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this was partially because the shocks to asset prices were less broadbased, and partially because commodity markets had gone through a period of volatility just a few months earlier, so initial margin was already elevated. some early lessons just because central clearing has been a success, does not mean that ccps and ccp regulators do not need to keep learning. ccps have been central to making the financial system safer over the past decade. but we have also seen new significant strains that need to be addressed. policy makers and market participants have deliberately and sensibly put ccps in the centre of the financial system. to continue to earn that trusted role we need to keep learning – we cannot be defensive. i see three areas for further work ( 1 ) tackle the side effects without sacrificing the cure by design, post - crisis reforms mean that in events of market turmoil losses are crystalized promptly and risk is repriced. but as we have seen in 2020 and again in 2022 this can mean very sharp strains on liquidity in parts of the system. the answer here is obviously not to return to pre - 2008. we need to avoid having such short memories that we return to a pre - lehman system. instead, just as ccps were part of the solution when it came to counterparty credit risk, they can play a role in helping to solve the liquidity risk we have seen recur in each recent episode of stress. in particular, ccps can : ensure that im is sufficiently conservative in good times that it reduces the need for wild swings once a crisis hits ; and ensure that participants have sufficient information, data, and tools to anticipate what margin calls might look like under stress, and how pro - cyclical they may be. importantly, tackling the side effects will also require addressing participants ’ preparedness to meet stress margin calls. while ccps can play a part in the solution, this is not something ccps can solve on their own. we also need to take a hard look at the ability of non - banks to insure against severe but plausible liquidity stress. the international work to look at these issues [ 8 ] is welcome – it offers opportunities to address them in a way that preserves and enhances the role of ccps. if done right, it can help to address the lessons of the covid and russian invasion market turmoil, while ensuring that market participants have incentives to centrally clear their derivatives trades in good and bad times. (
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jens thomsen : government bond market in light of the recent turmoil speech by mr jens thomsen, member of the board of governors of the national bank of denmark and chairman of the economic and financial committee, sub - committee on eu government bonds and bills market 1, at the european government bond summit, brussels, 24 october 2008. * * * introduction i am delighted to be here today to offer my view on the ongoing turbulence in the financial markets. in the not so distant past the financial markets played a role by applying pressure on member state governments to run sound public finances in stage iii of the emu. today the tables have been turned. a reasonable description of the present agenda is more along the lines of how the public finances can promote sound financial markets ( see slide 2 ). liquidity in turbulent times the price of liquidity increases. since august of 2007 there has been four consecutive waves of illiquidity, during which the perceived default and liquidity risk of banks have risen and widened the spread between unsecured and secured lending and where the fourth and last spike following the default of lehman brothers has been the most severe ( see slide 3 ). the decomposed ted spread shows how t - bills have become especially valuable in times of crises ( see slide 4 ). during the four spikes the lending against us t - bill has driven down the t - bill rate. the same effect has not been quite as prominent in the european money market ( see slide 5 ). the most recent flare up of the turbulence has however lead to significantly increased demand for short term government securities leading to lower interest rates for the german t - bills. prior to the recent turbulence in september the search for safety drove down both the t - bill and the highest rated commercial paper yield. lately the status of the commercial paper programs as a safe heaven has eroded, as the cp - markets have frozen ( see slide 6 ). outstanding amounts of asset backed commercial papers took a significant dive at the outset of the turbulence in 2007 ( see slide 7 ). recently the outstandings of commercial papers for financial issuers have been declining. note however that the latest data does not reflect the impact of the commercial paper funding facility ( cpff ) provided by the federal reserve. credit risk and issuance terms the increased price of liquidity has been followed by an increase in of the price of credit. the recent announcements of bank recapitalisations and guarantee schemes have curtailed the upswing in the cds spread in
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is how to move from a cyclical recovery to a more balanced and sustainable pattern of growth globally. just as there are substantial fiscal imbalances in several countries that threaten to become unsustainable in the absence of consolidation, so there are large - scale imbalances in the world economy as a whole that raise issues of long - term sustainability. in particular, there continues to be a need to reduce consumption and increase saving relative to investment in the united states, and a parallel need to increase consumption relative to investment in parts of the emerging world. the recent crisis has reduced but not eliminated current account imbalances worldwide. in many cases, the imbalances remain sizable, and they could begin to grow again and ultimately become destabilizing. the case for global rebalancing is compelling when we consider the structural backdrop. if we in the united states and other deficit countries are to move to a more healthy balance of private and public spending in relation to income, other countries cannot be as reliant on us as in the past to be their growth engine. the recent configuration of global demand, after all, has involved persistent trade surpluses in many emerging markets and this represents foregone consumption and investment that has mostly been recycled into large scale accumulation of foreign exchange reserves. to be sure, the crisis demonstrated the value of an ample reserve cushion to protect against sharp shifts in capital flows. however, a number of countries have surely reached a point at which further reserve accumulation comes with more costs than benefits. the expected return on foreign exchange reserves is likely to be quite low in relation to potential domestic uses. in fact, there is the prospect that reserves could earn a significantly negative return in local currency terms, especially when the acquisition of such reserves is undertaken to resist local currency appreciation that must eventually occur anyway. finally, delay in adjustment of demand patterns and currencies raises the risk that these adjustments will ultimately occur in a more compressed and wrenching manner. how many times have we seen bottled - up pressures ultimately give way to disruptive overshooting? moreover, lack of progress on rebalancing demand would put at risk the open trading regime that has been so important to global prosperity and growth. to date, protectionist pressures have been largely contained. but if surplus countries are perceived as resisting global adjustment, the political consensus in favor of an open global trading regime could begin to erode. protectionism is a lose - lose proposition – for surplus and deficit countries alike
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on the side of all ending up in a similar place, rather than on the relative degree of difficulty in getting there. the process is also fragile because some countries seem intent on strengthening their own set of standards before the international process has had a chance to reach consensus. although it is understandable that countries would want to move quickly to strengthen their regulatory regimes, such actions should not be undertaken in a way that is immutable and unresponsive to the emerging international consensus. 1 at the end of the day, to achieve harmonized standards, each sovereign nation is going to have to bend a little bit from what it believes is best for its financial system viewed in isolation. this is necessary, of course, because a series of regulatory regimes that appear best for each individual country would likely be distinctly second - best or even worse when considered collectively. the recent crisis underscores the fact that the regulatory regime needs to be harmonized and global in nature. my second concern on the regulatory reform front is that reform may be too focused on the traditional banking sector and not enough on other financial intermediation activities. of course, it is clear that we need to make the traditional banking system more resilient and robust. 2 but make no mistake, we also need to ensure that regulatory reform fully encompasses the full range of financial intermediation activity, including capital markets and insurance, over - the - counter ( otc ) trading of securities and derivatives, wholesale collateralized funding markets, and payments and settlements. this is necessary for two reasons. first, too much focus on raising the requirements on banks runs the risk of just forcing activity into the non - banking sector. second, many of the problems of the financial crisis originated outside of the banking sector. to a significant degree, the crisis was about regulatory gaps – be it gaps in terms of loosely regulated mortgage underwriting practices in the united states, the activities of bank - sponsored structured investment vehicles ( sivs ) and conduits, the providers of insurance guarantees against structured finance products such as aig financial products group, or the structured in this regard, i am considerably more worried about countries that implement standards that are more lax than the norm, rather than more tough than the norm. however, if many countries individually were to opt for tougher standards, this could raise questions about whether the international norm is too lax. work underway by the basel committee on banking supervision and others all are designed to make the traditional banking sector more robust. this
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dr. liebscher talks about european economic and monetary union – chances and challenges for europe address by the governor of the oesterreichische nationalbank, dr. klaus liebscher, to the eurogiro central and eastern european conference at the sas palais hotel in vienna on 9 april, 1999 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ladies and gentlemen, it is a great pleasure for me to share a few thoughts with you on the chances and challenges for europe that arise from european economic and monetary union. as you may know, the oesterreichische nationalbank has a long tradition of close co - operation with central and eastern european countries and central banks. it is therefore quite natural - for historical, geographical and economic reasons that, within the newly established european system of central banks, the oenb sees itself as a kind of interface between the escb, on the one hand, and central and eastern european countries and central banks, on the other. this is particularly relevant at the present juncture : eu accession negotiations with central and eastern european countries are in full swing. the escb needs to build up expertise on the prospective new eu member countries. at the same time, central and eastern european candidate countries might benefit from the oenb ’ s practical experience with its own – still quite recent - accession to the eu and its integration into the euro area and the escb. all those who have been following eu politics, eu economic developments and the establishment of economic and monetary union, know that there are, indeed, many chances and challenges arising from emu, which could easily provide material for discussion for a whole series of conferences. let me therefore focus on just four areas which i believe might be of particular interest to you. the first area concerns the eurosystem ’ s monetary policy. the second area deals with the economic impact of emu on the euro area and the interplay between the eurosystem ’ s monetary policy and the other areas of economic policy. the third area relates to the chances and challenges emu holds for banks. the fourth area, finally, concerns the consequences of emu
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##ecd. all these institutions boast a track record of training and cooperation initiatives and have played a major role in supporting the acceding countries during the transition process. while the formal enlargement of the european union is scheduled for may 2004, an “ enlarged europe ” has already become reality for all of us in many respects. preparations for the final step have been progressing steadily and i can imagine that many representatives from the acceding countries feel as if they were part of the european union already. to mention just one example : delegates from the acceding countries have observer status in all escb and eu committees and thus closely follow the discussions about the future challenges of economic and monetary policy. we appreciate the medium - term prospect of a number of new members joining the euro area. of course, they will have to fulfill the same conditions for emu accession as earlier members did, which are : european union membership, participation in erm ii for at least two years without severe tensions and sustainable compliance with the maastricht criteria. these are sensible and sound milestones on the route to full monetary integration. as to the single monetary policy, sticking to the primary objective of maintaining price stability remains a key factor for the credibility of both emu and the euro. by maintaining price stability, monetary policymakers optimally contribute to enhancing the long - term prospects for economic growth and thus also employment in the euro area. even though the short - term nominal interest rates are at the lowest level in 50 years, inflationary expectations are in line with our definition of price stability. at this juncture, it may, however, be particularly warranted to stress that monetary policy cannot by itself generate lasting and sustainable growth and employment in the euro area. to stimulate the economy and employment, economic policymakers are called upon to devise adequate structural measures that tackle the fundamental weaknesses and set off pressing adjustments. whereas emu entails a common monetary policy for all of its members, fiscal policy is formulated and executed at the national level. fiscal policy must be part of a comprehensive and growth - oriented strategy that focuses on improving the structure of public expenditures. besides, we must continue to credibly meet the provisions of the stability and growth pact, which is crucial for the smooth functioning of emu. let me emphasize that in a monetary union we need fiscal policy rules to prevent one country ’ s unsound fiscal policy from negatively impacting on other members of the monetary union. what is more, our complying with
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assets resolution trust. the ncb was recapitalised and privatised in 2000. during 2004, the privatization process of the savings bank was finalized, being purchased by the raiffeisen international bank holding, thus recording the transfer of 94 % of the banking capital to private ownership. currently the albanian banking system is composed of 17 banks, 14 of which are of foreign capital. the capital source is from different places, such as greece, italy, austria, germany, united states of america, etc. after the privatization process of the former savings bank was over and a 100 % of its stock was transferred to the raiffeisen international bank holding ag in august, the capital ownership structure during that period underwent significant changes, having the share of “ domestic government capital ” estimated at 6 % from 32. 1 % at end of 2003, and the “ domestic capital ” at 12. 75 from 35. 15 % it was in the same period of the previous year. figure1 : banking system capital ownership structure in years 1 recently, the improved climate for the development of business and the economy, the savings bank ’ s privatization from the raiffeisen bank, the macroeconomic stability, and the low inflation, have all led to rapid development of the banking system. hence, we can highlight that : • during 2005 and onwards, considerable developments have occurred. the system was more oriented towards the lending activity. the latter one constituted 26 % of the portfolio, from 16 % in the same previous year period. in 2005, the outstanding credit of the banking system increased by all 57. 6 billion 2 or 82 %, from all 19. 3 billion or 38 % in the previous year. in the meantime, the significant growth rate of the outstanding credit compared to end of 2004 has been reflected even in the changed credit structure by terms. it comes out of the analysis that the short - term credit has maintained the same growth rate, while a shifting of the mid - term credit to long - term credit is noticed, particularly when the comparison is made with year - end 2004. banking system assets of the nine - month period of 2006 increased by all 71 billion or 14 % more than at year - end 2005, maintaining almost the same growth rate with the previous year. the downward trend of the large banks ’ contribution to the growth of the system indicates a reduction of the overall banking activity concentration. meanwhile, the banking system assets performance in years, but particularly in 2005, expressed as a share of gdp, shows
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jean - pierre roth : are we still on the growth track? summary of a speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the general meeting of the schaffhausen regional association of industry and commerce, stein am rhein, 18 march 2005. the complete speech can be found in german on the swiss national banka€™s website ( www. snb. ch ). * * * after the economic downturn witnessed in the second half of 2004 and at the beginning of 2005, the question arises whether switzerland will remain on the growth track. jean - pierre roth believes it is and anticipates gdp growth to be in the range of 1. 5 % this year. owing to the favourable international economic situation, the economy in europe is likely to pick up again, which will also benefit the swiss export industry. at the same time, we can assume that domestic demand will continue to grow at a moderate pace. the decline in important economic data during the last few months, however, suggests that economic growth in the first half of 2005 will remain weak. this notwithstanding, involves the risk of declining corporate and consumer confidence, which in turn would jeopardise economic development. it is also doubtful whether the weak dollar and high oil prices have already had their full impact or whether it is yet to unfold. based on such considerations, the national bank decided to leave the three - month libor rate at 0. 75 % in mid - march. it was a relatively easy decision to make for the governing board in that inflation prospects over the entire three - year forecasting period have improved. consequently, an interest rate hike became less critical, and there was greater leeway to support economic recovery with an expansionary monetary policy. as soon as the recovery process is again under way, the national bank will continue the normalisation of monetary policy. this is the only way of ensuring price stability in the medium term and preventing the economy from overheating.
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john hurley : financial stability report 2004 opening statement by mr john hurley, governor of the central bank and financial services authority of ireland, at the presentation of the financial stability report 2004, dublin, 21 september 2004. * * * general introduction i would like to welcome you to the publication of the central bank ’ s first annual stand - alone report on the stability of the financial system in ireland. the report is published in accordance with our mandate under the central bank and financial services authority of ireland act, 2003. our mandate as a member of the european system of central banks also requires us, in conjunction with the various national central banks, to contribute to financial stability. financial stability reports are an element in the discharge of this mandate. this is the fourth report that we have published on financial stability issues but up until now the analysis has been published as a chapter in our annual report. the publication of a stand - alone report has allowed us to expand greatly the depth of analysis on financial stability issues. for the first time, seven research articles complement this analysis with special attention being paid to the irish housing market and the results of the recent exercise in stress - testing of the banking system which we undertook jointly with the financial services regulator. what is financial stability? financial stability exists where the various components of the financial system ( financial markets, payment and settlement systems and financial intermediation ) function smoothly and without interruption, with each component resilient to shock. if financial institutions run into difficulties then other banks, businesses and consumers could be very negatively affected. there have been many examples of financial crises in the past in various countries that proved to be very costly in terms of economic disruption and lost growth. the primary aim of financial stability analysis is to try to identify any factors that might lead to crises in the future. this is a major task as each crisis tends to be very different from the previous one. background to the report the publication of this report in itself is a contribution towards the promotion of financial stability. it is intended to increase awareness among all the players in the financial system of the various important issues at stake to ensure the continued health of that system. there are two distinct approaches adopted in this publication ; first, to report on the current health of the irish financial system and second, to highlight the possible shocks which could hit the system and simulate, to the extent possible, the likely impact of those shocks. the nature of the exercise involved in financial stability analysis is quite distinct from the type required for the other
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patrick honohan : restoring ireland ’ s credit by reducing uncertainty remarks by mr patrick honohan, governor of the central bank of ireland, at the institute of international and european affairs, dublin, 7 january 2011. * * * there is a temptation to quantify economic and financial prospects with greater certainty than is warranted. but, especially in the aftermath of events as dramatic as we have seen, this can be a big mistake. all too often in recent months, projections about the economic recovery, about the budget and about the likely evolution of banking loan losses have been provided and received without sufficient acknowledgment of the uncertainty surrounding those forecasts. but uncertainty is itself central, not only in our own assessments of future prospects, but in influencing ireland ’ s overall creditworthiness and thereby feeding back on the recovery process itself. doing what can be done to reduce the uncertainty facing the irish economy is a large part of what current economic and financial policy is about at present. today i want to focus mainly on uncertainty around the banks, but i ’ ll also touch on some other key dimensions of short - term macroeconomic prospects : employment and output growth, the budget and cost competitiveness. i want to illustrate the points with some charts which should at this stage be thought of as schematic rather than representing thoroughly precise representations of our current level of uncertainty. one great visual device for speaking about uncertainty is the fan - chart. here ( figs 1, 2 ) are two fan - charts, one for growth and one for the budget deficit. this is a better representation of what we know about what is likely to happen than a point estimate. the central paths shown in the fan - chart for growth and the deficit also correspond broadly to those presented by the institutions of the european union and the imf – and they have committed their institutional funds on the basis of their forecast that ireland is well able to service even if the full amount of €67½ billion debt is drawn. to use a word whose relevance and appositeness is more evident now than it was six months ago, they do not consider the debt position to be other than manageable. a glance at bond market yields suggests, however, that market participants are not yet fully convinced that the relatively benign central scenario is the only outcome imaginable. instead, it seems that investors in government bonds are still factoring in the possibility of what are called in the jargon “ tail events. ” take tail
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jean monnet, robert schuman, altiero spinelli ). the other would be based on market liberalisation, forming an outer rim of a new european construct, in which britain could obviously play a leading role, if it so wishes. 2 / 5 bis central bankers'speeches for southern european countries of course, the 1 - billion - dollar question is the following : if this dual architecture becomes a reality in the eu ( definitely not likely before the german elections ) will the south of europe be part of a “ new eurozone ” [ a proper fiscal union, with a banking union, a defence and a political union ], or will it be left behind in a secondary, outer circle of countries? this is something i would not like to speculate about here today, and to be frank with you not ever! but it ’ s not a matter of wishful thinking, it ’ s a matter of tough realism. point number 4 : coup d ’ etat in turkey – migrant crisis clearly, brexit is an issue for the whole of europe and southern europe will not be immune to the implications of brexit, for instance because of tourism, external demand, etc. however, coming from one of the countries located on the eu ’ s external border, which has received massive influxes of refugees from war - torn countries such as syria ( we have all seen the pictures of boats washed ashore in lampedusa, gibraltar, or the greek islands of northern aegean ), it would rather be an omission on my behalf not to discuss the more urgent problem for southern european countries right now, which if it escalates further in the next 6 - 12 months may affect the rest of the eu and eventually present an existential threat to the european union itself. migration needs to be recognised as a major policy issue that will play a critical role in shaping the eu ’ s future and it is definitely an issue that should not be underestimated. we have seen last fortnight ’ s election results in berlin and three weeks ago in the german chancellor ’ s own constituency ( mecklenburg - vorpommern ) with the anti - immigration, right - wing ( afd ) party gaining significant ground. it is urgent to tackle the migrant crisis and the linked labour mobility issue. i am particularly worried about recent developments in turkey following the attempted coup and the impact this will have on the migrant crisis, as a major challenge for the eu ’ s future. against the backdrop
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in all markets. 6. of course, apart from the structural factors that determine the growth prospects of productivity and of real incomes, the establishment of conditions of price stability in the medium term can also make a crucial contribution. actually, achieving and securing price stability over the medium term is the primary objective of the monetary policy conducted by the ecb, according to its statute. monetary policy in the euro area monetary policy in the euro area will remain fully committed to the mandate, the institutional responsibilities and the primary objective entrusted to the ecb by the 320 million of european citizens. following the recent increase in the ecb interest rates, the rise in medium - term inflation expectations among credit market participants came to a halt. business firms and consumers can be assured that the ecb will not allow secondround inflationary pressures to threaten price stability in the medium term. the ecb does not make a pre - commitment on the future level of its interest rates. it takes into account a comprehensive set of information available at any given time and decides on the basis of its current assessment of prevailing risks to price stability over the medium term. 1. in an economic environment like the present one, the only effective contribution that monetary policy can make to the cause of economic growth is through its firm commitment to the objective of price stability in the medium term. i emphasise the words " in the medium term ", given that monetary policy cannot offset the short - term fluctuations of inflation around its medium - term trend level which are due to exogenous factors such as developments in world prices of oil and other commodities. 2. what monetary policy can and must do is ensure that inflation in the medium term remains consistent with promoting economic growth and job creation. to ensure achievement of this goal, monetary policy must above all ensure that exogenous inflationary pressures do not trigger second - round effects, through firms'price - setting behaviour, wage agreements or other developments that anticipate a rise in inflation over the medium term. such phenomena turn what is a temporary problem into a permanent one, aggravate shortterm rises in inflation and strengthen medium - term inflation dynamics. 3. the governing council of the ecb decided the recent increase in interest rates for a dual purpose : first, to prevent broadly based second - round effects on inflation as those i just described ; and second, to counteract the increasing upside risks to price stability over the medium term, evidenced by the facts summarised below : - between the autumn of
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jean - claude trichet : interview with the “ junge zeitung ” of the frankfurter neue presse interview with mr jean - claude trichet, president of the european central bank, conducted by a group of pupils in the framework of the project “ junge zeitung ” of the frankfurter neue presse on 8 september 2009 and published on 12 september 2009. * * * mr. president, as “ mr. euro ” : how many euros do you have in your wallet? not many. ( counts ) i have 50 euro in 20, 10 and 5 euro notes und 4. 50 in euro coins. i think i don ’ t need more today. in your opinion : how important is the euro for europe? the euro is extremely important for europe. if you go back to the vision of the founding fathers of europe, more than 50 years ago : they wanted to establish a common market, what we would call now a single market for our continent. an achieved single market also calls for a single currency. what would be the single market of the united states of america if they had different currencies in florida, california, and massachusetts? the euro is also the powerful symbol of our european unity. what do you like about the germans – and what not? i have known a number of german friends for a very long period of time. i had the privilege to work very closely with my friends hans tietmeyer, karl - otto pohl and helmut schlesinger. i had an extremely good relationship with president kohler, when he and i were both staatssekretar in our respective countries and were negotiating the maastricht treaty. and working with otmar issing and jurgen stark to the success of the euro has also been a great privilege. as you see, amongst many others, german friends with whom we have worked actively for the success of the european endeavour. and i have always appreciated the capacity of the german culture and the german public opinion to support sound and reasonable monetary and economic policies over the last 60 years. what i perhaps like a little less is the level of anxiety, of “ angst ”, which exists. that is sometimes too high and doesn ’ t fit, in my opinion, to the kind of qualities that the german culture has. do you still learn the german language? yes. ( wieder deutsch ) ich lerne deutsch, aber es ist schwierig, und
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impressive. i ’ ve been associated very closely to the construction of europe, particularly to the strategy of my own country towards monetary and fiscal stability and structural reforms. when we decided to start this strategy – which i call the “ competitive disinflation strategy ” – in 19821983 it was a very moving moment. i experienced also very tense moments in the 80 ’ s and the 90 ’ s as president of the paris club for rescheduling the debts of the developing and emerging countries. i presided over the rescheduling of the debt of brazil, of poland, of egypt, of soviet union. finally i participated actively in the maastricht treaty negotiation. when it was decided by the heads of states and governments that we will start the euro no later than january, 1999, it was a moving historical moment. and more recently when on the 9th of august 2007 the executive board of the ecb had to take bold decisions to cope with the start of the turbulences on the money market that was also an important moment. ( anmerkung der red. : die ezb pumpte zu diesem datum in bis dahin nicht gekanntem umfang liquiditat in den markt und war damit die weltweit erste notenbank, die auf die krise reagierte. ) do you personally still convert to franc? no. do you understand the germans sometimes still regret the loss of their old d - mark? the promise which was made to all nationalities, and in particular to the germans before the euro started was the following : the new currency will be at least as confidence - inspiring and as a good store of value as the previous national one. and i can say today to you : the promise has been met. the euro, which is now almost eleven years old, is as good a currency, as solid and stable as was the dm.
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the euro area has become very easy. and, as consumers, wherever we are in the euro area, we can make uncomplicated payments by cash, card or the click of a mouse. internationally, the euro is now widely recognised as a currency of major significance. there are some 12. 5 billion euro banknotes circulating in europe and beyond, representing a face value of more than €750 billion. so, it is fair to say that we are happy with our ten years so far and we, at the ecb, are confidently looking forward to anniversaries to come. the euro exhibition that we are inaugurating today here in berlin provides an opportunity to learn more about the euro as cash. from the history of money to the production of euro banknotes, visitors can interact with the different displays to learn about the various characteristics of the euro banknotes and coins. visitors will also learn how to check the security features of euro banknotes and will have the opportunity to examine some counterfeit banknotes. in a few minutes, an ecb banknote expert will show you how to identify genuine euro banknotes and how easy it is to detect counterfeits. as the euro is the money of all citizens of the euro area, we have also taken the younger generations into consideration in our exhibition. we have developed a range of tools based on the fact that there are various ways of acquiring knowledge and of conveying messages. children can enjoy the educational computer games, learn more about the features of euro banknotes through the interactive displays or follow the story of anna and alex as they catch counterfeiters. for those of you here who have children, please make sure they do not miss this opportunity to learn about the euro in an entertaining and enjoyable way. as you walk through this exhibition, you will no doubt recognise the windows and doorways representing the “ ages and styles of europe ”. this design feature comes directly from our euro banknotes, which show windows on the front and bridges on the reverse side. these elements symbolise communication and connection between the people of europe and between europe and the rest of the world. bridges represent the connection between past and future and symbolise our european future. indeed, it strikes me that there is no better time or place to speak of communication, connection and a european future, than here in berlin ’ s museum fur kommunikation on the twentieth anniversary of the fall of the wall. the euro exhibition is well - travelled
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jose manuel gonzalez - paramo : the euro exhibition address by mr jose manuel gonzalez - paramo, member of the executive board of the european central bank, at the opening ceremony for the euro exhibition at the museum fur kommunikation, berlin, 19 november 2009. * * * ladies and gentlemen, distinguished ambassadors and members of parliament, it is a great pleasure for me to be here in berlin, at the beautiful premises of the museum fur kommunikation to inaugurate “ the euro exhibition ”. i would like to thank the museum for its fruitful cooperation with the european central bank, which has given us the opportunity to display our euro exhibition here. this year we are celebrating the tenth anniversary of the euro. let ’ s take a look back at the short but memorable history of our common currency. on 1 january 1999 stage three of economic and monetary union began with the irrevocable fixing of the exchange rates of the currencies of the 11 member states initially forming the euro area. the number of countries participating in economic and monetary union has grown over the years. today, the euro banknotes and coins are legal tender in 16 of the 27 member states of the european union and are used daily by almost 330 million citizens in the euro area. the single currency is used in an area that stretches from cyprus to ireland and from portugal to finland. we are actually celebrating another anniversary this year. it is 20 years since the process of german reunification began and we all remember 9 november 1989 as the day which marked the fall of the berlin wall. let ’ s not forget that berlin itself is a city that occupies a special place in german and european history. indeed, currencies can play an important role in shaping a national identity and the deutsche mark is one of the strongest symbols of german reunification. the foundations for political reunification were laid by the treaty establishing monetary, economic and social union, which came into force on 1 july 1990 and enabled the east german mark to be converted into the highly regarded deutsche mark. these days it is the euro that is shaping a european identity. for many, the euro only became a reality when the euro banknotes and coins first entered into circulation on 1 january 2002, replacing national currencies like the deutsche mark. in the eight years that we have been using the euro in our day to day lives, once complex transactions have now become effortless : there is no need to exchange money within the euro area and transferring money within
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useful parallels and lessons that can be drawn for malaysia. cagamas is very pleased to have established a strategic partnership with hkmc in 2007 which will allow us to avail of hkmc ’ s significant expertise to provide the banking industry in malaysia with expanded options for effectively managing mortgage risks. we are encouraged by the strong turnout from among members of the board risk management committees, senior management and risk managers at this event today. your roles are critical in bringing visibility and attention to the key risk issues in mortgage financing within your institutions in order to ensure that the associated risks, both present and foreseeable, are identified and effectively controlled. it is particularly useful to bear in mind that vigilance is needed to be alert to problems that can quickly arise in business segments that may not have presented difficulties in the past. by acting proactively to avoid controllable risks, material future losses can be avoided at far lower costs to banks and the society at large. on that note, i look forward to a fruitful and constructive dialogue. thank you.
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. developing our division of labour is especially important, as the eurosystem needs to improve its cost efficiency to a significant degree. many activities have large fixed costs and thus delegating them to some central banks avoids duplication of these costs. this kind of pooling is actually one of the most promising ways of pursuing the efficiency goals set out in the organisational principles. for these reasons, the bank of finland takes a very positive attitude to this drive for efficiency through deeper cooperation. however, some conditions for further progress in the field should still be borne in mind. in particular, governance and accounting systems must be built very carefully for each " pooling " arrangement, ensuring that costs and benefits are adequately measured and shared, and that users can get sufficient control of how the pooled services are produced and developed. this is, of course, necessary for the kind of trust required for the delegation of tasks. it is also in conformity with our organisational principles which emphasize the values of transparency and accountability. secondly, we expect that all eurosystem central banks can and will participate in the emerging division of labour on the basis of reasonable reciprocity. this reciprocity also conforms nicely with the organizational principles, according to which " all members of the eurosystem shall contribute strategically and operationally to the goals of the system ". the bank of finland for its part – as with other ncb's – actively analyses its relative strengths and considers its capacity to participate in the emerging division of labour in a balanced way ; not only as a user of pooled services, but also as a service provider. so i expect that our willingness to participate in future pooling schemes will be in some proportion to our prospects of hosting some of the services, where we feel we can usefully contribute. however, i expect that the conditions which i have mentioned here will not prove any great obstacles for progress in the important further deepening of operational cooperation within the eurosystem. good governance models for pooling schemes will be developed – perhaps along the lines marked by the cashssp project – and ncb's will find their niches, in which they can make their strongest contribution to the success and efficiency of the system as a whole. to finish, let me again congratulate all those who have worked in order to make this cooperation agreement possible and also express my appreciation of the national bank of belgium for its very useful and innovative work. thank you.
