text1
stringlengths 1
3.21k
| text2
stringlengths 1
3.21k
| label
float32 0
1
|
|---|---|---|
or are available for work. labour force participation has increased over time in new zealand as female participation in the workforce has increased, and, more recently, as older age cohorts remain in the labour force for longer. increasing participation increases the supply of labour and increases potential output. assumed trends amongst labour market cohorts, combined with demographic projections, suggest that a structural upward trend in the participation rate will continue in new zealand through the remainder of this decade. labour force participation is also influenced by the state of the economy. upswings in activity encourage more people to actively seek work, increasing the participation rate. conversely, during recessions participation tends to weaken, as people leave the labour force, discouraged by lack of employment opportunities. bis central bankers β speeches figure 5 : labour force participation rate and estimated trend ( % of working age population ) source : statistics new zealand, rbnz estimates. similarly, growth in capital inputs can be influenced by structural factors in the economy such as population growth or changing technology, but can also move somewhat cyclically with business sentiment, access to finance, and investment intentions. in an ideal world, we would take full account of these short to medium term influences on potential, but it is difficult to measure and interpret these movements in real time. the reserve bank β s use of trends in estimating potential output means these estimates capture the large permanent or persistent changes in input components, such as lasting shifts in participation, but does not capture higher - frequency movements. β fundamental β factors ultimately affect β long term β prospects there are a range of more fundamental determinants of growth that matter hugely for economic outcomes over the very long term, but their effect over shorter time horizons is difficult to detect. typically these factors are more important for explaining differences in growth across countries rather than over time. for these reasons they are less relevant considerations for monetary policy and central banks tend to talk about them much less. to acknowledge their role in the overall growth story, let me briefly offer a couple of examples of these determinants : geography and institutions. economic geography can have a significant effect on long term prospects. 2 proximity and connectedness to regional or global markets exposes domestic businesses to greater competition, aids in the transfer of technology and knowledge, and generates greater efficiencies of scale and scope. new zealand β s small population and distance from major markets can make it difficult to capture these benefits. our geographical location may be fixed, but the challenge posed by our isolation can change
|
subsequent rise in international food and energy prices would still have led to headline consumer price index inflation exceeding 6 % now. in an absolute sense, actual and expected inflation is too high and needs to be reduced. subsequent monetary policy committee decisions have seen the ocr rise from 0. 25 % in august 2021 to the current rate of 4. 25 %. our actions display the monetary policy committee's determination and confidence in returning annual inflation to within our 1 % to 3 % target range. our focus on low and stable inflation is the best contribution we can make to the overall wellbeing of new zealanders. in a relative sense, new zealand is in a strong macroeconomic position relative to most oecd nations. we are around the lowest quartile for both inflation and unemployment relative to other oecd nations. we have a stable and well - functioning financial system that is resilient to a wide range of interest rate and employment shocks. and, as outlined in our most recent monetary policy statement, we have resilient household, public, and business sector balance sheets in aggregate. new zealand has a near record low unemployment rate of 3. 3 % and exceptionally high labour force participation rates. households have accumulated financial savings, with average household incomes rising in line with inflation. nominal wage rates have risen, with incomes further bolstered as people moved jobs to earn more, worked longer hours, or gained promotions. average hourly earnings growth for the private sector was 8. 6 % 1 in the year to september 2022, compared with consumer price index inflation of 7. 2 % in the same period. as interest rates rise, we expect spending to slow and unemployment levels to increase as more people join the workforce over the coming year. even with the expected slowdown in the period ahead, it is anticipated that the level of employment will remain high. large scale asset programme 2 / 7 bis - central bankers'speeches i'd like to briefly comment on the large scale asset purchase and funding for lending programmes which featured during the 2021 / 22 financial year. the review and assessment of monetary policy over the past five years showed that the large scale asset programme was highly effective in response to the liquidity crisis that emerged in early 2020 and in lowering longer - term interest rates. the funding for lending programme also gave banks confidence that a stable and secure funding source was available during a period of heightened financial market uncertainty. banks were able to continue their business of financial intermediation, avoiding a credit
| 0.5 |
way for south africa β s participation in this process. 5. the southern african development community a further consequence of the socio / political / economic reforms in south africa over the past few years was a natural greater involvement for the country in the economic development process of the african continent. apart from a more active participation in continental initiatives working through the organisation of african unity, the united nations economic commission for africa, and the african development bank, south africa is taking an active part in the activities of the southern african development community ( sadc ). fourteen countries of the southern african region now belong to this formal agreement for economic co - operation, with the long - term goal of eventual economic integration. south africa plays a leading role in the development of financial and investment co - operation amongst the participants in sadc. within the structured institutional framework of sadc, a committee of governors of all the central banks of the region was established. this committee introduced a number of co - operation projects intended to develop the financial systems and markets of the region. the approach of the governors committee at this stage is first to develop the financial infrastructures in each of the countries, before venturing into the more challenging task of macroeconomic co - ordination or integration. one of the important projects in the work of the sadc governors committee is to remove remaining exchange controls within the region. where practicable, countries are encouraged to do this even faster than what has been programmed for the overall phasing out of the controls. it is envisaged that there will eventually be a relatively free movement of goods, services and capital in this vast area with a total population of more than 180 million people. 6. the financial globalisation process the phasing out of exchange control and the restructuring of the financial system are important preconditions for south africa β s greater participation in the financial globalisation process. as can be deducted from some of the statistics quoted in this address, south africa is now firmly on the road of greater participation in the expanding international financial markets. recent events in the wake of the east asian financial crisis proved once again, however, that the globalisation process is not without risk. the easy movement of large amounts of funds into and out of countries with relatively small economies can at times be very disrupting. during the four months january to april 1998, non - residents increased their holdings of south african bonds, acquired through the bond exchange, by more than r16 billion. over the next ten weeks,
|
that is during may, june and the first half of july 1998, they reduced their holdings again by r12 billion. both the inflows and the outflows of capital on this occasion disrupted the south african financial markets and complicated the implementation of monetary policy centred on the medium - term objective of maintaining financial stability in the interest of optimum economic growth. in the situation and against the background of a rather depressed domestic economy, the yield on long - term government bonds increased from 12. 7 per cent on 30 april 1998, to 16. 4 per cent on 6 july, before it declined again to 15. 5 per cent last week. the reserve bank β s fluctuating repo rate similarly showed wide fluctuations and increased from 14. 8 per cent in early may to a peak of 24. 0 per cent on 22 june, before settling down at a level of about 21 per cent. all banking institutions in the country were forced to raise their deposit and lending rates by about 6 percentage points since the end of april. the prime overdraft rate of the major commercial banks now stands at 24 per cent. with the latest measure of inflation at only 5 per cent per annum, real interest rates are at an extremely high level. the exchange rate of the rand also came under a lot of pressure. after being relatively stable for a period of about 18 months from october 1996 up to the end of april 1998, the rand depreciated from r5. 05 against the us dollar in the middle of may to r6. 62 = $ 1 on 6 july 1998. since then, the exchange rate appreciated again to fluctuate around the r6. 00 = $ 1 level for the last few days. at this level, the rand, measured against a basket of currencies, is still about 18 per cent down from where it was at the beginning of this year. some critics do believe that the removal of the exchange controls is partly to be blamed for this greater volatility in financial conditions. they advise south africa, therefore, to reintroduce some of the controls, for example, the two - tier exchange rate system. this view is not shared by the monetary authorities in south africa. despite the gyrations of recent weeks, we still believe that the advantages of participation in the financial globalisation process will, over time, bring more advantages to the south african economy than disadvantages. 7. concluding remarks the policies of the phasing out of exchange
| 1 |
ethics. in advancing this endeavour, the fspb will promote, advocate and facilitate the identification, development and the adoption of professional and ethical standards across all sectors of the financial services industry. the primary purpose of such standards will be to clearly define the expected level of performance and ethical conduct that financial services professionals are required to achieve in the service of the public. it is particularly important that the standards are unambiguous about the values for the industry and its workforce. it would facilitate financial services practitioners to understand and embrace their professional obligations, and be held accountable for their own continuing professional development. bank negara malaysia and the securities commission malaysia believe that with its stature and global complexion, the fspb is well positioned to lead efforts aimed at raising the bar of bis central bankers β speeches professional and ethical standards including continuous professional development for across the financial services industry, thereby strengthening confidence in the industry and affirming the industry β s commitment to better serve public interest. its membership of eminent experts and financial practitioners from the united kingdom, europe, australia and asia provides a valuable global perspective that will enhance the relevance of the standards developed by the fspb and their universal application. the establishment of fspb also reflects the advancement and progress of the financial services industry in malaysia and the vision of its members to embrace and promote globally acceptable and applicable standards of professionalism, human capital development and ethical behaviour that will provide the much needed clarity to the public and the industry on what is expected of financial services practitioners. indeed, in moving forward, the emphasis on the development of human capital which includes elevating professionalism and ethical behaviour of financial services professionals is paramount. today, professionalism, ethics and the quality of human capital have become key drivers and enablers of change in the financial services industry. i would like to take this opportunity to acknowledge the role of the asian institute of finance ( aif ). the idea of fspb culminated from engagements initiated by aif with the industry which was followed by a process of developing the conceptual framework to reflect the shared aspirations of the industry and the board of aif that has supported the establishment of fspb. i would also like to take this opportunity to highlight the participative role that the financial services industry would need to have in enabling fspb to meet its objectives. the value of the establishment of fspb lies in the role taken to develop professional and ethical standards that are relevant and practical, which could, subsequently, be
|
fairly among society. 3 / 7 bis central bankers'speeches the german government β s climate package is a good start. but it β s clear that further steps will also be needed. the cornerstone of this climate package is a more comprehensive co2 pricing system. this approach has been endorsed by numerous experts. it will probably need to be readjusted as time goes by ; a fact we are fully aware of. what this will boil down to is a balancing act between comfortably meeting climate goals and clear prospects for economic agents. what do we need from political stakeholders in terms of the financial markets? the answer is : solid guidelines for sustainable finance reforms, ideally at the international level. financial regulation isn β t a climate policy instrument ; instead, it serves to safeguard the stability of the financial system. what β s crucial here is the focus on financial risk rather than on promoting economic growth. and that mustn β t change. bafin recently published a notice providing supervisory guidance to institutions on dealing with the increasingly important issue of sustainability risks. in other areas, the eu is taking action with its sustainable finance action plan β in the form of its new taxonomy that defines which economic activities are considered β green β, for instance. the european council hopes that the taxonomy will be fully implemented by the end of 2022. disclosure standards for increased transparency are just as important. who is exposed to what climate risks? the recommendations issued by the g20 task force on climate - related financial disclosures are aimed at establishing consistency in climate - related reporting. a great deal is riding on these recommendations, since financial markets can only distribute capital efficiently with regard to climate risk and perform its guiding role properly if transparent, price - relevant information is available. nor must we underestimate the growing importance of sustainable finance within the eu as a location factor. the federal government has recognised this and wishes germany to play a leading role as a hub for sustainable finance. the sustainable finance advisory council is to act as coordinator here, providing the government with strategic advice and specific recommendations for action. the council has already outlined the first topics it believes should now be tackled in more detail. the first progress report should be ready as early as the start of 2020, in view of germany β s eu presidency in the second half of next year, amongst other factors. what β s crucial here is that the government will receive specific, workable recommendations within the next year. however, policymakers themselves can lead by example when it comes to sustainable finance.
| 0 |
policies in financial stability must be kept within realistic boundaries. while it is true that these instruments may have many possible advantages, we should not lose sight of the limitations that we still face. with more experience, additional empirical evidence and a better analytical foundation, we will be in a better position to evaluate their real potential. bis central bankers β speeches
|
javier guzman calafell : challenges for macroprudential policy and the mexican case remarks by mr javier guzman calafell, deputy governor of the bank of mexico, at the panel on β macroprudential policies for securing financial stability in a volatile external liquidity environment β, fifth summit meeting of central banks on inflation targeting, santiago de chile, 15 β 16 november 2013. * * * the views expressed in this document are strictly personal and do not necessarily coincide with those of banco de mexico. i wish to start by thanking governor vergara for his kind invitation to participate in this interesting conference. i will focus my remarks on some of the challenges faced by macroprudential policies at this stage, and on the mexican experience with these instruments, and more generally with policies aimed at preserving financial stability. 1. challenges for macroprudential policy financial stability has been at the center of policy makers β attention during the last five years. this is explained not only by the nature of the global financial crisis itself, but also by the side effects of the measures that have been put in place to overcome it. indeed, the unconventional monetary policies that were set in motion to face the crisis have allowed us to prevent a collapse of the world financial system and have rendered other beneficial effects. nevertheless, they have also given rise to a number of financial stability risks for the world economy, deriving to a large extent from the potential consequences of a prolonged period of extremely low interest rates in the advanced countries, and subsequently from the return to more normal monetary policies and interest rates in these nations. initially, one of the main concerns in emerging markets were related to the strong capital inflows to their economies fostered by these policies. more recently, with the expectation that the federal reserve of the united states may begin to reduce its monetary stimulus, anxiety has shifted to the implications of an increase in long - term interest rates in that country for emerging economies β exchange rates, domestic financial markets, and access to external financing. in any event, it is clear that the need to look for adequate instruments to preserve financial stability has become imperative after the crisis. one of the important lessons of the crisis is that price stability is a necessary but not a sufficient condition for maintaining financial stability. given the limitations that monetary policy faces in this respect, there is overall agreement that it is indispensable to complement available instruments with others which are more direct, and with a systemic perspective on the financial system. thus, macro
| 1 |
euro area economic outlook. with its inherent flexibility, pepp is best suited to address the dual objective of countering fragmentation in the euro area and closing the medium - term inflation gap that has emerged from the covid - 19 pandemic, in line with the temporary nature of the programme and its close link to the β coronavirus covid - 19 crisis phase β. 5 our regular asset purchase programme ( app ) and our interest rate policy, together with our forward guidance on rates and reinvestment, remain geared towards addressing the weakness in broad underlying inflation that is unrelated to the outbreak of the coronavirus. in light of these considerations, the governing council decided to increase the pepp purchase envelope by an additional β¬ 600 billion to a total of β¬ 1, 350 billion and to extend the horizon of net purchases under the pepp to at least the end of june 2021, or in any case until the governing council judges that the coronavirus crisis phase is over. we also decided to reinvest the maturing principal payments from the securities purchased 4 / 7 bis central bankers'speeches under the pepp until at least the end of 2022. calibrating pepp this brings me to the second question β the calibration of the pepp. by removing duration risk from the market, pepp reduces the bond free - float ratio β the share of bonds that need to be held by private price - sensitive investors relative to total bond supply ( see left chart on slide 8 ). in the absence of our new measures, this ratio would have gradually increased on the back of the large coronavirus - induced increase in debt issuance, thereby putting upward pressure on bond yields. the pepp envelope has been calibrated with a view to restoring and preserving financial conditions that are consistent with bringing inflation back to the pre - covid - 19 inflation path. the evidence speaks for itself. upon the announcement of the pepp, and again in response to our actions last week, the euro area gdp - weighted yield curve has shifted downward measurably, and today it is not far from the level we observed before the outbreak of the crisis ( see right chart on slide 8 ). in view of the historically weak inflation outlook and the already accommodative stance, the question arises whether our actions are sufficient and proportionate. in answering this question, the governing council assesses whether the benefits of achieving a faster return of inflation to levels closer to 2 % outweigh the
|
are no risks. there is currently a lot of uncertainty about the direction of the united states β economic policy in the coming months. we now have a good sense of how things will develop in china, but not in the united states. and it β s a fairly similar story with the united kingdom. it shows how a country can create severe difficulties for itself. europe offers a robust institutional framework, including for trade. the internal market works and is very important. and now the united kingdom is leaving it and heading for great uncertainty. what can the negotiations achieve? in my opinion, the british have made a huge mistake. populist forces have stirred up people β s fears and fear is not a good counsellor. the damage is done, the british economy is already slowing down. now it is just about minimising the negative impact. i hope there will still be a reasonably sensible solution. does us policy also concern you a lot? not many major decisions have been made there yet, unlike in the united kingdom. and i hope that, in the end, reason will prevail. in general we should not get mixed up in power politics where everyone only seeks their own advantage. ultimately, the danger is that large countries dictate deals to the others. that would be catastrophic. we need strong international institutions. and we again need a unified europe. because the weaker europe is, the more dangerous it will be for us. 3 / 3 bis central bankers'speeches
| 0.5 |
market changes and continued innovation in payment technologies both from new fintechs and established players. ultimately, we want to future - proof rtgs to interface with firms and technology that may not exist today. the renewed service will not be built on a distributed ledger technology ( dlt ) but firms who use dlt will be able to connect to the service. we have completed a proof of concept to understand all speeches are available online at www. bankofengland. co. uk / news / speeches whether our renewed service could be capable of supporting settlement in systems operating on innovative payment technologies. the punchline was that it could. we continue to engage with fintech firms to maintain our understanding of technology developments. while we currently plan to start operating the new service with the existing hours for chaps, the new service will have near 24x7 capability, and so when there is clear demand we expect, in consultation with industry, to extend operating hours. this flexibility means we can respond quickly to changing demands and an increasingly globalised economy. we will also provide application programming interface ( api ) access to users to enable read and write of payments data. the bank has committed to providing an exposed api to allow external participants to develop sophisticated and automated real - time tools for accessing rtgs transactional and liquidity data. we plan to announce in a few months our initial thoughts on the approach and implementation. and with a visionary new system, we want more participants to be able to benefit from it. in 2018 we expanded direct access to non - bank payment service providers, making it possible for a broader set of firms to compete with banks. five non - bank payment service providers currently hold accounts in rtgs and many more firms are exploring the possibility of joining. in addition, the renewed rtgs service will further reduce barriers to entry for new players β for example on - boarding will be quicker and testing will be streamlined making joining speedy and efficient. for chaps, we expect to be able to meet demand from dozens of new participants a year, rather than a handful as currently. there are two clear benefits from expanding access. first, increasing the number and diversity of firms that can directly access central bank money helps to reduce financial stability risk from events such as market wide shocks or a single firm failure. second, it promotes competition and innovation in payments. firms that have direct access to payment systems can benefit from faster transaction times and reduced individual transaction costs. by extending these benefits to a wider range of firms
|
payments : a platform for innovation speech given by victoria cleland, executive director ; banking, payments & innovation sibos, london tuesday 24 september 2019 with thanks to sara ward and emma playford. all speeches are available online at www. bankofengland. co. uk / news / speeches it is a great pleasure to be speaking today at the β uk payments infrastructure β renewing for growth β event at sibos. this year β s event is exciting for two reasons. first, it β s national inclusion week here in the u. k. 1 and, it β s a great coincidence that sibos has fallen during this week : at the heart of its agenda are discussions around how change and diversification in payments could lead to a more inclusive financial system. second, this is the first sibos conference to be held in london β and it is certainly an exciting time for so many global payments experts and innovators to be here. london has a long history at the heart of the global financial system. it continues to build on this expertise and is one of the leading fintech hubs in the world. it is home to an incredible pool of the world β s best and brightest talent, with 44, 000 people already working in fintech, more than in silicon valley or new york. 2 investment into the uk β s fintech sector continues to grow and reached a record level of $ 2. 9bn in the first half of 2019, which was nearly 85 % of the 2018 total. 3 and we can see that the uk fintech sector is maturing, evidenced by the size of increased investments. payments are vital to any real economy and in total nearly 40 billion payments were made in the uk in 2018. 4 they are also at the heart of the financial system. this makes london the perfect location for a payments conference, which is focused on β thriving in a hyper - connected world β. payments are innovating, fast. from the infrastructure and the messages that support each transaction, to new players entering the market and consumers seeking new ways to pay for goods and services. future of finance, future of payments while the core mission for the bank of england is maintaining monetary and financial stability, we also seek to enable innovation and empower competition in the financial system. to support our forward looking and dynamic approach we recently commissioned and responded to the future of finance report. 5 it considered how financial services might evolve over the next decade, and what this could mean for each
| 1 |
an african vision for sustainable finance dr. patrick njoroge ( 822 words ) on september 22, 2019, on the eve of the united nations ( un ) climate action summit, the un launched the principles for responsible banking, with 130 banks collectively holding usd 47 trillion in assets or one third of the global banking sector signed up. in these principles, the banks commit to strategically align their business with the goals of the paris agreement on climate change and the sustainable development goals ( sdgs ) and massively scale up their contribution to the achievement of both. it is gratifying to note the strong presence of african banks, including kcb bank, in the list of founding signatories to implement the principles. sustainable finance has gained traction particularly after the global financial crisis in 20072008. the crisis was in part fuelled by the short termism of the global financial sector. the short - term drive for profits trumped more long term societal good. sustainable finance takes a long term view and integrates environmental, social and governance criteria in business and investment decisions for the benefit of customers and society at large. green finance is a critical component of sustainable finance and refers to raising capital and financial investments into companies, services, products and projects that accelerate the development of an environment friendly and climate - resilient economy. sdg 8 captures the essence of sustainability as it seeks β to promote sustained, inclusive and sustainable growth, full and productive employment and decent work for all. β in particular, sdg 8 emphasizes the strengthening of the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all. globally, about usd 5 - 7 trillion per year is required to implement the sdgs with developing countries facing an annual investment gap of usd 2. 5 trillion in areas such as infrastructure, water and sanitation and agriculture. the bridging of this funding gap will require global partnerships, deepening of financial and capital markets and leveraging on innovation. africa has not been left behind in the sustainable finance agenda, but much more remains to be done. africa contributes least to global pollution but is impacted the most. for instance, it is estimated that africa is responsible for only 4 percent of global greenhouse gas emissions, yet 65 percent of the population of the continent is considered to be directly impacted by climate change. african countries akin to other developing countries globally also face a significant funding gap in meeting the sdgs. the need for sustainable finance is therefore critical and immediate for african countries
|
banking services reach especially to rural areas to help drive increased domestic savings. 5. in this regard, it is imperative for stakeholders to explore mechanisms to deliver financial services and push forward the financial inclusion frontiers in tandem with vision 2030. as a first step in pushing the initiative forward, the banking act was amended through the finance act 2009 permitting banks to use third parties ( agent banking ) to provide certain banking services on their behalf. i take this opportunity to urge banks to take advantage of the new provision. the agent banking model was designed to assist banks to lower their cost of offering banking services while at the same time improving their earnings as more kenyans are offered an opportunity to access financial services. 6. the kenyan banking sector continues to perform well despite the global financial turbulences and challenges on the domestic front. the sector β s total assets increased by 21 % from ksh. 1. 20 trillion in march 2009 to ksh. 1. 45 trillion in march 2010 whereas deposits increased by 23 % to ksh. 1. 14 trillion over the same period. profit before tax for the sector increased by 33 % from ksh. 12. 8 billion in the first quarter of 2009 to ksh. 17. 0 billion in the first quarter of 2010. this is remarkable, especially against the backdrop of domestic shocks and global financial crisis. 7. despite the impressive performance by banks, customers still have to contend with high borrowing costs. although many banks have responded to central bank β s plea of lowering interest rates, it is our expectation that all the banks should follow to support the economic growth via the support of expanded private sector credit at an affordable cost. on our part, we should now ask the real sector to access and negotiate credit in line with their potential investment. 8. finally, let me reiterate that central bank and indeed the government of kenya will continue to pursue policies that create a conducive environment for growth of the financial sector and encourage the provision of banking services to majority of the un - banked kenyan population at affordable cost. for us to be successful in this, we need to support strong institutional growth and remove underlying constraints that inhibit growth and financial reach. 9. with these few remarks ladies and gentlemen, it is now my honour and pleasure to declare the new brand of consolidated bank of kenya officially launched. thank you and god bless you all.
| 0.5 |
benefits. as far as the supervisory framework is concerned, in order to realise the economies of scale and scope offered by financial integration, the framework should facilitate the development of cross - border consolidation of financial institutions and the cross - border exchange of services and products, while maintaining the effectiveness of supervisory standards and action in a more integrated financial system. it is our view that the current institutional set - up, and in particular the lamfalussy framework, provides the appropriate structure for achieving these broad policy objectives, if it is used to the maximum extent possible. to this end, the work of the level 3 committees, i. e. the committee of european banking supervisors ( cebs ), the committee of european insurance and occupational pensions supervisors ( ceiops ) and the committee of european securities regulators ( cesr ), is expected to strongly promote supervisory convergence and cooperation. furthermore, in a more and more integrated financial system, increased supervisory cooperation across financial sectors is required. in this respect, the level 3 committees recently signed a joint protocol that aims to foster cooperation and coordination on tasks of common interest. 12 overall, the review of the lamfalussy approach that is due by the end of 2007 will provide an opportunity to form a comprehensive judgement about the progress made. * * * in conclusion, ladies and gentlemen, let me tell you how i appreciate today β s symposium on finance, banking and insurance. as i have pointed out, financial integration is at the heart of the european construction and the ecb and the eurosystem are strongly attached to foster this historical process of financial integration through all the means that are in our domain of responsibility. equally we trust that research in this field is of extreme importance. we must understand better the very complex transformations that are at stake. and that is the reason why our permanent dialogue with the academic world is for me of fundamental importance. 11 see at http : / / www. ecb. int / pub / pdf / other / ecgreenpaperfinancialservicespolicy2005en. pdf, dated 1 august 2005. 12 see β banking, insurance and securities supervisors enhance eu - wide cooperation β, press release dated 24 november 2005, at www. c - ebs. org, www. ceiops. org, www. cesr - eu. org.
|
jean - claude trichet : european financial integration speech by mr jean - claude trichet, president of the european central bank, at the 10th symposium on finance, banking, and insurance, university of karlsruhe, karlsruhe, 16 december 2005. * 1. * * introduction ladies and gentlemen, i am very pleased to speak to you today on the occasion of the 10th symposium on finance, banking, and insurance. i would like to congratulate the organisers for arranging this internationally esteemed conference at the university of karlsruhe. karlsruhe, the former residence of the dukes of baden, is not only beautifully located between the rhine and the black forest, it is also situated right in the middle of europe. and europe is at the heart of the topic that i will discuss in my speech today. this symposium traditionally aims to strengthen the links between theory and practice, addressing the latest developments in a wide range of finance issues. this is the second factor underlying my choice of topic. today, i will talk about european financial integration. this subject is of interest to market participants, policy - makers and academics alike, and is of the utmost interest to the european central bank ( ecb ). in fact, the governing council of the ecb has formulated the mission of the eurosystem ( comprising the ecb and the euro area national central banks ) as follows : β we in the eurosystem have as our primary objective the maintenance of price stability for the common good. acting also as a leading financial authority, we aim to safeguard financial stability and promote european financial integration. β 1 i will structure my remarks as follows. first, i will explain the link between financial integration and monetary policy and financial stability. i will then present the current state of financial integration in the euro area based on the indicators of financial integration recently published by the ecb. finally, i will mention some specific activities by which the eurosystem contributes to fostering financial integration, and i will highlight some topical eu policy issues in the field of european financial integration. 2. the link between financial integration and monetary policy and financial stability in accordance with the tasks referred to in the eurosystem β s mission statement, i will first discuss the link between financial integration and monetary policy, before addressing the relationship between financial integration and financial stability. in line with good academic practice, i will start with a definition. the ecb defines financial integration as follows : we consider the market for a given set of financial instruments or services to be fully integrated when
| 1 |
and labor force participation had increased. - 5full - time jobs. 9 the gains in employment may have come sooner and been greater if the new monetary policy framework had been in place throughout the previous recovery. the new policy approach, by avoiding the need to tighten preemptively, could support labor market conditions that help to reduce persistent disparities. this could, in turn, boost activity and increase potential growth by drawing individuals from groups facing structural challenges into more productive employment. 10 research and experience suggest the groups that face the greatest structural challenges in the labor market are likely to be the first to experience layoffs during downturns and the last to experience employment gains during recoveries. 11 at the october 2019 fed listens event, amanda cage, who now heads the national fund for workforce solutions, observed, β what we see is huge disparities in what unemployment looks like for neighborhoods. β 12 she highlighted the challenges facing those communities where unemployment remains at or above 15 percent even when unemployment falls below 4 percent at the national level. these numbers are based on the observed changes in various aggregate labor market statistics between the fourth quarter of 2015 and the fourth quarter of 2019 β the last quarter unaffected by the covid - 19 pandemic. for a discussion of how structural disparities can lead to household underinvestment in areas such as education and business endeavors, see lael brainard ( 2017 ), β labor market disparities and economic performance, β remarks at β banking and the economy : a forum for minority bankers, β a conference hosted by the federal reserve bank of kansas city, kansas city, mo., september 27, https : / / www. federalreserve. gov / newsevents / speech / brainard20170927a. htm. research finds that both unemployment rates and patterns of labor force entry and exit for black and hispanic workers are more cyclically sensitive than for white workers. see tomaz cajner, tyler radler, david ratner, and ivan vidangos ( 2017 ), β racial gaps in labor market outcomes in the last four decades and over the business cycle, β finance and economics discussion series 2017 - 071 ( washington : board of governors of the federal reserve system, june ), https : / / doi. org / 10. 17016 / feds. 2017. 071. see david wessel, amanda cage, victor dickson, russell kavalhuna, and robert
|
β speech delivered at β how the fed will respond to the covid - 19 recession in an era of low rates and low inflation, β an event hosted by the hutchins center on fiscal and monetary policy at the brookings institution, washington, september 1, https : / / www. federalreserve. gov / newsevents / speech / brainard20200901a. htm. - 3employment in either direction, monetary policy will now seek to eliminate shortfalls from maximum employment. in other words, the new framework calls for policy to address employment when it falls short of its maximum level, whereas the previous framework called for policy to react when employment was judged to be too high as well as too low. the new monetary policy framework also eliminates the previous reference to a numerical estimate of the longer - run normal unemployment rate and instead defines the maximum level of employment as a broad - based and inclusive goal for which a wide range of indicators are relevant. additional changes address the persistence of below - target inflation and the decline in the equilibrium interest rate. research and experience indicate that persistent low equilibrium interest rates increase the frequency and duration of periods when the policy rate is pinned close to zero, unemployment is elevated, and inflation is below target. 6 as a result, actual inflation and inflation expectations will tend to be biased below the 2 percent target, further eroding policy space and exacerbating the effects of the lower bound, risking a downward spiral for actual and expected inflation. from the time of the federal open market committee β s ( fomc ) announcement of a 2 percent inflation objective in january 2012 through the most recent data in november, monthly readings of 12 - month personal consumption expenditure ( pce ) inflation have averaged 1. 4 percent and have been below 2 percent in 95 out of the 107 months. see kathryn holston, thomas laubach, and john c. williams ( 2016 ), β measuring the natural rate of interest : international trends and determinants, β working paper series 2016 - 11 ( san francisco : federal reserve bank of san francisco, december ), http : / / www. frbsf. org / economicresearch / publications / working - papers / wp2016 - 11. pdf ; and lael brainard ( 2015 ), β normalizing monetary policy when the neutral interest rate is low, β speech delivered at the stanford institute for economic policy research, stanford, calif., december
| 1 |
β only debtor country that continued to pay its debt until the end β and this is why finland got its reputation as an uniquely reliable debtor. but why did finland continue to serve its debt? it was not a mistake, but a conscious means to improve finland β s reputation. in the 1920s, finland had, indeed, the reputation of a bad debt payer. that was the result of a law issued in 1921 providing for the loan taken from france at the beginning of the 1920s to be paid back in finnish markka. since the markka was suffering from a strong inflation at the time, france ended up losing a significant amount of money β at least in terms of gold. this pleased neither france nor the international financial markets. officers in our foreign ministry were aware of the problems regarding reputation, and tried to find a way to mend it. their hopes were fully satisfied when the us press paid a great deal of attention to finland β s being one of only a few nations ( and finally the only one ) to continue its repayments. between 1933 and 1936, almost 3, 000 stories were published in american newspapers on finland and the debt. finland was portrayed as a small northern country that gives the shirt off its back, while its richer neighbors leave their debts unpaid. the governor of the bank of finland, mr risto ryti, visited the us in december 1934 and gave a widely quoted interview to the associated press, in which he said that finland could do nothing less : β it is only natural that we should. we signed the contract. we promised to pay. it is the only honest thing to do. β indeed paying back the debt was maybe the best promotion campaign ever for finland β and furthermore it was not expensive. the size of the debt as a percentage of finland β s gdp was small, and its share of the us total receivables from europe was actually negligible. the huge attention paid to the matter in the american media was perhaps a bit out of proportion. but there was a principle at stake. the reason for the us media β s strong reaction was the great depression and the rage felt by american taxpayers against countries not paying their debts. bis central bankers β speeches finland continued to meet regular instalments until the 1940s, when a few years β moratorium was called because of world war ii. at that time, finnish and us authorities also discussed whether it would be possible to invest the money repaid by finland into something that would benefit
|
his recommendations. examples of critiques of the washington consensus include burki and perry ( 1998 ), rodrik ( 2006 ), and birdsall and others ( 2010 ). bis central bankers β speeches a nice summary of the prevailing views of 20 years ago, a time when the most dramatic growth in emerging markets still lay several years in the future. by comparing current views with those described by williamson in 1990, and accepted by many, we may learn something about which ideas have held up and which have been modified or refuted by recent events. i will take in turn the three groups of policies that make up the washington consensus. the first group of recommendations, as i noted, comprised policies aimed at increasing macroeconomic stability. in this case there is little controversy. abundant evidence has linked fiscal discipline, low inflation, and a stable macroeconomic policy environment to stronger, longer - term growth in both emerging and advanced economies. 6 in particular, many emerging market economies in the 1990s emulated the success of the advanced economies in the 1980s in controlling inflation. over the years, the emerging market economies have also improved their fiscal management to the point that their fiscal positions are now often more favorable than those of some advanced economies. improvements in macroeconomic management have been particularly striking in latin america, where large budget deficits and high inflation rates had produced costly swings in economic activity in previous decades. brazil, for example, suffered hyperinflation from 1986 to 1994, with several years of inflation well in excess of 500 percent, but has maintained an average annual inflation rate of about 5 percent since 2006, while ( not coincidentally ) reducing the ratio of its budget deficit to its gross domestic product. disciplined macroeconomic policies have also supported growth in emerging markets by fostering domestic savings, stimulating capital investment ( including foreign direct investment ), and reducing the risk of financial instability. the second group of recommendations listed by williamson emphasized the need for greater reliance on markets : the freeing up of the economy through privatization, deregulation, and liberalization. the basic idea here has held up pretty well ; most observers today would agree that carefully managed liberalization β the substitution of markets for bureaucratic control of the economy β is necessary for sustained growth. for example, trade liberalization measures, such as the reduction of tariffs and the removal of other controls on exports and imports, have been a key element of the growth strategies of a number of fast - growing emerging market economies, including china. 7 openness to inflows
| 0 |
near normal in present circumstances really does demand the wisdom of solomon - or at least the wisdom of greenspan. notwithstanding some more encouraging recent signs, there is still a possibility that continuing imbalance between domestic and external demand will need additional sedation or that it will eventually precipitate a sharp fall in the dollar and us asset prices. but the dollar has come off its recent peak and some of the exuberance may now have gone from equity prices - including some of the froth from the β new economy β sector, so the risks of sharp correction may be less than they were. elsewhere, in japan, after a long convalescence, there may now at last be some better prospect of a gradual but self - sustaining recovery in private sector demand. and there has been more substantial evidence in recent months of strengthening domestic demand and output growth across the eurozone. that fully justified the european central bank β s gradual shift away from its earlier accommodating monetary policy stance ; it may also have contributed to the beginnings of a recovery of the euro exchange rate towards a more comprehensible level. we are certainly not yet out of the woods - there is a long way to go before anyone can feel confident that we are in fact in sight of a more sustainable balance between the major industrial economies. but i am more hopeful that we are now at least moving in the right direction. and that is encouraging news for the uk. on a macro - economic overview, our own economy remains in pretty good shape. in the year to the first quarter total output grew by just over 3 % while prices rose by 2. 7 % measured by the overall gdp deflator or by 2. 1 % on the chancellor β s rpix target measure. that is the fifth time in the past seven fiscal years that output growth has exceeded the rate of inflation. since the recession of the early 1990s both output growth and inflation have averaged around 2ΒΎ %. the number of people in employment - as we saw from yesterday β s figures - is at an all time high. the rate of unemployment, on a claimant count basis is as low as it has been for 25 years. and interest rates over the past few years have been more stable and just about as low as anyone can remember. now it β s true that there are uncertainties ahead - as there always are - which could make for a bumpier ride. the welcome weakening of sterling - which had risen to quite unreal
|
scarce β. in this case, banks would be likely to respond by seeking to borrow reserves in money markets, bidding up the price in the process and thereby causing short - term interest rates to rise relative to bank rate. our incentive as a central bank is to ensure that we have liquidity provision facilities to prevent this from happening and maintain effective control of short - term money market rates. quantifying the pmrr is easier said than done. it cannot be objectively observed, it is likely to evolve over time, and it will be affected by our decisions. it will depend on banks β business models and choices over the mix of their liquid assets as well as any future developments in liquidity regulation. it will also be affected by our choices in how we supply reserves. this includes not least the price terms of our facilities, but also the assets we choose to hold to back them, and other non - price terms like tenor and eligible collateral. in making these decisions, we need to align the private interests in terms of the reserve demand of individual banks with the public good of maintaining a sufficient aggregate stock of reserves for financial stability purposes β as i will come back to in a moment. a starting point is simply to ask the banks what they think the reserves level in aggregate should be β as we do in biannual surveys. we do have to recognise the uncertainty around any answer we get, and check against our own assessment of the liquidity risk banks face. but the answers clearly point to a significantly larger balance sheet than we had before the financial crisis, with the latest assessments falling in the range of Β£345bn - Β£490bn. the current level of reserves of around Β£760bn is still comfortably above this range. but the continuing processes of unwinding the stock of qe assets and the tfsme mean that the level of reserves is falling. so when will we get there? that will depend not least on how quickly these unwind processes progress. chart 7 shows scenarios based on contractual tfsme maturities and two alternative assumptions on the future pace of qt. these are strictly illustrative, based on the past mpc β s decisions on the pace of qt. but they do suggest that we may reach the pmrr as soon as the second half of next year. while reserves remain in β ample β supply, the current β floor β system will continue to operate smoothly. but as we approach the minimum level of reserves demanded by banks,
| 0.5 |
7 million, despite the transfer of the ctp insurance class to the accf, underpinned by renewals and new policies issued for the motor vehicle class, and the continued uptake of the micro insurance bundled product. the life insurance sector recorded a turnaround with a 6. 2 percent increase in gross premiums to $ 142. 2 million from a decline in 2017 and is attributed to the continued uptake of investment - linked endowment products. honourable chair, the risk transfer role that the insurance industry provides is vital to the sustainability of our economy. insurance provides the necessary safeguard for the financial health of individuals, families, communities, businesses, financial institutions and the economy as a whole. a key safeguard therefore is in the form of claim payments, and total net claims and policy payments increased by 6. 0 percent to $ 223. 3 million in 2018. the general insurance sector β s net claims paid increased by 7. 8 percent to $ 104. 5 million, due to the settlement of major fire claims. similarly, the life insurance sector recorded an increase of 4. 5 percent to $ 118. 8 million in 2018, as matured policies accounted for majority of the payout to policyholders. honourable members, insurance companies can only honour their claim obligations if they are adequately capitalised through a buffered level of solvency capital, and i am pleased to report that the insurance industry was assessed as sound over 2018 with both the life and general insurance sectors reporting strong solvency positions. these sound solvency positions were supported by the positive profitability position of both sectors, though profitability reduced from the level reported in 2017 by 30. 1 percent to $ 23. 7 million, as a result of the higher loss ratios for the fire and motor ctp classes. the sustained safety and soundness of each individual insurance company is also supported by effective reinsurance arrangements. reinsurance premiums paid by general insurers in 2018 totalled $ 56. 6 million with total reinsurance recoveries reported at $ 23. 8 million. the insurance industry also plays a significant role by supporting economic growth as it recycles premiums back into the economy as investment capital. in 2018, the life insurance sector β s investment portfolio grew by $ 121 million to $ 1. 2 billion, investing mostly in government securities ( $ 719. 3m ), listed and unlisted equities ( $ 295. 6m ), and properties ( $ 103. 9m ). the insurance industry
|
market. these products add to the services that are available to the customers. i must say that the fiji has seen many of these products coming on stream in the last ten years. very quickly we have seen the introduction of atms, phone banking, internet banking and other services. i must acknowledge that westpac has been at the forefront of bringing these new technology and products to fiji which have helped modernise our financial system. later on this year we will launch a new real time gross settlement system which will make the clearance of cheques between commercial banks more efficient. new currency notes let me briefly mention our new currency notes. we put into circulation the new currency notes last tuesday. they have been well received by the people. the visually impaired welcomed the different lengths of notes so they can easily identify the denomination. there were comments on the difficulty of getting to change the $ 100 note. these were the same comments that we got when we introduced the $ 50 bill some 13 years ago. let me say, that even prior to the issue of the new $ 100 bill, taxi drivers and market vendors have difficulty breaking even a $ 20 bill and that is not in fiji only. the solution is simple. we do what we have been doing all along β make sure that we have smaller change before getting into a cab or going to the market. the $ 100 and the $ 50 bills are obviously not meant for small transactions. they make large transactions much easier. i thank the commercial banks for their support and cooperation in the smooth distribution of fiji β s new design currency notes. monetary policy let me say something on the economy and monetary policy. we all know that the economy is going through a very difficult time. it is extremely important that everyone understand two things. first, we need to clearly understand the real state of our economy. only then can we appreciate the urgent need to execute adequate and lasting solutions to these problems. tinkering at the margin will not work for us any longer. second, we should also appreciate that the solutions that will last are not without costs. there will always be a cost to correcting economic imbalances particularly of the magnitude that fiji is facing. to me the key economic challenge that we face is to correct our widening trade imbalance. our exports continue to be dismal. sugar is earning $ 100 million less than its peak year. garment has lost even more than that. gold production has now disappeared and that β s another $ 60 million. tourism numbers and
| 0.5 |
are a few things that we could do for the smes. first, we can lower the financing cost for smes which obtain guaranteed financing under cgc. on the average, smes are being charged between 10 to 12 percent. this is about blr plus 5 to 6 percent. the rate imposed is much too high. it seems that pricing mechanism doesn β t price properly the guarantees given by cgc. we ought to work on this. on the part of cgc, we need to response quickly to the banks when guarantees are being called upon. an ideal situation is akin to an irrevocable undertaking where once a guarantee is called upon, it will be made good immediately. second, to intensify promotion and awareness program on cgc products and services. cgc needs to work closely with the trade associations and generate more media exposures through radios and tvs. make cgc a household name among the smes. third, expand further advisory services, its reach and contents. not all smes require financing, some might need more β hand holding β, and rather than access to financing above. lastly, come up with new and specific guarantee products for new growth area, start - ups and young entrepreneurs. existing guarantee products might not be suitable to meet the needs of these groups. cgc should embark a study on this matter and come up with an action plan. before i end my speech, i would like to express my heartfelt congratulations and appreciation to the board, management and staff of cgc for 40 years of service to the malaysian smes. it is our greatest wish that cgc will continue to walk and grow alongside our smes in our effort to make our country prosperous. bis central bankers β speeches
|
regime, legal and shariah framework, and payment and settlement systems. in this decade, greater focus was particularly given to the institutional arrangements to develop the sukuk market. the sukuk market now accounts for more than fifty percent of our bond market. the market has drawn the participation from a wide range of international corporations and multilateral agencies in raising funds and investing in the sukuk issuances out of malaysia. more recently, there has also been continuous innovation and an increasing number of issuances in foreign currency. as malaysia offers international participation in our islamic financial system, we offer to be an international gateway, particularly in strengthening the link between the two important dynamic growth regions of asia and the middle east. malaysia will also continue to collaborate with other regulatory authorities to ensure financial stability in the islamic financial system. this will be through our active involvement in the islamic financial services board ( ifsb ), the islamic financial stability forum ( ifsf ), the initiatives by the islamic development bank ( idb ), and finally in the newly formed international islamic liquidity management corporation ( iilm ). in the area of capacity building, malaysia has also given priority to two areas : one is in human capital development and the second, in catalysing mutual recognition of shariah interpretations. the international centre of education in islamic finance ( inceif ) was established in 2006 for advanced education for practitioners in islamic finance, and in 2008, the international shariah research academy ( isra ) was established to conduct applied shariah research on the contemporary islamic finance issues and to provide a platform for active international engagement among shariah scholars. moving forward, malaysia will continue its efforts in strengthening our international linkages in the global islamic financial system through collaborative partnerships and cooperation with the objective of contributing towards greater international financial and economic integration. let me conclude. on behalf of the mifc executive committee, i would like to express my appreciation to the members of the panel of jury for the royal award for islamic finance which is led by yang amat berbahagia tun musa hitam, former deputy prime minister of malaysia and also to the members of the taskforce that was chaired by tan sri zarinah anwar, chairman of the securities commission, who oversaw the establishment of this prestigious award. it is my sincere hope that this royal award will be an inspiration to the global development of islamic finance.
