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, the end - 2012 recession gave way to a remarkable expansion in 2013. furthermore, against the backdrop of significant monetary easing there are indications that deflation finally may come to an end. in a nutshell : the advanced economies have entered 2014 in better shape than they were one year ago. but they are far from being in good shape. the economic improvements were backed by the extraordinary low policy rates and unconventional measures by central banks. insofar monetary policy can be regarded as successful. but it came at a price. monetary policy is in uncharted territory. questions came up whether further monetary easing could have diminishing or even negative returns. against this background, sizeable downward risks and vulnerabilities continue to exist. in addition to those mentioned in the background note, i will briefly focus on the fragilities of the recovery in the context of financial market developments. bis central bankers β speeches in 2013 there was only one way for most asset prices to go : upward. the eurostoxx 50 increased by 18 %, the ftse 100 by 14 %, the dow jones by 28 %, and the nikkei skyrocketed even by 57 %. funding conditions for troubled sovereigns and banks eased significantly. market volatility decreased, too. after years of risk aversion, sentiment switched to a β risk on β mode. 2013 was a very good year for financial investors. however, i look at these developments with some unease. indeed, catching - up dynamics after excessive pessimism up to the summer of 2012 can explain some of the asset price increases. yet abundant global liquidity in addition to abating risks and improving fundamentals has certainly played a role, too. one might even argue that the influence of ultra - loose monetary policies has begun to be stronger on financial asset prices than on real activity. the contrast between buoyant financial markets, on the one hand, and still limited improvements in economic fundamentals and activity, on the other, is apparent. the low volatility we have observed over the last quarters might even have blurred market participants β risk perception. did financial markets enter a new phase of β irrational exuberance β? such a verdict is certainly debatable. but at least financial markets have anticipated significant further improvements of economic fundamentals and prospects. this creates vast room for negative confidence shocks. the global financial crisis taught us how detrimental contagion and a negative feedback loop between the financial markets and the real economy can be
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be addressed. to improve the comparability of the methods used to calculate the capital requirements, the basel committee is aiming to curtail banks β leeway in weighting risk. for example, it is hard to assess the probability of default for low - default portfolios which include exposures to sovereigns, large companies or banks because β as the name suggests β the respective credit events are very rare. to some extent, the calculation of regulatory parameters for such low - default portfolios falls under what is known as the β turkey illusion β : imagine you are a turkey. every day you are approached by a man who feeds you. what kind of mental model of what happens when he appears do you think you β ll build up? however, thanksgiving is coming β¦ measures under consideration to reduce the leeway for banks using an internal - ratings based approach include the implementation of floors based on the standardised approach, restrictions on using internal estimates of certain parameters for risk calculation purposes, and the exclusion of certain asset types from the model - based approach. efforts are also underway to make the standardised approach more risk - sensitive. however, it should be noted that using different methods to calculate risk - weighted assets is not a problem per se. to some extent, deviations are acceptable and reasonable ; otherwise we would ultimately be calling into question the very rationale of the internal models - based approach. bis central bankers β speeches 3. beyond basel iii when basel iii is fully implemented, regulatory capital requirements will be significantly higher and tougher than under basel ii, and the financial system will be more stable than before. a typical credit institution will have to achieve a capital ratio of 8 % plus various buffers. but will that be enough? to give a profound answer to this question, we would first need to have an idea of what would be an optimal, or at least an adequate, capital ratio. academic research on this subject is not very broad. however, a recent study by several central bank economists found that a capital ratio of around 11 % would be a reasonable figure. 2 that number exceeds the basel iii minimum requirement but falls well short of β more radical proposals β. of course, there is a trade - off between the benefits and costs of higher capital requirements which lies at the heart of the optimisation problem in the study i just mentioned. on the one hand, higher capital requirements reduce bank leveraging, the risk of bank failures and the implicit subsidies given to banks on account of deposit insurance
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##tances for social and economic development through our economic and financial learning program. challenges however, while we have positives, there are concerns that we need to address. foremost is the adverse impact on remittance costs and flows of the closure of accounts of several money transfer operators ( mtos ) by correspondent banks who are limiting their exposure to possible channels for money laundering and other financial crimes. this is a derisking strategy largely driven by business decisions of foreign banks, weighing the risks and benefits of dealing with remittance companies. this has been going on in recent years and has not been helped by the present money laundering case here. since the closures limit the players that can competitively operate in the remittance market, this has the potential to reverse the steady gains we have made in reducing remittance costs. de - risking may also result in movement by ofs toward informal remittance channels and subsequent financial exclusion. in the end, this may exact an even larger toll on the ofs and their families in terms of deprivation of access to safe and reliable financial services. we are therefore addressing this issue. as early as 2014, we started raising our concerns on the adverse impact of de - risking with relevant international institutions. this includes the financial action task force, alliance for financial inclusion, the global partnership for financial inclusion of the g20, the us department of treasury, the financial stability board, and the world bank. in addition, we are gathering data and closely coordinating with concerned stakeholders for a more evidence - based response. among others, we have an ongoing national risk assessment ( nra ) which is an inter - agency effort to evaluate the country β s money laundering and terrorist financing vulnerabilities and weaknesses. this will enable us to sharpen our focus in ensuring effective enforcement of international standards against money laundering and terrorist financing. bis central bankers β speeches on the other hand, there is a silver lining : technological innovations from the market promise more cost - effective remittance channels. in today β s language, these are called β disruptive innovations β, the act of creating new value chains from existing markets or value chains. the advent of more affordable smart phones has encouraged new players ( e. g., financial technology companies or fintechs ) and new business models to address the problem of cost. there are now online money transfer services that are linking international remittances to facebook. 3 customer acceptance of these developments seems likely. in a recent global survey
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and put in place cohesive reforms to safeguard the philippine financial system from the impact of climate change and other environment and social risks. indeed, the financial sector holds a unique position in advancing the sustainability agenda. clearly, we can no longer afford to ignore climate change or sustainability issues as a governance priority. by deciding to finance sustainable projects, you create more value for the company β s stakeholders while preserving the environment and humanity. the current covid - 19 pandemic also offers a window of opportunity for re - shaping the industry β s 3 / 4 bis central bankers'speeches future. let β s not put this crisis to waste and build a climate - resilient, green, and sustainable economy. thank you and good afternoon! 4 / 4 bis central bankers'speeches
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##sustainable. policy makers are responsible for planning both for the short and the longer term and we encourage governments to consolidate their fiscal positions in order to enhance their nations β competitiveness. the fund should continue to monitor closely structural deficiencies and advise accordingly. good governance economic integration has brought increased prosperity to those who have been part of the globalization process. increased globalization also implies intensified competition in most areas. good governance is, therefore, more important now than ever because it fosters confidence and growth, without entailing much additional economic cost. all empirical studies confirm that much can be gained by embracing good governance and it is an essential component of crisis prevention efforts. good governance is equally vital in both the public sector and the corporate world, and its merits are relevant in all countries. recently, corporate governance issues have been prominent on the world economic agenda as financial markets have been recovering from scandals that came to the fore following a period of excesses in equity markets. in order to increase confidence in the markets, it is imperative that the corporate world adhere to the principles of good governance. good governance in the public sector is also an essential tool for strengthening institutional capacity, which is fundamental for economic and social development. the fund has an important role to play in this field and we welcome the increased emphasis it has given to the issue of governance. transparency and international standards with the world economy having suffered a confidence crisis, it is important to continue to promote greater transparency and accountability. various studies have demonstrated that transparency and adherence to international standards lead to easier market access and lower borrowing costs. there is much to gain by applying these simple principles. it is also important to continue developing international standards and codes that enhance transparency and facilitate comparison between countries and regions. the fund has invested considerable efforts in promoting transparency and developing standards and codes in cooperation with the world bank, the bank for international settlements and other organizations. remarkable progress has been made in this area but we realize that broad implementation of these standards will take time, although this is time well spent as improved practices and comparability will increase the stability of the international financial system. we believe that the next steps should be to harmonize accounting standards at world level. the nordic - baltic constituency encourages all member countries to support the efforts of the international accounting standards board to reach a consensus on accounting standards and principles. furthermore, we welcome the new steps taken to increase the fund β s transparency, especially the policy of moving to presumptive publication of all article iv reports and the
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mr. greenspan β s testimony on the international economic and financial system testimony of the chairman of the board of governors of the us federal reserve system, mr. alan greenspan, before the committee on banking and financial services of the us house of representatives on 16 / 9 / 98. as i testified before this committee in the midst of the mexican financial crisis in early 1995, major advances in technology have engendered a highly efficient and increasingly sophisticated international financial system. the system has fostered impressive growth in world trade and in standards of living for the vast majority of nations who have chosen to participate in it. but that same efficient financial system, as i also pointed out in that earlier testimony, has the capability to rapidly transmit the consequences of errors of judgment in private investments and public policies to all corners of the world at historically unprecedented speed. thus, problems that appeared first in thailand more than a year ago quickly spread to other east asian economies that are relatively new participants in the international financial system, and subsequently to russia and to some degree to eastern europe and latin america. even long - time participants in the international financial community, such as australia, new zealand, and canada, have experienced the peripheral gusts of the financial turmoil. japan, still trying to come to grips with the bursting of its equity and real estate bubbles of the late 1980s, has experienced further setbacks as its major asian customers have been forced to retrench. reciprocally, its banking system problems and weakened economy have exacerbated the difficulties of its asian neighbors. the relative stability of china and india, countries whose restrictions on international financial flows have insulated them to some extent from the current maelstrom, has led some to conclude that the relatively free flow of capital is detrimental to economic growth and standards of living. such conclusions, in my judgment, are decidedly mistaken. the most affected emerging east asian economies, despite the sharp contraction in their economic output during the past year, have retraced, on average, only one - sixth of their per capita growth over the past ten years. even currently, their average per capita incomes are more than 2Β½ times the levels of india and china despite the unquestioned gains both have made in recent years as they too have moved partially to join the international financial community. moreover, outside of asia, several east european countries have made significant progress towards the adoption and implementation of market systems and have increasingly integrated their financial systems into the broader world context to the evident benefit of their
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). according to their published annual reports, external indebtedness by petrotrin and ngc has grown tremendously. ngc β s external debt more than tripled between 2004 and 2006. of the approximately $ 9 billion increase in petrotrin β s debt over the period 2006 β 2009, almost all was financed on the external market. the often repeated rationale for the limited involvement of the domestic financial sector includes : ( i ) the large capital outlays and long lead times to production ; ( ii ) high risk and uncertainty associated with exploration investment ; ( iii ) potential for inherently variable resource revenue ; and ( iv ) the high interest rates and inefficiency of domestic capital markets. bis central bankers β speeches it is true that the domestic capital market is limited in terms of the financing requirements of the larger companies. for example, petrotrin went to the overseas market to raise us $ 750 million in 2007 and us $ 850 million in 2009 to finance the gasoline optimization project and the ultra - low sulphur diesel plant. the domestic financial system certainly could not supply those resources. ( but one is tempted to ask why a small portion could not have been raised here ). in terms of the capital market, the largest local currency, private sector issue in the domestic capital market was tt $ 1 billion in 2005 for tstt. in terms of foreign currency issues, the largest issue was us $ 130 million for the trans jamaica highway in 2004, followed by us $ 120 million for the government of barbados in 2009. the petrotrin transaction in 2009 clearly shows that the required capital could have been raised on the local market at a lower interest cost ( table iv ). however, the issue size was considerably larger than the customary values raised on the domestic market. apart from issue size, the multinational energy companies will not borrow on the domestic market because they can access financing at cheaper rates. according to the bp β s consolidated financial statements for 2009, the company β s interest cost for fixed rate debt for us dollar, euro and β other currencies β issues were 4 per cent, 4 per cent and 6 per cent, respectively. the rates were considerably lower for floating rate debt ( 1 per cent, 2 per cent and 3 per cent ). in this year, the prime rate in trinidad and tobago was 11. 9 per cent. capital issues were at rates ranging from 5. 25 to 8. 95 per cent. the pre - conditions for increasing domestic financing in the
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ewart s williams : stimulating domestic capital in the energy sector address by mr ewart s williams, governor of the central bank of trinidad and tobago, at the trinidad and tobago energy conference, port - of - spain, 8 february 2011. * * * it β s a bit of a paradox but the facts are that the energy sector makes a major contribution to gdp, to the public finances and to exports, ( but scarcely any direct contribution to employment ) and depends very little on domestic financing. table i illustrates the contribution of the energy sector to the various economic aggregates. you should note too, that since the beginning of the last decade, the energy sector was the main engine of growth and has grown at an average rate of 10. 3 per cent per annum, outpacing the average growth of 3. 8 per cent for the non - energy sector. in terms of financing, table ii shows that the energy sector accounts for a mere 3 per cent of total banking system loans and virtually the entire bank exposure is to the β service β companies. the picture is even worse if we look at the capital market. with the exception of one small company listed on the second - tier market, none of the 32 listed companies on the firsttier of the stock exchange are in the energy sector. in addition, of the $ 17 billion of ( private ) securities floated on the domestic capital market in the last decade, none were for local energy sector companies. and here i am defining the energy sector in the broad sense, comprising : ( i ) upstream β largely multi - national firms specializing in exploration and the production ( mining ) of oil and gas ; ( ii ) the downstream petro - chemical sector ( also largely foreign owned ) ; and ( iii ) the energy services sector ( the smaller firms that provide support services ) β these are largely locally - owned, though there are three multi - nationals that also operate in this sector. the foreign - owned enterprises are financed almost exclusively from abroad through direct equity injections and intra - company loans. the table iii presents estimates of total foreign direct investment in the energy sector in the period ( 2001 β 2009 ). the significant inflows during the first half of the decade were on account of the considerable capital investments associated with the development of the lng industry. of course, petrotrin and ngc, the large local companies in the energy sector are state corporations who also finance their investment projects largely from international sources ( of course, in addition to retained earnings
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##ants, the chairpersons, as well as the bank of albania's staff for dedicating your time and efforts to this important activity. i kindly invite you to actively participate in and conduct a very lively and fruitful debate. i truly believe that the productive discussions which will certainly take place during these two - day workshop, will contribute to strengthening further cooperation among researchers, and between the institutions. thank you! 4 / 4 bis - central bankers'speeches
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. 1 / 4 bis - central bankers'speeches despite the limited direct exposure of albania to russia or ukraine, the macroeconomic scenario changed almost overnight following the russia's war in ukraine. albania is now facing the challenges arising from the surge in international prices of energy, tighter global financial conditions, which are likely to persist and the economic slowdown in europe. inflation reached at 8. 3 % in october, continuing to remain the main threat to the macroeconomic stability and to both the stable and long - term growth of albania. given these circumstances, the bank of albania has undertaken a gradual monetary policy normalization process, ensuring that the speed of this normalization will return inflation to target within a reasonable period of time and with the lowest cost possible to the economic activity. our efforts to control and contain inflation have also been helped by the appreciation of our currency vis - a - vis the euro. during 2022, our currency, the lek, has appreciated by 2. 5 % on average against the euro, due to significant revenues generated by tourism, high fdis, and stable risk premia in our domestic financial markets. this was further strengthened by the convergence of our monetary policy cycle with that of the euro area. in parallel, the regulated energy price for albanian households has helped in absorbing the foreign pressures. this conclusion is well documented by previous and recent research conducted by our staff at the research and policy departments and by the econometric models that support our monetary policy. foreign price pressures helped by persistent domestic demand are already feeding to inflation of domestically produced goods and services, thus driving to the increase of production costs, and most importantly, of inflation expectations. this is evident in the labor market, capacity utilization rate and the capital markets, which seem to have already internalized these expectations in their decision making. the vast body of research conducted in the area of monetary policy has documented the real risk of high and persistent inflation and inflationary expectations. it also shows that without a strong and committed monetary policy response, inflation expectations become self - fulfilling, leading to increased uncertainty, disrupted price signals, inefficient distribution of resources, reduction of economic growth and increased long term volatility. our experience, research and current analysis, show that under current conditions, the only responsible policy for the central bank is to respond by increasing the policy rate and reinforcing its commitment to price stability. this course of action will create the necessary monetary conditions to control inflation and inflation expectations, and will eventually
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jean - claude trichet : enhancing the eu regulatory and supervisory framework β the eurosystem β s perspective speech by mr jean - claude trichet, president of the european central bank, at the 2007 eurofi conference β achieving the integration of european financial markets in a global context β, european parliament, brussels, 3 december 2007. * * * ladies and gentlemen, it is a great pleasure for me to introduce the discussion on the eu regulatory and supervisory framework at this year β s eurofi conference. the issue is particularly topical at the present juncture for two reasons. first, a wide range of eu institutions and fora are contributing to the first full review of the functioning of the lamfalussy approach across financial sectors in view of a discussion on the matter by the ecofin council. second, the recent financial market turbulence has underscored, among other things, the importance of effective cross - border cooperation and information - sharing among the competent authorities. the eurosystem which has strongly supported the lamfalussy approach from its inception and has actively contributed to its development during the past years also intends to contribute to the review process. it will publish its formal assessment β focusing on the banking sector β within the coming days and therefore i would like to take today the opportunity to share with you a number of issues which i judge important. basic premises underlying the eurosystem β s assessment let me start with the two basic premises underlying the eurosystem β s assessment. the first premise relates to the main challenges for the eu regulatory and supervisory framework, namely the need to promote further progress in the single market and, at the same time, safeguard financial stability in an increasingly interdependent financial system at eu and international level. the eurosystem is convinced that the eu framework will effectively meet these challenges only if divergences in supervisory requirements and practices are reduced to a minimum. at the same time, there is a need to ensure effective and timely informationsharing and cooperation among the competent authorities. while in recent years we have undoubtedly seen very good progress in these areas, it is also clear that the level of crossborder cooperation and convergence attained is not yet sufficient. moreover, structural developments β notably the increasing prominence of cross - border activities and institutions in the eu banking markets and the growing level of functional integration of cross - border groups β highlight that there is no room for complacency, and that further progress in crossborder convergence and cooperation is of the essence.
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the second premise underlying the eurosystem β s position relates to the choice of an adequate institutional vehicle to foster the heightened degree of supervisory convergence and cooperation. the eurosystem remains convinced that the lamfalussy framework provides an appropriate setting in this respect. one of the key advantages of the lamfalussy approach is the combination of a decentralised set - up with cross - border coordination at eu level. a decentralised approach is in line with the national responsibilities for safeguarding financial stability β relating not only to prudential supervision, but also to financial stability monitoring and assessment, crisis management, and deposit insurance β while also allowing to reap the benefits of geographical proximity and of the established experience and knowledge of local supervisors. however, the accompanying coordinating mechanisms need to be sufficiently strong so as to achieve the required high level of cross - border convergence and cooperation and to ensure a level playing field. we consider that the eu regulatory and supervisory policy process has not yet been sufficiently strengthened in this respect. to this avail, further measures will be necessary at all levels of the policy process, pertaining to ( i ) the overall institutional setting and political guidance for the pursuit of cross - border convergence and cooperation ; ( ii ) the eu regulatory framework, as laid down at levels 1 and 2 of the lamfalussy process, ( iii ) closely convergent supervisory requirements, as developed at level 3 of the lamfalussy process and ( iv ) streamlined and consistent supervisory processes, as implemented by national supervisors on a day - to - day basis with the support of the level 3 committees. three key issues for enhancement the eurosystem β s views on the required measures within these four broad areas are broadly in line with the respective recommendations of other eu institutions and fora, such as the european commission, the inter - institutional monitoring group, the financial services committee, and the committee of european banking supervisors ( cebs ). i would like now to briefly highlight three key issues on which we place particular importance. first, one priority in the coming period will be to reinforce the role and operating mechanisms of the cebs. the current status of the cebs β a private network of national supervisors with a limited formal recognition at either eu or national level β is simply not commensurate with the important tasks entrusted to this committee. the institutional standing of the cebs should therefore be enhanced significantly. against this background we very much support the commission β s plans to assess possible options for strengthening the
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risks have surfaced. this will render the traditional risk - management techniques obsolete as new derivative products and off - balance sheet operations become more common. the hitherto neglected area of operational risk management has also come to assume greater importance and the pervasive use of technology has multiplied the importance of managing this risk in tomorrow β s more volatile banking environment. the financial institutions now have to have enough paraphernalia to tackle these risks in line with the international best practices. in this respect, risk - management tools built upon the latest technology would provide the financial institutions to manage the host of new risks in a more efficient manner. this will enable them to deploy resources more effectively. the importance of sophisticated risk - management practices will become even more pronounced as the banks strive to implement the basel ii accord. the smooth switch over to basel ii will be a challenging task before the banks, and this has far - reaching implications for the future structure of the banking system. basel ii would require a heavy investment in technology and development of mis tools to incorporate the internal risk - based approach. the risk - based approach to capital allocation will be the inherent theme, as each asset will be allocated a rating both externally and internally. this will ultimately influence the capital charge for each asset and would thus help minimize the reckless risktaking by banks on account of the heavy capital charge. as financial innovation becomes ubiquitous and new technology and standards evolve to make financial transactions more complex and volatile, the role of the regulators is going to become tougher in the days ahead. this brings me to the concluding, but not the least important section, i. e. the changing role of and expectations and demands for regulators. changing role of regulator the central bank has been transformed substantially. it is today a very user friendly institution, based on feedback of the industry. it is candid in putting forth its views, and over the years has withstood a number of political challenges. over the next few years, we plan to : first, with the support of the government, launch adequate initiatives to strengthen the governance of the central bank. in this context, sbp is in the process of benchmarking itself with the other central banks that have attained good governance standards. the evaluation of central banks β governance practices is judged on the basis of the roles and responsibilities of the management and the board of directors, and the appropriate interaction and interface between the central bank and the government. in deciding an appropriate balance in these roles and responsibilities, it is critical
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unfortunately, it did not happen. in cumulative terms, the fiscal deficit grew by 146 percent in nominal terms during june 2007 and june 2010 compared to 113 percent during june 2003 and june 2007. if we take out the interest payments, which have been mentioned as a factor adding to the fiscal problems, and look at the primary deficit, the fiscal driven aggregate demand pressures look more pronounced. the primary deficit grew by 3182 percent in the last three years compared to an improvement of 140 percent in the three years before that. the same is the case with revenue deficit β the difference between current expenditures and total revenues. this deficit increased by 298 percent compared to only 27 percent respectively. thus, there is an unquestionable increase in aggregate demand pressure because of the public sector. what is more worrying is the trend in the financing pressures of this substantial fiscal expansion on the resources of the banking system. during june 2007 and november 2010, the cumulative borrowings from the banking system increased by 187 percent compared to 58 percent during june 2003 and june 2007. we all know that, within the banking system, the government has substantially increased its reliance on borrowing from the sbp. the stock of outstanding borrowings of the government from the sbp is in excess of rs1500 billion today compared to only rs53 billion at end - june 2003. imagine the effect on market interest rate if the government had borrowed this amount from the scheduled banks. undoubtedly, interest rates would have been much higher. moreover, since the interest rate by definition is the price one has to pay to bring future resources into the present, the borrowings and the increase in debt of this scale is not possible without a corresponding increase in interest rates. the continuation of these trends is fueling expectations of inflation and, resultantly, in interest rates remaining high. thus, if anything, the criticism on sbp β s current monetary policy stance could be that it has not been tight enough. the reason for the sbp pursuing a relatively β loose β monetary policy is our concern that it would further crowd out the private sector and negatively impact the growth rate. faced with this trade - off, sbp has been trying to strike a very difficult balance between such considerations. there is no denying that private sector has borne the brunt of required adjustment in the economy and government has considerably crowded out the private sector both through reduced availability and price of credit. between june 2003 and june 2007 private sector credit cumulatively grew by 162 percent, while it increased by only
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partners β currencies, the real effective exchange rate of the dinar remains close to its equilibrium level. therefore, the exchange rate played, to a large extent, its role as an external shock absorber, reflecting its flexibility, supported by the bank of algeria β s interventions in the interbank exchange market. third, as a result of the sharp contraction in fiscal oil revenue and the expansion of public spending, the fiscal deficit rose to 16 percent of gdp in 2015 from 7. 3 percent in 2014. however, public debt has remained historically low, representing 13. 6 percent of gdp at end 2015. fourth, the significant reduction in the treasury β s financing capacity in 2014 and 2015 is well reflected in the aggregate monetary survey, with the treasury becoming a net borrower in 2015 vis - a - vis the banking system for the first time in many years. on the other hand, the decline in net external assets and the significant slowdown in the growth of credits to the economy more than offset the reversal of the treasury β s net position. overall, monetary expansion, as measured by m2 growth, was only 0. 12 percent in 2015, the lowest rate ever, mainly reflecting the magnitude of the impact of the oil price decline. excluding hydrocarbon sector deposits, the money supply increased by 2. 8 percent. bis central bankers β speeches the credits to deposits ratio rose from 69. 5 percent by end 2013 to 74. 7 percent by end 2014 and 86. 7 percent by end 2015, indicating a decline in the surplus of banks β collected resources compared to extended credits. the evolution of credits, in particular medium and long term credits, in a situation of stable deposits, is the main factor explaining the decline in the public banks β short term liquidity ratio. deposits in the banking sector, which rose in 2013 ( 7. 5 percent ) and 2014 ( 17. 5 percent ), slightly declined in 2015 ( - 0. 2 percent ) as a result of the sharp contraction in the deposits of the hydrocarbon sector ( - 41 percent ). consequently, the banking sector β s liquidity, in excess since 2002, declined gradually during 2015 to reach dinar billion 1833 by the end of the year ( a decline of 33 percent ), after relative stability in 2014 ( dinar billion 2731 by end 2014 ). with a milder recession in the hydrocarbon sector in 2014 and an upturn as of 2015, economic activity strengthened during these two years despite the external shock. growth was
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mohammed laksaci : financial system developments in algeria β resilience and risks in the face of the international financial crisis and its spillover effects speech by dr mohammed laksaci, governor of the bank of algeria, at a meeting with the algerian bankers association, algiers, 22 january 2009. * * * algeria β s strong macroeconomic performance over the past nine years and the gradual strengthening of the banking sector β s stability have contributed to establishing a relative resilience to external shocks. key achievements include : β’ sound management of international reserves ( no investments in risky assets ), paying due attention to the strategic objective of safeguarding asset portfolios against any loss of capital ; β’ significantly reducing external debt, in 2005 and 2006, after strictly limiting external borrowing since early 2000. by end 2008, total medium and long term debt stood at only $ 4 billion ( less than 3 % of gdp ). furthermore, banks β external liabilities represent less than 1 % of their total liabilities, and banks are required to deposit their end - of - day foreign exchange balances at the central bank which manages the country β s overall exchange position ; β’ saving part of the fiscal revenue windfalls, with an annual budget saving averaging 23 % of gdp during the period 2005 - 2008. by end 2008, savings in the stabilization fund ( frr ), totaled da 4113 billion ( equivalent to $ 57, 8 billion ) ; β’ domestically financing the economy β s large investments, in the context of excess saving rates over investment rates ; β’ developing the bond segment of the financial market, with access limited to domestic investors ; β’ advancing the restructuring of the banking sector following failure and bankruptcy of small private banks which resulted in withdrawing their licences over 2003 - 2006 while compensating depositors through the deposits guarantee fund. the strengthened macroeconomic stability, as evidenced by subdued inflation ( 4. 4 % in 2008 despite the surge in world commodity prices ) and a real exchange rate of the dinar near its equilibrium level, as well as important foreign exchange reserves ( $ 143 billion, by end 2008 ) and low external debt, have constituted sound safeguards against the inherent shocks of the current international financial crisis. in addition, indirect monetary policy instruments ( deposit auctions, marginal deposit facility, β¦ ) have been successfully used to limit the impact of structural excess liquidity on inflation. although the direct contagion impact of the international financial crisis on the algerian banking system is limited, in view of its small
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engagement between the bank and the industry. through regular engagement, the association can play an effective facilitative role in addressing issues concerning developments in the industry, by providing meaningful feedback and input to the bank or other relevant authorities. we have found over the years that industry associations can add tremendous value in consolidating fragmented views of the industry on important issues and could assist in formulating public policy. there are many benchmarks that the association can draw on, both in malaysia and globally, in organising itself as an effective association. but of paramount, the players must be united in supporting the association. last but not least, the association is expected to undertake an active role in educating consumers on the services that the industry provides and in addressing consumer issues and complaints. in relation to this, the association should leverage on its nationwide network to increase awareness among the public of their responsibility to deal only with authorised money services. part of this should also include explaining the relevant regulatory requirements to the public, such as the need to produce identification documents for large transactions. over the last 4 months, i am encouraged by the numerous initiatives undertaken by the association and the fruitful engagements and consultations with the bank. i understand that the association has embarked on a series of nationwide training to help its members implement effective corporate governance practices, develop internal policies and procedures and put in place aml / cft compliance programmes. it has also helped to resolve a number of industry issues, including assisting members to obtain business insurance coverage at reasonable rates, and liaising with system vendors to ensure the provision of suitable and reliable management information systems. these are admirable progress and demonstrate the tremendous value that the association can bring to its membership. on this note, let me take the opportunity to congratulate the council members and the industry on this official launch. bank negara malaysia fully supports the malaysian association of money services business in its important endeavour, and we are confident of the significant impact that this association can make in taking the money services business industry to the next level of development. it now gives me great pleasure to officiate the launch of the malaysian association of money services business. bis central bankers β speeches
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mario draghi : reviving the spirit of de gasperi β working together for an effective and inclusive union speech by mr mario draghi, president of the european central bank, at the presentation ceremony of the de gasperi award, trento, 13 september 2016. * * * i have many reasons to be grateful and honoured by your decision to award me the premio de gasperi today. his character and his experience provide us with an inspiring message, loud and confident : β in europe we go forward together in freedom β. this message is rooted in the 20th century history of our continent. the raison d β etre of any government is to provide security for its citizens, both physically and economically. and in democratic societies, that means providing safety and security by preserving individual liberties and individual rights, by promoting social fairness and equal opportunities. the statesmen who, after world war two, looked back over the preceding half - century could reach only one conclusion : that the governments which emerged from nationalist and populist movements, and which were carried into power by a mixture of charisma and lies, completely failed to offer their citizens security, fairness and freedom. they had betrayed the very reason for their existence. in outlining the future shape of international relations, de gasperi and his contemporaries concluded that only cooperation between european governments within a common organisation could ensure the joint security of their citizens. they saw that implanting democracy in the nations of europe would not be enough. europe also needed democracy among nations. they understood that building barriers between countries would make them more vulnerable and less secure, not least due to their geographical proximity ; and that withdrawing behind one β s borders would make governments less effective. de gasperi β s vision of how this joint process should be shaped was articulated in various speeches he gave in those years. common challenges should be addressed via supranational instead of intergovernmental strategies. speaking to the assembly of the european coal and steel community in 1954, de gasperi noted that β β¦ from 1919 to 1939, some seventy international treaties were concluded β and all became mere pieces of paper when it came to their implementation β because of the lack of β joint control of common resources β. 1 and the experience of politicians was validated by distinguished economists, such as ragnar nurkse, who showed how those treaties ended up fostering protectionism. 2 integration above all had to meet the immediate needs of the people. as de gasperi observed, β we must
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- term money market, the level of the target interest rate is to be set based on the bank's assessment of economic activity and price developments. with regard to the future conduct of monetary policy based on the new operating target of money market operations, namely, the uncollateralized overnight call rate, the bank introduced a new framework. the bank announced that, under this framework, it would assess economic activity and prices from two perspectives, taking account of the " understanding of medium - to long - term price stability, " which is expressed as an approximate range between zero and 2 percent in terms of the rate of year - on - year change in the cpi. in light of this assessment, it would outline and release its current view on monetary policy. the april outlook report was compiled under the new framework. in the outlook report, the bank examined, from the first perspective, whether the outlook deemed most likely by the bank for economic activity and prices two years into the future is that the economy will follow a path of sustainable growth under price stability. the bank judged that japan's economy is likely to achieve sustainable growth under price stability as long as the economy develops in line with the outlook described earlier. from the second perspective, the bank examined the risks that are most relevant to conducting monetary policy, looking over a longer time horizon. as a result, the bank came to the conclusion that, as an upside risk, it should pay attention in the medium to long term to larger economic swings, resulting in large fluctuations in the rate of inflation, mainly due to acceleration of business fixed investment reflecting the accommodative financial conditions. as for downside risks, the bank examined the possibility of economic activity and the rate of inflation deviating downward from its projection due to various factors. the bank's judgment was that even if economic activity is less robust and the inflation rate lower than expected, the risk of the economy falling into a vicious circle of declining prices and deteriorating economic activity has become smaller, since the japanese financial system has regained stability and the economy has now cast off excesses in production capacity, employment, and debt. with regard to the future course of monetary policy, based on the assessment of economic activity and prices from the two perspectives, it seems probable that the accommodative financial conditions ensuing from very low interest rates will be maintained for some time following a period in which the uncollateralized overnight call rate is at effectively zero percent. through and beyond this stage
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trade expansion resulting from further progress in international division of the production process. as for domestic private demand, corporate performance continues to be strong. the bank's tankan ( short - term economic survey of enterprises in japan ) indicates that corporate profits increased for the fourth consecutive fiscal year, and firms expect their sales and profits to rise in fiscal 2006. business fixed investment plans for fiscal 2006 are relatively strong. as for the household sector, the employment and wage situation has been improving and private consumption has been on an increasing trend. japan's economy is likely to continue to show balanced growth. another characteristic is that the sustained economic recovery has resulted in a higher level of utilization of resources such as capital and labor. the current recovery has already lasted for over four years, and if it continues much longer, in october 2006 it will equal the izanagi boom ( 1965 - 70 ), which is the longest postwar economic expansion to date. as a result of the sustained recovery, according to the tankan, for the first time in more than a decade firms are no longer perceiving excess capacity but have started to feel more strongly that their labor holdings are insufficient. the ratio of job offers to applicants, below 1. 00 from 1992 until recently, has now exceeded 1. 00 since the end of 2005. furthermore, the conditions of persistent oversupply have been dispersed and the output gap, the difference between actual and potential output, which had long been negative, seems now to have closed. this indicates that demand and supply capacity in the economy are well balanced. given these characteristics of the current economic situation, the following are considered to be the three core elements of the most likely projection for economic activity and prices two years into the future. the first element is that the household sector is expected to be the main driving force behind firm domestic private demand. strong corporate performance has been benefiting the household sector, and this positive influence is likely to become more evident from now on. employment and wages have been improving against the background of favorable corporate profits and rises in labor shortages. the number of part - time employees and bonus payments are rising, and the number of full - time employees and regular payments are also on an uptrend. these developments suggest that households can expect the increase in their income to be more permanent, and this has contributed to the improvement in consumer sentiment. households'average propensity to consume is likely to remain at its current elevated level, and private consumption is expected to follow an increasing
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be persistently high. there has been a considerable imbalance in the supply and demand for housing for some time. housing is also sensitive to interest rates and thus quite responsive to monetary policy. so for the next few minutes, i would like to focus on how demand β supply imbalance in both owner - occupied and rental markets came about, how it is affecting prices for housing today and in future, and how housing is likely to affect the fomc's efforts to return inflation to our 2 percent goal. housing demand increased strongly in the years leading up to the pandemic, sustained by relatively low interest rates, the formation of new households, and rising incomes. demand for housing then surged during the pandemic as people spent more time at home, initially on the intensive margin - more housing square footage per household. couples in apartments wanted more space to work from home and opted for bigger apartments or houses. also, remote work enabled people to work from preferable locations so the demand for second homes surged. as the pandemic wore on, demand for housing also increased on the extensive margin - meaning more household formationas roommates sharing apartments now wanted to live on their own as they continued to work from home. and adult children began moving out of their parent's homes. all of these factors led to higher rates of household formation and greater demand for housing. so, by the end of 2021, the pandemic was driving up the demand for housing on both margins. meanwhile, the pandemic's supply constraints caused shortages in construction materials and construction workers, limiting the supply of new housing. the 2 / 6 bis - central bankers'speeches combination of soaring demand for housing and limited supply until earlier this year meant the housing market had substantial excess demand, which was reflected in substantial increases in housing costs. but now imbalances in the owner - occupied market have started to shift. due to the fed's actual and anticipated tightening of monetary policy, mortgage rates have increased from less than 3 percent at the end of last year to nearly 7 percent recently. higher borrowing costs have made it more expensive for households to buy homes, whether they are first - time buyers or trading their current home for a different one. and so, we have seen big drops in home sales over the course of this year. the monthly numbers of new and existing home sales are now back below the average levels seen in the few years before the pandemic. and the august decline in pending
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xiang junbo : the establishment of the pbc shanghai head office speech by mr xiang junbo, deputy governor of the people β s bank of china, at the inauguration ceremony of the people β s bank of china shanghai head office, shanghai, 10 august 2005. * * * honorable general secretary chen, honorable mayor han, dear guests, ladies and gentlemen, today, we are here to celebrate the inauguration ceremony of the people β s bank of china shanghai head office. the setup of the pbc shanghai head office is an important decision made by the cpc central committee and the state council to further improve our central bank system in the new situation, an important institutional arrangement to enhance the role of the central bank in macroeconomic management, and also a significant initiative facilitating the building of shanghai into an international financial center. now let me, on behalf of the people β s bank of china, express our sincere gratitude to all departments of the cpc central committee, the state council, the cpc shanghai committee, shanghai municipal government and various social circles for your support in preparing the establishment of the pbc shanghai head office. since china adopted the reform and opening - up policy, and with the gradual improvement of the socialist market economy, the central bank system in china has been constantly improved. in 1984, the state council decided to have the pbc function as a central bank. the law of the people's republic of china on the people's bank of china passed by the third plenum of the eighth national people β s congress in 1995 legally confirmed the pbc's central bank status. in 1998, the cpc central committee and the state council decided to reform the administrative system of the central bank by dismantling provincial branches and setting up regional branches, which further strengthened independence of the central bank. as an integral part of the pbc head office, the shanghai head office will operate under the guidance and authorization of the pbc head office in beijing. its major responsibilities include part of the central bank operational functions and some of the administrative functions. the establishment of the pbc shanghai head office will help the central bank to further improve its decision - making and operational system, and strengthen its macroeconomic management capacity. since china β s accession to the wto, china β s opening to the outside world has escalated and the economy has become increasingly market - oriented. the consequent profound changes occurring in the financial industry have given rise to higher uncertainties in the economic and financial development, posing new challenges
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oil and commodity prices which have also been buffeting the economy ) and taking into account the underlying structure of the euro area economy. one question that could arise here is whether the massive injections of liquidity into the banking system come at the price of either an inappropriate monetary policy stance or a less than optimal signalling of it. in practice, this is very unlikely to be the case. indeed, since the beginning of the financial turmoil in august 2007, the ecb has repeatedly emphasised that the policy stance is defined in terms of the interest rate at which financial intermediaries can obtain liquidity, rather than by fixing the quantity of liquidity which is provided. as early as 1970, william poole's classical analysis of the instrument - choice problem taught us that using the interest rate as policy instrument is desirable when short - term uncertainty stemming from instability in the money multiplier or from money demand shocks is high relative to the uncertainty stemming from aggregate demand shocks. the provision of liquidity then becomes an endogenous variable as it is steered in order to stabilise the money market rate at its desired level. in this framework, the sometimes substantial liquidity injections by the eurosystem should be seen as simply offsetting the sudden and sharp declines in the money multiplier induced by the financial crisis. as far as our monetary policy decisions are concerned, they depend on our medium - term assessment of the risks to price stability and are based on our two - pillar strategy, which enables us to cross - check developments in the money, credit and financial markets with the signals provided by economic analysis. given existing upward inflationary pressures from oil and other commodity prices and the associated likelihood of second - round effects, euro area monetary policy was until recently faced with predominantly upward risks to price stability. however, as the financial crisis intensified further, financial conditions for the private nonfinancial sector have tightened β independently of monetary policy β and the supply of credit from financial institutions might be reduced. as a result, expectations regarding economic activity have rapidly deteriorated over the last two months and the upward inflationary pressures have eased, partly as a result of lower commodity prices but also because of the change in the outlook for domestic economic activity. therefore, the coordinated interest rate cut of 50bp last week was also the appropriate response for the euro area to the materialisation of previously identified downside risks to growth and the associated decline in the upward risks to price stability. for the near future, we will continue
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benoit cΕure : interview with reuters interview with mr benoit cΕure, member of the executive board of the european central bank, and reuters, conducted by mr balasz koranyi and mr francesco canepa on 17 may 2017 and published on 18 may 2017. * * * the data has improved since the last governing council meeting. how is this affecting the policy discussion? when you look back at soft and hard data that we β ve had over the last weeks and months, it gives a much, much better picture than the one we had, say, one year ago. it β s a job - rich recovery and it β s much broader both across sectors and across economies. that β s all positive. the strength and robustness of the growth rate today in the euro zone shows that our measures have been working. it β s fair to say we now see our monetary policy measures fully unfolding. we said it would take time for policy to fully pass through to each and every part of the euro zone economy, in particular across countries. we β re seeing this now. what does that imply for future policy? it all depends on how confident we β ll be that price pressures will be building up to a point where inflation will be sustainably converging towards two percent, which is our definition of price stability. the growth picture makes us more confident that this will happen. but we cannot be sure at which pace and it β s fair to say that today, given the information that we have, we cannot yet be sure that the upturn in inflation is sustainable and self - sustained, that it will be there without our monetary policy support. this comes when you look at different measures of price pressures. one important measure is wages, which we still see as weak in spite of the material decrease in unemployment across the euro zone. you said that the situation improved a lot over the past year yet the guidance is exactly the same as it was back then. which parts of the guidance could change to reflect the improved economic situation? there are different components in our guidance. part of the guidance i would call it structural, so it β s not meant to be changed. it describes our reaction function, so the way that our monetary policy reacts to data. just to give you an example, that includes that our monetary policy support is conditional on inflation being on a sustainable path towards 2 percent. that is structural and we β re not going to change. when it comes to the choice of
