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should now conclude by saying something about the implications for monetary policy. monetary policy will continue to be conducted according to the medium - term principles contained in our inflation - targeting approach. this means that the exchange rate will be taken into account, along with the other variables that contribute to our inflation outlook ( where this is appropriately defined to exclude once - off factors such as petroleum prices and the gst ). on the other hand, as can be seen from our current behaviour, we have no intention of departing from our medium - term approach in an ad hoc attempt to push up the exchange rate for its own sake. the period ahead will contain many uncertainties, both here and abroad, but we have coped with uncertainty before. over the past year, we have had the unusual combination of strong domestic growth, a falling current account deficit and a declining exchange rate, all of which are conducive to future growth. we still have to ensure that the medium - term outlook for inflation stays on track which means making sure that several temporary factors have only a β once - off β effect and are not reflected in the ongoing inflation rate. if we succeed in doing that, we will be in a good position to continue the expansion we have had since 1991. | for granted. and, of course, if the assumptions we are making about the world economy turn out to be too optimistic, all bets would be off. i now come to the second part of my testimony, in which i attempt to answer the question of why we have done better than most other countries in asia or the pacific rim. in doing so, i am conscious that the story is not yet over, so this is really an interim report. i think a number of factors have been involved and i will list them in no particular order. as we go through them, it will become apparent that they are all intertwined. first, i think the asian crisis hit at a time when the australian economy was in good shape, partly for cyclical reasons. by mid - 1997, the economy was growing strongly and inflation was lower than our target. had we not received a contractionary impulse from the asian crisis, we may have been facing the need to tighten policy because of a potential overheating. no - one will ever know, but it is a possibility. i am conscious that attributing our performance over the past 18 months to our good starting point is rather superficial because it does not explain why the starting point was so good. but i will come back to that later. second, i think we have benefited from the flexibility of our exporters, who have switched from the contracting asian markets into the expanding north american and european ones, and into a number of other markets we do not usually think of as being important to us. the nature of our exports - with so much of them being commodities - has helped, but the efforts of our marketing companies and authorities should not be ignored. even so, it has not proved possible to prevent exports from falling, and over the year to the september quarter they fell by 2 per cent in volume. third, australia has benefited from a greatly improved perception of the soundness of its economic policies. the fact that the budget has moved back into surplus - where it should be in the mature phase of an economic expansion - has been important. so has nearly a decade of low inflation. also important on this occasion has been the recognition that australia scores well on such factors as its regulation of banks, other financial institutions and stock exchanges, and that its underlying body of commercial law and accounting practice is at or close to world best practice. not only have the international capital markets taken a better view of australia, but we also seem to have more confidence in | 0.5 |
outstation cheque transactions, it is noted that the full benefits of this technology are not passed on to customers by way of speedy cheque clearing due to reluctance by some banks to upgrade their cheque imaging technologies partly because of the cost of acquiring new machines or for reasons known only to banks themselves. what is clear is that sophisticated and modern it development has not been customer centric, aiming at reducing their transaction costs or enhancing service. the situation has improved after much persuasion by the central bank, but not through initiatives taken by banks. 8. staying ahead 8. 1 the banking sector is being driven by globalization, consolidation and convergence across the world with the pressure focused on achieving increased shareholder value through measurable investments in technology, cost reduction and performance management. customers today require easily accessible services operating on a global platform, while investors strive for optimizing and maximizing returns. successful banking institutions stay ahead and set the trends by adapting to market shifts, being proactive, keeping up with customer demands, and implementing change. 8. 2 in the sri lankan context, the implementation of new and comprehensive it systems is considered to be costly and the banks tend to compromise on the use of integrated solutions and advanced technology. often, they prefer to adopt partial and ad hoc solutions, which may be less costly. be it comprehensive or not, the primary objective should be to pass on the benefits of it development to their customers by way of more efficient and speedier service at affordable costs. while some customers, the high networth customers in particular, do not consider the high cost of banking services as a deterrent, many medium and small scale businesses and individuals consider banking services to be unaffordable. in this scenario, some segments of the population would not reap benefits of the advancement of technology due to the denial of access to finance. there are many other areas where despite it development in banking, the associated systems have not facilitated customer transactions at affordable costs. a classic example is the world - wide remittance flows. due to the high cost of payments to banks, both at the capturing and the distribution points, nearly half of the world remittance flows are still in the hands of the informal systems like hawala and undial. clients tend to move towards the informal financial sector, which is a form of financial exclusion. it is noted that, in recent times, banks in sri lanka have made some attempts to capture remittance flows through various means, by providing e - banking services through | through foreclosures are likely to seek new homes as their income permits, even though many may re - enter the housing market as renters rather than buyers. on the state and local side, a rising economy should boost sales and income tax revenue, and help narrow near - term fiscal shortfalls. we also need to remain watchful for signs that low interest rates could foster a buildup of financial excesses or bubbles that might pose a medium - term risk to both full employment and price stability. fortunately, current risk spreads on u. s. financial assets are not unduly compressed. this suggests that people are still being relatively cautious about taking on a lot of financial asset risk. on the inflation side of the ledger, there are some signs that core inflation is now stabilizing after falling for several years. at the fed, we track core inflation ( which excludes the volatile food and energy prices ) because experience and research tell us that core inflation provides the best measure of whether overall inflationary pressures are building up or subsiding. core inflation has proven quite reliable in predicting future total, or β headline β inflation rates. at the moment, both headline and core inflation remain below levels consistent with our dual mandate objectives β which most members of the fomc consider to be 2 percent or a bit less on the personal consumption expenditures ( pce ) measure. recent evidence shows that the large amount of slack in the economy has contributed to declining inflation over the past couple of years. i expect this slack to continue to dampen price pressures in the near term. inflation expectations are well - anchored today and we intend to keep it that way. a sustained rise in medium - term inflation expectations would represent a threat to our price stability mandate and would not be tolerated. nevertheless, we always need to be careful about inflation β even in an environment of ample spare capacity. let me focus on one issue, commodity prices, for a moment. surely some of the businesses in the audience have faced the challenge of sharply rising oil, food or metal prices in recent months. for example, the spot gsci β a broad measure of commodity prices β has risen more than 35 percent over the past year. this was in train before the upheavals in the middle east and africa raised market concerns about potential disruption to oil supplies, pushing energy prices β though not other commodity prices β still higher. commodity price pressures are pushing measures of headline inflation above measures of core inflation, which, as i mentioned | 0 |
. the fsf report encourages financial institutions to enhance their transparency already in their 2008 mid - year reports and to improve reporting standards for off - balance - sheet vehicles. the credit rating agencies also play a crucial role in this context, and the report has indicated several measures to improve their performance. the third lesson we have learnt from the turmoil is that when tensions arise and markets become illiquid, central banks may have to take care in explaining how they intend to act to maintain price stability while preserving orderly conditions on financial markets. this problem is likely to arise in particular on the money market, whose functioning is crucial to the liquidity of securities markets in general. in times of great uncertainty, monetary policy has to be perceived as a stabilizing force, providing a solid anchor to inflation expectations. when there are money - market strains, distinguishing between liquidity provision and the reasons underpinning the setting of policy rates, easy enough in normal circumstances, becomes difficult, but remains nonetheless essential. on the one hand, the actions needed to restore market liquidity may blur monetary policy signals ; on the other, decisions on interest rates could be interpreted as revealing information unknown to the market, thus exacerbating tensions. in these circumstances, it is important to make sure that more active liquidity management by the central bank, which is necessary to ease tensions in the money market, is not perceived as a signal of a looser commitment to price stability. see the considerations in o. issing, β in search of monetary stability : the evolution of monetary policy β, presented at the 7th bis annual conference, june 2008. during the recent turmoil, the policy actions and the communication of the eurosystem have carefully distinguished the operations needed to support the money market from genuine monetary policy decisions. since august 2007, the eurosystem has repeatedly injected funds into the money market through both mros and longer - term operations, in order to serve banks β demand for liquidity. these operations have been accompanied by prompt communication β via press releases or other channels β to reassure the markets that the ecb stood ready to do what was needed to guarantee the orderly functioning of the interbank market and to reduce the volatility of very - short - term rates. at the same time, the council has emphasized its determination to ensure that risks to price stability over the medium term do not materialize and to keep inflation expectations consistent with price stability. these events have demonstrated that central banks, and the ecb in particular | financial disequilibria and avoid perverse incentives and an asymmetric expansionary bias in investors β perception of monetary policy. m. draghi, β monetary policy and new financial instruments β, buenos aires, 4 june 2007. see, for example, the press release of the financial stability forum β s seventeenth meeting in frankfurt, 29 march 2007. see, for example, the report of the paulson committee on capital market regulation. of course, it is extremely difficult to define the meaning of β disequilibria β in this area and to design a policy that will mitigate the risks of financial imbalances and crises while ensuring the preservation of price stability. while we should probably avoid asking too much of monetary policy, we cannot ignore that excessively low interest rates and over - expansion of liquidity and credit can affect the financial industry by encouraging investors β risk - taking behaviour. this implies that monetary and credit developments should be central in the communication of our strategy. 15 the turmoil has confirmed that the ecb β s strategic emphasis on money and credit developments is appropriate. the second lesson we have drawn from the crisis is that to reap the full benefits of central bank transparency, the financial sector at large β financial institutions, financial instruments, and market behaviour β must also be transparent. first of all, a clear understanding of financial conditions is essential for policy decisions, since variables such as the leverage of the private sector, the distribution of debt and the riskiness of banks affect the transmission of monetary policy. moreover, when financial instruments are highly complex, the balance sheets of financial institutions may be so opaque that outsiders β central banks, supervisors and even shareholders β may fail to perceive the true degree of risk in the system and so react tardily to financial imbalances. it is even possible that a better predictability of central banks β actions β concerning the future path of policy rates or their reactions in a crisis β coupled with the perverse incentives for risk prevailing in some segments of the financial system, might encourage risk - taking by private investors. in order to arrive at first - best solutions and improve the system β s stability, progress in central bank transparency must be accompanied by regulatory and supervisory action to make the financial services industry less opaque. indeed, there is an urgent need for greater transparency in this sector, not only to improve the world financial system β s resilience, but also to ensure that the stance of monetary policy is consistent with both price and financial stability | 1 |
tax reform. the tax code had already been tailored to capture the economic rent in the petroleum sector β the petroleum company tax rate is about 80 percent. confidence in monetary policy gradually gained a firmer footing, after a succession of devaluations had come to a halt. inflation and the real interest rate declined, and cost competitiveness improved considerably. norway has not experienced a really pronounced economic downturn since the crisis around 1990. we have been helped by good luck, in terms of favourable terms - of - trade shocks and a relatively flexible labour market, which has allowed labour supply to grow. the economy was fairly robust when the financial crisis hit in 2008, in sharp contrast to our situation back in the 1980s. a more robust policy framework has improved the functioning of the economy. the act relating to the government petroleum fund was passed in 1990. at the time, in the midst of a deep recession, many doubted that any petroleum revenues would ever be saved. projections indicated that offshore petroleum production would peak in the early 1990s. however, the government β s cash flow from the petroleum sector started to increase sharply, and a strategy for the management of the fund was needed. the policy guidelines were bis central bankers β speeches clarified in 2001, and rules governing the interaction between norway β s petroleum wealth and fiscal policy were established : β’ all government revenues from the oil sector are to be transferred to the fund. β’ according to the fiscal rule, the government must only spend, on average over the cycle, the expected real return on the fund β stipulated at 4 per cent β in the annual budget. β’ all of the fund β s capital is to be invested in international markets. after nearly three decades of spending the petroleum revenues more or less as they came in, the fiscal rule enabled the government to save for future generations. at the same time, the rule made fiscal policy more robust : by decoupling spending from current petroleum revenues, the fiscal rule provides for a gradual and sustainable phasing - in of petroleum revenue spending. the guidelines ensure the necessary flexibility to allow automatic stabilisers to work, and they allow for careful countercyclical policy. the savings plan has remained intact and the fund has now reached a size of nearly nok 4 trillion, or 130 percent of gdp. when the fiscal rule was introduced in 2001, norges bank was charged with the task of keeping inflation low and stable. thus, our traditional fixed exchange rate policy was abandoned. a clear division of responsibilities between monetary | svein gjedrem : inflation targeting address by mr svein gjedrem, governor of norges bank ( central bank of norway ), at the seminar on foreign exchange policy issues arranged by the association of economists, gausdal, 31 january 2003. the address is based on the assessments presented at norges bank β s press conference following the executive board β s monetary policy meeting on 22 january and on previous speeches. please note that the text below may differ slightly from the actual presentation. * * * the norwegian economy exhibited strong growth from 1993 until 1998. this recovery brought the economy out of recession into a period of high economic activity. mainland gpd and consumer prices percentage change on previous year mainland gdp consumer prices 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 source : statistics norway sg gausdal 31. 01. 03 growth in the mainland economy in the 1990s averaged over 3 per cent. inflation was low and stable at around 2Β½ per cent annually, while it was higher than 8 per cent in the 1980s. annual wage growth1 ) and unemployment rate2 ) per cent annual wage growth unemployment 1 99 4 19 9 6 1 99 7 19 9 9 2 0 00 2 00 2 1 ) average for all groups. including costs associated with additional vacation days 2 ) registered unemployed as a percentage of the labour force sources : trcis, the directorate of labour and norges bank sg gausdal 31. 01. 03 at the same time, total employment rose sharply. the unemployment rate, measured by the lfs, fell from close to 6 per cent in 1991 to almost 3 per cent in 1999. later in the 1990s, unemployment declined as long as wage growth in norway was lower than wage growth among our trading partners. this came to a halt in 1998. the rise in salaries for white - collar workers accelerated and the social partners rejected a policy of wage moderation. unemployment stopped falling. output gap per cent of trend gdp hodrick - prescott method production function method - 1 - 1 - 2 - 2 - 3 - 3 - 4 - 4 - 5 - 5 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 sources : statistics norway and norges bank sg gausdal 31. 01. 03 at the beginning of the 1990s, the economy was in a deep recession. production was well below capacity. when growth in the economy picked up, capacity utilisation increased. the output gap, according to our methods of calculation, was closed | 0.5 |
next, i would like to discuss the current state of and outlook for japan β s economy. amid the global economic downturn that i have just described, japan β s economy deteriorated significantly, due mainly to an unprecedented decline in exports and production. thereafter, as overseas economies improved and progress was made in inventory adjustment both at home and abroad, exports and production started to recover. furthermore, as demand for automobiles and electrical appliances, which were subject to tax reductions and subsidies, started to increase, japan β s economy bottomed out from around this spring, and can now be judged to be picking up. however, the level of economic activity remains low, signs of improvement have mostly been supported by the government β s stimulus measures, and it is judged that there is not yet sufficient momentum for a self - sustaining recovery. turning to corporate financing, you may vividly remember that, around this time last year, issuance in the cp and corporate bond markets was difficult due to the effects of the failure of lehman brothers in 2008, those markets are now showing considerable improvement. in the cp market, issuance rates for cp have declined noticeably and issuance rates for some high - rated cp are even below yields on government bills. the corporate bond market has also been active. in addition to a decline in issuance rates, we have seen a rush in issuance since the summer, while firms have shifted the emphasis of their fund - raising from short - term funds to long - term funds. large firms β financial positions have been improving, supported in part by a pick up in their sales and profits and also by a considerable improvement in the issuing conditions for cp and corporate bonds. however, the management at many large companies seem to have not completely loosened the reins about their future financial position despite high levels of liquidity on hand, given their vivid memory of the difficulties experienced since the autumn of 2008 and persistent uncertainties regarding the economic outlook. moreover, the bank is fully aware of the fact that, although policy effects from the government β s emergency guarantee program have appeared, the financial position of small firms remains weak, as improvements in their sales and profits are lagging. as such, although japan β s corporate financing has been showing signs of improvement, the situation as a whole remains severe. regarding japan β s economic outlook, we expect that the pace of improvement will remain moderate up to around the middle of fiscal 2010 as pressure to adjust production capacity and employment is likely to remain. indeed, the pace of economic | saying that one of the bank β s most important purposes is ensuring stability in financial markets. i would like to reiterate that the bank will be prepared to act swiftly and decisively if concerns arise that financial market stability might be compromised. while the central banks of major economies, including the bank of japan, have generally addressed the acute problems brought about by the financial crisis, as regards the chronic effects of balance - sheet adjustment they have expressed the intention of maintaining an accommodative financial environment. for example, from autumn to the end of 2008 the bank of japan reduced the policy rate to 0. 1 percent, a level of interest rates of effectively zero. as for the future conduct of monetary policy, the bank has announced that it will maintain the extremely accommodative financial environment and provide consistent support to japan β s economy to overcome deflation and return to a sustainable growth path with price stability. at the beginning of december, since there was concern over a risk that international financial developments and instability in the foreign exchange market might adversely affect economic activity through worsened business sentiment, the bank promptly held an unscheduled monetary policy meeting and introduced a new funds - supplying operation in order to further enhance monetary easing. this operation employs the conventional framework of fundssupplying operations against pooled collateral, introduces a fixed interest rate set equal to the extremely low policy interest rate of 0. 1 percent, and provides to the money market ample longer - term funds with a term of three months. the bank plans to provide approximately 10 trillion yen through this operation. we expect that the longer - term money market rates, known as interest rates on term instruments, will decline further, and such effects have already started to appear and the financial markets appear to have regained some stability. moreover, at the monetary policy meeting held in mid - december, the bank clarified again its thinking on price stability. in 2006, the bank introduced what is called an β understanding of medium - to long - term price stability β ( hereafter β understanding β ), which outlines the bank β s understanding of price stability that should be taken into account when discussing monetary policy, and released a numerical expression, a year - on - year rate of change in the cpi that β falls in the range approximately between 0 and 2 percent. β this time, in order to prevent the expression β approximately β from inviting misunderstanding, we decided to employ clearer words to express the policy board β s intention to not tolerate a year | 1 |
central bankers β speeches β’ low and stable inflation is an essential pre - condition for securing medium - term growth. only in a situation of price stability can consumers and investors make informed decisions. β’ the reserve bank's monetary stance has been aimed at restraining demand and at managing inflation expectations. β’ admittedly, monetary tightening has resulted in some sacrifice of growth in the short - term. that is an inevitable price to pay for price stability. but the sacrifice in growth is only in the short - term. in the medium - term, there is no trade - off between growth and inflation. philips curve another facet of this growth - inflation debate that has played out in the recent period has been the growth - inflation trade - off in the context of the philips curve. β’ the argument is that we can raise growth by tolerating higher inflation. this is misguided. β’ relationship between growth and inflation is non - linear. β’ there is a threshold level of inflation. β’ below the threshold, may be, there is a trade - off between growth and inflation. β’ above the threshold, there is no trade - off between growth and inflation, higher inflation actually leads to loss of growth. with wpi inflation at 7. 25 per cent and cpi inflation in double digits, we are way above the threshold. β’ what is the threshold level of inflation? that maybe around 5 per cent. inflation today is above the threshold. dr. patel β s dictum about maintaining growth with price stability is the quintessential objective of monetary policy. β’ that is something that we are deeply conscious of and that is something we are adhering to in the reserve bank even today. ii. communication challenges the second issue i want to talk about is communication challenges. there is a paper by dr. patel and i quote a sentence from the paper : β apart from communicating its own slant on national and international trends, there are three special areas which need attention. the first is the glamorous but elusive area of what the central bank communicates and how it does so in relation to its specific responsibility for monetary and foreign exchange policy ; the second is communication on issues in regard to its regulatory functions ; and the last is communication with the government of the day, including parliament. β oxymoron i am deeply struck by this statement by dr. patel. not so much by the content, not so much by the context, but by the fact that dr. patel chose to say it at all. | all these years. alaknanda, your presence here means a lot to all of us in the reserve bank. bis central bankers β speeches the book this book β of economics, policy and development β is a collection of largely unpublished papers by dr. patel. β’ they cover a wide canvas money, finance, trade, balance of payments, economic development and international political economy issues. β’ they cover a wide time span articles written when he was a young economist at the imf to articles and papers written after dr. patel evolved as one of leading public intellectuals of the country. β’ they span a vast intellectual spectrum papers with deep academic orientation articles with profound practical policy implications what is common across all of the articles / papers regardless of the topic is deep scholarship, sharp intellect and above all an abiding concern for public interest. ideas and issues resonate even today what has struck me as i browsed through the book is that several of the ideas and issues that dr. patel addressed resonate even in today β s context, both at home and around the world. i will comment on some of the ideas that he raised. i. monetary policy in one of the articles, dr. patel reviews the evolution of monetary policy in the post - war years compared to the pre - war years. he writes : β the supreme test of monetary policy lies in its ability to control the supply of money in such a way that growth in prices is checked without retarding the growth in production. β the essence of that sentence is that checking growth in prices without retarding production ; that is the quintessential growth versus inflation debate that is playing out even today. a relevant question in this context is the following : β to what extent is the reserve bank acting consistent with dr. patel β s dictum of controlling prices without hurting production? β by far the most strident criticism against the reserve bank has been that even after persistent and prolonged tightening of monetary policy β by raising interest rate 13 times β we have not been able to restrain inflation. on the other hand, we stifled growth. so the question is has the reserve bank failed in following the dictum that dr. patel prescribed? i don β t believe so. in fact i will argue that the reserve bank β s action is fully consistent with dr. patel β s dictum of trying to protect growth with price stability. let me explain. β’ inflation is inimical to growth. there cannot be much disagreement on that. bis | 1 |
ben s bernanke : federal reserve β s exit strategy testimony by mr ben s bernanke, chairman of the board of governors of the federal reserve system, before the committee on financial services, us house of representatives, washington dc, 25 march 2010. * * * chairmen frank and watt, ranking members bachus and paul, and other members of the committee and subcommittee, i appreciate the opportunity to discuss the federal reserve β s strategy for exiting from the extraordinary lending and monetary policies that it implemented to combat the financial crisis and support economic activity. as you know, i previously submitted prepared testimony for a hearing on this topic that was canceled because of weather conditions. i request that that testimony be included in the record of this hearing. this morning, in lieu of repeating my previous prepared statement, i would like to summarize some key points from the earlier testimony and update the committee on recent developments. broadly speaking, the federal reserve β s response to the crisis and the recession can be divided into two parts. first, our financial system during the past 2 β 1 / 2 years experienced periods of intense panic and dysfunction, during which private short - term funding became difficult or impossible to obtain for many borrowers. the pulling back of private liquidity at times threatened the stability of financial institutions and markets and severely disrupted normal channels of credit. in its role as liquidity provider of last resort, the federal reserve developed a number of programs to provide well - secured, mostly short - term credit to the financial system. these programs, which imposed no cost on taxpayers, were a critical part of the government β s efforts to stabilize the financial system and restart the flow of credit to american families and businesses. besides ensuring that a range of financial institutions β including depository institutions, primary dealers, and money market mutual funds β had access to adequate liquidity in an extremely stressed environment, the federal reserve β s lending helped to restore normal functioning and support credit extension in a number of key financial markets, including the interbank lending market, the commercial paper market, and the market for asset - backed securities. as financial conditions have improved, the federal reserve has substantially phased out these lending programs. some facilities were closed over the course of 2009, and most others expired on february 1. 1 the term auction facility, under which fixed amounts of discount window credit were auctioned to depository institutions, was discontinued in the past few weeks. as of today, the only facility still in operation that offers credit to multiple | for specific national features. if the european legislator has left it up to the national legislator to transpose these options β as is the case in around 20 instances β and the national legislator has done so in the form of a law, the ssm must respect this. we have to apply national law, even if this might impair the level playing field. the situation is different when the european legislator has left the exercise of national options to the discretion of the supervisor, as has been done in around 80 cases. over the past few months, we have made a list of all the national options and will come to a decision as soon as possible as to where we stand on every single one them, whether we will exercise them and if so, how. the national supervisors will play an important role in this respect, as they are the ones that will have to explain the national features and the related risks to us. they are the ones who should complement our knowledge of national markets and market structures, of national legal systems and risk trends. and we know, as supervisors, that some of these options are the result not of specific market structures, but of the continued existence of old traditions and popular habits. ( 2 ) good supervision in europe requires knowledge and experience of individual national as well as european markets and market structures ; it requires knowledge and experience of national and european legal systems. knowledge should be consolidated and decisions taken centrally at the european level so that attention is focused on the european interest instead of on the solely national interest. the division of tasks within the ssm provides for just that. as i said, the ecb will take complete responsibility for the direct supervision of significant institutions. but national supervisors will bring their knowledge and experience to the supervisory teams and support the ecb in its supervision, and they will do so in line with a single supervisory approach. it is our aim at the ecb to have detailed knowledge of the business model and risk profile of each of the 120 directly supervised institutions. we want to be able to assess, at any time, the risk - bearing capacity, the internal control systems and the governance of banks, and to intervene at an early stage when we see danger. in short, we intend to supervise intensively. i have already spoken in detail about the division of labour with regard to the less significant institutions. in both areas, then, knowledge of national and bis central bankers β speeches european markets will be brought together with a single evaluation system, a single supervisory approach and a | 0 |
to manufacturing and high - tech industries and private enterprises 3 / 4 bis central bankers'speeches rebounded significantly, relieving the difficulties that smbs face in accessing affordable financing. by end - may, inclusive financial loans issued by the five major banks to smbs grew 23. 7 % compared to the end of last year, fulfilling the majority of their full - year plan. the average interest rate was 4. 79 %, reporting a decline of 0. 65 percentage point compared to the full year rate for last year. meanwhile, the banking and insurance sectors have been fully cooperating with local governments on the issuance of general bonds and special bonds, earnestly implementing decisions and plans made by the state to provide financing support for projects launched to bolster weak spots in infrastructure construction. we believe that, through the deepening supplyside structural reform to expand effective domestic demand, the effects of various impediments will be offset for certain. the chinese economy and financial sector is surely to achieve sustained, healthy, and steady growth! these ideas are only presented for your reference. to conclude, i wish this forum a complete success. thank you! 4 / 4 bis central bankers'speeches | yi gang : speech β conference on g - sifis of financial street forum speech by mr yi gang, governor of the people's bank of china, at the conference on global systemically important financial institutions of financial street forum 2021, 21 october 2021. * * * honorable mayor chen jining, colleagues and friends : good evening. it is a great pleasure to attend this year β s conference on global systemically important financial institutions. as systemically important financial institutions ( sifis ) are big, complex and interconnected with other financial institutions, and provide crucial financial services, they have a significant influence on the stable and efficient operations of the financial system as a whole. sifis are divided into two groups : global systemically important financial institutions ( g - sifis ) and domestic systemically important financial institutions ( d - sifis ). the former is identified by international organizations and the latter by domestic regulators. in the wake of the 2008 global financial crisis, to promote financial stability and prevent financial risks, the financial stability board ( fsb ) began to release the list of global systemically important banks ( g - sibs ) starting from 2011 and the list of global systemically important insurers ( g - siis ) starting from 2013 with higher regulatory requirements. currently, there are 30 g - sibs and 9 gsiis, including industrial and commercial bank of china ( icbc ), agricultural bank of china ( abc ), bank of china ( boc ), china construction bank ( ccb ) and ping an insurance group. in the meantime, major economies have also enhanced the regulation of their d - sifis. china has attached great importance to the regulation of sifis. in 2018, theguidelines on improving regulation of sifiswas issued, establishing the overall institutional framework in this regard. recently, the people β s bank of china ( pbc ) and the china banking and insurance regulatory commission ( cbirc ) announced the list of 19 domestic systemically important banks ( d - sibs ) and clarified additional regulatory requirements. among the 19 banks, six are state - owned commercial banks, nine are joint - stock banks and four are urban commercial banks. despite the limited number, the sum of their total assets accounts for 60 percent of the total assets of china β s banking industry. the identification of sifis and improvement in relevant regulatory systems can help us concentrate on crucial matters to better promote the overall stability of the financial | 0.5 |
and labor unions are all considered to avoid materialization of such risk. with economic fundamentals improving steadily, it is crucial that people spend, invest, and distribute money, keeping the economy moving by circulating money, rather than keep money in reserve. i believe it is necessary that more people become aware of the importance of preventing the fallacy of composition from materializing, and that firms and households must change their mindset to a further degree. concluding remarks in shaping modern monetary policy, central banks face the considerable challenge of adopting new measures when the economy is likely to be undergoing fundamental structural changes. communication with the public and the market will definitely be more difficult. however, central banks need to promote communication by providing a thorough explanation on their conduct of monetary policy, including the issues i have discussed, and by sharing the challenges we face. bis central bankers β speeches financial markets pay extremely close attention to each and every word central banks release. they tend to show a strong reaction to the release of detailed information such as specifics in a numerical form. in any financial market, the keynesian beauty contest, in which anticipation of others β reactions will be taken more seriously than fundamentals, is sometimes in evidence. therefore, overreaction in markets cannot always be avoided. in addition, central banks are directly intervening to a considerable scale in asset markets, where they had not heavily intervened in the past. thus, markets β behavior of always being looking - forward and trying to be one step ahead of others might become strengthened. all things considered, it is certain that central banks β communication with the market and the public increasingly will have to be based more on the economic mechanism and the comprehensive assessment. the market will demand more clear and concrete information from central banks. continuing to meet this demand, however, does not necessarily lead to enhancing economic welfare because it is difficult in practice to define the systematic policy reaction function. i believe that the desirable degree of central bank accountability is to offer judgment based more on a discretional comprehensive assessment while providing basic transparency. i hope this idea will be shared widely among the public and the market. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | important change in direction, and that i could not keep my opinion to myself on such a fundamental issue. β was mr weber correct when called the launching of the smp an β important change in direction β for the ecb? we are, in the european framework, in a unique situation. we have a single currency, a single monetary policy and a single system of central banks for the euro area, the β eurosystem β, comprising the euro area national central banks and the ecb. we issue the single currency for 17 sovereign nations and for 331 million fellow citizens. that explains why we have features ourselves that are not the same as in a fully - fledged federation. in particular it explains why we have a principle of speaking with one voice. question : why could the majority of the governing council accept the decision to launch the smp, but not mr weber? what is your explanation for this divergence of opinions? i have no comment. bis central bankers β speeches question : how do you explain the smp to ordinary citizens who fear that the ecb is engaged in the monetisation of debt and creation of inflation? as you know, securities are purchased by the eurosystem in the secondary market, after they have been issued and found a first buyer. and we always withdraw all the liquidity which has been injected with the smp, so that we do not practise quantitative easing, which has been used in other economies. the smp is one of the non - standard measures, which are transitory, we deemed necessary in view of the abnormal situation in markets, to help restore a normal transmission of monetary policy. another example of important non - standard measures was the full allotment at a fixed interest rate for liquidity with a duration of six months, even up to a full year. this programme of liquidity provision with exceptionally long maturities has been phased out. we also had a programme in which we purchased covered bonds. that has also expired. question : in your opinion, should an ordinary euro area citizen take a fixed - rate mortgage or a variable rate mortgage? by a variable rate mortgage i mean a bank loan with one of the euribors as its reference rate. [ laughter ] do not count on me to take the job of the investment advisors. i would only say to my fellow citizens that they can rely on us to be an anchor of stability at the level of the entire euro area. since the euro was set up we | 0 |
##tarily in part - time or temporary positions. 13 but it is not plausible that those effects could be as dramatic and long - lasting as the β hysteresis view β would suggest. since these workers remained attached to the labour market, they represented a broader definition of slack rather than a new category of structurally unemployed workers β and indeed, measuring slack in this way helps explain recent low inflation outcomes 3 / 7 bis central bankers'speeches better. such people, in other words, had been scratched by the crisis, but not necessarily scarred. this is not to say that these scratches are not deep, in particular in economies worst hit by the crisis. as william shakespeare put it, β he jests at scars that never felt a wound β. 14 but, as i showed before, current estimates of structural unemployment do indeed confirm that the initial revisions were exaggerating the impact the recession would have on labour force participation. and they might currently exaggerate the impact the current expansion might have on lowering structural unemployment. insofar as it can be reversed by higher demand, this would presumably happen only late in the cycle when the labour market is especially tight. it would be quite a stretch to claim that the euro area has been in such a β high - pressure economy β up to now that would explain the recent notable downward revisions in structural unemployment. this is probably true for the economy as a whole. in other words, it may well be that potential growth fell by less than we estimated during the depths of the crisis, and it is rising by less than we believe as the economy strengthens. so both the sudden drop in estimated potential growth in 2009, and the sharp rebound thereafter, are likely to be statistical artefacts, at least to some extent. the relevance of this view for monetary policy makers is corroborated by research from ecb staff, which you can see on my next slide. 15 it finds that a much more constant rate of potential growth, and therefore a larger output gap in recent years, is consistent with recent inflation dynamics. potential output, secular trends and the fourth industrial revolution as i said before, none of this is to say that potential output growth is invariant. in fact, even if we dismiss the sharp revisions to output growth during the crisis years, the chart on the right - hand side still suggests some slowdown in potential growth compared to the pre - crisis period. but rather than being a direct outcome of the crisis, this decline may rather reflect a continuation | and globally successful companies ; it enjoys comparably efficient and effective public services ; it boasts world - class infrastructure ; it maintains advanced education systems and generates internationally competitive top technology. and, at the same time, the contours of what may be called the european social model have remained intact : a well - developed welfare system provides a safety net for the needy ; income inequality is relatively contained, especially when compared to other parts of the world. nevertheless, in a comparative perspective, in the light of the economic growth rates registered in the united states β not to speak of the spectacular growth dynamics in some emerging market economies β the performance of the euro area economy has been rather disappointing. what are the reasons? taking a long - term perspective, and looking beyond the short - term fluctuations of the business cycle, we must examine the fundamental determinants of its potential or long - term economic growth : demographic trends, developments in labour utilisation and productivity and the variety of underlying factors that affect the ability of the european economy to achieve increased efficiency and to create more employment. in order to better understand and assess the relative contribution of these determining factors, it is useful to express, by employing a growth accounting framework, gdp growth in terms of the rates of change in productivity, labour utilisation and population. table 1 shows the extent to which the rates of change in these three variables have contributed to real gdp growth in the euro area and in the united states over the period 1996 - 2005. a number of interesting conclusions emerge from this decomposition of average economic growth. since the mid1990s, euro area real gdp growth has been driven mainly by labour productivity growth as measured by the rate of change in real gdp per hour worked. however, average productivity growth in the united states was significantly higher, by almost one percentage point. us output growth also benefited from faster population growth, which exceeded that of the euro area by 0. 7 of a percentage point. the degree of labour utilisation improved in the euro area and had a positive effect on its growth. in the united states, by contrast, it remained unchanged on average and thus had no impact on growth. the most important determinant of long - term or potential output growth in both the euro area and the united states is labour productivity. in the euro area, however, productivity growth has declined since the early 1980s, and it continued to decline further in the more recent period 1996 - 2005, when it fell, for the first time, | 0.5 |
denton rarawa : financial inclusion in the solomon islands β key areas and current status keynote address by mr denton rarawa, governor of central bank of solomon islands, at the opening of the solomon islands financial inclusion expo, honiara, 20 β 21 june 2014. * * * your excellency, deputy australian high commissioner, dr dave peebles, chief executive officers & representatives of commercial banks, national provident fund, permanent secretaries of government ministries representatives of state owned enterprises representative of non - government organizations pfip representatives members of the national financial inclusion taskforce our major sponsors of the event media representatives women β s groups, young people, and students ladies and gentlemen, introductory remarks good morning and a warm welcome to you all. it is a great pleasure for me to welcome you all to the opening of the first financial inclusion expo, with the theme, β know your money, save and grow β, organised under the national financial inclusion taskforce ( nfit ). this is an important event in our journey towards achieving greater financial inclusion in solomon islands. the hosting of a financial inclusion exposition is an idea that nfit has contemplated staging since its formation in 2011. so i am very happy indeed that we can finally witness its opening this morning. i believe, this event will greatly benefit both the consumers and the providers of financial services as we interact in this β out of office β environment in the next two days. nfit and financial inclusion the nfit, is a national committee set up in 2011, and comprises of stakeholders from the public, private, donor agencies, financial institutions and ngos, with the goal of extending financial services to our people especially those in rural areas. our target is to enable an additional 70, 000 ( of which 30, 000 must be women ) solomon islanders have access to financial services by 2015. i am pleased to report that our target has been achieved, some 21 months ahead of our target date. since the start of 2011 to may 2014, more than 98, 000 new accounts have been opened with the commercial banks. while we can celebrate this achievement, and i think we should, our journey has just begun. there are still outstanding areas and issues that need to be addressed. much has been said about financial inclusion and so i feel i need to explain what it means. maybe it will help us understand and appreciate its relevance to our country. the concept of financial inclusion continues to assume increasing prominence and importance across the globe and in the | generating moral hazard. such is the case of provisions for banks considered β too big to fail. β in addition, the tools may inhibit healthy innovation, and, as mentioned, they can boost the unregulated sector, amplifying and creating new avenues for shadow banking, at the expense of the regulated sector. finally, excessive regulation may hinder the development of the financial system, damaging long - term economic potential, something especially harmful for countries suffering from low financial penetration. mexico β s experience mexico has designed its financial policies on the basis of its experience with previous crises, which emerged from macroeconomic disequilibria and inadequate bank regulation. the focus has been on strengthening financial institutions, as well as helping to deepen markets. in general, measures have been based on a few rules that are transparent and predictable. much use of discretion has not proved necessary. mexico β s financial system is bank based, with high participation of foreign - owned institutions. foreign banks can only operate in mexico through the establishment of subsidiaries, which must comply with the same regulations on a stand - alone basis as domestic banks. strong capital and liquidity requirements were imposed even before basel iii rules became effective. specifically, as of today, mexico has been classified as compliant with those internationally enacted regulations, and certain features are even stricter. 12 in fact, in terms of bank prudential policies, mexico benefits from the following five measures. the first is capitalization rules that incorporate high weights for maturity mismatches in market risks, including the banking book in addition to the trading book. second, for foreign currency, caps govern net liabilities and net open position, while a minimum liquidity ratio is required. a third distinctive measure relates to loan - loss provisioning, based on expected losses rather than realized ones. estimation of expected losses covers information from the system as a whole, such as the level of aggregate indebtedness and payment behavior of borrowers, while it also takes into account an institution β s individual performance. a fourth characteristic is ring - fencing in terms of bounds on related - party lending, made tighter in the wake of the most recent financial crisis, as well as requirements for transferring assets and liabilities to related entities. for the problems related to relaxing macroprudential policies, see calomiris, c. w. ( 2013 ), β managing the risks of the new macro - prudential policy regime, β borsa istanbul review, 13. basel committee on banking | 0 |
zeti akhtar aziz : remaking malaysia - investing in the new malaysia opening address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the euromoney conference - β remaking malaysia : investing in the new malaysia β, kuala lumpur, 3 august 2004. * * * yang amat berhormat dato'seri abdullah ahmad badawi, prime minister and minister of finance distinguished guests, ladies and gentlemen, bismillahirrahmanirrahim and good morning, it gives me great pleasure to welcome you to this conference on'remaking malaysia and investing in the new malaysia '. we are most honoured today by the presence of yang amat berhormat dato'seri abdullah ahmad badawi, prime minister and finance minister of malaysia who has graciously accepted our invitation to deliver the keynote address of the conference. this conference takes place at a time of strengthening economic conditions in the global and domestic economy. at the forefront of investors'minds is the sustainability of these trends. there is also much interest on the policy strategies being adopted and how malaysia will reposition itself in this more competitive environment. this conference has brought together key policy makers, investors, fund managers as well as leading corporate and government officials to discuss these issues. building on the economic success that has been achieved for more than three decades, malaysia is now taking the opportunity to reposition its strategies to ensure the sustainability of this strong growth performance. in remaking malaysia, the strategy is essentially to focus on our distinct capabilities and to leverage on the areas of our strengths to secure our competitive advantage. let me touch briefly on the current economic developments : β’ malaysia has seen a steady and strengthening economic recovery since 2001, with the growth performance strengthening substantially in the first half of this year increasing the potential for growth for the year as a whole to surpass our earlier estimates. β’ this favourable performance has been accompanied by a rebalancing of focus between external and domestic sources of growth. in the external sector, there has been a greater balance between the traditional and new markets and between the goods and services sectors. β’ in the domestic sector, there has been a greater balance between the economic sectors. the strategy to have a more diversified economic structure and more extensive markets has aimed to reduce vulnerability of the economy to global shifts in demand in any specific sector or to any particular region. β’ the positive fundamentals of low inflation, strong external balance, low debt | financial system and our macroeconomic fundamentals, particularly since the asian crisis in 1997 - 1998, has raised our tolerance level for absorbing volatility, enhanced our resilience to shocks, improved the agility to adjust to change and increased our policy flexibility to mitigate any adverse external developments on our domestic economy. going forward, the strong growth in manufacturing and services sectors will continue to sustain growth. the prospects for higher consumption spending is also positive. with the savings rate still high at about 35 % of gnp and the rising incomes, malaysia has the potential to promote a higher level of consumption without undermining the potential for financing of private investment from domestic sources. the higher consumption has also not created risks of increased household indebtedness which has remained within prudential levels at less than 60 % of gdp. ladies and gentlemen, capital spending continues to gain momentum both in domestic and export oriented activities. domestic companies are also forging strategic alliances as part of the strategy to expand to new export markets and leverage on new technologies. the on - going capacity expansion and more competitive business environment will keep inflation low thereby allowing domestic interest rates to continue to remain low for sometime to come. malaysia's trade and investment links with asia, particularly with the large economies in the region, is also expected to strengthen further. there also continues to be steady inflows of foreign direct investment. in addition to sustained inflows into the manufacturing and oil and gas sectors, these flows have become more broad based with higher shares of new flows shifting towards higher value - added activity in the services sector. this structural change in fdi flows reflect the changing opportunities malaysia accords with the services sector now gaining significance as an engine of growth. the new inflows have also tended to be low import content and higher value added. the fdi in services sector has also been increasingly broad based. a number of regional and global business processing centres and other regional facilities have been set up including the ohqs, regional offices, international procurement centres and regional distribution centres. ladies and gentlemen, as part of the government policy commitment to improve the delivery system and reduce the cost of doing business, the central bank has undertaken a progressive liberalisation of domestic rules and regulations to reduce the cost of doing business. an area of focus has been the rules governing the foreign exchange transactions. reducing cost of managing risks associated with such transactions include the recent liberalisation of rules on foreign currency accounts, interest rates swaps and hedging | 1 |