| 0.5 |
of labour, a fast process of technological change and the ageing of the european population. the appropriate response is to create the conditions which will allow both firms and workers to deal with these challenges in the most effective and efficient manner, thereby ensuring a high level of output growth and job creation in the longer run. the recent relaunch of the lisbon strategy at the spring european council meeting has rightly refocused policy priorities on the drivers of growth and employment. this needs a strong commitment to well - designed and comprehensive structural reforms, the benefits of which are efficiently explained to the public opinion. by undertaking the measures and convincing the public in this way europe will succeed in both improving the economic outlook and sustaining the welfare and prosperity of european citizens. the exchange rate mechanism ii a little more than a year has now elapsed since ten new member states joined the european union, and their economic integration has been progressing at an impressive pace for a number of years. a number of these countries have also advanced significantly in terms of monetary integration. with effect from 2 may 2005 cyprus, latvia and malta joined the exchange rate mechanism ii ( erm ii ), bringing the number of countries participating in erm ii to seven. indeed, estonia, lithuania and slovenia had already decided β in june of last year β to join denmark in erm ii. the inclusion of the new currencies in the mechanism has proceeded in a very smooth and orderly manner. with their entry into erm ii, these countries have linked their currencies to the euro as a preparatory step towards the ultimate adoption of the single currency. being members of erm ii will help them to orient their policies towards stability. indeed, as was stressed in the 1997 amsterdam resolution of the european council on erm ii, the mechanism has been designed as a reference for the conduct of sound economic policies in general and monetary policy in particular. thus, the mechanism should also contribute to the achievement of sustainable convergence. however, membership of erm ii will not automatically yield sound policies. rather, successful and smooth participation in the mechanism requires significant commitments of the part of its members. although the precise nature of these commitments depends on the specific situations in the various participating countries, i would like to stress in this context the importance of pursuing sound fiscal policies and a stability - oriented monetary policy, as well as measures to enhance the flexibility and adaptability of the economy. the pursuit of such policies within the erm ii framework will not only be of direct benefit
|
rules in question vary in their extent and reach, depending on whether one considers the national level, the euro area level or the global level. at the national level, for instance, the existence of a national currency guarantees that there is no exchange rate risk hampering capital flowing from one region to another ; tax rules are usually applied uniformly across a nation, which prevents arbitrage ; and the regimes for regulation, supervision and resolution are identical, at least for specific parts of the financial sector, such as banks, which strengthens depositors β confidence. at the global level, financial stability arrangements naturally differ across countries. there has been significant progress in aligning global frameworks for regulation, supervision and resolution, but more still needs to be achieved. there is no global jurisdiction for cross - border and crosscurrency transactions across countries and tax regimes differ widely from one country to another, offshore financial centers and non - cooperative jurisdictions being extreme cases. last but not least, underlying economic conditions and policies widely differ across countries, which affect incentives for cross - border capital flows and for financial integration to deepen or weaken. and at the euro area level, financial stability arrangements before the crisis were not in line with the requirements of monetary union. while member states shared a single currency, there was no single framework for supervision and resolution. there was also a general lack of awareness of the risks that such a fragmented institutional framework could pose for area - wide financial stability. this led to a general misperception of financial risk, and short - term, uni - directional financial flows. iii. strengthening the necessary institutions and policy rules is essential for the euro area to reap the full benefits of financial integration the financial crisis of 2007 β 2009 and the sovereign debt crisis of 2011 were wake - up calls for our continent. they exposed the incompleteness of our monetary union, the fragility of our financial integration, and the limited scope for action of institutions other than the ecb. in short, they strongly underscored the need to move to a genuine economic and monetary union. euro area leaders have since launched the banking union, to be complemented over time with the capital markets union, to deepen financial integration within the euro area. the banking union will help strengthen cross - border lending to households and companies within the euro area. the capital markets union aims to strengthen integration of capital markets within the area. this, in turn, will help strengthen cross - border holdings of productive and financial assets.
| 0.5 |
weakness largely reflects anemic foreign demand β this is the weakest post - war u. s. recovery. but it is being compounded by a longer - term trend : our share of world exports has been in decline for more than a decade. since 2000, canada β s share has fallen from about 4. 5 per cent to about 2. 5 per cent. 1 part of this decline is the inevitable consequence of the entry of china into global markets. but even allowing for this, canada has fared poorly. our loss of global trade share has been the second largest in the g - 20. d. de munnik, j. jacob, and w. sze, β the evolution of canada β s global export market share, β working paper no. 2012 - 31, bank of canada, october 2012. bis central bankers β speeches following the financial crisis, the bank β s strategy for monetary policy was to support domestic demand while the recovery in exports took hold. the first part of the strategy worked. final domestic demand recovered quickly in canada. but a side effect has been the emergence of imbalances in the household sector, reflected in rising household leverage, stretched valuations in a number of housing markets, and an increase in the incidence of highly indebted households. today, there is a more constructive evolution of those household imbalances. this is good news. it reduces the risk of an abrupt and painful correction down the road. but this new - found and welcome household prudence is dampening growth. to replace this growth, we need a rotation in demand toward exports and business investment. unfortunately, this rotation has proven elusive. this is consequential β growth in canada has slowed. in the year leading up to this past june, growth averaged only 1. 4 per cent, compared to 2. 6 per cent the year before. with canada β s potential output estimated to be growing at about 2 per cent, growth in demand has not kept pace with the expansion in production capacity, and economic slack has increased. to absorb the current material degree of slack in the economy, demand needs to grow measurably faster than supply. that means growth of at least 2Β½ per cent. the bank is currently revising its forecast, and we will publish our latest outlook in our october monetary policy report. but in broad strokes, we expect household and government spending together to contribute about 1Β½ percentage points of growth. so to reach at least 2Β½
|
have experienced plunges in the markets for our goods. we recovered by developing new goods and services and entering new markets. there can be no doubt that we have the entrepreneurial spirit, the skills, the educated work force and the expertise to compete successfully in the global marketplace. but that does not make it easy. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches
| 1 |
corrections on all major stock exchanges and to a veritable flight into the swiss franc. the record highs the swiss franc reached on 21 september went in tandem with the stock markets hitting record lows. in response to the rapid and marked appreciation of the swiss franc, we cut interest rates in an extraordinary move on 24 september. following this step, and in the course of a broader normalisation of the financial markets, the euro rebounded somewhat vis - a - vis the swiss franc. our currency nevertheless remained strong against the euro. at the end of november, it was quoted at 3. 5 % above its average rate during the first eight months of the year. the euro - swiss franc rate was somewhat more volatile as well. its volatility in additional currencies now stands at about the same level as previously against the d - mark. on the stock markets, a distinct corrective movement set in even before the end of september. meanwhile, most stock indices are above the level obtaining on 10 september. bond yields have increased a little in the last few weeks as well. both effects can be interpreted as a sign of renewed optimism concerning the economic development in the medium term. in the days after the terror attacks, the resiliency of the financial system was put to a test never before described or even considered in any emergency plan. payment transactions in us dollars were affected directly. faced with the possible breakdown of individual banks and parts of the system which are crucial for carrying out transactions, the federal reserve - by way of the discount window pumped massive amounts of liquidity into the system. on the basis of a swap agreement, the european central bank supplied banks in the euro area directly with dollar liquidity. the national bank was in close touch with the swiss banks and - should this have been necessary - we would have been in a position to lend support as well. the demand for swiss franc liquidity also rose sharply. naturally, we made the necessary amounts available to the full extent. as was to be expected, it became evident that only a part of this liquidity was needed, and we were able to reabsorb it through repo transactions as early as 12 september. on the two days following the attacks, repos totalling approximately sfr 40 billion were turned over. the experiences gained in the aftermath of 11 september have shown three things. firstly, that the financial system - even in this unique and completely unexpected situation - still managed to function
|
mario draghi : money and monetary institutions after the crisis speech by mr mario draghi, president of the european central bank, at the conference on β money and monetary institutions after the crisis β, in memory of curzio giannini, bank of italy, rome, 10 december 2013. * * * summary central banks should continue to focus primarily on what they can and are mandated to achieve, which is price stability over the medium term. delivering on their mandate is the only way for central bankers to maintain public trust. pursuit of this mandate must be backed indirectly by public preferences, seen from a longerterm perspective. the actions undertaken by the ecb have not represented a departure from the ecb β s mandate but rather the opposite, namely its pursuit by all the means demanded by the situation. it is now crucial to complete the reform agenda at european and national level. with this agenda there can be no place for withdrawing into nationalism and protectionism. * * * introduction ladies and gentlemen : i very much appreciate having the opportunity to intervene in this conference, not only because it honours curzio giannini, but also because the issues that were close to his heart have turned out to be fundamental questions concerning the role of central banks in the postcrisis environment. the morning session has touched upon topics of vital importance for central banks. i would summarise them along two main lines. first, should the objectives ( though not necessarily the mandate ) of central banks be broadened? second, and related, how can central banks retain and increase public trust and preserve their legitimacy and independence? although these are issues that affect all central banks, i will naturally speak from the perspective of the ecb and our specific institutional context. the objectives of monetary policy claudio borio has presented a thought - provoking paper on the question of whether central banks had too narrow a focus in the decades preceding the global financial crisis. he now asks whether they should widen their horizon, in particular towards addressing financial imbalances. claudio first documents that there is a financial cycle of credit booms and busts that overlaps with the more usual business cycle, but which has a longer duration, in particular in the buildup phase. although not always easy to detect, this cycle is often characterised by the interplay between soaring real estate prices and easy credit, and both are in principle observable. second, claudio argues that monetary policy ( possibly in combination with other policies such as macro - prude
| 0 |
senad softic phd governor, central bank of bosnia and herzegovina conference : macroeconomic imbalances and eu convergence 07 november 2019 welcome speech and opening of the conference dear friends of the central bank of bosnia and herzegovina, distinguished panelists, dear guests, dear colleagues, a very good morning to all of you. it is my great pleasure to welcome you to sarajevo, to another international research conference of the central bank, jointly organized with the usaid finra project. a number of experts have agreed that large macro imbalances were the main cause of the euro area crisis. the eu has reacted with many institutional and organizational changes. this process will continue and our conference hopes to be a part of the efforts to discuss both the macroeconomic imbalances and the eu convergence process. i would mention some of the main macroeconomic imbalances : excessive government deficits and debts, excessive bank credit expansion, stock market and real estate bubbles, and large external account surplus or deficits. all of them can result in serious economic problems if unattended. in bosnia and herzegovina, as you all know, we have a currency board regime. we do not have independent monetary policy, nor can we use nominal exchange rate as a policy tool. if action is needed, we must rely on fiscal policy or use flexible labor markets to bring about the necessary adjustment. fiscal policy options can also be limited, especially if there is a trend of ageing population or decrease in working age population. in the case of structural imbalances, even fiscal policy measures can be of reduced efficiency. policy makers must keep in mind the macroeconomic context. let us take, for example, the annual growth rates of credit in bh in 2006, 2007 and the first half of 2008. just before the global financial crisis ( gfc ), loans to private sector were growing at the rate higher than 30 per cent annually. although it was viewed as a sign of overheating, the policy makers also considered factors such as low initial levels of lending. today, such accelerated credit growth would be considered a serious vulnerability. similarly, the path of the accession towards the eu is bringing structural changes to a candidate country β s economy. the convergence process itself will generate imbalances that, if not addressed properly, may be dangerous for macroeconomic stability. if the imbalances are neglected, the country may, at best, stay in the accession process for a long time. during the accession period, the legal framework and
|
norman t l chan : domestic and international dimensions of unconventional monetary policy opening remarks by mr norman t l chan, chief executive of the hong kong monetary authority, at the conference on β domestic and international dimensions of unconventional monetary policy β, organised by the hong kong monetary authority and the federal reserve bank of new york, new york city, 20 march 2014. * * * mr mcandrews, professor sims, professor woodford, ladies and gentlemen, 1. a very warm welcome to all of you for attending today β s conference jointly organised by the federal reserve bank of new york and the hong kong monetary authority. this joint conference is very timely, as it is neither too early nor too late to examine the effects of the unconventional monetary policy ( ump ) of the fed, including its spill - over effects on the emerging market economies ( emes ). as we all know, the fed has already started tapering and, if everything goes according to plan, would end the asset purchase programme by the end of this year. the fed has made it very clear in its external communications that tapering is not tightening and that there would likely to be a gap between the end of qe and the actual tightening of policy interest rates. however, the market considers that we are now in the phase of β exit β from the ump, which also marks the beginning of the normalisation of us interest rates. when chairman bernanke first talked about a possible timeline for tapering in may last year, there were strong market reactions globally and all emes experienced significant sell - off. the market then calmed down somewhat for several months before we saw another round of eme sell - off in january this year. the question that is most talked about now in the financial and central banking community is the pace of the fed β s exit and its impact on emes going forward. were these two rounds of eme sell - off merely isolated market over - actions or are they warning signals on the turbulence that awaits the emes when us interest rates normalise? 2. to assess what may lie ahead, it is useful to look back and try to understand what happened in the past five years during which the global monetary and financial environment was dominated by the ump of the us and other advanced economies. in 2009, the market expectation was basically that qe would last for a year or so, i. e. β low for a short while β. the expectation then changed to β low for long
| 0 |
protection act ( dodd - frank act ) gave the federal reserve regulatory responsibilities both for insurance holding companies that own a federally insured bank or thrift and for insurance companies designated as systemically important by the u. s. financial stability oversight council ( fsoc ). the insurance holding companies for which the federal reserve is the consolidated supervisor hold about $ 2 trillion in total assets, representing about one - quarter of u. s. insurance industry assets. these firms are highly diverse : they range in size from firms with total assets of approximately $ 3 billion to naic financial regulatory services, β p & c, title, life / a & h, fraternal, and health industry snapshots for the period ended december 31, 2015 ( pdf ). β ibid. ; bureau of economic analysis ( 2016 ), β gross domestic product : first quarter 2016 ( advance estimate ) ( txt ), β april 28, table 9 ; federal insurance office ( 2015 ), β annual report on the insurance industry ( pdf ), β september, p. 12. naic financial regulatory services, β p & c, title, life / a & h, fraternal, and health industry snapshots for the period ended december 31, 2015 ( pdf ), β pp. 1, 4 - 5. ibid. bis central bankers β speeches firms with total assets of over $ 700 billion. they engage in a wide variety of insurance and noninsurance activities. some are fully domestic, while others have material international operations. some are organized as mutual companies, while others are owned by public shareholders. the approach of the federal reserve in regulating insurance holding companies is derived from its overall statutory responsibilities for financial regulation as those have evolved over the years, most recently through the changes made by the dodd - frank act. first, as was the case prior to the enactment of the dodd - frank act, we are responsible for protecting the safety and soundness of federally insured depository institutions affiliated with any kind of holding company. with the dodd - frank act's transfer of slhc oversight to the federal reserve, that statutory responsibility now includes insurance holding companies. while the particulars are somewhat different than for bank holding companies, the aim and many of the tools to achieve this aim are the same. second, the dodd - frank act sharpened our statutory mandate to make clear that the federal reserve is to regulate and supervise holding companies with a view to the safety and soundness of not only the
|
daniel k tarullo : insurance companies and the role of the federal reserve speech by mr daniel k tarullo, member of the board of governors of the federal reserve system, at the national association of insurance commissioner β s international insurance forum, washington dc, 20 may 2016. * * * it is a pleasure to be here with you this morning to discuss the statutory role of the federal reserve in supervising and regulating insurance firms. since we inherited from the office of thrift supervision the oversight of savings and loan holding companies ( slhcs ) that contain insurance companies, we have looked at our role as complementing the role you β as insurance regulators β play. we value the interaction we have had with state insurance commissioners on policy matters and are pleased with the growth of ongoing, regularized cooperation in supervising the firms over which we both have oversight authority. personally, i have profited enormously from the assistance provided by the staff of the national association of insurance commissioners ( naic ) as i delved into the history and practice of capital regulation of insurance companies. today i would like to begin by describing how i view the federal reserve's role in insurance regulation and supervision β both what it is and what it is not. as i think you will find, we have tried to occupy that role in a way that is closely grounded in the duties that congress has given us. then i will present current thinking on a topic that i know has occasioned great interest β the federal reserve's plans for adopting capital requirements for the insurance firms over which we now have statutory responsibilities. the federal reserve's role in insurance regulation and supervision the u. s. insurance industry has historically been, and remains, a significant part of the u. s. economy. for the industry across all sectors, written premiums last year totaled nearly $ 2 trillion and earned premiums totaled nearly $ 1. 8 trillion, representing increases from 2014 of approximately 6 percent and 4 percent, respectively. 1 this represents over 7 percent of u. s. gross domestic product, as it has in recent years. 2 the two largest sectors in the u. s. insurance industry, property / casualty and life / annuities, together wrote approximately $ 1 trillion of premiums in 2015, up nearly 3 percent from the year prior. 3 moreover, for the u. s. insurance industry as a whole, written and earned premium last year were the highest in five years. 4 the dodd - frank wall street reform and consumer
| 1 |
telecommunications, media, transport, and electronic commerce and internet business firms who are managing touchpoints with a large - scale customer base. conversely, there are also financial institutions that actively adopt services of fintech providers. as for fintech as a service β the theme of this year β s fin / sum β there are cases where financial institutions utilize the advanced electronic know - your - customer ( e - kyc ) and fraud detection services of fintech providers in their applications. there is also a recent trend toward unbundling financial services that financial institutions used to provide as tightly coupled, thereby enabling componentized financial services to be combined with services of non - financial firms. this is referred to as β banking as a service β ( baas ), also known as embedded finance. it allows, for example, consumer firms issuing discount coupons 1 / 3 bis central bankers'speeches or providing loyalty points on their applications to enhance the usability of the coupons or points by plugging in cashless payment services provided as baas to their applications. there are also non - financial firms that seek to improve customer convenience and customer marketing by providing banking services under their own brands together with their businesses through baas. integrating information and financial systems in this way, a broad range of enterprises and entrepreneurs is creating new businesses through neue kombination ( new combinations ). the term neue kombination was originally introduced by schumpeter in his book the theory of economic development, and it was later interpreted as describing innovation. according to schumpeter, innovation is not necessarily about invention but is more about creating or changing combinations. needless to say, it is digitalization in various fields that is currently accelerating the creation of neue kombination. neue kombination 2. 0, brought about by digitalization, is reinforced by linking what were traditionally two separate systems : ( 1 ) the information systems assisting people β s livelihoods and business activities and ( 2 ) the systems supporting financial services. for example, most economic activities involve payments as financial activities. while commercial data such as billing and payments have been leveraged to improve the business efficiency of a supply chain, they have not been shared with financial services. this means that neue kombination, or innovation, could occur if the matching of commercial and payment data is enabled by linking commercial systems and payment services. for example, large volumes of invoice receipts could be automatically matched with payment records, thereby improving business efficiency, and potentially enabling real
|
bank of japan β s september report of recent economic and financial developments bank of japan communication, 11 / 9 / 98. the bank β s view japan β s economic conditions continue to deteriorate. with respect to final demand, public investment seems to have bottomed out. net exports ( exports minus imports ) are increasing mainly due to a decline in imports. however, business fixed investment has been decreasing significantly, and housing investment has declined further. private consumption has not yet shown a recovery despite the special income tax reduction. against this background of weak final demand, production has been reduced substantially. as a result, some industries have shown improvements in inventory adjustments, but the level of inventories is still high as a whole. with the decline in expenditure and production, corporate profits continue to decrease, and the decline of employee income is accelerating somewhat. in addition, the ratio of job offers to applications records a historically low level, and the unemployment rate remains at a high level. as a whole, the employment and income conditions have deteriorated further. as the above indicates, there are continued negative interactions of production, income, and expenditure. given the current considerably low level of economic activities, the economy is unlikely to transit immediately to a self - sustained recovery led by private demand, although a further deterioration in the economy is expected to cease gradually from the effects of the comprehensive economic stimulus package. additionally, attention should be paid to possible negative effects on the real economy from financial developments including the recent fall in stock prices. in these circumstances, the cabinet approved a guideline on budget requests by ministries for fiscal 1999. this guideline intends to stimulate the economy by allocating Β₯4 trillion to the special budgetary provision on the condition that the fiscal structural reform act is suspended. in addition, the bills to rebuild the stability of the financial system are being deliberated at the diet, and the reduction exceeding Β₯6 trillion in personal income taxes and corporate taxes is expected to be discussed in detail. the materialization of these policies along with their effects on corporate and household sentiment should be carefully monitored. with regard to prices, wholesale prices are on a downtrend, and consumer prices are lowering below the previous year β s level. with respect to the outlook, the downward pressure from domestic factors is unlikely to weaken considerably reflecting the already large output gap, despite the expected effects of the comprehensive economic stimulus package. hence, prices are likely to be weak for some time. in the financial markets, stock prices dropped considerably in late august
| 0.5 |
output is not likely to increase as a result of this kind of immigration. access to foreign labour may nonetheless relieve shortterm bottlenecks in some sectors. in 2007, the population increased by about 55 000, with net immigration coming to 35 000. this is the highest rise in the population ever recorded. this trend seems to have continued so far this year. second, businesses in norway have become more efficient in their operations, resulting in lower costs. it has been profitable to hire more employees despite the high wage level in norway. the business sector has made use of new technology and businesses have been restructured. the many sweeping reforms of the 1980s and 1990s β the fundamental shift in the norwegian economy β resulted in more efficient markets. we are now reaping the benefits of the measures implemented then. from jon e. dΓΈlvik, t. flΓΈtten, g. hernes and j. m. hippe ( 2007 ) : β hamskifte β den norske modellen i endring ( fundamental shift β the norwegian model in flux ), p. 15, gyldendal norsk forlag a / s. norwegian only. third, prices for goods we import have fallen, while prices for goods we export have risen. norway β s terms of trade have thus improved markedly. sales of norwegian exports have been high, and we can import more goods for the goods and services sold by the business sector. lower import prices have led to low inflation and a substantial increase in employees β real wages. high export prices have resulted in high corporate earnings. strong economic growth has gradually resulted in high employment and shortages of labour, real capital and other resources. information from contacts in norges bank β s regional network indicates that capacity utilisation has remained at a high level over the past year. other indicators show that capacity utilisation continued to increase through 2007. higher demand for goods and services combined with a shortage of real resources can easily lead to higher wage and price inflation. in assessing the inflation outlook, we must therefore have a view concerning the level of available resources in the economy. we attempt to smooth fluctuations in output and employment to some extent. in order to do so, we must also judge whether output and employment are high or low. the output gap reflects our assessment of the level of capacity utilisation. in our projections, we use several methods, a broad range of information and professional judgment. we can never determine the exact level of available resources
|
svein gjedrem : the conduct of monetary policy introductory statement by mr svein gjedrem, governor of norges bank ( central bank of norway ), at the hearing before the standing committee on finance and economic affairs of the storting ( norwegian parliament ), oslo, 22 may 2008. please note that the text below may differ slightly from the actual presentation. the statement is based on norges bank β s annual report for 2007, monetary policy report 1 / 08 and the executive board β s assessments published after the monetary policy meeting on 23 april. * * * i would like to thank the chairman of the committee and also thank the committee for this opportunity to report on monetary policy in connection with the storting β s deliberations on the government β s credit report. my statement is based on the bank β s annual report, but is also updated based on the executive board β s assessments for the period to the previous monetary policy meeting and new information received to date. i also refer to this year β s report from norges bank watch, an independent group of experts that evaluates norges bank β s conduct of monetary policy. monetary policy in norway is oriented towards maintaining low and stable inflation. the target is annual consumer price inflation of close to 2. 5 per cent over time. the inflation target provides employers and employees with an anchor for inflation expectations among businesses and households. inflation stabilised early in the 1990s after falling from a high level in the previous decade. annual variations in inflation are now substantially smaller than they were in the 1970s and 1980s. over the past ten years, average inflation has been somewhat lower than, although fairly close to, the target of 2. 5 per cent. inflation measured by the cpi varies from month to month, primarily as a result of wide fluctuations in electricity prices, but also due to other temporary disturbances. the rise in the cpi - ate shows inflation adjusted for one - time effects of tax changes and excluding energy products. inflation, measured this way, has risen since summer 2006. one disadvantage of this indicator is that it does not only exclude the temporary effects on electricity prices of, for example, changes in the weather ; it also excludes more persistent developments in energy prices. energy prices have risen more than other prices for a fairly long period, leading to an average year - on - year rise in the cpi over the past 5 - 10 years that has been close to Β½ per cent higher than the rise in the cpi -
| 1 |
s guidance β assessing culture is not a single point in time event. it should be a regular and ongoing exercise that management teams, boards of directors and supervisors conduct, taking the range of feedback from interactions and work conducted inside the firm, interactions and reactions from the firm β s senior management team, and interactions and dialogue with the board of directors. alongside risk culture, much work has been done on the roles and responsibilities of boards of directors. the g30 has issued two reports in the last two years. the first report, issued in 2012, set out fresh ways to describe and develop more effective governance at financial institutions. the second report, issued late in 2013, deals specifically with the interactions of boards of directors and supervisors. both reports place less emphasis on the form of corporate governance β the traditional structures of boards and the like β and focus more on the actual behaviors of the various players involved, be it the chairman, the lead director, the chief risk officer, auditors or senior management. the 2013 report proposes a new kind of relationship, one that involves far more direct contact and ongoing dialogue between directors and supervisors about the key issues confronting firms and the financial system, such as assessing financial institution strategies, business models, risk vulnerabilities, governance effectiveness and corporate culture. the federal reserve has growing experience in this area. nearly three years ago, the new york fed initiated a program of β enhanced engagement β with directors and senior management at the major firms we supervise, very much along the lines now described in the g30 report. we provided additional training for our senior supervisory officers concerning corporate governance and relationship - building with boards, key directors and senior managers. we also gave direction on how to focus their interactions on the most important supervisory matters, particularly with respect to the firm β s risk profile and risk management bis central bankers β speeches practices. we also reached out to board chairmen and chief executive officers to enlist their cooperation and support. this has required everyone involved to step up to the plate in a new way. for our senior supervisors, it has meant taking a higher - level and more encompassing view of the potential problems that a firm might encounter and, when necessary, delivering clearer and more timely supervisory messages and guidance to the firm. for directors and senior managers, it has meant a shift toward greater openness and increased candor with supervisors about the condition of the firm, its business strategies and risks, and the issues that they are most concerned about. it has also required devoting more
|
the market participants means that the liquidity that is still available in the financial system is not redistributed in the same way as under more normal circumstances. so why have the central banks been given this liquidity supporting role? the simple reason is that they β through their right to create money β have unlimited opportunities to provide liquidity in the national currency. this opportunity is essential when managing a financial crisis. as the banks β operations have become increasingly internationalised and their need for international securities markets has increased, however, the need to also offer liquidity assistance in other currencies has increased. but the riksbank, like other central banks, has limited possibility to lend foreign currency. here the central banks β for natural reasons β do not have any possibility to create liquidity. the foreign currency reserve at the central bank's disposal thus becomes an important tool with regard to meeting the banks β needs for liquidity in foreign currency in a crisis. this applies in particular in a small economy with a small currency, like sweden's. as liquidity problems are normally the first symptoms of a crisis, it is generally also the central banks that first take action in a crisis. they often have several ways of quickly adding liquidity. these include liquidity assistance to individual institutions, so - called emergency liquidity assistance, or to the financial system as a whole. a concrete example of when this type of measure was needed was the financial crisis 2008 - 2009, when it was difficult for the banks to obtain access to liquidity on the markets. many central banks were then forced to supply liquidity to a great extent so that the financial system would not suffer any shocks. the riksbank lent usd to the equivalent of around sek 250 billion. 5 in addition, the state in the form of the swedish national debt office provided guarantees corresponding at most to around sek 350 billion. 6 this was all done for the purpose of safeguarding the liquidity supply in the financial system so that households and companies would not suffer disruptions. i have now talked about three core tasks that central banks have to contribute to creating an efficient and stable financial system β issuing banknotes and coins, responsibility for a central payment system and acting as liquidity provider in a crisis. let me also say a few words about how we work to be able to carry out these tasks in a good way. 5 riksbank's annual report 2009, figure 11 ; http : / / www. riks
| 0 |
. ( 7. 5 ) there is now general agreement in the country about the importance of fiscal consolidation roadmap both at national and sub - national levels. while adhering to fiscal deficit targets and debt to gdp ratios, it is equally important to undertake robust expenditure planning based on a β commonly agreed expenditure code β to address the socio - economic challenges without diluting the goals of fiscal consolidation. 8. these are some thoughts which come to my mind while participating in this event today. steps like these will go a long way in strengthening fiscal federalism and overall fiscal robustness of our economy. i am sure the book authored by dr. y. v. reddy and shri g. r. reddy will generate substantive debate and contribute to our understanding of issues connected with fiscal federalism. i congratulate dr. y. v. reddy and shri g. r. reddy on their new book and thank them and the organisers of today β s event for giving me opportunity to be present here. 2 / 2 bis central bankers'speeches
|
shaktikanta das : some thoughts on fiscal federalism speech by mr shaktikanta das, governor of the reserve bank of india, at the launch of the book " indian fiscal federalism ", mumbai, 19 march 2019. * * * i am honoured to be invited for the launch of the book β indian fiscal federalism β authored by dr. y. v. reddy and shri g. r. reddy. this is the latest in a prolific body of work that draws from dr. reddy β s hands - on experience with the indian economy and public policy. these insightful expositions are interwoven with glimpses of dr. reddy β s professional life and his β insider β views. 2. as governor of the reserve bank of india during 2003 β 2008, after his stint as deputy governor during 1996 β 2002, dr. reddy β s journey was studded with many milestones. his tenure as governor can be best characterised by the words he used on assuming office in september 2003 to describe what his approach would be. he had said β continuity and change will be mixed together appropriately. β of course, it will be remiss of me if i do not to mention the response of dr. bimal jalan, the outgoing governor, who said β dr. reddy will change whatever i did and will continue where he left off [ as deputy governor ]. β 3. for a central bank, proactive action is of immense importance. when risks were brewing in the pre - 2008 period, dr. reddy sensed them pre - emptively. drawing from his speeches, the word β overheating β entered the lexicon of monetary policy in india. during the build - up of financial excesses in advanced economies with possible knock - on effects on bystanders like india, he resolutely set about preparing india β s defences β building investment fluctuation reserves in the banking system ; recalibrating risk weights for vulnerable asset classes ; and setting prudential limits on inter - bank liabilities. in short, when the world was behaving in a pro - cyclical manner, dr. reddy had turned counter - cyclical ahead of the curve. as events later showed, these bulwarks became critical in protecting the indian economy from the ravages of the global financial crisis of 2008 β 09. 4. i have been an avid follower of dr. reddy β s work. having worked for several years on fiscal and economic
| 1 |
management framework, using the experience of 2013 and the first half of 2014 as an illustration. but the events of the last six months have illustrated these points even more vividly. the bank has been setting policy with a view to balancing the risks facing both the outlook for returning inflation sustainably to its target, and the risks to financial stability such as those posed by the indebtedness of canadian households. the sudden drop in global oil prices has increased both risks. the oil - price shock is an important setback in our progress toward full capacity, full employment and stable inflation because it is a net negative for economic growth. and because lower oil prices mean lower canadian income, the shock will worsen the debt - to - income ratio of canadian households, thereby increasing financial stability risks. our decision to lower the policy interest rate last month was intended to take out some insurance against both sets of risks. it gives us greater confidence that we can get back to full capacity and stable inflation by the end of 2016, instead of sometime in 2017, and it will cushion the decline in income and employment, as well as the rise in the debt - to - income ratio, that lower oil prices will bring. using the term β insurance β underscores that we are in a very uncertain setting, and what we are trying to do is to manage the risks we face, not eliminate them β we are not in a position to engineer the perfect outcome. the negative effects of lower oil prices hit the economy right away, and the various positives β more exports because of a stronger u. s. economy and a lower dollar, and more consumption spending as households spend less on fuel β will arrive only gradually, and are of uncertain size. plus, the oil price shock itself is of uncertain bis central bankers β speeches size. so, the downside risk insurance from the interest rate cut buys us some time to see how the economy actually responds. as you can tell, it β s an exciting time to be a central banker. monetary policy - making is evolving in real time and, as i have argued, is deserving of true reinvention. we need to develop a monetary policy framework that integrates inflation risks and financial stability risks, both statically and dynamically, and captures much more accurately the uncertainties we face β in short, a true synthesis that takes full account of the lessons of the past, both new and old. let β s get to it. bis central bankers β speeches
|
of work in this area. today i will explore three points with you that frame our thinking on the issues. first, fintech has the potential to transform the financial system across a broad range of services. and that is a good thing, because there is a lot of inefficiency that can be shed. second, although some of the technology may be revolutionary, its overall effect on the financial system is likely to be evolutionary. financial institutions that adapt will survive, and see, for example, d. tapscott and a. tapscott, blockchain revolution : how the technology behind bitcoin is changing money, business, and the world ( new york : portfolio, 2016 ) ; mark walport, distributed ledger technology : beyond block chain ( london : government office for science, 2016 ). omers ventures, β canadian next - gen financial technologies & services, β september 2015. this is about five times the $ 4 billion that was invested two years earlier. see r. ghose et al., β digital disruption β how fintech is forcing banking to a tipping point, β citigroup inc., march 2016. bis central bankers β speeches new service providers will become part of the financial ecosystem. in some areas, this evolution is happening fast, while in others, the most transformative technologies still have developmental hurdles to clear. finally, now is the time for financial institutions, new entrants and policy - makers to work together. that is the best way to create the right environment for modernizing the financial sector and sensibly managing the risks that arise. this applies to many areas. for the bank, the focus is on preserving financial stability and maintaining the safe and sound operation of core payment systems in canada. change is in the air my first point is that change is definitely in the air. in many cases, financial innovations are simply interesting twists on existing technologies and business models. they promise to lower costs, improve services and broaden access. peer - to - peer lending is one example. as we have already seen with the taxi and hotel industries, peer - to - peer services challenge traditional intermediaries. this new competition could fundamentally change the relationship that traditional financial institutions have with their customers. from a regulatory perspective, the main issues relate to consumer protection, market integrity and rules that guard against money laundering and terrorism financing. authorities are working to close significant gaps in these areas and are monitoring implications for financial stability. then we have financial services enabled
| 0.5 |
rasheed mohammed al maraj : corporate governance and shari β a compliance in bahrain welcome speech by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the aaoifi ( accounting and auditing organisation for islamic financial institutions ) annual shari β a conference, manama, 7 may 2012. * * * excellencies, distinguished guests, ladies and gentlemen, this conference comes at an important time for the islamic financial sector. this conference is focussing on six key areas that both the standard setters and the financial sector must work together upon if islamic finance is to continue to grow and achieve its full potential. so i thought in this welcome address i would talk about one area where the central bank, as a regulator and as a member of aaoifi has a special interest. and that subject is governance. aaoifi currently has issued seven standards relating to governance and two standards with respect to ethics. deficiencies in governance at financial institutions have been repeatedly highlighted in the past five years following the commencement of the global financial crisis in 2007. three of the standards issued by aaoifi specifically refer to governance. the first of these standards concerns the audit & governance committee. in practice, this standard requires the audit committee to do rather more than just to review a financial institution β s accounting practices and audit plan. it requires the committee to review the use of restricted investment accounts β funds. it emphasises the need to ensure that funds are invested in accordance with terms agreed with the customer. too often over the past five years we have seen how the interests of customers at both conventional and islamic banks have been neglected as bank management have focussed on bonuses and share price. if banks neglect customers β interests, then they will lose those customers. this theme of looking after the interests of customers is carried on in the aaoifi governance principles paper issued in 2005. in particular principle 3 of this paper warns against inequitable treatment of fund providers. the 2009 aaoifi corporate social responsibility paper also focuses on dealing responsibly with clients and β par excellence β customer service. if you couple the governance standards with the ethics paper for employees of financial institutions, you find a formidable set of requirements, principles and standards relating to putting the interests of customers first. so against this background of improving levels of disclosures, the cbb will be making further efforts through its review of its corporate governance and business conduct rules to raise the bar for corporate governance.
|
offer to purchase substantially all of the assets of lehman β s brokerdealer, the new york fed used this financing to facilitate a transition of certain broker - dealer operations from lehman to barclays. once judge peck of the united states district court for the southern district of new york approved the arrangement at the end of the week, those operations were in barclays β hands. while there was nothing truly β orderly β about the lehman bankruptcy, the new york fed β s overnight financing of the lehman broker - dealer avoided further market disruption. this piece of the overall lehman story is rarely told, and yet it deserves attention. in contrast, lehman brothers international europe ( lbie ), the u. k. broker - dealer, was immediately placed into administration, its employees were sent home without paychecks, and the u. k. broker - dealer had no opportunity to wind down its positions. as such, its counterparties β positions were likewise frozen, which created liquidity problems and significant market exposures as asset prices moved in the wake of lehman β s failure. conclusion in conclusion, let me say a few words about regulatory reform and the tools we had to work with. i mentioned earlier the guarantee tool that the congress added when the eesa was enacted. another important development is the dodd - frank legislation, which promises more effective comprehensive consolidated supervision of systemically significant organizations like lehman. this supervision will demand higher levels of capital and liquidity, precisely the type of medicine that lehman needed. systemically significant non - banking financial companies, like lehman, will also be obliged to submit resolution plans which will help to avoid some of the problems experienced after lehman filed its chapter 11 petition. further, if a systemically significant organization like lehman needs to be resolved, dodd - frank creates a new resolution procedure that should facilitate a more orderly winddown. thank you again for the opportunity to appear before you today, and i look forward to answering your questions.