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, downside risks from weak global demand and geopolitical events, a lower long - run neutral federal funds rate, and the apparently elevated sensitivity of financial conditions to monetary policy. uncertainty about the location of supply - side constraints provides another reason for gradualism. there are potential concerns with such a gradual approach. it is possible that monetary policy could push resource utilization too high, and that inflation would move temporarily above target. in an era of anchored inflation expectations, undershooting the natural rate of unemployment should result in only a small and temporary increase in the inflation rate. 15 but running the economy above its potential growth rate for an extended period could involve significant risks even if inflation does not move meaningfully above target. a long period of very low interest rates could lead to excessive risk - taking and, over time, to unsustainably high asset prices and credit growth. macroprudential and other supervisory policies are designed to reduce both the likelihood of such an outcome and the severity of the consequences if it does occur. but it is not certain that these tools would prove adequate in a financial system in which much intermediation takes place outside the regulated banking sector. thus, developments along these lines could ultimately present a difficult set of tradeoffs for monetary policy. 16 conclusion to wrap up, with the support of monetary accommodation, our economy has made substantial progress. my view is that a continued gradual return to more normal monetary policy settings will give us the best chance to continue to make up lost ground. see, for example, laurence ball and sandeep mazumder ( 2011 ), β the evolution of inflation dynamics and the great recession, β brookings papers on economic activity, ( spring ), pp. 337 β 381 ; blanchard, cerutti, and summers, β inflation and activity β, in note 13. see for example, jeremy c. stein ( 2013 ), β overheating in credit markets : origins, measurement, and policy responses. β tobias adrian and adam b. ashcraft ( 2012 ), β shadow banking regulation β frbny staff report no. 559, and samuel g. hanson, anil k. kashyap, and jeremy c. stein ( 2011 ), β a macroprudential approach to financial regulation, β journal of economic perspectives vol. 25, no. 1, both note that macroprudential tools may not be sufficient to fully address risks rising outside of the regulated banking sector. bis central bankers β
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the need for more forceful global response? since i have heard from different locations of similar concerns, we are all working at home, looking at what could be done. but it β s at a very premature stage because we don β t want to overdo it. we are in an open society, where people are free to lose money as they like. it β s a phenomenon that affects central banking, payment systems, banks and financial market infrastructure. by definition those activities become cross - border so a cross - border response is always preferable to a fragmented national one. in many jurisdictions there is a very high concern about money - laundering and terrorism financing. what needs to be decided here as a superpriority has to do with the level of political responsibility rather than the level of individual agencies. therefore the g20 where you also have the government side coming is a welcome forum. the second in the list of priorities is to have more information because it β s very difficult to have access to what is happening and where it β s happening. we need more information and that β s why for me one obligation would already be to force the unregulated platforms to report transactions in a harmonized way to repositories so that we would have access to information also in order to create a better response. i hear often that there are concerns of criminal activity and the amount of hoaxes in this virtual world is rather high. so the main concern is the absence of proper information and the absence of traces so you could track the transactions. so this is certainly something that specialized staff in different member states will also look into. your colleague benoit coeure said recently that the ecb expects g - 20 meeting in march to focus on coordinated response to the growth of digital currencies and urged leaders to come up with a regulatory answer. what are you expectations about this meeting in buenos aires? you should not think of a meeting as being a switch. it will launch a certain amount of studies, it will probably task a certain number of existing institutions to dig deeper and then we will start the work. but in the meantime we already prepare in - house. whatever happens, we want to be prepared. what can you do until this coordinated response is ready? 2 / 3 bis central bankers'speeches we have on the one hand our existing toolbox. it always is useful if you look at the toolbox again in terms of what is possible from the point of view of a new application. then
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- financial enterprises. accordingly, investment and trading strategies have also become more diverse. in particular, let me focus on the changing nature of index investment. it is true that a significant proportion of investment is still tied to strategies which replicate major indices by investing in the front end of the curve and passively rolling into the next contract each month. however, some managers are adopting so - called β enhanced β index strategies, which may entail positions on various parts of the curve or allow investments in subsets of commodities. 2 etf sponsors have also diversified their investment strategies. etf sponsors, especially in the case of etfs linked to the price of precious metals, typically take long positions in commodity spot markets under so - called physical etf schemes. however, we have seen the emergence of synthetic etfs, that is, etfs backed by derivatives. under synthetic etf schemes, etf sponsors often engage in total return swaps or commodity futures to issue etfs linked to major indices. they also use other types of derivatives to issue complex products such as short etfs and leveraged etfs, although their presence is still limited at this stage. turning to other participants, hedge funds typically take both long and short positions for arbitrage purposes or based on macro - economic views. ctas trade in futures markets and often employ technically - based trading strategies such as trend following strategies. more recently, some ctas have become increasingly involved in algorithmic and high - frequency trading ( hft ). this is often described as a response to changes in the shape of futures curves and / or a crowding out of investor activities in some part of the curves. bis central bankers β speeches the growing participation of financial investors in commodity futures markets may also affect spot markets. in particular, several leading commercial and investment banks have become increasingly active in some physical markets, providing liquidity to their clients through arbitrage between physical and financial markets. there seems to be a variety of motives behind the growing investment in commodities. some investors view commodities as an effective tool in hedging against inflation. institutional investors with a long - term investment horizon have been attracted by the diversification benefits for portfolio rebalancing and high convenience yields. furthermore, some investors consider commodity investments as a proxy for investment in rapidly growing emerging market economies. investable assets in these economies are still limited. thus, in order to gain exposure to these rapidly growing emerging market economies, some investors turn to commodity investments correlated strongly with growth
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asset price and financial market developments are eventually critical factors which have a decisive influence on the resilience of the recovery of domestic private demand. firms and households can only reactivate spending such as investment and consumption when clear prospects of a demand recovery following the resolution of various structural problems are in sight, future uncertainties with respect to employment and wages are dissolved, and a stable financial environment is in place. such thinking again highlights the importance of structural reform, through which resources will be efficiently reallocated and growth potential strengthened. as assumed in the standard scenario, our economy is expected to stop deteriorating led mainly by improved exports and production, but there still remain various structural adjustment pressures. in other words, cyclical factors and structural factors are locked in battle. i will now address this issue. business cycle and structural problem cyclical recovery and structural problem although our economy has followed a daunting road since the 1990s after the bursting of the bubble, there were some periods when the economy expanded. according to the government β s official business cycle turning point, there were two recovery phases : from the end of 1993 and also the beginning of 1999. during the former, after experiencing a temporary standstill due to effects stemming from the rapid appreciation of the yen in spring 1995, the economy realized more than 3 % growth in 1996. in retrospect, the economy entered a recovery phase triggered by monetary easing and fiscal expansion after the bursting of the bubble, followed by an increase in personal consumption and capital investment partly supported by the prevalence of mobile phones and personal computers. the economy rapidly deteriorated in the latter half of 1997 against the backdrop of a slowdown in overseas economies due to the asian crisis, increased uncertainty with respect to the domestic financial system, and downward pressure from the fiscal front. the next recovery phase, from the beginning of 1999 to the latter half of 2000, is still clear in our memories. against the backdrop of the global boom of information technology ( it ), exports played a leading role and capital investment centering on it - related industries also increased. however, since adjustment pressure in the it - related area had intensified worldwide before domestic consumption, another engine of the economy, gained momentum, japan β s economy deteriorated again after entering 2001. what the two recovery phases in the 1990s have in common is that although the economy started to recover there was no autonomous and sustainable expansion of private demand as a whole. this was principally because the economy was directly hit by a cyclical slowdown in overseas economies and was
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a floating exchange rate. this had been forced on sweden by international developments with deregulation of the capital markets, in sweden as well, and not least by failures in attempts at corporative co - operation and stabilisation policy interventions. the government could now look back at 15 years of unsuccessful stabilisation policy. the shift to a new policy took place between 1993 and 1995. however, it should be added with regard to the failed defence of the krona, that experiences of free capital movements were not especially extensive. the government and the riksbank and political analysts in sweden did not have any experience of the conditions for economic policy in a globalised world. the new stabilisation policy regime the government formulated the goal for monetary policy itself in january 1993. inflation was to be maintained at two per cent per year with a tolerance interval of + / - 1 per cent. the goal is symmetric. it is as important to bring inflation up to two per cent when actual inflation is under two per cent as it is to bring down inflation when it is higher than the target. this can be said but a lot of practical issues remained to be resolved and the answers are not at all obvious : 1. how is inflation to be measured : by cpi, the gdp deflator, or some other measure of price movements? 2. shall the riksbank have other objectives besides price stability? 3. shall policies be directed at controlling the money supply or inflation directly? 4. how is confidence to be established in the riksbank β s policy and expectations about low inflation? 1. the inflation target the riksbank β s objectives has been expressed in the following way in legislation : β the objective of the riksbank β s operations shall be to maintain price stability. in addition, the riksbank shall promote a safe and efficient payment system. β the first objective has therefore been made concrete by the riksbank itself as 2 per cent inflation with a tolerance of one per cent upwards or downwards. the second objective, stability in the payment system requires monitoring of the β infrastructure β in the payment system and of the major institutions that could be associated with a systemic risk for the banking system. the second objective is hardly known although important and it will also continue to be the riksbank β s responsibility if sweden joins the monetary union, the emu. the riksbank has opted to measure inflation by the consumer price index, cpi. this measure has certain disadvantages,
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mauritian miracle is not just a thing of the past. but it requires a new spirit of adventure to match our talents to the opportunities of the cyber age. we must overcome the new threats through a concerted bis central bankers β speeches pursuit of macro - economic and macro - prudential policy. only then can we secure economic and financial stability and growth with equity. the keys to our future prosperity 28. the keys to the future are increased personal and corporate accountability and multisector collaboration. we need the private sector to take a lead role. we need more stimulation and nurturing of new start - ups. we need to challenge the monopolies of the past. we need a slimmer, more effective and efficient public sector, which is seriously in need of reform. some task there! for it has been well said : β reorganising the civil service is like drawing a knife through a bowl of marbles. β 29. but in racing ahead on this path, holding forth the torch of new technology, we must face up to the many risks of the cyber age. and in this, i am pleased to see, many of our brightest bankers are taking a lead. for, above all we need the continuing positive role of our highly competitive banking sector in an even closer and more effective working relationship with the real economy. and we need more inclusive management in the public and the private sector. here i β m reminded of the story of that great british military leader, the duke of wellington, who vanquished napoleon at the battle of waterloo in 1815. later he became prime minister and found government to be a harder nut to crack. after his first cabinet meeting, he was heard to remark : β i gave them my orders, and then, damn it, they just sat down and started to discuss them all! β hats off to our local bankers 30. so, let β s now take our hats off to our local bankers! they have never been part of casino banking. and they have a long history of serving the nation through their customers. as a central bank we are proud of our 46 - year history : just imagine how much more so must be les grandes dames de la place d β armes!. mcb inaugurated here in 1838 ; hsbc in 1916 ; and barclays in 1919. that is a span of over 175 years, with decades and decades of experience and skill, serving the people of this country. the state bank of mauritius
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##gnment is sufficiently obvious that one can be confident enough to take the risk. but i need to be clear that such situations are likely to be rare indeed. and the risks may be considerable. we are talking about circumstances where monetary policy may well have to be quite tight - tighter than would be the case if the sole objective was to keep consumer price inflation within the target range. in such circumstances, i expect many audiences would say that the bank was unnecessarily squeezing growth from the economy. it would be a foolhardy central banker who would take such risks lightly. that said, as i interpret my mandate, it does permit me to take such risks in rare circumstances. as i explained in an earlier speech, the pta clearly requires monetary policy to be forward - looking. normally, we would think in terms of the next three years. but, as i indicated then, there will be exceptions. given the potentially long - lived nature of asset price misalignments, it may occasionally be helpful to take a longer view of when risks might eventuate, how best to insure against them, and at what price. as a recent imf study 2 has pointed out, in effect an asset price boom can change the trade - off between current and future macroeconomic objectives. a new element enters the picture, which involves trading off the risk of severe economic dislocation further down the track with the near - term cost of reducing that risk. recent new zealand house price developments in context the next and obvious question is whether or not the recent run up in house prices in new zealand constitutes a bubble so severe that it warrants a one - off additional monetary policy response, as described. such a response would drive overall inflation to near the bottom or even below the 1 to 3 per cent target range in the pta, thereby letting the air out of the bubble to avoid a collapse later. the immediate answer is no, though of course, in terms of the day - to - day controlling of consumer price inflation, housing is still the biggest thing being faced at the moment. over longer periods of time, real house prices are determined by the balance between underlying demand and supply conditions. there are nevertheless some important idiosyncrasies to housing markets that should be borne in mind. on the demand side, such factors include demographics, migration, growth in household disposable income, features of the tax system and the average level of mortgage interest rates. on the supply
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madis muller : the issues that shape the capacity for growth in the estonian economy speech by mr madis muller, governor of the bank of estonia ( eesti pank ), ljubljana, 8 december 2023. * * * the estonian economy has been shrinking for almost a full two years now and our society is becoming increasingly concerned about how competitive we are as a country. that is why we will discuss at this seminar today the causes of the downturn in the estonia economy, and whether the difficulties are temporary or whether our economy has suffered a lasting blow to its capacity for growth. we should first discuss what we actually mean when we say competitiveness. competitiveness is quite a straightforward concept at the level of companies and business, as a competitive company is one that can sell its goods and services and expand its business at the expense of companies that are less competitive. this may be because its prices are better, or because it has some quality other than price that attracts buyers. companies that are not competitive have to change what they do or close down. the competitiveness of an economy is a more complex concept though. a competitive economy is one that can successfully introduce new technologies and invest in innovation, while also attracting new investment and skilled labour, and creating an environment in which businesses can thrive. this suggests that a competitive economy is one where productivity is increasing, and consequently so is the wealth of the population. we can distinguish between competitiveness over the short term and the long term. short - term competitiveness is above all competition on prices and costs. over the longer term though, competitiveness in an economy is affected by factors like demographic change, the level of education of the population, the availability of skilled labour, the amount of capital available, the degree of innovation and research and development in the economy, the quality of management of businesses, and institutional issues like bureaucratic complexity and tax regulation. there are also factors within competitiveness that we can influence ourselves at either the national level or the company level, and other factors that we have no power over, such as geographic location or the climate. then there are other factors in between these that we as a state can partly shape, such as european union regulations, or climate goals and the internationally agreed standards and costs for meeting them. the economic forecast published by the european commission in november expects estonia to suffer the deepest recession of any country in the european union this year, as it estimates gdp in estonia will contract by 2. 6 % this year. 1
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experts. i would like to wish all parties involved the very best of luck.
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2 / 4 bis - central bankers'speeches 1. it is easy to understand the risk profile of some blended instruments such as guaranteed loans. but other blended instruments have more complex structures. it is difficult to create a universal framework for all blended instruments. 2. as i mentioned earlier, the risk does not disappear. it is shifted from one balance sheet to another. this other balance sheet sometimes sits in the domestic financial system and sometimes sits in another jurisdiction. for financial sector supervisors, this creates a significant level of complexity around how we think about the risk profile of blended finance. we need to understand the balance sheets of the institutions that we supervise but also of those institutions that provide risk insurance. many of our tools such as risk ratings and internal capacity adequacy are based on historical data. climate - related risks and those associated with new financial instruments require forward - looking analysis, which is often characterised by high levels of uncertainty. this often leads to a higher pricing of risk. global standard - setting bodies recognise this challenge and have prioritised climaterelated risks in their work plans. now to the last question. how do we mitigate against risks related to blended finance instruments? many efforts to improve climate - related information flows in financial markets and enhance reporting by financial institutions can help with scaling up blended finance by helping central banks to better understand the risks associated with these instruments and mitigate them more effectively. this, however, is impossible without greater international cooperation as risks shift from one jurisdiction to another. blended instruments will increase financial linkages and require a greater exchange of information across different jurisdictions. financial sector regulators need to develop new skills and research capabilities to understand the various implications of the climate transition on the financial system. more importantly, we need to understand how the combination of different structural changes is likely to impact financial stability. for example, the rapid deployment of artificial intelligence ( ai ), in addition to the climate transition, is likely to have profound effects on the financial system and generate significant financial innovation. scenario analysis and transition planning can help financial regulators in understanding future pathways and the associated risks. there have been advances and improvements but data quality and consistency need to be enhanced, particularly in emerging market and developing economies. in conclusion, we need a massive increase in financing for the climate transition but also to adjust to other structural challenges. central banks and financial regulators have an important role in ensuring that the financial system is resilient to shocks and scales up fundings. however, our efforts to increase blended
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experience financial difficulties because of illness or loss of income. however, policy actions in the years since the last financial crisis have contributed to the financial system being in a much better place to support households and businesses now. resilience has been built incrementally through the mortgage measures, and has been locked - in with the activation of the countercyclical capital buffer ( ccyb ) and other capital buffers. with the release of the ccyb that we announced in mid - march, and the availability of the other capital buffers such as the o - sii buffer to absorb losses, banks are in a better position to lend sustainably to the real economy. to sum up, the covid - 19 crisis is not over and the scale of its economic impact is uncertain. the initial shock is behind us but the macro - financial outlook will depend on a number of factors. fundamentally, it boils down to the uncertainty over how the pandemic itself will play out : the success of the public health measures and medical advances to tackle it, the capacity and actions of the financial system, households and businesses to absorb and not amplify the shock, and the success of economic and financial stability policies to mitigate its impact. we are, as i said, at the end of the beginning. finally, when we published our previous fsr in early december last year, i spoke about our key areas of focus going into 2020 from a macro - prudential perspective, and how we were developing our approach to building additional resilience, covering banks, borrowers and nonbanks. that agenda remains but events over the last few months have led us to focus our work programme to devote more resources to ensuring that the resilience built in recent years can be drawn upon, as appropriate, to support the economy through the crisis. it is in the wider interests of the irish financial system that it continues to provide credit to households and businesses in a sustainable way, minimising the extent of the downturn and maximising its contribution to the recovery. 2 / 2 bis central bankers'speeches
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emergence of stronger companies, and provide the basis for sustained growth. political and social preconditions all these policies - accepting globalisation, fostering asean economic cooperation, restructuring the corporate sector, and reforming the banking sector - are essential for countries to recover. but to be in a position to implement and make such economic policies work, countries must first create the right political and social preconditions. investors, both domestic and foreign, will adopt a wait - and - see attitude until they know how political uncertainties are resolved. their views are coloured by past experiences, and they will look for evidence of a clear break with the past. a stable political climate is essential to foster confidence, investment and growth. governments must put their houses in order, bring corruption under control, and install men and women of integrity and competence to key positions within the top leadership. as mr anand panyarachun, former prime minister of thailand and now president of the thai chapter of transparency international, said : β the very basis of a non - corrupt culture is integrity. β¦ it is a state of mind, an attitude. you can be corrupt without taking any money. β 2 the values, norms and business environment of asean countries cannot be transformed overnight. it is more than enacting new laws and regulations. it means changing deeply established social relationships and norms which vary from country to country. businessmen, civil servants and politicians used to operating in one way for years will not suddenly abandon or condemn old practices as soon as a new law is passed. mom rachawong chatu mongol sonakul put it aptly : β what we are doing is a very long process. we β re not talking of months or years. we are talking in, maybe, decades or generations. we β re not changing our way of working. we actually try to change our way of life. β 3 these are matters that each country has to resolve for itself, in its own way. external inputs can be helpful, but may also be counter - productive. for example in indonesia the imf sought drastic economic reforms, which inevitably had far - reaching political implications. the result was a complete collapse of the suharto government. but creating a new order to follow this is now a challenge which only indonesia β s people and leaders can resolve. foreign advice and assistance now play only a secondary role. asiaweek, 3 november 2000. keynote address during a seminar organised jointly by the bank of thailand and the world bank
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other words, the first and the second role of monetary policy as identified by friedman are closely related to each other. while policymakers and economists understand that price stability represents a situation in which prices could remain stable in a medium to long term, inflation dynamics could evolve with a long lag and accompany nonlinear effects. against such a backdrop, if we focus narrowly on the current observed inflation rate, there is a risk that necessary monetary policy adjustments might be delayed, inducing large fluctuations in economic activities. in that regard, central banks around the globe seem to strive for exploring optimal ways to communicate a quantitative expression of price stability with different consequences. central banks under an inflation targeting regime announce the target level of inflation rate. the bank of japan and the european central bank ( ecb ) announce some kind of numerical definition of price stability, while the federal reserve provides a medium - term forecasted value of inflation given the current economic conditions and appropriate policy. the second challenge is how to design financial system policy. although we can recognize a risk of a nonlinear change of the economy such as the burst of the bubble, we cannot take preemptive monetary easing before a bubble burst. it is impossible to forecast precisely when the burst will take place. once we recognize such a change, it is appropriate to cut the policy interest rate more than the standard taylor rule suggests, as with the current policy by the fed. at the same time, the japanese experience shows that it is quite difficult to create sufficiently benign financial conditions only with a reduction in the policy interest rate when the balance sheets of firms and financial institutions are severely devastated. when looking at the current u. s. financial situation, the yields of corporate bonds with low credit standings have not been reduced yet compared with the level in summer 2007, despite the massive decrease in the policy rate. the fact suggests that in addition to the policy interest rate changes ex post, it is important to design a policy and institutional framework less prone to the formation of a bubble ex ante. while i have already mentioned possible measures in terms of monetary policy, how to align supervision and regulations remains an important challenge that needs to be addressed, so as not to let financial institutions'behaviors amplify economic fluctuations. the third challenge is the so - called banking policy of central banks. for effective monetary policy, stable financial system and well - functioning financial markets are indispensable. the events since summer 2007 have highlighted that the loss of market liquidity has played a crucial role. although the
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andriy pyshnyy : national bank of ukraine press briefing - monetary policy decisions speech by mr andriy pyshnyy, governor of the national bank of ukraine, at a press briefing on monetary policy decisions, kyiv, 15 june 2023. * * * dear colleagues, the board of the national bank of ukraine has decided to keep its key policy rate at 25 % per annum. this will help maintain the attractiveness of hryvnia - denominated instruments, preserve the sustainability of the fx market, and reduce inflation. combined, these results will pave the way for the further easing of fx restrictions. the pace of consumer price growth continued to decline faster than expected. inflation eased to 15. 3 % yoy in may. apart from the base effect, the pullback in inflation was driven by an ample supply of food and fuel, a stronger hryvnia cash exchange rate, and improved exchange - rate and inflation expectations. among other things, the nbu's efforts to keep the key policy rate high and make hryvnia instruments more attractive made it possible to stabilize the fx market and improve expectations. although headline inflation has decelerated, underlying inflationary pressures remain rather high. thanks to the removal of supply chain disruptions, the reduction of prices in the global commodity markets, and the nbu's consistent monetary policy, the central bank expects that inflation in ukraine will continue to decelerate. however, this process will not be as rapid as in previous months. first, the base effect, which contributed to a significant drop in inflation in h1 2023, will gradually fade. second, price dynamics will be affected by increases in certain utility tariffs and the announced return of pre - war taxes on fuels. in addition, the destruction of the kakhovka hpp dam will have an adverse impact on prices. 1 / 3 bis - central bankers'speeches by the nbu's early estimates, this will contribute about 0. 3 pp to this year's inflation rate because of how it has complicated the operation of multiple enterprises, and due to the partial loss of crops, primarily vegetables, that it has led to. the war is taking an increasingly large toll, but steady inflows of international aid and the revival of the domestic debt market have made it possible to cover the significant budget deficit without resorting to monetary financing. since the beginning of the year, international partners have granted ukraine about usd 20 billion
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the fiscal front. the general government deficit as a percentage of gdp was reduced by approximately 5 percentage points. the european commission and the imf, in three successive reviews, acknowledged the progress made, rendering possible the smooth inflow of funding under the financial support agreement. this averted the disastrous developments that seemed inevitable one year ago and a time margin was given to carry out the changes in the economy that, in any case, would have to be implemented, with or without the memorandum of understanding. * * * * * bis central bankers β speeches delays, but also objective difficulties, continue to feed market uncertainty within the past year, a lot has been achieved. however, in spite of the positive results and the great effort, the factors that generate uncertainty and feed the markets'wait - and - see attitude remain strong. first, the debt dynamics remain unfavourable, because of the size of the accumulated imbalances and because progress in adjustment has so far not been fast enough in order to reverse these dynamics quickly and decisively. second, competitiveness has improved slightly, mainly as a result of decreases in production costs. however, structural competitiveness, which is linked to the creation of a business - friendly environment, has not. furthermore, cost competitiveness gains in 2010 were small compared to the cumulative losses of the past decade. third, in spite of reforms to the functioning of the public sector, substantial improvement has yet to be made in the areas where deficits are initially generated i. e. public administration, numerous agencies, local government β or in the efficiency of tax collection. thus, fiscal adjustment, after getting off to a strong start, by early 2011 is already showing signs of fatigue and deviating from targets. in 2010, although there was a large reduction of the deficit, the initial target was missed. deviation from targets has also been recorded in the first quarter of 2011. fourth, in the area of structural changes, important legislation has been passed on the pension system, healthcare, closed - shop professions and the labour market, and in several cases there has been progress. in certain cases, however, the reforms do not go deep enough and their implementation is often delayed, either because of administrative inefficiencies or because of a reluctance to push ahead, in the face of opposition. fifth, the real economy performed worse than expected. gdp in 2010 contracted by 4. 5 %, due to a decline in private consumption by 4. 5 %, in public consumption by
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introductory statement to the presidency press conference following the meeting of the g7 finance ministers and central bank governors 20. 05. 2022 | konigswinter | joachim nagel 1 introduction 2 promoting long - term growth and resilience 3 ensuring sound public finances 4 refocusing monetary policy 1 introduction ladies and gentlemen, i, too, would like to bid you a very warm welcome to the g7 ( gruppe der sieben ) presidency press conference. and i would like to add my thanks to those expressed by finance minister christian lindner. i am especially grateful to everyone who helped organise the g7 ( gruppe der sieben ) meeting and whose efforts contributed to the smooth running of events. from my point of view, this meeting of finance ministers and central bank governors has been extremely successful β an impression that i hope our guests also share. we have discussed a number of important issues in depth. finance minister lindner has already addressed our support for ukraine. of course, our talks also focused on the economic consequences of the war and the changes to the inflation environment. at the beginning of this week, for example, the european commission downgraded its forecast for euro area economic growth this year to 2. 7 % ; this figure stood at 4 % in the february projections published shortly before the war broke out. the european commission now estimates that inflation in the euro area will come to 6. 1 % this year rather than the 3. 5 % previously anticipated. today, i would like to focus on the medium to long - term fundamental aspects that we have discussed over the past two days. first, in the light of the new geopolitical situation, how can we strengthen the long - term growth and resilience of our economies? second, looking ahead, how can fiscal policy navigate the conflict between the current challenges and rising debt levels? and third, what needs to be taken into account when refocusing monetary policy? 2 promoting long - term growth and resilience russia β s war of aggression on ukraine has changed the geopolitical landscape. policymakers and economists are striving to reduce, diversify or focus economic dependencies on safe trading partners. this shift may come at a cost to efficiency and productivity, which is something we will probably have to accept to some extent. that said, however, we should make all the more effort to promote open markets wherever possible and continue to exploit their advantages. greater resilience and strong integration into the
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out in a consultation paper proposing simplifications to liquidity, reporting, and disclosure requirements for banks and building societies that are eligible for the simpler regime. [ 21 ] in addition, we are also publishing a consultation paper proposing simplifications to remuneration rules for smaller firms. these are changes we could not have made whilst we were in the eu. they are a down - payment on our commitment to use our new powers to tailor rules and to make the uk a better place to operate a financial firm, without compromising on safety. we plan more. we are looking more broadly at the whole structure of rules around remuneration and we are committed to publishing proposals to simplify capital requirements for the simpler regime. ideas for how we can simplify rules for larger mid - tier firms are under development. on that subject, i want to draw attention to analysis we have published today about the impacts of the basel 3. 1 proposals we are consulting on and of some earlier reforms. [ 23 ] the analysis shows how these will together help to narrow the gap between capital requirements for mortgages under the standardised approach used by the majority of smaller banks and the internal ratings based ( irb ) approach used by bigger banks. this analysis shows how we are already levelling the playing field to facilitate effective competition between small and large banks. in this case, our analysis shows why we expect the gap between capital required for mortgages under the standardised approach and capital required under irb to narrow significantly. [ 24 ] these findings will inform our approach to simpler regime capital requirements for small firms. deepening our understanding as we continue our work, we must continue to draw on global best practice when pursuing our new objective. until now, the contribution of prudential regulation to international competitiveness and growth has not been a focus of research in academia or the regulatory and central banking community. more research and debate with practitioners, academics and regulators will help us deliver our new objective and will help us understand how to measure and report on how well we are doing. this is why i am delighted to announce that we will be holding an international conference on 19 september to deepen our understanding of the links between prudential regulation, international competitiveness, and growth. i hope that the conference, which will be held after the financial services and markets bill is expected to be enacted, will kick off the next stage of a debate about how we can pursue our new objective. we would also like to share
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fed a new wave of openness and growth. see the global financial centres index ( 2016 ) at : http : / / www. longfinance. net / global - financial - centre - index - 19 / 992 - gfci - 19. html and ernst and young, β fintech on the cutting edge β, ( 2016 ) : http : / / www. ey. com / uk / en / industries / financial - services / banking - - capitalmarkets / ey - uk - fintech - on - the - cutting - edge bank of england, β three centuries of macroeconomic data β at : http : / / www. bankofengland. co. uk / research / pages / datasets / default. aspx see bank underground articles on the crises of 1847, 1857 and 1866 and the development of the role of the bank of england at : https : / / bankunderground. co. uk / 2016 / 12 / 19 / christmas - special - financial - crises - in - the - 19th - century /. new laws emerged in the mid - 19th century, allowing the spread of joint stock banks across the country, to finance the growing needs of the economy. all speeches are available online at www. bankofengland. co. uk / speeches the accompanying burst of financial innovation spread the application of these technologies and supported the process of globalisation that bolstered trade, productivity and incomes. once again, however, the hard and soft infrastructure of the financial system failed to keep pace. lighttouch regulation, out - moded codes of market conduct, inadequate settlement and clearing infrastructure all contributed to the global financial crisis. we can draw on these experiences to help ensure that fintech boosts growth and promotes financial stability. not least because, following a raft of post - crisis reforms, the bank β s regulatory frameworks are now fit for purpose. the bank of england β s financial policy committee ( fpc ) is mandated to assess new and emerging risks to financial stability, including those that may exist beyond the existing regulatory perimeter. and it now has the powers to treat similar risks consistently, wherever they originate. with this new approach, the bank can help build the right infrastructure for fintech to realise its promise. the promise of fintech to its advocates, fintech will democratise financial services. consumers will get more choice and keener pricing. smes will get access to new credit. banks will become more productive
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mario draghi : imfc statement statement by mr mario draghi, president of the european central bank, at the thirty - third meeting of the international monetary and financial committee, washington dc, 15 april 2016. * * * the euro area economy is continuing on a path of gradual recovery, notwithstanding an external environment characterised by some further deceleration in economic growth and occasional bouts of financial volatility. but the outlook for euro area growth remains faced with uncertainty, mainly as a result of downside risks to growth prospects in emerging market economies, a clouded outlook for oil prices and their economic implications, and also geopolitical risks. given the new risks to the outlook for inflation, as well as the materialisation of some of the existing ones, the governing council of the european central bank has adopted a comprehensive package of monetary policy measures to further ease financing conditions in the euro area, stimulate bank lending and thereby reinforce the momentum of the euro area β s economic recovery and accelerate the return of inflation to levels below, but close to, 2 %. in order to reap the full benefits of these monetary policy measures, decisive implementation of structural reforms and greater progress towards sustainable and more growth - friendly public finances is necessary. such a combination of policy actions will not only lead to higher sustainable growth but will also make the euro area more resilient to global shocks. at the same time, this will be the best contribution the euro area can make in terms of promoting strong, sustainable and balanced growth in the world. the cyclical recovery in the euro area is largely supported by developments in private consumption, and more recently also investment. real gdp rose by 0. 3 %, quarter on quarter, in the second half of last year. recent data provide some mixed signals as regards the near - term outlook. while hard data show some improvement in january and february, survey data for the first quarter are consistent with a somewhat weaker growth momentum. nonetheless, the economic recovery in the euro area is projected to proceed at a moderate pace. domestic demand should be further supported by the ecb β s monetary policy measures, continued employment gains, the low price of oil and a slightly expansionary fiscal stance. the risks to this growth outlook remain on the downside, however, and relate mainly to the heightened uncertainties regarding developments in the global economy. headline inflation has remained low and its profile continues to be shaped by the path of energy inflation. in addition the recent partial unwinding of the past depreciation
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and prices as well as risk factors are to be examined comprehensively. as for the bank β s decision on enhancement of monetary easing at this timing, there have been comments, for example, from market participants that β the bank has followed central banks in the united states and europe. β each country β s central bank has been striving to pursue optimal policy according to each country β s economic and financial situation, and does not consider taking policy action following another country β s central bank. as long as the economy itself has been interrelated globally, there is a good chance that the economies of countries and regions simultaneously become weaker than expected and, as a result, each country β s or region β s central bank takes the same kind of response at the same period. as for this time β s policy actions, amid a sense of slowdown in the global economy becoming stronger than widely predicted, it appears to be the case that major central banks have examined the situation of each country or region and have respectively chosen responses deemed appropriate. as a policy stance going forward, the bank has clarified its view that β [ t ] he bank continues to conduct monetary policy in an appropriate manner. the bank will also do its utmost to ensure the stability of japan β s financial system, while giving particular attention to developments in global financial markets. β as has been the case, the bank will examine the outlook for economic activity and prices as well as risk factors, and, when judged necessary, respond decisively and flexibly. comparison with overseas central banks in relation to monetary easing by overseas central banks, we sometimes receive an opinion that β the bank should pursue bolder monetary easing, like the federal reserve, by purchasing assets without setting a ceiling and a time limit or clarifying the duration for the zero interest rate. β in that regard, as said before, a central bank strives to choose the most effective policy measure or policy framework based on policy challenges and the financial and economic situation of each country or region. while there are various differences in policy conduct between the bank of japan and the federal reserve, both share the view of doing its utmost as a central bank to achieve respective goal. it might not be desirable to argue which central bank is bolder, based on the difference in specific monetary easing measures. bis central bankers β speeches to be somewhat specific, let me point out three things. first, the relationship with policy challenges. the bank, with the recognition that japan β s economy is faced with the
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terms of trade has created greater scope for non - inflationary wage increases. this is true, to the extent that the improvement is not merely transitory. but even if it is merely transitory, it keeps inflation from rising above target for a while, even if wage increases are well in excess of the level that is consistent with the target in the long run. another possible explanation is that the equilibrium real exchange rate is rising at present because of the improvement in terms of trade and the reduction of external debt, owing in part to the settlement of the failed banks β estates and the release and tying - up of offshore kronur. to the extent that this does not surface in a nominal currency appreciation, it will put temporary pressure on wages and prices. it seems to me that a number of signs indicate that all of these explanations apply to some degree. but the consequences for economic stability will be determined, among other things, by the weight of each one and by the response of monetary policy and other economic policies. in any case, it is clear that something has to give. as chart 1 shows, we are undergoing a period of several years during which unit labour costs are growing well in excess of the level that is consistent with the inflation target. at the same time, productivity growth is very weak. bis central bankers β speeches if the central bank β s most recent forecast materialises, the result will be as is shown in chart 2 : the real exchange rate and wage share will rise far above their historical averages, and the tension in the labour market will be amplified even further. but i consider it unlikely that this will be the outcome. either the adjustment will take place through some combination of higher inflation and higher unemployment, or positive shocks will provide some assistance ; for example, the improvement in terms of trade will be greater and more lasting, productivity growth will be stronger, and interest payments to abroad will be lower because of reduced external debt and improved credit ratings. it will be very interesting to see how things develop in the next few years. it would be imprudent, however, for economic policy and contingency planning to rely blindly on positive shocks. and then there is inflation. inflation has risen more slowly following the recent pay hikes than perhaps could have been expected in view of historical experience, and it is still well below target. this could be due in part to the additional scope provided by the favourable initial position of many firms and by the improvement in terms of trade. but the
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financial system risk more effectively than we did previously, and we are developing prudential rules and macroprudential tools to respond to systemic risk. this will make the conduct of monetary policy easier. and in addition, i hope that statutory amendments will be passed soon in order to put brakes on foreign - denominated lending to resident borrowers without foreign currency income and assets. but the final brushstrokes remain undone : we have yet to develop tools that can be used to reactivate the interest rate channel if and when it becomes clogged up because of capital inflows related to carry trade. in this context, one might ask whether we are too late. to be sure, the capital inflows are taking place sooner than generally expected. we still have not released those who entered last, but we have already received capital inflows of nearly 50 b. kr. for investment in nominal treasury bonds β most of it after iceland β s sovereign ratings were upgraded because the next steps towards capital account liberalisation were announced in early june! and this has certainly disrupted the monetary policy transmission mechanism, as can be seen in chart 4. thus far, the impact has been more or less limited to the treasury bond market, and the banks β nominal interest rates have broadly followed central bank rates. the first signs of contagion to other parts of the financial market had begun to show before the central bank β s rate hike yesterday. it will be interesting to see what impact the rate hike has. independent monetary policy entails the possibility of maintaining a different monetary stance than other countries do if and when the need arises. recent research and international discourse indicate that it can be difficult for small, open, and financially integrated economies to pursue monetary policy that differs significantly from that in large economies. the final brushstrokes entail developing tools that will, if applied, restrict the benefits accruing to nonresidents as a result of our having higher interest rates than our trading partners. the precise structure of this will come clear in the next few months, but possibilities include some form of taxation or a special reserve requirement. central bank of iceland special publication no. 4 : monetary policy after capital controls, december 2010 and central bank of iceland special publication no. 6 : prudential rules following capital controls, august 2012. http : / / www. cb. is / publications / publications / special - publications / bis central bankers β speeches i have now reviewed the multiple crossroads that
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anand sinha : gauging the potential of emerging markets β can growth be achieved with durable financial stability opening remarks by mr anand sinha, deputy governor of the reserve bank of india, at the 2nd ft - yes bank international banking summit, mumbai, 15 october 2012. * * * inputs provided by ajay prakash and yarasi jayakumar are gratefully acknowledged. 1. ms. henny sender, chief correspondent, international finance, financial times and moderator for the panel discussion, my co - panelists, mr. bunt ghosh, head of emerging market strategy for asset management, credit suisse ; mr. sunil godhwani, cmd, religare enterprises ; mr. sizwe nxasana, ceo, first rand group ; dr. rana kapoor, founder, managing director and ceo, yes bank ; other delegates and members of print and electronic media. a very good afternoon to you all. 2. while it is unequivocally agreed that financial stability is an objective that we must all pursue, especially in the light of the lessons learnt from the global financial crisis, the debate continues on how to balance growth and stability, given the fact that pursuit of financial stability may have costs in the nature of foregone growth. in the light of this heightened policy debate, the current panel discussion on β gauging the potential of emerging markets β can growth be achieved with durable financial stability β as part of the ft - yes banking summit is very timely and apt. 3. before the panel commences their discussions, let me briefly touch upon a few issues. i. growth vs stability β is there a trade off? 4. the lessons of the global financial crisis have, very clearly, emphasised the significance of financial stability. if policies to ensure financial stability are not pursued, then the growth that comes with credit cycle in the upturn will be more than dissipated when the bust phase comes, with grave consequences for the financial system and macroeconomy in the form of large output losses, lack of growth, rising unemployment, impaired financial markets, weakened banks and financial system, impaired monetary policy transmission and a sense of pessimism. in such conditions, banks become extremely risk averse and do not have the required prudential strength to continue to lend. moreover, with markets not having confidence in financial intermediaries, the funding costs become high. the result is deleveraging or a substantially reduced lending with higher lending rates
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a tightening in credit conditions ( in response to threats of a real estate bubble ), a return to a more sustainable pace of public investment, and weaker external demand in advanced economies due to their slowdown. china β s surplus, for instance, fell to 2. 8 % of gdp in 2011 from more than 5 % in 2010. china β s growth in q2 of 2012 fell to a three - year low of 7. 6 per cent, down from 8. 1 per cent in q1. china β s economy continues to weaken, with the industrial sector growing by just over 9 per cent in july, the lowest in three years. india β s activity suffered from waning business confidence amid slow approvals for new projects and sluggish structural reforms and policy environment designed to rein in inflation. brazil β s economy, in the first quarter of 2012, grew at its slowest pace ( at 0. 2 per cent q - o - q ) in more than two years. brazil has been hit by falling commodity prices and capital outflows, and central and eastern europe, by weak demand in the eu and retrenchment by euro area banks. 17. many of the larger and faster growing edes are close to, or above, potential, which suggests that they will not be able to drive global growth as before. a perceptible shift in the growth strategy of some edes in favour of increase in domestic consumption and demand, entailed significant rise in wage levels which is adding to inflationary tendencies. the scope for policy maneuverability in the edes at present seems to be limited as compared to 2008 β 09. while during the time of global financial crisis, the domestic factors in edes were supportive which encouraged them to put in place monetary and fiscal stimulus measures, the domestic environment in most of the edes during the eurozone crisis is not conducive either because of rising inflation or fiscal tightness or widening current account deficits or combination of all, broadly reflecting the legacy of global financial crisis. coming to the specifics, the edes β capacity to provide monetary stimulus is constrained by rising inflationary expectations, and their ability to announce any aggressive fiscal stimulus is limited by the mounting gross public debt. for example, in the depths of the 2008 credit crunch, china made 4 trillion yuan ( us $ 586 billion ) fiscal injection over two years ; and surge in bank credit by 17. 6 trillion yuan helped prop up the global economy.
