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. ( this may partly be a payback for the mild winter, which brought forward some spending. ) employment growth remains positive, but has slowed considerably of late as the economy has lost forward momentum, and the unemployment rate remains elevated. the headwinds retarding recovery are well known. many consumers have been deleveraging in response to the large losses in wealth generated mainly by the collapse in home prices. the supply of credit β particularly mortgage credit β to many families remains constrained, limiting the degree to which many households can fully benefit from low interest rates. although there have been some positive signs in the housing market recently, housing activity nevertheless remains at very low levels. the sector has been restrained by several factors including the large shadow inventory making its way through the foreclosure pipeline, tight underwriting standards for new mortgage origination, and the sharp slowdown in household formation. although the corporate sector as a whole is now relatively healthy, there still is a significant constraint on the availability of credit to small business. business investment continues to expand, but at a restrained pace. i presume that this partially reflects uncertainty over the economic outlook, including the risks around the evolution of u. s. fiscal policy and the crisis in europe. fiscal policy has already become restrictive as state and local governments have cut expenditures in response to revenue shortfalls. moreover, we face the so - called β fiscal cliff β at the start of next year. at the beginning of 2013, federal fiscal policy is scheduled under current law to become sharply contractionary, with abrupt increases in taxes and cuts in spending. businesspeople tell me that the uncertainty about how congress and the administration will deal with the fiscal cliff β and our fiscal challenges more broadly β is already inhibiting hiring and investment. the fiscal cliff represents a threat to the recovery that is wholly avoidable. but we will only avoid it if our politicians act responsibly. we need a credible strategy for bringing down the federal budget deficit over time in a manner supportive of ongoing economic recovery. any plan should start slowly, but build steadily over time. it should be bipartisan in nature so that the plan is viewed as sustainable across the political cycle. bis central bankers β speeches meanwhile the crisis in the eurozone has resulted in a sharp slow - down in economic growth in europe and tighter financial conditions globally. it has hurt u. s. consumer and business confidence and is already a material drag on u. s. growth. economic momentum in many other
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requirement, a bank should already be operating above that level, which should dampen the effects of a sudden downturn in business conditions and asset quality. along those lines, the committee recently agreed that banks adopting the " internal ratings based " approach to credit risk will be required under pillar 2 to conduct meaningfully conservative credit risk stress testing. stress testing should help banks to maintain adequate capital buffers in advance of potential downturns in the economy. the treatment of operational risk beyond those two broad concerns expressed about the potential for complexity and procyclicality, some respondents have called for changes to more specific capital charges in the proposals. one of the most interesting discussions centers on whether β or how β the new accord should treat a bank β s exposure to potential losses that result from inadequate or failed internal processes and systems, or from external events. the endeavor to manage operational risk, as this group of risks has become known, has sparked significant research in the industry and beyond. supervisors, like more and more banks, have adopted a view of operational risk management as a comprehensive practice comparable to the management of market or credit risk. while operational risk cannot be quantified with the same degree of precision as market or credit risk, the committee believes that introducing a separate charge for exposures to operational risk will bolster efforts to find better ways to address it. failing to include an operational risk charge in the new minimum requirements could inadvertently derail the ongoing work to identify and manage this exposure. although we β ve seen encouraging progress in measuring operational risk β within both individual firms and industry working groups β the committee recognizes that the industry has not settled on particular methodologies or principles. accordingly, the new accord will permit an unprecedented amount of flexibility to accommodate a spectrum of approaches to operational risk. for the most sophisticated institutions, the " advanced measurement approach " β or " ama " β is really the ultimate expression of the goal of drawing on internal measures. in response to concerns that the proposed " floor " on the ama stifled innovation, the committee decided recently to eliminate it. consequently, banks will be free to experiment with a great variety of methodologies, without undue constraint on their value to the firm. the ama is meant to be a catalyst for innovation. calibration of other particular charges and the overall level of capital of course, a good portion of the consultations have addressed rules and formulae used to determine capital charges for other categories of exposures and transactions. the committee and its working groups have
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mohamed s fofana : tackling money laundering in sierra leone statement by mr mohamed s fofana, deputy governor of the bank of sierra leone, at the official opening of the unodc / giaba / bsl training workshop on aml / cft strategy development, freetown, 10 - 13 july 2006. * * * distinguished administrative secretary of giaba, fellow stakeholders, the board and management of the bank of sierra leone, participants, distinguished ladies & gentlemen let me on behalf of the governor, management and staff of the bank of sierra leone welcome you all, especially those of you coming to sierra leone for the first time for this very important training workshop. may i also take this opportunity to congratulate you, mr. administrative secretary of giaba, on your recent appointment. i believe that your appointment is to underscore the fact that african problems require african solution. i also want to particularly welcome the facilitators from the unodc and giaba and proffer our gratitude to them for facilitating this workshop and for heeding to our call for help in the establishment of a financial intelligence unit ( fiu ). in the past, emphasis has been placed on the drugs trade as the principal source of cash that is laundered. we now know that other activities such as terrorism, tax evasion, arms trafficking, smuggling, human trafficking and advance fee fraud ( aka 419 ) are veritable fountains of cash for money laundering. in the west africa sub - region, the principal sources of money laundering are from the illegal exploitation of natural resources especially in mining, and to a large extent the proceeds from corruption. concern over money laundering is growing because of its perverse effects on the socioeconomic environment and its close links with organized crime. armed with the immense financial resources at their disposal, money launderers can compromise persons and institutions to acquire economic, social and political power. the ten - year rebel war that officially ended in 2002 sadly illustrates the threat and problem that money laundering poses to emerging economies like sierra leone β s. the afrc and ruf using a network of criminal gun running organizations to finance their activities completely destabilized our nation politically, socially and economically. diamonds obtained by forced labour from the nation β s diamond fields ( blood diamonds ) played a significant role in fuelling the rebel war. although the war ended in 2002, the environment wherein criminals can launder their ill - gotten fortunes still prevails today because sierra leone is
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am glad to inform you that the present administration has moved consistently and decisively to up - scale general economic and financial data quality by strengthening data information flows both in bosl and mof and at the central office of statistics. these efforts have also included working closely with waifem and its technical partners to streamlining the back office functions of the mof ; and enhancing institutional capacity building efforts. government will continue to keep these measures under constant review, because the process of achieving effective debt management is not like a sprint race, but rather, could be likened to a marathon involving medium to long - term policy thrusts and interventions. ladies and gentlemen, over the past couple of minutes, i have attempted to sensitize you on some of the issues that would be dealt with in detail during this course. even so, i make no pretensions to any exhaustive analysis. i am aware that the expert faculty assembled by the organizers will do just that. all that is left for me to do is to invite you to take maximum advantage of the opportunity presented by this course to strengthen your competencies in debt data compilation in line with best practices. 4. 0 conclusion ladies and gentlemen, i would be remiss in my duty if i ended this address without expressing the profound appreciation of the board of governors of waifem to comsec, imf, and world bank for their support to waifem in strengthening capacity of countries of its member central banks in the area of debt management capacity building. before i take leave of you to commence the technical sessions, let me enjoin you to take some time off your crowded schedule to visit some of the tourist attractions in freetown, and its environs. the governors look forward toward greater collaboration between waifem and these institutions in the years ahead. on this note i have the honour to declare the course open. i thank you for your attention.
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must involve less current spending, more investment and lower taxes, and above all it must continue ; we have ceased to accumulate debt, we have not begun to reduce it. we must tackle the structural weaknesses of our economy with greater determination. household consumption, eroded by the extraction of rents and held in check by uncertainty about the outcome of reforms deeply affecting people β s lives, must regain its vigour. never dealing with the problem of pensions definitively has a cost in terms of lost growth and lower consumption. these are attainable objectives if we all, each according to his own role and without tarrying to lament lost opportunities but drawing strength from awareness of the progress already made, can rediscover that sense of the common good that is essential to the enduring development of the country.
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the intention to acquire control of a bank, repealed the rules on maturity transformation and the limits on banks β medium and long - term lending to firms, simplified the procedures for opening new branches, issued regulations for banks β covered bonds to create a broad and reliable market, and launched a review of all the supervisory legislation with a view to drastically reducing the number of authorizations. public confidence remains essential for the soundness of banks. the bank of italy verifies compliance with the rules on the transparency of banking and financial transactions and services ; the extensive checks it makes at intermediaries help to improve the standard of their dealings with customers. in addition to ensuring contractual correctness, the information banks give to customers must be clear and simple. in order to strengthen the real protection of savers and firms, we plan to review all the legislation on transparency and reduce the bureaucratic formalities. we have launched a new survey on the cost of bank current accounts, among other things to ascertain the importance of structural factors such as the impact of taxation and the excessive use of cash. the recently approved european directive on retail payment services opens the market to new operators, such as large retailers and mobile phone companies ; it increases competition, reduces costs, broadens the supply of services and lays the foundations for an integrated payment system in europe. the bank of italy will support an extensive application of the directive, which it is to be hoped will soon be transposed by parliament. * * * italy has transformed its banking system, begun to put its public finances in order and started to grow again. i have already reported on the progress made by the banking system. the role we played in this regard was neutral, not detached. we indicated the objective, not the actors : to aim for growth, abandoning the parochialism of the past and accepting the challenge of the market. this was where the transformation originated, not in the plans of the authorities. it is now essential that shareholders, households and enterprises clearly discern the benefits, in the shape of stronger banks ready to offer a wider range of services at lower cost. finally, the conflicts of interest that are ever present in the land of cross - shareholdings have to be resolved. the bank will follow all of these developments closely. a modern financial system does not tolerate the mixing of politics and banking. let the separation be clear - cut, and both will be strengthened. for the public finances once again to foster growth and not hamper it, their adjustment
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v leeladhar : indian banks and the global challenges inaugural address by mr v leeladhar, deputy governor of the reserve bank of india, at the seminar on β indian banks and the global challenges β, organized jointly by the indian merchants β chamber and the indian banks β association, mumbai, 31 january 2006. * * * it gives me great pleasure and privilege to participate in the seminar jointly hosted by indian merchants'chamber and iba at a juncture when financial services sector across jurisdictions is going through a strong phase of increasing globalisation. integration of economies leads to integration of financial markets catalyzing the globalisation process. the growing role of the financial sector in allocation of resources has significant potential advantages for the efficiency with which our economy functions. consequently, the adverse consequences of malfunction of the financial system are likely to be more severe than they used to be in the past. hence, all our efforts today are focused at ensuring greater financial stability. given the significance of the indian banking system, one cannot afford to underplay the importance of a robust and resilient banking system. 2. the enhanced role of the banking sector in the indian economy, the increasing levels of deregulation along with the increasing levels of competition have facilitated globalisation of the india banking system and placed numerous demands on banks. operating in this demanding environment has exposed banks to various challenges. the last decade has witnessed major changes in the financial sector - new banks, new financial institutions, new instruments, new windows, and new opportunities - and, along with all this, new challenges. while deregulation has opened up new vistas for banks to augment revenues, it has entailed greater competition and consequently greater risks. demand for new products, particularly derivatives, has required banks to diversify their product mix and also effect rapid changes in their processes and operations in order to remain competitive in the globalised environment. globalisation β a challenge as well as an opportunity 3. the benefits of globalisation have been well documented and are being increasingly recognised. globalisation of domestic banks has also been facilitated by tremendous advancement in information and communications technology. globalisation has thrown up lot of opportunities but accompanied by concomitant risks. there is a growing realisation that the ability of countries to conduct business across national borders and the ability to cope with the possible downside risks would depend, interalia, on the soundness of the financial system and the strength of the individual participants. adoption of appropriate prudential,
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of market infrastructure 5. appropriately, in this context, is an observation made in an imf staff position note 6 in respect of the financial system prior to the crisis : β financial systems and transactions became distorted along several dimensions, that is, financial system grew highly complex, opaque, over - leveraged and heavily interconnected ; liquidity risk was higher than recognized ; large complex institutions enjoyed the benefits of being β too important to fail β and financial intermediation has increasingly shifted to the shadow banking sector. β the two dimensions of systemic risks cutting across specificities, the different perspectives of systemic risks can be grouped into two dimensions β a time dimension and a cross sectional dimension. the time dimension of systemic risks, or what is more commonly known as procyclicality, relates to the progressive build - up of aggregate risk over time. the second dimension of systemic risk β common exposures / interlinkages in the cross section focuses on how risk is distributed within the financial system at any given point in time. an analytical framework to identify systemic risks must operate in both dimensions. assessing systemic risks as i mentioned earlier, the international financial crisis has refocused policy attention on systemic risks and forced us all to think much harder β about what systemic risk means, how it can be measured and what implications does it have for policy. there is a general consensus that systemic risk was underestimated across the board before this crisis and also that there is a pressing need to assess and evaluate such risks on an ongoing basis. considerable efforts are ongoing, both internationally and amongst systemic regulators domestically, to develop a framework for assessing systemic risks and for potentially predicting systemic events. the objective is to put in place an assessment infrastructure which is capable of raising β flags β i. e., signalling trends that could make markets or countries vulnerable to unanticipated events. with the increasing realization that systemic risks per se are generally complex, very often opaque, and always multifaceted, came the realization that the identification of such risks is β risk measurement and systemic risk β, andre icard, deputy general manager of the bank for international settlements, at the fourth joint central bank research conference on risk measurement and systemic risk, european central bank, frankfurt, 8 november 2005. β shaping the new financial system β, the international monetary fund ( imf ) staff position note ( spn ) spn / 10 / 15. bis central bankers β speeches also far from straightforward. it was felt that in order to see β
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, the real gdp growth rate is currently projected to reach 2. 7 percent ( 2. 8 percent in the july assessment ) in fiscal 2013, 1. 5 percent ( 1. 3 percent ) in fiscal 2014, and 1. 5 percent ( 1. 5 percent ) in fiscal 2015 ( chart 1 ). my view is more or less in line with this baseline scenario. to highlight some differences, however, my baseline projections of the real gdp growth rates for fiscal 2014 and fiscal 2015 are somewhat lower than the median of the forecasts. this relatively conservative outlook has remained unchanged since the time of assessment in april ( when the april 2013 outlook report was released ) and july this year. the main reason i have maintained this outlook is that while the additional economic measures to be introduced by the government will likely raise the economic growth rates for fiscal 2014 and fiscal 2015, i believe that at present this positive effect may be offset by other countervailing factors β namely, the moderate recovery pace of real exports and industrial production. indeed, the actual export performance has been unimpressive so far ( chart 2 ) ; and, i judged that the outlook for real exports and industrial production should be adjusted downward to some extent as well. a look at developments in overseas economies shows that the economic growth landscape has changed drastically this year. in other words, the growth dynamic has been reversed, and emerging and commodity - exporting economies are losing momentum while advanced economies are improving. this dynamic is likely to continue since the pace of increase in the economic growth rate is likely to be faster in advanced economies than in emerging and commodity - exporting economies in the future. however, the recovery path in the advanced economies is neither robust nor strong, since their output gaps are likely to remain negative throughout the projection period. 1 although the the imf β s world economic outlook ( october 2013 ) reports that the real gdp growth rate for advanced economies is projected to reach 1. 2 percent in 2013, 2. 0 percent in 2014, and 2. 5 percent in 2015. that for emerging economies and developing countries is projected to reach 4. 5 percent, 5. 1 percent, and 5. 3 percent, respectively. the output gap, whose projection is available for advanced economies up to 2014, is reported to be minus 2. 9 percent in 2013 and 2. 5 percent in 2014. the oecd economic outlook ( november 2013 ) reports that the output gap for the oecd economies is projected to be minus 2. 6
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##suading market participants. schelling once noted that " to communicate a commitment requires more than the communication of words... one has to communicate borio and filardo ( 2007 ) argue that the changes in gdp gap in foreign countries make the slope of the aggregate supply function flatter, while a study by staff of the federal reserve does not support the evidence on the effect of globalization ( ihrig, kamin, lindner, marquez ( 2007 ) ). we need to collect more microeconomic empirical evidence in assessing the price setting behavior of japanese firms, including the issue as to whether calvo - type or taylor - type staggered price adjustments are made. evidence that commitment exits ". it is important to implement monetary actions in a consistent manner based on the fundamental framework notably under the circumstances of imperfect public information. conclusion 16. the new policy framework of the boj has improved both transparency and flexibility. there is room for further improvement in transparency and communication policy. yet, we should be mindful of the limits of our knowledge and of transparency, as well as of the liability to distortion of communication in the process of consensus formation on decision making. references [ 1 ] bernanke, b. s., " the logic of monetary policy, " remarks before the national economists club, december 2004. [ 2 ] borio, c., and a. filardo, " globalisation and inflation : new cross - country evidence on the global determinants of domestic inflation, " working papers no. 227, bank for international settlements, 2007. [ 3 ] habermas, j., " between facts and norms : contribution to a discourse theory of law and democracy, " mit press, 1992. [ 4 ] ihrig, j., kamin, s. b., lindner, d., and j. marquez, " some simple tests of the globalization and inflation hypothesis, " international finance discussion papers, no. 891, federal reserve board, april 2007. [ 5 ] iwata, k., " the role of the price stability anchor in extricating japan from deflation, " at the symposium sponsored by the federal reserve bank of kansas city, august 2005. [ 6 ] iwata, k., " housing and monetary policy in japan, " at the symposium sponsored by the federal reserve bank of kansas city, september 2007. [ 7 ] morris, s., and h. s. shin, "
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main quantitative target pertaining to fiscal policy in imf programs in ssa is government net domestic borrowing. as a fiscal target this has three drawbacks for a frontier market. first, with the deepening of domestic financial markets in these countries, and the possibility of attracting external portfolio investment into the domestic securities markets, rigid ceilings on government domestic borrowing are no longer as critical for macroeconomic stability as they were in the past. second, the domestic borrowing target imparts a pro - cyclical bias to fiscal policy ; when budget revenues fall because of lower than forecast economic activity, public spending must be cut to meet the target. third, it provides only a partial indicator of the stance of fiscal policy β its impact on aggregate demand β which is what matters for macroeconomic management. 5 a more comprehensive indicator would be an appropriate measure of the fiscal deficit, preferably a structural measure of the deficit to avoid a procyclical bias. monetary aggregates monetary aggregates as targets for monetary policy are an effective tool for bringing down inflation from high levels ( which was a priority in the 1990s ), but they are much less useful for controlling inflation when it is already at low levels, because of the instability of money demand. 6 monetary targets are also an impediment to the more activist, discretionary, monetary policy which is needed to meet the challenges facing macroeconomic management in the frontier markets. some form of an inflation targeting lite monetary policy framework is better suited to meeting these challenges ; a monetary policy framework which has been adopted by many emerging market central banks. retaining monetary targets in imf programs is an obstacle to the progressive reform of monetary policy in ssa. floors on net international reserves targets for international reserves are clearly needed for countries facing bop crises in which protecting the international reserves from further depletion is a policy priority. but it is difficult to understand why such targets should be accorded the same priority for countries which have accumulated large holdings of international reserves, equivalent to five or six months of imports and which face no immediate threat to their bop. in these circumstances the targets constrain the country β s capacity to use its own foreign exchange reserves for purposes of exchange rate management. exchange rate policies should be determined on their merits, not as a by - product of an imf program target which is intended for an entirely different purpose. for example, government spending from external grants and loans can make a substantial contribution to the fiscal stance without affecting net domestic borrowing. thornton ( 2008 ).
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25 years ). this is despite their being substantial heterogeneity among ssa economies and the significant changes that have occurred within the same economies over the last 25 years. this begs three questions which i want to address. see brixova and ndikumana ( 2010 ) and imf ( 2010 ). imf ( 2008 ) sets out the rationale for the imf β s engagement in low income countries ( lics ). the imf perceives its role as extending far beyond support for the bop. instead this document states ( page 3 ) : β fund engagement with lics over the past decade has been focused on supporting macroeconomic stability β its key global mandate β as part of broader development efforts to reduce poverty, raise growth and secure progress towards the millennium development goals ( mdgs ) β. bis central bankers β speeches 1. is the technical design of the macroeconomic conditionalities in fund programs still appropriate for the macroeconomic challenges faced by all ssa economies, and in particular for the more advanced economies in the region ; the β frontier markets β? 2. should the imf be more open minded about heterodox policy measures which are being implemented by many emerging market economies in latin america and asia, and which are attracting interest among african policymakers? 3. is there still any value for ssa economies, which don β t face temporary bop problems and don β t need to borrow from the imf, in implementing imf programs? might these programs have actually become counterproductive? the technical design of imf programs in ssa i want to focus here on the design of the macroeconomic conditionalities of imf programs, which are fairly homogenous in ssa ( there is much greater heterogeneity in the structural conditions ). with very few exceptions, imf programs in africa comprise quantitative targets for monetary aggregates, net international reserves, government domestic borrowing and non concessional external borrowing. these are the key targets in an imf program ; in practice, it appears that the structural conditions are accorded less importance. one can argue that the quantitative targets are well suited to a certain type of economy facing specific challenges ; notably a low income economy with a very shallow financial sector, inadequate international reserve cover and for which the key macroeconomic challenge is to restore macroeconomic stability after a period of severe macroeconomic turbulence. this was the situation on uganda in the 1990s ( as well as many other ssa economies at that time
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the wto and with internationally - agreed standards agreed within the imf. it incorporates the minimum standards of banking supervision agreed ( and now subject to revision ) under the basel accord. it incorporates, too, those measures that have so far been agreed at the regional, european, level relating to a wider range of financial services activity in the context of progress towards the single financial market. whether or not these initiatives lead over time towards greater " convergence " of our financial systems in some structural sense β as they may β taken together with national deregulation they should at least contribute to greater competition, including cross - border competition, and help to improve the effectiveness of our financial systems in terms of the key criterion which i suggested earlier in my remarks. that is particularly true, at least potentially, of the steps proposed to advance the european single financial market, as set out in the commission's financial services action plan, because of its broad scope. but progress has so far been painfully slow. in that context i welcome the recent emphasis on closer and more active co - operation between financial regulators within europe, regardless of national regulatory structures. and i particularly welcome the proposals put forward by alexandre lamfalussy and his " wise men " for accelerating progress on measures that would encourage greater efficiency in europe's securities markets. but there is clearly a great deal more that we can do in this whole area. such changes in national financial services regulation, and related international and regional actions, taken together with increasing awareness in many parts of the world of the potential advantages of opening national financial markets to international competition, provide an encouraging environment for a second main driver of change in our financial systems β globalisation. it is a process we are particularly conscious of in london where major financial institutions from all over the world, including, of course, from elsewhere in europe, have long been predominant players, especially in international wholesale market activity. but international ownership of banks ( including newly privatised banks ) and other financial institutions has increasingly become a common characteristic of financial systems in a wide range of other countries. i will not comment further on globalisation, which is certainly very familiar to you, except perhaps to say that i have often been teased by people who talk about the wimbledonisation of the city of london β meaning that we provide the tournament venue but the prizes are mostly carried off by competitors from overseas. i think that many of those people now increasingly understand that it is activity rather than nationality of ownership which creates a competitive market place
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symmetrical inflation target. crucial to the success of such a policy is the ability to anchor inflation expectations on the target. for this to be the case, the target must be clear and well understood. from may 1997 the target was 2Β½ % for rpix inflation. but in december the chancellor gave the monetary policy committee a new target for inflation. it is 2 % as measured by the consumer prices index or cpi, formerly known as the harmonised index of consumer prices. what is this new inflation measure, and how will it affect monetary policy? on the rpix measure, inflation was at or above target for the whole of last year. in contrast, the cpi measure of inflation was below 2 % throughout the same period. indeed, cpi inflation has been below 2 % for all bar three months since may 1997, and it is almost six years since it was last above 2 %. how can it be possible for inflation to move from above to below target - just like that? to answer that question, we need to examine how inflation is calculated. inflation is measured as the increase in the price of a particular basket of goods and services over the previous twelve months. so there are as many measures of inflation as there are baskets. since no two people in this room spend their income on exactly the same items, in principle each of you could construct your own measure of inflation. the office for national statistics calculates an average inflation measure by weighting together the inflation rates of over 650 different goods and services, using as weights the estimated expenditure on each item for a representative household. but where unpublished writings of j. m. keynes, copyright of the provost and scholars of king β s college, cambridge to whom i am grateful for permission to publish this extract. a reference to the letter appeared in skidelsky, r. john maynard keynes volume 1 : hopes betrayed, 1883 - 1920, macmillan, london, 1983, page 280. the official attendance on 13 september was 38, 575 ; the villa scorer was the incomparable clem stephenson, who may have lacked pace but whose passes were, according to contemporary observers, β as sweet as stolen kisses β ; and the β most expensive β right winger for blackburn rovers was john β jocky β simpson who cost blackburn a record fee of Β£1, 850 when he was transferred from falkirk in 1911. do those prices come from? each month - on β index day β ( either the second or third tuesday of the month ) - around
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that can attract long term private investment. the bou has also taken the lead in championing financial inclusion which entails spreading access to financial services to those who currently are not served by financial institutions. finance trust bank is expected to make a very important contribution to the promotion of financial inclusion given the nature of its customer base. i would also like to mention that, through the uganda bankers association, the commercial banks have put in place financial literacy campaigns aimed at educating the public about financial services. these campaigns augment the bou β s financial inclusion efforts. bis central bankers β speeches on the regulatory front, your excellency assented to the anti - money laundering act last year. this legislation is essential to our efforts to combat money laundering, the effects of which on our economy and society are pernicious. in addition, legislation is in the pipeline to provide a regulatory framework for islamic financial services and banc assurance. the east african payments system went live last year and this enables financial institutions to speed up settlement of cross border transactions and to support the growth of trade in the east african community. with these remarks allow me to once again extend my heartfelt congratulations to finance trust bank for the successful transition to a commercial bank. thank you very much for listening to me. bis central bankers β speeches
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emmanuel tumusiime - mutebile : fostering a strong financial sector in uganda speech by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the official launch of finance trust bank ltd., kampala, 17 january 2014. * * * your excellency, the president of the republic of uganda honourable ministers honourable members of parliament the board of directors, finance trust bank the managing director and staff of finance trust bank distinguished guests ladies and gentlemen i am honoured to be here this evening for the launch of finance trust bank. i would like to begin by congratulating the shareholders, the board of directors, the management and staff of finance trust bank who have all worked tirelessly to bring about the conversion of the institution from a tier 3 microfinance deposit - taking institution to a commercial bank. this latest entry to the commercial banking industry in uganda has its origins in the uganda women β s finance trust that had been started in 1984 with the objective of providing financial services to low income people in uganda, especially women. it has thus been providing financial services to ugandans for 30 years. in particular, it has provided services to low and medium income segments of the population with a specific focus on women and the youth, offering a wide range of services like savings and loans, bill payments and money transfer services. the history of this institution demonstrates that it is committed to contributing to one of the nation β s strategic development priorities ; that of promoting inclusive growth. at the time of becoming a commercial bank in november last year, finance trust had a capital base of ugx 28 billion, it had ugx 43 billion in customer deposits, and ugx 59 billion in loans. the bank has a network of thirty one branches and six automated teller machines across the country. the transformation to a commercial bank will enable finance trust bank to widen its customer base. the bank β s capital base has increased and business volumes are expected to follow suit. however, the introduction of new products and the expansion of the bank β s portfolio require diligent board and senior management oversight to ensure that the risks which will attend this expansion are managed prudently. your excellency, the bank of uganda is committed to fostering a strong and vibrant financial sector which can contribute to the economic growth of the country while maintaining the safety of depositors β funds. the bou is also committed to maintaining macroeconomic stability which is the essential bedrock of a vibrant economy
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two global factors, region - specific factors have contributed to the recent deceleration in the global economy. the chinese economy has shown some weakness due to the lingering impact of deleveraging policy measures, together with trade tensions. in the euro area, exports have decelerated, automobile production has been hampered by delays in adjusting to new emissions regulations, and business sentiment have deteriorated due to heightened uncertainty regarding political and economic conditions. in short, these several factors have contributed to the slower pace of growth in the global economy. what then are the prospects for the global economy? the most recent world economic outlook from the international monetary fund ( imf ), published in april, indicates that the global economy will regain positive momentum during the second half of this year. first, economic policy measures in china and other regions will gradually begin to take effect. china has decided to implement or has already implemented a range of policy measures since the second half of last year, including fiscal and monetary policies. some asian emerging economies are also expected to increase fiscal expenditures. in emerging economies in general, monetary policy space has increased as the federal reserve has adopted a patient stance regarding its policy normalization. concerns over capital outflows, currency depreciation, and heightened inflation have also eased relative to last year. second, production adjustments are likely to show progress in it - related goods. manufacturers in asia, including those in japan, are now in an adjustment phase, but production of electronic parts is expected to turn around and increase gradually in due course. however, there remains a high degree of uncertainty regarding these prospects, and the downside risks are large. among them, i will touch upon four risk factors here. the first is the impact of trade tensions. although trade negotiations seem to have progressed somewhat, a number of issues remain to be resolved. due to the widening range of tariff increases, trade costs may rise, and corporate activity could be subdued due to reconsideration of production sites and global value chains. the second risk is the effects of economic policy measures, such as those in china. china has implemented a range of tax reduction measures, together with an increase in infrastructure investment. the effect of these tax reductions, however, depends on the extent to which households and firms increase their spending. households'and firms'spending is affected by their sentiments and prospects for the economy. since we have seen heightened uncertainty regarding, for example, trade tensions, we should be cautious about the effectiveness of these policy measures. the
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##ulating economic and financial sector imbalances. looking back on history, we have seen how asset bubbles in stocks and real estate, as well as excessive lending by financial institutions, have contributed to overheating the economy, and vice versa, and how current account deficits and accumulated external debt have become the source of crises. one lesson history teaches us is that, by helping to stem the source of crises, appropriate economic policy management is definitely the first line of defense in crisis prevention. rigorous monitoring of the global economy and financial conditions is crucial to detecting the early signs of crisis. with this in mind, we intensively examine global economic and financial conditions at every g20 meeting. of course, experience has taught us the difficulty of prior detection of excessive activities and imbalances. that is why we also need to prepare crisis management policy tools to prevent crises from spreading. the imf's lending facilities play a crucial role in such crisis management. one of the important functions of the imf is to provide short - term lending to a country with a balance - of - payments crisis. the imf's role in times of crisis has become even more important as international trade and financial transactions have expanded. besides the imf lending in times of crisis, regional financing arrangements ( rfa ) are also expected to be used. in asia, the chiang mai initiative multilateralization ( cmim ) is one such arrangement. japan, china, korea, and the asean countries participate in the initiative. once a crisis occurs, each country is expected to provide the funds necessary to prevent the crisis from spreading. in order to mobilize funds promptly, there is the so - called de - link portion of the fund. this portion comprises 30 percent of the total funds, and is not directly linked to the lending from the imf. we have also seen an expansion in bilateral swap agreements. when a crisis occurs, countries can use a swap agreement to exchange their currency for another in order to obtain the funds needed for international transactions. in short, we now have multiple layers of measures to cope with global financial crises, with imf lending playing the central role, supplemented by regional financing arrangements and bilateral swap agreements. thanks to this enhancement of international financial architecture, together with the strengthening of financial regulations following the global financial crisis, it is fair to say that the resilience of the global economy and financial system has been increased. nevertheless, it is important to remain vigilant as global financial and economic
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treaty, was given to the escb on several grounds. central banks have a large body of inside knowledge which may help in the exercise of prudential supervision, and measures to counter financial market fragility may, on the other hand, have monetary aspects which should be discussed by central banks. 10 moreover, information held by the escb, for instance, in the context of its role in the oversight of payment systems may be of great use for supervisory authorities. payment systems oversight and prudential supervision focus on avoiding systemic risks and safeguarding the soundness of financial institutions. at the same time, it should be stressed that the flow of information from ( instead of to ) the supervisory authorities and a mutually fruitful cooperation between supervisory authorities and central banks are crucial, with the latter being entrusted with a contributory task in the field of macro - prudential supervision. 11 the ecb has pointed out in various opinions that see r. smits, the european central bank, institutional aspects ( kluwer international, 2000 ), p. 340. r. smits ( ibid ), p. 342. β central bank access to prudential information and cooperation between financial supervisory authorities and central banks are essential for the conduct of macro - prudential monitoring, the oversight of payment systems and the safeguarding of other market infrastructures, which are in turn essential for the smooth conduct of monetary policy β. if we examine closely the current eu legal framework applicable to the exchange of information between central banks and supervisory authorities, we note that the eu treaty is β asymmetric β since it does not contain any provisions requiring the banking supervisory authorities to contribute to the performance of the tasks under the responsibility of the ecb or the escb, in the same way that the ecb and the escb contribute to the smooth functioning of supervisory policies. this may have historical roots : the national supervisory authorities, unlike the ecb or the escb, are not community law bodies and do not have a european mandate enshrined in the treaty. however, this entails some limitation in the ability of the ecb and the escb to perform their tasks. one has to take into account a series of facts that make this problem less acute. first, a number of central banks in the euro area perform supervisory functions and therefore have easy access to supervisory information. second, european secondary legislation, namely a number of community directives applicable to the financial sector β and, for instance
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, the capital requirements directive ( crd ) β addresses the issue of the cooperation and exchange of information at eu level between supervisory authorities themselves but also between banking supervisory authorities and central banks. the crd identifies a number of exceptions or β gateways β through which member states may authorise confidential information to be disclosed, in most cases subject to conditions of professional secrecy. this directive provides in particular that exchange of information should be authorised between supervisory authorities and central banks in their capacity as monetary authorities. third, in previous opinions on draft national laws, the ecb has observed that virtually all member states that have adopted supervisory models based on an independent financial supervisory authority have included provisions stipulating a duty of cooperation and authorising the exchange of information between central banks and supervisory authorities. 12 against this backdrop, it is essential to eliminate all legislative obstacles that prevent supervisory authorities from providing information to the ecb and eurosystem central banks on specific banking and financial institutions as well as to guarantee more generally a duty of cooperation between central banks and supervisory authorities, whose ultimate purpose is to put in place effective and practical arrangements for cooperation and information - sharing. this should be a priority in the european union. the european commission has recently launched a public consultation on possible targeted amendments to the crd 13 which includes aspects relating to cooperation and exchange of information between banking supervisory authorities and central banks. more specifically, the proposed amendments to the crd include two new provisions. first, β in an emergency situation, member states shall allow competent authorities to communicate information to central banks in the eu when this information is relevant for the exercise of their respective statutory tasks, including the conduct of monetary policy, the oversight of payments and securities settlement systems, and the safeguarding of financial stability β. second, the consolidating supervisor should alert the relevant central banks and communicate to them all information that is essential for the pursuance of their tasks should an emergency situation, see, for instance, the opinion of the ecb of 5 november 2007 at the request of the austrian ministry of finance on a draft law amending the law on banking, the law on savings banks, the law on the financial market supervisory authority and the law on the oesterreichische nationalbank ( con / 2007 / 33 ), paragraph 2. 4. 1 or the opinion of the ecb of 9 march 2006 at the request of the polish minister of finance on a draft law on the supervision of financial institutions ( con / 2006 / 15 ), paragraph
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will not only improve the operational risk managements of banks but also foster confidence in the banking system. on another note, i would like to take this opportunity to remind everyone that while the delivery platforms for products and financial services may have changed, the banking industry is exposed 3 / 6 bis central bankers'speeches to the same risks credit, liquidity, market, and operational, among others. as such, as we put more resources on information technology systems and infrastructure. an important part of risk governance is having the effective policies, practice, and systems in place to combat money laundering and terrorist and proliferation financing. please allow me to briefly discuss the philippine β s recent inclusion the financial action task force β s grey list. the financial action task force ( fatf ) included philippines in its latest β grey list β of countries, which means that the philippines will be under increased monitoring as we prove our progress against money - laundering and terrorist financing. if we as a nation fail to institute the recommended measures, this may potentially increase the cost of doing business with filipinos, as regulators and financial institutions add another layer of scrutiny on our transactions. while we have not yet received any report on changes in the cost of transactions, we continue to engage different stakeholders to inform them of the actions taken by the country to address the remaining issues identified in the mutual evaluation report. indeed, the philippines swiftly acted on the concerns raised in the report and took a whole of government approach in addressing the issues. we have completed our key commitments and continue to do so in the midst of our fight against the ill effects of the pandemic. on our part, the bsp remains steadfast and committed to implement initiatives aimed at further strengthening banking system β s framework and defenses against money laundering, terrorist financing and proliferation financing risks. we will continue with our strategic initiatives to promote awareness and enhance the capabilities of our supervised financial institutions against these risks. moving on, the bsp believes that digitalization and financial inclusion are mutually reinforcing goals. it is in this light that the bsp is espousing an enabling environment to promote responsible and responsive innovation while at the same time ensuring that attendant risks are prudently managed. promoting the growth of the digital financial ecosystem is a win - win proposition for the industry and the public. on one hand, digitalization will allow financial institutions to broaden their client base, tap other revenue sources, and improve operational efficiency. on the other hand, financial consumers will benefit in terms of
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may consider sponsoring or conducting studies to contribute to the growing literature on the philippine banking system. we will be happy to be your partner in this endeavor as we also recently created a bsp research academy. the bsp looks forward to our continued partnership in retooling, reskilling, and shaping the professional development of our colleagues in the banking industry. i would also like to recognize the officers and committee chairpersons of the baiphil in the past year under the leadership of our very own assistant governor resty cruz. under their leadership baiphil remained strong and productive despite the ongoing crisis. maraming salamat at mabuhay po tayong lahat! 6 / 6 bis central bankers'speeches
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six months of the life of the ecb and the transition from the emi will be released to the media on thursday 15 april 1999. it was also agreed to release the ecb β s first monthly bulletin on tuesday 19 january 1999. β 5 β swap agreements with the federal reserve system and norges bank the governing council took the opportunity of the forthcoming introduction of the euro on 1 january 1999 to review and adjust existing swap agreements between euro area central banks on the one hand and the federal reserve system and norges bank on the other. first, the governing council jointly agreed with the federal reserve system that the existing bilateral agreements of six euro area national central banks β the central banks of belgium, germany, france, italy, the netherlands and austria β with the federal reserve system will be allowed to lapse as they expire. second, the current swap agreements between euro area national central banks and norges bank will be replaced by a new swap agreement between the ecb and norges bank amounting to euro 1, 535 million as from 1 january 1999. ecb budget for 1999 the governing council approved the ecb β s budget for 1999, which gives the ecb the green light to recruit around 150 additional staff ( both permanent and temporary ) needed to support the new operational activities which the ecb will take on from 1 january 1999. this will bring the ecb β s permanent staff to around 700, with nearly 50 limited contract staff. * * *
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it is an encouraging signal that financial market participants are apparently prepared to attribute a credibility bonus to our stability - oriented monetary policy shortly before its official start. at the current juncture, the outlook for the euro area economy is still very much influenced by the uncertainties surrounding the evolution of the world economy in 1999. these uncertainties have negatively affected indicators of industrial confidence in the euro area and have fuelled expectations of a slowdown in economic activity in the short term. very recently, a first estimate of real gdp β 3 β growth in the euro area in the third quarter of 1998 has been released by eurostat, suggesting a growth rate of 2. 4 % against the third quarter of 1997. this would be around one - half of a percentage point lower than the average growth rate of 3 % in the first half of 1998, compared with the first half of 1997. other indicators of real activity were mixed up to november. while order books and capacity utilisation point to a less optimistic assessment of growth prospects, consumer confidence remained high and retail sales continued to increase at a broadly stable pace up to september, i. e. the latest month for which data are available. also, the decline in unemployment, after pausing in the summer months, resumed, with the rate of unemployment decreasing from 10. 9 % in september to 10. 8 % in october. the factors underpinning the currently low increases in the hicp continued to include falling energy prices, downward movements in producer prices, subdued wage growth and slight decreases in unit labour costs. on balance, the overall environment described above does not point to significant upward or downward pressure on prices in the short term, as also reflected in all available forecasts for 1999. nevertheless, factors contributing to risks to price stability on both sides need to be taken into account. on the one hand, downward risks relate to the global environment and potential repercussions on the euro area, for example via import prices and further pressure on producer prices. these developments will be monitored closely. on the other hand, unexpected upward pressure on wages and a relaxation of the fiscal stance would clearly alter the general environment. therefore, we will also carefully monitor the outcome of ongoing wage rounds, the plans for fiscal policy in 1999 and over the medium term, as well as their implementation towards compliance with the stability and growth pact. in conclusion, the actual situation, characterised by monetary growth compatible with continued price stability and the absence of immediate upward or downward pressure on prices, justifies
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stanley fischer : β the paris club at fifty β address by professor stanley fischer, governor of the bank of israel, at the celebration of the 50th anniversary of the paris club, paris, 14 june 2006. these remarks were prepared for presentation at the β fiftieth anniversary conference of the paris club β, to be held in paris on june 14, 2006. i am grateful to mark allen of the imf for helpful discussions. * * * it is a pleasure and an honor for me to take part in this celebration of the fiftieth anniversary of the paris club β both as a former official of the imf, who learned so much from the former chairman of the paris club with whom i had the pleasure of working for over five years, and as governor of the bank of israel. the paris club is the gifted child of the french tresor. but it is also in many ways a british institution β and i take that to be a compliment. it is a club, a voluntary gathering of interested parties, it operates without a written constitution, it operates case - by - case, and it displays a remarkable pragmatism and flexibility that has enabled it to evolve and deal with an enormous variety of debt problems over the years β over 400 agreements with over 80 debtor countries and more than $ 500 billion rescheduled. in performing its essential task, it has stood the cause of development well over the past fifty years. and at the age of fifty, it faces new challenges that ensure that it will have to continue to evolve with the times. i. debt relief like the bank for international settlements, the paris club grew out of the need for debt relief β a need which has been with us for as long as debt has existed. in gradually developing a flexible set of rules for granting relief on inter - governmental debts, mostly the debts of developing countries, the club has made a major contribution to the orderly operation of the international financial system. the principle of conditionality is critical. by making the conditionality that of the imf, the paris club gained at least two major benefits for the international community : that of operating with the fund β s skilled professionals, who understand how to design and monitor an economic program ; and the legitimacy of operating within an institutional framework in which both the creditors and debtors are members. in turn, by putting the imf at center stage in developing and enforcing conditionality, the club contributed to the development of the fund β s analytic and
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operational approach. there are nonetheless major questions about the effectiveness of the combination of conditionality, concessional loans, and debt relief. these can be summarized by recognizing that many countries that received conditional debt relief once, received it again β and again. the underlying question is why it has turned out to be so difficult for many of the poorest countries to begin to grow on a sustained basis, despite receiving aid that amounted to double digit percentages of their gdp over long periods, and despite being in imf and world bank programs. i suspect that if we were to go back to the participants in paris club discussions in the fifties and sixties, they would say that income levels in many of the countries whose debts they rescheduled are much lower today than they would have imagined in their most pessimistic moments. these concerns relate mainly to some african countries. many african countries have been growing more rapidly recently, so maybe we are beginning to turn a corner. the renewal of growth is helped by the global commodities boom, and the fact that several african countries are now exporters of oil. developments in south africa are encouraging, and south african growth affects the countries around it. nigeria too is making progress, helped by a paris club agreement and by the price of oil. but the facts remain that the number of people in poverty in africa is increasing, that a greater share of the world β s poor live in africa than ever before, and that aids and other diseases are exerting a devastating effect on populations in many countries. it is easier to raise questions about the effectiveness of conditional debt relief than to answer them. for the problem is not particularly that of conditional debt relief, it is rather the question of what development strategies are most likely to succeed. i will not go into that question in any detail now, beyond saying that while we know many of the necessary conditions for growth, we do not yet know the sufficient conditions. over the course of its lifetime, paris club rescheduling became increasingly far - reaching. the original approach of flow rescheduling combined with new money lasted for about thirty years. in the late 1980s under the brady plan, paris club reschedulings began to include relief on the stock of debt. now we all know that to a first approximation what matters is the present value of the debt, so that there is no difference in the economics of flow versus stock reschedulings. 1 nonetheless the shift from flow to stock debt reduction was a major change
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benoit cΕure : which models do we need in times of crisis? speech by mr benoit cΕure, member of the executive board of the european central bank, at the bank of france, cepremap, federal reserve bank of atlanta and centre d β analyse strategique international conference on β macroeconomic modeling in times of crisis β, paris, 26 october 2012. * * * i would like to thank peter mcadam for his contributions to these remarks. i remain solely responsible for the opinions expressed herein. ladies and gentlemen, i would like to thank the organisers for inviting me to this conference. we are living in extraordinary times. unprecedented challenges call for bold policy action, but the bolder we are, the more we need solid, principle - based policy analysis. this is all the more challenging as the crisis has also exposed weaknesses in our existing tools. this conference gives us a chance to reflect on the lessons that can be learnt and on how we can proceed. let me share a few ideas based on the ecb β s experience. prominent economists β akerlof and shiller, buiter, krugman and mankiw, 1 as well as popular opinion2 β have concluded ( from different perspectives ) that the current generation of micro - founded theory - based models have somehow taken a wrong turning. others β among them kocherlakota, lucas and woodford3 β have reached a more positive assessment. others still ( such as john taylor ) point less to models and more to policy : specifically, the failure to adhere to the policy rules derived from those same models. 4 the truth probably lies somewhere in between. thus, i take the view that while we should acknowledge the contribution of our models, we must likewise acknowledge their limitations and make improvements. it β s worth reminding ourselves where we are and what β s been achieved. policy interventions by the ecb, the federal reserve system and other central banks β lowering policy rates to historic lows and employing non - standard measures such as infinitely - elastic liquidity provision or the ecb β s new β outright monetary transactions β β have certainly eased financial market pressures. although we are still grappling with tensions in credit and sovereign debt markets, and with the painful adjustment of our economies, the financial system is recovering and we are working hard to strengthen that process. in addition, banks are replenishing their capital buffers and the institutional foundations of the euro are being strengthened, e
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. g. references : buiter. w. ( 2009 ) : β the unfortunate uselessness of most β state of the art β academic monetary economics β, financial times, 3 march 2009 ; akerlof, g. and shiller, r. ( 2009 ) : β animal spirits : how human psychology drives the economy, and why it matters for global capitalism β, princeton university press ; krugman, p. ( 2010 ) : β the international finance multiplier β. new york times, 22 march. mankiw, n. gregory ( 2006 ) : β the macroeconomist as scientist and engineer β, the journal of economic perspectives 20 ( 4 ) : 29 - 46. 23. kay, j. ( 2011 ) : β the map is not the territory : an essay on the state of economics β, available at http : / / www. johnkay. com / 2011 / 10 / 04 / the - map - is - not - the - territory - an - essay - on - the - state - of - economics. for example, see woodford β s recent essay β what β s wrong with economic models? β, institute for new economic thinking, research note 9, 2012. lucas, r. ( 2009 ) : β in defence of the dismal science β, economics focus section, economist 6 aug. kocherlakota, narayana ( may 2010 ) : β modern macroeconomic models as tools for economic policy β, banking and policy issues magazine. federal reserve bank of minneapolis. http : / / www. minneapolisfed. org / publications _ papers / pub _ display. cfm? id = 4428. john taylor has argued that protracted departures from well - known normative policy prescriptions based on consensus macroeconomic models ( such as those based on the β taylor rule β ) have contributed to the crisis. taylor, j. ( 2009 ) : β getting off track : how government actions and interventions caused, prolonged, and worsened the financial crisis β, hoover institution press publication. bis central bankers β speeches through the fiscal compact and the forthcoming banking union, together with improved regulatory frameworks. these decisions have not been taken in an intellectual vacuum. the notion that the great recession would have exposed fundamental flaws in economic theory can be firmly dispelled. it is my conviction that more than ever β and here i quote john maynard keynes β β madmen in authority β¦ are distilling their frenzy from some
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no widespread bank runs : in general depositors did not line up at their bank and request their deposits, even for banks that were widely reported to be in poor financial condition. this is likely the case because of the widespread understanding of u. s. federally insured deposit insurance, which protects depositors β funds up to the current limit of $ 250, 000, and the presence of the discount window, by which banks can increase their cash holdings to meet withdrawal demands without having to sell assets at panic prices. 12 however, the financial crisis of 2007 β 09 manifested another type of run on banks as well as non - banks, a run on the short - term, non - deposit debt issued by the intermediaries. this is a point made clearly by gary gorton ( 2012 ). these runs weren β t clearly and easily visible to the public, and this fact impeded the quick understanding of the severity and potential consequences of the run that was underway. i β ve outlined two strains of thought that provide models for us to understand the mechanisms that amplify what might initially be small shocks into large and dangerous events for the economy : the procyclical leverage of financial intermediaries and their sensitivity to measures of financial risk, such as volatility, and the potential for private intermediaries to issue moneylike instruments. when the economy is vulnerable to a financial crisis β that is when the levels of debt are high and the macroeconomy is at or past a peak, and in some cases, a housing boom is ending β then financial intermediary leverage and the issuance of money - like debt instruments can become excessive. such excess can lead to a rapid scramble to deleverage β that is, to reduce levels of debt, causing fire sales and failures of financial intermediaries, which, in turn, confers further distress on the financial economy and the working of the prior to october 3, 2009 the fdic limit on deposit insurance was $ 100, 000, but was raised on that day to $ 250, 000, for a temporary period. the dodd - frank act made the expansion in the insurance limit permanent. bis central bankers β speeches macroeconomy generally, as important sources of credit are blocked from reaching households and firms. in essence, i β ve argued that there are two views of the mechanisms that could lead to a crisis : one is about excessive leverage or the scarcity of loss - bearing capacity that builds up in an expanding economy
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stock of vacant homes will shrink when foreclosures fall and more empty homes are sold or rented out. on the sales side, even though low mortgage interest rates and falling home prices have together boosted housing affordability to its highest level in 40 years, the current pace of sales is quite sluggish. impediments to home sales include tight lending standards, a weak job market and continued uncertainty about home prices. importantly, the large drop in home prices between 2006 and 2008 also reduced homeowner equity broadly, making it more difficult to β trade - up β and move into better homes. with lower home prices, many families now owe more on their mortgages than their homes are worth. this means that they cannot refinance or sell their homes easily if they experience a crisis such as a job loss or a serious illness. foreclosure completions are at an all - time high, although the initiation of new foreclosures may be finally slowing. recently, attention has focused on cases where some of the documentation used in the foreclosure process may have been flawed. the fed actively encourages efforts to find viable alternatives to foreclosure. not many people know this, but a team of new york fed officials work with mortgage counselors and community activists to support distressed homeowners, and our lawyers support legal aid programs for people facing foreclosure. at the same time, it is important that foreclosures that comply with the law can ultimately take place. this is a necessary part of returning the housing market to more normal conditions. along with two other agencies, the fed is reviewing the foreclosure practices at the major bank mortgage servicers. we are also keeping an eye on banks β potential liabilities where they made representations about mortgages bought by investors that may not have been correct in all cases. we want to ensure that the housing finance business is supported by robust back - office operations β for processing of new mortgages as well as foreclosures β so that homebuyers and investors have full confidence in the process. we are monitoring developments closely in order to evaluate any potential impact on housing or financial markets and the overall economy. economic conditions in upstate new york now let me turn to economic conditions in upstate new york. it is no secret that this region has struggled with weak economic growth and population loss in recent decades. the region has experienced some very painful economic restructuring, particularly as it lost so many of its
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right now. if they expect that the prices on average would rise, then, they can be said to be harboring high inflation expectations. a central bank can gauge this situation by conducting periodical inflation expectation surveys. second, a consumer price index, compiled to measure the changes in the cost of living of a given group of people, may show a continuous increase over a substantial period of time. it indicates an unstable situation in the macro economy leading to an upward movement in the general price level. the presence of either situation requires a central bank to go into action against fighting inflation. this means that, even if the consumer price index shows stability or a relatively low growth, the central bank cannot stop taking inflation fighting measures. what a central bank should do is to eradicate the cause rather than pampering with the symptoms. it is similar to a physician who does not take delight when he observes that the high fever of a patient has subsided. the physician would not stop his curative treatment, until the cause of that high fever is totally eliminated. there appears to be a general tendency for equating increases in the cost of living with inflation. an increase in the cost of living occurs when the basket of commodities consumed by a given group of people entails a higher cost. as mentioned earlier, this is measured by compiling a consumer price index. a central bank cannot do anything about the increases in the cost of living, since it does not produce goods and services. that is why john exter, the founder governor of the central bank, remarked in his very first press interview that β β¦ the bank does not itself produce goods and services. it will facilitate it by creating right monetary conditions β implicit in these β right monetary conditions β is the need for attaining economic and price stability in its totality. inflation is a much wider phenomenon than the cost of living. it entails the absence of stability in the macro economy leading to an increase in all the prices at the same time. a consumer price index measures the price impact on a consumption basket consisting of only consumer goods. in contrast, inflation occurs when the prices of all goods, consumption, intermediate, investment and inputs, rise at the same time. it elevates the general price level to a higher level, including those of the consumer goods. the above misunderstanding may lead to the pitfall of a central banker trying to stabilize the value of a cost of living index through artificial means. it can be attained by fixing price ceilings or granting price subsidies
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we all have to push ourselves to a greater productivity level. we have to, β’ work smarter, β’ combine better, β’ deliver results, β’ get it right. it should be noted that the private sector has continued to make commendable efforts in order to improve productivity in the country. what can the icc sri lanka do? icc sri lanka too can play a prominent and essential role. since your organization establishes the business stance on broad issues of trade and investment policy as well as on vital technical or sectoral subjects including financial services, information technology, telecommunication, marketing, environment, transportation and etc., a vital role can be played in articulating the need for improving productivity. do it now. this will be a major contribution that you make to our country.