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. the adjustment will be that much more severe given the lack of an exchange rate policy lever. an early resolution to the crisis is unlikely because there is a lack of trust at a number of levels. there is a lack of trust in the leadership of the eurozone to take difficult decisions ; there is a lack of trust between countries ; there is a lack of trust of the banking system, and bis central bankers ’ speeches the recent revelations concerning libor fixing and money laundering reinforce that lack of trust ; and there is a lack of trust between banks, as evidenced in the dysfunctional nature of the interbank system in europe. and as austerity measures bite ever deeper, there are limits to how much the electorate can take. ultimately, the situation becomes increasingly economically and politically untenable. as the eurozone crisis impacts increasingly on the rest of the world, it again raises the question that was asked at the beginning of the crisis : can the emerging market economies decouple from the advanced economies? while there seems to be little doubt that the centre of gravity of the global economy is shifting eastwards, and the asian economies as a bloc may be better able to withstand a renewed global downturn given increased intraregional trade, a complete decoupling is unlikely. already a number of institutions have downgraded their emerging market growth forecasts and we have seen slowdowns in asia and latin america, including china, india and brazil. in 2010 brazil recorded an annual growth rate of 7, 5 per cent. in 2011 this had moderated to 2, 7 per cent, and in the first two quarters of this year, annualised growth rates of 0, 8 per cent were recorded. while chinese growth of 7, 6 per cent may seem extremely fast to us, we must bear in mind that it is significantly slower than the levels previously achieved, and further moderation is expected. a recent imf survey viewed the slowdown in china as having been initially self - induced, to correct overheating asset markets, but more recently is due to the effects of the global slowdown. the channels of contagion to emerging markets from the slowdown in the advanced economies are likely to be similar to those experienced in 2008. we have already seen declining emerging market exports and weaker commodity prices, although what happens in china will be an important determinant of the outlook for commodity prices. in general it will be difficult to sustain growth in many emerging markets, particularly those that are non
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per cent to 108, 2 per cent ; that of greece from 107, 4 per cent to 165, 3 per cent and the italian ratio increased from 103, 1 per cent to 120, 1 per cent. these data illustrate three important points : first, that sovereign debt crises in some countries did not originate in the public sector ; that debt ratios can accelerate very quickly from seemingly benign and sustainable levels ; and that any given level of debt may be seen to be sustainable, but if the bond markets change their view on this, spreads rise to the extent that the costs of servicing these deficits can rapidly turn sustainable deficits into unsustainable ones. these debt ratios have increased because of widening current fiscal deficits in response to the crisis, and not necessarily because of previous excessively large deficits. for example, in 2007 ireland and spain had fiscal surpluses and the deficit / gdp ratio in portugal and italy were 3, 1 per cent and 1, 6 per cent respectively. greece on the other hand already had a deficit of 6, 5 per cent. bis central bankers ’ speeches at a time of continued private sector and bank deleveraging, excessively deep public sector austerity is likely to generate and reinforce negative growth and debt dynamics : as growth falls, the debt to gdp ratio increases, and if debt is reduced too fast, growth will fall even more. there is no doubt that some countries have excessive fiscal burdens and unsustainable fiscal positions. those countries have to adjust, and take the pain, but a key question is over what time horizon. nor does it mean that all countries should be following austerity measures. if they do, and the austerity measures proposed are excessive, it will only reinforce the global downturn. the pace of fiscal consolidation has to be more measured, and it is for governments and the central banks to ensure that their interventions keep the markets in check. as krugman and layard have argued, “ at a time when the private sector is engaged in a collective effort to spend less, public policy should act as a stabilising force, attempting to sustain spending. at the very least, we should not be making things worse with big cuts in government spending or big increases in tax rates on ordinary people ”. this does not mean that governments should go on a spending spree. more focus should be placed on the efficiency of government expenditure, to ensure that it is of the type that is likely to generate growth,
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central bankers to have candid discussions on the best approaches to be adopted. true it is that the implementation of cbdcs touches the core of central bank mandates of monetary and financial stability and that each country should consider its own requirements and subsequently adapt the design features of its cbdc to ensure the intended policy objectives and specificities are met, while mitigating associated risks. in the new post - covid global financial architecture that is currently taking shape around us, the potential of the use of cbdcs is, and will be, prominent. it is therefore vital that we are able to adapt ourselves and be ready to act in the most appropriate manner in this new financial architecture. at the bank of mauritius, we are already gearing up for this. i have noted that the agenda across the 3 days is a very packed one. but i am certain that what participants will reap in terms of knowledge, experience and sharing will be simply priceless. we are fortunate that eminent subject matter experts from all continents have willingly accepted to put their expertise at the disposal of the central banking community. 4 / 5 bis - central bankers'speeches we are very eager to hear about the participants'experiences on their respective cbdc journeys, not only on the payment system side, but also on the monetary and financial stability sides. the lessons on consumer experience, including challenges and solutions for service delivery will benefit the greater number. pertinent questions from market players and consumers will keep rising and, as central bankers, it is our duty to reflect on them, and provide meaningful answers. ensuring strong privacy safeguards while meeting financial compliance rules, who will be able to access sensitive cbdc payments data and for what purpose, are some of the questions which we currently face and need concrete answers to. my call to all participants is to make the most of this opportunity for interacting with peers, sharing experiences and working together to devise the best possible approach for the elaboration and roll out of cbdcs. before i end, i would like to reiterate the need for close collaboration between participants, stakeholders and the public in general. next month, the bank of mauritius will be issuing a document for public consultation on cbdc. i encourage all stakeholders concerned to be fully involved in the discussions and share their views. i wish you all a fruitful workshop. ladies and gentlemen, i thank you for your attention. 5 / 5 bis - central bankers'speeches
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the notion that a cbdc cannot be a " near - cash " option. it needs to be " cash - like ". it needs to be as convenient, safe and trusted as cash, though digital in nature. a cbdc must be construed as a type of payment instrument to be made available to one and all. hence, it should be working just as efficiently as any other existing mode of payment. otherwise, adoption and acceptance of the cbdc will become very complex. this is particularly more pronounced in countries with well - established payments systems as end - users may have little motivation to switch to another payment mode. it goes without saying that industry buy - in and the public's trust are very critical in the cbdc experimentation. as a matter of fact, the success of cbdcs hinges on awareness. cbdc experiments can be subject to various challenges, often unexpected ones. that is why it is critical that central banks collaborate with each other, and with international institutions, as well as with their respective stakeholders for meaningful implementation of cbdcs. amidst the growth of private payment systems, the incursion of bigtechs in the payment arena and the potential risk of partial displacement of legal tender by private crypto assets, central banks started a few years ago to explore the possibility of the issuance of their own digital currency. the extensive research conducted by international organisations including the bretton woods institutions and the bis have significantly contributed to our understanding of cdbcs. ladies and gentlemen, two weeks ago, the imf launched its handbook on cbdcs in prelude to an international monetary fund panel on cbdc in the context of the 2023 imf - world bank spring meetings. i was delighted to contribute to the panel by showcasing the mauritius experience, and sharing our experience and lessons learnt. this handbook stands as a beacon for central banks along their journey towards creating and rolling out their respective cbdc. in this ethereal digital environment, a number of central banks have adopted a " wait and see approach " on how cbdcs evolve, both conceptually and in practice. other central banks have, for their part, been actively working to gauge the pertinence of digital currencies, and understand the challenges and benefits that stem from them. this is the case for the bank of mauritius. shortly after i assumed office in 2020, i deemed that working on the creation of our cbdc, the'digital rupee'was to be one of our key priorities
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and e. levy - yeyati ( 2003 ), financial dollarization, journal of international economics, vol. 59, pp. 323 – 347. bis central bankers ’ speeches
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national bank of serbia governor ’ s opening remarks at the presentation of the inflation report – august 2017 dr jorgovanka tabakovic, governor belgrade, 16 august 2017 ladies and gentlemen, dear colleagues, welcome to the presentation of the august inflation report. as always, we will give you an overview of monetary and macroeconomic trends for the period since the previous report and set out our expectations for 2017 and 2018. however, before we move on to this, allow me to briefly venture outside the usual timeframe covered by this report and look back at the results which the national bank of serbia achieved in the past five years, that is, in the period since my appointment as governor. this period is long enough to allow us to take stock of what we have accomplished and of the challenges that are still ahead of us. the presence of strong challenges emanating from the international environment, which heightened uncertainties in all markets, did not work in our favour, but also did not prevent us from achieving and maintaining price and financial stability in the five years behind us. i would like to use this opportunity to highlight some of our key achievements as well as their significance for all of us. inflation has been low, stable and predictable for four years in a row. from nearly 13 % in autumn 2012, inflation was brought down to 2. 2 % in less than one year. after that, we have kept it at a low level. low inflationary pressures from 2013 onwards were partly attributable to low cost - push pressures from the international environment ; however, they are mostly a result of the effects of domestic factors – relative stability of the exchange rate, more anchored inflation expectations and the effects of fiscal consolidation. with the price stability it has achieved, serbia is now comparable to other european countries – since the start of the year, inflation has moved within the new, lower target tolerance band and measured 3. 2 % y - o - y in july. core inflation moved at around 2 % during the year and equalled 1. 7 % y - o - y in july. this is also a confirmation of the adequacy of the monetary policy that we conducted in the prior period, as well as of the legitimacy of our decision to lower the inflation target by 1 percentage point to 3±1. 5 %. according to our latest projection, we expect inflation to remain within the new, lower target tolerance band for the following two years. chart 1 price movements ( y - o -
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access for non - resident investors as well as the growth in complementary market segments such as repo markets. bis central bankers ’ speeches
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in the centre of economic gravity to the asian region is continuing, and if anything it has been highlighted by the different performances during the crisis and initial recovery. the differences in speed of recovery between the emerging world and the advanced world, and the likely persistent differences in growth trajectories into the future, will increase the pressure on exchange rate arrangements in the region. the second challenge is the increasing focus on sovereign creditworthiness. we saw a brief period of turmoil regarding dubai late last year, and more recently the public finances of greece have been under the spotlight, with some other european countries just in the background. going beyond just these instances, government balance sheets in numerous countries have taken on considerable burdens as a result of the crisis, and markets are beginning to focus on issues of sustainability. it will be a very delicate balancing act for those governments to strengthen their fiscal positions without undermining the upturn in their economies. happily, in both these areas, australia is relatively well - placed. we are located in the part of the world that is seeing the most growth. and in terms of fiscal sustainability, australia ’ s position is, by any measure, very strong indeed. turning to australia, we think on the basis of available data that real gdp grew by about 2 per cent through 2009. we expect that it will grow by a bit over 3 per cent for 2010 and about 3½ per cent in 2011 and 2012. notwithstanding reports of patchy retail sales through the christmas period, we judge consumption to have held up reasonably well after the various fiscal boosts faded. but in the future consumption is unlikely to be a leading driver of growth to the extent it was a few years ago. households seem to be adopting a more cautious position regarding saving and borrowing, which is appropriate. a turnaround in private housing construction is under way. the effect of the temporary firsthome buyers ’ boost is fading, but underlying demand is solid as a result of population growth and there is something of an “ underhang ” of earlier low construction to work off. credit costs and availability are adequate for households. while for developers credit remains quite difficult to access, it looks like we have seen a turning point in approvals for multi - unit construction. housing prices have been rising quite smartly over the past year. government spending is having an impact on demand, holding both residential and nonresidential construction at higher levels than would have resulted from private spending alone. this effect will gradually diminish over
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, workforce development, and economic development. three stages of monetary policy normalization in thinking about the outlook for monetary policy, it ’ s useful to remember how we got to where we are today. the financial crisis and the great recession led the fomc to lower the federal funds rate target to near zero and to keep it there for seven years. this lengthy spell at zero reflected the long shadow of the crisis — evident in the subsequent subdued growth rate and inflation rate — and the need for the economy to convalesce after enormous trauma. with the unemployment rate still very high and inflation low, the federal reserve embarked on a long journey through terra incognita of unconventional monetary policy actions, including large - scale asset purchases and forward guidance on the future path of interest rates. we weren ’ t alone : indeed, some central banks across the globe went even further down the road of unconventional policies. in part due to the fed ’ s actions, the u. s. economy gradually recovered, and as a result the fomc has been slowly but surely moving monetary policy “ back to normal. ” this process can be thought of in three stages. stage 1 : lift - off the first stage in policy normalization focused on the lift - off of the federal funds rate target from near zero, which occurred in december 2015. but, well before that happened, the fomc went to great effort to communicate its thinking to the public to better prepare it for the upcoming change in policy. 2 importantly, we also made extensive preparations to ensure that we were ready and able to raise rates as needed, in the context of a very large fed balance sheet and bank reserves. and, consistent with the fed ’ s aim to be as transparent as possible, we published our plans on how we would use interest rates paid on bank reserves and overnight reverse repurchase agreements to keep the federal funds rate within the fomc ’ s target range. 3 at the time — in light of the shallow recovery and low inflation — the fomc was very focused on balancing the risk of a premature removal of accommodation against concerns that excesses could eventually develop in the economy. in the end, lift - off went without a hitch. the approach developed back then has served us extremely well in controlling the federal funds rate, and has proven to be flexible as market conditions have evolved. i will come back to this point later. 2 / 5 bis central bankers'speeches stage 2 : normalization the second stage
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07 - 25. html 4 / 14 7 / 25 / 2019 inflation targeting and economic welfare | speeches | rba the second explanation for low inflation is the continuing existence of spare capacity in parts of the global economy. the existence of spare capacity was an important factor explaining low inflation in the aftermath of the global financial crisis. and today, it remains a factor in some countries, including here in australia. but, on the surface, it is a less convincing explanation for low inflation in countries where unemployment rates are now at multi - decade lows. based on conventional measures of capacity utilisation, these economies are operating close to their sustainable limits. one explanation for continuing low inflation in this environment is that the current rate of aggregate demand growth is simply not fast enough to put meaningful pressure on capacity. if so, stronger demand growth would be expected to see inflation pick up. another possibility is that the unemployment rate, by itself, no longer provides a good guide to spare capacity, partly due to the flexibility of labour supply. i will come back to this idea in the discussion of inflation outcomes in australia. the third explanation is that globalisation and advances in technology have changed pricing dynamics. there are two main channels through which this appears to be happening. the first is by lowering the cost of production of many goods. and the second is by making markets more contestable and increasing competition. the main effect of these changes should be on the level of prices, rather than on the ongoing rate of inflation. but this level effect is playing out over many years, so it appears as persistently low inflation. it is widely accepted that the entry into the global trading system of hundreds of millions of people with access to modern technology put downward pressure on the prices of manufactured goods. reflecting this, goods prices in the advanced economies have barely increased over the past couple of decades ( graph 4 ). but the effects of globalisation and technology extend beyond this and into almost every corner of the economy, including the services sector. https : / / www. rba. gov. au / speeches / 2019 / sp - gov - 2019 - 07 - 25. html 5 / 14 7 / 25 / 2019 inflation targeting and economic welfare | speeches | rba graph 4 in today's globalised world, there are fewer and fewer services that can be thought of as truly non - traded. many services can now be delivered by somebody in another country. examples include : the preparation of architectural drawings, document design and publishing, customer
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date we have published a report on emu ’ s conceivable importance for the swedish krona ; the conclusion was : not much, provided - and it is a major proviso - sweden provides equal conditions in other respects for wealth formation and business enterprise. the krona ’ s part in the assessment of inflation has varied one of the topics in the discussion during the past six months has been how the riksbank reacts to the exchange rate in the formation of monetary policy. we have been accused of being indistinct or dithery during the summer and autumn. first let me say that there is a pattern to this that i find familiar. conducting and interpreting monetary policy is more difficult when the situation is appreciably affected by other factors than resource utilisation, for instance the exchange rate or inflation expectations. the assessments are then more complex and the riksbank faces greater educational challenges. the decisions also tend to be more controversial because there is a clearer conflict between different goals, so that more criticism is only to be expected. our forecasts are always based on a variety of factors. a traditional model for determining inflation in the context of a phillips curve, for example, points to resource utilisation, inflation expectations and the exchange rate as central components. however, these variable ’ s relative importance for inflation changes over time. to illustrate our reasoning over the past nine months, here is a presentation of resource utilisation, our view of international prices and the exchange rate ( diagram 4 ). 4. assessment of growth * and export prices * and the tcw index * percentage annual change tcw index jan - 98 jul - 98 jan - 99 jul - 99 jan - 00 jul - 00 jan - 01 jul - 01 4. 0 4. 0 forecast of growth 2001 and 2002 3. 5 3. 5 3. 0 3. 0 2. 5 2. 5 2. 0 2. 0 1. 5 1. 5 growth forecast 2001 1. 0 forecasts exportprices 1. 4 1. 4 1. 2 1. 2 1. 0 1. 0 0. 8 forecast 2001 0. 8 0. 6 forecast 2002 0. 6 1. 0 growth forecast 2002 0. 5 0. 5 0. 0 0. 0 ir 00 : 4 ir 01 : 1 note. ir = inflation report. ir 01 : 2 ir 01 : 3 0. 4 0. 4 ir 00 : 4 ir 01 : 1 ir 01 : 2 ir
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it is that, despite our efforts to the contrary, we seem to have induced many segments of society to believe that we can fulfil the target, if not always then almost so. that is evidently not the case. inflation fluctuates, sometimes a lot. the same seems to apply in most other relatively small countries. compare inflation in, for instance, the individual euro countries with the average rate in the european union. in sweden ’ s case the fluctuations are possibly accentuated by the price - setting being comparatively centralised in some important respects, for instance the labour market and rents. 2. und1x and product groups that fluctuate percentage annual change und1x electricity, telecom, meat, petrol, light fuel oil, fruit and vegetables - 1 - 1 - 3 - 3 ja n95 ju l - 9 ja 5 n96 ju l - 9 ja 6 n97 ju l - 9 ja 7 n98 ju l - 9 ja 8 n99 ju l - 9 ja 9 n00 ju l - 0 ja 0 n01 ju l - 0 source : the riksbank still, there are good reasons for taking a close look at the latest inflation outcomes. the prise rise has come mainly from food and energy but also from telecom prices ( diagram 2 ). in the case of food and electricity, the price increases, particularly during the spring, largely stemmed from factors on the supply side : foot - and - mouth disease, mad cow disease, a relatively dry winter, production problems at oil refineries and so on. it is, in fact, these cpi items that normally fluctuate most. it is not just a coincidence that in canada, for example, the inflation index that primarily guides monetary policy does not include either food or energy prices. the rather large price fluctuations that are a normal feature of these goods and services can be taken to indicate that the recent increases do not constitute a ketchup effect, so that the conditions for a return to a rate in line with the target should be relatively good. not just transitory effects at the same time i definitely do not want to make light of the increase in inflation. even excluding the goods and services i just mentioned, inflation has moved up more than expected and it has done so even though resource utilisation is lower, at least at present, that we counted on earlier. that is the main reason why, in the latest inflation report, we have slightly revised our
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rate of steady state inflation, in which it is emphasised that inflation has both so - called " grease " effects, essentially because it makes the economy more flexible - particularly in the presence of specific downward rigidities -, and so - called " sand " effects, which are mainly due to the fact that inflation leads to more adjustment costs and to excess relative price and wage variability which distorts allocative decisions. the " sand " argument stresses that the existence of nominal rigidities is an important element explaining why inflation is costly and why central banks should maintain price stability. however, central banks also acknowledge the " grease " argument as they typically define price stability as a moderately positive inflation rate. weighing both arguments was one of the reasons why the governing council of the ecb in may 2003 specified that, in the euro area, price stability is to be seen as an annual increase in the area - wide hicp below, but close to 2 % in the medium term. moreover, monetary policy may be faced with a short - run trade - off between inflation stabilisation around the target value and output stabilisation. some contributions during the conference, for instance the keynote presentation which jordi gala will give this afternoon, address these issues in theoretical models. it is however obvious that this topic is also relevant for the actual conduct of monetary policy. indeed, as in recent years we have been faced with a rather unusual clustering of shocks of the cost - push type with an upward impact on inflation in the euro area, the medium - term orientation of the monetary policy framework of the eurosystem induced us to accommodate their first round effects on inflation and to focus on avoiding their having second - round effects in price and wage setting. thus, the flexibility explicitly embedded in the medium term orientation of our monetary policy framework allowed us to take care, insofar as possible, of stabilising output developments, while the mere fact of having a well - specified strategy with a quantified definition of price stability helped us to anchor inflation expectations. another relevant question being raised is how price and wage rigidities are affected by the ongoing process of globalisation. the keynote presentation of andrew scott in tomorrow afternoon's session for instance focuses on how relative prices and mark - ups are influenced by trade integration. ongoing globalisation is indeed expected to strengthen competition and to reduce mark - ups in goods and labour markets. in conjunction with other structural changes resulting from reform efforts, this should lead to a higher steady state
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is first of all important to document the stylised facts of price and wage setting at the micro, the sectoral and the macro level. recently, there has been an increased research interest in studying price and wage setting at the very micro level, for instance within the scope of the eurosystem inflation persistence network and the international wage flexibility project. the studies produced in these research networks constitute important contributions to our understanding of price and wage rigidities and i myself was impressed when frank smets presented the findings of the inflation persistence network in a seminar for the governing council of the ecb. frank smets will give a similar presentation here. i am also pleased that tomorrow morning bill dickens from the brookings institute will present the results of the international wage flexibility project. in addition, some other papers will provide us with new material based on micro - economic datasets of prices and wages. besides measuring the degree of price and wage rigidities, it is also important to understand their economic rationale. nominal adjustment costs constitute the simplest argument to explain price and wage rigidities. however, constraints on price and wage changes may also assume a much more complicated form. pricing decisions can be influenced by arguments that are derived from strategic interactions with competitors or with customers. wage flexibility can be restricted by the existence of collective agreements, that avoid costly individual and frequent wage negotiations, by the existence of search costs or by the impact of wages on the employee - employer relation in terms of motivation or perception of fairness. price and wage arrangements might also reflect distributive motives to guarantee a stable income flow to firms or households, as capital market imperfections may constrain their ability to smooth their revenue. therefore, understanding the rationale behind the different forms of rigidities is of particular importance for analysing their welfare implications, for assessing the scope to address them with structural reforms and, finally, to derive their implications for monetary policy. understanding how prices and wages are set at the firm level is also a prerequisite for understanding the behaviour of the aggregate price and wage level over the business cycle and to see how they react to different types of shocks. nominal rigidities in price and wage setting also imply that monetary policy, and nominal demand fluctuations in general, have an impact on economic activity. knowledge about price and wage setting is therefore fundamental to understand both the monetary policy transmission process and the potential trade - offs monetary policy may be faced with. these trade - offs come up in the debate on the optimal
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john hurley : recent economic developments in ireland and the outlook for the economy opening statement by mr john hurley, governor of the central bank and financial services authority of ireland, at the presentation of the annual report 2007, dublin, 10 july 2008. * * * you are all very welcome to this press briefing to mark the publication of the annual report of the central bank and financial services authority of ireland. i will briefly introduce my colleagues who join me today. tony grimes, our director general, deputy director general brian halpin, and tom o ’ connell, assistant director general, economics. the annual report describes in detail our activities in 2007, which proved to be a challenging year for the bank, both in terms of our domestic and our euro area responsibilities. in my statement today, i will begin by reviewing current developments in the irish economy. we have seen a substantial adjustment in the domestic housing market, international financial market turbulence and, more recently, the effects of higher oil and food prices. this has led to a greater - than - anticipated slowdown in growth and higher - than - expected inflation. notwithstanding the challenging short - term outlook, we continue to believe that the mediumterm outlook is favourable and that growth should gradually recover and inflation moderate. however, such an outcome is not guaranteed and will require concerted action. current developments in the irish economy the latest cso national accounts data, which were released after the annual report was finalised, indicate that growth in the domestic economy remained robust in 2007 with real gdp and gnp increasing by 6. 0 per cent and 4. 1 per cent respectively, in line with average output growth over the previous five years. while the performance of the irish economy was strong in 2007 as a whole, there was a significant moderation in growth as the year progressed. this slowdown has accelerated considerably this year. while the emergence of a slowdown in the economy was not unanticipated, the loss of momentum has been greater than expected this year. this has arisen from a sharper than expected adjustment in the housing sector alongside a deterioration in the international environment. growth prospects for the next 18 months or so are now significantly less favourable and we will be revising our forecasts to reflect this. overall, it seems likely that both gnp and gdp growth will remain positive this year, albeit significantly less than 1 per cent. although some improvement is in prospect, growth is likely to remain below potential in 2009 at about 2 per cent. the down
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john hurley : recent economic developments in ireland and the outlook for the economy opening statement by mr john hurley, governor of the central bank and financial services authority of ireland, at the presentation of the annual report 2006, dublin, 11 july 2007. * * * you are all very welcome to this press briefing to mark the publication of the annual report of the central bank and financial services authority of ireland. i will briefly introduce my colleagues who join me today. liam barron, our director general, deputy director general brian halpin, director general designate, tony grimes, and maurice mcguire, head of economic analysis and research. as you know, liam barron is retiring as director general next month. at the outset today i would like to thank liam for his outstanding contribution to this organisation over a long and distinguished career, in particular as director general and as a member of the board. i would also like to take this opportunity to wish tony grimes all the very best in his new role. tony is well placed to bring this organisation forward and to meet the various challenges in the years ahead. the annual report describes in detail our activities in 2006, which proved to be another busy year for the bank, both in terms of our domestic and our euro area responsibilities. today we are also publishing our strategic plan for the coming three years. i should also mention that the annual financial stability report will be published in the autumn and that the financial regulator will publish its own annual report later this month. economic developments i will begin by reviewing economic developments in ireland over the past year or so, before moving on to discuss the outlook for the economy for this year and next. the latest cso national accounts data, which were released after the annual report was finalised, indicate that the economy performed very well last year with gnp growth of 6. 5 per cent and gdp growth of 5. 7 per cent. reflecting the strength of output growth, last year was another good year for employment. an expansion of almost 4½ per cent in the numbers employed brought total employment above the 2 million mark for the first time. the unemployment rate remained low, below 4½ per cent – essentially full employment conditions. the pace of expansion last year was, in fact, somewhat above the economy ’ s medium term potential and, partly as a result, there was an increase in inflation. the harmonised index of consumer prices, which is the most appropriate measure, rose by 2. 7 per cent compared with 2. 2 per cent the previous year.
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joachim nagel : welcome address welcome address by dr joachim nagel, president of the deutsche bundesbank, at the opening of the parallel beginnings art exhibition, cambridge, massachusetts, 16 april 2024. * * * check against delivery 1 welcome ladies and gentlemen, thank you so much for inviting both – the bundesbank art collection and myself! it is a pleasure to see the lively exchange taking place between harvard university and the bundesbank. last year, benjamin friedman held a couple of exciting lectures at the bundesbank. as for me, i have had a few opportunities for spirited exchange here. and hans - helmut kotz, former member of the bundesbank's executive board, is serving as a steady bridge between the institutions, having been a visiting professor of economics at harvard university for 15 years. so far, it has been an exchange on economic issues. this is now to be complemented by an exchange around art : 21 works from the bundesbank's art collection will go on display here. they will establish a dialogue with works from the art collection of the center for european studies. for example, numerous works by ida kerkovius are on show. i am particularly impressed by the bright and contrasting colours of these pieces. you may have noticed them in the foyer. they will undoubtedly captivate a great many visitors. i find it remarkable that a german artist like ida kerkovius is represented in the collection of the center for european studies. that's thanks to guido goldman, cofounding director of the center for european studies and the driving force behind its art collection. in guido goldman's biography, he was dubbed " america's mr germany ". he was particularly committed to advancing relations between the united states and germany. together with willy brandt, the german chancellor, he founded the think tank german marshall fund at the start of the 1970s. it sought to promote political and social relations between the united states and germany. given guido goldman's particular interest in germany, it is not surprising that german artists such as bernard schultze and ida kerkovius are so prominently represented in the art collection of the center for european studies. works by these two artists were also among the first acquisitions for the bundesbank's collection. this provided a wonderful basis for our joint art project entitled " parallel beginnings ". but what do you need to know about the bundesbank's art collection? 2 the bundesbank '
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##2 for instance, a wholesale payment system operated by deutsche bundesbank, banca d ’ italia and banque de france. more than 1, 000 banks all over europe are directly connected. the service ensures the speedy and final settlement of national and crossborder payments in central bank money. each working day, an average of around 350, 000 payments with a value of about 1. 7 trillion euro – which equals half the german gdp last year – are processed by the system. target2 is just one example for critical financial market infrastructure for which bundesbank is in charge. others include target2 securities, a service for the settlement of securities in central bank money. or think of our monetary policy operations, which provide the banking system with liquidity. a proper functioning of these services is crucial for the stability for our financial system. 1 / 7 bis central bankers'speeches but how does the bundesbank interpret the term “ cybersecurity "? at the bundesbank, we refer to cybersecurity when our focus is on protection against cybercrime and the associated risks. we define cybercrime in the following ways. there is a deliberately targeted and it - based attack on data and it systems which can viably impair confidentiality, integrity, or availability. additionally, the unauthorised use of internet capabilities to spread information very quickly, in large volumes, and on a broad scale. finally, we understand cybercrime to include the procurement of personal information through social engineering. in these ways, the attackers usually gain either broad reach or access to a specific target. to what extent has the bundesbank been hit by attacks? cyberattacks also pose a risk to the infrastructures and applications of european central banks, which is not to be underestimated. there are four reasons why central banks, in particular, are a lucrative target for cyber espionage and cyberattacks. 1. because of their economic and policy mandate, 2. because, as a result, information is available to them at an early stage, 3. because of their responsibility for cash - based and cashless payment systems, and 4. because of their prominent role in their country ’ s financial system. last year, the bundesbank was also the target of isolated distributed denial - of - service attacks. these involve known systems being overloaded by a flood of requests and thus brought to a standstill. the bundesbank has used its protective measures to successfully
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become smaller. reasonable people can debate whether or not it is sensible for this element of provisions to be so sensitive to risk - free rates, and it may be that once we are into a solvency ii world some firms will choose to hedge this exposure. however, that debate is for another day : the risk margin and its calculation are part of the law and our job is to implement it. more specifically, the directive is clear that the solvency capital requirement ( scr ) and the risk margin are separate concepts : put simply, firms have to survive a 1 - in200 stress, using the capital held to meet their scr, and then have the risk margin available to provide for the costs incurred in an orderly transfer of liabilities. it is obvious that in this respect solvency ii is more demanding than the icas regime, even if other elements of the regime are not. a related source of tension is our use of the quantitative indicator ( qi ) framework as part of our assessment of internal model applications. this framework describes a set of judgements, based on evidence and analysis that provide an assessment of the most common risks faced by uk insurers, such as longevity risk for life insurers, and how they relate to each other. many of the areas covered by the framework involve a significant degree of judgement, and accordingly we are flexible in how we use the framework and consider it just one input into our consideration of whether firms ’ models meet the tests and standards for approval under solvency ii. the way we use the qi framework has also been, and continues to be, informed by evidence and practices presented to us by firms. however, it would be odd indeed if a regulator ( or a firm for that matter ) were to change their view of conditions in the real world because of a change in regulatory regime. clearly, despite the lofty ambitions of european legislators, the move from solvency i to solvency ii doesn ’ t change how long people will live for, or the probability of a north american windstorm. so our beliefs about the nature of the risks to which insurance companies are exposed will persist as we move into the new regime. but the regime requirements are different, and we will embrace that change. people should not confuse these two things. adapting to the new regime solvency ii introduces some important reforms to modernise the regulatory regime for insurers in the uk. but a sudden implementation of these changes by firms, and particularly on the life side given
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important factor. we do not merely make an analysis, write a report and disappear. we are still here and can continue the discussion whenever necessary. the problems that were indicated in the evaluation were more of an administrative nature. for instance, it is difficult to find a place in a foreign aid context for low - cost projects like this, as they do not really follow the set patterns for other aid efforts. finally, i can mention that the riksbank has allocated resources in our internal business plan for next year to extend our cooperation with some of the central banks in sida ’ s cooperating countries. we consider that our work has been both interesting and rewarding and we hope that it has also helped some of our colleagues to make their own institutions stronger.
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radovan jelasic : payment card business in serbia speech by mr radovan jelasic, governor of the national bank of serbia, at the round table discussion on payment card business, belgrade, 17 september 2008. * * * distinguished members of the press, colleague bankers and hosts to this event, i would like first of all to warmly thank the organizers of this round table on payment card business for the invitation to give introductory speech and to take part in the discussions during this event. payment card business, together with the overall system of payment operations, represents the backbone of a stable and efficient financial industry of any market. supervision of these operations in serbia, however, is under the remit of the national bank. recently, we have been witnessing major, both technological and regulatory changes in the domain of payment card business equally in europe and worldwide. its significance in some economies has met and even exceeded that of payments in cash and has consequently grabbed the attention of financial market regulatory authorities and central banks. perhaps the most significant decision in this domain is the one taken by the master card ( under supervision, not to say pressure, of the european antimonopoly commission ) to cut down cross - border interchange fees down to the zero level, and hence open up a new era in the relations between payment card systems, financial market regulatory authorities, banks and traders in europe and worldwide. besides, the initiative of the european commission and the european central bank to develop a new european payment card system within the implementation of the sepa agreement ( if you ’ ll permit me to boast a bit, following in the footsteps of our “ dina card ” ) and to do so now when visa and master card have already established strong positions for themselves, shows how important payment cards have become for the stability of payments systems, not only from the financial, but also from the social point of view. today, we shall also attempt to discuss current issues prevailing in our economy. one of the topics of discussion ( and often a bone of contention ) between the nbs and commercial banks in the course of several recent years has been the treatment of payment cards and debit card overdrafts. i sincerely hope we shall see further discussions on this matter as they strongly contribute to the improvement of the quality of the system. on our part, i wish to reaffirm the position of the nbs to continue its best efforts begun six years ago to promote further intense development of the card business in serbia.
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radovan jelasic : the national bank of serbia – accomplishing its objectives speech by mr radovan jelasic, governor of the national bank of serbia, on the occasion of consecration of the new office building of the national bank of serbia, belgrade, 10 october 2006. * * * your eminences, reverend bishops, esteemed guests and dear colleagues, it is an honour for me to share with you all the joy of this historical moment of consecration of the new office building of the national bank of serbia. i hope that this will also mark a peaceful and blessed start of work in this beautiful building, after rather tumultuous two decades. i believe that this festive atmosphere may be a good time to remind ourselves once again of what our legal obligation to serbian citizens is, with regard to preserving the stability of the national currency and building an efficient financial system. the construction of this building began in the former yugoslavia, and was completed in today ’ s serbia. no one believed it was possible to finish such building and put it into use in a short time. and yet, we did it. in only three years, we renovated and completed the work which had remained unfinished during the previous fifteen or so years. this is yet another proof that the national bank of serbia always accomplishes the objectives it sets. similarly, our claim that we will succeed in transforming a completely ruined banking system into a sound and financially strong one, in which ownership has been transformed and which both citizens and economy will trust, was greeted by the same sort of disbelief. today, new foreign currency savings in banks amount to more than eur 3 billion, and in only eight months this year the sum of credits increased by around csd 100 billion. serbia ’ s strength today is perhaps best illustrated by the fact that this year ’ s foreign direct investments amounted to almost usd 4 billion, bringing us a strong dinar, which many of our fellow citizens still view with distrust, even after all this time. a similar thing happened when the national bank of serbia was entrusted with insurance supervision and when it confirmed in practice that, just like in the banking sector, it will ensure the enactment of the necessary regulatory framework, control of participants in the insurance market, supervision of their operations, consumer protection and conditions for stable development of this sector. six months ago, when monthly inflation stood at over 1. 5 % and the national bank of serbia, despite this, asserted that it was possible for this year ’
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developments in the eu will continue to affect the growth and financial prospects of many nations, especially those with the closest ties with this large economic bloc. bis central bankers ’ speeches
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mario draghi : monetary policy in unconventional times introductory remarks by mr mario draghi, president of the european central bank, at the ecb colloquium held in honour of mr jose manuel gonzalez - paramo, frankfurt am main, 16 may 2012. * * * ladies and gentlemen, dear jose manuel, it is my pleasure to welcome you here today on the occasion of this colloquium on “ monetary policy in unconventional times ”. it is held in the honour of jose manuel gonzalez - paramo to mark the end of his eight - year term as member of the ecb ’ s executive board. the topics of today ’ s colloquium are not only of great relevance, but i believe also very close to your heart, jose manuel, as they reflect two of the main areas which you have dealt with during much of your career : the first topic concerns the experiences gained with the ecb ’ s non - standard measures and monetary policy during crisis times. jose manuel was closely involved in shaping these measures during his time at the ecb, having been in charge of monetary policy operations for several years, also prior to the financial crisis. jose manuel joined the ecb in times that seemed very different from today. financial markets seemed to work rather efficiently in an environment of low volatility and seemingly little risk. liquidity was distributed by stable and efficient interbank markets at ( almost ) uniform prices throughout the euro area. the operational framework served well its purpose of transmitting the decisions by the governing council on policy rates to market rates. monetary policy relied on standard monetary policy operations. money market rates were quite stable and close to the ecb ’ s main refinancing rate, with fluctuations in money market rates being within a few basis points. how times have changed! over the past few years, a number of standard and non - standard measures have been implemented as the eurosystem ’ s response to the dysfunctions in money markets caused by the financial and sovereign debt crises. you have been involved in the design and the implementation of these measures in all phases of the recent crisis : in the early phases, the ecb mainly responded to the crisis by adjusting the timing of its liquidity provision and the lengthening of the maturity of its open market operations, which helped to stabilise short term rates in an environment of high volatility and extreme distrust. later on, we dealt with the design and the launch of longer - term refinancing operations,
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jarle bergo : monetary policy and the cyclical situation speech by mr jarle bergo, deputy governor of norges bank ( central bank of norway ), at a meeting with local authorities and the business community, kapp, 23 november 2005. please note that the text below may differ slightly from the actual presentation. the address is based on the assessments presented at norges bank ’ s press conference following the executive board ’ s monetary policy meeting on 2 november, inflation report 3 / 05 and on previous speeches. charts in pdf - format can be found on the website of the norges bank. * * * the economic situation the cyclical upturn in the norwegian economy continues. overall capacity utilisation in the economy has increased. after a period of very low consumer price inflation, there are prospects that inflation will again rise at a faster pace. interest - rate setting since this spring has been oriented towards a gradual increase in the interest rate – in small, not too frequent steps – towards a more normal level. on the basis of the analysis in inflation report 3 / 05, this strategy still appears to provide a reasonable balance between the objectives of monetary policy. the reduction in norges bank ’ s key rate through 2003 and into 2004 resulted in low interest rates. at the beginning of the recovery, falling interest rates and expectations of low real interest rates ahead fuelled private consumption. a weaker krone exchange rate and the international recovery stimulated traditional merchandise exports. moreover, fixed investment in the petroleum sector has expanded sharply, which has led to rising demand for goods and services supplied by mainland enterprises. mainland fixed investment also picked up after a period. since the recovery started, quarter - on - quarter mainland gdp growth has averaged 3½ per cent annualised. growth has been steady. the economic upturn has continued this year. on balance, demand is expected to remain relatively high in the near term. expectations of continued low albeit rising interest rates and real income growth should support growth in household consumption and fixed investment ahead. brisk investment growth in the petroleum industry, moderate wage growth and high profitability in many enterprises suggest further investment growth in the mainland enterprise sector. the economic upturn is now broadly based. in manufacturing, the order backlog is at a record - high level, which implies continued production growth over the next quarters. statistics norway ’ s business tendency survey for manufacturing points in the same direction. activity has remained buoyant in the construction sector for a long period. new orders in this
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are events that were difficult to capture in advance in norges bank ’ s projections. the origins of such disturbances may often lie outside norway. the assessment of our near future and our current situation may change as time passes and as more accurate statistics become available. the functioning of the economy could also change. monetary policy is oriented towards stabilising inflation and output growth. if unexpected disturbances arise and new information concerning the functioning of the economy emerges, the executive board must assess whether a different interest rate path may be more appropriate in order to achieve our objectives. the interest rate outlook may therefore change over time. the fan charts illustrate the uncertainty that can be expected based on recent history. the executive board discussed the main content of inflation report 3 / 05 before the report was published. on the basis of the analysis and the executive board ’ s discussion, the board assessed the consequences for the future interest rate path and approved the monetary policy strategy for the period to the next inflation report in march. the interest rate path presented in the inflation report will, in the assessment of the executive board, provide a reasonable balance between the objective of bringing inflation up to target and the objective of stabilising developments in output and employment, conditional on the information norges bank had at the time the report was published. the interest rate may gradually – in small, not too frequent steps – be brought back towards a more normal level. the objective of bringing inflation back to target and anchoring inflation expectations nevertheless implies that monetary policy remains expansionary. in the assessment of the executive board, the sight deposit rate should lie in the interval 2 - 3 per cent in the period to the publication of the next inflation report in march 2006, conditional on economic developments that are broadly in line with the projections. in the press release following the executive board ’ s meeting on 2 november, the following factors of uncertainty were highlighted : • stronger trade shifts and increased labour market competition may result in lower price and wage inflation and weaker pressures in the economy. in isolation, this would imply less frequent interest rate changes. • we have little experience of such low interest rates over a long period. there is a risk that an interest rate that is kept low for a longer period may lead to expectations of a persistently low interest rate. this might result in a higher - than - projected rise in output and inflation and would in isolation suggest a faster interest rate increase. • developments in the global economy are uncertain. our projections are based on favourable growth prospects in other countries
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a small part of the value to be delivered in the commerce experience, with loyalty programs, location and behavior - based offers, and personal financial management tools becoming part of the broader customer experience. financial institutions are working hard to figure out how they will participate. we must consider how the payments industry can design its future systems and services to address these new opportunities. the business challenges for financial institutions are also great when considering international payments. cross - border transactions are generally slow, inconvenient and inefficient, especially bank account - centric international payments sent or received on behalf of consumers or businesses. some closed networks, such as western union and paypal, have made advances in this space, but their networks are not as ubiquitous as open banking networks. our leadership in the global economy calls for a more seamless international payment experience. each of these areas – speed, efficiency, security – are embodied in the federal reserve ’ s vision for the future of payments. success in achieving these goals will require collaboration and engagement with the industry. we need to understand industry views on the benefits and costs of addressing these gaps and opportunities, the technical and operational impacts of potential solutions, and the associated safety and settlement issues. in the coming months, we intend to work with industry stakeholders to facilitate development of a shared vision for enhancing the future payments system. a recent payments strategy roundtable in chicago was a first step in this effort, we envision many forums to gather diverse industry perspectives. our ongoing collaboration with the clearing house leadership on strategic issues is critical to this planning process, given our key roles in common as payment system operators. in september, our chicago payments symposium will offer a platform to report on the progress of our work. all of us at federal reserve financial services are committed to working collaboratively with the leaders in this room and the entire payments industry to implement innovations that meet user needs today and into the future. we thank you for your ongoing partnership in these endeavors. bis central bankers ’ speeches
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institution may need to send a message to communicate that good funds are on their way. a key question for the future is this : do notification and memo - posting suffice, so that funds actually move at discrete times in the day, as they do in the uk, or do funds need to move in near real time as well? bis central bankers ’ speeches in the near term, we in the federal reserve continue to work to reduce the time required to complete payments and deliver payments - related information in the channels in which the fed operates. the debate to be had by the industry is whether our existing payments mechanisms can meet the needs of the future or we need to embark upon designing a next generation payment instrument. we welcome your voice in that debate. let ’ s turn our focus to end - to - end efficiency in the payments system. innovation is occurring in closer proximity to end - users, at points between payment providers and their customers, and between merchants and consumers. enhancing efficiency will mean moving business - tobusiness ( b2b ) and person - to - person ( p2p ) payments from paper to electronics, and bringing down the end - to - end cost of initiating and receiving payments. efforts will continue by internet / web vendors to create customer - facing technologies to help users initiate payments. here ’ s where mobile and handheld innovations may play a large role. in what form, and when, growth occurs will depend on when alternatives offer the speed, convenience, simplicity and other advantages that drive broad adoption. end - to - end efficiency also means that innovation in payments origination and receipt integrates smoothly into demand account systems and traverses risk filters and the payments infrastructure with both speed and relatively low cost. we have ample room to increase efficiency. end - users are still writing paper checks by the billions across many different use cases. some recent payment innovations are designed to address these opportunities. for example, in the p2p space there are paypal, popmoney and dwolla ; in b2b, paymode x and paynetexchange ; for bill payment, fis and fiserv, and among the proliferating mobile options, square wallet and levelup. in many ways, however, checks continue to provide features that are not replicated by electronic alternatives and innovations. checks offer a large measure of ubiquity. in other words, senders and receivers can reach nearly everyone without signing up for multiple services. they provide convenience
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andreas dombret : in support of coco bonds op - ed by dr andreas dombret, member of the executive board of the deutsche bundesbank, published in frankfurter allgemeine zeitung, 21 february 2015. * * * one of the key outcomes of regulatory reform in the banking industry, launched in 2008, is that banks need more and more capital. to illustrate this point, the new basel iii regulatory framework requires credit institutions to hold significantly more higher - quality capital than before. in addition, global systemically important banks need to additionally strengthen their capital base so that they can bear potential losses unassisted. the idea is to enhance banks ’ resilience and avoid putting taxpayers back on the hook for banks ’ losses in future crises. although these reforms are good, they raise the question of how banks will be able to cover growing capital requirements. with this in mind, we should turn our attention to a different kind of capital instrument. known as “ contingent convertible bonds ”, or “ coco bonds ” for short, they are bonds which convert automatically from debt to equity upon a specific trigger event – for instance, if an institution is faced with insolvency or if its tier 1 capital ratio drops below a certain threshold. in such cases, coco bonds increase the bank ’ s capital buffer. this new type of bond is attractive to credit institutions for several reasons. one is that, under certain conditions, coco bonds are recognised by supervisors as capital. these conditions hinge on the category to which the capital is to be assigned and reflect, for instance, subordinated status and long - term availability of the capital. the issuing bank ’ s discretionary scope for deciding whether or not to make coupon payments to investors is a further condition. another selling point for coco bonds to banks is that interest payments on the bond are tax - deductible. coco bonds can be attractive to institutional investors as well ; owing to their particular risk, they promise superior returns to those on normal bonds – which accounts for much of their appeal to investors, particularly in the current low - interest - rate setting. so are coco bonds a “ silver bullet ” for banks? in germany at least, their importance has been marginal up to now. up until the end of last year, these bonds were issued mainly by large banks in spain, switzerland and the united kingdom. their total volume amounted to some €50 billion. only two german institutions issued coco bonds in 2014. uncertainties surrounding the
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tax treatment of these instruments – which have now been cleared up – were one of the reasons why german banks were so slow to issue such bonds. in addition, german companies legislation has thus far not explicitly provided for mandatory convertible instruments where the right to convert lies with the issuer. the 2014 draft act amending the companies act, which is currently making its way through the legislative process, will make it legal here in germany, too, to issue coco bonds, which would then convert to equity shares. banks ’ growing need for capital could be precisely the catalyst that might increase the importance of coco bomds in germany, too – which is all the more reason to be careful. attractive as these instruments may be to banks and investors, we must remember that these are very complex capital instruments, especially since they are governed by such disparate areas of the law as companies law, debt law, tax law and supervisory law. there is a risk that retail investors in particular, mesmerised by the relatively high returns on coco bonds, could lose sight of the risks involved. banks are aware of the danger : deutsche bank, for instance, issued its coco bonds in denominations of €100, 000 in order to restrict entry into coco bond business to institutional and professional investors. in the united kingdom, the sale and distribution of coco bonds to retail investors is even prohibited by law. bis central bankers ’ speeches now is the time for supervisors to develop a code of best practices for issuing coco bonds. while taking national legal systems into account, we supervisors need to strive for as much standardisation as possible in order to achieve convergence in the eu. it is important, though, that coco bonds actually be used to absorb the losses that the issuing banks could potentially incur. this challenge has been recognised by eu lawmakers and supervisors. the key tasks facing supervisors now are to observe the market very closely and to press ahead with efforts to improve the legal framework for coco bonds. once these tasks have been accomplished, coco bonds can be a useful addition to banks ’ capital structure. by helping to strengthen the capital base, they will make an added contribution to enhancing banks ’ resilience to future crises. bis central bankers ’ speeches
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entire 2000s. the number of cash withdrawals has been around sek 320 million. does this mean that we have reached a lower limit for how much the use of cash can decline? has the heyday of the account - based payments ended? i do not believe we should be so sure of that. cash is still expensive to transport and manage and a heightened risk of robbery in recent years has not made cash management cheaper. in the end, it is we consumers who pay the costs in different ways. however, we must probably point out that we swedes like our cash more than most analysts believed a few years ago. how then have the account - based payment instruments developed? the use of cards has increased rapidly card payments have increased rapidly in sweden in recent years. in ten years the value of card payments has almost quadrupled and the number of payments by card has increased sevenfold. six years ago, in 2002, for the first time ever more card payments were made in payment terminals than atm cash withdrawals. in the most recent statistics available, from 2006, card payments in payment terminals were three times more common than atm cash withdrawals. if one calculates in terms of the number of transactions, cards are now the most used account - based payment instrument. like cash, card payments are mainly used for payments that are made at the actual time of the transaction. according to a 2006 temo survey, 45 per cent of those questioned used cards as legal tender in at least four of five purchases. 3 the value of an average card payment has almost halved in the past ten years, from around sek 730 to around sek 380. we are then using cards to a greater degree to pay smaller amounts. in this way cards increasingly appear to act as a substitute to cash. this is particularly so in the case of younger people, which is indicated in a study recently published by the riksbank. 4 the economist, 17 - 23 february 2007. the stock of banknotes and coins totalled sek 114 billion on 31 december 2007. sveriges riksbank. “ allmanhetens syn pa bankerna ” ( the swedish public ’ s opinion of banks ), temo survey, march 2006, the swedish bankers ’ association. bergman, guibourg and segendorf, “ the costs of paying – private and social costs of cash and card ”, working paper series, ( no. 212 ), sveriges riksbank, september 2007. moreover
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##enskaplig tidskrift ( political science journal ), vol. 3, no. 5. farelius, d., s. ingves and m. jonsson ( 2020 ), “ financial integration in the nordicbaltic region vis - a - vis the eu : a swedish perspective ”, suerf policy note, no. 189. floden, m. ( 2018 ), “ how large should the riksbank ’ s balance sheet be in the future? ”, speech, swedish house of finance, 13 april 2018. gertler, m. and p. karadi ( 2013 ), " qe 1 v. 2 v. 3... : a framework for analyzing largescale asset - purchases as monetary policy toll ”, international journal of central banking 9 pp.. 5 - 53. goodhart, c. ( 2014 ), “ the changing role of central banks ”, bis working papers, no. 326, bank for international settlements. greenwood, r., s. g. hanson and j. c. stein ( 2016 ), “ the federal reserve ’ s balance sheet as a financial - stability tool ” in designing resilient monetary policy frameworks for the future, federal reserve bank of kansas city economic symposium at jackson hole. 26 p. gustafsson and t. von bromsen ( 2021 ), “ coronavirus pandemic : the riksbank's measures and financial developments in spring and summer 2020 ”, economic review 2021, no. 1, sveriges riksbank. ingves, s. ( 2020 ), future money and payments ”, economic commentaries, no. 9, sveriges riksbank. international monetary fund ( 2020 ), “ technical assistance report — proposed amendments to the riksbank act ”, imf country report, no. 20 / 239, august 2020. kocherlakota, n. r. ( 1996 ), " money is memory ", federal reserve bank of minneapolis staff report, no. 218. lagos, r., g. rocheteau and r. wright ( 2017 ), “ liquidity : a new monetarist perspective ”, journal of economic literature 55, pp. 371 - 440. lundvall, h. ( 2020 ) “ what is driving the global trend towards lower real interest rates? ”, economic review, no. 1, sveriges riksbank. melander, o.