| 0 |
part to a large volume of public guarantees on bank bonds, which will mature in the next few years, however. going forward, the supply must be maintained by increasing the share of eligible assets, among other things by adding new types. great care must be taken to ensure that loan granting procedures meet the requirements for eurosystem refinancing. in the coming weeks we will call on the banks for an examination of the steps to be taken. in several cases italian banks not only provide finance, they also participate directly in the capital of firms. this can lead to a more accurate assessment of a firm β s growth prospects and a better evaluation of its financial needs. however, a participating interest can sometimes distort lending decisions ; as the size of shareholdings and loans increases, there is the risk of collusion or of actions designed to delay the surfacing of difficulties. the banks β governing bodies must properly safeguard against these risks : to maintain loan quality and keep banking profitable, in the banks β own interest ; to protect the value of the savings entrusted to them, in the interest of their customers ; and above all to ensure the efficient allocation of savings and boost the competitiveness of the productive economy. in january the legislation on related - party transactions came into force. it aims to protect banks from potential conflicts of interest with closely connected parties ; it provides a necessary counterweight to the european rules easing the restrictions on the links between banks and industry. the limits on exposure to each related party are calculated in relation both to the amount of credit granted and to the size of the bank β s shareholding in the company. the decision - making process on these matters must be transparent and correct and the outcome suitably motivated. the banks must be scrupulous in applying the new rules. the bank of italy will evaluate the effectiveness of the measures they adopt ; when necessary, it will intervene, possibly by setting stricter limits and conditions for related - party transactions. the difficulties besetting the credit system highlight once again firms β overdependence on bank lending. by international standards italian firms are undercapitalized, make very limited use of the capital market, and tend to limit scrutiny by investors. the credit market tensions will persist in the months to come. bank loans cannot be the sole source of external finance, as they are at present for most firms. the financing of investment must also tap new resources as well. it is in the banks β interest to encourage this process by
|
governance. ahead of global regulatory developments, the bank of italy has issued rules on governance and stiffened them over time. it has urged the adoption of best practices and intervened repeatedly with corrective actions. progress in this direction must continue. a number of unresolved problems remain to be tackled. i addressed two β the role of the banking foundations and the governance of cooperative banks β in my concluding remarks last may. here i would like to offer some further considerations. in most cases the presence of the foundations among banks β shareholders has fostered stability. during the crisis, in the absence of other large investors, some of them underwrote very substantial capital increases. at this point foundations should be encouraged to diversify their investment portfolios, so as to loosen their sometimes excessive dependence on the performance of their reference bank and prevent interference in banks β governance and business choices. this would be conducive to the inclusion of new investors in the banks β shareholder base. analyses of banks β bylaws, shareholder pacts and shareholders β behaviour at general meetings have shown that some foundations tend to interpret shareholders β prerogatives very extensively indeed. this has produced excesses, at times impeding the necessary turnover within the governing bodies and causing directors to be chosen according to criteria other than professional qualifications. episodes of this sort have an adverse effect on banks β performance, limiting their ability to finance the economy. measures to prevent their recurrence must be taken as soon as possible. the charter adopted by the association of savings banks and foundations in 2012 calls for transparency in the criteria and procedures for appointing the members of foundations β decision - making bodies. it establishes waiting periods and incompatibility conditions with respect to previously held political positions. it sets experience and independence requirements for the top officers of foundations and also of the banks in which they hold stakes. these indications must be made fully effective. they must also be strengthened by prohibiting passage from top positions in foundations to those in banks. bis central bankers β speeches the ban on controlling stakes to which the largest foundations are subject must be fully observed, if necessary by redefining control in such a way as to cover its exercise on a de facto basis or jointly with other shareholders. adequate measures for enforcement of the ban must be instituted. incompatibility with other positions and stricter requirements for bank directors also need to be provided for. the imminent application of the fourth revision of the capital adequacy directive offers the occasion for reinforcing the
| 1 |
the board of directors and management. the policy on shareholding will therefore be enhanced to promote greater shareholder activism within banking institutions. shareholders need to be concerned with the practices of banking institutions, particularly those which can have adverse implications on depositors'interests and on financial stability. similarly, given the increasingly competitive environment, advancement in risk management practices and the strengthened corporate governance framework, a more flexible policy framework on lending to connected parties will be put in place. however, to prevent abuses of such flexibilities, there will be safeguards and conditions that need to be observed by banking institutions. ladies and gentlemen, the adoption of a principle - based regulatory approach will provide banking institutions with greater flexibility in deciding on strategic options in a more competitive environment. as the banking industry grows at an accelerating pace, there are common areas where collective efforts by the industry will not only bring benefits to the financial sector but also to the overall economy. in this regard, there is an increasing trend among developed countries such as the united kingdom, canada, and australia, where the bankers associations have an important role in spearheading initiatives to promote high standards of ethical code of market conduct to meet consumers'rising expectations and demands. the bankers associations have increasingly assumed the role as a focal point for consultation with not only the regulatory authorities, but also by the other stakeholders on policies affecting the financial sector. in this respect, such associations have played an important complementary role to the regulatory authorities'efforts in promoting a more progressive, dynamic and resilient banking system. in addition, banking associations in these countries have also acted as the voice for the industry in articulating the position of their members to promote the interests of the industry. in malaysia, there are several areas of common interest to the industry which the associations can spearhead. it is, therefore, to the benefit of the industry to reassess the role of the associations with respect to taking forward common initiatives and interests of the industry. ladies and gentlemen, moving forward, consumer and sme financing will continue to be two important areas of growth. the overall macroeconomic and interest rate environment would continue to be supportive of growth in these two sectors. the challenge for banking institutions is to ensure that consumers and the businesses have access to a wide range of products, while at the same time ensuring that the necessary infrastructure is in place to manage risks arising from these businesses. this is to ensure that lending to these sectors would be sustainable and avoid the risks that have recently been experienced in
|
nor shamsiah mohd yunus : advancing digitalisation for recovery, sustainability and inclusion speech by ms nor shamsiah mohd yunus, governor of the central bank of malaysia ( bank negara malaysia ), at the myfintech week 2022, virtual, 24 january 2022. * * * assalamualaikum, bismillahirrahmanirrahim and welcome to myfintech week 2022. myfintech week is an important event for malaysia β s financial sector. it is here where changemakers from finance, technology, government, business and other disciplines come together to discuss how we can shape the future of finance through technology and innovation. the theme of this year β s conference is β advancing digitalisation for recovery, sustainability and inclusion β. over the last two years, we have seen an accelerated pace of digital adoption across government, society and business unmatched in recent history. against this backdrop, this theme aims to tap into the enormous potential of digital technology to transform finance and help build a more inclusive, resilient and sustainable economy of the future. over the next five days, over a hundred speakers will discuss a broad range of issues ranging from environmental sustainability, the future of money, emerging technologies and the financial health of consumers. at myfintech week 2019 two years ago, i spoke about the dynamic shifts that the world was undergoing, and in turn, the opportunities and risks they presented to the financial industry. these included changes in the global economic order, climate change, rising income inequality and the advancement of technology. in the two years since, the severe global health and economic crisis faced by the world has brought these trends into even sharper focus. for example, the pandemic has highlighted and deepened long - standing vulnerabilities in malaysia and many places around the world. these include the fragile state of social protection systems, under - investments in health and infrastructure, and the need to improve our education system. as a result, vulnerable groups bore much of the economic, social and health cost of the pandemic and they continue to be at risk. this will affect economic and social resilience and thus not only our prospects to recover and bounce back from the pandemic, but also to deal with other existential challenges further ahead, like those in the environment and climate. on the bright side, the pandemic has demonstrated the power and potential of finance to address the pressing problems of our time. the financial
| 0.5 |
segments of our financial community. we are now attempting to reverse this through more proportionate risk - based systems. beyond banking, affordability of access is more constrained in property insurance markets, where financial vulnerability is heightened because of the increasing frequency and intensity of hurricanes, which can in a single season push households into ruin. finally, relevant to the themes of consumer empowerment, we recognise the scope for improved literacy and conduct regulations to improve financial welfare. 1 / 2 bis central bankers'speeches as it should be, political pressures to address financial inclusion deficits are mounting in the bahamas, and there has to be comprehensive constructive responses. in the strategies that the bahamian central bank is formulating, we understand that the private sector will not optimally achieve all of the outcomes that we desire. we recognise that an enabling environment that embraces the aspirations of the maya declaration, with a focus on fintech, to promote digital inclusion is critical. this is defining very critical elements of our approach. however, we also have to identify those elements of both the policy space and technology infrastructure that ought to be supplied by the public sector. for example, the central bank of the bahamas is engaged in the creation and promotion of a digital version of the national currency which is expected to close vital payments system gaps for the bahamas that many countries are able to leave up to the private sector to resolve. at the same time, the bank has volunteered to coordinate development of a national financial inclusion strategy that would enlist all relevant stakeholders, and focus on more than just payments and banking. we are already seeing the benefits of our membership in the afi, in bringing sharper focus to our financial inclusion initiatives. in that spirit, we look forward to a continued build out of this network of peers, capturing all of the accessible knowledge and experiences that you have to offer. coming into these working group meetings i expect that we have broadly similar goals, and expectations ; and that there will be mutual gains from our exchanges over the next four days. indeed, we have two very stimulating agendas. as we have received you as our guests, we hope too that you will find time to experience a sampling of our culture and the beauty of our people and country. welcome again and my best wishes for a productive week! 2 / 2 bis central bankers'speeches
|
at https : / / www. afiglobal. org / sites / default / files / publications / 2018 - 08 / maya _ fs _ 18 _ aw _ digital. pdf see press release : the central bank of the bahamas joins the alliance for financial inclusion & commits to the maya declaration, https : / / www. centralbankbahamas. com / news. php? id = 16452 & cmd = view the sochi accord : fintech for financial inclusion ( https : / / www. afiglobal. org / publications / 2851 / sochi - accord - fintech - for - financial - inclusion ) 9 | page box 3 : central bank of the bahamas commitments under the maya declaration under the maya declaration of the alliance for financial inclusion the central bank has committed to : i ) support the development of a national financial inclusion strategy by 2020. ii ) increase access to banking and payment services by reinforcing our newly revised customer due diligence ( cdd ) requirements. iii ) introduce a digital version of the bahamian currency by 2020, to ensure minimum levels of access to banking and payments services in geographically remote parts of the bahamas. iv ) collaborate with the government on improved national identity infrastructure to enhance the know your customer ( kyc ) procedures in our supervised financial institutions ( sfis ). v ) conclude the development and start - up of a credit bureau in the bahamas by 2020 to foster trust and accountability between our sfis and their customers. vi ) in partnership with relevant stakeholders, pursue the creation of the office of the financial services ombudsman ( ofso ) by 2020. vii ) promote public awareness of consumer rights and responsibilities through our recently deployed financial literacy program, get money smart bahamas. 10 | p a g e
| 0.5 |
capable of indicating when the financial system as a whole or parts of the system are approaching a β danger zone β. risk identification calls for the monitoring of a comprehensive set of macrofinancial variables and forward - looking indicators. this task will require a detailed understanding of the channels through which emerging risks are transmitted. i spoke yesterday in cambridge about the analytical challenges underlying systemic risk and the various research avenues that are being pursued. the other challenge for effective macro - prudential supervision concerns the quality of recommendations themselves. here, the key lies in their specificity. the more specific recommendations are, the easier is their implementation in concrete actions. it is here where knowledge of supervisory and regulatory authorities has to enter the equation. it is an important component of macro - prudential assessments and, in particular, in the design of recommendations on the appropriate policy actions needed to contain the build - up of financial vulnerabilities or to mitigate material risks. specific warnings require close input from supervisors, regulators and from all public and private stakeholders. this is the reason why a credible framework of macro - prudential supervision should be set up very broadly, combining a variety of perspectives and closely coordinated with micro - prudential supervisors. macro - prudential recommendations will not be addressed to individual institutions. this remains the sole prerogative of micro - prudential supervisors. instead, they will be addressed to regulators, supervisors or other authorities so as to foster regulatory and supervisory policies. these authorities have instruments which can steer variables such as maturity mismatches, excessive credit growth, leverage, or the risk appetite of market participants. while it might not be desirable or feasible to target these variables directly, prudential policy instruments β individually or in combination β can affect them indirectly. the bank of england released an interesting analysis of the role of macro - prudential policies in november 2009, highlighting many of the analytical challenges as well. the ecb has undertaken a series of research in the field of systemic risk. macro - prudential supervision will not and should not be a substitute for micro - prudential supervision. rather, it should complement micro - prudential supervision ; it has been conceived because the deep integration of the financial system has made it too difficult to ensure systemic stability while focusing on financial institutions one at a time. in providing specific warnings and recommendations, based on a comprehensive analysis of systemic risk, an effective framework of macro - prudential supervision can close the gap between the analysis
|
framework for macro - prudential oversight at the level of the single market of the 27 member countries of the european union. the single financial market is a crucial component of the overall single market project, and macro - prudential supervision should enhance the resilience of this market. 3. the conduct of macro - prudential supervision the desirability of macro - prudential supervision is clear. and from that naturally spring the objectives β to mitigate and prevent systemic risks to financial stability in the eu on the basis of identified vulnerabilities and systemic risk assessments. now we must turn to my second question and ask how such supervision should be conducted. 2 bis data on foreign claims by nationality of reporting bank ( ultimate risk basis ), 2009q1. see also l. papademos, β financial stability and macro - prudential supervision : objectives, instruments and the role of the ecb β, speech of 4 september 2009. almost everywhere in the world, central banks are seen as playing, or called to play, an important role in macro - prudential supervision. in my view there are very good reasons for that. on top of their key involvement in the financial sector, central banks possess three main features that are qualifying themselves for that function : they are, by their very nature, anchors of stability ; they are medium - term oriented ; and they are independent. central banks have traditionally been active in financial stability analysis. of course, from financial stability analysis to macro - prudential supervision is yet another step. financial stability describes the overall resilience of the system, focusing on imbalances and stresses in the financial system in the aggregate. while macro - prudential supervision takes a similarly broad view, it must also focus on specific sources of instability or specific groups of financial institutions, adding the policy component to the oversight function. overall, the effectiveness of macro - prudential supervision depends on many inputs, including quantitative or qualitative information from supervisors, regulators, macroeconomists, market participants and other stakeholders in seeking to identify systemic risks and proposing policy responses. the analysis for systemic risk surveillance and assessment is indeed very demanding, 3 and as much of the credibility of the entire framework depends on it. in my view, the most difficult pieces will be the analysis of the implications of interlinkages in complex systems and understanding how a potential risk might spread throughout the system. risk surveillance and risk detection call for early warning indicators and approaches
| 1 |
in human capital development to support the industry. while malaysia β s own experience and aspirations is to evolve into an international islamic financial centre, we also continue to promote a more inclusive financial system to support a more balanced growth. on the international front, the aim is to enhance our international connectivity and thus establish greater economic linkages with other economies. in dubai, the efforts by the authorities to create the islamic economy initiative to further enhance the inter - linkages with other islamic financial centres is also a step towards strengthening the international economic connectivity especially between our regions. the efforts will not only enhance islamic finance as an effective financial intermediary but also as a binding force for the other segments of the islamic economy, including with other parts of the world. our collective efforts in developing islamic finance will provide an important platform to unlock the potential opportunities that lie therein to benefit every segment of the society and the business community that now extends beyond our domestic borders. in this highly dynamic and rapidly changing world environment, efforts will need to be unrelenting on bis central bankers β speeches developing further the enabling infrastructure, the foundations for stability and enhancing the internal capability. and with the greater international linkages, the greater will be the importance of working collectively for the common goals we aspire and for which the benefits will be mutually reinforcing. bis central bankers β speeches
|
arendal in 1886. not long afterwards, in the late 1890s, kristiania ( now oslo ) experienced a financial bubble. a favourable international economic situation and the building of railways led to a period of prosperity in the norwegian economy, particularly in the capital. the money market was highly liquid as a result of the inflow of gold, and interest rates were relatively low. growth in banks β deposits and lending increased in pace with the money supply. kristiania β s population grew and there was an explosive period of construction, of both dwellings and commercial buildings. prices for land, building materials and houses rose dramatically. the crash was triggered in 1899 by a major bankruptcy. the crisis gradually became more acute for norwegian banks, particularly commercial banks. it had lasting consequences for the norwegian financial industry and the economy. the stock market was virtually at a standstill until world war i. the crash compelled norges bank, for the first time in its history, to channel crisis liquidity to the banking industry. bordo, m. d, b. eichengreen and j. kim ( 1998 ). was there really an earlier period of international financial integration comparable to today? nber working papers 6738 mauro, p., sussman, n. and y. yafeh ( 2000 ). emerging market spreads : then versus now. imf working paper. the next financial bubble occurred during world war i. during the first half of the war, in particular, there was strong growth in the norwegian economy. this provided the foundation for a boom that is unparalleled in history. banks β lending rose sharply. the build - up of risk in the financial system was far more pronounced than in previous episodes. a strong inflow of gold led to uncontrolled growth in the money supply and inflation at the beginning of the war. in addition, the constraints implicit in the gold standard gradually broke down, and the money supply expanded sharply. the banking crisis came in the wake of a cyclical downturn in the early 1920s and can largely be attributed to the build - up of risk during the boom period. the bulk of bank losses occurred before the introduction of parity policy. the authorities β response in response to the extensive banking crises in the interwar period, a financial safety net for banks was introduced in most developed countries. in norway, guarantee funds were introduced for savings banks in 1921 and for commercial banks in 1938. there was also a need for separate rules
| 0 |
prices and their impact on inflation, the increasing trend is largely due to its own fundamentals, including above all the major growth in emerging countries over the past few years, biofuel development and structural changes in livestock feeding. nevertheless, seasonal factors are also influential ; among them, it is worth mentioning supply shocks from climate hazard and geopolitical conflicts, and the increase in speculative demand to protect against us dollar depreciation and financial asset loss, and inflation. agricultural commodities in my view are more resilient to a recessionary outlook by their lower income elasticity and the relative strong fundamentals of emerging economies, where demand increased substantially. soft commodities accumulate increases ranging from 100 % to 150 % since the beginning of the century with an acceleration in 2007 - 2008 that is leading to historically low stock to consumption ratios. in the cases of soy and corn, where argentina is a world - class producer, demand is consistently outpacing supply due to a hike in demand for food in the emerging world and a growing demand for biofuels in the industrial countries. while supply stays in historically high levels it cannot keep up with the demand forces. just to give you an example, corn inventories are 30 % below the average of the last ten years. the outlook of financial volatility will continue to be a source of speculative demand for commodities as hedge for inflation. in addition, the continuity of monetary policies aimed at reducing reference rates would likewise aid speculative demand for commodities. as the paper points out, food and energy impacted on the acceleration of consumer prices, especially in emerging countries, where foodstuffs have a significant weight in the consumption basket. however, the prices of other goods and services remained relatively contained. insofar as structural factors prevail over temporary ones, food and energy prices would more likely have second - round effects on other goods and services through cost pressures. while by the end of 2007 headline inflation accelerated in close connection with the behavior of core price indices, these second round effects have not materialized yet. food prices can potentially lead to wage demands which, given the stickiness of this component of the cost structure of the private sector, would result in subsequent increases in general level. however the risk is more evident in emerging countries than in developed ones. for example, the average wage in china increased by 26. 9 percent year - over - year in the third quarter of 2007, significantly above the average of the past five years ( 16. 8 percent ) and well above the
|
β speeches i would like to close by recalling that during these last few years the bank of greece had to cope with historically unprecedented conditions that required swift decision - making and difficult and delicate handling. the bank responded to these heavy challenges outstretching its capacities, thanks to the hard work, ethos and dedication of its staff. it is to you therefore β members of the family of the bank of greece, who have successfully shouldered a heavy load β that i would like to say a big β thank you β and dedicate this book. bis central bankers β speeches
| 0 |
remarks by lawrence schembri deputy governor, bank of canada canadian association for business economics august 25, 2020 delivered via webcast perceived inflation and reality : understanding the difference β all our knowledge has its origins in our perceptions. β β leonardo da vinci introduction good afternoon. it is a pleasure to once again have this opportunity to speak at cabe β s annual late - summer conference, although the circumstances have changed radically since i last spoke a few years ago. the covid - 19 pandemic has disrupted all our lives and imposed much hardship on many. when i was last with you, we were on the top floor of a kingston hotel overlooking lake ontario. i felt tested to hold your attention given the lovely view. today, i β m similarly challenged, but by a virtual platform, made necessary by the serious health threat posed by the virus. the topic i β ll be addressing is inflation. it is a subject that central bankers never tire of talking about, since low and stable inflation is the core objective of the bank of canada β s monetary policy mandate. i would like to offer a slightly different perspective to engage your interest β namely, the difference between how people perceive inflation versus the actual measured rate. this issue is important because individuals β perceptions of inflation today β and their expectations of it for the future β influence their spending and saving behaviour, and thus affect overall macroeconomic outcomes. moreover, inflation expectations have significant implications for the credibility of our 2 percent inflation target and for the effectiveness of monetary policy. i would like to explore with you the observation that consumers, on average, think inflation is higher than what is measured and reported by statistical agencies. i would like to thank patrick sabourin and rolande kpekou tossou for their help in preparing this speech. not for publication before august 25, 2020 1 : 30 pm eastern time - 2this gap has been regularly observed in canada as well as in other jurisdictions, such as the united states and the united kingdom. 1 recent public outreach conducted by the bank has provided further evidence of this gap. as part of the process leading up to the renewal of our inflation - control target agreement with the federal government in 2021, we have sought out and are listening to the views of the public and other key stakeholders. one of the messages we have heard is that many people feel that the official consumer price index ( cpi ) inflation rate does not reflect the higher inflation they believe they are facing. this gap between perception and measurement has been more
|
is a correlation between current perceptions and future expectations of inflation at both the one - and five - year horizons. for example, if consumers think prices have notably increased in the last 12 months, then there is a good chance they will expect inflation to stay high in the future. finally, the difference between expected inflation and current inflation ( as well as relative to our target ) increases as the horizon is extended from one year to five years. 6 chart 1 : households perceive inflation to be higher than official measures % 2014q4 2015q4 2016q4 2017q4 bank of canada inflation - control target current perceptions of inflation five - year - ahead inflation expectations sources : statistics canada and bank of canada 2018q4 2019q4 actual cpi one - year - ahead inflation expectations last observation : 2020q2 as an aside, it is noteworthy that a comparison of the csce with a similar survey published by the new york federal reserve bank finds the perception gap is smaller and less dispersed in canada than in the united states ( chart 2a and chart 2b ). this difference may reflect the impact of different communication strategies by the bank of canada and the us federal reserve. 7 5 it is important to note that this gap is observed, on average, across canadian households. the gap is larger for some groups β for example, younger households. 6 the higher expected inflation rate at the five - year horizon might reflect increased uncertainty about inflation outcomes, as suggested by relatively lower response rates. we also observe a greater degree of dispersion among respondents at this horizon. 7 bellemare et al. ( 2019 ) conjecture that the narrower gap in canada might be related to the bank β s success with and focused communications on the 2 percent inflation target, creating a focal point for perceptions and expectations at 2 percent. in bellemare, kpekou tossou and moran, β the determinants of consumer's inflation expectations : evidence from the us and canada, β ( unpublished manuscript, department of economics, universite laval, july 1st, 2020 ), latex. - 5chart 2a : inflation forecast errors are larger in the united states than in canada % - 1 2013q3 2014q3 2015q3 2016q3 2017q3 2018q3 canada one - year - ahead inflation expectations canada inflation realization, one year later united states one - year - ahead inflation expectations united states inflation realization, one year later sources : statistics canada, federal reserve bank of new york survey of consumer expectations, us bureau of
| 1 |
a few staff with all the usual amenities. ladies and gentlemen, within this new building we have also provided for the reserve bank of fiji β s first fully fledged archives. we are grateful to the national archives for their assistance in making this a reality and we look forward to continued cooperation and assistance in maintaining sound record management practices and the managing of our documents for national posterity. our first fully fledged archives will meet our needs well into the future. this site is linked by fibre leased line to our primary site at the reserve bank building in suva, allowing for a fast and reliable flow of data. there are added features to this link to enhance security of data. in addition to the usual utilities, we have stored water and there are two generators that will back up any loss of power to the building. the building is also well secured with the use of cctv cameras which are linked to the main control room located at the reserve bank building. in terms of building design standards, the building is designed to withstand most severe cyclones and earthquakes. the design incorporates an appropriate level of augmentation of normal loading levels allowed by the respective design codes and fully complies with the provisions of the national building code of fiji. it is also in line with recognized overseas standards. i am proud to say, in summary, that the building has been designed to provide maximum resilience to disasters and has been equipped with very high level security controls. finally, ladies and gentlemen, i would like to acknowledge and thank the numerous persons who have contributed to the successful completion of this project. these include : β the reserve bank of fiji board, for their foresight and continued support ; our in - house project team ; larsen, holtom, maybin, in particular colin radford, the project architect and manager ; engineered designs limited, the structural engineers ; irwin alsop, the building services engineers ; raghwan construction, the main contractor ; and to all sub - contractors, i extend the sincere gratitude of the bank and thank you for your efforts. with these words i am proud to declare the reserve bank of fiji business resumption site operational! thank you.
|
of comparative advantage, to new areas of growth, with the private sector being the main driver of growth. resources have continued to shift towards the services sector, towards strengthening linkages in the manufacturing sector, and to the resource - based industries and the agricultural sector. this has contributed to a well - diversified economic structure and has increased the resilience of the economy to external developments. the financial sector has also seen significant transformation. the restructuring, consolidation, and internal rationalisation of the banking sector is now virtually completed. governance and risk management practices have also been improved while structural enhancements have been made in the capital market, significantly enhancing its role in the financial system. a comprehensive and robust islamic financial system now also operates in parallel with the domestic, conventional financial system. against the background of strengthened economic fundamentals and financial system, malaysia has taken the opportunity to sequentially deregulate and liberalise the financial system. this includes the introduction of a new interest rate framework that is market - driven, 1 / 2 the liberalisation of foreign exchange administration rules to promote greater efficiency and enhance risk management in foreign exchange transactions, and the introduction of new foreign players into our financial system. in july this year, malaysia adopted a managed float for the ringgit exchange rate to better position malaysia to respond to structural changes in the global and regional environment. under this arrangement, the ringgit is monitored against a basket of currencies of malaysia's major trading partners. in this world of greater uncertainty, there has been significant focus on the issue of surveillance and risks and vulnerabilities. experience has shown that surveillance has improved policy performance as well as the ability to take pre - emptive action to contain the impact of disruptive and destabilising developments. these efforts, however, need to be balanced by efforts to enhance the capacity of countries not only to manage the risks and vulnerabilities, but also to sustain their own capacity to support growth and development. capacity building involves helping countries to help themselves. it requires enhancing the institutional capacity of the country. support in putting in place the necessary institutional structures, arrangements and systems would increase the potential for the sustainability of the development process. strengthening these foundations are vital to the deregulation and liberalisation process. they represent the pre - conditions to any reform agenda. in this regard, capital account liberalisation needs to be managed in accordance with the country's own institutional capabilities and implementation capacity. supporting financial infrastructures, sound and strong financial institutions,
| 0 |
and monetary policy β are generating new patterns of funding, new players and changes in capital flows across global markets. those issues will be reviewed in the initial session. as i mentioned before, the euro area has to deal with a severe crisis which has led to the fragmentation of the european financial system. while there are signs of a certain reversal in this process, a failure in this respect would be particularly harmful for the european project, since integration is at the core of the european union itself. the policy actions of the ecb and other european authorities, including the decisive drive towards a banking union, have been able to overcome or dissipate the worst fears, but the road ahead is still long and difficult. finally, the role of central bankers should be highlighted in this new context. we are big players in the financial arena, both from the regulatory and monetary policy standpoint ; and the framework for our actions β and reactions β must necessarily change and adapt to the new environment. the renewal of the set of instruments to address the price stability bis central bankers β speeches mandate, be it in a situation of low growth, as happens to advanced economies, or in a situation of large capital inflows, as happens to emerging market economies, is one aspect of that change. the need to take on board financial stability considerations is another aspect widely discussed. you will devote the final part of the day to this quest. and i do not want to take more time out of the tight agenda you will follow now. thank you very much for your attendance to this conference. i wish all of you and excellent day and a good discussion. bis central bankers β speeches
|
at countering these pressures. i would like to briefly describe the developments in the main income statement captions and then identify the courses of action available. the net interest margin performed well in 2008 and its growth of around 14 % over the same period of the previous year was higher than that of activity. this favourable performance, despite representing a slowdown with respect to other years, reflects highly recurrent core income from banking activity, a characteristic of the spanish banking system. also, net interest margin growth was favoured by the high percentage of lending granted at variable rates, which allowed institutions to progressively raise interest rates in the first half of 2008. however, financial costs also grew strongly, and may continue to do so in the future. the higher pressure from funding costs has three sources. first, the notable increase in risk premia, in a very sharp pendulum swing, has surely over - corrected the abnormally low levels reached in summer 2007, so these levels will foreseeably not be regained when conditions in the international financial markets return to normal. second, the persistent difficulties in obtaining funding on the wholesale markets, which are also unlikely to regain the rate of expansion seen in the past, have led to notably heightened competition for new deposits, particularly time deposits, the cost of which is higher than that of other alternative sources of funding. lastly, it should be recalled that in a setting of low interest rates, the cost of bank deposits has a floor, and this also contributes to the narrowing of margins. for these reasons, the net interest margin will foreseeably come under downward pressure in an environment in which it is not, and will not conceivably be, offset by increases in the volume of activity. fees and commissions fell slightly in absolute terms. firstly, analysis of the various components of fee and commission income shows that those directly related to more traditional banking activity have, in line with their lower rate of expansion, grown more moderately. secondly, spanish deposit institutions have been marketing non - bank financial products and securities services to their customers, which has generated significant fees and commissions. however, the data for december 2008 reflect a fall in fee and commission income from business of this type. this is because the difficulties besetting financial markets have made these products less attractive to customers and because institutions have changed their product mix. it thus seems that their customer sales focus has moved from fee - generating products which they themselves market, such as pension and investment funds, certain insurance products, etc. towards deposits.
| 0.5 |
. co. uk / publications / pages / speeches / default. aspx of course, given the uncertainties around climate, not everyone will agree on the timing or the scale of adjustments required to achieve this goal. but the right information will allow optimists and pessimists, sceptics and evangelists, to back their convictions with their capital. the main obstacle standing in the way of a smooth and timely market - led adjustment has been the absence of quality information on climate - related financial risks and opportunities. as the task force has highlighted, a significant number of climate - disclosure regimes β indeed on some counts around 400 β already exist. but existing schemes vary in their status, coverage and ambition. for example, while 80 % of fortune 500 companies participate in one of the existing schemes, it remains the case that only around a third of the top 1, 000 us companies produce broadly comparable information on the climate - related financial risks they face. the task force β s report β presented to you today β shows the way forward. let me highlight some of its recommendations that will make a major contribution. the first breakthrough is a disclosure framework that it sufficiently comprehensive for use by all publicly - listed companies, whatever their sector, across the full set of climate - related financial risks they face. the recommendations are designed to leverage, rather than replace, existing disclosure regimes. so the task force has set out how firms can comply more effectively with existing disclosure obligations, by disclosing their climate - related financial risks and opportunities in their mainstream financial reports. in turn, this should ensure that consideration of climate - related financial risk, and opportunities, is properly embedded within, and subject to, firms β corporate governance and risk management. reporting on these risks cannot remain a niche activity. decision - useful, actionable information the disclosure recommendations deliver actionable information that will be useful in decision making. in particular, they focus on four areas critical to how real - world businesses operate : governance, strategy, risk management, and metrics. see oecd ( 2015 ), β climate change disclosure in g20 countries β. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx the expectation is that qualitative and narrative disclosures will be complemented with quantitative ones as is the case for other disclosures made in financial statements. these are grouped into the categories of revenues, expenditures, assets and liabilities and
|
spencer dale : the uk β s economic recovery β why now ; will it last ; and what next for monetary policy? speech by mr spencer dale, executive director, monetary policy, and chief economist of the bank of england, at the confederation of british industry ( cbi ) east of england midwinter lunch, newmarket, 13 december 2013. * * * i would like to thank john lewis, matt trott and gavin wallis for their considerable help in preparing this speech. the views expressed are my own and do not necessarily reflect those of other members of the monetary policy committee. i thought i would start today with a short reminiscence about the late eddie george, who was governor of the bank of england between 1993 and 2003. soon after becoming governor, eddie gave an interview in which he was asked how he would judge the success of his governorship. now this was before the advent of the monetary policy committee, so he couldn β t frame his response simply in terms of hitting the inflation target. instead, eddie replied that β my personal ambition is that the rate of growth of output should be above the rate of inflation for three years in a row β. 1 at the time, this seemed a fairly tall order : prior to eddie taking over, this hadn β t been achieved even once since the second world war. but as it turned out, growth was stronger than inflation in every single year of eddie β s 10 - year reign. and that continued for the next few years after he β d retired. indeed, during the halcyon days of the so - called great moderation that preceded the financial crisis, it started to seem that eddie β s ambition was no longer quite so demanding. but β as you all know β then came the crisis! that, combined with a commodity price boom and a sharp depreciation in sterling, meant that the days of gdp growth outstripping inflation quickly became a thing of the past. we β ve failed to live up to eddie β s ambition for each of the past six years. the good news is that recent developments β on both growth and inflation β mean that we appear to be heading back towards an environment of which eddie would have approved. over the past six months, output has grown at an annualised rate of almost 3 %, almost a quarter of a million new jobs have been created and indicators point to a continuation of strong growth. at the same time, inflation has fallen sharply and, at 2. 2 % in october
| 0.5 |
the ai public - private forum is committed to being transparent and will publish summary reports of all forum and workshop discussions. it will also aim to deliver a final report of its findings and conclusions. however, the outputs of the forum should not be considered as an indication of future policy by the bank or the fca. by being as open and transparent in our approach as possible, and by sharing the information of the forum publically with all its stakeholders, including other regulators, we hope to further the collective dialogue on how best to support safe adoption of ai in financial services. finally, i would like to welcome the members of the forum and its observers, and thank them in advance for committing to and participating in this exciting and important project. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice
|
. " stability is a necessary condition for sustainable growth " has become the universal central - banking credo - though that doesn't necessarily make it any easier to achieve! this emphasis on macro - economic stability - and sustainability - has served to focus attention increasingly on the supply - side of our economies - on structural reform and supply - side flexibility - as the key to raising the underlying rate of growth which our economies can maintain. and that is the second general trend i'd like to touch upon. it has meant increasing reliance upon free markets - again both nationally and internationally - to allocate productive resources to where they can most effectively contribute to meeting demand. the collapse of communism is a dramatic example, but the promotion of free trade through the wto and of the free movement of capital through the imf, or the spread of privatisation and deregulation all around the world, not least in financial markets, can all be seen as aspects of essentially the same thing. this emphasis on free markets cannot mean " anything goes ". public policy concerns, of course, remain ; and we need to have rules to ensure that competition is fair as well as free. but it does mean less centralised, bureaucratic, intervention telling people what they may or may not do, leaving them much greater freedom to do what they choose provided they meet the necessary nationally or internationally agreed standards. the resulting intensification of competition can, of course, be uncomfortable for existing producers - and can lead to protectionist pressures at the micro - economic or even the national level - so we still have a long way to go. but it is increasingly accepted as the best means we have raising the sustainable rate of growth - and employment - and living standards - at the macro - economic, and international, level. these trends together have resulted in substantial economic progress in most of the developed economies. but - and this is the third theme i would draw attention to this morning - there was growing recognition of the fact that not all countries were equally well - placed to share in the potential benefits of free markets within a stable macro - economic framework, and of the need - as a matter of self - interest and not just social responsibility - to help draw other countries in to the global economy. emerging markets and transition economies have increasingly gained access to international capital markets. and there is an increasing emphasis on the need to help the poorest countries that are seeking to help themselves to participate. this last concern will be on the agenda
| 0.5 |
##act the efforts of monetary policy to bring inflation back to levels closer to 2 %. conclusion heterogeneity is part of the euro area β s dna. it is a source of strength, provided our institutions and markets have the instruments and ability to effectively absorb idiosyncratic shocks. heterogeneous currency unions need a sufficient degree of private and public risk - sharing, and they need economic policymakers doing their part to preserve and nurture cohesion and convergence. not doing so means that too much of the burden of macroeconomic stabilisation falls on the ecb, thereby challenging the achievement of its medium - term price stability objective. thank you. 1 see, for example, ecb ( 2005 ), β monetary policy and inflation differentials in a heterogeneous currency area β, monthly bulletin, may. 2 see cΕure, b. ( 2016 ), β the ecb β s operational framework in post - crisis times β, speech at the federal reserve bank of kansas city β s 40th economic policy symposium, jackson hole, 27 august. 3 see, for example, trichet, j. - c. ( 2007 ), β the euro area and its monetary policy β, president β s address at the conference β the ecb and its watchers ix β, frankfurt am main, 7 september ; and trichet, j. - c. ( 2011 ), β two continents compared β, keynote address at the β ecb and its watchers xiii β conference, frankfurt am main, 10 june. 4 see cimadomo, j. et al. ( 2018 ), β risk sharing in the euro area β, economic bulletin, issue 3, ecb. 5 also note that the credit channel includes both private and public borrowing, meaning the contribution of private risk - sharing is likely to have been even more negative if one accounts for the establishment of the european financial stability facility / european stability mechanism in 2010. research shows that these institutions made a substantial contribution to the absorption of country - specific shocks. see, for example : cimadomo, j., furtuna, o. and giuliodori, m. ( 2018 ), β private and public risk sharing in the euro area β, working paper series, no 2148, ecb, may ; and milano, v. ( 2017 ), β risk sharing in the euro zone : the role of european institutions β, celeg working paper series, no 1701, luis
|
- starting the capital markets union. financial markets that can absorb shocks efficiently reduce the need for macroeconomic stabilisation and thereby free up costly political capital. structural policies to enhance resilience and feed convergence the second aspect of pre - crisis thinking concerned the role other policy domains should play in supporting the single monetary policy. i will focus here on the structural side and turn to fiscal policy in a minute. although pre - crisis policy advice strongly focused on reducing nominal and real rigidities in product and labour markets, today there are still significant differences across countries in the response to common euro area - wide shocks. my next slide shows two ways of looking at this. 6 / 14 bis central bankers'speeches on the left - hand side you can see ecb research on the extent to which output in each country responds to a common area - wide shock. clearly, there are significant differences, even among countries of broadly comparable size. on the right - hand side you can see eurosystem estimates of the slope of the phillips curve. 8 it shows a high degree of heterogeneity across euro area countries for the sensitivity of core inflation to economic slack. in other words, country - specific factors of inflation remain considerable, for example the degree of wage negotiation centralisation. these factors are also related to national institutions. the upshot is that, in this environment, monetary policy is more difficult to calibrate. different transmission mechanisms propagate the same shock to different degrees and with lags that may vary across countries. minimising these differences in transmission does not require all countries to adopt the same economic structures. 9 what matters is for countries to have institutions that deliver the right outcomes, both individually and jointly. our system of economic coordination, the european semester, still falls short of achieving this objective. 10 and as a consequence, it still falls short of supporting adequately the single monetary policy. strengthening domestic institutions is not only about improving shock absorption capabilities. it is also about cohesion and sowing the seeds for renewed convergence. you can see this on my next slide. 7 / 14 bis central bankers'speeches the more benign pre - crisis view of heterogeneity reflected the fact that the direction of travel was at least similar among euro area countries, and not too different from, say, the united states. as you can see from the chart, the longer we wait to improve the quality of the institutions that underpin domestic growth and living standards, the larger the gap will
| 1 |
in the forex market to prevent appreciation entails costs. if the resultant liquidity is left unsterilized, it fuels inflationary pressures. if the resultant liquidity is sterilized, it puts upward pressure on interest rates which, apart from hurting competitiveness, also encourages further flows. currency appreciation is not the only problem arising from the ultra loose monetary policy of advanced economies. speculative flows on the lookout for quick returns can potentially lead to asset price build up. the assurance of advanced economies to keep interest rates β exceptionally low β for β an extended period β has also possibly triggered financialization of commodities leading to a paradoxical situation of hardening of commodity prices even as advanced economies continue to face demand recession. emes have been hit by hardened commodity prices through inflationary pressures, and in the case of net commodity importers, also through wider current account deficits. emes have dealt with the problem of excess flows in diverse ways depending on their macroeconomic situation. this has broadly taken one of several forms : controlling capital at entry, taxing it on entry or intervention in the forex market. such measures would have attracted criticism in the past as they went against the broad economic orthodoxy that market forces should not be resisted. the crisis has changed the terms of that debate. it is now broadly accepted that there could be circumstances in which capital controls can be a legitimate component of the policy response to surges in capital flows. managing capital flows should not be treated as an exclusive problem of emes. in as much as lumpy and volatile flows are a spillover from policy choices of advanced economies, the burden of adjustment has to be shared. how this burden has to be measured and shared raises both intellectual and practical policy challenges. our current theory of external sector management draws from an outdated regime of fixed exchange rates and limited capital flows when the task was largely limited to managing the current account of the balance of payments. what we now need is a theory that reflects the changed situation of flexible exchange rates and large and volatile capital flows. the intellectual challenge is to build such a theory that encompasses both current and capital accounts and one that gives a better understanding of what type of capital controls work and in what situations. what is the practical challenge? the practical challenge is that once we have such a theory, we need to reach a shared understanding on two specific aspects : first, to what extent are advanced economies responsible for the cross border spillover impact of their domestic policies, and second, what is
|
risk management architectures. in this regard, an important lesson thrown up by the crisis is that in addition to managing more effectively the traditional risks such as credit risk, operational risk and market risk, banks also need to manage some new risks that have proven to be significant such as reputation risk, counterparty credit risk, liquidity risk, interest rate risk in the banking book and incremental risks in the trading book. expertise in risk management needs to be complemented by strengthening stress testing techniques. evidently this calls for substantially broadening and sharpening the skill endowment at the institutional level. however, this cannot stop at getting a new toolbox and learning how to use it ; it has to extend to changing the mindset. banks need to develop a culture of risk management at the institutional level. what the crisis has shown is that risk management cannot be done in silos ; it demands a more integrated approach with risks and their interconnections across the entire organization recognized and managed synergistically. 47. buffering the capital base of banks is obviously a standard and much needed response to risk management. in this regard, countries around the world are in the process of migrating to the basel ii capital standard. in its current form, the standard provides a menu of approaches from simple to advanced to assess credit, market and operational risks and to calibrate the capital requirement to the assessed risk. importantly, the standard provides a framework for assessing the new risks that i talked about earlier. 48. india is committed to adopting the international best practices though with the sequencing and pacing determined by our domestic conditions. as of march 2009, all indian banks have migrated to the simpler approaches of the basel ii standard. the task on the way forward is to graduate to more advanced approaches. towards this end, in consultation with banks, the reserve bank has now finalized a four - year time frame starting in april 2010 and ending with march 2014. moving to advanced approaches is both skill and technology intensive. in the first instance, it will therefore necessarily have to be confined to the larger banks. while the reserve bank will actively facilitate the transition of such larger banks to advanced approaches, it is expected that the banks themselves will be proactive in preparing themselves to meet the preconditions for the transition in view of the competitive advantages it will offer. 49. all in all, going forward, risk management is going to involve pushing the frontiers of knowledge and transforming that knowledge to practical policy. that can hardly fit the description
| 0.5 |
of march 2011. inflationary expectations remain anchored close to the mid - term target of the bank of albania. in addition to the domestic demand, the relative stability of the exchange rate contributed to preventing further inflation increase. more specifically, during 2011 q1, inflation reflected a hike in prices of some food items, further increase of oil prices as well as an upturn in medication prices. with the warmer season approaching, domestic agricultural output is expected to contribute to an upward domestic demand, thus buffering high pressures from export prices. the bank of albania deems that policies to encourage domestic production, which reduces the exposure of the albanian economy to external shocks, are necessary. annual inflation of tradable goods sector in 2011 q1 was 4. 9 %, explaining about 75 % of the headline inflation. primary reasons for this conduct were the actual and expected aggravated conjunctures of commodity prices, unusual geo - political situation in large economies of oil and agro - industrial products, as well as unfavourable weather conditions that has damaged bis central bankers β speeches agricultural production. inflation of non - tradable goods of the cpi basket, which represent internal pressures, in the first quarter of 2011, reached 2 %. this value is close to that of the previous year and comparable to its historic average. inflation trend, without counting temporary effects on it, that is core inflation, was close to 3. 0 %, reaching high historical values. this long - term inflation component shows that inflationary outlook in the economy, though reflecting a value that is relatively higher, remains well anchored with the bank of albania target. in the future, inflationary pressures along the time span of action of the monetary policy are forecasted to be high, but their intensity will be falling over the course of the year. i would like now to address, in more details, the factors that determine inflation developments and relevant risks. during 2011 q1, world economy demonstrated growth, while unemployment remains high. economic growth is expected to intensify, mainly owing to the private sector, hence providing the conditions for attracting the public sector. as a result of high divergences among countries, authorities have to deal with diverse challenges ; in advanced economies focus is on reducing public debt and adjusting economic agents β financial balances, while in emerging economies the main risk appears to be about overheated economy and rapid credit growth. inflationary pressures are considered to follow an upward trend due to supply shocks in the oil and other commodity
|