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jorgovanka tabakovi : instant payments, global inspiration speech by dr jorgovanka tabakovi, governor of the national bank of serbia, at the opening of the conference " instant payments, global iinspiration ", organised by the national bank of serbia, belgrade, 6 march 2024. * * * ladies and gentlemen, on the brink of a new era, we have gathered at the conference themed " instant payments, global inspiration " to jointly embrace the future of innovative types of payments that is approaching us at a fast pace. as the governor of the national bank of serbia, i have not only the honour and privilege, but also a deeply personal responsibility to open this gathering, which is a reflection of our shared commitment to creating a more inclusive, accessible and efficient economic environment. critical for the development of the economy, as well as of the payment ecosystem, are stable and predictable business conditions, echoed by the movement of macroeconomic indicators. despite the challenges posed by global uncertainty, the national bank of serbia carefully weighed its decisions and gradually tightened its monetary policy stance in the fight against inflation, using all instruments on hand, and has thus contributed to the preservation of the country's overall macroeconomic stability. regardless of the multidimensional crisis β the pandemic, the energy crisis and the situation in ukraine, even in conditions when many developed countries are struggling with recession, we have managed to maintain economic growth and record employment gains. since peaking in march last year, inflation has been on a steady downward path and we expect it to continue down going forward. the fall in inflation was largely aided by monetary policy with a measured but well - timed increase in interest rates, which also had a favourable effect on the stabilisation of inflation expectations. early last year, when double - digit inflation rates were recorded, i pointed out repeatedly that at the end of 2023 it will be at a twice lower level β and that has come true. the strong fall in inflation continued this year as well. in january, y - o - y inflation declined further, to 6. 4 %, fully in line with our nowcast model. our estimate is that inflation slowed down further in february, to around 5. 5 % y - o - y. we continue to keep a close eye on domestic and international factors, ready to take additional measures if necessary. for more than a decade, the national bank of serbia has maintained the stability of the exchange rate through well - timed and
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have proved we can do it. and as we do it, we also signpost the way and serve as an example for many countries around the world. the national bank of serbia receives compliments from institutions such as the european central bank, international monetary fund, world bank, while many countries from different continents asked to learn from us and we generously provided our help. in light of seneca's wise words : " if one does not know to which port one is sailing, no wind is favourable, " i am thinking about the journey undertaken by the nbs. this quote reflects the very essence of our efforts : to have a clear vision and goal ahead of us. it is precisely this clarity of direction that has enabled us to turn each challenge into an opportunity and each effort into a step towards success. it took time, patience and unremitting commitment to achieve what we have today β a serbia which is on the map of global leaders in innovation. in the digital world where borders are disappearing faster than ever it is our responsibility to serbian citizens to make clever use of the technological development. to integrate new opportunities and raise the standard of security and reliability in financial exchange. innovation is what differentiates a leader from a follower. all of us here today have the opportunity to change things and introduce new products and services, but responsibility goes hand in hand with this. by trimming interbank fees, we directly reduced the costs for merchants, facilitating their decision to accept payment card payments. in addition to the nbs ips system, i 2 / 3 bis - central bankers'speeches must also mention our dinacard and numerous activities to develop the national card system. it is an important pillar of independence of the national payment system. in a sound way, it contributes to the profitability of accepting card payments, wider availability of payment services, all of which has a direct positive impact on further economic development and the reduction of the grey economy in serbia. as the central bank, we feel a connection with each individual whose life we can make better. and i also believe that we share with you a vision where payment services are not a privilege, but the right of each man. for centuries we have lived in a region where we are often at a crossroads, where our decisions and actions take place in a more or less dramatic context or circumstances. and this is not likely to change. but our doubts and hesitations today will always be the greatest impediment to our achievements tomorrow. for this
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is to achieve the ultimate objective for islamic finance that will contribute significantly toward the overall development of our economies, through the intermediation process to facilitate trade and investment. moving forward, it is the ability of islamic financial industry to build key strengths and enhance institutional capacity, intensify the collaborative efforts to strengthen the effectiveness of the islamic financial infrastructure and the acceleration of its global integration that will provide the synergies and opportunities for the islamic financial industry in the face of this more challenging environment. in doing so, islamic finance can evolve into an important component of the international financial system that can contribute to enhance prospects for balanced global growth and shared prosperity.
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##sb and the existing standard setting body embraced common objectives, l do not see any difficulty in integrating the international standards with the islamic prudential standards. this will contribute towards the development of a robust and resilient islamic financial system that can effectively preserve financial stability and contribute to balanced growth and development. this will also facilitate the integration of the islamic financial system as a viable component of the global financial system. over the years, the islamic financial industry has adopted the adaptation approach in the formulation of islamic financial products and services. although there are islamic financial instruments that are distinct from the conventional financial instruments, the numbers are still few. in most instances, the islamic financial products are repackaged along the features of the conventional financial products, while eliminating the elements that are not in - compliance with the shariah. while this adaptation can continue, the downside risk is that islamic financial instruments will always have to β catch - up β with the pace of product development in the conventional system. efforts should therefore be intensified to develop new financial products that embodied the virtues of islamic banking. this would evolve islamic financial instruments into distinct, innovative and cutting - edge products. innovative instruments such as the sukuk have attracted interest from both the islamic and conventional markets. one of the central issues towards developing a dynamic islamic financial industry is the shariah. the shariah should always be viewed as an enabler to innovation and creativity, rather than a constraint. on the contrary, innovation and creativity is strongly advocated. efforts therefore, need to be enhanced to fully appreciate and maximise the true potential and wisdom of shariah. thus, there is a need for greater collaboration among the shariah scholars, practitioners and researchers to undertake in - depth studies and research to originate products. this would provide the fundamental foundation towards developing a dynamic islamic financial system. an issue that needs to be addressed is the development of a pool of intellectual capital for islamic finance. the investment in adequate expertise for the development of islamic financial instruments and services need to be made. in this regard, there is a need for islamic financial players to intensify efforts in the training and development of expertise in the various specialised areas. such islamic financial programmes would benefit from a comprehensive approach, encompassing both conventional banking and islamic banking, complemented with shariah. the dynamism of the islamic financial industry can only be demonstrated through a pool of talent that possesses convictions and expertise in islamic finance. our quest to create a dynamic islamic financial system
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prudent to identify the issues that limit women β s access to financial products and services and explore innovations to expand the access to affordable financial services to women at all income levels. ladies and gentlemen, ultimately this summit offers us the opportunity to identify and propagate key actions that financial sector market players and policy makers need to take to invest differently in women and towards building stronger financial sectors and competitive economies in africa that are inclusive. we should therefore identify the policy drive expected in this regard and be the agents of the change required towards this end. the rt. hon. prime minister, with these few remarks, it is now my pleasure and duty to welcome your rt. hon. raila odinga of the republic of kenya to make a few remarks and to welcome you to address this forum. rt. hon. prime minister, you have the floor.
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njuguna ndung β u : investing differently in women speech by prof njuguna ndung β u, governor of the central bank of kenya, at the african women β s economic summit, nairobi, 18 β 20 march 2010. * * * the right hon. raila odinga, prime minister of the republic of kenya ; hon. uhuru kenyatta, deputy prime minister and minister for finance of the republic of kenya ; mrs. graca machel, founder, new faces, new voices network ; dr. donald kaberuka, president, african development bank ; distinguished guests ; ladies and gentlemen : first, rt. hon. prime minister, may i take this opportunity to thank you most sincerely for finding time from your busy schedule to grace this important forum whose theme is investing differently in women. your presence demonstrates the seriousness with which the government of kenya embraces the role of women and participation in the development process and more importantly their role in the financial sector. may i also heartily thank the new faces, new voices network ( nfnv ), the founder madame graca machel and the african development bank ( afdb ) represented by the president, dr. donald kaberuka for choosing to host the inaugural african women β s economic summit ( awes ) in nairobi. this is a great honour to us in kenya. i also warmly welcome all international delegates represented here including fellow central bankers from the region. the rt. hon. prime minister, the central bank of kenya is delighted to partner with afdb and nfvn in this summit especially when the central bank and indeed the government of kenya is in the process of promoting more inclusive financial policies. in the recent past, the government has introduced new institutions to support, shape and deepen the financial sector. examples include : licensing and supervision of deposit taking microfinance institutions ; savings and credit co - operatives ( saccos ) and the saccos regulatory authority ; amendment of the banking act to allow shariah - compliant banking products ; licensing of credit reference bureaus to facilitate credit information sharing ; agent banking for cost effective financial outreach. since we have seen commercial bank branch expansion by over 100 branches in three years, deposits have increased from ksh. 800 billion on to ksh. 1. 01 trillion and accounts from 2. 4m to 8. 4m in the same period. the rt. hon. prime minister, as we commence deliberations at this important summit, it is
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which has proved essential to growing our global financial business and underscores our legacy of innovation in financial infrastructures. however, to remain competitive in an ever - evolving landscape, we must continuously build upon this rich heritage. as financial technology takes centre stage in the future of finance, we invite you to join us in showcasing hong kong's innovative mindset and ability to conduct pioneering work in the tokenisation market. by doing so, we not only reinforce hong kong's status as a premier international financial centre, but also create an environment for new business opportunities, talent and expertise. our commitment to innovation will continue to draw global players and skilled professionals to our city, fostering a vibrant digital asset ecosystem. together, we can position hong kong as a leader in the financial technology revolution, ensuring that we remain at the forefront of the global financial landscape. thank you. 3 / 4 bis - central bankers'speeches 4 / 4 bis - central bankers'speeches
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policy. for the past twenty years, the meetings have been held on the first tuesday of each month, except in january. of course, meetings can be convened at any time, if needed, and the board can be contacted by phone in the event of some urgent matter. such events are rare, though they have occurred occasionally in the past. it has come to be regarded as a good thing, however, that policy decisions are, in normal circumstances, taken at meetings with a known schedule. such a schedule for decision - making meetings, as well as for regular documents ( such as the quarterly statement on monetary policy ) is increasingly the norm internationally. even some countries that do not have a decision - making board have established a fixed timetable for making and announcing decisions on monetary policy. this is quite efficient, in that it helps financial markets and other observers in allocating their own resources β they know when to pay attention! β and lessens unnecessary speculative activity. internal processes the monthly schedule naturally provides the rhythm for the staff β s efforts. in the case of the economic group, the process begins about two weeks or so before the board meeting date ( that is, not long after the previous meeting has finished ). relevant desk staff who monitor the data flow begin the preparation of comprehensive documents giving details of all the relevant information. this documentation ultimately forms part of the detailed briefing paper on the economy presented to the board, and is updated continually as the information comes in ( some of the key data, like the cpi, typically come in quite late in the process ). at the same time as the documents are in preparation, there is a sequence of meetings. around twelve days prior to the board meeting, we in the economic group hold a staff meeting to focus on the available economic information. we review data on the rest of the world, domestic economic activity, prices, wages, the labour market, and financial conditions. the full range of economic data is quite extensive : we track over 2000 data series on the australian and international economy. hence the focus has to be on those pieces of information that are most significant and potentially view - changing. we are also exposed to relevant pieces of analytical or research work which can inform our assessment of the economy β s development. at this meeting, there is a good deal of questioning about various elements of the figures, and in particular about apparent contradictions or tensions which inevitably arise in the short run data flow. much of the process of data analysis for the purposes of policy
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, it is also important that wage settlements move away from automatic, backward - looking indexation mechanisms. turning to the monetary analysis, annual m3 growth rose to 9. 3 % in november. this represents its highest annual rate of growth since the introduction of the euro and, indeed, its strongest aggregate growth in the euro area group of countries since 1990. while the significance of monthly figures should not be overstated, as they may also be influenced by temporary factors, the series of strong monetary data over the past couple of months underscore the continued very dynamic underlying rate of broad money expansion in the euro area. rising short - term interest rates, in combination with low long - term interest rates, have exerted only a limited influence over monetary developments in recent months. this has mainly taken the form of shifts among the components of m3 rather than constraining the overall expansion of m3 itself. in particular, over recent months the annual growth rate of m1 has moderated somewhat, reflecting shifts from overnight deposits into other components of m3 that offer more market - related returns. all in all, the rate of monetary and credit expansion remains rapid, reflecting the low level of interest rates and the strengthening of economic activity in the euro area. in particular, the annual growth rate of loans to the private sector was 11. 2 % in november, unchanged from the previous month. while β in the context of rising interest rates β the growth of household borrowing has shown signs of stabilisation in recent months, albeit at very high rates, the growth of borrowing by non - financial corporations continues to trend upwards. thus, credit continues to expand rapidly and in a broadbased fashion, thereby remaining the main driver of the current strong monetary growth when viewed from the counterpart side of the mfi balance sheet. taking a medium to longer - term perspective, the latest developments are consistent with a continuation of the persistent upward trend in the underlying rate of monetary expansion. following several years of robust monetary growth, the liquidity situation in the euro area is ample by all plausible measures. continued strong monetary and credit growth in an environment of ample liquidity point to upside risks to price stability over the medium to longer term. monetary developments therefore continue to require very careful monitoring, particularly against the background of improved economic conditions and continued strong property market developments in many parts of the euro area. to sum up, annual inflation rates are projected to hover around 2 % this year and next, with risks to this outlook remaining on the upside. given
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so that minority shareholders are better represented on the board. audit committees are now a requirement and many banks now have nomination and compensation committees to reduce the power of the major shareholders. most also have risk management committee or, at least, asset and liability management committee. to further increase transparency, commercial banks now have to announce at the end of each month their npl level, penalties and fines imposed by the authorities, as well as the amount of their related lending. by year - end, we will launch the director's handbook for the financial community and further encouraging increased transparency of appointment and compensations. of course, we cannot change others without changing ourselves at the bank of thailand. our reorganization strategy focuses on four aspects, namely organizational structure and work process, human resource management, decision - making process, and database and information technology. our hierarchical structure has now been reduced from a total of seven layers to four. authorities and responsibilities are being further delegated toward a lower level to the operating officers in charge. this helps reduce the previously lengthy approval process and increase our flexibility. new departments have been established to better cope with the rapidly changing economy and the rising information need of the organization. these include the data management group, the information and public relation group, the planning group who conducts a bank - wide risk assessment as well as a new department of risk management and information technology examination, who monitor risk profile and risk management at the financial institutions. in addition, our business processes are now more client - oriented with a new website, new voice - mail, and new central point of contacts being offered as services to our stakeholders. both the netherlands and thailand are small open economies in the world market. to survive the tide of globalization, we both need a well thought out strategies. we have to choose our battleground and cooperate with friends around the world. to do this, local strength has to be further strengthened while lessons and technologies must be learnt from others. here, international co - operations through jointed ventures, through foreign direct investment, or through international trade will play major roles in our successes. on this front, thailand has done remarkably well, registering a substantial increase in net inflow of foreign direct investment in the four years following the crisis despite the overall net capital outflow due to debt repayment within the banking sector. foreign direct investment ( to the non - bank sector ) increased from an average around 1. 4 billion us dollars during 1992 - 1996 to 3. 4 billion us dollars during 1997 - 2000
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, published a new vision and strategy document ( vision 2010 ) for the nps in april this year. the purpose of this document was to provide high - level strategic guidance for the payment system up to 2010. finally, there appears to be a general misunderstanding that the bank has a " hands off " approach to the oversight and regulation of the nps. i would remind all nps stakeholders that section 10 ( i ) ( c ) of the south african reserve bank act states clearly that the bank, " perform such functions, implement such rules and procedures and, in general take such steps as may be necessary to establish, conduct, monitor, regulate and supervise payment, clearing or settlement systems β. furthermore, as i noted earlier, the 2004 amendment to the nps act makes provision for the bank to issue directives pertaining to the nps. we raise this issue as the bank will soon be issuing directives in terms of the nps act which will regulate non - bank participants in the nps for the first time. we have noticed that the number of nonbank participants has increased to the extent that the risk associated with their operations and the risk that they bring to the clearing and settlement environment requires some formalisation. of particular relevance in this regard are system operators and third party service providers, who mostly operate in or on behalf of the retail sector. we want to make it clear, particularly to the banking sector, that strict regulation will be applied as far as the nps is concerned. this should not be perceived negatively, nor do we wish to stifle innovation or competition in the industry. however we need to apply strict supervision and regulation to both bank and non - bank participants in the critical area of the nps and avoid the risk of turbulence that may emanate from a hands - off approach to regulation. this may require some adjustment to current structures in the nps and the bank will have to start playing a far more prominent role in areas such as supervision, regulation and licensing of participants. we also need to ensure that these newly regulated entities have channels to engage with the bank and other stakeholders, including pasa, in a fair and transparent way. the bank has already initiated discussions with various international central banks and consulted with nps stakeholders with a view to adopting a model which will facilitate such engagement. this may take some time but i can assure you that the bank will continue with the collaborative approach it has used for nps matters in the past before making any final decisions in
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norman t l chan : hkma and the protection of bank customers speech by mr norman t l chan, chief executive of the hong kong monetary authority, at the kpmg luncheon talk, hong kong, 11 july 2013. * * * ayesha ( macpherson lau ), distinguished guests, ladies and gentlemen, first of all, let me thank ayesha and kpmg for inviting me to this luncheon talk. when i took up the post of the chief executive of the hkma in 2009, we were faced with the aftermath of the lehman brothers saga. as most of you would remember, there was immense public pressure on enhancing the protection of consumers and investors. my colleagues in the hkma and i have regarded this as one of our priority areas and we have put our hearts and souls into strengthening our regime on banking conduct supervision in the past few years. in 2010, i set up two new departments, namely the banking conduct department and the enforcement department, within the hkma. these are important milestones in the development of the hkma, and we have indeed turned a new page in protecting bank customers, be they consumers or investors. i would like to take the opportunity of today β s luncheon talk to share my thoughts on this. why should we provide protection to bank customers? first, let me pose a question β why should we provide protection to bank customers? β the answer is quite simple. in modern times, most societies would demand proper protection of consumers when they purchase a wide variety of goods and services, such as food, electrical appliances, drugs, health care and financial services. consumers, as compared to suppliers and their intermediaries, are normally in a disadvantaged position in terms of product knowledge and bargaining power. therefore, they need to be protected from unscrupulous sales practices or misrepresentations. regardless of what kinds of goods or services are involved, the basic principle in consumer protection is that consumers should be treated fairly. in essence, what it means is that consumers should be able to know what they are buying, the costs involved and all other relevant terms and features of the transactions and should not be subject to high handed sales tactics. in hong kong, when a customer walks into a typical retail bank, he or she can undertake a wide variety of financial transactions, ranging from conventional banking services, such as deposits, currency conversion, credit cards, remittances and loans, to the purchase of wealth management or insurance products.
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peter praet : remarks at the fibi annual lunch speech by mr peter praet, member of the executive board of the european central bank, at the federation of international banks in ireland ( fibi ), dublin, 23 september 2015. * * * in recent years the global economy has witnessed a set of economic and financial conditions that were considered barely possible in the years of the β great moderation β. interest rates across advanced economies have fallen to very low levels. in the euro area we have even seen negative yields out along the yield curve : at one point in april 2015 up to about 36 % of euro - denominated government bonds were in negative territory. and inflation in most advanced economies has remained subdued : in our case it has followed a prolonged downward drift since late 2011 and still remains stubbornly low. what i would like to explain in my remarks is how we arrived at this situation, and how we can return to a situation that, looking retrospectively, would be considered β more normal β. my main message is that the euro area is still going through the correction phase of a pronounced financial cycle, and while monetary policy has a vital to role to play in supporting demand through that transition, it must be complemented by other policies to achieve a strong and sustained recovery from the crisis. the causes of the current situation the low growth and low interest rate environment we see in the euro area today is in part a secular phenomenon. the growth rate of total factor productivity ( tfp ) has been slowing in the euro area for decades. population growth has also declined from about 0. 7 % in the early 1970s to around 0. 3 % in recent years. this has been mirrored in the long - term decline of real interest rates, as lower tfp and population growth implies lower demand for investment and for loanable funds. but secular trends do not explain fully the current situation. cyclical forces also lead to fluctuations around secular trends, especially when driven by the financial cycle, and such forces are still at play in the euro area today. demand conditions, while improving, appear relatively weak for the early stage of the business cycle. this is largely explained by the legacy of the financial crisis. specifically, the euro area is coming out of a β balance sheet recession β, where a build - up of excessive debt set the conditions for a sharp downturn, which in turn created the need for substantial deleveraging and balance sheet repair, prolonging the length of the slump
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premium which should translate into lower interest rates. third, enhanced awareness among borrowers through simplified factsheet and no pre - payment penalty on microfinance loans would enable them to easily switch between lenders. fourth, a reduction in the minimum threshold of microfinance loans for nbfc - mfis from 85 % of net assets to 75 % per cent of total assets is expected to lower their concentration risk and cost of funds. fifth and finally, an increase in the maximum threshold on microfinance loans for other nbfcs from 10 % to 25 % of total assets should increase competition. all these five elements should collectively help in bringing down the credit cost for the borrower. addressing regulatory arbitrage and operational inflexibility 4 / 7 bis - central bankers'speeches in 2011, microfinance sector was still evolving and there was a need to introduce a rulebased regulatory framework to bring some order in the sector. over last decade, the sector has come a long way. the prudent practices in the microfinance sector are well laid out and are better understood now. therefore, product specific requirements for microfinance loans such as an absolute limit on loan amount, limit on number of lenders, minimum tenure of loan, etc., which were anyway applicable to only nbfcmfis, have been withdrawn. the new framework provides the flexibility to lenders to customize their products and services to better meet the needs of microfinance borrowers. while the harmonization of regulations between the two largest contributors to microfinance loan portfolio viz., nbfc - mfis and banks has been deliberated extensively, harmonization of regulations between nbfc - mfis and other nbfcs has not received the required attention. i would like to highlight one significant change that has been introduced to address the risks in the business models of some nbfc - mfis. earlier, the threshold on microfinance loan portfolio of nbfc - mfis was calculated as a percentage of net assets which meant that nbfc - mfis could potentially have a significantly large share of their total assets deployed in the form of'bank balances '. it was observed that some of the nbfc - mfis were largely acting as the business correspondents of the banks thus subverting the entire premise of the business of a financial institution as provided under the reserve bank of india act i. e
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including of course the bank of canada, the office of the superintendent of financial institutions, and the canada deposit insurance corporation. ultimately, it is the minister of finance who is responsible for the sound stewardship of the financial system. conclusion prudent, conservative policies have provided significant support to canada's housing market, through both good times and bad. this point has been amply demonstrated, during the recent recession β where many countries saw imbalances roil their housing markets β and in the ongoing recovery here in canada. the current revival in our housing sector was a desirable, and intended, part of canada's economic recovery, but like all good things, it must be carefully monitored to ensure that it doesn't go to an extreme. you can be sure that the bank of canada will be closely watching developments in the housing sector and taking them into account in our decisions on monetary policy and in assessing financial stability. in setting interest rates to achieve the inflation target, housing developments need to be weighed along with all the other factors influencing economic activity and inflation. in assessing financial stability, we focus on the potential risks to the whole financial system. in carrying out these responsibilities, we are committed to promoting the economic and financial welfare of canada, by fostering confidence in the value of money, and in the safety and efficiency of our financial system. with that, i wish you a happy and prosperous 2010.
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timothy lane : canada's housing sector in recession and recovery β beyond bricks and mortar remarks by mr david wolf, adviser at the bank of canada, on behalf of mr timothy lane, deputy governor of the bank of canada, at the edmonton chartered financial analyst ( cfa ) society, edmonton, 11 january 2010. * * * good afternoon, thank you for inviting me to speak with you today. the beginning of a new year is a good time for reflection β a chance to look back over the past 12 months and consider what may lie ahead. certainly, 2009 saw remarkable economic and financial upheaval around the world, which plunged canada into a severe recession. a global recovery has begun, however, and as we look ahead, we can be confident that this recovery will become more deeply entrenched as the year progresses. today, i will discuss some trends in the canadian economy, focusing on a particularly important sector : housing. the strengthening of the housing market β especially in the resale market β over the past few months has been striking. housing is of considerable interest to the bank of canada, from two perspectives. first, it is important to consider the housing market when formulating monetary policy. the housing sector is a crucial part of the canadian economy, and it typically plays a disproportionate role in economic cycles. housing wealth provides collateral for household borrowing and spending. increases in the cost of housing are an important element in consumer price inflation, and demand for housing is a gauge of household confidence. the housing market is also very sensitive to changes in interest rates, so it can provide an important channel through which monetary policy may influence the economy. second, experience shows that increases and collapses in house prices have been driving forces behind bouts of financial instability in many countries. because the purchase of a home is the most significant reason for household borrowing, housing looms large on the balance sheets of both homeowners and financial institutions. this nexus between financial system stability and the housing sector has been vividly illustrated by the developments in the u. s. housing market over the past two years. the painful correction in the u. s. housing sector was at the root of that country's financial system turmoil that started in august 2007 and then spread around the world, triggering the global recession. canada has been spared such drama, both in this recession and in recent history, and this has drawn much international interest. therefore, it's important to understand the policies affecting the housing market,
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njuguna ndung β u : sustainable finance initiatives across the kenyan financial sector remarks by professor njuguna ndung β u, governor of the central bank of kenya, at the technical experts convening on long - term sustainable finance in kenya, nairobi, 11 february 2015. * * * dr. achim steiner, executive director, unep ; mr. manuel moses, regional head, ifc africa ; distinguished participants ; ladies and gentlemen : it is my pleasure to welcome you to this convening together with my co - host, dr achim steiner. my thanks go to dr. steiner and mr. manuel moses for putting together this forum. our meeting today follows yesterday β s convening with chief executive officers and leaders of regulatory agencies from the financial sector. ladies and gentlemen : i was impressed at the level of enthusiasm and ownership of sustainable finance by the ceos at yesterday β s convening. we should also be proud of the already budding sustainable finance initiatives across the kenyan financial sector ranging from banking, insurance, capital markets, retirement benefits and asset management. these initiatives will be shared with you in the course of today. my key takeaway from yesterday β s convening is that there is high level support at ceo level for sustainable finance in the institutions represented here today. ladies and gentlemen : wearing my dual hats as a central banker and regulator, let me underscore that sustainability lies at the heart of our decision making. as a central bank, we take the view that we need to go beyond our traditional mandate of price and financial stability. in emerging economies such as kenya, it is imperative that central banks also act as market development agents. in this role, central banks support development of financial infrastructure, strong institutions and a conducive policy environment. it is this underlying philosophy that has guided us in execution of our mandates that i will now turn to. first, stability of domestic prices creates an environment of certainty. the market formulates long term solutions based on this certainty. when there is uncertainty, the market develops a waiting option and slows down economic activity. a waiting option is not sustainable. ladies and gentlemen : second, we can only talk about financial sustainability when the financial markets are accessible. financial inclusion will lead to financial development and open discussions about policies for financial sustainability. several initiatives in kenya for financial inclusion include : β’ introduction of mobile phone financial services, β’ introduction of the agency banking model and currency centres to lower the cost
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interest of determining how credit affects aggregate demand, a clear understanding of what motivates the private sector to seek bank credit enables the industry to react in a timely manner. and by identifying constraints, it can propose modalities for overcoming them. at the top in this agenda is to link it to investment. is our investment constrained by credit? we need to know more. ladies and gentlemen : the body of research work arising from the conference β s theme will obviously not be definitive ; but it will surely provide a good platform for reflection on the many ways through which the banking industry is readying itself towards further enhancing its role in the economy β s progress. there is also a possibility that ideas will emerge which have a quick response that can be put into practice in the short run ; furthermore, there is an opportunity to pick areas for further investigation. i am confident that the banking industry, that has remained stable on the back of the steady growth seen over the past decade, will continue to play an important role in supporting the various economic sectors through provision of credit. with an asset base of ksh. 2. 70 trillion as at the end of december 2013 compared to ksh. 2. 33 trillion as at the end of 2012, the industry is clearly maintaining the growth path. similarly, customer deposits grew by 14 percent in the period from ksh. 1. 71 trillion to ksh. 1. 94 trillion. the banking industry β s asset growth of 16 percent between 2012 and 2013 at a time when the economy β s real growth rate was less than 5 percent points to the possibility of the acceleration of the growth momentum emanating from finance. that growth will be accelerated once the overall cost of doing business that is being addressed, declines. this will ensure that the underlying asset quality accompanying the growth in the banking industry remains good. as a country, we are making strides in ensuring that financial inclusion is enhanced. the finaccess 2013 survey results revealed that kenya β s financial inclusion landscape has undergone considerable improvement. the proportion of the adult population using different bis central bankers β speeches forms of formal financial services was at 66. 7 percent in 2013 compared to 26. 4 percent in 2006. this is a notable achievement. the proportion of the adult population totally excluded from financial services has declined to 25. 3 percent in 2013 from 38. 4 percent in 2006. similarly, the proportion of kenyans accessing informal financial sources dropped from 35. 2 percent in 2006 to 7. 8 percent
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financial products that can meet the needs of savers throughout their life cycle. the availability of a wide range of savings instruments for savers is a necessary pre - requisite for effective mobilisation of the nation's savings. indeed, the ongoing evolution of an innovative, dynamic and diversified financial system in malaysia will not only help malaysians save, but also invest effectively for their future by facilitating the more efficient allocation of personal resources. thank you.
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and would urge the participation of all financial institutions in this effort to promote the use of electronic payments in the country. thank you.
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re excited by the initiatives that you, the private sector, have taken to model the risks and transform the financial markets. i believe you can drive innovation and might even be able to provide a more significant lever to advance global change. however, at a time of rapid change it is also important to analyse innovation within the public sector so as not to create new risks. so therefore, we hope to continue our dialogue and work on this challenge together. or, in other words, as we are now in the β grand ballroom β of the okura hotel : together, let us face the music and dance. let β s dance together! thank you.