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can we draw from this? the combination of excess lending with an obvious failure to adhere to fundamental and sound risk management standards not only produced significant losses in mortgage portfolios ; it also tainted an asset type that was key in the broader securitisation and credit distribution process. the reckless use of the originate - to - distribute model increased uncertainty regarding credit quality, where risk resides and the impact of deterioration. this heightened uncertainty suggests that in maintaining their capital buffers β the dikes β banks need to do a better job capturing the risks related to this business model. we have to build higher dikes but must not forget the importance of building on a sound foundation, which is high quality capital. basel ii provides the necessary framework within which to achieve these enhancements. i will return to the capital issue in a moment. liquidity liquidity was another victim of the current storm and its demise holds valuable lessons for supervisors. increasing banks'liquidity cushions and improving liquidity risk management and supervision has been an area of sharp focus for the committee. we have seen massive illiquidity in certain market segments ( especially complex structured products ) for a much longer period than any market participant would have predicted. complex and illiquid investor - specific instruments, such as resecuritisations, have experienced significant marketvalue losses, which has led to the loss of confidence in their financial worthiness and the drying up of liquidity in the short - term interbank market. the recent turmoil has shown that banks must strengthen their liquidity buffers. one way to do this is to increase their holdings of high quality liquid securities β in particular, liquid central government securities. the committee β s guidance on sound liquidity risk management and supervision and vigorous supervisory follow - up will help raise the bar in this area. we will continue to examine the topic of liquidity with a focus on cross - border aspects of liquidity supervision. while liquidity risk cannot be mitigated with capital, capital is itself a form of liquidity since, unlike other liabilities, it does not have to be repaid. furthermore, a strong capital buffer enhances a bank β s creditworthiness and, from the market β s perspective, reduces its counterparty risk. this helps to ensure continued access to funding. capital adequacy and this brings me to the issue of capital adequacy. after several years of high profits, often record profits, we know that the level of risk was grossly
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underestimated by many financial institutions. this latest storm has therefore revealed cracks in the dikes and the supervisory community is in the process of patching up those cracks. high losses have put pressure on capital cushions and many banks have been forced to go to the market to replenish their capital base. this is critical if a contraction in lending and credit are to be avoided. of greater importance, though, are the cracks in the dike that are not yet evident. while we do not know the nature and strength of the next storm, we can take measures today to strengthen the dike so it could withstand the battering. one of those measures is to significantly strengthen banks β capital buffers. in addition to moving ahead aggressively with basel ii, the committee has issued a proposal to strengthen the capital treatment for risks not captured under basel ii β s existing trading book regime. in this context, the committee is also carefully considering the topic of procyclicality, especially as it is influenced by bank capital issues. there are many dimensions here, such as the level and quality of capital ; provisioning, capital buffers and the ability of banks to dip into those buffers. we will continue to review these and other issues related to procyclicality and are in the process of developing a work programme to address both near term and longer - term issues. the committee is also developing enhanced guidance under pillar 2, the supervisory review process. here, our focus is on improving risk management practices, such as stress testing and the management of risks arising from complex instruments, among other things. we are also developing proposals to strengthen pillar 3 disclosures, especially for securitisation activities. conclusion we have learned much from the severe storm that is currently raging. i have outlined some of the measures that banks and supervisors must take to better prepare for the next storm. but what is becoming increasingly clear is that, over time, the banking system needs to strengthen capital and liquidity buffers to withstand prolonged periods of stress in the financial system and the broader economy. this will be done in a manner that does not aggravate the current stress in the system. enhancements to risk management and market transparency will help, but we must enhance banks β buffers to reflect the increased degree of uncertainty in the system. the need for increased margins to protect against uncertainty will also become apparent as rapid financial innovation continues and uncertainty increases about how new products, valuations, markets and the real economy will interact
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nestor a espenilla, jr : thinking out of the bank speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the cocktail hour : up close and personal with the bsp governor, manila, 26 october 2017. * * * wtcmm chairman guilly luchangco, wtcmm president pamela pascua and officers of wtcmm, partners from the private sector, fellow public servants, special guests, ladies and gentlemen, good afternoon. to get up close and personal β this underlines the terms of reference for this afternoon β s cocktail hour..... i think the natural tendency is for people not to disclose too much of themselves... candor requires courage. sharing about one β s identity, vision and values, necessitates confidence. i welcome this opportunity to share more about the bangko sentral ng pilipinas, who we are, our policy thrusts and initiatives. to be able to engage our stakeholders in the shared task of national development, we must make ourselves and our mandates more widely known and understood. getting past first impressions with philippine banknotes issued by the bsp and marked with our logo... with banks making reference to our authority... and with our name mentioned in media fairly often, it is easy for filipinos to know of the bangko sentral... but knowing the bsp is an entirely different thing. allow me to take us beyond acquaintance... apart from being a supervisor and regulator of banks and other financial institutions, and apart from being the sole issuer of our currency, most of what we do at the bsp seems esoteric to the general public. this is not surprising as the workings of economics, statistics, data analytics and the like, often do not enjoy public attention ( maybe, even public interest ). issuing and implementing policies to promote stability is the crucial work that the bsp does in the background. when one thinks of the bsp, one may have the initial impression that our functions are detached and removed from everyday life... the impression is that perhaps, the policies and regulations we churn out do not have that much impact on the ordinary citizen... i hope very much that we would get past this notion. as businessmen, investors and consumers, you may have seen and experienced that the philippines has, been enjoying strong economic growth
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and collegial respect, grounded on the conviction that everyone has something to contribute to the organization. at the same time, let us always be mindful of protecting and strengthening our institution through risk based management and ensuring efficient resource management, among others. we should work on strengthening our financial position so we can pursue our mandate more effectively. the rms sector under andy suratos has led the way by implementing a bankwide energy conservation program for which we have been awarded a five - star rating of 97 %. think bsp. fellow workers at the bangko sentral. you have within you, we have within us, the capacity to make things better for our institution and for our country. our mandate empowers us to serve through responsive monetary and banking policies. let us therefore remain united in working on our vision of a better life for all filipinos. finally, on behalf of the members of the monetary board, i thank all of you for a job well done in the first half of the year, all things considered. let us also congratulate and thank cpo for organizing this insightful midyear organizational performance review session, and acknowledge all the other departments and offices that have provided support to this undertaking. mabuhay ang bangko sentral! mabuhay ang ating bansang pilipinas! maraming salamat sa inyong lahat! let β s enjoy the rest of the evening.
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questions will be critical to understanding racial and ethnic differences in lending outcomes. staff at the federal reserve will continue their research, and we hope and expect others will join them. research would benefit greatly from the input of banks and mortgage lenders such as yourselves. the national bankers association, in particular, has provided valuable insight in the past into the structure and dynamics of mortgage lending markets with substantial minority populations, and into ways lenders could better serve those markets. we value your information as we collectively search for ways to improve the efficient operation of the mortgage market and the health of our economy and society more generally. in the case of conventional first - lien home - purchase loans extended in 2004, 32. 4 percent of blacks and 20. 3 percent of white hispanics obtained higher - priced loans, compared to 8. 7 percent of non - hispanic whites and 5. 9 percent of asianamericans. robert b. avery, glenn b. canner, and robert e. cook, " new information reported under hmda and its application in fair lending enforcement, " federal reserve bulletin, summer 2005, at table 10. a. 4 / 5 conclusion in conclusion, i would like to say that we at the federal reserve value interaction with organizations such as the national bankers association so we can better understand the issues that banks face today, from capital to credit risk to compliance issues. i look forward to continuing our dialogue in the future. 5 / 5
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amando m tetangco, jr : the importance of microentrepreneurship keynote address by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the microentrepreneur of the year ( moty ) awarding ceremony, manila, 19 november 2008. * * * magandang hapon sa inyong lahat! ladies and gentlemen, we are gathered once again to celebrate, honor, and give recognition to our outstanding microentrepreneurs. their collective success in overcoming the difficulties inherent in microentrepreneurship serves as a powerful inspiration for all of us. their stories remind us that with vision, courage, passionate commitment, a persevering spirit, we can pursue and reach seemingly impossible goals even in the midst of a global economic slowdown and financial turmoil. and so, friends, let us show our appreciation for all our awardees by giving them a long round of applause. palakpakan po natin ang ating mga awardees! let us also thank the officers and staff of citi philippines headed by country officer sanjiv vohra for initiating and sustaining the citi microentrepreneur of the year awards which is now on its 6th year. with citi, this annual recognition of outstanding microentrepreneurs has been institutionalized. a round of applause please for citi. of course, we also salute the members of the working groups from the microfinance council of the philippines headed by rollie victoria, from the bangko sentral, from citi, and from other partner institutions. palakpakan din po natin sila. they had the privilege of seeing our successful microentrepreneurs up close and personal, but i am sure they had a difficult time narrowing down the list. i can say this with certainty because we who compose the national selection committee devoted long deliberations on each of the finalists. given the remarkable accomplishments of our finalists, it was a tough choice indeed. and so, this year, the members of the national selection committee decided to give three special awards on top of our eight major winners. friends, let us also reward the hardworking members of the national selection committee with a round of applause. ladies and gentlemen. the stories of our winners become even more significant when viewed against the backdrop of an increasingly difficult operating environment.
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our monetary policy tools to address whatever situation arises, as we have done throughout these turbulent times. we know that canadians count on us to make the right decisions in the face of uncertainty and to navigate relentless change. and we will always work hard to be worthy of that confidence. thank you.
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and the bank of england worked together to develop a β middle - ground β approach to crisis resolution. this approach, which was detailed in a joint paper published in 2001, was designed to provide the right incentives for debtors and creditors. it contained three basic elements. first, β presumptive limits β to official assistance, which would be known in advance. secondly, the possibility of exceptional official lending, but only in the unlikely event that a crisis threatened global financial stability. third, orderly standstills or temporary suspensions of debtservice payments to give distressed debtors some time to take steps, including debt rescheduling, to address their problems. since that time, the g - 7 finance ministers and central bank governors have adopted much of this approach in the context of their action plan for crisis prevention and resolution. what is important now is that we support that plan and enforce the rules that have been put in place. if we ignore the rules that have been established, we risk losing the trust that we are trying so hard to build. to conclude, i hope that i have been able to illustrate the importance of trust. by strengthening this trust, we can make the global financial system work better. and by doing so, we can deal with the changing fortunes of the world economy and find a more efficient means of financing world growth.
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be unpopular with the regulated industries ( the agents ), which can be noisy at times. we insist on an adequate capital buffer to absorb losses, internal capability to manage the shop, and β skin in the game β via directors attesting to these factors. we also insist on transparency so that customers and competitors can keep an eye on each other. likewise, for the large, systemically important, banks we insist on failure management capabilities β where we can step in and keep the bank going so that the whole system doesn β t fail. we can also be unpopular with wider new zealand, as shifting interest rates and / or implementing and altering the loan - to - value ratio that banks are allowed to lend at, are often not immediate vote winners. these activities directly cut across our human instinct for instant gratification, despite in the long - run maintaining a stable financial system and reducing the scale of financial volatility and / or crises. we aren β t here to win votes, but we are aware that our stakeholders are demanding more from us, and we are responding. as a result, we have developed a new vision for the bank, we want to be a great team, best central bank. all of our strategic priorities work towards this goal. we have visualised β our island β that we will always move towards on the horizon, one that all new zealanders can be proud of and that tane mahuta β our bank β can stand tall on. to reach β our island β, we need to be aware of the long - term forces shaping the global economy, the very things we have just been talking about. these factors will have a significant impact on the allocation of resources, and the future wellbeing and stability of the new zealand economy. we are embarking on, amongst other things, our own climate change strategy β focused on our own activities as well as our regulatory duties with concern for financial stability. we need to factor climate change issues into our concern for financial stability and efficiency. to be most effective, we are committed to working cooperatively on these issues, in particular harnessing the new zealand council of financial regulators ( cofr ) to provide longer - term leadership. cofr includes the bank, the treasury, the financial markets authority, and the ministry of business, innovation and employment. as part of our commitment, the cofr are discussing their own β island β or vision, so as to best identify work effort and prioritisation β moving beyond
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broken down by activity ; detailed information on the ownership of deposits ; information on the holders of government paper ; information on tax yields, import breakdowns, agricultural yields, etc, etc. we should mine this data for practical insights about how our economy works. we need to address the data with a variety of parametric techniques, ranging from charts and tables to econometric modelling, and covering the whole gamut of tools and approaches. we should avoid over - emphasis on technique, and we must devote more resources to structural models of the economy, such as the central bank still employs for forecasting, and less to simplistic models which reduce complex economies to a handful of equations. we need to be flexible in our approaches, and to develop a greater humility in our analysis. we must stop saying that this or that theory has been β proven β, or this or that policy has β worked β. in the physical sciences, where they actually have methodologies that can prove things, they acknowledge that the proof is valid only until evidence that contradicts it emerges ; proofs in the physical sciences are not forever. in economics, where we have no tools to prove anything, we are too fond of ex cathedra pronouncements. we must stop saying that the world is what our theory tells us, and learn to see things as they really are. there is exciting new research in economics which draws on the knowledge and insights of other disciplines, including finance, psychology, ethics, law, cognitive sciences, and others. hopefully we will also see a resurgence of interest in philosophy and epistemology. we should all seek to broaden our own research into areas such as these in search of useful insights and guidance for policy. in the case of the central bank, i hope this will be reflected in increasing contributions to this seminar from members of all departments of the bank, not only the research department, and in joint research that crosses disciplinary boundaries. these are exciting times for economics, and for economists and central bankers. we have a chance to contribute to the changes in approach to research and analysis for policy, we have a rich store of data from which to draw insight, and relevant analytic expertise is increasingly spread across the bank, and in disciplines outside of economics. let us maintain our focus on policy, and let us draw on the knowledge and expertise of our colleagues throughout the bank, and in related disciplines, to help in the search for deeper insight into our evolving economies.
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as people have been adapting to covid - 19, the economies have picked up, supported by the large - scale fiscal and monetary policy measures. in the u. s., where vaccinations have progressed and economic activity restarted ahead of other countries, it took only about a year for the economy to recover to the pre - pandemic level. economic expansion see the shibusawa eiichi memorial foundation website ( https : / / www. shibusawa. or. jp / english / ). has spread from the manufacturing sector to services, and the u. s. economy's high growth has been supporting the recovery in the global economy. on the back of this recovery, japan's economy has picked up, led by exports and the manufacturing sector. the recovery in the face - to - face services sector has been slower than in the u. s., partly due to the spread of the delta variant before the widespread vaccinations ( chart 2 ). that said, japan's fullyvaccinated rate has risen to the same level as that of the u. s. if japan can simultaneously protect public health and improve consumption activities through the use of vaccination certificates, for example, the economic recovery trend is very likely to become more pronounced, even in the services sector, also supported by the materialization of pent - up demand. the u. s. and japanese economies have followed a similar recovery path during the pandemic, albeit at slightly different paces. however, labor market dynamics have differed greatly between the two ( chart 3 ). in the u. s., reflecting a sharp drop in economic activity due to lockdowns, job cuts and layoffs spiked. as a result, the unemployment rate, which had been at around 3. 5 percent before the pandemic, surged to 14. 8 percent in april last year. although the employment situation subsequently turned positive as economic activity resumed, employment is slow to recover compared with gdp, and the unemployment rate is still above 5 percent. in contrast, in japan, the rise in the unemployment rate has been modest relative to the decline in economic activity. although the rate has increased from the pre - pandemic level of around 2. 5 percent, it remains low at around 3 percent. these different developments in the labor markets come from differences in employment practices of the two countries. in the u. s., employment adjustments are fast and firms therefore tend to promptly conduct
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of a development agenda of future priorities and contextualise the future of payment system oversight. ladies and gentlemen, since the establishment of the ccbg a decade ago, methods of effecting payments and other financial transactions have quickly become sophisticated with a trend towards execution in real time electronic media. all this is taking place because consumer confidence is growing in these instruments and mechanisms, which have been supported by growing confidence in sadc member countries β economies in general and stability of the national financial systems in particular. it is therefore the expectation of the bank of zambia that this conference will discuss this trend and its implications, particularly with regard to limited accessibility to technology and technicalknow how of consumers in sadc member countries. other themes i am sure you will deliberate upon include confidentially of financial information, money laundering and terrorist financing. effective payment system oversight needs to be promoted so that public confidence in the safety and soundness of the national payment systems is maintained. understandably, this is a new area and in most member countries work is still exploratory. i therefore urge you all to double your efforts in this regard and deliver on this very important central bank responsibility. ladies and gentlemen, another new area is that of mobile phone enabled payment services. this development has a huge potential to help the sadc region leap frog a number of financial sector development challenges particularly those related to improving access and availability of financial services. this is because mobile phone based services, particularly those focused on low - value payments where swift and convenient service is the primary goal could be a practical solution for sadc member countries. the challenge therefore is how well we all respond without damaging this sprouting and potentially cost - effective delivery channel for financial services, which can be damaged with over regulation or lack of mitigation for the risks its poses. ladies and gentlemen, i wish to conclude by reminding all delegates that it is my hope that at the end of the conference all of you will have obtained a better understanding of payment systems best practice. equally important you will also have obtained a clearer view of the purpose of payment systems within a developmental context and the need for concerted efforts in balancing our responses in a manner that is supportive of the objective of attaining economic inclusion and growth, regional economic co - operation and integration. with these remarks, i declare the conference officially open and wish you successful deliberations. i thank you.
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bank of japan β s february review of monetary and economic trends in japan bank of japan, monthly economic review, 18 / 2 / 97. a moderate economic recovery continues in japan as private demand shows increasing firmness. with respect to final demand, public - sector investment has decreased while net exports are on an increasing trend. housing investment has remained at a high level and business fixed investment is increasing steadily. while growth in personal consumption has been moderate on the whole, passenger car sales, which have a strong influence on production, have accelerated significantly. meanwhile, inventories on the whole are at appropriate levels. in these circumstances, industrial production has recently increased at a somewhat fast pace and labor market conditions have continued to improve moderately. meanwhile, prices have stopped declining, and monetary aggregates continue to grow at 3. 0 - 4. 0 per cent. with regard to personal consumption, sales at department stores and supermarkets are improving moderately, albeit with some fluctuations. outlays for travel have remained firm. growth in sales of electrical appliances has become somewhat moderate as the pace of expansion in personal computers and cellular telephones decelerated. passenger car sales have recorded buoyant two - digit growth year - to - year for four consecutive months since october 1996. among leading indicators of business fixed investment, machinery orders are increasing steadily on average, although they are expected to show a decline in the first quarter of 1997 as a reaction to the large increase recorded in the fourth quarter of 1996 in both the manufacturing and non - manufacturing sectors. construction floor area has also continued to pick up moderately. with respect to housing investment, housing starts have remained strong reflecting low interest rates and reasonable housing prices. they recorded a high seasonally - adjusted annual rate of over 1. 7 million starts in the fourth quarter of 1996, partly reflecting the rise in orders ahead of the consumption tax rate hike. regarding public - sector investment, public works contracted showing developments in orders have decreased significantly since autumn 1996 compared to the high level recorded in the previous year which reflected the large economic stimulus package. as for actual implementation of public works, with a time lag after orders, the seasonally adjusted level of shipments of related goods has been decreasing since autumn 1996 after having increased until the summer. real exports have recently shown an increasing trend as the effects of the yen β s depreciation since summer 1995 have gradually permeated. meanwhile, the increase in real imports has slowed, also reflecting the depreciation of the yen. as a result
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##ence goes beyond technology, it also encompasses governance, company culture and business processes. given the extensive interlinkages and interdependencies in the financial system, it is obvious that 1 / 2 bis central bankers'speeches markets β overall cyber resilience depends not only on the resilience of each individual market actor but also on that of interconnected market infrastructures, participants and service providers. the eurosystem cyber strategy for financial market infrastructures following the increase in both the frequency and severity of cyberattacks over the last few years, legislators, regulators and standard setters have issued legislation and guidance on cyber security at national and international level and at cross - sectoral as well as sector - specific level. let me briefly mention three initiatives. first, in 2016, the ec adopted the directive on security of network and information systems ( the nis directive ). its aim is to bring the cybersecurity capabilities of operators of essential services to the same level of development in all the eu member states and to ensure an efficient exchange of information and good cooperation on the topic throughout the eu. second, at international level, the g7 countries have drawn up a set of fundamental elements of cybersecurity for the financial sector, as well as three further recommendations on the effectiveness of cybersecurity assessments, third - party risks, and coordination with other critical sectors. third, with a key focus on financial stability, the cpmi - iosco published a principles - based β guidance on cyber resilience for financial market infrastructures β in june 2016. supplementing the β principles for financial market infrastructures β, it provides additional detail related to the preparations and measures that financial market infrastructures should undertake to enhance their cyber resilience. in recognition of the escalating cyber threats, the legislative and regulatory guidance and the required paradigm shift, the eurosystem β s overseers have launched a strategy for cyber resilience in relation to financial market infrastructures. this strategy β which will be explained in more detail at agenda item 3 β is built on three pillars. the first pillar refers to the cyber resilience of individual financial market infrastructures. the second pillar refers to the resilience of the financial sector as a whole. the third pillar highlights the importance of establishing a forum which brings together market actors, competent authorities and the cybersecurity service providers. this brings me to the third and final objective of today β s meeting. creation of a
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instruments. in combination these measures have enabled central banks to create accommodative financial conditions, greatly enhancing the transmission of monetary policy. however, in the world of rapid transformation, it seems sensible to think that central banks should evaluate their monetary policy frameworks time to time. regular review would also make the strategy more open and transparent. it is also important that the central bank does not act in a way that does not reflect announced long - term policy goals. 5 / 6 bis central bankers'speeches many central banks already have an evaluation process in place. the bank of canada is one example of such practice. the federal reserve system also has a procedure in place for strategy review. the same is true for the bank of england and the swedish riksbank. the evaluations could be internal or made partly by outside evaluators. the background papers supporting evaluation could be made public. the ecb would benefit from considering its strategy work in this perspective. regular reviews would assist the ecb to stay in tune with the rapidly changing economic and financial environment. especially in our present times of uncertainty, it is essential for any central banker to possess a fully modernized monetary policy toolbox that is as functional and as effective as possible. that would help β the fox β to outsmart the opposing forces and overcome the immediate obstacles, and enable β the hedgehog β to stay the course of medium - term price stability, sustained growth and high employment. so why not pursue it? many thanks for your attention, and welcome to the seminar. 1 michaela schmoller, secular stagnation : a false alarm in the euro area? bank of finland bulletin 4 / 2018. 2 brainard, william, uncertainty and the effectiveness of policy. american economic review, 57 ( may ), 411 β 25. 3 peter praet, economic policymaking under uncertainty. speech at the caixa, madrid, 17 october 2018. 4 e. g. a broad study by banco de espana concluded that in the united states, the range is from β 3 %. to 5 %. similarly, holston, laubach and williams, leading names in this area of research, estimate that the confidence band around their estimates of the natural rate for the u. s. is currently around 5 percentage points. 5 for further discussion on the state of the phillips curve, slack in the economy and inflation expectations, see e. g. www. bofbulletin. fi / en / 2018 / 1
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as environmental tax reforms. likewise, a number of central banks and supervisors have joined their hands in the network for greening the financial system. in the eu, and also globally, the financial sector still lacks adequate instruments for mainstreaming green finance. the eu commission, through its plans for a capital markets union and sustainable finance action is working on this. climate - related criteria should be better reflected in the key tools used for decision - making by market actors, such as benchmarks and credit ratings. apart from the simple carbon footprint, we also need to look beyond that. in addition to the production and life - cycle of things, it is becoming more important to consider what happens to products in their afterlife. many things considered green are not that, if we do not reuse and recycle the resources. electric cars is one of the prime examples. similarly, many things considered brown might be less so, if 1 / 2 bis central bankers'speeches the product lifetimes are long enough and resources can be recycled in afterlife. looking at what the financial sector can do for the circular economy, in my view the financial industry does acknowledge the problem, and there are ample amounts of capital looking for sustainable companies. more work needs to be done on how companies can cost - effectively and reliably indicate the sustainability of their operation. but for all companies planning their future, now it β s the time to think deep about how to transform their business models sustainable, and turn that into concrete actions. not least because there is a paradigm shift going on in the sentiment of the investor base, and it is starting to affect the selection of companies that attract investments and funding in the future. i know this first - hand, because this is what we do in the investment policy of the bank of finland. ladies and gentlemen, let me conclude. as i said, environment - and climate - conscious business models are becoming increasingly mainstream. that is fine, but the transition should be much speedier. hence, i want to encourage us all to recognize the urgency of concrete climate action, and build a timely and consistent transition path to the sustainable circular economy. 2 / 2 bis central bankers'speeches
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r jayamaha : basel ii and operational risk keynote address by dr r jayamaha, deputy governor of the central bank of sri lanka, at the 10th seacen - fsi regional seminar for bank supervisors and regulators, colombo, 12 december 2005. * * * it is indeed an honour to have been invited to deliver the keynote address at this seacen - fsi regional seminar for bank supervisors and regulators on the implementation of basel ii and operational risk. i would like to take this opportunity to share some thoughts on this important subject, which is currently engaging the attention of the bank regulators, not just in our region, but worldwide. i will first deal with why basel ii requires a separate capital allocation for operational risk and what it intends to accomplish. next, i will discuss how basel ii deals with operational risks and how it contributes to financial system stability. finally, i wish to mention a few steps regulators can take in preparation for adopting basel ii and mitigating operational risk. 2. deregulation and globalization of financial services, together with the growing sophistication of financial technology are making the activities of banks and their risk profiles more complex. in this context, not only well known credit, interest rate and market risks, but also other risks can be substantial and threaten the stability of a financial system. a growing number of high - profile operational losses worldwide have led banks and supervisors to increasingly view operational risk as an integral part of risk management policy. management of specific, more common or day - to - day operational risks is not a new practice ; it has always been important for banks to prevent fraud, maintain the integrity of internal controls and reduce errors in data transaction processing, ensuring the availability of information technology infrastructure and their back up systems when needed. more often than not, operational risks are taken as given and very little attention has been paid to it. operational risk is intrinsic to financial institutions and it should be an important component of their firm - wide risk management systems. however, operational risk is harder to quantify and model than market and credit risks. operational risk differs from other banking risks. it is a risk that is not willfully incurred in return for an expected reward but is implicit in the ordinary course of banking business and has the potential to affect the risk management process. however, ignorance of operational risks or failure to properly manage such risk can result in a misstatement of an institution's risk profile and expose the institution to significant losses. such institutions can become a regulatory
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government approach to recovery, we expect the philippines to move back to our pre - covid development path soon. the worst is behind us. the recovery phase has begun. now, the philippines is starting to write its post - covid narrative, which in the near future will speak of a remarkable rebound. as an active member of the international community, we are happy to share the things that we do to thrive, as much as we are willing to learn from and work with the rest of the world. thank you very much for listening. i wish everyone a productive conference. 3 / 3 bis central bankers'speeches
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ipumbu shiimi : national payment system vision 2015 launch speech by mr ipumbu shiimi, governor of the bank of namibia, at the launch of the national payment system vision 2015, windhoek, 5 april 2011. * * * director of ceremonies mr. ian leyenaar, representing mr. erastus hoveka the president of bankers association of namibia, dr. gift kavari chairperson of the payments association of namibia members of the banking industry members of the media distinguished invited guests, ladies and gentlemen good morning it is with great pleasure to welcome you all here today to witness the launch of the national payment system ( nps ) vision 2015 for namibia. let me first use this opportunity to thank the banking industry for their respective contributions in the process of finalizing the vision document. without your input we would not have achieved this milestone. much has been achieved since the development of the first nps vision and strategy in the year 2000, and although i do not want to detail these achievements, there are a few major milestones which are worth highlighting : the first major milestone was reached on 10 june 2002, when the namibia inter - bank settlement system ( niss ) was implemented, enabling banks to settle their obligations with each other immediately, the so - called real time gross settlement system ( rtgs ). the second milestone was reached with the promulgation of the payment system management act in december 2003. the act provides the bank with the mandate to oversee and monitor the payment system ; the third major milestone was reached during 2004 β 2005 with the establishment of the automated clearing house, namclear, which localised the clearing and processing of the electronic funds transfer system ( eft ) and cheque processing system ; the payment association of namibia ( pan ) was established in 2005 to manage the affairs of its members in relation to payment instructions, but also to act as a medium of communication with the different stakeholders, namely the bank, public bodies, the media and even the general public. finally, perhaps one of the most important achievements in the nps recently was the establishment of namibian card switch, namswitch in november 2008, enabling the clearing and settlement of namibian card transactions locally. director of ceremonies the payment system is dynamic and new demands and opportunities arise as a result of market requirements and technological developments. therefore, new challenges are facing the nps, hence a new strategic direction is required. it is against this background that the bank in collaboration with the banking industry has
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niklaus blattner : review of the swiss economy introductory remarks by prof dr niklaus blattner, member of the governing board of the swiss national bank, at the end - of - year media news conference, zurich, 13 december 2002. * * * in conducting monetary policy, the swiss national bank ( snb ) must be able to rely on a healthy banking system. we can consider only efficient and solvent banks as counterparties. monetary policy can only be implemented effectively in a system made up of such banks. furthermore, only efficient and solvent banks ( including the non - bank postfinance and the infrastructures for the settlement of payments and securities ) can maintain efficient and secure payment transactions. the current bill for a comprehensive revision of the national bank law took this realisation into account. overseeing the payment and securities settlement system is only one of the central bank functions spelled out in the law. what is new, in particular, is the explicit requirement that the national bank shall contribute to the stability of the financial system. by taking organisational measures, we already created better preconditions for fulfilling the expanded mandate in 2001. the law and the organisation are moving in the direction taken by other central banks worldwide ever since they have increasingly identified the stability of the financial system as a necessary precondition for pursuing an effective monetary policy. in accordance with the revised law, our close cooperation with the swiss federal banking commission ( sfbc ) will be further expanded. the responsibilities will remain clearly delineated, however. the sfbc is mainly responsible for the supervision of banks and institutions, while the national bank is entrusted with overseeing payment and securities settlement systems and promoting the stability of the financial system. our activity in this area focuses on analysing the structures, the behaviour and the results in the swiss banking system. up until now, the national bank was known primarily for its banking statistics. furthermore, it frequently conducted and published banking surveys. we are now increasingly turning our attention to the analysis of topical issues, including a periodic analysis of the situation in the financial system. in so doing, we concentrate on those aspects which are relevant for assessing system stability. for this reason, banks are the main focus. developments in the insurance world jeopardise system stability only indirectly at the most, e. g. in the case of a financial conglomerate. the situation in the swiss banking sector the swiss banking sector found itself in a hostile environment in the past few months. there was a slowdown
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the adoption of crypto - assets and related technologies could improve the speed and efficiency of financial intermediaries and infrastructures but, on the other hand, it can worsen their carbon footprint because of the energy consumption of some of the underlying processes ( such as mining ). the answer, however, is not to block the development of these new technologies but, conversely, to trust even more scientists and innovators and support them in improving the environmental and sustainability profiles of their solutions. in order to support the development of efficient technological solutions combining innovation in finance and sustainability, new policy instruments such as innovation facilitators could play an important role. in fact, innovation hubs may allow the identification of use cases where innovative technologies can help to channel investments into sustainable objectives and to assist the transition to a greener economy. innovation facilitators also help supervisors and regulators in getting to know innovation from up - close and may ease the design of rules that provide the right incentives for the development and diffusion of β climate - friendly β technologies. 1 / 2 bis central bankers'speeches in this respect, it is worth saying that, at bank of italy β in addition to our β fintech channel β ( a web window through which operators can communicate with the central bank on any financial innovation issue ) β we have recently launched in milan a new innovation facilitator ( called milano hub ) aimed at fostering collaboration and knowledge sharing between public sector authorities and different stakeholders ( market operators, academics, etc. ) and facilitating, among others, the development and spread of safe and sustainable fintech solutions. that said, i am convinced that this g20 2021 techsprint, the projects and the technological solutions it will attract, will help in making this year a turning point in the transition towards a greener and more sustainable finance. i expect a successful global hackathon that will attract a wide variety of participants from every country of the planet. since in italy this year we are celebrating the 700th anniversary of dante, let me say that i hope that this competition will attract modern ulysses that, as dante recalls in the 26th canto of the inferno, are craving for β worth and knowledge β and are eager to discover new lands. at this moment of our history, we need more than ever that the brightest and most ambitious minds will set to work on the challenges that our society and institutions are facing. it is a great pleasure for me to wish you a fair competition. might all of
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supervisors must remain vigilant. implementing and updating international standards is crucial to adapting to new challenges. after all, for supervisors there are always'interesting times'ahead. 1 i wish to thank francesco cannata and fabio recine for their very valuable input. 2 the role of internal models has been fundamentally revised. for certain risks, such as the credit valuation adjustment and operational risks, rather than questing for perfection, the bcbs simply accepted the idea that models cannot provide meaningful estimates. for other risks, such as credit risk, the new standards constrain the possibility to achieve capital optimisation by imposing input floors as safeguards against overoptimistic assumptions ; moreover, the advanced modelling approach can no longer be used for certain portfolios where data are too few and cannot yield statistically robust estimates. for market risk, the bcbs fundamentally revised the approach to modelling to make it more consistent with the complexities of modern trading activities. an output floor was set as a safeguard against model risk. 3 the weighted average cet1 ratios of the main global banks included in the basel monitoring exercise sample almost doubled, from around 7 to around 13 per cent, and the leverage ratio almost halved, from around 3. 5 to around 6. 5 per cent. the liquidity position improved strongly ; the lcr and nsfr were always well above their minima during the same period. see the'evaluation of the impact and efficacy of the basel iii reforms'report, published in december 2022. 4 let me also recall, as the issue of asset valuation is sometimes raised, that in the lcr high - quality liquid assets ( hqla ) are marked to market and subject to haircuts. 5 see bcbs,'newsletter on bank exposures to non - bank financial intermediaries ', december 2022. 5 / 5 bis - central bankers'speeches
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associated with them, people have come to see mostly the β dark side β of these services. nonetheless, there is still an essential need for financial products and services that can help individuals and firms manage their risks, since sustainable economic development can only be achieved through sound risk taking by private entities. moreover, financial institutions will be expected to play an even more active role as more countries face the problems arising from population ageing. this is especially relevant to satisfying the need for longevity risk for a theoretical framework of rational decision under investment irreversibility and ( fundamental ) uncertainty a la frank knight, see nishimura, k. g., and h. ozaki, β irreversible investment and knightian uncertainty, β journal of economic theory, 136 ( 2007 ) 668 β 694. bis central bankers β speeches management and in coping with the problems of declining fertility, since financial institutions β full use of their technologies and resources is the key to solving these problems. thus, financial service providers should be able to contribute to the economic society by providing people with the tools to address the risks and harsh uncertainties of life, while enabling them to enjoy its thrills and happy surprises. in this respect, i believe that regulators and supervisors should bear the following two things in mind : first, regulators and supervisors should always have a cross - industry and in some cases cross - border perspective, and they should also have a grand design as to how the economy can spread the risks necessary for sustainable growth, especially under population ageing. second, regulators and supervisors should be aware that a desirable regulatory framework will continuously evolve, partly due to population ageing and the consequent structural changes in the economy and financial services. the current structure and regulatory framework will not last forever, and neither will sectoral classifications such as β banking, β β insurance, β and β securities β. for example, increased demand for longevity risk management could perhaps foster new cross - industry innovation between medical and financial services. from its unique vantage point, the joint forum is able to observe the signs of structural changes in financial services and to identify the need for regulatory and supervisory evolution. i sincerely hope that the forum will continue to be attentive to new developments in financial services and lead the global debate on regulation and supervision. now i come to the final words of my speech about ageing. just as we mortal individuals mature and come of age, so too do institutions. here is the bank of japan ( figure 4 )
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repeatedly published its forecast in which the decline in the fertility rate was declared to be only temporary and the birth rate expected to rise again soon ( figure 2. ) similarly, life expectancy forecasts have shown that the actual figures consistently exceeded the forecasts ( figure 3 ). these forecast errors show the fundamental uncertainty surrounding the pace of population ageing. and if the actual outcome deviates from the estimated life expectancy and longevity of the entire population in an economy, all service providers will be affected. for example, in the case of longevity risk products, even a slight deviation could significantly increase the exposures of service providers. avoiding patchwork and β spaghetti code β problems regulatory and supervisory reform is often called for once such deviation causes an unexpected accumulation of losses. however, this kind of loss - induced regulatory and supervisory reform often leads to patchwork plumbing, which in turn results in a vicious circle of further losses and more patchwork. the repetition of such ad - hoc adjustments to the framework can cause what computer programmers refer to as β spaghetti code β problems, in which the framework becomes too complex and entangled, like spaghetti, so that no one knows how to fix the problem. thus, we must be careful not to make over - optimistic forecasts, especially when these forecasts underlie the overall framework and any forecast error might bring about irrevocable losses. it is also important to have in advance a clear strategy on appropriate policy responses when a forecast error is observed, especially in dealing with β spaghetti code β risks. the performance of the framework should be subject to continuous review, and necessary measures should be readily available at all times. with these measures in place, it should be possible to prevent a mere forecast error from turning into an β irreversible β disorder of the whole system. in this sense, it is better to address the challenges of population ageing by incorporating a second best β fail - safe β mechanism into our overall institutional framework, rather than by chasing the first best solution while pretending our forecasts are always rational and unbiased. 2 concluding remarks the recent financial crisis has completely changed the landscape of financial services, both for financial institutions and for supervisors. before the lehman crisis, people tended to see only the β bright side β of new financial products, such as securitized products, derivatives, and cross - border transactions, believing them to be backed by advanced and innovative risk - management and investment tools. however, since the crisis revealed the risks and problems