be funded with interest - bearing debt capital. moreover, the expansion of the balance sheet will substantially increase the snb β s credit and currency risks. strengthening the snb β s provisions the financial crisis has highlighted how important it is for the snb to have a solid equity capital buffer. without it, the snb would be unable to carry the risks on its currency reserves internally β nor would it be in a position to take the measures to stabilise the financial system that proved essential in the financial crisis. equity capital, furthermore, is central to the independence and credibility of the snb. in spite of the extensive crisis measures we have taken, the snb β s balance sheet is as robust as ever β though its financial stress resistance is heavily dependent on the distribution reserve, which is high at present. like the provisions, this forms part of the snb β s equity capital. in the short term it helps to absorb any losses, while in the longer term it is transferred to the confederation and the cantons as a distribution of profits. if it were not for the distribution reserve, the snb β s resilience could only be guaranteed to a limited degree. there are two reasons for this : for one thing, a need for measures to safeguard the system could arise unexpectedly, greatly increasing the risks faced by the snb suddenly ; and for another, these risks are significantly higher because of the permanently expanded balance sheet. the snb has therefore decided to additionally strengthen its equity capital, and thus its balance sheet. the snb β s ability in the long term to respond to a crisis must not be dependent on the distribution reserve. this is only possible if the snb increases its provisions from their current level. in the past, it increased its provisions each year at a rate equal to average nominal gdp growth for the previous five years. the snb now intends to double this allocation in financial years 2009 β 2013 : instead of approximately chf 1. 5 billion, some chf 3. 0 billion will now be allocated to provisions in 2009. strengthening provisions will reduce the potential for future profit distributions to the confederation and the cantons. on a current view, however, the annual profit distribution of chf 2. 5 billion can be expected to be maintained until 2017, when the current agreement on profit distribution lapses. this view is substantiated, in particular, by the fact that the distribution reserve will increase considerably as a result of the profit expected for the year
| 0 |
services through various channels to cater to the needs of different consumer groups. the industry should continuously identify and address any gaps in the current e - payment infrastructure and services by improving their product offerings. for instance, building on the wider penetration of online banking services which now have a total of 17 million subscribers ( of whom 7. 5 million are active users ), banks have also provided alternatives to consumers to conduct electronic funds transfers using either the interbank giro ( ibg ) or the instant interbank fund transfer ( ibft ) via 9, 410 atms and 2, 475 selfservice internet kiosks nationwide. while the fees imposed for ibg and ibft are differentiated, consumers are given choices that suit their preference. to promote infrastructure sharing and reduce cost and enhance online bill payment facilities in malaysia, there is currently an ongoing industry initiative led by the malaysian electronic clearing corporation sdn. bhd. ( or myclear in short ) to develop a national bill payment scheme known as jompay. jompay leverages on shared infrastructure to significantly expand the scope and utility of bill payment facilities. at present, customers can only use the online channel of a bank to make bill payments to merchants who maintain banking relationships with the same bank. this is set to change with the implementation of jompay, which is a common and open platform that allows customers of any bank to make online bill payments to any merchant registered with jompay. in other words, a merchant will be able to receive payments from customers across all participating banks. this would not only reduce duplication of investment costs by the banks, but also bring about greater convenience, cost savings and efficiency gains to both consumers and merchants. jompay is targeted to be rolled - out in phases starting from next month. ( in the next presentation, the director of payment systems policy department will provide you with further details of the supporting e - payment infrastructure and the strategies undertaken by bank negara malaysia to accelerate the country β s migration to e - payments. ) d. safeguarding the security of transactions ladies and gentlemen, let me now move on to the issue of security and consumer confidence in the use of online banking and e - payments. considerable efforts have also been taken by the industry to improve user confidence in the use of payment cards. as i mentioned earlier, the banking industry had migrated our payment cards to the more secure chip - based cards in 2005. the investment cost of rm200 million was subsequently recovered through the projected
|
these measures are necessary to secure long term sustainable prosperity and modernisation of the country as we move forward. lest we forget, a well - compensated labour force also makes for good consumers as well. devising policy to be part of the future. we are constantly crafting policies to secure a stronger foothold in the future. businesses and policymakers need to be proactive and agile. to embrace and facilitate, not to deter or hinder. this is the bank β s modus operandi in embracing financial technology, or fintech for short. we were one of the pioneers to implement a regulatory sandbox, which allows for the safe experimentation of fintech innovations. we shall facilitate and make the hard decisions necessary if the innovations benefit the economy, even if it means changing the status quo. in meeting demands of the future economy, malaysia welcomes innovators to develop the β next big thing β. this year, the government launched the world β s first digital free trade zone in collaboration with e - commerce giant, alibaba group. the hub will be alibaba β s first e - hub foray out of china. 5 / 6 bis central bankers'speeches the sharing economy is another new source of growth that promises to increase efficiency in an inclusive manner. unlike the conventional work structure, it is accessible to anyone who has idle or under - utilised assets, skills or time to spare. recognising its vast potential, the government has partnered with the industry to promote sharing economy, while safeguarding against its risks. the measures include ensuring adequate worker and consumer protection, and creating a level playing field. population that is used to change, reform and transformation. malaysia is no stranger to change and reform. our people are very adaptable. we used to be a primary commodity producing economy in the 1960s and 1970s, before embarking on import substitution and then manufacturing. in merely two decades, we have transformed from an agricultural economy to a manufacturing powerhouse. since the asian financial crisis, we have metamorphosed the economy from an export dependent to a domestic driven economy. and now, malaysia embarks on a journey into high - value growth activities. we are confident in achieving our quest to be a high income nation with equity. today, amazon has steadily nudged out physical retailers, rendering them almost - obsolete at retail outlets. soon, checkout counters would seem as foreign as cassette tapes to our millennials. while driverless cars seems to be the β in β
| 0.5 |
rate, weight is also given to stabilising developments in output and employment. for monetary policy to contribute to stabilising developments in output and employment, there must be confidence that the inflation target will be reached. inflation will not be at target at all times, but if there is confidence in monetary policy, expected inflation will be close to the inflation target over time, which in itself contributes to stabilising inflation. norges bank β s communication of monetary policy aims to stabilise inflation expectations by giving the reasons for and explaining interest rate setting. by publishing its interest rate forecasts and monetary policy strategy, norges bank has made it easier for others to understand and evaluate monetary policy. it is my objective to continue and enhance the bank β s analysis and communication. since march of this year our monetary policy reports have included a summary of the executive board β s discussion of monetary policy prior to the reports. chart : surplus liquidity in the banking system to be effective, the key policy rate must have an impact on market rates. norges bank supplies liquidity to banks to bring short - term money market rates down closer to the key policy rate. surplus liquidity in the banking system is kept as sight deposits at norges bank. the redistribution of interbank liquidity does not function adequately. in 2010 norges bank had to maintain high liquidity in the banking system to keep short - term money market rates close to the key policy rate. to dampen demand for central bank liquidity and promote increased activity in the money market, norges bank β s executive board approved changes in the system for managing liquidity in the banking system in december 2010. under the new regulation, only a certain amount of banks β deposits β a quota β will bear interest at the key policy rate. deposits in excess of this quota will bear a lower interest rate. this will give banks a stronger financial incentive to redistribute liquidity among themselves, making the norwegian money market function more effectively. the new system is expected to take effect from 3 october of this year. 3. from financial crisis to debt crisis chart : general government gross debt the experience of recent years has shown the costs of financial instability in many countries. global economic growth has recovered, but the effects of the financial crisis are still visible and will be so for some time ahead. financial crises tend to be followed by debt crises. fiscal policy was used actively in most countries to dampen the effects of the financial crisis. the mistakes
|
mainland norway growth in the norwegian economy has been solid since autumn 2016. at the same time, labour market conditions have improved considerably. the number of employed has increased by more than 100 000, and unemployment has declined. solid global growth, higher oil prices and low interest rates have contributed to lifting growth. the enterprises in norges bank β s regional network reported rising output growth through 2018, particularly for oil service providers thanks to the rebound in petroleum investment on the norwegian shelf following several years of decline. there was also a pick - up in exports from oil service companies. chart : employment as a share of the population after some years of solid growth, spare capacity has gradually diminished. at the end of 2018, capacity utilisation appeared to be close to what we regard as a normal level. employment also appears to have returned to a more normal level. owing to a high employment rate, the number of employed persons as a share of the working - age population is now close to the level prevailing before the sharp fall in oil prices in 2014. in 2018, employment rose in most sectors of the norwegian economy, including oil - related industries. more people entered the labour market, but unemployment nonetheless edged down. there are signs of growing pressures in the economy. a rising number of regional network contacts report little spare capacity. a number of employers report difficulties in finding skilled and experienced labour. in the wake of the oil price decline, wage growth has been moderate. the improvement in the labour market has contributed to a pick - up in wage growth in recent years. at the same time, inflation has been high. as a result, real wage growth has been low, with little improvement in household purchasing power. chart : consumer prices 2 / 3 bis central bankers'speeches consumer price inflation edged up through 2018, primarily reflecting a sharp increase in electricity prices. underlying inflation also moved up, partly owing to the pick - up in wage growth and higher imported inflation. annual consumer price inflation ( cpi ) was 2. 7 percent in 2018. persistently high debt growth has added to the vulnerability of the household sector. high house price inflation has fuelled debt growth. in 2018, house price inflation was low, and debt growth eased somewhat. debt nevertheless grew faster than household disposable income. because of a high household debt burden, the effect of an interest rate rise will likely be stronger than earlier. chart : policy rate the monetary policy assessments through 2018 attached weight to the fact that the monetary stance is expansionary
| 0.5 |
simple messages seem to me to be important. first, we should not assume that the recent pace of national income growth is a good estimate of the likely sustainable pace. we should allow a good deal of the income growth to flow into saving in the near term. we can always consume some of that income later if income stays high, but it is harder to cut back absorption that rises in anticipation of income gains that do not materialise. to date, that precautionary approach seems to be in place. households are saving more than for some years and the much - discussed β consumer caution β has been in evidence. firms are consolidating balance sheets. governments have reiterated commitments to stated medium - term fiscal goals. second, there is going to be a non - trivial degree of structural change in the economy as a result of the large change in relative prices. this is already occurring, but if relative prices i note that prices observed over the past year have exceeded, more or less continually, what had been assumed. bis central bankers β speeches stay anywhere near their current configuration surely there will be a good deal more such change in the future. because we can β t confidently forecast where relative prices will settle, we cannot know how much such change is β optimal β. therefore we can β t be sure that some of it will not need to be reversed at some point. but the optimal amount of change is unlikely to be none at all. so we should not look to prevent change ; we should look to make it cost as little as possible. in general, that means preserving flexibility and supporting adaptation. third, productivity is going to come back into focus, especially in sectors that are exposed to the rise in the exchange rate. their prices will be squeezed, and their costs potentially pushed up by the demand of the resources sector and related industries for labour. surely maintaining viability will involve achieving significantly bigger improvements to productivity than we have observed in recent years. fourth, if we have to face structural adjustment, it is infinitely preferable to be doing it during a period in which overall income is rising strongly. if nothing else, in such an environment the gainers can compensate the losers more easily. many other countries face major issues of economic adjustment in an environment of overall weakness. conclusion at the risk of sounding like a broken record, the rise in australia β s terms of trade over the past five years is the biggest such event in a very long time. it reflects powerful forces at work in the
|
ore each day ; now it is over a million tonnes a day. coal shipments have been running at a rate of around 300 million tonnes a year, at least until the recent floods. australian capacity to export lng is now around 20 million tonnes a year, up from around half that in 2004. this looks like it will increase to over 50 million tonnes within five years. the rise in demand has been driven in large part by the rapid growth of key emerging market economies such as china and india. over the past decade : the average annual growth of gdp per capita has been around 5Β½ per cent in india and almost 10 per cent in china ; the number of people living in cities in those two countries, especially china, has risen by over 250 million, which implies having to expand or create cities ( with the attendant buildings and infrastructure ) to house the entire population of australia more than 10 times over or, alternatively, to house the populations of france, germany and japan combined ; and steel production has doubled in india and it has more than quintupled in china. thus far, the demand for resources has stretched the global capacity of suppliers. prices of key raw materials have consequently been driven upwards. as a result australia β s terms of trade have risen sharply, to be about 65 per cent above the 20th century average level, and about 85 per cent above the level that would be expected had the downward trend observed over the 20th century continued. even assuming the terms of trade soon peak and decline somewhat, they are nonetheless, over a five - year period, at their highest since at least federation β by a good margin. with the terms of trade at their current level, australia β s nominal gdp is about 13 per cent higher, all other things equal, than it would have been had the terms of trade been at their 100 - year average level. of course australia has substantial foreign ownership in the resources sector so a good proportion of this income accrues to foreign investors. nonetheless, probably about half of that additional 13 per cent of gdp accrues to australians one way or another. we also know that a large expansion in the resource sector β s capacity to supply commodities is being planned. already, mining sector capital investment has risen from an average of around 2 per cent of gdp over the past 25 years to about 4 per cent, which exceeds the peak reached in the booms of the late 1960s and early 1980s. given the scale of possible additional investment projects that have been mooted
| 1 |
and homeland security issues. and, of course, they must still find the time and resources to run their businesses profitably. the committee of sponsoring organizations ( coso ) internal control integrated framework is still the u. s. standard on internal controls. 1 the coso model serves as the basis for meeting the internal control assessment and reporting requirements for depository institutions laid out in section 112 of the federal deposit insurance corporation improvement act ( fdicia 112 ). this model is also broadly applicable to public companies in complying with section 404 of the sarbanes - oxley act. under coso, directors have responsibility for overseeing internal control processes so that they can reasonably expect that their directives will be followed. although directors are not expected to understand the nuances of every line of business or to oversee every transaction, they are responsible coso defines internal control as β a process, effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of : effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. β internal control integrated framework is available for purchase from the american institute of certified public accountants ; an executive summary is available at http : / / www. coso. org / publications / executive _ summary _ integrated _ framework. htm. for setting the tone regarding their corporations'risk - taking and for establishing an effective monitoring program. the implication is that directors should be vigilant in maintaining a clear understanding of how coso is being implemented in their organizations. directors should also keep up with innovations in corporate governance. for example, directors should be aware that a new coso framework has been proposed to encompass enterprise risk management. 2 a draft of the updated coso framework was released for comment last summer, and a final document is expected later this year. for those of you not familiar with the new coso framework, let me briefly explain that enterprisewide risk management is a discipline that an organization can use to identify events that may affect its ability to achieve its strategic goals and to manage its activities consistent with its risk appetite. such events include not only those that may result in adverse outcomes, but also those that give rise to opportunities. when embraced, an enterprisewide risk management framework improves the quality and flow of information for decisionmakers and stakeholders, focuses attention on the achievement of organizational goals, and improves the overall governance of an organization. some key steps in effective enterprisewide risk management include
|
a valuable source of information, shared your expertise with others, and made connections that will assist you and your organizations in meeting the needs of those you serve. thank you for your efforts, and for the opportunity to be with you today. u. s. department of labor, bureau of labor statistics, ( 2010 ), β overview of the 2008 β 2018 projections β, in occupational outlook handbook, 2010 β 2011 edition : ( washington : bls ).
| 0.5 |
driven those economies. so that β s the model that the government is trying to put in place. it is doing a number of things to sustain that model in terms of the macro - economic policy making. have been put in place. there are three frameworks that the government has a revenue page 2 of 17 enhancement - based fiscal consolidation program which is intended to bring the budget deficit down to 3. 5 % of gdp by 2020. the central bank is putting in place a flexible inflation targeting framework which is intended to bring about monetary policy formulation which is pro - active and forward - looking. today β s interest rates, i. e. when setting interest rates today, the full passthrough effects of the transmission does not have full effects in the system for about twelve months. so, in setting interest rates today we have to have an educated view of what inflation is going to be in twelve months β time. in the past, we tended to do too little too late. we allowed the economy to overheat and then we would move. this is why we have had big fluctuations in our interest rates which have made business planning very difficult. we are trying to put in place a framework which will now enable us to set forward - looking, pro - active monetary policy, which should smooth out these sharp fluctuations in interest rates. they will still go up and down, but you won β t get the spikes and troughs that we have had in the past, if we are able to implement the flexible inflation targeting regime properly. that β s what we are trying to do. equally, on the exchange rate, in the past, we tried to defend an over - valued exchange rate. we used depleted borrowed foreign reserves to do that. in doing so, we lost a large amount of foreign reserves and then eventually there was an inevitable sharp page 3 of 17 depreciation in due course. this doesn β t make any sense, so we are trying to follow a more flexible exchange rate policy, which will, we hope, enable us to have a competitive and stable exchange rate. if we get fiscal policy and monetary policy right, then the pressure on the exchange rate is reduced. so that β s crucial. you have to take all three macro - economic instruments together. if you are able to implement the other two macro policies well, then there won β t be pressure on the exchange rate and it will be possible to have a competitive and relatively stable exchange rate, which is what we
|
is 5 ), the seed or reserve money produced by central banks is also called β high powered money β. thus, the total money in an economy would be much more than what a central bank would issue to the economy. when that money which is known as money supply chases after the limited availability of goods and services, the general price level would elevate to a higher level. if it happens continuously, inflation sets in an economy imposing an inflation tax on the society. why is there a preference for inflation tax? there is a general preference for inflation tax for several reasons. first, it is easy, quick and convenient to borrow from the central bank, compared to conventional forms of taxes available to a government. such conventional taxes need to be backed by legislation, take time to generate the tax revenue and have to be enforced by an elaborate tax administration. it also runs the risk of failing to generate the required revenue due to tax evasion and avoidance. but, borrowing from the central bank is just a single transaction and the treasury could use it immediately for making payments. second, because of the limitations of the tax bases in developing countries, there is resource paucity for governments to undertake much needed infrastructure projects. hence, it has been argued that the governments in developing countries could initiate the development efforts by mobilizing resources through inflation. the initial inflation so created would get reversed once the new economic development increases the production of goods and services and raises the market supply. so, inflation would become a self - destroying process and, therefore, it is argued that there is no danger of using inflation for economic development. third, taxes are mandatory payments and therefore, there is resistance on the part of tax payers to pay the taxes. because of the pressure coming from the lobbying groups, political authorities too sometimes are unwilling to raise the tax rates to generate higher tax revenue. however, the resistance of the citizens to inflation tax is virtually nonexistent. this is because no one realizes that they are paying a tax to the government, when the prices move up. any resistance by them is not against the inflation tax per se, but against the inflation. that again takes place after sometime when they have been very badly hit by inflation. fourth, inflation is said to be bringing about some salutary effects to an economy from the point of view of its long term growth. it re - distributes income in favor of the rich people who normally save a greater proportion of their income than the poor people.
| 0.5 |
, is expected to provide positive impetus to growth over the next two years. furthermore, demand for exports should benefit from the on - going global recovery, and should thereby reinforce the growth momentum in the euro area. although labour markets have shown some signs of improvement, unemployment remains high in the euro area. unutilised capacity continues to be sizeable. moreover, credit growth to the private sector remains subdued, and the necessary adjustment of balance sheets in the public and private sectors will probably continue to dampen the pace of recovery. the risks surrounding the economic outlook remain on the downside. geopolitical risks, as well as developments in both emerging market economies and global financial markets, may have a negative effect on economic conditions in the euro area, through their impact on energy prices and global demand for euro area products. further downside risks include an bis central bankers β speeches inadequate implementation of structural reforms in the member states and weaker than expected domestic demand. looking at price developments, we see that euro area hicp inflation declined sharply from late 2011 to october last year, and has since been fluctuating around very low levels below 1 %. according to the latest data ( eurostat β s flash estimate ), euro area annual hicp inflation stood at 0. 5 % in june 2014, unchanged from may. annual hicp inflation is expected to remain at low levels over coming months, before increasing gradually in 2015 and 2016. at the same time, medium to long - term inflation expectations remain firmly anchored in line with price stability. upside and downside risks to the outlook for price developments are both seen as limited and broadly balanced over the medium term. we will monitor the possible repercussions of geopolitical risks and exchange rate developments closely in this context. the exchange rate is not a policy target for the ecb. nevertheless, the exchange rate remains an important driver of future inflation in the euro area. certainly, the appreciation that took place since mid - 2012 had an impact on price stability. in the present context, an appreciated exchange rate is a risk to the sustainability of the recovery. recent monetary policy measures let me now move to explaining our monetary policy stance. we decided on a number of monetary policy measures in early june. these measures are aimed at providing additional monetary policy accommodation by supporting lending to the real economy. in line with our price stability mandate, these decisions are an essential contribution to bringing inflation rates closer to 2 %. they will also contribute to a further strengthening of the
|
recovery. β’ specifically, we lowered all key interest rates further. our main refinancing rate now stands at 0. 15 %. accordingly, our deposit facility rate has been cut to a negative level and now stands at β 0. 10 %. β’ we will conduct targeted longer - term refinancing operations ( tltros ) as of september 2014. in these operations, banks will be entitled to borrow from the eurosystem, conditional on their lending to the private non - financial sector, with loans to households for house purchase being excluded. β’ in addition, we are intensifying our work in preparation of possible outright purchases in the market for asset - backed securities ( abss ). β’ furthermore, we also decided that at least until the end of 2016, we will continue to fully meet the demand of banks for liquidity in our refinancing operations β of course, against adequate collateral. β’ finally, we have suspended the weekly operations to absorb the liquidity injected under the securities markets programme. we took these decisions to enable our accommodative monetary policy stance to better feed through to the wider economy. weak credit growth in the euro area, particularly to small businesses, has been a major headwind for the recovery. indirectly, it has been a continuous drag on inflation over the recent past. in fact, despite significant reductions in policy interest rates and, overall, more contained macroeconomic risks, bank - intermediated credit growth remains subdued and lending rates for small businesses are well above the levels usually observed in similar phases of the business cycle. to address this challenge, our tltros are tailored to incentivise bank lending to the real economy in the euro area. the tltros will provide long - term funding to participating banks. this should ease their financing costs, allowing banks to pass on such attractive conditions bis central bankers β speeches to their customers. this will ease credit conditions and stimulate credit creation. moreover, the growth of our balance sheet as a result of a significant take - up in our tltros will put downward pressure on interest rates in the money markets. this will contribute further to lowering the banking sector β s funding costs. however, the tltros will not merely provide long - term funding. the tltros are targeted operations : the stronger the flows of new net lending to non - financial corporations and consumers ( relative to a specified benchmark ), the higher the amount that banks will be permitted to borrow from the
| 1 |
mandated that all rbi - regulated entities should report the otc trades in corporate bonds on this platform. other regulators have also prescribed such reporting requirement in respect of their regulated entities. this has resulted in building a credible database of all the trades in corporate bond market providing useful information for regulators and market participants. ii. clearing houses of the exchanges have been permitted to have a pooling fund account with rbi to facilitate dvp - i based settlement of trades in corporate bonds. iii. repo in corporate bonds was permitted under a comprehensive regulatory framework. iv. banks were permitted to classify their investments in non - slr bonds issued by companies engaged in infrastructure activities and having a minimum residual maturity of seven years under the held to maturity ( htm ) category ; v. the provisioning norms for banks for infrastructure loan accounts have been relaxed. vi. the exposure norms for pds have been relaxed to enable them to play a larger role in the corporate bond market. bis central bankers β speeches vii. credit default swaps ( cds ) have been introduced on corporate bonds since december 01, 2011 to facilitate hedging of credit risk associated with holding corporate bonds and encourage investors participation in long term corporate bonds. viii. fii limit for investment in corporate bonds has been raised by additional us $ five billion on november 18, 2011 taking the total limit to us $ 20 billion to attract foreign investors into this market. in addition to the limit of us $ 20 billion, a separate limit of us $ 25 billion has been provided for investment by fiis in corporate bonds issued by infrastructure companies. further, additional us $ one billion has been provided to the qualified financial institutions ( qfi ). ix. the terms and conditions for the scheme for fii investment in infrastructure debt and the scheme for non - resident investment in infrastructure development funds ( idfs ) have been further rationalised in terms of lock - in period and residual maturity ; and x. further, as a measure of relaxation, qfis have been now allowed to invest in those mf schemes that hold at least 25 per cent of their assets ( either in debt or equity or both ) in the infrastructure sector under the current us $ three billion sub - limit for investment in mutual funds related to infrastructure. xi. revised guidelines have been issued for securitisation of standard assets so as to promote this market. the guidelines focus on twin objectives of development of bond market as well as provide investors a safe financial product. the interest of the originator
|
##ly obvious β previously, the financial markets appeared to assume that, should individual euro - area countries experience financial difficulties, the european community would bail them out, even though the eu treaty prohibits mutual liability. as a result, doubts as to the soundness of individual governments led to doubts regarding the euro area as a whole. it is therefore extremely important that, in the future, it is possible for over - indebted states to default. for one thing, this would significantly limit the extent of future crises ; for another, it would reduce the likelihood of the european community of states having to intervene. until then, however, we still need to overcome a few obstacles. one major obstacle is the strong nexus between banks and sovereigns. it means that insolvent banks can pose a threat to the solvency of entire governments, and vice versa. banks are not required to back bonds issued by european governments or other oecd countries with capital, and can hold unlimited quantities of them on their books. in theory, a bank β s business could therefore consist entirely of bonds issued by a single state. this rule creates a troubling risk concentration. to sever this unhealthy link, we need to make just one simple change. in future, banks must back the government bonds they purchase with sufficient capital. in short, the existing rules need to be improved to ensure that both creditors and borrowers consider the risks more carefully when lending or borrowing. however, this reform won β t be enough on its own to resolve the euro area β s underlying problems. another starting point for reform would therefore be to intensify the coordination and integration of economic policy within the euro area. without an integrated economic policy, it is difficult for the economies in a currency union to converge. implementing deficit ceilings for government debt is another area in which progress needs to be 2 / 4 bis central bankers'speeches made. all member states should adhere to these ceilings β in no way should they be seen merely as recommendations. the onus here is clearly on politicians. central banks can apply pressure, at most. 4. where is europe heading? now, there will be some who say that these reform proposals sound too ambitious given the current state of europe. but there are signs that the eu is indeed both willing and able to reform and that, overall, it is making progress. i would therefore like to bring three points to your attention. first, it goes without saying that you can think long and hard
| 0 |
janet l yellen : fiscal responsibility and global rebalancing speech by ms janet l yellen, vice chair of the board of governors of the federal reserve system, at the committee for economic development 2010 international counterparts conference, new york, 1 december 2010. * * * good morning. thank you for inviting me to be with you today. the committee for economic development has a long and distinguished record in identifying and addressing crucial issues related to our nation β s economic growth and productivity. and today β s conference on fiscal sustainability and the global economy fits squarely within that tradition. my remarks will focus on the challenges faced by u. s. policymakers as they confront the need to put fiscal policy on a sustainable track in the long term while providing support to the economy in the near term. i will also offer some thoughts on the recent actions undertaken by the federal reserve and on the implications of our nation β s fiscal and monetary policy choices for the global economy. 1 the challenge of achieving fiscal sustainability in the united states charting a sensible course for the federal budget is an essential but formidable task for u. s. policymakers. since the onset of the recent recession and financial crisis, the federal budget deficit has soared as the weak economy has depressed revenues and pushed up expenditures and as necessary policy actions have been taken to help ease the recession and shore up the financial system. at 9 percent of gross domestic product ( gdp ), the budget deficit in fiscal year 2010 was a little lower than it had been a year earlier, but it was still considerably above the average of 2 percent of gdp during the pre - crisis period from fiscal 2005 to 2007. as a result of the recent deficits, federal debt held by the public has increased to around 60 percent of gdp β a level not seen in 60 years. for now, the budget deficit seems to have topped out. so long as the economy and financial markets continue to recover, the deficit should narrow relative to gdp over the next few years as a growing economy boosts revenues and reduces safety - net expenditures and as the policies put in place to provide economic stimulus and promote financial stability wind down. that said, the budget situation over the longer run presents some very difficult challenges, in part because the aging of the u. s. population implies a sizable and sustained increase in the share of the population receiving benefits from social security, medicare, and medicaid. currently, there are about five individuals between the ages of 20 and 64 for each person aged 65
|
. amazonaws. com / wpcontent / uploads / 2010 / 07 / icb - final - report. pdf. see www. sif. admin. ch / dokumentation / 00514 / 00519 / 00592 / index. html? lang = en. see www. federalreserve. gov / boarddocs / srletters / 2001 / sr0101. htm. bis central bankers β speeches banks with both bank and nonbank operations in the united states depends on the foreign bank β s own organizational choices. a rebalanced approach to foreign bank regulation as has been the case in the past, we need to adjust the regulatory requirements for foreign banks in response to changes in the nature of their activities in the united states, the risks attendant to those changes, and instructions from congress in new statutory provisions. the modified regime should counteract the risks posed to u. s. financial stability by the activities of foreign banking organizations, as manifested in the years leading up to, and through, the financial crisis. special attention must be paid to the risk of runs associated with significant reliance on short - term funding. in addition, the regime should reduce the difficulties in resolution of cross - border firms. finally, it should take steps to diminish the potential need for ex - post ring - fencing when losses mount or runs develop during a crisis, since such actions may well be unhelpfully procyclical. at the same time, in modifying our regulatory regime for foreign banking organizations, we must remain mindful of the benefits that foreign banks can bring to our economy and of the important policies of national treatment and comparable competitive opportunity. thus, we should chart a middle course, not moving to a fully territorial model of foreign bank regulation, but instead making targeted adjustments to address the risks i have identified. in basic terms, three such adjustments are desirable. first, a more uniform structure should be required for the largest u. s. operations of foreign banks β specifically, that these firms establish a top - tier u. s. intermediate holding company ( ihc ) over all u. s. bank and nonbank subsidiaries. an ihc would make application of enhanced prudential supervision more consistent across foreign banks and reduce the ability of foreign banks to avoid u. s. consolidated - capital regulations. because u. s. branches and agencies are part of the foreign parent bank, they would not be included
| 0.5 |
mitigate and even neutralize interest rate risks. in many economies around the world, there are two common types of financial products based on benchmark interest rates : ( 1 ) deposits, loans, and mobile nominal interest bonds to various periods ; and ( 2 ) interest rate derivatives. in israel, unlike many other advanced economies, activity is currently conducted mainly in the assets themselves, and not through derivatives. it is important to note that even though activity in interest rate derivatives has grown significantly in recent years, it is still quite low compared to other countries, mainly in the longer terms. these differences indicate the underuse of financial defenses against interest rate risks in israel, relative to what is common in other advanced economies. in order to illustrate how the development of this type of instrument would help the broad public, we can use the example of the early payment fee that is well - known to the representatives of the banking system who are here, and that is relevant to almost anyone who takes out a mortgage in israel. it is reasonable to assume that if the banks were able to hedge the risk of early repayment of such a long - term loan and better manage their risk balance, this fee would be reduced. the banks would be able to do this by adopting a long - term irs instrument, which replaces cash flow from fixed interest with variable interest. as a result, the customer would have a greater ability to refinance a mortgage in view of various developments β whether they are specific to that customer or they apply to the entire economy β and would improve his financial state, or what we economists refer to as β consumer well - being ". in contrast with most advanced economies, where a significant proportion of interest rate derivative transactions are settled through a central clearinghouse, such infrastructure still does not exist in israel. in a central clearinghouse, the risks of various transactions offset each other, and the remainder is transferred to one central entity that manages it through the appropriate collaterals. in order to develop the interest rate derivatives market in israel, it is important to advance a central clearinghouse that will significantly mitigate the credit risks inherent in such transactions. there are other advisable measures that it is worth thinking about, which i will discuss at other occasions. to conclude, the israeli economy has made many steps in recent years to advance competition in the credit market. there are additional possible stems that would complete what is necessary to advance competition in this market, some of which β particularly those that deal with the structure of
|
goals. these pressures notwithstanding, the ministry of finance is adhering to the correct and prudent policy without yielding to demands for unproductive hyperactive steps. b ) continuation of the bank of israel's interest policy, aimed essentially at maintaining price stability. in this respect there has not been, there is not, and there will not be any change in the bank's view of the maintenance of price stability as its major objective. at the same time, the bank will continue to contribute to the government's other economic goals, especially growth and employment, as long as doing so does not adversely impact on the objective of price stability. the bank will also continue to support financial stability. this issue, the bank of israel β s objectives, leads me to the bank β s role in the economy. the perception of the bank of israel's policy objectives is expressed in the modern approach to central banking, according to which the central bank is an independent institution, with clear division of labor and responsibility between the government, and especially the ministry of finance, on the one hand, and the central bank on the other. the independence of the central bank is vital for the success of the economy. this is because of the irresistible temptation for governments to ask their central banks to print money to finance their activities, rather than imposing taxes on the population. the request to print money can take on different guises, such as a request to cut the interest rate β which initially, under certain circumstances and in the short run may boost growth, but which eventually, after what may be a very short period, leads to inflation. other examples could include a request to finance a particular industry, or to purchase government bonds, or to write off government debts. this danger is particularly acute in democracies, because democratic governments β in all countries and at all times β generally have a short horizon, especially when elections are approaching. hence, despite the fact that printing money ultimately brings inflation, it is not the focus of their concern, despite the destructive impact it has on the economy and the society. in other words, governments in democratic countries have an inflationary tendency. some of us well remember israel β s economy thirty years ago, and the crises that resulted from that tendency. price stability should thus be placed in the hands of a professional independent institution that is free of any political consideration and involvement, and that will operate with a longterm perspective. the political systems in advanced countries understood how important this
| 0.5 |
modestly from the very high levels reached toward the end of 2006. this global outlook bodes well for canada. real gdp growth should average about 2 1 / 2 per cent in the first half of 2007, rising to about 2 3 / 4 per cent in the second half of the year. in 2008, growth is projected to stay in line with the growth of potential output, estimated to be 2. 8 per cent, keeping the economy operating near its full production capacity. the underlying trend of inflation, as measured by core cpi inflation, should be close to 2 per cent through 2008. total cpi inflation is expected to average just above 1 per cent in the first half of 2007, returning to the 2 per cent target in 2008. in line with this projection, in january we judged the current level of the policy rate to be consistent with achieving the 2 per cent inflation target over the medium term. the risks to this outlook for the canadian economy are reasonably well balanced. the biggest downside risk is sharper or more prolonged weakness in the u. s. economy, and the upside risk comes from the strength of the canadian housing market and credit growth putting upward pressure on demand and inflation. in addition, there remains a small possibility of a disorderly resolution of global imbalances, particularly if policy - makers fail to take appropriate actions. i'll conclude now, and then i'd be happy to hear your comments and answer your questions. conclusion the past five years have been a period of significant economic adjustment. canada is a wealthier country as a result of this change. we will continue to prosper, whether the external environment is favourable or not, provided that we learn the larger lesson β that it is essential to be flexible and adjust effectively to changes in economic circumstance. the current favourable outlook, for both canada and the global economy, should not lead to complacency. we all have a stake in meeting the challenge of adjustment. as citizens, business leaders, workers and policy - makers, we all have a role in ensuring that canada can respond effectively to changes in the economic landscape, and that canadians can seize the opportunities that such changes often bring.
|
our judgment at this time that the risks around achieving our inflation objective over a reasonable time frame are roughly balanced. accordingly, we believe that the current level of monetary stimulus remains appropriate. some of you may be wondering why we aren β t being more specific about the likely future stance of monetary policy. let me answer by saying that forward guidance remains a key element of the policy tool kit β but one that we will reserve for times when we believe there are net benefits to its use. there will no doubt come a day when we will offer forward guidance again β but not this day. and with that, carolyn and i would be pleased to answer your questions. bis central bankers β speeches
| 0.5 |
supporting the normalisation of price stability, as well as the ongoing economic recovery. i am confident that full implementation of the private and public sector asset purchase programmes, as announced, will lead to a sustained return of inflation rates towards levels consistent with our definition of price stability, underpinning the firm anchoring of medium to long - term inflation expectations. as always, the governing council stands ready to use all the instruments available within its mandate to respond to any material change to the outlook for price stability. references bhattarai, s., eggertsson, g. b. and gafarov, b., β time consistency and the duration of government debt : a signalling theory of quantitative easing β, unpublished manuscript, 2014. curdia, v. and woodford, m., β the central bank balance sheet as an instrument of monetary policy β, journal of monetary economics, 2011. del negro, m., eggertsson, g. b., ferrero, a. and kiyotaki, n., β the great escape? a quantitative evaluation of the fed β s liquidity facilities β, frb ny staff report 520, 2011. eggertsson, g. and woodford, m., β the zero bound on interest rates and optimal monetary policy β, brookings papers on economic activity, 2002. gertler, m. and karadi, p., β qe1 vs. 2 vs. 3 : a framework for analyzing large - scale asset purchases as a monetary policy tool β, international journal of central banking, 2013. bis central bankers β speeches vayanos, d. and vila, j. l., β a preferred - habitat model of the term structure of interest rates β, nber working paper 15487, 2009. wessel, d. ( ed. ), central banking after the great recession : lessons learned and challenges ahead, brookings institution, 2014. bis central bankers β speeches
|
in broader credit conditions since the introduction of our new non - standard measures. the survey, addressed to the senior loan officers of a representative sample of euro area banks, provides information on financing conditions in euro area credit markets and on banks β lending policies. the left - hand chart in figure 4 shows that banks have consistently eased their credit standards for loans to non - financial corporations over the past year. the easing of credit standards stems, notably, from the lower cost of funds and balance sheet constraints, as well as from greater competition among banks. both developments were clearly objectives of our measures, in particular of the tltros. the right - hand chart in figure 4 shows net credit demand conditions and their contributing factors. easier access to credit has been coupled with a consistent increase in firms β demand for loans. the general level of interest rates, according to the survey respondents, is contributing most to the recovery in loan demand. as i have already mentioned, an important transmission channel for asset purchases relates to the fact that different assets are imperfect substitutes. consequently, interventions by the central bank that affect the supply of various assets available to private investors influence the prices of many other assets, including investment grade bonds, equities, real estate and foreign assets, with consequences for the exchange rate. figure 5 shows the increase in equity and bond prices ( the latter illustrated by investment grade corporate bond yields ). bis central bankers β speeches figure 5 the ongoing deterioration of long - term inflation expectations was a major factor in the extension of our purchase programme in january this year. figure 6 shows the evolution of these expectations over the past decade and since 2012. euro area longer - term inflation expectations ( both market - based and, to a lesser extent, survey - based ) had been falling since early 2013, reaching an all - time low by early 2015. figure 6 bis central bankers β speeches expectations of inflation five years ahead, as expressed in the ecb survey of professional forecasters, fell from 1. 98 % in the first quarter of 2013 to 1. 77 % in the first quarter of 2015. the five - year inflation - linked swap rate five years ahead fell from 2. 4 % to 1. 5 % over the same period. since january 2015 this declining trend has been reversed. both market - based and survey - based measures of longer - term inflation expectations have recovered from their lows. while broadly similar dynamics in market - based measures of longer - term inflation expectations have been observed in other countries, the decline
| 1 |
at the developments in overseas economies by region, the u. s. economy has continued to recover, underpinned by household spending. in the january - march quarter of 2015, economic growth decelerated significantly due to transitory factors such as the effects of the severe winter weather and the strikes at west coast ports, but a clear rebound was observed in the april - june quarter, with high growth. against the backdrop of the continued favorable employment and income situation, the growth momentum seems to be solid. the federal reserve β s tightening coming into sight also suggests improvement of the u. s. economy. the european economy saw continued growth of nine consecutive quarters and has continued to recover moderately. as the financial assistance to greece is being implemented, global financial markets β view on the situation has become positive. going forward, as the effects of the depreciation of the euro and monetary easing permeate, the european economy will likely continue to recover moderately. while the advanced economies are growing steadily, the emerging economies are slowing. first, as for china, the recent substantial decline in stock prices has had a significant impact on global financial markets. this could be regarded as a correction of the excessive level in stock prices that had more than doubled during about the half - year prior to the decline. nevertheless, the real economy has also seen somewhat of a slowdown recently. with the increase in income levels, the chinese economy is experiencing a phase of a shift in its economic structure from one centered on manufacturers to one centered on the services sector, leading to a change from high growth to medium growth. the recent slowdown is considered to be the adjustments of excess investment in manufacturers in this phase. the fact that investment in regional economies has been weak as political, economic, and social structural reform is carried out seems to be another reason for the slowdown. under this situation, the chinese authorities have been providing a series of economic stimulus measures both on the fiscal and monetary fronts. with relatively large room for conducting policy measures both on the fiscal and monetary fronts, the chinese economy is likely to follow a generally stable growth path, albeit at a somewhat reduced pace. emerging economies other than china are also showing sluggishness, reflecting the spillover effects of adjustments in china and global weakness in it - related demand. this sluggishness is likely to continue for some time, but as the positive effects of the growth in advanced economies spread, economic growth in those emerging economies is expected to gradually accelerate, with domestic
|
sustainable financing. more respondent banks view such mode of financing as highly important. finally, banks intend to maintain capital and liquidity buffers at levels higher than domestic and global standards to promote institutional stability. the bsp will continue to push for major reforms to ensure the soundness, stability, resilience and inclusivity of the banking system amid the ongoing health crisis. the bsp β s strategic regulatory and supervisory thrusts focus on three key areas, namely : strengthening risk governance ; ( 2 ) promoting responsible and responsive innovation ; and advancing the sustainability agenda in the financial system. the pandemic triggered a strategic review of business models and business priorities due to the changing business landscape. this highlights the importance of having strong risk governance. the bsp will continue to raise the bar in managing risk to ensure that the financial industry remains resilient to threats to financial stability. in this respect, we expect three things from banks : 1. we expect banks to build buffers and adopt robust stress testing methodologies so that they will be able to timely identify emerging risks, anticipate the occurrence of new risk triggers and prepare for their occurrence. 2. we expect banks to adopt more resilient systems to fend off the increase in cyber threat actors as the industry becomes largely digitalized. 3. finally, we also expect banks to continuously adhere to the tenets of good governance and protect the interest of the public even with the reduced face to face interaction with their clients. recent issuances of the bangko sentral are all directed toward this end. for instance, the bsp recognizes that building and sustaining a good reputation is a critical element in promoting a bank β s safety and soundness. since reputational risk is inextricably linked to other risk exposures such as credit, market, liquidity, and operational risks, it can be triggered by any risk such as for instance an unfavorable feedback from a client. circular no. 1114 or the guidelines on reputational risk management recognizes that everyone in the organization has a role to play in the management of reputational risk. said guidelines highlight the importance of shared accountability and has set out the roles and responsibilities of the board of directors and officers, consistent with the principle that the tone of good governance should come from the top. in the same vein, the bsp issued circular no. 1112 requiring banks to observe due diligence in the recruitment of their personnel. the β know your employee β rule
| 0 |
s understanding of financial services through financial education and literacy. we have made progress in some areas but a lot of work still needs to be done. some of our recent achievements include : β’ new cbsi act : a new cbsi act was passed by parliament in november last year and one of the new provisions in the law is to specifically include financial inclusion as a mandate of the bank. this now formalises the bank β s involvement in financial inclusion activities. β’ review of legal framework : and to ensure that our other laws also support these efforts, we have, with adb support, completed a review of other laws and policies last year to ensure any legal impediments to financial services innovation are identified and addressed. β’ simplified kyc requirements : one of the barriers is the stringent bank requirements for opening bank accounts. so in collaboration with the anti money laundering commission, we have issued to the commercial banks simple requirements for identifying customers when opening bank accounts. this will make it easier for more rural people to open accounts with the banks. β’ financial education : in partnership with the ministry of education, we have set up a working committee to integrate financial education into the national school curriculum, targeting class one up to form three. the revision of the curriculum has bis central bankers β speeches been done but further work is required to prepare course materials and train teachers. β’ adult financial literacy : this is a very important area for us, given the low literacy level in the country especially among rural adults. the central bank is actively engaged in financial literacy through its money smart day programs, its weekly money matters radio program, and also through financial literacy workshops for communities and women groups. these achievements have been possible because of close collaboration and partnership with key stakeholders. working together with other stakeholders is critical if we are to achieve the goals and objectives we have set ourselves in terms of financial inclusion. i am sure this is also true for your respective countries. but i think our biggest weakness is trying to measure what we have done. how are we performing against our set targets? this is where data and indicators become very important. we need relevant data to measure progress and review our performance. and i am delighted to note that the whole of tomorrow is devoted to this very important issue. concluding remarks i would like to conclude by reiterating the importance of continuing to work together to address our common challenges as we strive to enable more of our people benefit from financial services. at the same time i would like to register our appreciation to
|
the role the credit unions play in the financial system as very vital. while they remain pivotal to the informal financial sector, credit unions play a very vital link with the formal banking sector, not to mention the important place they have in promoting and encouraging development of financial services in this country. under the legal framework however, credit unions are privately owned institutions, which are managed by a board and management, appointed by the members. that being the case, the central bank does not interfere with the way credit unions manage their businesses. cbsi however, subscribes to the philosophy behind the credit unions movement : that members working in cooperative spirit to encourage the habit of savings and educating them in the wise use of credit. the more educated credit unions members in the management of their money, the better it is for the financial sector and the economy. to this end cbsi has provided substantial support to the credit union movement over the years through the credit union league. cbsi would like to see a strong league office which is able to deliver services as expected under the credit union act to its member credit unions. cbsi support would continue but at the same time the bank believes that it is now time to promote and encourage other alternative and inclusive ways of delivering financial services to the majority of the solomon islands population. putting value on information finally i would like to stress the importance of this workshop. during the next few days valuable information and ideas will be imparted to you. this workshop will only be useful if what you learn from it is put into practice. no doubt you will agree that information is not cheap and instructions to better manage and run your credit unions can be very expensive, if these are not put to practice. i sincerely hope that you will do the right thing to ensure your credit unions are better managed for the greater good of your members and financial services development as a whole. in conclusion, let me take this opportunity to thank you all for the commitment and effort you have shown to attend this workshop. i am sure the next two days will prove useful in strengthening your credit unions compliance with the credit union act. thank you for listening.
