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1922. wages also plummeted ; for an industrial worker, for instance, the wage level fell more than 35 per cent in the course of about 18 months. firms were caught in a vice, squeezed on all sides by steeply falling prices. as always, the firms that suffered most were those with inflated profits, over - valued assets and large misplaced investments. the abrupt plunge into a depression was followed by an equally sudden recovery. manufacturing output rose around 1922 and annual growth in the following years up to 1929 averaged as much as 4 per cent. so what was the attitude to economic policy in those days? on the whole, the depression, with falling prices and rising unemployment, was seen as a necessary evil, a purgatory that would result in a spontaneous recovery to economic balance. as regards stabilisation policy in one form or another, the primary responsibility rested with the riksbank. in practice, however, policy was passive and tardy. a look at the wholesale price index from 1913 to 1920 shows that the increase in sweden was almost twice that in the united states, for example. in time, the interest rate was raised and the supply of credit was restricted. however, the tighter monetary stance was then retained even after activity had turned downwards. the reason was that the riksbank tried to bring the swedish krona back to its par value in 1913 in order to rejoin the gold standard. as a result, at the beginning of 1921 the interest rate was around 6 per cent at a time when prices were falling about 20 per cent. schon, l ( 2000 ), en modern svensk ekonomisk historia ( a modern swedish economic history ), sns forlag, stockholm. fiscal policy was based on other criteria than those of stabilisation policy. built - in stabilisers did exist, for instance in the form of unemployment support, but the benefits were low in order to strengthen the incentive to search for new employment. this did work β when the upturn came in february 1922 the number of persons on relief work or the dole was over 100, 000 ; by the end of 1923 the figure had dropped to 6, 000 β but the flexibility did, of course, exact a price in the form of social hardship. stabilisation policy β s emergence in contrast to the lack of an active economic policy in the period around 1920, decision - makers in the 1930s had high ambitions, underpinned by a nascent stabilisation policy
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##a has had quite a bit to say about it. a misconception that we still see from time to time is that some people seem to think we have been concerned mainly about excessive rates of construction. construction has been very strong, and there may be over - supply in some areas. but our main concern has not been about the addition of 130, 000 to 150, 000 new dwellings each year. rather we have been worried by the market for the existing 7Β½ million dwellings and the way in which they were changing hands for higher and higher prices, with an associated build - up in debt levels. that is, we have been worried about the housing market as an asset market, and about the borrowing behaviour of participants in that market. the concern was not out of a desire to target house prices, but more over the potential risks to macroeconomic stability from a major boom - and possible bust - in the household sector β s main asset class. on the most recent readings, there has been a distinct softening in most of the major housing markets, with more than one data series showing an outright fall in prices in the march quarter in several cities. this was associated with a decline in the demand for credit, though on the most recent data that demand still seems very strong. house prices in brisbane and the gold coast declined a little on these measures, though not by as much as those further south. median house prices $'000 $'000 sydney gold coast melbourne brisbane source : australian property monitors in our judgement, this is a welcome development. while various fundamental reasons can be advanced for dwelling prices to have risen noticeably in the 1990s, it was hard to avoid the conclusion that strong speculative forces were at work over the past couple of years. that was not a healthy state of affairs and the sooner it passed, the better. it is just about impossible, of course, to predict with any precision how all of this will unfold from here. much will depend on what else is occurring in the economy. in individual cases, the extent of leverage will be very important. my own view is that the palpable sense of disappointment being felt by many leveraged investors in residential property is likely to grow further for the next year or so, possibly longer. for many owner - occupiers, on the other hand, a moderate decline in prices should not create major discomfort, in an environment of ongoing growth in employment and wages, as well as reduced taxes. in fact, it is hard
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capacity of foreign households, businesses, and governments. collectively, these factors could lead to pronounced losses among global financial intermediaries and a consequent reduction in the credit supply. in china, a further slowdown in economic growth could worsen financial stresses. many chinese firms, especially in the property sector, are struggling to service very high - 9debt burdens. local governments are also facing increasing fiscal strains. stresses originating in china could spill over to other emerging market economies ( emes ), particularly those highly dependent on trade with china or on credit provided by chinese entities. the spillovers could trigger significant capital outflows from emes, which may already be more susceptible to external shocks given generally heightened debt levels. given the size of its economy and financial system, financial stress in china could be propagated to global markets more broadly through disruptions to economic activity, deterioration of risk sentiment, and a sharp appreciation of the dollar. last but not least, a worsening of global geopolitical tensions, including those involving russia, the middle east, and china, could lead to broad negative spillovers to global markets. russia β s ongoing war against ukraine continues to weigh on many economies in a variety of ways, including sustained disruptions to regional trade in food, energy, and other commodities. the conflict in the middle east could generate further risks to energy and financial markets, as well as a worsening of global humanitarian and migration challenges. more broadly, escalation of geopolitical tensions could lead to lower economic activity and increased fragmentation of global trade flows and financial intermediation, raising financing and production costs and contributing to more sustained supply chain challenges and inflationary pressures. the global financial system could be affected by a pullback from risk - taking, declines in asset prices, and losses for exposed businesses and investors. i will conclude by saying that we must remain vigilant to potential shocks that could exacerbate vulnerabilities in the global financial system. thank you for inviting me to speak here. i look forward to participating on the panel. financial stability : resilience and challenges lisa d. cook member board of governors of the federal reserve system central bank of ireland november 8, 2023 the views expressed here are my own and do not reflect those of the board of governors or the federal open market committee
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in times of recession. β in addition, a fully - fledged capital markets union is more necessary than ever, in order to supplement public risk sharing with private risk sharing across the euro area. in conclusion, let me say a few words on chamber music. many of you have already heard the famous piano trio number 2 by franz schubert. the harmony of the three instruments has charmed generations of music lovers, including stanley kubrick in β barry lindon β. in this piece, none of the instruments should be the only game in its own town. and none of them should be dominated by any of the other two, otherwise the harmony is broken. quite the contrary, we can hear each instrument and the beauty of the piece comes from the response of each instrument to the others. the same applies to the three macroeconomic policies : monetary, macroprudential and fiscal. they should provide three kinds of stability in a delicate combination of β synchronisation without domination β. to overhaul the changing balance between an ex ante written music score and a real - time human interpretation, let us aim at least for β mutual predictability β β¦ and this is what today β s conference is about, for the macroprudential part of the piece. thank you for your attention. 1 interview of philip r. lane with expansion, 26 february 2021. 2 see for instance colletaz, levieuge & popescu ( 2018 ) : β monetary policy and long - run systemic risk - taking, " journal of economic dynamics and control, 86 ( c ), pp 165 β 184, and dell β ariccia, laeven & suarez ( 2017 ) : β bank leverage and monetary policy β s risk taking channel : evidence from the united states β. the journal of finance, 72 : 613 β 654. 3 this issue of the financial stability review contains several excellent articles on related subjects, see for example gabriel makhlouf, β lessons from covid : a macroprudential framework for the market based finance sector β. 4 istrefi, odendahl and sestieri ( 2020 ) provide evidence on this direction for the case of the federal reserve before the global financial crisis. see, β fed communication on financial stability concerns and monetary policy decisions : revelations from speeches β, banque de france working paper series no. 779. 4 / 4 bis central bankers'speeches
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billion $ 4. 0 billion $ 4. 5 billion six - month funding volumes median 15 % 12 % 9 % 6 % 3 % 0 % $ 100 million $ 500 million $ 1. 0 billion $ 1. 5 billion $ 2. 0 billion $ 2. 5 billion $ 3. 0 billion $ 3. 5 billion $ 4. 0 billion $ 4. 5 billion source : fr2420 and dtcc. daily volumes aggregated across all available fed funds, eurodollar, certificates of deposit, and unsecured commercial paper transactions of the 30 global systemically important banks with tenors between 25 and 35 calendar days ( for one month ), 80 and 100 calendar days ( three month ), or 150 and 210 calendar days ( six month ) over the period october 15, 2016 to june 30, 2017. figure 2 : daily volumes in selected u. s. money markets daily volumes in u. s. money markets billions usd $ 754 billion $ 197 billion $ 79 billion est. $ 13 billion $ 1. 1 billion $ 343 million $ 132 million secured overnight bank effective 3 - month t - bills 3 - month gsib 3 - month aa 3 - month a2 / p2 overnight funding rate federal funds wholesale nonfinancial cp nonfinancial cp financing rate rate funding ( sofr ) average volumes over 2017h1, with the exception of 3 - month t - bills, which are preliminary estimates from available finra trade reporting and compliance engine ( trace ) data over august and september 2017. 3 - month volumes are based on all transactions with remaining maturities between 80 and 100 calendar days or 41 - 80 business days. source : federal reserve bank of new york ; finance industry regulatory authority ; dtcc solutions llc, an affiliate of the depository trust & clearing corporation ; and the board of governors of the federal reserve.
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ultimately the ability of the economy to withstand shocks is a function of the flexibility and resiliency of labor, product, and capital markets ; strong and resilient market infrastructures ; and good macroeconomic policies, not the least of which is monetary policy. much progress has been made in our understanding of monetary policy in market - based economies. indeed the economic trends of the past generation show great promise, albeit interrupted by periods of genuine distress. in my view, we almost invariably end up with better macroeconomic outcomes than if we viewed stability as the sine qua non of policy. recent events serve as an important reminder that the next chapter of history is still being written. perhaps, that is always the case. as in the political realm, the path to the end of history may well prove to be prone to advance, overshoot, and correct. we must continue to deepen our understanding of financial markets and monetary policy, equipped with ample humility on a long, productive, and admittedly uneven path. references beattie, alan ( 2007 ). " master of the universe ( retired ), " a review of the age of turbulence : adventures in a new world by alan greenspan, in financial times, september 22 - 23. fukuyama, francis ( 1989 ). " the end of history? " national interest, vol. 16 ( summer ), pp. 3 - 18. kagan, roger ( 2007 ). " end of dreams, return of history, " ( august / september ), www. hoover. org / publications / policyreview. policy review kindleberger, charles p. ( 1996 ). manias, panics, and crashes : a history of financial crises, 3rd ed. london : wiley. laidler, david ( 2007 ). " successes and failures of monetary policy since the 1950s ", university of western ontario, rbc financial group economic policy research institute working papers 20072. london, ontario : university of western ontario, october. schumpeter, joseph ( 1942 ). capitalism, socialism and democracy. new york : harper. warsh, kevin ( 2007 ). " financial market developments ", speech delivered at the state university of new york at albany's school of business, albany, n. y., september 21.
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to be accomplished. financial sector reform the financial crisis revealed all too starkly that liquidity buffers were glaringly inadequate, and that the global banking system as a whole was dangerously undercapitalized and overleveraged. to redress this core vulnerability, new global standards in the form of basel iii have been agreed. they substantially increase the loss - bearing capital that financial institutions must hold and establish new liquidity standards and a limit on leverage. these new standards represent a significant strengthening of the global rules. the combination of greater emphasis on true loss - bearing capital β namely, tangible common equity β and increased minimum capital levels has effectively raised the minimum global capital requirement seven times. moreover, for the largest and most interconnected global banks, these requirements are being supplemented with additional loss - absorbing capital. these are major accomplishments. the new rules must now be assiduously implemented in every institution. all jurisdictions must ensure strong supervision and oversight. scrupulous international assessment must ensure equivalent implementation of these new higher standards. furthermore, we must agree on and implement a perimeter of regulation and oversight that encompasses all systemically important financial institutions, markets and instruments. and a new system of firewalls needs to be built to prevent the failure of one counterparty in the over - the - counter derivatives market from creating systemically perilous knock - on effects. in short, much has been achieved and much remains to be accomplished. it is critically important that the momentum driving financial sector reform be maintained. g - 20 framework for strong, sustainable and balanced growth progress on the framework for strong, sustainable and balanced growth has lagged that of financial sector reform β and needs to accelerate. the g - 20 leaders launched the framework in 2009, just as the global economy began recovering. their goal was to safeguard the nascent recovery and achieve stronger global growth over the medium to long term. leaders recognized the importance of beginning in the early stages of the recovery to put in place policies that would foster the adjustments needed to sustain recovery, prevent a re - emergence of global imbalances and support financial stability. at the toronto g - 20 summit in 2010, agreement was reached on a comprehensive, threepillared policy package to support stronger, more sustainable and more balanced growth. it included : fiscal consolidation in advanced countries that is credible and clearly communicated ; g - 20 working group on enhancing sound regulation and strengthening transparency, β final report. β 25 march 2009, which can be found at : < http : /
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have confidence in your forecast, incoming data may challenge that confidence. you neither want to overreact to incoming data nor do you want to ignore it. 3 / 5 bis - central bankers'speeches i am bringing this up because i hear from some quarters the claim that the fomc has become " overly data dependent. " this is a phrase that honestly doesn't make much sense to me but is apparently supposed to mean that we are over - reacting to data and allegedly sending confusing messages about the stance of monetary policy. i don't see how that argument applies to the views of the fomc, if one looks at the summary of economic projections ( sep ). between the march sep in 2023 and march 2024 sep, the committee median was relatively consistent in projecting around three rate cuts in 2024. this was in the face of some pretty dramatic shocks to the economy. there were the bank failures and wider stress in the financial system in the spring of 2023, when it was far from clear what the ultimate effects would be on the economy. there were significant fluctuations in inflation, which was hot in the first half of last year and then dramatically cooler in the second half. there was the revelation, over time and in different data, that a surge in immigration was augmenting labor supply and allowing a surge in job growth with very little upward pressure on wages and inflation. and then there were geopolitical developments, such as the threat that war in the middle east might spread to become a wider conflict. against this backdrop, the median fomc participant only gradually reduced their expectation for the unemployment rate at the end of 2024 and essentially left inflation unchanged. associated with this outlook, the median projection for the appropriate level of the federal funds rate at the end of 2024 moved by at most 50 basis points between the four seps over 2024, and more or less held to the median of three 25 basis point rate cuts over the past year. this hardly seems like an " overly data dependent " fed to me. for illustration purposes, contrast that with how the private sector reacted to developments in 2023. the implied federal funds rate based on overnight interest swap quotes for the end of 2024 see - sawed between 2 rate cuts and 10 cuts - for a few days, markets even predicted 11 cuts - and by the end of 2023 ended up implying 6 cuts. i make this comparison not to denigrate what markets were doing - they were simply
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expo 2020 dubai women on boards key issues and challenges in the mena region speech of mr. abdellatif jouahri governor of bank al - maghrib ( moroccan central bank ) november 14, 2021 expo 2020 dubai women on boards key issues and challenges in the mena region speech of mr. abdellatif jouahri governor of bank al - maghrib ( moroccan central bank ) your excellency, mrs. shamsa saleh, ceo of dubai women establishment ( dwe ) and secretary - general of the uae gender balance council ; mrs. nadia fettah, minister of economy and finance and commissioner general of morocco pavilion at β expo 2020 dubai β ; honorable audience, it is a great pleasure for me to take part with you today in this important meeting at β expo 2020 dubai β. i really wished to be there with you in this country where i always feel at home. unfortunately, multiple constraints have made it impossible for me. however, i would like to compliment the emirati authorities for the exceptional organization of this event. the everyday echoes of the expo tell a story of a tremendous success. i am also delighted as the topic chosen for this meeting is particularly close to my heart and i congratulate the organizers for such relevant choice. i would like to particularly thank mrs. amina figuigui and mrs. nadia fettah, respectively president and vice president of the club of women business administrators ( cfa morocco ), for inviting me to this meeting. ladies and gentlemen, the topic of this meeting centered on the place of women in governing bodies refers inevitably to the challenges of women contribution to economic activity and more broadly to the issue of gender inequality. in this respect, i think there is no need to argue nor to justify the importance of this issue. it is discussed and debated every now and then in public debates within national and international bodies, not to mention the regular or specific reports devoted to it. this increasingly highlights the stakes involved and, fortunately, the greater awareness about it. it is not only a problem of social exclusion but, as we all know, a considerable economic loss. the available data on the different dimensions of this issue unfortunately show that our region mena appears to have among the highest levels of gender inequality, if not the highest, in the world. however, i believe that there is a growing awareness about the situation. we have seen in recent years the adoption of policies and initiatives in the region to empower women and
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conduct sound economic policies and accumulate adequate reserves. this leads to the paradoxical situation that unconventional measures applied in a crisis might lower the incentive to maintain preventive measures during normal times. in turn this increases the likelihood that unconventional measures will be needed again in the future, i. e. crisis resolution might tradeoff with crisis prevention. these moral hazard considerations are a well - known problem whenever insurance is provided in a context of asymmetric information. their negative effects can be mitigated to a certain extent. for instance, appropriate pricing of foreign currency liquidity provision can limit its function to that of an emergency backstop facility which is costly for banks to use. additionally, the framework has to be in line with global economic objectives, such as price stability, balanced growth and efficient international allocation of resources. β’ policies that preserve price stability in the long term should also ensure stability of the financial system. however, in short term these two objectives might appear to conflict. even when liquidity in domestic currency is provided to another country, it might find its way back to the domestic economy and contribute to inflationary pressure, if not sterilised. β’ a buildup of national reserves might itself contribute to systemic instability. a reserve framework requires stability of the reserve currency in order to act as a global store of value and an anchor for price stability. however, the triffin - dilemma notes that the accumulation of reserves implies persistent current account deficits of the reserve - issuing country. this potentially creates instability and fuels global imbalances. moreover, such a reserve system aggravates interdependence between the reserve accumulating countries and the reserve - issuing country. for instance, the us treasury market relies largely on demand from emerging market central banks. this dependence is likely to increase as the federal reserve phases out its asset purchase program, reducing us demand. β’ this is connected to potential negative side effects of reserve accumulation or intervention in foreign exchange markets. in consequence, it can distort exchange rates and prices of other assets and might be difficult if not impossible to disentangle from its benefits. β’ finally, an acceptable solution from the country perspective might not appear desirable from the global perspective. for instance, excessive accumulation of foreign exchange reserves might distort international capital allocation. this leads me to the general conclusion that there are many practical obstacles to a first - best solution for foreign exchange reserve provisioning. ultimately, i will conclude with some considerations on the challenges facing the global framework for
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will be affected in different ways by monetary policy easing. this observation has led some people to draw hasty conclusions on the effects of monetary policy on inequality. under benjamin β s framework, however, the savers versus borrowers split is only one of the many dimensions of heterogeneity which characterise the data. other important dimensions are related to households β holdings of liquid assets and their ability to borrow, both of which enable them to absorb the impact of temporary income shocks. in addition, the borrowers versus savers difference is not crucially important if the indirect channel plays a dominant role in the transmission of monetary policy. the framework β s capacity to model interactions between heterogeneous households and the macroeconomy in the way i have just described hinges on benjamin β s innovative and extensive work on mathematical and computational methods to solve models in continuous time. as these techniques have substantially enhanced the set of economic problems that we are able to address, we are now able to rapidly solve and analyse models that have realistic and quantitatively important features, such as illiquid assets and adjustment costs. in addition to analysing the monetary transmission mechanism, the continuous - time solution techniques benjamin pioneered can be used to study a wide range of economic questions. for example, benjamin and his co - authors2 recently investigated which theories can explain the substantial rise in inequality in the top tail of the us income distribution in the 1980s and 1990s. while most established theories have difficulties in accounting for this development, theories allowing for β superstar β phenomena are consistent with it. superstar phenomena arise, for example, when changes in technology make it possible for entrepreneurs or managers who are a little better than others at any given task to capture a much higher share of the market and of income. i have spent much of my time today talking about the aspects of benjamin β s work that are particularly relevant for monetary policy. however, he has expanded our knowledge in an impressive range of other areas which i did not have time to discuss, including determinants of incomes across countries, the allocation of resources, human capital accumulation, and saving and wealth inequality. please join me in congratulating benjamin on receiving the 2018 bernacer prize. benjamin, i wish you continued success and look forward to following your future work. 2 / 3 bis central bankers'speeches 1 for a seminal contribution to this topic, see : kaplan, g., moll, b. and violante, g. l. ( 2018 )
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payments would be offered by the eurosystem at full cost recovery. as this is a pressing topic, the aim of the investigation is to reach a decision on whether to go ahead with this by the end of the first quarter of 2017 in order to not delay the go - live of announced market initiatives. 3. eurosystem collateral management system as the euro area β s banking and financial markets become increasingly integrated, demand for more efficient collateral management arrangements within the eurosystem central bank community is increasing. to date, collateral management in the eurosystem is rather fragmented as each national central bank has its own procedures and systems in place. as a consequence, some collateral management services are not provided in a fully harmonised manner. as we look to the future, the eurosystem will strive to drive harmonisation forwards, particularly regarding eurosystem operations for the mobilisation of marketable assets, as well as the handling procedures for non - marketable assets, which still vary across the central banks. furthermore, the eurosystem will investigate, throughout 2017, the business case for and the scope and cost of a possible common eurosystem collateral management system for managing eligible assets used as collateral in the eurosystem credit operations. conclusion the three components of the eurosystem β s strategy for the evolution of its market infrastructure 2 / 3 bis central banker's speeches are interconnected, such as shared software components, shared network infrastructure, shared hardware components, the use of the future market infrastructure single gateway. at the end of the investigation into the business case for and the scope and cost of each one, a decision will be taken as to whether they will be developed into projects with different durations. you may rest assured that throughout the investigation and decision, we will live up to the treaty and our mandate. thank you. 3 / 3 bis central banker's speeches
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with regard to the condition of existing commercial loan portfolios, delinquencies have been rising recently as has the volume of criticized assets. this has been most evident in the leveraged loan market, where lending standards appeared to weaken noticeably in recent years, and which tends to be more susceptible to soft economic conditions. supervisors are monitoring banks'commercial lending activities, particularly leveraged loan portfolios, to detect weaknesses in asset quality that may result from slowing economic conditions and to ensure appropriate risk management practices. in part, the agencies rely on their shared national credit ( snc ) program to assess the credit quality of banks'commercial loan portfolios. the 2008 review is now underway and will provide additional insight into the condition of large syndicated credits that are shared by three or more banks, including an evaluation of underwriting practices and trends in the leveraged loan market and the broader syndicated loan market. adequacy of loan loss allowance as the banking system has faced a more difficult environment in recent quarters, our examiners have identified significant weaknesses at some institutions in identifying and reserving against problem loans, which in some cases have led to deficiencies in allowance levels at some supervised institutions. in response, our examiners continue to remind bankers that allowance levels should be reflective of loan portfolio quality, based on sound processes, and consistent with current supervisory guidance. we recently provided additional clarity to our examiners regarding existing interagency guidance on loan loss allowances that should be factored into current examinations and inspections of state member banks, bank holding companies, and their nonbank subsidiaries. we believe this further clarity to our examination staff will help them in their regular discussions with bankers to ensure that reserving practices are robust and loan loss allowances are indeed adequate to the circumstances facing each institution. liquidity risk management recent reports cite the need for enhancement to liquidity risk management as one of the key lessons from recent events. financial institutions must understand their liquidity needs at both the legal entity and enterprise - wide level and be prepared for the possibility that market liquidity may erode quickly, unexpectedly, and for a protracted time. as is now widely recognized, many contingency funding plans did not adequately prepare for the possibility that certain off - balance - sheet exposures might have to be brought onto the firm's balance sheet, calling on available liquidity. nor did they adequately account for the possibility of widespread and protracted declines in asset market liquidity. while liquidity pressures in banking and financial markets have
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##igler ( 1961 ), " the economics of information ", journal of political economy, vol. 69 ( june ), pp. 213 - 25. thomas a. durkin ( 2006 ), " credit card disclosures, solicitations, and privacy notices : survey results of consumer knowledge and behavior ", federal reserve bulletin, vol. 92, pp. a109 - a121 ; thomas a. durkin and gregory elliehausen ( forthcoming ), financial economics of information disclosure : applications to truthin - lending ( new york : oxford university press ). consumers. 9 the prohibition of the provision of misleading or erroneous information can also help to improve competitive outcomes. to evaluate the effectiveness of disclosures, we must know what consumers understand, what information they use, and how they use the information in making decisions. in designing rules, we need to take consumers'actual behavior and understanding into consideration. as a result, the federal reserve has been using consumer testing to address the considerable challenge of making disclosures effective. as mentioned, consumers increasingly face more - diverse and more - complex financial products, including nontraditional mortgages and credit cards with multiple and complex features. given this complexity, we are mindful of the challenges of information overload and seek to design disclosures that are not only accurate, but also clear and concise, so that they are meaningful and useful to consumers. numerous pages of fine print may provide the comprehensive descriptions that lawyers may prefer, but they can also be confusing, or provide limited value, to consumers. we increasingly rely on feedback from surveys and testing from actual consumers to determine the information they need to make informed choices. in this regard, we recently completed several rounds of consumer testing for credit card disclosures. that testing has been essential to our effort to redesign and improve them. we have also begun using consumer testing of mortgage disclosures to help develop more - effective disclosures around product features and other terms that consumers need to know. limitations of disclosure protections when consumers are fully aware of and understand product terms and features, they are better positioned to make the right choices and achieve the outcomes most appropriate to their given circumstances, as well as give the signals and rewards to businesses that produce the products and services consumers most value. however, some product features and contract terms may be so complex that they are not readily understood. in some instances, even small misunderstandings, misjudgments, or the challenge of focusing on the most essential features
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cyril roux : the new regulatory and supervisory roadmap for europe address by mr cyril roux, deputy governor ( financial regulation ) of the central bank of ireland, at the banking union conference, dublin, 23 june 2014. * * * good morning. my thanks to the irish banking federation for inviting me to address this distinguished audience. it is my pleasure to be here with you. the last few decades have seen countries going back and forth between conducting banking supervision within or without central banks. but one thing remained constant : the domestic nature of supervision. to coordinate supervision within the eu, we have established in the past two main mechanisms : home host arrangements, and colleges of supervisors, in charge of joint risk assessment decisions. the ssm is a very big step beyond these two mechanisms for cooperation : as the name implies, we are now putting in place a unified banking supervisor in the eurozone. creating an international banking supervisor spanning 18 countries and trillions of assets is unprecedented. it is the most significant change ever made in european banking supervision. as the other two pillars fall into place, it forms the basis of the european banking union, which is arguably the main european project of our time. we have just heard from daniele nouy the operational challenges and opportunities presented by the single supervisory mechanism as seen from the ecb, so i will share with you how we at the central bank prepare for the implementation of ssm on 4 november this year. i will provide you with an update on the work we are doing to transition to this new regime of supervision, how it impacts upon the way we will organise ourselves and what it means for irish banks. our transition to ssm we have established a programme of work to prepare for implementation of ssm in the central bank β this project is called project europe. this the most significant project currently in progress in the central bank. it involves eleven divisions across the bank, from hr to banking supervision and it to legal and enforcement, among others. they work together under 23 separate work streams to ensure that we are prepared for 4 november. so what are we working on precisely? we revise our internal governance, reporting and decision making processes. we develop a supervisory board briefing process akin to that of the governing council. we are preparing to change our divisional structure in banking supervision we plan, devise and roll out training for all staff involved in ssm we update all our publicly available material on banking supervision and enforcement. we upgrade the receipt, validation and transmission
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tools of supervisory and statistical data we revise our fitness and probity regulations and our internal workflow around same. we support the department of finance in its drafting of transposing legislation. in so doing, the establishment of the ssm provides us with the opportunity to improve and strengthen our tools and procedures so that we can be an even better supervisor. our aim is not only to ensure that we will have completed all preparatory tasks in support of the ecb β s bis central bankers β speeches preparations but also to make the necessary organisational changes to allow us to deliver on our supervisory mandate ever more effectively. in doing so we seek to ensure that we are giving full expression to the aims and objectives of the ssm β not the mere implementation of the minimum required to be compliant with ssm methodologies and structures. but of course, we cannot do this in isolation. we have recently had the pleasure of hosting a series of visits by senior management of the ssm in recent weeks, and we are also looking forward to the visit of daniele this afternoon. in april, we were visited by dr korbinian ibel who is the director general in charge of dg iv of the ssm, which, among other tasks, is in charge of developing the ssm policies and methodologies and ensuring that all national supervisory authorities apply the ssm rules and procedures consistently, for significant and less significant institutions alike. we held a series of meetings with colleagues from different divisions, including our risk division. our risk based approach to supervision which was introduced by the central bank in 2011 has been considered in detail when devising the ssm approach of judgment based, forward looking supervision that daniele has described. as she already indicated, the system which will be used by the ssm will be based on the prism system that we currently use. this software will be adapted to the ssm methodology. more recently, in early june, we welcomed stefan walter and ramon quintana, directors general of dg i and dg ii of the ssm, with their deputies, for another fruitful day of meetings and engagement which some of you will recall being involved in. this afternoon, we will introduce daniele to the banking supervision team and also to the wider project team which includes colleagues from a variety of divisions including our policy and risk divisions, hr, it, statistics, enforcement and legal. we will host a town hall style meeting with all staff affected by the changes brought about by ssm
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. many challenges were encountered as the project was rolled out in a shorter timeframe than we normally would, but appropriate steps were taken to ensure 1 / 2 bis - central bankers'speeches its secured implementation. this hybrid model of work is still being implemented, and may remain long term. other initiatives have also been undertaken as we move to modernise our systems and processes. notably, in the third quarter of 2022, we awarded a contract to a firm for cyber forensic services and incident response plan. in addition, at the end of last year, we completed migration to the hyperconverged infrastructure, for which we are currently seeing significant benefits, primarily high availability of the system, prompt deployment of critical security updates and a downward trend in electricity expenses. leading to this event, we have also availed cloud communication technology with appropriate features for such meetings. the ict subcommittee is one of the ccbg cross - cutting enablers whose focus is to support sadc central banks to enhance communication, interaction, and integration. while i have emphasised cyber security, there are other technology risks and opportunities that are evolving in central banking, for which this committee, in particular, has an important role. i believe this meeting will be an opportune time for you ict and business continuity leaders to reflect and address these critical matters, as you strategise on achieving our common goals for the future. another risk that seychelles being a small island state is a strong advocate of since it threatens our existence, is climate change. i want to take this opportunity, on behalf of the central bank of seychelles, to express solidarity with the countries in southern africa affected by the recent floods. on this note, i wish you all successful and fruitful deliberations and hope you make the most of this opportunity for networking and peer - to - peer learning. to our foreign guests, i want to wish you an enjoyable stay on our beautiful shores, as you experience our creole hospitality. thank you very much! merci beaucoup! muito obrigado! 2 / 2 bis - central bankers'speeches
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inclusive leadership, i look forward to the collaboration, and i am equally excited to bear witness to the continued progress as we work on achieving the deliverables that we will outline for the coming years. once again, i would like to reiterate our appreciation to all afpi leaders and the afi management for the confidence entrusted in the central bank of seychelles. thank you! 2 / 2 bis - central bankers'speeches
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innovators must be responsible for the way they use their innovations. regulators must be responsible for ensuring that financial stability and consumer interest are not compromised by the innovations. this sort of responsibility demands competence, foresight and wisdom on both sides. payment and settlement systems 7. responsible innovation and regulation is the topic i want to address today. β responsibility β should be the thrust of innovation in all segments of financial markets and responsibility should be the credo governing regulation across all dimensions of financial regulation. today, though, i will focus on a narrower segment β responsible innovation and regulation in payment and settlement systems. 8. this choice of payment and settlement systems is informed by three motivations. first, payment and settlement systems have witnessed by far the most game changing bis central bankers β speeches innovations, especially in the matter of furthering financial inclusion. second, innovations in payment and settlement systems have been both market based and technology based, and illustrate how technology based innovations can be mainstreamed. mainstreaming technology based innovation is particularly relevant at this platform because that is the mandate of idrbt. 9. third, and most remarkably, during the depth of the financial crisis in 2008 / 09, when virtually all financial systems and all financial markets went into near collapse, the payment and settlement systems worldwide remained stable. what would have happened if the payment and settlement systems too had seized up? even to imagine that is frightening. rbi as a responsible regulator 10. the reserve bank is deeply conscious of being a responsible regulator. we interpret this responsibility as follows. we must encourage financial innovation but only such innovation that improves the efficiency of financial intermediation and therefore contributes to the real sector. we must ensure that as innovations are rolled out into actual financial transactions, they do not erode financial stability. we must be especially sensitive to consumer protection. and uniquely, because of our developmental role, we must ensure that financial innovation furthers financial inclusion. 11. responsible regulation here means providing a stable, predictable and contestable regulatory framework that encourages innovation, emphasizes safety, security, efficiency and accessibility, and aids the orderly growth of the payment and settlement systems. as you are aware, the payment and settlement system ( pss ) act, 2007 designates the reserve bank as the statutory regulator of the payment and settlement systems in the country. but even before becoming the statutory regulator, the reserve bank has been engaged in modernizing the payment and settlement systems ; and even as we are the statutory regulator today, we continue to take the lead
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##ing this transfer of money in bank accounts, a payment instrument was needed to instruct the bank to effect that transfer. this instrument was the cheque for a very long period. thus a system consisting of the cheque as the payment instruments and an infrastructure around the cheques consisting of the drawee bank, the drawer bank and the cheque clearing houses came on the scene and were known as the payment systems. 7. with the developments in the information and communication technology, world over, different kinds of payment instruments and innovations in the instruments and the payment systems evolved. it happened in india too and that β s the story i will be narrating now. 8. today we can boast of a strong retail payments framework in the country comparable to that of any advanced country, and perhaps even better than some of them in terms of the variety and efficiency. various types of payment instruments exist to meet the requirements of different users in different circumstances β bank accounts, cheques, debit and credit cards, prepaid payment instruments, etc. there are various systems to meet the remittance requirements of 1 / 7 bis central bankers'speeches users depending upon their time criticality and cost sensitivity β national electronic funds transfer ( neft ), immediate payment service ( imps ), aadhaar enabled payment system ( aeps ) and recently unified payments interface. the need for making bulk and repetitive payments is met by systems such as electronic clearing service ( ecs ), national automated clearing house ( nach ) and aadhaar payment bridge system ( apbs ). 9. let us take a look at the path of β evolution β of payment and settlement systems in the country : 10. the reserve bank took a studied stance with reference to ushering in changes to and in the payment systems. periodically, it constituted various committees like the rangarajan committee i & ii, saraf committee, patil committee, burwan working group, etc. to guide use of ict for the benefit of banking in general and particularly the payment systems. further, from 1998 onwards, the reserve bank has been continuously bringing out a payment system vision document for every three years, enlisting the road map for implementation. the latest one is for the period 2015 β 18. 11. for a long time the main payment instrument and payment system that existed in the country was cheque and cheque clearing systems. even the cheque clearing systems have evolved from manual clearing system to micr ( magnetic ink character
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developments, one of the top priorities on the global agenda. in line with our country's " 2053 net zero emission " and " green development " targets, we took a role on national and international platforms to contribute to the combat with climate change in the fields that fall under our bank's remit. in the period ahead, we will continue to monitor the economic and financial implications of climate change and sustain our cooperation with national and international stakeholders on this matter. we, at the central bank, will be working intensively for permanent achievement and sustainability in all matters related to price stability and financial stability, particularly monetary policies, with the pride and sense of responsibility of celebrating the centenary of our republic, at the istanbul financial center, the construction of which will be completed this year. distinguished guests, concluding my remarks, i would like to thank my esteemed colleagues for their painstaking efforts to support our bank in its activities, and also would like to pay my respects to you all for your participation. 4 / 4 bis - central bankers'speeches
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durmus yilmaz : globalization and monetary policy speech by mr durmus yilmaz, governor of the central bank of the republic of turkey, at the conference on β globalization, inflation and monetary policy β, istanbul, 21 november 2008. * * * dear guests, i would like to welcome you all to the conference on β globalization, inflation and monetary policy β, organized by the central bank of turkey. this conference will host a select group of central bankers, experts and academics today and tomorrow. it is a great pleasure for us to host this conference and such a distinguished group of participants. during these two days we will have the opportunity to discuss the globalization and monetary policy aspects in the context of current financial turmoil. dear guests, we have in the midst of fast changing economic agenda. when invited to an international conference in the spring of 2008, i was requested to make a speech on inflationist pressures faced by world economies. the title of the session was β inflation : is it back to stay? β. in fall 2008, a few weeks before the start of the conference, the organizers informed me that they had changed the theme of the conference. the new title was β how to cope with deflationary risks? β. in a very short span, the main talking points of the policy makers have shifted from β decoupling β, β high energy prices β and β food inflation β to β deflation β, β recession β and β credit crunch β. today, international financial system shaped more and more by globalization is on the brink of a crucial stage. the problems, which started in sub - prime mortgage markets in the united states, have spread the whole financial system and reached a point that threatens the economic stability. indicators on risk perceptions are at its highest level of all times. we have witnessed some relief in the liquidity shortage after the establishment of temporary reciprocal currency arrangements of federal reserve bank ( fed ) and short term liquidity facility established by imf, which is designed to help member countries that are facing temporary liquidity problems in the global capital markets. however, despite these measures, liquidity squeeze in the credit markets and reluctance in bank β s tendency to lend credit have been unabated. one of the adverse features of the current crisis is the freeze in the private credit and the tendency of capital to flow back to where the current crisis originated. recent readings on economic activities suggest that ongoing problems in international credit markets have spilled over into the real economy as