arrangement should be permanent, or in what circumstances a change would be contemplated. i said then simply that the peg was for the time being the most appropriate monetary anchor for hong kong. i would give very much the same answer today. our peg is not a fixed rate that is supported by or dependent on discretionary intervention. it is a rulebased currency board system which imposes a particular discipline of adjustment through interest rate channels and domestic prices. it enjoys widespread support from international observers both in official circles and more widely. this is not just people being nice to us and choosing not to say anything which might rock the boat, although there may be one or two of them. rather it reflects an appreciation of the unique features of a currency board structure and the benefits which it has brought over 18 years, as well as an appreciation of the distinctive characteristics of the hong kong economy. the main distinctive characteristics to which i allude are the following : the flexibility in costs and prices, as discussed earlier ; the extreme openness of the economy in terms of both trade and capital flows ; the constitutional commitment, through the basic law, to support the free movement of capital and not to operate exchange controls ; and the soundness of the banking sector. taken together, these factors help explain why a peg may be feasible and sensible for hong kong while it might not be so for others. this does not mean that hong kong would be incapable of operating or continuing to prosper under an alternative regime. indeed, we possess the necessary infrastructure to conduct discretionary monetary policy ( although that was not the case back in 1983 ), and i am confident that my colleagues would be quite capable of meeting the challenge of any new, more activist regime. however, although there may be moments when one thinks " if only we had a floating rate, things wouldn't be so bad right now ", one cannot chop and change between regimes to suit short - term expedience. we acknowledge that no system is perfect, but i have suggested that much criticism of the peg may be exaggerated, or even unfounded. we would need to be well satisfied that an alternative would be unequivocally superior, before ditching something which has been the cornerstone of internal financial stability and external confidence for over 18 years. | important libor transition. urgency of the libor transition 10. as we all know, time is running short, and end - 2021 is fast approaching. now, with a clear and certain timetable for libor cessation, we should all work together with a sense of urgency. although certain us dollar libor settings will continue to be published until endjune 2023, this 18 - month extension is intended to allow time for more legacy us dollar libor contracts to mature. and, this won β t alter the fact that β libor will come to an end. it is therefore vital for us to continue our preparation that is currently underway, and avoid any further build - up of libor - related exposures going forward. with that in mind and to smoothen the transition process, we expect banks in hong kong to cease to issue new libor - linked contracts by the end of this year. development of the hkd overnight index average ( honia ) linked market 11. as we have stepped into the fourth quarter, we will soon move into a post - libor world. as we look ahead, libor transition also brings with it markets relating to the new risk - free rates ( rfrs ), like secured overnight financing rate ( sofr ). according to isda β s transition to rfrs review published in august, trading activity in sofr - linked otc interest rate derivatives ( ird ) continued to grow in q2 this year, with the traded notional of sofr - linked ird increased by 22 % to us $ 932 billion from us $ 762 billion in q1 2021. going forward, these new market segments will no doubt have further room to grow. 12. closer to home in hong kong, we are adopting a multiple - rate approach, under which both hong kong interbank offered rate ( hibor ) and honia are expected to co - exist. in line with the market development efforts across the world, we are taking active steps in promoting the further development of the honia - linked market. to facilitate the adoption and usage of honia, we are planning to issue honia - indexed floating rate notes ( frns ) under the government bond programme later this year. we hope the proposed frn issuance could encourage the private sector to consider issuing similar products in the future, and provide further impetus for the development of other honia - linked instruments in hong kong. 2 / 4 bis central bankers'speeches sustainable finance | 0.5 |
speech joining forces : stepping up coordination on risks in central clearing introductory remarks by fabio panetta, member of the executive board of the ecb, at the second joint bundesbank / ecb / federal reserve bank of chicago conference on ccp risk management frankfurt am main, 26 february 2020 introduction i am pleased to welcome you to the second conference on central counterparty ( ccp ) risk management organised by the ecb together with the deutsche bundesbank and the federal reserve bank of chicago. we are pleased that such a wide range of public and private sector stakeholders have joined us today to discuss the key risk management challenges in central clearing. considering the increased concentration of financial risk in ccps, this is clearly an important issue. since the 2009 g20 agreement to introduce mandatory central clearing obligations for over - the - counter ( otc ) derivatives, we have observed strong growth in central clearing in these markets, in particular for interest rate swaps ( irs ) and credit default swaps ( cds ). compared with 2009, when only around 10 % of cds and 37 % of irs were centrally cleared, these figures now stand at more than 50 % for cds and almost 80 % for irs. the decision to launch mandatory central clearing was coupled with the premise that increased risk concentration in ccps must be accompanied by stringent safeguards. and indeed, global standard - setting bodies have worked hard to further enhance the resilience, recovery and resolvability of ccps. but this progress is no reason for complacency. so far, the expansion of central clearing has taken place in the context of a favourable financial environment, supported by very accommodative monetary policies. but such benign conditions will not last forever. and, over time, market value corrections may test the defences of central clearing. many regulatory reforms also still need to be fully implemented and in some areas of risk management, such as the management of extreme stress events, approaches are still evolving. finally, the rapid evolution of centrally cleared markets and of the broader financial and technological environment poses further challenges. ensuring the safety and efficiency of central clearing is critical for the ecb given the eurosystem β s role as central bank of issue for the euro. the large payment flows between ccps and their participants mean that inadequate financial risk management of ccps could transmit serious financial strains to institutions that are eurosystem monetary policy counterparties. interconnected payment systems and repo markets, which are essential for monetary policy transmission | all - time low. in combination with the continuation of the unlimited liquidity - providing policy it has maintained since the start of the crisis, the successive cuts in official rates have led money market interest rates to extremely low levels. the expansionary monetary policy stance was strengthened by the announcement that the ecb expects official interest rates to remain at or below the new level for a prolonged period. along with these external factors, the spanish economy has also benefited from other developments that have helped temper the contractionary pressures on demand and activity during this year. household spending began 2013 weighed down by the impact of the decline in employment on income from work and by the debt - reduction process. however, as the year unfolded, bis central bankers β speeches improved confidence and the somewhat less unfavourable state of the labour market have meant that private consumption has begun to pick up. further, according to the available indicators, investment in equipment has posted increases in the first nine months of the year. in a setting in which sluggish domestic demand, ongoing corporate deleveraging and the restrictions on access to financing continue to check investment, this improvement stems, above all, from the strong pace of goods and services exports, which would have led to greater investment activity by exporting firms. moreover, construction, as a whole, has continued shrinking, owing to the adjustment in residential investment and in public works. general government consumption spending has also carried on falling. as a result, national demand has continued to decline, albeit at a progressively slacker pace. the positive contribution of the external sector to activity has increased in 2013. that reflects the strong dynamism of exports, driven in recent months by the improvement in spanish competitiveness and the buoyancy of the euro area markets ; but it is also indicative of the weakness of domestic expenditure, giving rise to the contractionary behaviour of imports. as a consequence of these developments, spain will show a net lending position against the rest of the world of around 2 % of gdp, an unprecedented and record figure in recent decades. over the past months, inflation, proxied by the cpi, has been declining notably, essentially as a result of the tapering off of the effects of the vat increase over more than a year back. thus, in october, the cpi fell by 0. 1 %. foreseeably, however, positive though moderate rates of change will resume in the coming months, therefore proving compatible with the necessary continuation of the ongoing improvement in competitiveness | 0 |
β ah research academy for islamic finance ( isra ), islamic banking and finance institute malaysia ( ibfim ) and international centre for education in islamic finance ( inceif ) for greater synergy in international research and training, as well as capacity building. in concluding, i wish to congratulate the irti team, that has worked diligently with the council of islamic banks and financial institutions ( cibafi ) and thomson - reuters in producing this report. it is my hope that there is further continuity in developing such country references that can showcase the offerings of islamic finance to the global community. with this, more jurisdictions can contribute towards advancing islamic finance as an alternative financial system that adds diversity and vibrancy to the economy. thank you. bis central bankers β speeches | muhammad bin ibrahim : the β islamic finance country report for malaysia 2015 β keynote address by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the launch of the β islamic finance country report for malaysia 2015 β, kuala lumpur, 30 june 2015. * * * thank you for the invitation today to officiate the launch of the β islamic finance country report for malaysia 2015 β published by irti, the research and training arm of the islamic development bank. this country report is the fifth in its series and features malaysia β s ongoing initiatives and prospects in transforming into a high income economy and the contribution of islamic finance in this endeavour. islamic finance in malaysia has undergone three decades of progress and its current state of development is the reflection of the collaborative effort between the industry and the government. while malaysia has achieved a number of successes, a lot needs to be done still. islamic finance needs to advance from domestic - centric growth and expand beyond our borders. the next phase of achievement would very likely hinges on our ability to collaborate successfully with others and harness our capabilities to ensure that islamic finance will progress and expand transactional activities across borders to remain competitive and dynamic. progressive development of islamic finance in malaysia as part of the strategy to sustain balanced economic growth, malaysia has developed islamic finance as one of the sectors that not only adds value to the economy but offers an alternative to businesses and the public. our approach has been holistic, yet focused on specific outcomes. the focused approach has led to the exponential growth of the industry and contributed towards the diversification of the malaysian economy. the future and continued progress of islamic finance in malaysia would very much depend on the industry resourcefulness to build and maintain an innovative, competitive and inclusive islamic financial industry. empirical evidence shows the importance of an enabling environment for islamic finance to fluorish, with tax incentives, business - friendly policies and initiatives, as well as an appropriate and robust regulatory and supervisory framework. it is these ingredients that enable islamic banking assets to consistently record double - digit annual growth rate since year 2000 and now representing 25 % of domestic banking assets. in terms of customer base, it is estimated that non - muslims make up over 50 percent of the customer base of islamic banks in malaysia. growth numbers are also most evident for the islamic capital market, with the sukuk market commanding a 57 percent market share and attracting global issuers and investors. from 2006 to end - 2014, foreign issuers have issued su | 1 |
the premier asian hub for solutions in investment risk management ; a rapidly growing debt capital market ; anda promising equity capital market. first, a vibrant private equity and venture capital ecosystem. the thriving start - up and 1 / 4 bis central bankers'speeches fintech scene in singapore and southeast asia have drawn active interest from pe / vc players from around the world. pe / vc assets under management in singapore have doubled over the last five years. they grew by over 50 % last year despite the covid - 19 pandemic and recession, testament to the resilience of the ecosystem. technology and innovation are making private equity and venture capital investments more accessible. with tokenisation, assets can be fractionalised, allowing smaller investors to access investments that were once the domain of large institutional investors. example : addx, a private market exchange backed by the singapore exchange, offers eligible investors access to a wide range of investments with just $ 10, 000 β from global names such as partners group β private equity fund to homegrown private companies like xm studios. second, a comprehensive suite of solutions for investment risk management. singapore β s foreign exchange market is the third largest in the world. daily trading volume is more than us $ 640 billion. the deep fx market enables market participants to manage and hedge currency risks in their investments. singapore is the premier derivatives hub in asia, and the largest offshore market for asian equity index derivatives. corporates and investors can hedge their risks through a wide range of derivative products, across equities, fx, commodities, rates, and fixed income. let me give two examples of how these derivative products play an important role in managing risks. sgx β s freight futures contracts have proven especially useful in helping companies manage their freight rate risks amid strains in global supply chains and volatility in shipping rates. as a commodities trading hub, singapore β s deep derivatives market for materials such as iron ore provides global participants with the tools to manage risks as well as express their market views. singapore β s strengths in technology are helping to make its risk management solutions even more accessible and efficient. efforts are underway to use blockchain technology to enable a more streamlined and transparent market. example : sgx β s marketnode seeks to enhance the efficiency of fund raising through international debt capital markets, shifting from a largely analogue process today, to a digital, automated environment supported by distributed ledgers and smart contracts. we anticipate that in the near future, the ability | - ante risk financing and risk transfer strategies. adrfi phase 2 was approved by the asean finance ministers at the asean finance ministers meeting in april 2018 and the 3 - year detailed plan of action was subsequently endorsed in april this year. 12. to drive adrfi phase 2 forward, the plan of action will be implemented by a dual programme office, to be led by the asean secretariat and the ntu - icrm. the dual programme office will adopt an open architecture structure to support global collaboration with stakeholders including policy makers, governments, multilateral development banks, international organisations and the private sector. 13. allow me to provide an overview of adrfi β s 3 focus areas over the next 3 years. these are : ( i ) risk assessment, as i mentioned earlier ( ii ) risk advisory ; and ( iii ) capacity building. leveraging on their respective strengths, icrm will lead the risk assessment and risk advisory pillars, while asean secretariat will lead the capacity building pillar. 14. these are upstream activities which will strengthen asean β s disaster risk management capabilities, and complement the downstream public and private disaster risk financing solutions, such as the seadrif. let me elaborate further on the 3 key focus areas. 1 5. first, risk assessment. good quality data is necessary to quantity asean β s economic and insurance exposure to natural disasters. moreover, countries are facing increasingly complex threats that compound the negative impacts of disaster and climate shocks, ranging from supply chain disruptions, to population migration and adaptation issues, to the risk of pandemics. good data and analytical tools will allow policy makers to identify disaster risk zones, and to quantify the risks as well as the potential fiscal impact. this will in turn, empower governments, regulators and industry to make more informed decisions on disaster risk management, from infrastructure planning, to the use of disaster financing strategies and the development of solutions. 16. to this end, adrfi will establish a new asean data and analytics platform, to construct a high resolution and objective natural catastrophe database for asean. this platform will use remote sensing technologies such as satellite imagery, and advanced extraction techniques, to produce top down economic exposure data. such data include building attributes like age and type of construction, as well as building values, will be fused with bottom - up insurance exposure and loss data, to form a holistic and more accurate picture of risk. 17. you may already be familiar with the natural catastrophe data analytics platform ( or 3 / 4 | 0.5 |
have improved, although leasing charges have continued to decline. consumer prices ( nationwide, excluding perishables ) have remained stable at a level slightly above that of the previous year excluding the institutional factors, such as the medical insurance system reform. the growth in monetary aggregates, measured in terms of year - to - year growth of m2 + cds average outstanding, was 2. 9 per cent in october and 3. 2 in november. regarding money market rates, the overnight call rate ( uncollateralized ) had moved at a level slightly below the official discount rate, and the 3 - month cd rate had stayed at around 0. 50 - 0. 60 per cent since summer 1997. however, as the market participants became cautious following the failures of some financial institutions in november, the overnight call rate ( uncollateralized ) rose to around 0. 65 in late november, and the 3 - month cd rate to around 0. 85 per cent in early december. in reaction to this, the bank continued to provide the market with ample liquidity. as a result, the overnight call rate has gradually recovered its stability. longer term money market rates, on the other hand, have remained high, partly reflecting the japan premium in overseas markets. the long - term government bond yield fluctuated at around 1. 6 - 1. 8 per cent during november against the background of uncertainties about future economic growth and anticipation of the economic stimulus package. in early december, it reached the record low level of 1. 5 - 1. 6 per cent, and has recently recovered to 1. 6 - 1. 8 per cent. with respect to bank lending rates, the short - term prime lending rate has remained at a record low level of 1. 625 per cent since september 1995. the long - term prime lending rate has been at a record low of 2. 3 per cent since october 1997. in these circumstances, short and long - term contracted interest rates for new loans and discounts ( up to october ) have stayed at record low levels. according to the december tankan, both principal and small firms started to feel that the lending attitude of financial institutions have become more severe. among small firms in particular, the difference between the total number of those which feel that the lending attitude is easy and those which feel that it is severe ( easy minus severe ) has reached a negative figure. against the background of uncertainties about economic growth and about the stability of the financial system, the nikkei 225 | the second half of 1996 ahead of the consumption tax hike. housing starts have since remained weak at around 1. 3 - 1. 4 million. regarding public - sector investment, the amount of public works contracted has followed a decreasing trend reflecting the restrained budget for fiscal 1997. real exports have continued to rise since the second quarter 1997 against the background of steady overseas demand and the yen β s depreciation to date. real imports, on the other hand, have remained virtually unchanged, partly owing to weak domestic demand. meanwhile, the impact of the turmoil in the east asian economies has been limited, although some exports to asia have declined. as a result, the real trade surplus has been increasing with some fluctuations. reflecting these developments, the nominal current - account surplus has also been expanding significantly since april 1997. industrial production remained virtually unchanged in the third quarter 1997. production in the fourth quarter is expected to decrease on the whole. this is because inventory adjustment which has derived from weak domestic sales, began to spread from consumer durables and construction - related goods to materials. meanwhile, the december tankan shows that the increasing trend in current profits is expected to continue for the large manufacturing firms ( excluding petroleum refinery ) in fiscal 1997, while those in the nonmanufacturing sector ( excluding electricity and gas ) are projected to decline. forecasts of current profit growth in both the manufacturing and nonmanufacturing sector have been revised downwards since the september survey. in these circumstances, the business confidence di for current conditions and on the outlook for principal firms in the manufacturing and nonmanufacturing sectors have both deteriorated. current profits of small firms in both the manufacturing and nonmanufacturing sector are expected to decline in fiscal 1997. the business confidence di has also deteriorated in most industries. with respect to labor market conditions, the unemployment rate has remained at a high level, and the ratio of job offers to job applications has recently eased. in october 1997, overtime working hours fell below the previous year β s level for the first time since august 1994, and the growth in employment and nominal wages has recently been slowing gradually, reflecting weak production. thus, the pace of recovery in employment and income conditions has slowed. prices remained stable on the whole. domestic wholesale prices have declined to some extent, partly owing to inventory adjustments. the corporate service prices on the whole have remained virtually unchanged from the previous year β s level. this is because supply and demand conditions in real estate rents and information service prices | 1 |
##bahn β or β highway β system, whereas the united states created such a system almost 10 years ago. the aim of the european post - trading market must therefore be to create one single market across europe which is as secure, efficient and cheap as domestic markets are today. the eurosystem takes the view that today β s challenges are best tackled by involving market participants in solving the current economic and financial gaps. the eurosystem is acting as a market catalyst and playing a unique facilitation role, bringing together market participants to create a truly integrated european post - trading market. the eurosystem achieved a great success by providing β in the form of target2 β borderless core infrastructures for real - the difference between the price of an eu bank purchasing a settlement service by a european settlement service provider and the price an us bank pays for the equivalent settlement service from a us service provider. time settlement in central bank money. further support for the single market will come from the streamlining of collateral management systems through the ccbm2 ( collateral central bank management ) project. in addition, the target2 - security ( t2s ) project aims at building on the target2 system and brings securities transactions settlement with pure cash settlements together across europe. these eurosystem initiatives joins other european initiatives, such as the code of conduct and the markets in financial instruments directive ( mifid ), in helping to fulfil the objectives set out by the lisbon agenda for the provision of better services to issuers and investors. we firmly believe that these concerted initiatives will speed up the long awaited market integration and foster competition thereby creating opportunities for cost savings and allowing market participants to select and choose posttrade partners irrespective of their location within the single market. this also requires a clear roadmap for securing the β safety and soundness β 2 of post - trading systems from a european perspective and for the relevant authorities to define common practices compatible with a single market, including the dismantling of current legal and fiscal barriers, in particular, national differences in the legal treatment of securities and actions on conflict - of - laws. this is in conformity with the recommendations of the giovannini group findings, which examined the eu post - trading sector and identified 15 barriers to be removed in order to ensure and efficient cross border clearing and settlements in the context of completing the single market ; one of which relates to the current restrictions on the location of securities ( barrier 9 ), which limits the | in this context, it seems quite difficult to speak of a credit crunch or of a comparative hardening of credit conditions in belgium. nevertheless, given the recent trend towards bank consolidation, a clear understanding of how banks succeed in combining the benefits of large - scale operations without losing the close relationships with their clients is required. these questions as to the future equilibrium between banks and financial markets will be tackled during our first session today. these recent financial developments will have an impact on all financial tra nsactions and on the whole spectrum of financial firms. but the benefits gained from increased financial integration and efficiency will extend well beyond the financial sector. actually, the real economy may be expected to benefit most, because a more efficient financial system implies higher expected returns for sectors with a financial surplus and lower borrowing costs for investing in new projects that need external finance. this should facilitate the re - allocation of capital towards new developing sectors and firms that have a high growth potential. the real effects of financial market liberalisation will be envisaged during the second session of our conference. increasing financial efficiency while maintaining financial stability is not only a major objective but also a challenging task. in order to meet this goal we should carefully design and monitor market organisation and set up appropriate regulatory and supervisory arrangements. recent research has shown the important role market organisation or market micro - structure plays as to the efficiency and the stability of financial markets, and more in particular as to market liquidity. insufficient market liquidity during periods of tension may exaggerate price volatility and increase risks of contagion over markets and institutions. the availability of broad market liquidity under all circumstances is therefore crucial to reap the rewards from the expansion and the integration of financial markets. the third session in the conference will deal with these issues. financial services and bank management in general have become increasingly sophisticated and complex. information technology has fostered the use of quantitative management tools to evaluate credit and market risks as well as other risks, such as liquidity and operational risks. current banking regulations should be adjusted to take into account the specificity of bank risks. they should provide the proper incentives for financial firms to strengthen their internal control and risk management systems. the new basel ii solvency requirements for instance develop a more comprehensive and risk - sensitive approach to banks β capital requirements and a strengthened role of market discipline. as a member of the basel committee on banking supervision, the bank has been deeply involved in the design of these requirements. as the new requirements will have to | 0 |
ben s bernanke : acquisition of merrill lynch by bank of america testimony by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, before the committee on oversight and government reform, us house of representatives, washington dc, 25 june 2009. * * * chairman towns, ranking member issa, and other members of the committee, i appreciate the opportunity to discuss the federal reserve's role in the acquisition by the bank of america corporation of merrill lynch & co., inc. i believe that the federal reserve acted with the highest integrity throughout its discussions with bank of america regarding that company's acquisition of merrill lynch. i will attempt in this testimony to respond to some of the questions that have been raised. background on september 15, 2008, bank of america announced an agreement to acquire merrill lynch. i did not play a role in arranging this transaction and no federal reserve assistance was promised or provided in connection with that agreement. as with similar transactions, the transaction was reviewed and approved by the federal reserve under the bank holding company act in november 2008. it was subsequently approved by the shareholders of bank of america and merrill lynch on december 5, 2008. the acquisition was scheduled to be closed on january 1, 2009. as you know, the period encompassing bank of america's decision to acquire merrill lynch through the consummation of the merger was one of extreme stress in financial markets. the government - sponsored enterprises, fannie mae and freddie mac, were taken into conservatorship a week before the bank of america deal was announced. that same week, lehman brothers failed, and american international group was prevented from failing only by extraordinary government action. later that month, wachovia faced intense liquidity pressures which threatened its viability and resulted in its acquisition by wells fargo. in midoctober, an aggressive international response was required to avert a global banking meltdown. in november, the possible destabilization of citigroup was prevented by government action. in short, the period was one of extraordinary risk for the financial system and the global economy, as well as for bank of america and merrill lynch. discussions regarding the possible termination of agreement to acquire merrill lynch on december 17, 2008, senior management of bank of america informed the federal reserve for the first time that, because of significant losses at merrill lynch for the fourth quarter of 2008, bank of america was considering not closing the merrill lynch acquisition. this information led to a | a package that would help to shore up the combined company's financial position and reduce the risk of market disruption. the plan was completed in time to be announced simultaneously with bank of america's public earnings announcement, which had been moved forward to january 16, 2009, from january 20, 2009. the package included an additional $ 20 billion equity investment from the troubled asset relief program and a loss - protection arrangement, or ring fence, for a pool of assets valued at about $ 118 billion. the ring - fence arrangement has not been consummated, and bank of america now believes that, in light of the general improvement in the markets, this protection is no longer needed. importantly, the decision to go forward with the merger rightly remained in the hands of bank of america's board and management, and they were obligated to make the choice they believed was in the best interest of their shareholders and company. i did not tell bank of america's management that the federal reserve would take action against the board or management if they decided to proceed with the mac. moreover, i did not instruct anyone to indicate to bank of america that the federal reserve would take any particular action under those circumstances. i agreed with the view of others that the invocation of the mac clause in this case involved significant risk for bank of america, as well as for merrill lynch and the financial system as a whole, and it was this concern that i communicated to mr. lewis and his colleagues. disclosures the federal reserve also acted appropriately regarding issues of public disclosure. as i wrote in a letter to this committee, neither i nor any member of the federal reserve ever directed, instructed, or advised bank of america to withhold from public disclosure any information relating to merrill lynch, including its losses, compensation packages or bonuses, or any other related matter. these disclosure obligations belong squarely with the company, and the federal reserve did not interfere in the company's disclosure decisions. the federal reserve had a legitimate interest in knowing when bank of america or merrill lynch intended to disclose the losses at merrill lynch. given the fragility of the financial markets at that time, we were concerned about the potential for a strong, adverse market reaction to the reports of significant losses at merrill lynch. if federal assistance to stabilize these companies were to be effective, the necessary facilities would have to be in place as of the disclosure date. thus, our planning was importantly influenced by the companies'planned disclosure schedule. but | 1 |
christine lagarde : hearing at the committee on economic and monetary affairs of the european parliament introductory statement ( via videoconference ) by ms christine lagarde, president of the european central bank, before the hearing at the committee on economic and monetary affairs of the european parliament, frankfurt am main, 18 march 2021. * * * madam chair, honourable members of the economic and monetary affairs committee, ladies and gentlemen, it is a pleasure to be with you again today for the third regular hearing of the year. in my confirmatory hearing before this committee back in september 2019, i set out a goal : to ensure that the ecb engaged in a reflection on whether its monetary policy framework was sufficiently robust to meet future challenges. 1 with the successful conclusion of our strategy review in july, 2 i believe we have achieved that goal. the review took the ecb β s mandate and primary objective of price stability, which is conferred by the treaty, as a given. at the same time, we thoroughly looked at key aspects of citizens β lives. we have recommended a roadmap to include the costs of owner - occupied housing in the harmonised index of consumer prices to better represent the inflation rate that is relevant for households. we have also developed a climate - related action plan to address the profound implications of climate change for price stability. finally, we have modernised our external communication to make it more understandable to all citizens. the review has been an 18 - month - long journey involving an immense collective effort by staff across the eurosystem, and i am particularly happy that this work has now been published in 18 occasional papers which were made available to the public on our website last week. 3 i would also like to reiterate my gratitude to this committee for the important input it provided during the strategy review process. in my remarks today, i will outline some of the key elements of our new strategy and provide an update on the outlook for the economy and for inflation, together with some reflections on our current monetary policy stance. then, at the explicit request of this committee, i will discuss the topic of financial dominance. the ecb β s new monetary policy strategy in practice starting with our price stability objective, the new strategy incorporates two key innovations. first, we have adopted what i would call a simple and clear symmetric inflation target of two per cent over the medium term. it is simple, easy to communicate and clear because it gives a welldefined yardstick to help us | christine lagarde : welcome address - ecb conference on monetary policy welcome address by ms christine lagarde, president of the european central bank, at the european central bank conference on monetary policy : bridging science and practice, frankfurt am main, 4 october 2023. * * * it is my pleasure to welcome you all to the 2023 ecb conference on monetary policy. the last few years have been an incredibly challenging time for monetary policymakers around the world. we have faced a succession of overlapping supply and demand shocks that have created a complex and fast - changing macroeconomic landscape. and as a result, we have seen a paradigm shift in monetary policymaking. where central banks in advanced economies once wrestled with overcoming the lower bound on interest rates, they have more recently been engaging in the fastest hiking cycle on record. but policymaking, by nature, operates in real time. we make decisions based on the best analysis and data at hand. however, it is exactly when rapid shifts in the macroeconomic environment occur that prior, unforeseen knowledge gaps are suddenly exposed. this is why policymakers β who are practitioners at heart β can benefit greatly from cutting - edge research. fresh insights and innovative approaches can go a long way in closing those knowledge gaps, helping policymakers to navigate this new terrain more effectively. that is why this conference is called " bridging science and practice " β because the issues we are discussing are truly those that are informing our policymaking. today's event captures four such topics. the first topic is how the transition from the low inflation regime, which prevailed before the pandemic, to the high inflation rates we are seeing today affected the pass - through of shocks. the papers to be presented over the next two days provide important contributions to that important debate. in particular, we will see evidence that the propagation of adverse supply shocks is nonlinear : when inflation is high, the propagation is stronger. and we will see how firms'pricing strategies can become state - dependent and make prices more flexible in response to large shocks. 1 / 3 bis - central bankers'speeches the second topic on which the conference focuses follows naturally from the first. with such a rapid shift in the inflation outlook, there has been an equally rapid shift in the stance of monetary policy. and this has raised questions about how best to calibrate policy when accommodation must be quickly withdrawn after a long phase of loosening. we will see research that highlights some of the challenges | 0.5 |
for release on delivery 10 : 00 a. m. edt july 10, 2023 holistic capital review remarks by michael s. barr vice chair for supervision board of governors of the federal reserve system at the bipartisan policy center washington dc july 10, 2023 thank you to the bipartisan policy center for the opportunity to speak today. i β m here to report on my holistic review of capital for large banks and to outline steps that i believe are appropriate to update our capital standards so that banks can continue to serve our communities, households, and businesses. 1 the review was a top priority because capital is fundamental to safety and soundness. i approached the task with humility. we need to be skeptical about the ability of bank managers or regulators to anticipate all emerging risks. events over the past few months have only reinforced the need for humility and skepticism, and for an approach that makes banks resilient to both familiar and unanticipated risks. our dynamic financial system is complex and constantly evolving. regulators and bank managers are limited in our ability to comprehensively identify risks and to measure them. we cannot fully appreciate how a specific vulnerability can interact with other vulnerabilities to amplify and propagate risk in the face of a shock, or multiple shocks. it is extremely difficult to identify shocks in advance. and we also cannot fully predict how firms and markets adapt to changes in the environment or to the behavior of regulators or other participants. so, instead of trying to design rules to address every conceivable risk, regulators must focus broadly on resilience β ensuring that banks and the financial system can withstand challenges, wherever they emerge and however they are transmitted through the system. fortunately, there is a component of bank funding β equity capital β that is the views i express here are my own, and not those of the board of governors of the federal reserve system or the federal open market committee. - 2well suited to building resilience. 2 banks rely on both debt and capital to fund loans and other assets, but capital is what allows the bank to take a loss and keep on operating. the beauty of capital is that it doesn β t care about the source of the loss. whatever the vulnerability or the shock, capital is able to help absorb the resulting loss and, if sufficient, allow the bank to keep serving its critical role in the economy. higher levels of capital also provide incentives to a bank β s managers and shareholders to | of a single entity in one part of the world on all other connected parties illustrate the tremendous importance of sound and effective risk management in today β s financial world. due to the inter - connected economies around the world, asia has not been isolated from the spill - over effects of the global financial crisis. the western economies continued to be bogged down by slow and hesitant recovery with weak economic growth and high unemployment rates. emerging economies, particularly in asia, however, have been resilient through these financial challenges. this is attributable to various policies and practices adopted in the region following the lessons learned from the asian financial crisis in 1997 β 98. on the local front, malaysia has been largely successful in dealing with the challenges brought about by the global crisis. the economy has recovered beginning from the fourth quarter of 2009. prompt government responses and initiatives, as well as the existence of strong macroeconomic fundamentals and a sound financial system are the principal factors. in the first quarter of 2010, most asian economies registered robust growth, with malaysia recording a 10. 1 % real gdp growth. another recent measure of malaysia β s resilience is its rating in the imd world competitiveness yearbook 2010. malaysia β s global competitiveness ranking improved significantly from 18th place in 2009 to 10th place in 2010, out of 58 economies. malaysia has successfully issued a us $ 1. 25 billion sovereign sukuk ( islamic bonds ) last friday with large international demand even during a period of volatile financial markets. this further attests to malaysia β s success as well as international acceptance of malaysia β s standing as a major international islamic financial centre. although malaysia fared relatively well during this crisis, we should not be complacent. we should leverage on the lessons learnt from this and the late 1990s crises to improve our resilience to any future shocks. there is at present obvious optimism among financial institutions following the improved economic outlook and market sentiment. it is crucial to ensure, however, that this does not result in unchecked increases in risk appetite or compromises the quality of risk management practices. what was once a β black swan β event has increasingly become more common due to the high inter - linkages between international economies. as such, we need to be vigilant and ensure all potential risks are addressed and comprehensive risk management measures are adopted, both at the macro and micro levels of the economy. regulatory reforms in line with risk management let me turn now to the regulatory reforms in line | 0 |
developments in line with norges bank β s mandate. bis central bankers β speeches | debt reduction. the expansionary economic policy is reflected in household finances. for those who do not lose their jobs, real disposable incomes will grow considerably in the current and coming year thanks to sizeable wage increases and tax cuts in 2009 and, particularly, in 2010. in addition, consumer prices are rising at a moderate pace, interest rates are receding, especially at the short end of the curve, and this year special pension savings will be released at a reduced tax rate. falling cash prices, rising disposable incomes and lower interest rates all ease the financial burden of buying a home. at the national level, the price of an average house as a percentage of disposable income has been falling over the past 18 months. this development will accelerate in 2009, and by year - end housing costs as a ratio of disposable income is estimated to be some 3 - 6 per cent lower than in 2008. the largest falls will be seen in the copenhagen area and for short - term financing. under normal circumstances, rising income and falling interest rates exert upward pressure on housing prices. but the current situation is not " normal ". the housing market has almost frozen with many homes for sale, slow sales and business volumes at a long - time low. the market is driven by negative expectations that overshadow the positive trend in the private finances of most danes. expectations that cash prices will fall further can be self - fulfilling if people are hesitant to buy, and this pattern that can be difficult to break. especially if unemployment is rising. those initially affected are people whose social circumstances change due to unemployment, illness, divorce or similar. such events are often at the root of the observed rise in enforced sales. nevertheless, the level remains low. although the number of enforced sales can be expected to rise further in the near future, the current outlook for household finances does not point to an increase to the level seen in the early 1990s. combined with falling stock indices, lower housing prices have led to a reversal of the prolonged upward trend in household wealth, and a fall was seen last year. all the same, household wealth is still strong. the value of both assets and liabilities has increased over time, but what matters when it comes to the soundness of household finances is the difference between the two. last year, total wealth β i. e. the value of all assets, including pension savings, less the value of all liabilities β was 3Β½ times | 0 |
mario draghi : introductory statement to the plenary debate of the european parliament on the european central bank's annual report 2016 introductory statement by mr mario draghi, president of the european central bank, to the plenary debate of the european parliament on the european central bank's annual report 2016, strasbourg, 5 february 2017. * * * mr president of the european parliament, mr vice - president of the commission, honourable members of the european parliament, i am very pleased to be here to discuss with you the ecb β s activities and your draft resolution on the ecb β s annual report 2016. today β s debate represents a good opportunity to take stock of progress made and discuss the way forward. a decade ago, the global financial crisis was starting. today, while further efforts are needed to overcome its legacy, the euro area economy is expanding and employment is rising. your draft resolution points out that monetary policy has played a key role in this recovery process. the ecb has indeed acted decisively, in line with its mandate. we have addressed financial fragmentation and supported the economy, enabling inflation to gradually converge towards our objective. the draft resolution also notes that the independence of the ecb has allowed us to take resolute action within our mandate. but independence is just one of the cornerstones of our institutional framework. accountability is its necessary counterpart. and you, as the representatives of the people of the eu, are the heart of our accountability. together, independence and accountability underpin our effectiveness and our legitimacy. in my remarks today, i will focus on two particular issues that have been raised in the draft resolution. first, i will elaborate on economic developments in the euro area and the role of the ecb β s monetary policy. second, i will discuss the state of the financial sector and the measures needed to further strengthen its resilience. economic developments and the role of the ecb β s monetary policy the euro area economy is expanding robustly, with stronger growth rates than previously expected and significantly above potential. according to preliminary data, euro area real gdp increased by 2. 5 % in 2017, compared to the 1. 7 % that had been foreseen in our december 2016 staff projections for the same year. the economic expansion is broad - based. the dispersion of growth rates across countries and across sectors is at its lowest level for 20 years. accordingly, we see positive growth in over 85 % of the sectors in the euro area economy, compared with | an historical average of 74 %. employment growth has recently strengthened as well in all the main sectors, namely in industry, construction and market services. these developments bode well for economic growth, as expansions tend to be stronger and more resilient when growth is broad - based. the number of people employed in the euro area has also increased by around 7. 5 million since 1 / 5 bis central bankers'speeches hitting a low in mid - 2013. employment has now reached its highest level since the introduction of the euro. the unemployment rate continues to decline and now stands at close to a nine - year low of 8. 7 %, down by 3. 3 percentage points from its highest level. as more people find jobs, household incomes rise. this has helped to strengthen private consumption growth, which in turn is boosting business investment. in addition, a number of other factors have supported investment. these factors include higher demand for euro area exports, rising corporate profitability and an increasing use of installed productive capacity. these positive developments have been fostered and reinforced by the pass - through of the ecb β s monetary policy measures, which have eased funding conditions for households and firms. small and medium - sized enterprises ( smes ) in particular have benefited from our policy measures. the growing inclusiveness of this economic expansion is partly due to the renewed vigour of small businesses, which are a key engine of income creation in our economy. while our confidence that inflation will converge towards our aim of below, but close to, 2 % has strengthened, we cannot yet declare victory on this front. after increasing to 2 % in early 2017 due to a rise in energy prices, headline inflation has fluctuated since may 2017 between 1. 3 % and 1. 5 %. measures of underlying inflation, which exclude the most volatile components, remained subdued and have yet to show convincing signs of a sustained upward trend. also, new headwinds have arisen from the recent volatility in the exchange rate, whose implications for the medium - term outlook for price stability require close monitoring. on the back of improved economic conditions, the financial stability situation in the euro area has also continued to evolve positively. as i will explain in more detail, for the time being we have little indication that generalised imbalances are emerging. overall, while we can be more confident about the path of inflation, patience and persistence with regard to monetary policy is still warranted for underlying inflation pressures to build up and | 1 |
as proposed in the september 2010 eu banking structures report. such broader performance measures would incorporate more forward - looking information, encompass more aspects of the performance than just profitability and therefore could be less prone to manipulation from the markets relative to a pure market - oriented indicator such as return on equity. moreover, it provides investors with relevant risk - based information that is useful and relevant for investors. in this context, a bis paper already proposed in 2005 the usefulness of complementing the current accounting reporting framework with risk information. 2 ladies and gentlemen, not just for the aforementioned reasons do central banks have an interest in ifrss. there is an additional reason. in particular, an increasing number of central banks around the globe either comply fully with ifrss or apply an adjusted version of ifrss. issues like ( a ) volatility in the profit and loss account from the use of fair value accounting, ( b ) poor interaction of accounting rules with profit distribution rules and the resulting impact on the financial strength of central banks, as well as ( c ) the extensive disclosure requirements that might not be in line with policy objectives become relevant in this context. i would like to emphasise that the ecb has been a strong supporter of the objectives and work of the iasb since its inception and i personally believe that the iasb has significantly progressed in a relatively short period. the iasb has recognised the widening stakeholder interest in the development of accounting standards, and i appreciate that it has actively engaged with central banks, supervisors and financial stability experts in developing what should eventually be a single set of globally accepted, high quality accounting standards. finally on this point i am delighted that mr hans hoogervorst, chair of the iasb, has agreed to join us today to share with us his vision on the future of ifrss, and i am delighted that mrs flores, chair of the european financial reporting advisory group is also here with us to present europe β s view regarding ifrs developments on financial instruments. the second part of this conference deals with the sensitive issue of the financial strength of central banks. this issue has become more relevant over the last years as, due to non - standard operations, balance sheet risks, and in particular credit risk, have increased for a number of central banks. a lot has been written by central bank experts in the past decade on central bank independence and the link with the central bank β s financial strength, sometimes with conflicting views. a number of studies have | capital. in other words, the european economy grows more, the more integrated its financial system is. for example, according to a study ( london economics, 2002 ) 1 additional growth β resulting from financial integration of the european bond and equity markets β of 1. 1 % over a period of ten years is estimated. it is against this background that the ecb strongly supports the commission β s policy of pushing forward the lisbon strategy by focusing reform efforts, at the national level and the european level, on β delivering stronger, lasting growth, and creating more and better jobs β. one of the ecb β s most effective contributions to these efforts is to continue to act as a strong and reliable anchor for safeguarding monetary stability, thus providing a vital element for promoting sustainable output growth. however, the relationship between monetary policy and structural reforms like european financial integration is reciprocal, in the sense that the elements are mutually beneficial. most importantly, an integrated financial system promotes the smooth and effective transmission of monetary policy throughout the euro area. london economics ( 2002 ), β quantification of the macro - economic impact of integration of eu financial markets β, report to the european commission. furthermore, i would like to mention that the integration of the financial system is highly relevant to our task of maintaining financial stability. deeper financial integration, on one hand, has a higher capacity to absorb economic shocks than individual countries. it can also offer more possibilities for financial institutions to manage and diversify their relevant risks and realise economies of scale, which leads to greater efficiency of the financial system. on the other hand, deeper financial integration is transforming the nature of the risks all over europe, particular attention being given to systemic risk stemming from contagion through intensified cross - border links ( for instance infrastructure, interbank exposures, shareholdings and participation ) and to moral hazard issues resulting from much larger institutions posing as a consequence much larger risks in case of failure. therefore, the interaction between financial integration and financial stability deserves thorough analysis and consideration. having discussed the economic benefits of financial integration, let me now talk about the actors involved as well as the state of financial integration in europe. the actors involved and the state of financial integration in europe the main actors involved in the process of financial integration are the public authorities and the private sector. financial integration is a prime objective of the general economic policies of the european union. charlie mccreevy, the european commissioner for internal market and services, has explained the commission β s proposed line of | 0.5 |