| 0.5 |
. however, those constraints have eased over time. more recently, external financing has become widely available at very favourable cost. primarily, this reflects the stance of monetary policy ( both in australia and abroad ), which is delivering historically low levels of interest rates, ample liquidity and has helped to push up equity prices. indeed, a common refrain of firms in the course of our business liaison has been that neither the cost nor the availability of external finance have been factors limiting investment of late. moreover, ( non - financial ) corporate balance sheet data indicate that many australian companies currently hold relatively high levels of cash, suggesting that they have access to resources to finance investment when the time comes. the exchange rate is too high? the exchange rate has declined somewhat relative to its peak in the first half of 2013. but it remains high, especially given the sizeable decline in commodity prices this year. the implications of this vary across traded and non - traded sectors. a further decline in the exchange rate would provide additional support to demand for domestic firms producing tradable goods and services. at the same time, however, the high exchange rate also means that imported capital goods are currently relatively cheap. hence, the still - high level of the exchange rate may be a net positive factor for the investment plans of some firms in non - tradable industries. for firms in tradable industries, on the other hand, the low cost of imported capital is offset by the effect of the high exchange rate on the demand for the goods and services they produce. in short, the high exchange rate might be playing a part in restraining investment in some sectors of the economy, but it β s unlikely to be the full story. animal spirits are too weak? what is often referred to as β animal spirits β consists of three key elements. 3 first, there is uncertainty, which describes the range of possible outcomes, let β s say for demand, but other things like costs matter too. second, there is the expected or most likely outcome. together, these describe the distribution of possible outcomes. but firms β willingness to invest also depends on the third element, which is their appetite for risk. i β ll consider each of these elements in turn. the outlook is too uncertain? on the surface, uncertainty seems like an appealing explanation for subdued investment. however, we should remember that firms always have to make investment decisions in an environment of uncertainty, not just about the prospects for the macroeconomy but also for their industry
|
. i also note that some of the pessimism about productivity is happening alongside great optimism in some quarters about a new industrial revolution built on better algorithms. the truth may well lie somewhere in the middle. it might also take a while to assert itself. those of us who remember the 1990s would recall that there have been previous episodes where considerable innovation seemed to be happening, but this took a while to be evident in the productivity data. this is because firms take a long time to adapt their business models and processes to the new technologies. and the greatest spur to change is capacity constraints. tight economies spur process innovation. when there is plenty of spare capacity, not even strong competition necessarily induces higher rates of adoption of new technologies. risks to the outlook taking all that into consideration, there seems a reasonable prospect that β as long as nothing really bad happens β this global expansion could continue for a while. this is especially so if the technology optimists are right about the implications of recent innovations. but of course there are risk scenarios that have the potential to derail the current economic momentum. foremost of these at present would be geopolitical risks. these are particularly difficult risks to integrate into a macroeconomic analytical framework. we aren β t political analysts. and i question whether anyone can truly know what the odds of certain events occurring might be. but we can at least think about what those risks might be and whether they might be increasing or receding. i think it is fair to say that geopolitical risks in europe and specifically the euro area have receded. while it remains to be seen how brexit will play out from a practical perspective, an existential crisis for the euro area and the eu more broadly no longer seems so close. against that, geopolitical risks in asia have increased. these are the low probability, high - impact events that can only ever be a risk to one β s forecasts. until something actually happens, they do not and should not affect the central scenario. even if you knew for sure that an event happened, the economic effects are often difficult to predict. financial risks will also be ever - present as risks to a macroeconomic outlook, and they are almost as hard as geopolitical risks to quantify. one that seems to be becoming less pertinent at 8 / 10 bis central bankers'speeches the moment is the international risk posed by ongoing low interest rates and the resulting search for yield by investors. now that policy interest rates globally
| 0.5 |
emmanuel tumusiime - mutebile : the role of the central bank in the post 2015 era to promote local ownership of monetary and fiscal policies and processes special address by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, to the tenth annual meeting of the african science academies, kampala, 11 november 2014. * * * introduction the theme of my address this afternoon is the role, responsibilities and governance of the central bank in a modern market oriented economy, such as that of uganda. if uganda is to create and implement a successful development agenda in 2015 and beyond, it must build strong institutions of economic governance. academics and economic policy makers have learned many lessons about macroeconomic policy and central banking over the last fifty years, and these lessons have influenced radical changes in the practise of monetary policy and the governance of central banks around the world, including in uganda. in some important respects, including the operational independence of the central bank, the adoption of an inflation targeting monetary policy framework and risk based bank supervision, uganda has been among the pioneers of radical reform in africa. in this address i will argue, first, that central banks must have very clear and transparent policy mandates, which are consistent with the policy tools that they have at their disposal. without such mandates, which must command political consensus, central banks cannot be held to account for their performance. this requires that central banks must focus exclusively on monetary policy and bank regulation, and not undertake other roles which might create policy conflicts. secondly, i will argue that central banks need operational independence to pursue their politically determined policy goals. i will explain why this is so important and what it means in practise. thirdly, i will argue that policies which have distributional implications are inherently political and, therefore, should not be the responsibility of a central bank ; instead they should be the responsibility of the relevant government ministry. this principle requires a clear separation of monetary and fiscal policies. what is the proper role of a central bank? central banks are institutions which have a monopoly on the issuance of fiat money ; notes and coins which are legal tender within a given jurisdiction or set of jurisdictions. from this monopoly of the central bank is derived its two critical functions. first, the central bank can determine the quantity of money in circulation in the economy or, alternatively, set the price of this money, which is the interest rate. determining the quantity or the price of money is the essence of monetary policy. no
|
losses. policymakers with short term horizons include politicians seeking election. a central bank which is not independent of political interference would face pressure to pursue expansionary monetary policies which generate short term gains in output at the expense of higher inflation in the future. granting operational independence to the central bank is, therefore, an institutional mechanism to insulate the central bank from pressures to undertake actions which would have damaging long term consequences, and thus can deliver better monetary policy over the long term. moreover, monetary policy is likely to have more credibility with the private sector if the central bank is insulated from political pressures. in turn, the greater credibility of monetary policy means that the private sector is likely to take a more optimistic view of inflation prospects and, as expectations about inflation are to some degree self - fulfilling, this will help to bring about lower inflation. 4. the separation of fiscal and monetary policy the implementation of monetary policy and bank regulation does not, in general, have significant distributional consequences. for example, an increase in the policy interest rate has macroeconomic affects but it does not usually favour one section of the population at the expense of another. if the implementation of monetary policy and bank regulation had significant distributional consequences, the operational independence of the central bank would be much more problematic, because distributional issues should be determined in the domain of politics, not by technocrats alone. in contrast, fiscal policy is intrinsically distributional in its consequences. how taxes are raised and where government spends public resources does not have an equal impact on all bis central bankers β speeches citizens. consequently it is imperative, in a democracy, that elected politicians are closely involved in determining the details of fiscal policy. for example, in uganda all government expenditures must be approved by parliament, as must all public borrowing and all changes to tax policy. this principle is enunciated in the ugandan constitution. given that fiscal policy has distributional consequences and requires parliamentary approval if it is to command political legitimacy, it is imperative that the central bank is not expected to undertake policies which are quasi fiscal in nature, such as providing subsidised credit from its own resources to industries or firms which are regarded as priorities for development. if government desires to pursue such policies, they should be implemented through the government budget, after the necessary parliamentary approval has been obtained. it is essential to maintain a strict separation between monetary and fiscal policies. sound macroeconomic policy also requires the avoidance of β fiscal dominance β, which refers to government persistently borrowing
| 1 |
##ization, a country needs to carefully consider deficiencies in domestic financial institutions, corporate governance, and bank regulation and supervision. emergingmarket economies in which such financial market infrastructure is still in an early stage of development should consider the use of prudential regulations that discourage capital inflows, especially short - term capital flows, along the lines of the approach formerly in place in chile. such regulation of capital flows may be appropriate in the period before robust domestic institutions and sound policies are fully in place and tested by experience. the process the asian financial crises generated several initiatives aimed at preventing or better managing future crises. the academic and policy communities have sought a better understanding of the causes and transmission mechanisms of crises. there have also been initiatives to reform what has come to be called the international financial architecture. issues related to the prevention and management of emerging market financial crises have entered the agenda - - and sometimes dominated the discussions - - of the g - 7 in recent years. in addition, some groups have been formed specifically to study such issues. the g - 20, which includes finance ministers and central bank governors from major emerging - market countries in addition to the g - 7, was launched in september 1999 to facilitate dialogue between systemically important countries and to promote international stability. the g - 20 has recently focused on reform of the international financial architecture and the implications of globalization. i have participated in two of the new groups established in response to the asian financial crisis : the manila framework group and the financial stability forum. i represented the federal reserve at the first manila framework meeting and in the financial stability forum for the last few years. my focus in these groups has reflected my specialties at the board, including asia - pacific developments and bank supervision and regulation. the manila framework group was founded in november 1997, in the throes of the asian crisis, with the aim of restoring financial stability in the region. it consists of finance ministry and central bank officials from fourteen pacific countries, including the united states. the group has met twice a year and has undertaken a number of studies and launched cooperative ventures among its members. the financial stability forum was established by the g - 7 in april 1999, after the asian and russian financial crises, to provide a means for cooperation in the supervision of financial markets among national governments, international financial authorities, regulatory groups, and other experts. the forum's membership includes central bank and treasury representatives and a financial services supervisor from each of the g - 7 countries ; a single representative of a
|
, have social obligations to perform their work in a professional, competent, and ethical manner. 14. the results of statistical investigations are usually stated in numerical form and are, therefore, in the public mind, assigned a degree of definiteness usually associated with mathematical technique. the careful investigator, however, is constantly aware of the fact that the preciseness of his numerical result varies directly with the degree of care used in selecting, from the larger universe, the sample upon which his study is based. the numerical conclusions derived from a study of the sample are held to be characteristic and representative of the universe. a very common error in statistical investigation is the selection of a sample which is not an accurate cross - section of the larger universe but merely a particular, unique segment. conclusions drawn from the biased sample will not, of course, accurately reflect the larger universe. the misuse occurs when such conclusions are held to be representative of the universe by those who either deliberately or un - consciously overlook the sampling bias. 15. an article about cats appeared in the new york times β on august 22, 1989. it stated, β the experts have also developed startling evidence of the cat β s renowned ability to survive, this time in the particular setting of new york city, where cats are prone at this time of year to fall from open windows in tall buildings. researchers call the phenomenon feline high - rise syndrome. β statistics were like this : from june 4 through november 4, 1984, 132 such victims were admitted to the animal medical centre and most of the cats landed on concrete and most survived. from the data on the distance of the fall for 129 of the 132 cats, it was observed that the falls ranged from 2 to 32 stories. only one of 22 cats that plunged from above 7 stories died, and there was only one fracture among the 13 that fell more than 9 stories. but how a cat will survive of a fall from a great height defying gravitation? such description generally does not push one to scrutinize the statements till it was understood that majority of the cat owners do not report these incidents to any medical centre and believe that other people probably don β t report their cats β deaths, either. therefore, the error seemed so obvious that sample was not representative and there was data reporting problems. 16. let me cite another example on the wrong notion of conditional probabilities, which appear in statistical science 2005, a type of intentional and unintentional misinterpretation
| 0 |
andreas dombret : regulatory reform in europe β mission accomplished? speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the institute of international bankers ( iib ) annual conference, washington dc, 2 march 2015. * 1. * * introduction ladies and gentlemen thank you for granting me this opportunity to speak at the iib annual conference. it is a pleasure to be here. in my speech today, i want to answer the question whether the mission of regulatory reform in europe has been accomplished. allow me to begin with a quote from the movie β mission impossible β : β every search for a hero must begin with something which every hero requires, a villain β. for the topic of regulatory reform, i want to paraphrase that quote as follows : β every search for a solution must begin with something which every solution requires, a problem β. we all know that the problem in the banking system was the financial crisis and in my view, the solution is regulatory reform. let us therefore take a closer look at what has been done in post - crisis reforms in europe and beyond. 2. the first mission : regulatory reform one of the main lessons from the financial crisis was that the rules of the banking system were insufficient. we saw excessive risk - taking, insufficient loss absorbing capacities and banks that were β too big to fail β β just to name some of the problems that led to the crisis. over the last seven years since the collapse of lehman brothers, significant progress has been made on the regulatory agenda. the most important regulatory measure was the basel iii framework, which introduced stricter capital requirements and new liquidity rules. in europe, we have done a lot of work to implement these requirements β first and foremost with the crd iv and crr. these rules safeguard harmonised implementation of the basel iii framework throughout all member states. on a side note, the latest basel iii monitoring exercise is due to be published tomorrow. i am certain it will confirm the impression that most large internationally active banks already meet the fully implemented capital requirements. i am also quite optimistic that, on average, all internationally active german banks will fulfil the basel iii requirements with regard to the cet1 ratio. we should furthermore see that german banks have significantly improved their leverage ratios. in international comparison, there is still room for further improvements, however. but still, banks β loss absorbing capacity is far better than it was prior to the financial crisis. when basel
|
of the regulated banking sector into the unregulated shadow banking sector. this development is something regulators have to watch closely. without any doubt, shadow banks can become a source of systemic risk, especially when they are highly interconnected with the regular banking system. it is therefore of the utmost importance to monitor shadow banks β activities and try to regulate them adequately. at their 2014 brisbane summit, the g20 agreed on a new roadmap for regulating the shadow banking sector. work is being conducted simultaneously by the fsb, the basel committee and iosco. but the ambitious reform agenda is far from completed. in my view, a key task on the way towards transforming shadow banking into resilient market - based financing is now to identify areas where additional fsb recommendations are needed and where existing recommendations should be made more precise. we have to bring forward this reform agenda with all our efforts. let me conclude the discussion of regulatory reform with something that seems very important to me. each of the regulatory projects i have discussed calls for international cooperation. if we do not coordinate our approaches towards regulation, we will create a fragmented financial system with vast opportunities for regulatory arbitrage. when all is said and done, we all pursue the same objective : a stable financial system β certainly at the national level, but it is equally important at the global level. as european and us regulators, we therefore must work together in an effort to avoid any form of fragmentation of the regulatory space. the issue of derivatives oversight is just one example of where international cooperation is essential. 3. the second mission : supervisory integration in europe ladies and gentlemen, i have discussed some of the regulatory answers to the financial crisis. but regulation is only one answer to the crisis. the crisis has also shown that banking supervision failed to keep pace with the increasingly international developments in the banking sector. instead, it remained confined within national borders. in europe, the response to this observation has been a leap in integration. this leap in integration is mainly characterised by the establishment of the european banking union, which will comprise of a single supervisory mechanism, a single resolution mechanism and harmonised deposit insurance. the single supervisory mechanism, the first pillar so far, went to work on 4 november 2014. on that date, the ecb assumed responsibility for supervising the 120 largest banks in the euro area β with the accession of lithuania, the number of supervised banks has risen to 123. these 123 banks account for more than 85 % of the aggregate balance sheet of the
| 1 |
##duration courses addressing the needs of all segments of the financial sector β banking, insurance and capital markets. in conclusion, i would like to congratulate the bibf and sii for reaching this significant milestone today. let us all work together to ensure that bahrain retains its leading edge as a financial centre and as a centre of excellence in financial training and education. thank you.
|
and the need to adapt and revamp business strategies if companies wish to pursue growth opportunities in the region. in this context, let me outline some of these strategies and business practices that insurers need to address. first, the events surrounding the aig group have led to a tightening of reinsurance rates, a business aspect that is crucial in the smooth functioning of an insurance market. the current status of reinsurance capacity in our region needs to be scrutinized and companies must adapt new strategies based on their current assessment of the reinsurance markets. second, as insurance providers, companies receive funds from policyholders up front and must make important investment decisions to ensure that liquidity needs are met when called upon by policyholders. the current investment climate has been plagued with much uncertainty with many β sure β investments having disappeared from the financial landscape. who could have imagined that lehman brothers would no longer be an active member of the financial industry? companies therefore need to revamp their investment strategy to cope with these changes. third, we need to be reminded of the importance of having in place a good corporate governance regime. corporate governance is a key component in ensuring the overall soundness of all companies, including insurance firms. the valuation of shares as well as public disclosure and transparency are highly dependent on management β s approach to a sound framework of corporate governance. while it is sometimes tempting for those in the industry to view regulation as a burdensome imposition from outside, the financial crisis has been a reminder that markets need effective regulation if they are to operate properly. as a regulator, we at the cbb believe in creating a climate that encourages the development of a strong and sound insurance sector. in bahrain, we have welcomed several new companies over the last few years, a testimony to the belief that we offer an environment where companies can explore growth opportunities. these new entrants, many from world class international insurance players, have provided further evidence that there are ways to tackle the low level of insurance penetration in the region by offering products uniquely tailored to meet the local demand. several of these new entrants, have seen great advantages in setting up their regional headquarters in bahrain, having access to significant markets in the region. my remarks have highlighted key areas that insurance firms must focus on. i trust that this forum will provide you with the opportunity to have fruitful discussions over the next two days. additionally, i encourage all of you to look closely at your current business strategies and the need to possibly tailor them
| 0.5 |
##rtify, based on internationally - accepted accounting standards, that the financial statements of the entities are accurate β that is, it is a β true and fair view β of the institution β s financial position for the period in which such statements are prepared. although the auditor β s report is normally intended for the shareholders, the acts that the bank administers, including the banks and financial institutions act, superannuation ( general provisions ) act, life insurance act and savings and loans societies act, require the auditor to report to bank on any matters where the auditor has reasonable grounds for believing that the institution is insolvent, at significant risk or the state of affairs of the financial institution will materially affect depositors, policyholders, and contributors. the auditor β s opinion helps to establish the credibility of the financial statements, and the bank, as the supervisor, would normally rely on this opinion and use the accounts to verify and complement the periodic financial reports received from the financial institutions. the bank, as the prudential supervisor of licensed financial institutions, also wants to see the role of external auditor extended to include conducting compliance auditing. the bank would like to see licensed financial institutions attest their internal control systems, conduct checks and balances on the governance structures, and issue comprehensive disclosure statements, including disclosures along a number of risk dimensions, and be approved by the external auditors. this should assist license holders to comply with the prudential requirements of the acts. in summary, the bank would like to have a tri - partite approach in the supervision of the licensed financial institution, which is important for fostering closer working relationships, particularly with the external auditors. consequently, auditors will require better understanding of the supervisory concerns in order to help them perform their audit functions and thus report adequately on those requirements. an example of such arrangement is the tri - partite meeting arrangements between the bank, financial institutions licensed under the banks and financial institutions act and their external auditors, where the licensed financial institutions are required to provide a statement on compliance on all prudential standards and fx limits, a declaration by the ceo, endorsed by the board on whether the board and senior management have identified key risks facing the bank, established systems to monitor those risks and whether those systems are operating effectively and are adequate having regard to the risks they are designed to control. the external auditor shall provide to the bpng a report on their opinion whether the bank has complied with all specified prudential standards and
|
cases may still occur, but fund lending might be restricted to true emergency cases and not be used as an instrument without an emergency need. under the strategic review, an important question is how the newly agreed framework for exceptionally large access to fund credit could be strengthened in practice. in this vein, does the proposed introduction of β exceptional precautionary arrangements β contribute to a strengthening of market rules or rather a weakening? would such a step towards imposing an insurer role on the imf be compatible with the fund β s β risk - free β liquidity financing mechanism that designates official reserves as the source of short - term fund credit? in february 2003 the imf concluded that exceptional access should be reserved for truly exceptional cases, access limits must be strictly adhered to, and the four criteria for exceptional access must be fulfilled. will the agreed principles pass future tests? alternatively, should the fund have a free hand in resolving crises? the role of the fund in helping low - income countries is also being hotly debated. admittedly, the fund has a role to play in contributing to macroeconomic stability as an essential requirement for sustained growth and, thus, for effective poverty reduction in low - income countries through surveillance, technical assistance and financial support. however, does this justify a long - term financial involvement of the fund in these countries or should other development - oriented institutions accept chief responsibility? as a monetary institution, should the fund not continue to focus on shortterm adjustment needs? another key issue in the strategic review debate is surveillance. many useful surveillance initiatives have already been launched in recent years, including standards and codes, roscs, fsaps, and the increase in transparency. by strengthening bilateral, regional and multilateral surveillance, the fund can make useful key contributions aimed at achieving and maintaining stability worldwide and thus bolstering growth. fund surveillance increases transparency in financial markets and improves the functioning of the market mechanism. based on profound experience gained from the different regions of the world, the fund is an unbiased arbiter to give policy advice. i am convinced that the imf has done an excellent job so far in helping member countries adapt to a changing economic environment. in a process of trial and error, the fund has become a more open and accountable institution and a major source of information for the general public and capital market participants. the future role and priorities of the fund and its instruments should be carefully reviewed. a greater selectivity with regard to functions and a sharper
| 0 |
degree of economic challenges that we currently face in fiji. for instance, papua new guinea and samoa have better levels of foreign reserves in months of imports than fiji has. yet their lending rates are higher. i wish to take this opportunity to thank the commercial banks for their understanding and support in our effort to address the economic challenges before us. with the credit ceiling in place, the reserve bank has allowed liquidity to rise. liquidity has risen by over $ 50 million since february this year. in addition, we are reducing the statutory reserve deposits by one percentage point from 1st of may which should pump an additional $ 29 million into the system. this should take liquidity to a very comfortable level. we are already seeing the impact of this easier liquidity on wholesale deposit rates which have fallen sharply to 5 percent from around 15 percent late last year. with this liquidity condition, one would expect commercial banks and other lending institutions to pass this lower cost of funds through to lending rates. and here i must congratulate westpac for taking the lead and reducing its lending rates. lower rates will help support growth and investment in this difficult time. in support of investment and growth, the reserve bank now considers commercial banks β lending to investment, small and medium size businesses and to exporters to be outside the credit ceiling. since december last year, the reserve bank has approved over $ 70 million of loans above the credit ceiling. economic projection as you know, we project that the economy will fall by 2. 5 percent this year. there are some important factors that will determine the final outcome. first, what happens to tourism is important. there are mixed signals coming from this important industry. the latest visitor arrival figure shows a decline of around 7 percent in january compared to january the previous year. a survey we conducted recently of a few major hotels show a low occupancy rate of around 30 percent and not much higher going into their forward booking. the second factor is gold. the current forecast does not include any gold production. but with the change in ownership of the vatukoula mine, we hear that production may commence in june. the third factor is the possible industrial action by the trade unions. it appears to me that all trade unions are seeking strike mandates. i hope that the situation is amicably settled. the fourth is the uncertainty in the european union β s support for the important sugar industry reform. we all hope that the discussion in brussels this week is fruitful for fiji.
|
yields have now dropped. oil price remains at around us $ 60 a barrel. the trade deficit continues to widen. it is therefore essential that the reserve bank do all it can to safeguard the external financial position of fiji. since may 2004, we had progressively raised interest rate and tightened liquidity. we had also highlighted back then the need to lift our exports. unfortunately, exports have yet to respond. in fact, with gold production and the sugar reform uncertain, there is still no light in the tunnel. we have tightened monetary policies progressively. some say that we should have moved more aggressively at the start. i do not agree with this view. introducing harsher measures at the beginning would have discouraged growth which was the last thing we need. it would have been an over kill. it makes more sense to tighten progressively and as much as possible allow room for investment and the economy to grow. in december last year, we had to introduce a ceiling on private sector credit. we also reduced the delegated limits given to foreign exchange dealers on selected overseas transactions. recently, we announced changes to borrowing guidelines for non - residents individuals and companies. there have been some concerns on higher interest rates particularly from individual borrowers and investors. we understand these concerns. but again we ask that you appreciate the seriousness of our financial situation. when things are tough, we must safeguard the bigger picture. we cannot be reactionary. if we do not take care of the bigger picture, the smaller picture will suffer even a lot more than what we are facing now. there are lessons from around the world that we should heed. when we compare the interest rates in fiji with countries like australia and new zealand as well as some of our pacific island neighbors it clearly reveals that they are relatively low in fiji. for example the lending rate in new zealand is 12. 25 percent, in papua new guinea 10. 7 percent and samoa 11 percent. this compares with 9. 34 percent in fiji. while these are the weighted average lending rates and the rates will obviously differ for individual borrowers they are the best gauge of the general level of interest rate between countries. this comparison of interest rates throws up two interesting observations. first, all the countries that i have mentioned are performing better than fiji including samoa and papua new guinea. yet their lending rates are higher than us. it implies that there are other factors that are important for investment and growth than interest rates alone. second and perhaps more pertinent, these countries do not face the
| 1 |
for leading the way in bringing insurance broking services to the people of mzuzu and the surrounding area. distinguished guests, ladies and gentlemen, i now have the pleasure to declare the mzuzu office of swift insurance brokers & consultants officially opened. thank you and god bless you all.
|
forward - looking notion that depends on our sense of how the forces of productivity and thrift will evolve over time as measured in decades. an understanding of a likely long - run level of the equilibrium real rate is useful, even though the level is not directly observable, because it provides a general sense of the level that would, over that longer period, allow aggregate supply and demand to move into balance, given the evaluation of secular forces such as productivity and population growth. such an understanding of the longer - term prospects for the real interest rate aids in identifying variations in the concept over the intermediate run that is relevant for setting monetary policy - a period of several years, when cyclical forces dominate. critically, such deviations in the intermediate run can be especially important for policy choice. for example, an unusual hesitancy on the part of businesses to hire and spend emerged in 2001 after the collapse of equity prices and was subsequently reinforced by corporate - governance concerns ; this hesitancy could be thought of as pulling the equilibrium real federal funds rate down temporarily below its longer - run value. in addition, other forces may also have weighed on growth, making it appropriate to move the real funds rate below the intermediate - run equilibrium for a time. from that perspective, the fomc β s reduction in the actual nominal federal funds rate over this period from the level of 6 - 1 / 2 percent that prevailed at the beginning of 2001 to the forty - five - year low of 1 percent by mid - 2003 had three components : ( 1 ) a reduction to match the decline in inflation expectations so as to prevent the real funds rate from rising inappropriately, ( 2 ) an effort to chase a downwardly moving equilibrium real rate given the pressures on aggregate demand, and ( 3 ) an effort to bring the actual real rate below its apparently lowered equilibrium to provide sufficient stimulus to cope with transitory adverse factors and to speed the recovery in production and employment. so while the real federal funds rate ultimately was pushed below zero, the extent of policy accommodation was less exceptional, in that many estimates of the equilibrium real rate had also fallen significantly. this is a tangible recent example of the need both to judge how the equilibrium real interest rate that is relevant for policy might have changed from a perceived long - run level and to set policy against the background of such an understanding. indeed, in my judgment, the lingering hesitancy of businesses to make commitments, the restraint imposed on domestic consumers from an increase in the cost
| 0 |
i, xi ; convivio, iv ). seen through modern eyes, this argument can only leave us somewhat sceptical. like the market, democracy can only prosper in a framework of rules that are sufficiently certain, protective and observed. whatever incipient popular government dante saw around him seemed to be a harbinger of unrest and bloody factional battles, or at best, of unwarranted, even laughable ambitions ( β i β mi sobbarco! β, β i β ll take it on β ) and of a pathologically unstable legislative framework ( β a mezzo novembre non giunge cio che tu d β ottobre fili β, β what you spin in october does not reach to mid - november β : purgatorio, vi, 135 ; 143 - 144 ). this was clearly not just an abstract idea : the violence of the clashes between factions left a profound mark on his life, as he was exiled, theoretically sentenced to death and his goods were confiscated when his political faction fell from power. this dense fog of public ills and personal suffering prevented him from seeing further ahead. after all, nobody can judge dante while taking for granted the constitutional guarantees typical of a modern liberal democracy. inferno, iv, 131. however, dante had another intuition that was ahead of its time, namely the advantages of the division of powers, 29 but that is a conversation for another day ). i do not know whether we should hope for a universal empire to be established one day ; we can certainly hope that common solutions to common problems are found in time and in good faith. the second thought is that, when we think about bigger problems, it helps to rely on broader visions. no one viewpoint allows us to see the full picture ; no single discipline has the final say. so, as has happened this evening, it is a good thing for economists not to lose sight of literature and for literary scholars not to lose sight of economics. purgatorio, xvi, 106 - 108, where marco lombardo condemns the end of the separation between spiritual and temporal power, with arguments that would be called β checks and balances β in modern parlance. the topic of the relationship between the two powers is broadly covered in the third book of monarchia. dante was certainly not the first to discuss it ; this intellectual dispute had provided theoretical weapons for the struggle between papacy and empire for at least two centuries ; he did
|
aggregate demand and consumer price inflation. in the us, gdp returned to its pre - crisis trend at the end of last year, but aggregate data hid a somewhat elevated degree of heterogeneity between sectors : while demand in the service sector was ( and still is ) restrained by pandemic - related factors, the goods sector increasingly showed signs of overheating ( figure 2 ). in the spring of 2021, for example, personal consumption expenditure in the durable goods sector was already more than 30 per cent higher than its pre - crisis level. even in the euro area, goods purchases were less affected by lockdowns and fears of contagion, but their growth rates remained relatively contained and, at end - 2021, consumption expenditure in this sector was still lower than its modest pre - pandemic trend. pressures on consumer prices have been intensifying in the us since the spring of last year, with headline inflation peaking at 7. 9 per cent last february ( figure 3 ) ; core inflation played a key role throughout this process : in april 2021 it had already risen to 3 per cent and, last month, it had reached 6. 4 per cent, the highest in 40 years ( the picture remains essentially the same if we look at the personal consumption expenditure price index, which rose to above 6 per cent in january, with its core component increasing to 5. 2 per cent ). headline inflation also rose in the euro area, to 5. 8 per cent in february, but energy and food took the lion β s share, as the growth of the β core β component was more than 3 percentage points lower ( 2. 7 per cent ). * * * before the russian invasion of ukraine, to understand the economic outlook on both sides of the atlantic and how the policy mix should have evolved accordingly, three key factors were especially important. the first factor is related to the developments in the energy market. oil prices rose, gradually but steadily, at the global level from the lows of the most acute phase of the health emergency : on the eve of the war, they were 60 per cent higher than in january 2020 ( for both the us and europe ). gas prices in the us recorded similar dynamics, almost doubling with respect to january 2020 ( figure 4 ). but it was the cost of european gas, strongly dependent on supply from russia, that really skyrocketed : between september 2021 and february 2022 it averaged at over 8 times the value of january 2020
| 0.5 |
than 200 % in others ; in the degree of local market concentration ; etc. there are many more examples, some of them influenced by long - term developments, some by entrenched behavioural differences and habits. bis central bankers β speeches to apply β or even try to apply β a federal or pan - european approach to such a diversified financial system requires, in my eyes, a key precondition : to have a functioning european federation in the first place. if that is not possible then we should not try to create half - baked pan - european solutions here in the area of banking β an area which is arguably more sensitive in many aspects than that of fiscal policy and fiscal transfers. if we are not careful enough, we risk repeating the difficulties of the single currency project. the euro is a currency without a state. this means nobody knows who should pay what to whom in bad times. it is for good times only. and we now all know very well that this is the biggest shortcoming of the whole project. some believe that cross - border integration is good per se, without any conditions. i tend to believe β not least because of the current crisis β that cross - border integration of national financial systems is welcome only if each of the national systems alone is and can be sufficiently sound and stable. that β s why we at the czech national bank are so nervous about this tendency to continue separating the powers of supervisory and regulatory authorities from their responsibilities in the area of financial regulation. these powers are gradually shifting in small steps towards those who have no direct responsibility and no pots of money to pay should things go wrong in the future. and such a system is not sustainable for future bad times. i believe this is a concern shared by policy - makers not only in our country, but also in other eu countries ( such as here in poland ) and i hope that the coalition of like - minded states has the potential to grow over time. so let me repeat : until we have a full - fledged eu federation we should not build a half - baked one in the area of eu banking. and i strongly advise paying attention to the rules being prepared by the european commission ( for instance the crisis and resolution mechanisms ), which have the potential to be out of line with this proposed approach. bis central bankers β speeches
|
my definition of a clear hegemon is : it should have the right to set the rules and to force others to behave accordingly, the right to enforce the rules. and it has to have the right even to breach the rules itself and still not allow the others to breach the very same rules. but this is not true for germany after the introduction of the euro. to put it simply, eurozone membership turned germany from a hegemon into just one important player in rule making and practical policy making. if i use a simple analogy from the world of motoring, in the german mark era germany controlled the steering wheel, pedals and gearstick of the monetary vehicle, whereas in the euro era β and especially since the crisis broke out β it has had a firm foot only on the brake. and only sometimes, one must add. why is that? well, in a euro - style monetary union, many important issues are put to a vote ( or complicated negotiations ), and votes and negotiations typically have different outcomes than dictates or decisions of a hegemon. if there had ever been a notion that the euro could be as depoliticised as the former mark, it simply had to fail. in reality it had to be more politicised by definition. the euro could not be a depoliticised german mark, because in many key decisions and respects it had to be a rather more politicised french franc, italian bis central bankers β speeches lira or spanish peseta. otherwise, it seems to me, it could not have come into being in the existing set - up in the first place. a bitter remark : allan meltzer once said the ecb β s biggest advantage over the us federal reserve system is that it doesn β t have a government standing against it. this, he believes, is the best safeguard of the ecb β s independence. but the opposite and rather bitter argument can also be made. the ecb at times has to stand against all 17 governments of the eurozone member states. i do not want to talk about nominal and real convergence, about rigidities, oca arguments etc. rather, let β s take one example. many complain that it is so hard to make real macroeconomic adjustments within the current eurozone, among its individual states. but if i understand monetary history correctly, the eurozone was created partly to make standard adjustments more complicated. the fear of constant β humiliating devaluations β
| 0.5 |
ii ) macroeconomic management involving fiscal reform and monetary policy in an open economy context. 7. the new challenge are : how to bridge the gap between a growing demand for different skills as the economy resumes its journey on a high - growth path, and their supply. the demographic opportunity needs to be turned into a dividend : today, 50 per cent of india β s population is under 25 years of age. aspirations are rising. the demographic opportunity is increasing for india because the percentage of population of working age will continue to increase for another 40 years. this needs to be harnessed with greater focus on skill building, higher education, innovation, knowledge creation, and knowledge sharing. the government of india β s national skill development initiative uses public - private partnership to address this challenge. india is uniquely placed for attracting investments in education because there is a hunger for education in emerging economies and a strong commitment to education at the family level. global educational institutions will have to look at building a presence in india as they will have to gravitate where human resources are available. 8. in the coming years, millions of people in india are expected to move out of the agricultural sector and that jobs will have to be provided for them. india, therefore, needs to increase its manufacturing capability. though in the recent past, the growth of the manufacturing sector has generally outpaced the overall growth rate of the economy, at just over 16 percent of gdp, the contribution of the manufacturing sector in india is much below its potential. every job created in manufacturing has a multiplier effect of creating two to three additional jobs in related activities. therefore, a thrust on manufacturing is integral to the inclusive growth agenda of the government. the national manufacturing policy announced by the government of india proposes to increase the sectoral share of manufacturing in gdp to 25 % over the next decade. 1 9. as we capitalize on these strengths, i see india delivering on the aspirations of a young and growing middle class. and we will do so while increasing our integration with the world. india is now closely integrated with the rest of the world both by way of financial integration and trade integration. it is the intent and objective of the government of india to attract and promote foreign direct investment in order to supplement domestic capital, technology and skills, for accelerated economic growth. while india can look at an 8 % growth based on domestic opportunities, for a 9 β 10 % growth to occur the external environment has also to be hospitable b
|
and even brics economies having over 40 branches. regionally, north - eastern, eastern and central regions are more excluded in terms of banking penetration. given the fact that there is a large unbanked population in the country and a large informal sector that still does not have access to the formal banking sector, there is considerable scope for the expansion of india β s banking sector. this would also require greater presence of private entities at national and local levels. the assessment and comparison with other economies brings to the fore the need for imparting dynamism through expanding the commercial banking system in terms of its size and number of banks ; need for expanding smaller banks in unbanked and under banked areas ; need for focus on consolidation ; need to relax barriers to entry for improving competition ; and the need for enhancing operational efficiency. 13. with a view to ensuring that the banking system grows in size and sophistication to meet the needs of a modern economy and improving access to banking services, reserve bank of india is considering giving some additional banking licences to private sector players subject to their meeting our eligibility criteria as announced by the union finance minister in his budget speech for the year 2010 β 11. consequently, the reserve bank of india, released the guidelines for β licensing of new banks in the private sector β 2 on february 22, 2013. rbi is in the process of issuing new bank licenses consistent with the highest standards of transparency and diligence. further, reserve bank has recently ( on august 27, 2013 ) released a discussion paper on β banking structure in india β the way forward β 3 which is placed on the website for comments from stakeholders. the document explores the possibility of differentiated licences for small banks and wholesale banks, the possibility of continuous or β on - tap β licensing, and the possibility of converting large urban co - operative banks into commercial banks. we propose to carry forward these ideas and come up with a guidelines for licensing of new banks in the private sector released by reserve bank of india on february 22, 2013 and accessed from http : / / rbi. org. in / scripts / bs _ pressreleasedisplay. aspx? prid = 28191. discussion paper on β banking structure in india β the way forward β released by reserve bank of india on august 27, 2013 and accessed from http : / / rbi. org. in / scripts / publicationreportdetails. aspx? id = 713. bis central bankers β
| 1 |
a strong contribution with its financial stability report, which was deemed to be professional, candid and in line with international best practice. the bank β s next financial stability report will be published towards the end of april. although these were not enviable times for financial companies, they definitely learned a lesson from this ordeal and are both more cautious and more aware of external influences than before. rapid and sweeping changes in the financial sector put a great strain on regulatory agencies, which may face an uphill struggle to keep up with the swift pace of developments. the same may undoubtedly be said about the central bank. after all, useful and supportive as these institutions may be, they neither can nor should play a leading role. that role can only be performed by the financial companies themselves. because they rely so heavily on open access to credit markets, it is crucial for them to enjoy the confidence of their creditors. in this respect like many others, credibility is a fragile thing and a very high price can be paid for losing it. turbulence in global markets is sure to continue. naturally people try to read the signs and foresee the most important parameters, in order to adapt to them in good time or respond sensibly. important as it is to keep a close watch on developments and changes in global markets, what matters most of all is to be strong and well - positioned enough to withstand the most unexpected shocks. global liquidity has been exceptionally abundant in recent years, and has been widely tapped on good terms. the benefits of resourcefulness and bold, quick action can be realised to the full in such circumstances. it is impossible to rule out that such a climate will persist for a long while, but this is by no means certain. and when a change does take place, it may be caused by unexpected circumstances and strike quickly. it is then that caution and prudence prove most effective. interest rates have been on the increase recently in most parts of the world and capital is not as cheap as before, although it can still be procured at very low rates. conditions in capital markets in general are therefore more likely to tighten in the coming years. influential as economic developments on both sides of the atlantic may be for the icelandic economy, the way we handle our own affairs is still important. the crucial consideration is to achieve a rapid reduction in macroeconomic imbalances and restore stability. to do so, domestic demand must be reduced. part of this process will occur automatically with the completion of ongoing investments in
|
iceland β s economic history. even if gdp contracts on the scale forecast by the central bank in 2009 and 2010, average gdp growth in the period 2005 to 2010 will still be well above 2 %. given the characteristic fluctuations in the icelandic economy, one must take a longer view of developments than just one year to get a picture of long - term trends. it is also important to keep in mind that the contraction of the economy is unavoidable if sustainable balance is to be restored following the extended period of overheating. once that has been achieved, the economy will be very well set for a recovery of growth to a long - term sustainable trend. iceland is in the enviable position of being endowed with rich renewable energy resources in the form of hydro and geothermal power in addition to renewable resources of the sea. with rising energy prices and concerns for the environment, iceland β s energy reserves become all the more valuable. in addition, iceland has highly developed service sectors, including financial services and tourism, that will contribute to the recovery of activity following the adjustment of the economy. i should add here that in addition to favourable demographics, iceland has a largely fully funded pension system with total assets equivalent to over 130 % of gdp. thus, there is no fiscal overhang related to a slowly aging population. daniel svavarsson : international investment position : market valuation and the effects of external changes. central bank of iceland : monetary bulletin 2008 / 1. focusing again on developments this year, the attention of the outside observer is easily arrested by the depreciation of the krona. i mentioned earlier that it was overvalued for a rather extended period to the extent that the central bank warned that it would at some stage have to depreciate. the depreciation came earlier and faster than we would have hoped, partly and perhaps most importantly because of the radical changes in global financial markets after the middle of last year and the associated reassessment of risk. these changes meant that the access of icelandic banks to foreign financing was seriously curtailed. additionally, questions were raised about the viability of the icelandic economy in light of the large imbalances and all of this led to an erosion of confidence. subsequently, the exchange rate depreciated significantly. by the end of march it had fallen to a historically low level in real terms, a level that was clearly below its long - term equilibrium value. the central bank responded to the developments in march by raising
| 0.5 |
reviewing and accrediting training programmes to certifying individuals under fics ; β’ the management and staff of ibf have been unrelenting in their commitment to raising industry standards. as we look back at ibf β s 40 years, we can take pride in what it has achieved. β’ some 200, 000 participants have benefitted to - date from training courses offered or accredited by ibf. β’ close to 2, 000 practitioners have been certified under the fics standards. one of the reasons why ibf has done well is that it has renewed itself periodically, to stay relevant and effective amidst a changing environment but always focused on its core mandate of promoting competency in finance. today, ibf embarks on the next phase of its journey to raise industry standards. our new mission is to β empower practitioners with capabilities for a robust asian financial industry β. to equip our finance professionals for the next phase in singapore β s development as a financial centre, ibf will focus on two new dimensions. first, we will put together programmes which will not only develop depth in core competencies but also breadth across related functional capabilities. a successful career in finance today requires versatility across different areas, be it to offer comprehensive solutions to customers or manage risks holistically across multiple business lines. bis central bankers β speeches second, we will build expertise and capabilities to serve and operate not just in singapore but in a pan - asian financial market. with the surge of opportunities in asia, those with the knowledge and skills to operate across regional markets will be in high demand. these are capabilities that we must consciously seek to build amongst our professionals. ibf does not operate in a vacuum but in the larger context of what it takes to develop and grow the financial sector β to create meaningful jobs for singaporeans, support the needs of the economy, and serve the larger region. it is now my pleasure to welcome our guest - of - honour, deputy prime minister and minister for finance, tharman shanmugaratnam, to talk to us about this larger context. it is especially appropriate that dpm tharman is doing this as he is himself an ibf pioneer who, as ibf chairman some 14 years ago, transformed ibf to set competency standards for the industry. dpm tharman, please. bis central bankers β speeches
|
ravi menon : the institute of banking and finance at forty welcome remarks by mr ravi menon, managing director of the monetary authority of singapore and chairman of the institute of banking and finance, at the institute of banking and finance 40th anniversary dinner, singapore, 10 june 2014. * * * deputy prime minister and minister for finance, tharman shanmugaratnam, pioneers of ibf, distinguished guests, ladies and gentlemen, on behalf of the council and staff of ibf, let me welcome you to ibf β s 40th anniversary dinner. ibf is where it is today because of what previous generations of council members and staff, industry practitioners and training providers accomplished together. they are the pioneers of ibf, whose contributions and achievements we are gathered here to celebrate. it is the inspiring vision and tireless efforts of these pioneers to build competencies in finance that helped create the international financial centre that singapore has become today. i am delighted that several of them are here with us this evening. ibf was set up in 1974 with the support of the monetary authority of singapore ( mas ) and the association of banks in singapore ( abs ). those were early days in singapore β s development as a financial centre. the birth of ibf helped to fill a critical gap in the training of singapore β s financial sector workforce. the subsequent growth of ibf has been a story of each generation building on the efforts of previous generations and helping to strengthen the capabilities of singapore β s finance professionals. let me begin by thanking the first group of ibf pioneers : the past chairmen of ibf. β’ mr michael wong pakshong, as ibf β s inaugural chairman from 1975 to 1977, laid out the vision for ibf β to develop a strong suite of educational programmes to support the growth of singapore β s banking industry. β’ mrs elizabeth sam, as ibf chair from 1977 to 1981, introduced ibf β s first and most widely - recognised diploma programme β the diploma in banking and finance. β’ mr ng kok song, who served as ibf chairman from 1981 to 1982, introduced a new foreign exchange training programme that helped alleviate the shortage of fx dealers in those early years when singapore was establishing itself as a global treasury hub. β’ mr koh beng seng, ibf β s longest serving chairman β from 1982 to 1997 β oversaw the introduction of many new training programmes beyond banking to cater to the broader range of financial sector activities that took root during those years. β’ mr tha
| 1 |
the euro area z - scores https : / / www. ecb. europa. eu / press / key / date / 2021 / html / ecb. sp210128 ~ 8f5dc86601. en. html 1 / 13 29 / 01 / 2021 the sovereign - bank - corporate nexus β virtuous or vicious? sources : eurostat and ecb calculations. notes : the composite measure is based on a broad set of indicators along five dimensions : debt service capacity ( measured by the interest coverage ratio, corporate savings and revenue generation ) ; leverage / indebtedness ( debt - toequity, net debt - to - ebit and gross debt - to - income ratios ) ; financing / rollover ( ratio of short - term debt to long - term debt ; quick ratio ( defined as current financial assets divided by current liabilities ) ; overall cost of debt financing and credit impulse ( defined as the change in new credit issued as a percentage of gdp ) ) ; profitability ( return on assets, profit margin and market - to - book value ratio ) and activity ( sales growth, trade creditors ratio and change in accounts receivable turnover ). except for the overall cost of debt financing and gdp, all indicators are based on data from the ecb β s quarterly sector accounts. the overall cost of debt financing indicator is calculated as a weighted average of the costs of bank borrowing and market - based debt, based on their respective amounts outstanding. in response to these developments, governments swiftly launched broad - based measures to support households and firms, including job retention schemes, direct transfers, tax cuts and deferrals, as well as loan guarantees ( chart 2 ). at the same time, the ecb supported bank lending to firms by providing ample liquidity at favourable conditions, while prudential authorities took comprehensive supervisory relief measures. the decisive policy response allowed firms to draw down their credit lines in order to finance their working capital, leading to an unprecedented increase in bank lending in the spring of 2020. chart 2 loan guarantees and remaining envelopes relative to sovereign debt in 2020 in selected euro area countries percentages of gdp and percentages of outstanding sovereign debt https : / / www. ecb. europa. eu / press / key / date / 2021 / html / ecb. sp210128 ~ 8f5dc86601. en. html 2 / 13 29 / 01 / 2021 the sovereign - bank - corporate nexus β virtuous
|
area countries. a number of countries have lowered marginal tax rates in order to make their tax systems more employment - friendly. many countries have targeted tax cuts at the lower end of the labour market in particular. these measures have contributed to a higher demand for low - skilled workers. nevertheless, marginal tax rates still remain high in some countries. some progress has also been made with the introduction of part - time or more flexible working contracts and practices. in addition to government policies, there are signs of a gradual change in labour market behaviour related to the wage formation process. discipline seems to have improved in that field over the past decade. such a change, resulting from lower inflation expectations, is important. furthermore, there seems to be a growing awareness that, in a single currency environment, the price increases and loss of competitiveness generated by excessive wage settlements cannot be compensated by an exchange rate depreciation and may directly result in a loss of jobs. looking ahead, it is crucial that social partners continue to adhere to moderate wage developments, since this is one of the prerequisites in fostering employment and maintaining a favourable outlook for price stability in the medium term. in this respect, there is some cause for concern with regard to ongoing wage negotiations. the wage formation process also seems to have undergone changes. in a majority of euro area countries, there are signs of a gradual trend towards more decentralised bargaining and more flexibility at lower bargaining levels. this seems to happen, mostly informally, through clauses that allow firms to deviate from the sectoral or central wage agreements according to the financial situation of the firm or sector. this is encouraging. the outcomes of wage bargaining should allow not only for appropriate wage developments in the overall economy, but also for adequate wage differentiation across sectors, regions and firms. this will make it easier to account for local conditions, such as unemployment, productivity or profitability differentials across sectors, regions and firms. in short, labour market reforms have, in general, been going in the right direction in recent years and the benefits of these positive developments are clear. however, progress has been rather uneven across countries and areas. in many areas important reforms have not yet got off the ground. for instance, few changes have been made regarding employment protection policies in euro area countries, which remain amongst the strictest in the industrial countries. furthermore, in almost all euro area countries, reforms targeting unemployment benefit systems have only made slow progress. at the same time, significant mismatches between
| 0.5 |
evolve. on that note, let me once again thank marim for the opportunity to share some thoughts with you today and i wish you a productive conference ahead. 5 / 5 bis central bankers'speeches
|
shortage of liquidity would emerge, which could lead to a new period of economic contraction. enhanced international monetary cooperation can provide a way out of this dilemma. certainly, the sdr allocations of 283 billion dollars, which multiplied the existing stock tenfold, have helped to complement many countries β international reserves and boost confidence. but other avenues need to be explored to reduce the demand for reserves. i believe that bilateral swap agreements such as those negotiated between the u. s. federal reserve and a number of other central banks could play a useful role in this regard. moreover, the imf should build on the success of the flexible credit line ( fcl ) and consider more instruments offering credible alternatives to self - insurance through reserve accumulation. indeed, the fund needs to design additional financial instruments to promote long β term global stability and the proper functioning of the international monetary system.