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an increase in leverage ratios of non - financial corporations. the decline in the value of collateral has led to an increase in risk premia when taking up loans or issuing debt securities. this was shown clearly in the spreads of retail bank lending rates over corresponding market rates and in the increasing risk premia on corporate bond interest rates. the ratio of debt of non - financial corporations to gdp, which increased substantially in the second half of the nineties, only started to stabilise last year. the relatively high debt levels of non - financial corporations, combined with the decline in the value of financial assets, has had adverse consequences on firms'financing conditions via balance sheet effects and therefore on private investment in particular over the past few years. furthermore, corporations have become increasingly reluctant or have found it more difficult to issue equity capital on public stock exchanges. in 2002, total gross issuance of equity only accounted for around 45 % of the annual average for the period 1999 - 2002. in fact, in the second half of 2002, the value of quoted shares issued in the euro area was at its lowest level since the mid - nineties. the slowdown in equity issuance activity in 2001 and 2002 was accompanied by a similar decline in debt securities issuance by non - financial corporations. these declines in securities financing partly point to lower capital demand following the economic slowdown, but the worsening of capital market sentiment in recent years may also have induced companies to increasingly rely on other sources of finance. furthermore, stock market participation of households in the euro area steadily increased in the 1990s. when share prices collapsed, households experienced substantial losses in their financial wealth, bringing the ratio of financial wealth to disposable income back to levels similar to those witnessed at the end of 1997. the costs of the developments in financial markets over the past few years, which were often linked to the β new economy β, can also be measured by a critical erosion of trust. examples of accounting malpractice, corporate greed and imprudent stock market valuations have started to appear in increasing numbers, undermining the basic trust and confidence of investors in financial markets. there has been a lot of discussion about whether this unfortunate behaviour has been promoted by d. erasmus, β the praise of folly β, ( translated by j. wilson ), great mind series, prometheus books, 1994. see for β irrational exuberance β : a. greenspan, β the challenge of central banking in a democratic society β
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yves mersch : interview with reuters interview with mr yves mersch, member of the executive board of the european central bank, conducted by mr balazs koranyi on 14 march 2018 and published on 16 march 2018. * * * mario draghi took a cautious view on inflation, arguing that economic slack may be bigger than earlier thought. what is the implication of this unexpected slack? the policies we have undertaken, especially since 2014, have been quite successful in getting us closer to our inflation aim. but there are uncertainties about the process of inflation, given factors like globalisation and technological changes. mario draghi raised important questions, which have been discussed among central bankers : what is the non - accelerating inflation rate of unemployment ( nairu ), what is the output gap and how big is the slack? he was exploring the possibility that the degree of slack might be bigger than what you find in classical assessments. we are continuously surprised by the response of the labour market to increasing aggregate demand of a growing economy because rising demand has been leading to continuous positive supply reactions in the labour market. ecb staff estimates that the euro area output gap is closed, and there is already a positive output gap in germany. but there is little inflation. maybe there is another explanation. perhaps we are getting a supply of labour that is pushing the frontier out. in germany we know that migration from central and eastern european countries with relatively comparable skills is making an impact. without such a labour supply reaction, you would have had wage inflation about 1 percentage point higher, and as a consequence, higher inflation. would that mean that the output gap is not yet closed? that is an open question. we are all surprised by the reaction of the labour market to better economic conditions. the increasing participation of women and older people is certainly making an impact. in term of hours worked, we have not yet recovered the level of 2007. but in terms of employment, we have. it seems there is a trend for people to work less or part time. now we are reaching a floor for unemployment but it β s not so clear if we β re going to see wage increases and mario draghi was opening the conversation on the possibility that there may be more slack in the economy. that still needs to be confirmed but we already have strong evidence of a strong labour supply reaction. the survey of professional forecasters indicates that unemployment will fall to 7. 5 percent in 5 years. it β s not clear if that β s the
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current situation. there are three channels where this is particularly relevant. first, one cause of financial fragmentation is the high public debt levels in some euro area countries, which, as domestic banks are heavily exposed to their own governments, harms banks β asset quality. in italy, for instance, 65 % of bonds were held domestically in early 2012, and in spain 70 %. clearly, governments have a central role in dealing with this problem by ensuring that their debt is safe and sustainable. this requires credible fiscal consolidation. bis central bankers β speeches second, another cause of fragmentation is low growth, which deters banks from taking risk, especially lending to smes. interest rate spreads on sme loans compared with those for large non - financial companies have widened by an average of 40 basis points since 2010. a key part of the solution here has to be structural reforms that improve the medium - term growth outlook and hence support risk appetite. only governments can introduce them. third, fragmentation is also caused by weak bank balance sheets. lack of capital, weak profitability or rising non - performing loans lead to lower credit provision or higher interest rates being charged on new loans to offset losses elsewhere. but it is governments that have to deal with this problem through recapitalisation and restructuring. in other words, without actions from governments, we will not be able to reintegrate financial markets. fortunately, positive progress is being made. the commission projects the euro area fiscal deficit to fall below 3 % of gdp this year β less than half the peak reached in 2009. under pressure from supervisors, euro area large and complex banking groups have continued to improve their capital positions, with the median core tier 1 ratio reaching 11. 1 % in the first quarter of 2013, up from 9. 6 % at the end of 2011. but there is still a long way to go before the β singleness β of the euro area financial market is restored. this means that there is no room for complacency for governments. most of all, they should not expect the ecb to substitute for actions that they must take themselves. 2. dealing with financial fragmentation : the role of the ecb what is then the role of the ecb in addressing financial fragmentation? the ecb necessarily operates within certain constraints. we are the european central bank, and so our focus is the euro area as a whole, not the concerns of any particular country. and we can only address issues that fall within our mandate to maintain price stability
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is part of our supervisory agenda on climate. as you know, c & e risks have been one of our supervisory priorities for some years now and we have started treating them just like any other prudential risk. in this context, we have been rolling out a series of corresponding supervisory activities. in 2020 we published our guide on climate - related and environmental risks, which outlined our supervisory expectations relating to the management and disclosure of c & e risks. in 2021 we published a self - assessment benchmarking report. and in 2022 we launched the climate risk stress test and a thematic review of how banks incorporate c & e risks into their processes, a fully - fledged supervisory exercise, involving teams responsible for the day - to - day supervision of banks. at the same time, we are gradually integrating c & e risks into our regular supervisory methodology, and how banks manage these risks will ultimately impact their pillar 2 capital requirements. the ecb β s supervisory actions on climate are part of broader international efforts to advance the 1 / 4 bis central bankers'speeches supervision and regulation of c & e risks. at global level, the basel committee on banking supervision recently concluded a public consultation on draft supervisory principles for the prudential treatment of climate - related risks, and the input they received is now being reviewed with the aim of finalising those supervisory principles. this is part of a broader workplan of the committee to evaluate how to consider climate - related financial risks in all pillars of the basel framework. supervision, regulation and β the topic of the ecb report that is published this morning β disclosures. the importance of transparent disclosures there is growing international awareness of the great value of transparent disclosures. disclosures that are clear and easy to understand tend to benefit any company, banks included. generally, companies have strong incentives to publish frank and meaningful disclosures because transparency is usually rewarded by investors ; it helps reduce uncertainty and allows all interested parties to feel they are making safe investments based on trustworthy data. this is particularly true for climate - related and environmental risks. as the materiality of physical and transition risks increases by the day, investors are on the lookout for those companies that proactively take these risks into account in their daily operations and across all their activities. one of the essential functions of financial markets is to price risk and thus support informed and efficient capital allocation decisions. the accurate and timely disclosure of current and past operating and financial results is central to this function. to make it concrete
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christian noyer : world financial crisis β public and private strategies to overcome the crisis speech by mr christian noyer, governor of the bank of france, at paris - europlace, dubai, 22 january 2009. * * * ladies and gentlemen, it is a great pleasure for me to be here and share some thoughts on the financial crisis and on solutions that may be found to overcome the situation. it is too early to draw definitive lessons from recent events in financial markets. it is however vital to start reflecting on the experience of the last few months. even more in periods of tension than in normal times, action and reflection should reinforce one another. it is at the very moment of managing the crisis that we lay the foundations for the future financial system. having said that, i propose to discuss with you two main topics : β’ the nature of the financial crisis β’ the policies implemented to address it both from a public and a private sector perspective. the nature of the crisis the crisis first emerged as a liquidity crisis. the first symptoms appeared at the beginning of august 2007 when serious disruptions surfaced on the inter - bank market in the western world. more than a year later, tensions on money markets are still with us. recent months have witnessed abnormal levels of spreads, a shortening of maturities, and the contraction, or even closure, of some market segments. through spill - over, these tensions are also affecting non - financial corporations and, more broadly the financing of the economy. they also have spilled over to emerging market economies, which had until the autumn 2008 remained largely unaffected. the crisis also emerged as a crisis of securitisation. securitisation is an old and successful technique used to refinance a range of loans. what was new about it is that it got used extensively in highly unstable financial structures. these were financing short - term illiquid and complex assets whose value proved to be uncertain and contingent upon models. the instability of such structures was largely masked. indeed, cheap money allowed easy refinancing of poor quality debt and of assets with uncertain value. also, favourable ratings and credit enhancements artificially boosted the quality of loans underlying structured products. the rise in defaults on such loans, first on subprime mortgages, triggered a chain of reactions whose consequences are still unfolding now. credit protections proved illusory. liquidity dried up much more quickly than it had appeared. rating agencies massively, suddenly and sharply downgraded
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or will it persist? a temporary slowdown is, as you know, the base case for the ecb, which recently revised down its staff macroeconomic projections for real gdp growth substantially in 2019 but only slightly in 2020. third, β strategic β uncertainty in some cases, the uncertainty we face is about what other policy makers will do. this is particularly pernicious when unpredictability is considered a source of strategic advantage. for instance, a seemingly credible threat by one party to take actions that lead to mutual disadvantage can prompt concessions from the other, ( or not ). a former american president, 1 / 3 bis central bankers'speeches richard nixon, called this his β mad man β theory when applying it to the war in vietnam and there are echoes of this idea in current international trade disputes. such behaviour undermines multilateralism which has been an important source of stability and growth over many decades. if strategic uncertainty is a source of unilateral advantage, it will not dissipate but remain a source of latent policy risk. last, β structural change and monetary policy β uncertainty there are fundamental structural changes occurring, notably in the euro area economy but also elsewhere, that are poorly understood. the ongoing demographic transition, for example, is changing employment, investment and saving decisions, which will probably lower the natural rate of interest. the monetary policy transmission mechanism also seems to be changing. a sustained period of accommodative monetary policy has boosted growth and employment and is finally showing up in nominal wage growth : this first part of the phillips curve is at work. but higher nominal wages have not yet been passed through to core inflation. it should eventually, but the more pertinent issues β of when and by how much β are unclear. there is, thus, not a single mechanical relationship between monetary policy instruments and inflation, rather a distribution of likely responses. furthermore, differences in demographic trends and structural policy choices between countries in the eurozone ( or states in the us ) may create or perpetuate some heterogeneity across large monetary areas, an issue you will discuss tomorrow morning. 2 β how to respond to such uncertainties? without pre - empting discussions, let me flag some possible responses. i β ll first, address the issue of policy uncertainty between central bankers. so far, it is, fortunately, the simplest one : we are not in a so - called β game of chicken β and clarity about policy intentions between ourselves are
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three times β each time by 25 bp, to 5. 75 %. 3. we have also preserved relative stability of the dinar exchange rate against the euro, as an important pillar of investment and consumer confidence. 4. record fdi inflows have continued. i will make an exception here β this data is always first announced by the president, but since he is on the road, at a conference, i will give you the honour of announcing the latest data. of course, he already has it, because he is the one who contributed the most to such an outcome β fdi amounted to eur 4. 467 bn as at 30 november, and we still have the whole month of december, so we expect this year to be a record year with even higher investment inflows than the previous year. investment inflow remained diversified by project and geography. 5. our fx reserves amounted to a record eur 28. 3 bn at end - october, which is an additional increase of 13. 6 % during this year. 6. we also have record dinar savings, which have increased by over 80 % since the beginning of last year, reaching rsd 180 bn, which is ten times higher than in 2012. 7. in conditions of declining inflation, banks began easing credit standards by the end of last year, hence we have seen an acceleration in credit activity to 7. 2 % y - oy in october, with strong growth in loans to both corporates ( 4. 9 % ) and households ( 9. 2 % ). 8. in the past twelve years, we have tripled our gold reserves to 48 tonnes, and increased their share in total reserves to 13 %. this information becomes even more significant when we know that gold has gained almost 30 % in value just this year! gold gains in importance and value during periods of global turbulence, especially during global geopolitical conflicts and times of high inflation. unfortunately, in recent years, we have witnessed the effects of both of these factors. 9. i will always emphasise that our gold purchases were made in consultation with president vui, considering his strategic thinking, knowledge of global geopolitical relations, and the information he has access to. 10. all these results have officially placed us in the group of countries with an investment - grade rating! it is difficult to prioritise when it comes to opportunities and challenges. a year ago, i spoke here about the green agenda and digitalisation as opportunities
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to 2020, to 116, 401, signalling a change in consumers β habits and increased orientation towards using digital means of entering into financial service contracts. of this, 18, 300 contracts were concluded using video - identification of consumers. further, when we compare q4 2021 with q1 2020, we see that the number of performed mbanking transactions increased by close to 120 % for natural persons and as much as 170 % for legal persons and entrepreneurs. the use of e - banking, which performed well even before the pandemic, also went up, with the number of transactions higher by 17 % for natural persons and 36. 3 % for legal persons and entrepreneurs. in your report, you specified that many of the countries in which the ebrd is operating plan to introduce the regulatory sandbox, which we have had in serbia for a long time already. we are also exploring the possibility of applying different innovation technologies, such as blockchain technologies and artificial intelligence, to respond to the needs of our business processes. to the extent possible, we have also regulated virtual currencies as a type of digital assets. in addition to all that, we need to cooperate and keep an open mind. as augustin carstens, general manager of the bank for international settlements, recently said : β the soul of money belongs neither to a big tech nor to an anonymous ledger. the soul of money is trust. β i have the habit of saying that people, knowledge and trust are the key foundations on which rest governments and all institutions, banking in particular. this does not change an iota in the digital era. it is the task of central banks to build trust, and i can promise that we will strive to deserve this trust in the years ahead, just as we have deserved it in the past ten years. i thank you for your attention, but also for your trust. ladies and gentlemen, esteemed colleagues, it is my message that we should not shy away from new technologies, but that we need to be prudent and cautious and take measures to manage cyber and other risks, to which we pay particular attention in the national bank of serbia. it is our task to create conditions worthy of the 21st century man, because you cannot start anything without people or complete it without institutions. i wish you a successful presentation and good health! 2 / 2 bis central bankers'speeches
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panayotis thomopoulos : recent developments in housing finance speech by mr panayotis thomopoulos, deputy governor of the bank of greece, at the european finance convention, athens, 31 january 2007. * * * ladies and gentlemen, it is a great pleasure and an honor to address such a distinguished audience of practitioners in the area of finance on such a topical issue. before speaking succinctly on the housing market and its interlinkages with the rest of economy, i would like to say a few words about long term issues and challenges. in particular in the field of mortgage lending the effects of today β s decisions will be felt during the next 25 or even 35 years, when the last installment of a 25 or 35 - year loan is repaid. today most analysts and market actors seem optimistic about future developments and this because markets are mainly preoccupied with the short term, and tend to project current trends into the future. and if you want to lengthen the time horizon, many analysts, traders etc. will cite the famous words of j. m. keynes, β over the long run we are all dead β, thus bringing the discussion back to current developments and a focus on the short - term. indeed reading the figures and short - term forecasts about the world economy presented by the oecd, imf and others one cannot but be optimistic. the global economy has been growing at an average rate of almost 5 % since 2001, and the short - term prospects point to a continuing high rate of growth. the world has not seen such a high long - term rate of growth since the 1950s and 1960s. moreover, whereas in the past only a small proportion of the world population ( 1 / 4 ) were reaping the dividends of growth, nowadays nations accounting for almost ΒΎ of the word population are benefiting from rising standards of living, though to varying degrees. are these revolutionary developments and do they signal a new area of the world history? i believe the answer is yes and yes. the developed world, that is essentially eu, us & cnd, australia, n. zealand, japan & korea, are no longer the only global actors, and the consequences of the economic upheavals are being felt in the world political arena, cultural attitudes, social behaviour and unfortunately the climate across the globe. every year more than 50 - 60 million people from emerging market countries, essentially in china and india, are entering the market economy, both as consumers and
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be corrected sooner or later. the current account deficits observed in many countries in the region raise concerns regarding their sustainability. any loss of confidence on the external side may easily cause some upheaval in the domestic financial market. countries in south - eastern europe have the advantage of being able to learn from best practices developed in more advanced countries and avoid the mistakes of others. they should take the opportunity offered now by a relatively stable international environment and their domestic fast growth to put mortgage lending on a stable footing. the credit information infrastructure should be strengthened, the legal procedures for dealing with defaults should be simple, clear and transparent, and both banks and borrowers should realize the risks they take, especially as they move to more sophisticated instruments.
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each other. this reduces the costs of central clearing β costs that are ultimately borne by the real economy β as well as allowing a more efficient and effective management of the risks that brings significant global financial stability benefits. requiring each of these instruments to be cleared in the jurisdiction of the currency in which they are denominated would simply render multi - currency central - clearing impossible. this is but one example of the very many products in these pipes that are by their nature multi - currency. in central clearing, in settlement, in payments if we wish to maintain the infrastructure to sustain an open and integrated global capital market, we will need to build upon the arrangements we have developed for supervisory cooperation and co - ordination. these are not insignificant challenges. but the history of the development of this infrastructure is one of both private and public sector co - operation to provide international plumbing that is both efficient and safe. conclusion and these challenges may be older than we think. th less than a mile from here stands the temple church, built by the knights templar in the 12 century. originally established to protect pilgrims en route to jerusalem, the knights templar soon developed complex international financial operations to store assets and move money across borders. all speeches are available online at www. bankofengland. co. uk / speeches in london, pilgrims depositing assets in the temple church received a note that could be redeemed for money when they arrived in the holy city. the templar β s wealth and infrastructure grew enormously β aided by the fact that the pope exempted them from all regulation, supervision and taxes. one historian has categorised them as the first multinational corporation. in the end, however, they grew too powerful and the β authorities β of the day in rome, paris and london withdrew their β authorisation β and disbanded the order. today β s infrastructure, developed to support financial globalisation, exceeds by far anything the templars β or the first deputy governor of the bank β might have imagined. these global pipes increase efficiency, lower costs to the real economy and reduce risk. and because they are in essence global, we will have to find co - operative ways to manage the changing risks they present in order to maintain the benefits that they provide. all speeches are available online at www. bankofengland. co. uk / speeches
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financial centre, over a quarter of global clearing takes place in the uk. we take this supervisory responsibility very seriously β as we do the need for our supervision to keep pace with the growing systemic importance of this infrastructure. given london β s role as an international financial centre our aim is to be at the leading edge of supervision of key infrastructure. over the past few years we have been reinforcing our capacity and capability precisely to that end. and we will continue to do so. our annual report to parliament will be published today. it sets out how we have discharged our supervisory responsibilities for fmis over the past year β both through our core assurance programme and our forward - looking assessment of risks β in order to promote and enhance uk financial stability. it also sets out our priorities for the current year and beyond. but as well as accountability, we need independent assurance that we are meeting our aim to be at the forefront of effective, forward looking supervision of financial market infrastructure. last year the imf and cpmi - iosco published independent reviews of the bank β s approach to supervision and how far it meets international standards. cpmi - iosco confirmed that the bank β s approach is fully consistent with the international standards expected of fmi supervisors. on leading international financial centre, see for example β the global financial centres index 20 β, september 2016, published by the z / yen group. global clearing is based on bank of england calculations using data from cpmi - iosco quantitative disclosures in 2016 all speeches are available online at www. bankofengland. co. uk / speeches the imf β s financial sector assessment programme review of the uk, concluded that β supervision of financial market infrastructures ( fmis ) in the u. k. has significantly strengthened in recent years ; the bank of england ( boe ) is one of the leaders worldwide in shaping reforms in this area β. the bank is not content with simply confirming that it currently meets international standards as assessed by cpmi - iosco and the imf. independent challenge is also why the bank of england β s court commissioned an in - depth evaluation by the bank β s independent evaluation office ( ieo ) of the bank β s supervision of financial market infrastructure firms. the ieo report and the bank β s response are published later today. the ieo report provides an independent assessment of the bank β s reinforcement of this area over the past few years, which goes above and beyond international requirements, reflecting the growing importance of
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up our internal capabilities and human resources, and actively consult the industry participants in our efforts to meet the challenges in the coming year.
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this year during which the three fsf reports were adopted. singapore also participates actively in imf initiatives to enhance transparency as a means to minimising risks to the global financial system. in particular, we are in general compliance with sdds ( special data dissemination standards ), including the new requirements for more detailed breakdown of data on official foreign reserves of member countries. we also release regularly the imf β s assessment of our singapore economy and policies ; the latest report was based on the annual consultation that ended in june of this year. mas annual accounts assets & liabilities on mas β annual accounts, total assets increased by s $ 6. 2 billion to s $ 114 billion as at 31 march 2000, of which s $ 3. 9 billion was in the form of foreign assets and s $ 2. 2 billion in our holdings of singapore government securities ( sgs ). the increase in sgs holdings reflects a conscious effort to build up our portfolio of sgs to engage in more repo transactions for our money market operations, thereby broadening the range of money market instruments that we use. on the liabilities side, there was a reduction in deposits of banks by about s $ 3. 3 billion, reflecting the repayment of deposits previously placed by posb with mas prior to its merger with dbs. however, this was more than offset by increases in government deposits with mas and our borrowings from the money market, again due to the diversification of our money market instruments from mainly swaps to include money market borrowings and repos. income & expenditure statement for the financial year ended 31 march 2000, mas made profits of s $ 3. 6 billion ( net of provisions ), a decrease of 38 % or s $ 2. 2 billion compared with the previous year. the lower return was due mainly to translation losses, as the singapore dollar strengthened against major foreign currencies such as the us dollar and euro during the financial year. the organisation to support mas β expanded roles and functions in building a central bank of excellence, we have taken steps to strengthen our human resources. over the last two years, we have increased our headcount by 30 %. of these, a substantial number were early - and mid - career officers from a wide range of professional and academic backgrounds. the increase in mid - career employees has encouraged greater diversity in perspectives and views within the organisation as we address the increasingly complex issues in monetary policy and financial sector supervision and development. mas will continue to build
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of slowing in the coming months, the increasingly broad - based nature of inflation and inflation expectations moving above our 2 % target, the priority of our monetary policy is clear. we cannot influence the supply side shocks. however, our task is to strengthen confidence in the medium - term price stability and to prevent de - anchoring of inflation expectations through our credible action. these developments urge us to continue our journey down the path of monetary policy normalisation. in particular : first, the process of the gradual winding down of eurosystem net asset purchases will conclude this month, as we also end net purchases under the app, after the pepp net purchases already ended in march this year. second, as decided last week, our first interest rate increase in 11 years is scheduled for july, expected to be followed by another rise in september. while we intend to raise key interest rates in july by 25 basis points, the pace of further increases will depend on future price developments and outlooks. if the medium - term inflation outlook persists or deteriorates, a larger increase will be appropriate in september. third, based on our current assessment we anticipate that a gradual but sustained path of further increases in interest rates will be appropriate beyond september. high inflation is a major challenge for all of us, but we will make sure at the eurosystem level that inflation returns to our 2 % target over the medium term. [ financial fragmentation ] due to elevated inflation and the expected normalisation of our monetary policy, borrowing in the financial markets has become more costly for sovereigns, banks and corporates. similarly, the bank lending rates for households and corporates have also started to rise, though at a slower pace. since last august, the nominal sovereign bond yields have increased significantly. the increase, which gained pace in the last week, ranges from over 2 ppt for germany to over 4 ppt for greece. the spreads over german bonds have also increased notably, but remain far below the highest levels during the euro area debt crisis. a certain increase in spreads is justified, after their policy - induced compression over the last few years. however, if financial fragmentation were to become excessive, then this would endanger the proper transmission of monetary policy throughout the euro area. the primary tool of the eurosystem for mitigating excessive widening of the spreads is flexibility of reinvestments under the pandemic asset purchase program ( pepp ). flexibility can be used by investing the value of maturing
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wound down, and the privatization of one state - owned bank ( nkbm ) has already been initiated. the new european resolution mechanism is scheduled to take effect in 2016. banka slovenije is seeking to speed up the process. it intends to create in 2015 a deposit insurance fund and a resolution fund to facilitate the consolidation of weak banks. the banking sector is undergoing a necessary process of structural reforms, and the world of banks is changing. regulation and supervision is being strengthened to make the future of the banking system more stable and less crisis - prone. on 4 november, the european central bank assumed responsibility under the single supervisory mechanism for supervising 8 banks in slovenia accounting for more than two - thirds of the market share. the supervisory culture will change under the new regime. supervision will become more quantitative and the ecb will also inspect the business models of banks. for the 10 credit institutions not covered under the ssm, banka slovenia will align its supervisory approach with that of the ssm. the central credit registry is being upgraded to support banking supervision. banka slovenije has established, like other european central banks, an institutional framework for macroprudential oversight of the financial system that is in line with the recommendations of the european systemic risk board. the basic aim is to safeguard the stability of the financial system by identifying the emergence of systemic risks at an early stage and taking preventive measures to mitigate these risks. * * * * bank rehabilitation is only a necessary condition for unlocking credit growth to the slovene economy. successful corporate restructuring, which entails both financial and business restructuring, is also essential to lay the foundation for productive investment and strong employment creation. unless enterprise restructuring is undertaken decisively in a timely fashion, the capital buffer of banks created by their recent recapitalization will erode and further injections will be needed once again. the enabling legislative framework for enterprise restructuring is in place, but systematic restructuring is yet to begin. this should be given priority by the government. a decision must be made with regard to the most urgent restructuring cases a critical constraint that slovenia faces is the availability of funding for corporate restructuring and increasing investment activities. given that the feasibility of using state resources for these purposes is limited, privatization and entry of private investors should be the key vehicles for the required non - debt capital infusion foreign direct investment is a key source of potential equity. the business and political culture will need to adapt and embrace the realities of globalization and slovenia β s integration
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of these bilateral free trade agreements are to create a regional free trade area among west balkan countries. authorities in south east european countries have shown signs of consistent regional collaboration ; however, they need to make additional efforts to unify and harmonize their legal, institutional, regulatory and infrastructural frameworks. these efforts need to be supported by a clear commitment by eu financial groups to the region β s small open economies. the development of the regional markets for products and factors, investment in education and improvement of human capital, exploitation of economies of scale and comparative advantages, will depend on the availability of credit and investment and the financial support of the banking system. in this respect, eu financial groups will be instrumental factors for building bridges of cooperation among economies of the region and its transformation into a larger, better integrated, more competitive, more profitable and prosperous economy, eventually leading to a prosperous economic future through economic cooperation. in this respect, i encourage foreign groups to adopt a regional rather than a country specific view when considering their future in the region. it goes without saying that any policy that restricts commitment and exposure of eu financial groups in the region does not support economic cooperation among our countries. it rather creates a struggling environment and a less prosperous future for all economies of the region. the western balkans region offers great opportunities and profitable perspectives for eubased corporations and financial groups. the harmonization of above - mentioned reforms will create an even more attractive environment for different private entities interested in investing in our region. i invite eu financial groups to see the region under this perspective. european institutions and financial groups should support and become a positive force to facilitate, smoothen and support regional economic cooperation, which will lead to a better prosperous future and a faster european integration process of the region. thank you for your attention! bis central bankers β speeches
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cost - effective way, as well as to increase financial inclusion. the strategy has a detailed action plan ; the bank of albania is fully committed to its implementation. in this framework, i would like to emphasise a notable achievement, the finalisation of the draft law on β payment services β, which transposes the revised eu directive on payment services ( psd2 ). the draft is currently subject to public consultations. the approval of this draft - law would provide the preconditions for promoting innovative technological solutions, and introduction of more efficient and less - costly instruments. at the same time, it contributes to enhancing the security of payment services by addressing risks related to the implementation of innovative technological developments in these services. in the period ahead, we will continue to improve payment services ; an important initiative in this regard is the preparation of a draft - law β on payments account β which transposes another eu directive. it seeks to underpin the objectives for increasing financial inclusion of the population, which is currently at relatively low levels. i am confident that the expansion of financial inclusion, notwithstanding its short - term costs, will contribute significantly to bolstering your intermediation activity in the long run. in addition to regulatory improvements, we are engaged in a series of projects on infrastructure improvements. such as : creating a national platform for real - time processing of payments. such platforms have proven to be very effective, as they realise a payment within seconds and may replace or supplement areas where the activity of card payments have not been effective. 4 / 5 bis central bankers'speeches creating a national switch, which implies processing a cad payment through a domestic platform, avoiding prolonged cycles via international card processors. creating a system for the settlement of euro payments domestically in order to lower the existing very high commissions resulting from the use of correspondent banks, which are very costly. all these legal improvements and technological modules, which are being made available to you should be followed by concrete actions on your side, to expand the range of instruments and lower their costs. * * * dear ladies and gentlemen, the banking sector has had and will continue to have a positive development prospect in albania. that does not mean, however, that there are no challenges lying ahead of us. on the contrary, there are numerous, complex and dynamic ones, often combined with unpredictable development, domestically and internationally. it is our duty, as actors and regulators of this industry, to respond in a timely and decisive fashion, to turn the already
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clear that demand for senior sbbs would be enhanced by more extensive reforms that would encourage banks to adjust their current holdings of government debt. still, there is a diversity of opinion among taskforce members as to whether such banking regulation reforms are needed for success ( especially in relation to the fostering of banking union ), while taking into account the important role for non - bank investors in sovereign debt markets. after the necessary regulatory adjustments have been implemented, market development should be led by demand from investors. over time, a deep and liquid market could develop. the senior security could become a benchmark low - risk asset, which the euro area as a whole currently lacks. with such an asset, banks would be safer and capital markets more efficient. accordingly, the sbbs asset class could support the completion of banking union, capital markets union and monetary union, without weakening market discipline and without taking steps towards fiscal risk sharing. at the same time, there are many other factors at work in driving the dynamics of european integration on all three fronts and it is important to bear in mind the interactions between sbbs and these myriad other influences. as discussions on the nature and extent of european integration continue to unfold in the coming months, the taskforce report may be helpful in providing guidance on the potential role of sbbs in the broader design of the european monetary and financial architecture. 3 / 4 bis central bankers'speeches diversity let me turn to my third topic : diversity in the financial services industry. the inclusion of this issue as part of this year β s european financial forum is indicative of the welcome and necessary recognition of the importance of improving diversity across the financial services industry. at the central bank of ireland, we have increased our focus on diversity over the last couple of years, in relation both to the firms that we regulate and also ourselves. we have focused on diversity from a regulatory perspective because there is strong research to show that diversity at senior levels of regulated entities can help to reduce the likelihood of group think, increase the level of challenge and improve decision making and risk management. there is also a clear connection between the diversity in an organisation and its culture. these are all attributes that as a regulator we care about. group think, in particular, was identified in the nyberg report as a contributing factor to the financial crisis in ireland. the financial services industry can certainly expect to see a continued increase in the intensity and intrusiveness of our engagement on diversity. as an employer, we see the importance of
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international finance services and ireland the central bank of ireland has been focused on brexit since the announcement of the uk referendum. at a macroeconomic level, we monitor the impact of brexit on the irish economy and assess the potential macro - financial risks that may arise as a result of brexit over different forecast horizons. so far, the main channel by which brexit has had a macroeconomic impact has been through the 15 percent depreciation of sterling against the euro since the referendum. this has affected exporters to the uk but also contributed to a decline in good prices in ireland, given the important role of imports from the uk in the irish consumption basket. the buoyancy of domestic demand and global economic conditions has allowed the irish economy to expand at a robust level, despite brexit. still, we remain of the view that brexit will have a long - term negative impact on the irish economy, to the extent that it leads to trading frictions between the uk and the 1 / 4 bis central bankers'speeches eu27 and affects long - term uk economic performance. turning to the financial sector, one part of our work has been to ensure that irish - resident financial firms with uk exposures are making adequate preparations for brexit. even if firms may hope for a soft type of brexit, it is essential that all entities with significant exposures are prepared for downside risks. in addition, brexit is driving an expansion in both the size and complexity of the internationallyorientated section of the irish financial services industry. in engaging with firms, it is clear that there is considerable uncertainty and complexity for firms in dealing with brexit. among the issues raised by firms are : risk transfer ; appropriate governance structures ; contract continuity ; and the treatment of third country branches by both the home and host regulators. this uncertain environment is a complicating factor, since applicants for authorisation need to prepare robust plans that deal with a range of scenarios. the european regulatory system is hard at work in formulating the supervisory guidance on the many thorny issues raised by brexit : the central bank of ireland is heavily involved in the design of these policies through our participation in the ssm and the european supervisory authorities. at the same time, the final impact of brexit on the financial services industry depends on the outcome of the negotiations between the eu and uk : it is too early to tell. many types of entities β including banks
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adnan zaylani mohamad zahid : re - inventing payments - the future of financial services keynote address by mr adnan zaylani mohamad zahid, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the malaysian e - payments excellence awards ( meea ) 2019, kuala lumpur, 31 july 2019. * * * it is my pleasure to be speaking here today, at such an exciting time for our payments landscape. malaysia β s progress in migrating to e - payments has been promising. in less than a decade since 2011, we have reduced cheque usage by half to 101 million in 2018. e - payment acceptance points such as point - of - sale ( pos ) terminals have more than doubled to 16 terminals per thousand inhabitants in 2018. more merchants are also accepting qr payments with over 400, 000 registrations recorded to - date. meanwhile, e - payment transactions have almost tripled to 125 transactions per capita in 2018. at the same time, new business models are emerging. we estimate that 40 % of fintechs in malaysia are in payments or payment - related services β making it the largest segment. the ewallet space has been particularly vibrant, contributing to rapid growth in mobile payments. from 2017 to 2018, mobile payment transaction volume had increased twenty - fold from just below two million transactions to over 34 million transactions within a year. keeping these developments in mind, allow me to share three broad priorities in taking malaysia β s payments journey to greater heights. greater scope to enhance inclusivity and quality of e - payment adoption the first priority is to improve the quality of our e - payment migration to be more inclusive, broadbased and sustainable. the good progress so far means that malaysia has a solid foundation for more widespread adoption of e - payments. e - payments are increasingly prevalent, with adoption picking up across a wide range of use cases. a wider network of merchants is also increasingly open to accepting e - payments as a possible driver of efficiency gains and revenue growth. importantly, these encouraging developments have been contributed, in part, by the market reforms and incentive structures implemented since 2013. these measures have corrected market distortions and facilitated the pooling of industry resources to continuously enhance the payment infrastructure and services. nonetheless, there are opportunities for more inclusive and broad - based adoption. studies have shown that cash usage is still prevalent with more than 80 % of malaysians reportedly using cash in a majority of their everyday spend
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the success of these new business models will depend on the industry players β ability to harness customer data to develop value - added services while ensuring compliance with data protection laws and regulations. this is key to enable greater customisation and offering of new services. for example, industry players that understand their clients β cash flow, turnover and supply chain can potentially identify new growth areas. these may include the provision of shortterm credit, insurance and wealth management services to customers and businesses. in harnessing customer data, there are clear synergies between existing and new players. incumbents have vast amounts of data, but legacy systems and culture can pose challenges to turn such data into insights. on the contrary, new players could face the opposite challenge β with more agile technological capabilities built from the ground - up, but having little or no data to work with. it is thus no surprise that more strategic partnerships between traditional and new players are emerging, in malaysia and abroad. such initiatives could foster vibrant ecosystems that could penetrate market segments that were previously underserved or unserved. similar opportunities are also possible on the cross - border payments sector amid increasing migration flows, global e - commerce and internationalisation of value chains. concerted industry efforts are imperative to bring the cross - border payment experience up to par with that for domestic payments. likewise, a customer - centric approach that goes beyond just payments can potentially be transformational. in an increasingly globalised economy, malaysian smes stand to gain significantly from crossborder payment innovation. better integration of payment services with regional or global ecommerce networks could expand market access. value - added features could also be embedded to eliminate existing frictions for cross - border trade. this may include digitising trade finance documentation and streamlining back - end processes of financial institutions and corporates to drive greater efficiency and expedite compliance process. future - proofing the payments landscape will be key moving forward finally, let me turn to the third key priority for payment infrastructures to be future - proofed. payment systems of the future must be inclusive and able to accommodate the speed of change for implementing new solutions at scale. in this regard, we have achieved a key milestone with the launch of the real - time retail payments platform ( rpp ) last year. it is designed to be more scalable, flexible and open to support new use cases such as proxy payments, request - to - pay, e - mandates and services to support more seamless customer onboarding processes.