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central bankers ’ speeches performance and their rankings in governance indices published by, among others, the world economic forum and transparency international. the contracts provide an opportunity, if used properly, to “ go deep ” and address these more fundamental barriers to competitiveness. building a stronger economic union along these lines is necessary to correct what might be called an “ original sin ” of emu : the fact that the convergence criteria did not include any structural benchmarks for joining the euro, and hence structural policies remained mainly within the national remit. 3. areas for further progress in the future what about those areas that were not outcomes of the european council and where there is room for further progress in the future? the most important is greater sharing of sovereignty. the importance of credible governance has been starkly demonstrated during the crisis. countries without credible policies have been forced by markets to consolidate more rapidly than others in the downturn. this is because markets have not trusted that they can run sufficient surpluses in good times, or achieve sufficient growth, to lower debt levels and ensure long - term sustainability. paradoxically, the lack of strong external constraints on fiscal and economic policies has led to countries losing substantive sovereignty in these areas. by the same token, countries now need to share more sovereignty in order to regain their sovereignty. by sharing decision - making with the european level, they can restore their policy credibility with investors, while at the same time having a voice over where they are heading. this will mean going beyond the maastricht logic of national responsibility for fiscal and structural policies, and committing to governance arrangements that are actually enforceable – for instance, allowing for intervention rights by the center to prevent unsound national budgets. sharing sovereignty implies a number of other changes to euro area governance. first, there have to be strong institutions in order to exercise that sovereignty effectively. this will require a stronger eurogroup. second, those european institutions have to be properly democratically legitimated. this requires changes in the way the citizens participate in the european political process, in particular via the european parliament. let me stress : while i would have liked the outcome of the european council to be more ambitious, these ideas are not intended as criticism of it. they are orientations to advance further which will need to be properly fleshed out in the years ahead as the integration process evolves. this will require a treaty change in the medium - term in order to complete emu in a comprehensive way. 4. conclusion one year ago,
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the euro area was facing an uncertain future. but those painted a dark picture at that time have been proven wrong. one year later, europe has proven its ability to act and we have begun to set the euro area on a more convincing path. it is now critical that, over the next year, we continue down this path and provide emu with institutions it needs to advance. putting in place a genuine financial union and a stronger economic union must be our key priorities for 2013. it is essential that the appearance of calm on financial markets does not distract from the urgent need to address the euro area ’ s fundamental challenges. moreover, we should also not row back on what has already been achieved. implementing the fiscal compact and adopting the “ two pack ” of legislation in 2013 are essential to strengthen the fiscal framework. we should not undermine this by re - opening discussions on what constitutes “ good ” or “ bad ” deficits by arguing for exemptions for public investment. all bis central bankers ’ speeches deficits have to be financed on financial markets and increase public debt stocks – and this is the opposite of what we need next year. however, this focus on 2013 does not mean we should lose sight of the big picture. it is instructive to notice how little markets are reacting to the “ fiscal cliff ” debate in the us, while they are jolted by the prospect of earlier than planned elections in italy. our long - term goal is a situation where the essential functioning of the euro area is unaffected by events in individual countries, because sovereignty is shared and exercised in strong common institutions – and those institutions have a longer time horizon than politics. this is what jean monnet understood when he said : “ rien n ’ est possible sans les hommes, rien n ’ est durable sans les institutions ”. “ nothing is possible without men, but nothing is lasting without institutions ”. these words have never been more true than today. thank you for your attention. bis central bankers ’ speeches
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against that background, i should like briefly to review, without reaching firm conclusions on, four issues that feature in the recent literature. whether central banks should publish an expected ( optimal ) path for their policy rate. second, whether stabilisation policy is subject to a bias, meaning that a central bank will find it optimal not to deliver on promises and that, in consequence, its policies to offset shocks will be less effective than they could be if it could commit itself. third, whether stabilisation policy could be more effective if the central bank targeted a path for the price level rather than an inflation rate. and, fourth, how central banks should respond to asset price inflation. ( a ) should central banks publish an expected policy path? for a discussion of some implications of different loss functions, see vickers, j., 1998, ‘ inflation targeting in practice : the uk experience ’, bank of england quarterly bulletin, november, pages368 - 75. for example, tucker, p. m. w., speech at the national association of pension funds annual investment conference, march 2004, bank of england quarterly bulletin summer 2004, vol 44, number 2 ; and ‘ bank ’ s market man is ready for rate rises ’ p. m. w. tucker interview by d. smith, the sunday times 25 april 2004. amongst others, lars svensson 18 and michael woodford have argued that central banks should publish the path they expect for the policy rate or the near - term path of inflation they are aiming for. the norwegian and new zealand central banks have been publishing policyrate paths for a short while. 19 the bank of england does not. what do i – let me stress, personally – think about that? as others have pointed out, managing a scheme for voting by nine members on a path of rates would be pretty complex. proposals have been made ( eg for deriving a median path from individual members ’ paths ) 20, but they seem to entertain the possibility of shifting majorities for different parts of the resulting path ( or implied money market curve ). that may add an extra complication to explaining policy. indeed, more broadly, there would probably be a challenge in the area of communication. a single path for rates would, of course, be a misleading statement of the policymaker ’ s intentions ; of its ‘ reaction function ’. the path policy takes will depend, very obviously, on the shocks that hit the economy in the future. but not only on that.
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for the financing of consumption and investment. thirdly, the deleveraging process to reduce the absurd excessive gearing ratios of some mega - sized financial institutions can only be accomplished by a reduction in world liquidity. taking account of the magnitude of the problem of over - leveraging as evidenced by the balance sheet information recently released for ltcm, this can become a major constraint on the availability of new funds in the global financial market over the next year. against this background, the world can only extricate itself from this complex problem by a coordinated effort applied from three different levels : firstly, many macroeconomic deficiencies were exposed in a number of countries that in the end suffered most from the global financial crisis. it is dangerous to generalise the shortcomings as they would obviously differ from country to country and would therefore also require specialised treatment suitable to the underlying situation in each one of the affected economies. a number of countries such as thailand, korea and the philippines have already addressed their problems with appropriate adjustment programmes, and are beginning to reap benefits from often painful corrective measures. these adjustments provide for more disclosure and transparency, enhanced financial regulation and supervision, recapitalising of banking institutions, more restrictive monetary and fiscal policies, exchange rate adjustments and improved governance in macroeconomic management in general. secondly, all the criticism against the multinational institutions, and particularly against the imf, is not without foundation. these institutions did not keep up with the accelerating process of financial globalisation in recent years, and with the rapid integration of world financial markets. economic policy models that may have been appropriate in the old system where central banks and governments could still exert strong influences on the direction of major financial aggregates such as interest and exchange rates and could effectively control changes in the money supply and in bank credit extension cannot be applied without adjustment in the new world where market forces now dominate the scene. some changes in the global financial system have become necessary and urgent. these institutions are now concentrating on increasing their resources, e. g. imf quotas, on improving their surveillance functions and on revising the “ architecture ” of their existing infrastructural frameworks. thirdly, after the ltcm affair, there is an urgent need for multinational banking and other financial institutions to revise their own internal risk control models. the action taken by malaysia recently to reintroduce exchange controls on international capital movements and the de facto default by russia in its inability to redeem its public debt
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its use of policy to promote export growth. increased reliance on market - determined prices will help ensure that the allocation of resources into the export sector does not exceed their efficient use. the goal should be to raise productivity toward world - class standards in all sectors of the economy. recently china ’ s authorities have agreed that some rebalancing of the sources of growth away from exports and toward domestic demand is in order. among china ’ s east asian neighbors, the importance of developing industries to meet demand for domestic uses also is receiving increasing attention. the problem of export restrictions nevertheless, developing production for exports may still be useful for those countries at the lowest rungs of the developmental ladder, and it is surprising that many of the world ’ s poorest developing countries still not only do not encourage an export orientation but in fact maintain a regime of taxes, restrictions, and other policies that effectively discourage it. this problem remains especially serious in some african economies and may help explain why their growth performance has been so disappointing. the primary way that governments discourage exports is by imposing large taxes on them. because high export taxes are one method of obtaining revenue, governments may be attracted to them to solve their budget problems. they may also use these taxes to punish their political opponents, who are often involved in a particular export industry. the government can then distribute the resulting revenue to their supporters. the most pernicious forms of export taxes are those that are hidden through the government ’ s setting a fixed official exchange rate that artificially keeps the domestic currency at a value well above what it would be worth in terms of foreign currency ( say, u. s. dollars ) in a free market. the government then makes it illegal to sell dollars for the larger amount of domestic currency that could be obtained in the black market. the difference between the official exchange rate and the free, black - market rate ( often called the " black - market premium " ) imposes a tax on exporters because they are forced to sell the dollars they earn to the government or to the central bank at the official rate, and thus they receive a much lower price for their goods in terms of the domestic currency. although in recent decades a great many countries have abandoned currency controls and dismantled their black markets, such controls still exist in some of the poorest economies, especially in africa. in some countries, the tax from the black - market premium is confiscatory. an example from history illustrates this point. in 1982 ghana had a black -
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advantage of technological changes, innovations and provide a broader regulatory environment for competitive delivery of innovative payment solutions in the country. 9. the improvement in ghana ’ s digital payment systems are also supportive of online transactions aimed at financial inclusion. available data show significant progress in the deployment of electronic payments such as mobile money, payment cards, payment apps, direct debit and credit funds transfer, instant retail payments and virtual cards as alternatives to cash. in particular, mobile money transactions have grown by leaps and bounds. active mobile money accounts has jumped from in 345, 434 in 2010 to over 13 million subscribers with value of transactions of about gh¢223. 2 billion in 2018. 10. distinguished ladies and gentlemen, in spite of the digital revolution and rising use of electronic payments and digital currencies, we continue to see cash dominating transactions across several of our countries within the sub - saharan african region. undeniably, cash still remains the preferred medium of payment by the large informal sector, although trends are gradually shifting towards mobile money in ghana. thus, while making progress in financial inclusion by accelerating the migration to e - payment platforms, we are also mindful of the relevance of cash in our day - to - day dealings. this is why we must commit to the on - going currency feature enhancements and management of cash in circulation. page | 5 11. in this regard, the bank of ghana will continue to monitor the quality of substrates and features of the ghana cedi and take appropriate actions to make the cedi an all - time secured currency. special attention is being devoted to improve the features to make it more resilient to counterfeiting threats and facilitate data collection for cash life cycle analysis of the banknotes. the central bank will also conduct sustained currency awareness campaigns to educate the public on the proper handling of banknotes. 12. distinguished ladies and gentlemen, this seminar provides opportunities for participants to deliberate on currency management and operational issues. a cursory glance at the conference agenda indicates a very tight programme starting off with a closed door central bank workshop on substrate for banknote manufacturing. this would be followed by the plenary sessions on topics such as, ● ethical principles in central banks, ● crypto currencies – the real threats, challenges and future technologies, ● big data and the life cycle of the banknotes, ● the changing role of cits, ● cash handling and circulation models, and ● efficient co - existence of cash and digital payments 13. i can
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also show that, the banking system still remains less preferable by albanian emigrants who send money to their family members or relatives - only 15. 2 percent of emigrants show interest for using banking system. some of the reasons influencing migrants ’ decision for ( not ) choosing banks to transfer their money were : - geographical proximity of albania and greece ( albanians residing in greece and italy travel to albania frequently, on average 2 to 3 times a year, transferring money themselves ). - insufficiency of emigrants ’ families to the banking system. empirical measures have shown that while a considerable number of emigrants have become familiar with banking in the resident country ( 74. 4 percent of them hold their savings in the banks of their country of residence ), the corresponding families in albania appear to be less familiar with the banking system in albania. only 45. 3 % of albanian families hold a banking account. at this point, some policy implications are evident : improving population awareness of banking services, encouraging expansion of banking throughout the country and facilitating possibilities of money transfers. boa, is in process of designing a public communication strategy that aims at brining the public closer to banking products and services, including transfers. the flow of remittances may also raise if the fiscal burden of financial transfers is reduced. enhancing competition by increasing the number of participants in the market would also push transfer commissions down. here, the government has to incite the establishment of other companies as well as apply the reduced taxes. another way of amplifying competition in the sector is by pressing on price transparency. remittances, as mentioned earlier, are also affected by economic and financial situation in beneficiary country. international experience brings many examples to illustrate this point. after a constant growth of remittances in philippines, as a result of improvements in the investments environment in the early 90s, they became very shaky as the financial crisis affected the asian countries at the end of the 90s. likewise, turkey after experiencing a stable growth of remittances during the 90s, saw a drastic fall as the financial crisis broke out in 1999 - 2000. however, an interesting observation in these cases is that, the fall of remittances and their volatility were lower than those of private capital flows. remittances seem to react less to economic ups and downs compared to other capital flows displaying considerable stability over time ( ratha, 2003 ). in this context, countries with high remittance percentage
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relative to other capital flows could be more immune to capital drain during crises. remittances are not simply expression of emigrants ’ fondness to assist their families in adverse situations. they also represent an important financial source that augments capital inflows and investments in economy. remittances may have a positive impact not only on the volume but also on the quality of investments. migrants and / or their relatives being more familiar with the local economic and social environment could make a better use of the capital brought into the country than foreign investors. nowadays this is not just a theoretical inference. a growing number of emigrants that fled during 90s, are returning and funds but also a lot of know - how. a survey carried out with the assistance of the international organization of migration ( iom ) in albania and cards project. the questionnaire period comprises april - june 2005. 3 / 5 however, there is always another side of the coin. remittances inflow might have negative effects as well. if the recipient country remains dependant on money transfers, it will encourage further migration of labour by reducing the effectiveness of investments of domestic and foreign investors because of the unstable workforce. what's more important, if remittances go mainly for financing imports, their impact in the development of the domestic economy drops significantly. i fear albania is one of these cases. remittances are being mainly used to secure daily family needs and to improve life style, as well as to construct or reconstruct houses, and to finance traditional family ceremonies. only a small portion goes into banks as saving deposits. in fewer cases, remittances have been invested in real estates, manufacturing or services and agricultural sectors. this distribution of remittances alleviates poverty but does not lead to new job creation via investments, which would prevent new emigration by generating local opportunities. being utilised little as resources for the economic and social development of the country, remittances may have led to individual, family or local dependency. during the first stage of transition in albania policies for optimising the administration and utilisation of workers ’ remittances for developing purposes have been completely lacking. a few sporadic measures have aimed at driving workers ’ remittances into official channels and improving savings and investments incentives of emigrants in the country but have been by and large inadequate. more recently, the albanian government has taken a more attentive approach toward remittances and their
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that of royalties, reviewed by the sheshinski committee. i support the committee ’ s approach, the aim of which is to find a way of dividing the gas profits between the entrepreneurs who search for and find the gas and israel ’ s citizens. in this context i refer you to what i said when the committee ’ s recommendations were published and i stand behind the views i expressed then. the gas discoveries raise a related issue, known as the dutch disease. i have stated in the past that in my opinion the right way to deal with the problem is the norwegian model, in which the royalties and the relevant government ’ s tax revenues are invested in a sovereign fund. the fund invests its income abroad, and the government ’ s income from this investment is more stable over time, and the fund moderates the short - term effect of the gas income on the exchange rate, an effect that could prove disastrous for the tradable goods industries, as happened in the netherlands and other countries. i would now like to introduce the next speaker. dr jihad al - wazir, governor and chairman of the board of the palestine monetary authority ( pma ), was born in 1963. dr al - wazir obtained his ph. d. in business administration from loughborough university in the united kingdom, and in the past served as deputy minister of finance and acting minister of finance in the palestinian authority. relations between the bank of israel and the pma under dr al - wazir ’ s leadership are marked by effective and productive cooperation, and i hope that they will continue to be so.
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ahmed naseer : financial inclusion within the maldives keynote speech by mr ahmed naseer, governor of the maldives monetary authority, at the 35th asian bankers association general meeting and conference, hosted by the bank of maldives, male, 16 november 2018. * * * asian bankers association chairman, mr. daniel wu ; managing director and ceo of the bank of maldives mr. andrew healy ; distinguished experts and participants ; assalaamu alaikum, and a very good morning to you all. it gives me great pleasure to have this opportunity to speak at the 35th asian bankers association general meeting and conference. i am very pleased to be here today, in this unique gathering, bringing together industry players and financial experts from every corner of the asia region. in fact, the theme of this conference speaks to the heart of the imminent challenges that central banks are facing today : how will the digital revolution transform the economic and financial landscape? how can we gain the potential socio - economic benefits of the financial technology or fintech, while mitigating possible risks? ladies and gentlemen, while innovations in the financial sector are not new phenomena, the speed and broad consequences of these innovations have drawn our attention in recent times. the rapid improvements in computer technology such as quantum computing, innovations in cryptography, big data, artificial intelligence and the increased use of mobile phones have taken the traditional banking industry to a whole new level. it has enabled financial institutions to be in the financial lives of their customers at any time, any place, using any device or channel. in a nutshell, financial services are at our finger tips. in a few years from now, it is possible that the millennials and future generations will not see the need to step inside a bank during their lifetime. fintech has not only reshaped customer experience. it has paved the way for achieving financial inclusion, especially for a geographically dispersed country like the maldives, to break geographical barriers and reach underserved populations within the islands. with the nation - wide telecommunication coverage and high mobile penetration in the country, these innovative payment solutions have the potential to reduce cash usage and achieve financial inclusion in the country. at the end of last year, we reached an important milestone in advancing financial inclusion within the maldives. both telecommunications service providers now deliver easy and secure access to mobile payment services across the country. as a result, we have seen a significant increase in the volume and value of transactions being processed through mobile wallets. this mainly stemmed from the increased extent of the
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less burdensome discussions of the risks that banks face and the responses they adopt. the committee recognises that national laws and regulations provide different avenues through which supervisors may conduct such reviews, and consequently pillar 2 affords each jurisdiction the flexibility to accommodate those differences. the topic of supervisory review must also be considered in the context of the level playing field, one of the themes i mentioned earlier that came out clearly in the comment letters. as the members of the bba and the london investment banking association expressed in their joint comment letter, for example, the way in which the new accord is applied and supervisory review is conducted across countries matters critically to the daily operations of internationally active banking organisations. your letter noted the importance of consistency in standards and consistency in the interpretation of the new framework, as well as the challenges that even limited areas of national discretion can create. these concerns go the very heart of the committee ’ s mission. some thirty years ago, the founders of the committee recognised the growing need for cooperation and consistency in the supervision of internationally active banks. as we prepare to adopt a new capital framework, we know that we supervisors will need to cooperate even more in the future to supervise an internationally active bank ’ s adoption of the more advanced approaches to credit or operational risk. the accord implementation group was created under the leadership of nick le pan, the canadian superintendent of financial institutions, precisely to share experiences and approaches to applying the new rules. by sharing information on practical matters, we expect that supervisors will apply the new accord more consistently at home, thereby promoting a more level playing field across countries as well. based on the aig ’ s work to date, the committee published a paper this past august on the “ high level principles for the cross - border implementation of the new accord. ” in this paper, we reiterate our view that the traditional allocation of responsibilities to home and host supervisors will continue. cooperation will be critical to the effective supervision of institutions under the new accord, especially considering the challenges an internationally active bank will face in receiving the initial approval to adopt, and then validate, advanced approaches to credit and operational risk at home and in host jurisdictions. similarly, supervisors will need to find practical ways to cooperate in the evaluations of capital adequacy under pillar 2 and ongoing reviews of compliance with the minimum operational requirements of the new accord. by promoting a more consistent approach to supervisory review, we intend to strengthen the quality of supervision across countries. we recognise as well the special function the
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the escb will be willing to accept. this volatility will in turn depend on several factors : • the width of the corridor defined by the two standing facilities available to absorb or provide liquidity ( the deposit facility for the floor and the marginal lending facility for the ceiling ). under normal circumstances, the two facilities will bound the overnight interest rate. they will operate at the overnight maturity and will be accessible at the discretion of counterparties and for unlimited amounts, provided, in the case of the marginal lending facility, counterparties can supply adequate collateral. a very narrow corridor, allowing very little room for the functioning of the money market, would not be strictly in line with market principles. on the other hand, a very broad corridor would not help contain excessive market volatility. as a consequence, the width of the corridor is likely to be set pragmatically ( currently, it is around 2 % for most central banks that operate an interest rate corridor similar to the one planned for the escb ) ; • the frequency of fine tuning operations could be a more discriminating factor for interest rate volatility. very frequent intervention of the escb in the money market would not, in my view, be fully consistent with market principles. moreover, excessive intervention might complicate the extraction of information from movements in market interest rates, especially at the maturity at which the escb would intervene. intensive recourse to fine - tuning operations might also deprive regular refinancing operations and standing facilities of their signalling effect and be conducive to a centralisation of monetary policy operations ; • provided they are set at a sufficient level, and include an averaging provision, reserve requirements constitute an efficient buffer against liquidity shocks ; this would help stabilize short - term interest rates over the maintenance period. in turn, setting a fairly high level of minimum reserves might require remunerating them in order not to induce significant delocation or disintermediation ; 7 see the two emi reports “ the single monetary policy in stage three – specification of the operational framework ”, january 1997, and “ the single monetary policy in stage three – general documentation on escb monetary policy instruments and procedures ”, september 1997. • enhancing the signalling effect of the main refinancing operations should also contribute to lowering interest rate volatility. this may best be achieved through the normal conduct of fixed - rate tenders, which send clear signals to the market, rather than variable -
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the people at large remain our priorities. for this reason, we need to redouble our efforts to enhance our banking, finance and technological know - how. we also need to make sure that a wealth of knowledge and experiences is effectively shared among members of the clmvt. bis central bankers ’ speeches the last one is to leverage on specialized financial services that some of our members are ready to offer. for thailand, progress has been made to create financial ecosystem to meet growing regional demand for specialized financial services. in the capital market, thailand allows entities from clmv countries to raise funds from the thai capital market with the introduction of more accommodative rules on capital account and taxation. since 2013, the lao government and firms from lao pdr have issued baht - denominated bonds, worth 28 billion baht in total, to support large - scale infrastructure projects. in addition, the bank of thailand supports multinational corporations operating in the region to establish regional treasury centers in thailand. as of now, there are 13 companies holding treasury center licenses, of which 4 have been granted in the past 3 months. ladies and gentlemen, the work to develop domestic financial sectors and strengthen financial connectivity will always be a work in progress. the bank of thailand is committed to working with our counterparts in clmv countries to develop the financial industry and enhance regional financial integration. much progress has been accomplished, but there remain many more things that we can and should do to further promote more connected financial system. as we have done in the past decade, the bank of thailand will stand ready to work with our clmv partners in various ways from development of human capital and regulatory frameworks to infrastructure building. if we can build strong domestic financial systems and regional financial connectivity, we will be able to reduce costs and create positive spillovers to several other industries. livelihoods of our people will improve. workers and investors can more easily and cheaply remit funds across countries. merchants will find it easier to trade cross - border. the tourism sector will gain even more momentum. smes will be able to utilize e - commerce and e - payment in selling their products regionally and globally. financing of infrastructure projects can also be supported by long - term financial products with proper risk management features. furthermore, financial inclusion and financial literacy will equip households and small businesses with the needed resilience to go through the increasingly volatile world. ladies and gentlemen, just ten years ago, the low - cost
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pongpen ruengvirayudh : the current economic situation and recent monetary policy developments opening remarks by ms pongpen ruengvirayudh, deputy governor for monetary stability of the bank of thailand, at the joint foreign chamber of commerce in thailand ( jfcct ), bangkok, 21 may 2014. * * * distinguished guests, ladies and gentlemen, 1. it is my pleasure to be back here at the joint foreign chambers of commerce ( jfcct ). first of all, i would like to thank jfcct for inviting me and would also like to thank all the members of jfcct for your continuing contribution to the economic development here in thailand. economic outlook 2. a great deal has changed both domestically and externally since i was here last year. with respect to domestic economy, the prolonged political stalemate has weighed considerably on confidence, exacerbating the already fragile economy. externally, the announcement of the us fed to scale down its quantitative easing program since may 2013 has led to turmoil in financial markets across emerging economies. today, i therefore would like to take this opportunity to share briefly with you my thoughts on the country ’ s economic outlook, the medium - term challenges we face and monetary policy of the bank of thailand. 3. when it comes to current economic assessment, the slowdown of the thai economy over the last year, in combination with uncertainty over the ongoing political conflict, is a growing concern for many. the nesdb two days ago announced that gdp growth in 1q14 contracted by 0. 6 % ( yoy ), compared to same period last year. signs of moderation were witnessed in various economic activities, such as consumption and investment, as well as in government spending, despite signs of a rise in some exports. as the political deadlock lingers, tourism has begun to feel the impact. in the last mpc meeting of april 23rd, the committee projected that the thai economy in will grow less in 2014 than the previously assessed at 2. 7 percent. this will be mainly due to the weaker - than - expected economic momentum in the first quarter of the year and the political impasse posing downside risks to domestic demand and tourism. however, the economy is expected to resume its normal growth in 2015. 4. notwithstanding the short - term headwinds, there are also causes for optimism. global economic activity has been firming up. growth has gathered momentum in the us, the euro area and japan. recent government ’ s
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utilities ” and to monitor the compliance of those systems. the european equivalent to dodd - frank is the european market infrastructure regulation ( emir ), which sets rules for central counterparties and trade repositories. other countries that introduced or plan to introduce strengthened regimes include the uk, canada and hong kong. a common feature of these regulatory regimes is their risk - based approach. regulators focus their oversight activity on the largest systemic risks to financial stability. typically this involves classifying certain fmis as systemically important and paying particular attention to those systems. so far these requirements only apply to otc interest rate derivatives. formerly the committee on payment and settlement systems ( cpss ). http : / / www. bis. org / cpmi / publ / d101. htm. bis central bankers ’ speeches the reserve bank ’ s oversight role in the international context, the reserve bank ’ s regulatory framework in the payments area is at the non - intrusive end of the spectrum. the bank and fma have a relatively low level of regulatory authority in this area. under the bank - fma designation regime 6, fmis seeking designation must have their rules approved by the bank and fma. however, this regime is voluntary and, for fmis not choosing to be designated, the bank must rely on suasion and industry engagement to promote its stability and efficiency objectives. in promoting the soundness and efficiency of the financial system, and consistent with the internationally agreed principles for fmis, the bank has four core objectives that fmis are encouraged to follow as responsible “ nz inc. payments citizens ” : • the first is good governance. it is important that fmis are well managed by appropriately skilled people. governance arrangements should ensure that the views of all relevant stakeholders are considered. • the second is a sound risk management framework, covering legal, credit, liquidity, operational and other risks. • the third is continuity of service. given their role at the heart of the financial system, it is important that fmis operate continuously. this means that a system should be able to cope with potential disruptions like technical problems and the failure of a participant. • the fourth is fair and open access. fmis should have risk - based and publicly disclosed criteria for participation that promote fair and open access with no unwarranted barriers to entry. fair and open access should encourage competition between participants and innovation. the bank promotes these objectives through consultation with the industry and we especially value the relationship
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with payments nz in helping to achieve good results. we are confident that the requirements for designated fmis will ensure that they meet the four core objectives. however, we would like to see these requirements extended to all systemic fmis. in this regard we believe there is a case for some strengthening of the current regulatory framework. our concern relates to situations where our objectives for the safety and efficiency of systemic fmis cannot be achieved through suasion alone. another area where we believe there is a need for change is crisis management. when there is a crisis, particularly in a systemic fmi, there is a need for prompt and deliberate action to restore normal operations and mitigate the flow - on effects of the disruption. in past systemic events, for example the anzac day disruption, the industry has looked to the reserve bank for leadership. we are happy to play such a role but would like to formalise crisis management roles and responsibilities. the bank is currently looking to establish an enhanced oversight regime based around systemically important fmis with attention given to crisis management powers. our approach will be aligned with international principles and, while remaining near the non - intrusive end of the international spectrum, will focus on the core objectives for a sound and efficient payment system. the bank does not seek to prescribe the shape of the payment system or the direction of innovation. other national regulators take a range of approaches on such strategic issues. across the tasman for example, the rba and payments system board can take quite strong positions on industry shape and direction. in our own case, we often express views on once a payment system is designated, all payments through that system are final and irrevocable. bis central bankers ’ speeches industry direction, particularly if there are implications for systemic risk, but we prefer to see market - based solutions. an example of this is the current discussion about the future of domestic debit, where the bank has not taken a position. we acknowledge the arguments in favour of preserving a domestic debit product so that competing payment instruments are available. however, we also note the popularity of scheme debit cards given their ability to facilitate on - line and overseas payments. it may be that the cost of re - investing in the domestic product to provide comparable functionality is too high. in recent times, the most significant change to the payments landscape has been the settlement before interchange ( sbi ) arrangements for retail payments, introduced in 2012. these arrangements have helped to address long - standing concerns about
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alan greenspan : regulation, innovation and wealth creation remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the society of business economists, london, u. k., 25 september 2002. * * * since the dawn of the industrial revolution here in britain, virtually every generation in the industrialized world has witnessed advances in living standards. a never - ending stream of innovation has led inexorably to expanded trade and improved productivity in many nations throughout the world. today, we can see on the horizon vast new means of communicating and computing, practical applications of advances in biotechnology, and doubtless many other innovations. but a half - century from now, the goods and services that we produce and consume will, to a significant extent, reflect applications of insights not yet formed or even imagined. could the residents of sophisticated eighteenth - century london, prior to sir william herschel's demonstration of invisible radiation, even contemplate the existence of radio waves that would reach around the world? i still have trouble grasping how the shortwave transmissions of the bbc travel thousands of miles to find their way to my bedroom at night to be picked up by my transistor shortwave radio. our modern electronic devices work according to the laws of quantum mechanics, which were laid out in the 1920s by erwin schrodinger, werner heisenberg, and paul dirac ; they postulated that at the subatomic level the world did not obey the centuries - old newtonian views of how the forces of the universe function. the major revolutions of albert einstein had occurred a few years earlier and nuclear power was a generation or so beyond. i raise such examples only to emphasize that we cannot realistically project future innovations and the potential for those innovations to create economic value. novel insights, by definition, have not previously entered anyone's consciousness. however, that unanticipated discoveries of how to create wealth will emerge in the decades ahead no longer seems as conjectural as it may have, for example, before the industrial revolution. full realization of the benefits of past innovations, and of those our grandchildren will experience, will depend on the forces of globalization already in play to develop the commercial potential of new technologies and to transmit the application of these technologies across our economies. by spreading expertise and expanding the division of labor and specialization to ever broader markets, those forces led to enhanced trade in the past half - century, which in turn has dramatically elevated the
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to ensure it is future - ready. as i have said before, " the code is a cornerstone of consumer protection in financial services in ireland, establishing a set of rules and expectations for how firms should treat their customers and has allowed the central bank to intervene to protect consumers. " the changes we have proposed build on the existing code, reflecting the provision of financial services in a digital world. 1 / 3 bis - central bankers'speeches we have had very active and important engagement with stakeholders on the code, with feedback coming through from across industry, civil society and other government agencies and regulators, as well as from the minister for finance. the feedback we have received has been broadly positive with many stakeholders welcoming the proposals. we are aiming to publish the revised code early in the new year. when implemented, consumers will benefit from a package of protections that reflect how they are accessing financial services today. regulated firms will benefit from a clearer articulation of their code obligations. as you know, we are also making changes to our supervisory model, which we will begin to implement in january. the new model remains risk - based, but is evolving to deliver a more integrated approach drawing on all elements of our mandate ( consumer and investor protection, safety and soundness, financial stability and integrity of the system ). this enhanced approach is based on accumulated experience, on insight, on best practice and is built for a faster moving and more complex financial services sector. firms will hear one consistent voice from the bank, with more coordinated messaging and more streamlined demands across the full span of our regulatory and supervisory mandate. we will promote a more open and transparent supervisory approach. to enable and implement our new supervisory framework we need the right operational approach and organisational structure. we are moving to an organisational structure where our regulatory and supervisory directorates will have teams responsible for integrated supervision across all our regulatory outcomes. importantly, our supervisory model will place consumer protection at the heart of day - today supervision. it will position us better as an organisation to meet our objectives to ensure consumers of financial services are protected in this changing financial landscape, as highlighted by the oecd report. this is why this review by the oecd is so important, as it provides us with recommendations and insights that will support our ambition to transform and will be incorporated into our transformed supervisory approach. the oecd's assessment that the central bank is operating in line with the high level principles is very positive. we also welcome the recommendations on how
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fx ) mismatches in balance sheets of the government, banks, or corporations. second, procyclical fiscal and monetary policies that amplify external shocks. in such cases, even a mild external shock can push economies to the brink of recession. ∗ i thank the comments and suggestions in preparing this note to elias albagli, miguel fuentes, and carlos medel. in short, domestic weaknesses interact with global financial attitudes in a dangerous mix that has historically proven to be highly destabilizing for emes, compared to aes. still, this characterization is based on very crude generalizations ; in reality, emes spread over a broad range of possibilities for each dimension and different combinations of them. the question is then to what extent does such variety of cases make a difference for the spillover from changes in global financial conditions and what role does the exchange rate ( er ) play in it. how important are global financial and business cycles to emes compared to local ones? to address this issue from an eme ’ s perspective, a first question refers to the relative importance of externally - induced shocks as compared to purely domestic ones. even if the global financial cycle were a very powerful force, as long as countries can still get into troubles of their own, macro policy, including the er regime, may make an important difference. a review of the last 40 years of economic history reveals many episodes during which cyclical turning points originated in domestic, rather than foreign, shocks. in latin america in particular, many of the major shocks of the 1980s, 1990s, and early 2000s originated locally, usually from misconceived policies, private sector exuberance, or inadequate regulations. the fact that these shocks showed up as large current account deficits surely reflects the degree of dependence of governments and business on external funding, but that does not exempt local conditions from being the main source of the imbalances. in particular, a classical latin american and caribbean countries ( lac ) crisis would show up as an unsustainable disequilibrium between public, private, or foreign savings and investment partially contained by some form of fx control, which turns into a major economic and financial crisis once the currency devaluates. abundant foreign capital may help prolong the situation for a while, but only to make the inevitable turnaround more damaging. it is important to underscore the role of domestic er policies. during the upswing, central banks in emes often try
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be ruled out, hindering growth in other economies due to its weight in the global economy, and affecting commodity prices significantly. domestically, as aforesaid, medium - term risks for inflation are still present. the growth rate of domestic demand and output has dropped, albeit not as fast as expected. although the board estimates that output gaps have not narrowed further, if output again takes up a more dynamic path, there can be pressures pushing inflation up and demanding a monetary policy response. domestic demand has outgrown gdp in the last two years, thus widening the current account deficit. households ’ saving is low compared with earlier years, while corporate savings have decreased in the past year and investment is in record - high levels. if domestic demand becomes more dynamic, it could amplify the current account deficit. this could be risky in a scenario of weak world growth. as noted in our financial stability report, aggregate solvency and liquidity of the chilean economy remains stable. this is important, considering that banks ’ and enterprises ’ access to external credit could be hampered by a further deterioration of the global financial environment. in any case, and despite the impact of external volatility on the prices of some assets, financial markets have operated normally. in this context, i would like to highlight the need to continue advancing in initiatives to strengthen our regulatory and supervisory framework. one such case is the bill to reform insurance companies currently being debated in congress. the banks ’ solvency and liquidity indexes have been stable in the first half. in a context of good rents, core capital has hovered around 10 percent while regulatory capital – as measured through risk - weighted assets – around 14 percent. meanwhile, since the last financial stability report the banking industry has increased its long - term debt certificates, and some medium - sized banks have pursued strategies to attract retail deposits. another favorable development is the greater diversification of banks into different types of credit from abroad. also worth noting is the hoarding of liquid assets in foreign currency. the stress tests presented in our financial stability report show that the banking industry ’ s current capitalization levels allow it to cushion an episode characterized by a gdp slowdown, higher financing costs in local currency and an exchange rate depreciation associated with the materialization of the external risk scenario. as for household debt, it should be noted that, on aggregate, borrowing has increased in tandem with disposable income. this has translated into fairly stable aggregate debt indicators, whether comparing the debt level
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suhaimi ali : future - proofing talent for a dynamic and resilient workforce opening remarks by mr suhaimi ali, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the mydigital and tech roundtable kuala lumpur, 17 january 2023. * * * introduction distinguished guests, ladies and gentlemen. a very good morning and thank you to the organisers of this mydigital and tech roundtable for inviting me to deliver the opening remarks we are here today to discuss issues and ideas to spur digital - ready talent and futureproof the workforce for malaysia. i believe this conversation is timely. as leaders in our fields, i'm sure all of us agree that staying relevant amid a shifting and competitive landscape is a top challenge for today's employees and employers. the pandemic exposed deep - rooted labour market fragilities and structural inequalities. in malaysia, as in other countries, vulnerable segments such as low - income workers, the youth, women, ethnic minorities, informal and fixed - term workers were among the hardest hit by the crisis. some are still finding their footing. more importantly, we are facing several structural shifts that continue to reconfigure our economy, with resulting implications on the future of work. among the key ones that may resonate with us here today are : first, the digital and sustainability revolution. increased adoption of technologies such as ai and iot, coupled with rising urgency on the sustainability agenda will reshape industries. this will demand new skillsets and unlock opportunities, but also create challenges for businesses and employees. second, shifting work preferences. this includes expansion of gig workers, increased remote or flexible working arrangements, and a dynamic workforce with more frequent career switches. we have already witnessed, for example, a rise in digital nomads who travel freely and work remotely. third, an ageing population and the need for diverse participation. malaysia is swiftly ageing, requiring changes in the labour market policies to cater to an older working segment as well as encouraging higher workforce participation among women and other minority groups. at the same time, we need to resolve the issue of relatively higher unemployment rates among youths. and fourth, the growing generational gap in the workforce. up to four different generations now coexist in many workplaces. each have varying perspectives on leadership, learning and workplace culture. we can thus expect a host of opportunities, but also the need the navigate deep -
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##ryl and other adverse weather conditions could influence higher inflation. however, the factors that could result in lower - than - projected inflation include weaker - than - projected global growth, which could reduce domestic demand and imported inflation. in concluding its discussions, the mpc noted that any future monetary policy decision to reduce interest rates will continue to depend on incoming data. concluding statement ladies and gentlemen, the primary mandate of bank of jamaica is to maintain inflation firmly between 4. 0 and 6. 0 per cent and we remain resolute in this commitment. thank you. i will now take questions. 4 / 4 bis - central bankers'speeches
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jul oct jan apr jul oct jan apr jul oct jan apr jul oct 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 15 notes : ( a ) cpi inflation excluding energy, food, alcoholic beverages and tobacco. source : ons. measures of core inflation have been below 2 % since the middle of 2014 ( chart 13 ), and weaker than projected in august. this mainly reflects weaker goods price inflation, which, in turn, is likely the product of sterling ’ s past appreciation ( chart 14 ). 21 those dynamics will continue to weigh on core inflation for a while, since around two - thirds of the effects of a currency move are estimated to appear in cpi inflation at horizons beyond one year, making them relevant for monetary policy strategy. 22 of course, the recent weakness in sterling, if it persists, will moderate these effects somewhat. note that one would not necessarily expect core inflation at 2 % with cpi inflation at target if the items excluded from core inflation measures undergo persistent relative price shifts. for example, a “ core ” measure that relied exclusively on inflation in the services sector would have run above 2 % in the pre - crisis era, when overall inflation was around 2 %, in light of low inflation rates in goods prices. a “ core ” measure with a higher weight on goods prices would have shown the opposite. for example, although they are uncertain, estimates of the pass - through of exchange rate movements to cpi inflation suggest that, on average a 1 % appreciation reduces consumer prices by around 0. 3 %. those effects take time, though they are mostly complete in around three years – consistent with complete but gradual passthrough of exchange rate changes to consumer prices. that likely reflects, among other things, rigidities in retailers ’ pricing decisions. see the box on page 28 of the november 2015 inflation report for further discussion. bis central bankers ’ speeches chart 14 : sterling appreciated significantly since march 2013 before moderating recently sterling trade - weighted usd per £ euros per £ index ( march 2013 = 100 ) jan 16 dec 15 oct 15 nov 15 sep 15 jul 15 aug 15 jun 15 apr 15 may 15 mar 15 jan 15 feb 15 dec 14 oct 14 nov 14 sep 14 jul 14 aug 14 jun 14 apr 14 may 14 mar 14 jan 14 feb 14 dec 13 nov 13 oct 13 sep 13 jul 13 aug 13 jun 13 apr 13 may 13 mar 13 source : bank calculations. conclusion the three factors i have described
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, and that news is inherently difficult to forecast. each month the committee makes a careful assessment of the outlook for inflation, and it is that which will guide our decisions on the appropriate level of interest rates. it is over 3 1 / 2 years since interest rates were last raised - the longest such period since bank rate was held constant at 2 % through the 1940s. at some point reducing the present degree of monetary stimulus will be necessary in order to keep inflation on track to meet the target. the timing of any such decision will reflect our judgment of the outlook for inflation. listening to our business contacts and learning from our visits around the uk is an important input into that judgment. to retain the unrivalled degree of stability that we achieved during the “ nice ” decade will be an even more difficult challenge for the future. the present monetary and fiscal frameworks provide a seaworthy policy vessel, but, as all sailors know, fog, especially statistical fog, can be dangerous. so we must hope that lady luck will continue to smile on us.