| 0 |
the very beginning. but we think that as far as the corrective arm of the pact is concerned it is important to fully preserve the nominal benchmark of 3 % deficit and the integrity of the excessive deficit procedure. the commission proposes. the council will decide. it was, and it is, our duty to say what we think taking into account the crucial importance of the stability and growth pact for the cohesion of economic and monetary union. in any case, whatever the decision is we will be faithful to our mandate and maintain price stability. [ question ] in this context of low growth and low output, the fact that the population is ageing plays an important role too. is that a factor that the ecb takes into consideration? [ answer ] that is a very important feature. in many euro area countries we are seeing a gradual increase in the less dynamic and less active part of the population, which in general leads to a fall in consumption and investment with the resultant negative effect on the economy. that is another reason why reforms of the health and pension systems and the labour market are crucial. in some countries, specific policies have been adopted to correct this demographic trend. [ question ] of course, low growth in productivity also has an impact on inflation. [ answer ] of course. low growth in productivity means higher unit labour costs. cost - generated inflation tends to rise, and that certainly does not make the ecb's task any easier, given that our job is to maintain price stability within the monetary union. [ question ] on the subject of inflation, the ecb has estimated the euro area's non - inflationary potential growth rate to be between 2. 0 % and 2. 5 %. can you confirm that estimate? [ answer ] the ecb relies in this field also on assessments of market economists β consensus and on analyses conducted by other major international organizations. we have noticed that this estimate has been revised downwards recently. if i were to mention a figure today, i would say that a number of estimates are getting closer to 2 % than to 2. 5 %. [ question ] drawing to a conclusion this structural analysis of the european economy's problems, allow me to ask you one more question on the economic climate. what is the ecb's forecast for growth in europe in 2005? is the monetary institute optimistic? [ answer ] we are neither optimistic nor pessimistic. rather we are realistic and humble in front of facts and figures. the ecb
|
. in other countries, cashless payment instruments have driven down cash usage considerably. likewise, retail payment clearing and settlement is organised differently in the various countries, reflecting local tradition and business preferences. to overcome these entrenched differences, the banking industry joined forces in 2002 and launched the initiative to create the single euro payments area, sepa. the primary objective of this initiative is to achieve a fully integrated market for retail payment services. distinctions between national and cross - border payments should vanish. practically, one set of pan - european payment instruments should be available to serve the whole market, making national legacy payment instruments superfluous. needless to say, such an initiative, which requires unprecedented forms of co - operation among competing market actors, may give rise to competition concerns. it may also get to a situation where the self - regulatory powers of the banking community have reached their boundaries, and regulatory support is required. the european commission and the eurosystem have been supporting sepa by closely monitoring the developments and by providing guidance to the market. the payment services directive ( psd ), which is to be transposed at national level in november of this year, and the revised regulation 2560 on cross - border payments, provide the harmonised legal basis for retail payments in europe. today β s second theme will look at competition and regulation issues that emerged in the integration process of retail payment markets. i am very pleased that commissioner neelie kroes will deliver the keynote speech on this theme. the subsequent panel will focus on the role of central banks in shaping the future of retail banking and payments. unlike for target2 and target2 - securities, the ecb and the eurosystem have chosen not to approach the retail payments market as a system owner and operator β although some national central banks that are part of the eurosystem have such operational role β but rather as a catalyst, supporting the market processes by using their technical and analytical expertise as well as consultative and cooperative contacts with the banking sector and other public authorities. tomorrow, we will look at the other challenging dimension that shapes the future of retail banking and payments, which is innovation. i regret to have to say that while the chip, the internet and the mobile phone have fundamentally changed the way we communicate in the last 20 years, modernisation in the way we pay, be it as large companies or as individual retail clients, still have to catch up these developments. therefore, i am pleased to see the focus on the requirements and expectations
| 0.5 |
both price stability and financial market stability ; β leaning against the wind β : difficult in practice ; however more tools ( blurring boundaries between monetary policy and regulation ) ; price stability = sine qua non for financial stability ( but not sufficient ). 4. conclusion despite criticism, reform progress has been substantial. enough to avoid future crisis? certainly not, but hopefully enough to render crisis less severe. remaining reform workload is huge. changes in the regulatory framework are not technical matters alone implemented by pressing a button by a benevolent social planner. resistance from vested interests and lobbyists endanger success of reform agenda. policy makers need support for their ambitious project of securing future economic stability in europe and elsewhere. bis central bankers β speeches a more balanced development path will enable our peoples ( europeans, americans, asians and all other world citizens ) to prosper in a sustainable manner. bis central bankers β speeches
|
story! euro area = stability area : over the last decade, average inflation exactly matched ecb β s definition of price stability ( below but close to 2 % ), despite heavy oil shock ; euro = at least as strong a currency as german mark : against usd stronger 1. 18 eur / usd in 1999 ) ; than at time of introduction ( around marginal devaluation of effective exchange rate = relief for our exporters, after years of appreciation. with global crisis the euro has passed its hardest test : bis central bankers β speeches elimination of exchange rate volatility β beneficial for small member states : β in turbulent financial waters it is better to be on a large, solid and steady ship rather than on a small vessel, β ( ecb president trichet ) ; europe proved its solidarity and ability to act β ( recovery plan, rescue umbrella, reform debate ) ; ecb reacted swiftly and effectively β avoiding a collapse of the whole economy : providing boldly liquidity to banks : no inflationary impact as long as low credit demand ; exit already underway. securities market programme β temporary purchasing of bonds : no state financing β only to calm markets ; temporary, secondary market, very limited amount ; recovery on its way ( but slow and bumpy ) : 2010 : 1. 7 % ; forecasts 2011 : around 1, 6 % ) ; nevertheless national adjustment challenges still exist : structural reforms + fiscal discipline. bis central bankers β speeches 3. crisis lessons : a. financial sector stability : macro - prudential perspective : importance of systemic risk, better understanding of interconnectedness in financial system β turbulence can arise from relatively modest initial shocks. central banks role in financial stability : independence and anchor of stability ; austria : important improvements already in 2008 : financial markets authority ( fma ) and the oenb have joint responsibility for micro prudential supervision of banks. gradual progress in the europeanization of financial supervision ( european systemic risk board ) macro - prudential supervision www. oenb. at all financial sectors esrb banks ( eba ) insurance companies ( eiopa ) financial markets ( esma ) esfs / esas ( european system of financial supervisors / european supervisory authorities ) micro - prudential supervision oenb. info @ oenb. at european supervisory architecture. european systemic risk board to identify emerging systemic risk, to publish early warnings as well as to make recommendations to the competent authorities ; micro - prudential supervision : three european supervisory authorities
| 1 |
tlac ) chart 2 capital adequacy of financial institutions in major countries japan europe united states % % % % fy08 09 10 11 cy08 09 cy08 09 tier 1 capital ratio fy08 common equity tier 1 capital ratio notes : 1. figures for japan are weighted averages of internationally active banks. 2. figures for the united states are simple averages of five u. s. banks ( bank of america merrill lynch, citi, goldman sachs, j. p. morgan, and morgan stanley ). 3. figures for europe are simple averages of six european banks ( barclays, bnp paribas, credit suisse, deutsche bank, hsbc, and ubs ). sources : bank of japan ; bloomberg. chart 3 macroprudential policy macroprudential policy tools [UNK] countercyclical capital buffer ( ccyb ) [UNK] loan - to - value ( ltv ) regulation, etc. institutional frameworks for the implementation of macroprudential policy [UNK] establishment of interagency committees in jurisdictions with multiple regulatory and supervisory authorities, etc. [UNK] creation of the " council for cooperation on financial stability " in japan chart 4 a new horizon for the " lender of last resort " function the traditional " lender of last resort " function [UNK] responding to the risk of the deteriorating health of one financial institution tainting other financial institutions through inferences made by depositors, etc. " market maker of last resort " function [UNK] responding to the contraction of market activities resulting from concerns over counterparty risk among market participants " global lender of last resort " function [UNK] responding to foreign currency liquidity shortages faced by globally active financial institutions chart 5 core profitability of japanese financial institutions lending margins operating profits from core business major banks 3. 0 % major banks regional banks shinkin banks 2. 5 tril. yen second half of the fiscal year shinkin banks regional banks tril. yen tril. yen 2. 5 1. 0 2. 0 0. 8 1. 5 0. 6 1. 0 0. 4 0. 5 0. 2 0. 0 0. 0 0. 0 fy89 91 93 95 97 99 01 03 05 07 09 11 13 15 fy89 91 93 95 97 99 01 03 05 07 09 11 13 15 4. 5 4. 0 first half of the fiscal year 3. 5 3. 0 2. 0 2. 5 2. 0 1. 5 1.
|
inappropriate. since the introduction of qqe, the bank has been consistently pursuing powerful monetary easing both in terms of quantity and interest rates, and there is no change in its stance. the bank will continue with powerful monetary easing under " qqe with yield curve control, " aiming to achieve the price stability target of 2 percent at the earliest possible time. taking account of developments in economic activity and prices as well as financial conditions, it will take additional easing measures without hesitation if judged necessary to maintain the momentum toward achieving the 2 percent target. concluding remarks in conclusion, let me touch on the economy of nagasaki prefecture. tracing its history, the prefecture has functioned for a long time as a foothold for cultural interaction between many countries, as evidenced by the history of dejima, and thus represents a variegated history and culture. the prefecture takes advantage of the tradition of manufacturing, particularly of heavy industry including shipbuilding, and distinguished skill and technique. it also is endowed with tourist attractions including islands, hot springs, and fresh agricultural and fishery products, as well as a fascinating food culture. the shipbuilding industry, which is the key industry of the prefecture, is facing a severe environment surrounding orders, brought about by chronic excess of vessels globally and by sluggishness in the shipping market. there seems to be no influence on business operations for the time being as there is a backlog of orders for the upcoming three years or so, but i have heard that the local companies, including those engaged in shipbuilding, have started to take actions so as to change their business operations. in terms of tourism, the effects of the kumamoto earthquake have waned from summer, and i have heard that the number of visitors to major tourist facilities have picked up. moreover, efforts have been made steadily toward future developments of the prefecture, such as the proposal of " churches and christian sites in nagasaki " for inscription on the unesco world heritage list, nagasaki city being chosen as a " tourism nation showcase " by the japan tourism agency, and initiatives to establish destination management / marketing organizations for sightseeing. on the financial front, changes in the business environment - - such as consideration on integrating regional financial institutions - - have emerged under the idea to contribute to stimulating the region and vitalizing the local economy amid the situation of a declining and aging population. as for economic and financial communities of nagasaki prefecture, i believe that forthcoming changes must be addressed appropriately and strategically while gaining a strong footing. the bank anticipates
| 0.5 |
conducive for fostering healthy competition. having said all this, there is an important issue, which we cannot lose sight of. one of the major comforts that a regulator seeks as part of its depositor interest centric function is the reputation and the financial strength of the promoter. from this perspective the nation β s sovereign as the main shareholder gives a lot of comfort to the regulator. the recent events, even if one may consider them exceptional, demonstrated that those perceived as invincible also do not have the financial muscle of the sovereign. however, the regulator should not bask under the comfort of the sovereign being the promoter nor should it let any instruments of government abuse this comfort. the punch line, if one has to sum up the whole gamut of issues relating to regulation and supervision of public sector banks, could read β feel comfortable, but don β t relax! thank you all for your attention.
|
alejandro diaz de leon : introductory remarks on regulating big tech remarks by mr alejandro diaz de leon, governor of bank of mexico, at the bank for international settlements conference β regulating big tech : between financial regulation, anti - trust and data privacy β, 7 october 2021. * * * i would like to thank the bis for inviting me to participate in this panel on bigtech and data in finance, and discuss what does the entry of big techs in payments mean for competitiveness and financial ecosystem and the challenges it represents for central banks. recent advances in technology and innovation have created the potential for a structural transformation in payment and financial services ( platform payments and platform finance ). the inclusion of networks with a wide customer base in the financial ecosystems, the so - called bigtechs, seeks to link customers with financial services, either provided by financial intermediaries or themselves. this raises key issues for public policy, in terms of competition, consumer protection and financial stability. an open finance ecosystem could have several benefits, better services, lower costs and deeper financial inclusion, but authorities should be careful and avoid potential suboptimal results ( concentration, vertical integration, lack of interoperability, etc. ). an open finance ecosystem without adequate regulation will not deliver the desired public goods. bigtechs providing payment and financial services are clearly part of our financial ecosystem. we must work on the necessary technological and regulatory conditions to avoid regulatory arbitrage. it must be clarified that a level - playing field is not against innovation. instead, it is a response by policymakers to avoid the β winner takes all equilibrium in networks β and β too big to regulate β problems, as conditions needed to promote competition, sound risk management and public interest. to promote a well - functioning payment systems and a more inclusive and efficient financial system and to make a good use of the opportunities offered by new technologies, we have identified seven public policy anchors to guide this process : 1. same risk / same regulation : o align incentives to achieve maximum social benefits, o addressing market failures and o promoting an environment for competition. level playing field on aml / cft requirements, legal, financial and operational risks. 2. interoperability and neutrality : need to avoid large networks using their condition as a competitive advantage to carry financial transactions exclusively through their networks. 3. no kingmakers : large networks joint - venturing with specific financial institutions could extend the former β s market power and concentration to financial markets. 4. ensure business continuity
| 0 |
##d five times between 1976 and 1982, partly as a result of recurring cost crises. the large devaluation in 1982 was an offensive devaluation aimed at stimulating growth in the competitive sector. it assumed a tight fiscal policy to restrain domestic demand. during the 1980s both the credit and foreign exchange markets were deregulated, partly as a result of international developments. this was done gradually, but the credit market was formally deregulated in 1985 and the final parts of the foreign exchange regulations were abolished in 1989. demand was high during the second half of the 1980s and the economy became overheated, resulting in high inflation, large wage increases and very large increases in property and share prices. sweden β s competitiveness was undermined and finally the riksbank could no longer withstand the speculation against the krona. in november 1992 the krona was allowed to float and it depreciated around 30 per cent in just a few months. the 1990s crisis was not merely a consequence of stabilisation policy failures. the situation was aggravated at the beginning of the 1990s by the tax reform β which stimulated increased saving β and an international slowdown in economic activity. it was difficult to predict the large fall in share prices and property prices. the decline in demand was substantial in any case and production and employment fell considerably. unemployment reached the highest level of the post - war period. the budget deficit and government debt ( as a percentage of gdp ) also increased to all - time highs as a result of the crisis. sweden and finland were the european countries that suffered the most from the crisis, but other countries also experienced serious problems ( see figure 4 ). for most countries, this proved to be dearly - bough experience. monetary policy was reformed to inflation - targeting policy, the exchange rate was allowed to float and a deficit target and an expenditure ceiling were introduced as norms for fiscal policy. we have had this new policy in sweden for around 10 years now, and many other countries have chosen a similar policy. the labour market situation most people would probably agree that the period from the mid - 1990s, when inflation targeting was introduced, has been a relatively successful time in macroeconomic terms. inflation fell fairly quickly from levels close to 10 per cent to around the inflation target of 2 per cent. inflation has remained at a low level since then, albeit slightly too low in recent years ( see figure 1 ). annual gdp growth has on average been twice as high over the past ten years as during
|
β s nominal exchange rate is determined by the real exchange rate together with differences in inflation with the rest of the world. a currency β s real exchange rate can be described as the price of goods and services in that country relative to the rest of the world. if a difference in inflation grows, a corresponding depreciation of the currency is needed to keep the real exchange rate stable. the current exchange rate is also influenced by expectations of future rates. the credibility of economic policy β s commitment to long - term price stability is thus important for exchange rate tendencies. the value of a currency is also susceptible to influences of a more temporary nature. cyclical factors may play a part. when the economy is in an upward phase, a country may need a tighter monetary policy, which normally leads to an appreciation of its currency. deviations from the exchange rate β s more fundamental level may also be occasioned by matters to do with credibility. in addition, the exchange rate may be affected by transitory shifts in the currency market β s demand and supply. such shifts may arise from portfolio adjustments. in certain periods these mechanisms may tend to accentuate exchange rate movements even though economic fundamentals point in a different direction. one example of this is the large movements in the us dollar. against this background i shall now look at some factors that will probably be important for the development of the euro. i shall take the fundamentals first and then point out some factors that could be of transitory significance for the euro. fundamental factors provided economic policies in the euro area focus credibly on price stability accompanied by a corresponding low - inflation policy in the rest of the world - it is probable that the euro β s nominal exchange rates with other countries will display a high degree of stability. however, cyclical disparities between currency blocs and some uncertainty about monetary policy signalling are factors that could generate certain fluctuations. emu is constructed so that monetary policy will be formulated collectively by the ecb β s executive council and the national central banks in the light of the overall picture of inflation in the euro area, while fiscal policies are formulated at the national level. monetary policy the european central bank ( ecb ), which will be accountable for emu β s single monetary policy as of next january, was established on july 1st. the monetary policy objective is price stability. the objective has not yet been defined more specifically but statements suggest that there will probably be an intermediate money supply target and that price stability will be represented
| 0.5 |
should constantly think of ourselves as citizens of the global village. the strength of the united states economy and trends in financial markets in new york, london, tokyo and elsewhere will be significant factors in influencing whether or not south africa realises its economic potential. but we must not underestimate our own responsibility as south africans to develop our own potential and to run our economy responsibly and efficiently. as citizens of the global village, we must continue to participate actively in the debate on improving the international financial architecture in the hope that a way can be found to minimise the intensity of financial shocks to emerging and developed markets alike. after a long, stimulating and challenging year which i have spent navigating the transition from cabinet minister to central banker and getting to know my colleagues in south africa and other parts of the world, i am looking forward to starting officially next week with enthusiasm and confidence, inspired in no small part by many of you present here tonight. we are fortunate that the south african reserve bank is staffed by well qualified, committed and loyal people. to the president, the members of the board of directors of the bank, my colleagues the deputy governors, management and staff, and esteemed guests : sweswi hi ngene eka nkari wa mahlambandlopfu ( we are now entering the time of the day when the elephants go washing ; that is, the crack of dawn ).
|
it is particularly encouraging that share prices performed so well despite the resilience of the exchange rate. this is true even for sectors that have historically been very sensitive to exchange rate fluctuations. part of this buoyancy is, of course, attributable to high commodity prices. however, in the bank, we like to see this also as a sign that, in general, companies have adapted to a relatively robust exchange rate. as for developments in the south african foreign exchange markets, the exchange rate of the rand remains resilient and liquidity remains high relative to other emerging markets, despite the retracement in recent days. we have seen the average net daily turnover ( in respect of transactions involving the rand ) increase from around usd8bn in 2004 to just below usd10bn in 2005. in addition, the volatility of the zar exchange rate has also subsided. from the most recent peak of around 30 per cent and 25 per cent in january 2004, the one - month historical volatility and one - month implied volatility were at a level around 10 and 12 per cent, respectively, in march 2006. it is this positive environment that has attracted substantial investment flows into south africa, allowing the central bank to build up the official gross foreign exchange reserves from usd8, 0 billion in january 2004 to slightly more than usd23 billion in april 2006. it is partly owing to this increase in the reserves in recent times that the country was awarded credit ratings upgrades by all three rating agencies in 2005, to bbb + with a stable outlook. this has also contributed to a decline in sovereign risk spreads. a more stable currency is critical to an attractive investment environment. exchange rate volatility has in the past made the rand vulnerable to speculation and discouraged direct investments. the recent build up in reserves, together with some structural impediments that have now been dealt with ( e. g. the net open foreign currency position ), should over time add to the stability we have already seen and reduce uncertainty for both domestic as well as non - resident long - term investors. the sell - off in emerging - market assets and currencies during the first part of may 2006, and the effect that it had on financial markets and exchange rates, including our own, has once again reminded us of the vulnerability of emerging - market economies to a sudden and sharp change in sentiment by nonresident investors. in the case of south africa, the effects could be
| 0.5 |
insurance acts 2002. under the central banking act 2000, the central bank has three important objectives. these are : β’ the responsibility for monetary policy formulation and implementation ; β’ financial system regulation and prudential supervision ; and β’ oversight of the payments system. the act also made significant changes to the relationship between the central bank and government, eliminating political influence, introducing price stability as the objective of monetary policy, and provided greater independence to the central bank in the management and conduct of its affairs. the governor is responsible for monetary policy and financial system supervision whilst the board of the bank is responsible for administrative oversight of the central bank. the board of the central bank comprises of ex - officio members from the chamber of commerce, the trade union congress, the securities commission, council of churches, the institute of accountants and two appointees by the minister for treasury. the central banking act 2000 made price stability the main objective of monetary policy. consistent with the act, the monetary policy statement ( mps ) is released semiannually taking into account monetary policy views for the year and the medium term. however, as monetary policy shocks are more frequent and for the bank of papua new guinea to respond quickly to shocks, the kina facility rate ( kfr ) is announced on the first monday of each month, which provides a clear signal to the market on the bank β s monetary policy stance. this announcement is strengthened through operational instruments such as treasury bills, repurchase agreements and central bank bills, which are also used by many other central banks. the regulatory and supervisory framework for the financial system has evolved significantly since 2000. with the additional superannuation and life insurance acts, the main thrust of the policies has been to preserve the soundness and stability of the financial system whilst ensuring that the intermediation process continues to support economic growth. in this regard, the bank has introduced international best practices on prudential supervision of banks, finance companies and other financial institutions such as savings and loan societies, superannuation funds and life insurance companies. this is to ensure prudent management of depositor β s funds, members β contributions, and premiums on life insurance policies held with these financial institutions. in addition, a part of the standards introduced was focused on good governance practices and the assessment of fit & proper persons for directors and management of these financial institutions. to date, the reforms have vastly improved the conditions and outlook of the financial sector landscape of the country. in the banking sector, there is marked improvements
|
the rugged geographical terrain of the country makes access to financial services difficult for the semi - formal, informal and the rural population. in our endeavours to bring out financial services to these sectors, the bank of papua new guinea in collaboration with the asian development bank, the national government and ausaid established the β wau microbank β under the micro finance project. the pilot project is slowly growing into a viable complementary player in the development of the financial system. in addition, the png micro finance limited, which obtained a banking license in 2004, and has operations in ncd, western and oro province. the micro - finance industry development is a meaningful way of mobilizing savings and servicing a large section of the community to whom financial facilities are not readily available. the government has also introduced the district treasury roll - out program, which will further complements the provision of financial services in the rural parts of papua new guinea. this entails the provision of treasury, banking and post office services from one outlet mainly at local and district levels. the bank of papua new guinea is also supportive of the government β s initiatives to promote export driven economic growth strategy through removal of impediments to trade and investment. in recognition of this initiative, the bank liberalized the foreign exchange control regime by freeing up controls in all but ( 4 ) areas which are : β’ opening of foreign currency or kina accounts offshore by residents ; β’ approval for capital transaction contracts ; β’ gold export licenses ; and β’ approval for dealing in foreign exchange. in addition, borrowing restrictions on domiciled foreign companies were removed to encourage growth in lending. to date, consistent with the banks expectation, the liberalization has had limited impact on the balance of payments position of the country. this is the result of a close and ongoing dialogue and communication between the stakeholders and the bank of papua new guinea. macroeconomic outcome the end result of the financial sector reforms and the other reforms in aggregate have resulted in political and macroeconomic stability. the current government will serve a full term in office, which is a first of its kind since independence. the reforms have also helped to achieve macroeconomic stability as reflected by the lower annual headline inflation of 4. 6 percent in 2005, compared to 21. 8 percent in 1998, stable exchange rate at around us $ 0. 3240, high international reserves of us $ 770 million that is sufficient for 7 - 11 months of import cover, and a strong growth in private sector credit at an annual rate of
| 1 |
useful parallels and lessons that can be drawn for malaysia. cagamas is very pleased to have established a strategic partnership with hkmc in 2007 which will allow us to avail of hkmc β s significant expertise to provide the banking industry in malaysia with expanded options for effectively managing mortgage risks. we are encouraged by the strong turnout from among members of the board risk management committees, senior management and risk managers at this event today. your roles are critical in bringing visibility and attention to the key risk issues in mortgage financing within your institutions in order to ensure that the associated risks, both present and foreseeable, are identified and effectively controlled. it is particularly useful to bear in mind that vigilance is needed to be alert to problems that can quickly arise in business segments that may not have presented difficulties in the past. by acting proactively to avoid controllable risks, material future losses can be avoided at far lower costs to banks and the society at large. on that note, i look forward to a fruitful and constructive dialogue. thank you.