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abroad helped spur a robust expansion in u. s. real exports, which grew about 9 percent last year. the pattern of real u. s imports was somewhat uneven, partly because of fluctuations in oil imports over the course of the year. on balance, import growth slowed in 2006, to 3 percent. economic growth abroad should support further steady growth in u. s. exports this year. despite the improvements in trade performance, the u. s. current account deficit remains large, averaging about 6 - 1 / 2 percent of nominal gdp during the first three quarters of 2006 ( the latest available data ). overall, the u. s. economy seems likely to expand at a moderate pace this year and next, with growth strengthening somewhat as the drag from housing diminishes. such an outlook is reflected in the projections that the members of the board of governors and presidents of the federal reserve banks made around the time of the fomc meeting late last month. the central tendency of those forecasts β which are based on the information available at that time and on the assumption of appropriate monetary policy β is for real gdp to increase about 2 - 1 / 2 to 3 percent in 2007 and about 2 - 3 / 4 to 3 percent in 2008. the projection for gdp growth in 2007 is slightly lower than our projection last july. this difference partly reflects an expectation of somewhat greater weakness in residential construction during the first part of this year than we anticipated last summer. the civilian unemployment rate is expected to finish both 2007 and 2008 around 4 - 1 / 2 to 4 - 3 / 4 percent. the risks to this outlook are significant. to the downside, the ultimate extent of the housing market correction is difficult to forecast and may prove greater than we anticipate. similarly, spillover effects from developments in the housing market onto consumer spending and employment in housingrelated industries may be more pronounced than expected. to the upside, output may expand more quickly than expected if consumer spending continues to increase at the brisk pace seen in the second half of 2006. i turn now to the inflation situation. as i noted earlier, there are some indications that inflation pressures are beginning to diminish. the monthly data are noisy, however, and it will consequently be some time before we can be confident that underlying inflation is moderating as anticipated. recent declines in overall inflation have primarily reflected lower prices for crude oil, which have fed through to the prices of gasoline, heating oil, and other energy products used by consumers
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uncertainty on the introduction of the euro has contributed further to the increasing financial integration of the euro area member states. in recent years, new joint framework conditions for the european securities markets have also been drawn up. the globalisation of the financial markets provides for more efficient use of capital, with potential substantial gains for the global economy. for investors, the greater integration of the financial markets augments opportunities for investment. capital can seek out new markets yielding higher returns, and a larger financial market increases opportunities to spread risk. in addition, borrowers gain access to raise capital from a wider and deeper pool of investors. the overall effect is the more efficient use of capital, such that the capital is utilised where it has the greatest effect. but financial integration has also brought new risks. substantial financial imbalances across countries can be financed for as long as the financial markets have confidence in developments, but once this confidence has gone, things can change very quickly. since 2002, and without interruption, the usa has been able to finance a current - account deficit of around 4 - 7 per cent of gdp ( slide 6 ). during this period the usa's consumption and investment demand has persistently and significantly exceeded its income. considerable capital inflows from abroad have made this possible. but what will happen if these capital inflows suddenly cease? this will push up us interest rates and weaken the dollar significantly. in this scenario there is a risk that the necessary adjustment will be very cost - intensive for large parts of the global economy. the prices of a number of financial assets will adjust rapidly, leading to economic adjustments. fortunately, it is widely believed that the risk of an abrupt adjustment is diminishing, but it still exists. denmark has also been part of the global financial integration. danish companies frequently acquire companies abroad, and foreign companies buy danish companies. even in international terms, the sale of tdc to an international capital fund in 2006 was one of the largest ever transactions of its kind. the development in the danish securities markets reflects increasing financial integration, especially with the euro area. statistical analyses show that yield changes in danish 10 - year government bonds closely follow equivalent german yield changes ( slide 7 ). there is also relatively close covariation between danish, german, british and japanese interest - rate changes and interest - rate changes in the world's most important bond market β the market for us government bonds ( slide 8 ). the convergence has increased significantly in recent years. investors apparently increasingly consider
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than the already sizeable ones provided for in the bank β s forecast. the inflation outlook would then deteriorate, which would call for interest rate hikes. gdp growth would weaken as a result, perhaps even ending in a contraction. but there is always some uncertainty in both directions, and naturally, we could end up on the receiving end of positive shocks that improve the situation. but under these conditions, it is likely that the risk to gdp growth is tilted to the downside. in this connection, it is important to remember that we have seldom, if ever, been as well prepared for adverse shocks as we are now. our external assets exceed our external liabilities. our international reserves are close to an all - time high and are almost entirely financed domestically. public and private sector debt has fallen steeply relative to income in the past few years. our banks are robust, with high capital ratios and abundant liquidity, and the central bank β s newly published stress test indicates that they can withstand much more severe shocks than we currently consider likely. unlike many other advanced countries, we have considerable scope for economic policy to respond to shocks, as central bank interest rates are well above zero and the government is operating at a surplus and is relatively well positioned with regard to debt. the exchange rate of the krona is still strong, although it has fallen in the recent term, and the real exchange rate is estimated to be broadly as it was in late summer 2016. all in all, it can be said that our position is still relatively good, and nothing has yet happened to give cause for deep - seated pessimism. yesterday the bank announced a 0. 25 % increase in its key interest rate, to 4. 5 %. this rate hike was decided in view of economic developments and prospects, including those described in the bank β s new forecast, and in view of the considerable decline in the bank β s real rate in recent months, which stems from rising inflation and inflation expectations. one of the factors the monetary policy committee considers when it assesses the monetary stance is the central bank β s real rate in terms of various measures of inflation and inflation expectations. this is illustrated in chart 1, which shows that the real rate was 0. 8 % just before the last interest rate decision. this is lower than in 2013, when there was still a considerable slack in the economy. of course, the progress made in anchoring long - term inflation expectations at the target β another term for enhancing
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a situation where the currency had fallen more than 50 % in 2008, where foreign krona positions that were a legacy of carry trade and capital inflows amounted to around 40 % of gdp, and where a large fiscal deficit that had to be financed in the domestic market had developed. the capital controls therefore gave monetary policy more scope to help stabilise and turn around the real economy once inflation came down. franek will discuss the imf programme in more detail, but i would like to make one more remark regarding fiscal consolidation, as it is such an important part of the story. the crisis hit government finances hard, as can be seen from this slide. bis central bankers β speeches it was therefore of vital importance that government debt was relatively low immediately before the crisis. however, fiscal consolidation was needed earlier than some considered optimal at the time from a demand management perspective, in order to regain internal and external confidence and open market access. the effort was huge, as can be seen from this slide, but back - loaded, as automatic stabilisers were mostly allowed to work in 2009. and it did not derail the recovery that began around the middle of 2010. the policy responses mitigated the recession but could not stop it from becoming the deepest in iceland β s post - war history and a severe one in international comparison, as can be seen from this slide. bis central bankers β speeches but iceland was not the hardest hit, as can also be seen from the slide, and this would be still clearer if we were to look at the labour market. iceland lost 12 % of gdp from peak to trough, slightly more than ireland. however, as was probably also the case in ireland, that peak was unsustainable and was associated with a significant positive output gap. iceland has regained 7Β½ % since, which is significantly more than ireland but less than latvia, which suffered a much deeper recession. finally, i would like to mention selected lessons that i think can be drawn from this experience. first, dealing with failing big banks in small countries : guaranteeing the entire banking system in iceland β s case would probably have resulted in sovereign default and the bankruptcy of the country. in general, taking such a step with big banks in small countries is risky, especially if a significant part of their balance sheets are in foreign currencies. the alternative is to save only key infrastructure elements, such as the domestic payment system. second, dealing with volatile capital flows : deal with the in
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. the impact of the depreciation on other prices in the cpi basket has been in line with expectations ; core inflation ( i. e., the cpiefe that excludes foodstuffs and energy ) has also risen, although at a slower pace than headline cpi. inflation expectations have remained at 3 percent in the projection horizon, with a slight increase in the near term. the baseline scenario assumes that y - o - y cpi inflation will rise temporarily to the 3. 5 to 4 percent range, in the coming months, reflecting the direct propagation of the peso depreciation to the prices of goods and services. the lower use of installed capacity β proxied by the behavior of output β should mitigate inflationary pressures and the direct effects of the depreciation. as i just said, the credibility and consolidation of our inflationtargeting scheme also help. therefore, already by the end of 2014 headline inflation should move closer to 3 percent, where it should stay until the end of the projection horizon, that is, the first quarter of 2016. core inflation will hover around 3 percent throughout the same horizon ( figure 7 ). bis central bankers β speeches the current account deficit of the balance of payments is forecast to stand at 3. 6 percent of gdp in 2014, up a little from 2013, but below the december estimate. behind it is the expected decline in the copper price this year, which more than offsets the lower growth foreseen in domestic demand and imports. this implies that, measured at trend prices, the deficit will narrow further, approaching 3 percent of gdp. as for gdp, the rate of total investment will go slightly above 23 percent in nominal terms ( somewhat more than 25 percent in real terms ), while national savings should amount to 19. 5 percent ( table 2 ). aside from the already discussed trajectories foreseen for domestic growth and the world economy, this forecast uses as a working assumption that nominal wages will be adjusted in line with productivity and the inflation target. it also uses as a methodological assumption that the real exchange rate will remain stable, considering that it is now inside the range believed to be consistent with its long - term fundamentals. finally, the baseline scenario uses as a working methodological assumption that the mpr will follow a trend comparable with the one that can be derived by the prices of financial assets prevailing at the statistical closing of this report ( figure 8 ). the baseline scenario reflects those events that are
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believed to be the most likely to occur with the information at hand at the closing of this report. there are risk scenarios, however, which if materialized, may reshape the macroeconomic environment and, therefore, may modify the course of monetary policy. on this opportunity, having evaluated the alternative scenarios, the board estimates that the risk balance is downward biased for output and unbiased for inflation. abroad, one first risk has to do with the behavior of emerging economies, especially china. the latter risk has been present in several reports already and has recently been exacerbated because of growing doubts posed by the fragility of the chinese financial system and the overall increase in the risk perception of the emerging world. in particular, adeterioration in the chinese economy would have first - order effects on chile and the group of emerging economies, spreading through both real and financial channels. of particular importance is its impact on the prices of commodities, including copper, as well as on the growth of other important trading partners. moreover, it cannot be ruled out that the vulnerabilities that some emerging economies have accumulated may generate new episodes of volatility it is also possible for the recovery process in the u. s. to end up being stronger than expected. the timing of its effects shows different signs. in the short term, the anticipated normalization of the monetary stimulus could lead to a worsening of financial conditions for the emerging world, inducing new episodes of volatility as in recent quarters. going forward, the effect of increased external demand and higher commodity prices would prevail, with positive effects on economies like chile that have solid fundamentals. overall, the risk associated with the complex fiscal and financial situation in the eurozone is still present and, moreover, heightening of geopolitical tensions in ukraine could affect commodity prices, as well as confidence in europe. at the local level, an important part of the economic slowdown of recent quarters is due to a drop in investment. the baseline scenario assumes that this phenomenon will not deepen and for some components it will even be reversed. but there are risks, particularly since the drop in investment in late 2013 was sharper than expected. for example, it is possible that, due to its natural inertia, investment may remain weak for longer than foreseen. another risk is that a deterioration of the global economy may pull down the copper price below its longterm level, deferring new projects and slowing economic
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address by lesetja kganyago, governor of the south african reserve bank, at the 14th bcbs - fsi high - level meeting for africa on β strengthening financial sector supervision and current regulatory priorities β cape town, south africa, 31 january β 1 february 2019 introduction good morning, ladies and gentlemen. i am pleased to once again welcome you to south africa, cape town for the 14th basel committee on banking supervision ( bcbs ) β financial stability institute ( fsi ) high - level meeting for africa on β strengthening financial sector supervision and current regulatory priorities β. allow me to first thank you all for attending this meeting, which has become an important annual event for the south african reserve bank, bcbs, fsi as well as representatives from other various sub - saharan african central banks and supervisory authorities. i hope that this meeting will be as successful as the past meetings we have had over the years. importance of financial sector regulation before we get bogged down in very technical discussions around financial sector regulation and our regulatory priorities, it is important that we first remind ourselves of the policy imperatives behind the need to continuously strengthen the regulation and improve the resilience of our financial systems. the financial sector plays an important intermediation role in the economy β by allocating capital from savers to borrowers, managing financial risks, facilitating trade, as well as offering access to the payment system. financial intermediaries and financial markets play this role by moving funds throughout the economy that in turn affect businesses and the production of goods and services1. a financial system is therefore the lifeblood of a modern economy. inclusive growth and sustainable development objectives would not be achieved without a stable and well - functioning financial system. the 2008 global financial crisis highlighted the strong connection between the financial sector and the real economy and the extent to which challenges in the financial sector can have negative effects on the real economy. while the financial crisis originated in developed countries, it negatively impacted on most of the emerging market and developing economies, in very significant ways. on our continent, the effects were β reforming the financial system in sub - saharan africa : the ( long ) way ahead β, peter gakunu, 2007 particularly felt through reduced foreign investment, trade and remittances. the crisis exhibited itself in growing budget and trade deficits, currency impacts, higher rates of inflation, increasing public debt and dwindling currency reserves 2. so to reiterate, a stable and well - regulated financial sector is vital for
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the achievement of our long - term sustainable economic growth and developmental objectives. given the growing interconnectedness of financial markets, international financial stability has become a global public good. despite governments, central bankers and regulatory bodies mainly operating in their respective jurisdictions, we need to recognise that some of the decisions we make in our own jurisdictions can have global reach. in order to achieve a stable global financial system, coordination and cooperation becomes important. our gathering here is one such form of coordination and cooperation towards the strengthening of our financial sector supervision and contributing towards a more resilient and safer global financial system. the interactions here, the sharing of ideas and experiences as well as the fostering of professional relationships will make the regulation of our financial sector better. financial sector development in africa the financial system in sub - saharan africa is generally bank based and somewhat less sophisticated than our developed country counterparts, with countries on different levels of development. however, there has been remarkable progress over the past two decades. while the emergence of non - bank financial institutions and other alternative sources of capital, such as stock markets has been noticeable, with the exception of a few, financial systems are still dominated by informal finance and traditional banks, most of which are state or foreign - owned. the banking sector in africa is undergoing reforms focused on privatisation and other forms of restructuring with respect to state - owned banks, with a view of improving the quality of the banks3. a review of the sub - saharan africa banking system published4 by the imf in 2013 makes the following observations : banking systems account for the preponderance of financial sector assets and activities ; the depth and coverage of financial systems β as measured by the ratios of broad money ( m2 ) and private sector credit to gdp β have been gradually increasing over the past decade, albeit from a low base ; the scale of financial intermediation in the region remains significantly lower than in other developing regions of the world ; access to financial services is also relatively low, reflecting a combination of low income levels, small absolute size, and infrastructure weaknesses ; 2 the economics student society of australia, julia pham, 2017 3 β review african financial systems : a review β, franklin allen etal, finance department, the wharton school, university of pennsylvania, 4 banking in sub - saharan africa : the macroeconomic context, montfort mlachila, seok gil park, and masafumi yabara, washington dc, imf, 2013 most banking systems are small in absolute and relative
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β 62 ) and associated laws and regulations to accommodate noninterest based banking transactions. some specific developments around this period are noteworthy : i. in 1979, two government - owned mutual funds in pakistan, the nit and icp, started to eliminate interest from their operations by eschewing investment of their funds in quaid - e - azam : speech at the foundation laying stone of the state bank of pakistan, 1st july 1948. aurangzeb mehmood, β islamisation of economy in pakistan : past, present and future β islamic studies 41 : 4 ( 2002 ). interest bearing securities. investor scheme of icp was substituted as from october 1, 1980 by a new scheme based on profit and loss sharing. ii. the state - run house building finance corporation ( hbfc ) also eliminated interest from its operations from july 1, 1979. iii. in june 1980, legal framework was amended to permit issuance of a new, interestfree instrument of corporate financing called participation term certificate ( ptc ). iv. a new law, namely, the modaraba companies and modarabas ordinance, 1980 along with the modaraba companies and modaraba rules, 1981 was promulgated to introduce modarabas, as a two - tier fund structure, for undertaking shariah compliant businesses. v. in 1984, the banking and financial services ordinance, 1984 amended seven laws and banking tribunals ordinance, 1984 provided a new system of recovery of noninterest based modes of financing. vi. from january 1, 1981, separate interest - free counters started operations in all the nationalized commercial banks to mobilize deposits on profit and loss sharing basis. concurrently, banks were prohibited from specified interest based transactions, which resulted in development of islamic modes of financing. vii. finally, sbp issued bcd circular no. 13 of 1984 that called for elimination of riba from the banking system and in january 1, 1985 all financing to federal and provincial governments, public sector corporations and public or private joint stock companies was directed to be only through interest - free modes. viii. from july 1, 1985 all commercial banking in pak rupees was made interest free. 3 resultantly, profit and loss sharing ( pls ) deposits, as a percentage of total deposits, rose from 9. 2 % at the end of 1981 to 61. 6 % by end of 1985. these measures resulted in a country - wide roll out of islamic banking. however
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comfort to customers on islamic financial services ; and ( iii ) a shariah audit system. sbp has introduced nine model agreements and contracts for major islamic modes of financing and shariah audit guidelines for banks, after vetting and approval of the sbp shariah board. work is underway on three more model contracts, namely, diminishing musharaka, istijrar and wakalah. shariah compliance inspection of islamic banks will start this year and will cover a review of the islamic banks β arrangements and operations, their services and products, financial statements and accounting records to ensure that all transactions are being carried out in accordance with the injunctions of shariah. backed by this elaborate structure, today 6 full fledged islamic banks ( ibs ) and 13 conventional banks offer a network of around 170 branches. total assets of islamic banks are close to rs135 billion 5 while islamic deposits and financings stand at 2. 9 % and 2. 4 % of market share respectively. d. future strategy and outlook while the number and operations of islamic banks are fast expanding, this segment of the market is still small relative to the appetite for islamic finance. pakistan, in light of its past experience, is launching a gradual and steady approach to islamic banking. despite rapid expansion in industry, the share of islamic banking in the total banking system is a modest 3. 2 %. moreover, it only caters for around 23, 000 borrowers through around 170 branches relative to the country - wide 5 million borrowers ( or 4. 8 million excluding microfinance borrowers ) tapped through 7, 700 branches by conventional banks. financing and investment levels of islamic banks barely range around rs77 billion, which is below 3 % of the total banking system β s advances 6. on the product side, islamic banks so far offer about 75 % of products currently available in conventional banking while clean lending for consumer financing products, like personal loans and credit cards, still pose a challenge. islamic banks operate exclusively in large cities with some now venturing into secondary cities but they are absent from rural areas where there is great potential for business growth. global interest in islamic finance industry and pakistan β s success in laying basic foundation and core infrastructure of islamic financial system lends confidence that the country has further, it has also been specified that a shariah advisor shall not hold any executive / non - executive position in any other financial institution, except working as shariah advisor of islamic mutual
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connection with the banking union. here, too, some quarters are evidently seeking a far - reaching joint solution, but without imposing stricter rules on the other policy areas that are also affected. a genuine european banking supervision can indeed form a major component of closer integration within monetary union. however, such an institutional reorganisation of banking supervision also has to be integrated β into a comprehensive reform of the supervisory regulatory framework and of the respective national scope for economic and fiscal policy. otherwise, too great a burden will be placed on banking supervision. what is crucial for political union is the willingness to hand over national sovereignty. does such a willingness actually exist within the eu? schlesinger : this question always takes me back to the start of european unification. at that time, the main objective was quite a different one β namely, to ensure that there would never again be a war in europe. the plan for a common european army was ultimately blocked by france, even though the loss of sovereignty involved would have been easy to implement. it is actually hard to envisage how a loss of monetary sovereignty could be achieved in the absence of a unified state. weidmann : seeing how reluctant some countries are to relinquish their fiscal policy autonomy β even in return for financial assistance β it is hard to imagine political union being achieved in the foreseeable future. mr schlesinger, should the bundesbank have fought more strongly against monetary union without a political counterweight in the 1990s? schlesinger : all of our demands were fulfilled. but i think we all underestimated just how wide the gulf is in the mindset not only of the political class but also in terms of public opinion in the individual countries concerning the objectives of fiscal policy. i would like to refer you to a chapter by rudolf richter in the publication marking the 50th anniversary of the deutsche mark ( note : fifty years of the deutsche mark : central bank and the currency in germany since 1948 ). he writes that the culture of stability in germany has been able to develop only because it has had the full backing of the general public. if you look at the bis central bankers β speeches maastricht treaty, the relevant criteria are there. but you won β t find any reference to the member states having to have the same culture of stability. weidmann : political efforts to use the central bank for policy purposes exist in all countries. however, the public β s stance on this is probably the crucial factor.
