2015 to 17. 0 % at end - 2016, their lowest since 2011. this only serves to confirm once again that a systemic, interinstitutional and coordinated approach yields results in this area. while my associates from the directorate for economic research and statistics will present in detail our assessments of macroeconomic developments and our latest projections, i would like to highlight several key messages. the national bank of serbia will continue to keep a close eye on and to assess the developments and trends in the domestic market and the international environment. as so far, we shall use all available instruments to ensure that inflation stays low and stable in the medium run. this is the best way in which a central bank, while at the same time maintaining financial stability, can contribute to economic growth. growth is expected to accelerate
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federal reserve board and its staff are consulting with the treasury regarding the tarp. in addition, chairman bernanke serves as the chairman of the oversight board for tarp that will, among other things, review the policies that are implemented and make recommendations, as appropriate, regarding the use of authorities under tarp. eesa also temporarily raised the limit on the deposit insurance coverage provided by the federal deposit insurance corporation ( fdic ) from $ 100, 000 to $ 250, 000 per account. last week, the first use of tarp funds was announced. in particular, the treasury announced a voluntary capital purchase program, and nine of the nation β s largest financial institutions have agreed to participate. the program is open to financial institutions of all sizes. under the program, the treasury would acquire capital of financial institutions on terms that are attractive to the institutions and with features that protect the taxpayer. at the same time, the federal reserve board, the fdic, and the secretary of the treasury in consultation with the president, determined that there were significant risks to the stability of the financial system. with this determination, the fdic used its authority to expand for a specified period, insurance to non - interest - bearing transactions accounts, such as payroll accounts, and a guarantee for newly issued senior unsecured debt of fdic - insured depository institutions, including their associated holding companies. a second, complementary, use of tarp funds will be to purchase mortgage assets, including mortgage - backed securities and whole loans. these purchases are designed to remove uncertainty from lenders β balance sheets and to restore confidence in their viability. another objective is to improve the modification efforts of servicers on these loans to more effectively prevent avoidable foreclosures. the federal reserve system is also working to develop solutions to rising foreclosures. preventing avoidable foreclosures is good for borrowers, communities, and the economy. a number of efforts are underway. the federal reserve has worked with other agencies to put in place the standards and procedures for the new hope for homeowners ( h4h ) program, and i serve on the oversight board. these loans can help borrowers who might otherwise face foreclosure because the new loan payments are more affordable and the homeowners get some equity in their homes. lenders and servicers are analyzing their borrowers for good candidates for the h4h program, and the fha and its authorized lenders are poised to process applications
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deeply into monetary policy generally, i would like to make a few observations about the efficacy and costs of mbs purchases specifically. in doing so, i want to reiterate that these are my views and may not be in accord with those of my colleagues on the fomc. in many ways, purchases of mbs have the same downward effect on the general level of long - term interest rates as purchases of other longer - term securities. but, in addition, purchases of agency mbs reduce the spread between treasury and mbs yields and thus, compared with purchases of treasury securities, have somewhat larger effects on mortgage rates. this larger effect was especially true in the first round of purchases in 2009 when investor uncertainty about the degree of government support for agency mbs was quite high. 13 mbs purchases also influence mbs yields by affecting the cost of hedging the risk ( known as convexity risk ) that mortgages prepay more quickly when rates decline or more slowly when rates increase, because, unlike some mortgage market investors, the federal reserve does not hedge such risk. lower mbs yields result in lower mortgage rates, which can spur the economy through elevated home - purchase and refinancing activity. but this effect is not yet fully transmitted to the economy, as the difference between mbs yields and mortgage rates is still somewhat wide and, as i discussed earlier, tight credit has prevented many households from accessing the low rates. any improvement in credit conditions would thus act to improve the efficacy of mbs purchases. similarly, policies that constrain mortgage lending or increase its cost would reduce efficacy. i think the additional impetus to housing from mbs purchases is appropriate for at least three reasons. first, the housing market has suffered extraordinary damage during the past few years. second, even with the recent positive signs, housing investment has contributed far less to economic growth than in a typical recovery. and, third, even as terms and standards on other types of credit have eased, standards for mortgage credit remain quite tight. while the purchase of agency mbs has some special efficacy in supporting housing markets, the peculiarities of the mbs market itself present some potential market functioning issues that bear monitoring. the mbs market is not as deep or as liquid as the treasury market, and the total size of the market is not growing as quickly. as refinancing activity slows, the gross pace of new mbs issuance could slow as well, and federal reserve purchases at the
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norman t l chan : bond connect β enhancing hong kong as an international financial centre remarks by mr norman t l chan, chief executive of the hong kong monetary authority, at the bond connect launch ceremony, hong kong, 3 july 2017. * * * the honourable carrie lam cheng yuet - ngor, deputy director huang liuquan, deputy director qiu hong, financial secretary paul chan, deputy governor pan gongsheng, mr ck chow, distinguished guests, ladies and gentlemen, 1. good morning. 2. i am very pleased to join you today for the launch of bond connect. bond connect marks another milestone of mutual access of capital markets between the mainland and hong kong, following the shanghai - hong kong stock connect and the shenzhen - hong kong stock connect. it is also another important measure of the central government to support hong kong β s development as an international financial centre. 3. a key function of hong kong as an international financial centre is financial intermediation, providing efficient and safe conduits for fund flows. the establishment and smooth operation of these conduits shall be underpinned by suitable and sound financial infrastructures. over the years, the hong kong monetary authority ( hkma ) has endeavoured to build our financial infrastructures, from the real time gross settlement system to the central moneymarkets unit ( cmu ) for debt securities settlement, which have laid a solid foundation for hong kong β s development as an international financial centre. 4. bond connect is a new financial infrastructure established through the connection between hkma β s cmu and the relevant central securities depositories ( csds ) on the mainland. under bond connect, eligible overseas investors can settle and hold their mainland bonds through cmu using nominee holding arrangement. nominee holding arrangement is widely used by investors in international capital markets as it provides greater convenience and flexibility to investors and market participants. cmu also adopts nominee holding arrangement and provides nominee holding services for more than 200 local and international banks, trust companies and custodians through its linkages with euroclear, clearstream and other regional csds. the continued liberalisation of the mainland β s capital account and rmb internationalisation will progressively raise demand from overseas investors for rmb asset allocation, while the mainland has been proactively rolling out measures to facilitate overseas investors β access to its bond market. we believe that bond connect would enhance overseas investors β participation in the mainland bond market. 5. i wish bond connect a great success.