|
of excellence ', by delivering the highest standard in all aspects of business with fair and transparent conduct, strong shariah governance, and equitable practices through the sharing of risk, and balanced wealth circulation. integrating the value of'balanced wealth creation with wealth transfer and circulation'as a business aim can fundamentally drive islamic financial institutions to actively reorientate and facilitate more equitable financial resources allocation for productive and sustainable use. this in turn can boost productive economic activities that support malaysia's transformation towards a high - income nation, reducing economic disparities and fostering intergenerational equity, in line with the vision of " raising the ceiling " and " raising the floor ". the tenet of a'just economy'through balanced wealth circulation is also clearly emphasised in the holy quran, as mentioned in verse 7 from surah al - hasyr that " wealth should not circulate solely among the rich ". full realisation of these values can contribute towards addressing socio - economic imbalances and promote financial stability to catalyse a more sustainable, inclusive and progressive economy. these values are universal and transcend geographical boundaries. at a global level, embracing these values call for collective actions and solidarity in facilitating more 2 / 6 bis - central bankers'speeches balanced development of all economies, particularly the developing and emerging economies among islamic countries, to achieve a just and orderly transition towards sustainable and inclusive growth. these can be in terms of investment in infrastructural development, facilitating trade policies, and encouraging talent or technology exchange. with these in mind, i would like to take this opportunity to share my thoughts on two important foundations for the islamic financial sector to deliver more tangible impact through value - based finance. this is also a call to action for the financial community to take charge with greater leadership in catalysing sustainable growth of our nation and beyond. 1. first is the unlocking impactful innovations for economic and sustainability transformation. 2. second, doubling - down on value - based finance implementation. let me begin with the first foundation on unlocking impactful innovations for economic and sustainability transformation. the space for innovation in islamic finance is vast, and yet, to this day, the full potential of islamic finance has not been fully optimised as a tool for meaningful change to meet the world's financial needs. we have diverse shariah contracts and instruments which can be tailored to engineer solutions that can serve varying needs of different segments of society. in islamic
| 0.5 |
its deposits. this can precipitate the suspension of payments as a result of lack of liquidity even when a bank is solvent as a going concern ; and the forced realisation of illiquid assets may in itself result in insolvency. moreover, any suggestion that one bank is in trouble may be taken - perhaps wholly unjustifiably - as evidence that other banks are likely to be facing similar problems, especially when they are engaged in similar activities. bank runs can for this reason become contagious. and the risk of contagion is increased by inter - bank exposures, including those arising from the banks β role in the payments system. so the special nature of banks has reflected not just their distinctive functions, and the importance of those functions to the wider economy, but also their peculiar vulnerability to liquidity pressures. central banks evolved in response to this vulnerability, which gave rise to a readiness to act as lender of last resort to the banking system in situations in which substantial systemic disturbance could otherwise occur and to an on - going concern for the macro - prudential characteristics of the banking system. and while this concern relates to the banking system as a whole, last resort assistance, when it is judged to be necessary, is extended to individual banks because problems of course arise in the first instance at the level of the individual bank. now, the fact that central banks ( in conjunction as necessary with governments ) are prepared, in certain circumstances, to extend support in this way encourages bank intermediation ; it represents in effect a form of subsidy, implicitly justified as being in the wider interest of the economy. it helps to preserve public confidence ; and it enables the banks to take on more maturity transformation or risk than they could otherwise, so lowering the effective cost of their intermediation. but it has long been recognised that if central bank support is made available too liberally - in situations where there is no genuine systemic risk, so that it comes to be relied upon as a matter of course, then that would give rise to moral hazard. the extent of bank intermediation would be unjustifiably expanded. on the one hand, the banks themselves may be encouraged to take on excessive risks ; while, on the other, depositors may be encouraged to ignore risk and to become literally care - less as to where they place their deposits. so, both the safety and soundness of the banking system, and its competitive efficiency, and that
|
with monetary and financial stability frameworks - and crucial in cementing the success of both. i have done my bit, leading the bank β s outreach programmes and through 32 working papers, 75 published speeches, over 100 regional visits, around 150 published articles in books and academic journals, and many hundreds more unpublished speeches and schools talks. to say nothing of several spectacularly unsuccessful books. looking ahead, the transparency revolution has yet to run its course. there is more the bank can do to deepen and broaden its engagement with a wider audience. there is further for the bank to go in harvesting the stories from this audience to inform its view of the economy. and there is more the bank can do to widen and deepen its educational offering in schools. on each of those fronts, however, the bank has over the course of the past ten years established robust foundations on which to build. haldane ( 2018b ). all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice when it comes to one particular aspect of transparency - forward guidance - i think a more fundamental rethink may be needed, however. forward guidance was introduced by central banks after the global financial crisis. in principle, it offered real promise. offering a soft pre - commitment to a given policy path could bring forward some of the effects of future policy, giving it extra bang for its buck. 41 in practice, these benefits are only achievable if the policy guidance issued is hard enough to offer some credible pre - commitment, at the same time as being soft enough not to lock central banks in too tightly should circumstances change. this is a classic three bears problem : how to choose a form of words that is neither too hard, nor too soft, but just right. getting guidance just right is a problem central banks, a decade on, have not solved satisfactorily. in my view, with few exceptions forward guidance has ended up either being too vague and ambiguous to offer an effective source of assurance to the outside world, or a source of regret among central banks who have over - committed to something ex - post undesirable. sometimes, it has been a bit of both. as i see it, the structural problems with forward guidance come in two flavours. first, the type of forward guidance that financial market participants crave is precise, time - specific guidance. this makes their job of pricing assets
| 0.5 |
slide 10. treasury yield spread ( 10 year to 2 year ) β’ slide 11. payroll revisions β’ slide 12. consumer price index inflation revisions much of what i have shared today comes from an economic outlook speech i gave a few weeks back. if you would like to read the full remarks, you can look for those on the board β s website. 2 i hope you do. but even more so, i hope these slides today have helped show that you and your students don β t have to wait for a speech from a fed policymaker to get an update on the u. s. economy. you can use fred to access and analyze the data yourselves. i hope that reviewing these data series has been as fun for you as it has been for me or that at least i β ve sparked some ideas for how you can use this tool in the classroom. thank you. see christopher j. waller ( 2023 ), β something β s got to give, β speech delivered at the distinguished speaker seminar, european economics and financial center, london, united kingdom, october 18, https : / / www. federalreserve. gov / newsevents / speech / waller20231018a. htm. using economic data to understand the economy christopher j. waller member board of governors of the federal reserve system beyond the numbers at the federal reserve bank of st. louis november 7, 2023 the views expressed here are my own and do not reflect those of the board of governors or the federal open market committee. 1. real gross domestic product note : dashed line of 2. 1 percent is the average growth rate of real gdp between 2000 : q1 and 2019 : q4. the shaded bars indicate periods of business recession as defined by the national bureau of economic research ( nber ) : march 2001 β november 2001, december 2007 β june 2009, and february 2020 β april 2020. source : federal reserve bank of st. louis ( 2023 ), β real gross domestic product and average real gross domestic, product, β fred economic data ( accessed october 27, 2023 ), https : / / fred. stlouisfed. org / graph /? g = 1b1m6 ; u. s. bureau of economic analysis. 2. contributions to real gdp 2022 - present source : federal reserve bank of st. louis ( 2023 ), β contributions to percent change in real gross domestic product : personal consumption expenditures, gross private domestic investment, net exports of
|
goods and services, and government consumption expenditures and gross investment, β fred economic data ( accessed october 27, 2023 ), https : / / fred. stlouisfed. org / graph /? g = 1aj0j ; federal reserve bank of st. louis ( 2023 ), β real gross domestic product, β fred economic data ( accessed october 27, 2023 ), https : / / fred. stlouisfed. org / graph /? g = 1aj0r ; u. s. bureau of economic analysis. 3. change in payroll employment 2021 - present note : dashed line of 183, 000 is the average change in payroll employment between january 2010 and december 2019. source : federal reserve bank of st. louis ( 2023 ), β all employees, total nonfarm and average all employees, total nonfarm from january 2010 to december 2019, β fred economic data ( accessed november 1, 2023 ), https : / / fred. stlouisfed. org / graph /? g = 1b1n3 ; u. s. bureau of labor statistics. 4. vacancy - to - unemployment ratio note : the shaded bars indicate periods of business recession as defined by the national bureau of economic research ( nber ) : march 2001 β november 2001, december 2007 β june 2009, and february 2020 β april 2020. source : federal reserve bank of st. louis ( 2023 ), β job openings : total nonfarm / unemployment level, β fred economic data ( accessed october 27, 2023 ), https : / / fred. stlouisfed. org / graph /? g = 18bay ; u. s. bureau of labor statistics. 5. labor force participation rate note : the shaded bars indicate periods of business recession as defined by the national bureau of economic research ( nber ) : march 2001 β november 2001, december 2007 β june 2009, and february 2020 β april 2020. source : federal reserve bank of st. louis ( 2023 ), β labor force participation rate, β fred economic data ( accessed october 27, 2023 ), https : / / fred. stlouisfed. org / graph /? g = 1aj8i ; u. s. bureau of labor statistics. 6. personal consumption expenditures inflation note : dashed black line is the federal open market committee β s longer - run inflation objective of 2 percent. the shaded bars indicate periods of business recession as defined by the national
| 1 |
competencies as they progress in their career, across different job roles and levels. β’ through this framework, we aim to build a strong pipeline of singaporean talent and leaders in finance, so that our people can avail themselves of the opportunities that a growing financial industry will create. second, our industry associations are playing an important role in supporting talent development within specific sectors. β’ the life insurance association of singapore, for instance, is working with the singapore college of insurance, to develop a talent framework that provides structured training and development opportunities for insurance professionals. β’ the general insurance association of singapore is running a global internship programme which seeks to provide undergraduates with hands - on experience at insurance firms overseas. third, we have in singapore, fortunately, a strong academic and intellectual climate or platform to deepen specialisation in finance. bis central bankers β speeches β’ we have world - class universities such as insead and university of chicago based here, who will collaborate with this campus to design programmes to offer highquality, specialised courses in banking and finance. β’ we have research centres such as the centre for asset management research and investments and edhec conducting specialised research in areas relevant to the financial industry. β’ we have training providers such as the wealth management institute and risk management institute organising programmes and conferences to further thought leadership in areas of finance. bnp paribas β asia pacific campus is a welcome addition to singapore β s ecosystem to build human capital in finance for the future. conclusion this is an exciting time to be in the financial industry, notwithstanding the challenges it has gone through since the crisis. it is also an exciting time to be in asia. but to seize the opportunities in asian finance, we need a deep pool of highly skilled and trusted professionals. i thank bnp paribas for growing with singapore, and for being a strong partner with mas in our efforts to develop talent and capabilities. i am confident your strong presence in singapore will serve you well as you continue to extend your asian footprint. bis central bankers β speeches
|
##mensurate with their expected returns. we need catalytic capital to improve project bankability and crowd in private sector capital. blended finance is also about combining financing with capacity building, technology transfer, and institutional support, to reduce risk and enhance bankability. 1 / 4 bis - central bankers'speeches blended finance is not new but scaling it requires a fresh approach. about a month ago, the monetary authority of singapore ( mas ) held the inaugural transition finance towards net zero conference conference. the conference saw more than 500 leaders and experts from across the world β from industry, academia, governments, and multilateral development banks - discuss the nuts - and - bolts of what it takes for blended finance to scale. what were their key take - aways? one, greater capacity and expertise to prepare projects. this is critical at the early stages of project development, especially in developing economies. transition projects need to be well designed with clear targets and transparent metrics to draw private capital. two, better risk mitigation and risk transfer mechanisms. we need catalytic and concessional funding from the public sector, multilateral development banks, and philanthropic sources, to improve project bankability and crowd in additional multiples of private sector funding. this will mean re - looking the financing models and incentive structures of multilateral development banks. three, a more synergistic financial ecosystem. we need to recycle capital by taking loans off bank balance sheets and structuring them in a form that institutional investors can participate in. singapore is taking active steps to scale transition and blended finance. infrastructure asia, launched by mas and enterprise singapore, provides expertise in project scoping, shares best practices in project development, and facilitates infrastructure financing deals in the region. clifford capital, whose borrowings are guaranteed by the singapore government, provides debt financing to crowd in equity participation for infrastructure projects. pentagreen capital, a partnership between hsbc and temasek holdings, will deploy blended finance at scale to unlock marginally bankable projects in southeast asia. convergence, a global network for blended finance, has launched a s $ 5 million grant scheme supported by mas, which will fund feasibility studies and proof of concept work on innovative blended finance solutions in target sectors that are under - capitalised in asia. singapore is also partnering global efforts to promote transition and blended finance. the network of central banks and supervisors for greening the financial system ( ngfs ) has established a blended finance initiative, that will identify best practices and lessons from past case
| 0.5 |
effects on systemic risk and growth, β economic policy 31 ( 2016 ), 51 - 106. savings favours participation in capital markets7 and there is evidence that institutional investors have positive effects on corporate governance. 8 a look at the development of institutional investors in advanced economies highlights the challenges ahead. countries in continental europe continue to lag behind the uk and the us. the gap is all the more serious in the pension funds sector, reflecting the relative weight of funded retirement schemes in national social security systems. the gap is very noticeable in italy. for example, in 2015 the assets managed by pension funds accounted for less than 10 per cent of gdp in italy, compared with more than 100 per cent on average in the uk and the us. we definitely need to attain a more comprehensive understanding of the underdevelopment of institutional investors in most euro - area countries. for all of these reasons, policymakers look favourably at the development of market - based financing and the growth of institutional investors. it must be stressed, however, that banks and market - based finance remain complementary, rather than substituting one another, and that a level playing field should be ensured for all financial intermediaries. if regulatory changes put banks at a disadvantage, firms may end up having difficulties accessing both bank and non - bank forms of external finance. indeed, apart from remaining a vital source of corporate funding, especially for smes, banks are uniquely equipped to help firms to access the capital market. moreover, banks offer contracts ( such as overdrafts or credit lines ) and services ( such as lending assistance ) that are often complementary to market - based finance. these contracts and services can be helpful to firms, especially in periods of distress. 9 * * * to conclude, the corporate sector would greatly benefit from a more developed market - based segment within our financial systems. institutional investors play a pivotal role in this structural evolution. at the european scharfstain, d. s., β presidential address : pension policy and the financial system, β the journal of finance, 73 ( 2018 ), 1463 β 1512. mccahery j. a., z. sautner and l. t. starks, β behind the scenes : the corporate governance preferences of institutional investors, β the journal of finance, 71 ( 2016 ), 2905 β 2932. bolton, p., x. freixas, l. gambacorta and p. e. mistru
|
β. absent sizeable structural reforms, the main risk would be what the report calls an β inflationfirst β scenario, where a rise in inflation would eventually force central banks to increase monetary policy interest rates, which in turn would prevent an acceleration of economic activity. i fully support the report β s emphasis on the importance of structural reforms to place the global economy on a sound footing and to make markets work better. in fact, the crisis has clearly shown the limits of the self - regulatory capabilities of markets, particularly financial markets, and their consequences on financial and, ultimately, macroeconomic stability. i also agree with the report β s main policy advice, centred inter alia on investments in r & d and incentives for equity financing over debt. however, in order to ensure an orderly adjustment of the global economy and to allow structural reforms to rapidly kick - start the real economy, appropriate macroeconomic policies are also needed. in this vein, i do not share the report β s negative assessment of the current monetary policy stance that would be β harming the prospects of a sustainable recovery β. this view β which appears not in line with the one expressed in other recent oecd assessments and policy bis central bankers β speeches suggestions β seems to me to overlook the reasons behind the current monetary stance, while focusing too much on the possible unintended consequences. in a context of very low commodity prices and long - lasting weakness of both global and domestic demand, in advanced countries disinflationary pressures and slack in the economy are still high, although with differences among the main economies. under these circumstances, a wait - and - see approach to monetary policy would be unwarranted : rather, central banks observe economic developments, ponder risks and may need to act forcefully. the current low level of policy rates is the appropriate reaction to current cyclical conditions, not an arbitrary choice of central banks ; a less accommodative stance, particularly given the high debt levels as a consequence of the crisis, could lead to a deflationary spiral with severe consequences both for the real economy and the financial sector. this holds true in particular for the euro area, where unused productive capacity and labour are greater than in other advanced economies. estimates by banca d β italia staff ( which do not consider further possible non - linear effects ) show that in the absence of the measures adopted by the ecb governing council between june 2014 and december 2015, both annual inflation and gdp growth in the area would be
| 0.5 |
instruments that allows us to support economic activity and bring inflation back towards 2 %. there are not just the asset purchases, there are also interest rates. and on this, we have been clear that interest rates will remain at their current levels, that is, very, very low, close to zero β even below zero β for a long period, even beyond the horizon of our asset purchases. so we need to look at the longer term. in the event of an economic slowdown β and, again, it is a possibility β do you have the means to respond effectively? it β s not a possibility that we are currently talking about, because right now there is no reason to worry about growth in the euro area. growth is very strong, very robust and very broad - based across the euro area. but whatever the circumstances, the ecb has a clear mandate : to bring inflation back towards 2 %. we will do whatever needs to be done to bring inflation back towards 2 %. but at the moment there is no need to adjust the path that has been decided on by the governing council. inflation is currently at 1. 4 %... 1 / 3 bis central bankers'speeches yes, it β s just under 1. 5 %. is that a good level? it β s not enough, it β s disappointing. but we know the reasons : it β s because unemployment is still high and there is a lot of economic slack in europe. but we want to bring inflation back towards 2 % in the medium term, and that is why monetary policy will remain accommodative. the major issue at present are the threats issued by the us president, donald trump, who blows hot and cold on trade policy, and in particular this power struggle he has embarked on with china. should europe get involved at this stage? as a large trading power, europe is bound to be affected β¦ for now, trump is saying β i β ll threaten europe but without specific customs barriers on european products β β¦ europe has a single trade policy and that means it has to react, and not just to the threat of import tariffs. it also needs to look at the source of the problem, that is, overcapacity throughout the world, and in particular overcapacity in china. this is not a matter for the ecb, of course ; it β s a matter for the european commission and for eu governments. what β s important for us, from an economic perspective,
|
have been excessive. is the economy now in such a high gear that high inflation could become entrenched? looking at the big picture, the positive factors are that economic recovery continues in the euro area and employment is improving. at the same time, high fuel and food prices have hit the pockets of many people and cause concern to citizens. euro area consumer prices have increased exceptionally rapidly, by 5. 1 % in january. inflation has been fuelled by three factors in particular. 1 1. energy inflation explains over half of euro area inflation. the escalation of geopolitical tensions is likely to keep energy prices high for a long period. 2. inflation has been driven up by the normalisation of prices for services, following the opening up of economies in autumn 2021. 3. the rapid recovery from the recession has aggravated production bottlenecks and problems in the availability of components and has pushed up product prices. however, by themselves, these factors that are fuelling inflation will not lead to a permanent, prolonged rise in inflation, unless they cause significant second - round effects and a wage - price spiral. in contrast to the united states, wage inflation has thus far been fairly moderate in the euro area. we are thus following wage developments very closely. last summer, the european central bank β s governing council adopted a new monetary policy strategy for the ecb : we have a symmetric inflation target of 2 % over the medium term. currently, the medium - term outlook for inflation in the euro area is not far from this target. monetary policy decision - making does not react to short - term deviations from the symmetric inflation target, unless they are expected to leave a more permanent mark on inflation. if, however, inflation threatens to climb too high and for a prolonged period, the ecb β s monetary policy will work to prevent this by reducing the purchase programmes and refinancing operations as well as by raising policy interest rates. this is how an independent central bank that has been 2 / 3 bis central bankers'speeches set the primary objective of price stability operates. the ecb governing council launched in december the gradual normalisation of monetary policy. net purchases under the pandemic emergency purchase programme ( pepp ) will be discontinued at the end of march 2022. in our meeting last week, we assessed that risks to the inflation outlook are tilted to the upside. in an uncertain situation β i am referring also to the current geopolitical tensions and their possible impact on energy prices
| 0 |
as per the requirements of the application, was necessary. i would like to take a moment to thank all the institutions involved in the process for their utmost engagement dedicated to this work, particularly the ministry of finances. the bank of albania compiled an action plan, coordinated and cooperated with all the national 1 / 5 bis - central bankers'speeches institutions involved in the process, while established bridges of communication with the european payments council and the european commission, in order to address every arising during the process. the entire application process was conducted through the valuable assistance of the world bank. allow me to stress out that within less than 5 months, a voluminous and detailed material was compiled, and all the stages of preliminary consultations with the european payments council and the european commission were successfully completed thanks to this coordination and cooperation. the criteria set forth by the european payments council for countries that apply to participate in sepa are concentrated in two aspects. first, the applicant should demonstrate strong economic links with the european union, and second, it should demonstrate the alignment of its legislation with that of the european unions in the area of payments, but not exclusively. the latter has the largest volume in the application. in the area of payments, albania demonstrates a high legal compliance with the acquis and the regulatory framework of sepa. since 2018, albania has accelerated its efforts in this regard, through the drafting by the bank of albania and the approval of the law " on payment services " and the regulatory framework for the implementation thereof. this law transposes the eu directive on payment services, known as psd2. the approval of this law ensures that competition, transparency and consumer protection are maintained during the provision of payment services, following the standards of the european union. in order to fully align the regulatory framework of payments with the sepa criteria, in march and april, the bank of albania prepared and approved a new regulation, which transposes the sepa regulation. alongside laying down certain harmonised standards, this regulation gives the banking system the necessary time to prepare its infrastructure to adapt to the sepa schemes. another aspect of legal compliance is related to the supervisory practices of the banking system and the regulatory requirements on capital, which were for the most part congruent to the eu legislation on the context of sepa. a delicate point in the application is the legal compliance as regards the measures adopted for preventing money laundering and countering of terrorist financing. the delisting of albania from the " grey "
|
. what will be the overall state of the economy? 1 / 3 bis central bankers'speeches this year economic growth will accelerate to 3. 5 %, up from 3. 3 % in 2019, and will reach around 4 % in the following years. the monetary policy easing will contribute to the faster economic growth. high private consumption and investment will remain the main economic growth drivers. at the same time, the contribution of net exports to gdp will remain negative on the back of the real sector β s considerable need for investment imports. real household income will grow at a fast pace, which will further narrow the wage gap with neighboring countries and thus make ukrainians more interested in working in ukraine rather than abroad. the 2020 β 2022 current account deficit will remain acceptable the deficit narrowed to 0. 7 % of gdp in 2019. an important factor behind the decrease in the deficit was the compensation received by naftogaz of ukraine from russian gazprom under a ruling of the stockholm arbitration court. however, apart from that, the current account deficit shrank due to the decreased trade deficit in goods, steady growth in services exports, and smaller amounts of repatriated dividends. the current account deficit will range from 3 % to 4 % in 2020 β 2022. in particular, the wider deficit will be caused by large volumes of investment imports and decreased proceeds from natural gas transit. however, this will be offset by greater capital inflows to the private sector amid an improvement in the investment climate. what does the implementation of the forecast depend on? further cooperation with the international monetary fund remains the basic assumption of the macroeconomic forecast. the nbu expects that a new cooperation program with the imf will be signed in the coming months, after the ukrainian parliament approves the required draft laws. the new cooperation program, official borrowing and nonresidents β sustained interest in domestic treasury bonds and bills will sustain the rise in international reserves every year, despite ukraine going through a period of peak external public debt payments. international reserves will exceed usd 29 billion in 2020, and will continue to rise in the coming years. in this light, the nbu believes any delay in entering into a new cooperation agreement with the imf to be the key risk to its forecasts. risks to macrofinancial stability also persist. these risks could mainly arise from ukrainian court rulings on the responsibility and liability of the former owners of insolvent banks to the state. if materialized, these risks could
| 0 |
increase in the breadth and coverage of formal finance has been less than adequate. deepening the financial system and widening its reach is crucial for both accelerating growth and for equitable distribution, given the present stage of development of our country. there has been a burst of entrepreneurship across the country, spanning rural, semi - urban and urban areas. this has to be nurtured and financed. it is only through growth of enterprises across all sizes that competition will be fostered. a small entrepreneur today will be a big entrepreneur tomorrow, and might well become a multinational enterprise eventually if given the comfort of financial support. but we also have to understand that there will be failures as well as successes. banks will therefore have to tone up their risk assessment and risk management capacities, and provide for these failures as part of their risk management. despite the risk, financing of first time entrepreneurs is a must for financial inclusion and growth. the parliament passed the credit information bureau act last year and the guidelines for its implementation will be released shortly. this should enable, over time, the availability of credit histories of both individuals and small businesses, which will help significantly in reducing transactions and information costs for banks. it will also help in spreading the credit culture among borrowers. it should help banks greatly in assessing and managing risk at low cost. as poverty levels decline and households have greater levels of discretionary incomes, they will be first time financial savers. they will, therefore, need to have easy access to formal financial systems to get into the banking habit. banks will need to innovate and devise newer methods of including such customers into their fold. the importance of'no - frills'account and expanding the range of identity documents that is acceptable to open an account without sacrificing objectivity of the process in this milieu can never be over - emphasised. banks will need to go to their customers, rather than the other way around. the micro - credit and the self help group movements are in their infancy but are gathering force. more innovation in the form of business facilitators and correspondents will be needed for banks to increase their outreach for banks to ensure financial inclusion. new entrants to the banking system need households at their doorstep. to conclude, i wish to stress that with increasing liberalisation and higher economic growth, the role of banking sector is poised to increase in the financing pattern of economic activities within the country. to meet the growing credit demand, the banks need to
|
news conference berne, 14 december 2017 thomas jordan introductory remarks by thomas jordan ladies and gentlemen it is a pleasure for me to welcome you to the swiss national bank β s news conference. i will begin by explaining our monetary policy decision and our assessment of the economic situation. i will then hand over to fritz zurbrugg, who will speak about current developments in the area of financial stability. after that, andrea maechler will review the situation on the financial markets and the progress in reference interest rate reform. finally, we will β as ever β be pleased to take your questions. monetary policy decision let me begin with our monetary policy decision and the inflation forecast. we are maintaining our expansionary monetary policy in order to stabilise price developments and support economic activity. interest on sight deposits at the snb is to remain at β 0. 75 % and the target range for the three - month libor is unchanged at between β 1. 25 % and β 0. 25 %. we will remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration. the swiss franc has depreciated in recent months. the overvaluation has thereby decreased, yet overall the franc remains highly valued. the depreciation of the franc reflects the fact that safe havens are currently less sought after. however, this development is still fragile. therefore, despite the easing of the situation, the negative interest rate and our willingness to intervene in the foreign exchange market as necessary remain essential. these measures keep the attractiveness of swiss franc investments low and thus ease pressure on the currency. a renewed appreciation would still be a threat to price and economic developments. the new conditional inflation forecast for the coming quarters is higher than it was in september. this is mainly due to increased oil prices and the further weakening of the swiss page 1 / 4 berne, 14 december 2017 thomas jordan news conference franc. the longer - term inflation forecast is virtually unchanged. for the current year, it has risen marginally to 0. 5 %, from 0. 4 % in the previous quarter. for 2018, we anticipate an inflation rate of 0. 7 %, compared to 0. 4 % in september. for 2019, we continue to expect inflation of 1. 1 %. the conditional inflation forecast is based on the assumption that the threemonth libor remains at β 0. 75 % over the entire forecast horizon. global economic outlook i would now
| 0 |
naturally depends on who these creditors are β if they are other financial institutions, the chances are high that regulators will shy away from resolution. within the framework of the financial stability board, work is ongoing at the global level to define a minimum standard on liabilities in terms of both quality and quantity that are eligible for bail - in. in order to tackle the issue of contagion, this standard should discourage other financial institutions from holding these liabilities. european commission ( 2013 ), β the euro area β s growth prospects over the coming decade β, quarterly report on the euro area 12 ( 4 ). bouis, r and r duval ( 2011 ), β raising the potential growth after the crisis : a quantitative assessment of the potential gains from various structural reforms in the oecd area and beyond β, oecd economics department working paper no. 835. bis central bankers β speeches the euro area already has a minimum requirement for such eligible liabilities. but so far, these liabilities can be held by other institutions without restriction. in the interest of financial stability, europe should lead the way and change this. resolution is obviously only the last line of defence against a bank failure. higher bank equity is the first. basel iii with its more stringent requirements reduces the likelihood that losses will run a bank into trouble. and as the banks β shareholders have more β skin in the game β, their risk appetite should moderate, which reduces the likelihood of losses in the first place. the new capital requirements are not exactly loved by bankers. their argument is straightforward : equity is expensive. this is undoubtedly true. but as franco modigliani and the university of chicago β s merton miller already pointed out in the late 1950s, in theory, the total cost of a bank β s capital stems from the riskiness of its assets, not from the composition of its liabilities. this theorem, however, obviously does not hold today, and mainly for one simple reason. interest on debt is tax - deductible ; pay - outs on equity are not. how sensitive are banks to this difference in tax treatment? a study3 by imf economists suggests that they are as sensitive as any other firm. what does this imply for the leverage of banks? imf economists estimate that abolishing the preferential tax treatment of debt would raise average unweighted bank equity by 2. 2 to 4. 2 percentage points. even though the authors caution that the effect is likely to be lower
|
would like to remind you that our gold reserves are part of the german currency reserves. these were accumulated over time thanks, in part, to germany β s economic boom in the 1950s and 1960s. germany β s growing economic strength, especially its strong external position, resulted in rather large trade account surpluses, most of them acquired in us dollars. at that time, the international monetary system, known as the bretton woods system, was dominated by the us currency. as long as this system was in force, which was up until 1971, the us fed was obliged to exchange its currency for gold. any current account surplus thus resulted in an increase in germany β s gold reserves. this gold was stored in us vaults for obvious reasons. this was not only the case for the gold hold by the bundesbank β it was, in fact, common practice. by the way : it was the only practical thing to do, since running a trade account deficit meant a decrease in gold stocks. thus, we are now looking back at sixty years not only of fruitful cooperation in many fields and international fora, but also of storing gold and trading via the new york fed. as a matter of fact, it is sensible for us to do so in new york, as frankfurt is not a gold trading venue. throughout these sixty years, we have never encountered the slightest problem, let alone had any doubts concerning the credibility of the fed. and for this, bill, i would like to thank you personally. i am also grateful for your uncomplicated cooperation in so many matters. the bundesbank will remain the fed β s trusted partner in future, and we will continue to take advantage of the fed β s services by storing some of our currency reserves as gold in new york. at the same time, you can be assured that we are confident that our gold is in safe hands with you. the days in which hollywood germans such as gerd frobe, better known as goldfinger, and east german terrorist simon gruber, masterminded gold heists in us vaults are long gone. nobody can seriously imagine scenarios like these, which are reminiscent of a james bond movie with goldfinger playing the role of a us fed accounting clerk. while gold is important, we have to combat a crisis of confidence in the euro area. this is the task we need to concentrate on. and we will do so. thank you for your attention. bis central bankers β speeches
| 0.5 |
deputy governor of the bank of italy tips webinar bank of italy 12 β 13 july 20212 for pan - european instant payments developed by the european payments council at the request of the euro retail payments board. building tips required the fulfilment of a number of particularly challenging technical requirements : - virtually instant payment execution ( with processing times per payment not exceeding 5 seconds ) ; - the capacity to handle a large volume of processed payments ( over 43 million transactions per day ) ; β very high availability and resilience ( reaching 99. 9 % service availability, and the capacity to restart within 15 minutes in a site disaster scenario ) ; - extreme scalability of the system from a performance viewpoint ( the ability to sustain a doubling of the volume of payments over a year ). 1 / 3 bis central bankers'speeches as governor visco recently said, what makes tips really unique and unlike any other settlement platform is its distributed architecture in all layers, from application to infrastructure. 1 this architecture is based on β industry standard β and open - source software. the design is meant to ensure very high levels of stability that make service interruptions and software bugs very unlikely. the strengths of this powerful platform lie in its ability to process millions of transactions per day, requiring just a few seconds for each one, and operating all year round with an extremely low environmental impact. the presence of redundant servers allows the settlement engine to process payments without storing any information. this avoids the creation of β bottlenecks β in the processing flow and enables tips to be very fast and to achieve system resilience. it is worth emphasizing that this architecture differs from distributed - ledger systems ( such as the bitcoin network, based on a block chain ) which need to generate trust and consensus among a distributed community by means of an expensive and energy - intensive global validation process. in the case of tips, the recognition and guarantee of the transactions comes from the trust provided by the eurosystem ( a typical task for a central bank ). this also allows tips to be β green β. as shown in recent research carried out by the ict operations directorate of the bank of italy, the tips carbon footprint in 2019 was almost 40, 000 times smaller than the amount of co2 emitted by other distributed - ledger - based networks such as bitcoin. 2 this is because, absent the need to generate trust and consensus among all the network participants, there is no energy dissipation. due to its characteristics, this infrastructure
|
naples and milan ( β¬0. 8 billion ) and for the mose barrier project and other measures to safeguard venice ( β¬0. 2 billion ). finally, expenditure of β¬0. 9 billion is brought forward for development cooperation and assistance, of which β¬0. 4 billion on capital account. a one - off payment of β¬150 is to be made to taxpayers whose net personal income tax liability for 2006 was nil, plus an additional β¬150 for each dependent ( β¬1. 9 billion ). the report now estimates general government net borrowing for 2007 at 2. 4 per cent of gdp. with respect to the forecasts made in the autumn of 2006, which put net borrowing at 2. 8 per cent, revenue has been revised upwards by a total of β¬16. 4 billion ( 1. 1 per cent of gdp ) ; excluding the measure in favour of persons with low incomes who are unable to exploit all the income tax reliefs, the increase amounts to β¬18. 3 billion. the estimate for expenditure has been raised by β¬10. 7 billion ( 0. 7 per cent of gdp ) mainly as a result of the measures passed in june and september ( β¬11. 8 billion ). over half of the revision to the estimate for revenue ( β¬9. 3 billion ) was made in march 2007 on the basis of the 2006 outturn for receipts. the subsequent revisions have mainly involved direct taxes ( β¬6. 4 billion, excluding the effects of the measure in favour of persons with low incomes who are unable to exploit all the income tax reliefs ), in connection with the sharp increase in receipts of self - assessed taxes in the four months from june to september compared with the same period of 2006 ( 31. 1 per cent ). according to the official estimates, without the above provisions net borrowing in 2007 would be close to 1. 5 per cent of gdp. the report estimates that the ratio of revenue to gdp in 2007 will be 0. 6 percentage points higher than in 2006. this increase is largely ascribable to self - assessed taxes paid by enterprises and social security contributions, which include allocations to severance pay provisions. compared with 2006, the ratio of primary current expenditure to gdp declines by 0. 1 percentage points, to 39. 8 per cent. this estimate does not include the cost of the measure in favour of persons with low incomes who are unable to exploit all the income tax reliefs, which, as mentioned earlier, is accounted for as a
| 0.5 |
risk β for example, the long - term interest - rate risk posed by 30 - year fixed - rate mortgages. it is also difficult for investors who do not do the underwriting themselves to take long - term idiosyncratic credit risk. securitization backed by a predictable level of government support has a useful function in facilitating the allocation of these different risks to different sets of investors through the to - be - announced or β tba β market. i think the tba market will be key to ensuring americans β continued widespread access to the 30 - year fixed - rate mortgage. the tba market is also important to the role of small banks and lending institutions in a competitive housing finance system. ensuring an easy, predictable path to securitization of standardized mortgage products is essential to making mortgage credit available throughout our country β in traditionally underserved rural areas and urban areas, and to all sorts of current and potential homeowners, provided by financial institutions of different sizes in different locations. a strong regulator whose primary focus is the housing finance system can also help ensure fair access to smaller institutions. in summary, it is my personal belief that housing finance reform must incorporate an explicit government backstop accompanied by significant sources of high - quality first - loss private capital. thank you for the opportunity to appear before you today. i look forward to your questions. bis central bankers β speeches
|
democracy, encompassing areas as important as privatisation, the labour market and social security reforms, and the liberalisation of numerous markets ; notwithstanding, as i shall indicate later, that there is still considerable work outstanding in this area. an excellent example of these reforms is the transformation the spanish financial system has undergone. here, the efficiencies generated by liberalisation contributed to all players, in general, turning in a sound performance : bank and savings - bank managers, trade unions and employers'associations, governments and the financial supervisor all thus helped bring about an industry which is today held in worldwide esteem. nonetheless, although these macroeconomic and microeconomic policies no doubt brought their weight to bear, it would be very difficult to explain what has happened in spain without turning to other more structural causes. one essential factor of growth in recent decades has been the change in the level of spanish educational achievement in the 70s and 80s, which meant that those joining the labour market in the 90s had a far higher level of educational attainment than that of previous generations. and as well as higher education, these new entrants were also much greater in number than their predecessors. this indigenous population growth has been reinforced in recent years by the phenomenon of immigration, and has been an essential explanatory factor of our recent growth. in addition to the foregoing causes, which can be quantified, there are others that are more difficult to measure since they refer to qualitative aspects, but which are equally relevant. thus, for instance, spanish trade unions have progressively adopted a bargaining strategy more in keeping with the requirements stemming from spanish euro area membership and with the challenges posed by globalisation, and that has been conducive to employment generation and the growth of the spanish economy in recent years. something similar may be said of the substantial continuity over time of the broad thrust of economic policy, irrespective of the different governments that have successively been in power. such continuity has also impregnated the natural debate under democracy between the various policy options. underpinning this debate has been a degree of agreement on the importance of stability - oriented macroeconomic ( fiscal and monetary ) policies and the microeconomic policies geared to improving the workings of markets. and this is not something that is found in all developed countries. specifically, continuity in privatisation and market liberalisation policies, which has placed spain in a leading position in continental europe and has contributed significantly to the growth in the past 20 years
| 0 |
increased the demands on the audit committee, which further affirms the separation of these committees as best practice in order to maintain a clear focus on both risk management and controls. within existing structures in the insurance industry, we observe common overlaps in membership between audit and risk committee members. we also observe varying degrees in which firms explicitly refer to coordination between the audit and risk committees in their respective charters. there is even greater variance in the actual practice of how the two committees interact with one another. these observations lead us to believe that there is room for greater clarity and improved coordination in responsibilities between these committees. bank negara malaysia is mindful of concerns expressed by the industry that we are adding too much responsibility to the board β s plate, and requiring boards to approve numerous policies and management actions may be distracting boards from being effective in performing their core oversight functions. the addition of new responsibilities to the board has also raised some questions within institutions on whether the separation between management and oversight is being appropriately preserved. in revising the existing framework on corporate governance, we intend to take the opportunity to address this issue by improving how we capture board roles and responsibilities at the organisational level, bis central bankers β speeches taking into account all the things that we currently ask boards to do. this will reduce the need for the bank to direct matters that boards must approve in specific business areas. it does not however, obviate the need for boards to be fully engaged in approving core policies such as risk and capital management strategies. in other areas, the board should determine matters that are reserved for its decision, and the bank will look to the quality of engagement with management, escalation of issues to the board and the means by which boards obtain assurance on matters that it does not specifically approve. this will be reflected in our assessment of the quality of oversight and risk control functions of the insurer. i hope that these insights to some of the bank β s current policy considerations will provoke reflections of your own on how your organisations are currently organised and positioned to cope with an environment that will only become more challenging on various fronts. we have much work still to do and over the course of the coming months, we will be seeking industry feedback on these issues. we also have our own expectations of the industry. a key expectation continues to be that the board collectively ensures that it has the requisite knowledge and competencies represented on the board to discharge its role effectively. our demands of insurers will increase in this
|
bis central bankers'speeches
| 0.5 |
extremely difficult to identify, price, allocate, and manage with accuracy. 1 https : / / www. bis. org / review / r151009a. pdf 2 https : / / www. rbnz. govt. nz / research - and - publications / speeches / 2019 / speech2019 - 07 - 11 # fn7 ; https : / / www. rbnz. govt. nz / about - us / the - journey - of - te - putea - matua - our - tane - mahuta in the jargon, β market failure β is rife. we simply do not know the true scope and scale of the environmental risks we take on during our daily economic activities. likewise, many of the material costs of our economic decisions are β externalised β, that is, borne by others including future generations. there is no obvious market or price for selling climate risk, and hence no personal reward for managing it. and market participants often take a short - term, myopic, view in their decision making, pushing longer term problems to the never - never. what this means is that we will never have perfect information on the risks of climate change. however, firms β disclosure on how they identify and manage climate change risks greatly assist to sharpen our focus. after all, it is what gets measured that generally gets managed. and it is far often better to imperfectly measure something than ignore it completely. what we already know is that climate change holds far - reaching implications for new zealand β s financial system. these implications include physical impacts such as sea level rise and drought. for example, the national institute of water and atmospheric research ( niwa ) estimates $ 12. 5 billion of property is already exposed to extreme coastal flooding in new zealand, and that each 10cm of sea level rise puts another $ 2. 4 billion of assets at risk. 3 climate change also implies transition impacts - such as β flight shame β or a shift to plantbased protein that will pose unique challenges for our highly concentrated export economy. agriculture is already staring down the challenge of a triple whammy : emission pricing, changes in consumer demand, and more extreme weather. the reserve bank β s climate strategy our climate strategy at the reserve bank has three avenues : incorporating the impact of climate change into our core functions ; managing our direct impact on the climate ; and leading through experience and collaboration. firm disclosure of climate risks assists all three avenues. disclosure will
|
two days have stressed the necessity of prudential supervision of the banking system in the face of a credit boom. even though financial deepening and capital inflows bring about long - term benefits that can hardly be overstated, in the short to medium run they can lead to imbalances and distortions that pose a threat to the macroeconomic stability of a country. we have recently seen how badly lax lending and improper credit risk management can end in developed countries. in the case of converging economies, which are generally more financially vulnerable than fully - fledged market economies, it is all the more important to closely monitor risks to the financial system, enhance cooperation between financial institutions and supervisory authorities, and impose prudential constraints on lending. * the ideas that i have summarized so far were expressed in the papers prepared and presented by economists from academia, central banks, and international financial institutions. we have also heard important voices of top commercial bank executives and central bank governors during the panel that has just ended. household credit, and mortgages in particular, will remain an important source of revenues and profits for commercial banks. at the same time central bankers and banking sector supervisors will likely watch credit developments very closely to make sure that best lending practices are in place. in closing, i would again like to thank you all for attending the conference. i would like to thank the organizing committee and the nbp staff for their excellent work. i hope to meet you again at another conference organized by the national bank of poland. thank you.
| 0 |
for cash, and the implications of the pandemic for the economic outlook. other central banks took similar decisions around the same time. this helped to stabilise markets and reversed the dash for cash and thus the flows out of money market funds. second, the bank activated its contingent term repo facility on 24th march, committing to lend unlimited amounts of reserves at close to bank rate against a broad range of collateral. taken together, these operations brought money market rates back to more normal levels. the federal reserve in the us also launched a specific liquidity facility aimed at easing the stresses in dollar denominated mmfs. turning the fire hoses on at full blast worked and cured the immediate problem. it is always worth remembering that all of this happened at a time of a global pandemic and a historically unprecedented collapse in economic activity. so, it is hardly surprising that large and rapid actions were necessary. it helped that the situation in respect of both monetary and financial stability called for such actions, so there was no conflict between the two. moreover, this was an international shock, in at least two important respects. first, by its nature the global pandemic was affecting a very large number of economies and financial markets. second, money market funds, and particularly dollar denominated funds, provide funding to a wide range of banks internationally and are used for cash management by investors and corporates across the world. for instance it is common for us funds to buy dollar paper issued by european banks, and vice versa. so the transmission of the dash for cash was not constrained by borders or national markets. us prime mmfs saw large outflows, with net redemptions of 30 % from prime mmfs offered to institutional investors over a two week period ( president β s working group, 2020 ). this contributed to the effective closure of the market for short - term dollar funding ( fsb, 2020 ). us government mmfs, on the other hand, saw huge inflows over the same period. a similar pattern was also seen in dollar denominated mmfs in europe. 3 / 6 bis central bankers'speeches the important conclusion i draw from this review of the experience of the dash for cash is that while we can reasonably conclude that the actions taken meant that the immediate problem was tackled, in doing so some serious issues which represent a threat to the stability of the financial system were revealed. hence, it is right that a very large amount of effort is going towards tack
|
like funds and investment funds. we should remove the ambiguity of intermediate descriptions such as low volatility funds. third, and to support removing the ambiguity, it will be important to define in an accounting and substantive sense more explicitly what constitutes cash - like. current guidance leaves a lot of judgement to managers and auditors to make these decisions on a fund by fund basis1. money - market funds are a cash management instrument, so it may seem odd that the meaning of cash - like as a term has not been well defined. the resultant ambiguity may have seemed convenient as a means to stretch the boundary of the definition to allow less liquid instruments in, but when a stress event like the dash for cash happens, the flaw is badly exposed and financial stability is in jeopardy. the authorities then have to intervene in scale to restore well - functioning markets, but that should not be the accepted way to run the system. 4 / 6 bis central bankers'speeches that said, the definition of cash - like therefore needs to be clear and appropriate rather than overprescriptive. for many purposes it does need to provide near instant access to cash β i. e. quick redemption of a holding in a money market fund should be assured. but there are situations where, say, holding a three month tenor instrument is appropriate because it satisfies treasury management objectives. the critical need is to avoid ambiguity of definition and mismatches between an instrument β s liquidity and its use. funds that do not meet this requirement should be clearly labelled and treated as part of the investment fund world, serving a different purpose ( where there are also issues, but these are not my focus today ). you may well say β he really is labouring this point β. yes i am, because the post financial crisis reforms did not tackle it conclusively. so, what reforms are required to establish money market funds as cash - like without ambiguity? the first thing to say is that no single reform will solve things on its own. we must identify a coherent package of reforms that address the current vulnerabilities in the money market fund sector. it is easiest to describe three broad approaches to illustrate the potential options available that could deliver this objective. these are intentionally somewhat stylistic, to draw out the tradeoffs we face in addressing these issues. first, at one extreme, asset holdings could be limited to government instruments. given the low risk and liquid nature of these instruments, run risk would be materially reduced. the existing
| 1 |
10, 3 per cent and for 2004 it is expected to decline to 8, 6 per cent. bearing in mind that average inflation in africa was around 40 % in the early 1990s, this is quite an achievement. the african success in containing inflation is in reality even better. the higher inflation rate is occasioned by the impact of a few countries that still have very high inflation. examples in this regard are angola, zimbabwe and the democratic republic of congo. nonetheless, if the average inflation rate of 10, 3 per cent for africa in 2003 is compared to 2, 7 per cent for developing countries in asia, it is clear that there is still room for improvement. consequently, the pursuit of price stability is a major challenge for governments and central banks in africa. the worldwide success in bringing inflation down to more acceptable levels cannot be ascribed to monetary policy alone. it is certainly also a consequence of other important factors such as more prudent fiscal policy, the easing of trade barriers, greater competition, productivity improvements and changing public expectations of inflation. while the causality regarding inflationary expectations is not totally clear, it does appear plausible that success in the quest for price stability is rewarded with jackson hole, wyoming, is the venue for the annual meetings of central bank governors, academics, and financial editors, organised by the federal reserve bank of kansas city. further success as inflationary expectations adjust downwards, influencing the overall price setting mechanism or chain. these expectations also depend on the credibility of the central bank. whatever other factors influence the inflation rate, one can hardly deny that the execution of monetary policy in pursuit of price stability is a core function of central banks in all modern economies. the credibility of central banks depends to a large extent on whether they are perceived as either consistently applying monetary policy in a fair, dynamic, flexible and socially responsible manner or whether they are perceived as institutions staffed by arrogant, narrow - minded unelected bureaucrats. almost in passing, one would like to refer to the phenomenon of β dollarisation β. in some countries foreign currency, usually the us dollar, is preferred to domestic currency. one is not convinced that this would happen if the central bank has earned its stripes as a consistent inflation fighter. there are of course other reasons beyond β dollarisation β why central banks should pursue price stability. there has been a growing consensus that high and variable inflation distorts decision making in the economy, leading to a misallocation of resources and ultimately to bad economic performance. inflation also tends
|
policy decisions. the appropriate stance of monetary policy is often judged by considering developments in indicators such as the real interest rate, the slope of the yield curve, the output gap, the natural rate of interest and the natural rate of unemployment. to determine some of these measures is difficult enough at the best of times. in the absence of correct information it is impossible. 5. the development of the financial system as was indicated earlier, there is no denying that price stability has become a core objective of central banks all over the world. it is also becoming increasingly apparent that well - functioning financial systems require financial stability as well. this could be described as the presence of soundly managed financial institutions and robust financial markets. central banks in emerging markets typically face a more fundamental challenge in the sense that their financial systems are under - developed. today some developing countries experience low rates of economic growth, partly because of under - developed financial systems and a concomitant lack of financial intermediation. financial markets, including the institutions involved such as banks, through the process of financial intermediation, serve as a conduit for the efficient and optimal allocation of financial resources and can accelerate the rate of economic growth. in essence, financial intermediation tends to raise the level of saving and investment as it reduces the costs associated with bringing lenders and borrowers together. as in the case with price stability, the central bank cannot accept sole responsibility for the development of banks and financial markets, but is well placed to shoulder a major portion of the burden. the scope of the central bank β s role in developing the financial system is far too broad for an exhaustive discussion in one address and a few related comments will have to suffice. the first comment is an example of what a central bank can do in practice to help markets develop. some years ago, as part of the development of the market in government bonds in south africa and prior to the appointment of primary dealers, the sa reserve bank acted as a market maker in the market for government bonds. this was an interim phase in the development of the market. the bank contributed to the market β s development by managing liquidity. while the bank is still involved in the primary market as the issuer of government bonds, we have no role left as a market maker. the government bond market has matured with a group of primary dealers having to act as market makers. the bank also played an active role in the early stages of the development of the spot
| 1 |
saving rate as a share of current income and funds flow, some argue that a more relevant measure of saving adequacy is not the portion of current income set aside for saving but rather the change in net worth. and in this regard, the picture of household saving looks more favorable than suggested by the saving rate. the ratio of net worth - to - disposable income has come down from its peak in 2000, but remains at a high level relative to the past few decades, because capital appreciation on household assets, such as equities and real estate, has considerably outpaced income gains. this is a passive perspective on savings, though, where households rely on the markets to raise the value of their assets over time. but, to create these assets, households need to consistently set aside some of their current earnings to invest for their future needs. while the experience of the past few years of exceptionally low interest rates and lower expected stock returns encouraged a rational consumer to spend and not save, as the markets return to more long - term trends, we should see consumers moderate their behavior as well. office of federal housing enterprise oversight house price index. managing personal finances i now want to turn from an aggregate view of household finances to savings and credit at the individual level. in particular, i want to discuss issues relating to managing personal finances, including managing personal credit and saving for retirement, and the special importance of financial education. college graduates preparing to enter the labor force will soon assume a new level of responsibility for managing their finances. personal financial management includes the strategic use of both credit and savings to enhance asset accumulation and financial well being. just as the choices that students have made regarding their education play a vital role in determining career opportunities, the decisions they make and behaviors they establish regarding financial management in the coming years will also impact future opportunities and their ability to capitalize on them. compared to a generation ago, the financial marketplace of today is significantly more complex. there is now an extensive range of consumer financial products and services, and providers of these goods and services. advances in communications technologies and other technological tools have dramatically broadened the provision of financial services. for example, the development of sophisticated credit - scoring models permits lenders to more efficiently evaluate credit risk and underwrite loans and thus provide a broader array of loans to more closely meet the specific financial needs of different consumers. in addition, as workers have become more mobile and more likely to change jobs several times over the course of their
|
circumstances. one tool for managing risk is securitization. many of the assets on a firm's balance sheet, such as receivables and customer leases, can now be securitized - - that is, grouped into pools and sold to outside investors. securitization helps a firm manage the risk of a concentrated exposure by transferring some of that exposure outside the firm. by pooling a diverse set of assets and issuing marketable securities, firms obtain liquidity and reduce funding costs. of course, moving assets off the balance sheet and into special - purpose entities, with the attendant creation of servicing rights and high - risk residual interests retained by firms, generates its own risks. derivatives are another important tool for managing risk exposures. in the ordinary course of business, firms are exposed to credit risk and the risk of price fluctuations in currency, commodity, energy, and interest rate markets. for example, when an airline sells tickets months before a flight, it becomes exposed to fluctuations in the price of jet fuel. a higher price of jet fuel translates directly into lower profits and, perhaps, a greater risk of bankruptcy. firms can now use derivatives - - options, futures, forwards, and so on - - to mitigate their exposure to some of these risks. the risk can be transferred to a counterparty that is more willing to bear it. in my example, the airline could buy a forward contract or a call option on jet fuel to hedge its risk and thereby increase its financial stability. another major category of risk is credit risk, which also has become much more quantified. models analyze a corporate customer's or borrower's probability of default, the loss in the case of default, and the borrower's likely exposure at the time of default, taking into consideration future draw - downs. the greater use of credit models in retail transactions provides a stronger framework to assess risk and ensure that pricing reflects credit quality. for consumer credit, however, models are less proven, since data collection and loss estimates generally evolved after the 1990 - 91 recession and so have not been proven under stress conditions or for subprime borrowers. because many of these borrowers did not have significant access to credit in previous recessions, their ultimate default rate in the current cycle should help to validate the strength of the new statistical models. for example, the health of financial institutions today reflects the improvement in the risk management process that has been ongoing at banks for many years.