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suffice. however, there were also opposing movements within the bundesbank, such as when deciding in 1960 for or against revaluation of the d - mark. schlesinger : during the 1950s, it gradually became clear that the exchange rate of dm4. 20 to the us dollar set by the allies was too favourable to germany. we had an undervalued currency and considerable balance of payments surpluses, with implications for monetary policy : in a system of fixed exchange rates, the bundesbank had to keep buying up foreign currency in order to keep the exchange rate stable. it was thus involuntarily creating central bank money. ludwig erhard, the economics minister, therefore wanted a revaluation...... against which there was considerable opposition! schlesinger : along with chancellor konrad adenauer, the federal association of german industry and the german banks, the bundesbank and its president, karl blessing, were officially opposed to a revaluation, as they feared that this would weaken the export industry. however, there were also proponents of revaluation at the bundesbank, yet their opinions did not become public, with a few exceptions : the then - new vice - president of the land central bank of lower saxony, heinrich irmler, came out in favour of a revaluation in the land central bank β s annual report, which caused a major hubbub in frankfurt. however, i bis central bankers β speeches would like to add one thing : over the decades, there were no further tensions within the bank with regard to its stability orientation... weidmann : β¦ and that has been the case to this day. despite all our various qualifications and tasks, within the bank, there is a shared vision and a clear commitment to monetary stability. this is unique for such an institution and has also made the bank an attractive option for people applying to work for us. the public good of maintaining price stability and thus contributing to the common good is a major incentive for many. mr weidmann, how did you yourself see the bundesbank, say, while you were at university? weidmann : in 1987 i was studying in france. the banque de france was not yet independent at the time. that is when i first clearly saw the differences in outlook concerning the role of, and oversight over, the central bank. i myself had pretty much β inhaled β the bundesbank β
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that high and rising federal debt can, in the longer term, restrain private investment and, thereby, reduce productivity and overall economic growth. putting the federal budget on a sustainable path would aid the long - term vigor of the u. s. economy and help ensure 2 / 3 bis central bankers'speeches that policymakers have the space to use fiscal policy to assist in stabilizing the economy if it weakens. i will conclude with a few words on the technical implementation of monetary policy. in january, the fomc made the key decision to continue to implement monetary policy in an ample - reserves regime. in such a regime, we will continue to control the federal funds rate primarily by setting our administered rates, not through frequent interventions to actively manage the supply of reserves. in the transition to the efficient and effective level of reserves in this regime, we slowed the gradual decline in our balance sheet in may, and stopped it in july. in response to the funding pressures in money markets that emerged in mid - september, we decided to maintain a level of reserves at or above the level that prevailed in early september. to achieve this level of reserves, we announced in mid - october that we would purchase treasury bills at least into the second quarter of next year and would continue temporary open market operations at least through january. these actions are purely technical measures to support the effective implementation of monetary policy as we continue to learn about the appropriate level of reserves. they do not represent a change in the stance of monetary policy. thank you. i would be pleased to take your questions. 1 congressional budget office ( 2019 ), the 2019 long - term budget outlook ( pdf ) ( washington : cbo, june ). 3 / 3 bis central bankers'speeches
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better chapters to their lives. significant differences, however, persist across different groups of workers and different areas of the country : unemployment rates for african americans and hispanics are still well above the jobless rates for whites and asians, and the proportion of the people with a job is lower in rural communities. inflation continues to run below the federal open market committee β s ( fomc ) symmetric 2 percent objective. the total price index for personal consumption expenditures ( pce ) increased 1. 3 percent over the 12 months ending in september, held down by declines in energy prices. core pce inflation, which excludes food and energy prices and tends to be a better indicator of future inflation, was 1. 7 percent over the same period. looking ahead, my colleagues and i see a sustained expansion of economic activity, a strong labor market, and inflation near our symmetric 2 percent objective as most likely. this favorable baseline partly reflects the policy adjustments that we have made to provide support for the economy. however, noteworthy risks to this outlook remain. in particular, sluggish growth abroad and trade developments have weighed on the economy and pose ongoing risks. moreover, 1 / 3 bis central bankers'speeches inflation pressures remain muted, and indicators of longer - term inflation expectations are at the lower end of their historical ranges. persistent below - target inflation could lead to an unwelcome downward slide in longer - term inflation expectations. we will continue to monitor these developments and assess their implications for u. s. economic activity and inflation. we also continue to monitor risks to the financial system. over the past year, the overall level of vulnerabilities facing the financial system has remained at a moderate level. overall, investor appetite for risk appears to be within a normal range, although it is elevated in some asset classes. debt loads of businesses are historically high, but the ratio of household borrowing to income is low relative to its pre - crisis level and has been gradually declining in recent years. the core of the financial sector appears resilient, with leverage low and funding risk limited relative to the levels of recent decades. at the end of this week, we will be releasing our third financial stability report, which shares our detailed assessment of the resilience of the u. s. financial system. monetary policy over the past year, weakness in global growth, trade developments, and muted inflation pressures have prompted the fomc to adjust its assessment of the appropriate path of interest rates. since july,
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klaas knot : main risks to the financial system introductory statement by mr klaas knot, president of the netherlands bank, prior to the session with the standing parliamentary committee for finance, the hague, 18 june 2024. * * * i would like to thank the chair and the members of the house of representatives for their invitation. together with my colleagues from cpb and the afm, i would like to discuss with you the main risks to the financial system. i will do so on the basis of the dnb's financial stability report, which has been sent to you. i will start by outlining the overall macroeconomic picture before specifically addressing the risks of geopolitical tensions and the formation of blocs around the world ( geoeconomic fragmentation ), as well as the resilience of dutch financial institutions. on both subjects i will highlight a number of recommendations for areas where national governments and parliamentarians, such as yourselves, have scope to further improve the financial system. before moving on to these risks and recommendations, i will first look back briefly at the past year, because it has been an eventful year for the global financial system. in the spring of 2023, the rapid transition from low to higher interest rates β in response rising inflation β exposed vulnerabilities in the financial sector. in the midst of this transition, a number of us regional banks and the systemic swiss bank credit suisse encountered severe difficulties for different, unrelated reasons, leading to resolution, merger or acquisition. on my previous visit, i therefore drew a number of lessons from the failure of these banks. fortunately, a year on, the situation seems to have improved. inflation has fallen substantially in both the netherlands and the euro area. dutch inflation, for example, fell to 2. 7 % in may 2024. this substantial fall in inflation and the improved inflation outlook in the euro area prompted the ecb to cut interest rates for the first time in early june. at the same time, dutch economic growth is expected to pick up in the year ahead, spurring confidence in a " soft landing " for our economy. the dutch financial sector has also proved resilient, partly due to the reforms following the financial crisis. confidence in a soft landing for the economy is reflected among other things in historically high share prices and less tight financial conditions. as a result, the soft landing is initially good news for financial stability. looking ahead, however, there are risks to the economy and our financial
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of banks. more consistent use of instruments is also desirable for a more level playing field among european banks. in the case of non - banks, this macroprudential toolkit is still in its infancy, but pension funds, insurers and investment funds are now playing a greater role in the financial system. improvements to the framework are therefore desirable, particularly for investment funds. this concludes my introduction. 3 / 3 bis - central bankers'speeches
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other assets such as commercial real estate and consumer loans may come under greater pressure, affecting bank profitability. with profit declining, banks may become more risk averse to protect capital, putting more pressure on credit extension and the real economy. so, latest us data point to a weaker outlook ahead with more downside risks in the nearterm. the risks include further correction in the housing market, continued tightening of the credit conditions, and further decline in economic activities. outside the us, the economic picture looks less negative. while the adjustments in housing market are also ongoing in europe, and some european banks have reported losses in cdos, the impact on economic activities is expected to be more limited. for example, consensus forecasts in february, revised downward the euro zone β s gdp growth for 2008 by only 0. 3 percentage points from december compared with a 0. 5 percentage point downward revision for the us. for southeast asia, the impact is also forecasted to be limited. latest consensus forecasts for southeast asia β s gdp growth is 5. 7 percent for 2008, declining slightly from the forecast of 5. 9 percent in december last year. these forecasts, together with the latest data, suggest that, in the short - term, things will likely get worse before they get better, and the slowing of growth in the us will impact growth globally. the key question, at this time, is how deep can things get before we see a turnaround. this is definitely an important, but a difficult question to answer. market participants as usual will have a range of views, and i personally do not intend to offer another prediction. instead, i want to share with you my thoughts on the current developments and on what this will mean for thailand. to begin, one context that i think is useful in understanding the current turmoil is the unwinding of the global imbalance, triggered by corrections in the us housing market that began in 2006, and is now ongoing. such unwinding is a necessary process to clear excesses and reduce financial leverages that have been built up in the form of high level of the us β s current account deficits. economically speaking, to reduce the deficits, the value of the us dollar needs to fall and the levels of us long - term interest rates need to rise. exchange rate adjustment is very much ongoing. the us dollar has declined by about 8. 0 percent in nominal effective terms since 2006. and reflecting this, the us current account began
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economy makes it more difficult than usual to interpret various economic indicators and to predict future developments. when weak figures are received from various sources, it is difficult to know whether they are the result of a slowdown in the economic recovery due to fundamental reasons, such as households wanting to increase their saving to compensate for the large stock market falls, or whether they are the result of an inability to act while waiting for the solution of the iraq crisis. the assessments of the economic situation and even more the oil prices are largely due to the assumptions made with regard to developments in the geopolitical situation. let me emphasise, before i go into this, what is actually obvious ; a war entails much more than just economic consequences of the type the riksbank has reason to observe in its inflation report - first and foremost considerable human suffering. let me also say that in this field - i. e. geopolitics - we are of course amateurs, although we have tried to use our international contacts when putting together our forecast. the riksbank's main scenario assumes a solution will be reached in the iraq conflict that does not give any reason to significantly reconsider the picture we have of a gradual recovery in economic activity. the surveys we have made indicate that the macroeconomic consequences of a brief war will not be so different from a less dramatic development. in this sense one can say that our main scenario is consistent with both a peaceful solution and a brief war. the inflation report describes in greater detail how we assess the effects of a worse development, which is, of course, a possibility. a weaker recovery an increasing number of indicators over the past few months have given the impression that the international economic recovery will be more protracted than anticipated. the main difference from the assessment we made in the december report, is the deterioration in prospects for the euro area. all in all, our assessment is that international growth will be slightly lower this year than we believed when making our forecasts in december. the fact that we have revised down the international growth forecast also means that we expect a slightly less strained resource utilisation in the global economy. the slightly slower recovery for the global economy will also have repercussions for developments in sweden. growth this year is now expected to be lower than last year and almost one half of a percentage point lower than we had reason to assume in december - 1. 7 per cent instead of 2. 1 per cent. consequently, we are also anticipating there
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to mind : first, we must make best use of the resources which we are endowed with, such as to process commodities into chemicals and other derivatives to increase economic complexity. agriculture productivity can also increase by adopting modern farming. second, addressing climate change offers opportunities to attract investments and create high - quality jobs. the global economy needs usd23 trillion in green assets to meet the climate goals under the paris accord. 4 third, malaysia is among the best positioned within southeast asia to embrace the fourth industrial revolution. 5 malaysia already has one foot through the door in each of these opportunities ; we are major producers of petro - and oleo - chemicals, solar panels, as well as e & e components that will power future mobility. we must engage in serious conversations on moonshot strategies to build innovative industries and companies. only then can we set the foundation for a sustainable, dynamic and competitive malaysian economy. a society that is more inclusive economic growth does not necessarily go hand in hand with social progress, particularly if growth only enriches the few. thus, my second point is on improving social inclusivity. malaysia has made great strides in eradicating poverty. this is the result of numerous efforts to meet the needs of society β s most vulnerable, and to provide them with opportunities for upward social mobility. nevertheless, the covid - 19 crisis reminds us that shocks affect different segments unevenly, and this has clearly exposed gaps in our social protection system. it is therefore critical to accompany the transition to high income with efforts to close these gaps. the growing economic pie will provide the state with more capacity to deepen its social protection. we must use this space to future - proof the system to impending structural changes : malaysia will transition to an β aged nation β status, with the old - age dependency ratio expected to increase to 16. 6 % by 2040. however, in a 2018 employees provident fund study, two out of three active contributors are projected to have insufficient retirement savings to meet a minimum pension of rm1, 000 per month. 2 / 4 bis central bankers'speeches the nature of work will evolve, as we transition to a more knowledge - based, service - based and gig - based economy. work arrangements are expected to become more flexible, and provisions must be made to ensure that workers remain adequately protected. notably, provisions for shorter and more flexible working hours may entice women to participate in the labour force. the third change is the displacement of certain jobs, as we
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a wide ranging spectrum of islamic financial products to meet the needs of businesses. these include : supply chain finance, which enables businesses particularly smes, to leverage on the creditworthiness of their anchor suppliers or buyers who are mainly mncs, to obtain financing at a more affordable rate which may not be possible through direct approach with banks ; coverage in takaful products at competitive prices, which for example include coverage for loss or damage to goods shipped on all types of conveyances from manufacturing to trading ; the investment account platform or iap, established by six islamic banks in 2016 as the world β s first islamic bank - intermediated fintech platform that offers more competitive financing terms and variations in financing structures for ventures. to date, the iap has supported eight ventures worth rm161. 3 million ; and sukuk as an alternative form of financing for businesses, such as green sukuk for green 1 / 3 bis central bankers'speeches businesses. to date, five green sukuk have been issued by malaysian solar companies to finance solar power projects, amounting to rm866. 8 million since july 2017. these are but a flavour of what islamic finance can offer and i am sure you will hear about many more today. national policy for nurturing smes at the national level, the government is indeed supportive of the role of islamic finance as an important tool to assist businesses and smes to flourish. developing islamic finance and the growth of smes are key national strategies, as reflected in the recent 2019 budget. the sme shariah - compliant financing scheme of rm1 billion was established to strengthen smes. smes can enjoy lower financing costs offered by this scheme with a 2 % reduction in financing rate. sukuk issuers also benefit from the three year extension of the double tax deduction for additional expenditure incurred for sukuk issued under ijarah and wakalah principles. other cost savings for sukuk issuers include reduction in professional fees relating to due diligence, drafting and preparation of prospectus ; and various fees charged by securities commission malaysia and bursa malaysia. islamic finance is anchored on sustainable values beyond profit the unique propositions of islamic finance are drawn from its underlying shariah principles that have universal applications, which fundamentally advocate the prevention of harm or attainment of benefits. all islamic finance transactions must reflect islamic values which are ethical and fair. any financial conduct or transaction relating to goods or services that are contrary to islamic principles are
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yandraduth googoolye : renewed protectionist tendencies - some implications for macroeconomic policy in africa speech by mr yandraduth googoolye, governor of the bank of mauritius, at the continental seminar of the aacb for the year 2019, balaclava, 6 may 2019. * * * deputy governors mr papa lamine diop, executive secretary of the aacb delegates from member central banks ladies and gentlemen members of the media good morning and a warm welcome to you all in mauritius for this 2019 aacb continental seminar. this is the first time that the bank is hosting this event. we are pleased to have participation from 24 member central banks and 12 institutions. i am given to understand that we have about 70 participants. the large turn - out demonstrates the importance of the chosen theme. the bank of mauritius has participated actively in aacb meetings and activities over the past years. mr diop, who is with us today, can bear testimony to this. we hosted the governors β meetings of the aacb eastern africa sub - region in july 2007 and july 2008 and we also hosted the aacb annual meetings in august 2013 in our capacity as vice β chair of the association. last year, as chair of the sub - region, the bank hosted for the third time the governors β meeting for the eastern africa sub - region. the theme for this 2019 continental seminar : β renewed protectionist tendencies : some implications for macroeconomic policy in africa β is highly pertinent and topical. in its latest regional economic outlook for sub - saharan africa, the imf has estimated growth to pick up from 3 percent in 2018 to 3. 5 percent in 2019. the economic recovery under way is a positive development. however, one can reasonably argue that current and expected growth levels are somewhat inadequate to lift millions of people out of poverty and provide decent jobs to an estimated 20 million new entrants to labour markets each year. the imf has also cautioned against downside risks stemming from heightened trade tensions, slower growth in china, lower commodity prices, and tighter global financial conditions, which could lower growth in sub - saharan africa by 2 percentage points this year. as expected, the impact would be more pronounced for commodity exporters and countries with stronger links to china and global markets. a review of the performance of african countries with respect to the african monetary cooperation program criteria in recent years indicates clearly that african countries are not building adequate fiscal and external buffers to cope with a range
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bankers, such elements can influence the conduct of monetary policy. higher tariffs could translate into higher import prices and these could increase firms β production costs. this could ultimately reduce households β purchasing power. ultimately, depending on the severity of these impacts, they would weigh on consumption, investment and employment, which could negatively affect the gdp performance. the uncertainty about growth prospects is bound to postpone investment decisions. this is something that we would never wish to see. barriers to trade would also cause both productivity and potential output to decline. what this means is that protectionism does matter for central bank policy. and that is why this seminar will enable our participants to ponder on the implications of protectionism. before i end, allow me to quote former us president barrack obama β¦ i quote : β there are legitimate concerns and anxieties that the forces of globalisation are leaving too many people behind β and we have to take those concerns seriously and address them. but the answer isn β t to turn inward and embrace protectionism. we can β t just walk away from trade β. unquote. ladies and gentlemen, there cannot be winners in trade wars. protectionism is not the right answer to the economic challenges that some economies are witnessing. on this thought, i wish you all fruitful deliberations. i look forward to your report for consideration of governors at the 2019 aacb annual meeting 2 / 3 bis central bankers'speeches scheduled on 01 august 2019 in kigali, rwanda. thank you. 3 / 3 bis central bankers'speeches
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tarisa watanagase : creating sustainable financial inclusion welcome remarks by dr tarisa watanagase, governor of the bank of thailand, at 1st afi start - up committee meeting, bangkok, 10 july 2009. * * * deputy governor, director - general, dr. hannig, colleagues, it is a pleasure to welcome all of you to bangkok, which for some of you, i know is a long way from home. thank you for making such an effort to be here. i cannot tell you enough how much your presence and participation in this meeting is appreciated. though we have work to do this morning, i hope that you will also have a chance to enjoy your stay in bangkok, including our sight - seeing tour this afternoon. at the afi public announcement back in april where president babatz and i had a chance to address the meeting as members of our start - up committee, i was delighted to see the kind of positive response and enthusiasm shown by policy makers from a broad spectrum of countries. many of whom, i learned, have decided to jump on board with us, making afi membership grow to more than fifty countries, worldwide. this only confirms that among many agenda laid on the table in international policy forums today, financial inclusion is the one agenda that we can all agree and give our full support to. as i said in that meeting, there are challenges ahead that, together, we must address in a cooperative manner, namely creating sustainable financial inclusion and ensuring the linkage between greater financial access and improvement in wellbeing. please allow me to offer my initial thoughts on the subject. with wellbeing as the ultimate goal of policy makers, many policy building blocks need to be woven together. examples include policies on career development, education, macroeconomic stability and so on. while these policies do not necessarily fall under the mandates of financial regulators, efforts should be made to ensure that policy directions of all relevant institutions, government and private, are aligned. closer to our hearts though, are policies that aim to improve the poor β s capacity to be financially included. in this regard, i believe that there must be at least three key policy ingredients, namely financial access, financial literacy and consumer protection. first, for access, there is a need to ensure that the range of basic financial services provided can address financial needs of the poor in all important aspects of their lives. for instance, we need to consider an β inclusive package β of credits, savings, transfers, and insurance that
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group that aims at promoting governance and improving the distribution of economic opportunity. the amended securities and exchange act, which was effective since december last year, would boost governance in the capital market. in particular, enforcement mechanism to punish market misconduct will be more effective. the law expands coverage of wrongdoings and seals several loopholes of the previous law to prevent malpractices including front - running of client orders and usage of insider information. moreover, a perpetrator is no longer subjected to only criminal punishment, but is also responsible for civil liability, which makes the punishment process more efficient. overall, with this revision, investors should expect the thai capital market to have better governance and fairer trading environment. another sector undergoing significant governance upgrade is the state - owned enterprises or soes in short. it is important to acknowledge that soes are the driving force behind several strategic sectors of the thai economy, including energy, transportation, and telecommunication β with a total annual spending budget twice that of the central government. there is no denying that improving the governance of the soes will lead to more efficient resource allocation in many sectors. on the other hand, not doing so may lead to greater contingent liabilities for the government and higher costs of doing business in thailand. one key challenge with the current soe system lies in its complex governing structure that is prone to conflicts of interest. this is because government agencies or senior government officials involved with soes often assume multiple, and at time, conflicting roles β namely, the roles of policymaker, regulator, operator, and owner. the bill on the governance of the state - owned enterprises aims to tackle this problem head on ; it sets forth principles that dismantle these roles into separate governing entities. going forward, operation of the soes will be supervised by the state enterprise policy committee, who will also set the soes β five - year strategic plans. a separate entity β the holding corporation β will be established to act as the owner of incorporated soes to ensure long - term competitiveness and financial viability. furthermore, operation of soes will become more transparent with a better check and balance system. the bottom line is, this new law will lay a path for structural changes in the governance, the management, and hence the performance of the soes going forward. the new governing structure will also be more immune to political intervention. note that, while this new legislation on soes is expected to be effective in the coming year, some soe reform initiatives
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the treasury highlighted the potential of our economy to achieve this target at the β sri lanka economic summit β held in august 2014. we know that this would require greater efforts in bis central bankers β speeches all fronts β the government, the central bank and the private sector β that would support the economy in the transition to drive through the middle income path towards the higher end of the upper middle income category. this new economic model should be able to overcome the rising β economic gravity β, which would otherwise pull the economy into the β middle income trap β. with the renewed acceleration in economic growth, we need to focus our attention on the next phase of economic development beyond 2016 and transforming the economy to achieve a sustained, inclusive and balanced growth. sri lanka β s drive beyond 2016 will largely depend on the strength and the dynamism of the financial sector. as we strive to reach these new milestones, our current macroeconomic indicators are bound to undergo a massive transformation. as a part of this transformation, the greater challenge would be to make sri lanka a popular, emerging financial centre in the region, where setting up a financial hub in sri lanka would be a key task. to strengthen and expand the dynamism, the financial sector will have to possess technology - leveraged financial services to improve operational efficiency while diversifying funding sources by tapping the international capital markets to mitigate risks and improve cost efficiency. further, expanding delivery channels and business networks beyond domestic territories, enabling them to grow and exploit opportunities while addressing external vulnerabilities and spillovers are also essential. meanwhile, a stronger capital base, a high quality pool of human capital and a high level of corporate governance to meet the enhanced regulatory framework are required in the financial system to steer the country towards attaining a sustained growth. to facilitate accomplishing this task, it was identified that the financial sector of the country has to be strengthened and stabilised further by implementing an appropriate set of policies in a timely manner. reason 2 : necessity of maintaining stability in the local financial system amidst the growing complexity in the global financial system ladies and gentlemen, we all accept that a stable financial system is a crucial element for a conducive business environment supportive of sustained economic growth. however, in the present day, central bankers and other policymakers around the world are confronted with a number of challenges in maintaining financial system stability due to the high contagion effect resulting from the increased complexity and connectivity in this hyper - connected world. although globalisation can allocate
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in payment and settlement related activities who will attend to the preliminary work, such as stocktaking and identification of gaps in the national payment systems. there should be task forces on ( a ) policy and operational matters ; ( b ) legal and regulatory aspects ; ( c ) technical and institutional infrastructure ; and ( d ) communication and exchange of information. the task forces should make their recommendations to the spc, which will take considered decisions. in nominating members to the task forces, where possible, countries should select officers from their respective npcs, as such councils are expected to have representatives of all stakeholders with the necessary skills and expertise to handle work relating to the above areas. sri lanka has already established an npc with a clear mandate to take forward payment reforms across the nation. the npc has prepared a well - focused action plan after detailed deliberations with all stakeholders and is the apex body for payment system development policies and operations. i understand that india and some other countries too have npcs. it may also be important to set up a secretariat in one of the countries to lead the regional payment initiative. the spc, as well as the task forces, should establish close links with international organizations such as the wb, imf, bis and also with other regional payment groups and developed country central banks for guidance and technical assistance. as i mentioned before, the acu is the only regional clearing mechanism that exists today among saarc member countries. it needs a clear reform agenda to mitigate risks involved in that system and ensure safe payment flows among the member countries. already, a technical committee has been appointed under the chairmanship of sri lanka to look into some elements of modernizing the acu. the whole of yesterday we debated on some of the short - term measures that need to be introduced to the acu clearing arrangements in order to avoid any disruptions to cross border flows. that committee too could report its recommendations to the spc. there may be many other modifications, modernizations and reforms that need to be introduced at national and regional levels which will shape the annual work program of the saarc regional payment initiative. it is in that con text the topic β working towards a saarc regional payments group β was chosen as the theme for this conference. 8. conclusion we need not wait till the saarc region β s trade and investment flows rise significantly to modernize our payment systems. the saarc member central banks need to decide early to establish a regional payments
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has been greatly improved. by accurately showing the performance of a firm, these changes put strong pressure on corporate managers to pursue restructuring and higher profits. second, corporate managers have become increasingly aware of return on capital. third, the mentality of employees has changed. japan β s labor market, which is characterized by lifetime employment and the seniority - based wage system, used to be perceived by many as lacking flexibility. however, recently we have seen gradual changes in the market as large - scale employment adjustment has begun to be observed. fourth, reform of the financial system has been proceeding. since the autumn of 1998, a legal framework for the smooth dissolution of failed financial institutions has been established and public funds have been injected into major banks to strengthen their capital base. although there remain a lot of things to be solved, the condition of japanese financial institutions has significantly improved thanks to the restructuring efforts on the part of financial institutions. related to these positive developments, direct investment into japan has substantially increased in recent years. in the past, inward direct investment was much smaller than outward direct investment. in fact, it was only 200 million dollars in 1996. however, it has been on a rising trend, amounting to 12. 8 billion dollars last year. i have great expectations for a continuing increase in direct investment from abroad as it would stimulate japan β s economy through the transfer of managerial resources and business expertise. before closing, if i may summarize, firstly, a stable macroeconomic environment is a prerequisite for sustainable growth, and in this regard, monetary policy plays a very important role. second, to raise the economic growth rate over the medium to long run, structural reform affecting the supply side of the economy is indispensable. i think that the contrast between the us and japanese economies during the past ten to fifteen years exactly proves this point. let me conclude my remarks by quoting the following prayer for β serenity β by dr reinhold niebuhr which i cherish whenever i face challenging issues as governor of the bank of japan : god grant me the serenity to accept the things i cannot change, the courage to change the things i can ; and the wisdom to know the difference. thank you very much for your kind attention.
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. figures for " actual base pay increase " and " actual regular wage increase " from 1991 to 2014 are those published by the central labour relations commission, while those from 2015 to 2024 are figures released by the japanese trade union confederation ( rengo ). figures are based on the wage negotiation results of labor unions for which the base pay increase is clear. sources : central labour relations commission ; ministry of internal affairs and communications ; rengo. next, i will turn to business fixed investment. on the back of favorable corporate profits on the whole, business fixed investment has been on a moderate increasing trend ; as for the business fixed investment plans in the june 2024 tankan ( short - term economic survey of enterprises in japan ), the reported rate for fiscal 2024 indicates a relatively high increase compared with past june tankan surveys ( chart 4 ). under such circumstances, the remaining orders for machinery and construction have stayed on an increasing trend, as there have been some cases where firms postponed fixed investment in response to labor shortages. regarding the outlook, although the amount of business fixed investment could be pushed down due to these postponements, such investment is likely to follow a long - term uptrend. this is due to firm demand for fixed investment, such as investment to address labor shortages and digitalrelated investment, as well as investments associated with the green transformation and with strengthening supply chains. chart 4 : business fixed investment planned and actual investment remaining orders y / y % chg. 40 tril. yen tankan ( planned investment in current fiscal year as of the june survey of each year ) private nonresidential investment ( sna, nominal ) tankan ( actual ) tril. yen 30 machinery ( excluding orders for ships, left scale ) construction ( right scale ) - 10 - 20 fy08 cy19 notes : 1. in the left panel, tankan figures include software and r & d investments and exclude land purchasing expenses. figures are for all industries including financial institutions. 2. in the left panel, the figure for " private nonresidential investment " for fiscal 2024 is for 2024 / q2. 3. in the right panel, figures for " construction " are based on a survey of 50 major construction companies. sources : cabinet office ; ministry of land, infrastructure, transport and tourism ; bank of japan. b. price developments turning to japan's price developments, the year - on - year rate of increase in the consumer price index
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mario draghi : hearing at the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, at a hearing before the committee on economic and monetary affairs of the european parliament, brussels, 25 april 2012. * * * madam chair, honourable members of the committee on economic and monetary affairs, it is a pleasure to be back here in parliament and in front of your committee for our regular exchange of views. accolgo con soddisfazione l β esito delle riunioni di primavera di aumentare le risorse del fondo monetario internazionale ( fmi ) di 430 miliardi di dollari. l β area dell β euro ha fatto la sua parte accrescendo le proprie protezioni e impegnandosi a fornire al fmi un importo aggiuntivo di 150 miliardi di euro. sono lieto che ora altri azionisti del fondo si siano offerti di prestare il proprio contributo per incrementarne le risorse. il est maintenant d β une importance cruciale que le mecanisme de stabilite europeen soit entierement operationnel. la bce peut fournir son soutien a cet egard. naturellement, meme avec un pare - feu important en place, les pays de la zone euro doivent continuer a mettre en Εuvre les ajustements budgetaires et structurels qui s β imposent. wie ublich, werde ich zuerst auf die aktuelle wirtschaftliche lage im eurogebiet eingehen. danach werde ich mich den themen zuwenden, die sie vorgeschlagen haben : bewertung der sondermaΓnahmen der ezb und bewertung der wirtschaftlichen ungleichgewichte in der wahrungsunion. economic and monetary developments let me first focus on economic and monetary developments in the euro area since our previous meeting on 19 december last year. available indicators for the first quarter of 2012 broadly confirm a stabilisation in economic activity at a low level. latest developments in survey data are mixed, highlighting prevailing uncertainty. looking ahead, growth should
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christophe edmond : risk - based supervision for digital financial services, money value transfer services, money remittances and bureau de change sectors closing remarks by mr christophe edmond, first deputy governor of the central bank of seychelles, at the regional workshop on β risk - based supervision for digital financial services, money value transfer services, money remittances and bureau de change sectors β, mahe, 30 may 2019. * * * governor representatives of the esaamlg secretariat, distinguished speakers and participants, ladies and gentlemen, good afternoon. i address you at the end of what has been four days of insightful and knowledge - fuelled interactions on risk - based supervision, particularly for the digital financial services, money value transfer services, money remittances and bureau de change sectors. we leave here with no doubt that the risk - based approach to supervision is central to the implementation of the financial action task force β s international standards on combating money laundering, and the financing of terrorism and proliferation. the discussions and sharing of experiences that have taken place over the past few days have helped us ascertain the level that has been reached by the different regulatory and supervisory authorities in the region, as well as the global trends and expectations. we now have a broader perspective of the effectiveness of such an approach to supervision, as well as the challenges it brings. some of the key takeaways include the need to have well - designed and effective aml / cft policies and supervisory frameworks, to help foster greater financial inclusion, and the importance of having a continuous risk assessment process. limitations of the different regulatory and supervisory entities, in particular the cost, the availability and the allocation of resources, were also highlighted, with a specific focus on the need for such challenges to be understood both at the institutional and national levels. increased awareness, collaboration, and cooperation between the different entities and the buy - in of government, are all essential factors that will contribute towards sound policy formulation and assist jurisdictions in understanding the cost of aml / cft compliance. while the supervisory challenges posed by the specific sectors of the financial system may vary, devoting more time to sectors and activities perceived to be of highest risk should be prioritised. risk - based supervision provides a rigorous framework for assessing and addressing risks and efficient allocation of resources, which can improve the efficiency and effectiveness of all supervision. although there are several important principles and approaches to risk - based supervision, it is essential to be mindful that there can
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sector to the real sector whereas in emerging economies, the direction was the reverse β the fault lines spread from the real sector to the financial sector. finally, much of our pressures came from the supply side, not the demand side. for all these reasons and more, the challenges we faced were different and the responses called for from us had to be different. it is important for us as well as the rest of the world to appreciate these differences between advanced and emerging economies. what better person than prof. taylor to look at monetary policy responses from the special perspective of emerging economies? 15. prof. taylor β s career has been marked by a seamless back - and - forth between the academia and policymaking, most recently as the u. s. treasury β s top official for international affairs. when in academia, he jumps into teaching and research with an abandon that seems uncharacteristic of a washington policymaker. to grab students β attention in a class on agricultural supply and demand, he once pranced around the classroom in a california raisin costume to the tune of marvin gaye β s β i heard it through the grapevine. β 16. having a concept named after oneself is as much a mark of honor in economics as it is in other sciences. by this standard, prof. taylor is among the most honoured macroeconomists of his generation. indeed, concepts bearing his name have become so pervasive that the u. s. federal reserve board chairman ben bernanke once remarked that β with our appetites whetted by the taylor rule, the [ taylor ] principle, and the [ taylor ] curve, we now look forward to the taylor dictum, the taylor hyperbola, and maybe even the taylor conundrum. β 17. here in mumbai, and in a more immediate sense, we look forward to the taylor lecture. 18. ladies and gentlemen, i have great pleasure in inviting prof. taylor to deliver the 11th l. k. jha memorial lecture.