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alongside financial stability comes another topical issue in development debates across the globe, financial inclusion. for the financial system to be relevant to society, it needs to ensure that as much of the eligible target population has opportunity to access a variety of financial services ranging from credit, savings and payments, transfers, pensions, capital markets and insurance services. inclusion is an essential pre - condition to enhancing wealth creation and poverty reduction and ultimately broad based economic development. the consultative group to assist the poor ( cgap ) defines financial inclusion as a β state in which all people who can are able to have access to a full suite of quality financial services, provided at affordable prices, in a convenient manner, and with dignity for the clients β. these financial services are bis central bankers β speeches delivered by a range of providers, most of them private, and reach everyone who can use them, including disabled, poor, rural, and other excluded populations. ladies and gentlemen : why should we, as regulators, be concerned about the levels of financial inclusion in our respective jurisdictions? individuals and households lacking adequate access to a full range of responsibly delivered, affordably priced, convenient, formal financial services would be severely constrained in participating fully in the economy. as an entity, the financial sector would also face bleak prospects in terms of expansion and longevity, which holds back overall economic development. but more importantly, financial inclusion is supported by financial stability. in kenya, the proportion of the population totally excluded from formal financial services, as revealed by the finaccess 2006 and 2009 surveys, stood at 38. 3 % and 32. 7 % respectively. the proportionate reduction between the years is largely attributable to the advent of mobilebased financial services which have indeed revolutionized the provision of formal financial services and availed these to the market affordably and conveniently. for us to bring costs of financial services down, we need full inclusion. ladies and gentlemen : given the statistics above, as financial sector regulators, we share common aspirations of making the financial sector more stable, efficient and accessible. though these objectives may at times appear competing, they are for the most part complementary. stability is a pre - requisite for efficiency, while both are in turn required to raise inclusion. in cognizance of this, the central bank, jointly with other players, has undertaken several initiatives and reforms aimed at boosting overall inclusion. these include : licensing of deposit taking microfinance institutions ( dtms ), focusing
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hermann remsperger : real - time data and monetary policy welcome address by professor hermann remsperger, member of the executive board of the deutsche bundesbank, at the bundesbank conference on β real - time data and monetary policy β, eltville, 28 may 2004. * * * ladies and gentlemen, i have the pleasure of welcoming you to our conference on β real - time data and monetary policy β which has been organised by heinz herrmann, athanasios orphanides and pierre siklos. our conference concentrates on the uncertainty about the actual level of key macro variables. until a few years ago, this issue received little attention in the academic debate on monetary policy. this has changed dramatically over the last few years, not least under the influence of economists attending this conference like athanasios orphanides or dean croushore. awareness of the measurement problems in real - time data has important consequences. one could separate them into two classes which i would like to term β ex post β aspects on the one side and β ex ante β aspects on the other. with β ex post β aspects, i mean the implications for the empirical analysis of monetary policy. for instance, we have learned that the evaluation of forecasts based on final data may be misleading because it does not take into account which data were actually available at the time the forecasts were made. or, as another example, when analysing monetary policy decisions, it is important to reconstruct the information set available to policy makers at the time the decisions were made. with β ex ante β aspects, i mean the implications of measurement problems for the conduct of monetary policy. this category includes questions like β how can we learn from past data revisions to improve our knowledge about future data? β or β how will the awareness of these measurement problems influence our policy decisions and the choice of our monetary policy approach? β. obviously, all these topics are interlinked. answers to these questions require real - time data sets for key variables like real and nominal gdp, potential output and inflation. at first glance, developing a real - time data set seems to be rather simple - just enter old data into spreadsheets and save them for future use. but in practice, old data are usually overwritten by new data without saving the older vintage. producing a real - time data set thus requires a substantial amount of effort, including digging through old source data and figuring out what data were
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international commercial banking groups we should not assume a monolithic approach to resolution. it is not a case of one size fits all. what i have described could work for banking groups that issue plenty of debt. it would not work so easily for groups operating commercial banks around the world that are funded pretty well entirely from insured deposits. if they haven β t issued bonds, then there would be no bond holders to bail in. it has become fairly common to say that such groups should be resolved on a regional basis, ie broken up. maybe. but, even if that is correct, it is obvious that β break it up β is an incomplete resolution plan. what happens to the broken - up parts? under a β breakup β strategy, one needs a plan for each of the parts, both the distressed and the undistressed parts of the group. under the fsb standard ( ka 11. 8 ), it is clearly the responsibility of the home authorities of the group to ensure that a group wide resolution plan exists. there is no ducking that. it removes an ambiguity that has quietly haunted banking authorities for decades. imagine that some of such a group β s regional / local commercial banks are smallish and simple, but that others are very large and complex. ( contrary to what is sometimes imagined, commercial banking can be complex! ) to the extent that the group β s problems are in a bank ( s ) that is relatively small and simple, standard β purchase & assumption β techniques can be employed. ie break up that bank into a good and bad bit ; and effect a sale of the good and economically critical parts, aided by an injection of resources, in the usual way, by the deposit insurance scheme, up to but not beyond what it would have had to pay out to insured depositors in a liquidation. the critical services are thereby maintained, and the dis becomes a creditor in the administration and realisation of the rump. at the end of that process of realising the assets in the rump, the deposit insurer learns how much it has lost. i want to stress that the di typically incurs losses but discovers how much ex post. bis central bankers β speeches now imagine that the commercial bank subsidiary in question is big and complex. the realisation of the assets via a standard rump - administration is liable to destroy a lot of value, increasing the deposit insurer β s losses. and in any case that strategy may not be consistent with maintaining stability
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green finance. in my view, these should be resisted. while carefully circumscribed independence is highly effective in delivering price and financial stability, it cannot deliver lasting prosperity and it cannot address broader societal challenges. calls for the bank to solve broader challenges ignore the bank β s carefully defined objectives. and they often confuse independence with omnipotence. that is not to suggest that in a liquidity trap, fiscal policy would not have an important and powerful role. but even if that unfortunate circumstance were to come to pass, those decisions are best taken by governments. central banks are fiscal price takers ; the government is the stackelberg leader. in summary, in my view, all these issues underscore the value of a careful deliberate review of the current monetary framework, and the value of today β s research workshop. conclusion to conclude, the flexibility in the uk monetary policy framework means that the mpc has been able to support the uk economy through the changing of the seasons. despite the economy being buffeted by diverse and sizable shocks since the recovery began, inflation has averaged 1. 7 % ; gdp growth has generally been robust, averaging around 2 %, and above the subdued rate of potential supply growth. the wide margin of spare capacity present after the crisis was absorbed, unemployment is at multi - decade lows and employment at an all - time high. real wages have finally returned to relatively strong rates of growth. inflation expectations have remained anchored to the target, even when cpi inflation has temporarily moved away from it. this performance underscores that the bar for changing the regime is high. but it is nonetheless healthy to review it periodically, and that review is supported by the bank β s active research agenda. today β s workshop is organised with that in mind, and we appreciate all your contributions to help focus our research efforts. there is an old saying that there is no such thing as bad weather, just inappropriate clothing. with the economic climate changing, let β s ensure that the bank remains well suited to deliver its mission to maintain price and financial stability in support of the good of the people of the united kingdom. all speeches are available online at www. bankofengland. co. uk / news / speeches
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projections ahead of the referendum, which were conditioned on a vote to remain. estimates of the drag from brexit vary, but to give some perspective, the level of uk gdp is currently some 3 % lower than might have been expected given how demand in the rest of the world has evolved since june 2016. 22 supported by the package of monetary policy measures, the broad - based global expansion and fiscal easing in late 2016, uk growth did rise above the subdued rate of potential supply growth. over the course of 2017 and 2018, unemployment continued to decline and spare capacity was steadily used up. as the labour market tightened and companies found it harder to recruit and retain staff, wage growth began to pick up as expected ( chart 11 ). across the economy as a whole, pay growth rose from around 1Β½ % a year during 2010 - 15 to around 2ΒΌ % in 2016 and 2017 and 3 % in 2018. 23 although these rates of pay growth were still lower than pre - crisis averages that largely reflected weak productivity growth. as a result, indicators of domestic inflationary pressures, such as unit labour cost growth, rose towards rates consistent with the inflation target. the steady absorption of slack and the prospect of moving into excess demand by the end of the mpc β s three - year forecast period β evident in the dots showing the successive inflation report projections in chart 10b β reduced the degree to which it was appropriate to accommodate an extended period of inflation above the target. as a consequence, the mpc began to remove some of the policy stimulus, raising bank rate from ΒΌ % to Β½ % in november 2017 and then to ΒΎ % in august 2018 where it has remained since. this comprised : a 25 basis point reduction in bank rate to 0. 25 % ; a term funding scheme to reinforce the pass - through of that cut to the borrowing rates faced by households and companies ; Β£60 billion of gilt purchases ; and Β£10 billion of corporate bond purchases. the fpc cut the counter - cyclical capital buffer rate to zero, increasing credit availability by up to Β£150 billion ; emphasised that banks β liquidity reserves are usable ; and amended the leverage ratio framework for uk banks by excluding central bank reserves. the pra board used regulatory flexibilities to smooth insurers β transition to new regulatory standards in a very low interest rate environment. this estimate is based on the approach to construct a β synthetic β measure of uk gdp described in β the economic outlook : fading global tailwind
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rate curve. we should also describe the uncertainty in comparisons of different repo - rate paths. monetary policy is a more or less continuous process. we normally make decisions on the repo rate and renew our assessment of the repo - rate path every second month. there is always considerable uncertainty over economic developments, particularly in the longer run. but that does not matter so much. we gradually adapt our monetary policy to new information and new forecasts to be able to keep inflation close to the target and resource utilisation at a sustainable level. bis central bankers β speeches figures figure 1. gdp calculations in the long - term surveys gdp at fixed prices, index 1970 = 100 outcome lu70 lu75 lu78 lu80 lu84 lu87 b lu87 r note. r refers to the reference alternative and b to the balance alternative. sources : ministry of finance and statistics sweden figure 2. forecast for gdp according to the convergence programme gdp at fixed prices, index 1994 = 100 outcome convergence report 1995 sources : ministry of finance and statistics sweden bis central bankers β speeches figure 3. gdp with uncertainty bands annual percentage change, seasonally - adjusted data - 2 - 2 - 4 - 4 90 % 75 % 50 % outcome forecast - 6 - 8 - 6 - 8 sources : statistics sweden and the riksbank figure 4. cpi with uncertainty bands annual percentage change 90 % 75 % 50 % outcome forecast - 1 - 1 - 2 - 2 sources : statistics sweden and the riksbank bis central bankers β speeches figure 5. cpif with uncertainty bands annual percentage change 90 % 75 % 50 % outcome forecast sources : statistics sweden and the riksbank figure 6. forecasting performance for gdp and cpi 1 - rmse / sd, number of quarters ahead in time gdp cpi 0. 8 0. 8 0. 6 0. 6 0. 4 0. 4 0. 2 0. 2 note. prior to the vertical line, the forecasts partly contain outcomes. sources : the riksbank and own calculations bis central bankers β speeches figure 7. forecasting performance for gdp, cpi and unemployment 1 - rmse / sd, number of quarters ahead in time gdp cpi unemployment 0. 8 0. 8 0. 6 0. 6 0. 4 0. 4 0. 2 0. 2 note. prior to the vertical line, the forecasts partly contain outcomes. sources : the riksbank and own calculations figure 8. repo rate with uncertainty bands per cent, quarterly
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enormous. contracts that would have taken some time to establish themselves in a pit can be quickly listed on screen at relatively little cost. trading is now possible in such diverse commodities as electricity, telecoms bandwidth and even the weather. the organisers of this event may, in future, be able to hedge their exposure to fluctuating wine prices using exchange - traded futures based on the finest premier cru, i suspect this is one contract where traders would be happy to go to physical delivery. we central bankers will have to stick to our usual vin ordinaire. in any event it will be fascinating to see what other contracts emerge over the coming months. of course, not all contracts that are launched will be successful, and it β s interesting to reflect on what makes a successful derivative contract. lessons can often be learned from looking back to the past. not far from this location is the home of the london metal exchange. its origins can be traced back to 1571, when traders in metal and a range of other commodities began meeting at the royal exchange. what was originally a domestic market in physical metal became a major global market, and by the early 19th century traders had been forced to use nearby coffee shops. as the uk started importing large quantities of metal from abroad during the industrial revolution, the need emerged for importers to protect themselves against price movements during the long voyage from places like chile and malaysia. the β futures β market which developed from those humble beginnings continued to grow and, in 1877, the london metal exchange company was formed. that market was successful for a number of reasons. volatility in the price of the underlying product made the contract attractive to hedgers and speculators alike. technology - the telegraph would you believe! - encouraged the market β s growth by making shipment arrival dates more predictable. the lme had a first mover advantage that still stands. liquidity flourished as traders followed one another in using the new market. so there are a number of lessons for today β s exchanges, to do with the need to respond to market needs, the need to make full use of available technology, and so on. role of clearing houses it will be very little surprise to many of you that, as the central bank, the aspect of these developments which interests us most is the management of risk. clearing houses have traditionally played a central role in the derivatives markets and continue to do so as those markets expand. they are also increasingly active in the underlying cash markets.
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credit crunch has been discussed. foreign ownership without the participation of all customers and stakeholders has not prevented the stock exchange from raising capital β on the contrary. more recently and amid much media attention, danish and norwegian banks and danmarks nationalbank have sold their shares in nets. this has done away with a structure in which banks were both owners and customers of and in some cases also competitors to nets. it has eliminated a number of rather obvious opposing interests among the company β s owners and provided a more suitable framework for operating nets on commercial terms β which will ultimately benefit the end users of payment services : citizens and firms. vp securities is another jointly owned company that has undergone a transition from its establishment as an independent institution in 1980 over its conversion into a limited liability company in 2000 to now operating in a market where the framework conditions are changing radically. the single most important change in this area is the establishment of target2 securities β t2s β the future trans - european securities settlement platform. at the same time, the securities sector is being thoroughly harmonised. so these years european central securities depositories are changing from being national monopolies to operating on competitive terms. vp has decided to join t2s and will soon have to make a number of strategic choices as regards its position in a competitive environment. as i mentioned earlier, danmarks nationalbank is or has been a co - owner of several jointly owned companies. each shareholding has its own history. however, i would like to take this opportunity to emphasise that danmarks nationalbank β s role is that of an authority, including in relation to oversight of the financial infrastructure. our role is not to be a co - owner of competitive companies operating on commercial terms. for this reason we have gradually begun to withdraw from such companies. the first step was taken when we sold our shares in nets. since danmarks nationalbank had acquired those shares, pbs / nets had developed into an international enterprise competing with other companies offering advanced payment solutions in multiple countries. it was clearly no longer a company in which a central bank should have a stake. furthermore, we wanted to be beyond reproach in relation to performance of our oversight tasks, which also comprise nets. bis central bankers β speeches another jointly owned company in which danmarks nationalbank should at some point divest its shares is bks cash service. danmarks nationalbank and the banks established bks in order to support a secure supply of cash. we did so in response to several
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has shown double - digit growth rates since 2004. the banks have strongly penetrated the market for home financing with their mortgage loans. in addition, the risk appetite of many households has increased β supported by the marketing efforts of a number of banks. business lending gathers steam later in an upswing when business enterprises invest more than their internal sources of financing can support. business lending reached double - digit growth rates at the end of 2004, and growth has now reached 20 per cent year - on year. the high rate of growth in lending is an average for all banks. there is considerable dispersion. for some banks lending increases by more than 50 per cent year - on - year. the strong growth in lending is clearly reflected in the composition of the banks'balance sheets. the difference between banks β lending and deposits has increased considerably in recent years. total lending now exceeds total deposits by a three - digit billion kroner amount. so the banks have become increasingly dependent on financial markets to raise money - market loans from other banks and to issue securities both nationally and internationally. the individual bank will also find it important to maintain access to these sources of financing. these sources are more sensitive than traditional deposits to changes in market conditions and the assessment of the individual bank's financial performance. this could make the banks more vulnerable. the minster of economic and business affairs is finalising a bill which will enable banks to issue covered bonds on an equal footing with the mortgage credit institutes. you may ask why it is necessary to change the danish system of financing real property via the mortgage - credit institutes. the danish mortgage credit system is a well - functioning and stable system, which has given owners of real property access to financing on capital - market terms, with a transparent cost structure. let me be blunt. this change has been imposed on us, and it does have its positive elements. it increases competition between danish financial institutions, and gives them access to operate on the same terms and conditions as foreign credit institutions. it should also be born in mind that the amendment will not entail radical changes in danish home financing overnight. many adjustments have already taken place in the last couple of years. here, i have in mind the " mortgage loans " launched by the banks with great success. seen in this perspective, covered bonds issued by banks can promote financial stability as a stable source of financing mortgage loans, thereby covering the large deposit deficit in a more satisfactory manner. when the covered bond legislation is amended, danmarks national
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equipment and software to grow at a moderate pace this year, supported by high rates of profitability, strong business balance sheets, relatively low interest rates and credit spreads, and continued expansion of output and sales. investment in nonresidential structures ( such as office buildings, factories, and retail space ) should also continue to expand, although not at the unusually rapid pace of 2006. thus far, the weakness in housing and in some parts of manufacturing does not appear to have spilled over to any significant extent to other sectors of the economy. employment has continued to expand as job losses in manufacturing and residential construction have been more than offset by gains in other sectors, notably health care, leisure and hospitality, and professional and technical services, and unemployment remains low by historical standards. the continuing increases in employment, together with some pickup in real wages, have helped sustain consumer spending, which increased at a brisk pace during the second half of last year and has continued to be well maintained so far this year. growth in consumer spending should continue to support the economic expansion in coming quarters. in addition, fiscal policy at both the federal and the state and local levels should impart a small stimulus to economic activity this year. outside the united states, economic activity in our major trading partners has continued to grow briskly. the strength of demand abroad has helped to spur strong growth in u. s. real exports, which rose about 9 percent last year, and a robust world economy should continue to provide opportunities for u. s. exporters this year. growth in u. s. real imports slowed to about 3 percent in 2006, in part reflecting a drop in real terms in imports of crude oil and petroleum products. despite the improvements in trade performance, the u. s. current account deficit remains large, averaging 6 - 1 / 2 percent of nominal gdp during 2006. overall, the economy appears likely to continue to expand at a moderate pace over coming quarters. as the inventory of unsold new homes is worked off, the drag from residential investment should wane. consumer spending appears solid, and business investment seems likely to post moderate gains. this forecast is subject to a number of risks. to the downside, the correction in the housing market could turn out to be more severe than we currently expect, perhaps exacerbated by problems in the subprime sector. moreover, we could yet see greater spillover from the weakness in housing to employment and consumer spending than has occurred thus far. the possibility that
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risks to this forecast are to the upside. in particular, upward pressure on inflation could materialize if final demand were to exceed the underlying productive capacity of the economy for a sustained period. the rate of resource utilization is high, as can be seen most clearly in the tightness of the labor market. indeed, anecdotal reports suggest that businesses are having difficulty recruiting well - qualified workers in a range of occupations. measures of labor compensation, though still growing at a moderate pace, have shown some signs of acceleration over the past year, likely in part the result of tight labor market conditions. to be sure, faster growth in nominal labor compensation does not necessarily portend higher inflation. increases in compensation may be offset by higher labor productivity or absorbed β at least for a time β by a narrowing of firms β profit margins rather than passed on to consumers in the form of higher prices. in these circumstances, gains in nominal compensation would translate into gains in real compensation as well. underlying productivity trends appear generally favorable, despite the recent slowing in some measures, and the markup of prices over unit labor costs is high by historical standards, so such an outcome is certainly possible. moreover, if the economy grows at a moderate pace for a time, as seems most likely, pressures on resource utilization should ease. however, a less benign possibility is that tight product markets might allow firms to pass some or all of their higher labor costs through to prices. in this case, increases in nominal compensation would not translate into increased purchasing power for workers but would add to inflation pressures. thus, the high level of resource utilization remains an important upside risk to continued progress in reducing inflation. in regard to monetary policy, the federal open market committee has left its target for the federal funds rate unchanged, at 5 - 1 / 4 percent, since last june. to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation. because core inflation is above the levels most conducive to the achievement of sustainable growth and price stability, the committee indicated in the statement following its recent meeting that its predominant policy concern remains the risk that inflation will fail to moderate as expected. however, the uncertainties around the outlook have increased somewhat in recent weeks. consequently, the committee also indicated that future policy decisions will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information. thank you. i would be happy
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all financial markets and extraordinarily low risk premia, had the effect of covering up the building up of significant imbalances. significant financial imbalances were in the making, at various levels of the global economy and financial system. among these were exuberant real estate prices, and a flourishing securitisation business, which facilitated excessive credit growth. a group of countries β including china, japan, and oil - exporting economies β were saving too much, while others β such as the us β were heavily borrowing to finance consumption and investment. these developments were unsustainable in the long - run. at the same time, in an environment characterised by low interest rates, a global search for yield may have led investors to take on too much risk. on the micro side, it became apparent that market participants β incentives were not aligned with the risks they were taking, and that some investors were not fully aware of the extent of their exposures, which contributed to the under - pricing of risk. in the banking sector in particular, deficiencies in the design of the prudential framework for banks, in the supervisory review of banks β risk management procedures and in the rules for compensation and pay were some of the microeconomic factors leading to important vulnerabilities. iii. regulatory and supervisory initiatives currently under discussion after witnessing the first global banking crisis since the great depression, it became clear that it was absolutely crucial to get the banking sector on a sound footing again. policy makers responded rather quickly and forcefully to the crisis, which resulted in a wideencompassing reform agenda. this reform agenda is very ambitious and time - wise rather tight, but before describing the measures under discussion, let me first briefly introduce the main actors in this area. the g20 provides the political and strategic impetus for the reforms, with the financial stability board ( fsb ) playing an important role in the policy coordination. various committees and working groups, of which the most prominent is the basel committee on banking supervision, are charged with reviewing specific international standards. as regards the reform agenda, the most important issues are the following : the adoption of high - quality capital and liquidity standards for banks, measures to reduce the financial system β s procyclicality, the introduction of a regulatory framework for systemically important financial institutions, the regulation of credit rating agencies and hedge funds, improving otc derivatives markets, and finally, sound compensation practices that support financial stability. these issues are comprehensively
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bostjan jazbec : rethinking monetary - fiscal policy coordination opening remarks by mr bostjan jazbec, governor of bank of slovenia, at the bos - imf high level seminar on rethinking monetary - fiscal policy coordination, portoroz, 19 may 2016. * * * it is a great pleasure to welcome you all to the high - level seminar on β rethinking monetary - fiscal policy coordination β organized jointly by the bank of slovenia and international monetary fund. it is a great honour to have a very distinguished gathering of central bank governors, senior officials of governments and international institutions, leading academics and practitioners to discuss a very critical issue that occupies the minds of policy makers in the euro area and elsewhere. the objective of the seminar is to explore current thinking on the roles and coordination of monetary and fiscal policies. the presentations and discussion will focus on three main themes : ( 1 ) the principles and practical experience in the coordination of monetary and fiscal policies ; ( 2 ) fiscal policy implementation in the eu institutional framework and implications for monetary policy ; and ( 3 ) conducting monetary policy when fiscal space is limited. i will now briefly touch on these themes in general terms. policy makers in the euro area face considerable challenges in fostering sustained strong growth, price stability and financial stability. following the onset of the global financial crisis, economic recovery has been slow and growth remains lackluster. inflation is much below the medium - term objective of lower than, but close to 2 percent. for some time now, inflation continually has been weaker than expected and market - based measures of inflation expectations stand at their historical lows. therefore, monetary policy has become increasingly accommodative relying on several non - standard measures and negative interest rate policy. there is broad agreement that in the current setting there are limits to the scope of monetary policy actions and their effectiveness for lifting the eurozone β s economy. concerns are mounting that the outlook may be one of a prolonged period of low inflation and low interest rates, which can adversely affect both the real and financial sectors. therefore, many of us have emphasized on numerous occasions that β monetary policy cannot be the only game in town β. strong sustainable growth, price stability and financial stability will require a coherent, integrated policy strategy that also includes fiscal and structural policies. the message on the importance of fiscal policy supporting monetary policy is founded on historical precedence. in 1936, prescribing the way out of the
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only toward the end of the legislative exercise that resulted in the dodd - frank wall street reform and consumer protection act ( dodd - frank act ) that the process took a more partisan turn. indeed, the dodd - frank act contains measures that commanded fairly wide consensus, such as the need for higher capital requirements for the largest banks. furthermore, the origins of some features of the legislation rested as much or more with republican than democratic legislators, such as the section 165 requirement for resolution plans that will make systemically important firms resolvable in bankruptcy without requiring taxpayer support or resulting in major disorder in the financial system. the nature and impact of the new regulatory regime now let us fast forward to the present. less than a decade after being the epicenter of a global financial crisis, today the united states has the strongest and most diverse financial system of any major economy in the world. credit default swap ( cds ) spreads and other market indicators suggest that investors have remained confident in the solvency of large u. s. banks through several recent episodes of global financial volatility. 7 for example, during the market strains at the beginning of this year, the cds spreads of u. s. banks increased only 25 to 50 basis points, and even so only briefly, while large banks in some other parts of the world saw their cds spreads increase substantially more and for a longer period. the relative strength of, and some have suggested that market - based measures of bank risk indicate that banks are not safer than before the crisis. for example, cds spreads are well above their levels in early 2006. but this as likely suggests that investors were too sanguine in 2006 as that they believe there has been no change in bank safety since then. and, as reflected in the changes made by credit ratings agencies in their assessment of implied support for banks from the government, markets may rightly perceive that the government is less likely now to bail out a bank that gets in trouble. moreover, equity prices may be down because some combination of economic conditions and regulation make profits likely to be lower than was expected and experienced in the unsustainable period leading up to the crisis. resulting market confidence in, u. s. banks has allowed them to expand their lending, the growth of which has returned during the last couple of years to a pace similar to that in the pre - crisis, pre - bubble years. 8 what accounts for this dramatic change in the position of the u. s. financial system? first, the crisis
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other major economies and have held up well during the few bouts of moderate financial stress we have experienced over the last several years, these firms have not yet faced a major financial challenge. second, should we adjust statutory or regulatory provisions that are not needed for, or are less efficient means for achieving, financial stability? let me offer some perspective on answering both questions, along with a handful of specific proposals. with respect to the first question, there is certainly room for discussion over the most suitable minimum capital standards for the most systemically important financial firms. as i noted when we were deciding on the expected impact approach as the best available method for calibrating capital surcharges, there is no magic to that method. 14 indeed, even within that approach, we should be open to research that suggests new or improved ways to determine the relative systemic importance of firms. however, i think it is important to have a methodology that is clearly explained and is based on the research that has been done. let me note in passing two points that can be drawn from that research. first, there is work subsequent to the formulation of the basel iii capital standards suggesting that the costs of higher capital requirements may be somewhat lower, and the benefits broader, than previously thought. second, however, the reduction in the probability of a financial crisis associated with increasing capital levels will begin to level off at some point, thereby creating diminishing benefits for tighter capital standards. 15 see daniel k. tarullo ( 2011 ), β regulating systemically important financial firms, β speech delivered at the peterson institute for international economics, washington, dc, june 3, www. federalreserve. gov / newsevents / speech / tarullo20110603a. htm. see, for example, jihad dagher, giovanni dell β ariccia, luc laeven, lev ratnovski, and hui ton ( 2016 ), β benefits and costs of bank capital, β imf staff discussion note snd / 16 / 04 ( washington : international monetary fund, march ). moreover, as important as capital is to promoting systemic stability, it is not the only relevant consideration. the relative presence or absence of other regulations that mitigate risk in banks should affect minimum capital levels. to my mind, the most important of these are regulations limiting dependence of financial firms on runnable funding sources. 16 if a firm is not vulnerable to runs, it is far more likely to weather a financial
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24th assiom forex congress speech by the governor of the bank of italy ignazio visco verona, 10 february 2018 global growth strengthened considerably last year although uncertainties remain linked to future us trade policies and possible upward shifts in risk premiums in the financial markets. monetary policy in the euro area has staved off deflation but inflation is still far from the levels consistent with monetary stability. economic activity in italy appears less dependent on the expansionary stance of monetary and fiscal policies. the consolidation of the recovery requires us to proceed with the economic reform effort. prudent budgetary policies will help make markets more confident in the reduction of the public debt - to - gdp ratio. lending to households and firms is expanding and loan quality is improving, partly thanks to the successful handling of the most critical situations in the banking sector. the reduction in non - performing loans must continue, exploiting the favourable economic conditions. competitive pressures and a challenging regulatory environment have made it urgent for banks to continue to limit costs and to fully recoup profitability, including through additional mergers. these needs are especially pressing in the mutual banking sector, where the 2016 reform must be implemented in toto. notwithstanding the progress made since the outbreak of the crisis, the institutional arrangements of the european union and of the euro area remain a work in progress. diminished trust among member states has led to a sterile conflict between calls for risk reduction versus those for risk sharing. these proposals are instead complementary. only by acknowledging this can solutions be found from which all countries can benefit. recent economic developments the economic expansion is increasingly broad based at global level. according to the estimates of the main international institutions, in 2017 world output returned to growth at a rate of more than 3. 5 per cent ; this year it is expected to rise by almost 4 per cent. the favourable outlook remains vulnerable to the repercussions of possible trade restrictions and to a potentially abrupt increase in risk aversion in the markets. domestic demand in the euro area is being sustained by rising employment and very accommodative financing conditions. exports are continuing to improve, driven by the uptick in foreign demand. according to the eurosystem β s forecasts, this year output will expand by 2. 3 per cent, a similar pace to that recorded in 2017. inflation remains low, however, reaching 1. 3 per cent in january ; core inflation also continues to be weak, partly because of the effects of wage moderation in many economies
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. monetary policy is working. the strong cyclical momentum and ongoing reduction of economic slack have strengthened confidence among the members of the ecb β s governing council that inflation will gradually converge towards the inflation aim of a rate below, but close to, 2 per cent in the medium term. this is why we recalibrated our monetary policy interventions last october, while maintaining the highly expansionary conditions intended to ensure a lasting return to price stability. we have extended the duration of the app until september of this year, trimming our monthly purchases to β¬30 billion. the eurosystem will reinvest the principal payments from maturing securities purchased under the app for an extended period of time after the end of its net asset purchases, and will continue to provide abundant liquidity to the banking system until at least the end of 2019. the council expects to keep interest rates at their present levels well past the horizon of the net asset purchases. inflation, after falling slightly at the start of this year owing to the base effect associated with the temporary increase in energy commodity prices in 2017, is expected to rise gradually to levels consistent with the target in the second half of 2020. the risk of deflation has been averted but it is proving difficult to push up inflation expectations. exchange rate volatility poses one of the main risks to the inflation outlook, also given the high sensitivity of forex markets to the announcements of monetary and government authorities. the euro exchange rate is not among our objectives per se but it can have significant repercussions on the transmission of monetary policy ; disorderly developments, especially if triggered by factors unrelated to the macroeconomic fundamentals, can make it harder to achieve price stability. the decisions of the ecb β s governing council will continue to be shaped by economic data and by the inflation outlook. we will be patient in pursuing the inflation objective and perseverant on the monetary stance adopted. in italy gdp rose sharply in 2017. according to initial estimates, it rose from 0. 9 per cent in 2016 to 1. 5 per cent last year. employment continued to expand ( 0. 8 per cent in 2017 ), while the unemployment rate fell to 10. 8 per cent in december, its lowest level since august 2012 ; hours worked per employee also increased moderately from the low recorded in the first quarter of 2015, and grew by 0. 5 per cent in the first nine months of 2017. the expansion of productive activity is being driven by the global cyclical ups
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purchases and has helped investors form expectations about the size of the app and its duration. in particular, we have indicated a minimum horizon β an intended end - date β until which time we plan to carry out net monthly purchases, while retaining the option of extending the programme beyond that intended end - date if the β sustained adjustment β condition has not been met. the mutually reinforcing nature of our forward guidance on policy rates and the app became even more evident in march 2016, when the governing council clarified the future sequencing of these two instruments. by stating that policy rates were expected to remain at present levels β well past the horizon of our net asset purchases β, the governing council made it clear that keeping policy rates well anchored for the entire lifespan of the asset purchases was an enabling condition for the purchases to exert their full impact. looking ahead, monetary policy will evolve in a data - dependent and time - consistent manner. the transition towards policy normalisation will begin once the governing council judges that there is a sustained adjustment in the path of inflation. this assessment will be based on three criteria for the inflation outlook : convergence, confidence and resilience. convergence implies that headline inflation will have to be on course to reach levels below, but close to, 2 % by the end point of a meaningful medium - term horizon. this first criterion is a necessary but not sufficient condition for a sustained adjustment. the governing council needs to be confident that the expectation of an upward adjustment in inflation has a sufficiently high probability of being realised on a sustainable basis. so, a sufficient degree of confidence in our inflation projections will be a key requirement for declaring that a sustained adjustment has been achieved. our third criterion, resilience, measures the robustness of inflation convergence to a partial withdrawal of monetary policy accommodation. ultimately, we will need to verify that inflation would remain on a sustained path of adjustment even in a less accommodative monetary policy environment. the lessons learnt from the financial crisis have shown that it is crucial to test the confidence criterion and assess the resilience of the economy and of transmission to a partial withdrawal of accommodation. 2 / 3 bis central bankers'speeches the strong cyclical momentum, the ongoing reduction of economic slack and increasing capacity utilisation strengthen our confidence that inflation will converge towards our aim. however, measuring the degree of remaining unutilised resources in the economy remains challenging. in the labour market, the elasticity of labour supply during the recovery has been greater than assumed in
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##h compliance of all bank operations. shariah advisory board has shariah scholars but also industry representatives. β’ bahrain, sudan and syria have adopted shariah standards issued by the accounting and auditing organization for islamic financial institutions ( aaoifi ) and some others use them as guidelines. both the prudential regulation and shariah inspection and supervision are integral elements of the check and balances to ensure products and transactions meet the test of authenticity and compliance with shariah. while these systems may not be in place right away but development and implementation of this regulatory and supervisory infrastructure requires build up of capacities both at institution and regulators level and will pave way for building confidence in islamic system. e. conclusion in conclusion, from a regulator β s perspective development of if in tandem with conventional finance will help broaden and deepen financial markets which will help not only meet diverse requirements but will also infuse financial stability. the evolution and path pursued by if industry has triggered debates regarding the authenticity and innovation. what is critical to recognize is that if by design has to be authentic and brings in additionality both in terms of superior corporate governance framework as good ethical practices are embedded in if, and risk sharing structures which along with product diversity that the system offers lend itself to innovation. product proliferation and approaches to security markets, development of islamic exchange and fund management will help nurture financial diversification from bank based to market centric system. proper application of pls system will help provide greater opportunities for innovation provided it is backed by the right corporate governance architecture. on their part regulators have provided the industry free play. cooperation among regulators has helped to develop core and supportive if infrastructure which better weaves in the unique features and nuisance of the if. development of islamic prudential regulatory and supervisory framework, which subscribes to basel standards for conventional banking, will pave the way for development of if, while tweaking the regulations to accommodate special risk characteristics of the if. institutional framework and evolving approaches for supervision systems will help build confidence among investor and customers. it is my belief that proper practical application of if has the potential of taking global finance to new frontiers and heights.
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faced with such developments, it would be prudent to strengthen further the resilience of the global financial system. [ slide 3 ] i would argue that macroprudential policy has a key role to play to address the immediate concerns and is one critical element in strengthening resilience further. macroprudential authorities can seek to prevent an acceleration of the financial cycle. or, with more reasonable ambitions, to contribute to limit the formation of β lumps of risks β. the most ordinary macroprudential intervention relies on communication. by reminding time and again of the possible pitfalls of leveraging up and becoming complacent about risk taking, we seek to prompt second thoughts and ensure that risks are effectively understood, adequately priced and sensibly managed. if it starts with communication, macroprudential policy in this respect can also go further. indeed, this preventive reasoning led the hcsf, the french macroprudential board, to limit the main french banks β exposure to large β highly indebted firms β : by making it more difficulty to an already heavily indebted corporate to take on even more debt, the aim is to restrain the development of a segment of overstretched large firms. but the main objective of macroprudential authorities and an easier one to achieve should be to strengthen the resiliency of the financial sector when things are going well to allow it to withstand the shocks that will eventually hit. this is the rationale behind the ccyb. we do not intend to curb the overall credit growth. rather, as jfk once said, β the time to repair the roof is when the sun is shining β. by setting the ccyb rate above zero now, we lock in existing excess capital at a time it is relatively cheap ( in good times, retain earnings is the main driver of capital increase and the impact of a higher capital requirement on credit and the economy at large is limited is the current circumstances ) to be able to absorb futures losses and loosen the regulatory requirement at a time capital is scarcer and the macroeconomic impact of a gap would be significant. 3 / 4 bis central bankers'speeches a number of european countries have taken similar steps to increase their room for manoeuver ahead of a possible future storm. in that context, macroprudential policy is often described as a complement to monetary policy : a policy necessary to remedy the financial stability consequences of very accommodative monetary policy.