svein gjedrem : monetary policy in norway opening remarks by mr svein gjedrem, governor of the norges bank, to norges bank workshop on β the conduct of monetary policy in open economies β, held in oslo, on 26 - 27 october 2000. * * * introduction i am happy to welcome you to this workshop on β the conduct of monetary policy in open economies β. the workshop brings together researchers and practitioners of monetary policy from a wide variety of countries. the aim is to stimulate exchanges both across countries and between researchers and monetary policymakers on a topic of common interest. research on monetary policy is an international field. we thus find it tremendously useful to be a part of an international network of researchers and practitioners concerned with monetary policymaking. contact across central banks does represent an important source of inspiration to the policy discussions in norges bank. norwegian monetary policy the papers presented at this workshop address topics that are highly relevant to monetary policy in general and norwegian monetary policy in particular. some of you may be familiar with the norwegian system. for others it may be unknown that norway has a monetary policy regime that is unique in an international context : it is a system of neither a fixed exchange rate nor an inflation target. let me explain in more detail : the political authorities formulate norges bank β s mandate for the conduct of monetary policy. the exchange rate regulation of 6 may 1994 states that monetary policy in norway should be aimed at maintaining a stable exchange rate in relation to european currencies over time. norges bank has defined β european currencies β as the euro. what we mean by a β stable exchange rate β¦. over time β needs to be made more precise. the krone exchange rate has fluctuated in recent years, in spite of norges bank β s active use of instruments, indicating that norges bank cannot fine - tune movements in the krone exchange rate. thus, in its use of the interest rate norges bank focuses on the fundamental preconditions for stability of the krone exchange rate over time. empirical work on the norwegian economy suggests that there is mean reversion in the real exchange rate. this implies that higher inflation in norway than among its trading partners tends to be followed by a nominal exchange rate depreciation. thus, in order to stabilise the nominal exchange rate against the euro, monetary policy instruments must be oriented towards bringing inflation down to the level aimed at by the eurosystem. however | are reports of limited capacity in most regions. the number of unfilled vacancies is rising, and labour shortages are reported in almost every occupational category. there are shortages of drivers, pre - school teachers, supervisors, engineers, carpenters, architects, auditors, accountants, it personnel and health workers. it has probably not been since the 1970s that we find such widespread reports of purely physical production constraints, for example now in the form of shortages of rigs and other equipment in the petroleum industry or shortages of plank, concrete and insulation in the construction industry. unemployment has fallen markedly over the past year. the pace of decline and the level of unemployment are reminiscent of two earlier cyclical peaks, one in the mid - 1980s and the one that began at the end of the 1990s and continued into the present decade. both booms culminated in sharply accelerating cost and wage inflation. supply - side shocks to the norwegian economy the combination of strong growth, high capacity utilisation and low inflation is a reflection of favourable global developments and a number of positive supply - side shocks to the norwegian economy. the global expansion of recent years has resulted in strong growth in norwegian export industries. employment has increased and unemployment has declined. the favourable labour market has boosted household optimism and supported private consumption. strong demand growth and solid profitability have also paved the way for growth in business fixed investment in norway. so far, the weakening of the us housing market has not had pronounced spill over effects. growth in china and india is strong and the euro area is experiencing a broad - based upturn. global growth is probably less dependent on demand for goods and services in the us than was the case earlier. the global expansion has also resulted in high prices for many norwegian export goods. the increase in oil prices over the past 4 - 5 years has been very important. high oil prices over a longer period have boosted oil investments and there are prospects that the high investment level will be sustained in the coming years. oil prices peaked around usd 75 per barrel in summer 2006. later in autumn, prices fell. current futures prices indicate that market participants believe prices will remain above usd 60 per barrel in the coming years. a fall in prices in a number of commodity markets at the beginning of 2007 raised the question of whether the pronounced price rise of recent years was being reversed. the experience of previous commodity price cycles indicates that rising prices gradually lead to increased supply and reduced demand. this in turn leads to a fall in prices. following a | 0.5 |
formulation of monetary policy, it is considered good housekeeping to evaluate the balance of risks. there are several positive energies that are helping to shape the vision of india's future over the next few decades. the playout of these forces will condition the setting of future monetary policy. 3 / 8 bis - central bankers'speeches first, there is a traditional advantage that is likely to continue working in favour of india's growth prospects. the development process has been predominantly driven by capital accumulation, which makes investment the main lever of growth. the investment rate peaked at close to 40 per cent of gdp in 2010 - 11 but moderated unevenly thereafter until 2020 - 21. during 2021 - 23, however, it has stabilised around 31. 2 per cent and is showing signs of acceleration. historically, india's investment has been financed by domestic savings, with households being the prime provider of resources to the rest of the economy. in the period 2021 - 23, the gross domestic saving rate has averaged 30. 7 per cent of gross national disposable income. thus, unlike many countries, india does not have to depend on foreign resources, which play a minor and supplemental role in the growth process. in fact, the mirror image of this phenomenon β the current account gap in the balance of payments β has remained modest at around 1 per cent of gdp in 2023 - 24. this provides insulation to the indian economy from external shocks and imparts viability and strength to the external sector. illustratively, india's gross external debt, which is the accumulation of current account deficits over time, is less than 20 per cent of gdp and almost entirely covered by the level of foreign exchange reserves. debt service, i. e., interest and principal repayments are together less than 7 per cent of current receipts. as regards the supersavers β households β there is evidence of switching from financial saving to physical saving, with the latter being financed by accretions to households'financial liabilities. second, the rising growth trajectory on which india is poised is entrenched by macroeconomic and financial stability. after a long and arduous battle with the upside pressures unleashed by the pandemic and geopolitical conflicts, and exacerbated by sporadic onslaughts of food supply shocks, inflation has fallen back into the tolerance band around the target of 4 per cent. this reflects the cumulative impact of steadfast monetary policy actions and supply management. in fact, | it in alignment with productive capacity. analogously, when demand falls below productive capacity, deflationary conditions can develop and hence monetary policy has to boost the economy to restore balance between demand and supply. second, monetary policy has to be forward looking. at any point in time, the information available to monetary policy authorities on the goal variables is lagged β on a measure of economic activity such as gross domestic product ( gdp ) for instance, information 1 / 8 bis - central bankers'speeches available at any point of time is typically three months old, i. e., relating to januarymarch in india ; information on consumer prices in india is available only for may. furthermore, policy impulses travel through the structure of the interest rates with variable and uncertain lags β changes in the policy interest rate take time to be fully reflected in lending rates charged by banks and other financial institutions. so, more often than not, monetary policy has to shoot blind. besides, the goal variables are in motion and hence, monetary policy has to shoot forward. for this purpose, it uses all available information like a radar screen to track the formations of moving goal variables, and target them accurately. this task becomes even more complicated when dealing with their likely course into the unforeseen future such as over the next forty to fifty years. we shall get there presently. third, as jan tinbergen, the 1969 nobel prize winner for economics showed, any policy is most efficient in achieving its goals when it follows an assignment rule - if there is one instrument such as the policy interest rate, there should be one goal. if instead, monetary policy is overburdened with too many goals but is hamstrung with too few instruments, there is every likelihood that the instrument will end up hitting none of the goals. fourth, monetary policy should be conducted in terms of some rule like behaviour that binds it to pursue its goals across time. instead, if it falls prey to the temptation of exploiting short - run trade - offs β like abandoning inflation control in the short run and boosting growth or what economists call time inconsistency β it will ultimately lose sight of its objective because in the short - run pursuit of growth, inflation may be allowed to rise to levels that can be inimically harmful to growth. fifth, modern monetary policy authorities have found that the efficacy of monetary policy is enhanced when it is supported by clear and transparent communication about the intent of policy actions and stance in | 1 |
the economy β s capacity limits and lift inflation above the 2 per cent target, the bank would respond by raising the overnight rate. this would put upward pressure on other interest rates and the exchange rate, other things constant, dampening aggregate demand, eliminating the gap between actual and potential output, and stabilizing inflation to the 2 per cent target. the process would be reversed, of course, if demand were too weak and inflation seemed likely to fall below 2 per cent. the overnight rate would be reduced, boosting aggregate demand, narrowing the excess supply gap and lifting inflation. it is important to note that the bank takes a symmetric approach to the pursuit of its monetary policy objective, and is as concerned about undershooting the 2 per cent target as overshooting it. keeping actual output at or near potential is the only way inflation can be maintained at a low, stable and predictable level. establishing an explicit inflation target and consistently achieving it helps to build credibility, anchor the inflation expectations of businesses and households, and make monetary policy more effective. an explicit inflation target also provides a direct means by which the bank β s performance can be judged, thereby improving accountability. in exceptional circumstances, central banks have a number of other, unconventional, monetary policy tools at their disposal. they include quantitative easing, credit easing and conditional commitments concerning the path of future interest rates. these tools have been used by a number of central banks in the past four years as a means of providing additional monetary policy stimulus once the overnight interest rate approached zero and hit its effective lower bound. for more information, see the appendix of the bank β s april 2009 monetary policy report. bis central bankers β speeches this, then, is what the bank tries to achieve and how it goes about it β through the monetary policy transmission mechanism. life would be easy if, having achieved the target rate of inflation, we could just leave the overnight rate of interest where it was and let the economy motor on. in reality, of course, this is impossible. the economy is constantly being buffeted by shocks of varying size and duration from both internal and external sources. these shocks are difficult to anticipate ( if they were easy to foresee, they wouldn β t be called shocks ). indeed, it is often difficult to identify the nature and potential intensity of a shock until well after it has occurred. adding to the challenge is the fact that monetary policy operates on the economy with long and variable lags. adjustments to the policy rate that | ##s, based on the fsb's key attributes, were established. just like cross - border cooperation between national regulators. the past has witnessed several cases where such a resolution framework has proven to be an effective safeguard for both depositors and financial stability. but at the same time, we haven't had many bank failures since the attributes were published. which, in a sense, makes every new case all the more different. and so, it makes it all the more important to draw lessons from this specific case. one lesson for sure is that it is essential to prepare more than one resolution strategy. different circumstances require different strategies. so we need flexibility. this becomes all the more important in case of a liquidity crisis β when a bail - in can help to restore investor and depositor confidence by strengthening the solvency of the bank, but can't generate additional liquidity. what credit suisse has taught us, is that we need to further explore resolution strategies that are better able to stabilise a bank's liquidity position. taking alfred nobel's advice, and observing and searching for differences and similarities, i can say that, today, we are in a very different situation compared to 2008. european banks have improved their capital positions and there is a structural change in the interest rate environment. and this is, in principle, good news for a bank's business model. the challenges of an artificially flat yield curve, negative interest rates, and fierce yield competition, have finally eased. but there are also similarities. today, too, risks are lurking around the corner and there are numerous vulnerabilities. risks related to funding costs and interest rate sensitivity, or credit - related risks. and vulnerabilities related to high levels of debt in many corners of our economy, or hidden leverage along with liquidity mismatches in the non - bank sector. 4 / 5 bis - central bankers'speeches this means that we need to remain vigilant. supervisors, obviously. but also the banking sector itself β making sure their capital positions, risk management and governance strengthen their resilience in sentiment - driven markets. so, yesterday was the dutch king's birthday. and if i am not mistaken, two days from now, on april 30th, his majesty king carl gustaf will celebrate his birthday. i'm sure that in between there must be some room for a dancing queen. congratulations in advance to all swedes here today. walpurgis | 0 |
njuguna ndung β u : launch of the reconstituted market leaders forum talking notes by prof njuguna ndung β u, governor of the central bank of kenya, at the launch of the reconstituted market leaders forum, nairobi, 6 july 2011. * * * distinguished chief executives ; directors ; members ; ladies and gentlemen : 1. thank you all for finding time to attend this inaugural meeting of the reconstituted market leaders forum. 2. as background information to our meeting today, i wish to mention that the market leaders forum, popularly known as mlf, was formed in 2001 to promote and support the development of the government bonds program. the membership of the forum was drawn from stakeholders in the government securities market that included commercial banks, fund managers, stockbrokers, investment banks and capital markets authority. 3. the forum meets monthly and is chaired by the governor, central bank of kenya. the meetings of the forum are purely consultative. the bank takes into account the recommendations of the mlf in making decisions on bonds issuance, pricing and tenors and on other issues relating to the financial markets, and more specifically government securities market. but it is also a good meeting to discuss macroeconomic situation policy issues. achievements 4. since its inception, the forum has contributed significantly to the deepening and development of the financial markets in kenya. through the cooperation and support of the forum the financial market has realized great milestones including : i. lengthening of debt maturity profile : the initial objective of the mlf was to lengthen the maturity profile of securities in the domestic debt portfolio in order to minimize refinancing risks associated with short term debt and to also deepen the local financial markets. this has successfully been achieved with the ratio of treasury bills to bonds in the portfolio currently at 23 : 77 from 70 : 30 in 2001 and average maturity of all securities standing at 5 years 11 months up from 8 months in 2001. the average maturity for bonds alone is 8 years so far. in 2008, cbk issued the first long - dated paper of 20 - years maturity. this was followed by successful issuance of a 25 - year bond in 2010 and a debut 30 - year savings development bond in 2011. ii. secondary market infrastructure development : in 2008, the cbk in partnership with the nairobi stock exchange adopted the automated trading system ( ats ) for treasury bonds. the adoption of ats has improved efficiency and confidence in the secondary bond market with | patrick njoroge : developing robust and sustainable strategies for microfinance in kenya opening remarks by dr patrick njoroge, governor of the central bank of kenya, at the microfinance training course for policy and development 2016, organised by the alliance forum foundation, held at the kenya school of monetary studies, nairobi, 24 february 2016. * * * distinguished guests ; ladies and gentlemen : on behalf of the central bank of kenya, let me join my colleagues in welcoming you to this workshop aimed at developing a strategy to enhance financial inclusion in the comesa region. the strategy will be underpinned by an enabling regulatory and supervisory framework for microfinance institutions. i understand that the strategy is based on the draft proceedings of microfinance training course for policy and development, which was held in december 2014 in lusaka. at the outset, let me commend the comesa monetary institute, the african development bank and the alliance forum foundation, for the work done so far. establishing a financially inclusive ecosystem that does not marginalize people on the basis of income or geographical location has become a policy concern for many countries in the world, including comesa member countries. financial inclusion has gained traction over the recent years as a priority area for policymakers and regulators within the financial services sector. the various initiatives that have been undertaken by different stakeholders, to enhance access and usage of formal financial services, have led to a significant reduction in the global population that is financially excluded. the global findex report ( 2014 ), spearheaded by the world bank, estimates that between 2011 and 2014, the number of adults without a bank account dropped by 20 percent, to 2 billion. the enhanced access is attributed largely to a significant growth in account penetration and innovations in technology, especially mobile money and agency banking. however, it is time now to shift the focus away from access and towards quality breadth of services. in kenya, the outcomes of the various initiatives, some of which will be highlighted in this workshop, have been remarkable. noteworthy progress includes, the increase in the banked population from 24 percent to 67 percent between 2006 and 2013 as highlighted by the finaccess surveys conducted by fsd kenya between 2006 and 2013. a geospatial survey that was conducted in 2013 also estimates that 76. 7 percent of the kenyan population is within a 5km radius of a financial access point. however, despite the noticeable progress in recent years, 25 percent of the kenyan population still remains unbanked. the existence | 0.5 |
policy, it does provide some guidance. households and companies can continue to plan for stable prices in switzerland in the future. conclusion let me conclude. central banks'risk management approach, which is guided by pragmatism, consistency and determination, has served us all well in the fight against inflation so far. we are well advised to stick to this approach. at the same time, we must keep a medium - term orientation and communicate this clearly to the public and the markets. when the monetary policy outlook is very uncertain, an exchange of views as well as the sharing of experiences and research findings between economists from universities and central banks are particularly valuable. that is why i am very much looking forward to the discussions and presentations at this conference. thank you for your attention. 3 / 3 bis - central bankers'speeches | are using incoming data to reassess the desirable path for monetary policy from meeting to meeting. ladies and gentlemen, compared to a year ago, when monetary policy was being tightened with large interest rate hikes, central banks are now proceeding more cautiously. this is because there is less need to further tighten monetary policy given the economic situation. it is not because of a change in central banks'approach, which is still characterised by the three principles of pragmatism, consistency and determination. data - dependent but with a clear medium - term orientation 2 / 3 bis - central bankers'speeches however, proceeding in a data - dependent, meeting - by - meeting manner also entails certain challenges. let me mention two. the first challenge is not to fall into the temptation of reacting to every data surprise with a substantial change in policy. such behaviour would result in an erratic monetary policy. as monetary policy affects the economy only with a certain lag, frequent changes of direction would be counterproductive. thus, while being data - dependent, central banks must maintain a medium - term orientation. their models, which incorporate medium - term relationships between economic variables, can help them achieve this goal. rather than reacting directly to the data, central banks first let their models process the incoming data. by factoring in different assumptions, the models provide decision - makers with scenarios for monetary policy. but models only reflect reality to a limited extent. therefore, outside information β such as discussions with company managers and anecdotal evidence β support central banks in checking the plausibility of the model results. and, finally, central banks have to use judgement in deciding whether a new scenario has become more likely, and whether a change in monetary policy is warranted. a second challenge is how to communicate the currently high uncertainty about the monetary policy outlook while still providing some guidance to households and companies. of course, central banks have to acknowledge that there is uncertainty surrounding the monetary policy outlook. at the same time, they can give households, companies and market participants a compass by clearly communicating their reaction function. this includes information on how they deal with trade - offs. what are their priorities when there are upside risks to inflation, but downside risks to economic activity? the snb has clearly communicated that its focus remains firmly on ensuring price stability. we will not hesitate to tighten our monetary policy further if necessary in order to keep inflation below 2 % on a sustainable basis. although this may not give markets certainty about future monetary | 1 |
sector survey on outsourcing conducted by the central bank, identified issues across the life - cycle of outsourcing arrangements and suggests that outsourcing is not being considered a core priority of many financial services firms. some of the most critical observations from the survey, which tie in with findings from on - site inspection work, relate to poor governance and controls around the risk assessment and management of outsourcing, inadequate monitoring and reporting, failure to consider third - parties in business continuity plans and tests, and a lack of exit strategies or contingency plans should page | 6 the need for resilience in the face of disruption : regulatory expectations in the digital world the firm need to find a new service provider or bring the service back in house. these issues are more concerning given that a large proportion of outsourcing arrangements were reported to involve sensitive customer and business data, including to cloud service providers, and that 75 % of firms outsource all or part of their information technology. x with all outsourcing arrangements, boards and senior management must understand that they are placing the resilience of their firm into the hands of a third - party and while they may be able to monitor the service during normal operation, when something goes wrong, they are reliant on someone else to fix it. some firms might seek to take comfort from the fact that they outsource to a parent or sister group company rather than a third party, but, as has been seen with a number of high - profile events, firms cannot always rely on the parent to provide uninterrupted service. boards and senior management need to understand where their firm β s systems and data sit on the group priority list should something go wrong. cyber security risk as i am sure you are aware, october is cyber security awareness month. xi but cyber security and cyber resilience is not something we should focus on for just one month of the year. it requires vigilance and attention, day in, day out. former cisco ceo john chambers once said, β there are two types of companies : those that have been hacked, and those who do not yet know they have been hacked. β xii the cyber threat is constantly evolving β the frequency, sophistication and volume of attacks is increasing. the failure to adequately protect against cyber - attacks can have far - reaching repercussions given the interconnected nature of the financial system. xiii page | 7 the need for resilience in the | shocks, absorb the impacts of the shock and communicate effectively to stakeholders throughout, and to ultimately recover from the incident and use the learnings to further improve their future resilience. firms need to be better prepared for the future challenges that technology will pose to their firms β competitiveness and business models and they need to acknowledge and take ownership of the risks that go along with this changing environment. the approach of the central bank i have touched on the work of the it inspection team in the central bank. despite its relatively small size, the team has significantly enhanced the intensity and intrusiveness of our supervision of it related risk across the financial services sector. identified issues are required to be resolved through risk mitigation programmes and we will continue to issue thematic findings from our work to highlight areas for improvement for all firms. where necessary we have used our powers to sanction failures and require the use of third parties to help drive improvements. page | 9 the need for resilience in the face of disruption : regulatory expectations in the digital world the inspection team is ably supported by and contributes to policy and regulatory development within ireland and as part of the wider european system. we will continue to enhance and invest in our capability in this area. moreover, recognising the challenges and opportunities that arise from this revolution, we are continuing to enhance our data analytical capabilities, including through investment in our systems, our data collection and a restructuring of our organisation of prudential regulation to best utilise our resources. conclusion this is a very broad topic, in which i have only really scratched the surface. i have touched on the opportunities and risks, and recognised that for the financial services system to continue to serve the needs of the economy and its customers it must continue to evolve. to evolve it must leverage the advances of the fourth industrial revolution, while at the same time acknowledging and addressing the inherent risks. i expect boards and senior management of financial services firms to prioritise the issue of digital transformation and allocate the resources necessary to meet their customers β needs. firms need to demonstrate their understanding of the role technology plays in value chains. while looking at the opportunities for the future, many firms also need to continue to invest to get the basics right. significant improvements are required across the system to manage the incumbent and growing technology risks within it. a change in mindset is needed to see data as a valuable asset and to invest in protecting that asset. firms also need to be prepared for when | 1 |
mohd razif bin abd kadir : shared services and outsourcing in the malaysian financial sector address by mr mohd razif bin abd kadir, deputy governor of the central bank of malaysia, at the shared services and outsourcing in the financial sector β a joint forum by bank negara malaysia and the multimedia development corporation, kuala lumpur, 13 november 2007. * * * distinguished guests, ladies and gentlemen, it is with great pleasure that i welcome you to the inaugural forum on shared services and outsourcing ( sso ) in the financial sector. this forum is jointly organised by bank negara malaysia and the multimedia development corporation in a cooperative initiative to enhance the significance of sso in the malaysian financial sector. the organisation of this event, which focuses specially on the financial services industry and its players, is a timely bringing together of minds to discuss the issues and concerns faced by financial institutions in sso. the growing significance of the global sso market suggests to the financial industry players that the outsourcing of operations which would otherwise be performed in - house is certainly an idea worth exploring. according to a recent study by frost & sullivan, the global sso market was estimated to be worth us $ 930 billion in 2006 and is forecasted to reach a market size of us $ 1, 430 billion by end - 2009. further, the banking, financial services and insurance sectors had the largest sso spending in 2006 at an estimate of us $ 273 billion or almost a third of total sso spending. this is not surprising news, given that major global players in the industry such as hsbc, standard chartered and citibank have established sso centres on our shores. regional players such as maybank, cimb and ocbc have also outsourced certain operations here to increase their productivity levels. we are happy to have them here today to share their experiences and perspectives. it would not be presumptuous of me to say that the financial institutions in malaysia are in an enviable position where sso is concerned in view of malaysia's standing as a leading destination for the establishment of sso hubs. a. t. kearney ranked malaysia as the third most attractive outsourcing centre in their global services location index in three consecutive reports, including this year's index. the report states that malaysia was a " natural choice " for outsourcing in view of its low costs, modern infrastructure, business environment and high levels | axel a weber : finance after the turmoil β shape of markets and regulation opening statement by professor axel a weber, president of the deutsche bundesbank, for the panel discussion " finance after the turmoil : shape of markets and regulation ", at the 18th frankfurt european banking congress, frankfurt am main, 21 november 2008. * * * introduction mr ackermann, ladies and gentlemen the decision to run this panel under the title β finance after the turmoil β proves that the organisers belong to the more optimistic camp. and like most optimists over the past months, they have been proven wrong. of course, for a forward - looking policy process it is essential to learn from current events to build a sustainable future. this work on lessons learnt is ongoing in several international and national fora. the bundesbank is making every effort to play a constructive role in these processes, and, thus, it is a pleasure and an honour to share with you some thoughts on finance after the turmoil, even though times are still turbulent. current challenges are twofold. the first aspect is crisis management and focuses on the resolution of institution - specific problems as regards liquidity and solvency. moreover, it also concerns financial system rescue packages, their implementation, application and international coordination. the second challenge is to use the current window of opportunity to bring about lasting structural changes regarding the regulation of financial markets. the aim of such changes ought to be a financial system that is more resilient to the kind of disruptions that we are currently observing. i would like to share with you some thoughts on crisis management β especially from a german point of view β and on crisis prevention β the latter, of course, in a more international context. crisis management as you all know, it was the insolvency of lehman brothers that led to the dramatic intensification of the financial turmoil. as an aside, there seems to be a broad consensus that allowing this bank to go bankrupt was a mistake in view of the ensuing heavy losses. owing to a rapid rise in counterparty risks following the lehman insolvency, wholesale funding markets almost completely dried up causing a number of financial institutions that relied heavily on wholesale funding to run into serious difficulties. furthermore, financial market participants were forced to fire - sell assets thus amplifying market losses. after taking emergency rescue action for single institutions and in light of escalating worries among depositors, it became apparent that this systemic crisis needed a more systemic response. many countries implemented | 0 |
stefan ingves : cash management - an important social issue speech by mr stefan ingves, governor of the sveriges riksbank, to the first meeting at the sveriges riksbank of the cash management advisory board, stockholm, 26 april 2006. * * * i would like to welcome you all to the first meeting of the new cash management advisory board. all of you sitting at this table are in some way concerned with cash management in the economy : banks, cash - in - transit companies, representatives of the retail trade, trade unions and authorities such as finansinspektionen ( the swedish financial supervisory authority ), the police and the swedish work environment agency. my hope is that the advisory board will function as a forum for identifying and discussing issues in the field of cash management. the idea is that we should meet once or twice a year, and i look forward to fruitful discussions. before opening the debate, i would like to mention two questions that i believe can form a starting point for our discussions : β’ the process of change undergone by cash management in recent years and the new structure for cash management that the riksbank is establishing together with the banks. β’ the social problem comprised by the many and increasingly violent robberies of cash transports. towards a more expedient structure for cash management one of the riksbank β s tasks is to promote a safe and efficient payment system, and we are responsible for issuing banknotes and coins. these are important function with regard to cash management in the economy. at the end of the 1990s, the riksbank began work on achieving greater efficiency in cash management. we observed in the surveys made then that there were deficiencies in the system. this was partly due to the way the riksbank organised its work. by offering a service to the banks without charging in full for it, the riksbank had contributed to the preservation of an outdated cash management structure and inefficient methods of working, which included extensive cash - in - transit transports to and from the riksbank for the sole purpose of avoiding interest costs overnight. this system was very costly, while it led to unnecessary risks for cash - in - transit companies. the riksbank therefore wanted to make the cost of cash management more visible and allow the banks and other participants to bear the costs, which would give them a clear motive to make operations more efficient. the aim was to stimulate greater competition and increased product development for services | will be right, i envisage two possible ways forward for the major swedish banks, both of which represent extremes. the first strategy would be based on the banks β proven proficiency in terms of organisation and distribution, and to refine this strength and also become better at peripheral advisory services. fewer resources would be invested in product development and risk - taking β products can easily be copied and risks sold on to other, hungrier investors. the second strategy would instead be to rediscover what you could call β classic β banking, in other words healthy risk - taking underpinned by better knowledge about certain risks and conditions than the market in general. as long as higher loan losses and larger earnings fluctuations are kept at a bearable level and are compensated for by higher margins, then risk - taking in itself is not bad business. however, as a central bank governor i do not want to inspire the banks to take on higher risk but instead would encourage them to make use of the opportunities in today β s financial markets to repackage and spread risk, but like i said that is a different perspective. 4 / 4 | 0.5 |
deviation of three - month euribor option - implied density in one year β s time ( percent ) 9 / 11 bis central bankers'speeches sources : liffe and bloomberg, ecb calculations. notes : standard deviation of option - implied density of three - month euribor in one year β s time. latest observation : 29 october 2018. but let me turn to the next steps for monetary policy in the euro area. the latest surveys of market participants β expectations regarding the most likely date for a first rate increase indicate that the β at least through the summer of 2019 β formulation has been solidly internalised by market participants. looking ahead, the rotation implies that our key policy rates and forward guidance about their evolution will become an anchor for monetary policy as the end of our net asset purchases is nearing. our communication, and the rate path itself, will be calibrated to ensure that inflation remains on a sustained adjustment path. our policy will remain predictable, and we will proceed at a gradual pace that is most appropriate for inflation convergence to consolidate. in addition, as proved in the past, our forward guidance remains an effective firewall to insulate the euro area 10 / 11 bis central bankers'speeches from unwarranted tightening pressures originating elsewhere. this protection will be crucial to ensure that, as we move along the normalisation path, euro area financial conditions remain consistent with continued progress towards our policy objective. finally, our app portfolio and our unconstrained provision of liquidity will continue, for the time being, to provide an accommodative environment. i would like to make a final comment on the effects of our app portfolio on bond yields. while, overall, our app portfolio will continue to exert downward pressure on euro area long - term interest rates, other factors such as economic fundamentals and the creditworthiness of issuers, as assessed by market participants, remain key determinants of the levels of bond yields and spreads. conclusion the winding - down of net asset purchases is not tantamount to a withdrawal of monetary policy accommodation. the ongoing rotation from net asset purchases towards enhanced forward guidance on key ecb interest rates has preserved the ample degree of monetary policy accommodation that is necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2 % over the medium term. prudence, patience and persistence will continue to inform our policy decisions. the sizeable stock of acquired assets and the associated reinvestments, | changes that had happened and were happening to the structure of the economy. in addition, it was observed that the changes in monetary aggregates were no longer reliable indicators of current and future developments in inflation. it had also become difficulty to signal the stance of monetary policy, which we believe is critical to anchor inflation expectations. ladies and gentlemen, allow me, on behalf of the board, management, and staff of the bank, and indeed on my own behalf, to recognise the contributions of my predecessors and deputy governors to improving the monetary policy framework over the years and providing the solid foundation for the formulation and implementation of monetary policy comparable to those of other central banks globally. distinguished guests, the mpc formulates the monetary policy of the republic on behalf of the bank and prepares this report. the committee comprises nine members, as prescribed under the act, three of whom should be external and nonpublic officers. so far, eight ( 8 ) members have been appointed, two of these are external. the third external member is yet to be appointed. ladies and gentlemen, you might have noticed that in sharp contrast to the previous monetary policy statements, the statement published on february 14 was very compressed. this will become the norm and is in line with our objective of publishing the mpr, which provides salient detailed information on what informs the decision of the mpc on the policy rate. as earlier indicated, the report presents a detailed assessment of the path of inflation over the next eight - quarters based on a careful and critical analysis of current domestic and global macroeconomic developments. it also provides an assessment of the mpc view on the balance of risks to the inflation projection. our expectation is that such an assessment will help provide greater clarity to stakeholders on the basis upon which the mpc arrives at its decisions. it is also expected that the mpr will serve as a credible and reliable reference document for other economic policy makers, researchers, academics, and the public at large on economic developments in the country. the mpr will be published on the bank of zambia website soon after each mpc meeting. distinguished guests, the monetary policy framework that we are currently using requires a huge amount of high frequency data to gain an in depth and better understanding of recent economic developments and to forecast inflation over a 2 / 3 bis - central bankers'speeches forecast horizon of eight quarters ahead. in this context, the bank has been collecting real sector data directly from firms through the quarterly survey of business opinions and expectations and the credit conditions | 0 |
ishrat husain : the asian clearing union welcome address by mr ishrat husain, governor of the state bank of pakistan, at the inaugural ceremony of the 34th annual meeting of the board of directors of the asian clearing union ( acu ), lahore, 16 may 2005. * * * it is a great honour for the state bank of pakistan to host the 34th annual meeting of the board of directors of the asian clearing union. i welcome you all to pakistan and wish you a pleasant and productive stay in our country. it is also indeed a pleasure for me to welcome the guests from afghanistan and the maldives monetary authority, who are attending this conference as observers. we all are familiar with the purpose and background of the asian clearing union. we have also reviewed each year the progress that was made and problems that our members had faced in international trade and payments and tried to modify the coverage, mechanism and procedure of the asian clearing union. what i wish to emphasize today is that major changes have taken place in the international scene during the last one year which necessitates our taking a closer look at the record and relevance of the asian clearing union in relation to fast changing global environment. in the rapidly changing environment, in which regional grouping is becoming a vehicle for trade promotion and economic co - operation, the asian clearing union should revisit its charter, examine its relevance and find ways to expand the intra - regional trade and economic co - operation in a multilateral context. we have to be outward looking and our objective should be to bring about coherence and consistency in our macroeconomic policies that attract direct foreign investment. the annual report of acu for the current year ( 2004 ) indicates that even though intra - regional trade is growing, the operations through the asian clearing union are limited. our efforts to expand its membership have not as yet succeeded. however, i may add here that the acu has not experienced a default. although there have been persistent debtors in the acu system, their negative net balances have not been large. there has not been a " structural creditor problem " in the acu. i would like the governors to give some thought as to how we can make asian clearing union an important vehicle for the expansion of intra - regional trade and further economic coordination, and how our banking and financial markets could be made complementary for the maximization of economic welfare of the member states. asian countries have demonstrated during the last several decades that it is possible | to remove as much of the subjectivity as possible. the duty to consult with other regulatory bodies is of paramount importance. in any application of this sort, section 37 of the banks act requires a decision to be made by the minister of finance, after the registrar of banks has made a recommendation, subsequent to consultation with the competition commission. the registrar also has to engage the two banks in discussions, consult with other domestic and international regulators, and consult with the governor and deputy governors of the reserve bank. further, the banks act prescribes that the competition authorities must be consulted on competition issues in an application of this nature. however, prior to the amendments to the competition act, which came into effect in february this year, the act did not apply to applications " subject to or authorised by public regulation ". further, section 54 of the banks act says that no arrangement involving a bank and no arrangement for the transfer of the bank β s assets and liabilities, or a part of them, can be legally executed unless the consent of the minister of finance is conveyed through the registrar. this section does not contain a provision requiring consultation with the competition commission. in applications like these, the minister of finance has to be satisfied that the proposal is not contrary to the interests of the public, the depositors, and the bank concerned or to its controlling company. the minister of finance rejected nedcor β s bid based on the grounds, among others, that south africa β s already highly concentrated banking sector would be compounded by the merger ; the size of the merged bank would affect the banking authorities β ability to contain systemic crises ; and the potential social costs, such as job losses, outweighed the efficiency gains of the merger. the minister of finance took into account the recommendations of the registrar of banks and the competition commission, which had both opposed nedcor β s bid on the grounds of pub lic interest. in this case, the supreme court of appeal ruled that the registrar and the minister of finance had sole jurisdiction over share acquisitions in banks and banking mergers. as a result of this judgement, the department of trade and industry made certain amendments to the competition act. it deleted the provision that the competition act did not apply to acts authorised by public regulation. further, the minister of finance has the power to exclude the competition commission β s jurisdiction by issuing a notice. 5. concurrent jurisdiction the amendments established a concurrent jurisdiction between the competition commission, the registrar and the minister of finance. this concurrent jurisdiction | 0 |
in these markets. 3 in contrast, researchers have not found evidence of these behaviors in corporate bond markets, where traditional dealers still intermediate most trades and there is much less high - frequency trading. 4 see joint staff report : the u. s. treasury market on october 15, 2014 ( pdf ), u. s. department of the treasury, board of governors of the federal reserve system, federal reserve bank of new york, u. s. securities and exchange commission, u. s. commodity futures trading commission, july 13, 2015, and conference summary : the evolving structure of the u. s. treasury market ( october 20 - 21, 2015 ) ( pdf ), federal reserve bank of new york, october 20, 2015. see tobias adrian, michael fleming, daniel stackman, and erik vogt, has liquidity risk in the treasury and equity markets increased?, liberty street economics ( blog ), october 6, 2015. see dobrislav dobrev and ernst schaumburg, the liquidity mirage october 9, 2015. see tobias adrian, michael fleming, or shachar, daniel stackman, and erik vogt, has liquidity risk in the corporate bond market increased?, liberty street economics ( blog ), october 6, 2015. bis central bankers β speeches, liberty street economics ( blog ), apart from such episodes of sudden volatility, questions about whether liquidity in fixedincome markets has broadly deteriorated are difficult to answer definitively. in exploring these topics, it is important to distinguish between treasury and corporate bond markets, which have different characteristics. in treasury markets, traditional measures of liquidity, such as bid - ask spreads, have been fairly stable in recent years. 5 but the changing market structure has also meant smaller average trade sizes, 6 and participants now must break up their larger trades and employ complicated strategies in order to avoid moving prices. accurately measuring the effect of trading on prices, perhaps the most fundamental gauge of market liquidity, can be quite difficult in such an environment. 7 there are also differences between on - the - run treasury securities, the securities that were most recently issued and that are the most liquid, and offthe - run treasury securities. however, observable measures such as the spread between onand off - the - run treasury securities do not show any trend change in liquidity between the two market segments since the financial crisis. in corporate bond markets, estimated bid - ask spreads have declined, indicating | richard h clarida : us economic outlook and monetary policy speech by mr richard h clarida, vice chairman of the board of governors of the federal reserve system, at the 35th annual nabe economic policy conference & quot ; promoting global growth and domestic economic security & quot ;, washington dc, 28 february 2019. * * * thank you for the opportunity to participate in the 35th annual economic policy conference of the national association for business economics. before we begin our conversation, i want to share a few thoughts about the outlook for the economy and monetary policy. 1 current economic situation and outlook the u. s. economy expanded at a robust pace in 2018, and my baseline outlook for 2019 foresees somewhat slower but still - solid growth in the year ahead. in july, just about four months from now, the current economic expansion will become the longest on record. the federal reserve is charged by the congress with achieving and sustaining a dual mandate of maximum employment and price stability, and the economy is as close as it has been in many years to meeting these goals. the unemployment rate is near the lowest level recorded in 50 years, and average monthly job gains have continued to well outpace the increases needed over the longer run to provide jobs for new entrants to the labor force. most measures of nominal wage growth are running at or somewhat above the 3 percent pace, and recent wage gains have been strongest for lowerskilled workers. moreover, the strength of the labor market appears to have encouraged people to join the labor force and others, who might have left it, to continue working. the labor force participation rate - the share of people who are either working or looking for work - - has moved up 1 / 2 percentage point over the past year, and the participation rate of prime - age workers ( those 25 to 54 years old ) has risen about 1 - 1 / 2 percentage points over the past few years. inflation, as measured by the 12 - month change in the price index for personal consumption expenditures ( pce ), is estimated to have been a little bit below 2 percent of late, largely because of recent declines in energy prices. however, core pce inflation, which excludes food and energy prices and tends to be a better indicator of future inflation, is estimated to have been about 2 percent. market - based measures of inflation compensation have moved lower, on net, since last summer, though they have increased some recently, and some survey - based measures of longer | 0.5 |
charles i plosser : the economic outlook speech by mr charles i plosser, president and chief executive officer of the federal reserve bank of philadelphia, at the pennsylvania association of community bankers β 137th annual convention, amelia island, florida, 6 september 2014. * * * the views expressed are my own and not necessarily those of the federal reserve system or the fomc. highlights β’ president charles plosser gives his views on the economy and shares some thoughts about the stance of monetary policy. β’ president plosser believes that forward guidance should be adjusted to reflect economic realities and to give the fomc the flexibility to respond gradually to the evolution of the economy. β’ president plosser counters the view that rates cannot be raised because the labor market has not β completely β healed. he discusses two major risks with this strategy. first, economists do not know what maximum employment is and cannot easily measure it. second, waiting until we are completely confident the labor market has fully recovered risks that monetary policy will be behind the curve and could lead to a return to abrupt β go - stop β policies of the past that led to unwelcome volatility. β’ while he is not suggesting that rates should necessarily be increased now, president plosser sees that the first task is to change the language and to begin signaling that liftoff may occur sooner than many now anticipate and sooner than suggested by the current fomc guidance. introduction good morning. thank you for the opportunity to speak at this 137th annual convention of the pennsylvania association of community bankers. community banks have a long and venerable history in our nation, and the 137 years of the pacb is a powerful testament to your roots as stalwarts in our financial system. i would note that the longevity of this convention means that your organization significantly predates the federal reserve system, which is observing its centennial this year. my suspicion is that there are a number of community bankers here today who can trace their corporate histories to firms that petitioned for the establishment of a federal reserve bank in philadelphia 100 years ago. i actually have two letters here. one from the new tripoli national bank dated december 27, 1913, and one from the first national bank of mifflintown dated december 26, 1913, both addressed to william mcadoo, secretary of the treasury, requesting the establishment of a federal reserve bank in the city of philadelphia. over the years, community banking organizations, whether they are state member banks or | credit facilities to support particular asset classes, such as commercial paper and asset - backed securities, and in november 2008, the fed announced it would begin purchasing housing agency mortgage - backed securities and agency debt to increase the availability and reduce the cost of credit in the housing sector. these types of credit programs target particular market sectors and thereby alter the allocation of credit across markets, reducing funding costs for some sectors and likely raising costs for others. these programs departed from the usual way the fed implements monetary policy through buying and selling u. s. treasury securities, an activity that is generally neutral across markets. when the fed engages in targeted credit programs that seek to change the allocation of credit across markets, i believe it is engaging in fiscal policy. instead of the central bank engaging in this credit policy, the federal government could carry out these transactions by issuing treasury debt to support lending to the targeted markets or firms. in fact, the fiscal authorities frequently undertake such actions β think of β green energy β loans, small business loans, and subsidized home mortgages. such credit allocation decisions belong with the fiscal authorities, not the central bank. even the recent maturity extension program, or β operation twist β as it is sometimes called, involves selling short - term treasuries and buying longer - term treasuries β an action that could just as well have been conducted by the u. s. treasury. thomas sargent and neil wallace, β some unpleasant monetarist arithmetic β, federal reserve bank of minneapolis quarterly review, 5 ( fall 1981 ), pp. 1 β 17. bis central bankers β speeches once a central bank ventures into conducting fiscal policy, it may find itself under increasing pressure from the private sector, financial markets, or the government to use its balance sheet to substitute for other fiscal decisions. this pressure can threaten the central bank β s independence in conducting monetary policy and thereby undermine monetary policy β s effectiveness in achieving price stability. i have long argued for a bright line between monetary policy and fiscal policy, for the independence of the central bank, and for the central bank to have clear and transparent objectives. decisions to grant subsidies to particular market segments should rest with the fiscal authorities β in the u. s., this means the congress and the treasury department β and not with the central bank. should the fiscal authority ask the central bank to engage in lending outside of its normal operations, the fiscal authority should be willing to exchange government securities for the nongovernment assets that would accumulate on | 0.5 |