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risk assessment ; control activities ; information and communication ; and monitoring activities. the basle committee on banking supervision has recently put all this together into a set of fourteen principles for regulators to use in evaluating institution β s internal control systems. i do not propose to run through these one by one, but i would like to pick out one or two points so as to give you an idea of what i, as a regulator, see as the key ideas. first, on management oversight and the control culture, the starting point is that the board of directors need to understand the risks run by the institution, to set the acceptable limits on these risks, and to ensure that senior management takes the steps necessary to identify, monitor and control these risks. senior management must then take the responsibility to implement the strategies approved by the board, to set appropriate internal control procedures, and to monitor the effectiveness of these procedures. this makes it quite clear where the main responsibility for controls rests - and that is fairly and squarely on the shoulders of the institution β s board of directors and its senior management, not just on its compliance and audit departments. however, having said that, everyone in an institution shares the responsibility to some extent. a key task for the board and senior management is to establish the right culture within the institution, a culture in which the importance of internal controls is stressed, and high ethical and integrity standards are promoted. this culture will be determined not simply by what the top levels of management say but what they do. for example, do the institution β s remuneration policies reward risk - taking at the expense of prudence? does senior management display a casual attitude towards breaches of limits? do they encourage the right attitude towards regulatory compliance? is there backing and respect at senior levels for the internal audit and compliance functions? the response of the senior levels of the organisation to these kind of issues will determine how personnel lower down actually behave in practice, including their attitude to control issues. moving on to risk assessment, the important thing is to identify and evaluate every factor that could adversely affect the achievement of the institution β s objectives. this means not just the familiar risks of credit risk and liquidity risk, but also risks such as operational risk, interest rate risk, market risk, country and transfer risk, legal risk and reputational risk. and this needs to be an ongoing process, continually re - evaluating the risks and reviewing the control systems to address these risks. regarding control activities, the point i would
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pongpen ruengvirayudh : thailand in 2014 β recent developments and challenges ahead keynote address by ms pongpen ruengvirayudh, deputy governor for monetary stability of the bank of thailand, at the thomson reuters fx community forum 2014, bangkok, 18 february 2014. * * * distinguished guests, ladies and gentlemen, 1. it is a distinct pleasure to be back here again and i would like to thank thomson reuters for the invitation. to the winners of this year β s fx awards, i would like to congratulate you on your notable achievements. and to the rest of the market participants, i would like to express my thanks for your continuing contribution to the development of the thai foreign exchange market. 2. much has changed both at home and aboard since i gave an opening address at this event last year. on the external front, the us federal reserve β s planned scaling - down of its qe program has sparked turbulence in the emerging markets as investors continue to speculate on the fed β s exact tapering timeline. on the domestic front, the absence of political solutions continues to subdue public and private spending, with unavoidable repercussions on overall growth outlook. certainly, the interplay between these recent developments will have profound implications for the thai economy to some extent going forward. for this reason, i would like to take this opportunity to share with you my views on these important developments and the potential challenges they pose to the thai economy. 3. let me start with the developments on the external front. as you remember, around this period of last year, one of the issues that had attracted a lot of public attention was the continued influx of fund flows into the emerging markets including thailand. but this theme has suddenly changed when the us federal reserve signaled in may its intention to scale down, and eventually terminate, its asset purchasing program. the signaling immediately sparked turbulence in capital and currency markets in emerging economies and certainly serves as a recurring reminder that the linkages in the international economy are as psychological as they are mechanical. from june to august, thailand, like other economies in the region, continued to witness further episodes of outflows as investors continued to reform their expectations towards the exact tapering timeline. 4. in the recent months, turbulence in the markets seems to have somewhat been moderated. this possibly reflects the fact that much has been priced in during the earlier outflow episodes, as well as the fact that it has been clearer to the markets
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staff macroeconomic projections indicate continued progress in reducing fiscal imbalances in the euro area. the aggregate euro area general government deficit is expected to have declined to 3. 2 % of gdp in 2013 and is projected to bis central bankers β speeches be reduced further to 2. 7 % of gdp this year. general government debt is projected to peak at 93. 5 % of gdp in 2014, before declining slightly in 2015. looking ahead, euro area countries should not unravel past consolidation efforts and should put high government debt ratios on a downward trajectory over the medium term. fiscal strategies should be in line with the stability and growth pact and should ensure a growth - friendly composition of consolidation which combines improving the quality and efficiency of public services with minimising distortionary effects of taxation. national authorities should also continue with the decisive implementation of structural reforms in all euro area countries. these reforms should aim, in particular, to make it easier to do business and to boost employment, thus enhancing the euro area β s growth potential and reducing unemployment in the euro area countries. to this end, the governing council welcomes the european commission β s communication of yesterday on the prevention and correction of macroeconomic imbalances and on the excessive deficit procedure. looking ahead, it is key that the macroeconomic surveillance framework in the euro area, which was significantly strengthened in the wake of the sovereign debt crisis, is implemented fully and in a consistent manner. we are now at your disposal for questions. bis central bankers β speeches
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on reducing the exposure of european - based banking groups in south east europe. in the context of addressing this issue, the bank of albania has signed a memorandum of cooperation with the european banking authority college in 2015, on exchanging information and harmonising supervisory policies. regarding non - performing loans, the bank of albania continues to be committed to implementing the measures set out in the national plan for reducing them. the reduction of the credit risk, in parallel with the improvement of the banks β balance sheets and economic growth, should be accompanied by more realistic lending policies by the banking system. this is a recurring appeal i have made in my public appearances. the implementation of such policies would create the conditions for fulfilling the needs of the economy for financing, which are expected to be upward in the future. the third obstacle is the development level of financial markets and the narrow range of financial instruments. in 2017, the bank of albania, in cooperation with the ministry of finance and economy and the world bank explored options for developing the secondary market of government securities and improving the functioning of the primary market. this project will help in the government securities trading, increasing the investors β base, and forming a yield curve that is a representative one for the economy. such a curve enables a better management of liquidity for all the financial agents, as well as a better monetary policy transmission to financial markets. i would like, however, to underline that the development of markets is a long process, which requires cooperation by all economic and financial agents in the economy. * * * turning to the contribution of the bank of albania in the overall improvement of the financial and economic context, i would like to present now our work with regard to safeguarding and promoting financial stability. the main aspects of our work consisted in strengthening the stability 5 / 9 bis central bankers'speeches of the banking system, enhancing its resilience to shocks and adoption of international standards. 3. financial stability and banking system performance in 2017, the activity of the banking system was stable and supported the safeguarding of the financial stability. as at the end of 2017, the share of its assets stood at 92. 5 % of the gross domestic product ( gdp ). the main financial indicators of the banking sector activity improved, and the net financial result of the banking sector grew considerably in 2017. the return on assets ( roa ) of the system increased at 1. 54 %, in december 2017, from 0. 7 % a year earlier, whereas the return on equity (