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of β alternative asset classes β ( which the hotly debated clo market is an emblematic yet tiny part ) and the rising exposure of institutional investors toward β real assets β. such developments are indeed useful and welcome. however, the large shift in allocations toward these assets classes and the more general increased risk appetite driven by the current macrofinancial environment are not without risks : on the equity market, valuations can be stretched and mainly responding to financial developments rather than macro or fundamental factors as we have seen over the past few months when the late 2018 correction β corrected β quickly in 2019 ; similarly, after a ( modest in a longer - term perspective ) increase in late 2018, risk premia in the bond and credit market are compressed back to their historically low levels. losing sight of fundamentals while your risk tolerance is at its highest and you have grown accustomed to suppressed volatility can foster difficulties ahead when adjustments would have to be made. these two trends, non financial actors leveraging up and greater risk taking by financial institutions, are indeed global trends. within the euro area, credit distribution ( bonds and loans ) to the private sector has remained the most dynamic in france, resulting in a gradual but persistent increase in debt ratios. 2 / 4 bis central bankers'speeches more recently, credit has been getting some traction in other economies so that french developments may be informative of forthcoming developments elsewhere. in all cases, the concern is less about an immediate risk that one regarding the sustainability of the current developments. these are indeed medium - term trends deserving serious attention alongside other medium - term developments such as digitalization or climate change. the former ( digitalization ) hold very promising prospects in terms of efficiency, inclusiveness and quality of consumer services, etc. it is also a formidable challenge for the incumbents, threatening established positions and questioning business models. depending on the reactivity of the various stakeholders, ( traditional financial institutions, new players, established players in other sectors making a foray into financial services, regulators, etc. ), this challenge can be satisfactorily overcome or leave the whole financial system in a rather precarious situation. the latter ( climate change ) is a tremendous challenge that will contribute to reshaping the global economy and, more broadly society. this challenge is so significant that it is bound to have consequences for the financial system both as a risk concern and as a business issue. ( 2 ) strengthening the resilience of the global financial system
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to more traditional bank lending. the wider use of internal ratings, coupled with greater transparency regarding their compilation and some assurance of quality control by the regulators, may in fact contribute to further'commoditisation'of bank loans. it is conceivable that this development could reduce the cost of due diligence on loan portfolios by rating agencies and buyers. and, in turn, it could mean a reduction in the costs of risk transfer through securitisation or credit derivatives, with beneficial effects on banks'balance sheets and liquidity. however for this to happen, banks'internal ratings will need to carry credibility in the market and, for this, transparency is essential. the transparency proposals from the basel committee have come under a certain amount of fire for their volume and detail. but i would like the critics to dwell for a moment on the alternative : a world in which banks effectively set their own capital, with no assurance of consistency or comparability from one bank to another. this is an important debate and we are keen to listen to others'views before the proposals are finalised. turning to the possible effect of basel on capital flows more generally, including bank lending, undoubtedly the new risk sensitivity will tend towards changing conditions for certain borrowers and issuers. this is particularly marked in the sovereign context, where, based on current ratings, approximately twenty seven sovereign borrowers will incur a lower bank capital charge versus eleven incurring a higher one. again i would stress that the cushion of capital which most banks maintain over and above their regulatory minimum will blur the impact of the basel changes, since in these circumstances banks'lending and pricing decisions will not be constrained by the regulatory standard. however, in some sense the basel proposals will have failed in their purpose unless the pricing of bank credit better reflects the riskiness of borrowers. by removing perverse incentives for banks, we also wish to establish better incentives for borrowers. greater risk sensitivity does, however, carry with it a possible danger, and that is the introduction of potential'procyclicality'into the capital framework. i have touched on this concern more than once in the past, and make no apology for doing so again. to counteract this danger, regulators should not allow banks'internal ratings to reflect the optimistic prospects of borrowers during an economic upswing : rather, ratings need to be genuinely forward - looking, and to factor in borrowers'likely performance during economic stress. long runs
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security printing press at nasik had to go to work again until it could get better results that eventually passed muster with sir james. 11. i have recounted this story here not only because it is part of our history preserved in these archives, not only because it is interesting and funny, but also because many of our staff, especially those from the central office who observe me closely, find that i am fastidious about small things such as margins, formats, line spacing etc. many of them feel, perhaps rightly, that the governor should be spending his time and effort on more weighty concerns such as, for example, the menu of the staff cafeteria. the story of sir james and the seal is therefore a matter of comfort for me. it shows that some of my illustrious predecessors were equally fastidious, admittedly about more important things. hopefully, future generations will appreciate my fastidiousness even if the current staff think i am a nuisance. 12. the history of rbi over the past 75 years is indeed replete with such interesting events and developments. these archives tell many of those stories and they include extracts from the report of the edward young commission recommending the establishment of a central bank for india to be named reserve bank of india, the congratulatory telegram dated 1st april 1935 from the viceroy of india to the rbi governor on the commencement of operations of the reserve bank of india, the draft of rbi bill 1934, the minutes and photograph of the first meeting of the central board of directors, the design of currency notes and the weights earlier used for weighing coins and gold, a letter from our first prime minister pandit nehru to sir c. d. deshmukh, the first indian governor of the reserve bank, requesting him to send an analytical report on the deteriorating economic condition and suggest remedial measures, a letter from prime minister indira gandhi requesting release of foreign exchange for her son rajiv β s studies abroad, the reasons for closure of the rbi office in london and the devaluation of the rupee in 1966. 13. the archives also contain important records that predate the establishment of the rbi. for example, the rbi archives preserves the cancelled securities and bonds of the east india company and the government of india pertaining to the period 1777 β 1894. records such as these capture the economic situation of the time and are of great historical significance. 14. established in august 1981, the reserve bank archives were among the earliest corporate archives in the country
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their financial markets to attract investors. this year β s edition is to focus on policy and market development initiatives and will undoubtedly boost developments in the regional financial markets. 5. ladies and gentlemen permit me to share with you how the absa financial markets index is helping to shape the policy dialogue in ghana. the 2017 barclays africa ( now absa ) african financial markets index, noted that of the six pillars used in the assessment of african financial markets, improving the legal and regulatory frameworks through establishing the legality and enforceability of standard financial markets master agreements of the ghanaian financial markets could provide a major boost and enhance liquidity in the bonds and equities markets. 6. the results of the barclays survey noted that in ghana, isda documentation ( international swap and derivatives association ) was well recognized but global master repurchase agreement ( gmra ) was in limited use, global master securities lending agreement ( gmsla ) was rarely used and the insolvency framework needed to be strengthened. therefore in 2017, a stakeholder committee in ghana, led by the central bank agreed on key reform measures that could improve the legal framework for the financial markets in ghana. 7. these included the adoption of gmra for repo trading and at a later stage the gmsla for securities lending, the linking of the local central securities depository ( csd ) to international clearing platforms like euroclear and the strengthening of the insolvency framework in ghana. the result of these reform initiatives is the publishing of guidelines for a gmra - based repo trading in ghana, a country annex and country annexes that was just yesterday launched herein washington d. c. 8. apart from being a vital source of secured financing for banks and financial institutions, and a key tool for the implementation of monetary policy, repos also offer a low - risk and liquid investment for cash, as well as the efficient management of liquidity and collateral by financial firms and can be used to hedge or modify the risk profile of portfolios. 9. netting rights and setoffs are generally recognized and upheld under ghanaian law. with respect to the banking sector, the bog will issue a notice to clarify the recognition of netting arrangements in financial contracts in the banks and special deposit taking institutions act, 2016 ( act 930 ) in support of efforts to recognize ghana as a netting positive jurisdiction. 10. our experiences in ghana as a major destination for higher yield - seeking non - resident investors, tells us that access
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the global financial crisis. the left panel in slide 3 shows that the parallel shift of gdp to the downside took place in japan. this also was the case for other major economies, including the u. s. economy. although the gdp recovered to pre - crisis levels, for reasons we do not precisely know, it has not returned to the original trends in the japanese economy and many other advanced economies. on the contrary, the german economy, which you see in the right panel, was exceptional in that it reverted to the original trend rather quickly with higher growth rates. the difference may be an interesting topic to be further explored. therefore, the financial crisis was the root cause for japan's ordeal. but the country's problem was compounded by other factors ; namely, deflation and demography. slide 4 shows japan's potential growth rate with a solid red line and its determinants in bars of different colors. the protracted period of deflation that lasted for almost 15 years after the homegrown financial crisis in the 1990s prevented firms from investing in capital, and capital input remained sluggish because the corporate strategy under deflation was to sit on cash. meanwhile, labor input has negatively contributed since the 1990s as a result of the shift in demographics. this has much to do with japan's aging society, where the birth rates remained low and the baby boomers reached their retirement age. as the solid red line in the graph shows, the potential growth rate in japan has been on a declining trend, coming down from around 4 percent in the late 1980s to almost 0 percent before bouncing back to 0. 8 percent recently. what this chart implies is that, in order to elevate japan's potential growth rate, we need to raise all three determinants : total factor productivity ( tfp ), labor input, and capital input. another way of expressing this is that we need to raise labor productivity and labor input in order to elevate japan's potential growth rate. slide 5 provides a decomposition of japan's gdp growth rates into labor productivity growth and rate of change in the number of employed persons. it is quite obvious from the chart that the decline in labor force forecast for the next decades must be more than offset by improvement in labor productivity if the japanese economy is to maintain positive growth. what this chart suggests is that, for a country like japan, or any country with a shrinking population, improving labor productivity is the number one policy priority
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market ; addressing ghana β s import dependence through the pursuit of structural reforms geared towards promoting local production ; continued improvement in the business environment, especially in the area of ease in doing business, to attract investments into the country ; these should include re - examining laws that serve to improve the business environment, pursuing business - friendly regulations, making it easy to move goods across the country, and pursuing policies to facilitate trade among others ; taking a re - look at ghana β s retention agreements and promoting local content, especially in the downstream oil sector, and finally ; promoting non - traditional exports, including areas such as tourism. i believe that these pointers will help shape the follow - up discussions on achieving exchange rate stability in a sustainable manner. thank you. figure 1 : year - to - date depreciation ( 2000 - 2018 ) figure 2 : year - to - date depreciation in the first quarter ( 2011 - 2019 ) figure 3 : recent trends in macroeconomic fundamentals source : bank of ghana figure 4 : recent trends in macroeconomic fundamentals figure 5 : daily cedi / dollar exchange rate
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speech delivered at graphic business / stanbic breakfast meeting by dr ernest addison governor, bank of ghana at at labadi beach hotel on tuesday, april 23, 2019 introduction 1. ladies and gentlemen, let me begin by thanking graphic business and stanbic bank for the opportunity to speak on the topic : " achieving sustainable exchange rate : our options β this topic is timely β coming at a time that we have successfully emerged out of a sudden bout of volatility in the exchange rate, which generated a lot of debate domestically and also externally. it is my expectation that my brief remarks and subsequently discussions will shape the narrative on currency and exchange rate management in the context of a small open commodity dependent economy that has adopted a flexible exchange rate regime to underpin the conduct of monetary policy. 2. the recent sharp movements in the exchange rate of the cedi generated considerable debate on the options that we have as a country to deal with the seasonal bouts of depreciation in a more sustainable way. before i jump into discussing the underlying causes of these sudden episodes of sharp currency depreciation, allow me to first put the key issues into context. 3. first and foremost, i think what we need to understand is that the exchange rate reflects a price. and, as is the case with all prices for goods and services in the economy, the exchange rate will change and respond to the dynamics of the economy and will always be subject to the dynamics of demand and supply. as a country, we have adopted a flexible exchange rate regime, which has served us well in the past and continues to do so under the bank β s inflation targeting monetary policy framework. 4. looking at the history, the flexible exchange rate regime has served ghana well, given the structural characteristics of the ghanaian economy. i am sure there are some schools of thought that harbour the idea of ghana pegging the cedi to one of the major trading currencies to achieve some stability. whilst this might sound appealing, empirical evidence, including analytical work by the imf shows that growth has been more robust in countries with flexible exchange rate regime than in countries with fixed exchange rate regimes. 5. as we all know, ghana β s economy is import dependent, hence the existence of persistent foreign exchange demand pressures by importers. in addition to these huge demand pressures, the seasonal repatriation of profits and dividends foreignowned companies reflects in significant outflow of resources out of the services and income accounts, exerting additional pressures on the
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was the same for all former yugoslav republics. in fact, the activities of the head office of the republic of macedonia were reduced to performing only routine operations of executive and operational character. all policies, decisions and regulations were created and adopted in belgrade. the second period, period of institutionalization, represents some kind of a turning point in central banking. in 1971, instead of head offices of the former yugoslav republics, national banks of the republics and provinces were established, including the national bank of the republic of macedonia. in 1972, the parliament of the republic of macedonia adopted for the first time a law on the national bank of macedonia on the level of the republic, while in 1974 it was defined also with the constitution of the republic of macedonia. the first governor, appointed in 1972, was stojan kjosev, who was until then a member of the executive council of the republic of macedonia. in the law, the national bank of macedonia was defined as an institution of the single monetary system of former yugoslavia, with a status of a legal entity. established as such, it was independently executing the projections of the credit policy for the republic of macedonia. however, the setting of the monetary, credit and foreign exchange policies was still within the competence of the national bank of former yugoslavia, but a growing number of the decisions of its bodies were adopted by a consensus of the representatives of the republics and provinces. five years later, in 1977, the national bank of macedonia earned new competences : bank licensing, conducting international payment and credit operations. it was also given more rights and responsibilities with respect to maintaining banks'liquidity. these functions and competences remained almost the same in the following 15 years. the third period, period of complete monetary independence, followed by the constitution of the independent state - republic of macedonia, is definitely the most important period in the central banking from all aspects. this is a period of sweeping transformations, which constitute the nbrm as an institution with all explicit attributes of an independent central bank, hence as one of the key attributes of the statehood of the republic of macedonia. in this period the following had to be done : β’ introduce the new macedonian national currency - denar ; β’ surmount inflation, which at the time of the monetary independence equaled around 1. 200 percent on annual level ; β’ overcome the accumulated problems in banking, managed primarily by debtors ; β’ repay the so - called " frozen " foreign currency deposits to the depositors, as the first pre
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liberalization of the capital account, justifiably anticipated larger inflows of capital, which create new environment for our economy, together with the risks from instability and speculative pressures. this is imposed also by our strategic determination for admission of the republic of macedonia to the eu - which ultimately means reaching an institutional capacity adequate to the criteria of the maastricht agreement from 1992 in order to be prepared to join the european system of central banks. we should even further increase the capacity of supervision. therefore, new regulations, which we develop together with the ministry of finance are already underway, as well as new intensive activities for gradual shift towards risk - based supervision, as a basis for implementation of the new capital accord - basel 2. at the same time, we should improve our capacity for analyzing the financial stability of the country - activities we have started, but which require great efforts and dedication. i would like to express my gratitude on behalf of the national bank to all of you who in various circumstances and under serious challenges contributed to the development of an institution such as the national bank of the republic of macedonia. the monograph we prepared on this occasion - 60 years of central banking in the republic of macedonia, is primarily a tribute to them. i would like to thank all of you who are here tonight, deeply feeling the historical significance of this jubilee!
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measure ). the story thus far while there are pockets of risk and global growth is still decelerating, the combination of the policy response and the state of the current imbalances in advanced economies suggest that global growth is more likely than not to stabilise eventually around its new, modest trend. but this is a judgement, not a guarantee. the world is in a delicate equilibrium. productivity is weak everywhere. the sustainability of debt burdens depends on interest rates remaining low and global trade remaining open. and business and consumer confidence are being buffeted by extreme policy uncertainty. indeed, there are at least three important risks on the horizon. first, financial risks will intensify if complacency sets in. paradoxically a prolongation of the expansion could make its demise both more likely and more painful. the frequency of financial crises over history is partly because memories fade, financial lobbies are powerful, and the costs of backsliding on financial reform are invisible, at first. when it comes to financial stability, success is an orphan. g20 countries bear heavy responsibilities to safeguard the progress since the crisis through disciplined implementation of agreed reforms. and policymakers must remain vigilant and address new risks as they arise. the lessons of subprime bear recalling. subprime mortgages emerged in the mid - 1990s as an innovation to expand home ownership to those who had been unfairly excluded. but they eventually grew unchecked until subprime mortgages written in 2006 and 2007 were twice as likely to default as those originated just a few years earlier. it is just such a descent from responsible to reckless underwriting that we must avoid today. that β s why the fpc has acted to limit the share of high loan - to - income mortgages uk banks can originate, the pra has tightened standards on consumer credit and the bank is monitoring closely the growth in leveraged lending. all speeches are available online at www. bankofengland. co. uk / speeches the second reason for caution is the possibility of a more material slowdown in china. china is the one major economy in which all major financial imbalances have materially worsened. it may be the exception that proves the rule that financial imbalances cause recessions. while china β s economic miracle over the past three decades has been extraordinary, its post - crisis performance has relied increasingly on one of the largest and longest running credit booms ever, with an associated explosion of shadow banking.
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- term floating - rate notes ( issued in place of the non - transferable promissory notes, which would have been unsuitable instruments for the central bank to hold ). in the event, the β¬67. 5 billion borrowed from the european and imf sources almost covered the government deficit from december 2010 to the end of 2013, of which about one - quarter represented cash bank recapitalisation. there were long - term government debt repayments also in that period, but these were roughly balanced by new issues. this pattern is seen from the β sources and needs β table summarised in figure 1. 3 indeed many countries experienced banking failures in 2008 of comparable absolute magnitude to that of the irish banks. like ireland, each of britain, germany, the netherlands, spain, france and belgium saw banking failures that required their governments to step in for β¬50 billion or even more. given its smaller overall economy, however, such a sum, when for example by adding its guarantee to mortgage - backed securities. which is based on the ntma presentation at http : / / www. ntma. ie / business - areas / funding - and - debtmanagement / funding - needs - and - sources /. the pie chart excludes changes in cash balances and short - term borrowing ; note also that β cash deficit β includes promissory note instalment payments. bis central bankers β speeches combined with the sudden erosion of the tax base, proved to be more than ireland β s public finances could easily absorb. ( banking losses in cyprus and iceland were even larger than those of ireland in relative terms ). gradually, europe began to realise the broad interdependence of member states, especially among euro area members in the banking sphere : poorly performing member economies contributed to heightened systemic risk and slower growth across the entire euro area. the single banking market and the single currency implied such an interdependency and had encouraged policy thinking that focused on the euro area as a whole, and not on individual countries. awareness of the interdependency led, fairly early on, to a lowering of the interest rate on the official borrowings from europe and an extension of the maturities. when combined with the lengthy maturity of the floating rate notes issued by the government in respect of the liquidation of ibrc, these new terms for a large fraction of official indebtedness ( amounting to over 50 per cent of gdp ) have made all the difference to debt sustainability
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with asia has increased from us $ 29 billion in 2000 - 01 to us $ 91. 5 billion in 2005 - 06, comprising exports at us $ 47. 2 billion and non - oil import at us $ 44. 3 billion. β’ total trade with the asean ( exports plus non - oil imports ) has increased manifold from us $ 6. 7 billion in 2000 - 01 to us $ 21. 1 billion in 2005 - 06. india's exports to the asean region stood at us $ 10. 5 billion and imports at us $ 10. 6 billion during 2005 - 06. β’ india has become a formal dialogue partner of asean, and is keen to expand its participation in southeast asian and asia - wide institutions. similarly, india's trade with saarc countries which presently stands at about at us $ 6. 7 billion has vast scope to expand further. β’ in order to boost regional trade and investment, india has entered into comprehensive economic cooperation agreements / trade agreements with several countries including china, japan, korea, singapore, thailand, maldives, bhutan, bangladesh, nepal, sri lanka and regional blocks such as asean. β’ mr. raymond lim, singapore's minister of transport and second minister of foreign affairs, in his article " creating globally connected asian community " which appeared in the june 2006 issue of finance and development of the imf notes : " the rise of china and india will redefine regional divisions of labour and trade and help the southeast asian economies take off on a new and higher growth trajectory. china and india will bring asia into the center of the global economy. β¦.. the rise of china and india is helping asia to not only grow but to become more integrated. "
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insignificant proportion of the latter. this thus goes to support the idea that the extent of customer awareness about certain techniques and technologies would, at times, decide how effective an innovation would be. thus, this presents a contrast to an otherwise appealing concept like technology driven solutions and also highlights the need to popularize the same with extra initiatives, features, safeguards and possibly sops too. the potential of information technology, however, can positively be utilized better by banks and financial institutions in processes relating to prevention of frauds, unique identification of customers for effective adherence to kyc / aml / cft norms and generally putting in place risk based transaction monitoring systems in the larger interest of consumer protection and safeguards. further, there is an overarching need to integrate technology in the field of kyc bis central bankers β speeches compliance in the present scenario. that is one more reason why rbi has advised banks very recently to implement e - kyc across various customer service points ( csp ) through appropriate software solutions that can best integrate uidai defined application programming interface ( api ) protocols. thus, it is not need alone that would prompt the use of technology as an option but the associated security features that would appeal to the common man β s psyche and attract him to banking innovations. how does one tap the common man β s psyche? what are the possible methods to communicate with the customer? a very obvious initiative by rbi in this regard is the significant emphasis on hindi for bettering customer service. the reason and rationale is extremely simple and comprehensible. the use of the official language in circulars, customer centric pamphlets and brochures, notices and notifications etc. appeal to a wider category of people and attract them to banking products. further, the usage of hindi has been advocated in banking technology as well by way of use of bilingual software, which would enable customers to access self operated kiosks, electronic platforms and bring them closer to the adoption of banking practices. the use of official language, local and vernacular languages as well, may also further the cause of financial inclusion, a cause that rbi and banks alike espouse strongly. i would like to mention in this context that one potential, but untested option / method to tap common man β s psyche, is survey to gauge the evolving preferences of the customers. how does the edifice of customer service in banks work? institutional structures to monitor, implement and innovate in the field of customer service must necessarily
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that the balance between overseas and domestic production will be maintained. in addition, as investment was reduced to the level below depreciation following the lehman shock, this in turn is currently encouraging replacement investment. it can also be expected that firms will add investment spending to restore and reconstruct disaster - stricken facilities as well as to strengthen their earthquake resistance. given the situation i have described, it would be no surprise if domestic business fixed investment, compared with firms β cash flows or depreciation costs, became more apparent, and thus potential demand for investment is likely to have accumulated accordingly. if actual investment has been contained even though firms β investment appetite has not declined, this might mean that firms have been deferring investment decisions because of sluggish stock prices, the yen β s appreciation, the slowdown in the global economy stemming from the european debt problem, and related uncertainty about the future. let me repeat that firms β forward - looking investment in projects that would enhance value - added is a major driving force in order to increase the growth potential of the economy and improve productivity. it would also contribute to overcoming deflation. whether firms β investment spending will steadily increase β at a pace consistent with their growth expectations, both at home and abroad, in a balanced manner β is vital for japan β s economy to achieve sustainable growth and overcome deflation. turning to price developments, the year - on - year rate of decline in the cpi ( all items less fresh food ) slowed at a moderate pace in 2011, reflecting the improvement in the aggregate supply and demand balance, and has been hovering around 0 percent since the summer of 2011. the baseline scenario of the outlook for prices projects that the current situation is likely to continue for the time being, but the year - on - year rate of change in the cpi will gradually turn positive as the aggregate supply and demand balance improves. while crude oil prices have recently been surging due partly to the situation in iran, the price levels of other commodities have not necessarily risen compared with 2011. as this seems to be consistent with the currently still - weak recovery of the global economy, upward pressure on crude oil prices might be temporary due to supply - side factors. since crude oil prices might remain high depending on developments in geopolitical risk, careful monitoring is required. ii. monetary policy a. conduct of monetary policy let me now discuss the bank β s enhancement of monetary easing decided in february 2012. at the monetary policy meeting held on february 13 and 14,
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u. s. financial markets have been favorable. although long - term interest rates have not moved in tandem with the rise in stock prices and have been more or less flat for some time, they have started to rise recently, gradually reflecting the improvement in economic activity. asian emerging economies, led by china, have been maintaining high growth rates, and medium - to long - term growth expectations also appear to be high. in china, however, exports and imports declined and the pace of increase in production slowed around the turn of the year, due to the effects of monetary tightening to contain the rise in prices as well as to stagnation in the european economies associated with the debt problem. consequently, exports have declined and the economies of the nies and the asean countries have decelerated somewhat as well. asian emerging economies are leading the global economy, and the bank β s baseline scenario is that these economies will gradually recover, supported by buoyant domestic demand. at the same time, attention should be paid to the possibility that european financial institutions β credit contraction will spill over to trade credits and prolong the current economic slowdown. in terms of achieving sound development of the global economy in the longer term, a key factor will be how to maintain the balance between economic growth and price stability. in this regard, china β s announcement that lowered the economic growth target from 8. 0 percent in 2011 to 7. 5 percent in 2012 was a favorable step toward achieving a soft landing of the economy, despite the weakened economic stimulus effect in the short term. at any rate, in 2012 uncertainty and changes in economic policy associated with the transition of leadership in china should be carefully monitored. c. economic activity and prices in japan one year has passed since japan β s economy experienced the great east japan earthquake. following the disaster, economic activity plunged due to the disruption of supply chains and constraints on electric power supply. thereafter, as a result of strenuous efforts by the parties concerned, japan β s economy began to recover in the july - september quarter of 2011. however, in the october - december quarter, the economy faced downward pressure as exports and production grew at a sluggish pace due to a slowdown in overseas economies β on the back of the european debt problem, monetary tightening in china, and the flooding in thailand β as well as the appreciation of the yen. the annualized quarter - on - quarter growth rate of real gdp on a seasonally adjusted basis in 2011 was minus 6.
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health of the financial system, and put in place any measures that may from time to time be necessary to address any elevated risks to the system, whether from internal sources or from abroad. each year a financial stability report is published, reporting on the health of the system, with an update at mid - year. today we share with you the report of our mid - year assessment. we are well aware that there are ways in which our financial system needs to be improved. we have never had a perfectly competitive financial system, and if we are realistic we will admit that our financial sector is too small to attract many players. we should think of other ways to encourage higher levels of service and efficiency on the part of financial institutions. as you know, individual savers do not do very well at commercial banks, earning 2. 5 percent on savings only because the central bank stipulates that minimum. it is no secret that banks are unhappy that there is a minimum at all. i am suggesting to individuals that, for all their rainy day savings, they consider government savings bonds instead. savings bonds are just as convenient as savings deposits, because you buy them at commercial banks, and they are just as liquid as savings deposits, because you can cash them in at any time. however, if bis central bankers β speeches you hold them for the full five years of their maturity you earn an interest rate in the region of 5 percent, compounded over 5 years. one area which our financial sector does not serve very well is the financing of innovation and of small and medium enterprises. this is an area of exceptionally high risk, into which conventional financial institutions no longer have any incentive to enter. the stipulations for reserves and provisions against possible loss are now so stringent that even small portfolio allocations for high risk high return propositions may no longer be viable. conventional institutions, even insurance companies and others with a long horizon, may not be the best sources of funds for smes in their initial years. new firms should start with equity funding, so as to avoid debt service obligations during the formative period of the enterprise, before it has a regular clientele and a dependable cash flow. some new firms have been successful in finding equity, in spite of the absence of an organised market for venture capital in barbados, and some capital has been provided, over the years, by ngos and others. we need to continue the search for better arrangements for equity funding of new ventures. there are issues which
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delisle worrell : developments in the global financial sector with implications for regulators and financial institutions introductory remarks by dr delisle worrell, governor of the central bank of barbados, at the 4th annual domestic financial institutions seminar, bridgetown, 11 september 2013. * * * the conference offers an opportunity to reflect on developments in the financial sector at home and abroad, and on their implications for policy changes by regulators, and for the strategies of financial institutions. the presentations at conferences such as this one may serve as background material for policy making and strategic planning, and they may suggest to us topics to be added to our agenda for further study. on some topics we will be reporting on recent developments, while on others we will be sharing thoughts and ideas that are yet in the process of development. among the major challenges of today's world is the challenge of change, and an occasion like this one provides a forum for us to share perspectives on where changes to the financial sector are heading, and what we may need to do about them, at the individual and at the regulatory levels. in addition to the topics on which formal presentations will be made, participants are encouraged to raise any pertinent issue which we might fruitfully discuss, and put on our agenda for further discussion. on the whole we may be satisfied that we have a financial system that suits our needs, performs well and is well supervised. we keep up to date with international best practices and we keep our eyes on all the circumstances and developments, domestic, regional and international, that could have adverse effects on our financial system. our financial system has a full range of services for the needs of households, for savings, mortgages, purchase of consumer durables, insurance and payments. established businesses are also well served, with finance for equipment, office space and working capital. these services are delivered by financial institutions in which consumers may have confidence. they are all supervised either by the financial services commission ( fsc ) or the central bank, and they report regularly to the supervisor on their operations. we the supervisors carry out examinations to verify that our financial institutions operate to standards of international best practice. the central bank and the fsc collaborate closely to maintain oversight of the financial system as a whole. this collaboration, recently formalised in a memorandum of understanding signed jointly between the bank and the fsc, predates the fsc, and was reflected in links between the earlier regulatory bodies. twice per year the regulators conduct a comprehensive evaluation of the
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been made. most of our active members have been meeting a number of the macroeconomic convergence targets, as we continue harmonization and co - ordination of macroeconomic and monetary policies. we recently embarked on stage iii ( year 2009 β 2012 ) of the programme, whose successful implementation and assessment of macroeconomic performance will form a basis for the establishment of a continent wide common central bank. in addition hon. minister, the assembly of governors are working on a common strategy with regard to the establishment of the african central bank ( acb ) as well as advising on the formation of both the african investment bank ( aib ) and the african monetary fund ( amf ). the realization of these institutions will bring us closer to a continent wide monetary union. hon. minister and fellow governors, benefits of integration have been evident across the globe, including securing access to larger markets, enhancing trade flows and in the process attracting the much needed foreign direct investments, lowering trade costs among neighbours, leveraging or locking in domestic reforms, increasing bargaining power and political cohesion among others. notwithstanding these benefits, regional groupings in africa have tended to give less emphasis to monetary integration. under the amcp, the eastern africa sub - region central banks evaluate each other annually to ensure convergence in policies as we pursue further monetary integration. this meeting, hon. minister, will therefore consider the progress on the implementation of the african monetary co - operation programme ( amcp ) by the eastern africa sub - region countries in 2009 ; consider macroeconomic performance against the amcp targets and the status of execution of the decisions of the 8th meeting of governors of the sub - region held in moroni, comoros. my fellow central bank governors, ladies and gentlemen, with these few remarks it is now my humble duty to invite the hon. deputy prime minister and minister for finance to address and officially open this meeting. welcome hon. minister.
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the face of coming demographic challenges, costly stimulus measures could even backfire via negative confidence effects. is the case for higher investment therefore completely without merit? no, but arguments in favour do not stem from cyclical considerations : they stem from structural considerations. where germany β s growth potential is concerned, there is agreement that higher public investment does have a role to play. with regard to the size of the investment gap, however, there is probably no agreement. it is important that all investment measures are judged on a case - by - case basis, as we have seen in the past that not all public investment measures have been money well spent. and we should focus on shifting priorities in public expenditures. there is no need for a debtfinanced fiscal stimulus, but for a structural shift of government expenditures from consumption to investment. reforming the financial arrangements between the federal, the state, and the municipality level could encourage that shift. somewhat more autonomy with regard to revenues might alleviate the problem of lacking funds to some extent. at the same time, however, it has to be ensured that the overall tax burden does not increase. bis central bankers β speeches 4. reforms for resilience ladies and gentlemen the reforms laid out so far, together with other widely discussed structural measures and sound public finances, would allow the euro - area economy to shift gears and accelerate. but they do not in themselves guarantee that the engine will run more smoothly and reliably. this is where reforms addressing the euro area β s institutional architecture come in. the euro area teams up one common monetary policy with 18 national fiscal and economic policies. this approach reflects a currency area composed of sovereign member states. it grants member states sufficient leeway to preserve their diversity, that is to establish their own business models or to tailor institutions and policies to their own national preferences. at the same time, it leaves the consequences of such decisions with the respective member state and consistently rules out the option of mutualising public debt with other euro - area states. but this set - up also creates vulnerabilities. first, a combination of this kind gives rise to a deficit bias, as it allows the costs of fiscal imprudence to be shifted partially on to others. an unsustainable fiscal situation in one country has repercussions for monetary union as a whole. you can compare this to what economists call the β tragedy of the commons β. just as overfishing creates negative externalities for other countries, excessive public debt harm
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) was enacted in 2007. the npsa empowered the bank of zambia to develop and implement the national payment systems policy so as to promote the efficiency, stability and safety of the zambian financial system. the bank of zambia thus designates players wishing to provide payment services such as money transfer services, mobile banking and other payment services. this process has strengthened the capacity of the boz to monitor transactions and to ensure that only safe and efficient institutions are allowed to provide payment services. distinguished guests, allow me to conclude by congratulating ecobank zambia limited for the innovative products that we are launching today. we hope that our people can send and receive money conveniently, safely, and at a reasonable cost. i also wish to call upon all banks and financial institutions to emulate ecobank by introducing such products which contribute to increasing access to banking services for the zambian people. the opportunity, primarily for banks and other financial institutions, is to find ways to leverage zambians in the diaspora to use remittance services that will both be profitable for the banks and will also provide them and their families with greater financial access. i thank you for your attention.
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caleb m fundanga : increasing access to financial services in zambia remarks by dr caleb m fundanga, governor of the bank of zambia, at the official opening of national savings and credit bank, lukulu branch, lusaka, 27 may 2009. * * * the guest of honour ; the honourable minister of finance and national planning ; dr. situmbeko musokotwane, mp the honourable minister for western province ; the deputy permanent secretary for western province ; the honourable members of parliament for lukulu east and west ; the acting ngambela imbua imwaka representing the barotse royal establishment ; the district commissioners for lukulu and kaoma ; the board and management of national savings and credit bank ; distinguished invited guests ; ladies and gentlemen. 1. on behalf of the bank of zambia governor, i would like to thank the board of directors and management of national savings and credit bank for inviting us to the occasion of the opening of another rural branch in zambia, this time in lukulu. 2. national savings and credit bank ( also commonly referred to as natsave ) was established on 1 april 1972 by the national savings and credit bank act of 1972 and it commenced business operations in march 1973. the amendments to the banking and financial services act of 2000 extended the supervisory authority of the bank of zambia to natsave which was until then, supervised by the ministry of finance and national planning ( mofnp ). 3. natsave was set up to administer savings and to provide credit facilities in urban, periurban and rural areas to individuals and small business enterprises. its business strategy is to target the low and medium income earners through the establishment of a sustainable network of outlets and by offering sustainable financial services. the bank has continued to be a leading public vehicle in ensuring financial inclusion to all citizens across the country through the vast branch network. currently, natsave has 27 branches ( including lukulu branch ), spread across the country. 4. honourable ministers and distinguished invited guests, a key element in the strategy of poverty reduction is the provision of financial services to the majority of our people, the small and micro enterprises who have traditionally been neglected by the formal banking sector. natsave β s expansion program therefore has the potential to improve access to financial services and enhance competition in the financial sector. this improves financial services delivery to the zambian people and brings more of the financially excluded population to the financial institutions. the bank
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on individual hong kong stocks and, since the launch a few weeks ago, on a selection of leading stocks of certain overseas exchanges. exchange traded interest rate products include one - month and three - month hibor futures ; and futures contracts on three - year exchange fund notes are expected to commence trading later this month. less visible, perhaps, to the outside observer, but no less important, is the trading of over - the - counter derivative products among financial institutions. fewer high frequency statistics are available for otc activity than for exchange - based activity, but the bank for international settlements publishes regular estimates and has recently released the results of its comprehensive triennial survey of activity in the world's foreign exchange and related derivative markets. the hkma has in parallel released some details of the hong kong data which we collected and submitted for that survey. briefly, in the three years up to april 2001, while, roughly in line with experience elsewhere in the world, turnover in the foreign exchange market in hong kong declined, activity in otc derivatives - essentially currency swaps and options, and interest rate swaps, options and forward rate agreements - rose by just under 10 %. interest rate products accounted for almost two thirds of the total of this derivatives activity. the apparent buoyancy of interest - rate related activity may be partly attributable to the growth of composite products such as structured notes which include an option or swap element. some of the a fuller account will appear in the forthcoming november issue of the hkma quarterly bulletin. growth in the interest rate swap market has also been associated with the continuing development of the hong kong dollar bond market, where well - rated names may combine issuance of longer - term fixed - rate paper with a swap to secure floating - rate hong kong dollars at sub - hibor, or, particularly in the case of some international borrowers, link this also with a currency swap to obtain us dollars at sub - libor. as regards exchange traded products, there has been a recent surge of activity in hibor futures. this may owe something to the steep downtrend in interest rates this year, which could have prompted both those who expect it to continue and those who are content to lock in borrowing at current low rates, to enter the futures market in order to speculate or hedge on their respective hunches. all in all, as these various examples illustrate, the derivatives infrastructure in hong kong has developed well to meet the evolving requirements of the business and financial communities
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, would have cut their teeth in business through the route of micro and small enterprises. 6. secondly, msme sector is crucial for the success of the national agenda of financial inclusion. let me explain. normally, when we talk about financial inclusion, we do so largely from the perspective of an individual or at best a household. however, to my mind, universal financial inclusion cannot be considered to have been achieved unless it is ensured that the micro and small businesses are financially included. credits to these small family run or individual run entities from the formal financial channels would make these businesses sustainable and help them move out of poverty and propel them to a better quality of life. 7. the surmise that i am trying to drive at is that if this is the sector that is the bulwark for such critical developmental paradigms, there are compelling enough reasons for all stakeholdersbe they the associations, the financial institutions, the regulators or the government, to put annual report, ministry of msme 2015 β 16. bis central bankers β speeches all their might together in a convergent fashion so that the right environment is created to propel growth of msmes in our country. 8. for achieving this objective, there is a need to create an ecosystem which can facilitate handholding and nurturing of msme units particularly at the nascent stages. also, there is a need to eliminate a host of impediments β of permits, of inspections, of red tape and provide a set of enablers β skill development, infrastructure, markets, technology etc. however, of all the enablers, probably none is more important than credit. the ifc / mckinsey has estimated the credit gap for formal and informal msmes worldwide at around $ 3. 9 trillion globally, of which $ 2. 1 to 2. 6 trillion is in emerging markets. the abcd of credit 9. as i said, credit is perhaps the most critical component for msme entrepreneurs. provision for credit is essentially dependent on four pivotal issues which i would call β abcd β of credit. let me take you through each of them and also explain what we are doing to iron out these issues. a ) the a of credit β access / availability 10. the 4th all india survey of msmes states that close to 90 per cent of msmes are dependent on informal sources, which by any standards is a worrisome figure. since that survey, some headway must have been made in improving msmes β access
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unlike many developed and developing countries, data on quarterly gdp, employment and wages, etc. is not available in case of pakistan. moreover, the data on key macroeconomic variables ( such as government expenditure and revenue, output of large - scale manufacturing, crop estimates, etc. ) is usually available with substantial lags. this constrains an in - depth analysis of the current economic situation and evolving trends, and hinders the ability of the sbp to develop a forward - looking policy stance. 3. unlike many countries, both developed and developing, there is no prescribed limit on government borrowing from sbp defined in the sbp act or the fiscal responsibility and debt limitation ( frdl ) act 2005. besides being highly inflationary, government borrowing from sbp also complicates liquidity management. borrowing from the central bank injects liquidity in the system through increased currency in circulation and deposits of the government with the banks. in both cases, the impact of tight monetary stance is diluted as this automatic creation of money increases money supply without any prior notice. moreover, access to potentially unlimited borrowings from the sbp provides little incentives to the government to put the fiscal accounts in order. therefore, the foremost task to improve the effectiveness of monetary policy is to prohibit the practice of government borrowings from the sbp. in this regard, appropriate provisions are required to cease or limit government recourse to central bank financing through amendments in the sbp act and the frdl act 2005. 4. another issue is to make a clear distinction between exchange rate management and monetary management. currently, there is a general perception that the state bank is bound to keep the exchange rate at some predefined level and any movement away from this level is then considered as an inefficiency of the sbp. there is a need to understand that for an open economy, it is impossible to pursue an independent monetary and exchange rate policy as well as allowing capital to move freely across the border. since the sbp endeavors to achieve price stability through achieving monetary targets by changes in the policy rate, it is not possible to maintain exchange rates at some level with free capital mobility. this can only be achieved by putting complete restrictions on capital movements, which is not possible. sbps responsibility is to ensure an environment where foreign exchange flows are driven by economic fundamental and are not mis - guided by rent seeking speculation. 5. finally, based on experience particularly gained during the last two months is to
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recruitment of entry - level bankers. the next step in this value chain of human resource development is the continuing education, training, testing and progression of in - service employees and identification of future managers of the financial industry. recently, i had a very productive meeting with the human resource heads of some of your institutions at the ibp and we have agreed that this area needs your personal attention and commitment. we, at the sbp, have gained some experience in this endeavour and we are willing to share that with you. the ibp has been given a much larger mandate, the nibaf facilities have been opened up to the whole industry and the five large banks have offered to upgrade the quality of their training institutions which can then be available to other banks, leasing companies, etc. i attach a lot of importance to this particular area of work and i will take personal interest in developing a cadre of professional bankers in pakistan who are of international standards and can move into multinational banks without much difficulty. ( i ) risk management : the advent of basle ii regime in a couple of years imposes a sense of urgency on both the regulators as well as the financial industry to put their act together as far as risk management is concerned. i have very little doubt that the foreign banks operating in pakistan will have any serious problems in making the transition successfully but i remain very much worried about our domestic banks - large, medium and small. although we all have been talking about basle ii for sometime, our response in preparing ourselves have been at best patchy. the sbp has installed capacity for risk management within the institution and we intend to keep on expanding this capacity but i see that our large banks have not yet woken up to attract the human resource of the right kind, set up the internal rating systems and the supporting technology. we have started the training courses in real earnest and i have asked the ibp to give priority to this area but we need trainable material from the banks. i hope that the pakistan banks association ( pba ) will form an internal working group to bring their member institutions to reach minimum standards by certain timelines. ( j ) promotion of islamic banking : i have been very much encouraged by the enthusiastic response to the setting up of islamic banks and branches in the country. this is an extremely positive development as it brings into the fold of formal financial sector those who have remained outside because of their faith and beliefs. from my interactions, i can tell you that their numbers are in millions and