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been combined into large, complex, and opaque trust companies that were not members of the nych. this resulted in runs on those trusts, which led to broader liquidity problems. although the nych had the ability to provide liquidity to those trusts, the provision of that liquidity was delayed. it appears that at the time, the nych was, reasonably, observing some form of bagehot's dictum when deciding whether to provide liquidity. under that dictum, you want to know that the institution to which you're providing liquidity is solvent. if it isn't, then the liquidity extension could be akin to throwing good money after bad. but because the trust companies at the time weren't member institutions, the clearinghouse didn't have a good enough understanding of their balance sheets to know whether they were solvent. 5 some banks refused to clear checks from other institutions, which led to an erosion of depositor confidence and more failures. this historical example points to another aspect of a payment system that is important - resilience of the system. these problems highlighted by the 1907 panic - coordination failures and a lack of resilience - could have been mitigated with the help of a central bank. paul warburg, an influential banker at the time, argued that such a central bank could " establish and maintain a perfect system of credit, enabling the general banks to transform cash credits into actual cash with such absolute ease and certainty that the use of cash credit, instead of actual cash, will not cease, no matter what may happen. " 6 in 1913, congress agreed and created the federal reserve. it positioned the federal reserve at the center of the banking system by establishing a nationwide check - 2 / 5 bis - central bankers'speeches clearing system and a telegraph wire transfer service that is now known as fedwire®. the fed was also intended to function as a lender of last resort so that suspension of payments would no longer be necessary. in the 1970s, the fed promoted more efficient check - clearing by adding the automated clearinghouse service. our job in providing these services and carrying out our responsibilities was and continues to be to make sure the payment system functions efficiently and resiliently, promoting the kind of confidence that is vital for a modern economy. the lesson from this history, as relevant now as ever, is that the payment system has been one of those areas in which the best efforts of the private sector have sometimes fallen short. the
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like to thank caroline mehigan and micheal o ’ keeffe for their contribution to my remarks. 2. for the seminal piece see autor et al 3. for an overview see for example : http : / / www. oecd. org / trade / understanding - the - global - trading - system / why - open - marketsmatter / 4. note that ireland had a very free trade policy position from independence in 1921 until 1932 when protectionist policies were introduced in line with the practice elsewhere. 5. in 1961, ireland applied to join the european economic community. 6. the extent of our openness also complicates the interpretation of our statistics, so it is important to look at a number of measures of trade for example than gross exports and imports. 7. using the oecd wto tiva database ( 2014 ) indicator “ domestic value added in foreign final demand - partner shares ” the us demanded 18 per cent and the seu excluding the uk accounted for 33 per cent. 8. merchandise exports are often used to measure irish goods exports as they do not include contract manufacturing for example. in 2014 for comparison ( bracket values for 2018 ), merchandise exports to the uk were 14 % ( 11 % ) of the total, the us accounted for 22 per cent ( 28 % ) with 40 per cent ( 39 % ) going to the eu non - uk. 9. see the cso data 10. oecd tiva database data for 2014. 11. exports for jan - jun 2019 : food and live animals ( 5688 million euro ), beverages ( 720 million euro ), or 16 per cent of the total merchandise exports. 12. see https : / / www. esri. ie / publications / how - openness - to - trade - rescued - the - irish - economy 13. see table 1, calo & herzberg ( 2019 ), this paper also provides a forward looking view on financial sectors after brexit. 14. https : / / www. ifsc. ie / page. aspx? idpage = 6 15. amounting to 318, 000 people – https : / / www. cso. ie / en / releasesandpublications / ep / pfdi / foreigndirectinvestmentinireland2017 / ae / 16. ireland produces three quarters of global production of orthopedic knees with many medical technology firms based around
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improvements in foreign exchange settlement, and enhancing the framework for resolving cross - border failures of financial institutions must not be forgotten as well. concluding remarks already forty years ago, the nobel prize - winning economist sir john r. hicks predicted that in a globalized financial market “ a national central bank will no longer be a true central bank, ” but will become “ single banks in a world - wide system. ” whether we like it or not, this is clearly the direction we are heading. bis central bankers ’ speeches
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angle. the challenges for central bankers in the current ims let me move on to the challenges for central bankers in the current ims. i would like to raise three aspects. first, the implementation of macro - prudential policy. the recent global financial crisis has brought to the forefront the importance of macro - prudential policy. we have not been able to nail down its definition nor come up with a comprehensive toolkit. it may take some time before we can make it truly operational. but, we do need to recognize that it took a couple of decades before the importance of price stability for macro - economic stability was fully appreciated and became embedded in central banks ’ monetary policy framework worldwide. second, dealing with tail risks. taking preemptive action to avoid the emergence of bubbles which can seriously harm the economy means implementing measures to prevent the build - up of tail risks or occurrence of low - frequency, high - severity events. the independence and the need for a clear mandate are often emphasized as an important basis for a macroprudential authority. however, i believe that is not enough. a fundamental change in the way economic policy is perceived is called for. a collective understanding within society that it would be acceptable and appropriate for the macro - prudential authority to take away the punch bowl when conditions still seem to be benign, is necessary. this is a large change from the current policy paradigm, where measures are typically introduced after specific negative shocks occur. third, the cross - border spillover effects of policy actions. due to continuing globalization and financial innovation, the interlinkages among economies and financial markets continue to strengthen. in this environment, regardless of whether it is monetary policy or macroprudential policy, policy - makers will have to inevitably be cognizant of the cross - border implications of their policy actions. it also needs to be recognized that there will be feedback effects from overseas economies and markets which will influence domestic economic and financial conditions. forums such as the bis have played critical roles in enhancing central bank communication and cooperation over the years. their importance will increase further in such an environment. independent evaluation office of the international monetary fund. the ieo released a report titled the “ imf performance in the run - up to the financial and economic crisis : imf surveillance in 2004 – 07 ” in january 2011. bis central bankers ’ speeches i will not go into details here, but issues such as strengthening the plumbing of the financial system though, for example, further
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ben s bernanke : teaching and learning about the federal reserve remarks by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at a teacher town hall meeting “ 100 years of the federal reserve ”, washington dc, 13 november 2013. * * * thank you for that introduction. tonight marks the third time in just a little over three years that the federal reserve system has hosted a teacher town hall, and i am very pleased to have this opportunity to speak with educators, both those of you here in washington, d. c., and those watching at reserve bank gatherings around the country. i look forward to your questions in a few moments. but let me begin by briefly discussing an important milestone for the federal reserve – its centennial – and the opportunity that this occasion affords to teach and learn about the fed ’ s origins, history, and role, and about how this institution has helped shape the nation ’ s economy and financial system. president woodrow wilson signed the federal reserve act, which established the federal reserve system, on december 23, 1913. as the 100th anniversary of that event approaches, we have several reasons to look back at an eventful century. one important reason is to better understand what historical experience can teach us about how best to respond to current challenges. for example, as many of you know, the bold measures the fed took in response to the recent financial crisis reflected in part its determination to avoid repeating the sorts of mistakes it made before and during the great depression of the 1930s. similarly, our commitment to safeguarding price stability is reinforced by memories of the costs of high inflation during the 1970s and the federal reserve ’ s subsequent restoration of price stability under chairman volcker during the 1980s. beyond the insights that the study of the federal reserve ’ s first 100 years offer to economists, historians, and policymakers about how the fed can best meet its objectives today and in the future, a second reason to mark the centennial is the opportunity it affords to educate young people about the federal reserve and its important role in promoting a healthy economy and stable financial system. when i was an educator, i quickly came to understand that students are most motivated to learn when they can see the connection of the lesson to their own lives. the fed and its activities, and economics in general, can seem remote from daily concerns. but as teachers, you can show students how the federal reserve ’ s decisions concretely affect them and their families. the fed
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niklaus blattner : the demographic challenge – macroeconomic perspectives summary of a speech by mr niklaus blattner, vice - chairman of the governing board of the swiss national bank, at the conference " die alternde gesellschaft als sozio - okonomische herausforderung " ( the aging society : a socio - economic challenge ), university of basel, basel, 9 february 2007. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * demographic aging, i. e. the growing average age of the population, or the reversal of the age pyramid, is also a matter of concern for a central bank. without a careful analysis of the long - term developments in the real economy, any monetary policy assessment, and consequently any inflation forecast, will be inadequate. in addition to the activities in the money and capital markets, the longterm growth outlook – and thus also the population perspectives – are factored into the swiss national bank's monetary policy assessment. the aging of the population is a fact. it is linked to three main trends, which will greatly influence switzerland's demographic landscape in the decades to come : first, the economically active population will decrease, second, the old - age ratio, i. e. the ratio of people over 65 to those between 20 and 64 is on the rise, and third, longevity is increasing. in future, switzerland will have to produce more with fewer resources. " fewer resources " because the economically active population is declining, " produce more " because the old - age ratio is worsening and longevity increasing. the consequences for the macroeconomic outlook are clear : if labour productivity and / or labour input fail to improve, the impending demographic development will lead to slower medium and long - term growth. it is thus all the more important that labour productivity increases. the growth in labour productivity depends primarily on workplace capital and product market success. it would be ill advised, however, to make oversimplified calculations. neither technological progress nor capital investment are unaffected by demographic aging. while enthusiasm for embracing innovation may decrease with old age, greater experience can enrich human capital. on the one hand, a tighter labour market can be counteracted by shoring up investment. on the other hand, both the savings and the investment rate can decline. if foreign locations become more attractive, the latter is a particularly likely scenario. it is not clear how the
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of the extensive system of import controls, the partial lifting of wage - price controls and an overhaul of the income tax regime. while reforms were incremental, a number of landmarks stand out. in 1994, for example, a comprehensive package of legislation was enacted as part of a strategy to further develop malta as an international financial centre. the thrust of this initiative was to promote competition by opening up the licensing process and removing administrative controls on lending, while stressing the importance of maintaining adequate capital and managing risk appropriately. at the same time, the malta financial services centre was established as the regulator for financial services other than banking, which remained the responsibility of the central bank of malta. also in 1994, responsibility for monetary policy was moved to the central bank of malta. the introduction of reserve requirements and the bank ’ s engagement in open market operations paved the way for the establishment of a market - driven interest rate structure, which is of paramount importance for the transmission of monetary policy. to promote activity in the money market and bolster its own ability to steer interest rates, the bank initiated weekly auctions to influence the size of the monetary base, while gaining control over the excess liquidity of the banking system. further steps were subsequently taken to create an independent regulatory framework in line with international standards. in 2002 the renamed malta financial services authority took over from the central bank of malta the responsibility for supervising the banks and the stock exchange, becoming the single regulator. at the same time, the bank was given formal independence in the conduct of monetary policy, in the oversight of payment systems and in safeguarding the stability of the financial system. to complement the institutional framework, a financial intelligence analysis unit was established to strengthen the anti - money laundering regime and to combat the financing of terrorism. as part of the authorities ’ efforts to create a reputable financial centre, in late 2002 the imf / world bank were requested to conduct a financial sector assessment programme ( fsap ). the assessment concluded that malta ’ s financial system appeared to be healthy and well supervised, with a comprehensive legal framework and strong adherence to most international standards and codes. at the same time, the report also noted that, mainly because of the predominance of two large banks, the system was highly concentrated and exposed to the country ’ s narrow economic base. malta as an international financial centre eu membership in 2004 proved to be an important catalyst in the further development of the financial services industry. malta now benefits from the greater credibility conferred by
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u. s. virgin islands — and is the area the new york fed is responsible for. i spent yesterday and today meeting with district business leaders, community organizers, and elected officials, hearing about their work, their successes, and their challenges. people ’ s experiences are influenced by the macro level, but their local economy plays an equal, and often more important role in shaping their economic opportunity. one aspect of the fed that we don ’ t talk about enough is the work our regional economists and our outreach teams do, trying to understand what ’ s going on at the local level. while the u. s. economy has been growing for the last 10 years, analysis by new york fed economists shows that not everyone is feeling the benefits equally. growth is concentrated in the largest cities like new york and san francisco, and those who benefit the most are those who already have high incomes. 2 a large part of this is because current economic conditions favor highly skilled workers who tend to flock to cities. these big metropolitan areas are successful, but they also suffer from some of the starkest wage inequality in the country. by contrast, upstate new york is less unequal, but the disappearance of manufacturing jobs has held back growth. more equal wage growth is only good news if people have jobs. but many have found themselves in the position of leaving the area in which they grew up to look for work. the albany area has bucked this trend. the mix of colleges and universities specializing in innovative subjects like nanotechnology, and high - tech businesses, alongside its position as a state capital, has created a real economic success story. i know there are a lot of students in the room, and choosing suny was a wise move. investing in an education that equips you for the future will pay off over the long term. the tale of many economies so what can the fed do about this complex picture — the tale of many economies i ’ ve talked about today? 2 / 3 bis central bankers'speeches monetary policy is an important tool, but it alone cannot address all the economic issues that we face. the policies we enact at the fomc are vitally important for sustaining growth at the national level, but they can ’ t determine everything that happens at the local level. this is where our community development work comes in. through our research and outreach, we put data and analysis into the hands of community leaders to give them tools to strengthen their local economies. we have programs that use
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left idle. this is usually referred to as providing the economy with a nominal anchor. when households and enterprises can base their economic decisions on low and stable inflation, this provides an important foundation for higher activity and welfare over time. as long as there is confidence that inflation will remain low and stable, monetary policy can contribute to smoothing fluctuations in output and employment. when the economy is exposed to shocks, such as a financial crisis or a fall in oil prices, monetary policy can respond rapidly. sufficiently flexible inflation targeting could help ensure that lower employment levels do not persist over the long term following a downturn. this can reduce the risk of unemployment becoming entrenched at a high level. the probability of a pronounced downturn in the economy has been shown to increase after periods of rapid asset price inflation and debt growth. monetary policy can also to some extent contribute to high and stable output and employment by giving weight to counteracting the buildup of financial imbalances. however, monetary policy must not be overburdened. if norges bank pursues objectives it does not have the instruments to fulfil, confidence in monetary policy may be eroded. the regulation and supervision of financial institutions must be the primary means of addressing shocks to the financial system. employment levels over time are determined by structural conditions, such as the functioning of the labour market, the tax and social security system and the wage formation process. in norway, a well - functioning wage formation process has enabled unemployment to remain low while wage growth has remained moderate. the new regulation underpins norges bank ’ s flexible approach to inflation targeting. in the conduct of monetary policy, substantial weight will continue to be given to the real economy. in this context, whether the inflation target is 2. 5 percent or 2 percent is less important. at 2 percent, the inflation target is now at the same level as that of most of norway ’ s trading partners. the reduction of the target will not in itself significantly affect the short - term interest rate outlook. never before have global interest rates been as low for such a long period. growth abroad has now picked up, and there are prospects of a gradual interest rate increase among norway ’ s 3 / 4 bis central bankers'speeches trading partners. the outlook is also brighter in norway. in the two years since the cyclical trough was reached, growth has gained a firm footing and the unemployment rate has declined. the outlook suggests that it will soon be appropriate to raise the key policy rate – and
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interest rate in the best case. by influencing inflation expectations more directly, the real interest rate can be reduced by several percentage points. monetary policy alternatives with a zero interest rate bound : concluding comments as both japan and the united states now have a zero interest rate and several other countries are now cutting their interest rates close to zero, it is natural that monetary policy with a zero interest rate should be increasingly a subject for discussion and debate. the most recent monetary policy report contains an article on monetary policy with a zero interest rate, and there is also an alternative scenario in chapter 2 assuming weaker real economic development and a repo rate path that is at zero during part of the forecast period. although it is not particularly likely that we in sweden will be subjected to a strongly binding zero lower bound for the interest rate, it is wise to be prepared for this eventuality and to have carefully considered the monetary policy alternatives that would then be available, and which of these would be appropriate, depending on how serious the zero lower bound was. a zero lower bound on the interest rate means that the real interest rate is still too high to sufficiently stimulate the real economy, despite the policy rate being cut to zero. it is the real market rate that is important in the real economy, and this corresponds to the policy rate plus a spread arising due to various risk and liquidity premia, minus expected inflation. although the policy rate is zero, nominal market rates are positive as a result of the spread. the various measures taken by central banks and other public authorities during the financial crisis to ensure that the financial markets function more efficiently and that the spreads decline thus fulfil a function that is at least as important, even if the repo rate is at zero. it is reasonable to suppose, however, that their stimulating effect is much smaller than the effect a central bank can achieve with measures that focus on inflation expectations. the major danger with a zero lower bound for the interest rate is that inflation expectations will be too low and even negative, and that the real interest rate will thus become too high. it is thus necessary to keep watch on inflation expectations, to counteract expectations of falling inflation, and preferably to create expectations of higher inflation. in this type of situation it may be desirable to create expectations that actually exceed the inflation target. the riksbank ’ s current regime, with a credible inflation target and the publication of forecasts, including their motivation, for inflation, the real economy and the repo rate,
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the project objective was to improve our work practices in the field of banking supervision, statistics, payment systems, interbank market, coordination of eu integration process and financial literacy. more specifically, cooperation in banking supervision focused on implementing major reforms in areas such as consolidated supervision, approval of new regulations and staff training. this cooperation has fostered our relations with foreign supervisory authorities and international institutions. staff capacity building and development in this area was another priority of the project. our institution should take relevant measures to increase their skills for preventing or handling deficiencies or threats to financial system stability. in terms of statistics, this cooperation has led to a thorough review of the existing regulatory framework to completely fulfil ecb standards on compilation and dissemination of monetary and financial statistics. the review aimed to identify items of noncompliance with eu standards and to subsequently draft a solid agenda for comprehensively reviewing our bis central bankers ’ speeches methodology and infrastructure to compile the balance of payments in accordance with eu standards. payment systems constitute another priority of our work under this project. in this area, our practices further improved, aiming at approximating them to the escb practices on payment systems. also, pertinent legal acts and their compliance with the eu regulatory framework were reviewed. cooperation on interbank money market consisted in analysing the experience of other central banks in handling market obstacles and difficulties in relation to the regulatory framework. other useful aspects for adapting, including identification of necessary actions to be taken by our institution in the interbank money market were also addressed. coordination of the eu integration process is another major area that was broadly addressed by this project. thanks to this cooperation, our staff capacities were enhanced as regards the handling of responsibilities arising from the implementation of the stabilisation and association agreement, approximation to the escb standards, and the challenges that we may encounter when albania receives the status of a candidate country and starts negotiations of eu accession. last but not least, financial literacy is of key importance to the bank of albania. thanks to support from and cooperation with the project team, an action plan was designed to promote financial literacy and enhance awareness of market - economy principles across various groups of the society. also, a system for monitoring financial literacy in schools was set up. further on, due to complexity of our work and new developments in the banking and financial area, it is clear that the project has strengthened our institution and has helped us cope with new situations. moreover, the cooperation and communication between our institutions intensified from both
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viewpoints, professionally and personally. we do live in a global society, where financial developments take place at a rapid pace. therefore, central banks should possess strong and reliable mechanisms of coordination and communication, which may prepare our institutions to cope with such situations. a proverb says : “ no matter how long the journey is, one has to take the first step to start off. ” this philosophy was made concrete through this twinning project, which along with the assistance in the afore - mentioned areas, was also the first step on the path of our institution to eu standards, as one of the priorities of the stabilization and association agreement. i would like to extend my sincere thanks to the banca d ’ italia and the banque de france for the outstanding cooperation we have had during the project implementation. i commend the efforts of both honoured institutions and hope that the successful implementation of this project will provide us with an example to involve more in such initiatives in the future. also, i want to extend my thanks to the delegation of the european union for its ongoing assistance and prudence throughout the project performance. i am deeply confident that these are only the first steps towards a close cooperation. i would like to conclude by bringing to your attention a statement of mr. shimon peres, who, listening to his advisor, agassi, who was speaking about developing alternative oil sources in the absence of oil, interrupted him by saying : nice speech, but what are we going to do? in light of this, we should think about what to do in the future. i think that the political coverage of this approximation process is important, with which i mean brussels ’ probable acceptance of albania ’ s application for membership in september. this is an important step that would provide additional room for the country ’ s rapid convergence and for bank of albania ’ s rapid and irreversible development in line with the models of its european counterparties. bis central bankers ’ speeches
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central bankers have extensively examined the relationship between public and private money. for example, in marcello de cecco ’ s book on money and the empire ( 1975 ) we read of the substantial efforts of english banks to prevent the bank of england from collecting deposits during the xix century. on the other hand, in 1999, at the jackson hole symposium held by the federal reserve bank of kansas city, discussing old and new challenges for central banks, mervyn king speculated that ( in a world of electronic transactions in real time ) without the centralisation of settlements “ central banks, in their present form, would no longer exist, nor would money ”. even more than the “ end of money ”, the consequence would have been the potential “ end of monetary policy ”, with the return to a pure exchange economy or the loss of central banks ’ monopolistic supply of base money that technology would have made possible. but the importance of a centralised system built around an outside money issued by the central bank, which preserves its value and acts as a lender of last resort, and an inside money, issued by the banking system in connection with its role of maturity transformation, has emerged forcefully during the pandemic. i would therefore like to focus on three questions. one striking feature of the pandemic crisis is that banks, thanks to the progress made after the global financial crisis, have been an important stabilisation factor. in many countries, for example, the banking system has been the vehicle through which government support measures ( such as guarantees and moratoria ) have reached households and businesses. on the other hand, some types of money - market mutual funds have experienced severe problems. they required the central bank to step in and are now under scrutiny. would similar problems have also emerged for providers of private money - like assets? even more striking has been the importance of monetary policy. not only have prompt and exceptional liquidity provisions preserved accommodative financial conditions, consequently preventing a generalised tightening of credit and averting the risk of a spiralling crisis, but also the measures enacted by central banks have allowed governments to access the financial resources needed to support households and firms without market tensions emerging. absent a monetary authority, would issuers of stable - coins have been able to maintain the stability of the financial system? and would they have been able to preserve the value of their currencies in both normal times and during a crisis? a third, fundamental, question concerns inflation.
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euro area governments if certain institutional prerequisites are met. first, borrowers must adequately and promptly respond to market signals. second, transparent and timely information concerning the actions and the budgetary position of sovereign lenders should be available to all agents ( and a reform designed to improve the quality and reliability of fiscal statistics by strengthening eurostat ’ s powers has been recently adopted ). third, full bail - out of troubled governments should be credibly ruled out. a no - bail - out clause is already enshrined in the european treaties, but many investors were inclined to believe that the clause would not be applied in an emergency. this implied that, ex ante, investors did not demand sufficiently higher premia for holding government bonds with higher default risk. by contrast, if the threat of a default is credible, this will foster stricter market oversight and induce less fiscal profligacy ex ante. in equilibrium, default will be less, not more, likely. but how can a no - bail - out clause be made credible? the answer, of course, is by making, ex post, the bail - out more costly than a bail - in for official lenders ; that is, by reducing the spillover of a sovereign default so that the economic and political costs of a default fall mainly on the defaulting country. it is paramount to weaken the link between sovereign risk and bank bis central bankers ’ speeches risk. this will require a careful analysis of the many different channels through which a deterioration in fiscal conditions affects the cost and availability of bank funding. for example, regulators might want to carefully assess the ( regulatory ) incentives banks have to hold excessive amounts of risky sovereign bonds, and the collateral rules that are used by central banks and in wholesale markets could be reconsidered. the link between sovereign and bank credit ratings should also be carefully examined. rules and markets should not be seen as mutually exclusive, but as mechanisms that complement and reinforce each other. the challenge would be not only to limit the intermediary ’ s exposure to a given sovereign borrower considered in isolation, but also to guarantee that intermediaries can survive even if debt restructuring in one country triggers restructuring in others. it should also be taken into account that a default can threaten financial stability through its impact on derivative markets ( e. g. the market for credit default swaps ). all this clearly requires regular stress testing of financial intermediaries and the availability of timely and objective assessments of
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mario draghi : interview with lithuanian business daily verslo zinios interview by mr mario draghi, president of the european central bank, with verslo zinios, conducted by mr dalius simenas on 25 september 2014. * * * the saying that “ when america sneezes, europe catches a cold ” was absolutely true in the aftermath of the dramatic collapse of lehman brothers in the autumn of 2008. we are now seeing signs of a recovery in the united states and the united kingdom, but are still not seeing any in the euro area. does this worry you? what is missing? i am not sure i can agree with the last part. the euro area has, in fact, been recovering since the second quarter of 2013, when the economy returned to growth after six quarters of recession. it is true, however, that the recovery seems to have lost momentum recently : the flat gdp reading in the second quarter of 2014 was disappointing. according to the preliminary information received over the summer, economic conditions have been somewhat weaker than expected. overall, however, we expect modest growth in the second half of the year and continue to expect euro area domestic demand to be supported by various factors. these include our accommodative monetary policy stance, favourable financing conditions and structural reforms, which should sustain private consumption and investment. at the same time, unacceptably high unemployment and continued weak credit growth are likely to curb the strength of the recovery. there are clear risks in sight : in particular, heightened geopolitical tensions could dampen business and consumer confidence. furthermore, the risk of insufficient structural reforms could weigh on the business environment. how can this uncomfortable cocktail of high unemployment ( 11. 5 % this july ) and ultra - low inflation in the euro area ( 0. 3 % in august, i. e. far below the ecb ’ s target of below, but close to, 2 % ) be overcome? how, if at all, can europe avoid a stagnation scenario such as that faced by the japanese economy for decades? we do not see japanese - style deflation in the euro area, as a number of factors differ distinctly from japan in the 1990s. firstly, we, the ecb, took decisive action at a very early stage in the crisis, and have continued to do so. most recently, against the backdrop of a persistently weak inflation outlook, slowing growth momentum and subdued monetary and credit dynamics, we decided in early september to
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emmanuel tumusiime - mutebile : bank of ugandaa€™s 5 - year financial markets development plan speech by prof. emmanuel tumusiime - mutebile, governor of the bank of uganda, at the launch of the 5 - year financial markets development plan, kampala, 9 september 2008. * * * your excellencies, honourable members of parliament, ceos, invited guests, ladies and gentlemen, i would like to thank you for honouring my invitation to attend the launch of the 5year financial markets development plan. the decision to prepare this plan was made in 2005 at a meeting of the monetary affairs committee ( mac ) of the east african community, which at that time consisted of the three central bank governors of the bank of uganda, the bank of tanzania and the central bank of kenya. i am glad to add that the mac has since been expanded to include the governors of the central banks of rwanda and burundi, after their countries became members of the east african community in 2007. the process of developing the 5 - year financial markets development plan took some time, as the central banks had to come up with a harmonised common planning framework with the active participation of the various stakeholders in the financial sector in all the five countries. therefore, this plan has been developed through an extensive consultative process involving stakeholders in uganda and the rest of the east african region. at the 2005 mac meeting, it was noted that the governments of the east african countries had made significant progress in promoting the development of financial sector, in areas of regulation and supervision ; monetary and fiscal policies ; infrastructure development such as payments and settlement systems, and trading platforms. the above efforts were aimed at fostering price stability and sound and competitive financial systems. while macroeconomic stability had been achieved, deepening the financial sector and increasing the efficiency in the financial markets remained a challenge. to address these deficiencies, the mac decided to adopt a strategy of formulating a comprehensive five - year financial markets development plan for east africa. to spearhead the development of the plan in uganda, the bank of uganda established the financial markets development committee ( fmdc ) and its dedicated secretariat, and subcommittees comprising various stakeholders from the financial sector. i would like to thank the members of these committees for a job well done. without their commitment and dedication, we would not be here to launch this framework that is mapping out a grand programme for transformation of financial markets in uganda. i would also like to thank our development partners
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base societies. a new feature of the industry involves the establishment of contributor - based societies. the achievements as mentioned earlier, the savings and loan industry in papua new guinea today consists of 20 savings and loan societies. five ( 5 ) are provincial based while the rest are industrial based societies. total assets of the industry were approximately k172. 8 million with loans and advances forming about 48. 74 % of total assets at end june 2004. members ’ savings deposits were about k133. 8 million from 127, 276 members. the overall health of the industry is satisfactory. capital, asset quality and liquidity are satisfactory, while earnings are relatively fair. a. capital adequacy the capital of the industry is satisfactory. accumulated profits increased from k12. 9 million in june 2003 to k21. 9 million in december 2003 and slightly decreased to k20. 8 million at end - june 2004. however, capital funds to total assets increased to 18. 9 % from 12. 4 % in the same period last year. the capital of the industry is not threatened by non - performing loans ( npls ) as npls as a ratio of capital funds improved from 30. 0 % in june 2003 to 10. 8 % in june 2004. b. asset quality asset quality of the industry is satisfactory. loans and advances increased to k85. 9 million in june 2004 from k80. 5 million in june 2003, of which only 4. 6 % of the loan portfolio is non - performing. provision to total loans decreased to 4. 2 % in june 2004 from 7. 0 % in the same period last year. however, provisioning level is sufficient to cover up to 89. 8 % of non - performing loans. c. earnings earnings of the industry are less than satisfactory. net income decreased to k2. 7 million in june 2004 from k4. 8 million in june 2003. return on assets decreased to 3. 0 % from 6. 2 %, while net interest margin decreased to 3. 0 % from 3. 6 % in the same period last year. this is due to decline in treasury bill interest rates, where most of the industry ’ s unlet funds are invested. d. liquidity liquidity is adequate to cover for day - to - day liquidity requirements. liquid assets decreased to k32. 9 million in june 2004 from k41. 4 million in june 2003, while loans to deposits increased to 64. 2 % from 58. 9 %
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industry, which can aspire to promote solvency and innovation in the operation of all societies. the societies, which are now operating do not compete with each other as they have been set up to serve specific interest groups. they have therefore the opportunity within them to talk to each other and to be able to resolve very simple administrative matters, which could be commonly faced by them. i have come across different societies, which have turned to the regulator for solutions to very similar questions and situations. while these societies are not discouraged to do so, it would be preferable that they first share their experiences and problems amongst themselves to find solutions. there is potential for the movement to grow and offer the services the members need. corporate governance and the requirement to ensure ‘ fit and proper ’ persons hold the positions on the board and management cannot be emphasized enough. it should be a challenge for every society, and more importantly every member, to ensure that credible people get to hold those responsible positions. as part of enforcing good corporate governance, the bpng established the industry code of conduct thus requiring all directors and management to sign up before assuming responsibilities. furthermore the bank instituted ‘ fit and proper ’ requirements to ensure all directors undergo these tests before taking up their roles. as part of this initiative they need to undergo certain training courses conducted by the federation of savings and loans societies and bpng. good corporate governance is the key to enhancing strong reporting system, efficient internal controls and risk management systems. good governance is synonymous to an effective compliance culture. this should be the dream of all societies to achieve. we need to move from the dreaming stage, to the belonging stage and finally to the achieving stage. i hope the federation ’ s strategic planning workshop would deal with and address the issues i have raised. it is important that we all work together to ensure that the savings and loan industry achieve its full potential for the benefit of its members. with these remarks, i would like to thank the organisers of the credit union day celebrations. i now declare the strategic planning workshop of the federation of savings and loan societies limited open. thank you!
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andreas dombret : digitalisation – repercussions for banks and their supervisors speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the 16th norddeutscher bankentag “ digitalisation – ( r ) evolution in the banking industry ” at leuphana university luneburg, lundeburg, 8 june 2016. * * * professor baxmann ladies and gentlemen people love simple stories. there is evidence to show that we find it easier to follow a speech and memorise its contents if we quickly pick up the thread and the message that is being conveyed. the picture isn ’ t much different where the digitalisation of the financial sector is concerned. digitalisation is often portrayed as a huge opportunity, as a grave threat, as the first step into a world without banks or as a decades - long gradual process of evolution. but if you ask me, we need to suppress the urge to only ever want to tell, or have ears for, just one of these narratives. we will only be able to grasp what digitalisation means for the banking sector if we are willing to view it with very different sets of eyes and acknowledge the existence of highly disparate aspects. bearing this in mind, my speech today here at leuphana university will seek to paint a nuanced picture that does justice to the genesis and growth of digitalisation and how it will impact on banks and their supervisors. 1. general digitalisation trends ladies and gentlemen, technical innovation isn ’ t exactly a novelty in the banking sector. as you will know, credit institutions were often among the early adopters of information technology in their administrative operations, at the customer interface or in trading. hardly a day goes by without digitalisation grabbing the headlines, and that ’ s probably because it ’ s come to be seen as a force that will shake the structure and internal functional make - up of the banking industry to its core, just as it has done in other industries. but it ’ s not just the technical capabilities of digitalisation that make it so special ; the social upheaval it is expected to trigger – and already has done – also makes it something to be reckoned with. there is already evidence aplenty of this phenomenon worldwide. even in germany, which isn ’ t a pioneer in this regard, most bank customers now usually conduct their banking affairs online, and mobile banking is also on the rise there. there are already some institutions which use
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germany is much lower than, say, in the united states. on balance, the ratio of “ number of inhabitants to bank - office staff members ” in germany is below the comparable figure in the united states. moreover, the presentation of the current situation with the aid of simple statistical indicators remains unsatisfactory. qualitative factors, such as the duration of opening hours or the range of services provided by bank offices are disregarded. despite these warranted qualifications of statements about “ overbanking ”, cost - intensive and not always very profitable branch - office operations are sometimes regarded as a reason why german banks, on an international comparison of profitability figures, tend to lie in mid - table. iv ladies and gentlemen, the deployment of new technologies will no doubt also prompt the banks to reconsider the dimensions of their branch networks. but the significance of technology extends well beyond that : it is a main driving force behind change in the banking sector, and in financial markets worldwide. at the moment, we are witnessing the advent of completely new forms • of communication between bank and customer, • of the marketing of financial services, and • of the organisation of banking operations. a very important platform of communication between banks and their customers in the future will unquestionably be the internet. according to recent data, at the end of 1999 - in germany alone - no fewer than over 10 million online accounts were being operated. that represents a growth of as much as 50 % on the previous year. current expansion is so dynamic that the forecasts of future growth, both in germany and in europe, lie far apart, albeit at a high level. the wide range of the forecasts demonstrates, incidentally, that the banking sector in its projects and development has to plan and invest under conditions of great uncertainty, i. e. has to run significant strategic and other risks. that applies to an even greater extent to “ mobile banking ”, e. g. via wap ( wireless application protocol ) mobile phones, which is expected to expand sharply following the introduction of the umts standard. what might the banking business of the future look like under these conditions? many observers assume that in future at least retail banking will constitute a combination of “ click and mortar ”, i. e. will be offered and implemented in the context of multi - channel banking strategies in several different forms, that is to say both through the physical branch network ( “ bricks and mortar banks ” ) and through virtual pc banking
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but banks need to be aware of the risks their exposures to this sector add to their portfolios. what are rbi ’ s expectations from banks? one, the needs of the legitimate borrowers should be met fairly. this applies to small and medium enterprises, as there is a perception of inadequate flow to this segment and it is hurting the ability of these businesses to take advantage of the recovery. two, it is important to play safe. here, in the context of segments such as real estate, banks should not jump on opportunities that appear very attractive in the short term, while compromising on prudence. we do not want to squeeze the recovery and deny the needs for financing, but we do not want them to go overboard in risk taking. that ’ s the balance we are expecting. how big is the threat of large bad debt on the restructured portfolio? it is clearly something you need to watch out for. it may put some stress on certain individual banks. when the restructuring option was given, it was based on the premise that genuine borrowers in distress as a result of the liquidity squeeze would be subject to that restructuring. the risk was that assets that were not fundamentally sound would also be given the option. you cannot blame the concept of restructuring. some automobile companies said yesterday that the sales momentum would lose steam after the crr hike. let me use an automotive analogy. if you are driving a car at 100 kmph and know the road ends five kms later, what do you do? do you begin to gradually apply the brakes now or do you wait till you are near the end of the road and then slam the brakes? both are legitimate options : the question is which is riskier. we clearly take the view that if we see a barrier, which is now in the form of inflationary pressure building up, it is better to use the first option and gently apply the brakes. this way, you gradually adjust to the optimal speed and it is safer than the second option which can throw a lot of things out of gear. outside rbi, people always wonder how much backseat driving is done from delhi. now that you have been in rbi for a while, do you find an element of backseat driving? at the end of the day, we basically want the same thing, which is growth with stability. we want growth to be as high as possible, we want inflation to be as low as possible, we want financial stability and we want stability on the external front
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greening the financial system, based at the banque de france – estimates that the losses caused by chronic physical risks could amount to 15 % of global gdp by 2050, three times higher than its previous estimate of 5 %. another telling indicator is the recent estimate from france assureurs that more than half of private dwellings in france ( 11. 1 million ) are potentially at risk from clay shrinkage and swelling, which causes cracks and structural damage. lastly, the insurance industry needs to adapt its business models to the risks generated by demographic shifts in our societies. according to insee, iii the share of people aged over 65 is set to rise sharply, from 21 % in 2021 to 29 % in 2070. naturally, this is exacerbating the issue of how to maintain income levels after retirement, cover health costs ( senior health care ) and finance support for the elderly ( dependency ). in france, insurers already play a crucial role in health care and provident schemes, and hold a significant proportion of french citizens ’ retirement savings. how far can this role expand? 2 ) the frontiers of insurability : a few ideas this key issue is of course a sensitive one. i would like to share with you three thoughts on three levers. a better understanding of risks recent technological advances, especially in data gathering and artificial intelligence, must be fully leveraged to improve our understanding of the risks. but we should avoid the pitfalls of demutualising risks and excessive individualisation, which would be to deny the very role of insurance. on this issue, we have closely followed the debates surrounding the proposed european fida regulation, and the talks seem to be heading towards a sound balance between the secure but nonetheless broader sharing of financial data. moreover, climate stress testing is a good example of new tools. the exercise piloted by the acpr and completed in may 2024, which focused exclusively on insurers, has increased players ’ ability to anticipate the effects of climate change page 5 of 9 and adapt their strategies accordingly, notably thanks to the long - term scenario ( 2050 ) that was proposed. encouragement of prevention by insurers prevention must also play an important role : insurers can influence behaviour by encouraging measures to adapt to risks. regarding it / cyber risks, the terms and conditions of cyber risk insurance can help to boost resilience, notably by making security audits compulsory or setting minimum security standards to be met beforehand. regarding climate risks,
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rate by 25 basis points to half a percent. and we indicated that we expect interest rates will need to rise further. we also said that we will be considering when to end the reinvestment phase of our large - scale asset purchases and allow the bank ’ s holdings of government of canada bonds to begin to shrink. this is a process known as quantitative tightening, or qt. the timing and pace of further increases in the policy rate, and the start of qt, will be guided by the bank ’ s ongoing assessment of the economy and its commitment to achieving the 2 % target. in closing, i want to emphasize to all canadians that the bank is determined to control inflation. with that, senior deputy governor rogers and i will be happy to take your questions. 3 / 3 bis central bankers'speeches
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in the months ahead. it is therefore preferable that we go ahead with this operation now, in an orderly fashion, despite the fact that the markets have regained a certain degree of optimism in the past few days – rather than at a later point under potentially more adverse conditions. the federal council and the swiss federal banking commission have been kept abreast of the preparations underway and our negotiations with ubs.
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##ing the economy's ability to return to the path of rapid and sustained growth. all this, despite the forthcoming elections and the fact that the 2009 budget has not been approved yet. at this stage the bank of israel, in the framework of its powers and the instruments available, is taking the following steps : 1 ) it is conducting an active interest rate policy intended to strengthen the economy's ability to handle the crisis. 2 ) the bank supervision department has intensified its regular monitoring of developments in the banking system. in addition, the bank announced that it was ready to help the banks with all the means at its disposal, as necessary, in order to support depositors. 3 ) the bank's program to buy foreign currency will continue until the forex reserves reach the level considered appropriate under the current circumstances – between $ 40 billion and $ 44 billion. what do we still have to do? 1 ) a cautious fiscal policy should be pursued. thus, assuming a growth rate of 1. 5 percent in 2009, the budget deficit is expected to reach about 3 percent of gdp, based on the automatic stabilizers, i. e., the expected drop in tax revenues resulting from the slowdown in growth, on the one hand, and a certain rise in government expenditure arising, for example, from an increase in unemployment, on the other. it would not be advisable to allow the deficit to rise much beyond that ; in other words, our ability to embark on an expansionary fiscal policy is limited. nevertheless, the tax cuts planned for 2009 should proceed, in a manner consistent with the automatic stabilizers. 2 ) the measures formulated by the ministry of finance in cooperation with the securities authority and the bank of israel should be implemented. this program should help the economy weather the storm. 3 ) it is essential, and i would place the emphasis on this aspect, to introduce measures on the financial side, particularly steps intended to increase the sources of bank and nonbank credit for the business sector, including small and medium - sized businesses, and to stimulate foreign investment in israel's capital market. yesterday the prime minister decided to support the proposal put forward by the work teams of the ministry of finance, the bank of israel and the prime minister's office, regarding a " safety net " for savers close to retirement age. the bank is in favor of the proposal and its immediate implementation. however, we view the safety net as a temporary measure for this particular time. it is
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important to start thinking about changes to the structure of the pensions system in israel, to ensure that those paying into funded pension schemes, as opposed to those covered by unfunded schemes, are not placed in a situation in which, close to retirement age, they are likely to lose a significant part of their savings. it is important that the pension system be structured such that when the time arrives savers can receive a reasonable pension for the rest of their lives. one possible pension scheme structure that could be adopted is the sicilian model, in which the savings of those close to retirement age are transferred to relatively low - risk channels. to my great regret, the other steps formulated by the ministry of finance, although approved by the prime minister, are making little or no progress vis - a - vis the knesset, and are not being implemented. thus, valuable time that could be used to the benefit of the economy is being wasted, particularly regarding measures relating to the financial side. further delay in applying these measures is likely to erode the economic achievements of the last few years and our ability successfully to meet the challenges facing us. this is not the time, therefore, to postpone decision making. the financial crisis is here, and is not waiting for us. the measures have been planned, and all that remains is to start with the none - too - simple task of making decisions and implementing them. it is essential that at this time, in the approach to the elections to the knesset, we persist in being focused, and act with a view to the medium and long term. failure to do so will cost us dear.