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- ranging macroeconomic and societal consequences, including through elevated energy prices β potentially akin to those whose negative effects we are experiencing today. another key point for me is that no action on climate delivers the worst outcome from our scenarios. a naive comparison of loss rates in the two net - zero scenarios and the naa scenario might suggest otherwise ; in fact for banks, credit losses were lower under no action than for late action. but this is misleading because of the very different end - points of the scenarios. under both the la and ea scenarios, climate change has broadly been brought under control by the end of the 30 year period. by contrast, with no additional action the impacts will persist well beyond the 30 years of our scenario β incurring substantial economic costs not captured in these estimates. even sticking within the 30 year bounds of the scenario β and focusing on financial sector impacts β the naa scenario is pretty grim. projected impairment rates for banks are up 50 % compared with normal levels. and whereas the β transition β scenarios offer clear opportunities for banks to increase their profits by investing the transition, the β no action β scenario offered no such opportunities. instead the world gets poorer and more uncertain for all sectors, particularly those directly exposed to physical risks. the β no action β scenario is particularly unpleasant for life and general insurers β even sticking to the 30 year window, their losses in this scenario were worse than in the transition. for instance uk and international general insurers, respectively, projected a rise in average annualised losses of around 50 % and 70 % by the end of the naa scenario. it β s worth emphasising that these costs would be mostly passed on to consumers through higher premiums. ultimately, in a β no action β scenario, we would see a reduction in access to lending and insurance for so - called β climate vulnerable β sectors and households. to give an example of what this means, homes at risk of flooding would likely become prohibitively expensive to insure or borrow against. like so many of the impacts of climate change, this cost would be borne unequally : 45 % of the mortgage impairments in the scenario are accounted for by just 10 % of the country. [ 12 ] and there is evidence that in areas particularly at risk of flooding, many homes could become uninsurable. finally, the cbes exercise is a measure of the progress banks and insurers are making in their climate risk management. overall, this is a good news story
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climate capital β speech by sam woods given at a webcast hosted by the global association of risk professionals published on 24 may 2022 we recently tested the uk β s largest banks and insurers on how prepared they are for financial risks caused by climate change. sam woods talks about the results. speech climate change is now firmly in the focus of prudential regulators across the globe. in that context, i want to use this speech to outline the results of our first exploratory scenario exercise on climate risk β the β cbes β [ 1 ] β which were published earlier today. but before that, i want to put those results in context, and set out how i see climate risk fitting within the prudential regulation authority β s ( pra β s ) wider mission. the role of prudential policy tackling the threat from climate change will involve efforts by governments across the globe, as well as by many other organisations and individuals. in the uk, the effort to get to net zero greenhouse gas emissions is being led by government, with a wide range of other public bodies doing their part. where does prudential policy fit into this effort? the role of prudential policy is to ensure the safety and soundness of banks and insurers, so that they can continue to provide vital financial services to the real economy. getting our core job right, and so maintaining financial stability, is far and away the most important thing we can do to support the fight against climate change. achieving net zero will not be possible unless our societies make considerable investments in developing and disseminating new technologies, and will require major changes across the economy. a stable financial system can support households and businesses through these changes, and channel investment where it needs to go to support the transition. transitioning to net zero will be a major challenge for our institutions and societies even in a benign economic environment β doing so without confidence in the basic functioning of the financial system would be near impossible. it is therefore vital that firms can withstand risks to their safety and soundness, including those that arise as a consequence of climate change β both β physical β risks like flooding and extreme weather events, and β transition β risks that arise as the economy moves away from carbon - intensive activities. firms therefore need to understand, at a granular level, how their balance sheets and business models are exposed to both present and future climate risks, so that they can take the right risk management actions today. this includes investing
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guy quaden : the national bank of belgium - a century and a half of belgian and european history introductory statement by mr guy quaden, governor of the national bank of belgium, at a symposium on the history of the national bank of belgium, brussels, 22 november 2005. * * * ladies and gentlemen, when belgium celebrated its 175th anniversary, the national bank naturally joined in. thus, we sponsored an exhibition on β la belgique visionnaire β, and today we are publishing a book on the history of the bank, together with a set of detailed articles on the period 1940 β 1971. the history of the bank is closely intertwined with that of the belgian state. however, while the kingdom of belgium is celebrating its 175th anniversary this year, the bank is only β might i say β celebrating its 155th birthday. during the first twenty years of belgium β s existence, banknotes were issued by several private banks, mainly the societe generale, founded in 1822 under the orangist regime, and its principal rival, the banque de belgique, established in 1835. the financial crisis of 1848 led to the imposition of the β compulsory rate β β i. e. the suspension of the right to exchange banknotes for precious metals β and paralysis of the discount credit system. at this time, a young, dynamic politician, walthere frere - orban, was appointed as minister of finance. drawing radical conclusions from the situation, he took action against the two big mixed banks which were monopolising financial power in the country. he forced them to amend their statutes, renouncing their right of issue together with certain discount activities in favour of a new institution, the national bank. by way of consolation, when the national bank was launched, the two big banks became the sole shareholders in the new company, established in the form of a private limited liability company. all the same, at the time of its establishment the national bank was not the mere puppet of the big private banks. thus, the governor, the linchpin of the system, was appointed by the king and the government also nominated a commissioner, making the institution different from its counterparts in neighbouring countries. in return for the right of issue, the state also received a substantial part of the bank β s revenue. the national bank has never been quite like other financial institutions or limited companies. minister frere - orban, addressing parliament in 1850, made the following statement which i have
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governor β s notes on the inflation expectations of households prepared for the discussion at the general council meeting on 26 september 2024 ales michl good morning, president lagarde, dear colleagues. let me give you an insight into how we ( at the cnb ) approach the inflation expectations of households. methodology we have data on the short - term ( 12 - month ) inflation expectations of households from monthly business and consumer surveys. the surveys have been conducted for the czech statistical office and the european commission by data collect, a market research company. the survey is conducted via telephone interviews, using a sample of 1, 000 randomly selected households. since august 2015, we have numerical estimates of : 1. expected inflation : respondents are asked, β how do you think consumer prices will develop in the next 12 months compared to the previous 12 months? β 2. perceived inflation : respondents are asked, β how much do you think consumer prices have changed over the past 12 months? please estimate in per cent. β inflation expectations : households vs. financial market analysts and business managers inflation expectations in the czech republic ( 12 - month horizon, % ) households financial market analysts business managers ( quarterly survey ) inflation target ( 2 % ) source : czech national bank, data collect across the entire sample, households consistently expected higher inflation than business managers and financial market analysts. this can be observed in most countries. households β inflation expectations were above the inflation target of 2 % even before inflation began to rise. on the other hand, analysts and business managers had stable expectations before the pandemic, anchored at 2 %. actual, perceived and expected inflation cpi inflation inflation perceived by households inflation expected by households ( 12 months ahead ) inflation target ( 2 % ) source : data collect, czech statistical office both expected and perceived inflation were higher than actual inflation ; perceived inflation was more than twice as high as published inflation at the peak of the inflation wave in 2022. monetary policy response in the 2nd half of 2022, when i became governor cpi inflation inflation perceived by households inflation expected by households ( 12 months ahead ) cnb repo rate ( % ) inflation target ( 2 % ) source : data collect, czech statistical office i became governor in july 2022. at that time, actual inflation was 17. 5 %, the key interest rate was 7 %, perceived inflation was 35 % and inflation expected in 12 months was 27 %. the textbook approach prescribes that the central bank should keep raising key interest rates. when
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4 % nationwide, with floor space newly constructed up by 22. 6 %, but completed acreage by merely 9. 1 %. 4. low - income households have difficulties in affordability. at present, nearly 10 million urban households whose per capita floor space of residential housing is below 10 square meters. among them, 4 million households receive subsistence allowances, accounting for 5. 5 % of the total number of urban households. at the same time, persistent price hike and slow development in small - and - medium - sized house lease market make it difficult for low - income households to purchase or rent houses in the market. the above problems, though limited to certain localities and created by structural imbalance, have huge impact on society due to the following reasons. first, mismatch between supply and demand is acute. from the demand side, there is a continuously strong demand as a result of higher income and faster urbanization. from the supply side, the insufficient aggregate demand is coupled with imbalanced mix of housing available and shortage of supply of small - and - medium - sized apartments. from january to october 2007, floor space completed stood at 232 million square meters, up 8. 8 % y - o - y. sold space grew by 33. 1 % yo - y to 489 million square meters, 2. 11 times of space completed, resulting in a slower growth of supply than that of demand. second, shortage of residential construction land and price hike of land, raw materials and wages push up sales prices. third, psychological expectations and housing price hike interact. urban residents prefer purchase to lease, early purchase to late purchase and big apartments to small apartments. after having purchased their own apartments, some people make speculative investment, which further pushes up housing prices. fourth, housing price hike in the international market is contagious. in recent years, the global housing market has witnessed faster price hike during a longer period time with far more wide - ranging impact than any other period of time before, not only in developed countries such as the us, uk, france, spain, italy, belgium, denmark, sweden and australia, but also in brazil, india, thailand and other developing countries. from 2001 to 2006, housing price in the us, france and the uk rose by 54. 9 %, 50 % and 85. 4 % respectively, while the single - year price hike in the three countries was 11. 32 % in 2005 for the us, 16. 25 % in 2005
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places in real - time cross - border remittance, thus providing safer, more efficient and more convenient cross - border payment services for economic and trading activities and personnel exchanges between the two sides. also, we will further expand the list of participating banks offering residents of hong kong and macao agency account opening witness services. thanks to hong kong's unique advantages and its industrious residents, we believe its status as an international financial center will continue to be consolidated and strengthened. last but not least, financial leaders around the world are welcome to invest in china's financial market, sharing together with us the development opportunities. i wish this forum a complete success! thank you! 6 / 6 bis - central bankers'speeches
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gent sejko : financial inclusion, governance, tackling nonperforming loans, and albania β s milestones for 2020 address by mr gent sejko, governor of the bank of albania, at the meeting organised by the albanian association of banks, tirana, 12 february 2020. * * * dear ladies and gentlemen, it is always a pleasure for me to attend meetings and round tables with representatives of banks operating in albania. they are also an excellent opportunity to discuss and harmonise our efforts for a stable deepening and expansion of the financial market, as one of the core pillars of the economy and the main driver for sustaining development and enhancing the public β s welfare. i would like, in my brief address, to bring to your attention some highlights of 2019, regarding the contribution of the banking and financial systems, as well as some milestones for 2020. let me first focus on the overall state of affairs in the albanian economy. the devastating earthquake that hit albania on 26 november 2019 was a major event with a strong impact for 2019, on all the sectors of economy and the whole society. it was an unexpected shock giving rise to economic and psychological consequences in the affected areas and beyond. on the other hand, it was a difficult test, and i may say that all banks passed it successfully, in terms of continuity of financial market β s critical functions. in such a disastrous situation, it was very important that people could perceive the security, at least in the financial aspect, regarding their deposits with banks and continuous access to their funds to meet their basic needs. under these circumstances, not only did all banks generously contribute to recovering from earthquake consequences, but they also supported their clients in alleviating their pain and offering adequate solution, while ensuring continued operations and activities. beyond this event, overall, the albanian economy in 2019 performed in positive terms. its growth pace continued to trend upward, employment increased, internal and external balances strengthened, and main indicators of the banking sector β s soundness have been improving. all the above reasons boost the optimism on the outlook of economic growth in the medium - term horizon. among others, albania has reached an important milestone on its path to development and integration : the expected opening of accession negotiations with the european union. these negotiations should be definitely considered as an important development anchor and an additional guarantee for both domestic and foreign investors. year 2019, as i stated above, affirmed the stability of the albanian banking system. all structural changes that started
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uk and the european union is one of them. the anti - globalist movement and barriers to the free movement of goods, people and capital appear as harmful to the overall global economy. however, their negative effects fall disproportionally on emerging countries, such as albania, and the western balkans in a broader sense. let me know outline our assessment on the potential negative implications resulting from brexit and the relevant effects on the central banks in the region. 2. potential implications resulting from brexit for albania and the region brexit is certainly a determinant factor for the european union and the euro area. as such, it has left its mark in albania and the region. it may be accompanied by direct or indirect, short - term or long - term negative effects in the labour, goods and services markets. overall, the direct implications for albania and the region are assessed as minor ones, given that 3 / 4 bis central bankers'speeches trade exchange with the united kingdom is low. to illustrate my point, the export of albanian goods to the uk accounts for only 0. 2 % to the total over the past ten years, whereas the share of imports amounted to around 1. 1 %. the stock of british foreign investments in albania shows low rates, whereas the impact of emigration and remittances indicators is somewhat higher, but still a non - determinant factor. on the other hand, indirect effects would depend on brexit β s impact on the european economy and banking system. brexit may also translate into institutional developments that will affect the rules of european economic and financial market development, as well as european integration processes. in other words, implications for albania and the region potentially exist, but still remain difficult to identify. i would rather not dwell very long on this topic ; however, i do believe that today β s discussions will help us understand these processes and assess in advance the potential political and economic implications and consequences for our countries. i would like to stress that all of us in the western balkans remain hopeful that brexit will not generate centrifugal forces, which harm our european integration processes, initiate setting barriers to free trade and movement of people, and encourage further fragmentation of the european financial system. 3. monetary policy and financial stability in the post - brexit period the coordination of the monetary policy with the necessary measures for safeguarding financial stability remains a challenging issue for policy makers even in better days. the challenges to this
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delisle worrell : developments in the global financial sector with implications for regulators and financial institutions introductory remarks by dr delisle worrell, governor of the central bank of barbados, at the 4th annual domestic financial institutions seminar, bridgetown, 11 september 2013. * * * the conference offers an opportunity to reflect on developments in the financial sector at home and abroad, and on their implications for policy changes by regulators, and for the strategies of financial institutions. the presentations at conferences such as this one may serve as background material for policy making and strategic planning, and they may suggest to us topics to be added to our agenda for further study. on some topics we will be reporting on recent developments, while on others we will be sharing thoughts and ideas that are yet in the process of development. among the major challenges of today's world is the challenge of change, and an occasion like this one provides a forum for us to share perspectives on where changes to the financial sector are heading, and what we may need to do about them, at the individual and at the regulatory levels. in addition to the topics on which formal presentations will be made, participants are encouraged to raise any pertinent issue which we might fruitfully discuss, and put on our agenda for further discussion. on the whole we may be satisfied that we have a financial system that suits our needs, performs well and is well supervised. we keep up to date with international best practices and we keep our eyes on all the circumstances and developments, domestic, regional and international, that could have adverse effects on our financial system. our financial system has a full range of services for the needs of households, for savings, mortgages, purchase of consumer durables, insurance and payments. established businesses are also well served, with finance for equipment, office space and working capital. these services are delivered by financial institutions in which consumers may have confidence. they are all supervised either by the financial services commission ( fsc ) or the central bank, and they report regularly to the supervisor on their operations. we the supervisors carry out examinations to verify that our financial institutions operate to standards of international best practice. the central bank and the fsc collaborate closely to maintain oversight of the financial system as a whole. this collaboration, recently formalised in a memorandum of understanding signed jointly between the bank and the fsc, predates the fsc, and was reflected in links between the earlier regulatory bodies. twice per year the regulators conduct a comprehensive evaluation of the
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strategy to effectively respond to global forces in a strategic manner. in the end, however, the resources which firms put into integrating into the regional market in a proactive manner could influence relative success in the years ahead, not only in the region but internationally. in closing, let me once again congratulate toppin, walker and deloitte and all the partners on their recent initiative in establishing deloitte ( barbados ) and for the bold step which they have taken. i wish you every success. thank you for your attention.
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##cing the need for a more dynamic private sector and, therefore, the imperative to promote entrepreneurship, self - employment and diversi ed sources of income. again nance, in this regard, would be critical. fi fi fi fi distinguished guests, as a fourth element, in the modern day, progression with respect to nancial / economic inclusion, shift in the growth potential, and bene cial global linkages has to involve internet connectivity and digitisation. therefore, i note with satisfaction, the shift towards provision of banking services by absa bank through digital platforms. this eases the conduct of transactions and processing, especially in a geographically dispersed and thinly populated area, such as the okavango region. it should also address the hitherto apparent diminution of services as public servants and other service providers occasionally depart from their stations here in shakawe to travel long distances for banking services in gumare and / or even as far as maun. however, for such transition to be effective, it requires adaptation by customers, a secure environment and maintenance of process integrity, as well as availability of connectivity and continuous functionality of infrastructure and facilities. this is important for both domestic and customer service processes and for integrity and sustainability of global value chain and markets linkages. again, in this instance, i recognise the positive response by banks, including absa bank, in reducing transaction charges for use of electronic and digital banking services in order to sustain access and use of services, as well as ease the transition to digital platforms at a time when movements were restricted, and social distancing enforced to mitigate the spread of covid - 19. fi fi i would also like to highlight, as the fth area, the customer relationships that are important for safe, sound and sustainable banking arrangements. these include measured pace of the transition to digital platforms that takes into account customer capabilities and preferences, availability of backbone infrastructure and connectivity. i must be quick to indicate, managing director and chairman of absa that this movement towards digital platforms should not result in abrupt closure of brick - andmortar branches without providing more cost - effective alternative channels for maintenance of high - quality banking services. indeed, there is need for continued maintenance of functionality, resilience and uptime of electronic services, both for customer convenience and system integrity ( 24 / 7 availability as promised ). there is also a need for compliance with respect to business conduct and fair practices, as well as disclosure requirements, know - your
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s art collection 1 / 3 bis - central bankers'speeches its foundations were laid around 70 years ago, in the mid - 1950s. back then, the bank deutscher lander was the central bank for allied - occupied germany's western zones. the occupying powers, the united states and the united kingdom, had established it in 1948 with the mandate to maintain the stability of the new currency, the deutsche mark. this was before the formation of the federal republic of germany, the democratic state in western germany, in 1949. in 1957, the stability mandate for the deutsche mark was transferred to the newly established deutsche bundesbank. dedicated leaders from both institutions worked to ensure that the central bank, as a major public institution, contributed to the promotion of art and culture in the young democratic federal republic of germany. first, they wanted to directly support artists by purchasing their work. second, they wanted to give bundesbank staff the chance to encounter contemporary art in the workplace. placed in its historical context, this vigorous commitment to art and culture makes sense. under the national socialist dictatorship, artists who had devoted themselves to modern art movements had no longer been able to exhibit publicly. they lost their professorships at art schools. many emigrated. their works were removed from museums and banned as " degenerate ". in post - war germany, great interest in art and culture emerged just a few years after the end of the second world war, national socialism and after the shoah. this broadbased cultural awakening was accompanied by a general desire for a fresh start. the german artists sought connection with the art movements in europe and the united states. the idea was for art to serve as a bridge. it stood for freedom and participation in universal western values. moreover, it was hoped that the young generation, through dealing with new and unusual works of art, would be able to familiarise itself with openness and democratic practices. it was against this background that informalism developed in germany. the artists sought an intensive exchange with the french informal art and us abstract expressionism. in their works, they chose a new formal language β it was non - figurative. there was no foreground, no background, and no middle. instead, the central focus was on the painting process itself. karl otto gotz, for example, used broad paintbrushes to create his dynamic compositions with just a few strokes. the " new expressionist " exhibition in the zimmergalerie franck was an important milestone
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suggests that aggregate demand remains sluggish and economic growth below potential. economic activity has been mostly driven by the external demand and a higher fiscal stimulus, while the contribution of consumption and private investment remains low. the latter continue to suffer from the uncertain outlook, the lower increase in disposable income, the spare production capacities, and the relatively tight lending standards. these factors have been reflected in albanian households β increasing propensity to save and businesses β reluctance to invest. external demand and the favourable weather conditions increased albanian exports by about 34. 6 % in january. in light of the poor consumption and investment levels, which have reflected in the decline of imports by 8. 1 % during this period, this tendency has improved the external position of the albanian economy further. bis central bankers β speeches albania β s trade deficit shrank 32. 5 % in january. the developments in the external sector of the albanian economy reflected in improved foreign currency demand and supply ratios, contributing, in turn, to a stable exchange rate. the albanian government pursued an accommodating fiscal policy in the first two months of 2013, expressed in the increase of public expenditure and widening budget deficit. budget expenditure increased at an annualised rate of 1. 3 % in january and february. this increase was reflected in both current and capital expenditure. amidst the sluggish economy, budget revenues continued to contract, registering an annualised fall of 0. 8 % over the months under review. this performance of public expenditure and revenues increased the fiscal deficit by about 5. 1 %. reflecting upon the expected economic and financial developments, the bank of albania has been pursuing a stimulating monetary policy. through the constant key rate cuts and liquidity injections into the banking market, the bank of albania has aimed at ensuring more appropriate monetary conditions to meet its inflation target in the medium - term period. the financial market evidences low liquidity and inflation pressures, which, in turn, have enabled the pass - through of monetary easing into the money and primary market. interbank market rates soon reflected the last key interest rate cut and the yields on government debt securities continued to drop. the falling interest rates were mostly reflected in the deposit market rather than in the credit market, signalling a more conservative bank approach to lending and a savings - oriented real sector. monetary indicators have performed in line with the developments in the real economy and the monetary inflationary pressures remain low. money supply decelerated its growth rates further in january to 4. 9 %
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indicators point to its lesser impact on economic growth. the government β s prudent approach in the first eight months of 2010 in view of meeting the planned deficit figure for 2010 actualized in the annual reduction of public expenditure and budget deficit. the latter amounts to all 23. 2 billion, which is within the projected figure in the budget and about 51 % lower than in 2009. the 2010 state budget revision in july, which established the reduction of expenditure and budget deficit by 10 % and 23 %, respectively, is an expression of the fiscal authority β s firm commitment to safeguarding economic stability and ensuring fiscal sustainability in the long run. the high growth rates of exports and the contained performance of imports yielded a positive contribution of foreign demand to economic growth in the second quarter of 2010. foreign trade data on july and august attest to moderate annual growth rates of exports and positive annual growth rates of imports, hence leading to higher trade deficit in this period. the growth of exports in 2010 was fuelled by the recovery of global economy and the favourable conjuncture of prices in the global markets, the depreciation of the exchange rate, the albanian entrepreneurship efforts to expand the market and by some other factors of transitory nature. therefore, promoting exports in a stable and long - term fashion requires undertaking structural reforms, which will in turn enhance the competitiveness of the albanian economy. this would ultimately serve to the transition to a more stable economic growth model and, at the same time, to curbing the reliance on foreign financial sources. our analysis of monetary indicators concludes that the growth of money in economy is concurrent with the economic agents β demand for monetary assets, hence creating no room for inflationary pressures in the future. aggregate m3 β s average growth was 11. 2 % in july and august, being in line with the nominal economic growth and the enhanced confidence in the banking system. its growth during this period was mainly determined by the increase of the banking system β s net foreign assets. private sector credit grew by 9. 8 % y - o - y, close to the previous quarter β s rate. although the better liquidity figures and the improved banks β balance sheets led to higher banking supply and provided greater room for lending, the latter has progressed at moderate rates. our analyses on lending in economy show that demand remains contracted and the number of worthy projects to lend is still low. the foregoing remains a constant concern for the bank of albania. to this purpose, alongside the banking system, we
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elusive goal, and the depth and breadth of financial markets will invariably be tested in ways that punish the ill - advised and unprepared, the secular trend toward more complete markets is unlikely to abate. cyclical variances, however, are far more difficult to predict with precision. perhaps, then, we should consider the growth in financial innovation as being analogous to moore β s law, which has for more than a generation accurately predicted the growth in computing power of a transistor at constant cost. 7 neither moore β s law nor the development of new financial products is a mathematical or physical certainty based on some geometric extrapolation or law of the universe. rather, it is an ex post description of that which already transpired, an occurrence caused by a healthy mix of investment in human and technological capital, a culture of capitalism, and sound regulatory and legal policies. as a result, meaningful erosion of any these core elements could impair the future evolution of financial products and jeopardize the continued development of markets. conclusion innovations in financial products and practices, combined with strong liquidity, have accelerated the trend toward more complete markets. these changes have altered the roles of traditional financial intermediaries. in so doing, the products and practices of financial intermediation have, in my view, forever changed. as for the financial intermediaries themselves, they will continue to evolve with changing economic and financial risks. indeed perhaps some may retreat to the practices of an earlier era if liquidity falters. in this case, markets may, for a time, become less complete. however, i believe that the advances of intellectual capital and the culture of capitalism will likely continue to increase the ability of markets to transfer risk even as liquidity fluctuates. as policymakers, we should continually review the changing financial landscape. 8 our regulatory and supervisory responses should be as dynamic as the financial intermediaries and the products they proffer, while adhering to our long - standing objectives to promote financial stability, investor protection, and market integrity. in general, our regulatory frameworks should not be based on a product or class of institutions. rather, we should strive to develop common, principles - based, risk - focused approaches that can adapt as intermediaries makes choices about whether to be originators, distributors or owners of risk ( or all of the above ). among the key elements of such approaches are an emphasis on robust stress testing, enhanced counterparty risk management, and
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p l e m e n t a ti o n payment system infrastructures that facilitate retail payment using various real time and 24 / 7 instruments and canals operational hours banks and customers credit transfer implementation various payment instrument bulk, debit transfer implementation fraud detection, aml / cft digital id usage conceptual design development phase 2 development source : bank indonesia international standard money market infrastructure is the focus of bank indonesia β s reform policy in 2021. the development of money markets is carried out end - to - end, from trading platforms, clearing and settlement, to the trade repository ( scheme 20a ). for the trading venue, bank indonesia will follow up on the pbi market operator that was enacted in 2019 with the development of an electronic trading platform ( etp ) both in the market, with the availability of a multimatching trading system on the money market in 2021, and modernization of bi - etp for monetary operations in 2022. likewise, following up on the pbi that we have enacted, the central counterparty ( ccp ) infrastructure development is targeted to be operational starting in 2021 ( scheme 20b ). we believe that the development of etp and ccp will increase interest rate derivative transactions, particularly interest rate swaps ( irs ) and sbn repos, as well as exchange rate derivatives, particularly dndf and foreign currency swaps. the money market infrastructure development is also integrated and interconnected with the payment system infrastructures, both bi - rtgs and bi - fast, as well as the bi - ssss infrastructure which will also be modernized and complied with international standards. we believe that such financial market infrastructure ( fmi ) will increase the transaction volume, lower interest rates, and lower transaction costs so that it is more liquid, efficient, developed, and supporting the effectiveness of monetary policy transmission and the provision of financing to the economy. the development of money market instruments will be further expanded to increase the volume, liquidity, and efficiency of transactions, including instruments for hedging. in the money market, instrument development is focused on the repurchase agreement ( repo ) transaction instruments, interest rate derivatives such as overnight index swaps ( ois ) and interest rate swaps ( irs ), as well as financing instruments such as bank indonesia β s annual meeting 2020 scheme 20a. the development of financial market infrastructure ecosystem supporting the national economy towards indonesia as an advanced country in 2045 real sector financial sector financial market development that supports monetary policy transmission the development
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##rrencies of the euro. hence, the introduction of the single currency has resulted in more efficient and well - functioning markets, which benefit not only euro area residents, but also market participants outside the euro area. furthermore, this market still has great potential since the use of securities finance by the corporate sector, relative to bank finance, is still only about half that of its counterpart in the united states. the single currency also appears to be a catalyst for restructuring the european corporate sector, and for the emergence of new companies. the ongoing integration process of the national stock exchanges has also been supportive in this respect. primary issues of european equities have reached record highs, with whole new markets, such as the neuer markt in frankfurt, becoming prominent internationally. these developments can only favour those companies which may have found it difficult in the past to finance themselves, but which will now be able to raise equity more easily. in addition, a number of europe - wide equity indices have been established, thereby contributing to extending the trading possibilities and the position - taking opportunities for investors. alliances between stock exchanges should also foster the integration of stock market infrastructures. these changes are bound to intensify competition and make european markets more resilient and fit for the global economy. conclusion to conclude, the introduction of the euro has acted as a catalyst for promoting integration of financial markets in europe, and provides an opportunity to create a europe - wide securities market. the result will be more efficiently functioning markets which, in turn, will mean a reduced cost of capital and improved investment opportunities for businesses and individuals. this process will also enhance the depth and liquidity of financial markets, which in turn will promote stability. the european central bank contributes to this stability by pursuing a credible and transparent monetary policy. in fact, a consistent monetary policy that is committed to price stability is the best contribution that the ecb can make to the smooth functioning and integration of european financial markets. such a policy will be beneficial, as it will minimise the adverse effects of inflation and high inflation uncertainty, thereby creating conditions for steady and sound economic growth in the medium term. a stability - oriented monetary policy thus contributes to the smooth functioning of financial markets and to economic prosperity as a whole.
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of course, students β reliance on debt and the returns from graduating vary across educational institutions. of particular interest here is recent work by raj chetty and his co - authors showing that some colleges β some of which can be found in the cuny and california state systems β appear to be much better at fostering economic mobility than others. in other words, they accept relatively large numbers of lower - income students while also producing large numbers of high earners, which means that these institutions facilitate considerable upward mobility. learning exactly how they do it and how it can be replicated strikes me as a first - order question for further study. recent research by caroline hoxby to assess differences in productivity across educational institutions makes important progress in that direction. in summary, academic research on the financing, costs, and returns of higher education is more important now than it has ever been. we are pleased to have many of those researchers participating in this conference. i would like to thank raji chakrabarti and wilbert van der klaauw and the new york fed β s research group for organizing this timely conference, and for bringing together this superb group of scholars. thank you all for your participation. i wish you a very productive and enjoyable conference. 1 betsy bourassa, rajashri chakrabarti, andrew haughwout, and wilbert van der klaauw assisted in preparing these remarks. 2 / 2 bis central bankers'speeches
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luis de guindos : the euro area financial sector in the pandemic crisis speech by mr luis de guindos, vice - president of the european central bank, at the 23rd euro finance week, frankfurt am main, 16 november 2020. * * * i am honoured to open the 23rd euro finance week. my remarks today will focus on two main issues. first, i will provide an overview of the current economic situation in the euro area, and focus on how the pandemic has amplified existing vulnerabilities in the financial system. and second, i will highlight the important role that financial regulation and prudential policy have played in response to the pandemic so far, and argue that further policy measures are needed. an uneven recovery across sectors and countries increases the risks of fragmentation the pandemic crisis has put great pressure on economic activity, with euro area growth expected to fall by slightly less than 8 % in 2020. while the gradual relaxation of social distancing measures created a strong yet incomplete rebound in economic activity in the third quarter, that recovery started losing momentum. the tighter containment measures recently adopted across europe are weighing on current growth. with the future path of the pandemic highly unclear, risks are clearly tilted to the downside. economic uncertainty is being augmented by geopolitical risks, such as the possibility of a no - deal brexit. while its impact on the euro area economy should be contained, such an outcome could amplify the macro - financial risks to the euro area economic outlook. on the upside, news about a potential vaccine fosters hope of a faster return to prepandemic growth levels. the severity of the pandemic shock has varied greatly across euro area countries and sectors, which is leading to uneven economic developments and recovery speeds. countries more heavily affected by the coronavirus crisis and the associated containment measures suffered the sharpest falls in economic activity in the first half of 2020. and growth forecasts for 2020 also point towards increasing divergence within the euro area. the recent european initiatives, such as the next generation eu package, should help ensure a more broad - based economic recovery across various jurisdictions and avoid the kind of economic and financial fragmentation that we observed during the euro area sovereign debt crisis. the economic impact of the pandemic is highly skewed at the sector level. consumers have adopted more cautious behaviour, and the recent tightening of restrictions has notably targeted the services sector, including hotels and restaurants, arts and
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our non standard measures β the full allotment of liquidity at fixed rates, the covered bond purchase programme and the securities markets programme β to be commensurate to the market disruption, in order to improve the transmission of our monetary policy. bis central bankers β speeches some german central bankers say that the ecb β s actions have taken it to the limit of what is defensible, while others say that it has overstepped this limit. we are entitled to use all of the instruments mentioned, since the transmission of monetary policy is at risk if interest rates for β risk - free β monetary and financial investment instruments in the individual euro area countries are hampering our monetary policy. at the same time, we have always made it clear that financial stability is the responsibility of governments. we had to intervene β for monetary reasons β only because for a long time governments did not take their responsibility for ensuring financial stability seriously. have we perhaps gone too far as regards our monetary policy? to answer that, we should look at the policy rates of other currency areas, such as japan or the united states, which are much lower than ours. any comparison with other important advanced economies β central banks shows that we are actually very prudent in our application of non - standard measures. but is that also true of the non - standard measures? again, the comparison is simple. look at the evolution of central banks β balance sheets since the start of the crisis. our balance sheet has increased by around 80 %. on the other side of the atlantic, the equivalent balance sheet has grown by 226 %. none of us can ignore the crisis. drawing on the ideas of the great german thinker max weber, i would say that we have to rely on both the ethic of conviction, which i associate with the interest rate measures, and the ethic of responsibility, which i associate with all the non - standard measures. and we have to do that in a highly responsible way. that being said, did you know that in my own country i was called the β ayatollah of the strong franc β and β tietmeyer β s clone β? you must admit that you find that flattering. it was meant as very harsh and serious criticism by some in my home country. on the other hand, there are also those in germany who are not critical. i was awarded the karlspreis in aachen and the global economy prize in kiel. this was a very great
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mark it's held for the past two years, the longest stretch in five decades. and inflation - as measured by the personal consumption expenditures ( pce ) price index - 1 / 4 bis - central bankers'speeches continued to decline from its 40 - year high of about 7 percent in mid - 2022, reaching about 2 - 1 / 2 percent last year. given that we are in a museum that houses an actual lunar module - and all eyes are on plans to return to the moon - i cannot resist the temptation to use the mission to send astronauts to the moon as a metaphor for the economy. like traveling to the moon and back, inflation shot up, then came back down. and as with the apollo missions, it's the safe return home that's essential. while we've seen great progress toward achieving our goals, the journey is not yet over, and i am very focused on making sure we complete this mission successfully. a strong, more balanced labor market i'm going to spend some time digging deeper into the trends behind both sides of our dual mandate goals. i'll start with employment. as you'll recall, when the economy recovered from the pandemic, the labor market turned red hot. demand for workers far exceeded supply, and that imbalance contributed to rapid wage growth and high inflation. now, the labor market - both in the nation as a whole and here in the second district - has shown signs of returning to something closer to normal. nationally, many indicatorssuch as quits rates and surveys of perceptions of availability of workers and jobs - have returned to around pre - pandemic levels. throughout this process of getting into better balance, the labor market has remained strong. the current unemployment rate of 3. 7 percent is near my estimate for the unemployment rate that is likely to prevail over the longer run. and job growth continues to be solid. despite the very real progress in restoring balance, two important indicators point to lingering tightness in the labor market : job openings and wage growth. job vacancies, which reached all - time highs in the red - hot labor market of 2022, have trended lower since then, but are still quite elevated relative to pre - pandemic norms. and while we have seen measures of wage growth come down from their pandemic - era peaks, they remain above pre - covid averages. the return trip of inflation that leads me to the other side of our
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population. looking back, people used to be concerned about overpopulation. for example, in the first edition of an essay on the principle of population ( 1798 ), thomas r. malthus argued that, even though a population increases geometrically, food increases only arithmetically, and thus population growth constrains an enhancement in the living standard per capita. overpopulation also had been a concern in japan for a long period until recently. 10 in fact, economic growth can be achieved even under a declining population, which might be a headwind for the economy. taking the case of ehime prefecture as an example, gross prefectural product has increased moderately in recent years despite a continuing decline in the following argues that economic growth leads to openness, generosity, mobility, and democracy in a society : friedman, b. m., the moral consequences of economic growth ( new york : knopf, 2005 ). 9 there are arguments that dematerialization has progressed in advanced economies, whereby, despite the economic growth, the consumption of such items as energy and mineral resources as well as the emissions of carbon dioxide have declined. see mcafee, a., more from less ( london : simon & schuster, 2019 ). 10 tadokoro, m., " jinkoron no hensen " [ overpopulation or underpopulation? : japan's discourses on demography in retrospect ], hogaku kenkyu, vol. 84, issue 1 ( january 2011 ) : 63 - 90. total population in the prefecture ( chart 15 ). an international comparison shows that there is no correlation between the real gdp growth rate per capita and the population growth rate ( chart 16 ). aside from that, there is no correlation between the inflation rate and the population growth rate either. looking from the supply side, sources of economic growth roughly can be divided into three elements : capital, labor, and knowledge in a broad sense, including technologies and skills. among these, knowledge is definitely important in achieving economic growth. in the first place, before we use capital and labor, we need a certain level of knowledge to decide what kind of goods and services to produce and consume. even during the post - war rapid economic growth period in japan, the contribution of labor input was small while that of capital and knowledge was large ( chart 17 ). with regard to labor, the current increase in labor force that reflects a decline in the number of unemployed and an increase
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s fiscal rule. michel strawczynski and joseph zeira will examine the cyclicality of fiscal policy in a broad set of emerging market economies, and will analyze whether the dynamics they observe can be characterized using aguiar and gopinath β s distinction of permanent and temporary shocks. i would like to thank the organizers, jordi gali and luis felipe cespedes, for putting together this first - rate programme, and yan carriere - swallow and the department of institutional affairs for coordinating the logistics that have made this event possible. i look forward to two days of engaging presentations and fruitful discussions. thank you.