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the policy interest rate. 8. monetary policy has embraced the taylor rule so firmly that there has been an intense debate in the wake of the crisis on the policy stance of the us fed vis - a - vis the taylor rule. some analysts used the taylor rule to argue that the fed funds rate, even at this historically low level, was not low enough and made out a case for doing a lot more to stimulate the economy. prof. taylor himself weighed in on the issue suggesting that those analysts were not applying his rule correctly. he contended that, quite to the contrary, his measure shows just the opposite : that the fed policy is appropriate, the policy rate cannot remain low for too long, that central bankers are right to be considering withdrawal of their unprecedented monetary stimulus, and that critics who say otherwise are misinterpreting his rule. according to him, the formula is designed to show the best rate for spurring growth without stoking inflation. 9. if the taylor rule is so time tested in prescribing the policy interest rate, it is legitimate to ask what role there is left for central bankers. i do not have a simple answer for this ; perhaps prof. taylor does. i do have a complex and somewhat longish answer and here it is. 10. for my long and complex answer, it is necessary to refer to the interesting debate on whether economics can be a deterministic and exact science like physics. indeed, some people argue that one of the great follies of economics β the reason it often lost direction, if also credibility is because it had pretense to being like physics. i have no intention of getting into that debate, but in the context of the taylor rule, i can β t resist the temptation of drawing upon a comparison of economics with physics, if at an altogether different level. 11. sir isaac newton gave us the three laws of motion and the law of gravity. the mathematical formulation of these laws embodies a complete description of the universe. all you need to specify are the initial conditions and using newton β s laws, you can calculate the state of the universe for eternity with absolute determinism. this is classical cartesian reductionist framework in its quintessence. people, therefore, asked, if god has decided on the laws and decided on the initial conditions, he has determined the course of the universe for eternity. besides, he gave us newton to let us know of the laws so that we
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bank of japan β s monthly report of recent economic and financial developments1 bank of japan, communication, october 1998. the bank β s view2 japan β s economic conditions still continue to deteriorate. with respect to final demand, public investment has bottomed out. net exports ( exports minus imports ) are basically increasing mainly due to a decline in imports. business fixed investment, however, has been decreasing significantly partly because of financial constraints, and housing investment has declined further. private consumption has not yet shown a recovery despite the special income tax reduction. against this background of weak final demand, production has been reduced substantially. as a result, some industries have shown improvements in inventory adjustments, but the level of inventories is still high as a whole. with the decline in expenditure and production, corporate profits are worsening rapidly. furthermore, the employment and income conditions have deteriorated further as the unemployment rate marked a historical high and the decline in employee income has accelerated. in these circumstances, corporate perceptions of business conditions have worsened substantially and consumer sentiment has become cautious. as the above indicates, there remain continued negative interactions of production, income, and expenditure. with the effects of the comprehensive economic stimulus package and the recent monetary easing, the deterioration of the economy is expected to moderate gradually toward the second half of fiscal 1998. nevertheless, the economy is hardly expected to recover immediately, judged from the strong negative interactions mentioned above and the financial constraints such as financial institutions β cautious lending stance due to the nonperforming - loan problem. in these circumstances, there is an immediate need to rebuild the stability of the financial system. in this regard, bills related to financial revitalization have been legislated, and a bill related to bank recapitalization, including policy measures to strengthen banks β capital base through injecting public funds, has passed the house of representatives of the diet. it is desirable that functions of and confidence in japan β s financial system be restored based on these schemes. furthermore, the government is devising plans for economic recovery, including reduction in personal income taxes and corporate taxes as well as additional public investment. it is important to materialize these measures promptly, in such a way that they not only have sizable direct effects on the economy but also contribute to restore corporate and household confidence. with regard to prices, wholesale prices are on a downtrend reflecting the expanding output gap, and consumer prices have fallen below the previous year β s level. with respect to the outlook, given the
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of growth. the scheduled total amount of loans β 3 trillion yen β had mostly been disbursed. therefore, the bank created a 500 billion yen new line of credit in june 2011. the new line of credit provides funds at a low interest rate of 0. 1 percent for initially two years and maximum four years to financial institutions that make equity investment and conduct lending against accounts receivable and inventories as collateral. lending that takes accounts receivables and inventories as collateral is called asset - based lending ( abl ) and is utilized widely in the united states. compared with real estate collateral lending, the abl is more difficult in terms of making collateral assessment. the value of assets that have been generated in the process of business cannot be assessed unless a borrowing firm and a financial institution share the thorough understanding of the business contents and developments in the industry. nevertheless, aggressively putting such extra efforts will have a great merit in that it enables firms which do not own enough real estate collateral or personal guarantees to raise financial resources. to take advantage of such merit, the bank expects that corporate managers and financial institutions will jointly make efforts to explore profit opportunities, and the hidden seeds for growth to sprout in japan as a whole. respond flexibly and decisively when risks manifest themselves as explained, the bank has been pursuing powerful monetary easing and providing support to strengthen the foundations for economic growth, while stepping into an extraordinary territory for a central bank. however, as i have repeatedly mentioned today, the bank is aware that uncertainties at home and abroad are significant. upon carefully examining future economic and price developments, including the effects of the recent foreign exchange rate fluctuation, the bank will, if judged necessary, take appropriate policy actions in a flexible and decisive manner. concluding remarks in conclusion, i will refer to nagano prefecture β s economy. the development of japan β s economy depends on what extent it can incorporate globalization and aging into its advantage. in that regard, nagano β s economy has been developing by always paying attention to global markets, from the prewar era of the silk industry to the postwar era of electric and precision machinery. nagano β s export share in manufactured goods shipments has been consistently above the national average most of the time since the 1990s. also in terms of responses to aging, nagano prefecture is one step ahead of other regions. nagano is not only one of the leading longevity prefectures in japan and but also known for its high employment rate of
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contra - cyclical. in this regard and especially in the light of the profits announced by the major banking groups and the large payouts to traders, ceos or shareholders in the form of dividends, i would like to stress that these profits should primarily be used to bolster capital ratios and allow banks to focus on their core task of financing the economy. all in all, i praise international standards in the field of prudential rules. the ones already developed over many years and which the crisis is now leading us to adapt, or the new ones under scrutiny, are only meaningful and will only produce their desired effects if they are applied by all countries and, needless to say, first of all by those that negotiated them. from that viewpoint, the adoption of the basel ii framework by the united states looks to be one of the most important and urgent issues. it is also very important to improve and harmonise accounting standards. the views of g20 countries sometimes differ as to the role of accounting. for instance, one contentious issue is marking - to - market and the extent to which fair value accounting should be applied. it is vital that the accounting choices of standard setters better take on board the financial stability dimension, since they have an impact on the latter. lastly, the crisis has also highlighted the limitations of self - regulation ; it is also essential that the regulation of all systemically important institutions and markets be proportional to their potential impact on financial stability. however, in order to implement such an approach, agreement would have to be reached at the international level on a standard definition of the systemic nature of an entity, which clearly does not depend on its size alone. moreover, the consistency and the appropriate balance of such potential specific rules with the general rules must also be ensured. for instance, for banks, it is important to allow for the fact that the size of an institution is already taken into account in the prudential ratios, since capital requirements are proportionate to exposures. it is also important to bear in mind that the diversification of business lines, which goes hand in hand with a certain size of institution, may be a factor of resilience that should not be discouraged. this is an important and delicate task that has been entrusted to the fsb. 2. developing multilateral surveillance i will now turn to collective surveillance. let me start with the following simple observation : the crisis did not emerge from where we were expecting. our warning systems, both at the national
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way to enhance the future of our financial cooperation is to alter the composition of the 24 - or 25 - strong imf executive board by 3 or 4 members. nevertheless, i consider that a number of principles should guide this desired reform : governance today should be adapted to a multipolar financial world. while all members should be represented in proportion to their involvement and responsibilities, more than the complex calculations of quotas and voting rules, we should fundamentally focus on the functioning and mandate of the imf. in this respect, senior officials should be appointed strictly on the basis of their expertise and the imf β s mandate should be expanded. focusing on exchange rate developments alone is no longer sufficient, and if the imf is to be able to contribute to ensuring international financial stability, it must pay greater attention to capital account developments. furthermore, this contribution cannot simply be a matter of complying with a rigid and uniform body of rules. it must take account, in a balanced manner, not only of each country β s level of development but also the systemic risk that it constitutes within the global financial system. by the same token, for member countries, this requires effective participation in multilateral bodies aiming to foster the development of the international financial system, either through capital account liberalisation or provision of liquidity where necessary, as the crisis has clearly shown. neither can we escape from the fact that the international status of certain countries β currencies affords them a specific role or may affect them adversely. in all of these matters, beyond the stereotypical vision of the different interests of developed and emerging countries, i wish to recall that in fact we have converging interests : since we are closely linked in terms of finance and trade, it is in our collective interest to participate in the surveillance of financial systems within an enhanced multilateral framework. to conclude, i would like to reiterate that the new financial architecture that we are in the process of defining should not be hidebound but gradually adapted to address the major developments in the international economic and monetary system. in this regard, the possible emergence of a β multicurrency β international monetary system deserves particular attention. naturally, the us dollar remains the world's foremost reserve currency. similarly, the euro plays a major role. however, the increasing prominence of other currencies, provided of course that they become fully convertible and tradable without any restriction, suggests that a new situation may materialise in which a growing number of curre
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not so much as a management instrument but rather as a basis instrument. minimum reserves, as a durable basis instrument, enhance the responsiveness of money demand to changes in interest rates, and thus can make monetary policy more effective. so as to guarantee the uniformity of the money market in the euro area, the monetary policy operations of the central banks in β euroland β should be settled on a same - day basis. for that purpose, a cross - border large - value payment system - known as target - is being set up. since target is attractive to the private sector as well, a disagreement has arisen about the conditions of access. in the main, it revolves around the conditions on which banks and central banks outside the euro area are to be granted intra - day credit. there are good reasons for arguing that participants in another monetary area cannot be granted the same terms of access in every respect as participants within the monetary union. it seems to be only logical that those who wish to benefit fully from the advantages of target will also submit to the monetary policy constraints imposed by the euro area. at all events, the monetary policy of the euro area must not be undermined by recourse to the target system. viewed as a whole, there are signs that the instrumental prerequisites for a euro monetary policy consistent with stability will soon all be met. although that is not a sufficient condition, it is certainly a necessary condition, for a stable euro. and the euro must be stable if it is to unfold in full its undoubtedly great potential for economic benefits. it is only as a stable currency that in future it will be able to play a major role as a global reserve and investment currency, alongside the dollar. and it is only as a stable currency that the euro will make its due contribution to the stability of the international financial system. iv but the stability of the international financial system also depends on developments outside europe. at the moment, after all, international organisations, governments, central banks and private financial institutions ( such as the iif ) as well are engaged in drawing conclusions from the dramatic course of events in south - east asia. some observers are debating these conclusions in the rather imprecise terms of a radical reform of the structure of the international financial system, with ideas ranging from the abolition of the imf and world bank - without replacement - to illusionary notions of a new bretton woods system or even a world central bank. i am sure that all these extreme positions
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for these developments. it was staged in frankfurt β home of the bank deutscher lander β in 1952. this exhibition, which was very small but is still renowned to this day, also featured works by karl otto gotz, heinz kreutz and bernard schultze, the artists represented here. the bundesbank acquired such avant - garde works either from galleries or directly from the artist's studio. the managers responsible for the collection were up to date on current developments and maintained personal contacts with artists and gallery owners. the works of art purchased for the collection were presented to the central bank's staff in internal exhibitions, beginning in 1955. that year, 144 works by 39 artists were displayed. and staff were able to select pictures from this exhibition for their offices. it was not only avant - garde styles but also landscapes and still lifes which were represented at the exhibition. the idea was for there to be something for everyone. in subsequent decades and to this day, contemporary works have been regularly added to the bundesbank's art collection. after some seven decades, it provides an insight into developments in germany's art world since the 1950s. 2 / 3 bis - central bankers'speeches and it is presented in a variety of ways. in meeting rooms and offices as well as in the corridors of our buildings. to this day, staff can borrow works of art for their offices. this encourages employees and guests to discuss and debate art and society. art enthusiasts might also spot items from our collection when we loan pieces to museums. works from our collection are on display in the offices and rooms of the house of the euro in brussels. it is a joint representative office shared by the ecb and several euroarea central banks which was only recently inaugurated. last but not least, art tours and exhibitions, like this one here, are another way in which we display our collection. this is how we come into contact with the public. this is good for us, as central banks are often regarded as inaccessible and closed - off β even though most have been striving for openness and dialogue for years. the bundesbank's collection of modern and contemporary art is not, nor has it ever been, primarily about representation or about making rooms more beautiful. though, granted, this is a pleasing aspect. rather, the idea is to promote contemporary art and engagement with it. art challenges us and encourages discussion of our present and our society. 3 conclusion then, as now
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economy, including risks in sovereign balance sheets and the financial system. we call on the fund to adopt a new integrated surveillance decision that replaces the 2007 decision, which focused too narrowly on exchange rates. international monetary system we encourage the fund to continue its work to strengthen the international monetary system. the experience of countries in our constituency attests to the complex policy challenges posed to emerging market economies by volatile capital flows. we expect the fund β s work in this area to continue to be even - handed, non - prescriptive and to take into account country specificities. further, we look forward to the extension of staff analysis of capital flows and associated policies to cover both source and recipient countries. we also support the fund β s work on examining the case for broadening the sdr basket. this could contribute towards the diversification of reserve holdings, thereby strengthening the stability of the international monetary system over the longer term. governance reform governance underpins the legitimacy and traction of the fund β s activities and advice. for this reason, we support the managing director β s call for greater progress in implementing the 2010 quota reform and re - composition of the executive board. we also emphasise the importance of completing a review of the quota formula by january 2013. bis central bankers β speeches
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. though much work is required on the corporate sector in the march toward modernization of the thai economy, the government and the central bank also have vital roles in maintaining stable economic environment and providing the required infrastructures to allow the private sector to drive forward to create wealth and prosperity. several long - term plans have been made in the past couple years. on the macroeconomic front, the bank of thailand has adopted inflation targeting as a framework of our monetary policy since may 2000. it may be a little too early to claim our success, but the results thus far have been encouraging. long - term interest rates of the interpolated 14 - year government bonds were reduced from 8. 3 percent at the beginning of 2000 to currently at 6. 1 percent. inflation remained subdued and will stay within the target range during the next two years. the maturity of state enterprise debentures offered in the market increased from a maximum of 7 - year in 1998 up to 20 years in 2000, reflecting greater confidence on the long - term economic stability. on the financial system level, we are drafting a new financial system master plan in cooperation with stakeholders and representatives from other regulators within thailand such as the sec as well as the department of insurance. this will provide a new and vibrant financial system whose survival will be judged by the value added it creates and delivers to the clients. and these will ensure adequate provision of financial services as required by the new economic environment. as for the current economic policy, we are not yet out of the crisis. the economy recovered from a 10. 8 percent contraction in 1998 and posed a 4. 2 percent and 4. 3 percent in 1999 and 2000, respectively. nevertheless, the global slowdown, particularly from our main trading partners such as the us and japan who account for roughly 35 percent of our exports, have complicated our tasks. here, it is the lack of confidence in the overall economic conditions that is the main problem that prevents the resumption of business lending. earlier this week, the government announced its plans to put in place additional fiscal stimulus for the fiscal year 2002, as well as programs to stimulate domestic spending. these include new measures to utilize excess liquidity in the banking sector to further enhance economic activities, to increase investment through a matching fund, as well as to retrain the workforce. these should provide the much - needed economic stimulus to the corporate sector. prosperity of our nations rests on the hard work of the corporations, for what really matters in the long run is your
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suhaimi ali : catalysing technology towards building an inclusive and progressive islamic financial system keynote address by mr suhaimi ali, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the 3rd annual islamic fintech leaders summit, kuala lumpur, 25 october 2023. * * * assalamu'alaikum w. b. t and a very good morning, meet aishah, a working professional with a jam - packed schedule. as her car takaful coverage nears its expiration, she navigates the labyrinth of websites and, with a few swift clicks, renews her policy and road tax without ever setting foot outside her home. meanwhile, across town, ahmad finds himself in need of a caffeine boost. he saunters into a cosy cafe, deftly taps his debit card on the payment terminal, and seconds later, relishes the taste of his freshly brewed coffee. for ahmad, it doesn't end there. having some spare time on his hands, ahmad effortlessly opens an online account to secure his children's education fund, expertly navigating the intuitive interface of a mobile application to transfer funds in real - time. these snapshots of everyday life showcase the transformative power of fintech : it has made our lives easier, more efficient, and seamlessly connected. in fact, this entire paragraph is written by generative ai with my role limited to only providing a prompt. distinguished guests, ladies, and gentlemen, i am delighted to be here today at the 3rd annual islamic fintech leaders summit. examples that i just shared are only a minor fraction of what we are experiencing today. how intriguing it is to witness financial consumers'activities becoming deeply integrated into digital ecosystems. over the years, we have witnessed how technology progressions and sophistications have advanced the finance world. among others : i. technology helps in improving efficiency and accuracy in finance by providing real - time data, enabled automated compliance, and provided tools for analysis and reporting. technology such as blockchain is evolving - mobilised to provide a secure, transparent, and decentralised framework for a wide range of applications. we have also seen application programming interfaces or apis playing a crucial role in allowing different software systems to communicate, collaborate, and interoperate, regardless of their differences in technology or architecture, thus creating the much - needed efficiency. ii. technology also enables accessibility and inclusivity :
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it facilitates the unbundling of financial services, allowing fintech players to offer specialised and tailored financial products and services to customers. this, among others, catalyses access to financial services, bridging the gap between the unbanked or underbanked with the formal financial system, including in the areas of sustainability. iii. 1 / 5 bis - central bankers'speeches iii. and technology also facilitates decision - making : for example, data analytics enables financial institutions to process huge quantities of data to produce meaningful insights and use for fraud detection. robo - advisors are used to create and manage investment portfolios. and now, the generative ai has allowed for creation of new content and data which can assist in tasks like drafting contracts and assisting with financial reporting. in the future, professionals are likely to collaborate with generative ai - " assistant " to transform fundamental processes, reengineer business collaborations and reduce risks. against this backdrop and align with this year's theme of " tech toward sustainability : empowering resilient ecosystem ", i hope this summit will further catalyse efforts in leveraging the ever - expanding technology evolution towards enhancing the islamic finance industry to be more competitive, inclusive, and sustainable. although technology is agnostic to either islamic or conventional finance, the untapped opportunities within islamic finance are eminent. we can view this from the lenses of traditional roles of the islamic financial institutions, as well as from collaboration perspective, with emergence of fintech companies offering diverse, innovative, and potentially disruptive solutions. globally, the islamic fintech sector is showing signals of prospect with close to 400 islamic fintech companies present to date. the market size of islamic fintech in the oic countries is projected to grow at cagr1 of 17. 92, relative to global fintech growth rate at 13. 5 %, to reach usd179 billion by 20263. revolutionising change in islamic finance through greater adoption of fintech ladies and gentlemen, today, i wish to focus my remarks on how islamic finance, could be revolutionised through greater adoption of fintech from three fundamental aspects : firstly, we must optimise use of technology as tools to better deliver the objectives of shariah ( maqasid shariah ). this can be achieved by leveraging on technology to promote inclusivity, sustainability, integrate decision making and impact considerations with maqasid shariah, while continuing to advance accessibility and transparent services to customers
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30 years of monetary reform in estonia : lessons learned for the decade ahead keynote speech dedicated to the 30th anniversary of monetary reform in estonia 20. 06. 2022 | tallinn | claudia buch ladies and gentlemen, thank you very much for inviting me to talk at today β s event celebrating the anniversary of the introduction of the estonian kroon. i feel very honoured to speak here today. it offers an opportunity to reflect on the past 30 years of monetary history in europe. the success achieved by estonia and other former transition economies is impressive : estonia has implemented monetary reform, established a modern financial system, and managed the transition from a centrally planned economy to a modern market economy. this transformation has brought freedom and prosperity to many. but it also meant dealing with the hardships that any transformation process involves. i would like to congratulate the estonian people for everything they have achieved over the past 30 years β and i wish you all the best for the next decades in the common house of europe and in the eurosystem. there are important lessons to be learned from the estonian experience for all of us. these lessons could not be more relevant for the decade that lies ahead of us. let me give an overview of the main points i would like to make : first, we are at a crossroads in terms of globalisation and cooperation in europe. globalisation is at risk, uncertainty is high, the climate transition is urgent. our economies need structural change β the experiences and the success of transition economies can be encouraging and inspiring. second, stable institutions are key to managing transitions, and they need society β s support. economic policy decisions shape the direction a society takes towards prosperity. they require a democratic consensus how society is willing to bear and allocate the costs of negative shocks. third, cooperation and international coordination are crucial. estonia has taught us the benefits of importing institutional credibility and knowledge. there was a consensus in society on β what to escape and where to head in the future β : [ 2 ] to β return to europe β. in this spirit, we need to secure and further deepen our cooperation in europe and in the eurosystem to overcome the challenges facing us. to learn from the past, it is worth taking a journey back in time to the early 1990s : where was estonia standing 30 years ago? like many central and eastern european countries, estonia was standing at the threshold of a major transition from a planned socialist economy to a modern market economy. the successor states of the
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former soviet union were in fact facing a dual economic transformation : they had to introduce a national currency and build a nation while moving towards a market economy. on 20 june 1992, 30 years ago to this day, estonia was the first successor state of the soviet union to replace the rouble with its own currency. not only was the value of the estonian kroon pegged to the deutsche mark at a fixed rate ( 8 : 1 ) β the day also marked the anniversary of the introduction of the deutsche mark in 1948. let me put this decision into perspective : today, an inflation rate of 8. 1 %, which is the most recent figure for the euro area, is a cause for concern. [ 5 ] rightly so, because it is well above the european central bank β s medium - term target of 2 %. and the outlook for the real economy is weak. the growth rate, which is currently forecast to be 2. 8 % for the euro area in 2022, could drop, in a downside scenario, to 1. 3 %. but consider the situation policymakers in estonia were facing in the early 1990s : β’ in 1992 and 1993, estonia reported inflation rates of over 1, 000 % and 36 %, respectively. β’ estonia faced a seventy - fold increase in petrol prices in one year, amounting to a terms - of - trade shock of about 20 % in 1992 alone. [ 9 ] to compare this to the current situation in germany : between may 2021 and may 2022, petrol prices increased by roughly 35 %, while the price of diesel rose by more than 50 %. β’ in the first nine months of 1992 alone, industrial production in estonia declined by 40 %. β’ while real gdp ( gross domestic product ) growth stabilised relatively quickly, it would take another five years for inflation to decline to the single digits. in short : the transition that was required 30 years ago in estonia was much broader and deeper than the one we are experiencing today. the economic environment was not only highly uncertain, a sound institutional framework which would give guidance to policymakers, households and firms was also lacking. many decisions had to be taken that, today, we take for granted within an established set of institutions. but in those days, there was no blueprint to follow : β’ how should the markets for capital and labour be organised? β’ which institutional framework should be chosen? would the bank - based, european - style financial system best meet the needs of the
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benjamin e diokno : financial digitalization - harnessing potentials for a better post - covid philippine economy speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the hsbc β asean next β dialogue on digital banks β, 30 november 2021. * * * ladies and gentlemen, a pleasant day to all of you. i thank hsbc for inviting me to speak in your β asean next β dialogue on digital banks β. the covid - 19 crisis has brought enormous challenges for economies worldwide. we at the central bank are harnessing the potentials of financial technology to help achieve full recovery and realize a stronger post - covid philippine economy. following the 12. 0 - percent rebound in the second quarter, the economy grew by 7. 1 percent, the highest among asean nations. the further de - escalation of alert level and easing of mobility restrictions nationwide, but especially in the national capital region, would help restore jobs in the last quarter of this year. based on google mobility, we continue to see significant progress in mobility versus last year. the economic recovery is being supported by positive developments on the monetary, external and banking fronts. price movement is manageable, providing an enabling environment for pickup in consumption and investments. looking ahead, inflation could settle above the 2 to 4 percent target this year on account of supply - side pressures but is expected to revert to the target range in 2022 and 2023. external trade has recovered. from january to september, exports grew by 18 percent, while imports grew by 30. 3 percent. meanwhile, foreign direct investments jumped almost 40 percent in the first eight months of the year with the bulk coming from manufacturing and financial services. our external payments position remains strong. as of october, the gross international reserves stood at us $ 108 billion. this is equivalent to almost 11 months β worth of imports of goods and payment of services and primary income. the conventional wisdom is that 3 months β worth of imports is sufficient. let β s now move on to the philippine banking sector β s performance. benefitting from regulatory reforms of the past two decades, banks in the country have built resilience to shocks. while the pandemic caused a rise in soured debts, asset quality remains sound. banks also have ample buffers against credit losses. for one, philippine banks have generally observed prudent lending standards amid sound regulatory environment
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amando m tetangco, jr : corporate governance reform in the philippines β progress and challenges speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the asian roundtable on corporate governance, manila, 9 september 2009. * * * this roundtable conference on corporate governance is indeed timely as the world now moves to redefine the global corporate, financial and regulatory architecture with the view to prevent the recurrence of a similar crisis in the near or distant future. many have concluded that this crisis was to an important extent the result of poor adherence to the core tenets of good governance. decisions overstepped the principles of good governance either due to excessive risk - taking, conflicts of interest and or opacity of transactions. in the bsp, we take governance of banks seriously because we know banks are key in keeping the economy well functioning and growing. one of the main reasons our economy has weathered the crisis relatively better than most in our region is that our financial system has continued to function normally even at the height of the crisis in the last quarter of 2008. in this regard, please allow me to walk you through bsp β s initiatives to strengthen good governance in the financial industry and our continuing efforts to ensure that good governance principles are woven into the organizational culture and operations of our supervised institutions. bsp initiatives on corporate governance setting the tone from the top at the bsp, we believe that the corporate governance principles of fairness, accountability and transparency should complement our banking reform advocacies. when we were trying to flesh out the implementation of these tenets to banks, we asked ourselves where better to set the tone of good governance than at the corporate top? indeed we wanted to ensure that only those deemed β fit and proper β for the jobs are confirmed to assume their posts. to accomplish this, we issued regulations that set out standards on the qualifications of directors and key officers of financial institutions, putting as much weight on competence as on integrity. the bsp likewise required the members of the board to attend a seminar on corporate governance to formally structure the learning on the ethos of good governance. for this undertaking, the bsp accredited seven ( 7 ) training providers, which include the institute of corporate directors. we have also made explicit our expectations from the board of directors of our supervised financial institutions. we have issued regulations clearly identifying the duties and responsibilities that the board itself and
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and challenging environment, g - 20 countries have managed to make significant progress towards meeting their 2008 commitments. governor mark carney, in his capacity as the chair of the financial stability board ( fsb ) noted in an open letter to the g - 20 dated 2 september 2013, that major progress has been made in building stronger financial institutions and more robust markets through substantially strengthened international standards. however, work on this front is far from complete. governor carney stated that the g - 20 β s objective of strong, sustainable and balanced growth requires an open, integrated and efficient global financial system. clearly, one aspect of such a financial system is efficient and stable derivative markets that work for market participants in both the advanced economies and in emerging market and developing economies. this workshop is therefore of direct relevance to the global financial reform agenda. bis central bankers β speeches our challenge is to make sure that the reforms that are proposed at the global level for derivatives markets do not have adverse unintended consequences for emerging markets, and can be implemented in ways that ensure we remain active and attractive participants in global financial markets. a β one - size - fits - all β set of regulations without consideration of timing and scope may not be appropriate and reflective of where some economies are in terms of their financial market development. in order to meet these challenges, it is important that we understand the implications of the currently proposed otc derivative reforms and can act, collectively, in the appropriate global, regional and domestic forums to mitigate any adverse consequences and maximize their benefits for markets and our domestic and international stakeholders. the growing presence of emerging market and developing economies in the global regulatory reform process provides an opportunity to shape the outcomes of the process. 3. expanded role and responsibilities of emerging markets and developing economies the international financial standard - setting bodies were historically dominated by the advanced economies. today, emerging market and developing countries collectively account for about half of the global economy, it therefore is no longer feasible that they be excluded from important decisions that are made, which affect the management of the global economy and regulatory reform. as a result, following the crisis that started in 2007 the leaders of the g - 20 agreed to expand the membership of the international standard - setting bodies and to strengthen the mandate and capabilities of the financial stability forum, which was subsequently re - established as the fsb. this has helped these bodies to become more representative and will strengthen their role in developing and encouraging their members to implement policies in the interest of a stable global financial system.
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seung park : phases of the bank of korea β s 50 - year history and the future course of change contribution by mr seung park, governor of the bank of korea, to the korea herald for its 50th anniversary, 15 august 2003. * * * from its foundation in june 1950, the bank of korea has, as the country β s central bank, devoted great efforts for more than 50 years to the growth and development of the national economy. no sooner had it been established in 1950 than the korean war broke out, causing it to throw its energies into the efficient financing of the war and to the subsequent post war reconstruction and the building of a modern financial system. it played a great part in facilitating korea β s successful economic development within a short space of time through its positive role in the carrying - out of a series of economic development plans from the early 1960s. then, from the 1980s, the central bank sought the construction of a stable foundation for the economy and committed itself wholeheartedly to equipping the country with a new financial system, including the interest rate liberalization, which would befit the new financial environments brought about by liberalization and globalization. in the period of economic modernization, the bank of korea β s efforts were aimed at underpinning the government β s economic policies in terms of finance. in this process, the bank could not give full attention to the orthodox central bank role of maintaining the soundness of the financial system and the stability of the value of money. following the currency crisis in 1997, as the korean economy began to lay more weight on the market principle and autonomy of economic agents, the central banking system was also required to be more advanced. in this context, the recent passage by the national assembly ( july 23, 2003 ; finance and economy committee ) of the draft revision of the bank of korea act, whose main purposes are to heighten the independence and efficiency of monetary and credit policies and strengthen it in the exercise of its functions, takes on great significance. provided the bill is accepted and brought into force, it will above all affect the composition of the monetary policy committee by empowering the central bank β s deputy governor, as is the case in advanced countries, to sit as an ex officio member, thereby heightening both the independence of the central bank and the linkages between policy decision - making and execution. furthermore, in view of the length of time required before changes in monetary policy are transmitted to prices, the efficiency of monetary
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from having an exchange of information, for instance with the riksdag committee on finance and the ministry of finance on questions concerning the conditions for monetary policy. the policy rate should be the main tool of monetary policy. asset purchases are particularly effective in financial crises and when markets are not functioning well. references admati, a., m. hellwig and r. portes ( 2023 ), β letter : the real threat to stability is not from bank runs β, financial times 19 may 2023. akkaya, y., c. - j. belfrage, p. di casola and i. strid ( 2023 ), β effects of foreign and domestic central bank government bond purchases in a small open economy dsge model : evidence from sweden before and during the coronavirus pandemic β, sveriges riksbank working paper series, no. 421. andersson, b., m. beechey osterholm and p. gustafsson ( 2022 ), β the riksbank β s asset purchases 2015 β 2022 β, no. 2. australian government ( 2023 ), β an rba fit for the future β, march 2023. andersson, b., m. jonsson and h. lundvall ( 2020 ), β the new macroeconomic landscape after the global financial crisis β, sveriges riksbank economic review 2020 : 1. basel committee on banking supervision ( 2022 ), β evaluation of the impact and efficacy of the basel iii reforms β, bank for international settlements. billi, r. and a. vredin ( 2014 ), β monetary policy and financial stability β a simple story, β sveriges riksbank economic review, 2014 : 2. bernanke, b. ( 2013 ), β the economic outlook β, testimony before the joint economic committee, u. s. congress, washington, d. c. board of governors of the federal reserve system ( 2023 ), β review of the federal reserve β s supervision and regulation of silicon valley bank β, 28 april 2023. borio, c. and p. lowe ( 2002 ), β financial and monetary stability : exploring the nexus β, bis working paper no. 114. 25 brandao - marques, l., g. gelos, m. narita and e. nier ( 2020 ), β leaning against the wind : a cost - benefit analysis for an
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as the starting point for all capital adequacy regulations is the accounting values. i don't have a clear view of what needs to be done here, but when assets that have been booked at amortised cost have to be sold quickly at a large loss, it can affect the viability of the bank and, ultimately, financial stability, and therefore it is a problem. global rules are important for sweden i would also like to take this opportunity to emphasise the complexity and interdependence of the global financial system. banks are exposed to many risks that can be difficult to both understand and monitor. banks in most countries are also dependent on other banks and other financial institutions. many of these are located in other countries and are therefore supervised in those countries. if problems arise, they spread faster today and to more actors than they did 30 years ago. we saw this clearly in march. the concern created by the banking problems in the united states, which initially concerned a bank smaller than the major swedish banks, caused many international investors to become alarmed and wonder which bank in the world could be next in line. although many of the problems with which credit suisse struggled were not new, uncertainty in the financial markets led to an acute loss of confidence in the bank. this proved devastating for the bank and forced the swiss authorities to act. my conclusion is that it is important 11 for all countries to promote global regulation. swedish financial stability also depends to a large extent on sufficiently strict regulations in other countries. we are all dependent on this. this list of current global regulatory issues is by no means exhaustive. there are other issues that will come up in the debate. for example, the us reports on the events in march point to the effects of insufficient supervision. 13 this raises questions about the mandate and ability of supervisors to actually step in and change banks'decisions. however, it is unclear how this should be done in practice and how far such a mandate should extend. still, some conclusions are already evident today : banks and other financial actors are central to the economy and contribute to better welfare. this is important. at the same time, the banks'activities entail risks. if these problems materialise, they can have major contagion effects and negative external effect on the economy. therefore, legislators and authorities need to try to change the current regulations. the aim should be to ensure that banks have sufficient buffers to prevent problems from arising. the aim should also be to
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this was supported by the credible policies pursued by central banks, which increasingly prioritised the goal of price stability, thus contributing to a global reduction in the level and volatility of inflation. the battle against high inflation appeared to have been won. overall, this led to firm expectations of low inflation and a dramatic drop in risk premia in virtually all areas of the financial markets. however, the successful battle against inflation and the related reduction in macroeconomic volatility β also known as the β great moderation β β were not able to prevent serious instabilities within the globalised financial system. alongside its evident benefits, the β great moderation β thus seems to have produced a number of damaging by - products. in combination with low real interest rates, financial innovations and liberalised capital markets provided enormous credit - creation potential. together with a reduced perception of risk, this fostered a rapid rise in asset prices which ultimately led to excesses and imbalances in some markets. through contagion effects, the bursting of a credit and asset price bubble can bring the entire global financial system to the brink of collapse within a very short period of time. in view of the interaction with the real economy, this also has serious implications for the world economy and global growth. this raises a number of questions about the future role of central banks. can and should monetary policy be used to actively counter the development of imbalances or financial bubbles? does it make sense to use monetary policy instruments for this? will the new instruments used during the crisis also play a more important role in monetary policy in the future? to answer these questions, i would like to look specifically at two aspects. first, i will examine the measures used by central banks during the crisis and briefly outline the possibilities and limitations on their future use in monetary policy. then i will consider whether monetary policy should step up its focus on the goal of financial stability. with regard to measures taken during the crisis, i can say straight away that the effectiveness of monetary policy instruments was clearly demonstrated. we were able to safeguard price stability and cushion the negative impact on the real economy. however, vigorous interest rate cuts were not sufficient on their own β neither in switzerland nor in other countries. the liquidity situation on the money markets initially remained extremely tense. in many cases, interest rates rapidly dropped to zero. the chief monetary policy instrument could thus no longer be used. central banks around the world therefore adopted so - called unconventional measures. these included
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financial sector regulation and oversight is, without a doubt, a tough challenge. but the snb is also faced with equally tough challenges in the area of monetary policy. iii. review of monetary policy in 2009 in 2009, the snb β s monetary policy activities were focused entirely on combating the financial and economic crisis and the associated deflationary trends. price stability, which is not compatible with either deflation or inflation, remained the core objective. as early as autumn 2008, the snb had adopted an expansionary monetary policy stance as a result of the increasingly unfavourable economic outlook and the prospect that inflation would be low for the foreseeable future. between october and december 2008, the snb lowered the target range for the three - month libor by a total of 225 basis points, to only 0. 0 β 1. 0 %. the snb also ensured a generous supply of liquidity to the money market. the economic situation continued to worsen into the spring of 2009. in addition, the uncertainty engendered by the financial crisis had led to a strong appreciation of the swiss franc against the euro. in view of the economic situation prevailing in switzerland at that time, there was the risk of a pronounced deflationary trend, in particular if the swiss franc were to appreciate further. this risk necessitated a further easing of our monetary policy. the substantial monetary policy easing therefore continued, with a further 25 basis point reduction in the libor target range in march 2009. this left the new range at 0. 0 β 0. 75 %, where it has since remained. the snb aims to keep the libor in the lower end of the range, i. e. at around 0. 25 % ; the one - week repo rate has been at practically zero since the end of 2008. the room for manoeuvre using the traditional interest rate instrument was thus effectively exhausted in march 2009. to relax monetary conditions further, the snb significantly increased liquidity. it did so via a number of unconventional monetary policy instruments. it concluded longer - term repos and purchased bonds issued by private sector borrowers. it also bought foreign exchange on the foreign currency market and acted to prevent the swiss franc from appreciating further against the euro up to the end of the year. against the background of the economic recovery, following its monetary policy assessment in december the snb is acting only to decisively counter an excessive appreciation of the swiss fran