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you add another leg, its end must also lie on that plane, otherwise things get wobbly. so, it is not about whether the legs are arranged symmetrically ; it is about whether their ends are on the same plane. the same applies to monetary union. it is not necessary for all policy areas to be integrated symmetrically. what is needed is for control and liability to be situated on the same plane. only if control and liability are aligned either at the national or at the european level are the incentives for sound policymaking in place. take the example of a credit card. if it draws on your account, and you are the only one using it, then you will feel the consequences of splashing out. by the same token, if you share a credit card within your family that runs on a shared account, things should be fine as well. but if you give away your credit card without being able to rein in spending, the beneficiary might be unable to resist the urge to indulge. this is why the measures taken so far to contain the crisis have skewed the delicate balance between control and liability. the crucial question is this : how can we restore that balance? 2. 1 a fiscal union benoit cΕure and emmanuel macron have made proposals that aim at creating a fiscal union β that is, centralised decision - making in the fiscal realm, combined with fiscal transfers or mutual liability in the form of eurobonds. a genuine fiscal union could indeed restore the balance between control and liability. if decision - making is shifted from the national to the european level, the deficit bias of the individual member states inherent in the current set - up of emu would be mitigated. while this, in itself, is not a guarantee for sound fiscal policy choices, this framework is at least consistent with the concept of mutual liability. what kind of sovereignty shift are we talking about? last year, michel sapin declared that β la commission, je le rappelle, n β a absolument pas le pouvoir de rejeter, retoquer ou censurer un budget, comme j β ai pu le lire. ici, comme ailleurs, la souverainete appartient au parlement francais. β in a fiscal union, that would change. a member state would have to follow through on the demands of a european fiscal authority. as such, a common fiscal authority
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jens weidmann : at the crossroads β the euro area between sovereignty and solidarity speech by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at sciences po, paris, 12 november 2015. * 1. * * introduction ladies and gentlemen thank you kindly for inviting me here today. it is a great pleasure and a privilege to speak before such an international audience. even more so than my generation, you live a truly european life. your studies have an international outlook, and, in all likelihood, you have done, or will do, part of these studies abroad. some of you have started them at the campus europeen franco - allemand in nancy. and you are the first generation that has come of age with our common currency. europe not only comes naturally to you. your perspective on european matters is also invaluable because europe is not yet your legacy β but it is your future. to give credit where credit is due, the european legacy that you have come upon was shaped to a large extent by the efforts of french visionaries. back in 1949, economist jacques rueff declared that β l β europe se fera par la monnaie ou ne se fera pas. β in 1962, a commissioner penned a memorandum for a common currency for the first time β his name was robert marjolin. in 1969, the commission made a second proposal for a monetary union that resulted in the exchange rate system known as the β snake β β here, the commissioner in question was raymond barre, a graduate of sciences po. and the plan that finally served as a blueprint for our economic and monetary union was developed by a committee of national central bank governors. but it was chaired by the then president of the commission : jacques delors. the euro was always a political project that sought to establish even closer ties between the nations of europe. but of course, it was more than just a political project β it was also a promise of prosperity. in recent years, this promise has proven elusive for many in the euro area, prompting some to regard the requirements of our common currency not as an anchor of stability, but as a veritable straitjacket. the rescue mechanisms that were put in place prevented the crisis in the euro area from coming to a head. but they did so by mutualising fiscal liability on a substantial scale. fiscal and economic policies, by contrast, are essentially still a
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the peak levels they reached during the crisis has been significant. private - sector nonperforming loans, which have fallen by 60 % from their peak in 2013, currently stand at the same level as in 2009. foreclosed assets have followed a similar pattern, falling by 40 % from their peak in 2012. the economic recovery has certainly contributed to this process, but it has also been driven by credit institutions β management of troubled assets and by supervisory pressure. spain has made relatively more progress than other euro area countries in reducing the volume of non - performing loans built up during the crisis. moreover, economic growth β albeit at lower rates β can be expected to continue to help to gradually reduce them over the next few years. despite these improvements, the level of unproductive assets of spanish banks ( especially those related to business in spain ) remains relatively high and above precrisis levels. 3 / 11 reducing unproductive assets continues to be a challenge for the industry, requiring banks to strengthen the application of active management policies to their impaired assets. in this respect, the agreements to sell troubled asset portfolios announced over the past year will accelerate the reduction of future npl ratios more than initially estimated solely on the basis of the cyclical improvement in the economy and the experience of previous credit cycles. in order to address this challenge, which most other european banks also face, the european economic and supervisory authorities have taken initiatives to accelerate the reduction of npls. in particular, the european commission announced a package of measures in march this year, which included a proposal to review the capital requirement regulations and an npl provisioning schedule. correcting the high level of impaired assets is key for two basic reasons. first, because the balance - sheet clean - up will improve banks β profitability and solvency. that is to say, it will free up resources currently devoted to financing unproductive assets and allow them to be used to finance new lending. and second, because correcting the levels of bad debts in the euro area should smooth the path to creation of a pan - european, fully mutualised deposit guarantee scheme with sufficient fiscal backing, since it would enable risks to be shared without problems inherited from before the establishment of the single supervisory and resolution mechanisms. this is the third pillar of the banking union, a key element which seeks, moreover, to reduce the link between banking risk and sovereign risk ( see chart 3 ). restoring profitability restoring profitability is another of the main challenges facing the
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comfort with the personal relationship. in summary, president lula and i started from different points of view but brazil brought us close together. on the other hand, within my duties in the administration of a global corporation i was the person with ultimate responsibility for the bank's investments and those of its clients in all countries in which we operated. under these responsibilities, it was required that we track the evolution of the governments and economic policies of some 30 countries around the world. i saw amazing examples of success and of failure. i can assure you that my experience allows me to be confident in what i see from president lula's government. brazil is on the right track. it is important to note, however, that the main focus of an investment policy evaluation rests in the model of the central bank's actions. having been responsible for the areas of capital markets, currency, operations desks, and corporate and sovereign credits, i am confident in concluding that there is a consensus in the world today that the central banks that have been assigned a multiplicity of functions and targets are doomed to fail. successful central banks are those that have price stability as their only mandate. in this regard, i would like to emphasize that competence, seriousness and patriotism are a legacy of arminio fraga's administration at the central bank. there is no doubt that the implementation of a floating exchange rate regime and of the inflation targeting regime in brazil at a critical moment for the brazilian economy in 1999 are a hallmark in the history of central banks in emerging economies. the substantial improvement in transparency and credibility that has taken place over the past three years has been incorporated into the working structure of the brazilian central bank. arminio, thank you for the loyalty and professionalism you showed in the transition process. although there are many instruments a government can use to implement its economic policy, the task assigned to the central bank is to keep the rate of inflation at a low level, mostly because the central bank has only one instrument, which is monetary policy. even with only one goal and with only one instrument, in theory central bank actions can be organized in different ways. for a long time in the past, monetary policy was conducted through the control of monetary aggregates. this practice, however, proved to be increasingly inefficient as economic systems designed new substitutive mechanisms to create money that had not been supplied by the monetary authority. with advances in information technology and its effects on the productive processes
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also update our risk assessment. even now, 2 / 5 bis - central bankers'speeches it seems clear that the recent events in the middle east β terrible events β have increased the uncertainty of the medium - term outlook. overall, during the last few months, inflation in the euro area has fallen significantly. in october, the headline inflation rate slowed to 2. 9 %. this is encouraging. nevertheless, while the inflation curve currently looks a bit like the matterhorn β or, as it is called in italy, monte cervino β i do not expect this steep decline to continue over the coming months. statistical effects, particularly base effects, are currently exerting a strong influence on the monthly data. events that happened twelve months ago are having an impact on the year - on - year rate of inflation. even if energy prices remain where they are, i expect the inflation rate to rise again somewhat. for some months to come, the road ahead will probably be a bumpy one with many ups and downs. indicators of underlying inflation show that its dynamic is still quite strong. for example, in october, core inflation stood at 4. 2 %. this is the inflation rate excluding energy and food. in other words, now that the disinflationary effect of lower energy prices has faded away, we are faced with the most difficult part of our journey forward. that is to say, our job is not done yet. in particular, it would be a mistake to loosen our monetary policy stance too early. premature easing would jeopardise the timely return of inflation to our target of 2 %. and this timely return is important for keeping medium - to - long - term inflation expectations anchored at levels consistent with price stability. if our actions raise doubts about our determination, economic agents will increasingly expect inflation rates to persist above target and will adapt their behaviour accordingly. their price - setting behaviour or their wage demands, for example. now we need the patience to wait for the full effect of policy tightening on inflation to materialise. we expect the main effect on inflation to take hold in 2024. this is due to the time lag of monetary policy transmission. in any case, we must maintain our current restrictive policy stance until we are certain that price stability will return on a lasting basis. 3. 2 price stability is our guiding star one reason why the final mile on the road to price stability is considered to be the toughest is the growing public opposition to a restrictive monetary stance
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hermann remsperger : money in an uncertain world speech by dr hermann remsperger, member of the executive board of the deutsche bundesbank, at a dinner speech, bundesbank and university of bonn workshop, eltville, 27 - 28 october 2005. * * * ladies and gentleman, it is a pleasure for me to speak to you this evening on the role of money in an uncertain world. of course, the challenge of making decisions under different forms of uncertainties does not only apply to the conduct of monetary policy. on the contrary, model and parameter uncertainty, data uncertainty and shock uncertainty are present in many areas of our everyday life. as an example, take medical science. on the one side you could argue that doctors know more about the working of the human body than economists know about the functioning of the economy. but on the other side there is also no doubt that certain health problems are not entirely understood. at least it is a fact that you very often get different opinions about how certain health problems ought to be treated. uncertainty and monetary policy decision making well, before i become too much involved in health care, let me get back to those uncertainties with which we are confronted as central bankers. here, the package insert or the instructions at our disposal is the stock of economic research. all the different types of uncertainty have been picked up by academic literature. however, while the literature usually focuses on only one sort of uncertainty at a time, we face all of them simultaneously. i will focus on two of them, one is model uncertainty and the other data uncertainty. given the overall topic of this work - shop, i would like to convey the key message of my talk without any further delay : the analysis of monetary aggregates can play and should play an important role to cope with these two challenges. model uncertainty and money as central bankers we need models to structure our thoughts and to estimate the impact of our decisions. however, there is no consensus about which model is the appropriate representation of the real world. as a consequence, most central banks β including the ecb β use a wide range of models. but with such a variety of models, the problem of setting the appropriate monetary policy stance becomes a very difficult task. i think that ben mccallum is perfectly right in that the preferred policy rule should be one that works β reasonably well in a variety of plausible quantitative models β. 1 by the way, this approach can also be applied to the discussion whether monetary
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for banks and financial institutions. mitigation and green transition policies such as carbon pricing can also affect price stability, potentially precipitating large and long - lasting movements in relative 10 tree - based methods are flexible machine learning algorithms that can tackle a wide range of tasks. decision trees group individual data points by sequentially partitioning data into finer categories according to specific characteristics of interest. neural networks β main building blocks are artificial neurons, which take multiple input values and transform them in a non - linear way to output a single number β like logistic regressions. source : bis. ( 2024 ). artificial intelligence in central banking. prices and shifts in trend inflation. depreciation pressures on currencies of countries frequently affected by climate disasters can also cause financial instability, higher import costs and negative terms of trade. the range of policy options available to mitigate climate risks require dedicated research, especially in the context of the complex, non - linear ways in which climate, the real economy, financial systems and markets interact and affect each other. improved inter - disciplinary macroeconomic modelling is becoming crucial for understanding directions of causality and feedbacks. iii. globalisation and the natural rate of interest monetary policy making has evolved in line with structural changes in the economy and the financial system. inflation targeting ( it ) β the longest surviving modern monetary policy framework - is no exception. this could be attributed to the β rule - based β principle built into the framework alongside elements of β flexibility β that have evolved in practice. it has been argued while the application of a core set of " scientific principles " has expanded significantly in practice, there remains, and will likely always remain, elements of art in the conduct of monetary policy 11. 11 mishkin, frederic s. ( 2007 ). will monetary policy become more of a science? nber working paper 13566, october. one principle followed by central banks in setting policy rates is the natural rate of interest β popularly known as r - star. it is a theoretical benchmark for monetary policy, reflecting the real interest rate that supports the economy at full employment while keeping inflation low and stable. this concept of r - star or the natural rate dates back to 189812 and currently forms an integral element of modern macroeconomic frameworks. it is argued in a seminal work that β a central bank should seek to close the gaps between actual economic conditions and the economy β s potential for output and employment ( y - star and u - star, respectively )
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of time, i will focus on four emerging areas of research that, i believe, will redefine human behaviour and hence economic research. i. redefining technology shocks in economic models the rapid spread of digitalisation has been transformative, reshaping the way we live and work, the interactions between economic agents, production processes and market structures. digitalisation can be regarded as a long - term technology shock impacting economic growth, productivity, labour markets, older technologies and inflation. it is estimated that the global digital economy already accounts for more than 15 per cent of global gdp. 2 generative artificial intelligence ( gen - ai ) alone is projected to boost global gdp by $ 7 - 10 trillion over the next three years. 3 to capture these evolving dynamics, empirical research methodologies must evolve to be able to understand and assess the underlying relationships and implications. despite the potential of digital technologies to drive productivity through efficiency, growth has consistently fallen short of expectations. this has given rise to antithetical scenarios of slow innovation diffusion. 4 recent studies have deepened the debate, highlighting the uncertainty around ai β s impact on productivity and economic growth. 5 this productivity puzzle could be pointing to research gaps in growth decomposition models as well as in the received wisdom in explaining sectoral productivity shifts and the distributional effects of technology shocks across regions and income groups. digitalisation β s long - term impact on employment appears benign so far, but its disruptive effects on labour markets have drawn considerable 2 united nations. ( 2023 ). opening session of global development initiative digital cooperation forum. 3 jp morgan. ( 2024 ). is generative ai a game changer? 4 brynjolfsson, e., and mcafee, a. ( 2014 ). the second machine age : work, progress, and prosperity in a time of brilliant technologies. ww norton & company ; haldane, a. ( 2017 ). productivity puzzles. speech at the london school of economics ; summers, l. h. ( 2013 ). speech at the imf 14th annual research conference in honor of stanley fisher. international monetary fund, 8 5 goldman sachs. ( 2024 ). gen ai : too much spend, too little benefit report. attention. 6 population ageing may further accelerate adoption of digital technologies. with ai set to affect 40 per cent of global jobs, education, retraining and social safety nets will be crucial. 7 within central banks too, recruitment and retention of fintech
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encourage faster mbs repayments than are shown here, producing monthly paydowns larger than the 20 billion cap and thus some reinvestments β an issue i will return to later. policymakers have indicated that they want the portfolio β s size to decline β in the background, β and that the federal funds rate will be the primary instrument of monetary policy. balance sheet normalization is expected to continue until the fomc judges that the federal reserve is holding no more securities than necessary to implement monetary policy efficiently and effectively. the fomc has not specified how large the balance sheet should be at that point, other than an expectation that the level of reserve balances will be appreciably below that seen in recent years, but larger than before the financial crisis. my colleague lorie logan spoke in may on the many technical drivers of this ultimate level, which include the mode of policy implementation that the fomc chooses in the longer run, possible increases in recent years in the financial system β s demand for reserves and federal reserve reverse repo liabilities owing to new financial regulations and other factors, and the long - term evolution of demand for paper currency. 10 let me spend a few minutes discussing the importance of gradualism and predictability. gradualism the case for gradualism in reducing the fed β s securities holdings rests on evidence, as well as potential risks, that an overly fast flow of securities into private hands could be disruptive to market functioning, as well as the fomc β s confidence that it can adjust its policy stance as needed through changes in the federal funds rate. in particular, there is evidence that the agency mbs market, due to the nature of its trading conventions, is prone to dislocation when market participants expect large transitions in central bank agency mbs flows. 11 such concerns can be self - fulfilling : if market participants are concerned that an abrupt shift in flow might be disruptive, they might, for example, withdraw from liquidity provision. an overly fast redemption flow of treasuries could also create challenges in the government β s management of public debt auctions and result in communication challenges. 12 rapid portfolio declines also could have unforeseen impacts on overnight money markets, for example by creating significant shifts in dealers β demand for overnight repo financing. we have seen such impacts in the past. this sort of volatility did not, and would not now, pose a major problem to markets or policy implementation, but it
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reduce or eliminate residual holdings, and that the timing and pace of any sales would be communicated to the public in advance. portfolio projections released in july 2017 do not include sales of any type over the forecast horizon. 9 statement regarding reinvestment in treasury securities and agency mortgage - backed securities, september 20, 2017. 10 logan, implementing monetary policy : perspective from the open market trading desk, may 18, 2017. 11 kandrac, the costs of quantitative easing : liquidity and market functioning effects of federal reserve mbs purchases ( 2014 ). 12 the treasury borrowing advisory council considered this topic in its third - quarter 2017 meeting, including the potential impact of changes in central bank policy abroad. see the august 1, 2017, presentation by tbac to the u. s. treasury. 13 in addition to these topics, we at the federal reserve are following closely the potential for the decline in the balance sheet to affect other aspects of the structure of financial markets or the banking industry. as one example, we are paying attention to the possibility that a decline in the size of the balance sheet puts downward pressure on bank deposits. as discussed earlier, in general, balance sheet normalization removes an asset from the private sector that can be held only by banks ( reserves ) and replaces it with an asset that can be held by anyone ( securities ). it is possible that, on net in equilibrium relative to a counterfactual in which the balance sheet does not decline, ( a ) banks will hold fewer reserves ; ( b ) banks will offset some of this decline by holding securities instead, and some by taking in fewer deposits ; and ( c ) non - banks will replace those deposits with securities. the extent ( if any ) of any such decline in deposit activity on deposit and loan pricing will likely depend on a variety of factors, including the extent to which the decline comes from wholesale institutional deposit activity motivated by interest rate arbitrage. see ihrig, mize, and weinbach, how does the fed adjust its securities holdings and who is affected?, september 22, 2017 7 / 7 bis central bankers'speeches
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working to set up the institutional framework, coordinating mechanisms and enhancing governance. on the provincial side, a number of sub - national governments have undertaken major reforms of their public sector systems, introducing among others performance - based budgeting and one - stop public services. the legal arrangement is also directed to improve investment climate, both directly by promulgating investment law no. 25 of 2007 and indirectly by imposing open capital account through promulgating law no. 24 of 1999. the later is set up to improve the financial infrastructure to support capital inflows, both for direct investment and portfolios. to enhance macroeconomic stability, government and so does the monetary authority works hand in hand and commits to enhance fiscal and monetary discipline as well as strengthening the financial architectures. learning from the failure of 1997 β 1998 crises, our policies were focused on enhancing policy transmission, improving financial market efficiency through prudential practices and financial market deepening. to this point forward, the government was improving their capacity on fiscal budgeting, to be more specific, the adoption of active debt and cash management. they are also fully committed to improve fiscal sustainability by reducing debt to gdp ratio. steps were also taken in the area of monetary policy framework. since 1999, bank indonesia was mandated to achieve single objective of price stability, both in terms of inflation and the exchange rate and at the same time was given independency on our policy conduct. in 2005, bank indonesia has fully adopted inflation targeting framework marked by the introduction of bi rate as the policy rate to increase the policy effectiveness in achieving the inflation target set by the government. in 2008, further enhancement has been done in the area of monetary policy implementation by the introduction of overnight interbank rate as our operational target to improve the effectiveness of the monetary policy. institutional reform in the financial sector has been done by improving the soundness and efficiency of the financial market through the combination of imposing prudential practices and enhancing market deepening. financial sector reforms are crucial to raising indonesia β s growth rate and enhancing the economy β s resilience. in banking industry, reform is conducted by strengthening bank β s capital, introducing risk management practices and world bank, investing in indonesia β s institutions for inclusive and sustainable development, 2008. governance, and not to mention improving supervisory capabilities. these were done by adopting basel core principles and promoting mergers and acquisitions. the same reforms have conducted in the capital market, debt market, as well as non - bank financial institution. one of the most
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making with sufficient public consultation. third, how coordination is built between the central government, regional governments, and relevant authorities, thereby avoiding overlapping policy making. 5. today, we gather to inaugurate fspi and address the concern for coordination issues between authorities in indonesia. in fspi, we will consistently cooperate, build coordination, and immediately catch up indonesia β s lagging development in acceptable payment system. 6. we certainly expect the support and commitment of some of you as the heads of the relevant ministries and authorities to realize it. in addition, we believe that on the technical level, all technical teams need the commitment and direction of their respective leaders to allow effective role playing. distinguished ladies and gentlemen, β bi β s duties and authorities in ps β 7. every ministry and authority present today has their own regulations. in its capacity as a central bank, bi β s mandates specified in the law include not only ensuring effective monetary policies, but also maintaining financial system stability and implementing smooth, safe, efficient, and reliable payment system. furthermore, the law also mandates bank indonesia to grant permits for payment system implementation. 8. implementation of such mandates correlates and supports one another in order to achieve the objectives of bank indonesia. the reason is the roles of monetary policies in affecting real sector will be transmitted through financial and payment systems. 9. availability of adequate instruments and infrastructures of payment system, which can support financial system activities, will serve as a highly significant factor to facilitate public payment transactions. without such supports, monetary policies will not be transmitted effectively. distinguished ladies and gentlemen, β development of ps in indonesia β 10. in line with national economic growth, indonesian people make more payment transactions every year. various non - cash payment instruments have started to become an inseparable part of our daily lives. 11. the use of instruments, such as debit cards, credit cards, and electronic money, keeps developing, as followed by growing new payment channels. through the internet, mobile banking and internet banking facilitate transactions made by the people. the strong penetration of internet also offers a new online shopping medium for the people, which is also known as e - commerce. 12. if we follow the recent growth of e - commerce, it is unbelievable. we see that the rapid growth of e - commerce matches the penetration of cellular phones. facing such development, we as the regulator may not delay in our response. we should have been able to make an architecture, making all industries develop
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eyes of europe and the world, which is extremely positive. lastly, in 2017 basel iii was finalised. bankers β largely represented this evening β had expressed, alongside others, serious concerns. the agreement of 7 december 2017 is the best possible agreement for our country and for europe, thanks to the particularly active commitment of french negotiators. we maintain, against all temptation of nilateralism or deregulation, our commitment to the multilateral rules of the game in place since 2009. and we are stabilising these rules once and for all : there will not be a basel iv. in sum, 2017 positively marked a turning point for both the united states and france. the beginning of 2018 has thus been characterised by a welcome optimism, but one which must not act as a disincentive : confidence yes, complacency no. we must not lie back and enjoy the return of blue skies ; we must take steps to ensure that this improvement is transformed into stronger and sustainable growth. to this end, i wish to make four collective wishes for the coming year. 2. four wishes for 2018 my first wish concerns europe. this does not so much concern our monetary policy, which has 1 / 3 bis central bankers'speeches entered a gradual normalisation phase, and which is a success ; i will not discuss it further this evening during the " silent period ". 2018 must above all be the year of economic union, which still largely remains to be built. we must now or never take advantage of the recovery to tackle the shortcomings of the euro area. because france and germany β s electoral calendars are aligned for the first time in 15 years, and since last friday, there is a prospect of a pro - european coalition in germany. and because now is the time to strengthen our economic instruments in order to deal with a future european recession, the day it comes. otherwise monetary policy may be overburdened. my second wish concerns our country. the french economy is in much better shape, but there are still major drags on growth. at around 1. 9 %, we are above our potential growth rate, which means that we are coming up against more structural limiters. there are at least two indications of this : a persistent negative growth differential vis - a - vis the euro area of around half a percentage point, and a current account deficit and hence a lack of competitiveness. in order to increase the speed of the french economy, we need
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michel camdessus central banking lecture β washington, 14 september 2022 ethics of currency : a possible guide for central bankers? speech by francois villeroy de galhau, governor of the banque de france press contact : mark deen ( mark. deen @ banque - france. fr ), deborah guedj ( deborah. guedj @ banquefrance. fr ) page 1 sur 10 ladies and gentlemen, it is my great pleasure to be in washington with you today, and to deliver this speech in honour of michel camdessus. i would like to take this opportunity to pay a special tribute to him, and express my personal gratitude. michel is not only one of my predecessors as a governor of the banque de france, but also a friend of mine and β yes β a master. my speech was prepared with his precious help, so today you can almost enjoy a β camdessus lecture by michel camdessus himself β. the theme we chose together, the β ethics of currency β, has guided him throughout his career. in the murky waters that we central bankers are navigating, it should more than ever serve as a golden thread. i will briefly discuss the reasons why i dare to talk about the ethics of currency ( i ), then elaborate on the golden triangle of trust today ( ii ) and finally raise the question as to whether the international dimension of trust can still inspire us ( iii ). i. why i dare to talk about the ethics of currency before going any further, we must find a common definition of β ethics β. is it possible to take this word as a synonym for β morality β? for centuries, this question has been the β bridge of donkeys β ( pons asinorum ) for philosophers β apprentices. supporters of the synonym theory highlight a common etymology between the two words β morality is the latin translation of greek ethos. despite their initially identical meanings, the two words nevertheless have followed different paths over time : β morality β can be described as a β hard concept β, similar to the fundamental rules engraved on moses β stone tablets or in the code of hammurabi. in contrast, β ethics β refer to a softer and less binding concept, a kind of existential version of morality with a more personal dimension. i will use the word ethics in that way in this speech. the question of interest rates is a noteworthy example of the way a moral prohibition can evolve into a more flexible
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has been followed by slowdown in house prices. growth in household debt has been higher than growth in disposable income for several years now. the household debt burden ( household debt as a percentage of disposable income ) has increased to a historically high level and is expected to rise further. however, the household interest burden ( interest expenses after tax as a percentage of disposable income plus interest expenses ) is still low as a result of the low interest rate level. the interest burden is expected to increase to fairly high levels in pace with a normalisation of the interest rate. still, on the whole, households β financial position is strong. the rise in the policy rate so far has not been fully reflected in banks β lending rates. intensified competition, especially for mortgages, has dampened increases. banks β interest margin has declined during the last decade. falling interest margins have, however, partly been compensated by high lending growth, and banks have so far succeeded in maintaining good results. pre - tax profits as a percentage of total assets have been solid. norwegian banks are solid. due to high growth in lending, capital adequacy ratios for banks as a whole declined slightly in 2005. nevertheless, capital adequacy ratios are still high. under basel ii, capital requirements for credit risk are to be calculated using either the standardised approach or more risk - sensitive internal ratings based ( irb ) approaches. the five largest norwegian banks have applied to kredittilsynet to use the foundation internal ratings based ( fibr ) approach for credit risk. under basel ii, the required level of capital for banks in norway will be reduced. the main reason is that mortgages constitute a substantial part of banks β total assets. these loans are considered low risk under basel ii. the reduction in the required level of capital may be substantial for the banks using irb approaches for credit risk, though transitional arrangements provide for a gradual reduction. with solid results in banks, a good financial situation for borrowers and a well functioning financial infrastructure, there appears to be little risk of a crisis in norway β s financial system in the next few years. however, the long period of strong debt growth and asset price inflation may be a source of subsequent instability in the economy and in banks β losses and results. during an upturn such as the current one, it is therefore important to show vigilance and provide a cushion for weaker cyclical conditions and higher interest rates. within
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fall, oil companies invested about as much as all businesses in the mainland economy combined. total oil - sector demand 4 amounted to more than 13 percent of mainland gdp in 2014. this is well above current government spending of oil and gas revenues, and also more than the estimate of the permanent income. graph : demand from the oil and gas sector and government spending of oil / gas revenues it has been estimated that one in nine jobs in the norwegian economy was related to oil sector demand in 2014. 5 the step - wise development of oil and gas reserves in the north sea has helped to create a supply industry that has become world leading in special areas. the downturn following the oil price decline in 2014 has highlighted the oil - dependence of the norwegian economy. as oil - sector demand plummeted, the blow to the economy was cushioned by a substantial increase in government spending. this room for manoeuvre in fiscal policy was provided by the significant savings in preceding years. without it, the recent downturn could have become much more painful. intergenerational concerns graph : old - age dependency ratio allow me to move on to another argument for relatively high saving : the intergenerational challenges facing the norwegian economy. like many other countries, we must cope with the challenges associated with an ageing population. as we have developed a more extensive welfare state than many other countries, the impact on public finances is significant. the pension system is basically pay - as - you - go and health care is also funded by the government. an ageing population will therefore weigh quite heavily on public finances. in the 1990s and 2000s the demographic trend was different. during those years, the share of the population 67 years or older actually declined, mirroring low birth rates between the two world wars. since around 2010 the long - term trend towards a higher old - age dependency ratio has resumed. public pension costs have shot up as baby boomers have retired. the burden on the health and long - term care system is rather light at the moment. but this will change in the coming years. with the alternative strategy of spending the permanent income, we would have spent more of the oil wealth in the 1990s and 2000s, when demographic costs for the government were low. the present fiscal rule, on the contrary, allows increased spending of oil revenue also in a period where age - related costs are expected to grow much faster. 4 / 6 bis central bankers'speeches uncertainty a third concern related to wealth management is uncertainty
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. i take this opportunity to draw your attention in terms of applying the legal requirement for the observance of international financial reporting standards, starting from 2008. this is an issue banks belonging to european union banking groups are more prepared for. however, these banks, and in particular other banks not availing of this opportunity, should co - operate with external auditing companies, in order to define the concrete measures to be taken in their activity for the observance of this legal requirement. dear participants, i believe today β s meeting is a good opportunity to communicate with one - another ; therefore, i invite you to keep on exchanging effective ideas and thoughts. on behalf of the institution i represent, i would like to reassure you that the bank of albania remains fully committed and accountable in fulfilling its legal mission, capable and willing to loyally co - operate with any institution or stakeholder influencing on the country β s economic and financial development thank you.
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of banks in the republic of albania β. according to this law, the bank of albania has been assigned as the resolution authority, whereas the albanian deposit insurance agency is responsible for the administration of the resolution fund, which encompasses investing it in accordance with the policy approved by the resolution authority. moreover, the law gives a new role to adia as an important partner in drafting resolution plans, as well as a new source of financing banks β resolution, therefore increasing the pool of resources available to the bank of albania for resolving failing banks. so, to conclude, once again, thank you very much for the opportunity to speak to you today. it is a pleasure to have you here and i hope you enjoy the rest of your stay in tirana. i wish you all a successful event! thank you! 3 / 3 bis central bankers'speeches
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njuguna ndung β u : working towards an east african monetary union remarks by prof njuguna ndung β u, governor of the central bank of kenya, at the opening of the meetings of the economic affairs sub - committee of the monetary affairs committee mac, nairobi, 3 april 2012. * * * mf and igc officials present ; distinguished delegates from eac partner states central banks and eac secretariat ; ladies and gentlemen : the central bank of kenya is delighted and honoured to host you in this workshop aimed at reviewing the various studies under mac priority activities that will assist in understanding the policy terrain and the process of eamu protocol negotiation. the eac has a target of moving towards a monetary union and this meeting will improve and further consolidate our understanding of the eamu process and invigorate and guide our integration agenda. on behalf of the central bank of kenya, let me take this early opportunity to thank all those who have contributed to the organization of this workshop and all the participants and resource persons. i wish you an enjoyable stay in nairobi. ladies and gentlemen ; the monetary affairs committee ( mac ) of the eac central bank governors is working on various fronts to provide a knowledge base for exchange rate and monetary policy frameworks and how the policy designs can be applied in eac. this will support the east african monetary union ( eamu ) protocol negotiation, currently underway. in order to fast track this process, governors met in june 2010 and identified and apportioned the various priority study areas that would ensure that the decisions taken on eamu are informed and policy proposals are consistent with the aspirations of eac. the central banks of eac identified three levels of this process : analytical and design work, which entails immediate activities to improve the understanding of the entire eamu process, especially the pre - conditions for eamu establishment and the institutional set up ; harmonization of operating frameworks, which entails undertaking all the activities that will result in the harmonization of eac partner states β operating frameworks, thereby setting the stage for enhanced convergence in not only policies, but also the required structures ; and, the above blocks will deliver the input to the policy regimes block, which entail the tools for negotiating the eamu protocol. this block is being dealt with by the high level task force ( hltf ). distinguished delegates : the output from the first two blocks is meant to provide the technical input required to inform the hltf, a body
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been able to implement far reaching reforms in many areas including public financial management, revenue administration, financial sector regulation as well as macroeconomic policy analysis. i am sure you will agree with me that these reforms have contributed substantially in the growth and development of our economies that we have witnessed in the region in recent years. in kenya for example, east afritac has been our main source of technical assistance in implementing the public financial management aspects that were required to be implemented in a time bound manner by our constitution 2010. in this regard, we have received valuable and timely support in enacting the public finance management act 2012 and the accompanying regulations, reengineering ifmis, setting up the national treasury, performance based budgeting, revenue administration, and financial reporting and in developing the vat bill that is now in parliament. bis central bankers β speeches these are just a few examples of the critical support that we have received from east afritac. but one common feature of the support in these areas is that the technical assistance has been relevant and demand driven primarily to meet the requirements of our kenya constitution 2010. i must add that kenyans, through the national assembly have also been very proactive in demanding many of these reforms especially in performance based budgeting and financial reporting and accounting. there is therefore strong ownership of these reforms and this is a clear indication that they will be sustained. i believe what i am saying for kenya should be true for all the seven recipient countries of east afritac β s technical assistance and capacity building initiatives. in this regard, and on behalf of all the seven recipient countries, i would like to take this opportunity to once again thank the imf and the other contributing partners without whose support these reforms would not have been possible. but let me add that while we have made substantial progress, we need to do a lot more to in order to advance our reform agenda and in this regard, i welcome this meeting because it will help us in assessing implementation of our work plan for the financial year 2013 and also consider the proposed work plan for the financial year 2014. let me also say that the mid - term evaluation of east afritac β s performance will play a useful role in establishing the exact extent to which we have achieved the objectives we have set together. it will also inform any necessary realignment to sharpen our focus to the most relevant and priority areas. the evaluation report to be presented on wednesday should therefore be of keen interest to the steering committee. ladies and
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, melbourne, 19 august. bis central bankers β speeches doubt that will not discourage some readers from using their rulers to measure the graphs and focus on revisions down to the nearest 0. 1 percentage point! also, some commentators will be tempted to draw attention to what they might describe as β large Β½ percentage point changes β when the forecasts are revised, even though any such revisions may reflect much smaller adjustments if it is the case that the forecasts have merely crossed rounding barriers. 6 the key point i β d like to make here is that if we judge any forecast revision to be of substance worth noting, we β ll note it! to emphasise this point further, it is worth remembering that the available data are subject to a degree of measurement error. in the case of real gdp, for example, quarterly growth rates can easily be revised up or down by Β½ percentage point or more in the first four years after the initial estimate ( graph 1 ). 7 the recent revision to gdp growth β of 0. 2 percentage points in the september quarter of 2015 β was relatively minor, though the data now suggest that gdp growth picked up in the second half of 2015 to be more in line with the strength that was apparent in a range of indicators of the labour market and business conditions at that time. starting points a critical element of forecasting is to have a sense of where the economy is now and in which direction it β s currently heading. this comes from carefully dissecting the incoming economic data in an attempt to disentangle signals from noise and determine the extent to which shocks will be long - lived or transitory. 8 in addition to publicly available data, we make use of information obtained from our business liaison program. we also use information gleaned from econometric models, which include both single - equation models of individual variables as well as larger models that attempt to capture the behaviour of multiple variables simultaneously. the various information sources that we use don β t always provide a clear message about where we are and where we are heading. indeed, it is naive to think that the truth can reside in a single source of data or a particular model. to an extent, this reflects the usual noise in the various types of information, as well as uncertainty about the strength of different economic relationships. combining information from a variety of sources, and models, typically results in more robust conclusions than relying exclusively on a single source. the behaviour of inflation provides a timely example. a wide range of information suggests
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media - centre / speeches / australias - new - horizon - climate - change - challenges - andprudential - risk >. < https : / / www. fsb - tcfd. org / > summerhayes g ( 2019 ), β financial exposure : the role of disclosure in addressing the climate data deficit β, climatewise and university of cambridge institute for sustainable leadership, london ( february ). available at < https : / / www. cisl. cam. ac. uk / news / news - pdfs - or - prs / financial - exposure - geoff - summerhayes. pdf > see ngfs < https : / / www. banque - france. fr / en / financial - stability / international - role / network - greening - financialsystem > gencost 2018 Β© reserve bank of australia, 2001 β 2019. all rights reserved. https : / / www. rba. gov. au / speeches / 2019 / sp - dg - 2019 - 03 - 12. html subscribe : 10 / 10
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after which it reversed sharply. the surge in credit in the second half of the 1920s was less pronounced and shorter ; it reversed after about five years. before 1953, the series shown in the graph relates only to the credit provided by banks ; after that it includes credit provided by all intermediaries. graph 3 one of the clues as to why the recent episode of credit expansion has lasted longer is that it has been driven to an important extent by household borrowing rather than business borrowing. we have estimates of household and business credit, of varying quality, going back to the 1920s. before that, it is possible to get some guide to the split of borrowing between businesses and households by looking at which institutions were doing the lending. for example, credit extended by trading banks traditionally has mainly gone to businesses, while that extended by savings banks has mainly gone to households. the next couple of graphs decompose the series for total credit shown in graph 3 into its business and household components. in the case of business credit, graph 4 shows that the ratio of business credit to gdp exhibits big cyclical and secular swings, but these have taken place around a flat trend over the 150 years shown on the graph. periods when the financial sector has been relatively unregulated, such as the 1880s and the past couple of decades, have resulted in the ratio of business credit to gdp being elevated. the subdued credit growth in the 1950s and 1960s, a period when the financial sector was heavily regulated, also is noticeable. graph 4 i don β t think these outcomes are surprising. in the very long run, however, there are various economic relationships at work that tend to tie down the relationship between business credit and gdp. specifically, business profits cannot consistently rise faster or slower than gdp, and in the long run the p / e ratio also cycles around a flat trend. the combination of these two facts means that growth in the value of business equity must also be tied to gdp growth in the long run. in turn, this works to tie down the relationship between business debt and gdp, as the gearing of companies ( i. e. the ratio of debt to equity ) cannot consistently rise or fall. let me now turn to household credit, as shown in graph 5. here the picture is very different. up until the 1970s, households β access to credit was very limited. those of us over 50 years of age can remember when, in order to qualify for a housing loan, people had first to establish a long
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to buy shares. these are all signs of rising affluence, driven by a very prolonged economic expansion. over 80 per cent of households in the top half of the income distribution have some type of debt, compared with only 30 per cent of those in the lowest decile ( graph 7 ). essentially, higher - income households are the ones that have the capacity and the financial security to take on debt. it seems that debt is one of those products, like education and health, which has a high income elasticity of demand β i. e. as income rises, demand for it rises more than proportionately. it would be a mistake, therefore, to conclude that a rising ratio of debt to income is necessarily a sign of financial stress among households. graph 7 it is the high - income groups that have had the biggest increase in debt over recent years ( graph 8 ). about three quarters of the increase in owner - occupier debt over the decade to 2005 / 06, for example, was attributable to households in the top half of the income distribution. if comparable figures on debt associated with investment properties and margin loans were available, they would almost certainly further skew this distribution of debt. graph 8 despite the rise in the debt of this group of households, their debt servicing burdens remain relatively low. for those households who are in the top half of the income distribution and who have an owner - occupied housing loan, housing loan repayments currently average a little less than 20 per cent of gross income. this has risen only marginally over the past decade, and it remains significantly lower than the figure of around 30 per cent for households in the bottom half of the income distribution. this suggests that the former group still has substantial capacity to service debt. at the aggregate level across all households with owner - occupier housing debt, the median ratio of housing loan repayments to gross income, at about 21 per cent, is only marginally higher than a decade ago ( graph 9 ). graph 9 another interesting feature emerges when the composition of debt is broken down by age group. this shows that a large contribution to the increase in household indebtedness has come from households aged 45 - 65. this group no doubt overlaps considerably with the high - income household group. over the 10 years to 2006, the proportion of households aged 45 - 64 that are carrying owner - occupier debt increased very noticeably, from 25 per cent to 38 per
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the central bank that finely balanced competing interests and concerns. in particular, the federal reserve was given a regional structure, with twelve reserve banks that were distributed around the country and were empowered to represent sectional interests and to respond to local conditions. although wilson understood the political and practical advantages of decentralization, he also resisted some powerful proponents of a completely decentralized system by supporting the creation of a board of governors in washington to oversee and coordinate the activities of the regional reserve banks. the mandate of the federal reserve system has changed since the institution opened its doors in 1914. when the system was founded, its principal legal purpose was to provide " an elastic currency, " by which was meant a supply of credit that could fluctuate as needed to meet seasonal and other changes in credit demand. in this regard, the federal reserve was an immediate success. the seasonal fluctuations that had characterized short - term interest rates before the founding of the fed were almost immediately eliminated, removing a source of stress from the banking system and the economy. 1 the federal reserve today retains important responsibilities for banking and financial stability, but its formal policy objectives have become much broader. its current mandate, set formally in law in 1977 and reaffirmed in 2000, requires the federal reserve to pursue three objectives through its conduct of monetary policy : maximum employment, stable prices, and moderate long - term interest rates. one of my goals today is to consider the relationships among the three apparently disparate objectives of monetary policy. in particular, i will argue for what i believe has become the consensus view, that the mandated goals of price stability and maximum employment are almost entirely complementary. central bankers, economists, and other knowledgeable observers around the world agree that price miron ( 1986 ). stability both contributes importantly to the economy's growth and employment prospects in the longer term and moderates the variability of output and employment in the short to medium term. but that view did not always command the support that it does today. notably, during the 1960s and early 1970s, some policymakers appeared to believe that price stability and high employment were substitutes, not complements. specifically, some influential voices of the time argued that, by accepting higher inflation, policymakers could bring about a permanently lower rate of unemployment. 2 as i will discuss a bit later, the demise of the view that higher inflation promotes employment in favor of the modern consensus that low inflation and strong employment are complementary goals resulted from the constructive interplay between academic research and practical policymaking