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private partnerships ( ppps ). these take different forms. many employ a mix of public and private funding, with the operation and maintenance of the infrastructure performed by a private enterprise on behalf of the government. the most familiar example of a ppp is the confederation bridge between new brunswick and prince edward island. but there are still relatively few existing ppps in canada. other countries, such as the united kingdom and australia, offer many examples of successful ppp infrastructure. unlike most jurisdictions in canada, these other countries already have a well - developed legal and regulatory framework for ppp investments. each of these methods has advantages, but also problems. in the final analysis, it is all a question of incentives. for example, when infrastructure projects are solely publicly funded, the usual incentives to build and operate efficiently β the incentives to avoid bankruptcy and to make a profit β are not the driving motive behind the investment. the most efficient and timely allocation of resources for infrastructure occurs when the incentives are right. and that framework of incentives usually includes some expectation of profit. this applies this is partly due to varying definitions of infrastructure and the high level of subjectivity involved in assessing " need. " the government of ontario, for example, estimates that the cost of correcting past underinvestment and of building the public facilities that the province needs to accommodate future growth may exceed $ 100 billion. 3 / 4 equally to decisions on what to build and to decisions regarding how to operate the infrastructure once it is in place. the hardest incentive to get right is that of proper pricing. a lack of pricing that appropriately reflects demand and supply conditions may be one reason why there have been relatively few ppp infrastructure projects in canada. it is particularly important to improve pricing mechanisms for services that are provided through public infrastructure. governments have often been unwilling to price - to - market infrastructure - based services. as a result, shortages are managed through non - price rationing, such as rolling electricity blackouts, highway congestion, or waiting lists for government documents or services. and occasionally, we get the opposite problem β an over - build of infrastructure that cannot be justified by demand. new technologies, such as transponders on vehicles to monitor road use, and meters that allow peak - hour pricing of electricity, provide new opportunities to gauge demand for these services, and to price them accordingly. another key incentive with respect to infrastructure investment is the incentive to manage risk. private financing of infrastructure through the markets tends to lead to better assessment of the
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growth. 3 / 4 bis - central bankers'speeches last year, we had to pause inflation targeting, fix the exchange rate, and restrict capital movement. these measures allowed us to prevent panic in the early months of the invasion and maintain control over expectations, ensuring downward trend in inflation. as a result, we brought inflation close to the pre - war inflation target, the financial system remains stable, the economic downturn has stopped, and gradual recovery has begun. however, in the long term, the exchange rate peg deprives the central bank of the ability to effectively manage inflationary processes and leads to the accumulation of macrofinancial imbalances. ukraine knows this well from the experience of past currency crises. on the other hand, inflation targeting and a floating exchange rate policy from 2016 to 2021 allowed the national bank to ensure relative exchange rate stability, despite noticeable fluctuations in certain periods, reduce inflation and keep it close to the 5 % target. it also helped minimize cyclical economic fluctuations and contributed to economic growth, especially through a steady decrease in interest rates on hryvnia loans for businesses to historic lows. in july, the nbu clearly stated its intentions in the strategy for easing fx restrictions, transitioning to managed flexibility of the exchange rate, and returning to inflation targeting. according to the strategy, the transition to a more flexible exchange rate regime was to take place with the fulfillment of certain prerequisites, and the nbu's steps towards the strategic final goal - going back to inflation targeting - were to be gradual and well - balanced. remaining committed to this strategy, the nbu successfully transitioned to managed exchange rate flexibility in early october when the necessary prerequisites were met. in addition, step by step, we are easing restrictions on the foreign exchange market. we have also started a cycle of gradual reduction of the key policy rate to support economic recovery and see conditions for liberalizing the foreign exchange market and normalizing monetary policy in the future. while following global central banking best practices, we proceed cautiously, ensuring a gradual approach as macroeconomic prerequisites become clear to avoid compromising our achievements. maintaining trust in the national currency, the banking system, and the nbu's policy is paramount. today, our discussion will delve into the role of trust in shaping inflation expectations in ukraine, offering valuable insights for each participant. the war grinds on. we acknowledge the risks and the cost of error. our decisions and actions must be
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well - founded and balanced, it requires expert discussion and dialogue. that's why today's event is so important for us. we've assembled strong experts from the imf, ecb, bis, central banks, and academia. i wish everyone to get the most out of this workshop, which will help us all to successfully implement our mandates and return to an era of low and stable inflation. 4 / 4 bis - central bankers'speeches
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##notes and coins. this would in total involve a period of between two and three years from a referendum until the introduction of the euro is complete. however, i believe that this period can be shortened somewhat, assuming that the political process openly and clearly chooses a transition process and establishes a timetable for the different stages. it is worth remembering, in this context, that there is no reason why a cash changeover should have to be made at the start of a year, for practical reasons it would be better implemented in march or october. another alternative described in the report is known as " big bang ", i. e. to begin a cash changeover at the same time as the krona exchange rate is fixed and full membership of the monetary union occurs. this scenario requires a preparation period of 2 - 2. 5 years. this makes the demand that the euro can be handled in all transactions in sweden, both physical and electronic, and by everyone in sweden, from the corner tobacconist to the national swedish social insurance board and the major banks from the first day of membership. as this alternative involves a simultaneous changeover in it systems, other practicalities such as accounting and payment of taxes, as well as a physical cash changeover, it makes high demands on co - ordination and information. taking into account the longer preparation period prior to the actual emu membership required in this alternative, it would take longer until sweden could fully participate in all forums for co - operation and decision - making within the monetary union than would be the case with a gradual transition process. the advantage of this scenario is that it would avoid uncertainty arising among the general public over the position of the euro during the transition period in that the euro could be used everywhere immediately. it has not yet been established what kind of transition scenario we would have in sweden. nor is it yet clear how much time would be required, partly because the political process has not yet chosen a transition scenario and partly because changes are constantly being made in operations and it systems that affect the time required for a potential transition. examples of measures that reduce the time required for a potential membership are that it systems that are being modernised for other reasons are designed to also process euros. within the riksbank we are working on reducing the length of time calculated as necessary for the production of swedish euro coins. the result of our preparations and those of the financial sector are reported, as i mentioned earlier, in regular progress reports. number 8 will be published in may.