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horizon. we are taking into account the different factors affecting the outlook, such as the behavior of the exchange rate, the strength of the expansion of demand and activity, and the perspectives of lower interest rates in the world, among others. two years into the crisis, the world economy has entered a new stage, in which fiscal policy is increasingly being discussed. the joint effects of monetary and fiscal policy have been central in averting a much deeper crisis. however, disentangling the effects of each one on the economy β s performance and determining the best course of action remains the topic of heated debate within academia and in policy circles, in particular, on the speed and timing of the fiscal retrenchment. this is largely dependent on the strength of each country β s fiscal accounts. the ten papers to be presented during the conference will be organized into three sections. the first will assess the effects of fiscal policy on macroeconomic outcomes. the first contribution to this section, by tommaso monacelli, roberto perotti and antonella trigari, will focus on the effects of tax cuts on the labor market. joachim voth will present work that analyzes the extent to which fiscal retrenchment can take place before civil unrest is provoked. rodrigo caputo and miguel fuentes will examine the long - run effects of fiscal transfers and investment on the real exchange rate in a broad panel of countries. mauricio villafuerte, pablo lopez - murphy, and rolando ossowski will close with an examination of fiscal policies among resource - exporters in latin america and the caribbean. the second section will investigate the interactions of fiscal and monetary policy. in the first presentation, gauti eggertsson will analyze how the fiscal multiplier is affected by the degree of coordination between the fiscal and monetary authorities. then, giancarlo corsetti will question the conventional wisdom that fiscal policy is more expansionary under a fixed exchange rate than under a floating regime. finally, luis felipe cespedes, jorge fornero, and jordi gali will present a paper that estimates the effects of chilean fiscal policy on consumption and income using a framework that relaxes the assumption of ricardian equivalence. the final section will focus on fiscal policy in emerging market economies. jeffrey frankel will discuss the structural fiscal spending rule implemented in chile in 2001. eduardo engel, christopher neilson, and rodrigo valdes will conduct a welfare analysis of the effects of chile β
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the precise level of interest rate are not only likely but an indication that policy is broadly on - track. that is why the motto of the mpc should perhaps be β divided we stand, united we fall β. some commentators have been unable to resist labelling members of the committee as either β hawks β or β doves β. there is a fundamental problem with this labelling. it makes no sense in the new system to describe individuals as hawks or doves. each member of the committee has the same inflation target. unlike some other central banks, mpc members cannot entertain closet views about the attractions or dangers of slightly higher or lower inflation. their task - to which they will be held personally accountable - is to hit the government β s inflation target. so members of the committee vote on interest rates according to the economic data, which change from month to month, and the analysis of those data. no one takes a position that higher interest rates are a good or a bad thing out of principle. if you drove past an infant school at 40mph, you might well be described as driving dangerously fast. but if you drove at 40mph on a motorway, you might well be described as driving dangerously slowly. actions must be judged in the light of the circumstances. in terms of monetary policy, that means that the positions which members of the mpc take on interest rates will change over time according to the way the economy evolves. but if interest rates themselves cannot be predicted, because they depend on changing economic data, what should be predictable is the way mpc members respond to those data. a predictable β policy reaction function β, to use the jargon, should, over time, diminish the interest which market commentators take in the meetings of the mpc and direct that interest to what is happening in the economy. so, as the voting record shows, it is seriously misleading to think of the mpc in terms of fixed camps of β hawks β and β doves β. as circumstances change, it is easy to imagine that the β hawks β shall be β doves β and the β doves β shall be β hawks β. and, over a five year period, since each member of the mpc is trying to hit the same inflation target, i predict that it will be impossible to distinguish between β doves β and β hawks β. what will the commentators call us then? if britain either has or is about to join monetary union, then the birds
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, our intention is to apply the β same risk, same regulatory outcome β approach in the uk. the government has announced its intention to legislate in the current session of parliament to update the powers of the bank of england and the financial conduct authority to regulate and supervise stablecoins. we hope to issue a consultation document on the regulatory policy framework later this year. taken as a whole, the uk authorities have made clear that they are prepared to see stablecoins β issued by either banks or non - banks - operate in the uk, provided they are properly regulated and supervised [ 9 ]. this should not, however, be interpreted as any weakening in standards for risk mitigation. i doubt any of the stablecoins currently in operation in other jurisdictions would meet the necessary standards for operation at systemic level in the uk β whether in the crypto world, should that become systemic, or in conventional financial services. and this brings me to my final lesson β that innovation and regulation are, in the end, friends not enemies. as i said earlier, the initial use cases for the technologies developed in the crypto world, such as speculative crypto assets, may have a limited future. but we can see that a range of other use cases are being proposed and developed in both the crypto and the non - crypto world. on the retail side, while libra / diem, the most high profile proposal for stablecoins for retail payments, including cross border, has withdrawn, a number fintechs and established firms are exploring the potential for technology in this area. similar exploration around tokenisation and dlt is happening in the area of wholesale payments. a separate but rapidly developing field is the deployment of crypto technologies and smart contracts in the exchange, clearing and settlement of financial securities. today, in mainstream finance these activities are carried out in sequence by separate entities at significant cost. however, some of the protocols that have begun to be developed in the crypto world have pointed to the possibility of collapsing these activities into a single entity and automating through the use of smart contracts. if successfully developed, such technologies could simplify the network of relationships that need to be maintained for trading in shares and bonds and lead to lower costs, greater speed and greater transparency for end investors. of course, the automation of activities through a smart contract raises many questions about how firms and regulators ensure appropriate risk management and resilience. in the uk, the authorities are to establish a
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bank β are strongly encouraging financial institutions and corporations that use derivatives contracts referencing libor to review and, wherever practical, adhere to the isda protocol. [ 5 ] so if you haven't already signed the protocol, we'd urge you to do so as soon as possible. there is also a lot of good work going on across industry to develop robust fallbacks for non - derivatives products. this must proceed in a timely way so that these other contracts are also protected when libor ends after 2021. some more details last year the fsb published a global transition roadmap. this describes all of the steps involved and the relevant timelines for financial market participants. [ 6 ] for example : by now you should have identified and assessed all existing libor exposures and be following a detailed plan to manage your transition before the end of 2021. financial institutions should already be offering non - libor linked loans to their customers. if your bank is not doing so, ask why. if you are not satisfied, find a bank which does offer such products. firms should also adhere, if they haven't already, to the isda ibor fallbacks protocol. by the middle of this year, firms should have established formal plans to amend legacy contracts where this can be done. they also need to have implemented the necessary changes to their systems and processes to enable transition to robust alternative rates. asic, apra and the reserve bank have published a more detailed checklist of the range of things you need to include in your transition plans. [ 7 ] if you follow these steps in a timely manner, your institution will be ready for the end of libor. banks'libor transition plans are proceeding. progress in stakeholder education and the required changes to contracts, systems and processes is in train. it was very pleasing to see overall notional exposures to libor declining over the course of 2020 for the key australian institutions. it was disappointing though to see that exposures had increased at some individual institutions. that needs to reverse course over the next 9Β½ months. regulators everywhere β including in australia β will be taking action as required to ensure that risks are appropriately managed. key libor messages in short, by the end of 2021, institutions must have already transitioned to alternative reference rates, and for existing contracts where that's not possible, robust fallback provisions must be in place to make clear what the replacement rate will be when libor ends. any firms that have not done
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. in such a situation, the central bank had no way to act as lender of last resort. it could buy in government bonds, but the banks with bonds to sell are not the ones with liquidity need. money did not go round. in such a situation, if instead the market for corporate bonds had existed, financial institutions would have had some corporate bonds in hand - instead of just boxes of loan contracts. they could have sold the bonds. they might incur some losses. but at least they can look after themselves in the midst of crisis - regardless of the perception about their credit. the local bond markets in emerging asia, therefore, is an important safeguard that can help prevent a crisis. and since we want the asian countries to become more and more closely linked, lack of crisis is certainly good news. the bond market is a much better channel for capital flow than the bank channel. if capital comes in through the banks, foreign lenders may lend too much. they may bet on the eventual government bail out. on the other hand, if it comes through the bond market and if it is transparent and well - managed, resource allocation could be improved. however, for the local bond markets to be attractive to foreign investors, one has to accomplish many things. harmonization of standards and codes to international best practice must be done. hedging markets must be available for both currency risk and interest rate risk, and this may mean a rethink on capital controls. perhaps a gradual step - by - step relaxation in needed. transparency is also required both in price discovery and the management of both the macroeconomy and the individual corporates. the legal system must respect creditors β rights, and for investment products to be available for sale across asian countries, a uniform single passport of consumer production by the sec β s must be made. now comes the final question. what is the purpose of the asian bond fund? you may recall that the asian bond fund was announced on 2 june 2003 at us $ 1 billion by 11 central banks in east asia and pacific countries. initially it will invest in sovereign and quasi - sovereign bonds issued by asian governments in the international markets. this by itself already sparked a keen interest in asian bonds. i know of at least one asian central bank that had not invested in asian bonds before, other than in jgb β s, but has now started buying directly in addition to investment in the asian bond fund. thailand is now looking at doing this also.
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level of employment that is consistent with price stability was higher than most previous estimates. our flexible inflation - targeting framework contemplates seeking or probing for maximum sustainable employment in the right circumstances. when we do this, we will be transparent, communicating that we are probing and what we are seeing in our labour market and inflation indicators as we do so. communication is key this brings me to the final, and very important, point. we know that monetary policy works better when people understand it. this starts with a clear mandate. and it is enhanced by transparency. the move toward increased transparency by central banks over the past 30 years has increased the credibility and effectiveness of monetary policy. by explaining how our decisions link to our mandate and by delivering low inflation for 30 years, our monetary policy framework has earned the trust of canadians. to keep that trust, we will be clear about how we are implementing flexible inflation targeting. because monetary policy needs to be forward - looking, our decisions and our communication are anchored by our inflation forecast, our interpretation of incoming data relative to that forecast, and our assessment of the risks. 11 this will include how a broad set of labour market indicators are affecting our estimates of potential output and our assessment of inflationary pressures. we will continue to use the flexibility built into our framework when that flexibility will help us better manage risks and achieve our mandate. and when we use that flexibility, we will be clear about why and how we are using it. you will see it in our inflation forecast, and we will discuss it relative to incoming data and our assessment of the risks. 11 see bank of canada, β box 10 : evolving communications, increased transparency, β monetary policy framework renewal ( december 2021 ) : 72 β 74. conclusion it β s time to conclude. our monetary policy framework has delivered prosperity to canadians by keeping inflation very close to 2 percent, on average, for 30 years. flexible inflation targeting is well understood and broadly supported by canadians. and the credibility of the target helps to stabilize both inflation and output. this agreement reaffirms our commitment to price stability and the 2 percent target. this is the framework we need now as we face elevated inflation and the challenge of reopening the economy. looking beyond the pandemic, the renewed agreement also articulates clearly how we will continue using the flexibility in our framework to address future challenges confronting our economy. it explains how we will use our extended set of monetary policy tools when needed. and it outlines how we
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##gilant in following the array of indicators i have mentioned. we must not undermine the solid basis of low inflation and low interest rates that has been established in canada.
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, i must recognize and thank president harker for his forward - looking leadership. the third district and the federal reserve system are both better for his service. pat, thank you! to close, thank you again for allowing me these few moments to start the day. i look forward to today's discussion and to our conversations. 1 these remarks represent my own views and are not necessarily those of my colleagues on the federal reserve board or the federal open market committee. 2 / 3 bis - central bankers'speeches 2 michelle w. bowman, " innovation in the financial system " ( speech at the salzburg global seminar on financial technology innovation, social impact, and regulation : do we need new paradigms?, salzburg, austria, june 17, 2024 ). 3 / 3 bis - central bankers'speeches
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my next subject. 42. most of us here can remember when basic online banking was a novelty, and how we faced new challenges in cybersecurity. in the years to come, we are going to see continued transformation. we have already issued licences for eight virtual banks. 43. i believe we are only just starting to see the beginning of this. the future could be one where physical bank branches are just a memory β like public telephones on the street. artificial intelligence ( ai ) will lead to all sorts of possibilities in terms of client - behaviour and data analytics, and probably in areas we do not even anticipate. 44. the potential is in some ways very exciting, but it also raises all sorts of concerns. cybersecurity and data privacy are ones we all already face. but what about the possible implications for risk management? we do not know where new technology might lead us β so by definition we cannot predict what the risks will be. and what about the human factor in the relations between banks and customers? an ai system may be very smart, efficient and accurate β but will it have an understanding of morality? can it make the right ethical judgement? can it have a sense of fairness or decency? 45. i must be honest and say i cannot answer these questions. but it is clear that new capabilities for technology will require new capabilities from people. the industry could be entering a very different dynamic, where what is now a decade of change takes place in a year. culture 46. this is going to put new burdens on all of us. i believe that, more than ever, we will need a basic sense of purpose to help us keep everything in perspective. that brings me to my last subject β that of culture. 47. such qualities as integrity and respect are essential to maintain the community β s trust in the financial system. and, to be honest, this is one area where the hkma cannot impose its will 4 / 5 bis central bankers'speeches on banks. we can push banks to do many things β but cannot enforce morality. 48. i am always reminded of the words of baroness onora o β neill β the british academic and philosopher. she said, i quote, that β overuse of regulation leads to the formula β legal equals right β β. in other words, if the industry focuses only on complying with hkma rules and statutory laws, it will assume all other possible behaviour is legitimate and acceptable. in
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policy globalization index. data on social expenditure are oecd.
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β¬10 β more than nine months ahead of the launch. this should allow sufficient time for the machines to be adapted by 25 november. in addition, the ecb and the national central banks will conduct an information campaign addressing everyone who handles banknotes so that they will be able to recognise the new note and its security features. the new β¬20 note is the third denomination in the europa series that is gradually replacing the original euro banknotes introduced in 2002. it will be followed, over time, by new versions of the β¬50, β¬100, β¬200 and β¬500 notes. thank you for your attention. i now have the pleasure of signing the new β¬20 banknote. bis central bankers β speeches
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##preciate? south africa β s reserves, at just over usd42 billion, are relatively low for that type of exercise. furthermore, pegging the rand to the us dollar would not imply an automatic peg to other currencies, such as the eur, which is the currency of our biggest trading partner bloc. pegging also has the problem that if prices and wages are increasing, any competitive advantage will soon be eroded and there will be calls for changing the peg. aggressive reserves accumulation either in the context of a peg or to prevent or moderate appreciation also carries significant costs, given the wide interest rate differential between the interest paid on sterilization and the interest earned on reserves. this results in a negative cost of carry and places the bank β s income position at risk. the bank recorded a loss of approximately r1, 0 billion during the 2009 / 10 financial year. it is however important to point out that this loss was incurred as a direct result of the bank executing its public policy responsibilities rather than owing to any inappropriate risk taking or wasteful expenditure. over the past year, the bank continued to purchase foreign exchange as part of its strategy to steadily increase the level of foreign exchange reserves. gross reserves increased by approximately usd8, 0 billion from april 2009 to usd42, 3 billion in april 2010. the international liquidity position increased by usd5, 0 billion to usd38, 5 billion over the same period. apart from foreign exchange purchases by the bank, this increase in official reserves was also due to foreign currency deposits from government, the allocation by the imf of sdrs to south africa and valuation adjustments. although valuation adjustments contributed positively to reported usd official reserves over the financial year, there were periods where the bank published substantial declines in the level of reserves due to valuation losses stemming from the diversified nature of reserves in terms of currencies. the financial markets department continued to enhance reserves management policies in order to adjust and streamline our investment strategies. the investment policy, which provides a strategic and operational framework for reserves management, was reviewed during 2009 / 2010. the investment policy is reviewed every three years for governance purposes and also to ensure that it is responsive to and keeps pace with changes in the reserves management activities of the bank and the external environment. the recent global financial crisis provided an ideal opportunity to incorporate into the policy the lessons learned, while also aligning the policy with refinements to international best practice. conclusion the turmoil experienced in the euro zone with regard to sovereign
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emerge from the recent revision of the u. s. national income data is that, in recent quarters, household saving has been higher than we thought β averaging near 6 percent of disposable income rather than 4 percent, as the earlier data showed. 3 on the one hand, this finding suggests that households, collectively, are even more cautious about the economic outlook and their own prospects than we previously believed. but on the other hand, the upward revision to the saving rate also implies greater progress in the repair of household balance sheets. stronger balance sheets should in turn allow households to increase their spending more rapidly as credit conditions ease and the overall economy improves. household finances and attitudes also bear heavily on the housing market, which has generally remained depressed. in particular, home sales dropped sharply following the recent expiration of the homebuyers β tax credit. going forward, improved affordability β the result of lower house prices and record - low mortgage rates β should boost the demand for housing. however, the overhang of foreclosed - upon and vacant housing and the difficulties of many households in obtaining mortgage financing are likely to continue to weigh on the pace of residential investment for some time yet. in the business sector, real investment in equipment and software rose at an annual rate of more than 20 percent over the first half of the year. some of these gains no doubt reflected spending that had been deferred during the crisis, including investments to replace or update existing equipment. consequently, investment in equipment and software will almost certainly increase more slowly over the remainder of this year, though it should continue to advance at a solid pace. in contrast, outside of a few areas such as drilling and mining, business investment in structures has continued to contract, although the rate of contraction appears to be slowing. although most firms faced problems obtaining credit during the depths of the crisis, over the past year or so a divide has opened between large firms that are able to tap public securities markets and small firms that largely depend on banks. generally speaking, large firms in the most recent survey is available on the board β s website at www. federalreserve. gov / boarddocs / snloansurvey. data are from the national and income product accounts produced by the bureau of economic analysis, u. s. department of commerce. good financial condition can obtain credit easily and on favorable terms ; moreover, many large firms are holding exceptionally large amounts of cash on their balance sheets. for these firms,
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management groups for each systemically important institution. their role is to assess a bank β s resolvability and to support the process of recovery and resolution planning. the third element is a specific resolution strategy. this is the key component of resolution planning. the strategy will be chosen according to the respective business model. in the same vein, we need to establish the single resolution mechanism as a central pillar of the european banking union. it will be a quantum leap if the bail - in principle is generally accepted as it is foreseen by ecofin. if banks incur losses in the future, shareholders and bis central bankers β speeches creditors will be first in line to bear these losses ; the taxpayer, on the other hand, will be last in line. if the bail - in principle is implemented as currently foreseen, bail - ins are going to become the rule, bail - outs the exception. with the envisaged general acceptance of the bail - in principle, an important necessary condition for a return to the fundamental principle of market economies will be fulfilled : control and liability will be in balance, those who make the decisions will bear the costs. 4. redrawing the lines between the state and banks : capital buffers are essential i argued how important it is that the single resolution mechanism be applied effectively in the spirit of the bail - in principle. as i mentioned earlier, the bail - in threat can only be credible if the costs of the failure of a systemically important bank are significantly reduced. without reducing these costs, the bailin threat would be questionable. the overall costs of a failure would be greater than the costs of a bail - out. hence, establishing effective resolution procedures and reducing the overall costs of a bank failure are two sides of the same coin. this is where good bank capitalisation comes into play. it is the other side of the coin. good regulation should directly address the key problem. if the system is too fragile, an important and direct measure to reduce fragility is to have enough capital. with the basel iii requirements, regulation is taking an important step in the right direction. banks have to hold not only more capital but also capital of a higher quality. the system is therefore more resilient now compared with the situation after the lehman insolvency. and german banks are going to anticipate the higher regulatory requirements of basel iii. good capitalisation will have the positive side effect of reducing many of the wrong incentives and distortions
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globalization, journal of economic perspectives, vol, 18, no 3 summer 2004 ( forthcoming ). ladies and gentlemen, by attending this workshop and contributing to it, you have shown your interest in all these issues. i very much welcome your active participation. thank you once again for coming. last but not least special thanks go to the kiel institute for world economics for its hospitality and cooperation and to claudia buch and heinz herrmann for their excellent teamwork in organising and presenting this workshop on multinationals and international integration. our experience here in kiel and with the institute have stimulated us in frankfurt to intensify our research activities. as our new president at the bundesbank is a driving force in research i would like to pass on professor weber β s warmest regards.
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- bills / cmbs of the average month - end stocks need to reviewed as the market has grown significantly during recent years and the prescribed turnover ratios are far too low at present. ( c ) market development ( i ) widen investor base : it is the responsibility of the primary dealers to provide liquidity in government bonds as well as interest rate products. in order to do so, pds need to make efforts to widen the investor base, distribute securities more efficiently and bring in retail and mid - segment investors. reserve bank has imposed targets for retail and mid - segment business, but pds must cultivate the clients as a business opportunity rather than regulatory compulsion. even now certain entities are depending on brokers to buy g - sec at high costs. pds need to expand their reach and pds reluctance to do so in this technology driven era raises fundamental questions relating to their commitment. ( ii ) develop interest rate derivative markets : another aspect of market development is to deal in interest rate derivatives and provide liquidity. as entities dealing in interest rate risk, it is surprising that pds are not active in using the derivatives for hedging and trading. irs market is still dominated by select foreign banks. reserve bank permitted cash settled interest rate futures ( irf ) on 10 - year government of india security with settlement price based on a single benchmark bond after extensive consultations with stakeholders. the irf has received reasonably good response from the market with average trading volume at around rs. 3000 crore. however participation is not widespread as many market participants including pds are yet to start using the product. pds, as expert investors are expected to actively use the available products to hedge. this would perhaps call for pds warehousing more securities for market making. the interest rate risk that this may entail needs to be mitigated through greater participation in the irf market. why this is not happening needs serious soul searching. ( iii ) market intelligence : debt management operations of the sovereign, especially large scale borrowings can be accomplished only with active engagement with all stakeholders. bis central bankers β speeches we have been meeting the market participants regularly and exchanging views on several issues such as auction calendar, demand, maturity of instruments, introduction of new products etc. pds have been great sources of information and provided valuable inputs while preparing the auction calendar and introducing products like inflation indexed bonds, interest rate futures etc. we would like to keep the channel of communication free and open. ( iv ) prevention of
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primary dealer business is exposed to interest rate cycle and adverse movements would expose their balance sheets to losses. further, geopolitical and economic risks and consequent volatility in domestic or international financial markets could potentially damage the financials. this risk is amplified for standalone pds due to small balance sheet size. it is essential that pds have strong financials and risk management capabilities. in order to protect pds from downside risks, reserve bank has allowed pds to diversify their businesses. however, only a couple of pds have diversified. bis central bankers β speeches the pd boards must review the corporate strategy and de - risk the business from vagaries of interest rates and financial market volatility. ( iv ) exclusivity : an issue that has been debated for some time is whether we can think of exclusivity to primary dealers. exclusivity would enable issuer to sell bonds easily and also strengthen primary dealers. however, exclusivity gives commercial advantages and this aspect must be kept in mind in a market where major investors have regulatory and statutory mandate to invest in government securities. in a situation, where some of the primary dealers are banks, exclusivity would mean that level playing field does not exist for access to slr assets. further, standalone pds with small balance sheet size and limited holding capacity need to reflect on huge demands exclusivity would impose on them, given the large size of issuances. ( b ) market making primary dealers are mandated to make markets in g - sec and provide liquidity. however, market making efforts of pds are limited to few liquid bonds. once rbi starts rolling down the htm limit, forcing churning of portfolio by banks, particularly in the public sector, pds get to play a more active role in market making. gandhi working group had recommended that one of the ways for improving liquidity is to consider allocating specific securities to each pd for market making and, if required, rotate the stock of securities among the pds at periodic intervals. this would ensure continuous availability of prices for a select group of securities. reserve bank is in consultation with government and pdai to operationalise this recommendation. initially semi - liquid securities would need to be chosen. we plan to operationalise the market making scheme in the next fiscal and expect significant improvement in liquidity. in this context, the present annual minimum turnover ratios of 5 times for government dated securities and 10 times for t
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the place where securities are issued do not affect investors β clearing and settlement costs. it also means that the conditions at which banks obtain central bank money is not affected by the location of the securities they use as collateral. purely domestic retail payments as well as clearing and settlement activities in the eu are relatively cost effective and safe, but there is still progress to be made as regards cross - border arrangements. we at the ecb have a particular interest in the clearing and settlement infrastructure because of its role in the implementation of monetary policy. moreover, a major malfunctioning in this area might have important implications for the financial system at large and threaten financial stability. the ecb is active in this field in various ways. first, through the development of target 2. integration in payment systems and the euro money markets was achieved very quickly after the introduction of the euro because of the existence of target, the large - value payment system operated by the eurosystem. this will soon be replaced by target 2, which will reinforce the benefits from a common infrastructure. it will also provide for a harmonised level of services and a single price structure. target 2 is a clear illustration of how public authorities can contribute to financial integration by providing a common technical infrastructure. the second way the ecb is active in this area is through the removal of the remaining obstacles to integration. the report prepared by the group headed by alberto giovannini identified three types of barriers to efficient and competitive markets : differences in technical requirements and market practice ; tax differences ; and issues relating to legal certainty. for its part, the ecb contributes to removing these obstacles mainly by acting as a catalyst for improvement and by encouraging discussion among the relevant players. we also try to harmonise our central bank procedures and operations, which is beneficial to integration. finally, we also contribute to an integrated regulatory and oversight framework for clearing and settlement. we set risk management standards for the securities settlement systems that are used for our credit operations. we also regularly assess the systems that hold collateral for our operations. in a broader perspective, given the potential effects of the failure of a major clearing and settlement system, we think that public standards for risk management are essential. the escb, in co - operation with the committee of european securities regulators, is currently developing such standards for eu clearing and settlement systems. assessment of the progress that has been made in cross - border banking i remain very much convinced that the framework to foster financial integration in europe is now largely in place. my
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for integration. the timely finalisation of the fsap is a very impressive achievement. its full benefits will now be reaped if the rules are implemented and enforced consistently among member states. in this process i see a crucial role for the lamfalussy approach to financial regulation and supervision. this new framework provides for the establishment of sectoral committees of national authorities to pursue a consistent implementation of european rules. the new arrangement will be very valuable for the fsap, but also for the eu regulatory provisions in general. the lamfalussy approach addresses the supervisory challenges arising in more integrated financial markets. banking groups that perform a lot of their business in other member states rightfully expect to face similar attitudes and procedures of national supervisors. this is crucial for alleviating their compliance costs and also to ensure that no major competitive distortions are introduced through widely diverging supervisory practices. it is also a precondition for further cross - border activity. regulatory convergence, which applies to high - level principles, has therefore to be complemented by supervisory convergence. in other words, in the day - to - day practice the high - level principles have to be consistently implemented by supervisors. national authorities must therefore step up their information exchange and identify best work practices. moreover, closer co - ordination of supervisory actions is needed, especially for the major eu financial groups. the lamfalussy approach will not only foster financial integration, but also help to preserve financial stability. in integrated financial markets, risks can more easily spread from one institution to another and from one country to another. the so - called β systemic risk β is therefore no longer confined to one member state but has to be looked at from an eu - wide perspective. the role of the committee of european banking supervisors to enhance the cross - border exchange on individual institutions is therefore certainly important. at the same time, the cebs β s work is complemented by that of the escb β s banking supervision committee. the bsc closely monitors developments in the european financial system from a macro - prudential perspective. it has also been working successfully on arrangements of co - operation in the area of financial crisis management, another important dimension of financial stability. financial infrastructure i now come to the third important element of a robust framework for financial integration and that is often unknown to the general public, namely clearing and settlement. this particular infrastructure lies at the core of all financial markets and is indispensable for their proper functioning. integration here means that
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ravi menon : regional safety nets to complement global safety nets welcome remarks by mr ravi menon, managing director of the monetary authority of singapore, at the opening ceremony of the asean + 3 macroeconomic research office ( amro ), monetary authority of singapore, singapore, 31 january 2012. * * * director, amro, wei benhua, counselor, amro, yoichi nemoto, head, civil service and permanent secretary ( finance ) peter ong, distinguished guests, ladies and gentlemen. good morning. genesis of the chiang mai initiative 1. twelve years ago, we took the first steps in a momentous journey that has led us here today. 2. it was the aftermath of the asian financial crisis. the crisis had ravaged several economies in the region and was a wake - up call to all of us. rapid economic growth was not enough. to sustain growth and foster stability, sound macroeconomics and strong financial supervision mattered. asian economies had to get their domestic acts together. and they did, with painstaking reforms over the last 15 years. so, when the global financial crisis hit asia in 2008 / 2009, asian economies were shaken, but did not keel over. 3. the crisis taught us another lesson : had the region better harnessed the resources it had available, it might have been in a stronger position to deal with the crisis. it was this conviction that provided the impetus for the first proposals for a regional financing arrangement. 4. and so, in may 2000, the finance ministers of asean + 3 gathered in the idyllic city of chiang mai in the highlands of northern thailand, to discuss the establishment of a network of bilateral swap agreements. thus was born the chiang mai initiative. by october 2003, thirteen bilateral swap agreements had been successfully concluded, with a combined total size of roughly us $ 35 billion. 5. in may 2007, asean + 3 finance ministers agreed to transform these bilateral agreements into a multilateral agreement that would also provide a platform for mutual surveillance and dialogue. the chiang mai initiative multilateralisation, or cmim, thus came into being in march 2010, with a war chest of us $ 120 billion. the cmim operates as a common us dollar liquidity pool. a member state facing balance - of - payments or external liquidity problems can swap its local currency for us dollars from this pool. the size of the swap can be up to a fixed multiple of its contribution. 6. today marks another important milestone in that journey β the opening
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lim hng kiang : metamorphosis β singapore as a global capital for asian risk transfer official keynote address by mr lim hng kiang, minister for trade and industry and deputy chairman of the monetary authority of singapore, at the 14th singapore international reinsurance conference, singapore, 1 november 2017. * * * opening distinguished guests, ladies and gentlemen, a very good morning to all of you. 2 i am delighted to be here with you today at the 14th singapore international reinsurance conference. 3 this year β s conference is significant because this is the first year the sirc becomes an annual event. it is a milestone worth commending as the sirc is now finally able to serve as a platform for annual renewals, much like the monte carlo rendez - vous and baden - baden meetings of the east. and this is just the beginning. in the longer term, i am confident that the sirc can be built up into an annual gathering of key global and regional industry practitioners, meeting to discuss key issues facing the industry, and charting out future growth directions. 4 the sirc β s journey reflects the transformation of the singapore reinsurance industry over 20 years β from starting out as a domestic market in the early days, to going through market liberalisation in 2000, to being a regional insurance powerhouse in 2010, and now to becoming a global insurance marketplace going into 2020. 5 singapore is now widely recognised as the leading specialty insurance and reinsurance hub in asia. we are home to : four of the top five global insurance players ; a vibrant ecosystem comprising a strong brokers β cluster where nine out of ten of the top global brokers are based here ; the largest captive community in asia pacific ; a growing concentration of more than thirty specialty players ; and the largest grouping of lloyd β s syndicates outside of london, with 26 syndicates. reflecting the increasingly important role of non - life insurance in driving overall industry growth : the share of offshore non - life insurance as a proportion of total non - life insurance premiums has increased steadily, rising from 60 % in 2010 to close to 70 % in 2016. over one - third of offshore premium flows are attributed to specialist lines of business, such as large and complex property, marine, construction and engineering, energy, financial lines and agriculture. insurance companies are gradually anchoring more global and regional positions in singapore, and most asian risks, including large reinsurance programmes and specialty risks, can now be fully placed in singapore. singapore
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have fallen further. low interest rates abroad influence the krone and thereby the prospects for inflation, contributing to low interest rates also in norway. in december last year, norges bank cut the key policy rate by 0. 25 percentage point to 1. 25 percent. in our assessment, norges bank gave weight to the weakening of the growth outlook for the norwegian economy and attached importance to countering the risk of a pronounced downturn due to lower oil prices. last week, norges bank presented its latest monetary policy report with updated projections for developments in the norwegian economy and a new assessment of the orientation of monetary policy. developments in the norwegian economy this winter have been broadly in line with expectations. inflation remains close to 2. 5 percent and unemployment has remained stable. so far, the effects of the fall in oil prices on the real economy have been relatively small. however, the outlook for the norwegian economy has weakened somewhat. oil prices have continued to fall and activity in the petroleum industry appears to be declining more than previously assumed. wage growth in 2014 was lower than projected and there are prospects that wage growth will also be lower ahead than projected earlier. this will lead to lower inflation further ahead. at the same time, house prices continue to rise rapidly. this may increase household vulnerability and may trigger or amplify an economic downturn further ahead. the executive board decided to keep the key policy rate unchanged at 1. 25 percent. if developments in the economy ahead prove to be broadly as projected, there are prospects that the key policy rate will be lowered. bis central bankers β speeches the analysis in the report suggests a key policy rate of approximately 1 percent in the coming years, followed by a gradual increase. the analysis suggests that inflation will increase somewhat in the coming quarters before edging down and lie slightly above 2 percent later in the projection period. capacity utilisation in the mainland economy is projected to decline further, before returning to a more normal level. let me summarise. after the global financial crisis, the norwegian economy quickly rebounded, supported by robust public finances and strong growth in the petroleum sector. since last summer, oil prices have fallen. activity in the petroleum sector has probably passed the peak. so far, the impact on the real economy has been modest. at the same time, the norwegian economy is facing new challenges. vulnerabilities established during the golden years must be addressed. from being in a unique economic position, norway is now headed for a period of restructuring
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ΓΈystein olsen : the conduct of monetary policy introductory statement by mr ΓΈystein olsen, governor of norges bank ( central bank of norway ), at the hearing before the standing committee on finance and economic affairs of the storting ( norwegian parliament ), oslo, 19 may 2016. * * * please note that the text below may differ from the actual presentation. thank you for the opportunity to report on the conduct of monetary policy. my introduction here today is based on norges bank β s annual report for 2015 and our monetary policy assessments up to the monetary policy meeting last week. chart : inflation monetary policy in norway has since 2001 been oriented towards keeping inflation low and stable. the operational target is consumer price inflation of close to 2. 5 percent over time. over the past 15 years, inflation has averaged around 2 percent. this is close to the target. norges bank operates a flexible inflation targeting regime, giving weight in our interest rate setting to developments in output and employment as well as inflation. the effects of monetary policy are uncertain. this normally suggests proceeding with caution. as monetary policy also seeks to be robust and take account of the risk of particularly adverse outcomes for the economy, the tasks of monetary policy should include contributing towards mitigating the risk of a build - up of financial imbalances. over the past year, monetary policy in norway has to a great extent been influenced by weaker economic growth, resulting from the fall in oil prices and lower activity in the petroleum industry. to counteract the decline, the key policy rate has been reduced by a total of 1 percentage point since december 2014. the key policy rate is now 0. 5 percent. a small open economy such as norway is also influenced by the world around us. norway β s low interest rate level is largely a consequence of low interest rates abroad. chart : global growth projections growth in the global economy has been low in recent years, partly reflecting long - term trends such as lower productivity growth and demographic changes. long - term interest rates abroad have shown a falling trend since the 1980s. over the past few years, the repercussions of the financial crisis and the need for deleveraging in many countries have weighed on growth. while the moderate recovery in advanced economies continued last year, growth in china and other emerging economies slowed. in its april world economic outlook report, the international monetary fund ( imf ) revised down its global growth forecasts yet again. at the same time, the imf
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in business models and a recovery of profitability. internationally, the authorities are determined to complete the reform of the rules on banks β prudential requirements ( basel iii ) as soon as possible ; their intention is to avoid at the same time significantly increasing overall requirements. finalizing the reform will help to dispel the regulatory uncertainties that currently hamper the process of consolidation. the governance reforms introduced recently in italy facilitate this process ; they are starting to bear fruit. other such operations will follow the important merger of two ( former ) cooperative banks completed in recent weeks. the transformation into joint stock companies of the cooperative banks affected by the 2015 reform must be completed by the end of this year ; it should help them to strengthen their capital, restore profitability and improve credit quality. as regards mutual banks, the reform envisaging the creation of cooperative banking groups makes their strengthening much easier ; it should be implemented without delay. * * * the difficulties facing the italian banks will be solved all the more easily the sooner the economic recovery gains a firm footing : non - performing loans will be disposed of more quickly and the recovery of profitability will be less complex. the improved economic outlook would make it possible for saving to fund business investment. for the economy to return to a path of stable growth, however, capital accumulation must, crucially, resume at a more vigorous pace. the measures set out in the β industry 4. 0 β plan announced by the government will provide further impetus for public support to firms β innovation and investment activity. this action is part of a broader reform strategy that has been taking shape over the years. important measures have been implemented and are now yielding their first results. the only option is to continue resolutely along this path in order to provide a better working environment for firms, assist the creation of new job opportunities, and reduce the imbalances weighing down our economy and our society. designed and printed by the printing and publishing division of the bank of italy
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michael c bonello : the central bank of malta and financial stability speech by mr michael c bonello, governor of the central bank of malta, at the conference β onshore europe β, organised by the malta financial services authority, st julians, 13 september 2004. * * * the title chosen for this conference is as significant as it is brief. the two words β onshore europe β neatly capture malta β s current reality, that of a financial centre with solid credentials which affords its players both the guarantees and the opportunities to be offered by the single european market for financial services. as we commemorate malta β s first ten years as an international financial centre, it is appropriate to record that if we are able to look back with satisfaction at past achievements, it is only because our legislators had the political vision to adopt a consensual approach to the task at hand in 1994. this involved a radical overhaul of existing laws and the drafting of new ones to lay the foundations of a modern financial centre governed by the highest standards and yet flexible enough to allow new opportunities for growth and development to be seized to the country β s economic advantage. i would, therefore, like to pay tribute to all those who saw the project through to a successful conclusion. an analysis of malta β s track record leads to another important conclusion, which is that having in place an appropriate legislative and institutional framework is a necessary, but not a sufficient condition for success. recent experience around the world suggests that the potential of a financial centre cannot be maximized unless it possesses another essential attribute. that other ingredient is stability and it is this aspect that i propose to explore today. ensuring financial stability is a statutory responsibility of the central bank of malta. the bank is thus obliged to participate actively in the maintenance of a stable and efficient financial system and to contribute towards its development. this applies not only to the payment and settlement system, of which the bank is the regulator, but to the entire financial system. the bank has an on - going role to play in assessing the robustness of the system. it must draw attention to any problems and ensure that these do not in any way impede the functioning of the financial markets as efficient providers of capital for companies and households. the bank β s approach is therefore to consider the general risks to the system rather than the situation of individual credit and financial institutions. the latter is the task of the malta financial services authority ( mfsa ), which has successfully assumed, over the last ten
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sector that hampers domestic lending β and channels domestic savings abroad. of course, in some commodity exporting countries, surpluses and official sector savings have been boosted by elevated commodity prices. i would also like to emphasize the significance of the domestic policy contexts in the major deficit and surplus countries. as i mentioned in the beginning, the solution to the issue of external imbalances seems relatively simple if considered in isolation : just reverse the existing divergent trends in saving and investment ratios between the countries involved. it is important, however, to recognize that the global imbalances also reflect cross - country differences in economic structures and real resources, which give rise to differing policy interests. the post - crisis outlook for the imbalances so what does the crisis imply for the evolution of the imbalances going forward? here i wish to make a few brief observations. on the one hand, the challenge of external rebalancing in the deficit countries has become closely intertwined with the internal rebalancing between public and private demand. whereas the low saving rates in major deficit economies previously reflected large - scale private sector borrowing, the rapid decline in private spending after the crisis replaced private deficits with sizeable public sector deficits. too much of global demand and economic activity is now dependent on the fiscal deficits in the developed world. therefore, the deficit countries here face a dual task : to rebalance the government budgets and, at the same time, to establish a growth - friendly economic environment that provides a sustainable foundation for the growth of private spending. in terms of policy, one priority here lies in measures to maintain the availability of credit to the private sector, for example through repair and reform of the financial sector. however, credit is not enough by itself. the growth of private demand must lie on a sustainable basis. in the deficit countries, future growth inevitably needs to rely increasingly more on net exports. this is a competitiveness question, but also a structural question. and this, of course, goes part and parcel with the objective of reducing the external imbalances. on the other hand, recent events clearly demonstrate how the current crisis has increased the international pressure on emerging market countries with surpluses. this was clearly apparent at the last round of g20 discussions, where foreign exchange issues were at the centre of the agenda. undoubtedly, the problem has not gone away and will be one of the hardest issues also in the upcoming meetings. however the exchange rate, the real exchange rate to be
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erkki liikanen : global rebalancing, asset prices and policy responses speech by mr erkki liikanen, governor of the bank of finland, at the fifth high - level seminar of the eurosystem and latin american central banks, madrid, 10 december 2010. * * * due to the strike and weather conditions the speech was distributed in written form. some background global imbalances are certainly not a new policy concern. the most visible manifestation of these imbalances is the large current account deficits and surpluses, but these are not the whole story. current account positions reflect a number of deeper, more fundamental problems. therefore, the inevitable future rebalancing has to involve deeper structural changes in the countries involved. the risks caused by the global imbalances have been well documented in research and policy papers over the last ten years. also, the imbalances have long been among the central agenda items in several international meetings. most recent serious efforts to address them include the imf - led multilateral consultations in 2006 and, today, the ongoing g20 mutual assessment process. such rounds of discussions have successfully established a broad agreement over the key policy objectives to resolve the problem. at their simplest, these are remarkably straightforward. national saving needs to increase in the major deficit countries ( such as the united states ), and be reduced in the major surplus countries ( such as emerging asia and the oil exporting countries ). it has also been acknowledged that for both deficit and surplus countries, meeting these objectives requires significant policy adjustments. however, the multilateral initiatives to address global imbalances have so far suffered from an obvious lack of traction to actual policy outcomes. since the onset of the global financial crisis, the imbalances have admittedly undergone a certain reduction. but recent projections indicate that the imbalances tend to persist β or even grow β well into the future. it appears that the imbalances have become an even more persistent characteristic of our economic environment than was previously thought. the nature of the imbalances international surpluses and deficits are not, of course, harmful as such if they remain reasonable. they are a natural reflection of financial integration. they provide flexibility to savers and investors. by that, they are welfare enhancing. however, very large current account deficits, when persistent and growing, fuel concerns of external sustainability. two main risks to the international community have been extensively debated for almost a decade. first, sustainability concerns may
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##ries and investors may well affect the stability of the system. public authorities must carefully examine the changes induced by digital technologies and value innovative projects to preserve the stability, the efficiency, and the security of the financial sector. the complexity is increased by the fact that central banks are at once both users and producers of information and big data. proof of this is the collection of highly granular data on individual bank loans by the single supervisory mechanism ( the so called anacredit ), on daily money market statistical reporting by the european system of central banks, and on the trading repositories envisaged by the european market infrastructure regulation. the sheer amount of these granular data makes it clear that the necessary validation processes cannot be performed manually, but will require sophisticated algorithms and techniques such as machine learning or artificial intelligence. central banks should master these new technologies. the bank of italy has created an internal multidisciplinary team on big data which includes economists, statisticians and computer scientists from different departments, working in close cooperation with the directorate general for information technology. the team has built a hardware and software infrastructure in order to deal with different kinds of big data for both macroeconomic and microeconomic issues. some of the results will be discussed during this workshop. the analyses focus on using unstructured textual data from social media, in particular twitter, to compute inflation expectations4 or to gauge retail depositors β trust. 5 see c. angelico, j. marcucci, m. miccoli, and f. quarta, β can we measure inflation expectations using twitter? β. m. accornero and m. moscatelli in β listening to the buzz : social media sentiment and retail depositors β trust β, a measure of retail depositors β trust by checking twitter comments. banca d β italia, temi di discussione ( working papers ), 1165 ( 2018 ). social media are also used to assess customers β sentiment towards specific companies and its effect on stock returns, volatility and trading volumes. 6 twitter and news are used to measure economic policy uncertainty and to focus on payment card scams, to then relate them to trends in consumer payments. another strand of research uses data from single online real estate ads extracted from the web to understand the microstructure of the italian real estate market. 7 let me conclude by thanking once again all the speakers, discussants, panelists and participants for being here. i look forward to
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simply that capital adequacy and leverage are two different concepts, and measure different things. the risk - based capital framework is not ideal for placing an absolute constraint on leverage, just as a leverage ratio is not ideal for assessing whether capital is adequate to cover the risks undertaken. this is why basel iii adopts a β belt and braces β approach, using the leverage ratio as an important backstop for the risk - based capital adequacy regime. returning to the rationale for using internal models to measure risk, it is important to remember that a key premise was that banks β risk - based capital ratios should consistently reflect banks β risk - taking. that was why basel ii provided not only for the use of internal models in pillar 1 of the regulatory framework, but also for the pillar 2 and 3 requirements so as to provide a second view on banks β solvency ( pillar 2 ), including one based on stress tests and performance measurement, and to facilitate market discipline via disclosure ( pillar 3 ). unfortunately, the financial crisis and subsequent analysis have shown that bank and supervisory practices are not as consistent as they could be. for example, the risk weights of some banks that introduced internal models under basel ii have been trending downwards in recent years, when experience and intuition say they should have been moving in the opposite direction. many people worried that basel ii would be procyclical. it would seem that those fears are largely unfounded, but for reasons that may be far from satisfactory! increasingly, this has led to questions about the credibility of internal model - based capital ratios. therefore, alongside the assessment of national regulations, the rcap has also started studying the consistency of outcomes at individual banks. as with the introduction of a rigorous peer review programme, the significance of this initiative should not be underestimated. never before have we had international teams of supervisors looking at the modelling practices at individual international banks. i think this is a quite telling example of the regulatory community β s commitment to improving the consistency, comparability and reliability of bank capital ratios. the basel committee β s two recently published studies on rwa variability have compared banks β estimates of risk - weighted assets on hypothetical portfolios of financial instruments ( for the trading book ) and credit counterparties ( for the banking book ). to give you an idea of the size of the task, in the case of the banking book, for example, the committee collected banks β probability of default ( pd ) and loss - given
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, but i still see a number of upside inflation risks that affect my outlook. these include risks from geopolitical developments, including the risk of spillovers from geopolitical conflicts and the extent to which food and energy markets and supply chains remain exposed to these influences. there is also the risk that a loosening in financial conditions and additional fiscal stimulus could add momentum to demand, 1 / 5 bis - central bankers'speeches stalling any further progress or even causing inflation to reaccelerate. finally, there is a risk that continued labor market tightness could lead to persistently high core services inflation. recent labor market data suggest ongoing elevated wage growth as some businesses continue to report above - average wage increases to compensate for elevated prices and high inflation. given these risks, and the general uncertainty regarding the economic outlook, i will continue to watch the data closely as i assess the appropriate path of monetary policy. the frequency and extent of data revisions over the past few years, as seen in the most recent employment report, make the task of assessing the current state of the economy as well as predicting how the economy will evolve even more challenging, and i will remain cautious in my approach to considering future changes in the stance of policy. should the incoming data continue to indicate that inflation is moving sustainably toward our 2 percent goal, it will eventually become appropriate to gradually lower our policy rate to prevent monetary policy from becoming overly restrictive. in my view, we are not yet at that point. reducing our policy rate too soon could result in requiring further future policy rate increases to return inflation to 2 percent over the longer run. it is important to note that monetary policy is not on a preset course. my colleagues and i will make our decisions at each fomc meeting based on the incoming data and the implications for the outlook. while the current stance of monetary policy appears to be at a restrictive level that will bring inflation down to 2 percent over time, i remain willing to raise the federal funds rate at a future meeting should the incoming data indicate that progress on inflation has stalled or reversed. restoring price stability is essential for achieving maximum employment and stable prices over the longer run. notable developments in bank regulation and supervision as i look at the bank regulatory agenda, i am struck by the sheer volume of matters that have recently been completed, that have been proposed, and that are in the pipeline. these reforms touch on a wide range of topics that directly or indirectly impact banks of all sizes. this work shows no
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##ed by the veil of supervisory opacity, can have significant financial and reputational impacts or can disrupt the management and operations of affected banks. these changes largely occurred after the bank failures in the spring of 2023 and the ensuing banking stress. in part, the changes in supervisory practices may be attributable to flawed post - mortem reviews conducted in the immediate aftermath of these failures. many of these reviews suffered from serious shortcomings, including compressed timeframes for completion and the significantly limited matters that were within the scope of review. nevertheless, these reviews were, and continue to be, singularly relied upon as a basis for resetting regulatory and supervisory priorities. these trends in supervision are concerning and add to the already significant burdens placed on regulated institutions from an aggressive regulatory reform agenda. i worry that the mere fact of bank failures and the material banking stress we experienced last year has been interpreted as a " blank check " to remake supervision as a blunt instrument, one that ignores the unique characteristics of each firm and the benefits of an approach that prioritizes engagement and communication between banks and examiners. of course, the banking agencies cannot regulate our way to better or more effective supervision ; in the aftermath of the banking stress, it is appropriate to look carefully at what is working, and what isn't, in the realm of bank supervision. but in doing so, we must appropriately manage our supervisory programs and teams to ensure that effective and consistent supervision is implemented within each firm, and that it is effective and consistent across our regulated entities. conducting supervision in a manner that respects due process and provides transparency around supervisory expectations can help us accomplish these goals. closing thoughts thank you again for the opportunity to speak with you today. we are experiencing significant changes in the banking industry, not least of which are those coming from the regulators. it is imperative that you continue engaging on all matters involving regulatory reform. policymakers cannot fulfill the responsibility of promoting a safe and sound banking system if we ignore efficiency, tailoring, and appropriate calibration of 4 / 5 bis - central bankers'speeches requirements in the reform agenda. these tenets should be central to the reform process. i welcome your insight on what is working, what is not, and the real - world consequences of regulations and regulatory reform efforts. your input helps us ensure that the bank regulatory framework supports safety and soundness in an efficient and fair way. thank you for your continued engagement, and i look forward to our conversation.