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experience, an interplay that significantly improved policy outcomes and economic welfare in the united states. of course, fostering this sort of interaction between academic analysis and real - world policymaking is a principal objective of the woodrow wilson school. the dual role of price stability price stability plays a dual role in modern central banking : it is both an end and a means of monetary policy. as one of the fed's mandated objectives, price stability itself is an end, or goal, of policy. fundamentally, price stability preserves the integrity and purchasing power of the nation's money. when prices are stable, people can hold money for transactions and other purposes without having to worry that inflation will eat away at the real value of their money balances. equally important, stable prices allow people to rely on the dollar as a measure of value when making long - term contracts, engaging in long - term planning, or borrowing or lending for long periods. as economist martin feldstein has frequently pointed out, price stability also permits tax laws, accounting rules, and the like to be expressed in dollar terms without being subject to distortions arising from fluctuations in the value of money. 3 economists like to argue that money belongs in the same class as the wheel and the inclined plane among ancient inventions of great social utility. price stability allows that invention to work with minimal friction. in principle, the problem of inflation could be reduced by the practice of indexing dollar payments such as interest and wages to the price level, but people seem to find indexing costly and avoid it when they can. it is interesting and instructive, for example, that the indexation of wages to prices in labor contracts has always been quite limited in the united states ; some indexation was used during the high - inflation 1970s but the practice has been substantially reduced since then. moreover, some countries that adopted indexing during high - inflation periods, such as brazil and israel, largely abandoned the practice when inflation receded. borrowers and lenders likewise seem to prefer to contract in dollar terms, although inflation - indexed financial instruments have gained wider acceptance in recent years. borrowing and lending in dollar terms, particularly for long periods, requires confidence that the purchasing power of the currency will be stable and predictable. the savings and loan crisis of the 1980s, which cost u. s. taxpayers roughly $ 150 billion, is an example of the kind of problem that can arise in the absence of price stability. an important source of the s & l crisis was
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, and analysis of guarantor support for real estate transactions was inadequate. based on these findings, we are currently planning a further series of targeted reviews to identify those banks most at risk to further weakening in real estate market conditions and to promptly require remedial actions. we have also developed and started to deliver targeted examiner training so that our supervisory staff is equipped to deal with more serious cre problems at banking organizations as they arise. commercial and industrial loans while there are some pockets of poor performance in commercial and industrial lending, for the most part the sector continues to perform fairly well. commercial and industrial ( c & i ) loans surged in 2007 because of extremely rapid growth in the second half of the year resulting, in part, from large banks'inability to syndicate leveraged loans that they had underwritten. finally, after the issuance of an unprecedented amount of leveraged syndicated loans over the first half of 2007, issuance declined considerably in the second half of the year, when demand by nonbank investors for those loans diminished. in the senior loan officer opinion survey of october 2007 and january 2008, many banks reported charging wider spreads on c & i loans β the loan rate less the bank's cost of funds β representing the first such tightening in several years. a large proportion of banks also indicated that they had tightened lending standards. most of the banks that tightened terms and standards indicated that they had done so in response to a less favorable or more uncertain economic outlook and a reduced tolerance for risk. however, about one - fourth of the banks cited concerns about their own liquidity or capital position as reasons for tightening. the delinquency rate on c & i loans at commercial banks trended higher throughout 2007, but remained near the bottom of its historical range at the end of the year. charge - offs on c & i loans at commercial banks also increased in 2007, particularly in the fourth quarter when the charge - off rate moved up from 0. 48 to 0. 85 percent of average c & i loans. in addition, examiners continue to note early signs of credit deterioration at some banks where delinquencies have not yet increased significantly. here, too, supervisors are responding to ensure that banks'commercial and industrial ( c & i ) lending activities remain safe and sound. examiners are focusing on underwriting standards, evaluating both the methodology and results of banks'stress tests of credit portfolios and the impact of potential shocks on credit and asset quality. credit administration β that
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net income exceeding $ 90 billion for the full year of 2007. in addition, the overall nonperforming assets ratio remained below levels reached earlier in this decade. the earnings performance of the fifty largest u. s. based bank holding companies as a group, which together represent more than three - fourths of all assets at bank holding companies, has clearly been subpar over the past two quarters and accounts for the industry's overall weak performance. in aggregate, these companies generated overall losses of over $ 9 billion for the fourth quarter, incorporating asset write - downs of more than $ 31 billion and loan loss provisions that exceeded loan charge - offs by $ 14 billion. nonperforming assets also swelled at these companies during 2007, doubling from $ 33 to $ 67 billion, and raising the nonperforming assets ratio from a historically low 0. 70 percent at december 31, 2006, to 1. 25 percent at the end of 2007. liquidity has also been under pressure at some of the fifty largest bank holding companies. in many cases, these pressures reflect difficulties securitizing some assets and the need to bring on balance sheet some assets that had previously been securitized. as a result, banking companies have experienced a moderate overall decline in liquid assets as a portion of total assets, and strains have emerged in term interbank funding markets. bank holding companies are actively responding to these pressures and some have sought to increase more stable sources of funding to bolster their liquidity positions. in addition, as noted in last week's monetary policy report, the federal reserve has taken a number of steps to address the difficulties in term funding markets. asset write - downs and unplanned increases in assets have placed pressure on capital ratios and caused some banking organizations to take a more cautious approach to extending credit. however, large bank holding companies in aggregate and individually continued to maintain regulatory capital ratios in excess of minimum regulatory requirements. as of december 31, 2007, the fifty largest bank holding companies reported aggregate tier 1 leverage, tier 1 risk - based, and total risk - based capital ratios of 5. 3, 7. 5, and 11. 1 percent, respectively. in part, these capital ratios reflect steps taken by several large bhcs to replenish depleted equity positions by curtailing share repurchases, reducing dividends, and raising additional capital in order to maintain desired capital levels relative to regulatory norms. indeed, in recent months, large bank holding companies have raised
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high by historical standards, overall vulnerabilities in the financial sector appear moderate, as the banking system is well capitalized and broad measures of leverage and credit growth remain contained. even with a step - up in growth of economic activity and a stronger labor market, inflation has continued to run below the 2 percent rate that the federal open market committee ( fomc ) judges most consistent with our congressional mandate to foster both maximum employment and price stability. increases in gasoline prices in the aftermath of the hurricanes temporarily pushed up measures of overall consumer price inflation, but inflation for items other than food and energy has remained surprisingly subdued. the total price index for personal consumption expenditures increased 1. 6 percent over the 12 months ending in september, while the core price index, which excludes energy and food prices, rose just 1. 3 percent over the same period, about 1 / 2 percentage point slower than a year earlier. in my view, the recent lower readings on inflation likely reflect transitory factors. as these transitory factors fade, i anticipate that inflation will stabilize around 2 percent over the medium term. however, it is also possible that this year β s low inflation could reflect something more persistent. indeed, inflation has been below the committee β s 2 percent objective for most of the past five years. against this backdrop, the 1 / 2 bis central bankers'speeches fomc has indicated that it intends to carefully monitor actual and expected progress toward our inflation goal. although the economy and the jobs market are generally quite strong, real gdp growth has been disappointingly slow during this expansion relative to earlier decades. one key reason for this slowdown has been the retirement of the older members of the baby - boom generation and hence the slower growth of the labor force. another key reason has been the unusually sluggish pace of productivity growth in recent years. to generate a sustained boost in economic growth without causing inflation that is too high, we will need to address these underlying causes. in this regard, the congress might consider policies that encourage business investment and capital formation, improve the nation β s infrastructure, raise the quality of our educational system, and support innovation and the adoption of new technologies. monetary policy i will turn now to the implications of recent economic developments and the outlook for monetary policy. with ongoing strengthening in labor market conditions and an outlook for inflation to return to 2 percent over the next couple of years, the fomc has continued to gradually reduce policy accommodation. the committee raised the target range
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credit : how borrowers perceive their education debt results of the 2002 national student loan survey, february 2003. draut, tamara and silva, javier, β generation broke : the growth of debt among young americans, β demos : a network for ideas and action, october 2004. aizcorbe, ana ; kennickell, arthur, and moore, kevin, β recent changes in u. s. family finances : evidence from the 1998 and 2001 survey of consumer finances, β january 2003. employee benefit research institute, β will americans ever become savers? the 14th retirement confidence survey, 2004, β april 2004. indeed, lawmakers, regulators, and employers look to consumer savvy to promote efficiency in the consumer financial services industry. in recent years, surveys and other studies that evaluate the understanding of financial concepts have demonstrated the need for improved financial education, especially among younger consumers. one nonprofit organization dedicated to increasing financial education for youth, the jump $ tart coalition, has conducted a survey of financial literacy of high school seniors every two years since 1997. overall, the results have been disappointing : results from the 2004 survey showed more than 65 percent of students failed the survey β s questionnaire, with only 6 percent scoring a β c β or better. in terms of credit card usage by college students, a government accountability office ( gao ) study found that students were more likely than other borrowers to run up debts they could not pay because of financial inexperience. in recognition of this behavior, many credit card issuers provided access to financial education materials, and debt counseling services for students who faced repayment difficulties, but the gao did not try to determine the effectiveness of these education efforts. 6 some preliminary research by others suggests some possible benefits from online credit education tutorials to college student cardholders, but it is possible that more responsible usage only reflects the type of student who would participate in the tutorial. 7 clearly, more research is needed to assess the efficacy of consumer education, and the federal reserve system has been an active promoter. in fact, the system hosted a conference in early april on consumer financial awareness, including a session on the efficiency of delivering financial education to consumers. so what resources are available to consumers to help them become sufficiently familiar with financial concepts to make sound financial decisions? many public, private, and nonprofit organizations have developed a variety of financial education programs, and many are available on the internet. these educational materials address the full range of personal financial management
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be seen as β back to basics β of financial operations has been occurring in the united states and europe. proprietary trading of complex products, such as securitized products and derivatives, has complicated the risk profiles of financial institutions and made risks difficult to manage. based on such recognition, a move to return to the traditional business based on customer transactions has been emerging. the move includes a re - evaluation of traditional businesses related to deposits and payment and settlement while taking into account a viewpoint of improving the management of liquidity risk. those businesses are, so to speak, the areas japanese financial institutions have been good at. one question for financial institution management in japan is whether the costs associated with maintaining deposit bases are commensurate with the profits. retail banking is associated with a variety of unique factors that lead to an increase in costs, including atm that operates 24 hours. meanwhile, to charge fees for the current deposits whose balance dropped below the required minimum balance is not gaining customers β understanding. while how to balance the costs and profits is an important management judgment, it would be absolutely necessary for financial institutions to avoid the possibility of running below break - even. as financial institutions are expected to provide fine - tuned services to households reflecting their outstanding balance of deposits and the degree of use of services, it would be necessary to check the balance between the quality of services and the cost sharing. in addition, if one assumes a situation in which households β asset accumulation further progresses and their asset management diversifies, it would be essential to enhance the services to support households β asset management. such services are currently provided in the form of over - the - counter sales of mutual funds and insurance, and asset management services. by properly gauging the needs of customers and enhancing the provision of services, i believe it important that the fee business steadily takes root. personal loans second, the role of personal loans. in japan, housing loans have overwhelming weight and accounts for about 20 percent of the financial institutions β total lending. housing loans in japan have been increasing steadily even under the current financial crisis. the problem is its profitability. according to the bank β s analysis, the profitability of japanese financial institutions β housing loans has been consistently declining recently. for example, if the profitability of housing loans during the life of a loan that was lent in fiscal 2003 and fiscal 2007 is compared on a present value basis, it will decline by about six percentage points. if the default rates rise significantly in the future, it cannot be
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fluctuate according to economic developments, which lead to changes in capital. in addition, if financial institutions pursue a new business strategy to meet a variety of needs from firms and households, capital bases that can tolerate risks of a certain degree need to be enhanced. both the major banks and the regional banks have recently been reinforcing their capital bases, which the bank regards could lead to ensure soundness of individual financial institutions as well as the stability of the financial system as a whole. appropriate risk management second, the importance of appropriate risk management. for a financial institution, risk management is essential in ensuring management soundness and maintaining the smooth financial intermediation function as well as a key to ensuring profits. in terms of credit risk management, japanese financial institutions have been improving their screening skills, based on the experience of the bubble period during the 1980s, and have made fair accomplishments. however, the deterioration in firms β business performance triggered by the current financial crisis has progressed at an unprecedented pace. taking that into account, it becomes important for financial institutions, in addition to improving their screening skills, to strengthen follow - up management, and further strive for supporting corporate rehabilitation. moreover, the finely - tuned setting of lending interest rates according to credit risks continues to be an important challenge. in terms of market risk management associated with stockholdings, the size of strategic cross - shareholding will be basically left to firms β and banks β business strategies. however, the current market risk associated with stockholdings of japanese financial institutions as a whole remains to be high relative to capital bases, and a steady reduction in the amount of that risk is no doubt a critical challenge for financial institution management as well as for the stability of japan β s financial system. building a business model to strengthen profit base β focusing on retail banking third, building a business model to strengthen the profit base. while i will focus on the topic of today β s speech, retail banking, reinforcement in the area of wholesale banking is also essential for strengthening the profit base. retail banking could provide higher value - added services by managing it in an integrated way with wholesale banking. for the major banks, how to formulate coordination between wholesale and retail banking would be one of the keys to rebuilding their business model after all. operations related to deposits, payment and settlement, and asset management to that end, first i will take up the role of operations related to deposits, payment and settlement, and asset management. after the current financial crisis, a phenomenon to
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and sanctions on some major oil exporters when the world is beset by high food and energy insecurity and health crisis. we endorse the gpa β s emphasis on β acting together and acting now β to alleviate the immediate hardship due to successive years of global crises, and to build resilience for addressing future shocks that could come with more frequency and greater severity. however, as mentioned earlier, the basic requirement of β acting together β for the common good is at risk by the growing global fragmentation into economic and trade blocks, including the critical energy sector. we welcome the imf β s continued commitment to help members in need by enhancing and adapting its lending toolkit. the newly established resilience and sustainability trust ( rst ) is an important addition to the imf β s toolkit to help members build strong resilience to various shocks, including climate change and pandemics, through long term financing. we are encouraged by the strong uptake so far and look forward to seeing several rst - backed programs brought for the board β s consideration by the end of this year. against the background of swift tightening of global financial conditions, we are concerned about the precarious debt situation and the diminished debt service capacity of lics and emdes, with many of them already in debt distress or at high risk of debt distress. the imf has a key role to play in helping members with sovereign debt issues and in making the debt resolution process more predictable and efficient. in this vein, we support the joint efforts of the imf and the world bank to strengthen the common framework for debt treatment in a coordinated and timely manner, and in total concert with all creditors. we are all committed to a greener world and attach great importance to transformational reforms required to address climate change - related challenges for the benefit of generations that follow. no country and no region is immune to climate change. it is as much an existential threat to our constituency and to the mena region as it is to other constituencies and regions. in our region, we have experienced historical floods at the same time as historical droughts. we have to recognize, and collectively address, the existing highly inequitable burden sharing, where countries with negligible carbon footprints bear the weight of negative externalities associated with climate distress created over the years by large emitters. our countries are committed to their pledges made under the paris agreement with the recognition that there could be country specific strategies towards the
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in a few countries like kenya and philippines. while acknowledging that the mobile banking models in these countries were perhaps the appropriate solution in the respective jurisdictions, we, in india, came to the conclusion that absence of a bank presence in large parts of the country cannot be solved by non - bank players alone. having said that, after a careful evaluation of the existing banking infrastructure in place, it is our own perception of the scope of financial inclusion and the relative merits and demerits associated with the two models that india opted for the bank - led model. it is perhaps this model which has the capability to deliver the minimum of four basic products and services, viz. a savings account with overdraft facility, a remittance product, a pure savings product, preferably, variable recurring deposit, and an entrepreneurial credit product which in our perception are minimum qualifying products that any financial inclusion model should contain. further, the bank led model provides regulatory comfort as the banks have been in the business of banking including money transfer ; systems to adhere to bis central bankers β speeches kyc / aml norms and customer grievance redressal are in place and are under the direct regulation and supervision by the reserve bank of india. at the same time, we did recognize the important role which the mobile service providers ( msps ) could and should play in this payment space given their vast agent network across the country touching the remotest areas where banks did not have a physical presence. we, therefore, enabled these msps to be appointed by banks as their business correspondents of banks to foster a healthy partnership between the two which could gainfully utilize the expertise of banks and the reach of the msps. the new partnerships are beginning to happen and the full impact of this liberalisation is unfolding still. b. regulatory initiatives taken to promote mobile banking 5. the first measure to regulate mobile banking in india was taken in october, 2008. since then, we have progressively liberalized the manner and extent to which banks can conduct mobile banking ; alive to the needs of the market, in particular, the unbanked population and the migrant labour force within the country. today, banks in india are permitted to facilitate funds transfer between bank accounts through a mobile phone. to enable such transfers in a cost - effective manner particularly for the small ticket transactions, we have waived the need for end - to - end encryption for transactions of value up to rs. 5000 ( around usd100 ). we have also enabled money
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caleb m fundanga : bank of zambia retirees talking notes by dr caleb m fundanga, governor of the bank of zambia, at the luncheon in honour of bank of zambia retirees, bank of zambia, lusaka, 12 december 2006. * * * β’ deputy governor β administration β’ directors β’ ladies and gentlemen β’ retirees and potential retirees in our midst some people say β retirement is wonderful ; it is described by many as doing nothing without worrying about getting caught at it β. that is to say, you now become accountable to yourself for your actions! retirement marks an important milestone in one β s life, it is so important that in many cases you have to consult, and reflect extensively before you take that very important decision. it is a day one should not only anticipate during ones working life, but also plan for. retirement can occur voluntarily as the case is with vess, by attaining the age of 55 as provided by statute or prematurely due to a misfortune such as failing health. in all circumstances one must plan for the event. ladies and gentlemen, it is for this reason that the bank has found it befitting to host a luncheon in your honor, by recognizing all the hard work that you have put in the bank in the many years of service. admittedly, relationships between the bank and ex - members of staff have in certain cases not been so good. looking ahead, i wish to take this opportunity to state that despite the bad experiences in the past, the bank continues to extend an arm of friendship that aims to foster better relationships between the exemployees and the bank. we shall continue to regard you as members of the bank β s extended family. as retirees, we consider most of you as persons with vast experience and expertise coupled with a huge reservoir of institutional knowledge, which if natured well, can be a great source of information for future generations. the bank will endeavour to invite you to various functions as retirees whenever opportunities arise, especially when we organize historical events. we consider you as an important part of the bank β s history. ladies and gentlemen, there are many ways of leaving employment including dismissal, discharge, resignation or even death. in my view, retirement is the most admirable of them all. it is the ripe way of leaving formal employment, and therefore, a goal that every employee strives for. i congratulate you for achieving this. retirement should not be viewed as an
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end but rather as a beginning of a new life. it is my hope that you will find life after retirement fulfilling and a fitting reward for many years of hard work. it is my earnest appeal to all retirees to utilize all the skills and knowledge you have acquired during your working life most especially in the bank, to use your retirement resources wisely by investing prudently. stories of destitution among retirees is one but many of the sad stories, i would like you to avoid. guard the assets that you have acquired in your working life jealously, because retirement does not give you multiple chances to make amends when you make unsound business decisions. it is for this reason that the bank, through human resources department, has engaged future search a consultancy firm to give you tips on how to live in retirement, i urge you to attend the upcoming workshop. i therefore wish you god β s blessings as your pursue the challenges of life in retirement. thank you.
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sensitivity to the global financial cycle β. banca d β italia, temi di discussione ( working papers ), forthcoming. m. obstfeld ( 2015 ), β trilemmas and tradeoffs : living with financial globalization β. in global liquidity, spillovers to emerging markets and policy responses, edited by claudio raddatz, diego saravia, and jaume ventura, santiago, chile. central bank of chile. a. ciarlone and d. marconi, β financial spillovers to emerging economies : the role of exchange rates and domestic fundamentals β. banca d β italia, questioni di economia e finanza ( occasional papers ), forthcoming. the euro area : a dual role turning to the euro area, let me focus briefly on the international transmission mechanism of monetary policy. despite being a large economic area, the euro zone is not immune to international spillovers. the relative importance of global versus local shocks is increasing as globalisation and financial markets β integration advances. us monetary policy, the key driver of the global financial cycle, also influences euro - area financing conditions. at the same time, given that the euro is the second most important currency in the international monetary system, the ecb β s monetary policy is itself potentially a source of spillovers ( fig. 2 ). in recent years, extraordinary monetary stimulus has also been provided through unconventional monetary policy measures ; international spillovers have been sizeable. traditionally, monetary policy is thought to have cross - border effects mainly through the implied exchange - rate movements. recent experience, however, has shown that the monetary policy international transmission mechanism may have several dimensions. the international environment is now much more deeply integrated ; portfolio substitution by global asset managers acts as a powerful additional mechanism for transmitting financial shocks across monetary areas. moreover, with policy rates close to their effective lower bound and the eurosystem β s balance sheet greatly expanded, the entire macrofinancial environment has been transformed. accordingly, the theoretical framework to study the international transmission of the ecb monetary policy stance has been enriched to take into account the role of the increased global integration of financial markets and the distinctive traits of non - standard measures. unconventional monetary policy can have significant effects abroad through two relatively new channels. the first is the so - called portfolio rebalancing channel of asset purchase programs, which is likely to impact financial conditions beyond currency area boundaries to the extent that domestic and foreign long - term bonds are substitutes. the second channel
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, for many countries in the region trade integration is primarily with the euro area ( tab. 4 ) while exchange rates are mainly anchored to the us dollar ( with the exception of tunisia ; tab. 5 ). this creates potential currency mismatches, especially if export proceeds are mainly euro - denominated while debt obligations are in us dollars. policy implications given the interdependencies across the mediterranean countries that i have just described and the ongoing integration with the euro area, it is natural to ask : how should policies be designed in order to promote sustainable capital flows in the mediterranean area? the issue of how to deal with undesired spillovers from policies conducted in the euro area and in the us remains a controversial one. i would like to use the remainder of my time to discuss this question from three perspectives : that of the country ( or area ) generating the spillover effects ( β originating country β ), that of the country impacted and, finally, the multilateral approach. should the central banks in originating countries internalise the spillovers of their monetary policy to the rest of the world? the textbook answer to that question is that central banks pursue domestically - focused mandates : thus, they take into account the adverse effects of volatile capital flows only insofar as they negatively affect global financial stability, and through this channel may generate spillback effects to their domestic economy. both conceptually and empirically, the measurement of these spillbacks is very challenging as they depend in part on the policy response of the countries affected. however, central banks can limit adverse monetary policy spillovers, notably through transparency and clear communication of their monetary policy decisions and intentions. the 2013 β taper tantrum β episode exemplifies the potentially destabilising effects of policy communication mishaps. in addition, central banks can contribute to the resilience and soundness of their own financial systems with monetary policies designed to support economic activity and with macroprudential policies, as well as in their capacity as financial supervisors where they have such responsibility. this, in turn, contributes to global financial stability, with favourable spillovers to the rest of the world. from the perspective of the countries affected, the question is how can they shield their economies and financial systems from adverse spillovers? experience shows that having strong domestic fundamentals and sound policy frameworks is essential. this usually includes sustainable budgetary positions ; a business environment capable of stimulating investment and attracting fdi ; a policy framework that ensures effective
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sabine mauderer : sustainable finance : political efforts and mature markets needed speech by dr sabine mauderer, member of the executive board of the deutsche bundesbank, at the icma and jsda annual green & social bonds conference, virtual event, 13 november 2020. * * * 1 introduction ladies and gentlemen, i β m delighted to be part of the icma and jsda annual green and social bonds conference today. i really regret not being in tokyo. i am glad to see that japan, germany and the eu forge an alliance to combat climate change. in his first general policy address, japanese prime minister suga announced the goal of becoming climate - neutral by 2050 β like the eu and germany. today, i will focus on two topics : first, the political effort of germany and europe to push sustainable finance. second, what is needed for a mature sustainable financial market. 2 political efforts of germany and europe to push sustainable finance allow me to summarise recent political initiatives in sustainable finance, starting with germany. germany issued a green bond with a 10 - year term for the first time in september, followed by another green bond with a 5 - year term last week. both issues, with a total outstanding volume of β¬ 11. 5 billion, attracted huge interest among investors. looking back at these successful issuances, i can conclude that it was worth entering the market a little later, but with a tailored approach. germany entered the market with the innovative β twin bond β concept meeting market β s liquidity needs : each of these β green bunds β is twinned with a pre - existing conventional bond with identical features in terms of its coupon structure and maturity. the twin bond concept means that the β green premium β is immediately apparent. notably, the yield discount of the 10 - year green bund is around 2 basis points and around 1 basis point for the 5 - year green bobl. looking ahead, the federal government is going to build a β green curve β over the entire maturity range of federal securities from 2 to 30 years. a detailed issuance preview for 2021 will be provided in december. apart from the federal government, there are other public issuers in germany who are already active in the market : at the state level, north rhine - westphalia has issued a number of sustainable bonds with a total volume of β¬ 13. 3 billion, making it the top issuer in this segment. state - owned development banks are also a vehicle which can
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on the use of national taxpayers β money, for example, are unlikely to meet with much approval. at the moment, it is not possible to tell whether policymakers are prepared to take such comparatively far - reaching steps. as i see it, the objective should not be a β big bang β but rather the creation of better coordinated regulations and supervisory practices. iii i wish to talk now briefly about insurance supervision. in this area, too, the differences in the regulations in europe are probably still too great for a europe - wide centralisation of insurance supervision to appear an appropriate solution. but the debate is even going beyond that - in the direction of a european β one - stop β financial supervisory authority. given the problems in the individual financial sectors that i have just outlined, i do not believe that this would be a suitable organisational model for europe in the foreseeable future. moreover, β one - stop β financial supervision is not a familiar regulatory model in europe. it would therefore probably be difficult to implement. iv therefore, my conclusion is that it is necessary to close the remaining regulatory gaps, to harmonise the existing regulations and supervisory practices and to intensify cross - border and cross - sector cooperation among the supervisors. i believe that new institutions in europe are not practicable at the moment. the existing bodies should be strengthened instead. ensuring an appropriate system of regulation for the european financial system remains an ongoing task. more than ever, this calls for a flexible response from policymakers and regulators.
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and managed effectively, according to the stages of development of the domestic financial system, the inherent risks and the strength of the social safety net as well as the tolerance level of the financial system. successful implementation of this process, including evaluation of the trade - offs involved, will at the same time enable the emerging economies to achieve the overall national objectives. it must be emphasised that the tolerance level for the system as a whole will only be as strong as the strength of its components. having robust financial institutions that are able to withstand any potential shocks and that have the agility and adaptability to embrace the future challenges are key to ensuring long - term sustainability and survival in the competitive future as well as the maintenance of financial stability. one of the most important aspects in enhancing the tolerance level involves building the capacity and institutional development. wide - ranging strategies have included consolidation, reengineering of business processes and reassessment of business models to fit the new financial landscape. leveraging on advancements in information and communication technology is important to improve business automation and efficiency levels. to achieve a higher level of operational efficiency, rationalisation of business networks and outsourcing are gaining greater significance. the journey is however never - ending, to adapt to the changing needs of the market, and at the same time, taking into account all the potential risks. the need to enhance the capacity at the firm level is not limited to improving the way business is conducted and the level of efficiency in doing business. the financial institution, as a service provider, relies heavily on human intellectual capital which contributes to the innovativeness and competitiveness of the institution. thus, human capital has been constantly sharpened through continuous development programmes and challenged to maximise its full potential. towards this end, bank negara malaysia has established the international centre for leadership in finance to provide an avenue for the development of industry leaders especially in this region. in the wake of the growth in the volume and complexity of financial transactions, and worldwide integration of financial markets, risk management has increasingly become a key concern. sound risk management practices will minimise adverse consequences faced by financial institutions during periods of uncertainty. effective risk management systems facilitate the measurement and management of risk exposures, thus minimising potential future losses. in addition, robust internal controls which are designed to provide qualitative standards are also necessary to complement the quantitative analysis of risk and provide a check and balance in the overall risk management practices. the malaysian experience let me now take the opportunity to share with
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encik adnan zaylani mohamad zahid : prevention of corruption in project management opening remarks by mr encik adnan zaylani mohamad zahid, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the malaysian anti - corruption commission ( macc ) talk entitled " prevention of corruption in project management ", kuala lumpur, 3 april 2017. * * * it is my great honour and pleasure to welcome officers from the malaysian anti - corruption commission ( macc ), particularly the speaker for today, assistant commissioner mr mohan munusamy. a warm welcome is also extended to the project teams comprising the steering committees, contractors and consultants. my appreciation also goes to all my fellow bank staff who are here today. in more recent times, the bank and macc have collaborated on a number of fronts. the recent strategic cooperation between the bank and macc, together with lhdn to combat financial crime, particularly corruption, signifies our commitment to work together in this area. from the bank β s perspective, this demonstrates our effort to instil integrity for and beyond our regulatees in the financial market. integrity is taken very seriously at the bank where we continually and consciously maintain the highest standards, given that we enforce these standards on our regulatees in our supervisory capacity. we proactively manage integrity hazards and corruption risks and tackle those risks pre - emptively. corruption is not simply a crime on its own. its consequences can be far - reaching in terms of economic losses and irreparable reputation damage. thus, we must actively keep abreast of the management of integrity risks. as an institution, we have been blessed to have had pioneers who upheld the highest standards of excellence in our corporate conduct. the late tun ismail ali, the first malaysian governor from 1962 to 1980 was well known as a person of the highest integrity. i can recall his younger brother relating an episode in this regard. an aspiring architect at that time, he was told by the late tun ismail, not to ever set foot in the bank while he was the governor. uncompromising and unyielding, we certainly should strive to assimilate tun β s values and standards. indeed, we are fortunate that his successors have continued his trademark standard of integrity, to the extent that it is deeply ingrained in our corporate dna today. the bank does not tolerate any wrongdoing which may tarnish its reputation, given that our solid
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economic theory, vol. 146, no. 6, pp. 2169 - 2205. lazer, d, kennedy, r, king, g and vespignani, a ( 2014 ), β the parable of google flu : traps in big data analysis β, science, vol. 343, pp. 1203 - 1205. all speeches are available online at www. bankofengland. co. uk / speeches leamer, e ( 1983 ), β let β s take the con out of econometrics β, american economic review, vol. 73, no. 1, pp. 31 - 43. lehdonvirta, v and castronova, e ( 2014 ), virtual economies : design and analysis, mit press. levitt, s, list, j, neckermann, s and nelson, d ( 2016 ), β quantity discounts on a virtual good : the results of a massive pricing experiment at kind digital entertainment β, proceedings of the national academy of sciences of the united states of america, vol. 113, no. 27, pp. 7323 - 7328. moore, g ( 1965 ), β cramming more components onto integrated circuits β, electronics, vol. 38, no. 8. nyman, r, kapadia, s, tuckett, d, gregory, d, ormerod, p and smith, r ( 2018 ), β news and narratives in financial systems : exploiting big data for systemic risk assessment β, bank of england staff working paper, no. 704. obstfeld, m and rogoff, k ( 2001 ), β the six major puzzles in international macroeconomics : is there a common cause? β, nber macroeconomics annual, vol. 15, mit press. popper, k ( 1934 ), logik der forschung, akademie verlag. popper, k ( 1959 ), the logic of scientific discovery, routledge. rotemberg, j ( 1984 ), β interpreting the statistical failures of some rational expectations models β, american economic review, vol. 74, no. 2, pp. 188 - 193. sabouni, h ( 2018 ), β the rhythm of markets β, mimeo. schonhardt - bailey, c ( 2013 ), deliberating american monetary policy : a textual analysis, mit press. schwab, k ( 2017 ), the fourth industrial
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leading the changes needed and in having a sense of your responsibility to the wider economy. yours is a model of engagement for others to emulate. and i look forward to continuing to work together. thank you. bis central bankers β speeches
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mark carney : what are banks really for? remarks by mr mark carney, governor of the bank of canada, to the university of alberta school of business, edmonton, alberta, 30 march 2009. the original speech, which contains various links to the documents mentioned, can be found on the us federal reserve system β s website. * * * across the world's major economies, addressing the failures of banking ranks among the highest policy priorities. in the harsh glare of the current financial turmoil, it is clear that many banks outside of canada were either not doing their jobs or were doing them in ways that created enormous risks. it is vital that we learn from these mistakes to build a more robust financial order. the financial system should be the servant of the real economy. as one of my international colleagues recently remarked, " it is time the banks stopped swanning around like the queen of england and resumed their traditional role as handmaidens to industry. " it is apparent that an era of self - absorbed finance that viewed itself as the apex of economic activity led to widespread misallocation of capital. now, in some major economies, the challenge is that banks are not allocating capital at all. around the world, banks are accused of not lending enough, charging too aggressively when they do lend and, most fundamentally, of deepening the recession rather than dampening it. these concerns are much less valid in canada than abroad, but we too should reflect upon them and respond accordingly. my remarks today will address the role of banks and markets in our economy. in recent years, these core elements of our financial system became increasingly intertwined, with each expanding into the traditional role of the other, and each reliant on the health of the other. this blurring between banks and markets led to the emergence of the so - called " shadow banking " sector, whose presence helped trigger the crisis and whose absence will complicate the recovery. we now face important policy questions about which activities banks should perform, which should be located in sustainable, continuously - open markets, and which should be prohibited. the final answers to these questions require reflection and implementation will take time, but broad direction is needed now. markets are overshooting. on the current trajectory, virtually all financial activities will be put back onto bank balance sheets at potentially tremendous cost in terms of lost output and employment. restoring stability to financial markets requires broad direction on the type of global financial system that should emerge from the current financial mess
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be sure, our understanding of the forces that drive inflation is imperfect, and we recognize that this year β s low inflation could reflect something more persistent than is reflected in our baseline projections. the fact that a number of other advanced economies are also experiencing persistently low inflation understandably adds to the sense among many analysts that something more structural may be going on. let me mention a few possibilities of more fundamental influences. 1 first, given that estimates of the natural rate of unemployment are so uncertain, it is possible that there is more slack in u. s. labor markets than is commonly recognized, which may be true for some other advanced economies as well. if so, some further tightening in the labor market might be needed to lift inflation back to 2 percent. second, some measures of longer - term inflation expectations have edged lower over the past few years in several major economies, and it remains an open question whether these measures might be reflecting a true decline in expectations that is broad enough to be affecting actual inflation outcomes. third, our framework for understanding inflation dynamics could be misspecified in some way. for example, global developments β perhaps technological in nature, such as the tremendous growth of online shopping β could be helping to hold down inflation in a persistent way in many countries. or there could be sector - specific developments β such as the subdued rise in medical prices in the united states in recent years β that are not typically included in aggregate inflation equations but which have contributed to lower inflation. such global and sectoral developments could continue to be important restraining influences on inflation. of course, there are also risks that could unexpectedly boost inflation more rapidly than expected, such as resource utilization having a stronger influence when the economy is running closer to full capacity. in this economic environment, with ongoing improvements in labor market conditions and softness in inflation that is expected to be temporary, the fomc has continued its policy of gradual policy normalization. as the committee announced after our september meeting, we are initiating our balance sheet normalization program this month. that program, which was described in the june addendum to the policy normalization principles and plans, will gradually scale back our reinvestments of proceeds from maturing treasury securities and principal payments from agency securities. as a result, our balance sheet will decline gradually and predictably. 2 by limiting the volume of securities that private investors will have to absorb as we reduce our holdings, the caps should guard against outsized moves in interest rates and other potential market strains
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that, if there is no increase in global demand to offset the expected increase in desired savings, it may be difficult for monetary policy to effectively fulfill its role as the main short - run economic stabilizer in the years ahead. so, what should policy - makers be doing now to help us avoid a keynesian deflationary gap in the future? as it turns out, most of the policy prescriptions that i spoke about earlier in the context of the resolution of today's imbalances would also address potential problems further ahead. let me now return to those policies and talk about them in a bit more detail. first, one might look to governments to provide an expansionary fiscal policy. in a few economies, there is clearly room for fiscal policy to become more stimulative in order to boost investment and demand. certainly, the economies of emerging asia have the scope to support demand with fiscal policy. but in north america, europe, and japan the scope for fiscal policy to spur demand appears to be very limited, given current debt levels in most of these countries and the increasing demands that aging populations will place on the government sector. the strain on the public purse to meet the needs of our aging populations will be enormous. the situation will be more serious in those countries that have not yet taken steps to ensure that their public pension systems will be able to handle the retirement of the baby - boom generation. unless the ratios of public debt - to - gdp are reduced before this strain is felt, governments in many countries will face the difficult task of reducing services or raising taxes, or both. in any event, public debt in some countries may have already become so large that additional fiscal stimulus might actually be counterproductive. households, anxious about future tax liabilities or the viability of public pensions, might cut back on consumption. this could offset the positive effects of the easier policy stance. but if there is any scope at all for effective fiscal action, i would argue that the emphasis should be on improving the economic infrastructure in a way that can support the production capacity of the economy while, at the same time, helping to meet rising social needs as the working population begins to decline. this might include additional money for education and training, which by adding to human capital, would help maintain the production capacity of the world economy. but if there is one thing that all governments can do to stimulate demand, it is to have appropriate structural policies, and i stress the word " appropriate. " structural
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. beyond disruption to financial markets, a disorderly correction might also lead governments to adopt wrong - headed protectionist measures, which would then exacerbate the damage to the global economy. but regardless of how these imbalances are resolved, it is clear that the resolution will require greater net national savings in the united states. investment in the u. s. economy will need more financing from domestic sources - be it from the household, business, or government sectors - and less from foreign sources. this implies an increase in net u. s. exports and a decrease in net exports elsewhere in the world, as well as an increase in domestic demand in other countries. exchange rate movements have an important role to play in this regard, because they can help redirect international trade and investment flows. in this context, efforts by some countries to slow or prevent required adjustments by pegging exchange rates are, in the end, counterproductive. i know that governors zhou and noyer fully understand that, by frustrating market mechanisms, such policies raise the risk of a much larger and more disorderly correction in the future, as well as an outbreak of protectionism. but we should not look to exchange rate movements alone to resolve the existing global imbalances. within the united states, higher interest rates can be expected to lead to increased savings. authorities could also encourage greater national savings with a tighter fiscal policy. and they could implement structural reforms to encourage national savings through taxation, social security premiums, and other measures. but if the united states alone were to act to resolve its imbalance by taking the steps i've just described, it would leave the global economy with much weaker aggregate demand. and so a number of other countries must focus on stimulating domestic demand. this task is made more urgent by the fact that the global economy is currently operating somewhat below capacity. the fact that inflationary pressures are absent globally is evidence of this. 1 / 3 so, how can we stimulate domestic demand outside the united states? clearly, monetary authorities bear most of the responsibility for stabilizing domestic output in the short run and moving their own economies towards full production capacity. but monetary policy may not be as effective as it could be, if there are problems with an economy's structural or fiscal policies. thus, the appropriate policy prescription depends on each country's circumstances. structural reforms to remove market rigidities are important for most of us. many need to improve or develop their financial system so that savings
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disruption could be passed on to other ones through their interdependence in financial transactions and settlement. if a computer failure due to a lack of year 2000 readiness materializes in a settlement system, not only financial institutions but also end - users or customers will be affected because they may not be able to withdraw or transfer funds through cash dispenser ( cd ) and automated teller machine ( atm ) networks. the year 2000 problem could seriously affect the business of individual financial institutions as well as the stability of payment and settlement systems. the bank of japan, with the cooperation of market participants, is therefore promoting year 2000 readiness of individual financial institutions and payment and settlement systems. this paper discusses how japan β s financial sector is addressing key issues of the year 2000 problem and provides information on its progress in achieving year 2000 readiness. 16 after an overview of the results of the year 2000 problem survey of financial institutions conducted by the bank of japan in june 1998, the paper presents ( 1 ) plans for external tests of payment and settlement systems ; ( 2 ) global initiatives taken by international organizations including the bank for international settlements ( bis ) ; and ( 3 ) an upcoming issue. the paper focuses exclusively on the preparations being made by financial institutions and payment and settlement systems for the year 2000 problem. it does not deal with preparations made by social infrastructures, such as telecommunications or utilities that support computer system operations, nor does it cover year 2000 preparations of companies supplying host computers and software, although these deserve careful attention of financial institutions. * * * this paper was originally published in the form of a brochure on august 14, 1998. for inquiries regarding the brochure, please contact the financial and payment system office ( tel : + 81 - 3 - 3279 - 1111 [ x2954 ], fax : + 81 - 3 - 5255 - 6752 ) or the bank supervision department ( tel : + 81 - 3 - 3279 - 1111 [ x6442 ], fax : + 81 - 3 - 5255 - 6755 ), bank of japan, at 2 - 1 - 1, hongoku - cho, nihonbashi, chuo - ku, tokyo 103 - 8660, japan.
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since the end of last year. with respect to monetary aggregates, growth in m2 + cds has been slowing and private bank lending remains sluggish. this reveals the fall in credit demand following stagnant economic conditions as well as the continued cautious lending attitudes of private banks. the bank β s view on recent economic and financial developments, determined by the policy board at the monetary policy meeting held on june 12, as the basis of monetary policy decisions. meanwhile, some firms, especially small and medium - sized firms, have been facing difficult financing conditions in terms of both funds availability and fund - raising costs. this influence on the overall economy continues to warrant a careful monitoring.