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12 / 6 / 2018 lessons and questions from the gfc | speeches | rba speech lessons and questions from the gfc guy debelle [ * ] deputy governor address to the australian business economists annual dinner sydney β 6 december 2018 it is now just over 10 years since the date that people most associate with the global financial crisis ( gfc ), namely 15 september, the day that lehman brothers filed for bankruptcy. [ 1 ] there have been quite a number of articles written in recent months looking back at that time and the period leading up to it. [ 2 ] it is interesting to read the differing perspectives on the same set of events, especially those that recount events that i had a ringside seat at, or was even in the ring itself. as i have said recently, it's a bit like the standard line about the sixties, those who can remember the gfc probably weren't there. the sleep - deprived haze that was pervasive at the time affects the memory. critical decisions were made under extreme duress and fatigue, particularly in the us, which by and large stack up well with the passage of time. today i am not going to give another detailed account of what happened. i will talk about some of the events, but the main thing i intend to do is to talk about some of the lessons learned and relearned from the crisis. this list of lessons is by no means comprehensive. i will also discuss some questions that arise from the crisis that remain unresolved, at least in my mind. they are questions which i think should be a focus of the economics profession. answering them will help guide policymakers should they be faced with similar situations to the one we confronted in 2008. i am going to talk about both macro and finance today. some events can be seen through mostly a macro lens with finance playing a lesser role ( the seventies in australia is an example ), some events can be seen with the spotlight on finance with macro as a sideshow ( e. g., the dotcom bubble ). i don't think it is possible to look at the gfc and talk about one without the other. it is clearly important to integrate finance into macroeconomic analysis. indeed, the failure to do that is a criticism that is often levelled at central banks and the macroeconomic profession in the aftermath of the crisis. i think this criticism is overstated. one obvious counter example is the work https : / / www. rb
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of the year, but suggest that it has neither been particularly pronounced, nor showed signs of being long - lived. risks and policy considerations it has become much better understood in recent years that once a coherent framework for monetary policy is in place, the regular policy decision is essentially a matter of responding to the changing balance of risks to the outlook. the rba β s board certainly has had a busy time over the past year or more evaluating and deciding how to respond to the evolving balance of international and domestic risks. it takes a lot more work than you might think to leave rates unchanged for fifteen consecutive months! in the middle of last year, it looked as though the international economy was returning to stronger conditions, and australian domestic demand was growing very strongly indeed. to foster an inflation outcome consistent with our medium - term target, we believed that it would be prudent under such conditions to return interest rates to normal, or β neutral β, from a relatively expansionary setting. two initial steps were taken, and the likelihood of further steps clearly signalled. but in the event, the process did not continue, because the world economy began turning out differently to what we had assumed. by the end of 2002, it was clear that any thought of near - term tightening could go off the agenda for a while. the world economy had clearly lost some momentum, and for the time being, this meant that a steady interest rate structure would probably be associated with achieving our policy objectives. that remained the story through to the middle of 2003, as the iraq war came and went, most international data looked on the soft side, the drought continued, and financial market sentiment waxed and waned. the outlook for australia was for moderate growth - quite a good outcome in the circumstances - but our feeling was that the risks stemming from international developments were tilted to the downside. inflation, if anything, looked a little higher than had been expected, although our judgement was that in the medium term, it would still turn out to be consistent with the target. that was a macroeconomic outlook which certainly did not, in my view at least, amount to an obvious case for monetary policy to be noticeably easier than was already in place. a reasonable case could be made that policy should be easier than neutral - but it already was, and had been for some time. our conviction that the level of interest rates was exerting stimulus to the economy - a conviction strengthened when we looked at the demand for credit and the behaviour
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so participants in the bond market need to adjust to the current situation rather than simply complain about it. if transaction costs are higher, particularly for transacting in large size, then asset managers and other bond holders need to take account of that in the way they execute their transaction in the market. for example, as discussed above, one solution may be to execute more slowly in smaller parcel sizes. execution certainly needs to be more nimble and considered than in the past. but perhaps more importantly, the increased transaction costs in terms of liquidity and execution should also be taken into account in the way an asset manager constructs its portfolio. the differences in transaction costs across various classes need to be taken into account. if transaction costs are higher, then perhaps i should be transacting less. do i really need to be selling? in some cases, i might not have much choice, because the need to transact may be driven by the mandate i have been given. but in that case, a discussion should at least be had with the provider of the mandate highlighting the higher transaction costs and the implications that has for the portfolio. or maybe i need to transact because of redemption flows out of my fund. in that situation, i may need to think about holding a higher liquidity buffer than i did in the past. if the cost of obtaining liquidity in the market from my bond portfolio is higher than it used to be, then i need to think about weighing that up against the cost of holding more liquidity on my own balance sheet to accomodate potential redemption flows. let me now turn to another concern that is often expressed around bond market liquidity, namely that, with the decline in intermediation by the banks, the likelihood of market dislocation is higher. this often comes up in discussions around the consequences of the fed tightening monetary policy resulting in a large sell - off in bond markets. the β taper tantrum β of 2013 is often invoked as an example. this saw a rapid rise in bond yields in a number of emerging markets following indications that the fed was going to wind down its quantitive easing program. as i said last year, i think the issue is not so much one of a decline in liquidity as much as a decline in the capacity to warehouse risk. in the past, when there was a large sell - off in bond markets, liquidity was never that great. a bank has no more desire than any other investor to catch a
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ms. phillips discusses recent developments in supervision and regulation and how they affect the debate on financial modernization remarks by ms. susan m. phillips, a member of the board of governors of the us federal reserve system, at the annual washington conference of the institute of international bankers on 3 / 3 / 97. i am pleased to have the opportunity to address this group at a time when developments in global financial markets are presenting particular challenges for market participants and market regulators alike. i was asked to talk with you today about both developments in federal reserve supervision and regulation, as well as the approaches to financial modernization being debated in the congress. i won β t try to cover the full waterfront on these topics, but would like to share with you some of the board β s considerable rethinking about the way we supervise and regulate bank holding companies. i will also describe how i believe the recent board initiatives coming out of this process may well alter the debate about the structure and supervision of financial services in the united states - - a topic i believe has received insufficient attention in the legislative debate so far. i will focus my discussion of recent board actions on the supervisory process and on three regulatory changes made or proposed by the board : changes to the application and nonbanking provisions of regulation y, changes and proposed changes to the board - imposed β firewalls β between a bank and a securities affiliate, and changes to the board β s anti - tying rules. i stress these three not necessarily because they are the most important undertaken by the board, but because i believe that they most directly affect the debate about how financial services should be supervised. supervisory changes the cornerstone of the bank supervisory process is the verification of prudent practices and financial condition through on - site examinations, coupled with off - site surveillance. traditionally, on - site examinations of bank holding companies and their nonbank subsidiaries have focused on verifying compliance and determining the financial condition of an institution at the time of the examination by reviewing their loans and by testing other transactions. this process is changing. the federal reserve β s supervisory oversight at the bank holding company level is increasingly directed at evaluating risk management, internal controls, and decision making processes that are shared between a bank and its parent, rather than focusing on transactions and positions at nonbank affiliates. this focus is necessary given the continuing trend toward integrated management of financial activities on a consolidated basis. testing the adequacy of risk management and internal control helps us understand the financial condition of the consolidated organization and
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there are many policy tasks to be pursued for our economy to overcome the shocks caused by the global financial crisis, and what is more, to maintain steady growth. first of all, efforts to build up a foundation for more robust domestic demand should be continued. the global economic outlook makes it difficult to expect a rapid recovery of korean exports for the time being. a worsening employment situation, moreover, may hinder the recovery of private consumption and, along with sluggish facilities investment, lower the growth potential. in this regard, it is important to promote a virtuous circle of employment and growth and to strengthen economic resilience against external shocks through making continued policy efforts to boost domestic demand and create jobs. as it seems that the economic crisis has passed its peak, corporate restructuring has to be speeded up. if the resolution of ailing companies is delayed, it will be difficult for the financial markets to return to normal at an early stage with concerns over credit risk left unsolved, while there is also the possibility that the external competitiveness of the korean economy may be reduced. the financial and foreign exchange markets presently seem fairly stable, but more efforts need to be devoted to keep them on a firm track. as part of such efforts, it is necessary to develop measures which reduce the possibilities of market unrest from the large - scale inand outflows of foreign capital, while lessening dependence on short - term external debt. even when the financial markets and real economic conditions recover from this crisis, there is a need to devise means of preventing financial institutions from becoming locked into excessive competition for asset growth. there should also be a keen awareness that the accommodative monetary and fiscal policies implemented to tackle this crisis could impose a burden on the economy in the medium - and long - term horizon. my dear colleagues, i would now like to talk about what the bank of korea should promote as its top priority in the second half of this year and beyond. the bank should conduct interest rate policy with a main emphasis on supporting the continuation of the recent improvement in the real economy and the financial markets. the bank will also pay close attention to the possibilities that a rise in international commodity prices may disrupt the low and stable trend of prices and that rapidly swelling short - term liquidity may cause instability in asset prices such as those of real estate. the bank also has to make constant efforts to strengthen the foundation for financial stability. there is a need to examine the desirable scope of the
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juyeol lee : new year speech new year β s address by mr juyeol lee, governor of the bank of korea, at the bank of korea, seoul, 2 january 2015. * * * dear fellow members of the bank of korea! today is our first day of work in 2015, the year marking the 70th anniversary of national liberation. i would first like to express my sincere appreciation to all of you for so faithfully carrying out your duties under difficult circumstances. since returning last april to the bank of korea, where i had worked my entire career, i have devoted great efforts to fulfilling my heavy responsibilities as governor. and looking back i feel rewarded with some sense of achievement and satisfaction, but i also remember even more clearly that last year left much to be desired. since the time i took office as governor, i have thought that monetary policy communication with the market is very important, and i have endeavored to do this in a smooth manner. for effective communication, the accurate forecasts of economic conditions is required. this will enable us to send consistent policy signals and gain the confidence of economic agents. economic movements changed greatly last year, however, owing mainly to structural changes in the korean economy and to external and internal shocks, and so the results of our communication with the market were not so satisfactory. the fact that the effects of our monetary policy were unclear is also disappointing. although we strengthened our accommodative monetary policy stance further last year, by reducing the base rate on two occasions and raising the ceiling on the bank intermediated lending support facility, the trend of economic recovery was insufficient, with some even voicing concerns about deflation. as consumer price inflation was below the target range for a long period of time, controversy over the adequacy of our monetary policy stance continued. in a situation of low inflation resulting mainly from supply - side factors, such as declines in prices of international crude oil and domestic agricultural products, conducting monetary policy only to achieve the inflation target may not be desirable. i think it is disappointing that we did not get this message across properly to economic agents in our country. dear members of the bank of korea! it is generally forecast that economic conditions in korea will improve at least slightly more this year than last. the korean economy is expected to continue its modest trend of recovery going forward, on the back of improvements in the global economy centering around the us, the sharp declines in international oil prices, and the effects of expansionary macro
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of it was sold more than a decade ago. so in principle, if this were ever the aim of policy makers, there β d seem to be quite a bit of scope to spring β surprise β inflations ( a surprise in the sense that it wasn β t foreseen when the bonds were originally sold ) and reduce the real value of existing debt without any compensating rise in coupon payments. however, as we β ll see, you need relatively sizeable increases in inflation to make much of an impression on the debt. though the dynamics are extremely drawn out, the effect is ultimately temporary, as even longterm debt needs eventually to be refinanced12. and central bank asset purchases have made it harder : because it reduces the maturity of its interest - bearing liabilities, qe actually makes the public sector β s consolidated balance sheet less susceptible to any given rise in inflation. note that this relies critically on trend gdp growth ( let β s call it g ) being higher than the risk - free real interest rate ( r ). over time, and as long as inflation is on average in line with prior expectations, the change in the ratio of debt to gdp ( b ) is given by ( r β g ) b β d, where d is the primary deficit. this is stable β for given d it tends over time to revert to a steady state level ( b * = ( g - r ) / d ) β only if the term multiplying b is negative, i. e. g > r. with risk - free real interest rates comfortably below zero in developed economies this condition seems to be fulfilled at the moment, though that β s not always been the case. when r > g the debt ratio is no longer stable β unless d changes accordingly, small changes in r or g would put b on an unstable path. for more on the implications of g > r see blanchard ( 2019 ) and mehrotra and sergeyev ( 2019 ). all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice the blue line in chart 8 depicts the results of a stylised experiment in which inflation rises permanently, and without any warning, by 1 chart 8 : surprise inflations can reduce public sector debt though when g > r the effect is ultimately temporary percentage point ( from 2 % to 3 % ). there β s a corresponding rise in inflation expectations
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with nothing better to do. β 7 nor would norman necessarily have ingratiated himself to today β s army of bank economists. β you are not here to tell us what to do, but to explain why we have done it β is the way norman rebuked the bank β s chief economist of the day. 8 roberts, reading and skene ( 2009 ). john, roberts and weeken ( 2012 ). boyle ( 1968 ) p105. ahamed ( 2009 ) p233. bis central bankers β speeches norman saw the bank β s role in expansive terms, as provider not just of emergency help but as builder of infrastructure and supporter of industry. the bank became part of the post - war reconstruction effort. having spent 200 years tending to its back garden, the bank began to explore pastures new. to take one example, in 1928 the lancashire cotton industry was on its knees. these problems risked ricocheting back to the financial system, with at least two of the big five uk banks up to their neck in cotton. 9 a plan was conceived involving consolidating the industry into a lancashire textile corporation. this was to be financed with debt and shares issued and supported by β you β ve guessed it β the bank of england. it was a bold and cunning plan. unfortunately, it flopped. the share issue by the corporation in 1931 was a resounding failure, leaving the underwriter with a large chunk of the shares. the bank ended up having to support the market. 10 it, too, found itself up to its neck in cotton. undaunted, the stage had nonetheless been set for the bank β s on - going involvement in financial infrastructure. this came not a moment too soon. in the immediate post - war period, the uk faced pressing financial infrastructure problems β the so - called β macmillan gaps β. these gaps referred the inability of small firms to finance themselves with long - term loans. if these gaps sound strangely familiar, then they should. the post - war bank set about closing these macmillan gaps with gusto. in 1945 it set up two new financing entities β the finance corporation for industry ( fci ) and the industrial and commercial finance corporation ( icfc ). these were financially supported by banks and institutional investors, providing a platform for the supply of longer term funding and venture capital finance to small firms. in 1973, the two corporations combined to form finance for industry ( ffi ). during the early 1980s, the company
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- 08 oct - 08 sep - 08 aug - 08 jul - 08 jun - 08 may - 08 apr - 08 mar - 08 feb - 08 jan - 08 4. 0 20. the liquidity injection efforts of the reserve bank, despite being large, could be achieved without compromising either on the eligible counterparties or on the asset quality in the reserve bank β s balance sheet. the liquidity requirements of non - bank financial entities were met indirectly by extending liquidity support to the designated counterparties like scheduled commercial banks and primary dealers. liquidity expansion achieved through unwinding of mss and reduction in reserve requirement ensured that the reserve bank β s balance sheet did not expand significantly, unlike in several other central banks. how did monetary transmission work? 21. in the wake of the crisis, monetary transmission broke down in several countries as risk aversion gave rise to credit crunch. as regards india, the changes in the reserve bank β s policy rates were quickly transmitted to the money and debt markets ( chart 6 ). the money market rates moved in tandem with the policy reverse repo rate. however, transmission to the credit market was slow due to several structural rigidities in the system, especially the dominance of fixed term deposit liabilities in banks β balance sheets at fixed interest rates. chart 6 : transmission of policy rates to money and bond markets 12. 0 10. 0 6. 0 4. 0 oct β 09 sep β 09 aug β 09 july β 09 jun β 09 may β 09 apr β 09 mar β 09 feb β 09 jan β 09 dec β 08 nov β 08 oct β 08 sep β 08 apr β 08 may β 08 0. 0 aug β 08 2. 0 jul β 08 yield on aaa corporate bonds yield on 10 β year government securities call rates policy reverse repo rate jun β 08 per cent 8. 0 22. as bank deposits contracted in the past at high rates have started to mature and banks have significantly reduced their term deposit rates, the transmission of lower policy rates to the credit market has improved with a lag ( chart 7 ). chart 7 : deposit and lending rates of public sector banks what are the challenges of exit from monetary easing? 23. there is an active debate on the timing and sequencing of expansionary monetary stance around the world. in this context, governor dr. subbarao, in his j. r. d. tata memorial lecture had indicated that the current monetary and fiscal stance is not the steady state. the exit from the
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christian noyer : monetary policy formulation in the euro area speech by mr christian noyer, vice - president of the european central bank, at the " monetary policy and the markets " conference of the national association for business economics, washington, dc, 21 may 2001. * * * introduction ladies and gentlemen, it is a pleasure, and a very great honour, to have been invited to address this special meeting of the national association for business economics and to present the monetary policy of the ecb before this distinguished audience of business economists and policy - makers. the theme of the conference, " monetary policy and the markets " is of the greatest interest β i believe β both to market participants endeavouring to discern and assess central banks'policy directions, and to the ecb, which, since its creation almost three years ago, has been assigning a prominent role to transparency and openness in its policy - making. in my brief remarks today, i will first elaborate on the institutional set - up of the ecb and its objectives. against this background, i will then attempt to explain the ecb's decision - making process as it is structured by our monetary policy strategy. the institutional set - up and the objective of the ecb the body collectively responsible for monetary policy decisions in the euro area is the governing council of the ecb, which consists of the ecb's president and vice - president, the remaining four members of the executive board of the ecb and the governors of the national central banks of those member states that have adopted the euro as their currency. the executive board is responsible for the preparation of the meetings of the governing council and the implementation of the decisions the governing council takes. in particular, the executive board instructs the national central banks on the operations to be completed in accordance with the governing council's directions, making sure that the entire process develops in a consistent and fully harmonised manner. the treaty establishing the european community assigned to the ecb the maintenance of price stability in the euro area as the primary objective and unambiguous mandate. rooted in the long - standing experience of the participating national central banks, there rests the conviction that it is with the credible and lasting maintenance of price stability that the ecb could best enhance the welfare of eu citizens. given the uncertainties surrounding the monetary policy transmission mechanism that arise from the complexity and the continuous evolution of economic behaviour and institutional structures, the ecb is ill - suited to fine - tune economic developments
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7 ). this reflects the better lending decisions in earlier years. graph 7 our common external interests of course, good domestic policies can do only so much to ameliorate the impacts of very adverse international developments. both economies have slipped into recession as international forces have taken hold, albeit through differing chains of causation. but for the reasons articulated above, there are good grounds to think that both countries should be in a relatively good position and well placed to take part in a renewed international expansion. it is too soon to say this is beginning yet, though developments over recent months are certainly consistent with the view that a recovery will get under way towards the end of the year. that said, most observers think that the early part of any new global expansion will be characterised by pretty slow growth. even with the uncertainty over the near - term global outlook, however, it makes sense to look forward. so in the final part of this address, i should like to talk about the common interests we have at stake in the way the international community responds to the crisis and shapes the next expansion. first among these is the openness of trade and capital flows. the extent to which trade flows slumped late last year perhaps gives a sense of what could happen were trade barriers to go up. everyone would suffer, and badly. this is fully understood at an intellectual level around the world. yet we know that in times of domestic economic difficulty, the pressures for protectionism increase. countries like ours need to keep making the point that trade is not a zero - sum game ; it is collectively a positive - sum process that stimulates innovation and productivity, increases global growth and raises living standards. secondly, the continued development of many emerging economies will enrich the opportunities for firms and individuals in economies like ours over time. but it will be sensible for emerging countries to have strategies that rely less on the absorption of consumer products by the developed world, at least for some years. that will involve, roughly speaking, more consumption and investment at home, lower trade surpluses and a step back from very large outflows of capital to the developed world. this is actually a rational choice for emerging market countries. but a lesson many countries took from the asian crisis was that a strategy such as that was dangerous, because the rules of international engagement did not provide adequate protection in times of difficulty. their response was the build - up of reserve assets in the period since 1998 β a costly form of international self - insurance, involving sending
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glenn stevens : australia and canada β comparing notes on recent experiences1 remarks by mr glenn stevens, governor of the reserve bank of australia, to the canadian australian chamber of commerce, canada - australia breakfast, sydney, 19 may 2009. * * * thank you for the invitation to be here. as a one - time temporary resident of canada and graduate of a canadian university, it is pleasing for me to see the canadian australian chamber of commerce contributing to economic interaction between the two countries. it is surprising that australians and canadians do not spend more time comparing notes, given the things we have in common. apart from a shared heritage as members of the british commonwealth ( though canada, of course, has the french - speaking heritage as well ), 2 we are both federal states and constitutional monarchies. both nations have relatively small populations that occupy physically large continents. we are both commodities producers. our economies are open, and free flows of trade and capital are very important to us. there are some interesting similarities, and the occasional informative difference, in experiences, and examining these is helpful for australians to understand better the way the past six or seven years have evolved. i propose to look at some of those today. looking to the future, both our countries have reason to believe that we will come through this episode in reasonable shape. we also have important shared interests in the way the international economic and financial system evolves over the years ahead. in canvassing some of these issues, i am mindful that david dodge, the former governor of the bank of canada, spoke to this group only a few years ago, concerning many of the same questions. 3 i find myself agreeing with the sentiments he expressed then, and repeating many of them today. similarities, differences and recent developments australia and canada have similar levels of gdp per capita ( based on purchasing power parity, nominal gdp per capita was around us $ 37 000 for australia and us $ 39 000 for canada in 2008 ). since 1990, australia β s growth in real gdp per capita has been a little higher than canada β s. in terms of economic structure, the primary production sectors, combined, are of similar size in the two countries ( table 1 ). australia has less manufacturing, but more mining than canada. there are also some notable differences in the composition of our mining sectors. both these turn out to have been of some importance over recent years, as i shall point out shortly. but, overall, the economic structures of the two countries at
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constrained from falling could increase as price inflation moves toward or below zero. in these circumstances, the effective clearing of labor markets would be inhibited, with the consequence being higher rates of unemployment. taken together, these considerations suggest that deflation could well be more damaging than inflation to economic growth. while this asymmetry should not be overlooked, several factors limit its significance. in particular, more rapid advances in productivity can make this asymmetry less severe. fast growth of productivity, by buoying expectations of future advances of wages and earnings and thus aggregate demand, enables real interest rates to be higher than would otherwise be the case without restricting economic growth. moreover, to the extent that more - rapid growth of productivity shows through to faster gains in nominal wages, there will be fewer instances in which nominal wages will be pressured to fall. one also should not overstate the difficulties posed for monetary policy by the zero bound on interest rates and nominal wage inflexibility even in the absence of faster productivity growth. the expansion of the monetary base can proceed even if overnight rates are driven to their zero lower bound. the federal reserve has authority to purchase treasury securities of any maturity and indeed already purchases such securities as part of its procedures to keep the overnight rate at its desired level. this authority could be used to lower interest rates at longer maturities. such actions have precedent : between 1942 and 1951, the federal reserve put a ceiling on longer - term treasury yields at 2 - 1 / 2 percent. with respect to potential difficulties in labor markets, results from research remain ambiguous on the extent and persistence of downward rigidity in nominal compensation. clearly, it would be desirable to avoid deflation. but if deflation were to develop, options for an aggressive monetary policy response are available. * * * fortunately, the ability of our economy to weather the many shocks inflicted on it since the spring of 2000 attests to our market system's remarkable resilience. that characteristic is far more evident today than two or three decades ago. there may be numerous causes of this increased resilience. among them, ongoing efforts to liberalize global trade have added flexibility to many aspects of our economy over time. furthermore, a quarter - century of bipartisan deregulation has significantly reduced inflexibilities in our markets for energy, transportation, communication, and financial services. and, of course, the dramatic gains in information technology have markedly improved the ability of businesses to address festering economic imbalances before
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closed at the end of last month, the u. s. federal government's budget deficit shrank, as federal tax revenues came in at a greater - than - expected pace. although the final accounting for the fiscal year is yet to be tallied, treasury data indicate that the federal budget deficit was probably equal to about 2 - 1 / 2 percent of gdp - - below its level of about 3 - 1 / 2 percent of gdp in the preceding two years. that said, the budget figures for the fiscal year just ended were little affected by the fiscal policy response to the recent hurricanes. only a small portion of the emergency federal outlays budgeted for hurricane relief were actually spent in september, the last month of the fiscal year. the bulk of the hurricane - related spending and tax relief will show up in the budget accounts in the current and next fiscal years. moreover, the total magnitude of the federal response is still unknown, adding to the uncertainty associated with the fiscal outlook. viewed from a longer - term perspective, the financial position of the u. s. federal budget has oscillated dramatically over the past ten years. ten years ago, the federal budget had a deficit that amounted to about 2 - 1 / 2 percent of gdp, roughly similar to the current percentage, and forecasts at that time pointed to some widening in this budget gap in future years. budget agreements in earlier years - - 1990 and 1993 - - had both raised taxes and reduced spending, and the combination of these actions had helped lower the federal budget deficits from the levels of previous years. these budget agreements demonstrated the desire of policymakers to undertake some hard steps necessary to reduce the deficit. they had also put in place caps on so - called discretionary federal spending - - that is, the portion of federal spending that is allocated annually - - and had required that legislative changes to taxes or entitlement spending be deficit neutral, a requirement called the paygo rule. the paygo rule mandated that changes in taxes or entitlement spending be offset by other changes in taxes or entitlement spending so that the deficit was not increased. despite the enactment of deficit - reducing legislation and the existence of these budget rules, the best estimates ten years ago had the federal budget still running deficits far into the future. however, as it turned out, a number of positive developments pushed the budget into surplus in 1998 through 2001. importantly, bipartisan support in the congress for establishing and maintaining some measure of
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##s on the securities that it purchases under repo. this is relative to the banks'final estimates of net cash outflows under the lcr stress scenario using data on their balance sheet position as at the end of the relevant year. this compares to the clf banks'annual operating income of around $ 100 billion. bulletin, september, Β© reserve bank of australia, 2001 β 2019. all rights reserved. the reserve bank of australia acknowledges the aboriginal and torres strait islander peoples of australia as the traditional custodians of this land, and recognises their continuing connection to country. we pay our respects to their elders, past, present and emerging.
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are not able to simply pass on the higher cost of deposits to borrowers. as a result, in the scenario there is a marked squeeze in banks β net interest margins and hence on banks β revenues. the scenario also poses a number of risks to banks β market share, to the liquidity of retail deposits, to fees from payment services and to the ability to retain and access customers and to the use of their current data advantage to cross sell products. if firms are depending more on technology like the cloud and third party providers, this environment could also pose cyber and operational risks. the impacts are not of course all one - way. there is an upside for existing banks. new technology and customer relationships gives them the opportunity to provide customers with new and better products and services, to compete and, crucially, to become more efficient. all speeches are available online at www. bankofengland. co. uk / speeches in their responses, the banks in the test judged they could maintain existing business models without increasing overall risk taking, meeting the requirements of both regulators and investors, and using technology to increase efficiency to offset lower margins. our assessment was that there were a number of risks to the banks β projections in the exploratory scenario. in particular, open banking, psd2 and other related changes might cause greater and faster disruption to business models and the forecast increases in efficiency may be more difficult to deliver than assumed. investors might also demand a higher return than banks β forecast in the exercise. the bank of england β s 2017 exploratory scenario was not a pass or fail stress test. it was an exercise designed to assess the level and depth of banks strategic thinking about responses to future challenges, including the challenges to core business models from changes underway in the technologies around money. the exercise provided the financial stability and the prudential regulation committees of the bank of england with a number of important insights. we will be following up with banks on the results of the exploratory exercise. conclusion thinking about the future in this way is a key part of our responsibility for the money of the uk. the way we use the social technology of money has a long and very varied history. money has manifested itself in very different forms over the centuries. the confidence that lies at the heart of the technology that is money has been supported in very different ways. the technology has, on occasion, been abused and misused : to borrow mill β s analogy, the β machine β has
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jens weidmann fears that the ecb β s monetary policy is financing fiscal deficits. draghi : no, the governing council disagreed with that view. what has been decided is a monetary policy measure. there is a fundamental difference between buying on the primary market, which is forbidden because the money would go to the government, and buying on the secondary market where the money does not go to the government but to bond holders. article 18 of the statute states that the ecb may β buy and sell [ β¦ ] marketable instruments β as part of its mandate, if necessary to achieve price stability, of course always respecting the treaty β s article 123 on the prohibition of monetary financing. sz : where does the german opposition come from? draghi : it comes from the history of the country and the fear of inflation. but it has to be clear that in the case of efsf / esm support, the parliaments of the euro area countries will be involved. sz : but the parliaments do not decide on the amounts that the ecb is going to risk β¦ draghi : no, because monetary policy has to remain independent, and it is a prerequisite for the governing council to consider the specific monetary policy measures. sz : many germans were against the euro, because they had doubts about the economic policies of countries like greece or italy. now they feel that they were right. draghi : the euro has delivered price stability to an entire continent. it has removed exchange rate risk, fostered economic cohesion, employment and growth. germany has benefited greatly from all these accomplishments, as well as from price stability that is greater than in the years before the euro. sz : the ecb will be getting even more power by supervising the european banking industry. so, will the ecb always bail out ailing banks by printing money? draghi : no, we have to organise ourselves and keep banking supervision and monetary policy strictly separate. this has been done in many central banks. we are not mixing anything ; fundamentally, there will be a chinese wall. sz : chinese walls in regular banks have collapsed. draghi : not in central banks. sz : how can the ecb do a better job than the german bafin? draghi : it is not about doing a better job ; it is about making sure that uniform supervisory practices are applied across the whole single currency area. the more detached you are from national government, the more objective you
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meet are the best insurance against risk. the risks are well managed. and, in our assessment, doing nothing poses even greater risks. sz : if a country defaults on its bonds, the ecb and thus the tax payers lose a lot of money. draghi : this is why conditionality is so important. moreover, the outright monetary transactions will focus only on the shorter term, in particular on bonds with a maturity of one to three years. sz : but 42 % of the german population distrust you as the ecb β s president. draghi : that is a hindrance for our work. i will have to do more to explain our actions. we will start with this interview. but you always have to weigh the options. sz : which are? bis central bankers β speeches draghi : of course, you could say β nein zu allem β, but that is not constructive. for example, if we had not decided to conduct the longer - term refinancing operations ( ltros ), we would have seen a severe credit crunch across large parts of the euro area. under such conditions, and i have said this time and again, we would not be able to deliver what everybody expects us to deliver : price stability over the medium term. so, we have to help avoid such conditions. sz : how serious is your threat? it is hard to believe that you would stop buying bonds and let spain or italy plunge into disaster. draghi : if a given country does not comply with conditionality, the ecb cannot improve the monetary policy transmission in that country. any attempt to do so in such a situation would be ineffective because it would be offset by the country β s policy failure. sz : why didn β t you make it mandatory that esm / efsf first buy bonds on the primary market before the ecb steps in? draghi : the key for us is strict conditionality and effective monitoring. the possibility of primary market purchases by the efsf / esm should be sufficient to ensure that. sz : can the euro area now be saved after the ruling of the german constitutional court on the esm? draghi : the esm is an important measure in the crisis management toolbox. however, coping with the crisis does not depend only on having a stabilisation mechanism in place ; in particular, we need determined actions at the level of individual member states. and, collectively, member states
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juyeol lee : 69th anniversary of the bank of korea speech by mr juyeol lee, governor of the bank of korea, at the commemorating ceremony of the bank of korea's 69th anniversary, seoul, 12 june 2019. * * * ( this is an unofficial translation prepared by the bank β s staffs based on original speech released on june 12, 2019. ) dear fellow members of the bank of korea family! today is the 69th anniversary of the bank of korea β s establishment. i wish to express my sincere gratitude to our predecessors who devoted themselves to the development of the bank of korea and our economy, and to the many people who have supported and encouraged the bank. i would like to say in addition how much i appreciate the efforts of all members of our staff, who are faithfully fulfilling the duties entrusted to them in their positions. economic growth has faltered this year, as the pace of increase in consumption has slowed amid declines in exports and investment. going forward, government expenditures are expected to expand and slumps in investment and exports to ease. however, it is judged that uncertainties surrounding the growth path have further increased. this stems from changes in the external environment. there is a higher possibility that global trade could shrink with the deepening trade dispute between the us and china. the recovery of the semiconductor industry could come later than expected. as korea depends heavily on exports led by specific industries, growth is bound to be influenced by how these uncertainty factors evolve. domestically, there are structural factors that limit the growth of the korean economy : a low birthrate and aging population, weakening competitiveness in core industries, and a dual labor market structure. the pace of increase in household debt has recently slowed somewhat, but considering its very high aggregate volume and remaining risk factors, we cannot let our guard down. under these circumstances, the policy authorities need to manage the macroeconomy so that growth momentum is sustained, while working on structural reforms from a medium - to longterm perspective to enhance growth potential. macroeconomic policy needs to be effectively pursued, while carefully judging policy capacity and impact. at the same time, we need to step up our efforts to improve economic fundamentals. we should consistently pursue the discovery of new growth engines, the revitalization of high value - added service industries, the improvement of labor market flexicurity, and the rationalization of regulations. this is a moment that calls for urgent resolve : if we don β t change because
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changes in the payment and settlement environment. with the advancement of it technologies, new payment instruments are emerging and the participation of non - financial institutions in the payment services market is increasing. the innovation in the payment and settlement industry will help enhance market effectiveness and productivity. but on the other hand, we will have to pay more attention to ensure safety as such innovation will also heighten systemic linkages and complexity and introduce new types of risks. we will also need to complete, without delay, the establishment of the next generation bokwire +, which is scheduled to commence operations in 2020. fellow bank of korea staff! considering the recent economic environment, high uncertainty seems to have become a constant. some even say that we have entered the era of the so - called β new abnormal, β a persistent situation where it is hard to predict what will happen even in the near future. against this backdrop, if the central bank wants to gain greater trust from the general public, we need to enhance our policy capacity by heightening staff expertise, while communicating actively with the outside. first, in order to propose new alternatives in this rapidly changing policy environment, it is imperative to pay close attention to a variety of outside opinions. homogeneous thinking could be an advantage in running an organization, but it could also make it difficult to deal with the changing environment by narrowing perspectives and constraining flexibility of thought. in this sense, we need to engage in active exchanges with outside parties and make a level - headed review as to whether there are problems with the logic and points of views that we have until now 2 / 3 bis central bankers'speeches taken for granted. this could provide a chance to generate β creative abrasion β within our organization. while recently carrying out an overall review of its monetary policy framework, the fed has conducted the β fed listens β program in which it gathers opinions from academia and local communities. i think such efforts by the fed speak volumes of the importance of communication with the public. we should also strive more to strengthen our expertise. in a situation where knowledge and information changes rapidly, it is important to arm ourselves with response capabilities by detecting such changes and learning new things. it is not those who are strong but rather those who are well adapted to the environment who are likely to survive. we should consistently work to improve ourselves in order not to be left behind by change. and in terms of organization and human resources management as well, we will have to provide full support in this regard. meanwhile
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##falls that limit growth and build on synergies and innovation for catapulting it into the future. the outlook for the global economy remains uncertain with green shoots of optimism in the us as fresh jobs were added, but the eurozone remains embroiled in uncertainty of decision making and lack of consensus with the battered economies unwilling to commit bailout funds to the troubled nations. india has been more fortunate in that it has emerged virtually unscathed from the global crisis. a combination of strong regulation and supervision and a will to evolve policies that lean against the wind helped insulate the indian financial system from the crisis. it helped too that the indian banks were not very sophisticated and excessively leveraged. however, in a world where financial systems recognize no boundaries and the fortunes of nations are intertwined, no nation can consider itself an island and remain immune to the changes in the tides of the world economy for a prolonged period. if the envisaged growth rate of 9 per cent per annum during the twelfth plan is to be achieved and banks have to remain competitive and continue to improve their margins, they would need to look at the new drivers of growth. bis central bankers β speeches i. key drivers for propelling indian banking sector a recent iba - ficci - bcg report, titled " being five - star in productivity - roadmap for excellence in indian banking " has projected that the domestic banking industry is set for an exponential growth in the coming years with its asset size poised to touch usd 28, 500 billion by the turn of the 2025 from the current asset size of usd 1, 350 billion ( 2010 ). it is fairly obvious to presume that scope for such growth rates would inevitably usher in more competition for the indian banks aided in part by regulatory impulses and increased openness of the indian economy. simultaneously, the reach and penetration of banking is going to increase tremendously due to the policy spotlight on inclusive growth and financial inclusion. aiding the transition would be another fortuitous transformation in human resources area. public sector banks which account for nearly three fourths of the one million people working in indian banks face the prospect of retirement of nearly 55 per cent of their people in the next decade. thus, if ever there was a time for right sizing the organisation, hire the right talent, the right skilling of the workforce and bring about a cultural transformation, the time is now. we are, therefore, on the cusp of a defining decade in banking history