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during the crisis of the 1990s. despite this, i believe that there are two reasons for questioning the low risk weights for mortgages. the first reason relates to a possible reason why loan losses in sweden have historically been low ; namely that in times of difficulty the public sector has helped maintain the household sector β s debt - servicing ability through the swedish social insurance system. in practice, this means that when the household sector β s debt - servicing ability is shaken, it affects firstly the individual, secondly public finances and only thirdly the lenders. this could mean that the banks lack an incentive to fully take into account the risks entailed in excessive credit - granting and high loan - to - value ratios. to put it another way, the risk weights we currently have for mortgages may be β correct β from the banks β business point of view, but they are potentially too low in society β s broader perspective. the second reason for questioning the risk weights is that they are backward - looking. and as we all know, history doesn β t always repeat itself. this is one reason why i am concerned, despite the riksbank β s own stress tests showing that the swedish banks would not suffer particularly large loan losses, even if the situation in the mortgage market worsened significantly. one can β t help wondering whether it is reasonable that sweden β s risk weights are among the lowest in europe, while our households are among the most indebted. and their debts are increasing. i don β t think it is reasonable. and consequently i think that from the authorities β point of view we need to discuss whether the level of the risk weights is reasonable or whether it needs to be raised β perhaps by establishing a floor for the risk weights the banks use when calculating their capital adequacy. the third priority concerns ensuring that public authorities stand ready to use the tools we currently have at our disposal to cool down the mortgage market. finansinspektionen has already taken a stand by introducing a cap on the loan - to - value ratio. on our part it would involve using our possibility to require that the banks hold reserves with the riksbank. by linking the size of the minimum reserve requirement to lending to the housing market, lending to mortgage customers would become relatively more expensive than lending to other the risk weight of a loan is the risk that the borrower will not be able to meet his or her obligations. minimum capital ratios are set in relation to the total loan multiplied by
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component of financial stability. another β sine qua non β for more stable global capital flows is developing and implementing a macroprudential policy framework, and emerging market economies have taken important steps in this direction in the post - 2008 period. benefits and likely risks brought by this major transition in global finance will be discussed in length over the next two days by academicians and policymakers in six different sessions. i bis central bankers β speeches believe that this conference will produce fruitful and beneficial outcomes for global financial stability. i would like to thank our participants and distinguished guests for their contributions and for being here with us. bis central bankers β speeches
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ardian fullani : recent economic and financial developments in albania speech by mr ardian fullani, governor of the bank of albania, at the joint press conference of the imf mission with the ministry of finance and the bank of albania, tirana, 11 november 2008. * * * the regular visit of the imf β s eu1 european department mission is made in the context of the last review of the current 3 - year prgf β eff arrangement between the albanian authorities and the imf board of directors. this last review coincides with a sensitive outlook of the world economy, which is facing a highly intensive and uncommon global market correction. given this situation, present and future prospects still remain vague and uncertain. however, worth to note is that the albanian economy has exhibited admirable immunity to these developments. in this context, the prudent and systematic work of the bank of albania, both in terms of maintaining the macroeconomic balance at home and safeguarding the banking system β s financial stability, has provided an overwhelming contribution. over the last two years, the bank of albania has been an active actor in both directions, analyzing carefully all the risk factors and taking various measures to minimize their materialization in practice. in our work we have been guided by the philosophy that one cannot build authority in the market through the mechanical use of a set of instruments but through the market perception and trust in the policies pursued by the authorities. the conservative policy β the increase of the interest rate extended in a time period of 18 months β is the concrete application of this philosophy. in addition, measures have been taken in terms of amending and constantly improving the legal and regulatory package. the entire process of measures and decisions has aimed at ensuring the financial system β s efficiency and stability. the latest regulatory amendments, which have brought a new dimension to the banking business in relation to the customers, foreign currency lending, investments in parent banks and internal control, are of particular importance. the bank of albania will persistently make an assessment of the existing regulatory framework and aim at improving it, in order to address the present and potential risks. i believe the set of actions taken recently by the central bank have been a kind of intensive therapy which has contributed to the increase of the banking system β s immunity. with reference to the economic and financial situation at home, i would like to inform you that the bank of albania shares the same opinion with the imf and the ministry of finance regarding the current period as of end
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rafael buenaventura : implementation of bsp rules on the transport of currencies keynote address by mr rafael buenaventura, governor of bangko sentral ng pilipinas ( central bank of the philippines ), at the bsp strategic planning conference, manila, at the signing of the memorandum of agreement for the effective implementation of bsp rules on physical cross - border transport of currencies, manila, 17 january 2005. * * * good afternoon, friends, ladies and gentlemen. i would like to thank the agencies represented here for their full cooperation in the preparation of the memorandum of agreement ( moa ) for the effective implementation of bsp rules on the physical cross - border transport of currencies, which will be signed today. we know that, each agency has more than enough work in its hands, and therefore, it is not easy to define and accept additional responsibilities, as would be the case in this moa. i also want to thank the following signatories to this moa who have taken time off from their busy schedules for this signing ceremony : 1. bureau of customs commissioner george m. jereos, 2. manila international airport authority general manager alfonso g. cusi, 3. philippine national police director general edgar b. aglipay, 4. bureau of immigration commissioner alipio f. fernandez 5. air transportation office executive director helen n. camua, and 6. philippine ports authority general manager oscar m. sevilla. of course, i am also a signatory under two hats, as bsp governor and as chairman of the anti - money laundering council. this moa seeks to ensure the effective implementation of bsp rules on the physical cross - border transport of foreign currencies and the philippine peso ( php ). bsp circular no. 308 dated 15 november 2001, as amended, requires any person who brings in or out of the philippines in excess of us $ 10, 000 or its equivalent to declare the same in writing using the prescribed foreign currency declaration form. other countries such as the united states, south korea, and malaysia broadly require similar customs procedures in the transport of foreign currency. the circular was issued as part of a package of measures to help curb money laundering activities. as early as june 2000, the bsp has adopted anti - money laundering measures to be at par with international practices. the monitoring of the cross - border transport of currencies is covered under the 9th special recommendation of the financial action task force (
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fatf ), the body that evaluates the anti - money laundering regimes of individual countries. meanwhile, section 4 of circular no. 1389 dated 13 april 1993, as amended, requires any person who brings in or out of the philippines an amount exceeding php 10, 000 to obtain prior bsp authorization therefore. the rule was promulgated to help prevent speculation against the peso and maintain the convertibility of the currency. vigilance in the implementation of the bsp rules, particularly in the transport of foreign currencies, is important in addressing incidents such as recent events involving the discovery by u. s. customs authorities of large amounts of undeclared foreign currency found in the possession of filipino citizens arriving in the u. s. we are glad that we will be assisted by other government agencies in this regard. the moa defines the functions and responsibilities of the various government agencies involved and aims to promote harmony and maximum cooperation in the implementation of bsp rules on the transport of currencies. the moa demonstrates the strong commitment of the government, thru the heads of the various agencies who are signatories to the agreement, in instituting measures versus money laundering in the philippines. again, thank you for your support and we look forward to the smooth implementation of the moa.