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these issues need to be addressed on the ground, with proper enforcement by management to prevent misselling practices, unclear documentation or explanations by agents and marketing staff, and contract terms and exclusions that are unreasonable. wide gaps have also been observed between companies in the level of competence of staff selling the products, and in the quality of training provided to staff and agents. there is a need to achieve greater, as well as more consistent, progress in this area. bank negara is determined to improve standards in the area of market conduct, and we will continue to actively engage the industry in this effort. i hope that all insurers will throw their support, at the highest level, behind the various initiatives that are being implemented by both the bank and industry associations to achieve this. as a newly - formed alliance, the tokio - marine - asia group has a valuable opportunity to set the correct tone at the outset in this area for your group β s priorities in the malaysian market. i trust that you will use the opportunity wisely to set a new benchmark in responsible market conduct for the industry. on that note, let me once again congratulate tokio marine and asia on the official launch of tm asia life malaysia bhd. i look forward with great anticipation to your positive contribution to the further development and growth of the malaysian insurance industry.
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are marginally bankable. it is also about combining financing with capacity building, technology transfer, and institutional support, to reduce risk and enhance bankability. in short, it is about taking an ecosystem approach to solving a problem of the global commons. blended finance is not new but catalysing and scaling it requires a fresh approach. the use of public funds and development guarantees to reduce risks and encourage participation by private capital has been around for many decades. but such programmes are too few and too small. globally, annual flows of blended finance have averaged less than us $ 10 billion since 2015. we need a more systematic and coordinated approach to mainstream blended finance. first, we need to build a pipeline of shovel - ready transition projects. there is insufficient capacity and expertise to prepare projects that are attractive to the private 2 / 4 bis - central bankers'speeches sector. this is specially so in emerging markets, where regulatory and political risks heighten the likelihood of default, transaction lead times are long, projects require prohibitively large amounts of start - up capital, and there is limited access to expertise in project development and financing. second, we need to reduce the risks in marginally bankable transition projects to attract private capital. the return profile on many such projects is not commensurate with the risks facing private financiers or investors. to reduce overall risk and improve bankability, we need more catalytic and concessional funding from the public sector, multilateral development banks, and philanthropic sources. such funding can be in the form of grants, risk - sharing arrangements, debt at below - market rates, technical assistance, and structuring advice. they can help crowd in additional multiples of private sector funding. but while public capital can potentially do more to mitigate risk, private capital must still bear a fair share of project risk and exercise the appropriate due diligence on project viability and performance. third, we need to make the financial ecosystem work more synergistically. banks play a key role as lead managers for financing sustainability projects. however, with limited balance sheets and regulatory capital and liquidity requirements, banks need to offload these loans to institutional investors who have more absorptive capacity. but institutional investors prefer larger deal sizes with a diversified pool of assets to reduce concentration risk. we need to shift towards a portfolio approach to blended finance deals, through the structuring and securitisation of typically illiquid green and transition assets. there are some promising global
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diverse talent to draw on in the future, some of it in this room today. can i encourage you to join us and so to make this β modern central bank β even better. i β d like to thank benjamin king for his assistance in drafting these remarks. i would also like to thank renee horrell, matthew waldron, chiara punzo, niki anderson, andrew bailey, kristina bluwstein, fabrizio cadamagnani, geoff coppins, lee foulger, andrew hauser, grellan mcgrath, huw pill, nyssa roberts, martin seneca, sophie stone, danny walker and chris yeates for their helpful input and comments. the views expressed here are not necessarily those of the financial policy committee. references aikman, d., j. bridges, s. hacioglu hoke, c. o'neill, and a. raja. ( 2019a ). β credit, capital and crises : a gdp - at - risk approach β. bank of england staff working paper no. 824. aikman, d., p. chichkanov, g. douglas, y. georgiev, j. howat and b. king. ( 2019b ). β systemwide stress simulation β. bank of england staff working paper no. 809. allen, w. a. ( 2022 ). β models of central banking and the organisation of the bank of england β. available at ssrn 4283767. altunbas, y., l. gambacorta and d. marques - ibanez ( 2014 ). β does monetary policy affect bank risk? β. international journal of central banking, 10 ( 1 ), 95 - 136. aramonte, s. and p. rungcharoenkitkul ( 2022 ). β leverage and liquidity backstops : cues from pension funds and gilt market disruptions β. bis quarterly review, december. bailey, a. ( 2022a ). β the economic landscape : structural change, global r * and the missinginvestment puzzle β. speech at the official monetary and financial institutions forum. bailey, a. ( 2022b ). β monetary policy and financial stability interventions in difficult times β speech at the g30 37th annual international banking seminar, washington, d. c. balls, e., j. howat and a. stansbury ( 2018 ),
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bank restructuring is progressing as scheduled. in june the evaluation exercise was completed, enabling an estimate of the capital needs for the whole system to be made, and confirming that they were clearly below β¬100 billion ; at the end of august the royal decree - law on credit institution restructuring and resolution was approved, constituting a new code in this area ; at the end of september the exercise was completed, enabling the capital needs for each of the banks participating in the exercise, which accounted for 90 % of the spanish banking system, to be determined ; and, last thursday, the decree which will regulate the activity of the asset management company for assets arising from bank restructuring ( sareb ) was approved, another key step in the implementation of the programme agreed with the european commission. the analysis concluded in september enabled the classification of banks for restructuring purposes to be confirmed. previously, the banks without additional capital needs had already been determined ( group 0 ) as had the banks controlled by the frob ( group 1 ), to use the terminology of the memorandum of understanding ; this classification was completed, dividing the other banks with capital needs into : a ) those with plans to achieve the capital levels required using their own means ; and b ) those which will require state aid to do so. the latter were requested to provide restructuring plans which are currently being studied. at the end of this month, it is planned to approve the restructuring plans of the banks in group 1 ( those controlled by the frob ), and those of group 2 ( the other banks which will require state aid ) will foreseeably be approved before year - end. the restructuring plans envisage the transfer of assets to the asset management company, which will become operational in december, and the recapitalisation of banks which need it. each bank will bis central bankers β speeches have a schedule for implementing the measures that it must adopt, and these are expected to be completed in the first quarter of 2013. conclusions the state budget for 2013 represents a substantial effort in terms of austerity. the intended fiscal adjustment is certainly very ambitious, given the ongoing recessionary setting for public finances next year. central government efforts would be insufficient if not accompanied too by the adjustment to which regional and local government have committed. from the macroeconomic standpoint, some data show progress is being made in rebalancing the spanish economy. the bulk of the correction has already been made by the current account and it is close to balance in 2012 which, foresee
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by the central bank. on the ground, the differences you will note if your firm is in this category are more effective liaison with your direct supervisory team as well as more frequent on - site visits with yourselves by my staff. i will be asking my supervisors to look more closely at where those investor protection and financial stability risks i talked about earlier exist, including challenging assumptions that lie behind business models and strategies in the sector and the governance, systems and controls that underpin them. in contrast, each individual fund, in itself, has a limited potential impact on financial stability and investors in the event of failure β and so, each of the more than 5, 000 funds domiciled in this jurisdiction β cannot and should not expect the same level of supervisory engagement as afforded to the fund service providers. our supervisory model, however, does provide capacity for us to react to triggers and problems that emerge in individual funds as well as random spot - checks. we will also increasingly rely on the use of our thematic supervisory tool, namely examining a specific issue across a cross - section of institutions. shadow banking while individual funds may be low impact entities in our supervisory model, the funds industry is of course a high impact sector viewed collectively. this is not just a question of investor protection. increasingly, the interest of the international regulatory community is directed at the level of systemic risk posed by particular parts of the funds industry, namely money market funds. the backdrop to this interest is the risk of investor runs on money market funds as a result of a threat of breaking the buck and the onward impact of such a run on the markets in which those money market funds are invested. as you are no doubt aware, this is clearly on the regulatory agenda at the g20, in iosco, at the european commission and also in the us at the sec. a few concluding thoughts on the regulatory agenda in this area. my first high - level message, is that the industry in ireland must be prepared for change. during the financial crisis, investor runs on mmfs led to a disruption in the flow of finance to bis central bankers β speeches the real economy and necessitated dramatic interventions by public financial authorities. the central bank believes that regulatory reform should focus on the need to reduce the probability of investor runs, to curb implicit support from sponsors and to reduce the need for support from the taxpayer. in order to avoid disruptive industry shifts, my preference is for international alignment between europe and the us in this area. it appears that the sec
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98 % for aib, 14. 3 % for bank of ireland and 19. 08 % for ilp. the recent european banking authority capital raising exercise did not require further injections for the irish banks. the banks therefore have a substantial capital buffer with which to absorb losses on their mortgage portfolios. the central bank believes it is time to do just that and is encouraging a more realistic approach to provisioning and, as i will explain below, we would like to see a determined effort to identify unsustainable mortgages requiring loan modification. where does that leave the banks β capital position for the future? we already know that over the medium term, in the period leading up to implementation of basel 3 in 2019, that the banks will likely require more capital. at the two pillar banks, the elimination of deferred tax assets in the order of about β¬5 billion will have to be met through utilisation of taxable profits, or, to the extent that profits are not available, through additional capital. therefore, the sooner the banks can be restored to profitability then the better they will be able to meet these medium term targets, ideally from market sources. for the mortgage portfolios, the blackrock loan loss estimates provide a very large buffer. still, house prices have trended closer to the stress scenario and there are considerable uncertainties regarding the impact of the forthcoming bankruptcy law reform on borrower behaviour, of the economic and employment outlook and therefore of future arrears trends. the banks are also struggling to return to profitability as their basel 3 requirements loom and will start to feed into future stress tests. there is also uncertainty about the size of the unsustainable mortgages group, how many of these can be resolved through loan modification and at what cost, and how many instead are likely to be subject to repossession or voluntary surrender. this is an area where we want the banks to make substantial progress during the course of the year. the greater clarity we can have about the levels of loan modification based on a more refined analysis of the different cohorts of mortgage customer, then we will be in a stronger position for recalculating and updating the stress capital position of the banks. by conducting the 2012 pcar in the autumn there is more time to do this analysis. the policy framework for addressing mortgage arrears before i talk about what we have seen in the banks β most recent mortgage arrears resolution strategies and explain β
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mr. thiessen β s remarks to the canadian club of toronto notes for remarks by the governor of the bank of canada, mr. gordon thiessen, to the canadian club of toronto in toronto, on 1 / 12 / 97. what can monetary policy do to help the economy reach its full potential? today, we meet against a backdrop of some uncertainty in the international economy. i would like to begin my remarks with an assessment of what the recent financial and economic events in asia could mean for canada. the nervousness and uncertainty that spread around the world in the wake of the problems in southeast asia highlight the growing interactions among national economies and financial markets. the events in asia also underscore how crucial prudent macroeconomic policies and sound financial sector management are to good economic performance. the measures that have been taken, mainly through the international monetary fund, are important first steps for the affected asian economies in dealing with their problems. i believe that these measures have helped to contain at least some of the potential spillover effects to other countries and, thus, they are helping to settle global financial markets. canada β s direct trade links with southeast asia are not large. however, those with japan and korea are more important to us, and there are also potential effects on our other trading partners that need to be taken into account. the problems in asia and their possible implications for the world economy are probably the source of some of the recent softening in world commodity prices. because of the importance of commodities to canada, this softening has been a factor behind the recent weakness in our currency. our judgment at this stage is that the overall impact of these recent developments on canada does not look likely to be large. however, we are sensitive to the fact that some industries and regions will be affected more than others. i can assure you that we will continue to monitor the situation very closely, in view of the uncertainty that remains about the likely outcome of events in asia. even with this uncertainty, however, recent suggestions that there is a risk of worldwide deflation strike me as being very pessimistic. developments in asia will slow somewhat the pace of global economic expansion. but as long as the world β s largest economy, the united states, is pressing against its capacity limits, with the possibility of upward pressure on its inflation rate, the risk of worldwide deflation looks rather remote. certainly, from canada β s perspective, the u. s. economy is by far the most important influence
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around financial sector workforce data, so that everyone has a clear idea of where we are doing well as an industry and where we https : / / www. mas. gov. sg / news / speeches / 2020 / gearing - up - for - new - and - evolving - jobs - in - financial - services 3 / 18 04 / 12 / 2020 " gearing up for new and evolving jobs in financial services " - remarks by mr ravi menon, managing director, monetary authorit β¦ need to do better. the growing timber series takes its inspiration from the green shoots series. green shoots is a webinar series which mas launched in april this year to keep alive the fintech spirit and the drive for innovation amid the throes of the covid - 19 circuit breaker. these regular engagements have been hugely successful in raising awareness, promoting collaboration, and sustaining investments in fintech firms β so much so that we are looking at a record year for fintech investments in 2020. growing timber and green shoots represent the two key horizontals of mas β developmental strategies for the financial sector β jobs and skills ; and technology and innovation. let me set out the key dimensions of the financial sector jobs and skills agenda that we will cover over the next few months under the growing timber series : job opportunities β what are the new jobs being created and how to access these jobs ; job readiness β how can we prepare our tertiary students so that they are job - ready when they embark on a career in the financial sector ; job retention β keeping our mid - career workers employed through upskilling amid new skills demands ; job redeployment β reskilling mid - career workers in jobs that are being transformed by technology and pivoting them to new careers ; job specialisation β deepening skills and capabilities in highly specialised areas in strong demand ; and job leadership β grooming promising singaporeans for leadership roles at [UNK] levels. today, i will cover the first three dimensions of the jobs and skills agenda β namely, job opportunities, job readiness, and job retention. job opportunities https : / / www. mas. gov. sg / news / speeches / 2020 / gearing - up - for - new - and - evolving - jobs - in - financial - services 4 / 18 04 / 12 / 2020 " gearing up for new and evolving jobs in financial services " - remarks by mr ravi menon, managing director, monetary authorit β¦ the financial sector provides good job opportunities. financial services employs a
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recovery with positive quarterly growth rates is expected. the significant policy stimuli in all major economic areas should support growth globally, including in the euro area. in the view of the governing council, uncertainty remains high and we have to be prepared for ongoing volatility in incoming data. overall, the risks to this outlook remain balanced. on the upside, there may be stronger than anticipated effects stemming from the extensive macroeconomic stimulus being provided and from other policy measures taken. confidence may also improve more quickly than currently expected. on the downside, concerns remain relating to a stronger or more protracted negative feedback loop between the real economy and the turmoil in financial markets, renewed increases in oil and other commodity prices, the intensification of protectionist pressures, more unfavourable than expected labour market conditions and, lastly, adverse developments in the world economy stemming from a disorderly correction of global imbalances. with regard to price developments, annual hicp inflation was, according to eurostat β s flash estimate, - 0. 6 % in july, compared with - 0. 1 % in june. this further decline in annual rates of inflation was anticipated and reflects primarily base effects resulting from the peaks observed in global commodity prices a year ago. looking ahead, owing to these base effects, annual inflation rates are projected to remain temporarily in negative territory, before turning positive again later this year. however, such short - term movements are not relevant from a monetary policy perspective. consistent with available forecasts and projections, looking further ahead, inflation is expected to remain in positive territory, while price and cost developments are expected to remain subdued in the wake of ongoing sluggish demand in the euro area and elsewhere. in this respect, indicators of inflation expectations over the medium to longer term remain firmly anchored in line with the governing council β s aim of keeping inflation rates below, but close to, 2 % over the medium term. risks to the outlook for inflation are broadly balanced. they relate, in particular, to the outlook for economic activity and to higher than expected commodity prices. furthermore, increases in indirect taxation and administered prices may be stronger than currently expected owing to the need for fiscal consolidation in the coming years. turning to the monetary analysis, the latest data confirm the ongoing deceleration in broad money and credit growth. the annual growth rates of m3 and of loans to the private sector recorded in june β 3. 5 % and 1. 5 % respectively β are the lowest since the start of stage three of
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parallel on risk sharing and risk reduction, and we look forward to an ambitious mid - term review process of the capital markets union agenda. a more complete emu is the foundation for a stable, flourishing and resilient euro area economy that will be the best contribution to global economic growth and financial stability. the ecb will continue to do its part by delivering on its mandate. 2 / 2 bis central bankers'speeches
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prices that it was given by congress. i believe that the program delivered what could have been expected from it. in particular, let me highlight its success along two dimensions. first, the lsap2 program made broad financial conditions more accommodative. this conclusion can be drawn from the behavior of financial markets from late august 2010 to the program β s implementation date in november 2010 β a period during which market participants moved from seeing such a program as a remote possibility to expecting it with near certainty. 3 asset price movements over this period included a decline in real interest rates, a narrowing of risks spreads, an increase in equity prices, and a decline in the dollar β exactly the pattern that one would expect to be generated from additional monetary policy accommodation. these changes likely supported economic growth and the creation of employment relative to what would have been realized in the absence of the program. 4 second, the lsap2 program appears to have raised inflation expectations from unusually low levels and reduced the threat of deflation. the downside risks to inflation had become quite threatening by last summer. breakeven inflation rates had moved to levels that were well below those consistent with the fomc β s mandate, even for forward measures covering periods beginning several years ahead. in addition, the pricing of deflation risk, as computed by looking at treasury inflation - protected securities with different amounts of accrued inflation, reflecting fairly substantial odds of deflation over the next several years. 5 since that estimates of the contribution of additional risk coming from the increased size of the portfolio range from 60 percent to 80 percent, while estimates of the impact of its longer duration range from 20 percent to 40 percent. see, for example, chairman ben s. bernanke ( 2010 ), β the economic outlook and monetary policy β, remarks at the federal reserve bank of kansas city economic symposium, jackson hole, wyoming, august 27. one would expect market prices to incorporate nearly all of the effects of the programs in advance rather than during the actual implementation of the program. thus, the period before the november implementation is the most relevant period for assessing the program β s effects. for example, see chung et al ( 2011 ), β have we underestimated the likelihood and severity of zero lower bound events β and vice chairman janet yellen ( 2011 ), β the federal reserve β s asset purchase program β, remarks at the allied social science associations annual meeting, denver, colorado, january 8. tips are designed with a
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produce significant upward pressure on interest rates or a tightening of broader financial conditions, given our view that the effects of the program arise primarily from the stock of our holdings rather than the flow of our purchases. while there has been considerable volatility in treasury yields over the past several weeks, we attribute those movements primarily to incoming economic data and to broader risk events. however, we will continue to watch the markets and assess their adjustment to the end of the purchase program. future evolution of the soma portfolio while i am sure you are happy to hear more about our actions to date, i realize that you may be even more interested in the evolution of the soma portfolio going forward. just to be clear, i will not be saying anything about the likelihood of prospective policy actions beyond what has been conveyed in fomc communications. however, i would like to make a few points about the portfolio under those prospective actions. as noted earlier, the current directive from the fomc is to reinvest principal payments on the securities we hold in order to maintain the level of domestic assets in the soma portfolio. this approach can be interpreted as keeping monetary policy on hold. indeed, one can generally think of the stance of monetary policy in terms of two tools β the level of the federal funds rate, and the amount and type of assets held on the federal reserve β s balance sheet. the fomc has decided to keep both of these tools basically unchanged for now. given the considerable amount of uncertainty about the course of the economy, market participants have observed that the next policy action by the fomc could be in either direction. if economic developments lead the fomc to seek additional policy accommodation, it has several policy options open to it that would involve the soma portfolio, as noted by chairman bernanke in his testimony last week. one option is to expand the balance sheet further through additional asset purchases, with the just - completed purchase program presenting one possible approach. another option involves shifting the composition of the soma portfolio rather than expanding its size. as noted earlier, a sizable portion of the additional risk that the soma portfolio has assumed to date came from a lengthening of its maturity, suggesting that the composition of the portfolio can be used as an important variable for affecting the degree of policy stimulus. lastly, the chairman mentioned that the fomc could give guidance on the likely path of its asset holdings, as the effect on liquidity in treasury bills has worsened to some degree
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of community law has evolved, also for the euro, which is dominated, in a spectrum from high to low legislative influence, by notions such as unification, harmonisation, approximation, implementation and self - regulation. the road towards unification, if achievable at all, is of an evolutionary nature, where each legal action is determined on a case - by - case basis. this is not a bad development. after all, unification is not a goal in itself. legal action should have a well - balanced relation to the objectives to be achieved. particularly in the area of monetary and financial law, we have created such a well - balanced legal structure which ensures the fulfilment of the monetary union β s objectives at present. let me, without the pretension of being exhaustive, briefly touch on several aspects of this new corpus iuris monetae and explain how we, at a community level, have tried to strike a balance between unification on the one hand, and differentiation on the other. institutionally, legal convergence has taken place with regard to the statutes of the eu ncbs. the eu treaty prescribes that the escb ncbs are independent and that the eurosystem ncbs are fully integrated into the eurosystem. this requires the adaptation of statutes of ncbs. however, the legal requirements for central bank independence and integration in the eurosystem are not precisely defined in the treaty. therefore, the ecb and its predecessor, the european monetary institute, have done so themselves in their so - called convergence reports. these reports assess whether a member state qualifies for the introduction of the euro and they also contain a chapter on legal convergence. they develop features of institutional, personal and financial independence. in addition, they identify areas in which statutes of ncbs are likely to require adaptation in view of the integration of ncbs in the eurosystem. these reports thus gave guidance to national legislators in the process of adapting such statutes. as a result, new statutes of ncbs have come into existence, which, as far as eurosystem - related tasks are concerned, often contain very similar provisions. yet, the treaty does not prescribe harmonisation of statutes and ncbs may perform own, non - eurosystem related tasks, as long as such tasks do not interfere with the objectives and tasks of the eurosystem. overall, statutes of ncbs therefore still differ considerably from one another. in conclusion, there has not been harmonisation
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the good work accomplished so far. i would also like to thank the t2s advisory group. in the next phase of the project, this group will retain its important function of ensuring that t2s delivers in line with market needs. the group has provided invaluable advice to the programme board and to the governing council over the past few years. the level of transparency on the t2s project through the advisory group has been β i believe β unprecedented. this has certainly been one of the key drivers of the project β s acceptance amongst csds, market participants and political authorities. finally, i wish to thank the high level group t2s as well as the t2s teams both at the ecb and the 4cb. their work is not always visible, but it is invaluable. indeed it is thanks to their work β backstage β that the construction of the t2s platform is well on track. the system is now over halfway to delivery point and the development and testing of the application are proceeding on a firm footing. on this basis, and with the signature of the t2s contracts, we now have the solid foundations to continue building t2s and to transform post - trading in europe, making it both more efficient and safer. we have taken a major step today towards making t2s happen. in years to come, we will see the eurosystem, participating csds, and market participants more widely working together to make this project a success. thank you very much. bis central bankers β speeches
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balance sheets. the ecb is aware that some of the positive effects of our policy on banks β profitability will wane with time. however, low or negative interest rates cannot be blamed for low profitability per se. with lower interest rates, ( - 0. 50 % and - 1. 25 % for the repo rate and deposit rate, respectively ) which have been in negative territory almost for two years now, swedish banks, for example, have been able to sustain roe levels of close to 12 %. there are several explanations for this difference but a sizeable contribution comes from cost control stemming from adjusted business models. in fact, cost per banks total asset is at 0. 92 for swedish banks against 1. 42 for the euro area, on average. this clearly shows that european banks have to adjust their business models to improve their profitability prospects. however, to face bank profitability challenges, the euro area needs to develop and implement a joint strategy, over a determined period of time, to overcome excessive non - performing loans and / or excessive banking capacity in some jurisdictions. we need a stronger banking sector which is essential to better transmit monetary policy impulses and support the economic recovery. in this, as in other domains, europe must endeavour to work together to face a more challenging world that threatens european values of open and tolerant societies. thank you for your attention. 4 / 4 bis central bankers'speeches
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these have significantly improved financial conditions, reduced financial fragmentation and fostered economic activity and inflation. in the first half of 2016, the euro area grew at an annualised rate of 1. 7 %, similar to last year β s growth rate. this figure is far from impressive, especially considering that the euro area is in the early phase of a recovery, after the second recession in 2012 and 2013. on the other hand, the unemployment rate, albeit falling, still remains above 10 %, amid a continuous increase in the participation rate in the labour force since the crisis. one positive aspect is that our policies have contributed to a decrease in financial fragmentation and that the dispersion of gdp growth and inflation across euro area countries is at the lowest level since the beginning of monetary union in 1999. another positive note is that the recent growth was largely driven by domestic demand. moreover, the recovery has proved resilient to a series of adverse shocks over the past year : the slowdown in china last summer, the acute stock market turbulence in the early part of this year and, most recently, the uncertainty created by the u. k. referendum. this resilience reflects, to a large degree, the amount of monetary expansion β actual and expected β that is embedded in financial prices. indeed, with the five packages of measures adopted since june 2014, we have been able to : reduce the cost of capital, produce rebalancing effects in broader asset markets, improve credit supply conditions and restore credit volume growth since the latter part of 2014, after two years of negative developments. in the latest move in march 2016, a powerful set of measures was taken, comprising an increase in the asset purchase programme, its extension to corporate bonds and the introduction of a new mediumterm liquidity facility with interest rates that can go as low as our negative deposit facility rate, contingent on the banks reaching a credit growth benchmark. yields on bank and non - financial bonds have eased in response to the measures taken, testifying to the effectiveness of the current monetary policy. funding conditions for banks improved as wholesale money market rates turned negative and as banks received direct support from new liquidity facilities with four - year maturities and low rates ( tltro - i and ii ). these developments have stimulated the pass - through of this funding cost relief to borrowing costs for both firms and households. 2 / 4 bis central bankers'speeches as a consequence, bank lending rates to non - financial corporations ( nfcs )
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millison k narh : monetary policy and outlook for economic growth speech by mr millison k narh, second deputy governor of the bank of ghana, at the databank investor forum, accra, 26 april 2010. * 1. * * introduction distinguished ladies and gentlemen, i would like to thank databank for inviting me to this forum which has brought together institutional investors to apprise themselves of policy initiatives and assess investment opportunities in the country. i understand that databank is celebrating twenty years of entrepreneurship this year. let me take this opportunity to congratulate you on your significant achievements and contributions towards ghana β s financial sector over the past two decades and hope that you will expand your activities further in the coming years. my address today will focus on β monetary policy and outlook for economic growth β. i will seek to address this topic by focusing on three key issues. that is, the bank of ghana β s monetary policy stance, the stabilization role of monetary policy in the ghanaian economy and lastly, the outlook for economic growth in 2010 and beyond. 2. the monetary policy stance of the bank of ghana the primary objective of the bank of ghana is to maintain price stability. the objective of price stability is not an end in itself ; rather it is in the interest of promoting balanced and sustainable growth in the long - term. indeed, the clear focus on price stability as stipulated in the bank of ghana act 612 reflects a consensus from various policy dialogues that β inflation is a major obstacle to the growth process and price stability can contribute to accelerating growth by promoting an enabling environment for efficient investment and savings decision - making β. various country experiences, including ghana, show that sustained periods of strong growth have always gone hand in hand with low inflation whereas low growth episodes occur under highly inflationary environments. as you may be aware, the ghanaian economy witnessed consistent growth periods in the recent past with real gdp growth increasing steadily from 3. 7 percent to 7. 3 percent within a spate of nine years. to a large extent this growth phase of the ghanaian economy was largely supported by a policy environment aimed at macroeconomic stability which anchored inflation expectations. this was combined with structural reforms, particularly in the financial sector, needed to increase financial intermediation and promote economic growth. although growth was achieved, the reemergence of macro instability underpinned by both external and domestic factors such as considerable credit expansion to both government and the private sector dislodged inflationary expectations and increased inflationary pressures in
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, as economic stability gains a firm hold, the private sector must reposition itself to drive the growth agenda. as noted in the 2010 budget and economic policy statement, the government will continue with the fiscal consolidation process which started in 2009 with a view to stabilizing inflation and reducing exchange rate volatilities. external sector policies will also focus on building up reserves ( which is currently at 3 months imports cover ), and reducing the current account deficit, while pursuing strategies to increase economic growth in 2010. the budget is optimistic about growth prospects in 2010 with a revised real gdp growth of 6. 5 percent compared to an initial program target of 5. 0 percent. starting from 2011, ghana will benefit from oil production which is expected to attract additional investments into the country, and boost economic growth. initial production is projected to contribute about 17 percent towards ghana β s gdp. accordingly, real gdp growth has been estimated to increase above 20 percent in 2011. there is a general consensus that the contribution of monetary policy is to stabilize the economy and create an enabling environment for sustainable growth in the long - run. looking forward therefore, the bank of ghana β s monetary policy stance will remain focused on steering the economy towards price stability whilst deepening financial intermediation processes to ensure that credit flows to the productive sectors of the economy. despite the role of monetary policy in creating an enabling environment, promoting long - term growth is a complex process and requires the support of structural reforms that seek to remove β binding constraints β on the business environment to ensure sustainable growth. clearly, monetary policy is limited beyond the scope of resolving structural bottlenecks that often constrain growth in the ghanaian economy. the commitment of the bank of ghana to ensure macroeconomic stability and ease credit constraints must therefore be supported by policy reforms to strengthen the investment climate, increase productivity and innovation, as well as close infrastructural gaps especially in the energy and road sectors. it is anticipated that the increased government revenues from the oil production will create the much needed fiscal space to close the country β s infrastructural gaps and ease some of these growth constraints. additionally, the implementation of credible fiscal consolidation policies underscored by growth - enhancing measures should provide the needed boost for the private sector and accelerate economic growth. 5. conclusion ghana β s economy has rebounded strongly from the instability that characterized the first half of 2009. recent trends indicate that macroeconomic stability has gained ground with declining inflation, exchange rate stability, growing
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peter pang : the role of smes in asian development statement by mr peter pang, deputy chief executive of the hong kong monetary authority and head of delegation, hong kong, china, at the 41st asian development bank annual meeting, madrid, 5 - 6 may 2008. * * * let me first thank the government of spain and the people of madrid for their warm hospitality. i welcome the successful conclusion of the adf x negotiations ahead of this meeting, providing timely and critical resources to the adb to further its work in poverty reduction in asia. the remarkable development of the region over the past decade has significantly improved the lives of its people. yet, eradicating poverty remains a huge challenge, and the rapid economic growth has brought about a new set of development issues. we therefore welcome the extensive review of the bank β s long - term strategic framework over the past two years to identify the new challenges faced by the region and the launch of strategy 2020 to guide the bank β s work in the next decade. i am glad to see that strategy 2020 correctly puts a greater focus on the sustainability aspects of growth as asia enters the next stage of development. among other priorities, i am also happy to note more emphasis being given to private sector development and private sector operations. enabling the private sector with firms investing, creating jobs and improving productivity is crucial to sustaining the long - term economic growth and expanding opportunities for the poor. in this regard, supporting the development of a vibrant small and medium enterprises ( smes ) sector will be of particular importance. smes play a vital role in the economic growth of developing countries, typically accounting for over 90 % of business establishments and about half or more of output and export shares. their entrepreneurship, flexibility and responsiveness to change are essential driving force of economic development. the employment opportunities they create improve the livelihood of thousands of millions of poor people. in many developing countries, and in fact in developed economies as well, smes account for as much as 70 % of the labor force. despite the important role of smes in the economy, their growth is often constrained by the lack of capital, among other impediments such as regulatory red tape. their small size, lack of credit ratings and the generally underdeveloped capital markets in the region deny smes access to bond and equity financing. banks are also reluctant to lend to smes or charge them a high interest rate, since smes usually do not have strong credit history and cannot provide substantial collateral.
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laundering. our particular responsibility relates to ais. it is our job to verify that ais have adequate policies, procedures and controls in place to enable them to : β’ identify suspicious customers and transactions ; β’ report suspicious transactions to the joint financial intelligence unit ( β jfiu β ) ; and β’ assist the law enforcement authorities through providing an audit trail. we do this through issuing guidelines that lay down the minimum standards that institutions should incorporate in their anti - money laundering systems. we then carry out on - site examinations to check that these standards are being adhered to. this year we introduced a two - tier, risk - based approach towards examinations. in cases where ais may be at higher risk of money laundering, we conduct more in - depth examinations using specialist teams. this may involve sample testing and visits to branches to look at how controls actually work in practice and to ascertain at first hand the knowledge and awareness of staff. in more routine cases, higher level review of anti - money laundering controls is conducted, generally as part of our normal risk - based examinations. we intend to supplement our own examinations with a system of self - assessment by compliance officers of ais on risk indicators of money laundering within their own institutions and the quality of controls. this will be done using a structured self - assessment framework that we aim to release to the industry later this year. this should help the hkma to conserve its own resources and direct them where they are most needed. but it should also serve to remind ais that they have the primary responsibility for making sure that their own house is in order. the hkma guideline checking that standards are being observed is obviously important. but it is necessary to ensure that the standards themselves remain effective in dealing with risks. that is why we are currently engaged in reviewing our anti - money laundering guideline. in doing so, we are making particular reference to two main sources. the first is the paper on customer due diligence for banks issued by the basel committee in october 2001. the other is the consultation paper released by the fatf in may of this year on its review of the fatf forty recommendations that set the international standards on anti - money laundering. i would strongly recommend that all ais familiarise themselves with both documents. comments on the fatf consultation paper are due by the end of this month. the process of revising the fatf recommendations will probably not be completed until some time next year. final revisions to our own guideline
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some of their earlier difficulties but continue to struggle. the effect on financial markets of the devastating attack on the world trade center was pronounced, as telecommunications and trading capacities were severely impaired. but the markets are mostly functioning normally now, and as in the past, the infrastructure will be rapidly restored. for a brief time, the terrorist attacks markedly disrupted payment transfers, leaving those counting on receiving payments caught short. those needs ultimately were met by the federal reserve, both through record lending at the discount window and through an extraordinary infusion of funds through open - market operations. to facilitate the channeling of dollar liquidity to foreign financial institutions operating in the united states, thirty - day currency swap lines were arranged with major central banks, again in record volumes. it was essential in such an environment to meet all appropriate demands for dollar liquidity. as repair of the financial markets and payment infrastructure proceeded apace, loans were repaid, open - market operations could be scaled back, the unusual swap lines were allowed to expire, and the temporarily bloated balance sheet of the federal reserve largely returned to normal. but even as market functioning and liquidity flows were restored, the potential for heightened uncertainty to damp household and business spending for a time persisted. to cushion these effects, we have eased the stance of monetary policy appreciably since september 11. * * * we in the united states have assumed ourselves to be fairly well - insulated from terrorism or, at most, subject to limited and sporadic episodes similar to those previously observed on a number of occasions in europe. we have been aware of the possibility for losses on a much greater scale. but i suspect that those possibilities were deemed so remote that they were never seriously incorporated into most conventional assessments of economic risk. the shock of the tragedies at the world trade center and the pentagon has reshaped those assessments of risk and required an abrupt realignment of prices in many markets to reflect the expected costs of operating in what we now recognize as a more hostile world. these circumstances pose a difficult challenge for business decisionmaking, not so much because the costs are inordinately large, but because the events, which have potentially substantial consequences, are so uncertain. insurance deals with this problem by spreading the risk and converting potential large unknown costs into a steady stream of known insurance premiums that facilitates the forward planning so essential to an effective business operation. obviously, sharp increases in insurance premiums for all forms of businesses are to be expected. some higher
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entrepreneurs who are financially excluded. access to improved financial services, through the provision of better ways of accumulating savings and access to credit to augment accumulated savings, avails funds for investment in income generating projects that help the public to lay foundation for better standards of living for themselves and their families. madam managing director, as your bank introduces these products on the market, please ensure that the pricing aspect is also critically looked at. many a time a good product is introduced on the market yet it is out of reach of ordinary citizens due to the costs associated with the products. consumers of these products expect an affordable service if indeed these are new and innovative products. banks need to show more commitment to the growth and development of the country by encouraging more zambians to open bank accounts through provision of easily accessible and affordable products and services. as i end my remarks, i want to remind all players in the financial sector that some of the challenges we face in our country today can indeed be mitigated by all stakeholders playing their respective roles. in particular, we have seen food prices increasing dramatically in the past few months. this is despite zambia possess vast arable land, relatively good weather and plenty of fresh water. further, zambia is predominantly an agricultural country, but lending to agriculture has been limited. the challenge therefore is to devise financial products that meet the requirements of the sector while at the same time devise means of protecting the financial institutions from the risks associated with lending to the agricultural sector. a vibrant agriculture sector will no doubt lead to a vibrant economy less dependent on the mining sector. i hope that standard chartered bank will lead the way in establishing affordable products and services for our small scale farmers throughout our country. i encourage you madam managing director in your capacity as the deputy chairperson of the bankers association of zambia to expand your horizon and collectively join hands with all stakeholders in addressing this problem. i thank you for your attention.