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crisis era, the world trade organisation is in great need of reform today. that could be one important transatlantic project for the coming years. when we join forces, we are stronger. i am always happy to see europe and the united states acting together and improving the multilateral system. i ’ d like to see more of that. thank you very much for your attention! 1 the official name is economic and monetary union ( emu ), but i use european monetary union here to adapt to a u. s. audience. 2 the june 2019 eurosystem staff forecast for the euro area foresees annual hicp inflation at 1. 3 % in 2019, 1. 4 % in 2020 and 1. 6 % in 2021. 4 / 4 bis central bankers'speeches
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. with that, senior deputy governor wilkins and i will now be happy to take your questions. 2 / 2 bis central bankers'speeches
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for clearing payment transactions in nok, otherwise we will lose the advantages we have today. an efficient and secure common infrastructure must still be a main feature of the norwegian payment system, whichever solution the industry ultimately chooses. looking further ahead, a number of broad issues need to be addressed. norges bank will initiate a project to assess the payment and settlement system of tomorrow as a whole. the aim is to make active and constructive contributions to an efficient and secure payment system, today and in the future. we will seek long - term solutions to several of the issues mentioned above, in particular the following two key questions : should we continue to have a completely domestic payment infrastructure in norway, or could it become more international? how would we then solve issues related to national security? how should the infrastructure be changed to facilitate the services needed by end - users in the future? should payments still be cleared before they reach the central bank, or is gross settlement the best option? the first phase of the project is scheduled to be completed by the end of 2019. cyber security as the payment system is centralised and ict - dependent, it is vulnerable to cyber attacks. if an attack were to succeed, payments could come to a halt and financial losses could occur. an attack could also result in unauthorised access to or manipulation of sensitive information. the system ’ s vulnerability can be reduced in a number of ways, for example through wellestablished cooperation within the financial industry and between the industry and the authorities, sound security procedures and recovery capabilities. system owners are responsible for the resilience of their own systems. norges bank monitors the systems under its supervision to ensure that satisfactory defence mechanisms are in place. a number of payment system participants have outsourced the operation of their systems to a few ict service providers. this is a source of concentration risk. the failure of key service providers could bring important parts of the payment system to a halt. the problems at evry on 6 october 2017 affected approximately 40 banks in norway, as well as norway post and telenor. this incident illustrates the potential broad repercussions of the failure of a key ict service provider. such concentration risk is difficult for individual system owners to address alone. the entire infrastructure served by the provider is exposed to risk, not merely the individual system. ict service providers are not subject to the same regulation and supervision as licensed banking and payment system participants. it is norges bank ’ s view that the authorities should explore how 3
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behind the scenes in limited and systematic ways to promote price stability and long - term growth. since the onset of the financial crisis, central banks have become highly interventionist in their efforts to manipulate asset prices and financial markets in general as they attempt to fine - tune economic outcomes. this approach has continued well past the end of the financial crisis. while the motivations may be noble, we have created an environment in which “ it is all about the fed. ” market participants focus entirely too much on how the central bank may tweak its policy, and central bankers have become too sensitive and desirous of managing prices in the financial world. i do not see this as a healthy symbiotic relationship for the long term. if financial market participants believe that their success depends primarily on the next decisions of monetary policymakers rather than on economic fundamentals, our capital markets will not deliver the economic benefits they are capable of providing. and if central banks do not limit their interventionist strategies and focus on returning to more normal policymaking aimed at promoting price stability and long - term growth, then they will simply encourage the financial markets to ignore fundamentals and to focus instead on the next actions of the central bank. i hope we can find a way to make monetary policy decision - making less interventionist, less discretionary, and more systematic. i believe our longer - term economic health will be the beneficiary. bis central bankers ’ speeches
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bond yields reflect a growing integration of this market segment. as to the derivatives market, i do not have to recall here that eurex has become the largest futures and options market for euro denominated derivatives, breaking new trading records last year by transacting over 1 billion contracts. progress also occurred, although at less impressive rates, in the corporate bond and equity markets. the elimination of the currency risk has diminished the importance of the local component in the securities business, with institutional investors increasingly taking a pan - european view in investment decisions. the corporate bond market has developed strongly and witnessed a large increase in issues since the introduction of the euro, although part of this increase was due to temporary factors, such as corporate restructuring and the liberalisation of the telecom industry. over time, stock price variations in the euro area have become more sensitive to pan - european evolutions and new data and less to local informations and news. however, not all wholesale markets are equally fully integrated, the repo market being a particularly special case. participants in this market segment continue to trade preferentially with national counterparts and a significant share of the transactions are secured by national collateral. according to our data at the ecb, about 40 % of all cash lending and borrowing against securities is conducted exclusively at the national level. at this point, i would also highlight that the markets where integration has advanced the least are in the retail sector. in this area, there may well be structural explanations. for example, the proximity to the customer. i note that a great deal of market localisation is present in the u. s. in spite of the removal of barriers to intra - state and inter - state banking. according to a survey conducted by the federal reserve, more than 90 % of banks ’ clientele is located within a distance of less than 20 miles of the banks ’ premises. i am convinced that the potential developments in new technologies and financial innovation will continue to exert their influence both in europe and in the unites states and may well make geographical proximity to customers less relevant. public authorities also have a role to play in promoting the appropriate regulatory and supervisory environment that enhances investors ’ confidence in cross - border financial services. the integration of securities markets given these general considerations i would like now to focus on the securities markets. i believe that perhaps more than in any other field, the trading and post - trading services in the securities industry are good examples to illustrate the scope for further integration and how we can
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instruments in its discount window. the eurosystem was not forced to take such measures, since its collateral framework already foresees the acceptance of a very wide set of collateral. the eurosystem framework specifies that this very wide range of collateral is accepted for all types of eurosystem credit operations : intraday operations and monetary policy - related operations, the latter including both access to standing facilities and open market operations. the wide and unified set of collateral supports both the smoothness and systemic stability of intraday and overnight liquidity management of banks. payment systems and financial stability the global financial system has been going through a phase of major structural change, which may have several implications for payment systems and financial stability. 3 first, we have witnessed the creation of new financial instruments and products to address market and credit risk, and in principle to enhance liquidity of financial assets. at the same time, the size of the financial sector in relation to the real economy has significantly grown. this suggests that the stability of the financial system has become more important for the real economy. moreover, there has been a growing symbiosis between markets and intermediaries. while intermediaries and markets have often been seen as alternative forms of arranging financial relationships, they are increasingly complementary. indeed, intermediaries such as banks have become increasingly reliant on markets as a source of income and for their risk management, through their hedging operations. markets in turn have become increasingly dependent on intermediaries for the provision of market - making services and of funding liquidity. this structural change may have some implications for payment systems and market infrastructures, especially in periods of financial distress. one important implication is that more than ever before, the smooth functioning of the financial system is dependent on the assumption that the option to trade can be exercised even under stressed market conditions. this is a natural consequence of the development of markets and instruments which are actively traded or that are held in the expectation that, should the need arise, they could be traded. moreover, the new financial environment appears to be more reliant on the immediate availability of funding liquidity. funding liquidity is critical for the orderly execution of trades and it can become scarce at times of distress, precisely when for further details see claudio e. v. borio ( 2007 ) : change and constancy in the financial system : implications for financial distress and policy. it is most needed, as market participants cut credit lines and / or raise margin requirements
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president corazon aquino, a world class team of economist, headed by no less than paul krugman, analyzed the philippine economy. and they concluded that given the economic conditions at that time, during president cory aquino ’ s time, the long - term growth of the philippine economy was in the neighborhood of 3 percent. repeat, 3 percent. we could only grow at 3 percent. that was then. things are significantly different now. over the past 25 years, meaningful reforms have helped build and fortify the institutions that facilitate growth by expanding the role of market forces in key sectors of the economy ; encouraging investments and private sector activity ; removing bottlenecks for doing business in the country ; and strengthening the country ’ s fiscal position and the financial sector, to name just a few. no doubt, the duterte administration is in a strong position to push for reforms by leveraging on its strong political capital as evidenced by the number of laws enacted in less than 3 years of the current administration ’ s leadership. these include, among others, recent enactment of the tax reforms, amendments to the bsp charter and rice tariffication law. these reforms, along with the other structural reforms in the pipeline, will continue to play a significant role in propelling the economy on a path of balanced, sustainable, and inclusive growth. 3 / 4 bis central bankers'speeches let me take the chance to talk about republic act no. 11211 which was signed on 14 february 2019. this is a monumental milestone for the bsp. our three pillars of central banking — price stability, financial stability, and an efficient payments and settlements system — were further boosted with the expansion of the bsp ’ s policy toolkit. ra 11211 restored the bsp ’ s authority to issue its own debt papers as part of its regular monetary operations, establishes a stronger prudential regulatory framework to promote a safe and sound financial system through the expansion of supervisory coverage and authority to prescribe metrics attuned to international standards and practices. the amendment likewise empowers the bsp to oversee the country ’ s payment and settlement systems ( pss ) including critical financial market infrastructures that are vital components of the pss. looking ahead, we will continue to monitor domestic and global developments to ensure that the bsp is able to meet its inflation targets. the bsp is also ready to use all appropriate measures as needed to ensure an inflation environment conducive to sustainable growth of the philippine economy. rest assured
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that the future policy actions of the bsp will continue to be guided by the following principles : 1. our primary focus will be price stability. 2. we will be pre - emptive rather than reactive and 3. our policy will be data - driven and evidence - based. finally, let me leave you with the assurance that the philippine economy is sound. it is one of the best performing economies in the world. its prospects are bright — extremely bright. and if you have money to invest, and i can see, some people here have money to invest, this is the best time to invest, invest, invest in the philippines. do not delay, do not waver. because if you do, you will regret it. to wrap up, let me end my presentation with these key take - aways. the bsp ’ s monetary policy actions will help ensure that 2019 and 2020 inflation targets are achieved. nevertheless, the bsp will remain watchful and vigilant, utilizing its analytical and surveillance tools for any potential risks to its monetary and financial stability objectives. the philippine economy has demonstrated uninterrupted economic expansion and has built domestic sources of resilience to help cushion against uncertainty in external environment and emerging domestic challenges strategic policy and structural reforms, addressing infrastructure gaps, and leveraging the country ’ s demographic opportunities have played a significant role and will continue to underpin the economy ’ s path towards balanced, sustainable, and inclusive growth. commitment to pursue infrastructure and reform agenda will help promote globally competitive industries in order to sustain the country ’ s economic growth momentum. lastly, on behalf of the bangko sentral ng pilipinas, i congratulate all the energetic and irrepressible members of the rotary club of manila, both young and old, for reaching 100 years! mabuhay ang rotary club of manila! mabuhay ang pilipinas! mabuhay po tayong lahat! 4 / 4 bis central bankers'speeches
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mario draghi : hearing of the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, at the econ committee of the european parliament, brussels, 29 may 2017. * * * mr chairman, honourable members of the economic and monetary affairs committee, ladies and gentlemen, it is a pleasure to be back speaking to your committee for the second regular hearing of this year. i am also pleased that you have chosen as the topic for today ’ s hearing the role of financial innovation. this is only one element in the broader process of innovation which is taking place in the economy. but it is a decisive one, given the essential role played by financial markets in resource allocation. before addressing this topic, let me first review the economic outlook and discuss the monetary policy stance. the economic outlook the economic upswing is becoming increasingly solid and continues to broaden across sectors and countries. real gdp in the euro area has expanded for 16 consecutive quarters, growing by 1. 7 % year - on - year during the first quarter of 2017. unemployment has fallen to its lowest level since 2009. consumer and business sentiment has risen to a six - year high, supporting expectations of a further strengthening of growth in the coming months. downside risks to the growth outlook are further diminishing, and some of the tail risks we were facing at the end of last year have receded measurably. the fact that domestic consumption and investment are the main engines driving the recovery makes it more robust and resilient to downside risks, which relate predominantly to global factors. despite a firmer recovery, and looking through the volatile readings in hicp inflation over recent months, underlying inflation pressures have remained subdued. domestic cost pressures, notably from wages, are still insufficient to support a durable and self - sustaining convergence of inflation toward our medium - term objective. for domestic price pressures to strengthen, we still need very accommodative financing conditions, which are themselves dependent on a fairly substantial amount of monetary accommodation. at its june monetary policy meeting the governing council will receive an update of the staff projections and a more complete information set on which it will be able to formulate its judgement on the distribution of risks around the most likely outlook for growth and inflation overall, we remain firmly convinced that an extraordinary amount of monetary policy support, including through our forward guidance, is still necessary for the present level of underutilised resources to be re - absorbed
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sector. probably, the central bank will have to be able to choose a longer journey back to its target : it will have to accept more disinflation – and for longer – during the transition than it would tolerate in different balance sheet conditions. but at this point i start wondering : allowing a central bank a lot of discretion in the choice of the horizon for monetary policy is sometimes almost the same as giving it discretion in its choice of the monetary policy objective. and some memories come back to mind. in the 1970s monetary policy - makers were busy convincing their legislatures that rampant inflation was a temporary phenomenon. once the various structural forces at play – high pay demanded by unions, high oil prices charged by middle eastern countries, high food prices induced by drought – had faded, they claimed, inflation would return to more tolerable levels. of course those “ temporary factors ” never reversed and inflation persisted for a decade. inflation expectations had been fatally affected by a combination of high inflation and policy on the redistributive properties of monetary policy during the crisis, see goodfriend ( 2011 ). bis central bankers ’ speeches forbearance, and it took central bank resolve – and a painful global contraction – to break away from that equilibrium. i tell myself : we could imagine situations in which the same narrative – invoking structural forces to justify a monetary policy stance that tolerates a sustained deviation from the objective for too long – leads to a symmetric, durable scenario of uncomfortably low inflation, which eventually feeds itself. i do not have definite answers to all these questions. history is still being written as we speak. but let me share a few thoughts on these issues. what is the role of monetary policy in this process? maintaining a very accommodative policy stance for too long certainly carries severe risks. incentives for a timely balance sheet repair may be undermined and new imbalances may ultimately emerge. still, central banks will have to remain true to their mandates of ensuring price stability. this mandate should be interpreted as a symmetric mandate. too low inflation, or even deflation, for a prolonged period of time cannot be seen as consistent with price stability. the ecb ’ s policy framework there are clear limits to the leeway that we – central banks – can afford within our mandates. our medium - term price stability objective implies that we cannot stretch our policy horizon forever – even if the economy is undergoing a lengthy deleveraging process. monetary policy needs to act forcefully if
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guarantee and investment facility ( cgif ) amongst the asean + 3 countries, which aims to help companies in asean + 3 countries raise long term financing for infrastructure investment by providing the governments ’ guarantees on their corporate bonds, thereby reducing risk for bond - holders. projects such as iskandar malaysia are also a prime example of how intra - regional investments can be encouraged, and how countries in our region can develop competitive strengths jointly. • iskandar malaysia ’ s performance has been impressive – poised to exceed its targeted rm100 billion investment mark by the end of this year. • i am glad there is good progress on the joint venture by temasek holdings and khazanah nasional, pulau indah ventures sdn bhd to co - develop two separate sites in medini. • other significant projects include a s $ 1. 5 billion integrated eco - friendly tech - park by ascendas and malaysia ’ s uem land berhad in nusajaya ( one of the five flagship bis central bankers ’ speeches zones in iskandar ). once completed, the park will accommodate a range of industries including electronics and precision engineering. • just in the last month, we have seen other significant investment commitments in iskandar reported by singapore companies. iskandar malaysia will enhance the complementary space between our two economies. it is a win - win. to ensure continued progress in iskandar, singapore and malaysia will continue to take steps to improve connectivity, cross - border trade facilitation, and immigration processes. conclusion i would like to conclude by emphasising once again that i am basically optimistic about the prospects in our bilateral and regional cooperation. we face many challenges in this post - global financial crisis era. but the opportunities for us in asia are intact, and our ability to cooperate with each other to achieve our full potential as a region is an asset for all our countries. bis central bankers ’ speeches
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##ness of the financial system. such a framework will comprise the following elements : · risk - focussed, consolidated supervision ; · harmonised regulation ; · sound corporate governance ; and · effective market discipline. let me elaborate on these elements of the new framework. risk - focussed, consolidated supervision we are adopting a risk - focussed, consolidated approach to the supervision of financial institutions. we will place more emphasis on understanding and evaluating an institution ’ s risk management systems and internal controls. and we will apply this approach on a consolidated group - wide basis across all constituent institutions, local or overseas. at the micro - level, mas is improving the processes and techniques it uses to systematically evaluate a bank ’ s operations and risk profile to determine the key areas that require attention. at the macro - level, mas is enhancing its financial surveillance capabilities, to help identify emerging vulnerabilities, and assess how they will affect individual institutions or business activities, so that we can devote adequate supervisory resources to these areas. harmonised regulation mas will also develop a more harmonised and integrated approach to regulation. consistency in regulation across similar financial activities and products will help level the playing field, lower compliance costs, and reduce the scope for regulatory arbitrage. in this regard, mas has begun to streamline the licensing regime and put in place a risk - based capital framework across the financial sector. the new securities and futures act will introduce a single, modular licensing regime for securities and futures intermediaries. the financial advisors act will provide a single licensing regime and a more flexible and integrated regulatory framework, with consistent standards of business conduct for entities engaging in financial advisory activities for all investment products. but this is not a one - off process. as the industries and products continue to evolve, our laws and regulations will have to evolve with them. we are making progress in applying the concept of risk - based capital. in banking, where risk - based capital standards already exist, mas is working with the local banks to implement the proposed new basel capital accord. in insurance, securities and futures trading, we are revising the existing disparate capital frameworks, to replace them with a consistent risk - based approach based on common principles and objectives. “ issues in global financial supervision ”, remarks at the 36th seacen governors'conference in singapore, 1 june 01. effective corporate governance over time, we should rely more on corporate governance and market discipline to complement prudential regulation and supervision. good corporate governance is critical to foster
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continue to be more active in extending loans, mainly to blue - chip companies, while carefully evaluating the credit risks involved. there seem to be no significant changes in the fund - raising conditions of firms in the markets for such instruments as corporate bonds and cp. on the other hand, the improvement in economic activities has not stimulated corporate demand for external funds, since firms ’ cash flow is at a high level in parallel with the recovery in profits. moreover, firms continue to reduce their debts as part of their balance - sheet restructuring measures. as a result, credit demand in the private sector has continued to be basically stagnant. in view of this, lending by private banks remains sluggish, declining at around 2 percent year - on - year. meanwhile, the amount outstanding of corporate bonds issued is slightly above the previous year ’ s level. the amount outstanding of cp issued continues to be at a high level. recently, the growth rate of money stock ( m2 + cds ) is slightly increasing due to the inflow from postal savings. as for funding costs for firms, short - term funding rates basically remain flat but long - term funding rates seem to be declining reflecting the developments in market interest rates. in this financial environment, the lending attitude of financial institutions and corporate financing conditions remain easy. however, the effects of the decline in stock prices on the fund - raising conditions of firms need to be carefully monitored.
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, and the government ’ s new economic stimulus package are expected to underpin the economy. however, attention should be paid to growing risks of downward pressures on the economy induced by a possible further slowdown in overseas economies as well as by developments in foreign and domestic capital markets. with regard to prices, import prices are rising, mainly reflecting the depreciation of the yen. domestic wholesale prices are declining somewhat mainly due to the decrease in prices of electrical machinery. consumer prices continue to be somewhat weak owing to the decline in prices of other imported products and their substitutes, despite the increase in prices of petroleum products. corporate service prices are still falling slowly. this report was written based on data and information available at the time of the bank of japan monetary policy meeting held on february 9, 2001. the bank ’ s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on february 9 as the basis for monetary policy decisions. as for the conditions surrounding price developments, the recent yen depreciation is exerting upward pressures on prices. moreover, the balance between supply and demand in the domestic market is projected to be on a gradual improving trend, while an economic recovery is expected to continue at a moderate pace. recently, however, the pace of recovery seems to be slowing and crude oil prices, which had been exerting upward pressures on prices, are falling. in addition to the declining trend of machinery prices due to technological innovations, the decrease in prices of consumer goods arising from the streamlining of distribution channels, and the reduction in communications fees aided by deregulation will continue to exert downward pressures on prices. overall, prices are expected to be somewhat weak for the time being. in the financial market, the overnight call rate is generally moving around 0. 25 percent. interest rates on term instruments have been declining somewhat. the japan premium remains negligible. yields on long - term government bonds have declined to around 1. 4 - 1. 45 percent. the yield spreads between private bonds ( bank debentures and corporate bonds ) and government bonds are mostly unchanged or expanding somewhat. stock prices continue to be weak and are moving around the lowest level recorded since the beginning of 2000. in the foreign exchange market, the sharp depreciation of the yen since late december has come to a pause. the yen is currently being traded in the range of 114 - 117 yen to the u. s. dollar. with regard to corporate finance, private banks
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on global growth and employment ”. will the ecb do as the bis suggests and give, to quote, “ a more measured monetary response ”? answer : the bis is merely reflecting the debate, particularly the academic debate. ex ante you are called on not to increase rates. ex post you are reproached for not having done that earlier. so, again, we will continue to do what is necessary. our responsibility is very clear : to ensure price stability and be credible in ensuring price stability. it is what the treaty itself and i would add that it is what our 313 million fellow citizens as well as investors and savers in europe and in the rest of the world are expecting from us. 23 ) so you are continuously as vigilant as a hawk seeking its prey? answer : i leave the responsibility for this metaphor to you. i would say the governing council is permanently alert. we have to be. in several speeches i have mentioned the concept of “ credible alertness ”. it is the mark of our institution to be constantly alert. we, as you might have noted, never pre - commit ourselves unconditionally to any particular course of action, whatever happens. we do what is necessary when it is necessary. 24 ) does the unwinding of the global imbalances such as the deficit on the us current account argue for a more measured monetary response? answer : the possible disorderly unwinding of global imbalances is calling for all partners concerned to do their homework. and that homework has been very well documented, particularly at the global level, at g7 meetings. 25 ) what can europe and the united states do? answer : europe should implement structural reforms to elevate the level of its growth potential. the continent has a lot to gain in doing that, growth, more prosperity and more job creation. the united states has to address its fiscal imbalances and deal with the issue of the low level of savings in the overall us economy, which is a major issue. and it is also true for japan and the rest of the world : we all have homework to do in order for the global imbalances to unwind in an orderly way. i think we have done a very good job in the past, and we will continue to do so. 26 ) has the risk of a disorderly global unwinding increased or decreased? answer : there has been and there is an important risk for a number of years.
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jean - claude trichet : the times of unprecedented challenges address by mr jean - claude trichet, president of the european central bank, at the conference “ 20 years after the collapse of the socialist economy : transformation, economic growth and convergence in poland and other central and eastern european countries ”, organised by the national bank of poland, warsaw, 5 june 2009. * * * dear president kaczynski, dear president klaus, dear president skrzypek, dear joaquin, dear governors, ladies and gentlemen, we are celebrating today the 20th anniversary of poland ’ s first free elections after the second world war. this is a historic moment not only for poland but also for europe as a whole. without the courageous actions by the polish people at the time, this country might not be part of the european union today, and europe might even be still divided in east and west. by holding its first democratic elections two decades ago, poland – together with the other central and eastern european countries – had set the most important pre - accession requirement to join the european union in may 2004. it was a historic re - unification of europe after decades of division. today, the eu is a family of 27 members, 16 of which share the euro as a common currency. on the road to the eu : convergence and integration during the past two decades, poland has gone through a long and challenging process of transformation. the fruits of this process are clearly visible today. over the past 20 years polish gdp per capita more than tripled. in recent years poland has also made progress on the structural side, for instance, by improving labour market flexibility and by limiting the very costly early retirement schemes that were in place. at the same time, the adoption of an inflation targeting framework at the national bank of poland back in 1998 has been an important step towards bringing inflation down and closer to a level that is consistent with price stability. the catching - up process has been accompanied by a strong economic and financial integration with the eu. jacques delors – the former commission president – once defined the european integration as a triad : competition, which stimulates us, cooperation, which strengthens us, and solidarity which unites us. let me briefly spell out his words in today ’ s context. first, competition. the historic enlargement of the european union in 2004 has extended the border of our common internal market eastwards, thus unleashing the beneficial forces of competition in these countries whilst providing for a solid regulatory framework. polish
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our blog post published on the cnb website today, see adam and michl, 2023 ). the strong exchange rate made imports cheaper and tightened monetary conditions also for exporters. the large ones in particular had not been influenced by our monetary policy too much until then, since they were taking out loans in euros. 1 / 7 bis - central bankers'speeches i estimated that inflation should be below 10 % in annual terms within three months. the disadvantage of measuring inflation using year - on - year changes is that prices are compared to those observed a long time ago. if we want to know current developments in inflation, we should analyse the inflation momentum. at the cnb we define momentum as the three - month moving average of month - on - month changes in prices. we use seasonally adjusted and annualised data to make the figures comparable to the target – the cnb's 2 % inflation target is in annual terms. three - month moving averages of month - on - month changes in prices sound very complicated. moreover, they are seasonally adjusted and annualised... simply put, we can look at momentum as the inflation we would have if prices increased at the same pace as in the last three months. using the example of core inflation : in annual terms, core inflation has been coming down since october 2022. it peaked at 14. 7 % year on year in september 2022. it fell to 11. 5 % in march and 10 % in april. the momentum of core inflation peaked at 17 % in june last year. it is now 7 %. so, when the new bank board decided on rates for the first time in august 2022, the momentum was already falling. besides core inflation, the momentum has been declining for demand - pull inflation, which only includes consumer basket items correlated with demand ( cnb, 2022 ). it is an analogy to the supercore inflation measure used by our colleagues at the fed and the ecb. the momentum of demand - pull inflation peaked at 8 % in june last year. it is currently below 2 %. so, all the relevant inflation momenta are now falling ( adam and michl, 2023 ). however, i repeat that although headline, core and demand - pull inflation are falling and so are the momenta, inflation is still at unacceptable levels. therefore, we must not slacken in our fight against inflation. so far we have only succeeded in the first phase. therefore it is not
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few would deny that where european institutions have been invested with executive power, they have used it well. competition policy has been effective with both large companies and large countries. monetary policy has achieved a high degree of policy credibility. and for the ssm it is perhaps too early to judge, though i am certain we would not have had such a rigorous clean - up of our banking sector without it. if we look at the rules - based approach, however, it is difficult to reach such a positive conclusion. the fiscal rules have repeatedly been broken and trust between countries has been strained. and for economic policies rules - based approaches – such as the macroeconomic imbalance procedure – have so far not attracted much ownership from national policy - makers. so in my view the conclusion from recent experience is clear : if we agree that further institutional convergence is needed in the structural domain, then our long - term goal must be to move from a rules - based system to one based on stronger european institutions. 9 i must stress however that to make such a step, we first have to respect and follow the rules we have now. if we look at monetary policy as an example, we did not begin by creating a new institution. this would have been impossible. we had a series of rules - based systems – the “ snake ”, the european monetary system, the exchange rate mechanism – the experience of which led us to create the single currency and the european central bank. these various stages were however essential, because they gradually built trust between countries and led to a convergence of views about how best to conduct monetary policy. so there is no question today that the rules can be ignored because institutions would be better. on the contrary, it is only by following our rules that we can establish the mutual trust on which future institutions can be built. it is essential that the european parliament makes this process its own and imbues it with democratic legitimacy. 5. conclusion the way forward for the euro area that i have described today may seem simple, but it isn ’ t. it requires vision and perseverance. all those involved have to play their part in a sustained economic recovery. see my speech at sz finance day 2015, frankfurt http : / / www. ecb. europa. eu / press / key / date / 2015 / html / sp150316. en. html. am main, march 2015, bis central bankers ’ speeches but i also recognise that, in the process, we must not lose
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to see that lenders are taking a reasonable and controlled approach. all such sales must also comply with the affordability and suitability provisions set out in the consumer protection code. mortgage arrears resolution strategies : looking further ahead unsustainable mortgages, buy to let and negative equity mortgages, along with enhanced resources and infrastructure, are our immediate priorities in the follow up work with the banks. frankly, with such a difficult and complex issue there is a capacity constraint in the banks and we are wary about pressing to improve all the aspects of the banks strategies simultaneously for fear of not making sustainable progress on any as a consequence. however, looking further ahead we will plan to examine more closely the banks pre - arrears strategies, for example, and will, as i said earlier be both reviewing the effectiveness of the code of conduct on mortgage arrears and assessing banks ’ compliance with it. as part of the central bank ’ s on - going research on the mortgage market, a household income survey is being conducted. the survey will provide a more accurate picture of the financial position of a representative sample of mortgaged households. it is due to be in the field very shortly, with results and analysis being published later in the year. the immediate focus of our efforts has been on the seven largest lenders that account for nearly 90 % of the mortgage market ( by value ) and three quarters of arrears over 90 days. however, we will be following up with the other lenders who have sent in strategies to give them feedback and to press for improvements as needed. we are also in parallel undertaking some consumer research to inform our work. in conjunction with the household income survey i just mentioned, our consumer protection division is conducting a survey on a subsample of borrowers who are in pre - arrears and arrears and are in the mortgage arrears resolution process. the research will involve borrowers who have mortgages with four mainstream lenders and are in the marp since 1 january 2011, when the revised code came into effect. we want to understand the borrower ’ s experience and treatment when in the marp. the research will focus on areas of the marp which would not be easily learned from a client file during an inspection such as whether the information received by the customer was explained clearly and the type of support the customer received from the lender when going through the marp. our findings will feed into the review of the ccma planned for
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gained pace, the number of legal proceedings against mortgage holders have also been increasing. the central bank ’ s continued role in this area is to ensure that the banks adhere to the code of conduct of mortgage arrears, meet the criteria for sustainable solutions and continue to engage with their customers to find non - repossession solutions whenever possible. the consumer protection ( regulation of credit servicing firms ) act 2015 seeks to ensure that borrowers whose loans are sold to unregulated transferees maintain the regulatory protections they had prior to the sale. bis central bankers ’ speeches it is imperative that lenders continue to work with over - indebted consumers to try to resolve any arrears situation and to achieve sustainable solutions with co - operating borrowers. clearly for many, there is no quick remedy or solution to long term arrears and careful, empathetic but realistic approaches need to be taken. i welcome the new coordinated programme of assistance for those in long - term arrears, with mabs acting as a “ one stop shop ” for borrowers in need of advice and support. for credit unions, the central bank ’ s new regulations came into effect on 1 january this year. these will enhance soundness and provide for enhanced confidence in the sector, supporting its role in providing important financial services to the community. we will continue to work with credit unions to support appropriate restructuring measures, the embedding of the strengthened regulatory framework, and to facilitate prudent and appropriate development. this is also a landmark year for the insurance sector, with the solvency ii framework going live. the “ whole balance sheet ” approach to capital calculation combined with the strong emphasis on a firm ’ s risk management and supervisory review will result in a muchtransformed regulatory and supervisory framework. this year, central bank supervisors and the supervised firms will be putting this framework into operation for the first time. in december, we released new regulations on sme lending. the regulations aim to strengthen protections for smes, while also facilitating access to credit. the regulations provide for greater transparency around the application process and the reasons for refusing credit applications, greater protections for guarantors and an expansion of the grounds for an internal appeal. there is growing international recognition that financial regulators should be more pro - active in protecting consumers, in view of the complexity, risks and costs of financial products. it is not our role to run the firms we regulate nor is it to determine their business models or strategies ( including in
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, which are growing quickly in swedish exports. exports of telecommunications products have more than doubled since 1995 and pharmaceuticals have risen by 80 %. the economy is undergoing a restructuring towards these areas which releases us to some extent from the cyclical dependence on pulp, paper, steel and engineering products which are our traditional export goods. however, most important perhaps are not developments in these industries per se. although they are growing rapidly, they are still of rather small size. the computing consultancy industry has doubled during the 1990s but still only accounts for 80, 000 employees, or around 2 % of employment. the sector “ radio, tv and telecommunications products ” is approximately the same size. industry as a whole has recovered from under 18 % of gdp in 1993 to 22 % in 1998. no, the really important effects of the new technology will probably take place outside the hi - tech and knowledge - intensive industries. personal computers, mobile telephones, the internet, and other it can increase productivity within broad segments of the swedish economy. this can affect trade, office work, distribution and storage, manufacturing production, etc. however, it is important to realise that the introduction of new technology only takes place during a limited period and that it is probably only during these years that a higher growth in productivity is achieved. when the changes to the new are carried out, it is probable that productivity will develop more slowly again. this can be compared with the introduction of electricity and the spread of electrical motors in industry, or the spread of the internal combustion motor. i would thus like to warn against viewing the future through rose - tinted spectacles. it is true that productivity growth has been higher after 1994 than in the preceding 20 - year period. an increase from 1. 4 % to 1. 9 % has been registered. however, the first period included three long downturns and the second a broad upswing. we cannot therefore know whether it is only cyclical differences that underlie the figures or whether technological changes have also contributed to sustainable stronger productivity growth. to sum up, i would like to point out that we now have a better relationship between growth and inflation due to inflationary expectations being pushed down. it is possible that technical developments have also produced productivity improvements that mean that growth for a period can increase more quickly than previously without inflationary pressure being created. one factor that i have not touched on to date is the effects of increased competition through internationalisation and domestic deregulation. this process too can have contributed to a
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, which represents the framework of rules and procedures preventing countries from accumulating excessive public debts and deficits. in addition, the european commission proposes the establishment of a broader macroeconomic framework for the monitoring of economic policies, which – if not sufficiently sound – can give rise to imbalances such as a loss of competitiveness, current account imbalances and excessive private indebtedness. in addition to these eu - wide proposals at the legislative level, a separate pact ( the “ euro plus pact ” ) has been drawn up by the euro area countries and several other eu member states in order to further strengthen the economic foundations of emu. the ecb is of the opinion that, in both areas, the current reform efforts are not sufficiently extensive. while the proposals tabled by the european commission go some way towards improving macroeconomic and fiscal surveillance in the euro area, they fall short of the quantum leap forward that is needed in order to guarantee the smooth functioning of emu. the legislative acts implementing the reform of economic governance are now being discussed in the context of the “ trialogue ” discussions taking place between the european parliament, the european commission and the hungarian presidency of the eu council. the purpose of these discussions is to produce a common set of proposals that accommodates the amendments requested by the various authorities involved in the legislative process. the ecb has called on these authorities to produce a strong and clear set of rules, including automaticity in the triggering of procedures and sanctions, in line with the ten key elements for the reform of economic governance published on its website. 1 iii. ( e ) strengthening the financial sector the financial crisis has also revealed a number of deficiencies and vulnerabilities in the regulatory and supervisory frameworks in our economies. the massive economic and financial impact of the crisis has clearly indicated that addressing such deficiencies through far - reaching reforms is essential in order to prevent similar crises in the future. there is a relatively broad consensus as regards the nature of the reforms required. indeed, following the deterioration of the crisis in the wake of the collapse of lehman brothers, the see key elements of the ecb opinion on economic ( http : / / www. ecb. int / ecb / legal / pdf / key _ elements _ opinion _ con _ 2011 _ 13. pdf ). bis central bankers ’ speeches governance reform g20 rapidly identified some of the key areas for reforms and entrusted the task of drawing up concrete proposals to the basel committee on banking supervision
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qualified team of inspectors. there are no specific international standards on this matter. all the principles and recommendations mention supervision as the core component of prevention, but we are still in need of a standardized methodology. the third pillar is rating. we believe that specific rating mechanisms developed by local supervisors should be implemented, on the basis of an agreement on aspects such as components to be rated, and the rating systems applicable to financial institutions. although traditionally we have rated financial institutions mainly according to liquidity and solvency considerations in order to protect the stability of financial systems, we consider that rating banks on the basis of compliance with aml / cft regulations will be relevant. the last pillar concerns information sharing. guidelines for the use of information and to which extend it may be shared should be defined. all of this, with special emphasis on the analysis of the legal frameworks of the different jurisdictions. standards with these features would allow to enhance awareness of financial systems on aml / cft matters, providing them with a credible and stable framework for conducting their businesses and, in addition, for developing a valuable flow of information that can be exchanged between private sector parties and between the private and the public sector. this supervision methodology, in the process of being implemented in argentina, includes technical assistance from international institutions such as the world bank. our vision is fully consistent with the risk - based approach that allows financial institutions to focus their resources on those operations, transactions, customers and accounts that show greatest vulnerability to global crimes. these approaches - already adopted by countries such as the united states - are included in several of the regulatory aspects proposed by the us patriot act, and are in line with the spirit of many of the recommendations of the fatf. the risk - based approach recognizes that the banking business has peculiarities linked to cultural and historical matters associated with each region. therefore, any regulatory framework must be flexible enough to be able to ensure certain discretion to member countries, being applied on the grounds of their knowledge of their own banking and financial practices. there is no unique solution or pre - established methodology for governments or international institutions to define the nature and content of a risk - based approach. nevertheless, certain principles have been developed, describing basic concepts, which serve as a guide to develop and implement a system that can operate reasonably. however, specific aspects must be developed by the institutions on the basis of the particularities of each case. standards that, for example, break down risk into three vectors - country risk, customer risk and service
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establish institutions specifically to cater to the requirements of financial resources for long term developmental efforts. bis central bankers ’ speeches international experience 10. having seen the context in which the dfis were set up, let me now give you some global perspective on the dfis. two distinct models of development financing have been followed internationally. at one end of the spectrum is the anglo - american model, which is purely market based with financial markets playing an important role in allocating resources for competing uses, including the industry and long term projects. at the other end is the model adopted by continental europe and south east asian economies, in which financial savings were channelized and allocated through financial intermediaries like banks and dfis. the dfis played a very significant role in the rapid reconstruction and industrialization of germany and japan after the 2nd world war by providing long - term credit. in japan, the government owned japan development bank was established in 1951 for reconstruction of the economy. in korea and singapore also dfis were set up in 1960s with the main aim of rapid industrial development. the emergence of dfis in the then developing economies also coincided with a period when the capital market, as a source of long term funding, was yet to stabilize. based on the european model, the success of the dfis in the overseas territories provided strong impetus for creation of dfis in india after independence. 11. the initial mission for which the dfis were set up in the developed economies were complete by the 1980s and most of them have since been wound down or their roles have been redefined. most of the surviving dfis now operate in niche segments of financial market where the entry barriers are relatively very stringent. india has also witnessed several structural changes in the banking and financial system, especially in the post reform period which has undermined the objectives for which the dfis were established. commercial banks, which traditionally refrained from lending for the long term or infrastructure projects gradually improved their project appraisal skills, their risk management capabilities and slowly developed appetite for long term lending. the stable retail deposit base built by the banks also aided their asset - liability management function. further, the development of the bond markets also enabled commercial banks to raise long term funds from the insurance and pension funds. these structural changes in the economy meant that the dfis lost their competitive edge in the long term finance market and started facing challenges on solvency and liquidity fronts. the non - performing
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projected to receive benefits. notably, this year about 5 individuals are between the ages of 20 and 64 for each person aged 65 or older. by the time most of the baby boomers have retired in 2030, this ratio is projected to have declined to around 3. in addition, government expenditures on health care for both retirees and non - retirees have continued to rise rapidly as increases in the costs of care have exceeded increases in incomes. to avoid sharp, disruptive shifts in spending programs and tax policies in the future, and to retain the confidence of the public and the markets, we should be planning now how we will meet these looming budgetary challenges. achieving long - term fiscal sustainability will be difficult. but unless we as a nation make a strong commitment to fiscal responsibility, in the longer run, we will have neither financial stability nor healthy economic growth.