and quickly adopt them. as you can see, there is a great deal to do and central banks, governments and other public institutions play a major role here, because the past has shown that without their input no major and sustainable improvements can be achieved. let me draw to a close here. payments and payment systems, although often remaining unnoticed, inevitably affect everyone. they will always be driven by innovation and despite huge geographical distance, we face similar challenges when it comes to digitalisation in the financial sector. ultimately, the same holds true for both brazil and germany : a digital economy needs efficient, quick and competitive digital payment methods. thank you for your attention. 1 1. quote in the context of an event with febraban ( brazilian federation of banks ) in december 2019. see www. latinamerica. tech / 2019 / 12 / 12 / the - president - of - the - central - bank - of - brazil - highlighted - the - importance - oftechnology - in - a - meeting - with - the - brazilian - federation - of - banks / 2 2. fis / worldpay ( 2021 ) : global payments report. offers. worldpayglobal. com / rs / 850 - joa856 / images / 1149143 _ gpr _ digital _ all _ pages _ singles _ rgb _ fnl8b. pdf 3 3. lincoln, a. ( 2021 ) ; a look into brazil β s booming fintech www. forbes. com / sites / forbestechcouncil / 2021 / 08 / 09 / a - look - into - brazils - booming - fintech - scene /? sh = 27845aa672b0 scene. 4 4. furquim, c. ( 2019 ) : brazilians are more likely to choose electronic payments and here β s why. labsnews. com / en / articles / business / adoption - of - electronic - payments - in - brazil / 5 5. bloomberg ( 2021 ). brazil β s central bank built a mobile payment system with 110 million users. www. bloomberg. com / news / articles / 2021 - 10 - 06 / pix - mobile - payment - how - brazil - s - central - bank - launchedplatform 6 6. this refers to girocard, a national debit card system. 7 7. z. b. 8 8. scene. bargeldloses zahlen β girocard - zahl | speaking for the euro area, it would under no circumstances replace cash, but rather supplement it. a cbdc would expand the existing choice of payment methods. it could contribute to financial inclusion and ensure that less digitally savvy groups of the population also have access to digital payments. in addition, depending on the design choices, it could offer the opportunity to exploit technical innovations like dlt and thus enable, for example, payments embedded into programmable applications. in europe, when it comes to cbdc we aim to be β ahead of the curve β as ecb president christine lagarde put it, 12 while, at the same time, taking the utmost care to evaluate the design options for a digital euro. its development is a balancing act between two key risks. the first risk is that being too ambitious could lead to a crowding out of private payment solutions and a potential disintermediation of the banking sector. the second is the risk of creating an unattractive product that would not be accepted by consumers and enterprises. in october 2021, the ecb launched what it refers to as the investigation phase of the project. this is designed to ensure that the eurosystem stands ready to offer a functioning digital euro, should the decision be made to introduce it. until then, we will carefully investigate the risks, the 5 / 7 bis central bankers'speeches functional and technical design options, monetary policy independencies as well as financial stability implications. last but not least, we are holding lively discussions with all relevant stakeholders to identify key features that would add value for the potential users of a digital euro. the primary goal is to maintain the accessibility of central bank money in a digitalised economy. to fulfil this function, the digital euro must be accepted throughout the european union and adopted by its citizens. we are therefore fostering a dialogue with european businesses and citizens. the ebc recently published the findings of the responses by focus groups. 13 these give us additional insights on the payment needs of consumers and merchants and specific use cases of a potential digital euro. most importantly, participants in the focus groups preferred payment methods with paneuropean reach, speed, high convenience and universal acceptance in physical shops and online. in addition, privacy protection is of high importance. participants also valued the possibility of instant and contactless person - to - person payments. here, brazil β s instant payment system pix can serve as an example, showing that consumers have a demand for such services | 1 |
source of such retraining has been our community colleges, which have proliferated over the past two decades. we can usually identify somewhat in advance which tasks are most vulnerable to being displaced by foreign or domestic competition. but in economies on the forefront of technology, most new jobs are the consequence of innovation, which by its nature is not easily predictable. what we do know is that over the years, more than 94 percent of the workforce, on average, has been employed as markets matched idled workers seeking employment to new jobs. we can thus be confident that new jobs will displace old ones as they always have, but not without a high degree of pain for those in the job - losing segment of our massive job turnover. the american economy has been in the forefront of what joseph schumpeter, the renowned harvard professor, called β creative destruction, β the continuous scrapping of old technologies to make way for the new. standards of living rise because the depreciation and other cash flows of industries employing older, increasingly obsolescent, technologies are marshaled, along with new savings, to finance the production of capital assets that almost always embody cutting - edge technologies. workers migrate with the capital. this is the process by which wealth is created, incremental step by incremental step. it presupposes a continuous churning of an economy in which the new displaces the old, a process that brings both progress and stress. disoriented by the quickened pace of today β s competition, some in our society look back with nostalgia to the seemingly more tranquil years of the early post - world war ii period, when tariff walls were perceived as providing job security from imports. were we to yield to such selective nostalgia and shut out a large part, or all, of imports of manufactured goods and produce them ourselves, our overall standards of living would fall. in today β s flexible markets, our large, but finite, capital and labor resources are generally employed most effectively. any diversion of resources from the market - guided activities would, of necessity, engender a less productive mix. for the most part, we as a nation have not engaged in significant and widespread protectionism for more than five decades. the consequences of moving in that direction in today β s far more globalized financial world could be unexpectedly destabilizing. a likely fall in wage incomes and profits could lead, ironically, to a fall in jobs and job | on the global financial market and, hence, indirectly on u. s. output and jobs. in order to maintain the tight relationship with the dollar initiated in the 1990s, the chinese central bank has had to purchase large quantities of u. s. treasury securities with renminbi. what is not clear is how much of the unquestioned current upward pressure on the renminbi results from underlying market forces, how much from capital inflows due to speculation on potential revaluation, and how much from capital controls that suppress chinese residents β demand for dollars. no one truly knows whether easing or ending of capital controls would ease pressure on the currency without central bank intervention and, in the process, also eliminate inflows from speculation on a revaluation. many in china, however, fear that an immediate ending of controls could induce capital outflows large enough to destabilize the nation β s fragile banking system. others believe that decontrol, but at a gradual pace, could conceivably temper such concerns. central bank purchases of dollars, unless offset, threaten an excess of so - called high - powered money expansion and consequent overheating of the chinese economy. the chinese central bank this year has indeed offset, that is, sterilized, much of its heavy dollar purchases by reducing its loans to commercial banks, by selling bonds, and by increasing reserve requirements. but currency and commercial bank reserves have been rising enough to support a growth of the money supply well in excess of a 20 percent annual rate so far this year. should this pattern continue, the central bank will be confronted with the choice of an overheated economy, with its potential recessionary consequences, or a curtailing of dollar asset purchases. the latter presumably would allow the renminbi to appreciate against the dollar. china has become an important addition to the global trading system. a prosperous china will bring substantial positive benefits to the rest of the trading world. it is, thus, important to all of us that they succeed in navigating through their current economic and financial imbalances. * * * the challenges represented by china β s large surplus with the united states and the efforts to repair a recent breach in the current round of trade negotiations have engaged the attention of policymakers worldwide. but these are subplots in a much larger debate about the benefits and costs of expanding globalization. at the risk of oversimplification, i would separate the parties in that debate into | 1 |
3, 0 per cent, with the latest forecast of the bank being 2, 8 per cent. this followed successive downward revisions during 2011 as the european crisis intensified. since the 2009 recession, growth has been driven primarily by household consumption expenditure, which is clearly an undesirable and unsustainable growth path. emphasis must be given to ensure that growth is driven by investment. there are, however, signs that investment expenditure growth is gathering pace, and this will be reinforced if the proposals around increased infrastructure expenditure are followed through on. according to the latest budget, public sector projects totaling r845 billion have been approved for the mtef period. this emphasis on infrastructure investment is appropriate as it is likely to contribute to improved economic efficiencies and helps with the alleviation of existing bottlenecks in the economy. but the focus on infrastructure is not new, and the plans have often not met expectations, particularly since the 2010 world cup. for example in 2009 / 10, only 83 per cent of the amounts budgeted for infrastructure was spent. in 2010 / 11, this had declined further to 68 per cent. importantly, it is not only the government and state - owned enterprises that need to invest. michael spence, the respected growth theorist, in his book β the next convergence β, has shown that countries which have sustained growth rates of around 7 per cent or more for 25 years generally have government and public sector investment ratios of between 5 and 7 per cent of gdp, and total investment rates of at least 25 per cent of gdp. why emphasise a target of 7 per cent growth per annum? because a consistent growth rate of 7 per cent will allow for a doubling of income every 10 years, whereas a growth rate of 3 per cent will take 24 years to double incomes. south africa β s gross fixed capital formation as a percentage gdp averaged around 15, 5 per cent in the decade from 1994 and then accelerated to peak at around 23 per cent in 2008. this positive trend coincided with economic growth rates in excess of 5 per cent and a decline in the unemployment rate to 21, 9 per cent by the fourth quarter of 2008. since the crisis, this investment to gdp ratio has declined and in 2011 averaged around 19 per cent. between 1994 and 2007, government and public sector investment averaged 4, 4 per cent of gdp, but since 2008 it has averaged 8 per cent. we can conclude from this that the lack of investment is not simply a problem of government failure to | ##listed renewable energy infrastructure, ie a 50 percent stake in the world β s next largest offshore wind farm off the dutch coast. unlisted renewable energy infrastructure is still a relatively new area for norges bank. we intend to build up the portfolio gradually, primarily through investments in wind and solar power. we will prioritise investments that contribute to improving the overall risk - return tradeoff in the gpfg. management of the gpfg is to be cost - efficient, and the executive board monitors cost developments closely. earlier this month, norges bank announced a revised strategy describing how we will fulfil the investment mandate ahead. the strategy plan expresses our ambitions and our overall aim of achieving the highest possible return after costs. our ambitions are high. as they should be. nonetheless, we still aim to be a small, flexible and cost - efficient organisation. 2 / 2 bis central bankers'speeches | 0 |
##closures and we will soon launch a dialogue to find solution in favor of the macedonian economy. hence, there should not be any doubt that in future the national bank will β hear the voice β of the banks. but, also, it should be clear that the national bank does not discuss the monetary policy measures with anybody, not even the banks, before it makes a decision to adopt them. they are at the absolute discretion of the national bank. this is a worldwide practice. neither the european central bank, nor the czech central bank, nor any other central bank throughout the world consults or informs the commercial banks on the monetary policy measures before it makes the decision. distinguished ladies and gentlemen, i dedicated most of my last year β s speech arguing that the stable denar exchange rate is still the best solution for the macedonian economy. in the public debate concerning this issue last year, on many occasions, i presented additional arguments that underpin my view. on this occasion i will discuss the two theses recently presented by the advocates of floating denar exchange rate. the first thesis is that the floating exchange rate will ensure more relaxed monetary policy, and accordingly, higher economic growth. the second thesis is that the denar exchange rate is not realistic, i. e. it is overrated. yet, so far, i still have not heard any explanation of how would the floating exchange rate relax the monetary policy, nor arguments supporting the view that the denar is overrated. considering the first thesis, note that the exchange rate regime does not determine whether the monetary policy will be restrictive or relaxed. you could have floating rate and restrictive monetary policy, or fixed exchange rate and relaxed monetary policy. what is important for the monetary policy is whether there are imbalances in the economy or not. just because of the absence of imbalances in the macedonian economy, as i elaborated at the beginning, we can afford relaxed monetary policy. conversely, due to the nature of our economy, the floating exchange rate would fuel uncertainty and create imbalances and high inflation, the alleviation of which would require extremely restrictive monetary policy. concerning the overrating of denar exchange rate, i have presented, on several occasions, data on denar real effective exchange rate that indicate quite the opposite. on this occasion i will only refer to the market. it is the market that determines whether a commodity is overrated or not. since the beginning of august last year, the national bank has only once sold | euros on the foreign exchange market in the amount of euro 4. 5 million, and has purchased euros, approximately twenty times, on the foreign exchange market in the amount of euro 170 million. even countries that apply floating exchange rate much frequently intervene by selling foreign currency on the foreign exchange market, in order to defend their currency. bis central bankers β speeches distinguished ladies and gentlemen, euro area debt crisis is our greatest challenge in the period ahead. due to the large scale trade, the recession in the euro area which is very likely, has adverse effects on the real sector of our economy. in such circumstances, other than the maintenance of inflation rate at the level of the euro area, we will use the monetary policy together with the macro - prudential policies to preserve the balances in the external and the banking sector. in a medium run, the challenges of the banking sector again arise from the euro area, related to the implementation of basel 3 standards. it is very likely that it will cause β deleveraging β in the european banks, hitting seriously the lending activity of banks in the south east europe. we closely monitor this process and get ready to respond adequately in order to protect the macedonian economy against severe impacts. therefore, the cooperation between the national bank and the commercial banks will be even more important. thank you for your attention. bis central bankers β speeches | 1 |
for a growing population and infrastructure for a growing economy generally would be a key theme. it was clear that there would need to be a significant effort at restoring the state of the budget, so that fiscal expansion would again be possible in the face of a future shock, as it was in 2008 and 2009. all these things were said at the time. 1 see stevens g ( 2009 ) β the road to prosperity β, address to the 2009 economic and social outlook conference dinner ( the melbourne institute and the australian ), melbourne, 5 november. bis central bankers β speeches where are we, then, six years on? the world economy, despite various threats, has not had a relapse into recession. even with something of a slowing this year, global growth is still proceeding at a moderate pace. that said, this growth has taken extraordinary policy settings to achieve and many policymakers and observers find the outcomes disappointing. most countries around the world would like some more growth. but they can β t all get it by just exporting to others and focusing their own demand inwards. and, for a variety of reasons, policymakers are finding the effectiveness of policies aimed at boosting domestic demand more limited than they might have hoped. in some cases the efforts that have been made to foster growth have not been without a degree of risk. for our part in australia, we have managed the biggest terms of trade event for more than a century with, so far, some success. history has many examples of such booms that, ultimately, were not successfully managed and which ended badly. it β s easy to see how that happens. a gift of higher national income comes our way as a result of the discovery of natural resources or a rise in demand for them. the higher income permeates through the economy and before long even industries and regions not directly exposed to that shock are feeling good. human nature being what it is, we tend to assume that the good times will continue and we borrow and spend accordingly. credit growth speeds up, leverage increases, usually inflation increases. and then the terms of trade turn down, at which point the whole process goes into reverse β and a serious downturn ensues. the current episode is not yet over. but from what we can observe thus far, we can say two things. first, we did not see the same excesses on the upswing as we did in other similar episodes. 2 this has to put us in a better position to manage the | bilateral foreign currency swaps of considerably larger size, under which a central bank would offer us dollars or its own currency to another central bank in exchange for a corresponding amount of that other country's currency. the nature of such swaps is that no foreign currency risk is run by either country in the swap itself : the rate for the reverse transaction is contracted in advance. of course if the borrowing country sells the borrowed foreign exchange in order to support its own currency, it is then running a foreign exchange risk and the country initially supplying the funds is running a credit risk. the cmi swaps are mostly quite conditional β only a small portion of the money can be accessed without there being an imf program in place in the borrowing country. that proportion is to be raised, but even then the bulk of the funds will still be conditional. the overall size of the lines is being increased, and there is discussion about a collective activation arrangement, as opposed to the current one where the parties to each bilateral line presumably negotiate over activation. executives'meeting of east asia - pacific central banks. 2 / 4 this is certainly a useful step towards financial co - operation, and has considerable symbolic value. but it remains exclusively a lending facility, where the additional resources available to a country under pressure can only be used by taking considerable risk. there is no obligation on the other countries to make market purchases of the weakening currency. moreover, the cmi swap network has not yet been tested, and it is probably only workable when one or two countries come under pressure. if a number of countries are simultaneously experiencing pressure from capital markets, it would be only natural to expect a degree of reluctance to take on any additional obligations in defence of their neighbours. hence, there still seems to be a perceived need for a large degree of self - insurance in the region ( i. e. accumulation of large reserves of foreign currency ). efforts have also been made to accelerate the development of financial infrastructure. work under the banner of apec ( asia - pacific economic co - operation ) is seeking to promote securitisation and credit guarantee markets. the asean + 3 group is working towards the issuance of local currency debt by the multilateral institutions, with some success so far. the asian bond funds 1 and 2, initiated by the regional central banks, have made good progress. the idea here is essentially to work out how to set up cross - border mutual - fund type structures to invest in bonds issued by regional governments and | 0.5 |
sessions right away. on that note, ladies and gentlemen, it is my privilege to declare open the regional course on macroeconomic management and regional integration. i wish you all a rewarding time here in accra and i thank you for your attention. thank you. | impact of asymmetric shocks, and also to discover new regional markets for our exports. as you are aware, we are currently implementing the two track approach to the ecowas single monetary zone concept. the gambia, ghana, guinea, nigeria, sierra leone, and recently liberia have been working for the formation of a second monetary zone that will ultimately merge with waemu for the formation of the ecowas - wide single monetary zone. the second monetary zone project, like the single monetary zone programme was postponed a number of times due to the inability of its members to meet the macro economic convergence criteria and the structural benchmarks. at the 24th meeting of the convergence council of ministers and governors of central banks of the west african monetary zone ( wamz ), it was yet again agreed that the dateline for the single currency and monetary union in the wamz should be postponed to january 1st 2015. indeed, our economic and regional integration efforts continue to face challenges as countries struggle to meet and sustain the convergence criteria. but in spite of the adverse impacts of the global financial crisis on our economies, it is gratifying to note that member countries of the zone are making progress in containing the adverse impacts of the global crisis and stabilizing their economies to restore it to a path of stronger growth and poverty reduction. clearly, we must continue to implement sound macroeconomic policies so as to sustain progress toward convergence. we must all commit to work on the roadmap towards the introduction of the single currency, be it in the areas of harmonization of convergence criteria, or harmonization of the regulatory and supervisory framework for banking and other financial institutions, or harmonization of monetary policy frameworks, payments system infrastructure, trade liberalisation, exchange rate stabilisation, capital account liberalisation, or integration of financial markets in the zone, etc. ladies and gentlemen, i know that we can continue to count on management of waifem for building the capacity of technical staff of central banks and ministries of finance, as well as other public servants in member countries in the various areas connected to the successful implementation of the single currency framework both within the zone and indeed in ecowas. in conclusion, let me again thank the management of waifem for bringing this important course to our doorstep, and i urge you all to take time off to explore some of the tourist facilities and other landmarks that we have available. i know that you have an intensive training programme ahead of you and your desire to commence the technical | 1 |
andrew bailey : taking our second chance to make mmfs more resilient speech by mr andrew bailey, governor of the bank of england, at the international swaps and derivatives association ( isda ) 35th annual general meeting, 12 may 2021. * * * introduction thank you for inviting me to speak today. i want to start by thanking isda for the important work you do, and in recent times particularly scott o β malia and his colleagues for working with central banks and regulators to manage the transition away from libor. your support on this complex transition has been hugely important. you may be relieved to hear that i am not going to talk about libor today. i did speak on the subject yesterday, it β s on the bank of england β s website if you are interested ( bailey, 2021 ). instead, i am going to speak about another important part of our current work and a priority for the global financial stability board ( fsb ), namely money market funds ( mmfs ). the fsb analysed last march β s so - called β dash for cash β in their holistic review published at the end of last year, highlighting a number of vulnerabilities in non - bank finance and setting out some considerations for reforms required to tackle the issues we saw in that episode ( fsb, 2020 ). mmfs were one of the issues at the top of that list. mmfs also played a role in amplifying the stress we saw during the global financial crisis, so this is the second time they have proven not to be sufficiently resilient. i plan, therefore, to set out my views today on the reforms required to solve these issues. we are committed to working with others internationally, through the fsb, to avoid history repeating itself yet again. background to the issues posed by mmfs in talking about money market funds, it is important to put them into a wider context. several aspects of that context are important, including : their historical origins, the role they played in amplifying stresses in the global financial crisis, the direction of reforms following that episode, and the position of the funds relative to both banks and the broader investment fund landscape. to start, briefly, with some history. in the us, money market funds emerged in the 1970s when regulation capped the interest that banks were allowed to pay on deposits at a level below money market yields. money market funds were set up to mimic bank deposits by maintaining a stable value of | , cpi inflation is as low as it β s been for four years. in terms of growth, the obvious question this raises is, why now? why, after throwing everything bar the kitchen sink at the economy over the past few years, has the economy started to grow only now? even more importantly, will the recovery last? having seen a few false dawns over recent years, has the recovery really taken hold this time? and what does all this mean for monetary policy. in particular, what does the mpc β s so - called forward guidance, which we announced in the summer, mean for you β the businessmen and women driving this recovery? and that β s the plan for today : to consider three key questions about the economic recovery that we β re now finally enjoying β why now, will it last, and what next for policy? securities and investment review, september 1993. bis central bankers β speeches why now? first, why now? why after several years of frustration and disappointment has the economy begun to grow? it β s hard to be certain : this time last year we were not predicting such a sharp turnaround in growth and there β s a danger of appearing to be wise after the event. but, at least with the benefit of hindsight, two developments in particular seem important in driving the turnaround : an easing in credit conditions ; and a reduction in economic uncertainty. let me say a few words about each, starting with credit conditions. improved credit availability although it β s still patchy and there β s further to go, we β ve observed a marked improvement in the ability of many companies and households to access credit over the past 18 months or so. some of that stems from a lessening of tensions within the euro area, which has helped to ease pressures on banks both sides of the channel. it β s also been aided by domestic polices, including the funding for lending scheme, a series of regulatory actions to improve the strength and resilience of our banking system and, more recently, the government β s help - to - buy policies. i fully recognise that the ability of many smes β perhaps many of you here today β to access credit at reasonable rates still remains impaired. but even here my sense is that some progress has been made. that β s the message from surveys of small businesses, from reports by the bank β s agents, and indeed that i get from my own conversations with many businesses around the country. we β re not there | 0.5 |
( nasd ), the japan securities dealers association ( jasd ), the korea securities dealers association ( ksda ) have all played a very important role in promoting innovation and development, regulating market behaviors, safeguarding the industry's interests, and forestalling market risks, and are an integral part of financial market regulation system in their respective country. experience has shown that the sros enable market participants to mobilize themselves to exercise self discipline, help the transformation of government functions, make the regulation more responsive to market demand, and promote market innovation and development in a market - based approach. in recent years, a lot of achievements have been made in china β s financial market development. however, the financial sector has its problems. for example, the imbalance between direct and indirect financing remains serious as bank loans still dominate financing ; the financial market development is lopsided as the bond market still lags behind securities market, and enterprise bond market remains under - developed ; information disclosure, credit rating and other essential mechanisms have yet to play a sufficient role ; the range of financial products are not diversified and market functions are yet to be fully played out. it is an imperative task to promote innovation and development in the financial market. for quite some time, we focused on liquidity management in the inter - bank money market, but did not fully acknowledge the financing, value discovery and risk management functions of the market. as a result, launching of financial products that are conducive to market development and urgently needed by market participants has been delayed. i hope that the association will gather members β wisdom and serve their need ; and innovation of market participants will be given full play to develop innovation mechanisms and patterns based on the special features of otc market. in the future, the products that are developed based on members β need, and are suitable for trading among institutional investors who have pricing and risk managing abilities will be registered at the nafmii and reported for filing with the regulatory authority. administrative exam and approval procedure will be abolished for such products. as the agency that overseas the operation of nafmii, the pbc has a lot of expectations on the newly established organization. i hope that the association will provide good services to its members and to the government and the general public, exercise self regulation functions, and contribute to innovation, reform and development of financial markets in china through hard work and innovation. thank you. | a sizeable easing of financing conditions for firms, especially in vulnerable countries ( see chart 10 ). chart 10 lending rates to non - financial corporations of tltro bidders and non - bidders ( percentage points ; deviations from september 2014 ) sources : ecb individual monetary financial institution interest rate statistics and ecb calculations. notes : non - financial counterparty lending rates are the rates on outstanding loans to non - financial corporations weighted by volume. the chart shows average rates across bidders and non - bidders in deviation from rates in september 2014. β vulnerable countries β are ireland, greece, spain, italy, cyprus, portugal and slovenia. β other countries β are all the remaining euro area countries. asset purchase programme finally, by linking the horizon of the app β both in terms of net purchases and the reinvestment policy β to the forward guidance on policy rates, expectations on the purchase horizon of the app adjust in line with the inflation outlook and automatically regulate term premia. the transmission of our asset purchases in the euro area has been similar to the transmission of other central banks β asset purchases in their respective jurisdictions, with the most pronounced effects at longer maturities. while negative interest rates and forward guidance have primarily been transmitted through the expectations component of interest rates, asset purchases have primarily operated through the term premium component. this is due to asset purchases affecting interest rates mainly by reducing the interest rate ( or duration ) risk borne by investors holding long - term bonds β the duration risk extraction channel. by purchasing securities with a relatively long maturity, the central bank frees up risk - bearing capacity among investors and fosters a rebalancing of their portfolio towards other, more risky, types of assets, including investment in productive capital. in the euro area, our net asset purchases and reinvestment policy have led to substantial duration risk being withdrawn from the market, in the order of 20 percent of the duration - equivalent stock of current public debt in the four largest euro area economies ( see chart 11 ). based on a term structure model that incorporates the duration channel, we can track the time - varying effect of the app on term premia as expectations on the purchase horizon change over time. at present, the app is estimated to be compressing euro area ten - year sovereign yields by more than 100 basis points ( see chart 12 ). we are confident that the effects of our asset purchases continue to feed through to euro area financial conditions and support a more accommodative monetary | 0 |
yoshihisa morimoto : economic activity and prices in japan and monetary policy speech by mr yoshihisa morimoto, member of the policy board of the bank of japan, at a meeting with business leaders, wakayama, 20 february 2014. * * * i. recent economic and price developments a. japan β s economy and prices 1. current state of and outlook for japan β s economy i will begin by explaining the current state of, and outlook for, japan β s economy. economic activity had stopped weakening after the turn of 2013. the economy then returned to a moderate recovery path around mid - year as domestic demand remained resilient, mainly due to the effects of monetary easing and various economic measures. japan β s economy has since continued to recover moderately as domestic demand has remained firm, although exports have somewhat lacked momentum. business sentiment has been improving in a wide range of industries, including those of small firms, and in regional terms economic recovery has been spreading on a national basis. taking a closer look at developments in demand, exports showed relatively high growth in the first half of 2013 but have somewhat lacked momentum since the second half amid somewhat sluggish movements in some emerging and commodity - exporting economies. as for domestic demand, private consumption has remained resilient as a trend, with improvement in the employment and income situation, and a front - loaded increase in demand prior to the consumption tax hike has been observed mainly in durable consumer goods, as suggested particularly by the recent noticeable rise in new car sales. housing investment has been increasing. public investment has been trending upward, mainly reflecting the effects of various economic measures implemented thus far. business fixed investment has been picking up, as the aggregate supply of capital goods β a coincident indicator of machinery investment β has recently shown relatively high growth with improvement in corporate profits, and as machinery orders β a leading indicator of machinery investment β have been improving as a trend even in the manufacturing sector, albeit with fluctuations. taking these developments as a whole, the employment and income situation has been improving, supported by resilient domestic demand, indicating that a virtuous cycle among production, income, and spending is being maintained. as for the outlook, while japan β s economy will be affected by the front - loaded increase and subsequent decline in demand prior to and after the consumption tax hike, it is likely to continue growing at a pace above its potential, which is estimated to be around 0. 5 percent, as a trend | its characteristics and advantages, will lead to the further development of southern hokkaido. bis central bankers β speeches | 0.5 |
for banks. i want to end with a few words on transparency. quite simply, there will in my view be more of it in the future. when i started in supervision in the late 1980s, we prohibited banks from disclosing their basel i capital ratios, and we got exercised when they did nonetheless bis central bankers β speeches declare their ratios. that was a relatively simple regime. the basel iii regime is undoubtedly more complex and it is not about the single capital ratio. capital requirements and buffers will vary between firms and over time, for good reasons. banks and investors do complain about the lack of clarity about their future requirements in this regime. but that precision is not realistic. within defined parameters the regime is designed so that buffers adjust in relation to risk and the impact of firm failure. counter cyclical buffers can be varied over time depending on conditions, and banks can move between gsib buffers as they change size and structure. likewise, supervisory work, including stress testing, can lead our judgement about appropriate buffers to change. the regime is built this way deliberately to include a greater element of judgement by supervisors. my view is that this will inevitably lead to more transparency and disclosure, which is fine and to be encouraged providing it can deliver useful guidance. that means we have to work hard to deliver as much clarity as is possible in an uncertain world. and finally, we know that there is change on many fronts, the scale of which may only be exceeded by the scale of the crisis to which it is a response. as supervisors we are on the look out for unintended consequences of this change, and we will assess and refine our approach as needed. thank you. bis central bankers β speeches | is called the monetary base. if you were to ask any representative grouping of the community, say, the legislative council, what the monetary base is, i would be surprised if more than ten per cent of the group could come up with the correct answer. many would be tempted to relate this to the various definitions of the money supply, because that is the term mostly heard in commentaries on money and finance. but they are quite different things. the crucial part of the monetary base and the money supply, however defined, are in fact on the different sides of the balance sheet of the banking system. put this question to a group of academics and you would probably, on the contrary, get as many definitions as there are people in that group. 15. this confusion is understandable and, at least partly, in the context of hong kong, a reflection of the rather peculiar institutional framework for monetary management of the past that is now, one hopes, history, with the ten years of reforms to our monetary system. you may be surprised to hear this. it was not until the end of 1996 that the monetary base for hong kong was properly defined. this was when, on the occasion of the introduction of real time gross settlement for interbank transactions, all licensed banks were required to operate a clearing account with the hkma instead of with a commercial bank. yet we have been, somehow, controlling, or we claimed to have been controlling, the monetary base ever since the linked exchange rate system was established in october 1983. 16. even assuming that the definition of the monetary base is well understood, there is then the important question of how it should be controlled. herein lies one of the most interesting subjects in monetary management and that is the choice between discretionary control with people making decisions, and automatic rule - based control with no discretionary decisions involved. associated with this are considerations concerning, and possibly another choice between, flexibility in management and the credibility of the monetary system. even the most professionally competent central banker can be wrong. a system that involves discretionary decisions is therefore subject to human errors of judgement that may undermine the credibility of the system, and some would go as far as to argue that this would eventually lead to failure of the system. on the other hand, an entirely rule - based system without any discretion is inflexible and may not serve the best interest of the community, even though short - term interests may sometimes be involved - witness the many calls for lowering interest rates even when | 0 |
have a long history operating with respective greek offices. the fact that such ventures could also involve greek capital in the case of pure joint investments makes one more argument in support of my observation. according to the bank of albania surveys, greek companies are ranked first by the size of capital invested in the albanian economy, while holding the second place for the number of foreign direct investments. the involvement of these banks in financing such activities will play a positive role in shifting the balance of the loans portfolio from retail and consumer crediting toward production activities in industry and agriculture. at the same time, it might also fuel the growth rate of credit to economy, which has already experienced very rapid growth during the last two years, raising concerns for macroeconomic and financial stability. the results of reforms were not limited only to the openness and development of domestic financial market. they generated price and financial stability, sustained economic growth, assisted institutional building and increased confidence. these developments attracted interest of, and brought big financial groups in the region in general and albania in particular. as i mentioned above entry of big financial groups, and the consolidation process that has followed since will continue to grow. what we are observing right now in the market is that the big fish is eating the small fish ; the very big fish is eating the big fish in the european market with implications for the host countries. however, the process is far from over, gigantic fish ( global player ) might enter the region by eating the very big fish. last but not the least, there will be mergers among domestic banks as well. despite the increase in the concentration ratio that comes with these mergers and acquisitions, we have started to observe increased competition in our market. this competition increases efficiency, introduces new services and products, lowers spreads and generates positive spillovers for economic activity. while this makes a good precondition to foster financial stability, it is not a sufficient condition to increase financial discipline. currently, the activities of financial institutions and commercial banks have a limited scope ; however, we are starting to see the signs of financial conglomeration. we have no doubt that this trend will grow and continue in the future. it will bring innovation, new financial instruments and products in the market. along with this, rapid growth of credit and debit cards as well as other systems of payments will continue to grow. while these instruments might not subside or even reduce the use of cash, this trend must be taken into account. transition economies of the region are lucrative markets. they | of eased monetary policy signals is also observable in the deposits market, while it is expected to be transmitted in the future also in other market segments, conform to the time lag of the transmission mechanism. in the primary market, government security yields showed upward trend reflecting developments in relevant structural factors of the demand and supply, without signalling added risk or inflation premiums. verified developments insofar, change the basic projections for economic developments in the future. year 2012 is expected to be influenced by unfavourable developments in the global economy, which may affect the albanian economy as well. foreign demand is expected to provide lower contribution over the course of the year, impacted by economic slowdown in our trade partners. fiscal policy orientation towards further consolidation of fiscal parameters limits the space for a substantial fiscal stimulus to foster the economic activity. under these circumstances, private domestic demand remains determinant for aggregate demand increase in the future. overall, analyses suggest a better performance of private consumption and spending, helped also by the eased monetary policy stimulus. estimates of the bank of albania suggest that, in the course of the year, demand growth below the potential of the economy will continue to exercise low inflationary pressures from the demand side. at the same time, the balance of inflationary pressures generated by supply - side factors is assessed as contained, given the reduced imported inflation and anchored inflation expectations. taking into account the insofar developments and expectations for the future, bank of albania projections show that, with 90 % probability, consumer price inflation for 2012 will range within the 0. 7 % β 2. 8 % band. materialisation of this baseline scenario will be reflected in retaining the stimulating nature of the monetary policy in the course of the year. moreover, the bank of albania remains heedful to future developments and ready to respond in the appropriate time and extent in order to comply with its target on inflation. based on the analysis of the information set out above, the supervisory council holds that pressures on consumer prices at home remain low over the monetary policy relevant horizon ; they have been, however, on the down side over the recent months. on the demand side, below - potential economic growth will continue to generate low inflationary pressures, while shocks from the supply side are expected to be moderate. at the conclusion of discussions, the supervisory council decided to keep the key interest rate unchanged at 4. 25 %. this decision aims to establish the appropriate monetary conditions to comply with the inflation target in the medium run. | 0 |
national bank of serbia introductory speech inflation report β february 2022 dr jorgovanka tabakovic, governor belgrade, 18 february 2022 ladies and gentlemen, esteemed members of the press, dear colleagues, welcome to the presentation of the february inflation report. we will give you an overview of recent economic trends, our new macroeconomic projections, as well as monetary policy decisions made in the period since the previous report. since our last meeting in november, the global economy has been marked by geopolitical tensions, deepening energy crisis and further growth in cost - push pressures on a global scale. in addition, we are faced with persisting problems in global supply chains and the spread of the omicron variant, to which the leading world economies reacted differently. all of this has led to additional mismatches between demand and supply and to new inflationary pressures globally. energy and food prices recorded a sharp rise worldwide. unlike in the previous crises, besides oil prices, the prices of gas and electricity also recorded robust growth in international commodity exchanges. global strengthening of cost - push pressures and the spread of the omicron variant in our key foreign trade partners led not only to the upward revision of inflation projections, but also to a slowdown in economic activity and a downward revision of gdp growth projections. despite unfavourable circumstances in the international environment, the nbs kept its november projection of real gdp growth for this and the following years. in 2022, as well as in the medium run, gdp growth is expected at 4. 0 β 5. 0 % range, with the central projection in all years measuring 4. 5 %. overall risks to the projection are judged to be symmetric and, as so far, those from the international environment being tilted to the downside and those from the domestic environment to the upside, including primarily government investment and better results in attracting fdi inflows. besides, it will be easier to achieve the 2022 projection as we are building on excellent trends from the last quarter of the previous year, in which, despite the slowdown in the euro area, serbia recorded real gdp growth of 6. 9 % y - o - y or 1. 6 % s - a relative to q3 2021. this was largely a result of the record level of government investments, but also fdis, whose inflow in 2021 reached eur 3. 9 bn and thus surpassed the record high from pre - pandemic 2019. over the past few weeks | domestic and international environment, which will determine our future decisions and moves. you can rest assured that the serbian government and the nbs will conduct a consistent and responsible economic policy, doing everything in their power to see our economy grow even stronger and more resilient to future challenges from the international environment. medium - term price and financial stability remain the nbs β s priority, because that is the best way for the central bank to contribute to sustainable economic growth and to a rise in employment and living standards. i will now give the floor to my colleagues from the economic research and statistics department, to give you a detailed account of our new projections. | 1 |
recession. i. learning from crises folk wisdom, policymakers and researchers see opportunities in crises. everyone is familiar with the notion that one should never waste a crisis. jean monnet, among the founders of the european union, said that β europe will be forged in crises, and will be the sum of the solutions adopted for those crises. β 1 european union and emu decision - makers have made similar statements in each of their crises, including the present one. and when talking about the present situation, they often conclude by saying β and we will emerge stronger this time too. β policy economists seek to learn from crises, so that they can do better next time. during the thirty years from 1985 to 2015, i have been involved in a variety of roles in the management of crises, starting from the successful israeli stabilization program of 1985, during which i was part of a small team advising then secretary of state, george shultz, and through the see jean monnet ( 1976 ), memoires, ( paris : fayard ). bis central bankers β speeches ongoing management of monetary policy in the united states today, where we are engaged in managing the expected exit from the policies adopted by the fed to deal with the great recession. this morning i want to talk about major lessons learned from the economic crises of the last twenty years, many of them crises in which i was involved. i draw on three papers on lessons of crises that i wrote at different stages during that period. the three papers were written in 1999 ( when i was at the imf ), 2011 ( when i was governor of the bank of israel ), and 2014 ( when i had been nominated but not yet confirmed as vice - chairman of the fed. ) the ten lessons presented in each paper are summarized in table 1. each lesson is numbered, and each bears a letter : f for the 1999 paper ( written when i was at the imf ) ; b for the 2011 paper, when i was at the bank of israel ; and s for siepr 2, where the 2014 paper was presented. each of the lists reflects the concerns of the times and circumstances in which it was written. the 1999 paper was written at a time when the imf was under criticism for its handling of the many crises with which it had been confronted since 1994. it was a time of far less transparency than today. for instance, in may of 1997 when i paid a secret visit to thailand to try to gauge the seriousness of | legislators, and regulators in most countries. in the case of the united states, most of the important changes have been introduced though the dodd - frank act, and they have been supplemented by decisions of the regulators and the supervisors. we are now at a difficult point. regulations have been strengthened and the bankers β backlash is both evident and making headway. of course, there should be feedback from the regulated to the regulators, and the regulated have the right to appeal to their legislators. but often when bankers complain about regulations, they give the impression that financial crises are now a thing of the past, and furthermore in many cases, that they played no role in the previous crisis. we should not make the mistake of believing that we have put an end to financial crises. we can strengthen the financial system, and reduce the frequency and the severity of financial crises. but we lack the capacity of imagining, anticipating and preventing all future financial sector problems and crises. that given, we need to build a financial system that is strong enough to withstand the type of financial crisis we continue to battle. we can take some comfort β but not much β from the fact that this crisis was handled much better than the financial crisis of the great depression. but it still imposed massive costs on the people of the united states and those of other countries that were badly hit by the crisis. no - one should underestimate the costs of the financial crisis to the united states and the world economies. we are in the seventh year of dealing with the consequences of that crisis, and the world economy is still growing very slowly. confidence in the financial system and the growth of the economy has been profoundly shaken. there is a lively discussion going on at present as to whether we have entered a period of secular stagnation as larry summers argues, or whether we are seeing a more frequent phenomenon β that recessions accompanied by financial crises are typically deep and long, as carmen reinhart and ken rogoff β s research implies. ken rogoff calls this a β debt supercycle β. these issues are discussed in s3, s4, s6, b2, b3, and f6. bis central bankers β speeches it may take many years until we know the answer to the question of whether we are in a situation of secular stagnation or a debt supercycle. either way, there is now growing evidence that recessions lead not only to a lower level of future output, but also to a persistently lower | 1 |