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also embarked on outright purchases of securities, though on a relatively limited scale, in order to support the broader functioning of euro area financial markets. the covered bond purchase programme was initiated in july 2009. this programme was part of the β enhanced credit support β measures and its objective was to support a financial market segment that is particularly important for the longer - term funding of banks and the financing of the real economy in the euro area. the spill - over effects connected with the intensification of the financial crisis in september 2008 had led to a virtual shut down of the covered bond market, notwithstanding the high credit quality of this type of asset. in response, the eurosystem purchased eur 60bn of covered bonds between july 2009 and june 2010. empirical research conducted by ecb staff suggests that the cbpp has been successful in achieving its goals ( beirne et al., 2011 ). not least due to strong and timely action by central banks and governments, worldwide signs of stabilisation in financial markets emerged, with spreads returning to pre - lehman levels and positive output growth resuming in the second half of 2009. in this respect, the ecb β s non - standard measures played a non - negligible role in supporting the euro area economy. ii. 3 from the financial to the sovereign debt crisis chart 1 also shows that sovereign credit spreads ( relative to the german bund ) started to widen already in the early stages of the crisis as the market reassessed risk across the board. but sizable repercussions on the sovereign bond market are noticeable only after the collapse of lehman brothers, when the spread on irish and greek long - term government bonds soared above 250 basis points. this reflected the fact that, during the initial stages of the crisis, government guarantees for the financial sector and, more generally, the policy response to the crisis implied a transfer of risk from the private sector to the government sector. however, as deficits surged and the greek government revealed a much larger deficit than previously thought, the attention focused more on the state of public finance. from then on, and in particular after the downgrading of greek bonds by all the major rating agencies, the financial crisis that originated in the us turned into a sovereign debt crisis with a european epicentre. this escalation of events brought the crisis to a new dangerous level. while in the early phases concerns focused around the risk of a protracted recession the new phase raised concerns regarding the ability of some euro area
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generates margin calls or increased haircuts, will lead to larger asset - price falls the more illiquid are these assets. for these reasons, financial intermediaries play a key role in this environment. on the one hand they increase stability by providing liquidity - transformation bis central bankers β speeches services. on the other hand, when their net - worth deteriorates, their ability to provide liquidity ( inside money ) is impaired increasing the value of outside ( central - bank ) money. as the money multiplier shrinks, β fisherian deflation β sets in worsening the debt burden of borrowers and, hence, further amplifying the contraction. regrettably, the diversification delusion discussed in boz and mendoza and the understatement of the liquidity - risk channel in brunnermeier et al. affected investors as well as policymakers and regulators. indeed this same literature tells us that there can be ample scope for welfare improvements through economic policy. the fundamental reason for this public role is that private agents, typically, are not large enough players to internalize the general equilibrium β or even market specific β consequences of their portfolio decisions ( as in the case of fire sales ). these results warrant ample liquidity injections by central banks and underpin the current wave of regulatory reforms undertaken in the european union as well as in other major economies. among these reforms, it is important to mention in particular the new basel accord ( basel iii ) on banks β capital adequacy which is consistent with the idea of brunnermeier et al. that critical reductions in banks β capital can generate dangerous liquidity shortages. equally important is the establishment of the european systemic risk board ( esrb ) with macro - prudential oversight responsibilities over the financial system in the european union, which directly relates to the limited ability of financial markets to internalize systemic risk. another important lesson that has been learned, admittedly the hard way, is that it is very difficult, if at all possible, for the market to correctly price sovereign risk. charts 1 and 3 offer a clear example of what i mean. in particular consider two of the most troubled economies, i. e. greece and ireland. the evolution of their public finances in the recent history leading up to the crisis is dramatically different ( as chart 3 shows ), in large part reflecting the deep differences in their growth experiences. up to the start of the crisis ireland experienced a rapid fall
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decisions without fear of direct political interference. it does not mean β nor should it β that the central bank is not accountable for its policies. it is important to remember that the federal reserve does not select its own goals. instead, congress sets the goals it wants the fed to pursue with monetary policy. since 1978, congress has mandated that the fomc β shall maintain long run growth of the monetary and credit aggregates commensurate with the economy β s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long - term interest rates. β the goals of monetary policy are rightly a subject of legitimate debate. i have frequently argued that these goals are too broad, and they risk making the fed responsible for more than it can actually deliver. that, from my perspective, risks undermining the fed β s credibility and invites policymakers to lurch from one goal to the next when it seems convenient, thus making it more susceptible to political pressure. as a consequence, i have favored a single mandate for the fed β price stability β to increase the clarity of the objective and make it easier to hold the fed accountable. nevertheless, given a mandate, what central bank independence means is that congress has left the decisions of how best to achieve this mandate to fed policymakers. why did congress design the fed this way? there are two very important reasons. first, monetary policy affects the economy with sometimes long and variable lags, but elected politicians, and even the public, often make decisions with the next month, next quarter, or the next election in mind. monetary policy actions taken today will often not have their full effect on the economy for at least several quarters and perhaps as long as several years. that is why monetary policy choices today must focus on the intermediate to long term and anticipate what the economy might look like over the next one to three years. indeed, the mandate itself stresses the long run focus of monetary policy. moreover, there can be a conflict between what monetary policy may be able to achieve over the short term versus its impact over the long term. for example, in the short term, it might seem expedient or even desirable to try to spur economic growth and employment by conducting excessively accommodative monetary policy. yet, this could lead to very bad economic outcomes in the long term, including higher inflation, higher interest rates, and an eventual tightening of policy to control inflation that
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instead, i believe we should describe how we will respond to the data ; that is, we should describe a reaction function. i frequently consider such reaction functions as i think about policy. these are typically taylor - like rules, named for stanford university economist john see charles i plosser, β the benefits of systematic monetary policy, β speech given to the national association for business economics, washington economic policy conference, washington, d. c. ( march 3, 2008 ). finn e kydland and edward c prescott, β rules rather than discretion : the inconsistency of optimal plans, β journal of political economy, 85 ( june 1977 ), pp. 473 β 491. bis central bankers β speeches taylor who first proposed them in the early 1990s. these policy rules typically call for the targeted funds rate to respond to deviations of inflation from some desired goal and to deviations of output from some measure of potential β sometimes referred to as economic β slack β or the β gap. β sometimes such gaps are translated into deviations from full employment. such robust rules recognize that data are measured imprecisely and are subject to revision. moreover, they have been shown to perform well in a variety of models and conditions. i believe these robust rules can be useful guideposts for policymakers and the public in assessing the stance of monetary policy and its expected path. communicating about such guideposts would enhance transparency and help make policy more systematic. however, i don β t believe that we need to follow rules mechanically. judgment will always be required. yet, policymakers and the public should be very cautious when they call for policy rates to deviate in significant ways from these guideposts. making such judgments should require careful analysis, and the justification for deviating from the guidelines should be clearly communicated to the markets and to the public. thus, policymakers will still be able to exercise discretion, but using rules as guideposts will enhance transparency and effective communication. improving transparency this leads me to my third important principle for monetary policy β communicating in a clear and transparent way. in recent speeches, i have proposed that the fomc could improve communication and transparency by publishing a more comprehensive monetary policy report on a regular basis, perhaps quarterly. 3 this report could incorporate a discussion of such robust systematic rules i referred to a moment ago in its description of the underlying policy framework. the rules could serve as a benchmark for the current stance of policy and the expected path of