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spencer dale : 2010 – a progress report speech by mr spencer dale, executive director and chief economist of the bank of england, at the kent business school 21st anniversary dinner, canterbury, 1 december 2010. * * * i would like to thank ryan banerjee, rohan churm, and geoff coppins for their considerable help in preparing this speech. the views expressed are my own and do not necessarily reflect those of other members of the monetary policy committee. introduction it is an honour to be invited here this evening to help you and the business school celebrate its 21st anniversary. birthdays are a natural time to pause and reflect – especially those that mark a coming of age. reflecting on your first 21 years, much has changed since the business school was founded. some of you may remember that 1989 was the year in which nigel lawson resigned as chancellor and the berlin wall fell. you may remember less well that it was also the year that kylie and jason enjoyed four number 1 hits and coronation street attracted its largest ever audience to watch alan bradley meet his grisly end under a blackpool tram. how time flies. the economy has also had its fair share of ups and downs since then. after the 1990s recession, we enjoyed 63 quarters of consecutive growth, withstanding en route the effects of black wednesday and the dotcom bubble. inflation targeting was introduced, the monetary policy committee created and we benefitted from a sustained period of low and stable inflation. but as you know, this period of great stability came to an abrupt end with the largest financial crisis for at least a generation. output fell like a stone and inflation was buffeted by a series of price level shocks. i want to continue this theme of reflection in my comments tonight. however, with 2010 drawing to a close, i will restrict my observations to events over the past year – and what they may herald for the future – rather than your entire 21 years. a progress report for 2010. this has certainly been a busy year. the uk economy continued along the road to recovery. a new coalition government was formed and set in train what is planned to be the largest fiscal consolidation of the post - war period. the government also announced a major reform of the structure of financial regulation, assigning considerable new responsibilities to the bank of england. these events have taken place against a backdrop of strong global recovery, but one in which some countries, most notably within the euro area, continue to face acute fiscal and banking pressures, and large imbalances between surplus
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of non - performing loans, low profitability, and it and cyber security. for european supervisors, preserving the “ tough but fair ” character is to a large extent a matter of day - to - day supervisory practice. daniele will surely stress this point when she addresses you later. and there are external events such as brexit which demand our attention. i consider brexit to be manageable for banks, but it requires timely, thorough and comprehensive preparations. and because of the uncertainty it involves, supervisors have their own part to play in ensuring a smooth transition to a post - brexit era. it requires us to be responsive and pragmatic as well. therefore, i strongly welcome the commitment shown by ssm supervisors to cooperation and 1 / 6 bis central bankers'speeches open exchange. there is no need for me to go into detail on these subjects. as i mentioned just now, these are topics i very much imagine daniele will touch upon. instead, i wish to review the set - up of the european single supervisory mechanism and offer some ideas as to how it can be developed further. but for that purpose, i find it helpful to remind ourselves of the organisational principle of the ssm. it was not intended to be a single, hierarchical organisation, but rather a supervisory network. there are still many misperceptions on that matter. without doubt, the ecb has key competences regarding the ssm. the ecb assumes responsibility for the overall functioning of the project. and apart from directly supervising the large, “ significant ” credit institutions, it has also taken over various powers from the national competent authorities, the ncas – one such important power being licensing. but that does not make it a hierarchical undertaking. instead, different modes of cooperation were installed. for example, joint supervisory teams include personnel from ncas that now receive their instructions from the ecb, while inspectors from ncas continue to be directed by their employer. other nca staff again are on secondment at the ecb. the different modes of cooperation also become visible with respect to competences. ncas still have major tasks and competences beyond directly supervising the 3, 200 smaller, “ less significant ” institutions in the euro area. think of the roughly 1, 500 written procedures from last year : every single decision is approved by the supervisory board, which includes members from 19 ncas, thus boosting the transfer of knowledge from ncas to the ecb and ensuring that decisions
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who else, if not creditors, would be more suited to pushing governments to take a sustainable financial path? why should we expect states to leave the welltrodden path of least resistance – which is expanding debt instead of committing to painful reforms – when there are no regulatory restrictions such as a non - zero capital requirement for sovereign bonds in place that provide actual incentives to do so? so whatever transitional challenges there may be, they don ’ t make the idea of a more riskadequate treatment of sovereign bonds less of a desirable ultimate aim. also, framing the reform as a mere distribution battle between member states is deceptive. in the long run, everyone stands to benefit from a sustainable order. instead, we need to focus on change management. how do we smooth the transition toward a sustainable financial order? in my view, just as nobody should want a drug addict to die from going “ cold turkey ", we should take into account the challenges facing those who will be worst affected by a change in regulation – and offer demanding, but feasible transition schedules. of course, regulation of sovereign risk is also a global issue. any framework of rules for the financial sector these days needs to be comprehensive and consistent. there is a straightforward and sobering reason for this : you can count on the global financial industry to quickly locate regulatory gaps. the basel committee has put sovereign risk on its agenda for 2017 and 2018. i strongly welcome this step, and call upon all parties to work together to find a good solution. for the euro area, reforming the regulation of sovereign risk will be even more vital. this is because a currency union is particularly vulnerable to national distress in case that market forces break down. a common currency, for example, does not allow currency depreciation as an automated correction mechanism. therefore, achieving reform towards better self - governance in the banking sector, markets and state finance will be an indispensable step towards a more sustainable euro area. 5. conclusion ladies and gentlemen i have listed several organisational challenges which the ssm will need to come to terms with, if it is to live up to its character as a network. 1. national authorities need to honour their staffing commitments, because these are what drives the operational functioning of the ssm. 2. we need to remove boundaries between supervisors in their daily routines with a view to nurturing a “ one - team ” culture. 3. we need to enhance our language skills to account for the cultural diversity that is part and
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speech speech by governor lars rohde at the swiss finance policy seminar of the federal assembly ’ s finance committees 3 july 2017 danmarks nationalbank's monetary policy – possibilities and limitations first let me thank you for inviting me to speak at this seminar. it is a special pleasure to have this chance to share views and experiences on a matter close to my heart, namely danish monetary policy. especially with this audience as there are many similarities between monetary policies in denmark and switzerland. out of the grey sky on a cold and dull thursday in january 2015, these similarities caught the financial markets'attention – fueled by the snb announcement that it would abandon the floor on the swiss franc against the euro. as you probably know, denmark experienced a massive inflow of currency shortly after this announcement. and over the following weeks, we saw unusual turbulence in the danish foreign exchange market. [ agenda ] today i will talk about the danish fixed - exchange - rate regime with the cold thursday in january 2015 as a point of departure. then i will discuss some of the potential spill - overs to danish financial markets from the unconventional monetary policies conducted by the ecb in recent years. i will end my speech with some remarks on our experiences with very low interest rates. we have had negative rates for some years now and so far their implications have been far less exciting or radical than some might have thought before entering the negative territory. basically, negative interest rates have just been a continuation of low interest rates. page 1 of 9 1 background for the fixed - exchange - rate regime let me revert to that episode in 2015. [ chart 1 : intraday dkkeur ] the swiss announcement surprised financial markets resulting in increased volatility in a wide range of financial asset markets. the danish fx market was one of them. in the first few hours after the swiss announcement, the danish exchange rate fluctuated more than usual. over the following days and weeks, we experienced a massive currency inflow, resulting in strong appreciation pressure on the exchange rate. the swiss decision seems to have led some foreign investors to look for comparable candidates to abandoning a peg. there are not many countries to look for. these investors could make a substantial profit if the fixed - exchange - rate policy were to be abandoned and the krone appreciated. the initial push came from foreign investors. however, nearly two thirds of the increased demand for kroner in those few weeks in january and february came from domestic investors, including insurance companies and pension funds
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each piece of communication. summing over the 17 pieces of communication included in the study, we arrive at the effects that you can see here. 1 the chart shows that in all of the 2 - day windows combined, danish 10year sovereign bond yields declined by a total of 30 basis points. this is very close to the corresponding decline in german yields of 28 basis points. yields in other northern european countries declined slightly more. however, countries in the south of europe experienced substantially larger declines in yields. to sum up, danish and german bond yields are close substitutes. the impact of qe on bond yields in the euro area also has a spillover effect on danish bond yields. 3 monetary policy when rates go negative let me share with you some of our experiences with very low and negative interest rates. danmarks nationalbank pioneered by setting a key monetary - policy rate well below zero already in 2012 to stave off large capital inflows. since then, many other central banks, including the ecb and the snb, have now gained experience with policy rates significantly below zero. with monetary policy rates as low as currently - 0. 75 per cent in switzerland and - 0. 65 per cent in denmark, we have been in unchartered territory for some years now. what have we learnt from this period? a key message is that the situation with negative policy rates in denmark largely mimics that of low, but slightly positive rates. and side effects have generally been negligible. in the following i will go a bit more into detail on some of the aspects. [ chart 8 : different deposit rates for different segments ] there has been more or less full pass - through to lending rates in the economy since the key policy rate was lowered to - 0. 75 per cent in 2015. however, the degree of pass - through to banks'deposit rates has differed across customer segments. many large non - financial corporations face negative interest rates on their bank deposits. the same applies to the majority of insurance and we use the 17 events listed in carlo altavilla, giacomo carboni and roberto motto, 2015, asset purchase programmes and financial markets : lessons from the euro area, ecb working paper series, no 1864. page 7 of 9 pension companies. this is appreciated due to the importance for the transmission to the exchange rate. banks have, on the contrary, been reluctant to introduce negative interest rates to households. their actions have generally little impact on the exchange rate. with negative policy
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behalf of the federal reserve system. he works closely with a national coordinator on the board's staff to ensure that the program is successful and provides effective and useful responses to your questions and concerns. in december, we held the first annual meeting for the district contacts and invited several bankers to help us learn more about the challenges faced by your institutions. drawing on the insights shared by the bankers at the meeting, we have refined our outreach efforts so that they better match the needs of your institutions. a key effort that we have completed since that meeting is the development of federal reserve training materials designed to help examiners understand the unique challenges faced by minority depository institutions. the training materials were recently shared with supervisory staff at a senior examiners'forum in dallas and will soon be used in other training for examiners. on the community reinvestment act ( cra ) front, the banking regulatory agencies approved q & as in january that allow non - minority - owned banks and non - women - owned banks to receive positive cra consideration for capital investments, loan participations, and other ventures made in cooperation with minority - owned banks, women - owned banks, or lowincome credit unions. while these activities must help meet the credit needs of the local communities in which the minority - owned banks, women - owned banks, or low - income credit unions are chartered, the q & as clarify that the activities do not also have to benefit the nonminority bank's assessment area. the q & as apply to all types and sizes of banks, regardless of the performance test under which they are being evaluated. on june 24, the agencies announced proposed rulemaking for cra that would codify the guidance provided in the january interagency q & as. in concluding, i would like to commend you for the important work that you do to support your communities. as a former banker and now as a regulator, i recognize the importance of fostering the soundness of minority - owned institutions to ensure that they can continue to provide access to credit, especially in our current economic environment. i wish you success and would be happy to take questions at this time.
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: clear objectives, willingness to co - operate, and openness to “ newcomers ”. 1. from the beginning, europe has been set on a clear course and sailed with a clear mission. this is to achieve prosperity, peace, and stability for the citizens of europe. 2. member states work together as a team. they are willing to pool their specific abilities and national sovereignties. in a co - operative manner - unparalleled to any international organisation - they overcome differences and manage diversity. they share the conviction that they should find european solutions to european problems. the eurosystem is a perfect example for the co - operative approach that characterises the union. 3. europe has always been open for new member states. membership is neither limited nor exclusive. clear rules and procedures pave the way for newcomers to join the union. over time, the ship has grown in size and quality. new members joined and new competencies were acquired. in the nineties, the ship was given an important additional mast. this new mast is monetary union. its strong sails push the ship further. they reinforce the strength of the eu and generate stability. in the coming months, this ship will be restructured considerably and will expand its crew significantly. it is doing this at sea. the day - to - day work of the eu continues ; there is no break or pause that allows for practices or trial runs. the key challenge is to accomplish these tasks while keeping the three qualities. these qualities are worth maintaining. they have made the eu to what it is today. let me now concentrate on the first task, the constitution. the constitution the eu has diverted from its traditional path of recurring treaty reforms. it has decided to give itself a constitution. those of you who come from central and eastern european countries will be familiar with a process of adopting a constitution. in your countries the new constitutions have laid the foundation for an open society and democratic institutions. in the case of the eu, the new constitution does not signify the start of a new political era. why then has the eu embarked on a constitutional process? speaking as an outside observer to the process, it seems to me that the constitution is to serve two purposes. the first purpose is renovation. the eu has to be made fit for the future. it needs wellfunctioning decision - making procedures and effective institutions. this is not only in view of enlargement but also in order to adapt to new international demands and changing economic
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, since a well - functioning payment system can promote commerce across a broader range of consumers and businesses. while achieving goals like network scale and interoperability is a complex problem, technical standards are one part of the solution to support consistent communication among existing and emerging technologies. perspectives on technical standards a technical standard is simply a common specification or guideline. for example : when i drive across the country, i do not need to worry about whether pumps at different gas stations will fit my gas tank. that is because there is an agreed - upon standard. or, in the example of payments, financial institutions adopt messaging standards to allow systems and networks to communicate with one another. 2 / 5 bis - central bankers'speeches if done well, the development and adoption of technical standards can help increase efficiency across payment chains and promote consistency in how disparate systems communicate. this requires standards that are technically sound, implemented consistently, and timed correctly to meet a market need. technical standards - such as those developed within the international organization for standardization ( iso ) - are voluntary, open, and consensus - based. the collective market can identify frictions where standards would be beneficial, and then individual firms can choose whether and when to adopt them based on perceived benefit. the process to develop the standards is open and transparent, and it requires consensus at every step. this process establishes standards that are seen as credible and legitimate. considerations and lessons learned it is important to note that simply having a standard in place will not automatically translate to economic benefits. to achieve network effects, standards must be widely adopted. developing consensus - based standards implies that all relevant participants are at the table and advocating for their interests, which is not a given, but is critical if standards are to be widely adopted. timing is also important. in the early stages of technological advances, standards should not be overly prescriptive to stifle innovation and should be flexible and adaptable as the market changes. conversely, waiting too long to adopt a technical standard could lead to inefficiencies and high costs to comply after the fact. standards also need to be implemented consistently, which requires industry coordination to align on common practices. building on previous lessons learned, the iso 20022 messaging standard was developed to be a common standard for multiple payment rails, with a structured data format, and aims to align messages across payment systems. nonetheless, there has been variation in iso 20022 implementation, and further industry coordination over time will be necessary to align on common practices.
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forecasting inflation and in assessing the appropriate course of monetary policy. it is important that, as the forces retraining inflation dissipate or reverse, that this upward pressure on inflation is not reinforced by inflationary pressures generated from very high utilization rates. the key to sustaining the best possible performance going forward is making the transition from the current state where performance is exceptional but unsustainable to the best possible sustainable state. that will require a slowdown in growth, preferably in the near term. asia may accomplish this, in which case it would substitute for monetary tightening that in my judgment would otherwise be required. [UNK]
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asset - price boom. if a run - up reflects a bubble, the ensuing price bust could obviously be viewed as its bursting. alternatively, asset prices may have been driven up by expectations of a productivity boom, which would lead to improved earnings. in that case, if the expected productivity boom does not subsequently materialize, asset prices will fall. the end result in this case would not be termed the bursting of a bubble. nonetheless, this case may be indistinguishable from such an experience : among other common elements, one could also see an investment overhang in the sector that saw its asset prices rise and subsequently fall. recessions are almost always accompanied by asset - price declines. but such declines sometimes appear to be the source of adverse surprises, and asset - price busts may subsequently have disproportionately adverse consequences. falling asset prices create a negative wealth effect and restrain consumption. by making collateral less valuable, they also increase the risk of lending to businesses and thereby worsen the lending terms faced by borrowers. when asset prices fall substantially, lenders may also find themselves holding substantial amounts of nonperforming loans that are backed by what may have become, in some cases, worthless collateral. for this reason, recessions that are preceded by asset - price booms and busts may also be associated with problems in the banking industry. in such episodes, the ensuing loss of intermediation may serve as an additional force acting to prolong and deepen what might otherwise have been a milder recession. concerns about the severity of downturns that follow significant asset - price collapses suggest that the identification and analysis of boom - bust asset - price cycles could be useful for policy. for that reason, i would next like to briefly review some of the issues associated with detecting asset - price bubbles. detecting bubbles the word bubble is sometimes employed to describe any quick and large increase in asset prices, but a more precise definition would associate bubbles with only those increases in asset prices that are not due to economic fundamentals. 4 under such a definition, a bubble is present when investors buy assets at prices above their fundamental values in the expectation of being able to sell them at even higher prices in the future. 5 to be sure, such departures from fundamentals may start small, but over time they could grow explosively. the fundamental price of an asset typically is defined in terms of the discounted present value of the income stream or equivalent services that the asset is
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in the u. s. economy in this sample. for japan, one can see the remarkable run - up of the 1980s and its agonizing reversal during the 1990s. for the united kingdom, one may notice the asset - price boombust cycle of the early 1970s followed by the painful recession beginning in 1974. indeed, these three episodes stand out as perhaps the clearest suggestions of an asset - price boom - bust cycle significantly influencing or possibly triggering a subsequent recession and recovery. how do these three cyclical turning points compare with other recessions? to be sure, such a comparison rests on ( 1 ) our identification of these three episodes as the ones that appear to have been preceded by significant asset - price booms and busts and ( 2 ) separating these recessions from the rest. such a classification necessarily involves some element of ambiguity, but the three episodes highlighted in figure 1, the u. s. recession in 2001, the japanese recession in 1992, and the u. k. recession in 1974, do appear to stand out. 12 estimates of real gross domestic product ( gdp ), the output gap, potential output, and real investment are from the economic outlook database of the organisation for economic co - operation and development. the investment data ( shown in later displays ) reflect total fixed investment. in figure 1, both actual and potential output are expressed relative to the value of actual real gdp in 1985. by definition, output should equal the economy ’ s potential - and the corresponding measure of the output gap should equal zero - when productive factors in the economy are employed at their normal levels. output is below the economy ’ s potential when resources are underutilized and above it when the economy is overheated. to be sure, assessing the economy ’ s potential with much accuracy is inherently difficult, and historical estimates of the implicit output gap are highly imprecise ; however, these measures can serve as helpful summary indicators in historical comparisons such as those discussed below. there are at least two reasons for the ambiguity in such classifications. the first relates to how one defines an asset - price bust. the second relates to the dating of cyclical peaks, which, as noted earlier, may differ somewhat depending on the methodology underlying business cycle chronologies. the three episodes on which i concentrate my attention are relatively uncontroversial in that the recessions followed rather substantial asset - price boom - bust cycles. but other recessions, which followed milder boom - bust cycles, could
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current account deficit in the months to come. another noteworthy development are rising oil prices from some 10 us - dollar per barrel in the late 90ies, to some 80 us - dollar today. at first, rising oil prices led to a significant worsening of trade balances for energy importers, and to considerable trade balance improvements for oil exporters, which were perceived as a mainly cyclical development. in the meantime, high oil prices are perceived as a rather structural and probably lasting event, which is going to allow oil exporters to spend more of their energy - related income on imports, thereby ameliorating global imbalances. finally, let me also touch upon the euro area. for several years the euro area ’ s balance of payments has been broadly balanced. nevertheless, the euro area has to contribute to and prepare for the orderly resolution of the global imbalances. why? because ultimately, the – at least in the longer term – necessary rebalancing of the imbalances will be accompanied by significant shifts of productive factors from and to tradedand non - traded sectors, respectively shifting resources between export orientated - and domestic demand orientated sectors. in particular, this will hold true for countries with large current account imbalances, but also for the euro area, as there are significant current account imbalances within our region. as you would expect, flexible and productive economies with sound and well structured public finances certainly will cope better with these challenges. albeit important structural reforms in europe have been implemented already, much remains to be done in order to improve potential growth, thereby reducing growth differentials lastingly. we have to respond with policies designed to use opportunities of globalization, particularly to increase productivity and competitiveness, while minimizing unavoidable adjustment costs. the right answer to globalization and international competition is therefore to continue and intensify the lisbon process already mentioned. there is no doubt that globalization has worked well for the people of europe. after nearly nine years of experience, economic and monetary union has proven to be europe ’ s most forceful strategic response to global economic change. however, we have to concede that big changes rarely only create winners. in many eu countries, regrettably, people are critical and see little benefit from globalization. there has been an undue proliferation of fears that increased import competition from low - wage countries would put too much pressure on domestic producers and workers and that economic activity would allegedly be relocated abroad. sometimes, these concerns have
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first have a look at the achievements of monetary easing. ii. the achievements of bold monetary easing chart 3 shows developments in employment and the unemployment rate. although it has been widely said that the only employment that has been growing is non - regular employment, the share of part - time employees in the total number of employees actually peaked in 2017. 2 moreover, the unemployment rate has fallen substantially. the chart shows that the unemployment rate at the end of the 1990s stood at 5 percent, while japan's structural unemployment rate in the 2000s was said to be around 3. 5 percent. 3 some had argued that a structural unemployment rate of 3. 5 percent implies that monetary policy measures that would reduce unemployment below this level would stir inflation and give rise to a speculative bubble and should therefore be avoided. 4 however, the unemployment rate currently stands at 2. 8 percent, and there is no inflation or a bubble. thus, if we understand the argument that japan's structural unemployment rate is around 3. 5 percent as implying that a drop in unemployment below this rate would give rise to inflation, this was incorrect. 5 according to the labour force survey by the ministry of internal affairs and communications, the share of non - regular employees peaked in 2014. the following publications suggested that the structural unemployment rate was in the range of about 3. 0 - 3. 5 percent using unemployment - vacancy analysis : ( 1 ) analysis of the labour economy 2015 by the ministry of health, labour and welfare ; ( 2 ) annual report on the japanese economy and public finance 2015 ( summary ) by the cabinet office ; and ( 3 ) outlook for economic activity and prices by the bank of japan. shirai has argued that " japan is not suffering from a shortage of demand. looking at the unemployment rate and the capital utilization rate, there is almost no slack " ( translated by the bank of japan ). see noguchi asahi and shirai sayuri, " herikopta mane no shotai : gekitotsu taidan " [ the true meaning of helicopter money : a heated debate ], shukan ekonomisuto, august 2, 2016. for instance, hayakawa argues that " although the rate of wage increases is still low, it has started to gradually rise since the unemployment rate reached 3. 5 percent. this suggests that the relationship that the structural employment rate [UNK] the natural unemployment rate [UNK] 3. 5 percent generally chart 3 improvement in labor market conditions introduction of qqe ( april 2013 ) million number
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such discrepancies were followed by significant upward revisions of the budget deficit. with regard to the implementation of the revised stability and growth pact, there is no uniform picture emerging across member states. overall, progress towards sound public finances remains slow. in general, member states have defined reasonable medium - term budgetary objectives, and the planned consolidation progress is in most cases in line with the revised framework. however, in some cases the planned pace of consolidation is very slow indeed, and many countries do not have sufficiently concrete or credible plans to comprehensively address the fiscal imbalances. the implementation of the excessive deficit procedure is broadly consistent with the revised pact. at the same time, a number of countries continue to report severe imbalances, and some of them have presented plans that barely attain the minimum adjustment called for by the revised pact, despite the improving growth outlook. the prospective budgetary costs of population ageing also cast a shadow over the long - term fiscal outlook for most euro area countries. to adequately address the long - term fiscal challenges and support higher sustained economic growth, sound budgetary positions should be pursued in a more determined manner, avoiding reliance on one - off and temporary actions and employing effective policy measures, embedded in a comprehensive reform strategy. such comprehensive and systematic consolidation and reform efforts will enhance the credibility of the revised pact, help to establish confidence in a sound and growth - friendly fiscal environment and boost consumer confidence, thus fostering economic activity and employment growth. the lisbon strategy the recent call by the european council to maintain the momentum of the relaunched lisbon strategy for growth and employment is very important, and has been explicitly welcomed by the ecb. it is vital for potential output growth and job creation that this initiative is successful and that european citizens can see that it delivers results and eventually increases their welfare. there is a real danger that, with a further delay of reform delivery, europe may not reap the expected benefits of reforms, including greater market flexibility and efficiency, higher productivity and potential growth, reduced unemployment and price pressures and increased resilience to economic shocks. we clearly need more reform in almost all policy fields : more reforms of public expenditure as well as of tax and benefit systems, so as to enhance the quality and sustainability of public finances ; more measures raising wage and price flexibility ; more competition in goods and especially in services markets ; more action to achieve a fully operational eu internal market ; more steps towards an entrepreneur - friendly business environment ; more research & development ; more innovation ;
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our institutions. i am now at your disposal for questions.
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it is crucial that the zero interest rate policy does not remain in place for longer than is really needed to restore price stability, and that the benefits and costs of monetary accommodation are carefully weighed against each other against the background of our price stability mandate. in the meantime, monetary policymakers need to take care of their independence. and they should avoid being taken hostage by financial markets or fiscal policies. of course, monetary policy has contributed to the unusually low level of long - term interest rates. not only the forward guidance, but also the purchase of long - term bonds – issued by sovereigns, banks or enterprises – aimed at lowering long - term rates. but long - term interest rates are not only determined by monetary policymakers. they are also a reflection of nominal growth expectations, and if potential growth is slowing, it has a depressing impact on the real rate of return. making our economies more prosperous would therefore pave the way for higher real interest rates. there are plenty of growth - enhancing measures – like strengthening competition in product markets or making labour markets more flexible – and all of these measures go beyond the central bank ’ s sphere of influence. blaming savers for saving too much is therefore, in my view, just as mistaken as blaming investors for investing too little. both accusations have been levelled at this country very frequently indeed : germans invest too little, it is claimed, and they save too much. and sometimes, the conclusion is drawn that germans themselves are to blame for the low level of interest rates. the high current account surplus and the purportedly too low investment ratio in germany would appear to back up this accusation. however, while it is true that a current account surplus of more than 8 % of gdp is certainly not sustainable, let us not forget that its most see stephen morris and hyun song shin, risk premium shifts and monetary policy : a coordination approach, princeton university – william s. dietrich ii economic theory center research paper no. 075 _ 2016, 2015. bis central bankers ’ speeches recent rise owes a great deal to the depreciation of the euro and the strong decline in oil prices. moreover, germany is an ageing society, so it has good reason to engage in precautionary savings. if those savings were invested in other euro - area economies – or even outside the euro area – everyone would benefit – provided the funds were invested in projects generating an adequate return. should more funds be invested in germany? that ’ s something i would wholeheartedly
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key role in this process, with a blueprint expected to be published by the end of the year. at european level, the framework proposed by the pilot programme can support this common vision by enabling the use of new distributed registry technologies to be tested in regulated and secure environments. this framework is an opportunity for market participants to start anticipating and adapting their businesses. nevertheless, regardless of whether we are talking about multilateral trading facilities ( mtf ), securities settlement systems ( sss ) or a combined solution ( trading and settlement systems ), obtaining a licence is both a medium - and a long - term commitment. many players seem reluctant to take this step because of the uncertainty surrounding the future of a central bank digital currency settlement solution for tokenised assets. this uncertainty needs to be resolved and the authorities are working together to provide a clear perspective on what the central bank settlement solution will look like. in my view, a secure and liquid settlement asset available on the dlt is one of the keys to the success of the pilot programme. a cbdc - based solution would provide an important lever in supporting the transition enabled by the pilot programme, and we have already developed our own blockchain, dl3s, for this purpose. but trials are in progress and we shall see which solution is chosen. this european challenge is rounded out by an international challenge. it is vital that the french and european financial sectors are well represented in the experiments being conducted on a global scale, such as the work being carried out by the bank for international settlements. i am thinking in particular of the agora project, which focuses on cbdc and commercial bank money for cross - border payments. adequate representation of national players in these different projects page 4 of 5 is essential for defending our interests and ensuring that the international standards developed are in line with both our interests and our needs. b. setting priorities : maintaining the two - tier monetary system and modernising the market segments that are currently least well served [ slide 4 ] in this phase of the transformation, it is vital not only to cooperate but also to define clear priorities to guide the modernisation of our market infrastructures. the most important of these priorities is to retain the two - tier monetary system, in which central bank and commercial bank money each play a distinct but complementary role. this model has proved its worth in ensuring the stability and resilience of the financial system and must be preserved to help with the adoption of technological innovations without upsetting fundamental balances. at
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y v reddy : issues in managing capital account liberalisation presentation by dr y v reddy, deputy governor of the reserve bank of india, at commonwealth secretariat - world bank conference on developing countries and global financial architecture, held in london, on 23 june 2000. * * * the objectives of this presentation are : ( i ) to suggest the need of some of the developing countries for managing capital account, implying elements of control, regulation and liberalisation as appropriate ; ( ii ) to emphasise the importance of both international and national context in the management of capital account ; ( iii ) to outline the contours of control and regulatory framework and the possible use of these in prioritising capital flows while suggesting the dynamic elements needed to enable liberalisation ; ( iv ) to elaborate the linkages with other external sector policies, while considering the appropriate control and regulatory framework or liberalisation ; ( v ) to highlight the complementary policies that are necessary while considering liberalisation of capital account. this presentation is from the perspective of policy making in developing countries, and is drawn mainly from the indian experience. need it is currently well recognised that although global capital flows have a potential for improving efficiency and growth prospects, they can also trigger instability, due to a variety of reasons. the objective of current deliberations on the international financial architecture is to enhance efficiency of such flows while avoiding, to the extent possible, instability, and managing instability if and when it occurs. these issues are assessed essentially from the view point of developing countries, which, as a group has tended to be more vulnerable to instability arising out of capital flows. though there are some differences of opinion as to whether liberalisation of capital account would necessarily add to growth prospects of developing countries, there are several developments in regard to international trade in goods and services, international business, technology, cross - border flows of capital, etc. that would necessitate a more active management of capital account, with a view to continuously assessing the costs and benefits of liberalisation vis - a - vis control or regulation. in the current debate on international financial architecture, there is no settled position on several of the actions being considered. in respect of liberalisation of capital account, however, there appears to be a broad consensus, viz. such a liberalisation is desirable, should be gradual, well - sequenced and undertaken in conjunction with several other measures at micro and macro level. in most cases, the desirability of limiting total external debt, especially short - term is generally
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several policy areas that have been identified as being critical to the health of global monetary and financial systems in future. many of them fall within the jurisdiction of the countries concerned. there is certainly an implicit recognition that the net benefits from liberalisation of capital account in respect of any developing country would be enhanced if the complementary policies are followed. among the more important of these are : first, strengthening the banking system, diversifying financial intermediation through both banks and non - banks, and developing as well as regulating financial markets in a sound manner. secondly, the regulatory practices and the coordination between regulators as the national level and among the national level regulators at the international level are also attracting attention. thirdly, monitoring the balance sheets of large banks, large corporates and even governments in terms of their growth, quality and vulnerability to shocks is considered important. this monitoring may have to cover stocks and flows, as also foreign currency exposures hedged or otherwise and direct or indirect. fourthly, there is a fiscal burden in case there are systemic problems, especially in the banking sector, irrespective of whether banking is in the public or private sector. the health of the banking sector is critical for many reasons, one of them being stability in the external sector. in india, the complementary policies considered essential have been identified by the committee of capital account convertibility ( 1997 ). the committee observed that while there were benefits of a more open capital account, it could also impose pressures on the financial system. hence the committee indicated certain sign posts or preconditions for a more open capital account and these are : fiscal consolidation, inflation - mandate and strengthening the financial system. of particular significance in regard to complementary policies that are relevant to management of capital account are standards and codes being evolved and monitored by several agencies, including in particular imf, world bank, bis, financial stability forum etc. ( dr. s. n. acharya has made an excellent presentation on this at this conference ). each country will no doubt benchmark their existing practices against the international codes and standards, and consider their appropriateness, extent of application, nature of adaptation needed, relative priorities, etc. several of the actions suggested require tremendous effort in regard to many developing countries and if full compliance is desirable for further liberalisation of capital account, the pace of such liberalisation may not be rapid. in india, several advisory groups have commenced a review of the international standards and codes and an assessment insofar as india
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of ideas, as w ell as feedback and evaluation of their performance. extensive use of the w ebsite also allow s for w ider and continuous access to information and external contributions and commentary. the bank also finds that research and publications, as w ell as participation in w orkshops and seminars, help to project the quality and content of the bank ’ s w ork, w hich also engenders credibility and integrity of the sources of policy analysis and decisions. ladies and gentlemen, allow me to end here and i w ould be happy to continue the dialogue as you make observations, comments and ask questions.
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of policies w ould be contractionary. the converse is true, w here sustained low and falling inflation, depressed economic grow th and credit demand should engender expectations of expansionary or accommodative monetary policies. therefore, in this environment of w ell - informed expectations and trust in the stabilising capacity and potency of instruments arsenal of the authorities, there is less risk of market overreaction to the path of economic indicators. indeed, economic agents might take stabilising and policy reinforcing decisions. consequently, once a policy - setting institution has built up integrity and reputation, markets and economic agents generate belief and respond accordingly because the institution consistently does w hat it says it w ill do in given circumstances. i w ill now illustrate, and indeed reinforce, how communication is evolving w ith respect to tw o areas of macroeconomic policy formulation in botsw ana. you w ill appreciate, that in the areas of monetary policy and exchange rate policy, there is ongoing improvements and clarity relating to institutional setting, policy framew ork and parameters, instruments and decision - making cycles and dissemination platforms. in my view such developments have greatly improved understanding and efficacy of these policies. regarding monetary policy, the bank of botsw ana has now entrenched a price stability objective of 3 – 6 percent, w here the institutional set - up entails six pre - announced meetings in a year, of the monetary policy committee that assess developments, economic outlook and make a policy decision. a media briefing, and a statement announcing the policy decision and related background information follow each meeting. the annual monetary policy statement and its mid - term review serve as the anchor for dissemination of the monetary policy framew ork, policy analysis and guide for expectations on economic and policy outcomes. in this regard, aw areness of institutional arrangements for consistency, promote necessary the the policy framew ork, decision - making integrity and and transparency that foster efficacy of monetary policy. in essence, economic agents are able to anticipate, as w ell as respond to policy action. in addition, markets are more aligned to the policy stance. we, therefore, view the maintenance of a transparent and accountable monetary policy and the related communication contributing to sustained attainment strategies, of the as inflation objective. the exchange rate policy is also much more transparent. it is now clear to the market that w e have a fixed exchange rate, albeit in a craw ling band arrangement, pegged 55
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and supervision of community banks to achieve those aims. tiered regulation for community banks there are two complementary ways to implement a tiered approach to prudential regulation. one is to apply specific regulations only to those classes of banking organizations whose activities and scale require those measures. the second is to tailor the application of generally applicable measures based on the size, complexity, and possibly other characteristics of banking organizations. we are following both approaches in putting into place an explicitly tiered method of regulating community banks. 8 an example of tailoring generally applicable regulations is the revised capital guidelines that were issued in 2013. 9 it was clear in the wake of the financial crisis that strong capital positions were essential for banks of all sizes, including community banks. but a number of changes that were appropriate for large banks did not make sense for community banks. as i counties that experience failures of community banks are likely to see significantly lower income and compensation growth, higher poverty rates, and lower employment. see john kandrac ( 2013 ), “ bank failure, relationship lending, and local economic performance ( pdf ). ” while not directly the subject of these remarks, it also bears noting that additional tiering of expectations is increasingly taking place even among larger banking organizations. for example, capital planning and stress testing requirements are more extensive for the very largest, most systemically important firms than they are for smaller regional banking organizations. likewise, liquidity and capital requirements are or will be higher for the most systemically important firms than for other large banking organizations. see federal deposit insurance corporation ( fdic ) ( 2013 ), “ regulatory capital rules : regulatory capital, implementation of basel iii, capital adequacy, transition provisions, prompt corrective action, standardized approach for risk - weighted assets, market discipline and disclosure requirements, advanced approaches risk - based capital rule, and market risk capital rule ( pdf ), ” interim final rule, federal register, vol. 78, pp. 55340 – 55598 ; and board of governors of the federal reserve system ( board of governors ) and office of the comptroller of the currency ( occ ) ( 2013 ), final rule of the same name ( pdf ), federal register, vol. 78, pp. 62017 – 62291. bis central bankers ’ speeches am sure you all recall, community banks gave us quite a bit of help in identifying which portions of the originally proposed rule were, and were not, appropriate for community banks. following publication of the final
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statutory provisions to carve out their applicability to community banks. i have previously suggested two candidates for consideration : the volcker rule and the incentive compensation requirements in section 956 of dodd - frank. 15 the risks addressed by board of governors, fdic, and occ ( 2013 ), new capital rule : community bank guide ( pdf ) ( washington : board of governors, fdic, and occ, july ). board of governors, fdic, and occ ( 2014 ), “ federal bank regulatory agencies seek comment on interagency effort to reduce regulatory burden, ” press release, june 4. see also the federal financial institutions examination council ’ s ( ffiec ) egrpra website at http : / / egrpra. ffiec. gov /. see http : / / egrpra. ffiec. gov /. for more information about large - bank capital planning and stress testing requirements, see the board ’ s website at www. federalreserve. gov / bankinforeg / stress - tests - capital - planning. htm. board of governors, occ, and fdic ( 2014 ), “ liquidity coverage ratio : liquidity risk measurement standards ( pdf ), ” final rule, federal register, vol. 79 ( october 10 ), pp. 61439 – 61541. the volcker rule applies to all banking entities that engage in prohibited activities, irrespective of size, and the dodd - frank incentive compensation requirements apply to all banks and holding companies with total assets of $ 1billion or more. bis central bankers ’ speeches these statutory provisions are far more significant at larger institutions than they are at community banks. 16 moreover, in the unlikely event that a community bank engages in practices in either of these areas that raise heightened concerns, we would be able to address these concerns as part of the normal safety - and - soundness supervisory process. while the banking agencies have used the other method of tiering and tried to tailor the volcker rule ( as we will do with section 956 ), i believe that both community banks and supervisors would benefit from not having to focus on formal compliance with regulation of matters that are unlikely to pose problems at smaller banks. today i would like to add a third candidate for consideration – a statutory amendment that would permit the federal reserve board to raise the size of banks covered by our small bank holding company policy statement. 17 as background, the board originally
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spirit of my argument was expressed succinctly some 20 years ago by karl otto pohl. in his speech at the economic club he said : “ the true function of a central bank must be, however, to take a longer - term view. ” and after five years of crisis, the long term might catch up with us faster than we expect. we therefore have to think about the future now – and we have to act accordingly as well. thank you for your attention. bis central bankers ’ speeches
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. the international labour organisation estimates that up to 56 million people lost their jobs in the wake of the crisis. this number equals the combined populations of california and the state of new york. or look at government debt : between 2007 and 2011, gross government debt as a share of gdp increased by more than 20 percentage points in the euro area and by about 35 percentage points in the united states. bis central bankers ’ speeches i think we all agree that the crisis was unprecedented in scale and scope. and the first thing to do was to prevent the recession turning into a depression. thanks to the efforts of policymakers and central banks across the globe, this has been achieved. following a slight setback in 2011, the world economy now seems to be recovering. in its latest world economic outlook, the imf confirms that global prospects are gradually strengthening and that the threat of sharp slowdown has receded. looking ahead, the imf projects global growth to reach 3. 5 % in 2012 and 4. 1 % in 2013. for the same years, inflation in advanced economies is expected to reach 1. 9 % and 1. 7 %. basically, i share the imf ’ s view. however, we all are aware that these estimates have to be taken with a grain of salt – probably a large one. being a central banker, i am not quite as calm about inflation. taking into account rising energy prices and robust core inflation, prices could rise faster than the imf expects. we have to be careful that inflation expectations remain well anchored and consistent with price stability. expectations getting out of line might very well turn out to be a non - linear process. if this were to happen, it would be difficult and expensive to rein in expectations again. even though the outlook for growth has improved over the past months, some risks remain – the european sovereign debt crisis being one of them. and this seems to be the one risk that is weighing most heavily on peoples ’ minds – not just in europe but here in the united states, too. the euro - area member states have responded by committing to undertake ambitious reforms and by substantially enlarging their firewalls. this notwithstanding, the sovereign debt crisis has not yet been resolved. the renewed tensions over the past two weeks are a case in point. thus, we have to keep moving, but each step we take has to be considered very carefully. as i have already said : each small step we take now will determine where we stand in the future
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the european monetary union although euro banknotes and coins only began to circulate in 2002. portugal was among its eleven founding member states. for millions of young european citizens the euro is the only national currency they know. it is common knowledge that the establishment of the economic and monetary union was the most far - reaching political step in the history of european integration. likewise, we have always known that the architecture set up in maastricht was incomplete and risk - inducing, particularly due to the absence of mechanisms to cope with asymmetric shocks. its architects implicitly admitted that the missing components would sooner or later be added, as a result of the integrationist momentum. however, history has repeatedly proven that determinism can be a mistake... up until the onset of the financial crisis, we lived under a kind of ‘ spell ’. in many countries, the decrease in interest rates boosted indebtedness, while there were illusory improvements in living conditions. neither the economic agents nor the authorities managed to clearly perceive that the monetary union would necessarily entail a new economic regime : the centralisation of monetary and foreign exchange policies warranted a completely different policy mix. fiscal and income policies acquired greater importance, but, in fact, fiscal policy was also subject to heavy constraints. when the international financial crisis broke out, it progressed rapidly, quickly exposing and enhancing the accumulated imbalances within the union. the response to the crisis focused on strengthening the coordination between fiscal policies, the development of new financing mechanisms, and the establishment of the banking union and, of course, non - standard monetary policy measures. this was far from insignificant, but, in some cases, it was perhaps a little late and surely was not enough. in many ways, we were entering a new territory as it was with the implementation of adjustment programmes, which pose unique challenges in countries within a monetary union. we need to drive the economic and monetary union reform forward. it is indeed time for reform. part of this reform merely consists in finalising the previous cycle of reforms by completing the banking union with the implementation of its third pillar and by endowing the single resolution 3 / 4 bis central bankers'speeches fund with the adequate financial resources to fully accomplish its mission. no debate is more sterile than the one on whether to reduce or to share risks. in truth, we must do both. and, in some ways, we have been doing just that. as many contend, it is human nature to only
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elisa ferreira : from repair to vision - conceptions for a common beneficial and resilient financial architecture and institutional framework in the eu address by ms elisa ferreira, vice - governor of the bank of portugal, on the panel " from repair to vision : conceptions for a common beneficial and resilient financial architecture and institutional framework in the eu " at the " financial stability conference 2018 ", lisbon, 31 october 2018. * * * the setting up of the single rulebook in the european union ( eu ) and the launch of the banking union ( bu ) with its rules and institutions constitute a commendable success of the post - crisis financial sector reforms in europe ; however the lack of political will to complete the architecture seriously jeopardises its key benefits. recent cases highlighted what i would call an ‘ accountability conundrum ’. banks nowadays are mostly ‘ european in life but remain national in death ’. this means that, while supervisory and resolution decisions are mostly taken at european level, the ensuing consequences still lie with taxpayers at national level, with potential serious impacts on national budgets. as the ultimate guarantor of financial stability remains national, but with limited tools to act, this ‘ accountability conundrum ’ needs to be solved. this unstable balance that emerged in the eu prevents economic agents from fully reaping the expected benefits of economic integration. europe needs concrete plans going forward, and must address pressing questions on what is still missing to safeguard financial stability. absent a fully - fledged european deposit insurance scheme ( edis ) in the short to medium term, a plan is urgently needed for the interim period ( until the bu can be completed ). among the possible topics for debate, i would suggest : 1. first, the development of a specific institutional regime to address member states ’ concerns over the risks of potential failures of cross - border banking groups : host member states within the bu need tools to address financial stability risks arising from locally systemic undertakings ; the absence of such instruments currently hinders progress on issues such as : ( i ) the adoption of waivers on liquidity and capital, and ( ii ) the removal of options and national discretions ( onds ) which are in close connection, among others, with : the rethinking of the single point of entry ( spe ) / multiple point of entry ( mpe ) resolution models ; in particular, the generalisation of the spe model within the bu requires that both the concerns at group level ( home ) and
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or government at the cannes summit 2011. in this context the main focus has been put on the relationship between developed lcbms and the volatility of international capital flows, which is also the theme of today ’ s workshop. against this background, i would like to focus on the following points : objectives of the initiative and the contribution by the lcbms to increasing financial stability state of development of lcbms main challenges ahead objectives of the initiative the main objective of the initiative was and is to strengthen national and global financial stability. it is important to stress this. the development of lcbms enhances the resilience of bis central bankers ’ speeches the national financial systems and, therefore, global financial stability. in addition, a number of developing countries have set themselves the task of attracting long - term global investment capital to finance infrastructure investment and, in this way, to boost growth. but very rightly, the g20 action plan points out that “ future activities should … bolster the role that lcbms can play in improving domestic and global financial stability and strengthening the ability of economies to manage capital flows, thereby contributing to international monetary stability more generally. ” merely stating that developing these markets can have a stabilising effect does not tell us how to get there, nor what form the relevant process might take. in my view, there is a clear need to step up research and expand the necessary data base. useful though it may be to acquire data by conducting surveys at intervals of five, seven or ten years, this process is inadequate and hardly acceptable. yet we must be just as frank when considering the risks entailed in developing local bond markets. after all, they are an important playing field for short - term portfolio inflows and outflows. indeed, this is true of the present capital inflows to the emes : short - term portfolio investment represents no less than 50 % of capital inflows. as far as potential contributions by lcbms to financial stability are concerned, i would like to mention just a few which have proven important, not least in the context of the current financial crisis. deeper lcbms reduce the vulnerability of the relevant emes to fluctuating interest rates and exchange rates. the main reason for this is that lcbms help reduce currency and maturity mismatches, which trigger and amplify crises. thus, they help check contagion and prevent spillovers to the real economy. lcbms make
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. growing tourist arrivals, rising business process outsourcing receipts, the boom in real estate and construction, a growing trade with partner nations, and the steady stream of remittances from overseas filipinos ( of ) support current domestic economic expansion. increasing domestic and foreign investments provide assurance of sustainable growth. we have posted record high foreign direct investments for two years in a row : usd 8 billion in 2016 and usd 10 billion in 2017. on the external front, the country ’ s balance of payments is firmly under control and is supported by a gir level of usd 80. 1 billion as of end - march 2018. this level assures payment for 7. 8 months ’ worth of imports of goods and services for the economy under the worst case scenario. 1 / 4 bis central bankers'speeches the movement of the peso remains market - driven and supported by sound macroeconomic fundamentals. high demand for the dollar can be attributed to higher import payments, residents ’ outward investments, and public and private sector debt repayment. these developments are fundamentally healthy, aid the country ’ s competitiveness and strengthen the economy in the long run. the latest inflation outturn for march 2018 at 4. 3 percent led to an average of 3. 8 percent for the first quarter of 2018. this remains within the government ’ s target range of 2 to 4 percent. recent inflation reading shows an elevated path in 2018, with baseline forecast nearing the high - end of the target range before decelerating to the midpoint in 2019. we are closely monitoring the situation. amidst the pick - up in inflation, we will carefully evaluate the appropriateness of a measured policy response to firmly anchor inflation expectations so that inflation targets will continue to be met in 2018 – 2019. thrift banking industry remains an anchor of stability amidst increased competition and evolving technologies, the thrift banking industry has exhibited sustained stability, resilience and commitment to support inclusive growth – thrift banks resources stood firmly at p1. 17 trillion at end - 2017, mostly funded by retail deposits, indicative of continued trust and confidence in the thrift banking industry. thrift banks continue to support msmes, real estate development and consumer financing, with a loan portfolio equivalent to about 71 percent of industry assets. nevertheless, the industry ’ s asset quality remains solid, with the npl ratio at 4. 7 percent in 2017 and npl coverage at 67 percent. retained earnings boosted the industry ’ s overall capital position as the capital adequacy
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, suggested to us back in 2006. they showed us how a more export - led growth strategy needs to be predicated on a more competitive page 9 of 11 exchange rate achieved by running a fiscal surplus to create space for lower interest rates, and supplemented by an effective inflation - targeting framework. 4 in fact, under inflation targeting, excessive exchange rate appreciation has been rare and short - lived. these discrete periods occurred when capital flowed in as a result of high commodity prices, sustained public borrowing, and low yields in advanced economies – not because of inflation targeting. all else being equal, the inflationtargeting framework has lowered inflation and rates, reducing the pull on hot money in recent times. in fact, a fundamental objective of inflation targeting has always been to achieve a more competitive exchange rate, and the best way to achieve this is to get inflation to be permanently low. conclusion the constitution recognises and expresses the public good which is price stability because it helps societies to achieve balanced and sustainable economic growth. it is necessary but not sufficient. like the mandate, central bank independence is also not a static, ivory - tower concept. it is a living and breathing idea. it is an idea that is practical. it gives life to the mandate set out for the sarb by the constitution. this independence means that the sarb can make the case for how best to achieve that goal, in consultation with government and with full transparency to the general public. as an institution, we have worked with government to identify the inflationtargeting framework as the best way of achieving the mandate, for all the reasons i have set out today. we believe that the case for the existing framework is very strong. we have achieved a historically low rate of inflation and, as a direct consequence of this, historically low 4 for the panel ’ s recommendations, please see ricardo hausmann ’ s final recommendations of the international panel on growth, available at http : / / www. treasury. gov. za / comm _ media / press / 2008 / final % 20recommendations % 20of % 20the % 20i nternational % 20panel. pdf, especially pages 6 and 12 - 13. page 10 of 11 interest rates. of course we would like to improve on this track record and edge both inflation and interest rates lower on a sustainable basis. this is the most important contribution that monetary policy can make to full employment, economic growth and the well - being of our society. thank
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and in the east african region as a whole. it is now my honour and singular pleasure to invite the honorable deputy prime minister and minister for finance hon. uhuru kenyatta to make his remarks and welcome his excellency, the president. welcome, honorable deputy prime minister. thank you and god bless you all bis central bankers ’ speeches
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sound and liquid financial assets is largely disconnected from their level of economic growth : rising revenues in the emerging world need to “ find a home ” in sound and liquid financial markets. finally, in any case, the question of sustainability – the resilience of capital flows to the accumulation of imbalances – remains a pressing one. while capital flows tend to move freely across borders, exchange rate regimes remain very diverse in their degrees of flexibility. this leads to asymmetric adjustments depending on the exchange rate regime, not only between currency areas, but also inside the same region, such as in asia. overall, some of the main floating currencies may end up bearing a higher share of the adjustment on their shoulders than they should. maintaining integrated global capital markets in an environment where such differences persist might not be sustainable over the long term. an orderly unwinding of global imbalances might therefore imply greater flexibility from countries with large current account surpluses and fixed exchange rates. i will conclude on a matter of debate for international financial stability for the future. as i have said, financial systems have become more efficient as a result of globalisation and innovation. but have they become more resilient, that is, more capable of absorbing shocks? none of us has the answer to that question now, but it will be interesting for central banks and regulators to monitor financial developments in the coming months, in search of clues. ladies and gentlemen, thank you for your attention.