financial stability. 11 central banks will also have to deal with issues of regulation and supervision of digital lenders ; observance of fair practices code by the stakeholders ; data security and privacy ; and third party service providers, etc. 19. the fifth challenge relates to the advent of artificial intelligence and machine learning ( ai / ml ) tools in financial services. while its application and usage in central banking and financial services has tremendous scope, it also poses challenges of data privacy, algorithmic bias and discrimination, cyber security and ethical issues. 12 central banks and other players in the financial services ecosystem have to enhance their own capacities to deal with these challenges. 20. to sum up, central banks in the 21st century will have to gear up for all these challenges. while climate change and geopolitics may work as supply shocks to fuel inflationary pressures and slowdown global growth and trade ; innovation and artificial intelligence, if well supervised and properly channelised, can help in enhancing productivity and reducing costs. the net effect will depend, to a great extent, upon central banks β own capabilities in harnessing the potential while managing the transition. this in turn will determine the financial landscape of the 21st century. silva l. a. p. ( 2023 ), β central banks at the crossroads β bis speech, august. acemoglu, daron ( 2024 ). β harms of ai β. in : the oxford handbook of ai governance. ed. by justin b. bullock, yu - che chen, johannes himmelreich, valerie m. hudson, anton korinek, matthew m. young, and baobao zhang. oxford university press. concluding observations 21. every crisis brings with it new lessons and ideas. the frontier of knowledge and ideas in economics have advanced with each crisis in the past. for example, the great depression of the 1930s underlined the importance of fiscal and demand management policies ; the great inflation of the 1970s brought to focus the need for credibility and consistency in policy frameworks ; the global financial crisis of 2008 underscored that financial stability can not be separated from overall macroeconomic stability ; and now the sequence of unprecedented shocks since the pandemic have driven home the need for policymakers to be agile, proactive, innovative and prudent in their policy responses, without being constrained by orthodoxies or dogmas. thus, economic theory and policies have evolved over the years with experience gained and lessons learnt from each crisis. in fact, this | to an inflation target, maintaining buffers in the form of reserves, and following a prudent and forward looking approach in financial sector policies. this approach, together with prudence in fiscal management, will go a long way in enhancing the resilience of emes. some of these drivers include global slowdown, high inflation and concomitant high interest rates in aes, strong dollar, bank failures in aes and associated contagion risk, high commodity prices, tapering of quantitative easing and associated capital outflows from emes. the indian context 12. let me now turn to the indian context. i wish to highlight some aspects of the reserve bank β s approach that have worked well for us. we have not only managed to shield the indian economy from multiple shocks in the last few years but have also enabled it to emerge stronger from the crisis. the indian economy today demonstrates vastly improved macroeconomic fundamentals and buffers. 13. unlike many central banks which are narrowly focused on price stability using monetary policy, the reserve bank has a wider canvas of functions. it is not just responsible for maintaining price stability, but also has the larger responsibility of maintaining financial stability as the regulator and supervisor of banks and other financial sector entities, financial markets and payment systems. 7 this helps us to take a holistic view of the economy, appreciate the synergy and trade - offs involved in various objectives, and act appropriately using multiple instruments at our disposal. 14. the flexible inflation targeting ( fit ) framework which got embedded into the law in 2016, established the primacy of price stability among the objectives of monetary policy, but not unconditionally. it defined the objective as maintaining price stability, while keeping in mind the objective of growth. the fit framework retained the essence of the earlier multiple indicator approach without any ambiguity about the hierarchy of objectives. fit provides flexibility to support growth if the situation so the preamble to the rbi act 1934 describes rbi β s main functions as : β β¦ β¦. to regulate the issue of bank notes and keeping of reserves with a view to securing monetary stability in india and generally to operate the currency and credit system of the country to its advantage ; to have a modern monetary policy framework to meet the challenge of an increasingly complex economy, to maintain price stability while keeping in mind the objective of growth. β demands. financial stability which is a pre - condition for price stability and sustained growth is thus implicitly embedded as part of the broader mandate of the | 1 |
that high and rising federal debt can, in the longer term, restrain private investment and, thereby, reduce productivity and overall economic growth. putting the federal budget on a sustainable path would aid the long - term vigor of the u. s. economy and help ensure 2 / 3 bis central bankers'speeches that policymakers have the space to use fiscal policy to assist in stabilizing the economy if it weakens. i will conclude with a few words on the technical implementation of monetary policy. in january, the fomc made the key decision to continue to implement monetary policy in an ample - reserves regime. in such a regime, we will continue to control the federal funds rate primarily by setting our administered rates, not through frequent interventions to actively manage the supply of reserves. in the transition to the efficient and effective level of reserves in this regime, we slowed the gradual decline in our balance sheet in may, and stopped it in july. in response to the funding pressures in money markets that emerged in mid - september, we decided to maintain a level of reserves at or above the level that prevailed in early september. to achieve this level of reserves, we announced in mid - october that we would purchase treasury bills at least into the second quarter of next year and would continue temporary open market operations at least through january. these actions are purely technical measures to support the effective implementation of monetary policy as we continue to learn about the appropriate level of reserves. they do not represent a change in the stance of monetary policy. thank you. i would be pleased to take your questions. 1 congressional budget office ( 2019 ), the 2019 long - term budget outlook ( pdf ) ( washington : cbo, june ). 3 / 3 bis central bankers'speeches | applied in the examination of financial institutions, enables us to identify the warning signs in the supervised institutions well in advance and to take appropriate corrective actions. we shall also continue to work closely with government ministries and agencies to ensure that operations of other microfinance institutions are properly conducted. the proposals for streamlining policy on regulation and supervision of the different forms of microfinance institutions have already been undertaken by government. you will note that of recent, bank of uganda has made public statements in the print media warning that the operations of unlicensed deposit taking business in uganda constitutes an offence punishable under the provisions of the financial institutions act 2004 and under the microfinance deposit - taking institutions act 2003. i, therefore, strongly advise the general public not to risk losing money deposited or placed in unregulated institutions. in addition, bank of uganda will continue dialogue with the commissioner for cooperative development / registrar for cooperative societies, and other stakeholders in the microfinance industry to ensure that the microfinance industry is governed in accordance with the relevant regulatory requirements. the association of micro finance institutions in uganda ( amfiu ) has also published lists of micro finance institutions and saccos affiliated to it in the news papers. the list for registered cooperative societies can be obtained from the registrar of cooperative societies / commissioner of cooperative development in the, ministry of trade, tourism and industry. i urge the public to take note of these developments. finally, it is now my privilege and honour to declare the new uganda finance trust ltd head office and main branch open and i, also, hereby unveil the new corporate identity. i thank you for your attention. | 0 |
looking at the same thing. a weak or misused classification system would destroy any such process. as critics correctly have noted, such an approach has the potential to create procyclical swings in the minimum required capital of banks as the risk classifications of credits migrate up and down in conjunction with the state of the economy. i think this is an example of what i referred to at the outset : regulations in banking will have their own cyclical responses as events move banks toward and away from minimums. but that also would be the case for self - imposed management guidelines in an unregulated world. let me emphasize that the basic cause of procyclical bank lending is less the result of rules - regulatory or self imposed - - and more our difficulty in predicting the future. no lender starts out to make loans that default. risk management does not enable us to perceive unfolding events with any greater clarity. but it creates an analytical structure and enforces reference to past events and, in so doing, eliminates consideration of or suggests higher pricing for loans with a low probability of repayment. enhanced risk management, by increasing our ability to focus better on probabilities, will tend to flatten cyclical lending patterns. indeed, though we are not going to eliminate cyclically correlated changes in attitudes of human beings, i am impressed by the effect that facts, historical relationships, and quantification can have on reducing such swings. first, relative to what we have today, basel ii is endeavoring to reduce cyclical reserving and write - offs that traditionally have come with the late recognition of excess risk taken earlier. second, the supervisory leg of basel ii is being structured to supplement market pressures in urging banks to build capital considerably over minimum levels in expansions as a buffer that can be drawn down in adversity and still maintain adequate capital. finally, negotiators in basel continue to fine - tune the proposed accord in ways that promise to damp cyclical swings in capital requirements relative to what was implied by last year's proposal. conclusion to sum up, i think it is worth saying again that, as high - quality borrowers deserted banks for the commercial paper and direct debt markets, banks have tended to move in ways that, at a minimum, reinforce the business cycle. but technology, innovations, and increasingly efficient capital markets have reduced that contribution to the overall macroeconomic cycle. new developments in risk management hold the promise of further reductions, and they may already have | . 251 ( 1913 ). bis central bankers β speeches for as long as they have existed, central banks have calmed financial crises by lending to financial institutions against good collateral. because central banks step in when other sources of funds retreat, central banks acting in this capacity are known as lenders of last resort. but that phrase doesn β t mean that central banks make bad loans ; nearly all of their loans are to sound borrowers with sound collateral. banks rely on short - term funding such as overnight interbank loans or customer deposits to make the longer - term loans their customers need. if funding becomes scarce, banks become less willing to extend credit. to maintain the flow of credit to businesses and consumers, the federal reserve provides short - term credit to sound depository institutions as needed. to ensure that banks use the facility only as a backup source of funds, federal reserve loans are made at an abovemarket rate. in the panic of 2008, liquidity needs were not confined to the banking system. the shadow banking system, made up of investment banks, money market funds, finance companies, and investors in a wide range of debt securities, provided a large part of the credit that fueled our economy. when panic set in, it froze lending in banks and non - banks alike and produced funding pressures across a wide range of markets and institutions. the actions taken by the federal reserve to fight the crisis were quite traditional in the sense that, for years, central banks have been providing liquidity by lending to financial intermediaries. but they were unconventional in that the concepts had to be adapted to fit markets and lenders that had never been supported by the federal reserve before. now, i didn β t live through the banking crises of the distant past or those that might have occurred in other countries. but i can tell you what it was like at the center of the most recent crisis. funding was drying up for one institution after another and for one market after another. our efforts to provide liquidity were criticized by some as bailouts for the banks. i can understand how it could seem that way, but i also know that every action the fed took was directed at improving the economy rather than the well - being of the banks. we had to make many difficult decisions in the darkest days of the crisis. for me, the decisions were made a bit less difficult by several factors. first and foremost was the calm, decisive leadership by chairman bernanke, whose lifelong study of economics and economic history provided unique | 0.5 |
, and in spain in september 2007. and this is not simply a problem affecting advanced economies : the problem is just around the corner for some emerging economies like korea, china, and brazil. population ageing is likely to have a significant impact on financial services, and requires a new policy response. here i would like to raise two issues : one is the necessity of cross - industry and even cross - border coordination, and the other is the question of how to deal with the fundamental uncertainty surrounding population ageing. necessity of cross - industry and cross - border coordination let me first consider the necessity of cross - industry and cross - border coordination. as a society begins to age, its older citizens become the dominant holders of financial assets. for example, see nishimura, k. g., and e. takats, β ageing, property prices and money demand β, bis working paper no. 385 ( 2012 ). bis central bankers β speeches however, with the coming of age, many people are likely to become risk - averse in managing their financial assets, for natural reasons. thus, a mature economy, with its lower growth potential due to ageing, faces the serious problem of how to provide risk money to promising sectors of the economy so as to encourage entrepreneurs β sound risk - taking and enhance value production. to be more specific, financial products and services should enable older citizens to maintain their quality of life and help foster an environment where longevity is seen as a gift, rather than a risk. these products, in addition to retirement savings, are expected to play diverse roles. given the improved average health of senior citizens in many countries, it is increasingly important that these financial products and services help the older population stay active and contributing to the community to the best of their abilities, while mitigating age - related risks such as illness. to provide such products, financial institutions must cooperate with other industries to take full advantage of their advanced technologies and expertise. at the same time, financial institutions should utilize their own expertise to measure, distribute, and manage the various risks as intermediates between asset - rich older citizens and prospective entrepreneurs. these attempts inevitably involve β cross - industry β elements. furthermore, with the transition from a growing economy to a mature economy, it is natural for people in an ageing economy to pursue higher returns by investing their savings in growing overseas economies. thus, it is also important for a mature economy to make full use of the benefits of cross - border transactions while | referendum and, for another, the uk still needs to meet the exchange rate criterion for joining the monetary union. let us take a closer look at these obstacles. first of all, the british government will have to convince the people of the importance of membership. this will be possible if the advantages are presented in a convincing way, since the idea of joining monetary union is no longer an unfamiliar one. but the exchange rate criterion, which applies for countries in search of emu membership, is another, more complex and more formal, matter. countries wishing to join emu on 1 january 1999 are required to have taken part in the exchange rate mechanism of the european monetary system for the last two years, without the fluctuation margins being exceeded. countries joining at a later stage are basically subject to the same rules. but the exchange rate mechanism which will take effect as from 1 january 1999 differs from that currently in force. in my opinion, erm2 will replace erm1. but legally, it is not that simple, and my view is not shared by everyone. for the time being, the uk is not making any moves to join the new exchange rate mechanism. i understand the uk β s reluctance to join erm2, considering its unfortunate experience with erm1. although the uk only joined erm1 in 1990, it was already forced to leave in 1992. naturally they feel that the experience does not bear repetition. but the circumstances prevailing at that time, viz. an excessively high entry rate for sterling and, more importantly, a macroeconomic policy which did not fully support the exchange rate objective, are in no way comparable to those in evidence in the uk and europe today. - 3now let us take a look at britain β s cyclical conditions and economic policy. the exchange rate movements of sterling largely reflect the cyclical divergences between the uk and the european continents. i already noted, it is crucial to british participation in emu that, in the longer term, its economic development does not diverge substantially from those in europe. the uk β s economy has always been subject to greater turbulence, and its business cycle is invariably ahead of those on the mainland. but the cyclical outliers seem to be decreasing. it is gratifying to note that the political stop - go cycle of interest rate policy has made way for a monetary policy aimed at keeping inflation under control. the government β s economic policy is now also directed at putting a stop to the | 0 |
the euro area and the united states β, monetary policy report, february 2011, and β the relationship between the business cycle and the labour market in sweden β, economic commentaries no. 2, 2010, sveriges riksbank. okun β s law shows the short - term relationship between the level of unemployment and gdp. bis central bankers β speeches competitive pressures in the economy, labour market legislation, the negotiating strength of employers and employees and so on. 8 these are the factors that determine equilibrium unemployment. so affecting these would require broad - based economic policy measures. although it is obvious, it is still important to bear in mind that monetary policy cannot affect these fundamental conditions for long - term growth and employment. breaking down unemployment β a complicated story on the other hand, however, monetary policy is able to influence the cyclical part of unemployment via effects on the aggregate demand in the economy. in theory, this is a matter of using monetary policy to keep actual unemployment as close to the equilibrium level as possible. in practice, this is difficult, as equilibrium unemployment is not observable but must be calculated indirectly. these calculations are highly uncertain, something which is true of all gap calculations in which various actually - measured quantities are related to an estimated, unobserved quantity. so this also applies to the gdp gap, the hours gap, and so on. but the unemployment gap has an advantage over other gap measures, as the actual statistics are not revised, as is the case with gdp and to some extent the number of hours worked, for example. allow me to now discuss this uncertainty when it comes to calculating the labour market gap in a little more detail. calculations of equilibrium unemployment according to a common interpretation, equilibrium unemployment is the unemployment that arises when an economy is not impacted by new shocks or disruptions for a longer period of time and is thus in a state of long - term equilibrium. 9 equilibrium unemployment is thus independent of economic activity. however, this is a theoretical concept. in practice, the economy is never in a shock - free state in which long - term equilibrium has been achieved. assessing the level of equilibrium unemployment depends partly on the theoretical model used as a basis and partly on the calculation methods used. there is no consensus on which method of calculation is best, and this creates uncertainty on the level of equilibrium unemployment. let me illustrate this with a diagram. the figure shows how equilibrium unemployment in sweden has been calculated for the period 1980 β 2010 using three different methods. the | louis kasekende : stronger rules foster growth, stability keynote address by dr louis kasekende, deputy governor of the bank of uganda, at the official opening of the banking, finance and insurance expo 2011, kampala, 15 april 2011. * * * uganda β s banking industry has experienced significant transformation over the past three years, with rapid growth in the number of service outlets for various categories of financial services. branches of commercial banks, credit institutions and microfinance deposit - taking institutions have increased from 194 in 2007 to 397 in 2010. similarly, the number of automatic teller machines has risen from 262 in 2007 to 598 by december 2010. in addition, numerous financial products and customized services have been rolled - out by financial institutions in response to the ever - changing tastes of the clientele. these include electronic banking services, faster methods of money transfers, mobile banking, transfer services, and flexible banking hours to suit different categories of customers. the deputy governor said that the central bank is cognizant of the inter - linkages between the various sectors of the financial system because instability in one sector could eventually spill over into other sectors and spark off system - wide crisis. he urged regulatory agencies to draw lessons from the financial crisis that rocked the western world and spilled over to the developing economies. each sector must be effectively regulated in order to foster systemwide soundness and stability and mitigate attendant risks. β to this end, bank of uganda has signed a memorandum of understanding with capital market authorities and uganda insurance commission in order to foster formal exchange of information for regulatory purposes. β bank of uganda has also set up a financial stability department and financial sector surveillance committee to look at the macro - linkages, β he said. uganda β s financial system comprises formal, semiformal and informal institutions. the formal institutions include banks, microfinance deposit - taking institutions, credit institutions, insurance companies, development banks, pension funds and capital markets. the semi informal institutions include saccos and other microfinance institutions, whereas the informal ones are mostly village savings and loans associations. formal institutions are less prominent in rural areas than urban areas and they only serve 14 % of the rural population. informal institutions play an important role in the rural service provisions and serve approximately 12 % of the rural population. these numbers indicate that uganda β s financial system is still quite shallow. most ugandans ( 62 % ) have no access to financial services. the number of the population holding accounts in banks is | 0 |
benoit cΕure : euro interest rate benchmark reform : achievements and remaining challenges opening remarks by mr benoit cΕure, member of the executive board of the european central bank, at the annual dinner of the working group on euro risk - free rates, frankfurt am main, 26 february 2019. * * * good evening and welcome to the first annual dinner of the working group on euro risk - free rates. on this very day one year ago, the working group on euro risk - free rates held its first meeting in frankfurt, hosted by the ecb. looking back, your achievements have been impressive, almost on a par with the challenges that lie ahead. in its short existence, the working group has recorded two prominent achievements. the first is the choice in september 2018 of the ecb β s overnight rate as the new euro risk - free rate. this decision provided clarity to market participants and planning certainty for the transition towards more robust benchmarks in the euro area. it also brought the euro area closer in line with other currency areas in preparing for new benchmarks. the second achievement is that, at the roundtable on euro risk - free rates in november 2018, the working group took a major step in reaching out to stakeholders and raising awareness of its activities. sound communication and transparency are vital for spreading awareness about the transition to risk - free rates beyond a small circle of informed parties. by getting the message across to a more diverse audience, the working group lends more legitimacy to its recommendations and does as much as it can to promote market consensus. this first roundtable was a successful exercise in this regard. in time, i would expect such open communication to play a pivotal role in the transition to more robust interest rate benchmarks. besides these two very concrete achievements, i know that a great deal of work on building a consensus has been going on behind the scenes in the various sub - structures of the working group over the past year. reaching agreement on recommendations that reflect the views of such a wide variety of institutions is not an easy task. over the course of last year, the working group and subgroups members held no less than 80 teleconferences and seven working group meetings, which give some idea of the work that went into aligning views within such a tight time frame. i would like to thank all of you, including the team supporting the working group chair, for your contributions, as well as the secretariats of the ecb and the european securities and markets authority for | , the greenspan era : lessons for the future, speech given at the federal reserve bank of kansas city symposium on β rethinking stabilization policy β, jackson hole, wyoming. woodford, m. ( 2008 ), convergence in macroeconomics : elements of the new synthesis, paper presented in the session β convergence in macroeconomics? β at the annual meeting of the american economic association on 4 january 2008. | 0.5 |
have high rates of inflation which are out of line with the rest of the world, disruptive capital flows could occur because of fears of currency misalignments. the closer integration of the world economy has therefore focused the ultimate objective of monetary policy and made it even more important to attain this objective. it should, however, also be realised that such a policy stance does not provide unconditional protection against speculative capital outflows. external economic shocks or perceived poor policy measures can still trigger a reversal in capital movements. monetary policy cannot prevent these reversals. international investors make their decisions on the basis of a wide variety of developments, including price stability. the best approach that central banks can follow is to pursue financial stability in a transparent and accountable manner so that they can at least forestall any uncertainties in this regard. although the objective of monetary policy has been better focussed within the context of globalisation, the integrated world economy has resulted in a more complex mechanism for transmitting monetary policy. the relationship between changes in interest rates, money supply and inflation has become less clear under these new conditions, compared with the period when south africa was more isolated from external influences. as a result of large international capital flows, the effects of policy changes are being transmitted to a greater extent through critical indicators such as bond yields and exchange rates. these changes in the transmission mechanism of monetary policy have reduced the credibility of the money supply as an intermediate guideline for policy. the integration of financial markets and financial innovations made the demand - for - money function less stable. this was clearly reflected in a consistent decline in the income velocity of circulation of m3 of about 13 per cent from 1994 to 2000. the income velocity of circulation of m3 continued to decline strongly in the first three quarters of 2001. the money supply accordingly became a less reliable anchor for monetary policy. volatile capital movements further complicate the transmission mechanism under floating exchange rates, because of the impact that exchange rate changes have on the foreign transactions of a country. in a closed economy, the transmission mechanism runs from increases in the repo rate and other short - term interest rates through to longer - term interest rates and asset prices and then to aggregate demand and prices. the open economy version of the transmission mechanism under floating exchange rates runs from interest rates, to nominal exchange rates, to the absolute and relative prices of tradeable goods and eventually to the prices of non - tradeable goods. in view of this more complicated transmission mechanism in a reintegrated global | by side with general education. we need engineers, accountants, pilots, of course lawyers, actuaries, doctors, nurses, scientists and other specialised technical skills for a an increasingly services sector driven economy. and how can i forget economists! mathematics education is fundamental to this. alongside these structural changes in our economy has been the process of global integration of the south african economy. whilst in the 1960s we were mainly an extractive economy, by the 1990s the south african economy was fairly integrating broadly into the world economy. with sanctions out of the way, imports and exports of goods and services amounted to about 44 % of the economy. currently this has increased to 55. 6 %. the manufacturing sector, despite its challenges from time to time saw its exports rise to 29. 6 % in the 1990s to about 37. 9 % in the period 2000 - 2004. one of the most notable features about the globalisation of the south african economy is to be found in the banking sector. south african banks as a percentage of gdp averaged 77 % during the period 1965 - 1994. in 2004, this share of gdp by south african banks was 109 %. the equity market averaged r2 billion in the period 1970 to 1985., r21 billion per year for the period 1986 - 1993, the annual turnover in the equity market was r62 billion in 1994 and in 2004, the annual turnover was about a r1 trillion. market capitalisation on the jse increased from an annual average of r40 billion for the period 1970 - 1980 to r2 trillion in 2004. further more compelling evidence of globalisation is to be found in the performance of the bond market. between 1970 and 1985, turnover in this market was about r8 billion, in 1995 this had increased to r2. 3 trillion and in the year 2004 turnover was r8. 4 trillion. finally the foreign exchange market which interests so many people has also seen some remarkable evidence of globalisation. to cut a long story short, in 1987 the average daily turnover in this market was 1. 1 billion us dollars and during the course of 2005 the average daily turnover in this market in some 12 billion us dollars. so there is a lot of activity going on there. the only conclusion i can come to is that we are coping well with globalisation. we have seen some benefits but yes there has also been some costs such as the impact of globalisation on the gold mining sector. let me conclude by saying that there has been a remarkable achievement in | 0.5 |
to a situation where long - term investments have to give way to shorter - term investments. it is often those with low incomes and the smallest buffers that are hit hardest when prices rise rapidly and unexpectedly. the operational target of monetary policy in norway is inflation of close to 2 per cent over time. but we are not solely focused on inflation. inflation targeting must be flexible, so that it can also contribute to high and stable output and employment. in the long term, there is no conflict between low inflation and high employment. price stability is a precondition for an efficiently functioning economy. in the long run, we cannot trade off higher inflation for higher employment. in the short term, however, there may be a conflict between these two considerations as we approach each policy rate decision. a trade - off must therefore be made between the objectives of low inflation and high employment. we interpret the mandate to mean that we must give considerable weight to employment also in the current situation with inflation markedly above the target. rΓΈisland, ΓΈ. ( 2023 ). β nar kan lΓΈnns - prisspiraler oppsta? om samspillet mellom pengepolitikken og lΓΈnnsdannelsen β [ when can wage - price spirals arise? on the interaction between monetary policy and wage formation ]. samfunnsΓΈkonomen nr. 3 β 2023 ( in norwegian only ). 12 bergholt, d., ΓΈ. rΓΈisland, t. sveen and r. torvik ( 2023 ). β monetary policy when export revenues drop β. journal of international money and finance, 137. norges bank economic perspectives 2024 chart 5 we make use of our monetary policy leeway cpi. four - quarter change. percent registered unemployment as a share of the labour force. seasonally adjusted. percent inflation target sources : norwegian labour and welfare administration, statistics norway and norges bank since autumn 2021, we have raised the policy rate sharply and rapidly to tame inflation. throughout, we have emphasised the need to avoid a sharp rise in unemployment. while we still have a ways to go, inflation is now heading down. we could have brought inflation down faster, but unemployment would probably have risen more. the trade - offs we make are expressed in our forecasts ( chart 5 ). we expect inflation to gradually approach target in the years ahead, with unemployment edging up to about its pre - | emmanuel tumusiime - mutebile : brief look at payment systems, financial markets and the micro - finance sector in uganda speech by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the farewell dinner of mr peter rhode, kampala, 28 september 2007. * * * your excellency the ambassador of germany mr. peter rhode, outgoing director, gtz / financial system development programme, chief executives of financial institutions, distinguished guests, ladies and gentlemen, this evening, as you are all aware, we are attending a farewell dinner in honour of mr. peter rhode, the outgoing director of the gtz financial systems development programme ( fsd ). mr. rhode has been director of the gtz / financial sector development programme since 2002. the fsd programme has several project components, covering a number of areas including payment systems, financial markets, and the micro - finance sector. under the able leadership of mr. peter rhode, the gtz financial sector development programme has played an important and commendable role in the development of the national payment system, financial markets and the micro - finance sector. mr. peter rhode played an active and positive role in the acquisition and implementation of the real - time gross settlement ( rtgs ) system, otherwise referred to as the uganda national inter - bank settlement ( unis ) system. mr. rhode personally oversaw the recruitment of a qualified and experienced consultant who worked with bank of uganda staff to carefully and objectively evaluate the rtgs bids. as an rtgs system is a critical national economic infrastructure that facilitates the efficient and safe transfer of monetary value between transacting parties, bank of uganda is grateful to mr. rhode's contribution in implementing the system in uganda. the east african community is in the process of implementing an east african cross border payment system to faciiitate the efficient and safe transfer of monetary value within the region. as the community becomes more economically and socially integrated, the implementation of an efficient cross border payment system to support increased levels of regional trade and social interaction becomes a strategic imperative. i am glad to note that mr. rhode has been supportive of the cross border payment system project, and gtz has contributed to the enhancement of the bank's technical capacity in the design and management of multi - currency cross border payment systems. during his term, mr rhode has placed a lot of emphasis on capacity building in the different areas of the financial sector. indeed, the fsd programme | 0 |
hard to boost inflation. but despite the fact that they are still not satisfied with the level of inflation, the economy is doing very well. can β t we be satisfied with that and be a bit more relaxed about inflation? i can understand why politicians may think that way, but as central bankers we can β t. our mandate is narrow, and it is a price stability mandate. in the united states there is quite an open discussion about the inflation target. isn β t it time to start that discussion in europe as well? i really do not think that it is the right time to start a discussion on the ecb β s definition of price stability, in either direction. throughout the crisis we have been an anchor of stability. if you look at longer - term inflation expectations, they have been very stable, and this has helped avoid deflation. this anchor remains needed at a time when the euro area is still coping with the legacy of the crisis. another topic that is currently the subject of heated debate is the possibility of bitcoins replacing cash. how important is this topic for the ecb? there are different forms of digital currency. bitcoin is not a currency ; it is a financial instrument which creates major risks for investors because its value is highly unstable, not to mention the issues of tax evasion and criminal activity. this is not a monetary policy discussion. on the other hand, new technologies are being developed on wholesale financial markets, such as the use of 4 / 5 bis central bankers'speeches blockchain for clearing and settlement, which may one day require digital money to settle transactions. we are looking into it because we have to follow all technological developments. finally, whether there should be a shift out of cash and towards digital currencies issued by central banks is yet another discussion. what is your view on that? i believe that central banks should be extremely cautious when they deal with such issues, because they concern trust in the currency. there are different views on the use of cash. germany, for example, is a country where people remain very much attached to cash. different societies will have different opinions. 5 / 5 bis central bankers'speeches | euro is very popular and i think that assessment by the european population is correct. it is a very good invention for europe and i think for all of us in the euro area we should be proud of our common currency. one personal question. you are an academic, how do you see your new position now as chief economist? your position is very important in the ecb. so i think monetary economics, central banking is very closely connected to academia. one of the reasons the bank of finland is having this conference today is to recognise the importance of interaction between central bank officials like myself and university professors and students. this is an area where i β ve said in the speech the ecb has to be a learning organisation, we have to learn from our own research, from the university sector, from other central banks. so actually i think this is an area where i feel coming from a university background helps me in my current job. 2 / 2 bis central bankers'speeches | 0 |
insights to contribute and i would like to conclude by sharing some from slovenia. 1 / 2 bis - central bankers'speeches at banka slovenije, in cooperation with the imf, we have developed a tool for monitoring and predicting cyber risks in the banking sector. my colleagues, in collaboration with the esteemed slovenian institute of science, have also developed an ai tool for assessing money laundering and terrorism financing risks. for both tools, some basic information is available through the qr codes you have received. of course, if this happens to pique anyone's interest, do not hesitate to get in touch with my colleagues that will gladly provide you with more details. before we start to enjoy the dinner, let me take this opportunity to express my sincere appreciation to the organizational teams of banka slovenije and the ecb for their efforts in facilitating this meeting. when everything works seamlessly, it can mask the complexity and effort behind the scenes. thank you very much for your dedication. finally, for a few hours tonight, let us shift the focus from the digital realm to the richness of in person connection. let's enjoy each other's company and tonight's dinner at the ljubljana castle. thank you! 2 / 2 bis - central bankers'speeches | wound down, and the privatization of one state - owned bank ( nkbm ) has already been initiated. the new european resolution mechanism is scheduled to take effect in 2016. banka slovenije is seeking to speed up the process. it intends to create in 2015 a deposit insurance fund and a resolution fund to facilitate the consolidation of weak banks. the banking sector is undergoing a necessary process of structural reforms, and the world of banks is changing. regulation and supervision is being strengthened to make the future of the banking system more stable and less crisis - prone. on 4 november, the european central bank assumed responsibility under the single supervisory mechanism for supervising 8 banks in slovenia accounting for more than two - thirds of the market share. the supervisory culture will change under the new regime. supervision will become more quantitative and the ecb will also inspect the business models of banks. for the 10 credit institutions not covered under the ssm, banka slovenia will align its supervisory approach with that of the ssm. the central credit registry is being upgraded to support banking supervision. banka slovenije has established, like other european central banks, an institutional framework for macroprudential oversight of the financial system that is in line with the recommendations of the european systemic risk board. the basic aim is to safeguard the stability of the financial system by identifying the emergence of systemic risks at an early stage and taking preventive measures to mitigate these risks. * * * * bank rehabilitation is only a necessary condition for unlocking credit growth to the slovene economy. successful corporate restructuring, which entails both financial and business restructuring, is also essential to lay the foundation for productive investment and strong employment creation. unless enterprise restructuring is undertaken decisively in a timely fashion, the capital buffer of banks created by their recent recapitalization will erode and further injections will be needed once again. the enabling legislative framework for enterprise restructuring is in place, but systematic restructuring is yet to begin. this should be given priority by the government. a decision must be made with regard to the most urgent restructuring cases a critical constraint that slovenia faces is the availability of funding for corporate restructuring and increasing investment activities. given that the feasibility of using state resources for these purposes is limited, privatization and entry of private investors should be the key vehicles for the required non - debt capital infusion foreign direct investment is a key source of potential equity. the business and political culture will need to adapt and embrace the realities of globalization and slovenia β s integration | 0.5 |
. we have to improve very significantly risk management in all pertinent institutions. and last but not least, we have to introduce much more discipline in the macroeconomic policies, and that of course goes for fiscal policies, but also for appropriate discipline to prevent excessive domestic and external imbalances. | savings need to be made. the third key issue is the need to make progress in reducing the high government debt - to - gdp ratios that have substantially increased over the past two decades. whilst there was some improvement in the run - up to the start of emu, the recent progress has been disappointing as the average debt - to - gdp ratio for the euro area fell only slightly to 73. 8 % in 1998, compared with 74. 6 % in 1997. such imbalances are undesirable and can also have wider implications for the conduct of monetary policy. if there are any doubts about the soundness of fiscal policies, this can influence the effectiveness of monetary policy instruments, and undermine the credibility of monetary policy. in addition to the long - term economic issues mentioned so far, i should also like to emphasise that the structural reform agenda available to national governments to promote economic development extends well beyond the reform of labour markets and public finances. for example, national governments can take steps to promote entrepreneurship and make it easier for people to start and run businesses and thus create new jobs. this could involve encouraging competition through measures to promote the entry of new firms, such as reducing the administrative burdens they face, making markets more competitive and facilitating access to venture capital. governments can also liberalise previously highly regulated sectors, such as utilities, to increase efficiency and reduce prices to the benefit of industrial and household users of these services. national governments may also wish to take steps to raise productive investment in research and development to increase growth in expanding high - tech industries. the introduction of the euro and a common monetary policy has certainly not rendered national governments impotent. with the ability to vary fiscal policy and undertake structural reforms, national governments retain the key powers to address the real needs of their economies. if the terms of the stability and growth pact are adhered to, then there is sufficient flexibility to allow automatic stabilisers to work in the event of a slowdown. structural reforms provide the only means of achieving lasting reductions in unemployment, preparing for the ageing of the population and reducing the burden of government debt. national governments would be well advised to press ahead with such reforms. apart from having their own merits, such policies would also support the ecb in maintaining price stability in the euro area. | 0.5 |
and efficient, and also as a response to the growing challenges to the european independence in the field of payments. the spread of instant payments in europe is expected to continue, as is the establishment of infrastructure to accept instant payments initiated by customers via smartphone applications on physical pos terminals at merchants. in this regard, the socalled european payments initiative5 ( epi ) was created, which aims to develop payment alternatives in europe, including through a digital wallet based on instant payments. the review of the second payment services directive is also gathering serious speed, and after the directive has been into force for more than five years, a legislation package for the revision of psd2 is expected to be announced in the summer of 2023. this package is expected to contain a revised payment services directive ( i. e. psd3 ) and a proposal for a new payment services regulation. in addition, a new legal framework for open finance will be developed, which will build on the existing regulations in the psd2 on open banking, which shows good development, including in our country. the purpose of such a new legal framework would be to allow, with the customer's consent, their data falling outside the scope of psd2 to be shared and reused by financial service providers to create new and improved services. the financial services and payments sector in europe and in our country has traditionally been developing intensively and upwardly in recent years, driven by both innovation and the development of european regulations, which create a favourable environment for competition and security of consumers. the measures related to the introduction of the euro favour the faster and more efficient integration of the financial market infrastructures in our country with those in the euro area. i wish interesting and fruitful work to the participants in today's financial forum. 1 ecb report on card fraud in 2020 and 2021, may 2023. 2 https : / / www. bis. org / about / bisih / topics / cbdc. html 3 https : / / www. imf. org / en / news / articles / 2022 / 02 / 09 / sp020922 - the - future - of - money - gearing - up - for - central - bank - digital - currency 4 https : / / www. ecb. europa. eu / pub / pdf / other / ecb. eurosystemretailpaymentsstrategy ~ 5a74eb9ac1. en. pdf 3 / 4 | gradually removing monetary accommodation in may. the data released over the past two months or so accord with the view that the earlier soft readings on the economy were not presaging a more serious slowdown in the pace of activity. employment has remained on an upward trend, retail spending has posted appreciable gains, inventory levels are modest, and business investment appears to have firmed. at the same time, low long - term interest rates have continued to provide a lift to housing activity. although both overall and core consumer price inflation have eased of late, the prices of oil and natural gas have moved up again on balance since may and are likely to place some upward pressure on consumer prices, at least over the near term. slack in labor and product markets has continued to decline. in light of these developments, the fomc raised the federal funds rate at its june meeting to further reduce monetary policy accommodation. that action brought the cumulative increase in the funds rate over the past year to 2ΒΌ percentage points. should the prices of crude oil and natural gas flatten out after their recent run - up - - the forecast currently embedded in futures markets - - the prospects for aggregate demand appear favorable. household spending - - buoyed by past gains in wealth, ongoing increases in employment and income, and relatively low interest rates - - is likely to continue to expand. business investment in equipment and software seems to be on a solid upward trajectory in response to supportive conditions in financial markets and the ongoing need to replace or upgrade aging high - tech and other equipment. moreover, some recovery in nonresidential construction appears in the offing, spurred partly by lower vacancy rates and rising prices for commercial properties. however, given the comparatively less buoyant growth of many foreign economies and the recent increase in the foreign exchange value of the dollar, our external sector does not yet seem poised to contribute steadily to u. s. growth. 1 / 5 a flattening out of the prices of crude oil and natural gas, were it to materialize, would also lessen upward pressures on inflation. overall inflation would probably drop back noticeably from the rates experienced in 2004 and early 2005, and core inflation could hold steady or edge lower. prices of crude materials and intermediate goods have softened of late, and the slower rise in import prices that should result from the recent strength in the foreign exchange value of the dollar could also relieve some pressure on inflation. thus, our baseline outlook for the u. s. economy is | 0 |
regime would continue to be less intrusive than in most other jurisdictions. as in our recent engagement with the industry on the potential impact of a point - of - sale switch outage, we will seek to identify relevant action points for the reserve bank and industry. but, consistent with our broader regulatory philosophy, we will avoid prescriptive solutions if possible. industry cooperation and rigorous self - assessment in the context of international standards is 3 / 5 bis central bankers'speeches preferable to regulatory intervention. the proposals are still subject to cabinet approval. the next step in the process would be to prepare new legislation. the reserve bank would issue an exposure draft for consultation around the end of q1 or early q2 next year. apart from the new regulatory framework for fmis, the ministry of business, innovation and employment ( mbie ) has recently released an issues paper on retail payment systems, their focus being on merchant service and interchange fees. this is an important efficiency and competition issue that many countries are grappling with. the reserve bank and the government share the common objective of a sound and efficient payments system and which facilitates innovation and open access. the government β s issues paper looks at features of the retail payments system that may also have broader social efficiency implications, for example arising from the allocation of costs associated with new payment services. i encourage you to consider and make submissions on the issues paper. replacement technology for esas and nzclear the reserve bank operates two important parts of the new zealand payments infrastructure : esas and nzclear. these systems, both of which are designated, need to remain reliable, efficient and fit for purpose. we also need to be responsive to changing customer demands and new technologies. the current esas and nzclear systems, introduced in 1998 and 1990, have served us well, but both now require upgrades. the replacement project underway aims to implement systems that meet modern standards of reliability and security while having sufficient capacity and agility to meet customers β performance expectations. at this point, these upgrades are expected to be completed by the end of 2018. closing in conclusion, i want to reinforce what i have said about the proposed new fmi oversight regime. we have sought your input to the regime over recent years and we believe we have listened. we do not envisage that the new framework will significantly change how the payments industry operates or how we engage with each other. we already have a very collaborative relationship with the industry, including payments nz. while some | i j macfarlane : australia's economic situation and implications to monetary policy opening statement by mr ian j macfarlane, governor of the reserve bank of australia, to the house of representatives standing committee on economics, finance and public administration, canberra, 17 february 2006. * * * it is a pleasure to be back here again in front of the committee, and to be having this hearing in canberra for the first time in a number of years. i note that the membership of the committee has changed again, particularly on the government side. that is something that has happened pretty well continuously in the nearly ten years i have been reporting to it under the current arrangements, but it has not interfered with the committee's effectiveness. as you know, we had our february board meeting last week and we issued our quarterly statement on monetary policy earlier this week. this document spelled out in detail how we see the current situation in the economy, and why the stance of monetary policy is where it is. this morning i would like to take the opportunity of looking at the broader trends in australia's economic situation and examining the implications they have for the stance of monetary policy going forward. i will take as a starting point australia's current economic expansion. for years i have made the point that progress in winding back economic slack is made not by high growth in any individual year, but by maintaining an expansion over a sustained period. australia's current expansion began in late 1991 and is now in its fifteenth year. this means that it is already significantly longer than its predecessors in the 1960s, 1970s and 1980s. the expansion has been marked by good growth in gdp, which has averaged 3ΒΎ per cent per annum over this period, one of the best performances in the developed world. a consequence of the sustained expansion is that the economic slack generated in the last recession has been gradually used up. one indicator of this is the unemployment rate, which has trended down from a peak of 11 per cent in 1993 to be currently just over 5 per cent. other indicators of the economy's capacity utilisation are also at cyclically high levels. business surveys report that businesses are operating at close to their highest levels of capacity utilisation since the late 1980s. the surveys have also been reporting high levels of labour scarcity. for the past year or so, many businesses have been in the unusual position of reporting that scarcity of suitable labour was a bigger constraint on their activities than their traditional concerns about the adequa | 0 |