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and effective and embedded risk management. these are critical enablers for credit unions to address the challenges they face and avail of development opportunities. responsibility for meeting these challenges rests first and foremost with the board of each credit union, although there remains a need for greater sectoral leadership too. each board must set and own the strategic plan for its credit union. the strategy should be clear in identifying and setting out actions to address current and emerging sustainability challenges. individually and collectively, credit unions need to form and realise a clear vision of their role in the provision of financial services and ensure that they can implement the necessary business model and technological changes to realise their vision and fulfil this role for their members in a safe and sustainable way. strategic plans need to be tailored to the credit union β s individual financial circumstances and capabilities, as well as common bond dynamics, while addressing operational and commercial challenges. strategic plans should demonstrate sound and prudent risk - focused strategy formulation, business planning and implementation, aimed at the sustainable delivery of member products and services. post restructuring development the sector has undergone significant restructuring in recent years. restructuring provides strategic transfer solutions for weaker credit unions, enabling affected members to retain access 5 / 7 bis central bankers'speeches to credit union services and indeed gain access to a wider range of services provided by stronger, larger credit unions. restructuring also offers opportunities for other credit unions to build scale and reach by coming together voluntarily. this restructuring has resulted in a significant change in the asset size profile of the sector. at 30 september 2021 there were 213 trading credit unions ; down from 343 at 30 september 2015. credit unions with assets of at least β¬100 million now represent 67 per cent of total sector assets β up from 41 percent in 2015. at the other end of the size scale credit union with assets of less than β¬40 million now represent 10 percent of total sector assets. central bank strategy the central bank published its new strategy yesterday9, 5th november. as key central bank stakeholders, i recommend you take the time to read the short strategy document, which sets out the four core key themes underpinning the strategy. these themes will be our β north star β when it comes to our focus in the years ahead and will act as a constant guide to everything we do as an organisation : future - focused β the world in which we operate is changing rapidly. the economy, the financial system and financial services and products are changing and will continue to change over the coming years. we want to be ready
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lending. in 2018, to facilitate increased diversification, we introduced additional classes of investment in which credit unions may invest surplus funds. while development of appropriate investment structures for some of these new classes has taken time, recent developments will facilitate investment in approved housing bodies and corporate bonds for those credit unions seeking to do so. in 2020, we introduced changes to the lending framework providing those credit unions with the financial strength, competence and capability, flexibility to undertake increased longer term lending, including home mortgage and business lending. after this period of significant change, the central bank is not planning further significant changes to the specific regulations directly focused on the credit union sector in the foreseeable future. that is not to say we are closed to the possibility of future changes, and we will continue to engage with sector representatives and the oireachtas on the appropriateness and effectiveness of the credit union regulatory framework. notwithstanding this degree of relative stability, credit union boards and management will have to continue to address regulatory and legislative change relevant to the financial services system as a whole. one such area where there is increasing scrutiny relates to aml / ctf, as recognised by the theme of this event. at an international level, shortcomings in the aml and ctf frameworks and approaches have been recognised and we can, consequently, expect changes to underlying regulations and the supervision of aml and ctf matters. it is vitally important that ireland, as a small, open economy with a thriving financial services industry, is pro - active in preventing its financial system from being used for money laundering and terrorist financing purposes. all financial service providers, including credit unions, have an important role in achieving this. the central bank is the competent authority for aml / cft supervision of credit unions. 4 this requires us to effectively monitor credit unions β compliance with their legislative obligations and, where weaknesses are identified, to take actions that are reasonably necessary and 3 / 7 bis central bankers'speeches proportionate to ensure compliance. in delivering on this mandate, in september 2019 the central bank published aml / cft guidelines for the financial sector, 5 which were subsequently revised in june 2021 to reflect changes in the legislation. the purpose of these guidelines is to provide clarity on the central bank β s expectations in respect of compliance with aml / cft obligations as set out in : the criminal justice act 2010 ; central bank aml / cft sectoral reports / bulletins ; and relevant european supervisory authority guidelines. areas of focus
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paper series, no 1747, ecb, december. 5 / 6 bis central bankers'speeches 9 the fiscal stance is measured as the change in the cyclically adjusted primary balance net of government assistance to the financial sector. 10 see knotek, e. s. and zaman, s. ( 2014 ), β on the relationships between wages, prices, and economic activity β, economic commentary, august ; bidder, r. ( 2015 ), β are wages useful in forecasting price inflation? β, frbsf economic letter. 11 bobeica, e., ciccarelli, m. and vansteenkiste, i. ( 2019 ), β the link between labor cost and price inflation in the euro area β, working paper series, no 2235, ecb, february. 12 bobeica et al., op. cit. 13 see head, a., kumar, a., and lapham, b. ( 2010 ), β market power, price adjustment, and inflation β, international economic review, 51 ( 1 ) : 73 β 98 ; and taylor, j. ( 2000 ), β low inflation, pass - through and the pricing power of firms β, european economic review, 44 : 1389 β 1408. 14 bobeica et al., op. cit. 15 see hahn, e. and o β brien, d. ( 2018 ), β monitoring the exchange rate pass through to inflation β, box 3 in economic bulletin, issue 4, ecb. 16 see koester, g. and guillochon, j. ( 2018 ), β recent developments in the wage drift in the euro area β, economic bulletin, issue 8, ecb. 17 andersson, m., kok, c., mirza, h., more, c. and mosthaf, j. ( 2018 ), β how can euro area banks reach sustainable profitability in the future? β, special feature, financial stability review, ecb, november. 6 / 6 bis central bankers'speeches