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in the position to adopt resulting guidelines or requirements ( in the eba case ). nevertheless, at a moment where networks or work streams are burgeoning, especially within european institutions, we should be very careful about the good coordination of these different initiatives to avoid redundancy and duplication. it is also important that the nfgs, which remains a club of the willing, ensure some minimal degree of cooperation and harmonization by issuing high - level recommendations. from this point of view, i welcome the six very important recommendation issued in april directed to supervisors, central banks and the financial sector : i ) integrating climate - related risks into financial stability monitoring and supervision ; ii ) integrating sustainability factors into own - portfolio management ; iii ) bridging the data gaps ; iv ) building awareness and intellectual capacity and encouraging technical assistance and knowledge sharing ; achieving robust and intentionally consistent climate and environment related disclosure ; vi ) supporting the development of a taxonomy of economic activities. in the longer - run, when there will be a global convergence about the necessity to issue global standards and regulatory requirements, global standard setter such as the bcbs and fsb would need to take the lead on addressing climate change - related risks. 12 1 main findings : climate change : which risks for banks and insurers? acpr. banquefrance. fr / sites / default / files / medias / documents / as _ cover _ note _ en. pdf analysis and synthesis no. 102 : “ french insurers facing climate change risks ” april 2019 acpr. banquefrance. fr / sites / default / files / medias / documents / as _ 102 _ climate _ change _ insurers _ en. pdf 2 analysis and synthesis no. 101, “ french banking groups facing climate change - related risks ”, april 2019acpr. banque - france. fr / sites / default / files / medias / documents / as _ 101 _ climate _ risk _ banks _ en. pdf 2 / 2 bis central bankers'speeches
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many decades. thank you. references berger, h. and e. stavrev ( 2008 ). “ the information content of money in forecasting euro area inflation ”. imf working paper wp / 08 / 166. bernanke, b. and m. gertler ( 2001 ). “ should central banks respond to movements in asset prices? ” the american economic review, papers and proceedings of the hundred thirteenth annual meeting of the american economic association, 91 ( 2 ) : 253 - 257. blinder, a. and r. reis ( 2005 ). “ understanding the greenspan standard. ” in the greenspan era : lessons for the future, proceedings of the jackson hole symposium 2005, federal reserve bank of kansas city, pp. 11 - 96. borio, c. ( 2008 ). “ the financial turmoil of 2007 -? ” : a preliminary assessment and some policy considerations. ” bis working paper no. 251. christiano, l., r. motto, and m. rostagno ( 2007 ). “ two reasons why money and credit may be useful in monetary policy ”. nber working paper no. 13502. de gregorio, j. ( 2001 ). “ la politica cambiaria. ” economic policy paper no. 2, central bank of chile. _ _ _ _ _ _ _. ( 2003 ). “ mucho dinero y poca inflacion : chile y la evidencia internacional ”. cuadernos de economia 40 ( 121 ) : 716 - 724. _ _ _ _ _ _ _. ( 2006 ). “ esquema de metas de inflacion en economias emergentes ”. economic policy paper n° 18, central bank of chile. friedman, m. ( 1959 ). a program for monetary stability, fordham university press. garcia, p. and r. valdes ( 2003 ). “ dinero y conduccion de la politica monetaria con metas de inflacion. ” cuadernos de economia 40 ( 121 ) : 698 - 706. goncalves, c. and j. salles ( 2008 ). “ inflation targeting in emerging economies : what do the data say? ” journal of development economics 85 ( 1 - 2 ) : 312 – 318. goodfriend, m. and b. mccallum ( 2007 )
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is it a commitment to a policy path. rather, it shows the median, central tendency, and range of the participants ’ projections estimated using the 19 individual projections. - 6just as the pandemic itself led to unprecedented losses in the labor market, the subsequent recovery was unprecedented in many ways. as the health risk abated and the economy reopened, labor demand surged as businesses attempted to re - hire workers, but many workers remained on the sidelines. by late 2021, the labor force participation rate was still well below its pre - pandemic level. vacancies rose to record levels, while, at the same time, quits, as shown in figure 7, surged as workers sought out new job opportunities, leading some to refer to the post - pandemic recovery as the “ great resignation. ” consequently, as shown in figure 8, the gap between available jobs, the solid black line, and available workers, the dashed red line, which had been just over 1 million positions in late 2019, widened to over 6 million, the equivalent of two job openings for every unemployed worker. this was an exceptionally tight labor market, far exceeding any in recent history, including the labor market before the pandemic. the strong post - pandemic aggregate economy reversed the disparities between groups that initially widened in 2020. the aggregate unemployment rate fell to 3. 4 percent in april 2023, its lowest since 1969. that same month, the unemployment rate for african americans fell to 4. 8 percent, the lowest level on record and 1 / 2 percentage point below the previous record set in 2019, as shown in figure 9 by the red solid line, which is the difference between the unemployment rate for african americans and its own average in the year 2019. although labor force participation was initially slower to recover, the labor force participation rate among prime - age women climbed to its highest level ever in 2023, well above even pre - pandemic levels, as shown in figure 10 by the red dashed line, which is - 7the difference between the labor force participation rate for women and its own average in the year 2019. the tight labor market also led to a surge in nominal wage growth, especially for workers lower in the earnings distribution. in fact, as shown in figure 11, wage growth for low - wage workers, the solid red line, was strong enough, with a peak wage growth close to 7. 5 percent in 2022, to drive a meaningful compression in
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economy have bolstered the economic climate and led to an increase in bank deposits, to upgrades of the credit ratings of the greek sovereign and to successive reductions in greek banks ’ dependence on emergency liquidity assistance ( ela ). these better prospects also resulted in sovereign bond yields falling to january 2016 levels, thereby allowing the greek government to return to the markets in july 2017 for the first time in three years. corporate bond yields also fell and greek banks returned to international financial markets with covered bond issues. against this background, it is reasonable to anticipate a pick - up in growth for 2018, with gdp 3 / 7 bis central bankers'speeches growing by 2. 4 %, driven by : ( a ) the solid performance of tourism ; ( b ) stronger manufacturing output, reflecting the improved business environment and heralding a rise in business investment ; ( c ) increased exports ; and ( d ) favourable global economic conditions. hicp inflation returned to positive territory in 2017, posting an average annual rate of 1. 1 %, compared with 0 % in 2016. the weakening of deflationary pressures is mainly attributed to the sharp upswing of international oil prices, particularly in the first five months of the year, and to the inflationary impact of new indirect taxes, effective from early 2017. in 2018, domestic inflation is expected to be determined largely by base effects, which will keep inflation in positive territory, but lower than in 2017. it is, however, worth noting that the favourable projections rely crucially on the assumption that the fourth and last review of the current economic adjustment programme will be completed smoothly and according to schedule, without delays or setbacks, and that the implementation of reforms will continue unabated in the post - programme period. fiscal policy in 2016, greece ’ s general government primary balance – as defined in the economic adjustment programme – overshot the target set in the programme, for the second consecutive year. more specifically, the general government primary balance, according to the programme definition, turned out at a surplus of 3. 8 % of gdp in 2016, against a target of 0. 5 % of gdp. this overachievement reflected the better - than - expected performance of direct and indirect tax revenue, as well as the containment of social expenditure and of public investment. in the course of 2017 and in the context of the second review of the programme, a number of fiscal measures were adopted aimed at bolstering tax revenue, curbing tax evasion and, in
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delimitation of state intervention in private initiative. the state ’ s role should be to regulate the institutional framework governing the private economy and provide oversight of performance and monitoring capacity rather than 6 / 7 bis central bankers'speeches acting as an entrepreneur - producer. furthermore, the use of public - private partnerships in a wide range of administrative procedures and in the delivery of public services would shift costs from taxpayers onto users, while at the same time enabling care to be taken to support the weaker groups of the population. second, speeding up the privatisation programme and the development of public property. with government intervention under the new productive model being limited to the role of overseerregulator, privatisations will increase public revenue, while also strengthening competition to the benefit of the consumer. third, changes in the tax system with a view to creating a clear and stable tax regime with lower tax rates for households and businesses and to broadening the tax base. fourth, expanding the use of electronic transactions to all types of economic activity, so as to effectively reduce the informal economy and increase public revenue with a fairer distribution of the tax burden. the success of this endeavour will crucially hinge upon citizens ’ familiarisation with digital technology applications, as well as upon building a taxpaying culture. fifth, emphasis on the “ knowledge triangle ” ( education - research - innovation ), with evaluation of higher education and linking research to funding and to the production process. this is so because linking higher education with the production process promotes innovation and the country ’ s competitive advantages. sixth, and most important, strengthening the operational independence of key institutions and the rule of law. for this to become possible, society and the political forces must understand that strong and sound inclusive institutions, which do not serve the interests of specific groups at the expense of others, promote the welfare of society as a whole. for the restart of the economy to be a success, the status of institutions – which is synonymous of confidence – needs to be elevated in future. weak and closed institutions generate uncertainty and disorientation, whereas strong, open and socially accepted institutions are necessary for a return to normality. * * * today, the greek economy is close to an exit from the crisis and a return to normality. the economic fundamentals, as recorded, so far, in the evolution of economic indicators, are encouraging. however, making the most of these favourable conditions calls for a comprehensive plan for the future, within a climate of social
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than the present network of national systems was designed to support. technological advances provide us with a new set of tools to make what may seem optimal from a systemic perspective more practical. we will continue to work closely with the private sector in designing effective ways to deal with the full range of new challenges from increased financial integration and increased concentration, greater complexity, and new threats to operational security and continuity. and we will work hard, as we have in the past, to try to find the right balance between the broad objectives of stability and security and the efficiency of the system.
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new tools to implement monetary policy or used traditional tools in new ways or in unprecedented size, in part because economic conditions have necessitated historically low interest rates that have bumped up against the zero bound for almost seven years. one result is that the balance sheets of central banks in many advanced countries are now much larger than the amount of currency in circulation, which raises new questions and, perhaps, challenges. 2 walter bagehot, lombard street : a description of the money market ( london : henry s. king, 1873 ). while bagehot is often remembered for his advice regarding lender - of - last - resort policy, most of his book provides a careful study of money markets, which is our current focus. central banks that maintain large foreign exchange reserves may also have balance sheets that far exceed currency in circulation. this is more typical in emerging markets, where domestic currency money markets tend to be less mature. bis central bankers ’ speeches we have also seen important changes in money markets, which we can define as wholesale markets for low - risk, highly liquid, short - term ious – including central bank liabilities, which are among the highest quality assets traded in these markets. for centuries, money markets have played a central role in financial intermediation. these are the markets in which central banks traditionally operate and from which the monetary policy impulse is transmitted. although their role hasn ’ t fundamentally changed, modern money markets look quite different today than they did during bagehot ’ s time and even just ten years ago. the pace of change has been remarkable following the financial crisis, mainly because of exceptional monetary policy measures and new regulations. changes in market structure and regulation have implications for monetary policy implementation, and today ’ s discussion provided some interesting insights on these topics. this combination of changes in money markets and new policy tools, as well as observations on how central banks ’ operating frameworks did or didn ’ t work during the financial crisis, suggests that those of us responsible for monetary policy operations should be researching and analyzing how monetary policy will be implemented in the years to come. what are the lessons from the crisis and the long period spent at the zero bound and how do these lessons change our views regarding monetary policy implementation? these are questions that many central banks are currently facing, particularly in advanced economies. they are certainly relevant for us at the federal reserve as we begin our own efforts to think about a long - run framework for monetary policy implementation. 3 in my remarks tonight, i would like to
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and in which problems can be resolved. the imf could be that forum. but it needs to become more legitimate, that is, more representative of an international economic community where all members share responsibility for promoting the common good of international financial stability. the imf needs to operate with clear objectives ; effective, market - based tools to achieve these objectives ; and a governance framework that supports sound decision - making and accountability. the need for change is pressing. as the risks associated with global imbalances grow in importance, the imf will be tested. i very much hope that a significantly more effective institution will emerge from the strategic review currently under way. if we can get it right, a more effective imf will be central to maximizing the benefits of globalization. indeed, the renewal of the international monetary fund is tremendously important, not just for americans and canadians, but for all nations in this increasingly interdependent world.
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targeting is that monetary policy works best when it is well understood. the explicit inflation target is the centrepiece of our communications on monetary policy - it helps to anchor inflation expectations, and it makes it easier for us to explain our actions, and for people to judge our performance. it provides a strong incentive for us to meet the objective and to be accountable. taken together, these are the characteristics of effective, modern central banking. but i think that one can go further and say that these characteristics are useful principles that apply to the broader realm of public policy making. let me now turn to the topic of imf renewal, and talk about how these same principles can be applied to the task at hand. principle - based renewal at the imf the place to start is clear objectives and effective tools for achieving those objectives. the imf's first article of agreement states that it should " promote international monetary co - operation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems. " in the globalized, market economy of the 21st century, what this really means is the promotion of global financial stability by supporting a market - based international monetary order. i hope that there's a broad consensus that this should be the objective of the imf. i view the challenge facing the fund as being how best to fulfill this objective. the main tool is surveillance. but surveillance needs to be more effective. this means two things. first, surveillance should be more multilateral, putting greater emphasis on the linkages between members, the spillover of one country's policy choices on other countries, and the joint risks that this implies. the reality is that in an increasingly globalized economy, our understanding of these linkages and spillovers is not as good as it should be. the fund staff is an enormously talented group of men and women. we have to ensure that they undertake the research and analysis needed to understand the changing nature of global linkages. but understanding these linkages is not enough. we need a forum where risks are debated openly, frankly, and comprehensively by national policy - makers. in turn, this implies less emphasis on bilateral communication between the imf and a given country and more multilateral discussions among countries, supported by the imf. making surveillance more effective also means strengthening the analysis of the linkages between the financial sector and the real economy. in recent years, the fund has devoted considerable energy to developing sound standards and codes for assessing the financial infrastructure
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associated with this incentive is socially divisive. from a socially optimal perspective, green investments may also be underfinanced if market participants make investment decisions based on excessively short horizons. moreover, scale, 3 / 6 bis central bankers'speeches liquidity and reliable benchmarks can considerably improve market functioning. public sector intervention at the creation of such markets can provide the right framework to help kick start private - sector involvement. the european investment bank issued the world ’ s first green bonds in 2007, listed at the luxembourg stock exchange. further issuance has provided volume to the market. today, more than 160 green bonds list on the luxse. certification and incentives are also in place, but the issue of international recognition is still unresolved. as a aaa - rated issuer, the eib helps provide a benchmark for calculating yield curves and spreads in the green bond market. the european commission ’ s work on standardised definitions, classifications and reporting requirements should help increase transparency, discourage “ green - washing ” and improve market pricing. these initiatives now appear to be bearing fruit, with the private sector issuing more green bonds in recent years. but while there may be a role for such public sector initiatives at the european level, the ecb ’ s narrow mandate curtails its ability to contribute – a fact that, i think, is not always well understood by our critics on the subject. there are two ways in which some people say that we could contribute : first, through our asset purchase programme ( app ) and second, through our role as banking supervisors. the treaty has granted us independence in choosing the best monetary policy instruments to use in fulfilling our mandate for price stability. but that independence is not a carte blanche to act arbitrarily. our use of monetary policy tools needs to be necessary, suitable and proportionate to achieving our aim, while respecting the principles of an open market economy with free competition. 16 going beyond these strict conditions would erode our legitimacy, which could in turn threaten our future independence and reduce our ability to achieve our mandate over the long term. so where do green bonds fit into the app? purchases and reinvestments under the app are temporary and are undertaken to preserve price stability. as such, purchases have to be calibrated to achieve the maximum impact on output and inflation, which means purchasing bonds issued by a wide range of economic sectors without distorting the relative asset prices. carbon - intensive sectors accounted for nearly half of the
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and monetary policy transmission. this link we still have to better research. that public policies at international, but also national level are all intertwined. national policies – macroeconomic and fiscal policies – can have a systemic effect on the whole euro area. it took this crisis to really understand this. and the euro countries need to prove now that it can work, that we can make policies consistent and can recover trust and confidence. the euro countries took the necessary steps to pave the way put of the crisis. as a central bank we have made our contribution to overcome the deep recession we experienced only 2 years ago, contributing to bring back trust and confidence. now it ’ s time to address new challenges : first, governments have to work on regaining confidence, putting the necessary reforms in place second, the regulatory reform which is on its way has to be fully implemented and third, the unwinding of our non - standard monetary policy measures has to go forward as financial conditions improve, not least to prevent moral hazard and delay in the needed financial sector restructuring we should not forget that the european monetary union came a long way. the werner report 40 years ago, the establishment of the european monetary system 30 years ago, the delors report 20 years ago and finally the establishment of the european monetary union a bit more that 10 years ago. we must not undermine this great achievement. the serious currency turmoil and fluctuations in the 50 years preceding the european monetary union, notably the exchange rate shocks in the 1980s and the crisis at the beginning of the 90s should be a reminder how precious the current achievement of a monetary union is. like with financial integration, i believe that the european monetary union and more integration and consistency of public policies on a european level is a fact, a necessity and an irreversible process. what we need to ensure are sound and sustainable policies for an ongoing success. i thank you for your attention. bis central bankers ’ speeches
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in domestic demand would keep our economies operating closer to capacity than in the eurozone. and the yen, which had been notably weak on the back of japanese recession, has subsequently picked up as the prospect of economic recovery there improved. it is the strength of sterling ’ s exchange rate which gives rise to the most vociferous complaints. i am only too well aware that for many of the internationally - exposed sectors of the uk economy most of agriculture, much of manufacturing industry, and some services sectors - these developments came as a series of hammer blows - of varying intensity depending on the particular international orientation of the business. companies trading with, or competing against, much of east asia, but also other emerging and transition economy markets, saw their markets collapse and prices fall dramatically given the massive falls in many partner - country exchange rates. trade with the eurozone - by far our largest trading partner - was also adversely affected, until recently, by sluggish domestic demand in the major continental countries and by the weakness of the euro. and even those who look mainly to the united states - where both the market and the currency relationship have been more stable - faced intensified competition from the rest of the world. these effects were not, of course, peculiar to scottish businesses. they applied equally to all similarly internationally - exposed businesses throughout the uk. each region has its own particular business characteristics so that some were affected more than others - with some english regions worse affected than the overall economy here in scotland. but the effects were just as damaging to similar businesses wherever they were located, so that the differential impact was felt within regions throughout the uk not just between them. these cries of pain from the most severely affected businesses and sectors right across the uk i really do understand. the question is what can we do about it through the operation of monetary policy? the problems - as i have explained - derive essentially from developments abroad, and there is not much that we can do directly about them, although both the bank and the government are very actively involved in the wider international debate on how to bring about greater stability and better balance in the global economy. of course we take full account, in our forecasts and in our policy judgements, of the implications of the international environment for our own economy. that is why we moved aggressively to cut interest rates from the autumn of 1998 and early last year. even though we could not change the international environment ( and as i say the exchange rate actually rose despite our interest rate cuts
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), we could cushion its negative effect on the economy as a whole by providing an offsetting stimulus to the domestic economy. had we not done so, we might well have suffered recession in the uk. but the hard question for us is could we - and should we - attempt to shelter internationally - exposed businesses even if that were to mean putting our objective of sustained low inflation at risk. in fact i ’ ve not heard anyone argue openly for that - and i would be surprised if they did. the reality is that if we were to put the economy as a whole at any significant risk of accelerating inflation notwithstanding our mandate - we would not succeed in providing the intended protection to the internationally - exposed sectors other than possibly in the very short term ; and in the medium to long term our overall economic performance would almost certainly be worse. the more hopeful news is that we have more recently seen strong signs of recovery - of both economic activity and exchange rates - in a number of emerging markets and transition economies. and we are seeing a strengthening of domestic demand and of output in the eurozone, where the currency is commonly acknowledged to have considerable potential for appreciation. these trends, and the extraordinary efforts of uk businesses themselves to cope with the hostile international environment, are already resulting in a stronger net external trade performance. that in turn is contributing to the recovery, particularly in manufacturing output growth and to the more encouraging news in some recent surveys. to the extent that this improvement in external demand persists, it will help to ease the exceptional pressures on the most internationally - exposed sectors, and contribute to a better balance within the uk economy. but it needs, of course, to be accompanied by corresponding moderation of the growth of domestic demand - after the offsetting stimulus of a year ago - if we are to maintain overall stability. that essentially is why interest rates have had to rise since last autumn. mr chairman, most people, as i say, accept in principle that sustained monetary stability is good for the economy as a whole in the longer term - though it is accepted with varying degrees of enthusiasm by adversely affected sectors at any particular time. but there is, nevertheless plenty of room for debate about the operation of monetary policy in practice. specifically at present the mpc is often accused of being overzealous - and it is suggested that we don ’ t in fact need to raise interest rates at this point in order to achieve the inflation target. that is a more technical question. changes in interest rates take
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essay contest, the primary goal is to encourage high school youth to be more informed about economic and financial topics. cbk will continue to be focused in order to continuously advance the field of financial education, in order to contribute to the awareness raising, transparency and information of citizens and in particular consumers of financial products and services. similarly, we will continue to cooperate with local and international financial institutions in order to, through this function, be as close as possible to the citizens. finally, i want to thank you for your presence at the distribution of these awards and on this occasion, you are closer to the central bank and as a result, you will have greater familiarity with the central bank of the republic of kosovo and with the functioning of the financial sector in kosovo. you may complement this acquired knowledge by studying in financial directions at universities in the country or abroad and in the future, you will be the bearers of the development and steer of the finances of our country, both in the central bank and in other financial institutions. congratulations on the prizes and i wish you success in your studies and new school challenges. all the best! 2 / 2 bis - central bankers'speeches
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states, can be seen in us studies. 4 another possibility to improve the accounting is to look more closely at the link between labour and capital. so far the analysis has been based on the two resources in production being dealt with separately. but there are good examples of when labour and capital are interdependent. technical knowledge becomes particularly valuable with regard to the development of programs and systems, the production of computer games, etc. artists, film stars, elite athletes / sportsmen and others active in the experience industry get more out of their special skills through the developments in it and communications. the us central bank governor ben bernanke uses the company walmart as another example. 5 for the purpose of using the it investments the company had made, they reorganised their work, gave the staff further training and changed the relationship to their suppliers. this type of technique for general use, of which it can be said to be an example, can in turn push up other investment, such as further education. there are also other ways of developing the analysis. for instance, there are studies based on general equilibrium models indicating that the contribution of capital to productivity growth is forsling & lindstrom see, for example, stiroh ( 2001 ) and jorgenson et al ( 2006 ). bernanke underestimated in growth accounting. 6 if we avoid such underestimations the residual item declines. our knowledge has increased. and it is important for us at the riksbank to increase our knowledge of the development of productivity and of what might explain it. one of the current projects at the riksbank aims to obtain greater knowledge of how it investment, reorganisation and further education together affect productivity. better statistics lead to better analysis i would like to conclude this section with a few words on the considerable significance of economic statistics for being able to analyse productivity and the driving factors behind it. the previous us central bank governor, alan greenspan, was famous for his ability to take in large volumes of statistics. he became legendary when in the mid - 1990s he was the first to predict that productivity growth in the united states would strengthen as a result of increased use of it. this led to the central bank being able to conduct a more expansionary monetary policy for a period, without inflation rising. a few years ago i carried out an examination of economic statistics. my conclusions then were that these needed to be improved in four areas. all of them had in common that they were important to
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- in capital ( php46 billion ). to top it all, our u / kbs appear to be purposely leaning on the side of caution. the account “ cash and due from banks ” has significantly increased. since end 2012, u / kbs have recorded an increase of php867 billion or a staggering annualized growth of 37 %. reforms : how strength can be further enhanced as these numbers validate, there is definitely every reason to believe that we are in a position of strength and finding ways to sustain it. this is a feather on our cap. but we also must be circumspect enough to accept that strength is neither absolute nor eternal. financial markets continuously evolve and the same position of strength can be a marked weakness at another time and under different market circumstances. this is why the bsp has made it clear that we support the principles underlying the espoused global reforms. we believe that there is reason to the global reforms. but we are open to both the timing and execution of the reform details. bank capital – the very core of banking supervision principles – must always have the capacity to absorb losses from risk taking behavior. these are no longer from your plainvanilla credit, market and operational risks. instead, we need to be more cognizant of such issues as liquidity pressures, excessive leverage, interconnectedness, and the bar of governance applicable to each entity with a public franchise to operate as a bank, including and especially for those which are deemed systemic by virtue of their operations, market reach and the unique products and services that they provide. these are all enshrined in the basel 3 reform agenda. and while we support the basic prudential intent of these reforms, we have also been very deliberate in our roll out of the reform components. within the asean - 5, we were the last to implement the capital reforms for basel 3. to - date, we have issued exposure drafts for the treatment of counterparty credit risk, domesticallyoperating systemically important banks, the data aspect of otc derivatives and of leverage. and while the exposure draft for liquidity risk has yet to be issued, this too has been simulated, much like our prior efforts on capital, d - sibs and leverage. apart from the global reforms, we have quite a bit in the pipeline for things that we consider home - grown issues. it is a long wish list, and i shall not go through each of them here. i am fully
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efficient retail payment system. notwithstanding all of these developments, we recognize that the fintech narrative goes beyond just the bsp. in fact, more pioneering solutions are cutting across regimes of different regulators of the financial sector. this is why in the 3rd quarter of last year, the financial sector forum, composed of four financial regulators in the country, namely the securities and exchange commission ( sec ), the insurance commission ( ic ), the philippine deposit insurance corporation ( pdic ) and the bsp, formed a fintech committee aimed at harmonizing regulatory responses to fintech innovation in the financial sector. among the priority agenda that the fsf - fintech committee undertook was identifying the numerous fintech use cases and the scope of authorities of each regulators. through clear understanding and increased collaboration, financial regulators can quickly anticipate changes, assess technological trends across different sectors, and optimize the potential of digital innovations to provide more convenient, and efficient financial services. the cross - cutting nature of fintech developments has also magnified the importance of shifting to activity - based regulations. likewise, i am pleased to share that the fsf - fintech committee is in the initial stages of crafting a cooperative oversight framework which will institutionalize our collaboration and clarify regulations to all supervised and would be supervised entities. but again ladies and gentlemen, we are just one side of this financial equation and we need your support in striking the balance of ensuring that regulatory and supervisory frameworks are in tune with emerging trends and developments. we hope that you can actively help us shape this narrative into something that is desirable, safe, sustainable, inclusive and rewarding for all stakeholders, most especially the filipino people. 3 / 4 bis central bankers'speeches as we move forward in this collaboration, i hope that we all keep the benefit of the filipino people in mind. thank you for the opportunity and i am looking forward to engaging conversations with all of you. needless to say that the bsp, as your partner in promoting financial innovation and inclusion, will remain dedicated and committed in supporting beneficial fintech innovations through an enabling policy and regulatory environment. thank you and i wish everyone a fruitful conference. 4 / 4 bis central bankers'speeches
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##scuring the assessment of risks, with attendant uncertainty. given the flux associated with both the financial markets and the monetary policy settings globally, india cannot be immune to these developments. the policy challenge for the reserve bank, now, is to manage the current transition to a higher growth path while containing inflationary pressures and focusing on financial stability. contextually, we in the reserve bank are, therefore, maintaining enhanced vigilance to be able to respond appropriately to the prevailing heightened uncertainties in global financial as well as monetary conditions. we expect to provide a detailed assessment of the evolving macroeconomic conditions as part of the mid - term review of the annual policy due to be released on october 30, 2007. the technical advisory committee on monetary policy is meeting on october 25, 2007, which will, as usual, provide valuable guidance for the review. iii. medium term : challenges and prospects for a large and diverse economy like india, with a low per capita income that is undergoing structural transformation in a highly uncertain global environment, challenges for public policy are manifold. i would like to focus on a few challenges that have been articulated in the latest annual report of the reserve bank of india – a document that reflects the views of the distinguished members of our board of directors on the subject. first, the recent upward trends in global prices of major food items have significant implications for the domestic agricultural sector and overall macroeconomic and financial stability. although the share of agriculture in overall gdp has declined over the years from around 38 per cent in 1980 - 81 to less than 20 per cent in 2006 - 07, agriculture continues to play an important role in the indian economy. the proportion of the population dependent upon agriculture remains large at almost 60 per cent. since the mid - 1990s, however, the growth of the agricultural sector has been low as well as volatile. volatility in agricultural production has implications not only for overall growth but also, as the experience of 2006 - 07 amply demonstrated, for maintaining low and stable inflation. thus, enhanced growth of the agricultural sector is vital for ensuring food security, poverty alleviation, price stability, overall inclusive growth and sustainability of growth of the overall economy. in view of significant weather and price risks, appropriate risk mitigation policies would need to be put in place to provide relief to distressed farmers as well as enhance the efficiency of production. in view of small and fragmented farm holdings, the population dependent upon agricultural activity will have to increasingly rely on non - farm sources of income in
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y v reddy : some perspectives on the indian economy address by dr y v reddy, governor of the reserve bank of india, at the peterson institute for international economics, washington dc, 17 october 2007. * * * mr. chairman and friends, i am greatly honored by the invitation extended to me by the peterson institute for international economics to share some of my thoughts on the indian economy. this meeting is reflective of the recently observed growing interest and confidence in the status and future of the indian economy. today, i intend to submit that, since independence in 1947, the indian economy has been on the whole, on a path of gradually self - accelerating development accompanied by reasonable stability. there has been a noticeable acceleration in the level of confidence and the performance of the indian economy in the 21st century. the short - term prospects, despite recent global uncertainties, continue to be, by and large, benign for india. over the medium - term, there are several challenges and opportunities. the public policy may, therefore, have to specially focus on these aspects in order to meet not only the expectations of the global community, but also, and more importantly, the aspirations of millions of people in india, particularly the poor and the underprivileged from diverse backgrounds. i. self - accelerating growth since independence and in the new millennium before independence, during the first five decades of the 20th century ( 1900 - 01 to 1946 - 47 ), the annual average growth performance of the indian economy was dismal, averaging 0. 9 per cent. since the beginning of the planned development process in the early 1950s, the gdp growth displayed a self - accelerating tendency reaching a level of around 6. 0 per cent in the 1990s. two exceptions during this phase were the dipping of the growth rate in the 1970s to 2. 9 per cent and during the crisis year of 1991 - 92 1 when the growth was as low as 1. 4 per cent. the record of inflation in india has been satisfactory. since independence, the wholesale price inflation, on an average basis, was above 15 per cent in five out of fifty years. in thirty six years, out of fifty, inflation was in single digit and on most occasions high inflation was due to external and domestic shocks such as sharp rise in fuel and food prices. in the new millennium, the gdp growth rate has accelerated further averaging 6. 9 per cent during the seven - year period 2000 - 01 to 2006 - 07, while the growth rate in the last four
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haruhiko kuroda : the impact of covid - 19 on the japanese economy and the bank of japan's response remarks by mr haruhiko kuroda, governor of the bank of japan, at the virtual event co - hosted by harvard law school ( hls ) and the program on international financial systems ( pifs ), 26 june 2020. * * * introduction it is my great pleasure to have the opportunity today to participate in this virtual discussion. in my opening remarks, i will talk about the impact of covid - 19 on japan ’ s economy and the bank of japan ’ s response. the impact of covid - 19 on japan ’ s economy the covid - 19 pandemic has had a severe impact on countries all over the world, and japan is no exception. with the increasing number of confirmed cases, the japanese government declared a state of emergency in april and implemented strict public health measures. as economic activity became significantly constrained, private consumption for april declined by about 20 percent from last year. new cases of infection decreased sharply thanks to the public health measures, and the state of emergency was lifted at the end of may. the total number of confirmed deaths is less than 1, 000 in japan, and economic activity has resumed gradually. that said, given the significant economic downturn, japan ’ s economy is likely to remain in a severe situation for the time being. thereafter, as the impact of covid - 19 wanes globally in the second half of the year, japan ’ s economy is likely to improve, mainly on the back of pent - up demand and the effects of macroeconomic measures. of course, there are significant uncertainties over the outlook for the economy. the covid - 19 pandemic continues on a global basis, and concern about a second wave of the virus has increased recently. under these circumstances, there is a risk that the second - round effects of covid - 19 may push down the economy considerably. there are two important points in particular. the first is to ensure corporate financing. to this end, it is essential to maintain financial system stability and accommodative financial conditions, thereby avoiding further downward pressure on the real economy from the financial side. the second point is whether firms ’ and households ’ growth expectations will decline and lead to cautious attitudes toward spending. some sort of hysteresis effects could arise after a large shock, as shown in protracted cautious firms ’ behavior in japan after the
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- 20 - 30 " unfavorable " - 5 - 10 large firms - 40 medium - sized firms - 15 small firms - 50 cy 07 09 11 13 15 17 19 21 23 cy 07 09 11 13 15 17 19 21 23 - 20 fy 08 10 12 14 16 18 20 22 24 notes : 1. in the left - hand chart, figures are based on the tankan. 2. in the middle chart, figures are current profits based on the financial statements statistics of corporations by industry, quarterly and exclude " finance and insurance. " figures from 2009 / q2 onward exclude pure holding companies. 3. in the right - hand chart, figures are based on the tankan, including software and r & d investments and excluding land purchasing expenses. r & d investment is not included before the march 2017 survey. figures are for all industries including financial institutions. sources : bank of japan ; ministry of finance. chart 3 i. economic developments household sector confidence indicators private consumption s. a., cy 2019 = 100 s. a. total real private consumption of which, services ( travel, dining - out, etc. ) of which, nondurable goods ( food products, clothes, daily necessities, etc. ) cy 19 improved consumer confidence index economy watchers survey ( household activity ) worsened cy 19 notes : 1. in the left - hand chart, figures for total real private consumption are the real consumption activity index ( travel balance adjusted ) based on staff calculations, which exclude inbound tourism consumption and include outbound tourism consumption. 2. in the right - hand chart, figures for the economy watchers survey are those for the current economic conditions di. sources : bank of japan ; cabinet office. chart 4 i. economic developments overseas economies imf projections in the world economic outlook update y / y % chg. imf projections real gdp growth in the united states ann., q / q % chg. - 2 - 4 cy 21 cy 1990 - 2019 average : + 3. 6 % - 1 - 2 - 3 cy 00 02 04 06 08 10 12 14 16 18 20 22 24 labor market in the united states 16 % cy 19 unemployment rate ( left scale ) ratio average hourly earnings ( y / y chg., left scale ) ratio of job openings to unemployment ( right scale ) 3. 5 3. 0 2. 5 2. 0 1. 5 1. 0 0. 5 0. 0 note : in the left - hand chart
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balance sheets. among the factors that will shape the ecb ’ s approach to exiting the nonstandard measures are the following : • first, we will act with the aim of securing price stability in the medium - term. by implication, any non - standard measure that may pose a threat to price stability will be promptly withdrawn. if no such risk exists, a measure can be maintained in case of significant financial - market tensions. • second, we have built a degree of phasing out into the exit process through the design of our measures. in the absence of new policy decisions, several of these measures will unwind naturally, for example, through pre - determined termination dates. • third, the ecb ’ s operational framework comprises a broad set of instruments so that the exit strategy can be formulated in a flexible way. for example, the interestrate corridor allows short - term interest rates to be changed while keeping some nonstandard measures in place should the need arise. therefore, the governing council can choose the way in which interest - rate action is combined with the unwinding of the non - standard measures. let me turn to the issue of the exit from expansionary fiscal policies. in my view, an important medium - term risk to sustained recovery revolves around deteriorating fiscal positions. the large increases in fiscal deficits and public debt incurred to provide stimulus to the economy have already raised concerns in financial markets, as suggested by the widening sovereign spreads relative to pre - crisis levels, for economies with large fiscal burdens. if the recovery were to stall, followed by a prolonged period of very - low growth, deficits and debt could swell to difficult - to - sustain levels. governments will, therefore, need to start addressing mounting long - run fiscal challenges by committing to large reductions in deficits once the recovery is on a solid footing and advancing reforms that will put public finances on a more sustainable path. i need to add that greece is among the euro - area countries for which the challenge of medium - term fiscal viability is especially urgent. financial sector regulation the best way to manage a crisis is to prevent it happening. at the root of the market failure that led to the crisis was optimism bred by a long period of high growth, low real interest rates, and policy failures. one such failure was that financial regulation was not equipped to address the risk concentrations and distorted incentives underlying the financial innovations. this circumstance raises another medium - run challenge. the present crisis has revealed that macro - pr