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world economy affects how we do business in the pacific. this was seen clearly by the recent global financial and economic crisis which prompted governments to come up with new laws and rules to safe guard banks and financial institutions from systemic risks. at this point let β s discuss some issues relating to the global regulatory trends. the world council of credit union ( woccu ) 2013 annual report, highlighted the following four issues as key challenges to the credit union movement, which are : 1. increased regulatory burden ; 2. payments innovation ; 3. young adult membership growth ; and 4. small credit union sustainability. those of you who attended the world credit union congress in gold coast may remember these issues being discussed. firstly, i see these challenges as the key areas that are driving the regulatory trend. since the global financial crisis, governments around the world have tried to push for credit unions to come under close scrutiny and regulation, which is good for the credit union credibility but can damage the movement. for example, pushing smaller credit unions, to report as per the international financial reporting standards ( ifrs ) for credit instrument impairment and basel iii requirements. this goes also for aml compliance. whist they are appropriate for bigger banks, they may not be for credit unions because the credit unions are established to bis central bankers β speeches promote thrifts and provide access to credit for provident purposes and are an alternative to the banks and financial institutions. therefore, it is becoming increasingly difficult for credit unions to serve their members when such laws and regulations are ignoring the business structure and size difference between credit unions and banks. however, if the regulation is streamlined to a model conducive for credit unions to grow, regulation of the sector will be beneficial in the long term. in png, we have taken the initiative to review the savings & loans society act in close consultation and input from the industry. the review of the draft s & l legislation has been completed in 2013 and has now progressed to parliament to be finalised and passed as law. it is our wish that the new legislation will assist the industry to grow and allow for the expansion of societies / credit unions in the long term. we must be committed to enhancing the credit union movement as much as possible particularly with regard to business lending and raising of capital, but at the same time we also need greater flexibility in order to serve our members. secondly, another trend the credit unions worldwide are embarking on is to address payments innovation, where credit unions venture into
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the liberalisation be implemented? as mentioned, the liberalisation means the bank of papua new guinea will no longer be required to review, analyse and grant exchange control approvals. whilst it will not be a delegated function, the authorised dealers, which at the moment are the four ( 4 ) commercial banks operating in the country would have to process all transactions, including reviewing applications for foreign exchange transactions and ensuring tax clearance is obtained from the internal revenue commission ( irc ). the bank of papua new guinea β s emphasis now will be on the reporting forms from the dealers and other transactors for balance of payments analysis purposes. at the time the initial round of consultations took place with stakeholders, including the authorised dealers, many were not aware of the full impact of the liberalisation of the existing controls and their ability to handle it. the views expressed by the major stakeholders and business community, including the minister for finance and treasury during the post - announcement discussions is that whilst they welcomed this major reform, a cautious approach to stagger the liberalisation process should be followed. those were the reasons for the delay in implementing the proposed reform. it is my pleasure however to announce at this forum that the first aspect of this reform in the remaining controls on current and capital account transactions will be effective on 01st june 2005, except for the following controls : β’ approval involving private capital account contracts between residents and non - residents ; β’ approval to open and operate foreign currency accounts outside papua new guinea ; and β’ licensing of authorised dealers and gold exporters. these controls are still subject to the approval of the central bank as required under the foreign exchange & gold regulation. for those transactions that will be liberalised, they will still require tax clearance, which will now be the responsibility of the authorised dealers and the irc. prior to the effectiveness of the liberalisation of these controls, the bank of papua new guinea will undertake public awareness campaigns around the major centers of papua new guinea and hold further consultations with the major stakeholders. subsequent announcements on the liberalisation of the remaining controls will follow later on. we would like to work together with everyone concerned to ensuring the reform is implemented successfully. the exchange controls are a hang - over from the days of the fixed exchange rate regime. liberalising exchange controls would open up the economy, removing one of the administrative impediments to doing business in papua new guinea and assist in the government β s export - led growth strategy. our supervision of the financial system in
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society. in some countries, fundamental structural changes are being pursued to reduce the complexity of banking and to protect banking services from such higher risk - taking activities. the challenge however, is how this might be achieved in a sustainable manner without undermining growth and development, and erasing the important efficiencies in financial management. a model to reanchor finance to the real economy while the global financial stability efforts have made progress in generating an enabling environment for a new equilibrium of financial stability, a key consideration as we move forward is the need to redefine the fundamental character of modern finance and how it would interface and interact with the economy and the broader society. new considerations that prioritise justice and fairness, sustainability and inclusion have also become essential underpinnings of such a financial ecosystem. the recalibration of finance should aim to serve the needs of the real economy and more importantly the broader society. this would generate positive externalities that would in the medium term lead to more sustainable financial systems, and in turn contribute positively to growth and development. a core underpinning of islamic finance is the tenet that requires islamic financial transactions to be supported by genuine productive economic activity. islamic finance is also a financial regime that places emphasis on risk - sharing, thereby strengthening further the link of finance to the real economy. thus, it provides a greater understanding on the fundamental relationship between the financial sector and the real economy. the concept of risk - sharing in finance is not new. while risk - transfer activities currently dominate the conventional financial systems, risk - sharing in the form of equity has long been a cornerstone of capital markets with vibrant stock exchanges. techniques used by venture capital financiers also have similarities to risk - sharing contracts in islamic finance. the development towards a more equity - based financial system where risk - sharing takes place reduces the over - reliance on debt funding, thus avoiding excessive debt and speculation and thus financial system fragility. in islamic finance, this is further reinforced by shariah principles that strongly discourage excessive debt given its detrimental effects on society. the use of risk - sharing transactions and undertakings under participatory finance models in islamic finance thus offers the potential to reinforce the links between finance and the real economy. the contractual arrangements between the financier and the entrepreneur place bis central bankers β speeches strong emphasis on the value creation and economic viability of the enterprise. this results in a close link between the growth of the financial sector and real sector
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zeti akhtar aziz : policy and regulation of financial inclusion welcoming remarks by dr zeti akhtar aziz, governor of the central bank of malaysia, at the unag asia regional forum on policy and regulation of financial inclusion, kuala lumpur, 6 may 2009. * * * introduction it is my pleasure to welcome you to the united nations advisers group asia regional forum on policy and regulation of financial inclusion. this conference takes place at a time when the world is confronted with addressing many issues that have emerged from the current global financial and economic crisis. whilst significant attention and efforts are being channelled to resolving the financial crisis and creating an enabling environment for the resumption of growth and job creation, we must not lose sight of the financial inclusion agenda. financial inclusion is vital for creating balanced sustainable economic growth. it provides the opportunity for all members of society to benefit from economic progress. it allows for a shared prosperity, an aspiration that is encapsulated in the united nations millennium development goals. the central bank of malaysia is most honoured to be given the opportunity to host this forum which is being held in asia for the first time. we are most honoured to have governor nout wellink, president, of the central bank of netherlands. we are also pleased to have present mr. jacques toureille, unag advisor, who will be delivering the keynote address by her royal highness princess maxima on her behalf. this forum brings together some of the best minds from different parts of the world with diverse experiences in the field of financial inclusion. i am certain that this forum will enhance our understanding of the vital issues confronting the financial inclusion agenda, and will contribute towards the formulation of new ideas in addressing the important issue of regulation and policy that will ensure the sustainability of an inclusive financial system. the financial crisis and its implications on the poor the year 2009 will likely to be a difficult year for most countries. as we enter the third year of this financial crisis, there is already a synchronised recession in the advanced economies. for most of the emerging economies however, the full effects of the crisis on their domestic economies will be felt this year. it is important to note that the financial systems in most emerging economies continue to remain sound and more importantly continue to function, providing credit and supporting the economy. the collapse of external demand has however, adversely affected the more open emerging economies. the issue of equal concern however, is the more disproportionate impact these developments will
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programme as well as the 22 financial institutions that are represented by the pioneer caf participants. bis central bankers β speeches while acknowledging that the challenges facing agriculture are huge given the growing population, declining land sizes, climate change that has imposed severe costs on the sector, all of which compound the problem of financing agriculture, the challenges are not insurmountable, if we work together. ladies and gentlemen, it is now my pleasure and privilege to welcome the hon. minister for agriculture, dr. sally kosgei to give the key note address and officially launch the east african agricultural finance network ( eaafn ) and inaugurate the regional certificate program in agricultural finance. thank you. bis central bankers β speeches
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njuguna ndung β u : a new agricultural finance training programme for kenya remarks by prof njuguna ndung β u, governor of the central bank of kenya, at the launch of the certificate in agricultural finance ( caf ) and the east african agricultural finance network ( eaafn ), kenya school of monetary studies, nairobi, 7 september 2011. * * * the hon. minister for agriculture, dr. sally kosgei ; the secretary general, east africa community, amb. dr. richard sezibera ; permanent secretary, dr. romano kiome ; usaid east africa regional director, lawrence meserve ; chief executive officers of commercial banks ; esteemed members of afraca ; distinguished participants ; ladies and gentlemen : good morning : hon. minister, about a year and a half ago, on 17th march 2010, we gathered here to discuss innovative ways to increase financial flows to the agricultural sector. the delegates in that meeting identified limited human capacity in agricultural lending as an impediment to financing the sector. the kenya school of monetary studies was tasked to address this human resource gap amongst lending institutions. ladies and gentlemen : i am pleased to inform you that after extensive consultations with key stakeholders, the school with the support of usaid - competitiveness and trade expansion project ( compete ), developed a modular certificate training program whose launch we are all here to witness. i wish to commend the team that steered the process of initiating this important program. in order to further develop this sector, this committee has been transformed into the east african agricultural finance network ( eaafn ) with a view to nurture, deepen and consolidate the sector β s capacity building agenda. hon. minister, i also recognize the presence, at this forum, of the inaugural class of the regional certificate program in agricultural finance. i hope the course is has met your expectations. hon. minister, ladies and gentlemen : the rapid growth of microfinance suggests that there may be a large market for rural and agricultural loans. it is therefore important to better understand the demand for and use of agricultural credit to develop effective products, institutions and policies. that is why the caf program mainly targets staff working in the credit and product development units in regional commercial banks, agricultural saccos and micro - finance institutions. hon. minister, ladies and gentlemen, let me conclude by again expressing the central bank of kenya β s appreciation of various institutions that have enabled the development of this capacity building
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clearing members altogether and bear it themselves. ccps are risk poolers, not insurance providers. in fact, a substantial increase of β skin in the game β could provide clearing members with a false sense of security, by reducing their potential contribution to the loss - allocation process. 12 this could lead them to be less vigilant in monitoring risks, which may have severe consequences for the safety of ccps. furthermore, in order to represent any meaningful part of the default waterfall, β skin in the game β would need to increase dramatically, thus completely changing the size of ccp balance sheets and their business models. this could even defeat the purpose of mandatory central clearing by pushing ccps to dramatically increase the cost of clearing, or to compromise on their risk management in order to retain profitability. in sum, it seems reasonable that an increase in prefunded resources, should it become necessary, should be mainly borne by clearing members. strengthening ccp recovery capabilities via specific recovery tools. an alternative conclusion to our current discussions could be that cover 2 is an appropriate standard for ensuring ccp resilience in a pre - recovery phase, but that more reassurances are needed to ensure ccps can adequately cope with a recovery situation if they face tail losses. let me stress that, here too, it is too early to state whether and, if so, what additional guidance regarding recovery capacities will be needed. however, let us think about the ways in which authorities could improve ccp recovery tools if the need did arise. 13 in a recovery situation, a significant amount of additional funding could come from ex post cash calls on non - defaulting clearing members, also referred to as β default fund top - ups β or β emergency assessments β. this could provide ccps with ample resources to avoid a complete depletion of their capital, and would share the funding burden across the whole clearing membership. such assessments are usually allocated according to each member β s contribution to the ccp β s default fund. this way of allocating assessments, provided it is transparent, gives members a degree of predictability about what will happen. nevertheless, they could expose surviving clearing members to sudden and very large liquidity demands which they would have to source in the market, and could thus have strong contagion effects14 β even pushing members to close out their contracts and leave the ccp, rather than face the spiralling costs of remaining a member. for these reasons, such tools may prove problematic for bank
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since the financial crisis. however, catastrophic losses beyond those already covered by the regulatory requirements could still occur. given the critical role of ccps in financial markets, regulators need to think the unthinkable. indeed, stress events concerning ccps are β thankfully β rare : the most recent example of a ccp failure was the collapse of the hong kong futures exchange clearing house in 1987. a more recent β albeit less dramatic β stress event was the uncertainty caused by the default of a clearing member at krx, the south korean ccp, which caused it to tap its mutualised default fund, and revealed that clearing members were not always aware of their potential liabilities towards the ccp. when such events occur, they have the potential to shut down the markets they serve. with the emergence of supersystemic ccps serving global derivatives markets, a ccp failure could be a catastrophic event of global proportions. in september 2014, the gross notional outstanding amount of centrally cleared positions was estimated at usd 169 trillion for otc interest rate derivatives, and at usd 14 trillion for credit derivatives. 7 the sheer magnitude of these figures ( around ten times the gdp of the united states or european union ) gives us an idea of the severity of the potential consequences from a stress event at a major global ccp. authorities see the distinct benefits of central clearing and wish to set proper market incentives for participants to move away from bilateral trading and into the centrally cleared world. mandatory central clearing allows risks to be pooled, monitored and properly see cpmi - iosco, recovery of financial market infrastructures, october 2014. see fsb, key attributes of effective resolution regimes for financial institutions, fmi annex, october 2014. see cpmi - iosco, disclosure framework and assessment methodology, december 2012. see cpmi - iosco, public quantitative disclosure standards for central counterparties, february 2015. see fsb, eighth progress report on implementation of otc derivatives market reforms, november 2014. bis central bankers β speeches managed. however, pushing more complex products towards mandatory central clearing makes risk management more challenging, and therefore may increase the risks to which ccps and clearing members are exposed. authorities may need to assess whether overly complex products should really be submitted to central clearing, so as to ensure ccps can continue pooling risks in a safe and efficient way. in recent months, concerns have been expressed regarding the adequacy and consistency of the level of risk management across the ccp landscape
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##ogenous risk β, london school of economics, september 2002. β’ federal reserve bank of new york : β new directions for understanding systemic risk β, economic policy review, november 2007. β’ mandelbrot ( benoit ) and hudson ( richard ) : β the ( mis ) behaviour of markets β, basic books, 2004. β’ ubide ( angel ). β anatomy of a modern financial crisis β, bank of spain : financial stability review, no 14, april 2008.
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##raged by economic agents so that they incorporate the same information about the real interest rate, then the difference between the conventional nominal rate and the real rate would provide, by factoring in an inflation risk premium, a measure of the expected inflation rate over the same period, known as the β break - even inflation rate β. now, if we had both nominal and indexed bonds across the whole maturity spectrum, up to, say, 30 years which is the maximum maturity at which inflation - indexed bonds are currently issued, then we would be able to pin down market expectations of inflation for all the forecast horizons, up to 30 years, as well as forecasts of inflation for each year up to the maximum maturity. so you can easily imagine the importance of such information for central banks, information which is, moreover, updated on a daily basis. our staff and also private forecasters are unable to routinely produce inflation forecasts in such a detail, at such a frequency and for such horizons! as far as the euro area is concerned, the reliability of both the inflation - indexed yield and the break - even inflation rate is strengthened by the significant development of the market for indexed bonds over the recent years, which accelerated further in 2003 with the arrival of two new government issuers : greece in march and italy in september. if we take into account the overall euro area inflation market, it is now the third biggest market in terms of market capitalisation, just behind the united states and the united kingdom. however, in 2003, it was not only the fastest growing market in terms see barr, d. g. and j. y. campbell ( 1996 ) : β inflation, real interest rates and the bond market : a study of uk nominal and index - linket government bond prices β, nber working paper, # 5821, november. of issuance but also the largest and most liquid inflation derivatives market, characterised by both the broadest range of products ( government bonds, agency bonds, inflation swaps, etc. ) and the largest number of frequent issuers ( france, italy, greece, cades, cna, etc. ). what has the eurosystem learned to date from inflation - indexed securities? first, since the inception of the euro, long - term expected inflation, i. e. the break - even inflation rate, as derived from the french oat indexed bond and the french oatei - indexed on the euro area hicp - has been broadly stable in a
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toshihiko fukui : prospects for the future of japan β s economy speech by mr toshihiko fukui, governor of the bank of japan, at the kisaragi - kai, tokyo, 23 july 2003. * * * when i was appointed governor of the bank of japan four months ago, i made a pledge that i would do my best to contribute to reviving the japanese economy. as we all know, japan β s economy is currently beset with a number of formidable problems. by resolving each of these problems steadily and patiently, i believe, prospects for the future of japan β s economy will be improved. with such a vision in mind, today, i would like to talk about these problems and the steps the bank has been taking to address them. 1. current situation and challenges facing japan β s economy current condition let me begin by briefly talking about the current condition of japan β s economy. economic activity, as a whole, remains flat. on the bright side, corporate profits continue to improve, and business fixed investment is on a gradual upturn. indeed, according to the bank β s tankan survey released in early july, the ratio of profits to sales is expected to hit a record high in fiscal 2003 since the bursting of the bubble, surpassing the past highs of 1996 and 2000. and, the business fixed investment plan for fiscal 2003 is the largest since fiscal 2000. but, on a more subdued note, personal consumption remains lackluster. high corporate profitability despite anemic sales implies that the effect of corporate restructuring in reducing labor and other costs has been quite substantial. this, in turn, means that the household sector has been faced with harsh labor and income conditions, which have adversely affected consumption. meanwhile, japan β s exports have not shown any clear movement either to rise or to decline. thus, as i described at the outset, economic activity overall remains flat. but recently, uncertainties surrounding japan β s economy have been gradually abating. the uncertainty surrounding overseas economies, an important factor for exports, has been declining in the wake of the end of the war in iraq and the containment of severe acute respiratory syndrome ( sars ). it is the prevailing view that despite lingering uncertainties, the growth of overseas economies will pick up in the second half of this year. under such circumstances, we expect that a cyclical upswing in japan β s economy will begin to materialize in tandem with the gradual improvement in exports and
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pursued a free - floating foreign exchange regime until as recently as november 2011. the currency appreciation was getting quite alarming at the time and required urgent policy responses on our part. the orr allowed us to address not only the growing appreciation of the rupee but to build up our reserves which crossed the rs100 - billion threshold in may 2013. we are today well on our way to achieve the target of six months β import cover. the orr resulted, however, in excess rupee liquidity in the domestic money market and the bank had to conduct open market operations to mop up the surplus. we had to complement the issue of government securities with our own paper which reached a record level of almost rs19 billion. this came with a cost and weighed heavily on the bank β s balance sheet. the continuation of open market operations at the same level as in recent months will rapidly become unsustainable for us. a few years ago, i had flagged this issue. today, i am renewing my call to the authorities to share the burden as it is certainly not in the interest of the nation to have a central bank with weak finances. bis central bankers β speeches ponzi schemes at the beginning of 2013, we were hit by a spate of financial scams. scammers, using the loopholes in the regulatory framework, lured the public into investing in schemes that promised extravagant returns β which in fact turned out to be ponzi schemes. this was a wake - up call for regulatory and other authorities to review their operations as they relate to detecting and combating financial crime. when the ponzi schemes were uncovered, the bank stepped in to manage the crisis and reassure victims by setting up a help desk to attend to the grievances of the public. the number of known victims of the six companies involved in the financial scams, who lodged complaints at the bank reached 2, 290 and the total defrauded amount stood at rs835 million by 28 june 2013. the figure is rapidly nearing the rs1 billion mark. we undertook a series of actions to deal with the problem ; most notably we sought the assistance of the reserve bank of india ( rbi ), which has first - hand knowledge of the matter. the rbi team β s recommendations range from the reinforcement of know your customer procedures and due diligence in banks, the setting up of dedicated cells to gather market intelligence, to enhanced coordination among regulators. these recommendations are in line with the restructuring and
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is resolutely upheld. managing transitions as we look at the challenges in the financial sector today, it becomes important to address the profound structural shifts that are transforming the shape of the financial sector. these transitions encompass a myriad of factors, each with its own set of 1 / 7 bis - central bankers'speeches unique challenges. these are also complex, multifaceted issues that demand nuanced, adaptable solutions. striking the right balance between encouraging innovation and maintaining the stability and security of the financial sector is always a formidable task. let me elaborate on few of such transitions which we are engaged with. climate transition we are all aware of the global challenge that climate change poses to our planet and its impact which is felt across the world. the transition to a more sustainable, environmentally responsible financial sector is no longer an option but an imperative. as societies demand greater commitment towards a cleaner greener environment, regulators must undertake the task of integrating climate risks into the regulatory frameworks. ensuring that financial institutions consider the environmental impact of their actions while simultaneously managing the flow of credit, demands a delicate balancing act and requires collaborative solutions. the moot question which the regulators have to deliberate on is whether climate risk is a unique risk that need to be captured separately and thus requires a separate framework on a standalone basis or whether it transverses across credit, market and operational risks and can be captured as a part of the existing risk frameworks. another point of debate is whether these risks need to be captured as combination of pillar 2 ( supervisory review ) and pillar 3 ( market discipline and disclosures ) requirements or is it better to capture the risk as part of pillar 1 ( capital and liquidity ) straight way. technology transition technology is reshaping the landscape of finance at an unprecedented pace and has emerged as a transformative force reshaping operations and customer experiences alike. digitalisation is helping to enlarge the options available to customers and lenders, increase efficiency and competition in the provision of financial services, and, more importantly, making these services available to larger segments of the population. as we embrace these technological advancements, it is imperative that regulatory frameworks evolve in tandem to ensure the security, privacy, and integrity of financial system. in an era defined by data, the protection of personal and financial information has come the fore. in india, the digital personal data protection act, 2023 ( dpdp act ) has been recently enacted. such a legislation was necessary for safeguarding individuals'rights
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economy β. we heard this a lot back when we started aiming for 4. 5 %, and we also hear it now, in the ongoing discussion about moving to a lower target. unpacking this issue, it is important to realise that high administered price inflation negatively impacts everyone, whether the target is 6 % or 4. 5 % or 3 %, or whatever it may be. what we are seeing with administered prices is known as a β relative price adjustment β. essentially, these goods and services are becoming more expensive relative to others. when this increase stems from inefficiencies and the pricing power of monopolies, it is detrimental both to the economy and to consumers. this is an important part of the reason we have long called for lower administered price inflation. however, it does not mean that the administered price inflation problem is worse at a target of 4. 5 % than 6 %. similarly, raising the inflation target would not necessarily improve the situation. if you have a higher target, you would expect all prices to rise faster, across the economy. you would expect your currency to lose its buying power for global commodities, such as energy and food, faster. you would expect more currency this comparison uses international monetary fund data. the measure for south africa is the cpi, not targeted inflation, so average inflation for 2020 - 23 was 5. 54 % ; it would be higher using targeted inflation ( 5. 85 % ). average inflation for chile was 3. 78 % for this period. depreciation, meaning your currency would become less valuable compared to others that hold their value better. in these circumstances, administered price inflation would likely increase. price setters, still intent on making relative price adjustments, would still have the power to do so, and would simply implement even larger price increases. if this situation is turned around, it becomes clear how it is possible to achieve lower headline inflation even with high administered price inflation. the overall price level rises more slowly, the currency depreciates at a slower pace, and the rate of administered price inflation slows, even as the β wedge β to other prices remains. this is what we observed after 2017. headline inflation slowed, and so did inflation for administered prices. the gap between the two was largely unchanged. from 2010 to 2016 it was 2. 4 % ; since 2017 it has been 2. 3 %. 23 of course, the administered price series is heavily influenced by global oil prices, which are not
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and regulatory policies that are more β incentive - compatible β, in the sense that they are reinforced by market discipline and the profit - maximizing incentives of bank owners and managers. to the extent this can be achieved, and i believe we have taken some innovative steps in this direction, supervisory and regulatory policies will be both less burdensome and more effective. unbundling of financial services the unbundling of financial products is now extensive throughout our financial system. perhaps the most obvious example is the ever - expanding array of financial derivatives available to help firms manage interest rate risk, other market risks, and, increasingly, credit risks. derivatives are now used routinely to separate the total risk of more generic products into component parts associated with various risk factors. these components frequently are repackaged into synthetic products having risk profiles that mimic financial instruments in other markets. the synthetic products can then be resold to those investors most willing and able to bear the associated risks. another far - reaching innovation is the technology of securitization - - a form of derivative - - which has encouraged unbundling of the production processes for many credit services. securitization permits separate financial institutions to originate, service, fund, and assume the credit or market risks of a portfolio of loans or other assets. thus, a financial institution may specialize in those activities where it has particular expertise or other comparative advantages. for example, to reduce the costs of originating and securitizing certain types of household loans, the underwriting processes used by some financial institutions rely on highly automated credit - scoring models developed by third - party vendors. these models, in turn, typically are linked to huge databases on borrower characteristics maintained independently by national credit bureaus. numerous types of assets are now routinely securitized, including residential mortgages, commercial mortgages, auto loans, and credit card loans. in addition, medium - and large - size businesses, including some that are below investment - grade, regularly access the commercial paper market by securitizing their trade accounts or other assets. recently, securitization and credit - scoring are beginning to be applied to small business lending. these and other developments facilitating the unbundling of financial products have surely improved the efficiency of our financial markets. one benefit is greater economic specialization, as banks and other financial institutions are able to create market niches, for example, in cash management, investment management, or the origination or servicing of certain loans. moreover, by lowering the
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tension between disruption of existing players and collaboration with them. many fintech players see themselves as disrupters. but there β s also a fair bit of collaboration that β s taking place. established financial institutions have been partnering or acquiring new, smaller players with new technologies. acquiring them either as a defensive mechanism or as a way of bringing disruptive technologies within their own organisation with the hope of strengthening what they offer customers. it β s hard to say how this will play out in the years to come β hard to say whether the disrupters will indeed disrupt the existing financial business in a significant way. i think it β s too early to say. in china, we have some major fintech players, they are no longer new now, those like alibaba and tencent. they have become established names. elsewhere it hasn β t made too much of a difference yet. it is early days. it β s entirely possible that some new fintech players will eventually make their mark as enduring brands in finance. but we are also likely to see the growing collaboration i have talked about, between established players and start - ups. it is not a zero sum game. and fintech ventures are also acting as a catalyst for existing players to reengineer legacy systems. but most importantly, fintech is promoting a shift from the traditional focus on products to a focus on customers. it β s about understanding their needs, and finding a way of delivering cheaper, or more convenient and more tailored services to the customer. the second tension is also important, and which we must be willing to manage. it β s the tension between allowing for experimentation in finance and preserving trust and credibility in our financial system. they are both important and we must be willing to manage the tension. there was i think, in the first wave of fintech, a certain breathlessness in the way which new businesses were coming up, and in the way which they were perceived and talked about. such as, in the ( peer - to - peer ) p2p lending platforms, where the name of the game was often to lend as quickly as you can, leveraging on investments in these fintech companies. the scene is now maturing. some of these new lending platforms in the us and elsewhere are now more concerned with the quality of loans they make. like banks, whose business is credit underwriting, they have to be good at both data analytics and judgment. bis central bankers β speeches most fintech ventures, globally
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is a financial literacy session for microfinance clients and beneficiaries of the government β s conditional cash transfer ( cct ) program, many of whom are unbanked. the sessions are designed to enhance their capacity to manage resources and make wise financial decisions that would eventually benefit their household, their community, and eventually the larger economy. these sessions are conducted in partnership with our department of social welfare and development, the lead administrator of our cct program. indeed, we continue to view multi - stakeholder partnership as an important strategy to facilitate the expansion and deepening of our financial system. moving forward, we see the value of collecting evidence and data that conclusively affirms what we believe to be true : β’ that access to financial services empowers households to better manage their resources and improve the quality of their lives ; and β’ that broad - based access to finance and financial inclusion support financial stability and facilitate inclusive growth. aside from anecdotal evidence, it would be ideal to have metrics that will give us solid data on how we are doing and how we can make things even better. to implement this commitment, we will engage various institutions in further consultations... to develop a national financial inclusion strategy. with a unified vision, synergy of action and complementarity of initiatives, we should make financial inclusion a reality across our country. our ultimate goal is to provide every filipino the opportunity to benefit from having access to appropriate financial services. ladies and gentlemen. we are here because we share the same vision : to fight poverty and improve lives across the world. let us therefore leverage on each others β competencies and expertise by forging effective partnerships, and moving in unison toward our common goal of poverty reduction, financial inclusion and inclusive growth. together, we can cover a lot of ground. once again, i welcome all of you to the philippines for the 2013 microcredit summit on partnerships against poverty. thank you! and as we say in the philippines : mabuhay! bis central bankers β speeches
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##sos if necessary. on top of this was the bsp β s 20 billion pesos remittance to the national government as advance dividends. an important aspect of bsp β s financial sector regulatory interventions are the micro, small and medium enterprises ( msmes ) and the informal sector which are among the most vulnerable in this pandemic. msmes generate two - thirds of our country β s employment and represent 99 % of the total number firms. to stimulate bank lending to the sector, the bsp has included new msme loans as part of 1 / 3 bis central bankers'speeches the banks β compliance with the reserve requirements. we also issued temporary reduction in the credit risk weights of current loans to msmes, and the assignment of a zero risk weight for msme exposures that are covered by guarantees from the philippine guarantee corporation ( philguarantee ), the agricultural guarantee fund pool ( agfp ) and the agricultural credit policy council ( acpc ). the bsp likewise lengthened the period of relief on the reporting of past due and non - performing loans of borrowers affected by the covid - 19 to december 31, 2021 from the original timeline of march 8, 2021. these measures are designed to free up bank resources to expand their msme loan portfolio. meanwhile, the national government under the bayanihan to heal as one act launched key programs to support the adverse impact of the pandemic on msmes and informal sector. these included the p205 billion social amelioration program covering informal sector workers, the p51 billion wage subsidies for employees of small businesses ; a p1. 2 billion guarantee fund for msme loans under the philguarantee ; and soft loan program for msmes under the dti and acpc ( p2 billion ). all these measures supported the country β s survival and containment response geared to keep the economy afloat amidst the crisis. the first round of immediate response was primarily about winning the war. that was act one. with the government now preparing to lift movement restrictions, we are moving to act two where we are called to rebuild for the post - covid world. the pandemic has revealed and brought urgency to necessary reforms around public health, social safety nets, disaster response, and countryside development. but what reinforces all these reforms is the digital imperative. there is no arguing that the new economy is digital. our aspirations for a more inclusive and prosperous post - covid world necessitate putting
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##2 year 3. 8 3. 4 3. 6 3. 0 3. 9 3. 5 private consumption 2. 9 1. 6 2. 3 1. 8 3. 8 2. 8 construction investment β 7. 1 β 3. 0 β 5. 0 2. 1 3. 4 2. 8 facilities investment 8. 9 β 1. 1 3. 7 5. 0 7. 3 6. 2 goods exports 14. 5 6. 9 10. 5 3. 8 5. 8 4. 8 source : bank of korea in the medium - to long - term, the growth rate is projected to decline due to a falling birth rate and ageing population. total fertility rate ( persons ) : 3. 6 in 1970s β 1. 9 in 1980s β 1. 6 in 1990s β 1. 2 from 2000 to 2011 total & working age population source : national statistical office population by age groups source : national statistical office to boost the future growth potential, the key is making the transition from input - led growth to productivity - led growth. as the increase in the productive population will be limited due to the low birth rate, it is more effective to make efforts to increase the quality of human resources and to use the given labor resources more efficiently. bis central bankers β speeches more specifically, it is necessary to induce improvements in productivity as the driver of growth by enhancing that in the relatively laggard service industry and by increasing input quality through investment in r & d and innovative technologies. concluding remarks distinguished members of the asia society ladies and gentlemen, as i pointed out earlier, the asian emerging market economies are leading world economic growth and they are sure to become the axis of the world economy. it is worth noting the attention korea has been drawing from the international community for the way in which it overcame the asian currency crisis and the global financial crisis and the country is expected to contribute to global economic growth in the coming years as well. however, we cannot say that such rapid growth will last in korea and other asian emes, simply because they are currently exhibiting a remarkable economic performance. since the asian growth model is accompanied by several constraints such as the heavy reliance on overseas demand and production factors, the derivative use of advanced technology and a low degree of financial market development, it is important to recognize these shortcomings and strive to improve them. for instance, due to their heavy external dependence, asian emes were greatly affected by the recent financial crisis, even though it originated in the advanced western
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understood by labour, business, the private sector and the other sectors of the economy. if these sectors understand that the bank targets inflation and that it is committed to the chosen target, this will engender public confidence about the reserve bank β s monetary policy procedures. i will now turn to the specifics of our inflation targeting monetary policy framework. the reserve bank monitors a number of factors that have a direct influence on inflation. these include the growth in money supply and bank credit extension, the changes in nominal and real salaries and wages, the nominal unit labour costs, the gap between potential and actual national output, the exchange rate developments and import prices. the oil price is another factor that has played a major part in domestic inflationary trends of late and one that we have closely monitored. this exogenous factor is one over which we have little control. another exogenous factor is food prices, which can be volatile as a result of drought or floods. and administered prices, those influenced by government or monopolies including medical and education costs, also have an impact on domestic inflationary trends. in order to monitor these factors, the reserve bank has embraced the system of a small core model supported by other models. it has moved away from the single large - scale macroeconomic model, in keeping with international developments. the aim is to keep the core model concise so as to focus on the key economic variables that influence inflation, as i have already mentioned. the core model incorporates some basic assumptions about the economy. it presupposes, among other things, that higher output cannot be achieved in the face of persistently higher inflation and that the level of prices in money terms and the rate of inflation in the longer term depend on monetary policy. changes in monetary policy, that is changes in the bank β s repo rate, are transmitted through the economy via various channels, the so - called transmission mechanism. however, the transmission mechanism is a complex structure and can encompass a large number of cause and effect scenarios. the traditional channel is the direct effect of changes in interest rates on demand and supply. changes in the repo rate have a direct effect on other interest rates, the exchange rate and decisions on spending and investment. changes in the repo rate, therefore, affect the demand for and the supply of goods and services. the pressure of demand against the supply capacity of the economy is the key factor influencing domestic inflationary pressures. the link between the reserve bank β s modelling activities and
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eli m remolona : digital bridges for financial inclusion speech by mr eli m remolona, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the media launch of the 3rd digital financial inclusion awards, manila, 20 march 2024. * * * magandang hapon sa inyong lahat. we at the bangko sentral [ ng pilipinas ] ( bsp ) are pleased to launch the third digital financial inclusion awards ( dfia ) in partnership with the microfinance council of the philippines, inc. ( mcpi ). the mcpi is led by gilbert maramba and paul favila [ for ] citi philippines. this event shows the strength of the partnership among mcpi, citi, and the bsp in promoting financial inclusion through the digitalization of microfinance. i think digitalization is the secret sauce. parang bagoong sa kare - kare. so, we thank the members of the national selection committee of our awards program. they have chosen inspiring leaders from a broad cross - section of our economy. all these leaders shared their time and expertise to support financial inclusion through the digitalization of microfinance institutions ( mfi ). to us at the bsp, financial inclusion is an undertaking that requires a whole - of - nation collaboration. every form of support matters, whether from the private sector, ngos [ non - government organizations ], multilateral institutions, local governments, microentrepreneurs, microfinance institutions, or the media. the national strategy for financial inclusion ( nsfi ) of 2022 - 2028 defines financial inclusion as a state where everyone, especially the vulnerable, has access to a wide range of financial services. to us, microfinance remains integral to the initiatives and programs in the nsfi. here is where we stand. as of the third quarter of 2023, 138 banks engaged in microfinance served approximately 1. 9 million borrowers. non - bank microfinance institutions, such as cooperatives, supported 9. 7 million members by the end of 2021. microfinance ngos catered to 6. 6 million clients as of 2022. if microfinance institutions adopt innovative financial services, especially through digitalization, we expect additional benefits that would generate better reach and better quality of services. 1 / 2 bis - central bankers'speeches this is where the d
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##fia program comes in. the dfia focuses on recognizing outstanding mfis and microentrepreneurs who have successfully adopted digitalization in their operations. by encouraging innovation in microfinance, we hope to inspire more organizations to do the same. as we promote increased access to credit through digitalization, let us remember that microfinance is not only about borrowing. microfinance also provides access to savings, investments, and insurance. these tools will enable the vulnerable to better manage their resources and protect themselves against certain risks. this resilience is about the overall financial health of microentrepreneurs. so, digitalization is a bridge that connects financially underserved segments of the population to providers of formal financial services. so, let us build more digital bridges so that everyone may enjoy the benefits of financial inclusion. thank you all for your continuing support. magandang hapon sa inyong lahat! 2 / 2 bis - central bankers'speeches
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, or unduly burdensome regulation and to consider how to reduce regulatory burden. see 12 u. s. c. Β§ 3311. - 21 before understanding how regulators expect an activity to be conducted. a community banking regulatory framework that enables small banks to thrive must prioritize tailoring. closing thoughts thank you for your commitment to community banking, and conducting the important research that can inform the regulatory policy agenda. community banks may be small but their contributions to local communities are mighty. the importance of their role in providing credit to a broad range of customers and businesses that in their absence would have far fewer banking options cannot be overstated. there simply is no alternative or replacement for community banks and the relationship banking model. if regulators believe in a dynamic banking system, if we support financial inclusion and extending the availability of banking access, we must acknowledge the importance of community banks and ensure that our regulatory framework preserves their role for the future. to function effectively, the banking system requires the presence of banks of all sizes β larger, regional, and community banks. this diversity of our financial institutions is the greatest strength of our banking system, and it can easily be imperiled by insufficiently targeted regulation, supervision, and guidance. the discussions we will have over the next two days will include steps to further preserve and enhance the future of community banking. the presentations will enhance our understanding of the dynamics and pressures that shape the banking system, identify issues and concerns that may threaten different bank business models and activities, and develop policy approaches that consider the tradeoffs in our regulatory and supervisory approach.