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in any event, the papers presented today and tomorrow bring further evidence that the relative importance of banks and markets is a widely used summary indicator of the evolution of financial systems. the changing nature of banking relationships in european finance today is the issue on which i would like to share a few thoughts with you this evening. banks deserve special attention as they are, in continental europe, the main suppliers of credit and financial services to individuals and firms. my argument will develop around two simple questions : β’ how important is relationship lending in the euro area? β’ given the current trends in bank structure and competition, is relationship lending on a declining trend, and if so, what could be the consequences? 1. relationship lending in europe by relationship lending, i mean that banks and their customers build up agreements on terms of credit, implying for instance secured access to credit lines at pre - set prices. the bank acquires expertise about the credit - worthiness of its customer by keeping close contact with the management of the firm. for instance, the bankers who sit on the board of many european firms can gain insider information on these firms. the implication of this close link may be that the bank provides the firm with easier access to liquidity. relationship lending is particularly widespread in the euro area, in particular regarding small and medium enterprises ( sme ). given that sme account for about 60 % of private sector employment in the euro area, it is immediately apparent that a reduction in the availability of relationship lending could have an effect on the euro area's economy and on the working of monetary policy. this is particularly relevant to determine the importance of the often mentioned " credit channel of monetary policy ". at the micro - economic level, relationship lending implies that as a tendency the bank insulates its customers from liquidity or interest rate shocks. in case of a drop to its cash flow e. g., a firm can draw on a credit line that has been previously negotiated. likewise, bank lending rates will not necessarily be adjusted in line with market interest rates. while firms that have access to these risk - sharing schemes can be expected to pay some form of an insurance premium to the bank, their decisions on investment, employment and production should be less sensitive to financial shocks. hence, at the macro - economic level, the more widespread relationship lending is, the smoother the business cycle should be. this may contribute to explain why business cycle fluctuations have traditionally been larger in the us and the uk, where relationship lending is limited
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to 2020, to 116, 401, signalling a change in consumers β habits and increased orientation towards using digital means of entering into financial service contracts. of this, 18, 300 contracts were concluded using video - identification of consumers. further, when we compare q4 2021 with q1 2020, we see that the number of performed mbanking transactions increased by close to 120 % for natural persons and as much as 170 % for legal persons and entrepreneurs. the use of e - banking, which performed well even before the pandemic, also went up, with the number of transactions higher by 17 % for natural persons and 36. 3 % for legal persons and entrepreneurs. in your report, you specified that many of the countries in which the ebrd is operating plan to introduce the regulatory sandbox, which we have had in serbia for a long time already. we are also exploring the possibility of applying different innovation technologies, such as blockchain technologies and artificial intelligence, to respond to the needs of our business processes. to the extent possible, we have also regulated virtual currencies as a type of digital assets. in addition to all that, we need to cooperate and keep an open mind. as augustin carstens, general manager of the bank for international settlements, recently said : β the soul of money belongs neither to a big tech nor to an anonymous ledger. the soul of money is trust. β i have the habit of saying that people, knowledge and trust are the key foundations on which rest governments and all institutions, banking in particular. this does not change an iota in the digital era. it is the task of central banks to build trust, and i can promise that we will strive to deserve this trust in the years ahead, just as we have deserved it in the past ten years. i thank you for your attention, but also for your trust. ladies and gentlemen, esteemed colleagues, it is my message that we should not shy away from new technologies, but that we need to be prudent and cautious and take measures to manage cyber and other risks, to which we pay particular attention in the national bank of serbia. it is our task to create conditions worthy of the 21st century man, because you cannot start anything without people or complete it without institutions. i wish you a successful presentation and good health! 2 / 2 bis central bankers'speeches
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national burden, β which includes the fiscal deficit, the same conclusion still holds. although this suggests that shouldering a somewhat heavier burden for somewhat better safety nets is a reasonable option for japan, the question of how much remains. all in all, it is not easy to achieve a national consensus on how much higher benefits and burdens will be appropriate. it may take some time before japanese people make a choice. iv. to the second stage of structural reforms the worst scenario is that japan will fall into a β heavy burden but insufficient benefit β society, which might actually take place without a gain in productivity. it is exactly in this context that the structural reforms should be propelled further. among many reform agenda, i will focus on the importance of facilitating further integration of japan into the global economy. further integration into the global economy although at home resources are constrained by the declining population, there is a great source of usable technology, labor, and management skills abroad. i believe that what determines a nation β s long - term economic growth is not its population but its flexibility in taking advantage of globally available resources. let me discuss two aspects of globalization : use of the foreign management resources and use of foreign labor force. the first aspect is to introduce more foreign management resources. as chart 10 shows, although foreign direct investment into japan has been increasing considerably, the stock of direct inward investment as a ratio to nominal gdp is still much lower than the same ratio for other countries. one good example is the united kingdom in the 1980s. tax incentives, infrastructure improvements, and other measures were taken to promote foreign inward investment. japanese manufacturers, encouraged by the u. k. government, decided to build their factories here ; nissan was an early good example and many others, particularly automobile companies and electrical appliances companies, followed suit. the core of the reform in the united kingdom was perhaps its willingness to be open to the world. many years later in the late 1990s, it was again nissan that became a model, this time, of demonstrating the merits of learning from foreign management. mr. carlos ghosn came to nissan as a new president, transforming the company at a crisis into one with years of record performance. the revival of nissan, by creating a more competitive environment, contributed to invigorating the entire automobile industry and triggered a large - scale restructuring of suppliers. the second aspect of global integration is more extensive use of foreign labor. some people express their concern that if the introduction of foreign workers is too rapid,
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the advance of the fourth industrial revolution, new growth engines can no longer be created through larger inputs alone. we need to devote all our energies to 2 / 8 strengthening productivity across the economy and fostering new industries. we must provide unwavering support to create an environment in which the private sector can unleash its creative and innovative potentials, thereby expanding investment, creating quality jobs and heightening efficiency. shifting to an innovation - based economy will entail numerous challenges. however, delaying this process to avoid headwinds will distance us from greater growth potential. dear members of the bank of korea! let me talk now about the main tasks that the bank of korea will need to focus on this year. we will have to conduct our monetary policy so as to support economic recovery and to ensure that inflation stabilizes at the target level over a medium - term horizon. since it is forecast that our economy will grow at a pace below the potential level, and that demand - side inflationary pressures will not be high, we will need to maintain our accommodative monetary policy stance. in this process, we will determine whether to adjust the degree of monetary accommodation, based on an assessment of wide - ranging factors such as external risk developments, domestic macroeconomic trends, and any changes in financial stability conditions. 3 / 8 i would like to once again highlight the critical importance of accurate diagnosis and forecasting of economic developments for the timely and effective operation of monetary policy. we will need to improve the precision of our forecasting by expanding the scope of financial and economic indicators and utilizing information technology. the remarkable development of digital technology offers us tools to use the vast amount of real - time information related to economic activity. we need to equip ourselves with the abilities to analyze and forecast precisely based on ai and big data. in terms of economic analysis and forecasting, we must consider the possibilities that the behaviors of economic agents and the relationships among major economic variables may have changed significantly from the past. we will also need to pay closer attention to policy communications. in this persistently low - interest and low - inflation environment, we may face an increased possibility of conflict between the two goals of price stability and financial stability. therefore, a clear rationale behind the bank β s decision - making should be presented so that economic agents can easily understand its policy decisions. since inflation is hovering below our target objective, we need to thoroughly analyze and review price conditions and explain them to the public in detail.