| 0.5 |
way. the european economy is coming back and recovering from the recession. but monetary policy cannot create long - term growth. long - term growth will be driven by productivity gains, well - functioning economies and a reformed economic and monetary union. it is the responsibility of the democratically elected governments to propose and implement the right reforms. mario draghi has insisted in his press conferences that fiscal policy and structural policy are also important, yet some european countries still continue to pursue austerity. could you tell us your opinion on that? as regards fiscal policy, the discussion in the g7 should not just be about increasing spending, it should also be about improving the quality of the budget. the ecb agrees with the idea that β countries that have fiscal space should use it β, but many countries do not have this fiscal space. reducing unproductive expenditures and cutting taxes or increasing bis central bankers β speeches investment in productive infrastructure, such as education and research, can lead to growth without increasing the deficit. what about foreign exchange policy? the uk pound and japanese yen have been increasing and volatility is very high. what will the g7 do to reduce volatility? the g20 countries have committed not to use the exchange rate for competitive purposes, as confirmed in recent meetings in shanghai and washington. all of us should act in a way consistent with this commitment and which does not add to global uncertainty. emerging markets are slowing down and advanced countries have very low growth rates. what should the g7 and advanced countries do for the world economy? in a low - growth environment globally, there might be a temptation for some countries to grow at the expense of other partner countries. so it is precisely the role of the g7 or the g20 to resist such temptation. there is no β magic bullet β for increasing growth. for the g7, it is crucial to send the message to support domestic demand and focus on those structural policies that will be most conducive to growth. you cannot just rely on other countries. the message that we would like to hear is that β growth starts at home β. bis central bankers β speeches
|
subordinated debt. if there is still some loss left, then you write down the claims of uninsured, unsecured creditors in one way or another ; the scope of this would need to be made clear in the statutory framework for resolutions. the loss is then covered. but it is still necessary to recapitalise to the bank, so you convert some of the residual claims of the unsecured, uninsured creditors into equity. how much? whatever the microprudential regulatory authority concludes is needed to provide adequate capitalisation for the bank or dealer going forward. this is a technique that will work only in circumstances where the size of the loss could be estimated in the run up to the resolution and where the underlying franchise of the business remains basically viable. but it has the promise of being able to take an essentially viable business with a toxic part, write - off the toxic part and reconstruct the capital structure of the bank or dealer so as to be able to maintain the business as a going concern. for those of you familiar with chapter 11 in the united states for non - financial corporates, this amounts to applying those techniques in a very accelerated way and under the discretion of the resolution authorities rather than through a negotiation mediated by a judge. as i have described it, it is a resolution tool. there is no good reason of public policy why resolution should always involve closing the firm, provided that shareholders, uninsured creditors, the board and management pay the appropriate price. whichever combination of tools is incorporated into resolution regimes, we should expect them to induce changes over time in behaviour of banks and their creditors. there might, for example, be greater incentives to lend to banks against security or at short maturities. as we reintroduce the disciplines of capitalism back into the heart of the financial system, we might have to think carefully about regulatory policies on the encumbrance of assets and on the maturity structure of liabilities. the third point i would make is that even if we were equipped with a decent set of tools for the domestic context, we must be able to cope with the cross - border element of a financial firm failure. within the eu, this should not be the hardest thing in the world and i hope that the commission will be able to develop proposals that will lead the way for the rest of the international community in identifying how we can do this. because within the eu we can enter into more or less binding commitments under the terms of
| 0 |
##economic constraints to grow beyond the current rates. on the one hand, financial conditions are highly favorable and corporations and financial institutions face no liquidity constraints. on the other, with a current account deficit of 1. 6 % of gdp, chile has little pressure from external savings. finally, public net debt is only slightly positive and there is very little risk of crowding out private investment. figure 9 public sector balance ( percent of gdp ) latin america : 1995 - 2015 average ( * ) 1. 1 - 2 - 4 - 1. 5 - 0. 9 chile - 2 0 - 4 - 3 - 3 - 0. 5 - 3. 4 - 3. 1 - 6 - 6 chile peru argentina mexico brazil colombia - 6 - 6 effective 14 18 ( f ) structural ( * ) general government financial balance. ( f ) for 2017 to 2019, forecasts obtained from the 2016 public finances report. sources : moody β s and national budget department, ministry of finance of chile. 22. this is one of the factors that explain the cb estimates of growth at 2. 25 % - 3. 25 % in 2018. other factors include improving external conditions, the expansionary monetary policy and the gradual disappearance of idiosyncratic factors that have dragged down economic activity in recent years. according to the cb growth should resume gradually from the second quarter of 2017 to gain speed and start reducing the output gap, currently at 1 Β½ per cent, in the second half of the year ( figure 10 ). 23. the above compares to a potential growth between 2. 5 % and 3 %, according to the latest central bank estimates. this is indeed significantly lower than trend growth rates close to 5 % in the mid - 2000s. however, the same central bank analysis indicates that reallocating resources beyond the shorter term, recovering the historical investment / gdp ratios and resuming the increase of participation rates of women in the labor force could allow the country to attain trend growth of about 3. 5 % per year. this suggests that the chilean economy still has considerably headroom to grow. the challenges 24. speeding up growth with price stability in chile still faces some important challenges. first and foremost, closing the current output gap would require recovering productive investment that has remained particularly weak over the last four years. part of this is due to a substantial drop in investment in the mining sector, but gross capital formation in sectors other than mining has also faltered. while recent data points towards an increase in machinery imports, a more
|
substantial change would require an improvement in business expectations that have remained in negative territory for some time. 25. the possibility of raising potential growth beyond the figures quoted above relies mainly on : ( 1 ) increasing human capital accumulation through increased labor participation, raising working skills above the already projected levels or the migration of workers with the competences required by the chilean system ; and ( 2 ) making productivity improvements via enhancing companies β efficiency, lowering production and trading costs, and changing output composition toward more competitive and productive sectors, while advancing in terms of innovation and technological development. 26. as chile β s concern for growth has intensified, many ideas about public policies have emerged that could help enhance productivity, with proposals coming from the government, private agents and the national productivity commission. in particular, policies have been developed that have permitted to diversify the energy matrix, increase supply reliability and reduce costs. there have been other factors, however, that pose a risk to productivity, including initiatives that may overburden corporate costs, generate new trading costs or reduce savings. last, but not least, any discussion about productivity must necessarily cover technological development and innovation, which in chile is limited by low private and public investment in r & d and by discontinuity in long - term policies aiming at economic diversification. 27. a third key challenge for the chilean economy is to strengthen its institutions and making them more trustworthy. even though chile enjoys a substantial advantage in this respect over other emerging countries, trust in public and private institutions has suffered from a series of scandals in recent times and rebuilding such trust would require consistent action over a number of years. such effort, however, would be well justified since a low - trust economy is likely to suffer from high transaction costs, free - riding behavior and low policy effectiveness. 28. the former three elements β investor expectations, potential growth and institutional trust β are certainly not part of the conventional agenda of central banks. however, even a narrow focus on stable and low inflation requires monitoring the key developments affecting the future path of the economy. while the central bank can contribute indirectly to these goals by reducing economic instability and uncertainty, it would greatly benefit from the additional flexibility, effectiveness and welfare that they would be able to build.
| 1 |
from all stakeholders there are ample opportunities in small businesses in india and such opportunities will transform the country in the coming future. for such transformation to happen there needs to be support from all stakeholders, government, banks, corporate, regulators, civic society, etc. technology universities may be set up and the government can tie up with the best in the world to help in research. we need to harness entrepreneurship and look at skill building. a scheme for utilizing ngos to provide training services to tiny micro enterprises could be encouraged. entrepreneurship development is important in view of its visible impact on wealth creation and employment generation. to facilitate and encourage this, skill building has been impressed upon by the prime minister β s task force for msmes. enterprise development centres ( edc ) should be set up by the central / state governments with incubators to provide training not just for setting up of new units but also to provide continuing education on different aspects like product design, packaging, technology upgradation, financial management and marketing. entrepreneurship development is the key factor to fight against unemployment, poverty and to prepare ourselves for globalization in order to achieve overall economic progress. initiatives by government of india / reserve bank of india as the level of financial exclusion is very high in the sector, government and reserve bank of india are taking the lead in facilitating access to finance by increasing the outreach of banking facilities to unbanked centers. financial access is critical for msmes growth and development. with an objective of ensuring uniform progress in provision of banking services in all parts of the country, banks have been advised to draw up a roadmap to provide banking services through a banking outlet in every unbanked village having a population of over 2, 000 by march 2012. such banking services need not necessarily be extended through a brick and mortar branch but could be provided through any of the various forms of information and communication technology ( ict ) - based models, including banking correspondents ( bcs ). about 74, 000 such unbanked villages have been identified and allotted to various banks through state level bankers committees ( slbcs ). as at the end of september 2011, as reported by the state level bankers β committees of various states / union territories, banking outlets have been opened in 42, 079 villages across the various states in the country. this comprises of 1127 branches, 39, 998 bcs and 954 other modes like rural atm, mobile van etc. further, the reserve bank of india has also advised banks to roll out
|
k c chakrabarty : microenterprise development β path to creating mncs of tomorrow keynote address by dr k c chakrabarty, deputy governor of the reserve bank of india, at the citi micro entrepreneur awards ceremony, organised by citi bank, mumbai, 5 december 2011. * * * assistance provided by smt l. vadera in preparation of this address is gratefully acknowledged. mr. pramit jhaveri, ceo, citi bank, india, dr isher judge ahluwalia, chairperson, icrier, mr haresh shah, chairman of confederation for the promotion of khadi and village industries, mr anami roy, ex - dgp ( maharashtra ) and chairman vandana foundation, ms radhika haribhakti, chairperson, swadhaar fin access, distinguished guests and winners, ladies and gentlemen. i am extremely happy to be here for the annual citi micro entrepreneur awards ceremony. first of all, i would like to congratulate all the awardees who have come from various parts of the country. these awards recognize and celebrate the superior performance of the recipients. coming as it does from an eminent jury, they fully deserve our wholesome applause and accolades. we hope their performance and achievement will serve as a beacon to others to emulate and perhaps even exceed. i would also like to compliment the organizers of citi micro entrepreneur awards, i. e. citi bank especially mr pramit jhaveri and other members of his team for recognizing and honouring exemplary micro entrepreneurs who have overcome all challenges to successfully build self - sustaining micro enterprises, creating employment and contributing meaningfully to the economic growth of the country. the conferring of these awards also entitles micro entrepreneurs an opportunity to receive training in business development in order to develop and grow in to β state of the art β micro enterprises. it is universally acknowledged that great opportunities open up if one is well trained and skilled. entrepreneurs need not necessarily be born, but can be developed through well - conceived and well - directed activities. spearheading entrepreneurship movement throughout the nation is the need of the hour and i compliment citi bank for their commendable initiative in providing support to skill and knowledge building of the micro enterprises. moreover, today β s winners will serve as role models who could inspire and mentor future generations of entrepreneurs. importance of micro and small enterprises in a developing nation β s economy, it β s the small and
| 1 |
further towards our target, since it will increasingly dampen demand. taking into account our updated assessment of the inflation outlook, the dynamics of underlying inflation, and the strength of monetary policy transmission, the governing council decided yesterday to raise interest rates again by 25 basis points. that means we have now raised rates by 400 basis points in less than a year. this is testament to our determination to ensure that inflation returns to our 2 % medium - term target in a timely manner. 1 / 2 bis - central bankers'speeches we also confirmed that our future decisions will ensure that the key ecb interest rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to our 2 % medium - term target and will be kept at those levels for as long as necessary. in other words, we still have ground to cover. barring a material change to our baseline, it is very likely that we will continue to increase rates at our next policy meeting in july. thereafter, we will continue to follow a data - dependent approach to determining the appropriate level and duration of restriction. in particular, our interest rate decisions will continue to be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission. the governing council also confirmed that it will discontinue the reinvestments under the asset purchase programme as of july 2023. 2 / 2 bis - central bankers'speeches
|
is one that is based on a relationship of trust and integrity. reputation and trust are indeed the valued assets of the insurance and takaful industries'business. any lapses in market conduct will have widespread implications on the business and on the industry. ensuring fair and equitable dealings with customers should also be a priority. in this environment where the industry originates more and more innovative and complex financial solutions, insurers and takaful operators therefore have a responsibility to ensure that : β’ consumers receive sufficient information to be able to make informed decisions ; β’ that they understand the key features of a policy, including any significant exclusions, before any purchase ; β’ that the recommended policies are suitable for their demands and needs ; and β’ that their claims are dealt with promptly and fairly. the new environment of increased market discipline now places even greater emphasis on stronger corporate governance, integrity and transparency. high standards of integrity should also define the management of the institution's human and physical resources. in this respect, there can be no substitute for the commitment of an institution's leadership to uphold the highest standards of integrity in dealing with its human capital and corporate resources that are managed on behalf of shareholders and policyholders. achieving success in an environment of greater competition will hinge on the ability of the domestic industry to innovate and provide enhanced value propositions for consumers. this underscores the importance of capacity building by industry players in research and development, and re - engineering of business processes in search of operational excellence and enhanced customer service delivery. a strong culture of excellence is therefore vital : one that is embedded into all levels of the organization ; one that fosters and rewards innovation and service quality. increasingly, highly - skilled individuals will be needed to be able to deliver high value - added products and services, adopt advanced business practices, and have the necessary competencies to build consumer confidence and trust. it is, therefore, crucial for the industry to continuously invest in human intellectual capital to create the pool of talent, skills and expertise that will drive the performance of the industry. to meet this demand, specialised training organisations have been established. they include the international centre for leadership in finance ( iclif ), which is now in its 3 rd year of operation, and the recently - launched international centre for education in islamic finance ( inceif ). the programmes carried out by the malaysian insurance institute ( mii ) have also been reviewed to meet the evolving demands of the financial sector. as we move towards the
| 0 |
federal reserve adopts policy statement supporting prudent commercial real estate ( cre ) loan workouts, β press release, october 30. important as this goal is, it will not be easy to achieve for many banks. for example, one means to this end would be to operate a bank with much higher capital ratios and thereby lower concentrations. this strategy, however, would lower a bank β s returns and, while that may be manageable for a closely held bank, it would make any needed capital raises more difficult for a publicly traded community bank. alternatively, banks could further diversify their loan and investment portfolios, expanding into lower risk or new loan and investment segments. but this too presents difficulties. for one thing, lower risk assets have lower returns. also, one of the reasons community banks have been so concentrated in commercial real estate loans is stiff competition for other types of loans, such as consumer installment loans, from larger banks and other nonbank competitors. a second long - term challenge facing community banks is the secular compression in the net interest margin. despite all of the emphasis on noninterest revenues in recent years, community banks have continued to rely heavily on spread income, indicating that many community banks have been unsuccessful in diversifying their revenue streams. 3 the aggregate net interest margin for banks with assets of $ 10 billion or less has also tightened considerably as competition in the debt and lending markets has intensified, compressing by more than 70 basis points over the last 10 years to 3. 63 percent. as a result, it becomes more difficult for community banks to cover their overhead, pressuring their earnings and their ability to support capital needs from internal sources. it is possible that this declining trend in spread income could be reversed once the high level of non - accruing assets falls and if the premium charged for credit risk remains elevated once the current crisis has passed. smaller banks may also find that they are able to win good, solid business away from their national competitors, if customers turn away from large banks as a consequence of the crisis. but community banks cannot count on this happening. as a result, some banks may reach further out on the risk spectrum to relieve earnings pressures. we have seen these actions in the past, for example, when banks have engaged in ill - conceived investment securities leveraging programs or entered the subprime credit card market to expand their income. others may be tempted to cut back on critical riskmanagement infrastructure, such as loan review, to par
|
daniel k tarullo : the present and future of community banking speech by mr daniel k tarullo, member of the board of governors of the federal reserve system, at the federal reserve bank of new york community bankers β conference, new york, 8 april 2010. the original speech, which contains various links to the documents mentioned, can be found on the us federal reserve system β s website. * * * these are difficult times for many community banks, a reflection of the difficult times for the many workers and businesses across the nation who depend on the loans provided by your institutions. this morning i will address some of the problems that you currently face and offer a few thoughts about the future of community banking. before doing so, however, i thought it would be useful to explain my perspective on the federal reserve β s monetary policy posture, which will obviously have great significance for the economic environment in which community banks will be operating. specifically, i want to speak about what has become known as our β exit strategy β β that is, the means by which the federal reserve will bring to an end the extraordinary lending and monetary policies that it adopted in response to the financial crisis. planning and implementing an exit strategy in thinking about an exit strategy, it is important to distinguish between two types of policies that the federal reserve adopted, beginning in 2007 and continuing thereafter, beyond its sharp reductions in the target for the federal funds rate. first, the federal reserve created a number of liquidity programs, which provided well - secured, mostly short - term credit to various parts of the financial system that were under increasingly severe strains. among these were the term auction facility ( taf ), which auctioned short - term funds to banks ; the primary dealer credit facility, which served as a backstop liquidity provider for securities firms ; the term asset - backed securities loan facility ( talf ), which was designed to help revive the market for asset - backed securities, and others. second, and separately, the federal open market committee ( fomc ) undertook large - scale purchases of treasury securities, agency mortgage - backed securities, and agency debt. this unconventional monetary policy action was taken because the fomc, after having reduced short - term interest rates nearly to zero, determined that the severity of the economic downturn made additional stimulus necessary. in addition to improving conditions in mortgage markets, these asset purchases helped lower yields on long - term debt ; they also substantially increased the level of reserve balances that depository
| 1 |
andrew g haldane : accounting for bank uncertainty remarks by mr andrew g haldane, executive director, financial stability, bank of england, at the information for better markets conference, institute of chartered accountants in england and wales, london, 19 december 2011. * * * the views are not necessarily those of the bank of england or the financial policy committee. i would like to thank alan ball, verena bracke, antony ford, priya kothari, vasileios madouros, colin miles and peter richardson and paul tucker for comments and contributions. introduction1 fair value accounting principles are under attack from all quarters β accountants, regulators and politicians. the paper by christian laux is a welcome attempt to shed some analytical light on this heated debate. it represents a staunch defence of fair value accounting principles, as the least - worst means of measuring and managing financial risk. it makes a compelling case. in these comments, i will focus on three issues. linking these issues is the idea that the special characteristics of banks might require a special accounting treatment, perhaps even a distinct accounting regime. as context for that, the fair value debate is first placed in some historical context. accounting rules for banks have not stood the test of time, especially at crisis time. better recognition of the uncertainties associated with bank assets, and the fragilities associated with bank liabilities, might make for a more durable accounting regime. fair values and financial crises the fair value debate is not a new one. it has a history stretching back at least a century. the fortunes of this debate have been shaped importantly by financial crises. indeed, a clear historical pattern has emerged : fair value accounting principles have waxed when asset prices and banks are rising and waned when both are falling. 2 consider experience in the united states either side of the great depression. fair value principles were rolled - out progressively during the early part of the 20th century. this move was led by the banks who held marketable securities as assets. as these securities rose in value ahead of the great crash, marking them to market allowed profits to be booked. rising asset prices and bank profits went hand in hand, with fair values playing the role of matchmaker. that was one reason why the β roaring β 20s β roared. the stock market crash of 1929 put paid to this happy marriage. falling asset prices, marked to market, crushed bank profits and balance sheets. in the united states, around 10, 000 banks went bust between
|
francois villeroy de galhau : what can monetary policy do? speech by mr francois villeroy de galhau, governor of the bank of france, at the house of finance days of paris - dauphine university, paris, 14 march 2016. * * * ladies and gentlemen, it is a great pleasure for me to participate in this first edition of the house of finance days of paris - dauphine university. in order to β [ imagine ] the finance of tomorrow β β to quote the theme of this event β it is essential to understand all facets, and in particular to be able to decipher the prevailing environment. through its three main tasks, the banque de france plays a key role as, firstly, it implements monetary strategy, as a member of the eurosystem alongside the european central bank in frankfurt ; secondly, it ensures financial stability, by supervising the banks, insurance firms and, more generally, the financial system ; and, lastly, it provides an economic service to households and smes / vses. today i will focus on the monetary policy that we conduct in the framework of the eurosystem. monetary policy has long been considered a technical or even an austere subject. but, since 2008, it has been far more widely discussed : central banks in different countries have played a major role, and a role largely hailed as positive, in exiting the crisis. today, however, their actions to address the persistence of very low inflation are subject to debate. i would first like to talk about our objective, then our instruments and their effectiveness. first, the question of the objectives. this question, which really covers two questions, has generated much thought and debate. indeed, central banks examine their actions, with a lot more modesty than is often credited : 1. what is the objective, the β mandate β, of the central bank? 2. what are, with regard to this objective, the current challenges? 1 ) let us start by the mandate. a ) in the united states, the federal reserve has a dual mandate of price stability and full employment. in the euro area, under the maastricht treaty β approved democratically in each country, and in france by referendum in september 1992 β the objectives are clearly set out in a hierarchical order : the eurosystem is dedicated to price stability, which is its primary objective ; ensuring a high level of employment and sustainable growth is secondary to its price stability objective. this difference has often
| 0 |
dimitar bogov : payment systems and market infrastructures speech by mr dimitar bogov, governor of the national bank of the republic of macedonia, at the 10th jubilee edition of the nbrm's conference on payments and market infrastructures : drivers of european payment integration - innovations and cooperation, ohrid, 5 - 7 july 2017. * * * distinguished guests, ladies and gentlemen, it is a great pleasure for me to address you on the 10th jubilee edition of the conference on payments and market infrastructures. organizing this conference has become a valuable tradition of the national bank of the republic of macedonia. we take great pride for being able to host it all these years. this notable anniversary is an opportunity to look back and reflect on the beginnings, to honor the achievements we have made so far and set the road for future growth and development. the history of the conference dates back to 2008 set as a joint project with de nederlandsche bank who is our partner in this journey from its very beginning. i feel the need to credit for it the enthusiasm of toni mircheski, deputy head of the payment systems department within the nbrm, mr michiel van doeveren and mr paul osse from de nederlandsche bank for initiating and organizing the very first conference. three years later, banco de portugal came on board thanks to mr rui pimentel, to jointly create a conference that certainly grows into a recognizable brand name, set with the aim to inform of all relevant payment - related matters, to share knowledge and to educate, to influence and last but not least to network and socialize. payment systems and market infrastructures β why this topic in the first place? there is no doubt that payment systems comprise vital part of countries β economic and financial infrastructures. however, it was only the last two decades or so when this issue gained in topicality, concerning both, service providers and policymakers and central banks. this is because of the new global landscape, which shaped by the streams of globalization, the dramatically rising volumes of payments and the advancing fintech innovation has returned payment systems to the focus once again. with their safety, resilience and efficiency becoming critical to the financial stability and the well - functioning of the economy as a whole. we started this conference as domestically oriented, having the domestic financial sector as target audience, to later on move to expand internationally from southeastern and central and eastern europe to the black sea region and the middle east with
|
northern africa countries joining us lately. allow me to extend my sincere appreciation to the vice governor maja kadievska vojnovic and to igor velichkovski, head of the payment systems department within the nbrm for successfully turning this conference into a truly international one. over the years, delegates from central banks of 30 different countries have attended the conference. this growing international attendance makes particular strength of the conference showcasing diverse experiences from very different areas of the world driven by the common interest in payments and market infrastructures. equally appreciated is our domestic audience that continues to valuably contribute to the conference each year. focusing on current issues in the payment systems, the conference agenda is each year carefully designed to cover the latest trends and feature the main challenges in the area. variety of interesting topics has been on the menu so far including the european payment landscape and legislation with a special focus on psd and psd2 ; topics related to payment systems and payments oversight ; the eu payment integration initiative known as single european payment area ( sepa ) ; then, innovations ; security and efficiency of retail payments. we have elaborated 1 / 3 bis central bankers'speeches on instant payments, financial inclusion and accessibility of payment services, financial structures resilience and many more. this year β s agenda covers themes related to digital banking, cryptocurrencies and their regulation, the new technologies such as dlt and blockchain β all of them being topics of considerable relevance at the moment, and will only become more important over time. bracketing this jubilee edition we had the pleasure of hosting many distinguished speakers from various affiliations starting from central banks, through relevant international institutions, commercial banks, clearing houses and custodians etc. we express our deepest gratitude and appreciation to all speakers and conference delegates for the great impact you make, keeping the conference alive and growing. the engaging social events are another important hallmark of the conference as they make an excellent opportunity to network and reconnect and finally to amuse and entertain. moreover, ohrid, the home of the conference, a charming city surrounded by water and mountains, known as a jerusalem of the balkans and protected by unesco for its natural and cultural heritage, is a unique experience by itself. as we celebrate our 10th jubilee we are proud to be able to host a conference that certainly evolves into important meeting place for the payment system community in the region and beyond. this success would not have been possible without the wholehearted support of our
| 1 |
few years and i expect to see inflation begin to firm later this year. if this labor market improvement continues and the fomc is reasonably confident that inflation will move back to our 2 percent objective over the medium term, then it would be appropriate to begin to normalize interest rates. at their march meeting, the fomc removed language from the statement that indicated that we would be patient in beginning the process of normalizing monetary policy. but, as chair yellen remarked in her most recent press conference, removal of the word β patient β from the statement does not indicate that we will now be β impatient β to begin to normalize monetary policy. rather, the timing of normalization remains uncertain because how the economy evolves is also uncertain. when, hopefully, the data support a decision to lift off later this year, it does not mean that u. s. monetary policy will be tight. rather, we will simply be moving from an extremely accommodative monetary policy to one that is only slightly less so. i would view this as a positive signal about the progress we have made in restoring the u. s. economy to health. it is important to remember that near zero short - term interest rates and the large expansion of the federal reserve β s balance sheet were designed to be a temporary extraordinary treatment to help the economy regain its vitality, and not a permanent palliative. i remain confident that when the fomc decides to begin to remove policy accommodation that we have the requisite tools to support this decision. we have tested numerous tools including overnight reverse repurchase operations, term reverse repurchase operations and term deposit facilities to ensure that, when the time comes, lift - off can be managed smoothly. as the fomc has communicated, the primary tool will be interest on excess reserves ( ioer ), with overnight reverse repurchases as a supplemental tool to be used as needed to help ensure a firm floor under short - term interest rates. bis central bankers β speeches once normalization has begun, two important questions will be : how fast will it proceed? and how high will short - term rates ultimately need to go? how fast the normalization process will proceed depends mainly on two factors : how the economy evolves and how financial market conditions respond to movements in the federal funds rate target. if financial market conditions do not tighten much in response to higher short - term interest rates, we might have to move more quickly to achieve the appropriate
|
size of the banking system β s balance sheet by a dollar. keister ( 2016 ) shows that it is optimal to commit to providing liquidity to a bank that faces a run. moral hazard is addressed ex ante, by setting a pigouvian tax that gives incentives for the bank to invest in the optimal amount of liquid assets. the tax can be interpreted as liquidity regulation and supervision. goodfriend and lacker ( 1999 ), however, argue that neither constructive ambiguity nor extended supervisory and regulatory reach can effectively overcome the fundamental forces that cause a central bank to lend. they propose that the only way for a central bank to credibly limit lending is for it to build a reputation over time for restraining lending. carlson, duygan - bump, and nelson ( 2015 ) argue that central bank liquidity provision and liquidity regulations are complementary tools. the bank of england ( 2013 ) defines stigma as β the risk that drawings from [ the central bank β s liquidity ] facilities may be taken as a signal ( by investors, depositors, rating agencies, regulators or even firms β own boards of directors ) of more serious weaknesses at the firm in question. see for example federal reserve ( 2007 ). bis central bankers β speeches this led to the creation of the term auction facility, or taf, which used an auction mechanism to allocate funds in the hope that banks would feel more comfortable borrowing if other banks were doing the same. the taf was a success and can perhaps teach us something about ways to mitigate stigma. the ecb seems to have had a different experience. its lending facilities do not appear to have suffered from stigma to the same extent as those in the u. s. or the u. k. 14 this is related to the fact that banks rely more consistently on central bank provided liquidity in the euro area. this difference could perhaps provide insights into what gives rise to stigma and how to address it. in any case, understanding stigma, and potential ways to mitigate it, seems like an under - researched area at the moment. 15 let me put aside stigma now and focus on moral hazard. an important development, which researchers should take into account when thinking about liquidity provision and moral hazard, is new liquidity regulation. 16 ulrich is not an optimist when it comes to the ability of regulations to mitigate moral hazard. as exhibited in figure 6, he notes that β β¦ managing liquidity risk is a core activity
| 0.5 |
streeck, new left review 71, sept / oct 2011 or β the true lessons of the recession : the west can β t borrow and spend its way to recovery β, raghuram rajan, foreign affairs, volume 91, no 3, may / june 2012. tyler cowen ( 2013 ), the great stagnation, ebook, gordon, r. ( 2012 ), β is us economic growth over? faltering innovation confronts six headwinds β, nber working paper 18315. bis central bankers β speeches it is obvious from these lists of factors that it is hard to disentangle the effects of weak aggregate demand from slow growth in potential supply. population ageing contributes to both. indeed, one may cause the other. for example, anticipating a slowdown in growth potential, households, worried about impending retirement in the face of undeliverable pension and healthcare entitlements, may try and build savings. this will depress demand further. conversely, anticipated weak demand may reduce incentives for corporations to invest in physical and human capital, causing supply potential to grow more slowly. structural reforms, typically ones that increase competition, foster innovation, and drive institutional change, are the way to raise potential growth. but these immediately hurt protected constituencies that have become accustomed to the rents they get from the status quo. moreover, the gains to constituencies that are benefited are typically later and uncertain while the pain is immediate and its incidence clear. no wonder jean - claude juncker, then luxembourg β s prime minister, said at the height of the euro crisis, β we all know what to do, we just don β t know how to get re - elected after we β ve done it! β the growth imperative if indeed fundamentals are such that that the industrial world has, and will, grow slowly for a while before new technologies and new markets come to the rescue, would it be politically easy to settle for slower growth? after all, per capita income is high in industrial countries, and a few years of slow growth would not be devastating at the aggregate level. why is there so much of a political need for growth? one reason is the need to fulfil government commitments. as sociologist wolfgang streeck writes, in the strong growth years of the 1960s when visions of a β great society β seemed attainable, industrial economies made enormous promises of social security to the wider public. 6 promises have been augmented since then in some countries by politically convenient ( because
|
at a later time and become honourable customers, the negative label issued by the crib would not give them another chance of reaching formal credit institutions. the inevitable result would be to drive them back to the informal sources of borrowing or to seek political redress. there is no doubt that there could be several willful defaulters in this group who deserve to be blacklisted, but among them the influential ones will seek ways and means of getting back into the system. it is well known that the banks and the credit institutions do not report the full list of borrowers to the crib. it is also no secret that the institutions cherry - pick the borrowers according to the former β s preference. the affluent borrowers, multi national companies, large corporates, highly connected borrowers and the banks β other preferred customers do not get reported to the crib, even if they default altogether. the credit profiles of the affluent customers will continue to have clean records of regular payments which protect their image. the crib is totally dependent on these institutions for reliable information and given the objective of looking after its client institutions, the crib would fix negative labels on defaulting borrowers. the crib is not in a position to verify or go into details of the operations of any credit institution and establish the class, creed or social status of the customer. it only fix labels according to what is reported by the credit institution. on the other hand, the bank supervision dept. and non - bank supervision dept. of the central bank of sri lanka, within their own regulatory ambit, can detect the non - reporting by institutions to the crib, but these departments are not mandated to share such information with the crib or vice versa. hence, the injustice continues and often some of the deserving borrowers are denied access to credit institutions. in such a situation, how can the crib ensure social justice and equity in terms of public policy? the crib can be fair only if the credit institutions resolve to report on all defaulting customers with no exceptions. this situation clearly indicates that the decision to groom, retain or eliminate a customer rests largely with the bank or the credit institution. the injustice begins when the reporting institutions do not report defaults of all segments of borrowers. the extent to which the banks and credit institutions have done a disservice to some of the deserving borrowers, is known only to the banks and credit institutions themselves. it is in this context that small businesses
| 0 |
flat, it has not changed in any statistically significant manner in recent years ( see left chart slide 4 ). instead, phillips curve models point to other factors putting persistent downward pressure on underlying inflation in recent years ( see right chart slide 4 ). research suggests that these factors include slow - moving secular forces, such as demographic change, the decline in productivity growth, the impact of globalisation and digitalisation on prices, profits and the bargaining power of workers, as well as far - reaching changes in energy production and consumption, also due to climate change. the coincidence of low inflation with a persistent decline in real interest rates corroborates the view that structural factors are likely to have played an important role in recent years ( see left chart slide 5 ). with more savings chasing fewer investments, low and stable inflation today is consistent with real short and long - term interest rates that are much lower than even a decade ago. available estimates of this β equilibrium β rate of interest suggest that nowadays stable inflation is likely to require a negative real shortterm interest rate ( see right chart slide 5 ). the implications of these developments for monetary policy are twofold. first, since monetary policy is acting on the demand side, it has less traction in countering persistent structural shocks to inflation. in the absence of supply - side policies, inflation can then diverge from central banks β aim for a protracted period of time. adaptive expectations raise the costs of such divergences. if firms and households expect inflation to remain at very low levels, it becomes even harder for central banks to achieve their inflation aim ( see left chart slide 6 ). second, the decline in real interest rates limits the extent to which monetary policy can stabilise the economy in the wake of demand - side shocks. the pandemic is a case in point. despite the unprecedented severity of the crisis and the large shortfall in aggregate demand, the ecb did not cut its key policy rates. although there is some room left to reduce short - term rates further, the benefits and costs of deeper negative rates need to be weighed carefully. to circumvent the effective lower bound, central banks have resorted to unconventional monetary policies. for example, in response to the pandemic, the ecb launched a new asset purchase programme β the pandemic emergency purchase programme ( pepp ) β and a new series of targeted longer - term refinancing operations ( tltro iii ). such tools are
|
##eri, g. and tambalotti, a. ( 2020 ), β what β s up with the phillips curve? β, working paper series, no 2435, ecb. 2. schnabel, i. ( 2020a ), β how long is the medium term? monetary policy in a low inflation environment β, speech at the barclays international monetary policy forum, london, 27 february ; schnabel, i. ( 2020b ), β covid - 19 and monetary policy : reinforcing prevailing challenges β, speech at the bank of finland monetary policy webinar : new challenges to monetary policy strategies, 24 november. 3. stansbury, a. and summers, l. ( 2020 ), β the end of the golden age of central banking? secular stagnation is about more than the zero lower bound β, unpublished manuscript ; schnabel, i. ( 2020b ), ibid. ; mckay, a. and wieland, j. ( 2019 ), β lumpy durable consumption demand and the limited ammunition of monetary policy β, nber working paper no 26175 ; di maggio et al. ( 2017 ), " interest rate pass - through : mortgage rates, household consumption, and voluntary deleveraging ", american economic review, 107 ( 11 ) : 3550 - 88 ; chetty, r. ( 2007 ), β interest rates, irreversibility, and backward - bending investment β, review of economic studies, 74 : 6791 ; and borio, c. and hofmann, b. ( 2017 ), β is monetary policy less effective when interest rates are persistently low? β, bis working paper series, no 628, bank for international settlements, april. 4. van den end, j. w. et al. ( 2020 ), β macroeconomic reversal rate : evidence from a nonlinear is - curve β, dnb working paper series, no 684, de nederlandsche bank, may. 5. see furman, j. and summers, l. ( 2020 ), β a reconsideration of fiscal policy in the era of low interest rates β, discussion draft ; sims, c. ( 2016 ), β fiscal policy, monetary policy and central bank independence β, address at the annual economic policy symposium organised by the federal reserve bank of kansas city, jackson hole, 26 august ; tulip, p. ( 2018 ),
| 1 |
of change are blowing... some people build walls and some people build windmills. β well, the spanish have built quite a few windmills in recent years. in the first half of this year, the world β s attention was focused on greece to a much greater extent than on spain and its successful reform process. in light of the refusal of the greek government to accept the bail - out conditions, and due to acute financing needs, there was even speculation about whether the country would potentially have to leave the euro area or even the european union itself. this risk has since vanished, thanks to the adoption in august of a third assistance programme for greece, which is subject to strict conditions and temporarily resolved the country β s funding bottleneck. however, further payments are contingent on greece fulfilling these conditions. in addition, the central challenge facing greece lies in implementing structural reform measures for greater competitiveness as well as achieving sound government finances in the long term and establishing a functioning administration. only then will greece overcome its current period of weakness and embark on a path of growth. 5. 2 reforming the regulatory framework however, aside from the unsound developments in european periphery countries, the euro area β s regulatory framework also needs to be strengthened. the principle of aligning liability and control must once again be more rigorously enforced. this is because, over the course of combating the crisis, the element of joint liability has been increasingly expanded. this, in turn, has severely disrupted the balance between liability and control. the crisis countries were granted large - scale emergency loans by other member states and the european stabilisation mechanism. but the eurosystem also reacted, for example by not only lowering interest rates, but also by loosening the requirements for monetary policy collateral. in addition, the eurosystem acquired government bonds of crisis countries on the capital markets in order to ensure monetary policy had a more uniform impact. however, this propelled the eurosystem deep into uncharted and dangerous territory, blurring the boundary to prohibited monetary financing of governments. that being said, all parties are well aware that monetary policy is unable to resolve the crisis in the euro area, and is merely buying time for policy makers to implement the necessary measures. in order to permanently safeguard monetary union as a union for stability, it is important to bring liability and control back into a more balanced position. essentially, this can be done in two ways : either the euro area evolves into a genuine fiscal union, where fiscal
|
growth model that has acted as a political and social substitute for productivity - enhancing reforms. " hence, there are good economic arguments against higher inflation targets β and not the oftcited german angst when it comes to inflation. this is not to deny that, for germans, price stability is of particular importance. in this regard, it is also instructive to look back to germany one century ago. when the first world war was over, the german state was heavily indebted, and to finance the mounting debt service, the reichsbank printed more and more money. hyperinflation was the outcome. at the start of the first world war, the us dollar was worth 4. 20 marks. from then on, the german currency steadily depreciated, and in the summer of 1922, it went into free fall. we can be sure that most germans, unlike bavarian comedian karl valentin, did not see the funny side of this. when the dollar rose to 40 billion marks in autumn 1923, he quipped : " well, it certainly isn β t worth more than that. " seen from this perspective, valentin was in fact wrong. by mid - november 1923, when a new currency was introduced, the dollar stood at 4. 2 trillion marks. it is often argued that the travails of hyperinflation have been burnt into the collective memory of the german people, just as the experience of the great depression has become etched into the collective memory of americans. this, and the suppressed inflation during the second world war which led to a second currency reform in 1948, certainly go a long way towards explaining why germans appreciate monetary stability so much. o coibion, y gorodnichenko, j wieland ( 2012 ), the optimal inflation rate in new keynesian models : should central banks raise their inflation targets in light of the zero lower bound? review of economic studies 79, pp 1371 - 1406. bis central bankers β speeches perhaps a factor at least as important, though, is the positive experience germans had with the d - mark and its stability - oriented central bank. the young bundesbank was successful in gaining credibility as a guardian of the currency, even in difficult times. later on, during the inflation - ridden 1970s, germany kept inflation rates at comparatively modest levels. while the average rate of 5 % was quite high, other industrialised countries with the exception of switzerland had to cope with significantly higher inflation rates : for instance,
| 0.5 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.