years to address the weaknesses in structural, regulatory and supervisory arrangements that existed prior to the crisis. the fssa recognises the significant strengthening of irish financial system, the major structural changes that have taken place since the financial crisis and the implementation of a more proactive regulatory approach, concluding that β the authorities have been effective and vigorous in strengthening prudential regulation and supervision, implementing the lessons of the crisis, and keeping up with developments in european and international good practice. β in relation to the supervision of securities markets, the fssa also acknowledges the bank β s leading role in the analysis of collective investment activities, which is significant in view of the large scale and international interconnectedness of the irish investment funds sector. at the same time, the imf has also made a number of important recommendations to increase further the resilience of the irish financial sector and improve the effectiveness of the bank as a regulator. the bank has already started to work on these recommendations, in conjunction with other irish and european authorities. to take one example, the bank has recently formed a new internal advisory committee on the design of domestic macroprudential policy measures, including the borrower - based mortgage rules, the counter - cyclical capital buffer and the other systemically important significant institution ( osii ) buffer. in line with the imf β s recommendation to improve further the degree of public transparency in relation to our decision - making processes and our own ongoing commitment to provide evidence - based explanations for our policy measures, summary records of the meetings of this new macroprudential measures committee ( mmc ) will be published. stress tests an important element of the fsap was a stress test exercise for the banking system. the forward - looking assessment of the resilience of banks to various risk scenarios is a key tool in informing supervisory actions and financial stability policies. in fact, the bank has recently participated in three stress testing exercises : first, as part of the imf fsap ; second, as part of the wider bank stress tests across the european union, led by the european banking authority ( eba ) ; and third, the single supervisory mechanism ( ssm ) stress tests, which followed the eba methodology and ran concurrently with it. the bank also continues to review and challenge the banks β own stress testing approaches and outcomes. i will focus on the first two exercises, as the outcomes are now in the public domain. the bank β s analytical framework was used to support the imf f | states. as a small economy, our engagement at these fora is especially important so that policies can help all member states overcome the crisis. the recent agreement on the next generation eu fund, which should help support all countries in their recovery from the current crisis, was also a considerable milestone. the agreement provides a common budgetary instrument to complement national fiscal policies. while the fund is currently temporary, it should provide useful lessons for how a shared fiscal capacity can be used for macroeconomic stabilisation. on the monetary policy front, the governing council of the ecb responded rapidly with sizeable measures, including a pandemic emergency purchase programme ( pepp ) and the pandemic emergency longer - term refinancing operations ( peltros ). the envelope for pepp alone is β¬1, 350bn worth of assets, or approximately 11 per cent of euro area gross domestic product ( gdp ) [ which can be purchased on the secondary market under this programme, until the end of june 2021 ]. furthermore, additional monetary policy accommodation was provided through an increase in the existing asset purchase programme. the goal of all these measures is to support the flow of credit to the real economy, prevent a damaging tightening of financing conditions and proactively respond to the worsening outlook for growth and inflation in the euro area. furthermore, monetary policy has learned lessons from the euro crisis. philip lane, member of the executive board and former governor of the central bank, highlighted in a recent blog post that the flexibility embedded in the pepp has reduced the risk of fragmentation, a key issue in the euro crisis, by frontloading asset purchases and targeting them to where they are most warranted. 7 these significant actions of governments and of central banks β have been critical in stabilising our economies. these counter cyclical policies, domestic and international, fiscal and monetary are positively reinforcing each other across borders and supporting the recovery. they are examples of the european project delivering a better outcome for all. initial estimates suggest that for ireland, compared to a scenario without policy action, these measures would reduce the scale of the decline in output in 2020 by just over four percentage points. 8 there have been, and always will be, economic downturns but deeper integration with the common aim of minimising hardship for households and firms should lead to better outcomes for the people of europe. and our engagement in europe is central to delivering this for the people of ireland. financial stability β a shared concern now let | 0.5 |
is a need to incorporate new instruments, principally with a macroprudential approach. however, in the case of some of these instruments β specifically, the use of regulation for countercyclical purposes β evidence is scarce and debate as yet inconclusive. however, beyond the contribution that a central bank can make, financial stability requires a comprehensive framework of financial institutions, policies and practices. the solidity of this framework and its consistency are crucial. regulation and supervision, whether or not in the hands of the central bank, are critical, but so too are monetary and fiscal policy. the recent sovereign debt crisis in europe, for example, has demonstrated the importance of fiscal conditions for financial stability. market discipline and institutions β management, although discredited by the crisis, are factors that can, with an appropriate regulatory framework and incentives, contribute to stability. the efficiency of regulation and supervision should, in the end, be reflected in good behavior by institutions and the proper functioning of markets. discussion as to the institutional arrangements that are most appropriate from the point of view of financial stability remains open. one key question is who should be responsible for the tasks of prudential regulation. another, although perhaps slightly less important, is who should do the supervision. there are arguments in favor of different policy options, but any specific recommendation must take into account the experience and circumstances of each country. until the crisis, the prevailing trend was for a body different from the central bank to be responsible for regulation and supervision whereas now the wind seems to be blowing in the opposite direction. in this context, one piece of practical advice is not to significantly change something that has worked well. in any case, the decisions that are taken may have significant implications for central banks β institutional insertion, the scrutiny to which they are subject, and internal organization of their activities. these implications become particularly important if it is decided to give the central bank broad responsibility for financial stability. in this case, it may be advisable to adjust internal governance so as to ensure the necessary separation of the objectives of financial stability and price stability. under any institutional model, coordination and communication between the different authorities with functions related to financial stability will always be very necessary. even under a model that assigns all the relevant functions to the central bank, coordination and communication between it and the government will still be essential because it is the fiscal authority that is responsible for the use of public resources. in a globalized world, it is, moreover, necessary to develop mechanisms | enrique marshall : central banks β contribution to financial stability β the experience of chile speech by mr enrique marshall, board member of the central bank of chile, at the central bank of bolivia β s first financial workshop β macroregulation and financial stability β, la paz, 29 september 2010. * * * i am indebted to kevin cowan and jorge cayazzo for their valuable comments on an earlier version of this presentation but the opinions expressed here are the exclusive responsibility of the author. 1. introduction financial stability has been a concern for central banks since their very origins. the functions for which they were created β to regulate money and credit markets and to serve as lenders of last resort β have a direct bearing on the objective of financial stability and this relationship has been further reinforced by the fact that many central banks have also undertaken a role in regulating and supervising the banking system. both the economic literature and historical experience provide sound grounds for this concern for stability, clearly demonstrating that the functioning of the real economy requires an efficient and stable financial system. the hardest lesson of history, however, is that financial crises have occurred time and again, with a very high cost in terms of both their fiscal impact and the associated losses of output. 1 financial stability has, as a result, emerged as a paramount objective of public policy. however, the transformation of this general intention into specific objectives and policies has been, and remains, a complex matter that often involves options or dilemmas that are not always easy to resolve. to start with, the concept of financial stability is difficult to define precisely, nor do we have a sufficiently solid analytical framework equivalent to that used to conduct monetary policy. moreover, responsibility for preserving stability is normally shared among different authorities, each with its own approach to the issue. as a result of the current global financial crisis, financial stability is very much at the center of debate, prompting an in - depth review of institutional arrangements, authorities β responsibilities, policies and the instruments that can be used for this purpose. in developed countries, where the crisis had its origin, financial reforms are underway in a bid to overcome the weaknesses that were detected. emerging economies, although they did not experience the same problems, must take advantage of the opportunity to review their own situation, draw lessons and advance in perfecting their financial systems. from this point of view, the exchange of opinions that is the purpose of this seminar may help in drawing up recommendations. 2. the central bank of chile and financial stability the concern | 1 |
markets before legal confirmation illustrate the critical role of trust. even when followed to the letter, laws guide only a few of the day - to - day decisions required of business and financial managers. the rest are governed by whatever personal code of values that market participants bring to the table. commerce is inhibited if we cannot trust the reliability of counterparties β information and commitments. indeed, the willingness to rely on the word of a stranger is integral to any sophisticated economy. this necessary condition for commerce was particularly evident in freewheeling nineteenth - century america, where reputation and trust became valued assets. throughout much of that century, laissezfaire reigned in the united states as elsewhere, and caveat emptor was the prevailing prescription for guarding against wide - open trading practices. a reputation for honest dealing was thus particularly valued. even those inclined to be less than scrupulous in their private dealings had to adhere to a more ethical standard in their market transactions, or they risked being driven out of business. to be sure, the history of world business is strewn with fisks, goulds, and numerous others treading on, or over, the edge of legality. but they were a distinct minority. if the situation had been otherwise, nineteenth - century market economies would never have achieved so high a standard of living. over the past half - century, societies have embraced the protections of the myriad initiatives that have partially substituted government financial guarantees and implied certifications of integrity for business reputation. as a consequence, the value of trust so prominent in the nineteenth century seemed by the 1990s to be less necessary. most analysts believe that the world is better off as a consequence of these governmental protections. but recent corporate scandals in the united states and elsewhere have clearly shown that the plethora of laws of the past century have not eliminated the less - savory side of human behavior. we should not be surprised then to see a re - emergence in recent years of the value placed by markets on trust and personal reputation in business practice. after the revelations of corporate malfeasance, the market punished the stock prices of those corporations whose behaviors had cast doubt on the reliability of their reputations. there is no better antidote for business and financial transgression. corporate scandals and evidence of fraud and malfeasance notwithstanding, the history of ever - rising standards of living in a world fearful of violence is extraordinary testimony to the resilience of free peoples engaged in commerce. as president eisenhower opined | mario draghi : interview with the financial times interview with mr mario draghi, president of the european central bank, in the financial times, conducted by messrs lionel barber and ralph atkins on 14 december 2011 in frankfurt, and published on 19 december 2011. * * * financial times : we are now more than four years into the financial crisis. what lessons would you draw so far? what has gone right and what has gone wrong? mario draghi : we have to distinguish two stages. first was the financial crisis, with its repercussions for the real economy. i think we learnt the lessons that we need a more resilient financial system, a system where we would have less debt and more capital. there has been substantial progress in designing new regulatory policies and some progress in implementing this new design. the second stage of the crisis is really a combination of, i would say, a challenging political phase, where euro area leaders are reshaping what i called the fiscal β compact, β and a situation where banks and countries, face serious funding constraints. these challenging funding conditions are now producing a credit tightening and have certainly increased the downside risks for the euro area economy. action is proceeding on two fronts. at last week β s european union summit you saw a first step towards fiscal rules that are not only more binding, but actually are of a different nature. they would be binding ex ante, which is an entirely new quality, and written into the primary legislations of the member states. the second line of action is a set of meaningful, significant decisions taken by the ecb last week. we cut the main interest rate by 25 basis points. we announced two long - term refinancing operations, which for the first time will last three years. we halved the minimum reserve ratio from 2 per cent to 1 per cent. we broadened collateral eligibility rules. finally, the ecb governing council agreed that the ecb would act as an agent for the european financial stability facility ( efsf ). will the three - year refinancing operations give banks an incentive to buy β periphery β eurozone bonds? not necessarily. of course banks also have capital difficulties, and these measures don β t necessarily help them on that side. the objective is to ease the funding pressures that banks are experiencing. they will then decide what the best use of these funds is. one aspiration is to have them financing the real economy, especially small and medium sized enterprises | 0 |
##ps must now plan for a world in which these large firms will fail and be resolved without government support. recognizing the importance of strengthening our financial market infrastructure, the regulatory community has clarified and significantly raised expectations for ccps and all key financial market infrastructures ( fmis or market infrastructures ). these heightened expectations are set forth in the principles for financial market infrastructures ( or pfmis ), which were adopted in 2012 by the committee on payment and market infrastructures ( cpmi ) and the international organization of securities commissions ( iosco ). 3 the pfmis lay out comprehensive requirements for financial market infrastructures, including ccps. clearing and settlement activities are cross - border and indeed global in nature. major u. s. financial institutions interact with market infrastructures around the world. the pfmis have established a rigorous set of internationally agreed upon standards for the quality and these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. g20 leaders statement : the pittsburg summit ( pdf ), september 24 β 25 2009. committee on payment and settlement systems and technical committee of the international organization of securities commissions ( 2012 ), β principles for financial market infrastructures ( pdf ), β final report, april. bis central bankers β speeches quantity of loss - absorbing resources and liquidity, governance, risk management, stress testing, recovery and orderly wind - down, and other key areas. i believe that there has been reasonably good progress in implementing these reforms here in the united states. for example, according to the financial stability board, over 70 percent of new u. s. interest rate and credit derivatives are now centrally cleared. 4 and the federal reserve and other u. s. regulatory agencies have recently announced final margin rules for uncleared derivatives as well, which should enhance the resilience of trading that still occurs outside of central clearing. 5 but there is still plenty of work left to do. ccps are implementing the pfmis under the oversight of national regulators ; clearing members have been vocal commentators on this process. to assure that the standards are consistently implemented across jurisdictions and across fmis, cpmi and iosco are conducting joint reviews of the risk - management practices of a range of global derivatives - clearing ccps. working in conjunction with the basel committee on banking supervision and the financial stability board ( fsb ), they have also set out a detailed work plan for further enhancing the resilience, recovery | at the same time, the average coupon on outstanding corporate bonds remains considerably above rates on new debt issues, suggesting that firms are well positioned to cut their debt service burdens still further as outstanding bonds mature or are called. the net effect of these trends to date has been a decline in the ratio of business interest payments to net cash flow, a significant increase in the average maturity of liabilities, and a rise in the ratio of current assets to current liabilities. with business balance sheets having been strengthened and with investors notably more receptive to risk, the overall climate in credit markets has become more hospitable in recent months. specifically, improvements in forward - looking measures of default risk, a decline in actual defaults, and a moderation in the pace of debt - rating downgrades have prompted a marked narrowing of credit spreads and credit default swap premiums. that change in sentiment has extended even to the speculative - grade bond market, where issuance has revived considerably, even by lower - tier issuers that would have been hard - pressed to tap the capital markets over much of the last few years. banks, for their part, remain well - capitalized and willing lenders. in the past, such reductions in private yields and in the cost of capital faced by firms have been associated with rising capital spending. but as yet there is little evidence that the more accommodative financial environment has materially improved the willingness of top executives to increase capital investment. corporate executives and boards of directors are seemingly unclear, in the wake of the recent intense focus on corporate behavior, about how an increase in risk - taking on their part would be viewed by shareholders and regulators. as a result, business leaders have been quite circumspect about embarking on major new investment projects. moreover, still - ample capacity in some sectors and lingering uncertainty about the strength of prospective final sales have added to the reluctance to expand capital outlays. but should firms begin to perceive that the pickup in demand is durable, they doubtless would be more inclined to increase hiring and production, replenish depleted inventories, and bring new capital on line. these actions in turn would tend to further boost incomes and output. tentative signs suggest that this favorable dynamic may be beginning to take hold. industrial production, as i indicated earlier, seems to have stabilized, and various regional and national business surveys point to a recent firming in new orders. indeed, the backlog of unfilled | 0.5 |
##as, a. and m. mulino ( 2020 ), β october 2020 bank lending survey β, analytical articles, economic bulletin, 4 / 2020, banco de espana. secondly, the comprehensive nature of the monetary policy response has also been very important. it should be borne in mind that the covid - 19 outbreak in the euro area came about against a background of : low inflation and extensive monetary stimulus, with benchmark interest rates at a record low of - 0. 5 % ; net asset purchases under the asset purchase programme ( app ) ; and a set timetable for the tltros. in this setting, the ecb measures have run along two main axes : the purchase of financial assets and the provision of liquidity to commercial banks, covering the euro area economy β s main financing channels. as regards asset purchases, i have already referred to the approval of the pepp. the main aim of this programme is to ease financing conditions and ensure the smooth transmission of the common monetary policy to all euro area countries. as to liquidity provision, we should recall that, in the euro area, banks are the main source of financing for households, the self - employed and firms. it was therefore vital to head off a severe contraction in the flow of credit to the real economy. the risks of a contraction stemmed chiefly from two factors : first, the possibility that money markets would deteriorate to the point of compromising banks β access to them ; and second, banks β possible reluctance to assume fresh risks in the form of loans against a backdrop of enormous economic uncertainty. to tackle the first of these risks, the ecb launched a line of longer - term refinancing operations ( ltros ). these provided banks with β bridge financing β under advantageous terms until end - june 2020, at which point there would be a major liquidity auction. this measure contributed to stabilising the banking sector β s financing costs in the initial phase of the pandemic. as to the second risk, the ecb already had an instrument to encourage banks to extend credit : the aforementioned tltros. this programme grants banks financing under particularly favourable conditions, provided they meet targets for granting credit to households and firms. with the onset of the pandemic, this programme was recalibrated to make it more attractive to banks, allowing them temporarily to obtain financing at an interest rate as low as - 1 %, on condition they did not reduce their volume of eligible lending. also | , given that banks participating in eurosystem refinancing operations must offer collateral to obtain liquidity, we decided to ease the collateral framework conditions so that they could obtain a greater amount of financing in these operations. the measures adopted included most notably reducing the average haircut applied to the value of the collateral and accepting higher - risk assets as eligible, including loans backed by the national authorities β various programmes. thirdly, the importance of the ecb β s flexibility as regards the recalibration and use of instruments should be highlighted. by way of illustration, the evolution of the economic crisis caused by the pandemic required an increase in the pepp in june of β¬600 billion, and of β¬500 billion in december, up to a total of β¬1. 85 trillion. the net purchase horizon was also extended until at least end - march 2022 and the maturing securities reinvestment horizon until at least end - 2023. in december we also decided to recalibrate the conditions of the tltros. we extended by 12 months, until june 2022, the period during which the reduced interest rate for banks meeting the lending target will be applicable, scheduling three additional quarterly operations between june and december 2021, and increasing the borrowing allowance of tltro funds each bank can obtain from 50 % to 55 % of its eligible loans. another of our decisions was to extend until june 2022 the aforementioned collateral framework flexibility measures. but apart from this flexibility in the response over time, there is a key difference in the pepp compared with the previous asset purchase programme ( app ). whereas the app retains a relatively rigid structure regarding the distribution of asset purchases both over time and across jurisdictions, the pepp afforded itself from the outset the possibility of concentrating these purchases in the most critical months of the crisis and in the countries which, at each point in time, have been subject to tighter financing conditions. perfectly illustrating this flexibility in the distribution of purchases over time is the fact that the average monthly pace of purchases in the april - june period was β¬113 billion, whereas from october to december, against a backdrop of greater easing in sovereign debt markets, average monthly purchases barely exceeded β¬60 billion. thanks to this flexibility, along with the large volume of asset purchases initially envisaged, the announcement of the creation of the pepp on 18 march helped substantially reduce sovereign yields in the euro area, particularly in countries such as italy and spain. these countries had relatively high levels | 1 |
real eu banking union, financial institutions should be an eu matter, both in life and in death. apart from completing the bu, other elements are necessary to continue making progress towards a more complete financial union. from a regulatory perspective, the lack of a sufficiently homogeneous legal basis across the eurozone is evident. while full harmonisation may not be possible in the foreseeable future, there are some critical areas, such as anti - money - laundering, fit and proper standards and insolvency rules at credit institutions, where a common set of rules across the eurozone would foster the integration of the market, improving also the efficiency of supervision and resolution. as regards the institutional side, and looking beyond the bu, i want to highlight a second priority which, in my view, is essential to enhance the capacity of the euro area to cushion macro - financial shocks. this capacity is linked to the development of deep and integrated capital markets. the completion of the capital markets union ( cmu ) would complement the bu and would foster a truly cross - border financial sector, allowing economic agents to smooth asymmetric, national shocks. last, but possibly not least, it may also be time to tackle the absence of a pan - european safe asset. while controversial, the implementation of a single eu risk - free asset would likely become a common benchmark, allowing the prices of equities and bonds across the euro area to reflect fundamental risk more clearly, enhancing the effectiveness of monetary policy and fostering the attractiveness of european capital markets. a safe asset would also help mitigate the bank - sovereign nexus, reduce cross - border safehaven flows in the event of crisis and, ultimately, improve financial integration. of course, we should be cautious to design it in such a way as not to water down the incentives for sound national fiscal policies, which are the essence of achieving safety. 4 / 5 let me conclude. throughout its history, the eu has followed a path towards greater economic and political integration, which has brought clear benefits in terms of economic growth and citizens β rights. the bu is an important step in this direction and has been key to addressing the euro crisis. still, the implementation of certain regulatory and institutional elements are needed to reap the economic benefits of an increase in cross - border banking activities. when assessing our capacity to deal with future financial crises, we should not forget that the institutional setting remains incomplete and policy space has been reduced. as memories of the crisis fade, we should strive | in any event, it is desirable that any reform strategy chosen should increase the system β s transparency, strengthen its contributiveness ( i. e. the relationship between contributions and benefits ) and, in particular, maintain an automatic adjustment mechanism that ensures the sustainability of the population β s future pensions. it is likewise important to recall that the impact of population ageing is not confined to public finances, since it also bears down on the participation rate, productivity and the economy β s potential growth ; hence, tackling this phenomenon calls for a broad - brush approach, regarding both the time period envisaged and the set of instruments that should be used. in this respect, the outlook for the spanish economy β s long - term potential growth is relatively modest ( see chart 13 ). specifically, on the latest available estimates, which are naturally subject to some degree of uncertainty, our economy β s potential growth rate is expected to fall from close to 3 % per annum in 2008 to post - crisis levels slightly below 1. 5 %. this level, though close to that of the euro area, is below that estimated for the most dynamic developed economies. among the key structural factors constraining this growth are the aforementioned population ageing, high structural unemployment and lacklustre productivity. indeed, despite the swift pace of job creation in recent years, unemployment remains very high, especially among certain groups, such as the lesser - skilled, whose unemployment rate is over 25 % ( see chart 14 ). the difficulties some groups face in finding work means that, according to figures for the third quarter of 2018, practically half the unemployed have been in this situation for over a year. of particular importance here is improving the quality of employment, which is affected by the high involuntary part - time status and short duration of employment contracts. such marked segmentation of the labour market hampers, moreover, productivity gains. these market inefficiencies also lie behind β at least in part β the changes in inequality in spain during the crisis. over the course of the spanish recession, strong job destruction, concentrated among certain groups, and the precariousness of many contractual relationships that arose from this more uncertain macroeconomic setting prompted growth in inequality in per capita income, despite the fact that wage differences among workers oscillated less than in other developed economies. the current upturn and, in particular, strong employment creation are allowing some correction of per capita income inequality. however, looking ahead, additional reductions in | 0.5 |
adjustment βͺ inefficient intermediation of savings reduces the return on real investment and balance incentives in favor of speculation and rent - seeking βͺ underdeveloped financial systems are also prone to concentration and vertical integration, at the cost of clients and systemic risk [ slide 10 ] the latter are rather dramatic examples of the challenges posed by protracted financial development for price and financial stability, the twin goals of central banks. but such challenges can take many more shapes. a low coverage of banking and credit means that a substantial fraction of the population and companies may not have access to liquidity when they need it, nor credit to live through a contingency. liquidity and credit constraints prevent relative prices from resolving disequilibria, amplifying the impact of shocks on employment, production and consumption. inefficient intermediation of savings reduces the return on real investment and tilt incentives in favor of speculation and rent - seeking. shallow capital markets may be unable to hedge market risks, particularly exchange rate and term exposures, and foster concentration and vertical integration. underdeveloped financial services can also contribute to economic informality. what is the point in registering a business, complying with regulations and paying taxes if you cannot get funding for working capital or investment projects? the financial dimension of informality is shadow, unregulated banking, which is prone to insolvency, abuse and fraud. there is ample evidence that economic and financial informality β albeit a rational alternative for people with little choice β is a major obstacle for emerging economies to grow in a more inclusive way. thus, while central bankers would normally emphasize that their focus is on short - term macroeconomics and price stability, there is little doubt that a more efficient, deeper and inclusive financial system would make things substantially easier for them and would provide a lasting push for development. what difference can fintech make? [ slide 11 ] the central bank and commercial banks have been traditionally close because maturity transformation and fractional banking is in the dna of universal banking, that is, the ability of commercial banks to provide a large set of interrelated services to the public. central bank of chile 29 june, 2017 in contrast, fintech refers to those technologically enabled innovations in financial services that could result in new business models, applications, processes or products with an associated material effect on the provision of financial services. 1 thus defined, the scope of products or activities that can be catalogued as fintech | experience with unconventional policies during the recent global financial crisis and our experience with financial rescues in our own financial disaster in the early 1980s. in the latter case, i will also touch briefly on the impact of rescues on the central bankΒ΄s balance sheet. 1. financial stability as a policy goal. the role of the central bank the recent financial crisis challenged the paradigm that the stability of the financial system could be preserved through a combination of micro regulation and macroeconomic stability. before the crisis, many countries focused financial regulation on the risks faced by individual financial institutions ( as indicated by basel ii ), and macroeconomic policy on the preservation of price stability. this approach may have worked well during calmed times, but it also may have allowed hidden financial risks to build up unchecked. as a result, there is growing consensus that the pursuance of macro financial stability has to be considered in its own right, in a way that combines micro regulation with a systemic view of the financial system. bis central bankers β speeches however, while there is consensus in the approach, there is still debate on what institutions should be in charge of ensuring financial stability, and in particular, what should be the role of central banks. there are advantages in having central banks involved in preserving financial stability, but these advantages do not necessarily mean that they have to be the sole institutions in charge. central banks have a systemic vision of the economy that allows them to visualize links between different players of financial systems and their potential consequences for the real economy. also, as lenders of last resort, the preservation of financial stability is of natural interest for central banks. thus, even if not formally in charge, central banks should and do care about financial stability. but at the same time, there are important risks in having central banks in charge of financial stability. first is the risk of diluting the mandate of the central bank and damaging its credibility. central banks have fought hard to establish credibility by focusing on measurable goals, maintaining clear communications with the public, and being transparent and accountable in achieving these goals. the focus on inflation, a simple observable variable has helped. having a central bank with multiple mandates creates risks of policy dilution and conflicting goals. in contrast with inflation, or even employment, financial stability is a fuzzy concept with many dimensions that are hard to encompass in a single indicator. attempting to do so risks ending with a narrow view of financial stability, but having a broader, less precise definition of financial stability makes it hard | 0.5 |
measured and managed in isolation from one another, whereas in reality, they are closely linked. a credit event that drives down the value of a particular asset is likely to reduce the liquidity and price of that asset as well, at least in the short term. therefore, as trading in those credit instruments grew, new portfolio models were developed to take on board the interaction between credit risk and market risk. traditionally, regulation has distinguished between credit risk and market risk, and has treated both risks independently. the basel ii accord requires banks to keep capital for credit risk for banking book exposures and market risk for trading book exposures. however, it does not provide an implicit capital cushion for correlation between the two risks, other than a capital charge for counterparty credit risk for certain trading book exposures. however, emphasis is put on stress testing credit portfolio for these types of events. the recent events in financial markets have brought central bankers, regulators and risk managers to rethink and question the reliability of these new risk management systems for credit risk and market risk ; and the diversification effects and the relevance of risk aggregation embedded in these instruments. having said this, it may also be opportune to reflect over the future of regulatory practices for credit risk and market risk. ladies and gentlemen, as my time is almost over, let me take the next few minutes to tell you more on our distinguished speakers for this session. we welcome today, experts from mckinsey & company. ( presentations by the speakers ) concluding remarks i thank you all gentlemen for your fruitful presentations on such an interesting topic. this session has indeed been very informative for all of us present today and i hope that we may all draw lessons from your presentation on credit risk and market risk, particular on part of the presentation that was focused on the experience of indian banks in managing those risks. i now wish to quote a few sentences from the report : β towards superior risk management in indian banking. β β banks will need to continuously refine today β s practices. it is important to constantly revisit the risk architecture through the on going refinement of models, stress testing scenarios, revalidating limits, redesigning customer facing processes and restructuring of the organization. this also implies broadening the traditional purview of risk management to include newer practices such as reputational risk, business process re - engineering and concurrent audit improvement. β to conclude, as banking gets more sophisticated, risk management systems should be able to size up | the newer risks the operations expose a bank to. therefore, while the banking sector has grown rapidly and displayed high resilience, the need for continuous vigil on the part of bank managements and the regulator can hardly be overemphasized. for me therefore, it is the systems and processes for being able to anticipate risk events in time in a complex financial world that should be the focus area for banks the world over including the banks in india. thank you all for you attention. | 1 |
and 2020, respectively. such is higher than the gdp growth forecasts for thailand ( 2. 4 and 2. 8 % for 2019 and 2020, respectively ), indonesia ( 5. 0 and 5. 2 % ), and malaysia ( 4. 5 and 4. 3 % ). on inflation, price pressures have been dissipating since late 2018 with average headline inflation at 2. 5 % for 2019. this is well within the government β s 2 - 4 percent target range for the year. looking ahead, the latest baseline forecasts indicate that inflation is projected to average 2. 9 % for both 2020 and 2021. the balance of risks to future inflation appears to be weighted toward the upside for 2020 but remains tilted to the downside for 2021. petitions for electricity rates and transport fare adjustments, the proposed increase in excise taxes on alcoholic beverages, the impact of african swine fever ( asf ) on meat prices, and higher global oil prices are seen as the main upside risks to inflation. meanwhile, slower global economic growth due to the escalation of protectionist policies in advanced economies as well as geopolitical tensions continue to be the main downside risks to inflation. equally important, inflation expectations β based on forecast surveys of private sector analysts β have remained manageable and well within the government β s 2 - 4 % target range. results of the bsp β s survey of private sector economists for november 2019 showed unchanged mean inflation forecasts for 2019 to 2021. last year, the monetary board ( mb ) cut the bsp β s policy interest rate by a total of 75 bps and the reserve requirement ratio by a total of 400 bps. the mb believes that prevailing monetary policy settings remain appropriate, supported by the benign inflation outlook and a strong positive outlook for domestic economic growth. in terms of the policy rate outlook for 2020, the bsp will always be data dependent with its decisions. that is, each policy decision will 2 / 7 bis central bankers'speeches be based on all the available information to monetary authorities at the time of its decision. for this reason, the bsp will continue to closely monitor economic conditions and on making reasonable assumptions about the future when formulating its monetary policy. while emphasis is given to inflation and inflation expectations, we also consider a wider set of economic variables and their dynamics in deciding on monetary policy. the bsp examines demand conditions, domestic liquidity and credit, financial market variables, and the external landscape in deciding whether adjustments | which leads to such inflationary effects that a monetary policy reaction is motivated, and a change which does not require any such reaction? presumably, today's increased competition is only part of the whole picture of developments, in the same way that tax increases were during the 1970s and 1980s. at that time, not taking into account the fact that tax increases were part of the inflation process was a considerable policy mistake. in the same way one can ask whether the effects of deregulation and other effects of international competition should really be taken into account today. there are fundamental arguments against the idea of discounting considerable aggregates of goods that have been hit by price falls. what central banks should be trying to do is to stabilise general price levels and not to counteract changes in relative prices. this is to do with the fact that it is general price levels that can be influenced by monetary policy, and not the prices of items such as meat or nails. this is also to do with the fact that the positive effects of stable monetary value manifest themselves precisely because the players in the economy can rely on purchasing power which is not undermined. at the same time the riksbank has, in various contexts, maintained that there can be reasons for ignoring effects on inflation which are thought to be temporary. the reason for this is that it is not often possible to influence inflation quickly enough to counteract transitional price impulses without this leading to larger real disruptions. we have said, however, that we shall give as clear an account as possible of what the temporary effects are and how we deal with them. when examining the formulation of monetary policy in situations involving considerable pricemoderating effects, it can also be a good idea to give some reflection to the time perspective of monetary policy. one possibility is that the visible effects ebb away quickly, even though they occur beyond the normal policy horizon. in that case, presumably, one should be careful not to stimulate the economy too much. the opposite would apply if inflation were forced up strongly by some effect which could be expected to dissipate beyond the 2 - year horizon. this is obviously a difficult question of judgement. should a forecast change in prices be considered to be temporary or not? is there a future risk of inflation rising or falling rapidly? 2. asset prices the next question concerns the importance of asset prices as regards the formation of monetary policy. asset prices are not included in the inflation index, which we normally try to stabilise. | 0 |
benoit cΕure : policy analysis with big data speech by mr benoit cΕure, member of the executive board of the european central bank, at the conference on " economic and financial regulation in the era of big data ", organised by the bank of france, paris, 24 november 2017. * * * the recent financial crisis, and the euro area sovereign debt crisis that followed, were characterised by periods of increased heterogeneity, market fragmentation and sudden turns in economic activity. this often made it difficult for economic policymakers to understand and assess in real time the underlying forces driving economic behaviour. both traditional statistical datasets and our models proved at times inadequate to support the decision - making process, reflecting long time lags, linear assumptions and the absence of more granular information. these events increasingly boosted the efforts in policy circles to obtain timelier and richer data for policy analysis, in short big data. 1 this push towards more granular information was not a revolution, however. it can be argued that big data, under different guises, have been used as an input into policymaking since adolphe quetelet β s memoire in 1848. since then, big data has been central to business cycle analysis, from the early work of clement juglar to the contributions of both wesley mitchell and the cowles commission, right up until today. according to central bank mythology, former federal reserve chair alan greenspan would sit in his bathtub perusing sheets of statistics. and indeed, economic historians have analysed how the power of governments has been shaped by statistics β and vice versa. 2 the most recent push towards more granular data was thus an evolution rather than a revolution, triggered in part by the emergence of new opportunities β themselves a reflection of rapid technological progress β and the experience gained over several years of crisis management. this evolution is already bearing fruit. policymakers today have access to a large number of micro datasets, often very different in nature and scope. some are the result of new financial regulations. others are by - products of increased use of technology. what they have in common, however, is that, if used appropriately and responsibly, they can help policymakers to extract more timely and diverse economic signals, and thus are a meaningful complement to existing official data. in my remarks this morning, i will take stock of the progress made at the ecb, and in the central banking community more generally, on the use of more granular | . carrying out checks by algorithm, using machine learning techniques and artificial intelligence is one way of ensuring that data remain of high quality. the eurosystem has a steep learning curve in front of itself. these efforts will no doubt pay off. indeed, mmsr data have proven highly useful to policymakers in their short period of existence. let me give you an example. the data help us assess the impact of the ecb β s asset purchase programme ( app ) on market functioning, as i explained in more detail in a speech i gave last week in brussels. 6 mmsr data show that since the ecb launched the app there has been a marked shift away from trades backed by general collateral, which are traditionally used to manage cash. instead, there has been a growing share of repos off the general collateral curve, termed specials. take for example the german bund market. traditionally, only around 5 % of bonds in the german repo market traded as special, but in the second half of last year, that share rose to 50 %. being aware of the distribution of trades and the premium placed on special bonds enables us to assess the impact of the app on market functioning. to ease potential frictions, we decided last december to allow cash to be used as collateral in our securities lending programme, and to permit app purchases below the deposit facility rate. as a result of these decisions, the β specialness β premium on long - term german bonds has declined, and the share of bonds that trade special is now around 30 %. a further notable area of use for mmsr data has emerged from growing concerns about the reliability and robustness of current risk - free benchmark rates for the euro area. 7 banks have become increasingly reluctant to participate in benchmark panels, owing to concerns about potential litigation, compliance risks and costs. the resulting uncertainty in the integrity of reference rates represents a potentially serious source of vulnerability and systemic risk. against this backdrop, the ecb recently announced that it intends to provide a new overnight unsecured interest rate, using mmsr transaction data. the new rate is intended to complement existing benchmark rates produced by the private sector and serve as a backstop reference rate, with the aim to start publishing by 2020. 8 this move is motivated by our desire to mitigate the potential adverse impact on the monetary transmission mechanism and on financial stability from the lack of reliable benchmarks. the market facilitating role played by the ecb in this field is consistent with the tasks | 1 |
##ia in international banking ", essays in international finance, no. 164, 1986. 6 see notably jean - louis arcand, enrico berkes and ugo panizza, β too much finance? ", journal of economic growth 20, 2015, p. 105 β 148. 7 private non - financial sector debt as share of gdp, q1 2017. sources : eurostat data, federal reserve, banque de france calculations. 8 luc laeven and fabian valencia, β systemic banking crises database ", imf economic review, vol. 61, no. 2, 2013, cited by taryk bennani, laurent clerc, virginie coudert, marine dujardin and julien idier, β politique macroprudentielle, prevenir le risque systemique et assurer la stabilite financiere ", pearson, 2017, p. 118. 9 see imf world economic outlook, april 2015 and see patrice ollivaud and david turner, β the effect of the global financial crisis on oecd potential output ", oecd, working papers, no. 1166, 2014. 10 see in particular β the impact of financial reforms β, banque de france financial stability review no. 21, april 2017. 11 basel committee, basel iii monitoring report, september 2017. 12 see reports by the basel committee β s macroeconomic assessment group ( mag ) and long term economic 6 / 7 bis central bankers'speeches impact group ( lei ). 13 financial stability board, implementation and effects of the g20 financial regulatory reforms, august 2016, 2nd annual report. 14 financial stability board, global shadow banking monitoring report 2016, may 2017. 15 see us department of the treasury, β a financial system that creates economic opportunities ", june 2017. 7 / 7 bis central bankers'speeches | difficulties β, as they have become systemically more important with compulsory centralised clearing for derivative instruments. above all, we must ensure a balance between financing channels. all discussions on the shadow banking system must continue in order to take account of the risks that may have moved into this sector as a result of the ramping up of requirements in the regulated sector, and for banks and insurers in particular. it has been estimated that the segments that may pose financial stability risks represented a total of usd 34 trillion. 14 the priority has now shifted from the solvency of banks, which has improved substantially, to the liquidity of the shadow banking sector, particularly funds and asset management companies that are exposed to the risks of sudden panic - driven runs. lastly, progress is required on fintechs and above all on the major digital platforms and businesses, which, if they carry out financial activities, will have to comply with similar regulations sooner or later. 3 ) the third challenge is evaluation. evaluation is essential to the credibility of the financial reforms that have been adopted worldwide, and to this end, the g20 adopted a postimplementation evaluation framework this summer. this framework should allow us to determine whether the reforms have actually achieved their desired results, without any unexpected, adverse effects, and to make adjustments if this is not the case. two initial evaluations are already underway : the first deals with the effectiveness of reforms that encourage the use of central clearing while the second assesses the impact of g20 reforms on access to financing, which will begin by looking at infrastructure financing before focusing on credit to small and medium - sized enterprises ( smes ). the first evaluation reports are expected to be made public by the end of 2018. 4 ) the fourth challenge, in order to consolidate the progress we have made, is to ensure that the new regulatory framework is implemented consistently across the board while remaining vigilant to avoid backtracking. in the country doctor, balzac wrote β... in all things human, is not constancy the highest expression of strength? ", rightly reserving this virtue for the great men of his day. now, as you know, the new us government has raised the possibility of reviewing their national banking regulations. 15 certain national adjustments could be considered appropriate and justified, as is the case, for example, for regulations that concern entities whose operations are only local in scale, or regulations that are purely american in scope such as the volcker rule | 1 |
miguel fernandez ordonez : global rebalancing, asset prices and policy responses opening remarks by mr miguel fernandez ordonez, governor of the bank of spain, at the fifth high - level seminar of the eurosystem and latin american central banks, madrid, 10 december 2010. * * * good morning and welcome again. more than three years after the global financial system started to show serious signs of instability and two years after being on the verge of a global economic and financial meltdown, the world economy seems to have avoided that risk, backed by a strong and coordinated policy response. nevertheless, the strengthening has been uneven and the risk of economic and financial instability is still persistent and significant in some regions, like the euro area. indeed, it is hard to emphasise sufficiently the challenges ahead and how crucial the present juncture is for the future of our monetary union. on the contrary, latin american economies had learned the lessons from the severe financial and economic disruptions they experienced in the not so distant past, and the challenges they currently face are more similar to those that characterised the period of strong growth prior to the financial crisis. these very different sets of present circumstances make today β s exchange of mutual experiences and policy discussion particularly interesting. the title of today β s seminar was chosen almost a year ago, but it couldn β t be more timely : global rebalancing, asset prices and policy responses. from today β s perspective, these three issues refer β more or less directly β to the basic challenges that will have to be tackled to make the present uneven and unbalanced global recovery sustainable. with this in mind, i will organise my opening remarks around these three topics. first, i will deal with global rebalancing and how to achieve it in a context of diverging economic prospects for advanced and emerging market economies. second, i will address the recent behaviour of global financial flows and the challenges that emerging market economies face in this regard, including the risk of asset price overvaluation. and finally, i will touch briefly upon the need to enhance policy cooperation at the global level, especially as some economies progressively leave the worst of the crisis behind. let me move now to the first issue : global rebalancing and the world economic outlook. although global imbalances were considered one of the major risks facing the world economy before the crisis, such risks did not finally materialise in the expected form of a disorderly adjustment of exchange rates, with disruptive effects | granted to these institutions ( whose estimated cost as at 31. 12. 2013 was β¬6, 898 million at present value ) and the potential losses caused by the acquisition of shares in ncg and cx, provisionally evaluated at β¬754 million. 4. the new challenges for the sector and the authorities having reviewed the transformation of the spanish banking sector and its consequences in terms of costs for the public coffers, i have some thoughts i would like to add on the outlook for the sector. in particular, moreover, i wish to analyse the consequences, both for banks and public authorities, of the regulatory reforms agreed in response to the financial crisis. as i said earlier, the banking industry has been strengthened considerably in terms of asset quality, efficiency and solvency. this has been the result of the restructuring undertaken, the independent measures of the banks themselves, the regulatory changes made and the proper application of the demanding accounting rules laid down by the banco de espana. i trust this will all come to light in the assessment exercise which, as you know, is being conducted at the european level as part of the groundwork for the start - up of the single supervisory mechanism ( ssm ) in november this year. however, the challenges ahead are significant. the current environment, marked by stillweak macroeconomic conditions and very low interest rate levels, continues to exert pressure on banks β turnover and margins. while the recovery under way is being felt and there are discernible signs of credit stabilising and non - performing loans declining, it is likely that banks β recurring income β in line with developments in the rest of europe β will remain at still - low levels for some time. in addition, the new regulatory changes, both prudential and resolution policy - related, require not only the availability of ample capital levels but also, moreover, of other liabilities - side instruments able to be converted into capital if needed. taking advantage of the foreseeable improvement in economic conditions to raise the return on equity, while responding to new regulatory requirements, is a notable challenge for the financial system. note that this figure does not include the sale of shares of bankia by bfa ( 100 % - held by the frob ) in february β accounting for 7. 5 % of capital, at the price of β¬1. 51 per share β insofar as the liquidity obtained remains in the selling institution and is not therefore a refund of assistance until bfa β | 0.5 |