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industry, for example, our regional low cost carriers have significantly increased interconnectedness among asean countries. the economic spillovers from this increased connectivity cannot be ignored. by opening up access to lombok, for example, these low cost carriers have contributed to a surge in tourists, marking the fastest growth of tourist arrivals in indonesia. this has incentivised the indonesian government to provide more infrastructure development, including solar power plants, water treatment facilities and roads. this is only one of the many other success stories from our regional home - grown champions. it is my hope that we keep nurturing more, and that their footprints in asean bring even greater benefits to our people. ( b ) role of financial integration 1 / 3 bis central bankers'speeches the private sector ’ s role in enhancing shared prosperity in asean must be facilitated by an enabling environment for efficient cross - border business transactions. this has been achieved through greater financial integration in asean including deeper banking integration ; smoother capital mobility ; and efficient payment and settlement systems. asean central banks have made significant strides towards this end, but by no means will we coast on by. we will continue to champion financial integration that benefits all. an asian development bank study in 2013 has shown that banking integration mobilises savings towards more productive investment, thereby increasing productivity and accelerating growth. this study also showed that smoother capital mobility will facilitate more competitive and productive cross - border lending and borrowing, while promoting financial sector and capital market development. lastly, an efficient cross - border payment and settlement systems promotes cost - effective transactions by reducing the cost of doing business. hurdles faced by asean like it or not, the path to achieving the strategic objectives of the asean economic community ( aec ) 2025 will be filled with hurdles. the pace of convergence within asean would be shaped by members ’ different levels of development. it is harder for countries with resource constraints to shoulder the high costs involved in undertaking structural and institutional changes, which are required for effective integration. in overcoming such hurdles, i stand proud in acknowledging that asean adopts a gradual and phased - in approach that ensures a win - win situation for all. to illustrate this, let me share with you an anecdote from asean ’ s financial integration experience under the aec. the core principles of our framework are inclusiveness and readiness. for example, under the asean banking integration framework, two or more asean countries can liberalise their banking sectors if they are mutually ready. but what if a member is not ready
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1 ) a significant improvement in corporate profits, particularly among large manufacturing firms, resulting from the successful restructuring efforts and the depreciation of the yen from the middle of 1995 ; ( 2 ) progress in the reorganization of the international production system as seen in the shift in japan ’ s exports and production toward more capital - and technology - intensive goods ; and ( 3 ) increased business fixed investment in new sectors owing to technological innovations and deregulation in information and communications industries. with regard to balance - sheet adjustments, strong adjustment pressures remained throughout fiscal 1996, as seen in the persistently high level of the ratio of debts to assets, especially among small nonmanufacturing firms. in fiscal 1996, weakening of prices came to a halt. domestic wholesale prices followed a downward trend until the middle of 1996, but in the second half of fiscal 1996 they virtually stopped declining, owing to a moderate improvement in domestic supply and demand conditions, as well as a rise in import prices reflecting the depreciation of the yen and the rise in crude oil prices. in march 1997, the year - to - year change shifted from decline to increase. although corporate service prices continued to decline compared to the level of the previous year, reflecting the decrease in leasing prices and real estate rents, the year - to - year declines were smaller in the second half of fiscal 1996, due to a recovery in demand for services following the improvement in corporate profits. consumer prices ( nationwide, excluding perishables ) also increased by a slightly wider margin from the previous year owing to a smaller decline in commodity prices as a result of the depreciation of the yen, and the halt in the decline in domestic wholesale prices, as well as a gradual increase in service prices. while prices seemed to have stopped declining, the increase in import prices from the depreciation of the yen and higher crude oil prices had little impact on domestic prices, as there remained persistent downward pressures on prices from imports of manufactured goods, particularly final goods, and technological innovations. as for commercial land, prices for large and well - located plots of land suitable for development virtually stopped declining owing mainly to the gradual progress in stock adjustment for office space. however, the prices of smaller plots of land with limited commercial value continued to decline. the recent development in commercial land prices thus indicates a distinct splitting into two groups. meanwhile, residential land prices are bottoming out, reflecting the high level of residential housing construction. the cyclical momentum for economic recovery gathered strength in fiscal
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##rate the need for improved financial literacy is gradually taking hold in japan. in the council ’ s survey, we ask about the “ purpose of holding financial assets. ” the reply chosen most often had long been “ preparation for illness and unexpected emergency. ” but in 2013, this changed for the first time in its 60 - year history to “ funds for life during my retirement period. ” this is symbolic for japan, which has a well - developed public pension system. bis central bankers ’ speeches the financial behavior of japanese people has changed accordingly. households ’ financial assets1 have increased by around 20 percent over the last decade ; that is, the period before and after the global financial crisis. notably, the amount held by people aged 60 years and older has reached 25 million yen per household. this is almost the same level as the “ target amount of funds you regard as necessary ” in the survey. financial assets are being accumulated to ensure a stable living standard over an individual ’ s retirement period. however, there are worrisome signs that financial literacy associated with lifetime planning has been undermined. as i mentioned earlier, households ’ financial assets have been growing. however, at the same time, the number of households that do not have such assets has been increasing recently. this trend has been observed in a wide range of income groups, including the highincome group. the backgrounds to this are varied, and problems related to financial literacy represent one of the factors. one example is a weaker awareness of the importance of lifetime planning. there are various concerns regarding children as well. in this affluent society that is undergoing demographic changes and rapid progress in technology, children could lose their sense of the value of money. for example, we have the so - called “ six pocket problem. ” this refers to a phenomenon in which a child is indulged with money given by the parents and grandparents of both the father and mother. another is the “ invisible money problem ” ; that is, a situation in which a child does not feel that they actually paid a price for something, given the increasing use of electronic money. in both cases, children have fewer opportunities to realize, through the first - hand experience of using physical money, that there are limits to the money we can spend. we must keep up with these developments, as lifestyles and values have become diverse and everyday life is more dependent on and convenient with technology. however, we still need to understand that there are limits to the goods we can own
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challenges over the next eight years for all of us. so it ’ s good to have that kind of retreat and that time to have some informal discussion. i know a lot of people are curious about how maybe the structure and the operational side of decision - making at the european central bank could potentially change. i know there are a lot of voices – especially amongst the fresh blood that is coming in – of wanting it to look a little bit more like the fed or like the bank of england. do you see that kind of openness coming into play when decision - making is made going forward? do you see that playing a role in the way europe looks at the european central bank? there ’ s a lot in that question. let me differentiate between the formalities of decision - making, where the tradition – i think it ’ s a very strong tradition – is, where we can, to make decisions by consensus. and actually, most of the time monetary policy is not that divisive. most of the time i think we can achieve that. but what is true is, when you have different voices, new voices, how do you have a debate that adds light as opposed to noise? because it ’ s not a good idea to have – in any system – signals which are hard to interpret. it ’ s very important for monetary policy that there ’ s a clear narrative, there ’ s a clear understanding of what we ’ re up to. and so i do think, collectively, it ’ s fine to elaborate where you have a different point of view. but we also have to emphasise that we also make decisions. so we ’ ve got a decision, and i think it ’ s important to say the most important element of that decision was achieved by consensus. the most important element of the decision in september was : we need to add extra 1 / 5 bis central bankers'speeches accommodation in our monetary policy, that inflation is too low and we need to demonstrate our commitment to having inflation move back towards its target sooner rather than later. after that, the details of which instruments we use, of course, with 25 members and … you can ’ t really have consensus. … many choices, there is going to be a range of views, but all of that is secondary to the fact that there was consensus that a monetary easing of some type was needed. well, let ’ s talk a little bit about where there is no consensus and there is no clarity – which would be
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is a fundamental right enshrined in the treaty on the functioning of the european union. but how much use do citizens make of this right in practice? since the enlargement of the european union ( eu ) in 2004, labour market mobility has certainly risen, albeit from very low levels. 3 [ the number of eu workers residing in another eu country rose from 4. 7 million in 2005 to 8 million in 2013, representing an increase from 2. 1 % to 3. 3 % of the total labour force. ] the crisis boosted intra - eu mobility. some studies suggest that the migration response to the crisis might have been even stronger in the eu than in the united states. 4 this is quite remarkable given that the united states is often taken as a benchmark for mobility. moreover, it has sizeable macroeconomic effects : estimates suggest that post - enlargement mobility flows over the period 2004 – 09 increased the gdp of the eu15 by around 1 %. the impact on the gdp of major destination countries for migration, such as ireland, spain, italy and the united kingdom was even higher. increased labour mobility is certainly good news – both for originating and destination countries. another piece of potentially good news is that the level of education that migrants ad hoc task force of the european system of central banks, “ comparisons and contrasts of the impact of the crisis on euro area labour markets ”, occasional paper series, ecb, frankfurt am main, forthcoming. oecd economic surveys : european union 2014, http : / / www. oecd. org / eco / surveys / economic - surveyeuropean - union. htm. jauer, j., liebig, t., martin, j. and puhani, p., “ migration as an adjustment mechanism in the crisis? a comparison of europe and the united states ”, oecd social, employment and migration working papers, no 155, http : / / www. oecd. org / eu / adjustment - mechanism. pdf. bis central bankers ’ speeches bring to their destination countries has improved. with highly - skilled people willing to move for work, skills shortages in destination countries could be compensated for by workers emigrating from other countries. at least, this is how it should work ideally. what is worrying, however, is that many intra - eu migrant workers are employed below their skills level. the resulting underutilisation of human capital shows that reforms are needed to improve the
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, and lower duties. the fiji electricity authority has a renewable energy development program which aims to provide 90 percent of energy through renewable sources by 2011. currently, around 60 to 70 percent of fea ’ s annual electricity output is generated by renewable energy sources. the ongoing nadarivatu hydro project, when completed, should add 41. 7 mega watts of power to the national power grid and produce around 100 million units of electricity on a yearly basis. on its part, the rbf has recently introduced an import substitution facility to try to assist large scale commercial agricultural businesses to obtain credit at concessional rates of interest. the rbf has also offered a scholarship for chef training in malaysia which should encourage the use of local foods in preparation of hotel menus. this is targeted at reducing our import bill and improving our balance of payments position, as well as encouraging local value adding. i wish to repeat my message once again to the hotel industry. please do everything in your power to reduce your consumption of imports. this will go a long way in assisting our bop. i wish to congratulate those hotels which have taken the effort to start growing their own fruits and vegetables. this is very encouraging indeed. as a result of the trend of declining exports and rising imports, the country has been faced with a deteriorating trade deficit and an associated current account deficit which reached a new high recently. the current account deficit is estimated at around 9 percent of gdp in 2009. a 9 percent current account deficit is unsustainable. therefore, we have to do everything in our power to increase export earnings and reduce imports. tourism has picked up well following the global downturn. in my view, under the current circumstances, tourism holds the greatest potential to lift fiji ’ s growth rate. the tourism development plan has set a target of 1 million visitors by 2016. we should aim to raise visitor arrivals threefold in the next three years. the industry and the government should develop clear strategies to make this happen. it is very encouraging to see three new airlines have started operations to fiji since december 2009, with our own air pacific adding hong kong to its list of destinations. this has linked fiji to new markets and should boost future visitor arrivals. let me now touch briefly on government finances. fiji has experienced chronic budget deficits over the past two decades. the proportion of capital expenditure to total government expenditure has been low. on the other hand, operating expenditure has continued to balloon over the years. in 2009, the proportion of
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daniel mminele : establishing a proper governance framework for central bank reserves management address by mr daniel mminele, deputy governor of the south african reserve bank, at the institutional investor, africa sovereign funds roundtable, cape town, 7 march 2013. * 1. * * introduction good morning ladies and gentlemen. thank you to institutional investor for inviting me to address this roundtable meeting, and for choosing to host it in cape town. i trust those of you visiting south africa or cape town for the first time will have an opportunity to see the exceptional beauty that this part our country offers. judging by the agenda, i have no doubt that the discussions will be rich, as the topics being covered are all pertinent, and should allow us to exchange views and gain valuable insights to inform the work in our respective institutions in strengthening sovereign funds management operations and their oversight. i have been asked to talk on the topic of governance for central bank reserves management. with the increase in reserves assets observed in recent years, there has come a higher level of scrutiny with regard to how these assets are managed, in particular heightened interest around proper governance structures. as public investment managers we should welcome this trend, because reserves are public assets, which should be seen to be managed prudently and carefully while achieving appropriate returns. as some of you may be aware, the south african reserve bank ( the bank ) has made significant progress in recent years in enhancing our governance framework. 2. evolution of reserves management in south africa before i talk about the governance aspects of foreign exchange reserves management, i would like to first provide a brief history of the build - up of reserves in south africa, and the evolution of reserves management activities. in 1998, south africa had gross reserves of just us $ 6 billion, but was running an oversold forward book and consequently had a negative net open foreign currency position ( nofp ) of us $ 25 billion. this huge forward dollar commitment left the country in a precariously dangerous and vulnerable external position and resulted in our currency being deemed a one - way downward bet. the bank and the national treasury embarked on a drive to reduce the nofp to zero, and to build up the reserves of the country, with the former being achieved in march 2003. subsequently, there was a rapid build - up of reserves over the years, made possible by a combination of purchasing the proceeds of government ’ s foreign bond issues ; taking advantage of large fdi related inflows ; and purchasing foreign exchange
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greek government bond yields due to risk aversion among international investors. to address these risks and confirm the positive outlook, we need to promptly and effectively tackle a number of major issues lying ahead, which will ultimately determine the outcome of the programme as a whole and greece ’ s ability to regain access to markets thereafter. 1st speeding up the implementation of the programme the first and most important issue refers to commitment to the programme ’ s objectives, in particular the need to speed up the implementation of the agreed reforms. the next few days will see the start of the second review, which will be looking at a number of fundamental structural reforms, with expected positive effects on economic activity. the review must be completed without any delay. this will allow these positive effects to be felt soon, thereby strengthening the prospect of growth in the greek economy at an accelerating pace from 2017 onwards. 2nd non - performing loans the second, equally serious, issue that represents a challenge for banks, the government and the bank of greece alike, refers to the restructuring of the banking system, so as to restore normal financing conditions in the private sector. strengthening the banking system and freeingup resources for financing the economy requires tackling the bulk of non - performing loans as soon as possible. effective management of non - performing loans is key to both the recovery of credit expansion and the restructuring of enterprises and sectors across the economy. to this end, the bank of greece has stepped up its efforts by promoting, in cooperation with the government, a number of major initiatives, the implementation of which needs to be accelerated and completed in the coming months. let me indicatively mention some of these initiatives : the development of a secondary market for loans ( performing or non - performing ) ; the reform of the framework for out - of - court debt settlements ; the improvement of infrastructure and expertise of the judicial framework ; 2 / 7 bis central bankers'speeches the legislative reform to ensure that existing shareholders participate in the reorganisation of companies, or otherwise immediately withdraw. in parallel, however, banks need to adopt a more active npl management policy, focusing on long - term solutions, multi - creditor workouts and restructuring of viable companies, with the participation of shareholders. during the protracted period of the crisis, the private sector has paid a high toll. uncertainty, crumbling demand, funding constraints and high indebtedness as a legacy of the past have driven many companies out of business, thousands of workers to unemployment and the volume of npls to burgeoned levels
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yannis stournaras : lessons from the financial crisis and challenges for the greek banking sector speech by mr yannis stournaras, governor of the bank of greece, at a lecture organized by the international center for monetary and banking studies ( icmb ), geneva, 13 november 2018. * * * ladies and gentlemen, introduction i am honoured to be here today and have the opportunity to share my thoughts on the lessons from the international financial crisis. i would also like to touch upon greece ’ s experience over the past eight years and the key challenges for achieving a successful turnaround of the greek economy in general, and the banking sector, in particular. however, before we move on, it is crucial that i stress the importance of financial stability as a necessary condition for achieving prosperity and sustainable growth, common goals for all market participants and central bankers. i shall begin this lecture by briefly commenting on the lessons from the international financial crisis and the response of monetary and supervisory authorities. i will then outline the unfolding of the greek sovereign crisis and its impact on the domestic economy and the banking sector. subsequently, i will present the authorities ’ response, before proceeding to the core of my intervention and the lessons from the greek banking crisis. lessons from the international financial crisis the recent financial crisis has been the most severe in seventy - five years. a key question, not only for all of us in this room but also for those who study it or act as policy makers, is “ will it happen again? ” my answer is that − if and when it does happen − it will be different. first, a valuable lesson is that, while things may work well if left to the invisible hand, during times of stress that hand seems to lose its grip, in the words of ahamed liaquat in his pulitzer – award “ lords of finance ”. policy makers around the world have learned their lessons from the great depression : a financial system in distress requires active central bank intervention. central banks thus acted quickly and forcefully. they developed their toolkit with a combination of more flexible, effective and innovative measures and enormous firepower. given the success of these policies, some of these instruments may be permanently included in the new standardframework, and thus equip policy makers with the tools to engage in proper and timely action. all in all, there is no strong case for a fundamental change in the monetary policy framework. central banks are expected to continue to use the asset side of their balance
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in the norwegian economy is still solid, inflation is close to the target and capacity utilisation is somewhat above a normal level. on the other hand, there is considerable uncertainty about the global growth outlook. the policy rate path reflects a trade - off between these conditions. chart : low policy rates abroad a rate of 1. 5 percent is considerably lower than the average level for the policy rate since inflation targeting was introduced in 2001. this must be viewed in the context of persistently low policy rates among norway ’ s trading partners. weighting our trading partners together, we find an expected policy rate of close to zero at the end of 2022. among some of norway ’ s main trading 1 / 9 bis central bankers'speeches partners, market rates are negative for maturities as long as ten years. despite persistently low interest rates, there are few signs of pressures in our trading partners ’ economies. although unemployment in the us, euro area and the uk has fallen steadily for several years, and to somewhat below pre - crisis levels, wage growth remains moderate and inflation is below target for a number of our neighbours. chart : unemployment and inflation in selected countries the combination of persistently low interest rates, moderate economic growth and low inflation suggests that headwinds have dampened the effect of the monetary policy measures. these conditions can be purely temporary, such as high uncertainty contributing to increased saving and low willingness to invest. but the forces at work are also of a more structural kind, rooted in demographic trends, wider income gaps and global downward pressure on wages for large groups of workers. regardless, the consequence seems to be that the interest rate level that is consistent with normal growth and inflation, ie what we refer to as the neutral interest rate, has fallen to a low level. how long this will persist is difficult to predict. but an environment in which borrowing is free and the real interest rate is considerably lower than trend growth in the economy is unlikely to be sustainable over time. chart : estimates of the neutral interest rate the neutral interest rate cannot be observed and must be estimated. in the bank ’ s monetary policy report, the current neutral real interest rate in norway is assumed to be around zero. the estimate is based on calculations from a range of different models. as we can see in the chart, these calculations show that the neutral interest rate has fallen to a historically low level close to zero over the past 20 years. with an inflation target of 2 percent, this means that setting the policy rate
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and the service sector. imports are expanding at a brisk pace. there are prospects of continued strong growth in petroleum investment in 2005. employment is rising, albeit still at a moderate pace. monetary policy influences the economy with long and variable lags. there is always uncertainty surrounding inflation developments. a very high oil price may also have an impact on the krone exchange rate. historical deviations between projected and actual developments in the cpi - ate provide an illustration of the uncertainty surrounding the inflation projections. the fall in the value of the krone through 2003, low interest rates and solid growth in the real economy will gradually push up inflation. price developments in recent months have, nevertheless, increased the risk that inflation will remain low for a longer period. thank you for allowing me to make the introductory statement at this hearing.
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on energy and food, such as lower - income households. a return to price stability – that is, a rate of inflation in - line with our 2 per cent target over the medium term – is necessary for a stable economic environment to support long - term growth. as interest rates are the primary tool to fight inflation, my colleagues on the ecb's governing council and i started raising our key policy rates in july last year. these are now at 2 per cent. our primary mandate is price stability and we are determined to achieve our inflation target by aligning aggregate demand more closely with aggregate supply conditions in the euro area economy as a whole. raising the policy rate also signals our commitment to price stability. it sends a clear message that we will not allow inflation to stay above 2 per cent and helps to contain inflation expectations, guarding against the emergence of self - reinforcing inflation dynamics and tackling the risk of a persistent increase in inflation expectations. we need to continue to increase rates at our meeting next week – by taking a similar step to our december decisions – and also at our march meeting, although our future policy decisions need to continue to be data - dependent given the prevailing uncertainty. to sum up, inflation remains far too high and interest rates will have to rise significantly at a steady pace to reach levels sufficiently restrictive to ensure a timely return of inflation to our 2 per cent medium - term target. bringing inflation back to target is essential for the wellbeing of our economy and community. domestic outlook turning to the domestic outlook, our most recent quarterly bulletin described 2022 as a year of two halves, with strong growth in the first half and slowing considerably in the second. 1 we expect that 2023 is likely to be a mirror of this year, with our economy continuing to adjust to the energy shock but a strong labour market and moderating inflation driving a recovery in household real incomes, reversing the trend later in the year and into 2024. while the domestic economy was predicted to slow considerably, our forecasts still pointed to positive ( albeit lower ) growth for 2023 as a whole. we will be updating these projections in our next quarterly bulletin in early march. 2 domestic headline inflation continues to be high at 8. 2 per cent in december, but moderating energy prices, particularly gas prices, points to an improving outlook. our expectation remains that inflation peaked in q4 of 2022 and will moderate as the year progresses – assuming no further shocks – supporting consumer spending
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company branches – and strong demands for greater economic and social justice. in this context, i know that i can count on french banks to strictly comply with their commitments made to the president of the republic on 11 december regarding the capping of bank charges at eur 25 a month for 3. 5 million vulnerable customers. these measures apply now – at the latest in february – and they will be controlled throughout the year. the acpr has made honouring this commitment a priority for its on - site and off - site inspections in 2019. the french observatory for banking inclusion ( oib ), which i chair, with the participation of consumer and social integration associations, will monitor the figures and take any necessary action. the oib will also ensure that banks meet their commitments regarding the diffusion among these vulnerable customers of the “ specific offer ”, and its lower cap on bank charges ( eur 20 / month 2 / 3 bis central bankers'speeches and eur 200 / year ). 2019 will also mark the 30th anniversary of the neiertz act : we welcome the decrease in the flow of newly overindebted persons whose number has finally returned to its 1989 level, since it stood at 90, 000 “ first - time applicants ” in 2018, against 140, 000 five years ago! a more recent yet very promising development is our mobilisation in favour of green finance. in the first quarter of 2019, the acpr will publish the results of its survey on climate risk management by banks and insurance companies. the network of central banks and supervisors for greening the financial system ( ngfs ), launched by the banque de france in early 2018, is a considerable success. it has grown from eight to 24 participants on five continents. its first report, which will be presented at a conference in paris on 17 april, will provide new proposals for action. i would like to end with a few words about the banque de france. our institution is strongly committed to improving its performance. in 2018, the banque de france cut back its net operating expenses by 8 % compared to 2015, which represents an annual saving of eur 100 million. and we are innovating in - house : the lab, the madre blockchain, or the success of our dematerialised acpr authorisation procedure, which came into effect in november 2018. in these more turbulent times, our first responsibility is to stay the course both in serving the french economy and in pursuing our transformation.
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– 98 asian crisis, 2005 mini - crisis, and 2008 global financial crisis when indonesia responded “ procyclically ” by raising interest rates and tightening fiscal policies. this edited volume prepared by imf staff, entitled indonesia : sustaining growth during global volatility, elaborates the substantial improvement in the quality of macroeconomic management and banking regulation that indonesia has achieved in the midst of a volatile global environment. in addition, this book also highlights the most binding constraints that need to be addressed to sustain and increase economic growth as well as to further lower vulnerability going forward. overall, this book provides a deep and balanced perspective on the indonesian economy that might help to further enrich the framework of macroeconomic management in indonesia. we appreciate the thorough analysis of imf staff on various issues regarding indonesia ’ s economy. this in - depth and balanced analysis benefited from candid discussions between the indonesian authorities and imf staff during the article iv consultations. their analysis has provided insight to our policy discussions which should contribute to improving indonesia ’ s economic performance. i sincerely hope that publication of this book will help to better understand the progress made by indonesia in macroeconomic management and policy that can be used to further strengthening not only indonesian economy but also other economies. distinguished guests, ladies, and gentlemen needless to say, we cannot and may not assume that our macro stability will definitely continue in the future. this assumption can lead us to comfort zone that would reduce our ability to anticipate future challenges early on. i believe this seminar will be the right place to discuss both global and domestic challenges and how we should deal with them. at the global perspective, the immediate policy challenges is certainly how to mitigate the impacts of global economic slowdown and uncertainties. meanwhile, at the domestic front, a lot of domestic unfinished issues to be addressed which most of them are structural issues we never solve and thus have created inefficiencies both in the financial and real sectors. i hope this seminar will give us various perspectives on how to strengthen indonesian economy amidst those global and domestic challenges. may allah almighty always be with us, bless us and lighten our way towards a better future. thank you. bis central bankers ’ speeches
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the products in the market as well. with respect to secondary bond market development, developing the private repo market has been one avenue that the bank has adopted to enhance a more liquid bond market. what i have mentioned here is only some examples of the earlier and ongoing efforts that the bank of thailand was involved in developing the capital market. going forward, there is still much work to do. the bank of thailand will continue to coordinate with other authorities and the private sector in order to move us closer to having a deeper and well structured capital market. ladies and gentlemen, in closing, i would like to stress that the underlying fundamentals of the thai economy remain sound, as evidenced by its continued ability to weather various adverse shocks. while it is uncertain how the current political confrontation will unwind, i am confident that the economy will prevail, as it has done a number of times in the past. over the longer term however, thailand will need, among other things, a deeper and stronger capital market in order to grow sustainably. it is therefore in our best interest to promote the development of the thai capital market and make thailand an attractive destination for quality investors. for this, we will need your active participation and continued faith in the thai economy. thank you very much for your attention.
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consider electronic means of payment to be more in keeping with the times. this divide is also reflected in public opinion about cash. on one side of the spectrum, there is at times talk of cash as a " curse " or a technology of a bygone age. at the other extreme, there are some who believe that we are heading knowingly towards a cashless society – and thus entering a world devoid of privacy and data protection. of course, books on polarising topics need to exaggerate in one direction or the other. when it comes to the multifaceted question of the future of our money, though, i don't think it's particularly helpful to see things only in black and white. 3 the book's key messages ladies and gentlemen, the main thrust of this book is to engage precisely with this often - impassioned debate on the future of our money by presenting and appreciating different viewpoints in an objective and balanced manner. 2 / 4 bis - central bankers'speeches we achieve this by considering the various aspects of money and currency from all manner of angles in the hope that the resulting insights yield a particularly nuanced, and at times even surprising, new overview. a conscious decision was made to cover a broad range of topics : from the history of money in europe to the symbolism and special importance of currency in the context of german monetary union and ultimately of european integration, all the way through to the money of tomorrow in an era of digital transformation. these are illuminated from an economic, philosophical, sociological or – as heard at the beginning – psychological perspective. i am very grateful to each and every one of this book's truly renowned authors for their enlightening contributions. the end result is, i believe, a unique compendium containing 33 individual perspectives. the contributions to the book are divided into three parts. the first covers money and currency in europe. these contributions shed light on aspects of european integration, put the role of cash into an economic and legal context, and explore the history of money. the second part of the book focuses on the special significance of national central banks in supplying cash to the domestic economy. we start by looking at germany and the bundesbank's prominent role in germany's cash cycle. we then broaden our horizons beyond the euro area and embark on a journey through the world's large industrial nations and emerging market economies. national central banks from major g20 countries explore three key issues
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willem f duisenberg : the euro and the greater europe speech by dr willem f duisenberg, president of the european central bank, at the parliamentary assembly of the council of europe, during the debate on the theme " the euro and the greater europe ", held in strasbourg on 24 january 2001. * * * dear president, members of the parliamentary assembly, ladies and gentlemen, i should first like to thank you, mr. president, for your warm words of welcome. it is indeed a privilege to address an audience as distinguished and truly pan - european as the parliamentary assembly of the council of europe. i am happy to continue the exchange of views that commenced with the visit of the committee of economic affairs and development to the european central bank in april 1999, which you mentioned. my presence here today - as with our meeting then - is intended to confirm the great importance which the ecb attaches to the implications of the euro for the greater europe. in my brief remarks, allow me to elaborate on some of the issues that are raised in the draft resolution of this assembly, in the hope that i may enrich your discussion by providing an " insider's view ". the effects of the euro on the greater europe will depend to a large extent on our ability to make the euro a lasting success. i say " our " ability, because i am referring to the joint efforts of all relevant actors within the european union : not only the ecb and the national central banks, but also policymakers in eu institutions and in the member states, business and trade unions, financial market participants and the citizens at large. i am aware that the eu has been criticised for its obsession with its own internal dynamics, and for having little regard for the greater europe or for the rest of the world. nevertheless, allow me to start with a brief overview of what we have achieved with respect to our new currency. thereafter, i shall outline the challenges ahead, many of which are inextricably linked to the prospect of eu enlargement. by a number of measures, the euro is already a success today. first and foremost, the ecb has fulfilled its mandate to preserve price stability. we consider this a substantial accomplishment, not least in view of the sometimes adverse circumstances, such as the protracted depreciation of the euro or the sharp increase in oil prices. both led to sizeable, although only temporary, inflationary pressures. we are also witnessing a deepening integration of the financial
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sharing the tax burden more equitably, improving the equalisation capacity of public transfers. these results also rely on structural interventions to improve the underlying capacity of the italian economy to post higher growth, above and beyond short - term stimuli. any improvement achieved thanks to public intervention in the areas of income and its distribution will be the more solid, the more it is rooted in solid funding measures and the more carefully it is designed to take account of the incentives to create income and jobs, this being the most reliable way to combat the spread of poverty. tables and figures table 1 macroeconomic outlook in the most recent official documents ( percentage changes ) economic and financial document 2018 update to the 2018 economic and financial document current legislation scenario real gdp 1. 5 1. 5 1. 4 1. 3 1. 2 1. 6 1. 2 0. 9 1. 1 1. 1 imports 5. 3 5. 4 4. 0 3. 4 3. 5 5. 2 1. 7 2. 6 2. 9 3. 5 consumption by households and nonprofit institutions serving households 1. 4 1. 4 1. 0 0. 9 1. 2 1. 5 1. 1 0. 7 0. 8 1. 1 general government expenditure 0. 1 0. 5 0. 1 0. 4 0. 6 - 0. 1 0. 4 0. 6 0. 6 0. 5 investment 3. 8 4. 1 2. 8 2. 4 1. 7 4. 3 4. 4 2. 2 1. 5 1. 6 exports 5. 4 5. 2 4. 2 3. 9 3. 2 5. 7 0. 4 2. 7 3. 4 3. 6 nominal gdp 2. 1 2. 9 3. 2 3. 1 2. 7 2. 1 2. 5 2. 7 2. 8 2. 6 consumption deflator 1. 2 1. 1 2. 2 2. 0 1. 5 1. 1 1. 3 2. 2 2. 0 1. 5 employment ( fte ) 0. 9 0. 8 0. 8 0. 9 0. 9 0. 9 0. 7 0. 6 0. 7 0. 8 policy scenario real gdp 1. 6 1. 2 1. 5 1. 6 1. 4 imports 5. 2 1. 7 3. 0 3. 8 4. 0 consumption by households and nonprofit institutions serving households 1. 5 1. 1 1. 3 1. 3 1. 2
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, above all thanks to the positive performance of vat and personal income tax ( irpef ) revenue. if the data are adjusted to take account of some asymmetries of a purely accounting nature, the estimated increase in revenue would be greater, and basically consistent with the growth forecasts of general government tax revenue indicated in the update. in the policy scenario, the structural deficit ( that is, cyclically - adjusted and net of temporary measures ) is expected to reach 0. 9 per cent of gdp. the expected reduction in the structural deficit is less than that for the overall deficit ( 0. 2 percentage points versus 0. 5 points ) ; the difference is mainly due to the reduction in the output gap, as the net effects of the temporary measures are extremely limited in both 2017 and 2018. according to the update, in 2018 the debt - to - gdp ratio will fall slightly, from 131. 2 per cent at end - 2017 to 130. 9 per cent. the reduction is almost 1 percentage point less than that estimated in april, owing to higher net borrowing expectations and, especially, slower nominal gdp growth. as part of its september revision of the national accounts data, istat adjusted upwards its nominal gdp estimate for the two years 2016 - 17. owing to these changes, in both years the debt - to - gdp ratio decreased by about 0. 6 percentage points. public finance projections for 2019 - 2021 current legislation scenario. – the update revises the net borrowing forecasts for the three years 2019 - 2021 in the current legislation scenario, raising them ( compared with april ’ s def ) by 0. 4 percentage points for next year and by 0. 7 points for each of the two years 2020 - 21. the revision takes account of a worsening gdp growth outlook and of higher interest payments ( more than 0. 1 percentage points in 2019, 0. 2 points in 2020 and 0. 3 points in 2021 ). notwithstanding this revision, current legislation net borrowing is expected to continue to decrease, also thanks to the safeguard clauses ( whose effect is equal to 0. 7 per cent of gdp in 2019 and to 1. 0 per cent from 2020 onwards ) : as a percentage of gdp, net borrowing is estimated to fall to 1. 2 per cent in 2019, 0. 7 per cent in 2020 and 0. 5 in 2021. the nominal budget balance, which according to april ’ s def would have been attained in 2020, would now not be achieved in 2021 either. the
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to objective debate. and this kind of aggressive language is not limited to the media. politicians of various parties have referred to mario draghi as “ the gravedigger of german savers ” or “ the speculators ’ accomplice ”, who has “ continuously expropriated ” savers ( slide 7 ). this public reaction far exceeds the usual degree of criticism about economic policy decisions. and it seems that negative interest rates are the chief cause of these deep feelings of discontent. indeed, negative interest rates are a relatively recent addition to the central banking toolbox ( slide 8 ). the ecb first took the deposit rate for banks into negative territory in june 2014 and subsequently lowered it to - 0. 5 % in several steps. structural factors are the main driver of interest rates against this background, the question arises as to why the ecb needs to make use of negative rates, and why interest rates were much higher in the past? if inflation needs to be pushed up, central banks need to bring the real interest rate – that is, the nominal interest rate adjusted for inflation – below what is called the “ real equilibrium interest rate ” – the rate at which all factors of production are at full capacity and inflation is stable. the level of the real equilibrium rate is determined by a number of structural factors, such as a country ’ s demographic situation or capacity to innovate. the real equilibrium interest rate cannot be directly observed and instead has to be estimated. and almost all estimation methods show that the real equilibrium interest rate in the euro area has fallen markedly over the past 20 years ( slide 10 ). indeed, many estimates have even been showing negative values in recent years. this suggests that the supply of capital is matched with relatively low demand – in other words that the desire to save is meeting with a comparatively low propensity to invest. germany offers a prime example of this savings surplus. the vast and enduring current account surplus means that in germany much more is being saved than invested. the central bank, however, steers the nominal rate of interest – that is the sum of the real interest rate and expected future inflation. if the real equilibrium interest rate and inflation are both strongly positive, the central bank has considerable scope to stimulate the economy by cutting rates. but if the real equilibrium rate is close to zero or even negative, that scope is greatly reduced because monetary policy is constrained by the zero lower bound. and so you can see that low equilibrium interest rates create problems for
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in a nutshell, it is evidence that the euro area financial crisis has not eroded trust in the euro as a currency. however, central banks are currently facing important challenges in using information from markets for inflation protection to support monetary policy decisions ( see slide 7 ). during the crisis, and especially after the bankruptcy of lehman brothers, inflation - linked markets were characterised by high volatility and low market liquidity, which made it very difficult for policy - makers to infer signals about the level of inflation expectations, as perceived by market participants. also, they have not escaped the trend towards fragmentation which has been a common feature of euro area capital markets throughout this crisis. during the euro area sovereign bond market crisis, and especially in the second half of 2011, country - specific developments were increasingly apparent. in particular, the rising yield spread between french and german bonds meant that the euro area real yield curve estimated on french and german bonds became biased. the technical solution was to split the estimation of the real yield curve into the country - specific yield curves before aggregating back to a euro area real yield curve. i believe our colleagues will present this new approach in more detail during the workshop. finally, regarding the markets for inflation options, we still need to understand better to what extent we can trust the signals extracted from these markets as being accurate information on the inflation and deflation tail risks perceived by investors. we need to understand the impact of particularly large players in the options market on shorter - term price developments and need to find ways to assess the maturity of these markets. our goal should be to be able to routinely extract probability density functions for inflation expectations based on a robust methodology, as we already do for short - term interest rates or stock indices. this would be particularly useful to inform our policy making process in a world where risk management plays a key role in policy decisions. having briefly sketched out our analysis and concerns, i would like to stress that the ecb has a strong interest in the developments in markets for inflation protection. they provide us with tools for monitoring inflation expectations in the euro area for various horizons at a high frequency. such tools are unique and that is why we need to make sure that we interpret the information from inflation markets correctly and understand the broader context of the observed developments. i trust this workshop will give you a good opportunity to reflect on these issues. i would like to wish you some interesting and productive discussions. bis central bankers ’ speeches bis central bankers ’ speeches bis central
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