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. but ultimately, banks retain responsibility for any malfunctioning. as a supervisor, i am therefore calling on institutions to be fully aware of what β s at stake and to have a plan as to how they intend to tackle risks. finally, a security culture must be set up and pursued, anchoring the awareness and willingness to act responsibly in the digital bank, above and beyond individual business units. 4.... but not reinvent the wheel in light of the rapidly changing environmental conditions β and by these i mean new technologies, new behavioural patterns, new competitors and new dangers β the question arises for many as to whether the current regulatory approach will still be viable in future. in my opinion, this question is the logical consequence of a superficial perception of technology, on the one hand, and banking on the other. we associate technologies with positive characteristics such as the 24 - hour availability of the internet, the transparency of comparison websites, the convenience of smartphone apps and the seemingly free services of many online providers. however, i think it is very important that we also take a look at the downsides. indeed, technology remains error - prone and obeys economic incentives. indeed, the manipulated issuing practices of an american loan brokerage platform have come to light just recently. and then there are self - regulating or self - supervising financial technologies such as distributed ledgers, whereby genuine bookings are confirmed by countless numbers of computers carrying out thousands of crosschecks on the bookkeeping of other computers. while these technologies may significantly reduce the likelihood of errors and fraud, they do not eliminate it altogether. faith in a thoroughly better technology - based world therefore seems to me to be a further expression of the yearning for simple realities and narratives that i mentioned at the outset. technology does not, therefore, obviate the need for a critical view from the outside. it is my firm belief that the state cannot, and must not, withdraw from its surveillance function. moreover, technology does not in any way alter the fundamental tasks and risks that justify the existence of both banks and banking supervisors. the financial system needs monetary policy intermediaries, as well as agents that enable essential services such as lending, deposits and payments. the existence of banks is therefore intrinsically linked to the mechanics of our economic and financial system. and, what β s more, key aspects of the financial sector such as risk taking cannot be left to computers because financial decisions are, by their very nature, associated
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4 mpm, the bank decided to temporarily suspend the so - called banknote principle until it achieved the price stability target. however, it is not necessary to repudiate the underlying concept of the principle that the amount of banknotes in circulation β namely, the bank β s long - term liabilities β should be backed by the purchasing of jgbs β that is, longterm assets. i understand that the bank should resume the purchases in line with the banknote principle in the future. in order to prevent concerns over fiscal dominance from arising following the temporary suspension of the banknote principle, it is important for the government to ensure the market credibility of its stance toward achieving fiscal consolidation. in this regard, in the joint statement by the government and the bank released in january, it is clearly stated that, in strengthening coordination between the government and the bank, the government would steadily promote measures aimed at establishing a sustainable fiscal structure with a view to ensuring the credibility of fiscal management. i strongly expect that such efforts will make steady progress. 8. summary of recent policy decisions the decisions made at the april 3 β 4 mpm have great significance. under the framework of β comprehensive monetary easing, β which had been adopted for the past two and a half years, the bank had been strengthening monetary easing through various unconventional measures while examining the effects of such easing. this has contributed to underpinning japan β s economy, but the economy has failed to exit from a period of deflation. bis central bankers β speeches it should be noted that, because of this experience of the comprehensive monetary easing, the bank could decide on a new policy of the quantitative and qualitative monetary easing at the april 3 β 4 mpm. it is true that the decision, which includes the purchases of jgbs on such an unprecedented scale, entails a certain degree of risk, but i am sure that this will produce effects that would more than offset such a risk. the bank will strongly pursue the quantitative and qualitative monetary easing in order to achieve the price stability target of 2 percent at the earliest possible time, with a time horizon of about two years. at the same time, if regulatory and institutional reforms as well as economic growth policies implemented by the government make progress and the growth potential of the private sector increases, this will further enhance the effects of the quantitative and qualitative monetary easing. initiatives in such areas are steadily being undertaken, and i have great expectations that further progress will be made
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luis de guindos : the euro area economy and our monetary policy stance remarks by mr luis de guindos, vice - president of the european central bank, at the business leadership forum, organised by ie university, madrid, 30 october 2023. * * * recent economic developments the euro area economy remains weak. 1 foreign demand is subdued and tighter financing conditions are increasingly weighing on investment and consumer spending. the services sector is also losing steam, with weaker industrial activity spilling over to other sectors, and the impact of higher interest rates is broadening. recent indicators point to continued weakness in the near term. the labour market has been a bright spot supporting the euro area economy and has, so far, remained resilient to the slowdown in growth. but there are signs that it is turning. while unemployment stood at 6. 4 % in august, the lowest level recorded since the start of the euro, fewer new jobs are being created, including in services, which suggests that the cooling of the economy is gradually feeding through to employment. moreover, the risks to the growth outlook are tilted to the downside. growth could be lower if the effects of monetary policy transmission turn out stronger than expected, or if the world economy weakens further. furthermore, major geopolitical risks have intensified and are clouding the outlook. this may result in firms and households becoming less confident and more uncertain about the future, and dampen growth further. at the same time, while remaining significantly above our medium - term target of 2 %, recent inflation data have been in line with our expectations, confirming that our monetary policy is working. inflation dropped sharply to 4. 3 % in september and the fall was visible in all its major components. food price inflation decreased again, but β at 8. 8 % β remains high by historical standards. energy prices fell by 4. 6 %, but have risen again more recently, and have become less predictable in view of the new geopolitical tensions. inflation excluding energy and food also dropped to 4. 5 % in september, and we see continued declines in measures of underlying inflation. however, domestic inflation remains strong owing to the growing importance of wage pressures. the inflation outlook remains surrounded by significant uncertainty. in particular, heightened geopolitical tensions could drive up energy prices and higher than anticipated increases in wages could drive inflation higher. by contrast, a stronger transmission of monetary policy or a worsening of the global economic environment would ease price pressures. longer - term interest
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iii liquidity requirements. 3. increased risk aversion. this scenario investigates the risks arising from a global unwinding of the search for yield. it assumes an abrupt increase in investor risk aversion worldwide, which results in stock price declines and a marked increase in corporate bond spreads, thereby raising interest rates in the more risky market segments. this would trigger a recession in the united states with negative implications for the global economic outlook. the details of these scenarios and the underlying methodologies are discussed in detail in the latest ecb financial stability review from may 2013. just let me say that they are designed to account for a number of transmission channels and the size of the shock is based on historical evidence. ( chart 5 ) the scenarios generate a rich set of results, but let me focus on the implications for bank capital. under the baseline scenario, the core tier 1 capitalisation of euro area large and complex banking groups would increase from 11. 2 % in the fourth quarter of 2012 to 11. 3 % by the end of 2014. certainly, with regard to the findings of the adverse scenarios, they crucially depend on the implementation details of the individual scenarios. nevertheless, we observe that a scenario configuration involving a rise in interest rates and asset price declines would in general tend to exert a negative influence on banks β solvency positions. this being said, the decline in the large and complex banking groups core tier 1 capital ratios under the adverse scenarios is found to be relatively mild, which is a sign of resilience among the largest euro area banks also reflecting significant capital raising efforts in recent years. specifically, the average core tier 1 capital ratio would decline by 0. 4 percentage points in the funding stress scenario, by 0. 6 in the sovereign debt crisis scenario and by 1. 1 in the global risk aversion scenario. however, the average numbers mask some dispersion across euro area countries. bis central bankers β speeches this analysis is focused on the banking sector. the situation in the euro area insurance sector differs somewhat. insurance companies are also to some extent exposed to risks from shifts in sovereign bond yields and global risk aversion. forward - looking analysis of the assets and liabilities of the euro area insurance sector indicates that the impact of these risks would remain limited due to comfortable capital buffers. for the euro area insurance sector, low yields on highly rated government bonds can constitute a solvency risk in the medium term. this holds in particular for those jurisdictions where a market
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, monetary policy shocks appear to account for a significant proportion of variation in risk aversion. see hoerova m., bekaert g., lo duca m., 2013, risk, uncertainty and monetary policy, journal of monetary economics, forthcoming. bis central bankers β speeches of course, under certain circumstances, reducing the market price of risk and freeing up the risk - taking capacity of financial institutions is actually an outcome desired by monetary policy. consider, for instance, the various non - standard monetary policies undertaken globally after the financial crisis broke out in 2009. they were designed to remove risk from balance sheets so as to avoid destructive fire sales and at the same time to enable banks to continue providing credit to the real economy by taking new risks. the concern is, however, that persistent liquidity sows the seeds for market turmoil. unexpected events such as a shift in monetary policy or a change in economic growth prospects will inevitably affect the yield curve. since banks carry out maturity transformation by borrowing short and lending long, and there are limits to their ability to hedge against interest rate risk, the result could well be an abrupt unwinding of risk - taking positions, putting financial market under renewed stress. these risks are further exacerbated by the fact that banks operating under asymmetric information and limited liability will tend to take more risk than is socially optimal, since they do not internalise the losses they may eventually impose on taxpayers. a clear and consistent framework for bank recovery and resolution, including β bail - in β rules with a clear pecking order and limited exemptions, will be conducive to a stricter monitoring of risks by bank creditors. in fact, as i mentioned before, many of the most severe financial crisis since the great depression broke out after prolonged periods of exceptionally easy monetary conditions. apart from the 2009 financial crisis, similar developments occurred in relation to the burst of the new economy bubble in 2001, the collapse of ltcm in 1998, and the burst of the bond market bubble in 1994. search for yield in bond markets let me now turn to the current situation by showing you some evidence on the search for yield in the euro area, taking corporate bond markets as an example. ( chart 1 ) let me start with some recent developments in european bond markets. since early 2012, we have seen pronounced shifts towards bond holdings in investment funds and a general decline in yields across all risk categories. as chart 1 shows, equity holdings of euro area investment funds
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of non - banks able to provide individuals and companies with viable alternatives, but for now banks continue to act as gatekeepers to payment and settlement in central bank money. bis central bankers β speeches my own forecast is that fintech β s consequences for the bank β s objectives will not become fully apparent for some time. many of the technologies needed to deliver such transformations are nascent β their scalability and compatibility untested beyond proofs of concept. moreover, the bar for displacing incumbent technologies is very high. nor will the bank of england take risks with the resilience of the core of the system. disruption won β t come either easy or cheap. 4. enabling the fintech transformation we are actively exploring how new financial technologies could support our policy objectives. there are five ways the bank is enabling the fintech transformation. the first is widening access to central bank money to non - bank payments service providers, known as psps. 3 as the internet revolutionised commerce, making trade faster and markets more competitive, payments technology lagged in many countries, although it is worth remembering that the uk has been a global leader on real - time retail payments. faster payments ( fps ) was one of the earliest real - time retail systems introduced, in 2008. now, new entrants and established players are seeking to provide payment services that are instantaneous, secure, reliable and accessible anytime from anywhere. 4 retail consumers and firms are increasingly demanding payments completed in seconds, not hours or days. they expect payments to be seamless, reliable and cheap whether to recipients overseas or just up the street. and they expect to make payments without visits to a bank branch or even logging onto a desktop computer. similarly, companies, financial intermediaries and governments want to process ever larger and more complex bulk payments covering multiple systems, countries and currencies. central banks lie at the hearts of payment systems, giving households and firms the assurance that transactions have settled in the most secure form of payment : central bank money. to fulfil that role, our payments infrastructure needs to remain fit for purpose : reliable, resilient and robust. but we must also be responsive to changing payments demands. so earlier this year the bank announced we would be drawing up a blueprint to replace our current real - time gross settlement ( rtgs ) system, now twenty years old. 48 institutions currently have settlement accounts in rtgs. all other users of the systems that settle across rtgs access settlement
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message received and understood β speech by dave ramsden given remotely at a conference by the lietuvos bankas and the bank for international settlements ( bis ) on the β future of central banking β published on 29 september 2022 speech introduction thank you very much for the invitation to join this panel today and i am very sorry i can β t be with you in vilnius. real - time market developments kept me here in london, but i β m grateful to the organisers from the central bank of lithuania and from the bis for allowing me to contribute virtually to the bank β s 100th birthday conference. i really welcome the focus of this panel on data since having access to fast, accurate, appropriately structured data is critical in equipping central banks with the knowledge they need to function in order to meet their objectives. the bank of england β s mission to deliver monetary and financial stability is a broad and deep one. we need a similarly broad pool of data of varying depths to fulfil our mission. in 15 minutes i cannot hope to do justice to the variety of data we need to get a clear picture of the economy, the financial system as a whole and the firms we regulate in order to frame action. last year the bank and pra published our data strategy, joint with the fsa, setting out how we will transform our collection and use of data to fulfil our responsibilities as a supervisor and regulator [ 1 ]. in my time today i will focus on my bank responsibilities for payments and give a real - life example of why having real - time data matters and also point to how we could make payments data even more useful through the message that communicates the data. i will conclude with a brief recap on uk financial market developments this week and highlight the use we are making of real - time data to respond to those developments to meet our objective for financial stability. use of real - time payments data the covid - 19 pandemic continues to impact on us in many ways and to change how we do things. in the context of today β s panel the pandemic acted as a catalyst for extending use of the bank β s payments data. right from its start in march 2020 we knew that the pandemic and the necessary response to it would have very serious but also very different impacts on different sectors of the economy. but it was much less easy to be confident of the scale of those differential impacts and over what time frame. extracting a signal from an understand
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however, we should not forego the opportunity to learn from the events and possibly strengthen systems even further. future directions looking to the future, the lessons of asia provide sign posts for the areas of risk management in which work by both market participants and supervisors is likely to be concentrated. volatility, after all, usually leads to innovations to help deal with it. credit risk management emerged as one theme in assessments of the asian volatility. a reassessment of liquidity risk was another. an emphasis on the infrastructure of the market no doubt will continue as well. firms already were working upon ways to apply techniques developed for the management of market risk in the context of credit risk. supervisors also were evaluating the potential for applying such an internal models approach to the determination of regulatory capital requirements for credit risk. events in asia highlight not only the promise of such approaches but also the hurdles that must be overcome if their potential is to be realized. once one recognizes the correlation between market risk and credit risk, the next step is a consideration of a global approach to risk management and the possibility of extending an internal models approach beyond market risk. the application of that approach implies, however, that prices can be obtained from thin markets and used effectively in risk measurement. as we continue to pursue new approaches to credit risk management, the basic questions arise again and again : are data and techniques for revaluing positions available? can acceptable risk measurement models be developed? are hedging vehicles available? these questions represent hurdles that must be jumped. they will not necessarily be easy, but neither were other hurdles that this industry has overcome. another theme that emerges is liquidity risk. a fundamental assumption of many risk management procedures is the ability to get out of a position or to hedge it. events in asia demonstrated once again that assumptions about liquidity in normal markets rarely hold in more volatile ones. this argues both for a reassessment of the assumptions themselves and for more careful and fundamental thinking about liquidity risk in risk management procedures. at the outset of my remarks, i noted my appreciation for infrastructure developments as a foundation for the growth of the market. certainly, their importance is unlikely to diminish in the near term. market participants generally have an appreciation for potential legal risk but continuing reassessment is valuable. episodes of volatility give some counterparties strong incentives to try to walk away from losing contracts. such events indicate areas where further legal work may be necessary to ensure that the market
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were continued in 1997. in 1996, the central bank decided to withdraw from the long - term market and reached custodian agreements with three securities firms following a bidding process. the bank handed over to the firms a part of its securities portfolio and at the same time ceased to be a market maker in government bonds, government notes and housing bonds. the experience from these agreements is positive and they were renewed in march 1997. the new agreements were more extensive than the earlier ones, and in their wake two banks announced that they would engage in market making for certain classes of government securities in the same manner as the custodial firms. it is not unlikely that such custodial agreements will become unnecessary and that the central bank will no longer need to be involved in ensuring adequate market making in the long - term market. both the treasury and the state housing authority began to reorganize the classes of bonds they issue, with the effect of improving the price determination of government guaranteed bonds and raising turnover in the secondary market. the central bank β s monetary policy instruments in 1997, the central bank began preparing changes to its monetary policy instruments. the purpose was twofold : first, to level the playing field for domestic credit institutions with respect to their access to facilities at the central bank, and, second, to adjust the operating environment of domestic credit institutions to the environment prevailing in the european economic area. these changes have been modelled on the instruments designed for the prospective european central bank, which will be established on july 1 and formally commence operations on january 1, 1999. under the auspices of the european monetary institute, the precursor to the european central bank, work has proceeded on designing the monetary instruments of the bank. the central bank has followed this work to the extent possible. some issues, such as concerning reserve requirements, will not be resolved until after the european central bank has been established. the central bank may therefore adjust its rules when the situation in europe becomes clearer. the first step in changing the central bank β s instruments was taken on march 1 and covered the following. the liquidity requirement of deposit banks was abolished. weekly auctions of 14 - day repurchase agreements replaced the tap - sale of these agreements. all government guaranteed securities and the central bank β s certificates of deposit qualify as collateral for repurchase agreements rather than only treasury bills and certificates of deposit. the central bank will auction 14 - day certificates of deposit when it feels the need to withdraw liquidity. the direct sale of 45
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these assessments of maximum employment are necessarily uncertain and subject to revision. according to the federal reserve act, the employment objective is on an equal footing with the inflation objective. as a practical matter, our current strategy shares many elements with the policy framework known in the research literature as β flexible inflation targeting. β 15 however, the fed β s mandate is much more explicit about the role of employment than those of most flexible inflation - targeting central banks, and our statement reflects this by stating that when the two sides of the mandate are in conflict, neither one takes precedent over the other. we believe this transparency about the balanced approach the fomc takes has served us well over the past decade when high unemployment called for extraordinary policies that entailed some risk of inflation. the review of our current framework will be wide ranging, and we will not prejudge where it will take us, but events of the past decade highlight three broad questions. three questions the first question is, β can the federal reserve best meet its statutory objectives with its existing monetary policy strategy, or should it consider strategies that aim to reverse past misses of the inflation objective? β under our current approach as well as that of many central banks around the world, the persistent shortfalls of inflation from 2 percent that many advanced economies have experienced over most of the past decade are treated as β bygones. β this means that for a discussion of this terminology and references, see english, lopez - salido, and tetlow ( 2015 ) and clinton and others ( 2015 ). - 7policy today is not adjusted to offset past inflation shortfalls with future overshoots of the inflation target ( nor do persistent overshoots of inflation trigger policies that aim to undershoot the inflation target ). central banks are generally believed to have effective tools for preventing persistent inflation overshoots, but the effective lower bound on interest rates makes persistent undershoots more likely. persistent inflation shortfalls carry the risk that longer - term inflation expectations become poorly anchored or become anchored below the stated inflation goal. 16 in part because of that concern, some economists have advocated β makeup β strategies under which policymakers seek to undo, in part or in whole, past inflation deviations from target. such strategies include targeting average inflation over a multiyear period and price - level targeting, in which policymakers seek to stabilize the price level around a constant growth path. 17 these strategies could be implemented either permanently or as a temporary response to extraordinary circumstances.
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β community listening session β hosted by the dallas fed in february. several more fed listens events will follow in may. in addition, we are holding a system research conference on june 4 - 5, 2019, at the federal reserve bank of chicago, with speakers and panelists from outside the fed. the program includes overviews by academic experts of themes that are central to the review : the fomc β s monetary policy since the financial crisis, assessments of the maximum sustainable level of employment, alternative policy frameworks and strategies to achieve the dual mandate, policy tools, global considerations, financial stability considerations, and central bank communications. two sessions will feature panels of community leaders who will share their perspectives on the labor market and the effects of interest rates on their constituencies. information about the review and the events associated with it are available on the board β s website at https : / / www. federalreserve. gov / monetarypolicy / review - of - monetary - policy - strategy - tools - andcommunications. htm. - 12 we expect to release summaries of the fed listens events and to livestream the chicago conference. building on the perspectives we hear and on staff analysis, the fomc will conduct its own assessment of its monetary policy framework, beginning around the middle of the year. we will share our conclusions with the public in the first half 2020. concluding thoughts the economy is constantly evolving, bringing with it new policy challenges. so it makes sense for us to remain open minded as we assess current practices and consider ideas that could potentially enhance our ability to deliver on the goals the congress has assigned us. for this reason, my colleagues and i do not want to preempt or to predict our ultimate finding. what i can say is that any refinements or more material changes to our framework that we might make will be aimed solely at enhancing our ability to achieve and sustain our dual - mandate objectives in the world we live in today. - 13 references aaronson, stephanie r., mary c. daly, william wascher, and david w. wilcox ( 2019 ). β okun revisited : who benefits most from a strong economy? β paper presented at the brookings papers on economic activity conference, held at the brookings institution, washington, march 7 - 8, https : / / www. brookings. edu / wpcontent / uploads / 2019 / 03 / okun - revisited - who -
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sophisticated with more differentiation between risks : the separation of credit and market risk ; the recognition of operational risk as a distinct category ; and the importance of reputational risk. notwithstanding that the nature and size of our operations are different and smaller than many private sector institutions, the bank is exposed to many of these same risks. in managing these risks, we have wanted to ensure that our practices are consistent with best practice in the private sector, to the extent that this is applicable to a central bank. we have invested heavily in technology to allow management of the risks on a consolidated basis and where appropriate in real time. we have also instituted a number of organisational changes, setting up an assets and liabilities committee which i chair and which reviews at senior level the management of our balance sheet ; and a risk monitoring department ( based in part on the middle office model of the private sector ), independent from our banking line management. above this, like public companies, we have a number of board sub - committees, and in particular an audit committee, taking reports from the internal and external audit, looking carefully at our internal systems and controls and our policies and processes for management of the main financial, operational and reputational risks. like public companies, and no doubt many of you here who are directors of public companies, we are working hard to ensure full compliance with the turnbull report. personnel policies finally i would like to mention the changes we have made to our personnel policies. i have already indicated that the changes imposed by the 1997 proposals, together with the changes brought about by a changing environment, placed a heavy demand on the flexibility of our workforce. we have needed to increase the analytical capacity of the bank, in part by additional recruitment of economists. indeed we are among the largest employers of professional economists in the country. we have also substantially upgraded our programmes under which individuals are able to go back to full - time education supported by the bank to obtain the masters, and in some cases doctorate degrees, that we need to keep us at the forefront of thinking on economic and financial issues. we have reorganised the rank structure within the bank. for some time, we had two broad categories of staff : officers and officials. counter - intuitively, the officials were senior to the officers, rather like the civil service of many years ago when administrative grades were senior to the executive grades. we have merged the officers and officials grading into one structure, taking out several layers while we were at it - although i would have
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. conclusion i appreciate the opportunity to discuss the board β s legislative suggestions and priorities concerning regulatory relief. the board would be pleased to work with the committee and your staffs as you seek to develop and advance meaningful regulatory relief legislation that is consistent with the nation β s public policy objectives. appendix : regulatory relief proposals supported by the board of governors of the federal reserve system 1. authorize the federal reserve to pay interest on balances held at reserve banks amendment gives the federal reserve explicit authority to pay interest on balances held by depository institutions at the federal reserve banks. 2. grant the board additional flexibility in establishing reserve requirements amendment provides the federal reserve with greater flexibility to set the ratio of reserves that a depository institution must maintain against its transaction accounts below the current ranges established by the monetary control act of 1980. 3. authorize depository institutions to pay interest on demand deposits amendment repeals the provisions in current law that prohibit depository institutions from paying interest on demand deposits. if adopted, the amendment would allow all depository institutions that have the authority to offer demand deposits to pay interest on those deposits. 4. ease restrictions on interstate branching and mergers in a competitively equitable manner amendment affirmatively authorizes national and state banks to open de novo branches on an interstate basis. currently, banks may establish de novo branches in a new state only if the state has affirmatively authorized de novo branching. this existing limitation places banks at a disadvantage to federal savings associations, which currently have the ability to branch de novo on an interstate basis. the amendment also would remove a parallel provision that allows states to impose a minimum requirement on the age of banks that are acquired by an out - of - state banking organization. the amendment would not allow industrial loan companies ( ilcs ) that operate under a special exemption in federal law from opening de novo branches on a nationwide basis. the corporate owners of these ilcs are not subject to the type of consolidated supervision and activities restrictions that generally apply to the corporate owners of other banks insured by the federal deposit insurance corporation ( fdic ). granting exempt ilcs nationwide branching rights also would be inconsistent with the terms of their special exemption in federal law. 5. small bank examination flexibility amendment would expand the number of small institutions that may qualify for an eighteen - month ( rather than a twelve - month ) examination cycle. under current law, an insured depository institution must have $ 250 million or less in total assets to qualify for an eighteen - month examination cycle.
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s balance sheet over the years to come. 5 conclusion the normalisation of monetary policy provides us with an opportunity to review the operational framework. that framework should be simple, efficient and as marketneutral as possible, whilst at the same time allowing a good handle on interest rates. the operational framework is the vehicle through which monetary policy signals are transmitted. at present, the monetary policy signals are clearly pointing toward further tightening. inflation in the euro area may be receding but it is still too high. and the latest forecasts suggest that we cannot expect price stability to be restored in a timely manner. inflation is proving to be more persistent than many thought. in response, monetary policy must now show itself to be more persistent and more resolute than many would have expected. 1 lagarde, c. ( 2023 ), the fight against inflation, speech at " deutscher sparkassentag 2023 ", hanover, 1 june. 2 schnabel, i. ( 2023 ), back to normal? balance sheet size and interest rate control, speech in new york, 27 march. 3 borio, c. ( 2023 ), getting up from the floor, bis working paper, no 1100. 7 / 7 bis - central bankers'speeches
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add at this juncture that, one year ago, no one knew how strong and persistent inflation would turn out to be, either. some who didn't think the ecb governing council had it in them to turn the interest rates screw so robustly may well have had the financial system in mind. perhaps they reckoned that even if the governing council wanted to move, it would not be able to. german comedian karl valentin might have said : they would have been willing to want to, but didn't dare to be allowed. and indeed, such a rapid and significant interest rate reversal does present a challenge. especially as banks had built up vulnerabilities during the protracted low interest rate period. all the more encouraging, then, that euro area banks have coped well with the interest rate reversal so far. that's thanks not least to the supervisory and regulatory reforms in the wake of the financial crisis of 2008 - 09. today, our banks hold higher levels of capital and liquidity than they did back then. this is paying off now. and it is indeed the case that the banking turmoil that hit the united states and switzerland has not spilled over into the euro area. of course, that's not to say that regulation is perfect. it always makes sense to check whether and where regulatory adjustments need to be made. and that is what is happening. the tightening of monetary policy did not begin with the first interest rate hike β it started earlier, when asset purchases were scaled back. in march 2022, net purchases under the pandemic emergency purchase programme ( pepp ) were discontinued. it is current policy to reinvest maturing bonds until the end of 2024. one year ago, net asset purchases under the long - running asset purchase programme ( app ) came to an end. reinvestments were reduced from march of this year, and as of july, maturing securities are now not being replaced at all by new ones. the reduction of the balance sheet is gaining additional traction as a result. on average, app assets worth around β¬25 billion are maturing each month. however, measured against asset holdings totalling just under β¬5 trillion, the pace of decline remains modest. mind you, the phasing - out of the targeted longer - term refinancing operations ( tltro iii ) is also helping to shrink the balance sheet. just under β¬477 billion matured last week. in addition, lively use is
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the only useful financial innovation in the past few decades was the invention of the atm. after all, there are also studies that find no evidence of such a threshold in the capital markets. 3. core hypotheses regarding the role of capital markets any attempt to assess the macroeconomic importance of capital markets solely on the basis of empirical studies of their growth - promoting impact would surely overstate the meaningfulness of such studies. instead, a more comprehensive approach is necessary to address this issue. but first, let me present four core hypotheses regarding the importance of the capital market from a central bank β s perspective, on which i will then expand in the course of my speech. 1. developed capital markets are instrumental in providing investors with a broad range of investment products, enabling them to select the best risk - return mix in their particular case. key determinants of developed capital markets are liquidity, transparency and integrity. from the point of view of corporations, developed capital markets ensure a broad range of financing sources. this makes capital market funding an important and welcome supplement to bank borrowing for firms. a stronger role for equity capital would be desirable, not least in germany. 2. investor protection is essential. it contributes to making the capital market attractive to broader groups of investors. the best form of investor protection is a broadly based system of general financial education. however, it is also crucial to ensure that products are sufficiently transparent. 3. it is not the responsibility of central banks to provide investment advice or to protect investors against losses. a monetary policy approach that was forever willing to clean up the mess after financial market bubbles have burst would create the wrong incentives. the primary objective of monetary policy is to safeguard price stability ; bis central bankers β speeches financial stability ought to be ensured mainly through macroprudential instruments along in tandem with effective regulation and supervision. 4. capital markets have an important disciplining function, especially with regard to fiscal policy. in the run - up to the crisis in the euro area, the capital markets did not always live up to this role. the institutional framework of monetary union should be structured in such a way that capital markets can perform their disciplining role effectively. 4. capital markets from the investors β and issuers β perspective 4. 1 capital markets from the investors β perspective when talking about the economic significance of capital markets, it is useful to distinguish between the investor β s and the issuer β s perspective. for this reason, i will first
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jens weidmann : the macroeconomic importance of capital markets speech by dr jens weidmann, president of the deutsche bundesbank, at the annual reception of deutsches aktieninstitut e. v., frankfurt am main, 22 may 2014. * 1. * * welcome mr baumann, dr bortenlanger, ladies and gentlemen i would like to thank you very much for giving me the opportunity to speak to you at today β s annual reception of deutsches aktieninstitut. i would like to use this occasion to talk about the importance of capital markets. given that i am speaking before an audience of capital market experts, i shall try to avoid the danger of telling you what you already know and focus instead on the macroeconomic view of capital markets as seen by a central banker. first, however, i would like to congratulate the winners of the university prize, who are being honoured here today. they approached the subject of capital markets from different angles, analysed it from a scientific perspective and obtained valuable insights. 2. doubts about the efficiency of financial markets in macroeconomic theory, economists traditionally assume the ideal state of a β perfect capital market β. such a market is characterised by a high level of efficiency. this is, of course, based on assumptions that are not necessarily realistic. economists, too, are aware of this β or at least most of them are. you may be familiar with the dialogue between the two economists crossing the road. one of them says : β look. there β s a one hundred euro note lying there. β the other one replies : β if a one hundred euro note were lying there, someone would have picked it up by now β, and walks on. economists β faith in the efficiency of the markets is sometimes measured against reality and found wanting. the financial crisis, too, has sorely tested this faith in the markets β efficiency. this applies especially to the financial markets. in other words, the same markets that were previously regarded as being particularly efficient, as information spreads quickly in these markets and can therefore be promptly priced in by market participants. however, it has become evident that market participants do not always act rationally. in addition, markets are not completely transparent and do not function smoothly at all times. eugene fama β s efficient market hypothesis was, of course, criticised long before the financial crisis. way back in the 1980s, robert shiller, who last year was awarded
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##f will consider these issues as part of its planned review of recommendation 16 on wire transfers, to improve consistency and usability of message data, and enable more effective aml / cft checks. it will also continue efforts to promote consistent implementation of the travel rule for virtual assets. the new fsb industry taskforce on legal, regulatory, and supervisory matters, chaired by carolyn rogers from bank of canada, will help move the conversation forward in these areas. we hope to harness expert input from industry and provide guidance, working with national authorities and the international standard - setting bodies. continued collaboration improving the payments infrastructure will only be possible through successful collaboration. as policymakers and operators, we can improve the policies and core infrastructure to provide solid foundations for private innovation. the private sector needs to build on this to help deliver cheaper, faster, more transparent, and more accessible services to their customers. the new industry taskforces will play an important role. but this needs to be complemented by strong dialogue and actions in individual jurisdictions : exploring improvements to the domestic payment infrastructure, using the globally agreed frameworks. firms will likely need to continue to invest in their payments technology to be ready for upgrades to payment systems : such as the move to iso 20022. the industry taskforce on payment system interoperability and extension are developing a handy checklist to support firms on this journey. and importantly, firms should consider how to make the most of these changes. iso 20022 will make a big difference to cross - border payments : but it also offers a wealth of other opportunities, which the individual firms can benefit from. while the roadmap is a g20 - led initiative, the targets are international, and our goal is to improve payments across all countries and payment corridors. making progress therefore depends on sharing best practice widely and achieving change worldwide. to that end, the world bank and imf, along with the g20 central banks, are developing a technical assistance programme available to countries wishing to enhance their national payments infrastructure or policies. we have achieved a lot already but there is still more to do, and much more to gain. we have built the foundations and a framework to support a holistic set of changes. now we need to act and there is a role for everyone. i look forward to helping to smooth the path ahead in my role as a policymaker and a payment system operator. i hope that many of you will join and play your part in this exciting and transformational journey towards the
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global action to enhance cross - border payments β speech by victoria cleland given at global payments summit in cape town published on 29 june 2023 enhancing cross border payments to make them cheaper, faster, more transparent and easier to access would make an enormous difference to people and economies worldwide. victoria cleland sets out some recent achievements on this journey, including changes to the uk's rtgs service, and highlights future priorities. success relies on cooperation and action from the public and the private sector. speech it is a pleasure to be speaking here in cape town to open the global payments summit : an event that brings together representatives from over 30 countries across five continents. what better audience to address about enhancing cross - border payments : a global challenge that requires global solutions. the more countries that participate, the greater the difference we can make. almost three years ago to the day, the committee for payments and market infrastructures ( cpmi ) published the 19 building blocks [ 1 ] to enhance cross - border payments. the building blocks were the foundation for a clear action plan endorsed by the g20 β the roadmap [ 2 ]. this set out a vision and steps to achieve it, bringing together central banks, public authorities, standard - setting bodies and the private sector around the world. and to provide measurable focus, the g20 endorsed clear and ambitious targets for 2027 [ 3 ] to unite everyone around the same vision : to make cross - border payments faster, cheaper, more transparent, and more accessible. these enhancements could reduce barriers to trade : cutting transaction costs on international trade just by one percentage point would save firms $ 13bn in africa alone. and with a focus on remittances as well as wholesale and retail payments, ultimately improve financial inclusion and help to alleviate poverty. that is what i call a worthwhile vision! enhancing cross - border payments has been an objective for many decades. what is different now is that we have a clear vision, targets and a holistic approach on how to address the disparate set of underlying frictions. and the work is taking place at a time of rapid innovation in the payments industry and national payment systems, creating an opportunity to build on existing change programmes. cross - border payments are high on the agenda for public policymakers and financial institutions. a lot has been achieved recently through the collaborative effort of authorities worldwide, including of many of you here today. we have developed frameworks on operating hours and access policies to support public authorities to
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kerstin af jochnick : current monetary policy and the economic situation speech by ms kerstin af jochnick, first deputy governor of the sveriges riksbank, at the centre for business and policy studies, stockholm, 21 august 2015. * * * accompanying figures can be found at the end of the speech. economic developments in sweden look positive and the riksbank β s expansionary monetary policy is continuing to support the upturn in inflation. i am pleased to note this as i hold an august speech for the fourth year in a row based on the monetary policy decision in july and discuss what has happened during the summer. although i expect most people here follow events on stock exchanges and other markets around the world even during the summer, i hope that a summary of the most important events may be useful prior to assessing the prospects for the autumn. one can say that greece has not entirely unexpectedly been in focus during the summer, too. the forecasts in our july monetary policy report were based on the sequence of events not preventing a recovery in the euro area. while some work remains to be done before the new 3 - year loan programme is formally in place, my assessment is nevertheless that developments so far are in line with the assumptions we made in july. developments in global economic activity since july also support our assessment that we would see a gradual strengthening of growth and that the weak global growth during the first quarter of the year was temporary. the swedish statistics received also support our view that economic activity in sweden is gradually improving and that inflation is continuing to rise. unemployment was lower than expected in june, while gdp growth was higher than expected in the second quarter. although inflation was somewhat lower than we expected in june, it was higher than expected in july. the low interest rates entail risks that could cause problems in the swedish economy further ahead. a high level of indebtedness among households and rapidly rising housing prices could make the swedish economy vulnerable if there were to be a slowdown in economic activity for some reason. the government should therefore quickly ensure that sweden has a framework for macroprudential policy and that finansinspektionen ( the swedish financial supervisory authority ) has a clear mandate to conduct this policy. the assessment and the decision in july the global recovery is continuing after a temporary fall at the beginning of the year, but some concerns remain i would like to begin by looking back at our assessments prior to the decision in july. the year began
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svante oberg : public finances and monetary policy speech by mr svante oberg, first deputy governor of the sveriges riksbank, at sveriges akademikers centralorganisation ( saco ), stockholm, 26 april 2010. * * * public finances are of central importance to stable economic development the financial crisis has made it clear just how important it is for a country to have sound public finances and for confidence in fiscal policy to be maintained. the situation in greece and several other countries arouses unpleasant memories of the crisis in sweden in the 1990s. being forced to pay higher and higher interest rates on a rapidly growing central government debt is not an enviable situation to be in, nor is being forced to increase taxes and reduce public expenditure at the same time as unemployment is rising. when such a situation arises it also becomes much more difficult to use monetary policy to inject new life into the economy because the interest rates in the economy begin to be affected more by the credit rating of the central government than by the central bank policy rate. in this speech i intend to discuss the importance of public finances for stable economic development in the slightly longer term and the implications they have for monetary policy. i will not, on the other hand, comment on the formulation of fiscal policy in the short term. i would like to point out that the assessments and values expressed here are my own and that they are not necessarily shared by my colleagues on the executive board of the riksbank. public finances have deteriorated in 2008 and 2009, public expenditure in most industrial nations increased while revenue declined. expenditure in the oecd area as a whole increased as a percentage of gdp from 40 per cent in 2007 to 45 per cent in 2009, while revenue as a percentage of gdp fell from 39 per cent in 2007 to 37 per cent in 2009. 1 ( slide : public finances in the oecd countries ). the situation with regard to general government net lending, that is the relationship between public - sector revenue and expenditure, has therefore deteriorated. the deficit in public finances in the oecd area has increased from 1 per cent of gdp to 8 per cent of gdp. ( slide : general government net lending in the oecd countries ). this has in turn led to a substantial increase in public - sector indebtedness. the gross debt of the public sector in the oecd area has increased from 73 per cent of gdp in 2007 to 90 per cent of
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delisle worrell : the growing relationship between china and barbados welcome remarks by dr delisle worrell, governor of the central bank of barbados, at the press launch of the fish and dragon festival, bridgetown, 29 january 2015. * * * ambassador wang ke of the embassy of the people β s republic of china in barbados other representatives of the embassy of the people β s republic of china in barbados, mr. david bulbulia, deputy permanent secretary, ministry of foreign affairs, mr. kirk ottley, president of the bcfa and other representatives, festival director, ms. tonika sealy, ladies and gentleman, members of the media and press good morning. they say that the world β s centre of gravity has shifted to the east, suddenly and dramatically. even someone like myself, with more than a passing knowledge of chinese history, culture and policy, has been astounded by the transformation. the images i see on tv daily are of an utterly different country to the one i visited in 1980. the very fact that cctv america is available in barbados, and that its global coverage is among the most dispassionate, informative and sympathetic to my sensibilities, of any international broadcaster, is something that was inconceivable back then. most barbadians are only dimly aware of the magnitude of the change that the emergence of china implies, and the myriad ways our lives might be touched by that change. we do know of chinese interest in direct investment in the caribbean ; it is substantial, and it is to be welcomed, because it benefits both sides. barbados and the caribbean benefit from the increase of our capacity to produce goods and services, and the associated employment. china, for its part, is in search of opportunities to diversify foreign investment portfolios. i have only recently been sensitized to the extent of online commerce with china, and the inbuilt features that facilitate this commerce. the chinese embassy, the annu institute, the barbados - china friendship association and other groups and individuals have provided us with glimpses into china β s rich, ancient, and modernizing culture. we see more of it on cctv. the confucius institute is about to get going. we see reports of missions to china, and articles on the experiences of barbadians living there. what all this makes us realise is that a whole new world has emerged, with china as its hub, and we are feeling the swell
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efforts to manage climate - related financial risks, underscoring our commitment to resilience. the results of this work, led by dr. saida teleu and her team, were incorporated in barbados'2023 fsr. with the invaluable assistance of the coastal zone management unit, we've implemented a climate stress test, focusing on projecting damage to the accommodation sector, which is deeply intertwined with our tourism industry. this collaboration has allowed us to assess the potential impacts of climate - related risks on financial stability in a more data - driven and precise manner. in the most recent fsr, the bank has also successfully undertaken a significant revamp of its publication, with improvements that underscore our commitment to both innovation and comprehensive risk management. one of the key upgrades has been the introduction of a dynamic balance sheet approach to stress testing. unlike traditional methods, this approach allows us to incorporate explicit macroeconomic scenarios and extend our stress testing over a longer horizon. this dynamic perspective offers us deeper insights into how our financial system would respond to shocks in a changing economic environment. additionally, we've developed a nonperforming loan satellite model, giving us a more accurate assessment of credit risk in our financial system. we also recognised the growing importance of the real estate sector, and so we've enhanced our analysis of this sector. real estate is not only a critical component of household wealth, but also a significant driver of lending and investment activity, making it essential to the stability of our financial system. as the financial landscape changes, so too must our approach to assessing risks. in this regard, the 2023 fsr also incorporated the risks posed by digital financial services, fintech, and cybersecurity and issued a survey to the industry to gather vital data. this addition was particularly important given the rapid rise of cyber - crime and the increasing use of online financial services, and the recent publicised cyber - related breaches at the barbados revenue authority and one of our credit unions give testament to this fact. as a country, we are keen to embrace innovation, but it is equally important that we understand and manage the risks that come with these technological advancements. 4 / 6 bis - central bankers'speeches these most recent advancements significantly upgraded our report. indeed, the bank's fsr has now become, in our humble opinion, the regional benchmark for integrating climate change into financial stability assessments. however, we are keen to share our insights with our
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do act as intermediaries in the transactions, but it is the behaviour of the ultimate seller that matters for the economic impact. bis central bankers β speeches the upbeat retail sales figures announced at the end of last week may be a sign this is already starting to happen. but while growth should gradually strengthen, the continuing headwinds from the unwinding of excessive debt and the government β s continuing fiscal consolidation mean that the pace of recovery is likely to remain moderate by historical standards. as a consequence, a margin of unused capacity and labour in the economy is likely to persist for some while yet, helping to ensure that domestically generated inflation β presently running around 1Β½ %, depending on exactly how one chooses to measure it β should stay subdued. indeed, in the absence of the extra Β£50 billion of gilt purchases announced two weeks ago, we judged that inflation would be rather more likely than not to undershoot our 2 % target in the medium term. that was why we decided that it was necessary to do more. moreover, the longer capacity lies idle, the more likely it is to be scrapped completely. and the longer people are out of work, the more likely they are to become disconnected from the labour market altogether. so there is an added incentive to getting the recovery back on track quickly. the euro area represents the biggest single downside risk to this picture. greece is the country in the headlines right now, but several countries of the euro - area periphery face, in varying degrees, a challenging mixture of unsustainably high public and / or private indebtedness and weak competitiveness. correcting those problems requires : fiscal consolidation ; bank recapitalisation ; and a rebalancing of demand towards net exports. the first two are under way, but the third is harder to achieve in a monetary union where no exchange rate movement is possible to bring about the necessary improvement in international competitiveness. at best, these countries face an extended period of very low growth while the necessary adjustments take place. and while this morning β s agreement between the greek government and the euro - area authorities is certainly welcome, there still remains a possibility that events could unfold in a disorderly and damaging fashion at some stage in the future. the linkages to the united kingdom from such a disorderly outcome would be threefold. first, and most obviously, almost half our exports go the euro area, so weak growth there has a rather direct spillover on to us. second
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fiscal consolidation and de - leveraging even more challenging. and by providing a gloomier climate for business, it would also inhibit investment and slow the necessary re - balancing of our economy towards manufacturing and internationally tradable services. treating serious medical conditions often has unwanted side effects. but, unpleasant as those side effects sometimes are, treatment is invariably better than the alternative. so it is with the economic medicine of low interest rates and quantitative easing. the immediate consequences may be unpalatable, but the sooner we can get the economy on the mend, for a single male, aged 65. indeed, if the savings were held in bonds of a maturity structure that matched the likely longevity of the individual, the two effects would cancel each other out. bis central bankers β speeches the sooner we can return policy to more normal settings and the better it will be for all of us β savers, businesses and employees alike. thank you! bis central bankers β speeches
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stephen s poloz : release of the monetary policy report opening statement by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 15 april 2020. * * * good morning. senior deputy governor wilkins and i are glad to have the opportunity to answer your questions about today β s policy announcement and monetary policy report ( mpr ). allow me to begin with a few comments. the canadian economy is experiencing a significant and rapid contraction. the shock is a global one, affecting all countries, but commodity - producing countries like canada are being hit twice. in the very near term, policy - makers can do little more than cushion the blow. it is worth spending a moment to emphasize why the central bank β s inflation targets matter so much, even at a time such as this. inflation targets were put in place around the world when the dominant worry was higher inflation. today, the situation is very complex. however, governing council agreed that the balance of forces points to weaker demand and a decline in inflation as the dominant concern. inflation targets provide an anchor for the economy β particularly inflation expectations β and a guide for policy actions equally in today β s situation. keeping inflation close to target means taking measures to ensure that the economy stabilizes and then returns to full capacity. failing to do so now would mean that inflation would persistently fall short of target. if inflation were to fall short of target for an extended period, faith in that anchor would be eroded, and policy - makers would face even greater challenges in returning the economy to full capacity. this challenge can become particularly acute should inflation fall persistently below zero. subzero inflation, or deflation, would interact with existing indebtedness in a particularly undesirable way. specifically, negative inflation would increase the real value of outstanding debts while it would erode the ability of companies and households to service their debt β a very difficult mix for the financial system. fortunately, the risk of sustained deflation in canada is low, for several reasons. first, there has been a vigorous and elastic response from governments to the pandemic. these actions will put a floor under the economy and lay the foundation for the subsequent recovery. this is especially true for wage subsidies, which are designed to maintain the employee - employer relationship, thereby buttressing confidence and facilitating the recovery. second, canada began the pandemic episode with the economy operating near potential
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reached a peak when the final elements of the currency regulations were abolished in 1989, enabling the free movement of capital across our borders. however, this is nothing new, either. prior to 1914 capital could move freely over national borders. there was extensive direct cross - border investment. this was when the swedish railway network was built up and the swedish hydroelectric power system was built with the aid of foreign capital. however, i think that the deregulation of the capital markets was still seen as something new and that it is the political change during the post - was period that has mainly changed the conditions for economic policy. what people perceive as " globalisation " is probably exactly that, combined with the fact that the new information technology enables all transactions to be implemented much more quickly than before. however, the concept of globalisation also includes the growth of multinational companies, with production units in different countries, the fact that an increasing number of countries are drawn into the international trade exchange and that the labour force moves freely between countries, which is the case at least within the eu. when currency regulation was abolished, foreign investors could begin to buy swedish treasury bonds and shares. swedes could also begin to save in foreign banks, pension insurance funds and shares. there had existed major obstacles to such transactions before, although they were not completely impossible to overcome. foreign ownership of swedish shares and sek - denominated bonds rose from almost zero in 1980 to sek 1, 350 billion in 2001. when the barriers for capital movement were removed in this way, sweden became subject to daily examination. the slightest sign of mismanagement of economic policy, such as a growing budget deficit, rising payroll expenses or inflationary tendencies risks leading to foreign investors selling off their holdings of swedish treasury bonds and shares. signs of mismanagement can also lead to swedish households and companies choosing to invest their money abroad. this was the mechanism that made it impossible for us to keep the fixed exchange rate regime in 1992. at the time of the deregulation, sweden had a history of high inflation and other imbalances. doubts regarding the stability of the swedish economy led to capital outflows, rising interest rates and a shrinking foreign currency reserve. despite massive supporting purchases of the swedish krona and a drastic defence involving a 500 per cent daily lending rate for banks borrowing from the riksbank, the defence of the exchange rate failed. this meant that the general public had to live for a period with a 25 per cent interest rate
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1939 concept of β secular stagnation β with interest rates staying permanently at lower levels and economic activity remaining subdued. there are many such examples. for instance, our imperfect understanding of the current slope of the phillips curve and the trends in productivity is one of the reasons why the ecb has been reluctant to complement its forward guidance with numerical triggers. i do not share this pessimism but i think it is of great importance to understand to what extent this development is driven by long - term forces, such as demographic changes or lower potential growth, and to what extent it is driven by medium - term forces, such as changes in risk aversion and the perceptions of macroeconomic risks in the wake of the recent crisis. frictions and rationality institutional details and frictions, both on the side of market participants and regulatory institutions, have an impact which is difficult to detect in normal periods. interbank markets, for instance, used to be seen by academics as a somewhat dull topic before the crisis, so that little was known about their functioning. both in europe and in the united states, they have been at the centre of recent policy debates, generating a welcome crop of new research, to which mars has been contributing. the dominant β rational expectations β modelling paradigm in economic research postulates strong assumptions about human decision - making, implying, for instance, that economic agents are always able to assign sensible probabilities to alternative outcomes. clearly, this characterisation of human decision - making stands in stark contrast to our own recent experience. we need to understand how panics and bubbles can emerge from psychological biases. the nobel prize co - awarded to robert shiller last year will certainly encourage more research in this direction. while much progress has been made on studying notions such as knightian uncertainty, sentiment, confidence or sunspots, more work is probably needed before they can be part of our standard modelling toolbox. a challenge is of course to come up with tested and robust behavioural theories. another important departure from rationality that is of key practical concern is how simple behavioural rules adopted by market participants in normal times can lead to entirely different outcomes or even to market meltdowns in crisis periods. agent - based models are a promising way to look at these problems, but they need to be developed in close cooperation with practitioners and policy - makers to take the proper behavioural rules as inputs. on both issues, what policy - makers need above all is more work integrating these approaches into richer
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be necessary for central banks to stimulate research on topics and approaches relevant to them. the mars network has been very successful at promoting some of the new approaches and tools that we need, in particular by building an aggregate framework incorporating financial instability. we would now find it desirable that this approach takes root in academic circles, and can permeate the development of a new paradigm, influencing research and teaching. in other words, we invite other researchers, both in academia and in policy institutions outside the escb, to follow up on the progress already made to establish closer links between current policy challenges and economic thinking. i thank you for your attention. bis central bankers β speeches
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