banks which developed the originate - to - distribute model. as conceived by spanish banks, asset securitisation was not a business in itself but a mechanism to obtain additional funding. in this way, risks were not transferred to the financial markets but were retained on the balance sheets of the banks granting financing, and the perverse incentives under the originate - to - distribute model were thus avoided. second lesson : on the use of complex products that are difficult to assess and lacking in transparency the process of asset securitisation has also differed across banking systems as concerns the complexity of the products developed. the second key aspect of the turbulence is that some international banks, particularly when securitising us subprime mortgage loans, used highly complex structured products that are difficult to assess and lacking in transparency. products such as cdos, cdos of abs and cdo squared have been prominent in recent months in the business news, especially because of their adverse impact on the results of the biggest international financial institutions. some of these products used the bonds resulting from a specific securitisation, packaging them and combining them with other financial instruments in order to re - securitise them. other products, to offer another example, were made up of securitisations of relatively heterogeneous asset portfolios, in which the degree of concentration was high. evaluating these products required the use of sophisticated models based on numerous assumptions and on information not directly observable in the markets. also, owing to their recent development, the models had not been tested in a highly adverse scenario. in addition, the sophistication of these products meant that the calculation of the parameters needed for the valuation models was more complex, making it increasingly difficult to value the level of risk incurred. events have highlighted the fact that the valuation models have not worked well, meaning that many banks have miscalculated the level of risk assumed and that stress tests have not worked properly. beyond these quantitative considerations, the use of these complex products also indicates significant shortcomings in the more qualitative facet of risk management. quite simply, numerous banks and investors took positions in products that they did not properly understand. and today it is quite clear to see that they have perhaps committed the most basic error contrary to sound risk management, i. e. investing in products whose risks have not been fully understood. the third ingredient the turbulence has revealed in relation to this type of product has been the lack of transparency, both | ##d. indeed, the tasks to be performed pose an even more demanding challenge, considering that the turbulence is coinciding with a period of internal adjustment and deceleration in the world economy. the deterioration in macroeconomic conditions is most patent in the united states, with most analysts forecasting a sharp slowdown in the opening quarters of 2008. but slacker growth is also expected in europe in the coming months. the spanish economy, after an upturn lasting more than ten years, has also begun its adjustment. for all these reasons, as economic agents we all have a significant " to do " list ahead of us. i shall begin by referring to credit institutions, since it is up to them to continue managing properly the risks they assume, developing adequate risk measurement, control and management systems and, in short, determining what level of solvency is appropriate to their risk profile. in the present circumstances of the international financial markets, there are certain considerations that i believe to be particularly significant. first, spanish banks must respond appropriately to the change in cycle under way in our economy. this entails not only properly managing defaults as they occur, but also tempering the slowdown in the rate of credit expansion. it would be counter - productive for the spanish economy if an excessive reduction in credit growth were to limit its capacity to grow. second, as i have pointed out already, spanish banks β income statements have escaped the effects of the us sub - prime mortgage crisis. however, unquestionably the environment in which spanish banks will have to operate, and indeed in which they already do operate, has become very difficult. insofar as higher financing costs may affect their operating margins, alternative mechanisms for keeping their income statements sound must be strengthened. an initial consideration in this respect is that a high percentage of the financing granted in spain is variable rate, so banks have a greater, almost automatic, ability to pass cost increases through to borrowers. further, in the last few years spanish institutions have shown notable skill in managing operating costs, becoming some of the most efficient players in the world. in the current circumstances, progress along these lines is even more necessary. third, and very importantly, some of the international markets on which spanish institutions have raised financing in recent years have narrowed substantially. in this respect, the lack of discrimination seen in the last few months is surprising, as the markets have similarly penalised products whose features, in terms of level of complexity and risk, are substantially different. | 1 |
. the debate is about just how strong the growth and just how low the rate of inflation. but we will be keeping that prospect under continuous review and be ready to respond to the evidence that emerges in the real world - in either direction. you will have noticed that, although i disclosed my hand on the first ballot, i have not done so on the second. i will leave you to discover from the minutes of our future monetary policy committee meetings how i vote in the real thing! and that, mr chairman, is as clear a steer as you are ever likely to get from a central banker on the likely future interest rate path! | ##rrencies and artificial intelligence ( ai ). in the rest of this speech, i β ll describe how the bank of england goes about pursuing its mission in the fintech sector, and give some examples of how we put those principles into practice, developing the right public infrastructure both for incumbents and firms looking to scale up. payments one topic i don β t intend to cover in detail today is our work on payments. this is a rapidly - developing area even by fintech standards and an important area of work for us, and one worthy of a speech in its own right. i don β t have time to do it full justice today, so i β ll just note three key recent developments. 1. first, we are continuing with our work to renew our rtgs service, which is twenty five years old this week. building on the functionality provided today, the new rtgs service will deliver a range of new features and capabilities for payments and settlements between financial institutions, ensuring our payments architecture is fit for the future. 5 2. second, as the chancellor of the exchequer highlighted in his speech at the start of fintech week on monday, we have also enabled β omnibus accounts β to be opened in rtgs : these allow us to offer the benefits of settling in the ultimate risk - free asset, central bank money, to a wider range of payment systems, and by so doing can help the industry to develop faster and cheaper high - value payment services. 6 3. and third, as the chancellor also highlighted, we are, together with hm treasury, establishing a new joint taskforce, along with two stakeholder engagement forums, to explore a possible central bank digital currency or cbdc. a cbdc would, if introduced β and that is an important if β be a new form of digital money issued by the bank of england and for use by households and businesses, existing alongside cash and bank deposits rather than replacing them. 7 data strategy a second major fintech - related work stream for the bank has been around our data strategy. the bank has long been an active proponent of universal standards for data, a classic example of soft infrastructure. https : / / www. bankofengland. co. uk / - / media / boe / files / speech / 2020 / cross - border - payments - innovating - in - a - changing - world - speech - byvictoria - cleland. pdf https : / / www. bankofengland. co. | 0.5 |
reversing this dynamic will require measures in various areas including, among other aspects, improvements in education, the quality of institutions, competition in product and service markets and investment in research, innovation and development, along with a reduction in temporary employment in the labour market. i would like to conclude by stressing the importance of making europe β s challenges our own. in short, on the economic front, this currently involves two goals : completing the banking union and shoring up the fiscal stabilisation capacity of the euro area countries. with the supervisory pillar in place, completing the banking union still calls β as the euro area heads of state and of government recently concluded β for a common backstop for the single resolution fund. and, above all, the creation of a european deposit guarantee scheme. 4 / 5 in the fiscal policy arena, fiscal stabilisation capacity in the euro area needs to be completed through two channels : improving the member countries β fiscal headroom and developing supranational cyclical insurance instruments. to conclude, i turn once more to the spanish royal academy, which defines β challenge β as an aim it is difficult to achieve and which is thereby an incentive and a test for whosoever faces it. economic policy - making requires constantly facing the challenges our society throws up. to quote jean monnet, β nothing would be more dangerous than to regard difficulties as failures β. 1 thank you. jean monnet, memoirs, william collins sons & co. ltd., great britain, 1978. 5 / 5 | years. against this background it is necessary, firstly, to deepen the fiscal consolidation process. the high level of public debt is harmful to the economy β s financing conditions, it restricts the countercyclical leeway of budgetary policy and it means a high volume of resources must be set aside to pay the interest burden. there is room, moreover, for the fiscal consolidation process to be compatible with a revision of the structure of public revenue and spending, making it more efficient and 3 / 5 enhancing its contribution to growth. and, at the same time, a greater degree of fiscal coresponsibility should be promoted across the different tiers of general government. it is likewise a priority to pursue further reductions in unemployment and its persistence among specific groups, especially the lesser - skilled. the high level of joblessness is also closely related to the notable increase in inequality that came about during the crisis. achieving this will require not only labour market measures but also, more broadly, actions targeting employee skills and training, to encourage their greater adaptability to a new environment marked by technological progress, the automation of productive processes and the knowledge economy. in parallel, despite the significant progress in recent years, the financial sector continues to face deep - seated challenges. these include the need to tackle the effects of the farreaching changes in regulation, technology and competition, to improve low profitability levels and to complete the ongoing reduction of problem assets. looking ahead to the medium and long term, population ageing is probably the main challenge the developed societies face. according to projections by the national statistics institute, in the next 50 years the over - 65 population, which currently accounts for less than one - fifth of the total population, will grow to represent more than one - third. this phenomenon will exert β and is already doing so β an adverse effect on the economy β s participation rate, employment and productivity, and most singularly on public finances, raising spending on pensions, health and long - term care. the scale of this challenge means a broader and longer - term strategy must be defined where, along with revising the arrangements for our welfare state and its financing, in order to ensure its sustainability, it will also be particularly important to have policies encouraging worker participation in the labour market, to align migratory policy with labour market needs and to pursue policies promoting the birth rate so as to draw it closer to the rates in other european countries. the spanish economy also evidences very poor figures in terms of productivity. | 1 |
fout! onbekende naam voor documenteigenschap. opening remarks by frank elderson at the ngfs conference paris, 17 april 2019 at the c onference of the network for greening the financial system, the network presented its first ngfs comprehensive report. in it, the network issued six recommendations. the first four apply to the work of central banks and supervisors, while the last two are for policymakers. in his opening speech at the conference, frank elderson outlined why central bankers and supervisors have joined the network. elderson describes why they engage in greening the financial system, what the network aims at and what steps are already taken during the year and a half that the network exists. fout! onbekende naam voor documenteigenschap. in 1163 the first stone was laid of what later became the very heart of paris. two hundred years of countless hands, building, carving, constructing together. a marvelous monument. a tribute to what humanity can achieve. when working together, with a commonly held belief in a shared objective. the day before yesterday the notre dame - so much notre dame burned. and all our hearts burned with her. what was lost was a beautiful cathedral. what was lost was a jewel in the crown of the world β s heritage. what was lost was a symbol of peace and worship. but what was not lost, is our sense of common destiny. what was not lost is our acute awareness of what we, humanity can achieve, when working together, with a common held belief in a shared objective. in december 2017 the first stone was laid of what later became the ngfs. one and a half years, countless hands, building, carving, constructing together. a marvelous coalition of the willing. a tribute to what central banks and supervisors can achieve, when working together, with a commonly held belief in a shared objective. it β s a therefore only appropriate that we are here in paris. paris, where the seed for this initiative was first planted back in 2015, at the paris c limate agreement. paris, where the seed sprouted a couple of years later, at the one planet summit. i am happy to say that the network for greening the financial system has now firmly taken root. it is growing at an impressive rate, with shoots popping up all over the pla net. only yesterday two new members and an observer joined us. a warm welcome to the swiss national bank, | were at the heart of the sovereign debt crisis. it would be unfair to only look at germany for this situation, as many serious policy mistakes were made in southern countries. first, several countries failed to implement the structural reforms that were needed to function smoothly in a monetary union. rigidities in product and labor markets contributed to severe losses of price competitiveness. second, several countries experienced booms in domestic demand on the back of unsustainable growth of credit and house prices. third, several countries failed to use the windfall of lower interest rates due to emu - membership for a lasting improvement of public finances. between the mid - nineties and the financial crisis, interest rate expenditure on public debt in the periphery decreased by 4. 5 % of gdp on average. only spain used this fully to reduce budget deficits. unfortunately, in the other countries, on average almost half of this percentage did not translate into lower deficits. these policy mistakes suggest that the burden of adjustment mainly lies in southern europe. but it would also be unfair to turn the crisis into a moral caricature between the virtuous and the profligate, between ants and grasshoppers. as jens mentioned in one of his recent speeches, several so - called core countries are not in great shape either. think of low bis central bankers β speeches competitiveness and high public debt in france. think of low productivity growth in the german service sector. and think of the painful correction of house prices here in the netherlands. this clearly illustrates that all emu member states need to carry out reforms to improve their economic growth potential. moreover, policymakers in all european countries made misjudgments regarding the functioning of emu. most didn β t see these flaws when we celebrated 10 years of emu, only months before the collapse of lehman brothers. at the time, we all failed to see how the growing importance of financial factors had fundamentally changed the monetary union. it wasn β t recognized that the euro area was experiencing asymmetric financial cycles rather than asymmetric business cycles. this is serious omission as recent research shows that these financial cycles are much larger and longer - lasting than normal business cycles. they created divergences that emu was not designed to deal with. in addition, we thought that the strong increase of financial integration after the introduction of the euro would enhance risksharing. but we didn β t realize that it also spurred contagion and pro - cyclical capital | 0.5 |
john hurley : prospects for productivity and growth in ireland and the euro area opening statement of mr john hurley, governor of the central bank and financial services authority of ireland, at the central bank and financial services authority of ireland conference β prospects for productivity and growth in ireland and the euro area β, dublin, 15 september 2006. * * * ladies and gentlemen, i would like to welcome you to this one - day conference on the prospects for productivity and growth in ireland and the euro area. i extend a special welcome to those who have come from abroad, in many cases travelling long distances. today's event brings together a wide range of participants to discuss these important topics, not just academics and policy - makers but also representatives of commercial banks, international organisations, the public sector, industry groupings and economic commentators. the day will be divided into two sessions, the first dealing with the irish economy and the second with the euro - area economy. these sessions will begin with a number of presentations by invited speakers, including some of the bank's economists, and will be based largely on the speaker's own research. after contributions from discussants, there will be an opportunity for a more general discussion of the issues. of course, we do not expect that the conference will end with a consensus on all the issues. the conference topics are ones on which there can be quite a range of views and each of today's participants will naturally present their own particular analysis. however, i hope that, by the end of the day, most of you will feel this event has been useful and that it will stimulate further debate on matters that are of critical importance to ireland and the wider euro area. i would like to stress that this conference is about growth prospects over a number of years or even decades. it is not about what will happen in the next quarter, the interpretation of the latest data or any aspect of the conjunctural situation. it focuses instead on the medium to longer - term growth potential of the economies in question and the factors that will determine this potential over time. at the most basic level, these factors are the supply of labour and capital and the increasing efficiency with which these are used over time, that is, total factor productivity growth. the evolution of each of these three individual components - labour, capital and productivity - is a very complex story in itself. for example, the supply of labour reflects developments in a range of underlying variables, not just demographic developments such as ageing and | attained mainly through a reduction of about six percentage points, to 44 %, in the ratio of government expenditure to gdp. what does this target mean in terms of the savings that need to be made? during the past five years government expenditure has been increasing by an annual average of lm55 million. at this rate, it would exceed lm1. 1 billion in 2007. but the total contemplated in the convergence programme for that year is about lm950 million. in other words, the average annual increase in expenditures during the next three years must not exceed lm5 million, which is just one - tenth of the present growth rate. this implies that measures must be put in place now that would by 2007 reduce expenditures by lm150 million. required expenditure and taxation reforms the attainment of this objective clearly requires extensive reforms. in this context, i would like to propose some policy orientations which would help to reduce the deficit to the planned level. for this purpose, it is useful to look at government expenditure from two perspectives. the first is in terms of what it is buying. the second focuses on what such expenditure is achieving. the first of these approaches helps to identify the potential for savings. this year over 20 % of total spending, some lm200 million, will go towards wages and salaries and another 10 % will go to public sector bodies, again largely to finance human resource costs. in short, the public sector wage and salary bill absorbs close to one - third of total budgetary expenditures. against this background it is imperative that the current negotiations for the renewal of collective agreements in the civil service and in the public sector recognize the need to cut spending. it is important that any wage increases be matched by measurable productivity improvements. it is equally necessary to make better use of the human resources available by strengthening both the management culture and work practices. it must also be accepted that the public sector cannot continue indefinitely to carry the cost of employees who are effectively redundant. a time limit must be set beyond which this burden will no longer be carried, and training and redeployment schemes should be strengthened in the meantime to facilitate the transition. another third of government expenditures is absorbed by social security benefits, a category whose growth over time is conditioned by increases in wages and prices, demographic pressures and the need to preserve the social fabric. along the way, however, the original priorities seem to have been lost sight of. as a result, malta has a welfare system | 0 |
inflation, and the middle class will not see its savings eroded. all this awaits us as we stay the course. thank you very much for your patience in listening to me. references bruno michael and william easterly. 1995. β inflation crises and long - run growth, β nber working paper no. 5209 ( cambridge, massachusetts : national bureau of economic research ). easterly william and stanley fischer. 2001. β inflation and the poor. β journal of money, credit and banking. volume 33, issue 2. may. 160 β 178 fischer stanley 1993. β the role of macroeconomic factors in growth β. journal of monetary economics. volume 32, issue 3, december 1993, pages 485 β 512 khan, mohsin s., and abdelhak s. senhadji. 2000. β threshold effects in the relationship between inflation and growth, β imf working paper 00 / 110 ( washington : international monetary fund ). bis central bankers β speeches | board's role to provide oversight, asking the right questions and holding the management accountable for executing the bank's strategy within the agreed risk appetite. in this context, it is imperative that the views of the board are clearly articulated and documented in the minutes of the meetings of the board and its various subcommittees. it is said that the'palest ink is better than the best memory '. proper documentation serves as a vital record of the board's deliberations, decisions, and rationale behind those decisions, ensuring transparency and accountability in governance. clear minutes not only provide a historical account of the board's discussions but also serve as a reference for future decision - making, helping to maintain continuity and clarity in governance practices. boards should prioritise proper succession planning for top management. having just one whole time director ( wtd ) can create potential vulnerabilities, especially in times of transition or unforeseen circumstances. without a well - thought - out succession plan, 2 / 5 bis - central bankers'speeches the bank may face leadership gaps that could disrupt operations and affect strategic decision - making. a broader pool of experienced leaders also contributes to better governance and more resilient management structures. we observe that while the sfbs are strengthening their boards by bringing in new directors, some sfbs are yet to ensure the presence of at least two whole time directors. i would request these banks to expeditiously consider appointing more wtds. empowering assurance functions boards should accord due importance to assurance functions, namely, risk management, compliance and internal audit. these functions play a critical role in identifying and mitigating risks, ensuring compliance with laws and regulations as well as safeguarding the organisation's integrity. boards should ensure that heads of assurance functions are positioned appropriately within the organisational hierarchy and granted direct access to the board. dual - hatting, or combining assurance responsibilities with operational or management duties, undermines the independence and objectivity of assurance functions by creating conflicts of interest. therefore, any dual hatting of assurance functions, should be avoided. key risks to reflect upon small finance banks have demonstrated strong growth since their inception, now accounting for 1. 18 percent of total banking assets ( as of march 2024 ). this is a substantial rise from 0. 44 percent in march 2018. the deposit base has grown at a 32 per cent compounded annual growth rate ( cagr ) over the last five years whereas net advances recorded a cagr | 0 |
right, but there are many other places to make a deposit account, such as post offices, agricultural and fishery cooperatives, credit cooperatives, convenience stores, and supermarkets that provide banking services. deposit accounts can be held in a range of places nowadays. to examine the impact of the bank's easing policy on banks'profits, chart 2 compares the actual deposit - taking and lending - related profit as a result of the increase in lending and decline in interest rates since the introduction of qqe ( where profit is calculated by subtracting interest on deposits from interest on loans ) as well as hypothetical deposit - taking and lending - related profit had qqe not been introduced. in particular, two counterfactual scenarios are considered. in the first, case 1, it is assumed that without qqe see, for example, the 2 - day series, minami takero and nakatani shogo, " chigin haran jinzai kokatsu no kiki, " nikkei, february 20 and 21, 2019. 17 yamaneko, " keizai kishodai ginko no kyogaku sonshitsu, dare no tame, " the asahi shimbun, march 26, 2019. the article describes how deterioration in banks'profits has started to undermine users'convenience - - for example, branches that people nearby have frequented have closed and / or some other branches have stopped providing services for corporate clients, allowing use only by individual clients. lending would not have increased and interest rates would have continued declining, following the past trend. next, although i think that it is correct to assume that interest rates would have continued to drop as a trend due to the decline in prices and in real gdp growth rate, as pointed out earlier, the second counterfactual scenario, case 2, assumes that interest rates would not have declined. chart 2 simulation of deposit - taking and lending - related profit tril. yen introduction of qqe 6. 0 5. 8 5. 6 5. 4 5. 2 5. 0 4. 8 4. 6 4. 4 4. 2 4. 0 fy 2011 actual values case 1 case 2 note : all banks ( domestic business sector ). deposit - taking and lending - related profit is calculated by subtracting interest on deposits ( including negotiable certificates of deposits ) from interest on loans ( including bills discounted ). in case 1, data from fiscal 2013 onward - - those | , business closures, and job losses created tremendous hardships for many americans, and was especially devastating for communities of color. we know that people of color, and black people in particular, experienced higher rates of illness and death. 1 significant representation in essential services work β jobs that required close contact with others β contributed in part to these tragic outcomes. 2 over the past 18 months, we learned how these issues played out for families through regular conversations with community leaders in our district and beyond. separately, our research shone a spotlight on many of these painful realities. for example, a team of new york fed economists published a series earlier this year aimed at understanding the gap in covid - 19 intensity by race and by income. 3 and last month, they shared their findings around racial differences in icu stress during the third wave of covid - 19. 4 1 / 2 bis central bankers'speeches there β s no single or simple solution that can fully address these problems. but, as a nation we can build a stronger foundation so that everyone can fulfill their economic potential, thus better enabling the federal reserve to fulfill its mandate. that β s why at the new york fed β and across the federal reserve system β a key area of focus is to better understand economic drivers of health and wellbeing, and to champion promising solutions. we are able to do this in large part through our community development efforts to better understand the needs and issues of low - and moderate - income communities throughout our district. our community development team recently adopted a new strategy to concentrate on three key areas : health, household income, and climate. 5 our aim is to connect people, programs, and proposals β especially those focused on fostering racial equity β with the funding needed to promote equitable growth and tackle economic inequality. we are already doing important work in this space and there is so much planned for the future. a few months ago, we brought together mental health and policy experts to examine the pandemic β s impact on mental health in communities of color, including the correlation between depression, anxiety, and economic factors such as lost income. 6 and next week, we β ll be hosting an event in collaboration with new york university β s rory meyers college of nursing, the new york city department of health and mental hygiene, the low income investment fund, and the robert wood johnson foundation to discuss the need for investments in maternal and child health. 7 our goal for convening this coalition of thought and civic | 0 |
cricket for the first time. young people need role models and sport is perhaps the most important source of them. of the many black country sports men and women who have been role models down the years, there is one whom i would like to single out tonight β vikram solanki. born in rajasthan, vikram moved to wolverhampton as a small boy, and became the finest and most exciting batsman to emerge from the area for a long while. now captain of worcestershire, one could not think of a better role model to bring communities closer together. that is why i am pleased to say that i shall be one of vikram β s patrons for his benefit year in 2007. of course, i could not talk about sport in the black country without referring to football. nowhere had, in my day, more first division teams within a few miles radius than the black country. and all the supporters of those teams have had many opportunities over the years to learn how to win and, especially, how to lose. but for the sake of local interest and rivalry, i am looking forward to the day when wolves and the albion are restored to the premiership. just as football needs a referee, so does the economy. i think of the bank of england β s monetary policy committee β the mpc β as the referee for the economy. the mpc sets interest rates to keep inflation on track to meet the 2 % target. we want to allow you to focus on running your businesses β you are the players β while the mpc quietly gets on with its job. you may have seen in the news that yesterday the bank of england published its latest inflation report. that set out our view on the prospects for the economy over the next couple of years. perhaps i could briefly summarise our latest analysis of the uk economy. for the past year gdp has grown at a rate around its long - term average. inflation has picked up and has been above the 2 % target since may. overall, the central view is one of inflation rising further above the target in the near term, before falling back to the target. the risks around that benign central view are seen by the mpc as broadly balanced, but there is significant uncertainty about the outlook for inflation. the outlook for growth remains one of a continued modest rebalancing of demand, with consumer spending growing at close to its long - run average rate, business investment continuing to recover, and net trade making a small positive contribution to growth. the mpc judges that | andrew sentance : prospects for global economic recovery speech by mr andrew sentance, member of the monetary policy committee of the bank of england, at the british chambers of commerce annual convention, london, 18 march 2010. * * * i would like to thank michael hume and abi hughes for research assistance and i am also grateful for helpful comments from other colleagues. the views expressed are my own and do not necessarily reflect those of the bank of england or other members of the monetary policy committee. over the three - and - a - half years i have spent so far on the monetary policy committee, one of the things that has struck me most forcefully is the way in which the uk economy is so heavily influenced by international developments. the global financial crisis and the recession which resulted from it have highlighted that very clearly. but even before we felt the full force of the crisis in late 2008 and early 2009, uk inflation was pushed up to over 5 % by a surge in global energy and commodity prices. and looking back over the whole history of the mpc since 1997, most of the shocks to uk growth and inflation that the committee has had to worry about have had a significant international or global dimension. 1 these global influences on the uk economy partly reflect our economic history. flows of overseas trade, investment and finance have played a major part in shaping the development of the british economy, creating a highly international business and financial environment here in the uk. but links to the global economy have also been strengthened by globalisation, which has reinforced international linkages across the world economy as the global economic system has become more integrated and interdependent. 2 key global economic disturbances over this period include the asian crisis ( 1997 / 8 ), the bursting of the β dotcom β bubble followed by the impact of 9 / 11 and war in afghanistan and iraq ( 2001 β 3 ), and oil and commodity price volatility in the mid - 2000s. i have discussed the impact of globalisation in more detail in earlier speeches. see, for example, β monetary policy in turbulent times β ( 21 april 2009 ) and β energy and environmental challenges in the new global economy β ( 21 september 2009 ), both available on the bank of england website : http : / / www. bankofengland. co. uk / publications / speeches / speaker. htm # sentance. the performance of the global economy is therefore critical to the prospects for uk recovery. and it is therefore very encouraging that the global economy | 0 |
krzysztof rybinski : poland and euro panel speech 1 by mr krzysztof rybinski, deputy governor of the national bank of poland, at a debate organised by demoseuropa β centre for european strategy and ebert foundation, warsaw, 26 november 2007. * * * in my speech 2 in june this year i outlined the key benefits and costs of adopting the euro. let me briefly restate what they are : on the benefits side of adopting a common currency economists usually mention the following factors : lower transaction costs, lower interest rates, financial integration and trade creation. when speaking about costs economists usually cite two groups of factors : asymmetric shocks and arising micro - and macroeconomic imbalances. it is important to note that some costs will materialize if asymmetric shocks hit the enlarged eurozone. we do not know the likelihood of such shocks though, so it is impossible to calculate the expected value of costs related to these events. we know, however, that the probability of asymmetric shocks declines with rising similarity or progressing real convergence of the eu economies. let me also stress that the magnitude of costs depends crucially on domestic policy β prudent banking sector supervision, labor market reforms and sound fiscal policies to name a few. adoption of proper policies reduces future potential costs related to eurozone membership and, at the same time, enhances future benefits. in my view, given the evidence that reforms have been halted in many countries after entering the eurozone, these measures should be taken before the euro area accession. the last twenty years have been unusually good for the global economy. growth was high and less volatile, inflation fell to low levels in both developed economies and in emerging markets. real returns enjoyed by investors in bond and equity markets were higher than ever in the post - war history. there are however signs that this β great moderation β era may be coming to an end. if this is the case then the coming years may prove truly challenging for the central banks in emu - graduation zone. let me explain in some detail several factors that justify such claim. 1. agflation, is the rise of inflation due to increase of food prices. in recent months we have witnessed a significant increase of food prices, grain and oilseeds being the leaders. prices of food products on international markets has risen by almost 40 per cent within last two years and prices of grain and oil seeds has almost doubled within this period. many forecasters | ##ised capital control measures, but that is a topic for another day. 4. conclusion in conclusion, i would like to reiterate the imf β s views on the importance of maintaining sound policies and strong frameworks, including monetary policy and exchange rate flexibility, as the first line of defence against excessive capital flows. robust macroprudential measures as well as capital flow management measures can serve as a supplementary defence mechanism, where warranted. the macroeconomic environment should encourage domestic savings and the deepening of financial markets so that capital flows can be effectively absorbed and channelled towards productive investment. the work on capital flow management by the imf and the oecd, which forms part of the g20 agenda on the reform of the international monetary system, under the international financial architecture working group, is crucial in the construction of a macroprudential framework and policy tools currently under consideration by various countries. therefore, a more consistent global approach to capital flow management issues among various international frameworks and agreements should be facilitated, including addressing data gaps. we therefore welcome and support the current collaboration between the imf, the oecd, the g20 and the bank for international settlements in this area. thank you. | 0 |
, which among other things regulated the way in which the voting rights attaching to their ordinary shares would be exercised ; the share capital covered by the counterpact increased progressively from an initial 13. 5 per cent to 27. 7 per cent. individually, the parties to the counterpact owned shareholdings that did not exceed 5 per cent. consequently, their share purchases were not subject to prior authorization by the bank of italy and were in compliance with the ceiling designed to ensure separation between banking and commerce. this ceiling does not apply to shareholders β pacts as such. the existence of two opposing pacts gave rise to a state of conflict within the body of shareholders and the board of directors of bnl, engendering uncertainty in the management and operation of the bank and impeding initiatives for its revival and growth. 3. 2 banco bilbao vizcaya argentaria β s application for authorization to acquire control of bnl on 18 march 2005 bbva gave the bank of italy prior notification of its intention to acquire a controlling interest in bnl by means of a voluntary exchange tender offer for all of bnl β s ordinary shares. on 13 may, after completing the required consultation procedure with the bank of spain and receiving clarifications from bbva concerning the procedure for the exchange tender offer and its business plan for bnl, the bank of italy authorized bbva to acquire, by means of an exchange tender offer, a holding of more than 50 per cent of bnl β s share capital. the application process lasted a total of 56 days, from the prior notification on 18 march to the authorization on 13 may. counting from 29 march, the date on which the formal application for authorization was submitted, the process took 45 days, including a suspension of 19 days for consultation with the spanish supervisory authority and for the acquisition of additional information from bbva. in a note dated 30 may bbva asked the bank of italy to modify the authorization issued on 13 may by eliminating the requirement to exceed the 50 per cent threshold. in a note dated 10 june the bank of italy responded that if as a result of the exchange tender offer bbva were to acquire a holding of less than 50 per cent of bnl β s share capital, the bank of italy would evaluate the suitability of the new ownership structure to carry out the necessary reorganization. the major strategic and operational investments necessary to relaunch bnl require an ownership structure that can ensure stable management and effective policymaking, ultimately to safeguard the | instructed that we should review the housing reform and the real estate development experiences in full scale so as to identify the broad target and tasks in the future. i think we should focus on the following aspects in studying the housing financial system : first is the products system. a variety of financial products should be developed to serve different purposes and customers. currently, we don β t have such housing financial products that are targeted at special groups of people in the society, such as low - income families and entry - level staffs. even in commercial housing financial field, bank loans are the major products, so risks are excessively concentrated in the banking sector. we should promote housing financial products innovation to ward off risks. second is the market system. housing financial market should consist of different layers, including not only the indirect credit market, but also direct financing market which provides both direct financial instruments and marketplace to defuse relevant risks, such as credit maturity mismatch and liquidity problems. development of the housing financing should also rely on the development of the capital market and money market. third is the organization system. housing financial market should comprise not only financial institutions providing direct financing to the customers, but also institutions that involve in housing construction, trading and consumption such as the property appraisal agencies, loan insurance ( guarantee ) institutions, accounting offices, law offices and rating institutions etc. iii. research should be conducted down to the earth to formulate a proper development blueprint. both academics and governments have made great efforts to improve china β s housing financial system by studying international experiences, with some policies achieving good results while others entailing further studies. starting in 2003, the pbc has focused on resolving the strategic issues of housing financial development and communicated with the ministry of construction, the china banking regulatory commission and have reached important consensus. in 2005, the pbc began to cooperate with the world bank in relevant research and study program aimed to learn from the mature experiences of other countries. this seminar represents a further endeavor in this direction. i would like to give my personal views about the comprehensive research project : first, we must learn the essence of other countries β experiences, not only the surface. attention should be paid to successful experiences and failure lessons. the housing financial system of china and development strategy should be designed through summarizing experiences and exploring the embedded rules. second, chinese social, financial and economic situation should be fully considered and market development principles should be observed when mapping out our housing financial system and the development | 0 |
sabine mauderer : keynote speech - f20 climate solutions week keynote speech by dr sabine mauderer, member of the executive board of the deutsche bundesbank, at the f20 climate solutions week, frankfurt am main, 15 september 2020. * * * ladies and gentlemen, we are going through challenging times. the covid - 19 pandemic has caused disruptions to our societies and our economies. while the loss of economic wealth is enormous, some countries with stronger social systems and better healthcare infrastructures have been more resilient than others. but every crisis is also an opportunity. so what can we learn from the pandemic? and what are the lessons for the even bigger challenge of climate change? the answer is easy. just like the pandemic, climate change is a global systemic threat many scientists have been flagging for decades. and just like the pandemic, climate change will cause enormous costs for our economies and our societies. so it is not a question of if but how we have to act. here are my three core messages on how to act. they are closely interlinked. first, we need an adequate carbon pricing system. the idea is to incentivise producers and consumers to change their behaviour and to encourage more climate - neutral alternatives. second, we have to raise broad awareness β across the g20 β that we can only combat climate change if the real economies undergo transformation. both the private and public sectors need to fulfil their roles as agents of change. more public and private money needs to flow into research and development, fostering climate - friendly innovation. this will help us master the necessary transformation in the real economy. transformation is a precondition for resilience, and resilience is the key to economic survival. my third and final message goes out to financial institutions : be a real driver of the economic transformation! if and when capital flows more strongly into climate - friendly economic activities, the financial system can play a pivotal role in changing the real economy. this is the spirit of the paris agreement. and to achieve the goals of the paris agreement, financial institutions need better data to assess the financial risks related to climate change. central banks can serve as catalysts here, by fostering international disclosure and standardisation of data. we need to leverage our capacities as monetary policymakers, banking supervisors and guardians of financial stability. ladies and gentlemen, let me stop here and briefly conclude : first, we need an | adequate carbon pricing system. second, our real economies need to transform. and third, financial institutions must be the drivers of the transformation. central banks can act as catalysts. the overarching goal must be a more sustainable and resilient planet. it is worth the effort. many thanks for your attention. 1 / 1 bis central bankers'speeches | 1 |
attract lower interest rates. in relation to loan size, this suggests that borrowers with larger loans may have somewhat greater bargaining power. 2. loan - to - valuation ratios and offset balances the securitisation dataset provides us with a measure of the lvr, based on the current loan balance. 8 we refer to this here as the β current lvr β. this is one indicator of the riskiness of a loan. other things equal, higher lvrs tend to be associated with a greater risk of default ( and greater loss for the lender in the case of default ). 9 graph 4 shows current lvrs for owner - occupiers and investor loans, split into interest - only and principal - and - interest loans. i should emphasise again that the securitisation dataset may not be entirely representative of the set of all mortgages, particularly when it comes to lvrs. that is because high lvr loans may be less likely to be added to a pool of securitised assets in order to ensure that the securitisation achieves a sufficiently high credit rating. 10 with that caveat in mind, we see that there is a large share of both owner - occupier and investor loans with current lvrs between 75 and 80 per cent. that is consistent with banks limiting the share of loans with lvrs ( at origination ) above 80 per cent. also, borrowers have an incentive to avoid the cost of mortgage insurance, which is typically required for loans with lvrs ( at 5 / 13 bis central bankers'speeches origination ) above 80 per cent. comparing investor loans with owner - occupier loans, we can see that investors have a larger share of outstanding loans with current lvrs of 75 per cent or higher. 11 that β s most obvious in the case of interest - only loans, but is also true for principal - and - interest loans. this reflects the investor β s financial incentive to maximise the amount of funds borrowed ( without breaching the banks β threshold above which they require lenders mortgage insurance ). that can be more easily achieved with an interest - only loan. and, even in the case of principal - and - interest loans, investors don β t have the same incentives as owner - occupiers to get ahead of their scheduled repayments. but what i β ve just shown doesn β t account for offset accounts. these have | yannis stournaras : the recent decision of the german constitutional court regarding the public sector purchase programme of the european central bank speech by mr yannis stournaras, governor of the bank of greece, at the online discussion in the think tank β circle of ideas β, 12 may 2020. * * * the decision of the german constitutional court questioning the legality of the ecb β spublic sector purchase programme β or pspp β has generated a great deal of confusion and concern. the court found that, in launching the pspp in early 2015, the ecb exceeded its mandate ; the court ordered the deutsche bundesbank to stop participating in the execution of the pspp after a transitional period of three months, β unless the ecb governing council adopts a new decision that demonstrates in a comprehensible and substantiated manner that the monetary policy objectives pursued by the ecb are not disproportionate to the economic and fiscal effects resulting from the programme. β 1 two essential principles, both of which underpin european cohesiveness and unity, are at stake here. the first principle is a legal one. the german court β s ruling effectively challenges a 2018 ruling by the european court of justice that the pspp was legal. which court β the german constitutional court, a national tribunal, or the european court of justice β has primacy in matters relating to european institutions? because the ruling by the german court has created a great deal of uncertainty, the issue of legal primacy needs to be reaffirmed. i will leave it to my very distinguished co - speakers to address this issue from a legal perspective. the second principle concerns the independence of the ecb. it is this principle that i wish to address. in this connection, i will discuss three issues : first, the rationale for central bank independence ; second, the ecb β s mandate ; and third, the context of the decision to undertake the pspp. on independence, there are important reasons why the ecb was made an independent central bank on its inception in 1999. numerous studies in the 1980s and the 1990s that compared central bank performance had found that independent central banks β and a prime example was the deutsche bundesbank β performed much better than other central banks. independent central banks delivered lower unemployment and lower inflation than others because they were free from political pressures. independence, however, does not mean an absence of accountability. the ecb may be independent, but | 0 |
over the medium term. this mandate must be adhered to both in normal times and in times of crisis. the monetary policy stance appropriate to fulfil our mandate depends exclusively on our assessment of the balance of risks to price stability, and nothing else. there is absolutely no reason to deviate from this approach during times of crisis. this being said, the ecb, in cooperation with other central banks, has shown remarkable flexibility in terms of liquidity provision. this flexibility was necessary in order to avoid the breakdown of the interbank market, which is a very important transmission channel for monetary policy. let me finally mention that our recent interest rate cuts were fully in line with our monetary policy strategy. with the intensification and broadening of the financial crisis it became increasingly clear that the upside risks to price stability were diminishing when the downside risks to economic growth in the euro area and elsewhere were materialising. this created room for cuts in interest rates, based on and fully in line with our monetary policy strategy. i can assure you that, looking ahead, we will continue to base our assessment and our actions on this strategy, which has served us very well over the past ten years. let me now turn to fiscal policies, an area that is of the utmost importance and one with which i am also familiar. similar to monetary policy, it is important that fiscal policy - makers in the euro area see the benefits of adhering to a kind of separation principle. fiscal policies in the euro area need to be committed to the long - term sustainability of public finances, also in times of crisis. does this mean that fiscal policies should remain inactive? no, but it gives guidance as to the kind of intervention that is appropriate for managing financial crises. the rescue packages recently enacted by euro area governments to stabilise the banking sector were clearly necessary, timely and well - targeted. the design of the rescue measures ensures that taxpayers in the euro area will not be burdened in the long run. there are, of course, downside risks to government budgets but there are also upside risks, suggesting that the net effect on the long - term sustainability of public finances could be very limited. short - term increases in government debt associated with these rescue measures are to be accepted. however, the more recent plans of euro area governments to set up discretionary expansionary measures to stimulate the economy at large are totally different in nature. there is a substantial risk that the mistakes of the 1970s will be repeated | was that a market economy can only flourish in a sustainable manner if certain timeless principles are adhered to β and, importantly, all at the same time, because of what he called β the interdependence of orders β. let me enumerate these principles : β’ the primacy of price stability ; β’ the promotion of perfect competition on all markets ; β’ the protection of property rights ; β’ the freedom of contract ; β’ unlimited liability ; and, finally, β’ stability - oriented economic policies. moreover, there is an β interdependence of international orders β, suggesting that these principles should be adhered to around the globe. at the time of writing his book, eucken could not foresee the recent wave of globalisation and rapid financial market integration, which has reinforced the need to account for this international interdependence. have all these principles been adhered to properly in the run up to the current crisis? my answer is a clear β no β. before elaborating on this answer, let me briefly mention that the school of thought eucken belonged to β which has been called β ordoliberalism β by some and β german neoliberalism β by others ( at a time when β neoliberalism β was not yet a swear word ) β is very different from both state interventionism and laissez - faire capitalism. while eucken recognised that activist economic policies are a major source of distortion and should therefore be avoided, he still saw an urgent need for government action in the field of establishing the rules. in the absence of such rules, private agents would have the incentive to undermine the disciplining forces of free competition. i will now turn to the origins and causes of the financial crisis and i will show how valuable eucken β s insights are for understanding the genesis of the crisis and for devising preventive measures. 2. diagnosis : the origins and underlying causes of the financial crisis as regards the origins and underlying causes of the current financial crisis, i will focus on three aspects : the role of macroeconomic policies, the role of microeconomic policies including regulation and the role of financial market participants themselves. i can be brief because much has been said on these aspects over the past months. first, turning to the role of governments, it is clear that expansionary macroeconomic policies around the globe have contributed to the build - up of macroeconomic imbalances. these policies have facilitated the strong credit expansion, | 1 |
in this situation, due attention should be paid to the fact that there are downside risks to economic activity depending on developments in global financial markets and overseas economies. in addition, if financial conditions in japan, as reflected in lending attitudes of financial institutions and issuing conditions in the cp and corporate bond markets, should increase in severity, pressures acting to depress economic activity from the financial side might become more marked. turning to prices, there is a possibility that the inflation rate will decline further if downside risks to economic activity materialize or commodity prices fall further. ii. conduct of monetary policy as i have explained, the outlook for economic activity and prices is uncertain at present. in this situation, the bank will carefully assess the future outlook for economic activity and prices, closely considering the likelihood of its projections as well as factors posing upside or downside risks, and will implement monetary policy appropriately. for the time being, it is particularly important to pay attention to downside risks to economic activity, such as those that may arise from developments in the u. s. and european financial systems and in global financial markets and the consequent downward pressure. since early autumn, when the turmoil in global financial markets and in the u. s. and european financial systems increased in severity, the bank has continued to make efforts, by employing various measures, to ensure market stability and maintain accommodative financial conditions. specifically, against the background of the worldwide decline in u. s. dollar liquidity, the bank introduced u. s. dollar funds - supplying operations as part of the coordinated measures of central banks in september and thereafter expanded such operations. as for yen funds, the bank has introduced a complementary deposit facility to further facilitate the provision of sufficient liquidity, and has been providing funds for over the year - end with more frequency and in larger amounts than last year. in addition, the bank has been actively purchasing cp and japanese government securities under repurchase agreements, thereby ensuring market stability. furthermore, with a view to facilitating corporate financing, the bank has expanded the range of corporate bonds and loans on deeds it accepts as eligible collateral and has decided to introduce a new operation through which financial institutions can borrow low - interest funds from the bank against corporate debt. under this new operation, there will be no explicit ceiling on the total funds available, although the maximum loans available will not exceed the value of the corporate debt pledged as collateral. the bank will continue to make efforts to ensure market stability by conducting appropriate | money market operations such as the provision of sufficient funds during the run - up to the calendar and fiscal year - ends. | 1 |