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pertinent issues as we continue seeking to re - evaluate both the nature of risk management and the role of regulation and supervision in the wake of the global financial crisis. once again let me welcome you all and wish you bon appetit! bis central bankers β speeches
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laurence h meyer : capital standards and community banks remarks by laurence h meyer, member of the board of governors of the us federal reserve system, at the ohio bankersaβ¬β’ day conference, columbus, ohio on 15 march 2001. * * * i am pleased to be here today to discuss capital standards at community banks. this topic does not reflect any apparent problem with the current capital standard for such organizations. the system has worked well for both supervisors and community banks. with some minor exceptions, it continues to work well. nonetheless, the issue calls out for discussion because of the new basel capital accord proposed in mid - january as well as the banking agencies'advance notice of proposed rule - making last october on possible revisions to community bank capital rules. by way of background, you may recall that the original basel accord, reached in 1988, was designed for large, internationally active banks. nonetheless, regulators in the united states applied it universally to all domestic commercial banks and bank holding companies. other countries took a similar approach. technology and banking practices have advanced since 1988, and especially for the large, complex banking organizations, the rule has developed serious shortcomings. risk - measurement techniques have improved ; the costs of generating, maintaining, and analyzing data have declined ; and capital markets have become more tightly intertwined. as a result, the current accord that worked well before these developments has proven to be far too crude for practices today, particularly practices at large, complex banking organizations. supervisors in industrial nations have concluded that they need a capital measure for these large banks that is both more risk - sensitive and more compatible with current market practice than the current accord. my focus today is on what all of this means for the overwhelming majority of u. s. banks, specifically community banks. the new basel proposal clearly applies to all of the institutions we supervise under our program dealing with large, complex banking organizations. but that program covers only about twenty domestic entities of the nearly 9, 000 u. s. banks, almost all of which have assets exceeding $ 40 billion. the vast majority of banks in this country are neither large nor complex and seem to be unlikely candidates for a high - maintenance capital standard that requires costly and extensive riskmanagement systems. more than 98 percent of u. s. commercial and savings banks, for example, have assets of less than $ 5 billion, and 95 percent have assets of less than $ 1 billion. last fall, in anticipation of the basel proposal, the u. s. banking
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achieve and maintain price stability. achieving this objective implies keeping inflation at 3. 0 %. our monetary policy employs the inflation targeting strategy, whereas the exchange rate employs a free floating regime. the monetary policy of the bank of albania is forward looking ; it aims to be a flexible, balanced and transparent policy. bis central bankers β speeches the albanian economy has been facing, for some time, a sluggish economic environment. during 2014, our monetary policy was drafted and implemented amid low inflationary pressures and below - potential economic growth. annual inflation, in 2014, averaged 1. 6 %, standing lower than the 1. 9 % average rate recorded a year earlier. the low inflation rates were dictated mainly by low pressures generated in the domestic economy, as well as by the low inflation rates in our trading partners and low inflation expectations by economic agents. according to the albanian institute of statistics ( instat ) data, the albanian economy grew 1. 9 % in 2014, against the 1. 5 % growth in the previous year. economic growth was driven mainly by the domestic demand and β excluding construction β it was reflected in activity expansion across all the sectors of the economy. economic activity grew, benefitting from the eased financing conditions as well as the improved confidence and balance sheets of the real and financial sectors of the economy. these factors contributed to the increase in private consumption and investments. excluding the payment of arrears, the fiscal policy has been consolidating during 2014. on the other hand, trade exchanges with abroad did not generate positive impulses for economic growth. regardless of the higher growth rate, the albanian economy continued to operate below its potential. as a result, production capacities were not fully utilised and the situation has dictated unemployment rates, which go beyond the equilibrium level. as we have mentioned earlier, the spare capacities in the labour market lead to low increase in wages, production costs and final prices in the economy. these phenomena have been present in albania during 2014. in bank of albania β s opinion, aggregate demand is the main problem facing the albanian economy ; thus, addressing it requires the increase of macroeconomic stimulus. reflecting the above, our monetary policy has been increasingly accommodative. the bank of albania lowered the key interest rate three times in 2014, bringing it down from 3. 0 % to 2. 25 %, and further down to 2. 0 % in the first quarter of 2015. our monetary operations consisted in continuous liquidity injection in the banking system,
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gent sejko : launch of the ebrd transition report 2022 - 23 opening remarks by mr gent sejko, governor of the bank of albania, at the launching of the ebrd transition report 2022 - 23, tirana, 30 january 2023. * * * dear representatives of the ebrd, dear friends, colleagues and media representatives, first, i would like to thank you for participating in the presentation of the transition report 2022 - 23 by the european bank for reconstruction and development. as always, this report remains a professional and authoritarian analysis about the performance of transition economies in convergence process, fully reflecting the short and medium - term challenges they face, as well as a precious guideline of stabilisation and development policies needed to support a sustainable economic and social progress. in this context, it is a special pleasure for the bank of albania to host again this event, which brings together researchers of this field, important actors of public and private sectors, and representatives from the financial industry. i am confident that this discussion forum will facilitate the exchange of the ideas in addition to the identification of the necessary measures to address the challenges that lie ahead. before leaving the floor to the ebrd representatives to present the report, allow me to share with you the opinion of the bank of albania on some of the main issues addressed in it. the remit of this year's report are the economic headwinds arising from the war in ukraine, considered in both short - and - medium term as well as in long - term perspectives. this tragic war has caused huge losses of human lives, mutilations and long - term social consequences, while it has shaken the global geopolitical order. rightfully, this transition report highlights that we are experiencing an unusual time, and for most part of society, unimaginable till some time before. in economic perspective, this conflict was a strong supply - side shock across all the european continent. this shock was reflected in surged inflation rate and heightened uncertainty, worsened trading terms, expanded current account deficits, and tightened financial conditions. against this backdrop, within a short time of period, after the end of the pandemic emergency, the regional economies had to face another major challenge, which jeopardised the economic and financial stability and harmed the economic growth prospects for the future. naturally, the albanian economy was not an exemption of this reality. after a rapid and thoroughly economic rebound in 2021, the external
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of information technology, we expect that the launched electronification program may serve as a drive to answer this challenge by providing services to such people in a safe and efficient manner. ladies and gentlemen, distinguished guests, bank indonesia β policy to promote less cash society 26. bank indonesia β s authority in payment system is embodied in the following 4 roles : ( 1 ) establishment of policy, ( 2 ) authority in the entry and exit policy of payment system industry, ( 3 ) payment system operators, and ( 4 ) oversight. through such 4 roles, we may determine the future direction of payment system development. 27. the established policy is directed to achieve targets of non - cash transactions of up to 2. 4 times of gdp by 2015 and 3 times of gdp by 2016. the entry and exit policy aims to make the payment system industry healthier and ready to compete with the global industry. as an operator, bank indonesia consistently builds a safe and reliable payment system following the requirements of the community and payment industry. lastly, bank indonesia continuously strengthens payment system oversight to ensure any payment system development innovation is followed by good risk mitigation aspect which in turn will increase public trust in non - cash payment system. 28. to boost non - cash expansion, bank indonesia has launched less cash society achievement strategy in 4 focus activities, namely ( 1 ) change of public culture bis central bankers β speeches towards non - cash transactions, ( 2 ) expanded services of non - cash payment, ( 3 ) development of supporting infrastructure, and ( 4 ) alignment of regulations. 29. first, culture change strategy will be realized through an integrated campaign involving all stakeholders. we will seek facilitation with the government and the relevant institutions which may potentially serve as the catalyst of use of payment system electronification. the efforts made jointly by bank indonesia and the industry among others are e - ticketing cooperation in public transportation sector and development of government β s assistance distribution ( government to people ). 30. on the other hand, we are also seeking to increase public awareness on non - cash transactions through a sustainable education program, like integration of non - cash study into the education curriculum. 31. second, expanded payment electronification is also an integral part of financial inclusion policy to increase the access of unbanked people to financial institutions. through the use of information technology, we expect that the launched electronification program may serve as a drive to answer this challenge by providing services to such people in a safe and efficient manner. 32. bank
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agus d w martowardojo : the future of asia β s finance β financing for development welcoming remarks by mr agus d w martowardojo, governor of bank indonesia, at the joint imf - bank indonesia conference β the future of asia β s finance : financing for development β, jakarta, 2 september 2015. * * * β’ honorable managing director christine lagarde, the co - host of this conference ; β’ honorable minister bambang brodjonegoro, β’ honorable governors, deputy governors, ambassadors, representatives from regional and multilateral institutions, business community, our colleagues from academics, distinguished panelists, β’ ladies and gentlemen, good morning and warm welcome to all of you. 1. it offers me great pleasures to welcome you to this conference jointly co - hosted by bank indonesia and the imf with the topic of β the future of asia β s finance : financing for development. β the topic is indeed crucial considering wide financial gaps still exist in the region. in this regard, searching for an optimum financing would be challenging in the midst of current circumstances. 2. before i share my views on financing issues, allow me to discuss the global economic development. asia β s finance is now facing great challenges. in the near term, we may still confront an episode of heightened capital flows volatilities as consequences of unfavorable global economic condition. sluggish global economic growth continues to depress production and outlook. strong u. s. dollar following partial u. s. recovery and easing in europe and japan have tested some of asia β s economic buffers. weak commodity price has significantly hurt exports of some key regional economies. and more recently, china β s decision to rejuvenate its moderating growth through exchange rate policy has made the risk of external funding intensified. in fact, the increasing, yet again, global financial volatility, in a tune of 2013 global tantrum, is happening as we are sitting here, and it has led to a pull - back in capital flows from some emerging markets, including in asia. 3. while asia has remained broadly resilient to the risks, and it has led global growth for the past thirty years, its role to support global economic recovery seems to be weakening a little bit. a number of emerging market economies in the region are experiencing a declined economic growth and facing increased financial vulnerability, mostly related to capital reversal. 4. asia definitely needs the right policy mix to secure growth and
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mario draghi : ecb press conference β introductory statement introductory statement by mr mario draghi, president of the european central bank, and mr vitor constancio, vice - president of the european central bank, frankfurt am main, 8 november 2012. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. we will now report on the outcome of today β s meeting of the governing council. based on our regular economic and monetary analyses, we decided to keep the key ecb interest rates unchanged. owing to high energy prices and increases in indirect taxes in some euro area countries, inflation rates are likely to remain above 2 % for the remainder of 2012. they are expected to fall below that level in the course of next year and to remain in line with price stability over the policy - relevant horizon. consistent with this picture, the underlying pace of monetary expansion continues to be subdued. inflation expectations for the euro area remain firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. economic activity in the euro area is expected to remain weak, although it continues to be supported by our monetary policy stance and financial market confidence has visibly improved on the back of our decisions as regards outright monetary transactions ( omts ). at the same time, the necessary process of balance sheet adjustment in large parts of the financial and non - financial sectors as well as high uncertainty continue to weigh on the economic outlook. it is essential for governments to support confidence by forcefully implementing the necessary steps to reduce both fiscal and structural imbalances and to proceed with financial sector restructuring. the governing council remains firmly committed to preserving the singleness of its monetary policy and to ensuring the proper transmission of the policy stance to the real economy throughout the euro area. as we said before, we are ready to undertake omts, which will help to avoid extreme scenarios, thereby clearly reducing concerns about the materialisation of destructive forces. let me now explain our assessment in greater detail, starting with the economic analysis. euro area real gdp contracted by 0. 2 %, quarter on quarter, in the second quarter of 2012, following flat growth in the previous quarter. as regards the second half of 2012, the available indicators continue to signal weak activity. while industrial production data showed some resilience in july / august, most recent survey evidence for the economy as a whole, extending into the fourth quarter, does not signal improvements towards the
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and implement reforms fast. the natural tendency for most politicians is to favour gradual adjustment. β gradualists β say that in case of fast changes the risk of possible policy mistakes is higher, leading to losses in physical and human capital. opponents of that view, including myself, certainly acknowledge those risks. but we feel that the costs of delayed action may sometimes outweigh its benefits, as postponing the inevitable and failing to accept the changed reality will lead to additional unnecessary costs. one should not want to keep alive old structures that clearly cannot be sustainable in the changed world for longer than necessary. this is a waste of limited resources and reduces long - term productivity. there is a saying that β a crisis should not be wasted β β negative shocks to an economy should lead to productivity gains. our experience shows that quick decision - making and decisive policy actions can shorten the period of uncertainty that also weighs on economic activity. people and entrepreneurs in countries with delayed reforms overreact, leading to a higher level of risk aversion than necessary. overshooting in risk aversion results in lost jobs and postponed investments. bis central bankers β speeches estonia, for example, lost almost 20 % of its gdp during the crisis. by now we have regained the pre - crisis level, contrary to many countries that preferred to delay the necessary reforms. some of them still face years of decreasing economic output. in summary, i would like to stress that prolonged fiscal consolidation and structural reforms can lead to unnecessary costs to the society. some countries have chosen to delay the pain and take only gradual steps with their structural reforms, but this has in fact resulted in a reduction of the overall economic activity to the extent that might be no less than the shortterm cost of a quicker adjustment. the difference is that they are still not done and cannot hope for a rebound that might otherwise be there. bis central bankers β speeches
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marzunisham omar : supporting the robust growth of islamic finance in malaysia welcoming remarks by mr marzunisham omar, assistant governor of the central bank of malaysia ( bank negara malaysia ), at malaysia country showcase - ifsb summit 2017, kuala lumpur, 22 october 2017. * * * welcome to malaysia country showcase. i would like to express my sincere appreciation to all of you for being here today. i hope that today β s showcase will enhance your understanding of the critical role that professional ancillary services and talent development institutions play in supporting the robust growth of islamic finance in malaysia. indeed, these professional services, which include shariah consultancy, legal, accounting and talent development, are an integral part that make up malaysia β s vibrant islamic finance system. with islamic finance fast gaining a strong foothold in many countries, malaysia hopes to be able to contribute to this dynamic phase of islamic finance development by providing an array of reliable, high quality professional services ; one that is backed by decades of experience. today, malaysia has a competitive islamic finance that forms part of the mainstream financial system. islamic banking assets now account for 28 % of malaysia β s total banking assets, while more than half of our bond market comprises sukuk. we have a diverse range of islamic financial institutions, both domestic and foreign, which provide competitive, innovative products to meet the varied and unique needs of individuals and businesses. what we have today was not built overnight. the islamic finance journey in malaysia has been long and its beginnings were humble. it is the product of three decades β work in building strong foundations for the sector to thrive and grow. in reflecting on our journey of developing a vibrant islamic financial system, imperatives in three areas stand out β infrastructure ; players ; and talent. allow me to briefly elaborate on these three areas. first, infrastructure. similar to developing a conventional financial system, having a robust regulatory and supervisory regime is critical for the development of a strong, resilient and inclusive islamic financial system. what is unique about islamic finance is the need for a clear shariah governance framework to ensure shariah compliance. in malaysia, the islamic financial services act 2013 sets out a regulatory framework for end - to - end shariah compliance. bank negara malaysia is vested with comprehensive legal powers under this act to regulate and supervise the islamic financial system. complementary to this is the role of the shariah advisory council in ensuring greater certainty in shariah. while our sharia
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migrants ( in courier services and construction ) has surged over this period, companies still experience a deficit of labour migrants. consequently, the rise in the demand for labour in various groups of employees is translating into the steady increase in nominal wages. in the course of the discussions preceding our today β s decision, several executives of our regional branches stressed that increasingly more companies were forced to raise wages at a double digit pace to be able to retain their employees. the staff shortage is a factor limiting enterprises β capacities to expand output. it is hard for them to catch up with growing demand. this suggests that proinflationary risks brought about by labour market gaps are strengthening. monetary conditions continue adjusting to our earlier decisions on the key rate. after the meeting in october, nominal interest rates, including on federal government bonds, deposits, and loans, continued to go up. yields on federal government bonds rose over the entire curve. the growth of short - term yields has been mostly driven by the increase in the key rate and the updated forecast of its further path, whereas long - term yields are largely influenced by the escalation of geopolitical tensions. nominal interest rates on loans and deposits are rising. however, given the current level of inflation and inflation expectations, monetary conditions remain neutral in the meantime. this is evidenced by the persistently high growth rates in lending, as well as the still slow rise in deposits. businesses and households continue to demonstrate high demand for loans. nonetheless, the increase in unsecured consumer lending has started to slow down, which was promoted by additional macroprudential limits on high risk loans imposed on 1 october. as regards ruble - denominated time deposits, their growth in november β the first ten days of december continued, but its pace is still as slow as in october. on the one hand, higher interest rates make time deposits a more attractive savings instrument. on the other hand, banks artificially limit depositors β opportunities to use these new, more profitable offers. banks offer different deposit terms for the so - called β old β and β new β money. there are barriers in the form of fees that depositors need to pay to transfer their funds from one bank into another. we believe that such differentiation, or to be more exact, discrimination is inappropriate and have already proposed a number of initiatives to eliminate it. we hope that legislative authorities will support 2 / 4 bis central bankers'speeches our ideas. this will not only protect bank customers β rights,
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stable and liquid. in fact, the stability of our banking system in the midst of global turmoil has been a factor in our country finally getting out of junk status and receiving investment grade from s & p and fitch credit rating agencies. this is important. a higher credit rating generally enables a country and its corporations to have access to international capital markets at lower rates. similarly, our continuing efforts to involve and engage our stakeholders on key policy issues have produced positive results. for instance, our quarterly consumer expectations survey of 5, 000 households and business expectations survey of our top 7, 000 corporations help us formulate sound policy decisions. the continuous improvement in the quality of our surveys and our consultative approach provide a good anchor for the monetary policies of the bangko sentral ng pilipinas, the objective of which is to keep prices low and stable. in fact, when we tracked the correlation bis central bankers β speeches between the results of our expectation surveys with actual data on the gdp, inflation, interest rates and foreign exchange we found significantly high overall convergence. as a result, the bangko sentral β s policy decisions continue to provide the stability that preserves the public β s purchasing power and creates a planning environment conducive to strong and sustainable growth. in particular, we continue to be successful in taming inflation at low single digit levels β 2. 8 % as of june 2013, with year - to - date inflation at 2. 9 percent. and with bsp β s policy rates now at record low levels, average interest rates charged by banks to their customers have also dropped to single digit levels. this has benefitted consumers in terms of gaining access to more affordable credit while business is able to expand and create new jobs with lower financing costs. we are also heartened by our progress in developing a more inclusive financial system, the implementation of our nationwide economic and financial learning program, and enhancing protection for finance consumers. ladies and gentlemen. the ability to make informed financial decisions is now recognized globally as a life skill needed if one is to be successful. again, how to communicate finance lessons across different sectors, regions and age groups is a challenge the bangko sentral has taken up. finally, we observe that the resilience of our economy strongly reflects the efficient performance of our communication exchange with key stakeholders. to us at the bangko sentral therefore, efficient communication leads to transformational growth. of course, you and i know communications is always fraught with challenges. wittingly or
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unwittingly, statements from the bangko sentral move markets. the same is true of other central banks. we have also witnessed how global markets β big or small β can rise or fall sharply in reaction to statements from central bank heads. us federal reserve chairman ben bernanke today and alan greenspan before him come to mind. in the same vein, the european central bank said credibility and effectiveness of monetary policy come with effective communication. indeed, as much as credible policy actions, effective communication is of fundamental importance to central banks. and for this reason, this lifetime award on communication excellence from the iabc is truly meaningful and deeply appreciated. i also thank my fellow central bankers at the bangko sentral ng pilipinas who have been part of my journey as a public servant. and finally, i take this opportunity to thank my family, particularly my wife elma and my children, for their unconditional love and support. i can say i am truly blessed. maraming salamat sa inyong lahat! bis central bankers β speeches
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of england / nop public attitudes to inflation survey.
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a new stage of developing a liquefied natural gas project as well as a gas condensate project. the outcome is high demand for gas exploration licenses and many new companies have commenced exploration work. the investment incentive and tax regimes are considered very competitive and favourable. the areas with great potential are in tourism specifically eco - tourism, agriculture, and small to medium sized manufacturing. these are the least developed sectors and the ones that badly need entrepreneurial initiatives and skills. these are the industries that in the long run will provide the back bone of economic growth and income generating opportunities and employment for the great majority of the population. in our thirty one years of independence we have had, fourteen years of stable low growth up to 1989, ten years of very difficult times up to 1999, following the bougainville crisis. this lost decade was characterized by gross mismanagement of the economy that resulted in an almost default on our foreign currency liabilities in 1994, which forced us to float the kina our national currency, the sandline affair in 1997 of hiring mercenaries to fight on bougainville, an almost second default in 1998 to 1999, the combined effect of a very severe drought, the asian financial crisis and the world economic slowdown exacerbated by continued gross mismanagement of the economy. we were very fortunate that in mid 1999, a new government was formed, that undertook some major reforms. it took four years to stabilize the economy, re - establish the confidence of the public, and realising that the constitutional changes introduced to the political system through the integrity of political parties act, will result in political stability. we are experiencing for the first time a government which lasted a full term of five years. these developments assisted by very high commodity prices of oil, copper and some of the agricultural exports like rubber, resulted in a very stable macroeconomic environment, of fiscal surpluses, low inflation, low interest rates, an appreciating exchange rate and fast accumulation of foreign exchange reserve. i am not going to bore you with numbers, but just as an indication, our foreign currency reserves increased from around us $ 300 million to us $ 1. 5 billion in three years, and the increase is continuing. inflation and interest rates are lower than in australia. economic activity as measured by gdp growth is around 4 percent in recent years. for a low income developing country it is very low. to ensure that the great majority of the population is benefiting from the mineral boom we have to
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workshop fruitful and informative. please feel free to bring to our attention the kind of facilitation that you may need to make this workshop successful. thank you very much.
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development aspirations are taken into account in formulating the policy position. the payments system has undergone active modernization that began in 1998 to develop a world - class payment system to ensure : increased efficiency and effectiveness of the clearing and settlement ; provision of a variety of instruments and mechanisms for an integrated, modern and technologically sound payment system for transfer of funds between transacting parties ; reduction and containment of systemic and other payment related risks ; reduction of settlement cycles ; enhanced access to financial services and promotion of kenya as a competitive regional and international financial center. given the importance of payment and settlement systems in the economy, the central bank, with the support of kenya bankers association, implemented a real time gross settlement system two years ago going by the acronym kepss ( kenya electronic payment settlement system ). the central bank is happy with the way that the banking sector adapted to its usage especially for inter - bank payments. i commend the banking fraternity for this cooperation. the total value of transactions processed through the system increased by 71. 4 % from kshs 496. 3 billion in august 2005 to the current level of kshs 850. 7 billion. a commercial bank survey conducted in july 2007 indicated that 75. 1 percent of the users were corporate while 24. 9 percent were individuals. central bank is, however, convinced that this system β s usage for third party payments can still be enhanced and accordingly, the bank is seeking your support in achieving this objective by way of pricing the service competitively among other contributions. the bank has also initiated action in a number of areas namely : linking the central government and kenya revenue authority to kepss and capping the value of payments processed through the clearing house in order to reduce systemic risk associated with the large value payments while at the same time increasing the number of transactions processed on a rtgs basis. turning to the retail payment sector, the central bank has observed increased use of plastic money or payment cards and the use of mobile phones to transfer money in kenya. in a recent survey carried out by the central bank, atms in kenya grew from 648 in june 2006 to 844 in june 2007. the mobile phone as a means of transferring money was introduced early in the year and is recording rapid increase in usage especially for rural to urban funds transfers. this phenomenal growth is evidence of the modernization and innovations taking place in payments in the country. in order to facilitate this growth further, banking institutions are encouraged to expand access to the rural areas without ignoring the
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alex brazier : a macroprudential approach to bank capital β serving the real economy in good times and bad speech by mr alex brazier, executive director for financial stability strategy and risk of the bank of england, at the 27th annual institute of international bankers conference, washington dc, 7 march 2016. * * * i am grateful to rob edwards, jas ellis and calum mitchell for their assistance in preparing these remarks. your industry has known better starts to a year. bank stocks down, volatility up, earnings disappointing. all ghosts of crises past. but one ghost has not returned to haunt us. questions about returns haven β t translated as they β ve done before into questions about resilience. investors may have real questions about whether some banks can generate adequate return on equity in a difficult global economic and trading environment. they may also be more alert to the risks in and appropriate returns to contingent capital instruments. but when uk bank price - to - book ratios were this low in 2009, senior unsecured debt spreads were over 350bps. at the height of the euro crisis in 2011, they were 300bps. today, they are just 73bps ( chart 1 ). underlying that is the transformation of bank capital. in the uk, major banks now have core tier 1 equity ratios averaging nearly 13 %. before the financial crisis they had β on basel iii definitions β just 4. 5 % ( chart 2 ). those new levels of resilience are seen in the results of stress tests. last year, the bank of england subjected uk banks to a sharp slowdown in china, a fall in oil prices and intense market volatility, coupled with stressed estimates of redress costs for past misconduct. across the system, banks in the test incurred losses of Β£37bn. that β s over twice the losses of the system in the financial crisis. back then, losses on that scale would have wiped out almost two thirds of the capital of the entire british banking system. with so much more capital today, the stress test showed those losses could be absorbed, even while the system continued to grow credit to the real economy. far from sideswiping the real economy under stress, the test showed the banking system could continue to support it. 1 and yet, there is still, eight long years after the crisis, a lively debate in newspapers, blogs and academia, about whether the capital strength of the banking system should be built up further. available at http
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cost with net present value of 0. 6 % of gdp. 7 this all raises an important macroprudential question : how to best protect the real economy without the unnecessary risk of holding it back? our answer in the uk has three parts. first, to protect the economy from the consequences of bank failure. and to do so at minimal economic cost. effective bank resolution unlocks this. with minimum disruption to existing funding structures, it opens the door to preserving the functions of failed banks without recourse to the taxpayer. serious progress has been made in building resolution regimes. an eu - wide legal framework is now in place. cross - border arrangements have been stepped up. agreements have been reached on temporary stays to closing out contracts in resolution. and the g20 agreement on total loss absorbing capacity ( tlac ) standards for global systemic banks has a game - changing principle at its heart. systemic banks must have the capacity to replenish capital, up to minimum regulatory standards, even if all capital β of all tiers β has been completely burned through. 8 it β s a game changer because it hardwires the recapitalisation of failing banks. bailedin debt holders become, very quickly, the proud new owners of the bank. case study evidence is striking. rapid recapitalisation of failed banks speeds economic recovery. it cuts the long - term costs of systemic bank failure in half. but resolution through bail - in is more than a fire extinguisher. it β s a non - flammable coating of the banking system too. it helps to prevent bank failures in the first place. unsurprisingly, the evidence is that when debt holders face the consequences of failure, banks take fewer risks. international estimates suggest that the removal of the heads - i - win - tails - you - lose β too big to fail β subsidy cuts the risk of failure by a third. as you know, the removal of that subsidy isn β t a pipedream. rating agencies are already removing β state support β uplifts from bank debt ratings. 9 and yes, it will raise this is very similar to estimates of miles et al ( 2012 ), who find the effect of increasing capital from 3 % of total assets to 6 % of total assets to be around 6 % of gdp. the bank of england, as uk resolution authority, is now consulting on proposals to implement that principle in the uk for all systemic banks, as it must
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christian noyer : no moral hazard β the banks are doing their job comment by mr christian noyer, governor of the bank of france, in the financial times, 18 september 2007. * * * in recent weeks, central banks in europe and the us have acted repeatedly to provide liquidity to interbank money markets. these interventions have raised some questions. concerns were expressed that monetary authorities were bailing out speculators, thus creating the same kind of moral hazard that may have led to excesses in the past. there were also concerns as to whether the integrity of monetary policy would be compromised. these are valid questions. on numerous occasions, in the past, we pointed out the potential dangers that mispricing of credit risk posed for financial stability. we may be now seeing some of the consequences. excessive risks were taken, and losses will have to be accepted. it is important that monetary and financial authorities take no action that would prevent this process from running its course, let alone be seeing to be condoning past or future excesses. however, the logic behind recent interventions is different. put very simply, financial turbulence and uncertainty have suddenly triggered an upward shift in the demand for central bank money. faced with such a shift, whose direction is apparent but amplitude uncertain, the choice, for monetary authorities, is clear : either accommodate, and provide temporary liquidity ; or not, in which case, interest rates would have to rise to restore balance in the interbank market. standard economic theory dictates that, in such circumstances, exogenous changes in money demand should indeed be accommodated. in a seminal article going back to 1970 1, william poole showed that, when there is uncertainty about money demand, the optimal response is to stabilize the interest rate, thus letting money supply adjust. since short - term interest rates are, for all central banks, the main policy tool, an increase in interbank rates over and above the official rate would indeed be tantamount to a shift in monetary policy. in contrast, liquidity provision by central banks has ensured that the overall policy stance has remained unchanged. a clear distinction has been β and will be β maintained between temporary liquidity provision, on the one hand, and medium term oriented monetary policy, on the other. should liquidity be provided at a penalty rate, as some have argued, to avoid moral hazard? the answer is clearly positive if and when liquidity assistance is targeted at specific institutions. but there is no reason, for central
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the crisis. looking ahead they remain anchored even in the distant future. yet, the ecb has to continue earning the confidence it has acquired. the operational framework of the eurosystem, through which monetary policy is implemented, has proven to be resilient and effective. the ecb was the first central bank to respond to what was initially called β financial turmoil β. a very important part of the ecb β s policy responses came in the form of cutting rates and providing liquidity against collateral. in order to prevent a serious credit - crunch β and preserve the proper transmission of monetary policy β the ecb embarked in a series of exceptional monetary measures. for example, last december the ecb decided to hold two very long - term refinancing operations with a maturity of 3 years against adequate collateral. the first was conducted already in december, and the second is forthcoming. these measures are supporting the liquidity planning of banks, thus allowing the flow of credit from banks to the real economy. bis central bankers β speeches hence, the ecb has delivered in line with its mandate. however, looking ahead we have to ensure that this will remain so. risks that monetary policy may be overburdened in the future need to be counteracted. the primacy of sound monetary policy and price stability must be safeguarded. it is our shared asset in the euro area. in order to safeguard sound money, the other elements of ordnungspolitik also need firming up. i now turn to them. sound finances sound finances entail two components. the first is sound public finances, while the second is provided by sound financial markets. the crisis has shown that fiscal stability and financial stability are linked. unfortunately, both have struggled throughout this long, and mutating, financial crisis. yet, there has been progress on both components. a point sometime missed is that some of the root causes of the crisis go very far back in time. in many societies there was an excessive build - up of debt in recent decades : both sovereign debt and private sector debt ( household & corporate ). warnings were voiced repeatedly, also by the ecb. but, the start of serious debt consolidation was continuously postponed, offloading on future generations. there was too much complacency, although many debt sustainability analyses showed that there was a limited period of time to truly address the problem. the crisis has cut the room for manoeuvre. the economic downturn that
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know for certain that the growth of gdp per capita is highly correlated with productivity growth, and that without an increase in productivity, there can be no further progress or growth in living standards. what is happening in europe regarding economic growth and productivity? the good news is certainly that the imf expects a gradual acceleration of economic growth and a slowdown in inflation in the euro area, as well as in other eu countries with which we 1 / 4 bis - central bankers'speeches have strong trade and financial ties. such developments should positively affect serbia's growth prospects and lead to lower inflation. however, there is always a " but... " although economic growth in europe is on an upward trajectory, the report that the colleagues will present today highlights that it is still below its potential, and that the rate of growth of potential output is low. specifically, per capita income is 30 % lower in europe compared to the united states. the income gap reflects the declining productivity growth in europe, which extends to individual companies, as well as to the breakthroughs in information and communication technology and research and development, which are better utilised by american companies. this report by the imf serves as a kind of alarm to take appropriate steps as soon as possible to boost productivity growth and stimulate the european economy more strongly. and not only that. the report outlines economic policies that should improve growth prospects and the reforms that need to be implemented across europe to create conditions in which european companies can continue to grow, develop, and leverage economies of scale and advanced technology. in this regard, i find particularly important what is highlighted in the report, and it is here that i see opportunities and potential benefits for serbia as well, namely : 1. the fact that a deeper and larger single european market would enable productivity growth ; 2. that european integration in the two previous waves of eu enlargement ( 1995 and 2004 ) brought tangible benefits ; and 3. that further accession process could have a similar effect. the fund's analysis indicates that income gains after 15 years of enlargement amount to about 30 % in the new eu member state and about 10 % in the eu countries that have been members since its founding. so, we are talking about significant mutual benefits. serbia is a candidate country for eu membership, and we have clear goals. through responsible economic policies, the implementation of structural reforms focused on productivity growth, and diversification in every sense, we are accelerating the process of convergence to the developed market economies of europe
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adequate cushion against losses, especially during times of financial instability or stress. supervisors should continue to support approaches that minimize the negative consequences of risk taking by financial institutions, particularly those institutions that could contribute to financial instability. one such approach is the basel ii framework. by now most of you are aware that last month the u. s. banking agencies released their latest proposals with respect to basel ii and are now seeking comment on those proposals. i imagine that many of you have already read these extensive documents. the u. s. banking agencies are eagerly awaiting comments on the proposals and now expect to engage in a continuing dialogue with all interested parties as to whether the proposals meet our stated objectives and how they can be improved. we hope that those reviewing the documents understand that basel ii is intended to promote the stability of the u. s. financial system by ensuring the safety and soundness of the largest u. s. banks. thus, the ability of basel ii to promote safety and soundness is the first criterion on which the proposed basel ii framework should be judged. indeed, the federal reserve's main reason for pursuing the advanced approaches of basel ii is the growing inadequacy of current basel i regulatory capital rules for the large, internationally active banks that are offering ever more complex and sophisticated products and services. we need a more risksensitive capital framework for these particular banks, and we believe that basel ii is such a framework. in addition, basel ii promotes risk - management enhancements and improves market discipline, as well as providing supervisors with a more conceptually consistent and more transparent framework for evaluating systemic risk, particularly through credit cycles. basel ii should be able to establish a more coherent relationship between regulatory measures of capital adequacy and day - today supervision of banks, enabling examiners to better evaluate whether banks are holding prudent levels of capital given their risk profiles. the reasons for pursuing basel ii also provide justification for the recent basel revisions to the 1996 market risk amendment ( mra ). since adoption of the mra, banks'trading activities have become more sophisticated and have given rise to a wider range of risks that are not easily captured in their existing value - at - risk ( var ) models. for example, more products related to credit risk, such as credit default swaps and tranches of collateralized debt obligations, are now included in the trading book. these products can give rise to default risks that are not captured well in methodologies required by the current rule specifying
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policymakers, to students and to the very data we collect. coming from a central bank that has a mandate for both financial stability and financial sector supervision, diversity is vital. as a regulator, we actively recognise and promote the need for increased diversity in the firms we regulate. indeed a lack of diversity at senior levels is associated with some of the problems that contributed to the financial crisis. issues such as groupthink, insufficient challenge, poorly assessed risk, and problems with culture. these are compelling reasons why organisations and businesses should themselves ensure greater gender diversity at senior level. evidence shows us that diversity can lead to improved outcomes in terms of governance, decision - making, and productivity. research shows that female participation on bank boards has a positive effect on bank performance once a threshold is reached. 2 also that the very diversity of the board can mitigate groupthink, bringing a mix of values, beliefs and attitudes. 3 in terms of business, there is evidence on how gender diversity can affect the process and quality of decision making. 4 studies suggest that a higher female presence in top management could help develop better types of leadership behaviour across organisations β namely people development, setting expectations and rewards, providing role models, and participative decisionmaking. 5 furthermore, reducing gender differences between management and staff can enhance worker productivity. 6 beyond regulation, as central bankers, many of our decisions on monetary policy and on financial stability are made by people with a background in economics. and we know that perspectives differ by gender. a recent imf study shows that economists views on issues such as the fairness of the labour market and the desirability of government intervention varies systematically by gender. 7 different views by gender, were also evident on environmental protection in the same study. overall, female economists were more likely to support increased environmental protection than their male counterparts. recent research in germany shows that the gender of policymakers makes a difference. using the public provision of childcare as an example, the study shows that municipalities with a higher share of female councillors expand public childcare more quickly. 8 this difference in views is important when it is often economists that are designing policy that affects all households, businesses and lives for today, and crucially, for future generations. but it is not only looking at the policymakers today, we must also be conscious of the policymakers of tomorrow. speaking last year, president mary daly of the federal reserve bank of san francisco, noted that the gender of those entering economics in the us has
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) no. 575 / 2013 ( crr ) and directive 2013 / 36 / eu ( crd iv ) came into effect on 1 january 2014. the crr is directly applicable to all member states while crd iv has been transposed into irish national law via statutory instruments 158 / 2014 & 159 / 2014 [ european union ( capital requirements ) ( no. 2 ) regulations 2014 ]. further information. the bank recovery and resolution directive ( brrd ) provides national resolution authorities with comprehensive and effective powers for dealing with failing banks. this framework and related legislation enhances both the resilience and the resolvability of eu 6 / 7 bis central bankers'speeches institutions and in - scope investment firms, which will be better prepared to deal with, and recover from, a crisis situation. moreover, in the event that an institution does fail, the impact associated with that failure should be minimised. available here. 7 / 7 bis central bankers'speeches
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others as a consequence of the fresh outbreaks of the disease. in this context, the euro area outlook remains highly uncertain and the risks to the area tilted to the downside. at the same time, there are already signs that the pandemic may give rise to certain structural changes, although the full extent of these is, for the time being, difficult to know. in this context, for me the key for economic policies is to strike the right balance between supporting the recovery and spurring economic adjustment to the structural changes that will emerge after the pandemic. this means first maintaining support measures and avoiding cliff - effects. indeed, after the pandemic many euro area countries will be facing the highest level of public debt in many decades. and facing this challenge will require a gradual fiscal consolidation programme once the economy moves back onto a sound growth path. in the short run, however, the damage caused by the premature withdrawal of support measures would exceed the possible cost of maintaining them until the recovery shows signs of sufficient strength. notwithstanding, given the significant heterogeneity of the effects of this crisis, in particular in this recovery phase, support measures should be much more focused now and their timing adjusted to the duration of the crisis. in addition, we have to adjust the specific instruments used. in particular, the crisis has already generated an increase in the level of indebtedness of many firms. thus, it would make sense to assess the possibility of actions to support firms that do not involve an increase in financial obligations, such as, for example, by means of direct assistance or, in some cases through temporary capital injections. furthermore, for companies that have difficulty meeting their financial obligations, streamlined debt restructuring procedures need to be available to avoid such difficulties leading to the disappearance of heavily indebted firms whose business model is nonetheless viable. and, in parallel, for firms with non - viable business models, an orderly market exit should be available, since this would result in a more efficient allocation of resources. apart from these short - term actions, an ambitious structural reform agenda is urgently needed, to increase the economy β s potential growth, which was already low before this crisis. and this is also true for european policies. in this case, for example, it is crucial that the european fund be converted into a permanent, common fiscal stabilisation instrument for the euro area. this would allow a joint fiscal response to macroeconomic shocks and provide a larger supply of safe european assets,
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the second pillar, the stress test, began in may and will evaluate the ability to maintain adequate solvency levels under stress, using the methodology agreed by the ecb and the european banking authority. this process will conclude in september and the publication of the results of the whole exercise is expected in late october. after this disclosure, those banks facing a capital shortfall will have to submit their recapitalisation plans to the ecb. i would like to say that, as we all know, the spanish financial system has undergone intense restructuring and recapitalisation, as well as a significant consolidation process. i am confident that spanish banks are prepared for this rigorous exercise. setting up the single supervisory mechanism and making it operational is not going to be a simple task. both from the procedural and organisational standpoints, it will be a complex process, requiring great effort, and will be a major responsibility for those who take on the leadership of this new european union - wide institution. bis central bankers β speeches ms sabine lautenschlager β s responsibilities as member of the executive board of the european central bank and vice - chair of the supervisory board of the ssm place her in a unique position. i have no doubt that her intervention will be extremely interesting and informative to us all. bis central bankers β speeches
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those that are backed with an underlying asset and those that rely on an algorithm to continuously match the supply and demand of circulating units. unsurprisingly, the stablecoins that show the least volatility are those that back every issued unit with an equal amount of fiat currency. why use a proxy, then, if you can have the real thing β unless the issuers of that proxy seek to interfere with the control of trusted assets circulating in the economy the poor performance of crypto - assets is not an excuse for complacency, but rather a reminder of the importance of the central bank β s objective to maintain price stability. fulfilling this objective is conditional on the independence of the central bank, as ensured by a narrow but clearly defined mandate. central banks must not be overburdened with multiple goals without having the appropriate instruments to achieve them. this brings me to the role of the ecb in the oversight of market infrastructures. less is more the ecb has a treaty - based task to promote the smooth operation of payment systems, as part of which it takes a close interest in the regulatory framework for market infrastructures which clear and settle securities and derivatives in euro, in particular central counterparties ( ccps ). this reflects the systemic impact ccps can have in situations of extreme stress, by disrupting repo markets or channelling liquidity strains to banks β which are also monetary policy counterparties β thus affecting the circulation of liquidity in payment systems. ultimately, ccps may need to rely on central banks as lenders of last resort. central banks therefore have an important role to play in the regulation of central clearing β a notion which is largely recognised but often misunderstood. in this context, let me say a few words about recent developments in the area of ccp regulation, and in particular the outcome of the legislative process regarding the revision of the supervisory framework for ccps, the european market infrastructure regulation ( emir ii ), and the recommendation to amend article 22 of the statute of the escb and the ecb. the ecb recommended to eu legislators that its statute be amended to clarify that the ecb had legal competence over ccps, which would have allowed it to perform its statutory monetary policy role under emir ii. we made the case that the ecb needed explicit general competence to monitor and address risks relating to our mandate, including broad discretion to take necessary measures in exceptional situations where the stability of the euro is at stake. we also cautioned
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nestor a espenilla, jr : bsp and baiphil moving mountains - new heights in banking excellence speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the induction ceremony and general membership meeting of the bankers institute of the philippines ( baiphil ), makati city, 14 july 2017. * * * distinguished monetary board colleagues, juan de zuniga and tony abacan, baiphil president irene arroyo, immediate past president, liza ortiz, other baiphil past presidents, baiphil directors, officers and members, bap president nestor v. tan, bank ceos, my pdic colleagues, esteemed guests, friends, fellow bspers past and present, ladies and gentlemen, good afternoon! it is an honor and pleasure to carry on the tradition of inducting the new board members and officers of baiphil. as new bsp governor β¦ [ i assumed the post eleven ( 11 ) days ago ] β¦ it is auspicious that i now address the new leadership of baiphil β¦ on behalf of my colleagues in bsp and the monetary board, let me extend our congratulations. as new leaders, it is natural for us to aspire greater achievements for the teams we lead. this is why i find your theme : β scaling new heights in banking excellence β very engaging. the theme is both timely and relevant as we come into our fresh roles and as the financial system evolves. the theme mentions heights. to add imagery to this message, let me take mt. everest as a starting point. everest, known as the roof of the world stands twenty - nine thousand and thirty - five ( 29, 035 ) feet above sea level. this is the ultimate goal of hard - core mountain climbers, the highest of heights. on 29 may 1953, a new zealander, sir edmund hillary and a sherpa, tenzing norgay, successfully climbed mt. everest in the face of great risk. as documented, they were the very first mountain climbers to reach the summit. now, sixty - four ( 64 ) years later, the peak of everest is decidedly less lonely and more than 3, 500 climbers have already reached the top or β summitted β. a myriad of things have changed since then. but from the time it was first done to the present day, scaling everest or any mountain
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jerome h powell : comments on the fair and effective markets review speech by mr jerome h powell, member of the board of governors of the federal reserve system, at β making markets fair and effective for all β, sponsored by the brookings institution, washington dc, 20 january 2015. * * * the views expressed here are my own and are not necessarily shared by other members of the federal reserve board or the federal open market committee. i want to thank the brookings institution for inviting me to comment today on martin wheatley β s presentation on the fair and effective markets review ( review ). the review is an ambitious and important initiative. although london is perhaps the leading center for many fixed - income, currency, and commodities ( ficc ) markets, these markets are global, and the united states and the largest u. s. firms play key roles in them. so the review addresses issues that affect our markets as well. the review looks to identify further steps that should be taken to restore public confidence in ficc markets in the wake of the depressingly numerous instances of serious misconduct in these markets in recent years. that misconduct has been, and will continue to be, addressed through substantial fines and criminal prosecution of the firms and individuals involved. the federal reserve continues to take part in these enforcement actions in cooperation with other u. s. agencies. the design of the review is not only to advance the enforcement process, but also to look carefully at markets and firms and ask whether there are structural vulnerabilities or incentives for bad conduct that have not been well addressed by reforms to date. i will offer comments on a few specific areas and discuss some of our parallel efforts here in the united states. first, as the review notes, there is a perception that ficc markets and their participants are highly sophisticated and do not need protection. while that may be generally true, the perspective is too narrow, because the importance of these markets extends far beyond the largest participants in them. the market mechanism allocates credit and determines the borrowing costs of households, companies and governments. proper market functioning is really a public good that relies on confidence and trust among market participants and the public. bad conduct, weak internal firm governance, misaligned incentives, and flawed market structure can all place this trust at risk. one of the ways we have to influence incentives is through compensation practices at supervised institutions. many have argued that pre - crisis compensation practices at the largest financial firms allowed or created misaligned incentives.