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early 1980s, many latin american countries found themselves in a situation where their foreign debt exceeded their earning power and they were not able to repay it. even though quite a few researchers tried to explain the crisis as a result of the economic development strategy of import substitution industrialization and heavy reliance on raw material exports, the direct causes were the two kinds of abnormalities. on the one hand, the mishkin, frederic s., 1999, β global financial instability : framework, events, issues, β journal of economic perspectives, vol. 13, no. 4. governments and public sector typically took a large share of expenditures and investment in the economies, and thus the scale of the budget increased continuously. on the other hand, the governments were unable to collect the necessary taxes to pay for the increased spending. 7 the consequence of this double problem was increased budget deficits, which in turn limited the capacity of the states to finance the deficit through raising debt. when the government could not resort to tax collection or further debt accumulation, printing money was the only option left, consequently resulting in hyper - inflation. the evolution of the international financial environment at the time also played a role in the process. during the 1970s, oil prices skyrocketed and oil - exporting countries invested their money in international banks, which recycled a major portion of this as loans to latin american governments. however, at the end of the 1970s, the us fed led by paul volcker raised interest rates to curb inflation. as a result, interest rates in global financial markets rose and the world economy went into a deep recession. the debt obligations that should have been met by the latin american countries increased dramatically and it became much harder for them to pay back their debts. consequently, in august 1982, mexico declared that it would no longer be able to service its debt. and international commercial banks reduced new lending to latin america significantly or halted it altogether. as much of the latin american debt was short - term, a crisis followed when its rollover was refused. sudden stops and massive capital outflows brought about a rapid depreciation of the latin american currencies, thereby further raising the real interest rate. in terms of per capita real income, latin america experienced negative growth of almost 9 percent between 1980 and 1985. after the latin american debt crisis, the so - called β washington consensus β emerged among economists and washington, d. c. - based institutions such as the imf and the world bank. the term washington consensus
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ensure that the swiss payments ecosystem is in a position to absorb innovations and respond to user demands, while maintaining its trademark efficiency and safety, the snb has engaged in a dialogue with stakeholders. while recognising that the ultimate solutions will need to come from the private sector, the snb can help shape a common β swiss payments vision β that will help the various stakeholders to better position themselves vis - a - vis the new technologies in the swiss payments ecosystem. the covid - 19 pandemic seems to have accelerated the transformation of the payments landscape for users and providers alike. but payments is only one area faced with digital disruption. what about other areas β for instance, areas that stand to be affected by big data and automation? big data and automation the trend towards a digital economy is also generating huge amounts of new data. nowadays, more data are created every day than all of humanity created during the entire 20th century. this flood of information enables new ways of monitoring and analysing the economy. a march 2021 survey shows that central banks β interest in big data and machine learning has increased markedly over the last few years. 8 the snb is no exception. the covid - 19 pandemic brought the need to exploit non - standard data into sharp focus. in normal times, official economic indicators and surveys are sufficient to monitor economic developments. but such standard data are only available at lower frequency and with a certain time delay. with events unfolding rapidly during the first wave of the covid19 crisis, the need for non - standard, real - time data that are available at higher frequency became more pressing than ever before. to monitor economic activity, daily mobility and daily card transaction data became particularly useful as concurrent economic indicators. during the first lockdown in spring sebastian doerr, leonardo gambacorta and jose maria serena garralda ( 2021 ), β big data and machine learning in central banking β, bis working papers, no. 930, march 2021. page 7 / 10 2020, card payments data showed the sharp drop in economic activity in real time. 9 while online payments in retail trade β represented by the red bars in chart 7 β increased, stationary card payments fell by more than 20 % in march and april compared to the previous year, as can be seen from the blue bars. such data also allow a sectoral and regional breakdown. we could thus observe the pronounced payment shifts that took place from urban to suburban and rural areas, and across cantons.
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for companies. to be effective, financial support had to be fast and well targeted. to ensure that affected businesses could access covid - 19 loans quickly and at favourable conditions, the federal government, commercial banks, the swiss financial market supervisory authority ( finma ) and the snb engaged in unprecedented collaboration. the government guaranteed the loans ; 2 the banks used their existing client relationships to process applications and disburse the funds ; and the snb set up the covid - 19 refinancing facility ( crf ) β a new refinancing tool designed to complement the covid - 19 loan programme. this package of measures enabled firms to receive a government - guaranteed bank loan within one business day at the attractive rate of 0 % and with a minimum of bureaucracy, and the banks could refinance their loans at the snb policy rate of β 0. 75 %. 3 in addition to the crf, the snb took other measures to facilitate lending. at the recommendation of the snb, the federal council deactivated the countercyclical capital buffer. doing so made it easier for banks to reallocate capital to where it was most needed. the snb also raised the exemption threshold on the sight deposits that commercial banks hold at the central bank. since negative interest is charged only on the portion of the sight deposit account balance that exceeds the exemption threshold, this measure helped substantively lower the interest burden for the banking sector as a whole. 4 overall, the crf greatly facilitated the disbursement of covid - 19 loans to firms. participation was sizeable : 20 % of all swiss firms participated in the programme, with total loan volume amounting to 2. 4 % of gdp. the typical covid - 19 loan was small β around two - thirds of the loans had a limit of less than chf 80, 000. analysis also suggests that the loan programme was well targeted. participation in the loan programme is correlated with the exposure of firms to lockdown restrictions and with the geographical distribution of confirmed covid - 19 cases. 5 and, crucially, the loans reached younger and smaller firms, which are generally less likely to obtain outside financing during a crisis and are therefore more vulnerable. as you can see from chart 6, almost 75 % of all covid - 19 loans were taken out by firms with fewer than five employees. because banks played an important role in disbursing covid - 19 loans, it was important that they
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