forward any solution should look to meet four objectives ; restoration of confidence β it is essential that any solution furthers the restoration of confidence. customers must have confidence in the future of the bank of cyprus whether it is one bank or two. as confidence is re - established we can further ease and ultimately lift capital controls. funded balance sheet β the bank of cyprus β s reliance on emergency support is well known. any structure needs to be funded. the use of emergency support should be reduced over time. maximise value β the bank of cyprus has received substantial capital. it needs to manage its loan book, restructure loans and maximise value. this will not be best achieved through a fire sale. support the economy β as the largest and most important bank in the country the recovery of the bank of cyprus is vital to the recovery of cyprus. the bank must continue to prudently lend to business and consumers. bis central bankers β speeches the cypriot economy and the bank of cyprus have undergone a severe shock. however, both cyprus and the bank are resilient and can emerge strongly. it is important to recognise that substantial progress has been made. the bank of cyprus is now adequately capitalised and has exited resolution. new management is in place and they are working on preparing the strategy and restructuring plan. the ecb β s governing council has recognised the steps taken to restore confidence. continuing the efforts to create a stronger and safer bank of cyprus is in all of our interests. i look forward to hearing the panellists β views on how this can best be achieved. bis central bankers β speeches | strategic plan. and that is exactly what is been done in this community. sa β s diamond devastated. htm. towns devastated - http : / / www. miningmx. com / news / diamonds / sa's - diamond - towns - diversification is fundamental i am most certainly impressed by the forward thinking that obtains in this community. your diversification programme will most certainly guarantee sustenance beyond the availability of mineral resources and is testimony to the quality of leadership that is to be found here. it is indeed laudable that the bafokeng have recognised this need, as shown in the portfolio of investments that includes telecommunications, financial assets, manufacturing, services and cultural development programmes. and if there is one thing i know about the bafokeng that is their ability to implement. that capability is found wanting in many countries on our continent and also in parts of our own spheres of government. one marvels daily at countries that do not have the benefit of mineral resources like us, but have done wonders for themselves. take a city - state like singapore which does not have any mineral resources, let alone enough land for agriculture, but has managed to develop to such impressive levels ( a high income status ). opening a human capital summit recently, the prime minister of singapore, mr lee hsien loong, said : β for a small country like singapore, acquiring and nurturing human talent is a matter of survival. without much of anything else, we rely on human ingenuity and effort to build our economy and society. we have therefore made major investments in education, lifelong learning and talent development. β 2 in fact, the major manufacturing centres of asia, such as japan, singapore, and hong kong, have few or no significant natural resources. south korea, for example, was at almost the same level of development as ghana 50 years ago. while the latter is well endowed with natural resources and has recently discovered oil, south korea has none of these but has successfully grown its economy to be ranked 14th by gdp at purchasing power parity. there are possible and practical responses. the question then arises, why africa is not using its mineral and other resources to the benefit of its people? there is the possibility of ( the tired subject of ) beneficiation which has really not been pursued much in africa. we seem, as africans, to have been satisfied to continue as β extractive economies β. i gather that platinum jewellery is very much in demand in certain parts | 0 |
challenges, the bank of albania managed to keep the cpi inflation within the target. let us dwell on these elements further. 1. 1 economic growth the global context that accompanied albania β s economic and financial performance over the past year was not at all favourable. the year 2009 featured contracted global economic activity as a result of the economic downturn in advanced economies and considerable economic slowdown in emerging countries. global economy posted the first negative growth rate of the last 50 years. the increasing integration of the albanian economy and the financial system in particular caused the global crisis to be reflected early in our country. the main channels the albanian economy was exposed to were : decline of exports ; decline of remittances and other foreign currency inflows ; increased uncertainty in the financial institutions ; and, in response to the latter review of almost all economic agents β business plans. this impact was reflected in low growth rates and shaking of some macroeconomic balances in 2009. according to the statistics institute, gdp grew 3. 1 percent in annual terms in 2009. the slowdown of gdp growth reflected the contraction of activity in industry and construction, while the services sector β s value added remained the key contributor to economic growth. given the difficult circumstances in which economic activity took place and compared with other regional countries β experiences, the preservation of the economic growth rate at positive levels is an encouraging development. however, its slowdown and the new macroeconomic balances need due attention by all economic agents in their projections for the future. albania β s economic development outlook also requires greater support from the private sector, while the contribution of the public sector to economic growth is expected to decline. the data on aggregate demand show that the contraction of private consumption and the fall in investment were determining factors in the slower growth of demand at home. net exports continued to provide a negative contribution to aggregate demand in 2009, however at more moderate rates than in 2008. in addition to easing monetary conditions, the fiscal stimulus supported the economy in generating positive growth rates during 2009. private consumption is the key component of aggregate demand accounting for about 80 percent of gdp. the slow growth rate in wages, the decline of remittances and the contraction of consumer loans contributed to the slowdown of consumption in 2009. private investments are assessed to have been affected more by the global financial and economic crisis than the other components of aggregate demand. the contracted domestic and foreign demand and the tight lending conditions triggered the contraction of private investment in 2009. 1. 2 fiscal policy and | risk - oriented supervision. the main highlights of this new supervisory policy are : further interaction and harmonization among monetary policy, financial stability and supervision ; harmonization of our supervisory framework with the acquis communautaire ; interaction between the domestic and foreign supervisory authorities and the financial supervisory authority ; harmonization with the third pillar of basel ii, encouraging the process of self - regulation and consumer protection. the bank of albania has been constantly engaged in a process of deep analysis and supervision of the legal and regulatory framework compliance and enforcement from the licensed entities. this process has been achieved through on - site inspections, which in 2009 were more frequent and rigorous. besides the observance of the supervisory cycle, banks were constantly contacted for phenomena that have represented a concern during the year, taking appropriate measures to address potential problems in due time. overall, the banking system has acted with caution in conducting the operational processes of their activities and in compliance with the regulatory framework of the bank of albania. 2. 3 strengthening of regulatory and supervisory framework the design of strong and appropriate rules and their rigorous monitoring constitutes a guarantee for the preservation of financial stability. the bank of albania has been active in improving the regulatory framework, consolidating it further in compliance with the legal provisions and the basel committee principles, the european council directives and the best practices in the area of regulation and supervision of financial institutions licensed by the bank of albania. the main objective was the harmonization of the best practices in : strengthening internal control ; improving banking institutions β governance ; strengthening the risk management capacities ; and increasing the level of banks β transparency to the public. with respect to the latter, the bank of albania has required higher and improved communication of the banking system with the public about the products and services being provided, the promotional campaigns for new products and the provision of information on their real financial situation and risk profile. 3. other bank of albania activities after the analysis of the two key functions of the bank of albania, i would like to elaborate on some other aspects of the central bank β s work. 3. 1 payments β system the payments β system reflected security and efficiency in 2009. on average, 225 transactions a day were processed and settled in the aips system, with an average daily value of all 19 billion. total liquidities settled in the aips system during 2009 is about 4. 3 times higher than the gdp. 3. 2 european integration the bank of albania plays a key role in the european integration process. the | 1 |
through the remuneration of reserves at that rate. by pinning down the near - end of the interest rate curve, this is the first step in the transmission of monetary policy through financial markets to the real economy and thus influencing inflation. there are other ways of affecting short - term interest rates for monetary policy purposes, but all involve the use of central bank reserves in some way or another. before the global financial crisis, most central banks operated with a much lower level of reserves than today and an interest - rate β corridor β between official rates on a borrowing and a deposit facility. the approach involved managing the β scarcity β of reserves such that the money market rate was in the middle of the corridor. the bank of england operated a variant of this approach that required firms to specify the quantity of reserves they wanted to hold on average each month and then incentivised them to manage their holdings to this target by paying bank rate only on this target. in the system we have today, the much larger supply of reserves drives money market rates close to the β floor β determined by bank rate. if money market rates were to fall much below bank rate, banks would have an opportunity to profit by borrowing reserves from other banks, for example, and earning bank rate on their reserve accounts. this β floor β system has been successful in keeping money market rates very close to bank rate. while in principle we could implement monetary policy with a much smaller level of reserves than we have today, i will argue this evening that financial stability considerations point towards an increased reserve demand since the financial crisis, one that the central bank has very good reason to meet. but how many reserves do we need in the system to secure financial stability as well as to implement monetary policy effectively β what is the optimal level? and given that level, we are faced with another question : which assets should the bank hold to back it? these two questions are the topic of today. decisions on how we supply reserves will affect where it intersects demand. we need to account for potential market distortions from our choices, and what they imply for the balance between liquidity provision directly through the bank β s facilities and indirectly via the money market, both in normal times and in stress. and we need to consider where interest rate risk sits within the system and what the implications are of that. these are important questions. how we answer them will shape the bank of england β s balance sheet for years to come. it is useful to start with some history | jose manuel gonzalez - paramo : the euro as one of the main aspects shaping european identity today speech by mr jose manuel gonzalez - paramo, member of the executive board of the european central bank, on the occasion of the inauguration of the euro exhibition at banca nationala a romaniei, bucharest, 10 march 2011. * * * dear governor isarescu, ladies and gentlemen, i am delighted to be here today for the opening of the euro exhibition, which is being hosted by banca nationala a romaniei until 27 may 2011. this is yet another example of the strong ties that the european central bank has developed with banca nationala a romaniei over the last few years β i remember vividly the romanian artists who performed in frankfurt in 2009 as part of the ecb β s cultural days, which were showcasing romania that year. the euro exhibition is dedicated to europe β s single currency : the euro. stage three of economic and monetary union began on 1 january 1999 with the irrevocable fixing of the exchange rates of the currencies of the 11 member states initially forming the euro area, and culminated on 1 january 2002 with the introduction of the euro banknotes and coins. since then, countries have continued to join the euro area, the latest, as you know, being estonia on 1 january this year. the euro banknotes and coins are therefore now legal tender in 17 of the 27 eu member states and are used by the 331 million citizens in an area stretching from cyprus to ireland and from portugal to finland. in fact, they have become one of the most visible symbols of europe and the euro is one of the main aspects shaping the european identity today. the introduction of the euro has brought many advantages β not only for citizens of the euro area countries, but also for citizens of other eu member states, such as romania. for example, when travelling within the euro area, romanian citizens can use the euro as a means of payment across borders and thus only need to exchange their currency once. furthermore, they can compare prices across the euro area countries much more easily. finally, romanian enterprises, for which the euro area is an important trading partner, can use one currency, namely the euro, in their transactions with business partners from the 17 euro area countries. in order to join the euro area, each eu country must meet a number of clearly defined criteria, namely : 1. it must not be subject to an eu council decision that an excessive budget deficit exists ; | 0 |
on a 6 - month and 12 - month basis. i will be watching to see whether the employment cost index data at the end of this month show the deceleration from the third quarter continuing into the fourth quarter. see david autor, arindrajit dube, and annie mcgrew ( 2022 ), β the unexpected compression : competition at work in the low wage economy, β lecture delivered at markus β academy, bendheim center for finance, princeton university, princeton, n. j. ( via webcast ), december 8, https : / / bcf. princeton. edu / events / david - autur - on - the - unexpected - compression - competition - at - work - in - thelow - wage - economy. since the pandemic, significant supply and demand imbalances have coincided with large increases in retail trade margins in several sectors, increases that have exceeded the contemporaneous increase in wages paid to the workers in those sectors. for example, since the end of 2019, retail trade margins for food and grocery retailers increased by about 25 percent, outstripping the growth in average hourly earnings for workers in that sector, which was just under 19 percent. a similar gap exists between margin and wage increases for general merchandise retailers, which were 24 percent and 14 percent, respectively. - 6let β s now turn to the inflation leg of our dual mandate. inflation has declined in recent months from very high levels. with the consumer price index and producer price index now available, total pce ( personal consumption expenditures ) inflation in december is likely to have run at around a 2. 3 percent annualized pace on a 3 - and 6month basis, as compared with 5. 1 percent on a 12 - month basis. this deceleration reflects an easing in war - related energy shocks as well as in core goods inflation : energy and core goods each subtracted nearly three - fourths of 1 percentage point from 3 - month annualized total pce inflation. the declines in energy and core goods are a reversal of previous large increases and are expected to moderate. core pce inflation is running at a 3. 1 percent annualized pace on a 3 - month basis β below its 3. 8 percent reading on a 6 - month basis and 4. 5 percent on a 12 - month basis. within this, recent declines in core goods inflation reflect a reduction in core import prices, an easing of supply chains, a restocking of | maintain its legitimacy, an institution endowed with independence to pursue a specific public objective must act in a transparent manner. β’ fifth, monetary policy must maintain a medium - term orientation. β’ sixth, monetary policy must be underpinned by a comprehensive analytical framework. given the importance of maintaining credibility and a medium - term orientation, such a framework must include a thorough analysis of monetary and credit developments, reflecting the necessarily monetary nature of inflation over the longer term. β’ finally, a clear distinction must be maintained between the determination of the monetary policy stance required to maintain price stability and the provision of liquidity to the money market, the so - called β separation principle β. these principles should be the cornerstones of monetary policy - making in normal times but, arguably, become even more important in a time of crisis. in this respect, i would say that our monetary policy, while being pragmatic, has consistently followed these principles and has thus been able to address the challenges that the financial market tensions have brought about. allow me to briefly illustrate this point. our single, clear and unambiguous mandate has ensured that attention has remained focused on the attainment of our objective of maintaining price stability, at a time when other considerations could have come to the fore. at the same time, our monetary policy strategy has ensured that the appropriate mediumterm orientation of monetary policy has been maintained. in particular, the monetary pillar embedded in our strategy ensures that due attention is paid at all times to medium - term developments in nominal variables. the identification of the policy - relevant signal in monetary developments requires a detailed examination of bank balance sheets, complemented by the analysis of other sources of financial information. this is instrumental in understanding market developments, monitoring financial innovation and assessing its implications, for instance, for the transmission mechanism. in this respect, a thorough and broad - based monetary analysis not only provides relevant information on risks to consumer price inflation, but can also support the early detection of financial imbalances and asset price misalignments. 5 finally, by having a clear separation between the monetary policy stance, which as explained, has maintained the appropriate medium - term orientation, and its implementation through liquidity operations, we have proved able to act in the liquidity management domain rapidly and, when necessary, significantly, to support the functioning of the money market that is central to the implementation and transmission of monetary policy. concluding remarks allow me to summarise my remarks with the following points. 1. the long phase | 0 |
cpi inflation would likely fall below core inflation in 2004. however, there are significant risks to this economic outlook. these risks relate to the timing and magnitude of global demand, price, and exchange rate adjustments to economic imbalances. in particular, there is uncertainty both about the likely changes in key global exchange rates and their effect on the canadian economy. there is also uncertainty about the sustainability of u. s. growth beyond mid - 2004. we continue to assess the implications of all these developments - both past and future - for output and inflation in canada, and what this means for monetary policy. | oversight of the financial system did not fall between the gaps in the new institutional structure of supervision. since then other central banks have followed the bank of england β s lead. financial stability units β small teams with backgrounds in economics and banking supervision whose job it is to monitor wider trends in the financial system β are now increasingly a feature of the organisational charts of many central banks. these factors have led to a redefinition in the way in which central banks have begun to approach their traditional macro prudential remit. i would like to mention four of these in particular : β’ the formalisation of payments and settlement system oversight ; β’ the publication of financial stability reports ; β’ stress testing and scenario analysis ; and β’ concern with financial condition of non - bank financial intermediaries and health of corporate and household balance sheets. let me now briefly talk about each of these in turn. payment system oversight has been part of the core functions of central banks almost from the very beginning. however, once the formal responsibility for banking supervision was split away from central banks like the bank of england and the reserve bank of australia, these central banks began to formalise their role in payment system oversight. in australia, for example, the 1998 payment systems ( regulation ) act gives the rba powers to regulate the payments system and purchased payment facilities ( such as travellers β cheques and stored value cards ). it also allows the rba to obtain information from payment system participants and to set access regimes and determine risk control and efficiency standards for designated payment systems. the rba β s responsibilities in this regard are discharged by a payments system board. the adoption of real time gross settlement ( rtgs ) has been another key risk reduction initiative on the part of many central banks in the past decade and a half. these systems eliminate the build up of settlement exposure and herstatt risk between financial institutions as a result of the exchange of high - value payments and debt securities settlements. instead, individual transactions are settled in real time across accounts at the central bank. the availability of rtgs is also an important step in dealing effectively with foreign exchange settlement risk. finally, no discussion of payments system oversight would be complete without some mention of antimoney laundering initiatives. aml is important for the integrity of payments systems, and thus also has important macroprudential implications. the publication of a financial stability report is the second way in which central banks have given more prominence to their macro prudential responsibilities. the bank of england | 0 |
quantifying spillovers is challenging, as the magnitudes ( and even the signs ) through the different channels depend on a multitude of structural features of the global economy. moreover, the size of spillover effects also depends on the drivers of the monetary policy tightening. for instance, when the tightening occurs in the context of high growth, the positive spillovers of that growth can partially offset the adverse spillovers from the tightening of financial conditions. the importance of the context in which monetary policy is changing is increasingly being emphasized in the literature, such as the paper to be presented in session 4 of this conference. the staff at the federal reserve also have looked at these differences using both event - study and model - based approaches. 4 an additional concern, very relevant to the current situation, is what happens when monetary policy is being tightened simultaneously across a wide set of economies. 4 / 6 bis - central bankers'speeches when this concurrent tightening happens, cross - border financial spillovers could amplify the effects of our respective tightening. 5 of course, when others are also tightening, each respective central bank may need to do a bit less to achieve the same outcomes because of these spillover effects. but in a world of uncertainty, it is hard to judge the exact size of these spillovers. given the extent of monetary tightening globally over the past two years, it is striking that emerging market economies have fared relatively well compared with what might have been expected. a number of factors may be at play. several emerging market central banks undertook preemptive rate hikes that helped limit capital outflows, perhaps avoiding worse outcomes. effective communication by advanced - economy central banks may also have prevented greater financial market volatility. in addition, in these recent stress episodes, commodity prices were rising rather than falling, which benefited some vulnerable emerging market economies that are commodity exporters. of course, many other ( commodity - importing ) economies did not have such an advantage. and some emerging market and developing economies, especially those with high dollar - denominated debt, have struggled amid high commodity prices and food security issues as well as the resulting global rise in interest rates following the inflationary shocks from russia's war against ukraine. in sum, u. s. monetary policy actions can produce spillovers abroad and create tradeoffs for foreign monetary policy. spillovers from foreign economies can be sizable for the u. s. as well, especially in the current environment, in which many central banks have tightened policy | encouraged by the strong growth in labor productivity over the past two quarters, which, if sustained, could contribute to further progress toward price stability. i believe that a soft landing is possible, with continued disinflation and a strong labor market, but it is not assured. in setting monetary policy, we need to seek a policy stance that is sufficiently restrictive to bring inflation back to 2 percent over time. i see risks as two sided, requiring us to balance the risk of not tightening enough against the risk of tightening too much. we have seen continued momentum in economic growth and consumer spending, even in the face of monetary policy tightening over the past year and a half. there is a risk that such continued momentum in demand could keep the economy and labor market tight and slow the pace of disinflation. but i am also attuned to the risk of an unnecessarily sharp decline in economic activity and employment. some parts of the economy are showing strain from tighter financial conditions. households at the lower end of the income and wealth distributions have largely exhausted their excess savings, while delinquencies on auto loans and credit cards have risen to pre - pandemic levels or higher. small businesses generally borrow for shorter terms than larger businesses, and they are facing tighter credit conditions and higher rates as they roll over those short - term loans. homebuilders have done surprisingly well over the past year and a half, but they see the current level of mortgage rates as substantially slowing demand. as we try to identify the full, lagged effects of monetary policy tightening, i am considering whether small businesses, the housing sector, and low - and moderateincome households could be warning of broader stress ahead. the linkages we are talking about today connect us in ways that are economically beneficial but also have the potential to transmit stress. for that reason, i am also attentive to the risk of renewed global economic shocks. in recent weeks, oil prices have been volatile but are down from their september peaks. amid highly elevated geopolitical tensions, however, the risk of a sharp rise in global energy prices remains salient. i also see signs of subdued economic growth in our major trading partners, whose health affects u. s. economic conditions related to our dual mandate. china's economic growth has remained below pre - pandemic rates, and activity in its property sector has been extremely weak. in europe, recent data point to muted growth as the region deals with | 1 |
john gieve : financial system risks in the uk β issues and challenges speech by sir john gieve, deputy governor of the bank of england, at a centre for the study of financial innovation roundtable, london, 25 july 2006. * * * the bank and financial stability the bank of england β s central position in the economy owes a great deal to the development of its role in managing financial crises. the need for a central bank to provide liquidity to the market was identified as early as 1802, when henry thornton said : β β¦ if the bank of england, in future seasons of alarm, should be disposed to extend its discounts in a greater degree than heretofore, then the threatened calamity may be averted through the generosity of that institution. β 1 it took until the 1870s for that role to be institutionalised. the arrangement to request a letter from the chancellor permitting the bank to issue notes not backed by gold at a time of crisis was important to the remarkable financial stability that ensued. indeed, some academics suggest that a true financial panic has not taken place in the uk since overend gurney & company collapsed in 1866. 2 of course a lot has changed since then but maintaining financial stability remains one of the bank β s two core purposes. the current institutional arrangements are spelt out in a memorandum of understanding ( mou ) between the bank, the treasury, and the fsa. it establishes a framework for cooperation on three joint responsibilities β first identifying risks to the stability of the uk financial system, second reducing the risks where we can, and third managing crises if they occur. the bank contributes to all three. β’ we bring to the assessment of risks both the expertise in economic analysis that we have developed as the monetary authority and the experience that gives us as a participant as well as an observer of financial markets. β’ we can help to reduce risks directly through our engagement with payment systems and by working with the fsa at home, and with other financial authorities abroad, to improve the resilience of the financial system. β’ as lender of last resort, we can contribute to the resolution of crises either by supplying liquidity to the market in general or, in rare circumstances, acting as the channel of support or facilitating transactions for individual institutions. the new mou makes plain that the decision to authorise support operations rests with the chancellor following independent advice from both the bank and the fsa. our concern is with the stability and resilience of the financial | would allow wider access to central bank payment and settlement systems both in time and space. in an extreme case in which cbdc provides the same functionality as banknotes as an alternate measure, it could enable everyone to access central bank accounts 24 / 7, year - round. some overseas central banks have started to consider the rationale for or to conduct researches and analyses on cbdc. also, amid the global trend of fintech, some non - bank companies and their services, such as paypal in the united states and wechatpay in china, have built up a large presence in payment and settlement services, and the structure and composition of payment service providers are now changing rapidly. accordingly, some overseas central banks have started to reconsider to whom they should allow access to their payment and settlement systems. as economic globalization and technological innovation advance, the environment surrounding central bank payment and settlement systems is entering a new phase. iii. initiatives taken by the bank of japan the bank of japan has been continuously improving its infrastructure. we established the bojnet in the 1980s, and then introduced rtgs and liquidity - saving features. in 2015, we started full - scale operation of the new boj - net. although economic globalization and technological innovation are causing dramatic changes in payment and settlement infrastructures, we are confident that the boj - net can keep up with such changes and continue serving as a core infrastructure in the new era. at the same time, regarding how central banks should provide their infrastructures under the changing environment, we need to consider various issues. first, there is the issue of how to strike an appropriate balance between central bank money and private - based money in the economy, and between the stability in settlements and private - led innovation. these are classical issues. nonetheless, as new fintech players have increased their presence in payments and settlements, big - data attached to payment and settlement transactions is becoming more important as a source of added - value in various businesses. we will need to focus not only on the classical issue of β desirable sharing between central bank money and commercial bank money, β but also on new payment instruments carrying additional information provided by new players such as β non - bank fintech firms. β the emergence of these new payment instruments will make things far more complicated. second, it is crucial for central banks to ensure the security of central bank payment and settlement systems, which are the core infrastructure of the economy. we may also need to consider how to manage the information | 0 |
high uncertainty and potential costs associated with climate - related risks. it will be important to systematically assess the resilience of large financial institutions and the broader financial system to climate - related risk scenarios. climate scenario analysis as we are learning from the pandemic, risks emanating from outside the economy can have devastating financial consequences. as part of our prudential and financial stability responsibilities, we are developing scenario analysis to model the possible financial risks associated with climate change and assess the resilience of individual financial institutions and the financial system to these risks. the future financial and economic consequences of climate change will depend on the severity of the physical effects and the nature and speed of the transition to a sustainable economy. so it is important to model the transition risks arising from changes in policies, technology, and consumer and investor behavior and the physical risks of 1 / 6 bis central bankers'speeches damages caused by an increase in the frequency and severity of climate - related events as well as chronic changes, such as rising temperatures and sea levels. from the ipcc β s work, we know that the physical risks related to climate change will grow over time, while the transition risks will depend in part on how abruptly policy, technology, and behavioral changes take place. since financial markets are forward looking, a change in expectations regarding climate - related risks could lead to a sharp repricing of assets at any time. acute hazards, such as damaging hurricanes, or climate - related policy changes could quickly alter perceptions of future risk or reveal new information about the value of assets. sudden asset price changes can lead to financial instability when they interact with other vulnerabilities, such as high leverage or correlated exposures. 8 scenario analysis is a useful tool in assessing the links between climate - related risks and economic outcomes because it requires assessing the implications for financial stability and individual financial institutions in a systematic way. the interactions across institutions and market segments must be traced out, and missing data must be identified, acquired, and analyzed, leading to a clearer picture of the transmission of risks. scenario analysis should ultimately facilitate estimating the possible effects on individual financial institutions as well as on financial markets more broadly. by systematically modeling the effects of climate - related risks across the financial system, scenario analysis can help inform risk management at the level of individual financial institutions and more broadly. given that this conference is about stress testing, it is worth revisiting some lessons from the first generation of bank stress tests. 9 bank stress tests were developed at | 2 the study spells out the relative advantages of different types of funds for different kinds of projects β preservation versus development, for example β and details which funds are best for the early, middle, or late stages of a project. turning to support for small businesses, community development staffers across the federal reserve conduct extensive research and analysis of the challenges and opportunities facing small business owners. for example, the 12 federal reserve banks collaborate on the annual small business credit survey, which surveys business owners about their financing needs and experiences to provide timely insights to policymakers, service providers, and lenders. 3 in addition to providing information on small business credit conditions, the federal reserve is trying to advance understanding of the best economic development strategies for supporting small businesses. the kansas city fed has helped lead on these issues through its β grow your own β entrepreneurship - based economic development guidebook, and its 2018 growing entrepreneurial communities summit. 4 these are just a few of the ways that federal reserve banks and the board of governors support the efforts of community development organizations. i hope that our work will be useful as you chart a path forward for your second decade of service to utah, and i look forward to continued collaboration between the federal reserve and community development organizations such as ucns. together, we can help support thriving communities across the wasatch front, the state of utah, and across our nation. thank you again for inviting me to speak, and congratulations again for 10 years of building stronger communities in utah. 1234 1 ucns is the parent organization of four separate organizations that, in combination, work to advance access to affordable housing, including homeownership and housing near high - capacity or high - frequency transit ; support economic development and job creation by funding small businesses ; and improve access to important community infrastructure. 2 2. elizabeth mattiuzzi, β funds for kickstarting affordable housing preservation and production : lessons for new investors, β community development research briefs ( san francisco : federal reserve bank of san francisco, march 2019 ). return to text 3 see www. fedsmallbusiness. org / for more information. 4 the guidebook is available at www. kansascityfed. org / ~ / media / files / publicat / community / gyo / entrepreneurship - econ - dev - local - communities. pdf. 2 / 2 bis central bankers'speeches | 0.5 |
β and benefiting from government subsidies has been brought to heel. you can view the findings of these studies on the financial stability board's website. 4 transparency and the public consultations carried out as part of the evaluations are indeed crucial. this is because supervisory authorities and central banks are public institutions that serve the common good and must, accordingly, be held accountable for their actions. evaluations based on scientific standards are already good practice in many other fields, such as labour market policy, family policy, development aid, or medicine. there are also numerous examples of evidence - based policy such as β what works? β centres in the united kingdom and the use of cost - benefit analyses for policy initiatives in the united states. 5 this is why the bundesbank and the leopoldina, the german national academy of sciences in halle an der saale, hosted a workshop in may of this year to set up an interdisciplinary dialogue between academics and practitioners ( buch and riphahn seite 7 von 11 deutsche bundesbank, directorate general communications wilhelm - epstein - strasse 14, 60431 frankfurt am main, germany, tel : + 49 ( 0 ) 69 9566 3511 or 3512, fax : + 49 ( 0 ) 69 9566 3077 presse @ bundesbank. de, www. bundesbank. de reproduction permitted only if source is stated. 2018 ). there is more to come ; you are invited to β stay tuned β and keep following our progress. despite the fact that expert knowledge is often met with scepticism, the outlook for evidence - based policy discourse is in fact bright. on the one hand, there are undoubtedly increasingly populist trends. some 83 % of individuals responding to a eurobarometer survey regard β fake news β and online disinformation as a threat to democracy. 6 on the other hand, public trust in science remains high. according to a survey conducted in the united states by the pew research center, public confidence in the scientific community has remained unchanged at its high level since the 1970s ( funk 2017 ). research also shows that, in both europe and the united states, the general public often trusts scientific experts more than the government ( osman et al. 2018 ). furthermore, objective and transparent decision - making processes are important to the public ( oecd 2017 ). 80, 000 hours but back to you : around 80, 000 working hours lie ahead of you. there are a great | ##er, steven ( 2018 ). enlightenment now : the case for reason, science, humanism, and progress. s. fischer. frankfurt am main. rosling, hans, ola rosling, and anna rosling ronnlund ( 2018 ). factfulness β ten reasons we β re wrong about the world β and why things are better than you think. london. stevenson, betsey, and justin wolfers ( 2008 ). economic growth and subjective wellbeing : reassessing the easterlin paradox. brookings papers on economic activity 39 ( 1 ) : 1 - 102. seite 10 von 11 deutsche bundesbank, directorate general communications wilhelm - epstein - strasse 14, 60431 frankfurt am main, germany, tel : + 49 ( 0 ) 69 9566 3511 or 3512, fax : + 49 ( 0 ) 69 9566 3077 presse @ bundesbank. de, www. bundesbank. de reproduction permitted only if source is stated. sunstein, cass r. ( 2018 ). the cost - benefit revolution. the mit press. cambridge ma. i would like to thank christoph weiΓermel, manuel buchholz, rachel hand, and emma lyle for their valuable contributions and comments on an earlier version of this text. all remaining errors and inaccuracies are the sole responsibility of the author. rosling, rosling, and rosling ronnlund ( 2018 ) document these trends in their new book β factfulness β and the accompanying website www. gapminder. org. see http : / / www. muk. uni - frankfurt. de / 72980617 / jahrbuch _ 2017 _ deutsch. pdf, pp. 74 f. see http : / / www. fsb. org. see https : / / www. gov. uk / guidance / what - works - network or sunstein ( 2018 ). see https : / / ec. europa. eu / digital - single - market / en / news / final - results - eurobarometer - fake - news - and - onlinedisinformation. see https : / / 80000hours. org. seite 11 von 11 deutsche bundesbank, directorate general communications wilhelm - epstein - strasse 14, 60431 frankfurt am main, germany, tel : + 49 ( 0 ) 69 9566 3511 or 3512, fax : + 49 ( | 1 |
skills to confidently make responsible financial decisions at key stages of their lives. we need to promote healthy attitudes towards financial management. and in kofi annan β s words, we need to build a bridge to hope for every malaysian who has been affected by the pandemic crisis β not just to tide over the immediate challenges that they face, but to provide for their future financial security. with this in view, this community of practice aims to help fen members and the broader financial education community develop effective responses to meet the challenge of delivering lasting and impactful financial education to society. the community of practice agenda today focuses on two key areas. the first is the measurement and evaluation of financial education and its effectiveness. strengthening measurement and evaluation is a key pillar of fen β s strategies to increase the impact of initiatives implemented by fen and its members. this would enable fen members to design more effective and tailored financial education programmes, that also optimises resources, to achieve sustainable behavioural change. by strengthening the focus on outcomes and impact, we can reinforce effective practices and support the continuous improvement of programmes. with this in view, fen is committed to develop and execute an annual measurement and evaluation process for financial education programmes that support the national strategy for financial literacy β to be implemented from 2022. 2 / 3 bis central bankers'speeches the second area of focus today is on opportunities to make better use of data and behavioural insights to advance smarter financial education. a key challenge that we face today is the misalignment between information and resources made available to financial consumers, and the way in which they consume, process and act on such information. behavioural insights can help us close this gap to make better use of the tools at our disposal to bring about positive change. advances in technology are also opening up new opportunities to leverage on behavioural insights to achieve more effective financial education interventions. the ability to gain much deeper and richer insights into consumer behaviour are now possible, and could completely change the way we think about and deliver financial education interventions. the community of practice enables us to tap into a reservoir of knowledge and expert resources to explore new opportunities and ideas, and strengthen existing collaborations to take the financial education agenda forward. as fen continues to grow, we hope to further expand the community to provide thought leadership and strategic insights that will benefit all fen members and partners in our joint efforts to raise the level of financial literacy in malaysia. on this note, let me thank everyone again for taking the time to share your perspectives | can be addressed if all the relevant participants to the islamic financial sector - the industry, the regulators, the market participants and the academia are willing to forge their efforts together on a continuous basis to elevate the performance level of islamic finance. today, we are paving the way for closer collaboration between inceif and the institutions of higher learning in malaysia to realise our common objective of developing the pool of expertise in islamic finance. this collaborative move, would establish a network of mutual co - operation and collaboration that would strengthen the efforts between the institutions of higher learning in the areas of curriculum development, research, training, exchange of ideas and information, and resources in islamic finance. this partnership in connecting the knowledge communities in malaysia needs to be developed and maintained on a long - term basis. entering into strategic alliances with institutions of higher learning, islamic financial institutions and other organisations would create greater synergy, which may bring about new approaches, new technologies and new areas of specialization. collaborative efforts between inceif and institutions of higher learning in particular, would strengthen the ability to leverage on the respective institutions'expertise in research. the introduction of new research findings in islamic financial engineering could pave the way for increased innovation of new products. this would contribute towards broadening and deepening islamic financial markets and thus strengthen the overall development of the islamic financial industry. in addition, active collaboration between academic researchers and the practitioners will enable the practical application of research findings. one of the strategic steps that inceif has initiated is the forging into strategic alliances with the five takaful operators to collaborate in promoting and undertaking research, development, training and education in islamic finance. in the international arena, inceif has also established strategic alliances with the islamic research and training institute ( irti ) of the islamic development bank, lembaga pengembangan perbankan indonesia ( lppi ) of bank indonesia, national institute of banking and finance ( nibaf ) of state bank of pakistan and ceylinco sussex business school, sri lanka, among others. inceif is also in the midst of finalising its collaborative efforts with organisations in the united arab emirates, kuwait, bahrain and qatar. initiatives have also been taken to enhance the pool of talent is in the field of shariah. this has been done by awarding research grants and scholarships to deserving outstanding candidates. this initiative will be funded by the shariah endowment fund which was announced in august this year. the applications for the sharia | 0.5 |
available data at face value, households appear instead to have set aside a greater share of their income for financial investment. perhaps americans are finally becoming conscious of the need to accumulate additional assets to ensure not only that they can handle temporary interruptions in employment but also that they will have the wherewithal to enjoy a lengthy retirement down the road. be that as it may, the increased flow of private savings - - and a reduced call upon those savings by the treasury - - helped to fund substantial increases in fixed investment last year. homebuilding activity was up considerably ; notably, single - family housing starts were robust once again and helped to push the nation β s homeownership rate to a fifteen - year high. in addition, business fixed investment posted another strong advance. firms acquired large amounts of computing and telecommunications equipment in particular, seeking to enhance the efficiency of their operations as well as their overall productive capacity. at the same time, they accumulated inventories rather cautiously : stock - to - sales ratios, which had risen in 1995, were in many cases near historic lows as of november 1996, the most recent month for which statistical information is available. the growing economy had beneficial effects on the finances of many states and localities, which consequently could spend more on needed infrastructure and vital services and, in some instances, trim taxes. of course, overall government sector purchases were held down by the ongoing efforts to reduce the federal deficit. it clearly was private demand that drove economic growth last year. to be more specific, it was domestic private demand that did so, for net exports fell, on balance, in 1996. the volume of goods and services we sold abroad grew appreciably, despite moderate economic expansion by our major trading partners, but our imports continued to grow at a rapid clip. in fact, imports provided a safety valve in a u. s. economy marked by a high degree of resource utilization. i β ve already noted that our unemployment rate reached the lowest level in some time. moreover, throughout the year, we heard reports from around the country that qualified workers were in tight supply. although increases in hourly compensation remained relatively subdued - - an important fact to which i shall return in a few moments - - they did become more sizable, and they raised unit costs when employers were unable to enhance productivity commensurately. thanks to the very substantial additions to facilities in the past few years, physical capacity in the manufacturing sector was not greatly strained. the question is, of course, | macroprudential modesty introductory remarks by klaas knot, at the 82nd plenary meeting of the group of thirty federal reserve bank of new york, 6 december 2019 at the g30 meeting, hosted by the federal reserve bank of new york, a panel session was held on β the future of macroeconomic policies β. klaas knot was one of the panelists. in his opening statement he discussed the role of macroprudential policies in addressing financial vulnerabilities. he stressed the need to be realistic in our expectations on what macroprudential policies can deliver under the current circumstances. the macroprudential toolkit, mr. knot said, is limited in scope and impact to mitigate systemic risks. he stressed that financial stability has to be a relevant factor to take into account in the overall macroeconomic policy mix. introduction what a difference a year can make. in december 2018, the ecb decided to end its net purchases under the asset purchase program and it was believed that 2019 would focus on steps towards monetary policy normalization. now, one year later, rates have been cut both in the us and in europe and net asset purchases have restarted in europe. the main theme in international discussions at the fsb and imf is the prolonged nature of low interest rates. these discussions focus on the structural level of the natural interest rate and are reflected in terms as β low - for - long β or even β low forever β. the weakening of the economic outlook and shift in financial conditions have increased stability risks in the global financial system. i will argue today that we need to be realistic in our expectations on what macroprudential policies can deliver under the current circumstances to safeguard financial stability. the macroprudential toolkit is limited in scope and impact to mitigate systemic risks. following this observation, it also raises important ( and sometimes new ) questions on the implications for the overall macroeconomic policy mix. i. vulnerabilities in the financial system in order to discuss the role of macroprudential policies in current economic circumstances, let β s first take a look at the main pockets of vulnerabilities featuring prominently in the fsb β s semi - annual exercises. as my goal is to map macroprudential policies onto these vulnerabilities, i will abstain from geopolitical risks such as trade disputes and brexit. credit growth / leverage first of all, the low - interest rate environment leads to a | 0 |
is particularly helpful for firms in the private sector, especially small and medium enterprises that might otherwise not be able to manage the risks of dealing with overseas buyers. it is an important part of the kingdom β s economic vision 2030 that we develop a strong and thriving sme sector, especially one that can focus on export markets. more widespread use of export credit guarantees is, therefore, an instrument which has a particularly important role to play in the kingdom β s economic development goals. it is this background which makes the current workshop so important and timely. let me conclude by wishing you success for your discussions during the rest of this morning. | on global financial stability. nevertheless, even if large and unsustainable deficits financed by the accumulation of reserves by surplus emerging economies were not the ultimate cause of the global economic and financial crisis, it can still be argued that they provided support for the build - up of the financial excesses that led to it. in the aftermath of the crisis, global imbalances were reduced as a consequence of the financial retrenchment and the severe downturn in activity worldwide. however, a large portion of the correction is likely to have been merely cyclical. as a matter of fact, as the global recovery is taking hold, a new widening of imbalances is starting to be perceived this year and is foreseen to continue into 2011. indeed, the basic structural factors underlying global imbalances remain essentially in place ; but the crisis has brought about some potentially important changes in the nature of the imbalances. as trade and capital flows experienced a sudden stop during the crisis, the immediate impact was deeper in those economies more open to trade β which collapsed β and those with higher net external financing needs. when trade recovered, export economies tended to rebound strongly, but countries with large external deficits generally lagged behind. in many advanced economies, particularly in those running deficits, private domestic demand remains severely impaired by the adjustment process and the need for the private sector to deleverage. as a result of this process private sector saving rates have increased sharply and public sector balances have rapidly deteriorated. in the end, external deficits do not reflect anymore the large financing needs of the private sector β as they did before the crisis β but those of the public sector. high fiscal deficits and rapidly increasing debt levels in most advanced economies are both a consequence of the crisis and of the policy response to it, as governments tried to make up for the sharp collapse in private sector activity and to support their financial sectors, in a context of rapidly shrinking public revenues. given the deep concerns about public debt sustainability brought about by these developments, a key policy challenge in most advanced economies is to achieve fiscal consolidation, even at a time of expected lasting weakness in domestic demand. european economies have been acting resolutely in the pursuit of fiscal consolidation. in particular, spain is undergoing an intense adjustment process which has halved the current account deficit ( from 9, 6 % in 2007 to around 5 % this year ). the government is implementing an ambitious fiscal consolidation plan, combining some tax increases with | 0 |
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