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to illustrate that for banks to move to the next orbit, they have to realise their true strengths and weaknesses. they need to build on their strengths and rectify their weaknesses to prepare and adapt themselves for the challenges which these external, regulatory and internal drivers are going to entail. in this, a very relevant and critical issue which emerges is whether the regulatory and supervisory processes are also geared up for the next orbit. iii. how equipped are the supervisors? the existing supervisory framework for commercial banks in india has fared rather well over the years and drawn praise from peer supervisory agencies, global standard setters and the fsap assessors for the regulatory and supervisory regime as the indian banking system remained largely stable during the global financial crisis. however, as supervisors, we face challenges. the growing complexities of the banking business coupled with significant cross - border and cross - sector expansion has rendered the system increasingly vulnerable to the threat of β contagion β. the paradigm shift in the banks β business processes, products and systems with an ever - growing reliance on ict, as delivery channels pose immense challenges before the banking supervisor. while on the one hand, the banking landscape has witnessed considerable changes, the supervisory processes within the reserve bank have remained more or less static. this has necessitated a review of the supervisory processes and rationalisation of the organisational structure for bank supervision. additionally, lessons from the financial crisis which have manifested in form of new regulatory and supervisory benchmarks like basel iii, revisions to the core principles for effective bank supervision, increased focus on systemically important banks also have to be factored in for making the supervisory processes and mechanism at the reserve bank more robust and capable of addressing emerging issues. the present supervisory processes followed by the reserve bank are focused on elaborate transaction testing and compliance monitoring and do not provide a forward looking measure of risk that the supervised entities pose to the supervisory objectives. we need to move away from transaction based to risk based and from incidence based to theme based supervision. the on - site assessment and the off - site surveillance processes also need rationalization so that efforts made by the external / internal auditors of banks could be effectively utilised and duplication avoided. supervision has to be intrusive and decisive. the basic underlying theme should be that supervision must facilitate good business and must obstruct bad business. another issue worth pondering is whether the reserve bank β s supervision adds value for the supervised entity or is it an β unnecessary evil β that they have to endure
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underwriting performance of euro area insurers. at the same time, the turmoil in the financial markets continues to weigh on insurers in their attempts to generate investment income. iii. overall assessment in conclusion, i will summarise our overall assessment of the risks to euro area financial stability. over the past six months, the deterioration in the macro - financial environment has continued to test the shock - absorption capacity of the euro area financial system. the profitability of euro area major banks has been eroded and the prospects for a significant turnaround in the short term are not promising. these prospects weighed on investor confidence in the resilience of already - weakened financial institutions. importantly, however, capital buffers have been rebuilt through mitigating actions taken by the major banks themselves, as well as through the injection of capital by governments, and the securities prices of these institutions have responded positively. because capital buffers have been maintained well above the minimum regulatory requirements, overall euro area lcbgs appear to be sufficiently well capitalised to withstand severe but plausible downside scenarios. the main risks identified within the euro area financial system include the possibility of : β’ a further erosion of capital bases and a renewed loss of confidence in the financial condition of lcbgs ; β’ significant balance sheet strains emerging among insurers ; and β’ more widespread asset price declines coupled with high volatility. outside the euro area financial system, important risks include the possibility of : β’ us house prices falling further than currently expected ; β’ an even more severe than currently projected economic downturn in the euro area ; and β’ an intensification of the stresses already endured by central and eastern european countries. it cannot be excluded that many of these risks could materialise simultaneously. indeed, this could happen if the global economic downturn proves to be deeper and more prolonged than currently expected. all in all, notwithstanding the measures that have been taken by the eurosystem and governments to stabilise the euro area financial system and in spite of the recent recovery in the equity prices of most major banks, policy - makers and market participants will have to be very alert in the period ahead. there is no room for complacency because the risks for financial stability remain high, also bearing in mind that the credit cycle had not yet reached a trough. banks, in particular, will therefore need to be especially careful in ensuring that they have sufficient capital and liquidity buffers to cushion the risks that lie ahead while providing an adequate flow
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, the equilibrium real interest rate has some relation to long β run productivity growth. so this touches on the so β called β secular stagnation β hypothesis recently reinvigorated by gordon, krugman, summers and others. 28 indeed, there is evidence of declining productivity since the 70s. the issue is whether, and to what extent, the recent great recession and the resulting slow β 0. 125 and β 0. 125 and commit to max β, kiley and roberts ( 2017 ). see, for instance, blanchard, dell β ariccia and mauro ( 2010 ), and krugman ( 2014 ). constancio ( 2016 ). see gordon ( 2016 ) ; gordon ( 2012 ) ; krugman ( 2013 ) ; summers ( 2013 ) ; summers ( 2016 ). deleveraging process have exacerbated this trend, generating permanent costs from the crisis. this is a topic of heated debate at present, not only in the policy arena, but also in academic circles. 29 all in all, these arguments have merits, particularly for central banks with a dual mandate that includes output stabilisation, but they are too narrowly focused on the benefits associated with staying away from the elb. as going below the elb is not possible, fighting recessions and the resulting high unemployment rate becomes more difficult. increasing the inflation target real interest rates could then be effective to eliminate negative output and unemployment gaps. these benefits of a higher inflation target can be outweighed by the broader costs of higher inflation, depending on the chosen level. historically, relatively higher inflation has usually been associated with more volatile inflation. 30 moreover, the ecb and many other inflation β targeting central banks have shown that other monetary policy tools are available when interest rates cannot be lowered further. against this background, the desirability of higher inflation targets becomes very controversial as economic theory could never specify with certainty the most desirable level within the range of low inflation values. since the 90s most central banks defined 2 % as the appropriate inflation objective, in some cases admitting temporary small deviations around that level. in the case of the ecb, the inflation objective is to maintain in the medium β term a level below, but close to 2 %. should non β standard monetary policy tools become standard? let me now turn to the monetary policy toolkit to be employed in order to achieve central bank targets. more specifically, should the size and composition of the central bank balance β sheet be now
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term capital, so vital for sustained economic growth. the constraints imposed by such a financial infrastructure, and the inadequacies and inefficiencies attendant thereto, provide key justification for the development of the capital market which will play the lead role for mobilizing domestic and foreign investment, as well as engendering low cost, efficient, financial intermediation. while in our financial sector development we have taken steps to improve the payments system, supervision of banks, strengthening their capital base, and enhancing efficiency in general, we have also put strong emphasis on ensuring the emergence of a comprehensive financial sector, that will meet the demands of an emerging market economy such as ours. in the process of developing the capital market, we have worked with private sector and external development partners, especially the first initiative and the commonwealth secretariat, to put in place a robust legal and regulatory framework that will facilitate the process. through the resident consultant provided by the first initiative, we have defined the system of regulations that would guide the operations of the capital market, and the stock exchange in particular, in all facets of its operations. we have ensured that these are consistent with acceptable international standards, and i can now confidently say that our stock exchange will operate with adequate safety and protection of the interests of the investing public. no one therefore should entertain any fears in transacting business through our stock market. the process of developing the legal framework has been participatory and transparent. in december last year we held a stakeholders workshop at which the drafts of the revised companies act, the securities bill, the bankruptcy bill and the collective investment schemes bill were tabled for discussion by all stakeholders. these pieces of legislation are now being finalized and would be presented to the next parliament for enactment. the other financial services amendment act 2007 will serve to provide the legal basis for the operation of the stock exchange until the enactment of these legislations. we have also invested in training of personnel to guarantee the professional conduct of operations, and in this regard, we have collaborated with relevant institutions and professional bodies to make sure that the codes and practices underlying the operations of the market meet established standards. today, as we inaugurate the sierra leone stock exchange we note with pride and confidence that we have achieved a significant milestone in the development of our financial system. in the coming weeks we will commence actual operations. in this regard, i wish to solicit the support and cooperation of all institutions and the general public to work towards the
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, significantly influencing them to chart their future strategies. also, given the important role played in financing by private sources, there is a need for regulators to put in place right climate information architecture to create a conducive environment to attract private capital for climate finance. therefore, the role of disclosure frameworks which are consistent with internationally accepted norms is crucial. the point i wish to make is that it is possible to converge the objectives of growth and climate - protection in an optimal way. once we are able to put in place enabling 4 / 6 bis - central bankers'speeches frameworks, economy would be able to create a pipeline of the viable projects as well as evolve a set of new financial instruments like adaptation finance3, blended finance4 as an innovative climate financing tools. given these building blocks the possible policy direction points to strengthening regulatory and supervisory frameworks could include ( i ) disclosure requirements ( ii ) risk management ( iii ) robust network of third - party verification of green credentials and impact assessment of projects to address green washing concerns and ( v ) periodical stress testing as part of risk mitigation measures. as a country, india too has made significant advancements in addressing climate change and fostering sustainable development. we have submitted our nationally determined contributions ( ndcs ) to the unfccc in 2015, with updates presented at cop 26 in 2021. india also has committed to ambitious targets through its comprehensive strategy known as " panchamrit, " aiming to increase non - fossil - fuel energy capacity to 500 gw by 2030, derive 50 % of energy from renewable sources, and reduce gdp carbon intensity by 45 % by 2030, aiming for net zero emissions by 2070. launching of long - term low emission development strategies ( lt - leds ) at cop27, co - founding the international solar alliance, launching of the national hydrogen mission, introduction of mission life ( lifestyle for the environment ) are some of the other steps taken by the government of india. rbi too has taken proactive steps like including financing renewable energy projects under priority sector loans, introducing green deposits, and drafting a disclosure framework for climate - related financial risks. in near future, we plan to release guidance notes on scenario analysis, stress testing, and effective management of climate - related financial risks based on bcbs principles. rbi's aspirational goals for rbi @ 1005 includes establishing a robust regulatory and supervisory framework to effectively manage challenges arising from climate change, enhance the resilience of payment systems
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christine lagarde : welcome address - fifth european central bank forum on banking supervision speech by ms christine lagarde, president of the european central bank, at the 5th european central bank forum on banking supervision " europe : banking on resilience ", frankfurt am main, 30 november 2023. * * * it is a pleasure to welcome you to the fifth ecb forum on banking supervision. ten years ago, on 15 october 2013, the eu council approved the regulation launching the single supervisory mechanism. it was the most significant step in european integration since the introduction of the euro. and there were two main reasons for taking it. first, it would lead to stricter and more uniform supervision β a single supervisor enforcing a single set of rules for a single banking market. that would, in turn, make it possible to establish a true banking union, with a common safety net. and a banking union would strengthen the monetary union by ensuring that bank deposits were seen as equally safe everywhere. as andrea enria eloquently put it, " only unified supervision and an integrated safety net can make sure that one euro has the same value and is afforded the same protection regardless of the member state in which it is deposited ". 1 second, single supervision would help make monetary policy more effective, because a weak banking system can complicate our task of stabilising inflation β in both directions. when central banks are easing policy, a fragile financial sector can impede the transmission of lower rates to the economy, especially if banks are unable to lend. we saw this after the euro crisis when banks were deleveraging as the ecb was cutting rates. at the same time, weak banks can also interfere with rate hikes. if monetary policy gives disproportionate weight to financial stability risks, it might tighten less than it ought to. setting up a single supervisor was a necessary condition to achieve both these goals. but, of course, there was no guarantee of success. it had to be tested by events and shaped by leadership β notably that of andrea and his predecessor, daniele nouy. in my remarks today, i will explain how european banking supervision has brought about key improvements to the supervisory landscape and to the effectiveness of monetary policy. the benefits of single supervision for the banking sector 1 / 4 bis - central bankers'speeches three improvements to the supervisory landscape stand out. first, european banking supervision has led to sounder banks, thanks to supervisors enforcing tougher regulatory standards
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jorg asmussen : lessons from latvia and the baltics introductory remarks by mr jorg asmussen, member of the executive board of the european central bank, to the panel β lessons from latvia and the baltics β at the high - level conference on latvia, riga, 5 june 2012. * * * dear ladies and gentlemen, it is my pleasure to be here today in riga to discuss the lessons from the baltic recovery. in the hanseatic league, to which riga and other baltic cities belonged, commerce and politics went hand in hand. and history is never far away from the headlines of the day. the ongoing financial and sovereign debt crisis illustrates yet again how closely economics and politics interact β for good or for bad. i would like to structure my intervention around the following three main questions : β’ what makes the latvian experience so special in the context of the current crisis? β’ what can euro area countries learn from the baltic recovery? β’ what can latvia itself learn from its adjustment? i. when good economics coincides with good politics it is said that β good economics is often bad politics β and vice versa. the experience of latvia and more generally the baltics is worth exploring precisely because it defied this conventional wisdom β both economically and politically. first, it disproved the frequently made claim that an internal devaluation strategy cannot work. from 2008, latvia was faced with the deepest recession in the world. the cumulative output decline was 24 % ; unemployment peaked at 20 %. compared with this economic collapse, even some of the euro area peripheral countries were faring relatively better. keeping the euro peg was considered by many as a β mission impossible β. external devaluation was presented as the only way forward. but latvia did not choose the easy β quick fix β. it embarked on a courageous fiscal consolidation path and structural reforms. two years later, the speed of the economic rebound is as extraordinary as the depth of the recession. against all the odds, latvia recorded a real gdp growth rate of 5. 5 % in 2011. while domestic demand was the main driver of growth last year, exports have also recovered very strongly. evidently, latvia β s competitiveness has improved, even though many challenges still lie ahead. the economic dynamics behind this swift stabilisation and recovery merit close examination. equally interesting is the political economy of the baltic adjustment. jean - claude juncker once said : β we all know what to do but we don β t know how to get re - elected
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normal footing. the outlook for the spanish economy points to the continuation of the main features recently observed, namely : the restructuring of spending, thanks to a gradual easing in domestic demand, particularly in consumption and residential investment, and an improvement in the contribution of net external demand. the confirmation of these trends would allow for the projection forward of economic dynamism at somewhat more moderate rates, in line with growth potential. for this to occur, however, further progress in slowing spending and household and corporate debt, and in improving the economy β s supply - side conditions, is needed. we must not forget that the long expansionary phase of the spanish economy has been accompanied by a buildup in certain imbalances that pose considerable risks to its sustainability. thus, until they are sufficiently corrected, we should avoid complacency. admittedly, recent months have seen slower growth in household debt and a gradual slowdown in house prices, while the inflation differential with the euro area has narrowed. but it is important these processes continue to head off the risks the banco de espana has been warning about. economic policymakers have a major responsibility to take advantage of the current economic prosperity to adopt, on a preventive basis, the measures required to harness the existing opportunities and to mitigate the risks that may arise. the change in the single monetary policy stance dating back to late 2005 has contributed to gradually normalising the financial conditions under which households and firms take their spending decisions, although monetary conditions are still accommodative for the spanish economy. turning to fiscal policy, buoyant revenue, which continues systematically to grow above budget, has provided for an improvement in programmed objectives. achieving fiscal surpluses in expansionary phases, as established under the new budgetary stability laws, not only proves suitable for easing demand pressures, but also for retaining sufficient room for manoeuvre in the face of potential deviations from the scenario of economic dynamism and, naturally, for further restructuring public finances in order to absorb the future consequences of population ageing. this is, unquestionably, the main challenge for public finances in the medium term. the agreement reached last year under the toledo pact also addresses the goal of ensuring the sustainability of the pensions system, although the measures adopted are still of limited scope. it should be recalled, however, that the high growth of public revenue has a difficult - to - estimate temporary component that is linked in part to the strength of the real estate sector. accordingly, budget
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the executive commission, the deputy governor and the directors general, and to have received the firm support of the bank β s staff. i thank you all and, after having celebrated the 150th anniversary of the adoption of the name banco de espana, i can bear witness to the fact this institution is performing increasingly better the tasks entrusted to it.
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to be given greater emphasis include effective communication and problem solving skills. the second priority is to identify and address the barriers that are preventing qualified parties from entering the industry, and the constraints that are limiting the ability of financial advisers to recommend the best solutions to their clients. we are close to making an announcement on revised minimum entry requirements for financial advisory business. the bank is also currently working on measures to create a more level playing field with respect to product offerings among the insurance intermediaries. the bank and the securities commission will also continue to coordinate closely in facilitating the ability of financial advisers and financial planners to provide advice on a broad range of financial solutions. in this respect, further enhancements are expected to be made to regulatory processes to improve efficiency and further ease the regulatory burden on the existing players. the third priority is to improve the alignment between the interests of consumers and financial advisers. we believe how incentives are structured have an important role in shaping the quality of advice that a consumer receives. while there are current requirements for potential conflicts to be clearly disclosed to consumers, the effect of such disclosure in alerting consumers to consider how such conflicts may affect any advice received, and to temper their decisions appropriately, may not be adequate to resolve the inherent conflicts that are created when a financial adviser is compensated by product providers. at the same bis central bankers β speeches time, the vast majority of malaysian consumers are not currently accustomed to paying directly for advice. in moving towards a better alignment of interests, there is an opportunity for fee - based business models to gain more traction, with financial advisers doing more β individually and collectively as an association β to explain how they add value through the advice that they give. the fourth priority is to intensify our review of the quality of advice provided by financial advisers to consumers through our supervisory work programme. this will contribute towards ensuring that financial advisers stay at the β top of their game β in terms of quality of advice, and that this is sustained through effective oversight arrangements within financial advisory firms to check that the interests of clients are being well - served at all times. at the industry level, the afa will have a key role in elevating the stature of the industry by coordinating initiatives to create greater awareness on the role of financial advisers, educate consumers on the importance of financial advice and to promote financial advisory services. afa can also play an important role in driving higher standards of professionalism in the industry through the development and implementation of industry codes of conduct and ethics that are
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far ) and auditors. intermediaries now only bis central bankers β speeches need to notify the bank and comply with minimum qualification and suitability standards. while we believe this will help you run your businesses more efficiently, our focus on preserving a high level of integrity, competence and professionalism among intermediaries has not changed and we will, as we have demonstrated over the course of the year through stronger enforcement actions, apply more intrusive supervision if we find that intermediaries have not discharged their responsibilities as expected. a new category of financial adviser, that is the islamic financial adviser, was introduced under the islamic financial services act 2003. this is also aligned to the objective of encouraging takaful agents to upgrade themselves to be islamic financial advisers as the demand for financial advice grows. similar to specialised takaful brokers introduced in 2005, islamic financial advisers will be specialising in advising on family takaful and other shariahbased products. strategic priorities to further develop the financial advisory industry the bank has identified a number of strategic priorities to further develop the full potential of the financial advisory industry in delivering better outcomes to consumers and increasing the level of insurance penetration in malaysia. i should say that we benefitted significantly from our engagements with the industry on the direction that we intend to take and the key issues that need to be addressed moving forward. today, let me mention four key priorities. our first priority is to ensure that financial advisers are highly competent and professional when they provide advice. we understand from our engagements with afa that recruiting the right talent continues to be a major challenge given that financial advisory firms are competing with larger financial institutions for a limited pool of qualified individuals. the bank will continue to work in close collaboration with afa to increase the talent pool. this includes reviewing on a regular basis, the programmes and qualifications that meet the minimum standards for financial advisors and working with academia, training providers and accreditation bodies to broaden the qualifications recognized without compromising on quality. there is also a need to lift the competency requirements for financial advisers. the current emphasis has been largely on ensuring that financial advisers have sound product knowledge and the core competencies to understand and analyse their client β s needs. we believe there is a need for financial advisers to possess a larger body of financial and technical knowledge, that includes a deeper awareness of latest developments in the industry and opportunities available, and to be able to apply this knowledge to a client β s advantage. other core competencies that need
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it will be impractical to implement. this has led to the consideration of a dual or bifurcated approach to capital that parallels our approach to supervision. such an approach would recognize the potential tension between the complexity and cost of the next version of the international capital standards and the more limited needs of smaller, more traditional banks. implementing a second, more streamlined capital adequacy standard for qualifying domestic institutions would seem to have merit. discussions on such an approach are only preliminary, but the arguments for continuing to more fully calibrate our supervisory and regulatory approaches to the nature and risk profiles of the institutions we supervise are compelling. capital standards and the supervisory process are two of the three key tools regulators use to get their job done. the third tool, disclosure, holds promise for yielding benefits to our financial system both domestically and globally. in past decades, the business of banking was fairly opaque but straightforward, with banking risks largely embedded in the credit judgments inherent in the loan portfolio. today, with the explosion in financial innovation that has created various derivative, securitization, insurance, and other structured products and the greater diversity in activities permitted by the gramm - leach - bliley act, not only are risks more opaque, but even when revealed, sometimes difficult to interpret. fortunately, the same technology and financial techniques that have created this added complexity can also be harnessed to produce more meaningful disclosures that allow markets to analyze risks and exert discipline on those that would take on imprudent levels of exposure. while not a panacea, improved disclosure can complement the supervisory process and regulatory capital, and obviate more intrusive investigations, holding out the promise of less supervisory intervention. recently, the federal reserve, in collaboration with the securities and exchange commission and the office of the comptroller of the currency, established a private - sector working group to review industry best practices and develop options for improving the public disclosure of financial information by large, complex banking and securities organizations. enhanced disclosures are also being pursued through regulatory reporting. a proposal to be released shortly will eliminate less meaningful items on the call report and request additional information on activities of growing significance for some institutions, including loan servicing, securitizations, venture capital, and insurance. more relevant regulatory disclosures should not only improve transparency but should also help our off - site monitoring and tailoring of our supervisory program. in closing then, we live in a fascinating period in american history, in which rapid
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, home - ownership rates among blacks rose from 43 % in 1995 to 48 % in the first quarter of 2000, suggesting that some progress has been made in access to credit for minorities. although breaking down the barriers that have produced disparities in income and wealth is not simple, promoting equal access to credit for sound borrowers is one step in the right direction. as i have said previously, discrimination is against the interests of business - yet business people too often practice it. to the extent that market participants discriminate, they erect barriers to the free flow of capital and labor to their most profitable employment, and the distribution of output is distorted. in the end, costs are higher, less real output is produced, and national wealth accumulation is slowed. by removing the non - economic distortions that arise as a result of discrimination, we can generate higher returns to both human and physical capital. banking and other lending organizations that develop expertise to tap, educate, and encourage underserved customers are likely to provide better and more informed access to credit and expand profit opportunities. in that regard, many banks are well equipped to tailor their services to individual customer circumstances in a personalized setting and to educate customers about various products and services that could help them achieve their financial goals. in today β s more complex world, the diversity of financial product choices facing consumers is truly astonishing. similarly, banks are now also facing much broader choices, especially when one considers the opportunities presented by the passage of the gramm - leach - bliley act. by modernizing our banking laws and making them more consistent with marketplace realities and the needs of consumers, the financial services industry will be able to grow and innovate with far fewer artificial constraints. how various financial service providers choose to take advantage of the act will be one of the more interesting dynamics as our financial system evolves in the years ahead. clearly, many franchises can succeed by continuing to focus on traditional banking. organizations that decide to depart from past successful strategies by expanding into new activities should do so only after careful consideration. as of mid - may, 270 domestic banking organizations and 17 foreign banking organizations had filed to become financial holding companies. of those, roughly three - quarters had less than one billion dollars in assets. i suspect that many of these organizations are not intending to immediately launch into full - scale brokerage, venture capital, or insurance activities, but rather are looking to keep their options open and retain flexibility should opportunities present themselves. if true, that
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information endowment β another way to define asymmetric information β are likely to lead to differing behaviour by different classes of agents. this will have an impact on price formation and will affect market exchange. the first example is known as adverse selection and derives from akerlof β s seminal contribution on the market for β lemons β ( 1970 ). for those of us who are not native english speakers : in colloquial english a lemon is a good of very low quality. what is going on in a market for β lemons β? according to akerlof the seller knows the intrinsic quality of the good or services supplied, while the buyer has no means of knowing it. the buyer will then be ready to pay a price reflecting an average quality. however, since the price of the high quality good or services lies above that average price the seller who has high quality items will withdraw from the market. therefore only a market for medium and low quality goods will emerge. consequently most buyers will be disappointed and the high quality suppliers will be frustrated. ultimately this might even lead to an extinction of the market for those goods and services the quality of which cannot be correctly assessed by buyers. to eliminate this breakdown of market exchange due to adverse selection quality screening is required. market utilities such as csds, icsds or ccps contribute to soften the problem of adverse selection. indeed, these utilities may monitor their participants by defining financial and technical criteria to be met permanently. this ensures a certain quality of the participants. for example i may refer to central counterparties who have long recognised the value - added of such a monitoring function. as you know, ccps replace numerous bilateral counterparty risks that market participants face through a single counterparty risk towards itself. this transfer of risk tends to be efficient since the ccp is best positioned to monitor the risks of all the participants of the system. another means to soften the problem of adverse selection is the provision of delivery - versus - payment mechanisms since they eliminate principal risk in securities settlement. all in all, market utilities that ensure a certain minimum quality of the participants and reduce principal risk contribute to limiting the damage of adverse selection. the second example based on asymmetric information is moral hazard. while adverse selection stands in the way of the closure of deals, moral hazard occurs after a contract was concluded. if these contracts are insufficiently structured counterparties have an incentive to adopt a behaviour which is undesirable to their partners. moral
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and settlement services. let me concentrate on the latter, i. e. on the provision of clearing and settlement services. there is no doubt that central securities depositories ( csds ), international central securities depositories ( icsds ) and central counterparties ( ccps ) are among the crucial building blocks of any wellorganised financial system. they facilitate the allocation of resources and their deployment within a financial system by reducing risk and transaction costs. by facilitating market exchange of complex financial services they can be taken as a means to achieve efficiency gains within a financial system. various mechanisms are provided to clear and settle securities transactions. common features of these mechanisms are, e. g., that they provide for a technical infrastructure to exchange payment and settlement instructions and that they rely on commonly agreed rules and processes. there is widespread agreement that these mechanisms have been fairly successful in reducing settlement risks and transaction costs. with respect to the business activities of market utilities i can mention, e. g., the dematerialization and immobilisation of securities or the increasingly pervasive application of the delivery - versus - payment principle. in essence the clearing and settlement function provided in a financial system contributes to the reduction of imperfections and thereby makes possible increasingly more integrated and efficient economic systems. this improvement, in turn, facilitates capital accumulation and technological innovation that underlie the implementation of investment projects. thereby a long - term economic growth process is supported and, correspondingly, welfare is improved. let me state the obvious with levine ( 1997 ) : β the development of financial markets and institutions is a critical and inextricable part of the growth process [ β¦ ] β. however, despite the tremendous efficiency gains obtained through the emergence of the financial system, the improvement process is far from being over. in reality there continue to remain some important imperfections, which have always been with us and which tend to re - emerge in a new shape whenever measures are taken to eliminate them. i would now like to discuss some of these imperfections and their implications for your industry. 2. some imperfections of the financial system among the imperfections that affect the smooth functioning of a financial system i shall focus on asymmetric information, on negative externalities and on limited competition. a first imperfection that typically impairs the smooth functioning of a financial system is asymmetric information ( mishkin, 1997 ). indeed, information may not be universally or commonly shared within the financial system. differences in
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##ary monetary policy, and greater regulatory flexibility β all of these are extraordinary factors that are not covered by the models. models, including mathematical models, have their uses. however, especially in highly uncertain times of economic upheaval, model results must be interpreted with caution. additional shocks followed. geopolitical tensions are impacting future global economic relations ; russia β s invasion of ukraine has necessitated a paradigm shift in terms of security and energy policy ; addressing climate change is an urgent concern. scenarios that were once considered β adverse β have now become a reality. inflation in germany, which stood at 6. 9 % last year and, most recently, 7. 6 % in april, remains considerably too high. [ 16 ] in the past year alone, interest rates have risen by around 300 basis points. for the sake of comparison, the calculation of the basel interest rate coefficient assumes an increase in interest rates of 200 basis points. in the short term, the german economy appears relatively robust. germany β s gdp is expected to record a slight increase of 0. 4 % in 2023. [ 17 ] the pandemic and the energy crisis have barely dented the financial situation of enterprises. this is true even of energyintensive sectors β thanks to an array of economic policy measures and, more recently, energy prices dropping back again. corporate profits rose significantly last year. during this period of unexpected shocks, the financial cycle continued to expand. the financial cycle differs from the business cycle : during the expansion phase, lending goes up and asset prices rise, risk appetite increases ; when it reaches the downward swing, this can hit the real economy hard. lending has risen sharply in recent years. loans to the private sector stood at around 82 % of gdp at the beginning of the pandemic, compared with 87 % today. [ 19 ] the stock of housing loans peaked at almost 42 % of gdp in 2020, although the pace of new lending has recently slackened significantly, in keeping with higher market interest rates. banks β capitalisation actually rose during this period. by recent counts, german banks have surplus capital of around β¬165 billion in cet1 [ 21 ] β that β s around β¬36 billion more than at the start of the pandemic. [ 22 ] with vulnerabilities having built up in the system at the same time, the federal financial supervisory authority ( bafin ) announced a package of measures at the start of 2022 that, from february 2023,
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change. we are facing grave dangers ahead and the rise in temperature must be limited to 1. 5 degrees celsius for us to even have a fighting chance. the financial sector is a massive consumer of energy and digitalisation can, to some extent, reduce the global carbon footprint. sustainability is attracting attention from all stakeholders and the time is now ripe to embrace sustainable principles. if you miss the sustainable bus, it will be at your own perils. at the level of the bank, we launched our climate change centre last year to speed up the transition to a greener financial system. we are fortunate that we are able to meet physically in mauritius due to the easing of travel restrictions. i seize this occasion to encourage the foreign participants to take some time out of their schedule to visit the island. with these words, i thank you for your attention. 5 / 5 bis - central bankers'speeches
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points to 7, 5 per cent on 8 june 2006 and by a further 50 basis points on 3 august 2006. however, future monetary policy decisions will depend on changes in the outlook for inflation and economic developments. monetary operations the bank uses open - market operations to provide and drain liquidity from the money market in order to maintain the liquidity requirement of banks at a level sufficient for the implementation of monetary policy in line with the stance determined by the mpc. deposits of banks at the bank in terms of the minimum statutory cash reserve requirement ( 2, 5 per cent of liabilities, as adjusted ) amounted to r28, 7 billion for the june / july maintenance period. as at the end of june 2006, total outstanding debentures on issue by the bank and longer - term reverse repurchase transactions amounted to r5, 4 billion and r2, 0 billion, respectively. the deposits of the corporation for public deposits with the bank, which amounted to r11, 1 billion at the same date, also contributed to the draining of excess liquidity. notes and coin in circulation also had a contractionary impact on liquidity, increasing from r49, 0 billion on 30 june 2005 to r53, 9 billion a year later. currency in circulation the daily average value of banknotes in circulation in the period 1 april 2005 to 31 march 2006 amounted to r46, 3 billion, while the average value of coin in circulation during the same period amounted to approximately r2, 7 billion. while banknotes in circulation increased by 10, 2 per cent over the previous corresponding period, coin in circulation increased by 9, 1 per cent. a seasonal peak for banknotes and coin in circulation of r57, 4 billion was reached on 23 december 2005. the demand for coin has shown a substantial increase in the past few months. this is particularly the case in respect of the demand for the 5c coin, which shows an increase of approximately 30 per cent, compared to the corresponding previous reporting period. the bank has co - operated with commercial banks in the development of a more efficient and effective integrated national cash management system. the improved system has the potential to limit the cash holdings of banks, thereby contributing to a reduction in the cost of cash to the public. gold and foreign exchange reserves the activities of the bank in the domestic foreign exchange market are aimed at managing domestic money - market liquidity conditions through foreign exchange swaps, servicing the foreign exchange requirements of clients and increasing foreign exchange reserves in a
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fund to give direction to developing countries in times of crises than to provide similar advice to advanced countries. notwithstanding the weaknesses highlighted and the clear need for improvements, the impression gained at the annual meetings earlier this week suggest that, with the right level of commitment from all stakeholders, the bwis may adequately reform in the period ahead and regain their relevance. where do we go from here? with the financial landscape around us under severe stress, we can rightly question, β is there light at the end of the tunnel? β given the changing landscape of the world economy and the failure of today β s multi - lateral institutions to provide us with a collective response to the crisis, an ambitious rethink of the global financial system is required. we need to go far beyond incremental changes of the global financial environment and our ambition in the reform of the global architecture of finance and economic policy making must match the gravity of the crisis we currently face, as well as the realities of the global economic environment. the recent financial turmoil has exposed the peripheral nature of the imf's functions in global finance. once the crisis struck forcefully, its role was unclear and peripheral. the fund needs to be strengthened in order to place it on the centre stage, unless we would wish it to become totally irrelevant. on the other hand the crisis presents the imf with an opportunity to revive itself. with the necessary expertise, its universal membership and the convening power it can play a vital role into the future, especially if it is able to transform its governance structures to meet the challenges of tomorrow β s world. other institutions such as the financial stability forum, the bank for international settlements and the g - 20 have also enhanced their claim on providing leadership in the global economic environment. the g - 7 has proved itself to be increasingly irrelevant in the changing economic environment of today. lessons to be learnt from the current crisis it is too early to draw lessons from the crisis that is yet to run its full course. however we must continue to debate the causes of the crisis and contribute to solutions to avoid a similar situation globally and at home. we need stronger institutions that should be lasting, so that the current problems would not recur quickly. however, as the australian prime minister recently said at the united nations : β the failures that we have seen in recent times do not lie in the institutions alone. the failures lie more in the poverty of our political will to animate these institutions to discharge of the purposes for which
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board, reducing - though not eliminating - the structural inequalities. challenges remain as we seek to restore the balance of demand and supply and bring inflation back to target. slowing economic growth will disproportionately affect our most vulnerable households. high inflation and high interest rates to combat inflation put an additional burden on our lowest - income households. i want to close out my opening remarks where i started. our commitment to shared prosperity in the economy starts with our commitment to equity, diversity and inclusion in our organizations. we need a diverse and inclusive workforce at the bank of canada to take better decisions. we need a work environment where people feel they can bring their whole selves to work so that they can do their best work. and to sustain the trust of canadians, we need to reflect the diversity of the canadians we serve. as part of the broader economics and finance community, we also have a role to play in fostering diversity and inclusion in this community. and there are issues to confront in our own field. economics is having its own # metoo reckoning. rather than ignore it, or evade it, i want to address it because it's important. so let me be clear. harassment of any kind can never be ignored, or excused, or brushed away. it goes against everything we stand for at the bank of canada, and everything i stand for as an economist who has spent my career working with women who do amazing research, make impressive policy and dedicate their lives to this field we share. they pursue their career, as we all do, but they do so while facing harassment that i have never had to face. i cannot speak for the entirety of economics or even of central banking, but i can speak for the bank of canada. we've built up trust - with canadians and with each other - and nothing would destroy that trust more quickly than if we stopped treating each other with respect. we have encouraged staff to report harassment when they see it. we want leaders to bring it forward when they hear about it. we can't be so self - assured as to think that harassment can't happen here. but i am confident that if it is happening, it won't be ignored. there's nothing more important to me as governor than making sure that our outstanding staff at the bank of canada have an exceptional work environment where they can all be the very best they can be. 4 / 5 bis - central bankers'speeches i want
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of our 6 september interest rate announcement, the risks around the basecase projection are judged to be a little greater than at the time of the july update. the main upside risk relates to the momentum in household spending and housing prices, while the main downside risk is that the u. s. economy could slow more sharply than expected, leading to lower canadian exports. the bank judges that the risks to its inflation projection are roughly balanced. on 17 october, we left our key policy rate unchanged at 4. 25 per cent. the current level is judged, at this time, to be consistent with achieving the inflation target over the medium term. we at the bank will continue to pay close attention to the evolution of risks, as well as to economic and financial developments in the canadian and global economies.