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fund, november ). 5 / 5 bis central bankers'speeches
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' efforts interest rate : 0 % - - the measure will fall under category iii ( applied interest rate : 0 % ) in the interest scheme to promote lending twice as much as the amount outstanding of funds that counterparties receive will be added to the macro add - on balances in their current accounts at the bank duration of fund - provisioning : 1 year ; rollovers can be made until the end of the implementation period β effectively, long - term financing from the bank implementation period : in principle, until the end of fiscal 2030
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an international agreement like basel iii. but for this very reason, it is important that there be ongoing attention to the issue, in order to share ideas for action and monitor the steps various jurisdictions are taking to mitigate the risks. for example, we in the united states need to move forward with changes to money market funds and triparty repo markets to ensure that they do not serve as a trigger for wholesale funding runs. we also need to address further the issues raised by the dependence of some foreign banking institutions on large amounts of wholesale dollar funding. the responses to these issues may themselves involve a mix of national and international measures. a third priority is the area of otc derivatives, where strong capital standards alone are not enough to contain systemic risks. we know that otc derivatives dealers, as a by - product of that business model, become part of a global network of interconnected exposures. when one dealer in the network fails, as we saw in the case of lehman brothers, fear of losses at other dealers in the network can cause systemic stress. capital, which covers only a fraction of exposure, cannot alone prevent this contagion. to reduce the systemic risk of otc derivatives, the group of twenty ( g - 20 ) leaders have agreed to mandate that standardized otc derivatives must be cleared through a central counterparty. work in the united states is well under way to implement mandatory clearing. other countries have begun this work as well, but progress abroad has been slow to date. to help ensure that a global move toward central clearing of derivatives actually reduces systemic risk, it is critical that central counterparties in the derivatives market be very sound and stable. therefore, it is essential that the committee on payment and settlement systems ( cpss ) and the international organization of securities commissions ( iosco ) complete their important work on strengthening the oversight of central counterparties as soon as possible. to further build shock absorbers in the derivatives network, non - standardized derivatives that are not suitable for clearing should have margin requirements that are sufficient to prevent contagion when the next lehman fails. an international working group has been formed for this purpose. we hope to see considerable progress on this element of otc derivatives reform next year. institutional changes an audience of banking lawyers will appreciate the impact of the institutional features of international arrangements on the substantive output of those arrangements. in the time remaining this afternoon, i cannot do justice to this subject. but i do want to leave you with bis central bankers β speeches
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the ultra - accommodative monetary policy stance may increase over time. yet, higher interest rates are not likely to be to everyone β s liking. given the high level of government debt, central banks could find themselves coming under increasing pressure to pursue an accommodative monetary policy for longer than necessary. otmar issing, former chief economist of the ecb, recently issued a strong warning about a scenario in which monetary policy is dominated by fiscal policy : β if the government gains control of printing money, there will be no stopping it at some point. [ β¦ ] not straightaway, but sooner or later, inflation will follow, β issing said. 14 as central bankers, it is our responsibility to not let it get that far. conclusion ladies and gentlemen, the government acted swiftly and comprehensively in the coronavirus crisis. finding a way to exit crisis mode will be of equal importance. we also must be careful about the direction we take in future in view of the implemented crisis measures. in his inaugural speech, max warburg emphasised the value of free world trade for the benefit of all countries. 15 _ _ _ _ _ _ _ _ _ _ _ _ _ 14 o. issing, das ist ein tabubruch, interview by m. schieritz, die zeit, no 30 / 2020, 16 july 2020. 15 m. m. warburg, gesellschaft fur wirtschaftlichen wiederaufbau deutschlands und auslandskunde, spe - ech on the establishment of the ubersee - club, 27 june 1922, https : / / www. ueberseeclub. de / resources / server / pdf - dateien / maxwarburg. pdf page 18 of 19 deutsche bundesbank, directorate general communications wilhelm - epstein - strasse 14, 60431 frankfurt am main, germany, tel. : + 49 ( 0 ) 69 9566 3511, fax : + 49 ( 0 ) 69 9566 3077 presse @ bundesbank. de, www. bundesbank. de reproduction permitted only if source is stated. his speech was marked by the impact of the first world war and thus clearly highlights what a major achievement the european project is. our focus is now on moulding today β s europe into the shape we want it to take β not least in these challenging times. the ubersee - club β s values and traditions are a good guiding
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, remember, help firms to retain the employees they are going to need once the crisis has passed. these benefits might also be used, though, to tie workers to enterprises that have no future, thereby deep - freezing structures that are past their sell - by date. the more protracted the economic problems, the more questionable it becomes to deploy short - time working benefits as a way of making ends meet. _ _ _ _ _ _ _ _ _ _ _ _ _ 5 h. siebert ( 2001 ), der kobra - effekt β wie man irrwege der wirtschaftspolitik vermeidet, deutsche ver - lags - anstalt, stuttgart. page 8 of 19 deutsche bundesbank, directorate general communications wilhelm - epstein - strasse 14, 60431 frankfurt am main, germany, tel. : + 49 ( 0 ) 69 9566 3511, fax : + 49 ( 0 ) 69 9566 3077 presse @ bundesbank. de, www. bundesbank. de reproduction permitted only if source is stated. however, looking back at the financial crisis, during which entitlement to short - time working benefits had already been extended to up to 24 months, there is no evidence that structural change was held back. 6 rather, shorttime working benefits are regarded as a key reason why germany emerged from that crisis relatively unscathed. but perhaps the misguided incentives weigh more heavily today than they did back then. you see, the pandemic certainly has the potential to significantly accelerate the pace of structural change in our economy. to name just two examples, digital transformation could get a real boost, and the working world might change for good β with more people working from home, less business travel and fewer hotel stays. that said, there β s still no saying how far - reaching the long - term changes will be. most economists therefore consider it appropriate, given the severity of the crisis, to extend the period of entitlement to short - time working benefits to up to 24 months. yet still, it remains a balancing act. and as a quid pro quo, it would be important to scrutinise the merits of other special arrangements under the short - time working benefits scheme, such as the provision that the state pays the social security contributions. at the end of the day, the state needs to mitigate the risk that enterprises might use short -
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the accomplishment of inflation target over the medium term period, and provides at the same time the needed monetary conditions to support the sound development of economy. looking ahead, bank of albania shall continue to observe carefully the developments in inflation and in the other indicators of the economic progress, by analysing the need and time span in terms of a reaction from the monetary policy.
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import, signal a contraction of private investments even during the first three months of this year. the demand for monetary assets of private sector continues to be low, thus reflecting a deceleration of the economic activity. the annual pace of lending growth, excluding the exchange rate effect, for this sector slowed down onwards, at 4. 8 percent in march. business β demand for loans persists to be the sole lending increase source, whereas loan to households continues to shrink in annual terms, for the fifth consecutive month. during this period there are transmitted also the first signals on an easing of lending standards from banks, but this step is applied only on large - sized business. fiscal stimuli developed at more controlled paces in the first 4 - month period of year, providing a lower contribution on the economic activity during this period. fiscal policy has maintained an encouraging character, but at a lower rate relative to the same period of previous year. budget deficit amounted to all 5. 3 billion, contracted by 47 percent in annual terms. the low economic activity is reflected on the low growth by about 3 percent of budged revenues during the first 4 - month period of year. on the other side, budget expense recorded a reduction by about 2 percent from the rate recorded in the previous year. bank of albania continues to draw the attention that, notwithstanding the short - term positive effects the fiscal stimuli may generate ; the long - term stability of public sector should remain the main leader of fiscal policy. the lesson from the current problematic situation involving many european union countries, is the indispensability for consolidation of public finances and for that purpose the implementation of important correcting measures at quickest time, is a target of strategic importance. given the balancing of above stated developments, the accelerated growth of exports has provided a positive contribution on the total demand and on the economic growth. exports climbed by 45. 1 percent in annual terms, during the first quarter of 2010, whereas imports recorded an annual drop by about 2. 3 percent. accelerated upsurge of exports and the fall of imports at more moderate paces led to the contraction by about 17. 1 percent of trade deficit, pursuing the trend observed even during the second half of 2009. the ratio of imports covering from exports pointed to 35. 4 percent, about 11. 6 percentage points higher than in the previous year. the above stated developments in the foreign economy sector have established a more sustained balance of the supply and demand for foreign currency, thereby providing a higher stability of the domestic
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permits β. the state decides the total amount of emissions tolerated and provides for an initial distribution of the relative quotas ; private firms can then trade them against payment. those who are able to reduce emissions at low cost will take advantage of the chance to sell their shares to firms for which a reduction is more expensive. the overall reduction will not change, but the cost of achieving it will fall. this shows that the fourth solution, i. e. relying to a certain extent on the market, is not actually entirely excluded, even in the case of public goods. ronald coase, another nobel prize winner for economics, went so far as to argue that, in the absence of transaction costs and provided that property rights are clearly defined, there is no good to which the market cannot assign an efficient price. his paper on lighthouses is famous ( that is why wikipedia mentions them ), in which he tries to demonstrate that for a certain period in england, the coastal lighthouse service, apparently the most public of public goods, was actually supplied by private companies for profit. it should be pointed out that the details of this story are not uncontroversial. above all, however, the absence of transaction costs required for the validity of coase β s β theorem β is a very demanding condition. put simply, it assumes that it is possible to stipulate a private agreement instantly and at no cost, according to which all the stakeholders ( potentially millions or billions of people ) voluntarily β buy β ( for example ) the polluter β s renunciation of the right to pollute. difficult? impossible? in a literal sense, yes, of course. let us consider, though, another element of the ongoing debate on global warming. as we know, the emerging countries complain because the advanced countries want to impose strict limits on their emissions, having themselves pumped countless megatonnes of co2 into the atmosphere from the beginning of the industrial revolution until today. 25 the emerging economies say that they are only willing to adopt certain standards in exchange for cash transfers from the rich countries that are insisting on imposing them. in fact, the paris agreements already included this sort of idea and the most recent negotiations have further advanced the debate. think about it : if we look closely, this is basically the application of a version of coase β s theory, in which a few dozen governments try to negotiate on behalf of billions of people. anyone interested in a simple quantitative summary in graphic form can consult hannah ritchie,
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##ita le vostre tempie! β ah, deluded souls, wicked creatures who twist your hearts away from such a good, directing your faces toward emptiness! β even before this, in canto xi of the purgatorio, that of the prideful, oderisi da gubbio had warned about fame ( 100 - 102 ) : non e il mondan romore altro ch β un fiato di vento, ch β or vien quinci e or vien quindi, e muta nome perche muta lato. β the clamor of the world is nothing but a breath of wind that comes now from here and now from there, and changes names because it changes directions. β yet on fame, as on many other things, dante β s thoughts were not easily reconcilable ( inferno iv, 76 - 78 ) xvi ( 66 ) xxiv, 46 - 51 ; and there may be more passages to consider ). that in the commedia one finds everything and the opposite of everything is part of its centuries - long appeal. lines 73 - 75. each one β s portion ). in 1954, paul samuelson ( who would later win the nobel prize for economics ) formalised the concept of rival goods. 22 a good is defined as β rivalrous β if its enjoyment by one party is diminished when another party consumes the same good. we are in the classic chicken - sharing situation, and the consideration is precisely that which dante has virgil utter. samuelson, however, unlike dante, also identified a category of ( worldly ) goods that are β non - rivalrous β. for example, national defence or street lighting. if i benefit from a street lit at night, i do so without preventing my fellow citizens from enjoying the same good. these are non - rivalrous economic, worldly goods. if the two could meet, samuelson would tell dante that there are not only spiritual goods outside the sphere of envy. on the other hand, it is interesting how dante, in warning his contemporaries against this capital sin, highlighted a characteristic of worldly goods, or rather of many of them, which is their rivalrous nature β something which would only be formalized many centuries later by economists. although commentators have identified the probable origin of dante β s thinking ( saint augustine plays on the same theme in the city of god ), 23 nobody, that i know of, has emphasised the
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, for the rest of the financial sector the fsap reports indicates many problems, which simultaneously contain many themes including essential issues such as their supervision. although, due to their small dimensions, these problems do not present imminent risks for the time being, they still should be carefully examined and resolved. returning to the assessments made under fsap in other countries similar to albania ( i mainly refer here to south east european countries, seec ) and to many other financial reports referring to this region, we realize that these problems are similar and these countries suffer more or less similar symptoms. if one has a look back at the history, it realizes that it can not happen differently. the regional tradition is poor, of little inheritance in institutions, market rule and behaviour, and financial intermediation. however, today, about 15 years after the big collapse of the communist regime it seems that south east european countries ( seec ) have been engaged in an irreversible process of their stabilization and integration with the rest of europe.
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per cent. an additional important feature of the measures is that a certain amount of new lending is allowed above the specified thresholds. 17 these allowances recognise that higher loan - tovalue or loan - to - income mortgages can be appropriate in certain circumstances, as laid out in the banks β own credit policies, and can help to ease some valid concerns about market access difficulties, without permitting excessive leverage or credit risk to build up across the system as a whole. in addition, in december 2015, the bank announced the first settings of both the countercyclical capital buffer and other - systemically important institutions ( or o - sii ) capital buffer. 18 these measures are part of the capital requirements regulation toolkit which is applicable in all eu member states. the countercyclical capital buffer is a prudential tool designed to respond to fluctuations in the economic cycle and stabilise lending activity. when credit growth picks up, banks will be required to hold additional capital. when the economic cycle turns, banks will be able to release this, allowing stable lending to the real economy, through the cycle. although at present, following the central bank β s assessment, we have set this buffer at zero per cent for irish exposures. the o - sii buffer is an additional capital buffer applied to banks that are systemically important for the domestic economy. the central bank has set this buffer at 1. 5 per cent for its systemic institutions, to be phased in over the period 1 july 2019 to 1 july 2021. it is very clear to me that if these measures had been in place fifteen years ago, the scale of financial crisis experienced in ireland would have been much more limited. this time, our measures have been introduced early in the cyclical recovery in the market in order to prevent the recovery from becoming destabilised by excessive leverage being taken on by households. the mortgage rules in particular are designed to limit the risk of a house price β credit cycle emerging once again. while the parameters may in the future be amended, either tightened or loosened, in response to cyclical conditions, these measures, which seek to underpin prudent lending standards, have been introduced as permanent, structural features of the irish mortgage market. moreover, the evidence threshold to justify adjustments to these rules is significant. the loan - to - value measures include a maximum loan - to - value ratio of 80 per cent for non - first - time buyers of a primary residence, while for first -
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founding in 1975, by seeking to align fiscal, monetary and exchange rate policies. this is facilitated by regular consultations between the government and the bank, accompanied by operational and policy transparency through, among other avenues, periodic economic briefings. when i joined the bank shortly after its establishment, i did not envisage that, 23 years later in 1999, i would head it as governor and board chairman. nor did i know that during my tenure, i would be involved in what i consider a professionally fulfilling wide range of activities at regional and international levels. over time, i have learned the importance of the bank continuously adapting to evolving circumstances. indeed, the bank is much changed from when it was first established. while still operating under broadly the same mandate of promoting monetary stability and maintaining a sound financial system, the governing legislation has been subject to a number of reviews ; and there have been several reorganisations to accommodate the evolving nature of responsibilities. monetary policy implementation is now benchmarked against international practice, and the policies and guidelines for managing the foreign exchange reserves are regularly revisited. banking regulation and supervision are increasingly risk based and, accordingly, financial stability has also assumed centre stage. in all these endeavours, i counted and continue to rely on the support of structures at home and abroad ; this includes colleagues, counterparts and bilateral establishments, such as the official monetary and financial institutions forum. director of ceremonies, chairman of the omfif advisory board, co - chairpersons of omfif, the forum β s award jury, fellow governors, distinguished ladies and gentlemen, i end by reiterating my eternal gratitude for the generous acknowledgement of my work, as evidenced by the conferment on me of the official monetary and financial institutions forum β s lifetime achievement award. i embrace it. thank you for your attention. bis central bankers β speeches
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linah k mohohlo : economic understanding and integration, plus transparency and discipline in economic policy acceptance remarks by ms linah k mohohlo, governor of the bank of botswana, for the omfif ( official monetary and financial institutions forum ) β lifetime achievement award β, pretoria, 23 august 2011. * * * it is an honour and privilege to receive the lifetime achievement award from the official monetary and financial institutions forum. you will agree that what we think of ourselves may be important, but it is encouraging when observers β thoughts of ourselves are positive. in the circumstances, i am humbled by the generous gesture of the forum, an organisation which has now attained international stature and influence in advancing the cause of prudential management of international finance. i accept the award with humility. i accept it on my own behalf and on behalf of colleagues at the bank of botswana and counterparts elsewhere ; because without their support over the years, this award would not have been within reach. i would like to take this opportunity to say a few words on the two broad areas contained in the award citation : first, the importance of supporting β economic understanding and integration β ; second, the importance of β transparency and discipline in economic policy β. with respect to economic integration, its potential benefits are obvious. integration enables a pooling of resources to improve infrastructure, to facilitate the movement of people, goods and services, to align regulations, and to create opportunities and incentives for investors, all of which together, accelerate economic development. this has been demonstrated by the single european market, the current problems of the euro zone notwithstanding, and there is no reason why economic integration cannot also benefit africa. however, enthusiasm for integration, especially at the political level, has not always been accompanied by the necessary understanding of demands and sacrifices. this includes difficult political decisions and economic trade - offs in establishing mechanisms for effective alignment of national economic ambitions with common objectives. indeed, the current european experience provides a salutary warning ; the ongoing efforts to save the viability of the euro is a reminder that enthusiasm for a political agenda can obscure key economic issues. we should be grateful, therefore, that in the face of pressure to accelerate africa β s integration process, some enlightened minds have advised caution, taking the view that good intentions are not enough. agreements on an ambitious timetable for milestone events, such as the formal establishment of some additional pan - african institutions, are no substitute for adequately addressing the imperatives of economic integration
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await us in the future.
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that monetary policy should only react to a rapid credit expansion and price increase in the housing market if the forecasts made by the central bank indicate problems of, for instance, overheating and too high inflation in the coming period. if this is not the case, the central bank should wait and see, but be prepared to quickly ease monetary policy if the housing market were to collapse and demand in the economy were to fall drastically. one should not, as the expression goes, β lean into the wind β, but make do with cleaning up afterwards if problems arise. the main argument in favour of this way of acting is that the central bank is not better than others at assessing whether or not the price increase is due to over - optimistic calculations β if a bubble has arisen. if the bank makes the wrong assessment and raises the interest rate despite the events being justified by fundamental factors, demand will be pushed down unnecessarily. and even if the central bank were to be sure that the problem is overvaluation, the timing of the measures may be problematic. the hope is, of course, that tighter monetary policy will contribute to counteracting an imbalance. but if the central bank acts too late and, for example, raises the interest rate just before a bubble would nevertheless have burst of its own accord, monetary policy may instead contribute to worsening the fall in demand. the view that the central bank should only react if the forecasts indicate problems may appear reasonable, but there are some uncertainties in this, particularly with regard to how this should be translated into practical policy. in situations where house prices and lending are rising very quickly, the central bank can see risks in this development, even if it cannot be sure whether a bubble is building up. it may then be difficult and even inappropriate to remain completely passive, even if the main line of the forecasts is that developments will be balanced. if house prices were then to plummet and pull down demand and inflation, the consequences could be very severe, which is clearly illustrated by the current financial crisis. the conclusion the riksbank has reached with regard to monetary policy is therefore that this type of risk may need to be taken into consideration in a different way than the normal procedure, via the forecasts for inflation and the real economy. as indicated in the policy document " monetary policy in sweden ", this could be done by beginning a phase of interest rate increases slightly earlier than would otherwise have been the case, or by
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philip lowe : remarks at reserve bank board dinner remarks by mr philip lowe, governor of the reserve bank of australia, reserve bank board dinner, melbourne, 4 april 2017. * * * good evening. on behalf of the reserve bank board i would like to warmly welcome you all to this dinner. we are very pleased that leaders from the worlds of politics, academia and the community sector, as well as from business, have been able to join us tonight. having leaders join us from right across the community is important to us, as the decisions made by the reserve bank board and by the bank affect all australians. price stability, financial stability, sustainable growth and employment, and a well - functioning payments system matter to all of us. each of these is important to our collective prosperity. so thank you all for being here tonight. this is the first of these dinners that i have had the honour of hosting. a particular privilege is to be able to do so in melbourne, where we had our board meeting today at our offices on the corner of exhibition and collins streets. four of our nine board members are based in melbourne, with carol schwartz recently joining cath tanna, kathryn fagg and ian harper on the reserve bank board. it was more than 30 years ago that we last had four residents of melbourne on this board and, on that occasion, it was only for a very short period. at our meeting today, the board decided to leave the cash rate unchanged at 1. 50 per cent. as usual, the reasons for our decision were set out in the statement issued shortly after the meeting. i don β t propose to run through all the issues that were considered by the board. but there are two issues that i would like to talk about. the first is the improvement in the global economy. business and consumer sentiment have lifted in many countries and global trade and industrial production have picked up as well. commodity prices are also higher than they were for most of last year. headline inflation rates have returned to near normal levels in many countries, boosted by higher oil prices. and the point of maximum global monetary stimulus looks to have passed. given all this, at the g20 meetings that the treasurer and i attended in baden - baden in germany two weeks ago, the tone was much more positive than it had been at previous meetings. encouragingly, over recent months forecasts for global growth have been revised up, not down as has been the case for the past four years. so this is a
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guy debelle : developments in global fx markets and challenges in currency internationalisation from an australian perspective speech by mr guy debelle, assistant governor ( financial markets ) of the reserve bank of australia, at the rmb fx forum ( appearance via video link ), beijing, 18 may 2016. * * * thanks to david halperin and eden hatzvi for their help in compiling these remarks. i am very pleased to have the opportunity to speak at this event today. australia takes a keen interest in the ongoing process of internationalisation and liberalisation of the renminbi ( rmb ). i am sure you will hear many interesting perspectives on that subject today. i would like to talk about three things. first, i will talk a little about the use of the rmb in australia. second, i will talk about the rmb β s increasing role in the global economy and relate that to the work i am leading on the global code of conduct for the foreign exchange market. finally, i will provide an australian perspective on currency internationalisation and capital account liberalisation, reflecting on the challenges that emerged as australia went through this process in the late 1970s / early1980s. 1 turning to the use of the rmb in australia. first, from the rba β s own point of view, we have invested a portion of our foreign exchange reserves in rmb since 2013. this has allowed us to get direct insight into the way the fx and bond markets function in china, and has also allowed us to experience first - hand the benefits of the ongoing liberalisation that has occurred in recent years. in june 2015, the people β s bank of china ( pbc ) reported that foreign central banks and monetary authorities held over rmb650 billion in rmb denominated assets and that has almost certainly grown larger today. the rba and pbc also established a bilateral currency swap in 2012 for rmb200 billion that was renewed last year. the swap line highlights and supports the growing financial linkages between the two economies as well as trade and investment. to help further remove possible impediments to the use of rmb in australia, an official rmb clearing bank began operation in sydney in february 2015. in addition, australia was granted an rmb50 billion rqfii quota for portfolio investments. finally, for a number of years now, the australian dollar has been directly traded against the rmb in the onshore fx market. this has allowed for the growing
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in the emergence of peer - to - peer lenders and technology firms offering banking services. there is also increasing competition in banking services more generally, as firms like paypal become well - established in markets like retail payments that were previously the preserve of high street banks. on top of this, the trend towards more capital market - based financing in europe β supported by the new initiative on capital markets union β will inevitably weaken banks β market power, especially for firms that can easily substitute bank and market finance. and though still relatively small in quantitative terms, we are also seeing a greater role of β shadow banks β in direct lending β asset managers, pension funds, private debt funds β that heralds a shift towards a less bank - dominated financing mix. taken together, this represents a uniquely challenging environment for european banks, and this is visible in their generally weak financial performance : price - to - book ratios are low and profitability is meagre. many banks have a cost of equity exceeding their return on equity. bis central bankers β speeches moreover, there is little chance of the economy coming to the rescue or of interest rates rising any time soon. banks will have to return to profitability in the context of a slow recovery with depressed net interest margins. so, should we be concerned about how banks will fare in this difficult climate? as i already intimated, in my view we need to take a nuanced stance here that balances principle and practice. in principle, the developments in the banking sector should be largely positive for society at large. many banks grew too quickly before the crisis and developed unsustainable business models, so a period of consolidation is both desirable and inevitable. the aim of the regulatory agenda, which is to make banks more resilient and reduce the burden of bank failure on society, is also fully justified. and the ongoing structural changes are welcome. if we believe in the benefits of creative destruction for normal firms, then we must also believe in it for financial firms. innovation that raises competition in retail lending, and leads to better and cheaper services for customers, is a net gain for the economy. so, a priori, i do not see any role for regulators in protecting banks from new operators β on the contrary, innovation should be nurtured and encouraged. equally, the objective of a capital markets union is clearly in the public interest. it would benefit, in various ways, financial stability, access to finance and entrepreneurship. in particular for equity risk capital
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access to digital euro. this would also endanger network effects necessary to the success of a payment solution ( see footnote 9 ). 16. there are lessons to be learned from the delays in achieving pan euro area reach in case of the sepa credit transfers and direct debit schemes and then also the sepa instant credit transfer scheme. if broad access is to be ensured for the digital euro, the required regulatory measures need to be established at an earlier stage in the process. 17. panetta, f. ( 2022 ), β building on our strengths : the role of the public and private sectors in the digital euro ecosystem β, introductory statement at the committee on economic and monetary affairs of the european parliament, brussels, 29 september. 18. to avoid placing an additional investment burden on intermediaries, the digital euro scheme rulebook development groupecb hosts first digital euro rulebook development group ( rdg ) meeting is investigating how to leverage existing standards and solutions as much as possible, and how to make the digital euro compatible with existing solutions. it will also reflect on present and future regulatory requirements. see as well as rdg mandate and the related calls for expression of interestscheme compatibility workstream by experts to participate in workstreams ( e. g. ). 19. a compensation model for the digital euro refers to the framework that determines how entities are remunerated for their participation in or use of a digital euro currency. the digital euro compensation model is a four - party scheme with variations concerning three aspects : ( i ) pricing for private individuals, ( ii ) pricing for merchants, and ( iii ) costs for the eurosystem. the model could also cover factors such as transaction fees, interest rates, incentives and other mechanisms for compensating users. see ecb ( 2023 ), β compensation model for the digital euro β, presentation at the euro retail payments board, 22 february. 20. ecb ( 2020 ), β report on a digital euro β, october. the scope of digital euro basic services is yet to be defined, but it should be similar in nature to the basic services that banks are required to provide under the payment accounts directive. these basic services could therefore include features such as free - to - open digital euro accounts / wallets, payments between individuals, and the funding and defunding of digital euro accounts / wallets. if consumers had to pay for the basic services, it would also put the digital euro at a
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that most fijians currently depend on loans from financial institutions, family and friends and moneylenders, to manage financial emergencies. most loans are used to pay for expenses that could otherwise be covered through insurance, such as healthcare and family obligations related to funerals. the recent fijian financial inclusion demand - side survey noted that only about 12 percent of the adult population in fiji are covered by insurance. such a low level of insurance penetration directly implies that the vast majority of our low income communities are vulnerable to sustain financial losses as a result of a disaster, whether this is man - made or natural. this workshop is particularly timely for us in fiji, as we continue to undertake rehabilitation actions after the devastation of tropical cyclone winston. it allows us to ponder on this very important subject and whether inclusive insurance could have assisted the recovery efforts of our people at this time. i am certain it could have. friends and colleagues, i would highlight one issue which i believe is key to the successful implementation of an inclusive insurance framework for developing economies like ours. that is the important role that government plays in this initiative. traditional insurers have tended not to consider low - income segments as attractive, for various reasons. these include : β’ the individual premium sizes are perceived as too low given the per - policy fixed costs ; β’ the premium calculation is seen as more complicated due to limited available data ; and, β’ the nature of the demand and risks of this segment remain unknown. the distribution network which was more comfortable and familiar with the middle or higher income segments also did not find doing business with the low - income segments lucrative. simply put, traditional remuneration structures provide incentives to focus on larger premium products. bis central bankers β speeches the insurance industry therefore needs to be incentivised to play an active role in the development of a national inclusive insurance strategy, and the government is the only agency that can provide these incentives. but i will also not downplay the important role that we as insurance regulators have in this regard, and you will be receiving, from the facilitators at this workshop, a lot of advice on how we can be enablers as well. 2016 afi global policy forum ladies and gentlemen, before concluding i wish make a brief reference to the upcoming 8th afi global policy forum that will be convened on this very island just five months from now, from the 6th to the 9th of september. the event will be co - hosted by the reserve bank of fiji and the alliance for financial inclusion,
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barry whiteside : fiji - financial inclusion journey and key milestones welcome address by mr barry whiteside, governor of the reserve bank of fiji, at the pfip / piri / afi inclusive insurance workshop, denarau, nadi, 5 april 2016. * * * your excellency, ms. margaret twomey, the australian high commissioner to fiji, mr mark flaming, regional financial inclusion project manager - pfip mr eliki boletawa, head of policy, programmes and regional initiatives - afi deputy governor gane simbe, chair of the pacific islands regional initiative - piri mr michael carr, regional inclusive insurance specialist - pfip distinguished resource persons and speakers workshop participants ladies and gentlemen ni sa bula vinaka and a very good morning to you all! welcome it is with great pleasure that i welcome you to this inclusive insurance workshop, jointly organised by the alliance for financial inclusion ( afi ), the pacific financial inclusion programme ( pfip ) and the pacific islands regional initiative ( piri ). fiji is indeed privileged to be the host country for this regional workshop designed for officials from insurance supervisory authorities of our piri countries comprising papua new guinea, samoa, solomon island, timor leste, tonga, vanuatu and fiji. an especial thank you to her excellency, ms twomey, for her keen support of all the work we are doing in financial inclusion. i also thank eliki boletawa, who on this occasion is representing afi, but whom i am sure has no qualms about donning his fiji and pacific hats when called upon as one of our own. and finally to all our regional friends, thank you for taking the time to travel to denarau for this very important workshop. no doubt you are coming to fiji at what is a very challenging time for our nation, as we seek to recover from the devastation of tropical cyclone winston, a category 5 cyclone which hit our beautiful islands one short month ago. we truly appreciate your being here, confirming that fiji is still β open for business β in terms of our tourism sector and our ability to still host such regional events. may i at the outset, also acknowledge with sincere gratitude the commitment and ongoing assistance, to our region, of the alliance for financial inclusion and the pacific financial inclusion programme. the support provided has enabled piri to be near the forefront of significant developments in financial inclusion, not just in the pacific, but also globally. the financial and
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delisle worrell : in praise of foreign banks address by dr delisle worrell, governor of the central bank of barbados, at the re - opening of cibc firstcaribbean β s wildey branch, wildley, bridgetown, 9 august 2011. * * * barbados is fortunate to have banking system composed entirely of foreign banks : canadian banks in particular are of high repute internationally, and they dominate our system ; canadian banks have survived the international financial crisis in better shape than most large financial institutions in the industrial world ; their size relative to the barbados market means that they can contemplate projects of a magnitude that a domestically owned bank could not ; the impact of recession on credit quality is more easily absorbed, with no real danger of severe loss of capital or danger of insolvency, when a bank has the backing of a large parent ; local subsidiaries and branches of canadian banks have to meet the regulatory standards of the canadian office of the supervisor of financial institutions, so there is an additional guarantee of internationally acceptable standards of lending, asset management, risk management and financial reporting. i say additional, because the central bank of barbados supervises the local subsidiaries according to the standards of the basel committee of banking supervision. over the years the central bank of barbados has had very good relationships with commercial banks. the principle which undergirds our policy making is one of cooperation, based on a common understanding of the economic and financial circumstances the country faces. this approach has served us well in the past. for example, during the1991 balance of payments crisis short term foreign currency borrowings from commercial banks filled in the gap in the central bank β s foreign exchange reserves during an interim period of several months while a programme of financial assistance from the imf was under negotiation. more recently, we have stepped up our collaboration with banks and other financial institutions, as well as with other financial regulators. last year in october we held a one day conference of all financial institutions and financial regulators in barbados, to discuss presentations on topics of immediate importance to the performance and resilience of the financial system. this is intended to be an annual event and we are planning for this year β s conference, to be held on november 3. at that meeting we will discuss the health of the financial sector, our common interests as financial institutions, regulators and citizens, and what policy changes may be helpful in charting the way forward. the conference supplements meetings that the central bank arranges with commercial
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protection is usually referred to as deposit insurance. in bahrain we have had a deposit insurance system for some years. until now this has protected deposits up to a maximum of 75 % of bd15, 000. it is also what is know as an β expost β funded scheme in that the required funds can be collected from the other banks only after a bank has already failed. this takes time, and one of the lessons of the recent financial crisis is that it is important that depositors should be compensated promptly after their bank fails. reflecting the lessons of the financial crisis, and also the recent development of international best practice standards on deposit insurance, the central bank is in the process of finalizing a new regulation on reform of the existing deposit protection arrangements. the purpose of this reform will be to establish a pre - funded scheme. this will be a scheme in which a fund of money is accumulated in advance of the scheme needing to make any payouts to depositors. the fund will be accumulated by regular contributions from the banks that are members of the scheme. the purpose of all the measures i have described to you is to ensure that bahrain β s financial system remains sound, stable and able to provide the credit that the domestic economy needs. sometimes these measures might lead to complaints from particular sectors or groups that their access to credit is being impeded, but as a central bank we need to take a broader view of the overall stability of the system. it would be in no one β s interests to allow banks in bahrain to take excessive risks. a sound banking system is one in which firms are well - diversified, have many different revenue sources, and do not concentrate their risks in one particular economic sector. this is one of the most important lessons we can draw from the financial crisis. thank you for your attention.
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