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or the continuation of the same contribution forever. second, we in europe share a large single market. it is a tremendous asset which belongs to us all, the 27. it is no coincidence that access to the single market lies at the heart of the brexit debate. we cannot prejudge the outcome of the future negotiations, but we can be sure of one consistency principle : access to the single market must continue to go hand - in - hand with strict acceptance of all its rules. there can be no cherry - picking or free - riding. and we must obviously preserve the single european trade policy, if we want to exist in the trade negotiations to come worldwide. third, we share a common social model ( slide 2 ) which combines high standards of public service and relatively low levels of inequality β much lower than in american society. and this has been achieved in a market economy. at a time when globalisation may leave many behind in advanced economies, page 4 sur 8 when the debate about inequalities is coming back to the forefront β and these are real challenges behind the populist wave β, now is not the moment to give up on our social model. but this ambition must be clear - sighted : in some countries like france and italy, the high cost of the model and its disappointing performance in terms of growth and employment calls for an acceleration in reforms in the right direction ( slide 3 ). several european countries, including germany and spain, are showing the way forward : they have succeeded in carrying out wide - reaching reforms that are compatible with our shared social model. progress has been made in all four key areas : enterprise, employment, education and expenditure reduction. and these reforms are delivering results today : in recent years, gdp and employment have grown much faster in the β reforming β countries, than in france or italy for instance. ii. beyond our existing assets, we in europe must put our joint energies into mastering our common destiny. europe needs all member states to play their part in the common effort. it needs france, as well as spain and its constant european commitment. for this to be a success, projects for strengthening europe have to be carefully selected and prioritized ; and we must not only talk about them, we must give ourselves the practical means to achieve concrete results. in a nutshell : β few, well, till the end β, or in spanish if i may, β poco, bien, hasta el final β. there are of
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of inflation, in other words to the risk of losing in value as a result of rising prices for goods and services. apart from this, however, central bank money is practically risk - free. 4 in switzerland, central bank money is created by the swiss national bank. whenever, for example, the snb purchases foreign currency or swiss franc denominated securities from a commercial bank, it credits the amount paid to the sight deposit account of the bank concerned in swiss francs. if the snb wants to reduce the amount of central bank money, also known as the monetary base, it can conduct transactions in the opposite direction. it then sells foreign currency or swiss franc denominated securities to banks and charges the corresponding amount to their sight deposit accounts. the snb is thus in a position to either increase or decrease the monetary base in accordance with its monetary policy goals. the breakdown of the monetary base into banknotes in circulation on the one hand and sight deposits held by banks at the snb on the other is determined by public demand for banknotes. if you, ladies and gentlemen, withdraw more money than usual before christmas to do your christmas shopping, the volume of banknotes in circulation increases, only to decrease again after christmas when the money taken in by the shops flows back to the snb via the commercial banks. banks can, through the snb, exchange banknotes against sight deposits and vice versa. they thus have access to both banknotes and a sight deposit account in switzerland, central bank money as defined by the snb comprises banknotes in circulation and the sight deposits held by domestic banks at the snb. the federal act on currency and payment instruments ( cpia ) requires unrestricted acceptance of swiss banknotes as payment, and unrestricted acceptance of sight deposits with the snb as payment by anyone holding an snb sight deposit account ( art. 3 cpia ). residual risks are currency reform, settlement disruption in the payment system, and the possibility of banknotes being lost or stolen. page 3 / 12 at the snb, while the public has access to banknotes only, since private individuals cannot hold an account with the snb. sight deposits are used by banks for cashless interbank payment transactions. payments between banks β or their customers β are effected via the swiss interbank clearing ( sic ) system and result in the reallocation of sight deposits across the participating banks β accounts at the snb. moreover, banks are obliged to fulf
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bis is the best counterpart in capacity building for central banks, especially for the national bank of cambodia. every year bis provides on - site training to our reserve managers and i hope the bis continue providing this kind of training and cooperation in the future. distinguishes guests, ladies and gentlemen, i believe that the selected topics for this workshop are crucial and match with the current global financial crisis. i hope this workshop will produce fruitful discussions and provide a platform for reserve managers to receive good lessons while exploring best practices in setting the policy framework for the investment and management of reserves. in addition, i believe that this bis workshop will also provide all of you the opportunity to discover angkor, to visit interesting places and to get to know about cambodian people and their culture. last but not least, let me wish you an active, productive and successful discussion. the national bank of cambodia is very pleased with the current cooperation with the bis. i wish you all good luck. please have a pleasant stay in our ancient capital city of siem reap, angkor. thank you!
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chea chanto : opening remarks at the bis advanced reserve management workshop opening remarks by h. e. chea chanto, governor of the national bank of cambodia, at the advanced reserve management workshop, siem reap, 21 april 2009. * * * - mr. eli remolona, chief representative, bis asian office, - mrs. miranda tam, deputy chief representative, bis asian office, - mr. jean - pierre matt, head of financial analysis of bis head office, - distinguished guests, ladies and gentlemen, good morning! today, i have the great pleasure and honor to be invited to deliver some opening remarks for the bis workshop on advanced reserve management. this is the first time that the bis organize such a workshop in cambodia and i hope there will be more opportunities to join together in the future. taking this opportunity, i would like to express my warmest welcome to the bis resource speakers from bis head office and bis asian office and central bank participants from the asia and pacific region to this workshop as well as to cambodia. i sincerely appreciate the bis for their selection of the ancient capital city of angkor in siem reap province as the site for this workshop. distinguished guests, ladies and gentlemen, let me share with you a brief outline of cambodia β s economic development in recent years. cambodia is considered a small open economy, one which realized average gdp growth of about 10 % from 2005 to 2008 and gradually increased the level of international reserves to a level which can ensure 3. 8 months of imports. the financial system in cambodia, which is dominated by the banking sector, is considered strong. this is reflected in figures from the end of 2007 which show that total banking assets increased by 53. 6 %, bank deposits rose by 59. 4 %, and loans to the private sector went up by 52 %. however, with the global financial crisis that has affected most of the continents, cambodia β s total banking assets declined a bit in the last quarter of 2008 and the economy is expected to have very little growth in 2009. the national bank of cambodia still manages its reserves in a conservative manner, with principle strategies prioritized by : first, safety ; second, liquidity ; and third, returns. this conservative strategy is appropriate in light of the current financial turmoil. but with gradual increases of reserves, one β s portfolio should be well diversified and reserve managers should have a solid risk management and analytical skills. therefore, capacity building needs to be continuously strengthened.
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##ed population. the bank must improve further its strategies for nurturing the existing customer base as well as for attracting new ones and growing its book. customers must be kept satisfied with the quality of service being offered. i have no doubt that you will succeed in this endeavour. in conclusion, i would like to challenge the banking institutions in malawi to come up with strategies and plans, particularly in the area of access to credit by rural communities and other banking services by the malawian entrepreneurs so that jointly we all play our part in the process of transforming the malawi economy. the central bank as a stakeholder will continue to support efforts by banks in improving their service delivery systems for the betterment of all stakeholders. director mataya the managing director, mr joseph mwanamvekha customers of msb here present management and staff of msb distinguished guests ladies and gentlemen it is now my singular honour and privilege to declare msb dedza agency officially opened. i thank you all for your attention and may god bless you.
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manage themselves appropriately. likewise, the new framework is providing supervisors with an opportunity to enhance their ability to identify and respond to sources of banking risk, and to share this knowledge within the supervisory community. the basel committee was established precisely to maintain an open and constructive dialogue among banking supervisors. this spirit of communication will be more crucial than ever as the new framework is adopted across national jurisdictions. to help ensure that market competition is driven by each bank β s strengths, rather than by differences in each country β s regulatory capital rules, the committee established the accord implementation group. this group, comprised of senior line supervisors, is responsible for promoting the consistency and quality of implementation of the new accord. further, the group has been established to facilitate the exchange of information among national supervisors about bank and supervisory practices. this is something that i view as being critical to successful implementation of the new accord. ( b ) challenges for banks within the united states, supervisors have long considered how the new framework will apply to our banks. recently, our efforts have focused on the preparations and challenges ahead for some of the largest u. s. banks as they look towards implementing the irb approach to credit risk. among other important topics, the dialogue has focused on application of the minimum standards for entry and ongoing use of the irb approach. our sense from this interaction is that banks have both the desire and commitment to continue to develop their internal ratings systems in a manner consistent with the ideals embodied in the irb framework. the discussions with the industry have also highlighted a number of areas where banks may need to expand their efforts in preparing for implementation. these include the design and structure of rating systems ; the availability and quality of credit data ; and the role of corporate governance in evaluating bank assessments. i will touch on each of these in turn. rating system design the design of a risk rating system is key to its effectiveness. the basel committee believes that banks β internal rating systems should accurately and consistently differentiate between degrees of risk. the minimum irb standards in this area build on leading risk management practices observed in the industry. for example, many organizations either already have, or are in the process of developing, a ratings system that captures both the risk of borrower default, as well as transaction - specific factors that shed light on the amount that could be collected if things were to go poorly. in other words, these banks β systems are generally oriented to capturing the essential components in estimating credit risk. as the methods for measuring credit risk improve
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and staff of the mauritius civil service mutual aid association ltd. thank you for your attention. 2 / 2 bis central bankers'speeches
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tended to be the major driver of changes in household wealth. a rise in household wealth in turn results in a rise in household consumption ; with households feeling richer, they tend to spend more on consumption items. given that private consumption accounts for nearly 60 per cent of expenditure on gdp, it can be seen why we take such an interest in the β wealth effect β, and what house prices are doing. over the past three years, these linkages have been of particular interest to monetary policy. the upsurge in housing activity and construction has added directly to domestic inflation pressures. residential construction costs, as measured by the consumers price index, have increased by nearly 20 per cent, contributing significantly to overall inflation. we β ve also witnessed very strong household spending over this period which appears to have been reinforced by the rapid increase in house prices. whilst i would not want to overplay the significance of housing and construction in our policy decisions - stronger inflation pressures have been evident in many other parts of the domestic economy as well - we have clearly had to take the strong housing sector into account when determining policy settings. the recent period of strength in the residential property market is hardly unprecedented in new zealand. the early 1970s, the early and late 1980s, and the mid 1990s were also periods marked by intense activity in the housing market and strong house price inflation. there were some unique features to each of those cycles, but also some common drivers. each coincided with a substantial acceleration in population growth to levels well above normal, due mainly to a spurt of high net immigration - more arrivals and fewer departures. each cycle was also reinforced by some other stimulus, such as a lift in export prices received from abroad, fuelling household incomes. a sharp lift in net immigration and the sharp improvement in export returns from about 2000 through to 2002 were also catalysts for the recent upturn, although there are now indications that the migration pressures on housing are easing. figure 7 shows estimates of the annual demand for dwellings from migrants. these estimates, which are indicative only, were derived by assuming that the number of persons per household would be the same for migrants as for the rest of the population. as figure 7 shows, the demand from short term visitors has been negative over the last year, as the number of visitors leaving the country has outnumbered those arriving. this has largely reflected a very sharp fall in the number of short - term overseas students in the country over the past 18 months ( i. e. those here for periods of
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susan schmidt bies : a supervisory perspective on enterprise risk management remarks by ms susan schmidt bies, member of the board of governors of the us federal reserve system, at the american bankers association annual convention, phoenix, arizona, 17 october 2006. * * * good morning. it is always an honor to address the american bankers association. having been a banker, i find it particularly interesting to address this group in my current role as supervisor and central banker. i hope my past private sector experience helps provide a useful perspective on our current regulatory and supervisory policies. today i would like to focus on the topic of enterprise risk management. i am quite pleased to see more and more sessions at conferences devoted to risk management, analyzing its different facets and exploring ways to tailor it to specific institutions and situations. indeed, there is a growing understanding that good risk management should be an integral part of running any type of business. a key theme i would like to highlight today is that all banking institutions should seek ways to improve risk management, but that the methods to improve risk management should depend on the size and sophistication of the institution. in my remarks i will look at some recent cases in which we believe bankers and supervisors have learned some key lessons about enterprise risk management, or erm. these lessons demonstrate how good risk management increases business efficiency and profitability. but before i start discussing particular examples, i want to take a step back and give you my thoughts on erm generally. general thoughts on enterprise risk management the financial services industry continues to evolve to meet the challenges posed by emerging technologies and business processes, new financial instruments, the growing scale and scope of financial institutions, and changing regulatory frameworks. a successful erm process can help an organization meet many of these challenges by providing a framework for managers to explicitly consider how risk exposures are changing, determine the amount of risk they are willing to accept, and ensure they have the appropriate risk mitigants and controls in place to limit risk to targeted levels. of course, erm is a fairly broad topic that can mean different things to different people. for our purposes here today, i will define erm as a process that enables management to effectively deal with uncertainty and associated risk and opportunity, enhancing the capacity to build stakeholder value. borrowing from erm literature, i would say that erm includes β’ aligning the entity's risk appetite and strategies, β’ enhancing the rigor of the entity's risk - response decisions, β’ reducing
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janet l yellen : the bureau of labor statistics β a trusted us agency ( brief remarks ) speech by ms janet l yellen, chair of the board of governors of the federal reserve system, at the induction of carroll d. wright and janet l. norwood into the department of labor β s hall of honor, us department of labor, washington dc, 20 october 2015. * * * we are here to honor two exceptional public servants and the great institution they helped build. let β s consider for a moment why the bureau of labor statistics ( bls ) has succeeded and how carroll wright and janet norwood contributed to that success. in 1884, a time of great strife and mistrust between management and labor, the federal government created an agency with the mission of providing detailed and objective information on american workers. that task fell to carroll wright, who had won the confidence of workers and management as chief of the massachusetts bureau of labor statistics in the years after that state became the first to legalize labor unions. at that point, before the united states itself had recognized such rights and before the federal government could agree on labor standards, the public needed an unimpeachable assessment of the conditions faced by workers. under carroll wright, what was then called the bureau of labor investigated major labor disputes and issued reports that shaped public opinion and were the basis for executive action and legislation. he initiated the collection of data on hours, wages, and prices and was responsible for many important advances that successively improved the reliability of these data. the respect for the thoroughness and objectivity of the research that wright oversaw led to the dismantling of damaging trade barriers in the 1890s and later raised public awareness about the deplorable conditions faced by women in the workplace. in the u. s. constitution, there is not a requirement that government statistics be accurate and free of political influence or bias. carroll wright recognized that this simple, powerful idea could help build public confidence for the government β s effort to reduce conflicts between management and workers and move our nation forward. he and others are responsible for a fundamental feature of our democracy that is now often taken for granted β the public β s expectation and insistence that information provided by the government can be trusted. to carroll wright β s descendants, one of whom is with us today, thank you, on his behalf, for this valuable contribution. this legacy lives on in the agency carroll wright founded, and few of his successors did as much to advance this principle as janet
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for the financing of consumption and investment. thirdly, the deleveraging process to reduce the absurd excessive gearing ratios of some mega - sized financial institutions can only be accomplished by a reduction in world liquidity. taking account of the magnitude of the problem of over - leveraging as evidenced by the balance sheet information recently released for ltcm, this can become a major constraint on the availability of new funds in the global financial market over the next year. against this background, the world can only extricate itself from this complex problem by a coordinated effort applied from three different levels : firstly, many macroeconomic deficiencies were exposed in a number of countries that in the end suffered most from the global financial crisis. it is dangerous to generalise the shortcomings as they would obviously differ from country to country and would therefore also require specialised treatment suitable to the underlying situation in each one of the affected economies. a number of countries such as thailand, korea and the philippines have already addressed their problems with appropriate adjustment programmes, and are beginning to reap benefits from often painful corrective measures. these adjustments provide for more disclosure and transparency, enhanced financial regulation and supervision, recapitalising of banking institutions, more restrictive monetary and fiscal policies, exchange rate adjustments and improved governance in macroeconomic management in general. secondly, all the criticism against the multinational institutions, and particularly against the imf, is not without foundation. these institutions did not keep up with the accelerating process of financial globalisation in recent years, and with the rapid integration of world financial markets. economic policy models that may have been appropriate in the old system where central banks and governments could still exert strong influences on the direction of major financial aggregates such as interest and exchange rates and could effectively control changes in the money supply and in bank credit extension cannot be applied without adjustment in the new world where market forces now dominate the scene. some changes in the global financial system have become necessary and urgent. these institutions are now concentrating on increasing their resources, e. g. imf quotas, on improving their surveillance functions and on revising the β architecture β of their existing infrastructural frameworks. thirdly, after the ltcm affair, there is an urgent need for multinational banking and other financial institutions to revise their own internal risk control models. the action taken by malaysia recently to reintroduce exchange controls on international capital movements and the de facto default by russia in its inability to redeem its public debt
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global authorities themselves did with their control and surveillance systems. the approach now should not be for the markets to be stopped in their progress, but rather for the authorities to catch up. private sector financial market operators, including multinational banking institutions, hedge funds and institutional fund managers, must in their own interest reconsider and review their modus operandi in the markets. in particular, risk management models must provide for the volatile global financial environment in which they now operate. many encouraging signs emerged from the discussion in washington d. c. to indicate that progress is now being made at all three levels, and that greater stability is gradually returning to the world financial system. south africa, like many other countries in a similar situation, is watching these signs of hope with great interest.
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of electricity prices across different regions of sweden. note that there is a big difference between long - term investments that improve the functioning of the economy and strengthen supply side, which dampens inflation, and discretionary fiscal policy that can temporarily support households and businesses but risks increasing inflation. 2 drama thirty years ago we are living in dramatic times : a recent pandemic, war in ukraine and inflation that has risen sharply around the world. one similarity between then and now is the major geopolitical drama. then, there were revolutionary events such as the reunification of germany in october 1990, the kuwait war, the wars in former yugoslavia which started in 1991, and the dissolution of the soviet union in december of the same year. the political events made their mark on economic developments. i have often thought of the 1990s crisis as a domestic financial crisis. however, it is important to remember that it was a series of international events, combined with weak domestic economic policy frameworks, that made the crisis deep and prolonged. let me briefly give some background. 5 the german reunification, which created a local german boom and inflation that caused the bundesbank to raise its policy rate, had a particularly strong international impact. this attracted large amounts of capital to germany as investors in other countries sought the high return on the german capital market. this in turn led to an increase in tensions within the european exchange rate mechanism, the erm. other erm countries were forced to raise their policy rates to maintain the exchange rate parities, despite the fact that this worsened the already weak economic activity there. in sweden we had not created systems that could withstand the pressure this entailed for the swedish economy. in the mid - 1980s, sweden had begun to phase out the outdated and inefficient regulation system for credit markets. deregulation was perceived at that time more as a technical measure that was structurally necessary, but the effects on the macroeconomy came to be much greater than most policymakers back then had anticipated. neither lenders nor borrowers were used to managing the risks in a deregulated environment and lending grew too strongly. the fact that currency regulation was still in place meant that swedish investors were largely dependent on the domestic asset markets, where prices were soaring. in addition, the tax rules meant that the impact of interest expenses was reduced, which would change with the tax reform in 1990 - 91. moreover, there was a strong domestic inflation trend with price and wage spirals, which had
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- year government bond yields. sources : macrobond financial and the swedish national debt office. the overall picture is that the reforms implemented have benefited sweden well. both companies and households have benefited greatly. the economy has functioned better and prosperity has increased. let me highlight three lessons from the crisis and subsequent reforms : first, well - functioning frameworks make crisis management easier. sweden was well equipped to deal with the economic consequences of both the financial crisis and the pandemic. both fiscal policy and monetary policy could contribute to counteracting the economic slowdown and help the recovery in the swedish economy on these occasions. sweden therefore managed the economic effects of both the financial crisis and the pandemic better than many other countries in the western world. second, one must be careful about declaring that things will look a certain way for all time, even if that has been the case for a while. too much consensus on the possibilities of the fixed exchange rate thirty years ago meant that it took too long to embark on a more favourable economic path. more recently, we have seen that inflation was not β dead β as some commentators argued not very long ago, and a monetary policy with low interest rates and bond purchases was not something that lasted forever ( β low for long β and β qe infinity β ). third, reforms are painful in the short term, but often produce faster and greater results than expected. after the reforms were introduced, the swedish economy quickly turned upwards and prosperity increased more than expected. at the same time, it is clear that not everything has developed for the better. vulnerabilities have been built up that can make policy tightening painful ; high private debt, a housing shortage, a divided labour market and lack of investment. 8 these are structural problems that make the swedish economy vulnerable. i will talk about this in more detail soon. but when we think about our frameworks and their future, we also need to bear in mind, as i said earlier, that the swedish and global economies have changed since the 1990s. the swedish and global economies are different from thirty years ago the first thing i want to highlight is globalisation over the last few decades. the primary manifestation of globalisation is the entrance of china into the global economy. this has meant that the working population in the world has increased significantly, as have goods and services originating outside europe and the united states. china's entrance has also meant an increase in the global supply, which has probably dampened consumer prices and
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we lived for a long time - rather longer than the core emu countries - under the impression that better economic growth and lower unemployment could be achieved merely by allowing inflation to be slightly higher. this led to repeated devaluations and to much poorer economic growth. sweden fell behind the other eu countries in terms of gdp per capita and purchasing power. there was a break in this policy at the beginning of the 1990s, in connection with the crisis during that period. importing the stability - oriented policy that had long been conducted in the emu's core countries helped to create better conditions for future growth. the policy model we now follow comes originally from germany. during the entire post - war period they have endeavoured, to a great extent successfully, to maintain price stability. the task of achieving this has fallen to the german central bank - the bundesbank - which has operated independently, at arm's length from party politics. the bundesbank model is now copied by a number of industrial nations, which have given their central banks a large degree of independence and the task of aiming for price stability. this policy is also reflected in the maastricht treaty and in the riksbank legislation. my colleagues in the major industrial nations also try - as long as they are sure that inflation is not about to deviate from the desired level to take account of economic activity and unemployment. there are thus considerable similarities and this applies not only in europe, but also in a comparison with, for instance, the us, although the stipulated targets vary, sometimes for historical reasons. in this sense we are all the children of the bundesbank! within the central bank world the methods of working have also become more similar in recent years. although not all industrial nations with a floating exchange rate say that they use inflation targeting, they actually do so in some form. all of them apply a forward - looking perspective ; they produce forecasts and try to adapt interest rates in good time to ensure that inflation will be in line with a target that is formulated with varying precision. the ecb now says that inflation should be below, but close to, 2 per cent, which does not differ greatly from our symmetrical 2 per cent target, given the prevailing error margins. in addition, we usually say that we focus on inflation 1 - 2 years ahead, while the ecb says it applies a medium - term perspective. there is no great difference here, either. when it comes to communication and accountability,
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continues to be required, and i therefore call on all jurisdictions to intensify their commitment to achieving greater alignment. for its part, the central bank of bahrain will continue to provide its own strong support to initiatives aimed at narrowing these differences. with respect to accounting standards, the policies set by aaoifi, the accounting and auditing organisation for islamic financial institutions, provide a solid framework for islamic financial institutions. bahrain is one of the few jurisdictions to have made its standards mandatory, although others use them as guidelines. further promulgation of these standards would help increase consistency in accounting and sharia standards. similarly, in the field of financial regulation, we support the work of the islamic financial services board in developing various prudential standards, and would encourage other jurisdictions to also commit to implementing these standards over time. and finally, the third critical pillar under this heading is that of developing standard contract designs and associated documentation. progress here will help address the concerns sometimes expressed about the impact of different sharia rulings on the structuring of instruments, and the lack of certain types of instruments. it will also be instrumental in encouraging more liquid islamic capital markets. this critical third pillar, of course, is in many ways why we are here today, and i should like to pay tribute to the sterling efforts now under way within the industry, with the leadership of the iifm, to tackle these issues. i am now hopeful that real progress in this area is now within our grasp. you will hear during this conference updates on the initiatives now underway, in conjunction with the international capital market association and the international swaps and derivatives association, to develop sharia compliant hedging instruments, as well as standardized repo and commodity murabaha contracts. these will be important breakthroughs for the industry, and we very much look forward to their realization later this year. these initiatives have gained good support from the industry, but i would also call on regulators to help support these initiatives : we too can also play an important role in bringing about greater alignment, by encouraging the use of standardized contracts and documentation, where appropriate. on this positive note, i should like wish you a productive conference, and to thank you for your kind attention.
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to return to the old regime and introduce currency controls, but who would want to return to such an arrangement? exchange rate volatility is best prevented with economic policies which promote economic stability, but this does not only depend on the central bank. it is essential to take a long - term perspective. however, it should be noted that since september last year the central bank has been regularly purchasing currency in the foreign exchange market in order to boost its external reserve. the bank β s purchases of currency have amounted to more than 13 b. kr. since that time, and have undoubtedly weighed somewhat against the appreciation of the krona in the short run, although the long - term effect is negligible, if any at all. the central bank β s main monetary instrument is the interest rate on its repo agreements with credit institutions. in response to anticipated overheating of the economy the central bank began to raise its interest rates as early as 1997 and raised them rapidly in 1999 and 2000. in the beginning of 2001 the policy rate was up to 11. 4 %. since then the central bank has lowered its policy rate 13 times and it now stands at 5. 3 %. admittedly this is a higher level than among neighbouring countries such as the euro region, which have to tackle the problems of persistent economic weakness and high unemployment. the outlook is also bleak, for example in germany, judging from reports in the last few days. the european central bank has reviewed its growth forecast for the euro region as a whole and now expects 1 % gdp growth. according to this, growth will be zero in germany, because it will be higher in various peripheral regions of europe. thus the economic policy tasks that need to be tackled in iceland and the euro region have been different, and still are at the moment. on the other hand, central bank interest rates in norway are 5. 5 % to cite a close industrialised neighbour. the central bank β s policy rate is now 2ΒΎ % in real terms, which is somewhat below the current assessment of the equilibrium interest rate. the central bank β s interest rates therefore act as a stimulus on the economy, being at their lowest level in real terms since spring 1996. it should also be borne in mind that interest rate changes affect demand and inflation with a considerable lag. thus the impact of the extensive interest rate cuts in recent months is still being felt. the credit institutions β required reserve with the central bank has been another of its monetary instruments,
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however. there are no clear signs of a turnaround in the labour market and seasonally adjusted unemployment has still not decreased. leading indicators such as credit growth, business surveys of labour demand, and growing turnover and imports nonetheless strongly suggest that demand will rise in the near future. boosted by increased quotas during the coming fishing year, more public sector construction projects and aluminium industry investments, a reasonable level of output growth can be expected this year. however, since the growth rate is below estimated potential, the slack in the economy will increase slightly compared with 2002. the growth rate in 2004 is expected to exceed estimated potential at 3Β½ %, meaning that the output gap could turn positive next year. inflation will nonetheless remain below the central bank β s target until the final quarter of 2004, according to the forecast. this is explained by the low current rate of inflation and excess output potential. two years ahead, inflation is forecast to creep above the target. on the whole the future looks fairly bright, but as always we should not allow the celebrations to get out of hand.
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effects of this here too. even so, our interest rates did not fall as far as they did elsewhere due the combination of the resources boom, our relatively strong economy and higher levels of investment in australia. this year, the pandemic has brought another major shock, with investment intentions falling further. as a result, global interest rates and the return to savers have also declined. the gravitational pull of this on our own interest rates has been very strong. the rba has responded to this, with the policy rate now essentially zero in australia, as it is in many other countries. if we had sought to ignore this gravitational pull, there would have been obvious implications for our exchange rate and our economy. if our interest rates were higher than in the major countries there would be stronger inflows into australian dollar assets and this would put upward pressure on our exchange rate. in turn, this would make it harder to make the needed progress on jobs. over the medium term, i do expect to see a time when australia's strong economic conditions once again justify higher interest rates. but today, during a global pandemic when a lot of people have lost their jobs and many businesses are struggling, is not the time for that. the fourth and final change on the monetary front is the return to a world in which quantities, not just prices, matter. over recent decades, monetary policy has been about the price of money, or the short - term interest rate. little attention was paid to the quantity of money. this has now changed, with the rba now undertaking qe, or quantitative easing, as many other central banks are also doing. quantities and prices are obviously connected, so qe works partly through affecting the price of money, including long - term risk - free interest rates. but there are other effects too. when the central bank increases the quantity of money and buys assets, liquidity in the financial system is increased and investors in the private sector need to purchase other assets with the proceeds of the bonds they sell to the central bank. these portfolio adjustments can affect the price of other assets and international capital flows, as well as the exchange rate. we are still learning about how strong and durable these transmission mechanisms are, and we will learn more over coming months as we implement our own $ 100 billion qe program. to conclude, 2020 has been a year of great change and disruption. we are all talking about issues that few of us even contemplated at the start of the
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since 1916, when many australians left our shores to fight in the first world war. graph 3 population growth % % projection - 2 - 2 sources : abs ; australian treasury ; rba the fast population growth of recent decades has been a major factor shaping our economy. it has underpinned our relatively fast growth in gdp compared with other advanced economies. it also slowed the ageing of the population, given that the new arrivals have been fairly young. the large number of students coming to australia has also boosted our education sector. and the effects of fast population growth have also been felt in our housing market and in pressure on some of our infrastructure. so the effects have been widespread. looking to the future, it remains hard to predict when the borders will open again and when they do, what the rate of new arrivals will be. if population growth is to be noticeably slower in a post - covid world, the trajectory for our economy will look different too. a changed property market a third area where the pandemic is having a marked effect is on our property market. it is a complex picture here, with the market simultaneously adjusting to : a recession ; lower population growth ; record low interest rates ; substantial government incentives to support residential construction ; and changes to the way that people work, shop and live. so there are a lot of moving pieces at present and the effects are very uneven across different types of property and across the country. the effects of the pandemic are most obvious in the market for retail properties in our cbds, where vacancy rates have increased sharply ( graph 4 ). not surprisingly, rents and the capital values of these properties have both fallen. there has also been an impact on the cbd office market, as people work from home. the national office vacancy rate has increased sharply this year and further increases are expected ( graph 5 ). but even here, there is considerable variation across our cities, with the biggest increase in cbd office vacancies in sydney and melbourne. in contrast, the markets for industrial property have been stronger, with increased demand for warehousing and distribution facilities as people increasingly shop online. graph 4 retail vacancy rates * by property type % % cbd retail 10. 0 10. 0 7. 5 7. 5 5. 0 5. 0 regional * * 2. 5 2. 5 0. 0 * * * vacancy rates for specialty stores centres anchored by department stores source : jll research 0. 0 graph 5 office vacancy rate
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years fallen somewhat below the target. the implication is that monetary policy has been tighter β interest rates have been higher β than was necessary, which, they say, in turn at least helps to explain the behaviour of the exchange rate. i have genuine sympathy with their concerns, and i very much admire the huge efforts that many of the adversely affected businesses have made to overcome the disadvantage coming from the strong exchange rate. if it's any comfort, i can assure you, that the resulting imbalance within the economy has been a persistent pre - occupation also for us on the mpc. we necessarily, of course, take account of the exchange rate in trying to predict the future course of the economy. its strength against the euro has been a factor which has dampened both external demand and the rate of inflation, so that interest rates have certainly been lower than they would have been if the exchange rate had been weaker. it is nevertheless true that, in common with most other analysts, we have not fully anticipated the persistence of euro weakness. we don't of course have a crystal ball β but even if we had, it is important to recognise that the link between relative interest rates and exchange rates is much more complicated β and indeed more unpredictable β than is often suggested. our own exchange rate against the euro today, for example, is stronger than it was before our reductions in interest rates this year ; and the dollar, too, is substantially stronger against the euro than it was before the much larger cuts in us interest rates. so, in setting interest rates, we can β and do β make allowance in our projections for what has happened, and, on a best guess, for what is likely to happen, to the exchange rate, and that may cause the exchange rate to soften or it may cause domestic demand growth to strengthen, thereby offsetting the exchange rate's dampening effect on the economy. but what we cannot do β any more than the ecb β is to target the exchange rate, without putting the stability of the economy as a whole at risk of re - emerging inflation. that would not be in the interests even of the internationally - exposed sectors of the economy except possibly in the short term. they operate in the same labour market as more domestically - oriented businesses ; and what matters to them is the real, rather than the nominal exchange rate, and it is not at all clear how that would be affected. mr chairman, given the uncertainties, i am reluctant to
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abrupt retrenchment by consumers, and a significant shortfall on our inflation target, further ahead - would we be taking, and should we take, by cutting interest rates further now, to sustain consumer demand at the expense of a further build up of household debt and continuing increases in house prices, in order to maintain the growth of the overall economy? these are all difficult questions of degree. but you can be sure that my colleagues on the mpc will continue to monitor both the global and the domestic situation with their usual vigilance - and with an open mind. there β s no doubt that these are challenging times for all of us. but that should not obscure the fact that in terms of the overall economy - including here in the north west, things are better than they β ve been in a long while. and i am reasonably confident that we will find a way through the macro - economic, demand management, challenges. in the meantime there is a great deal that you can do - and are doing - yourselves, here in the north west, under the leadership of the nwda, in partnership with the other public authorities, the universities, and the private business sector, to identify - on the basis of your local knowledge - the particular obstacles to, and the particular opportunities for, creating a more positive and flexible supply - side environment for the future. in thanking you, bryan, once again for joining with us in hosting this dinner this evening, i wish you all possible success.
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, it is partly because we have undergone an adjustment from a high - inflation to a low - inflation regime, which affected policy in large measure during the first of those three episodes, and partly because inflation on different occasions has been depressed by supply factors that neither we nor others have been able to predict. allow me to conclude the retrospective part of this speech by underlining that i value an open, lively debate on monetary policy. i have previously pointed out before the committee that we would be happy to come here more often and that we are open to other forms of discussion than this one. if the committee β s members have ideas to improve the material that we present, we would be interested in hearing them. the riksbank is also considering initiating an annual forum for monetary policy debate, where our assessments and policy can be discussed against the background of regular independent evaluations of the forecasts that we β and other participants in the general debate β have produced. the current assessment cyclical upswing continuing with that i shall now look forward and briefly discuss the assessment of economic and inflation prospects in our latest inflation report and the decision we took yesterday regarding the repo rate. as usual i shall begin with a brief look at the international situation. economic growth abroad has remained high. there are many indications that international economic activity will continue to strengthen in the period ahead and that resource utilisation will gradually pick up. high productivity growth and weak resource utilisation have kept down cost developments in a number of industrialised countries. coupled with the increased integration of low - cost countries into world trade this has contributed to low global inflationary pressures. in the period ahead, price pressures are expected to remain modest even though they will increase as economic conditions improve and there is a reduction in spare production capacity. that means that market interest rates are also anticipated to rise from today β s unusually low levels. there are positive signals emanating from the us economy while the euro area, and notably germany, has seen somewhat weaker growth than expected. ( figure 6. ) overall, growth in sweden β s export markets is forecast to be largely the same as in the previous inflation report. the swedish economic recovery began in 2003 and it is predicted to continue during the forecast period. in 2004 robust international demand for swedish exports contributed to the high economic growth. manufacturing activity now appears to be entering a slightly slower phase. indicators and data point to a continuation of firm, healthy growth, albeit at a somewhat lower rate than in early 2004
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4. 5 4. 0 4. 0 3. 5 3. 5 3. 0 3. 0 2. 5 2. 0 1. 5 1. 0 jan - 02 2. 5 m arch 2002 august 2002 m arch 2003 august 2003 nier's repo rate repo rate 2. 0 1. 5 1. 0 jul - 02 jan - 03 jul - 03 jan - 04 jul - 04 sources : nier and the riksbank 5. und1x and cpi annual percentage change und1x cpi - 1 - 1 - 2 - 2 sources : statistics sweden and the riksbank 6. gdp for the united states and euro area annual percentage change gdp, united states - 1 - 1 forecast united states - 2 - 2 gdp, euro area - 3 forecast euro area - 3 sources. eurostat, the us department of commerce and the riksbank 7. und1x : outcome and forecast in the main scenario annual percentage change 4. 0 4. 0 und1x inflation report 2005 : 1 inflation report 2004 : 4 3. 5 3. 0 3. 5 3. 0 2. 5 2. 5 2. 0 2. 0 1. 5 1. 5 1. 0 1. 0 0. 5 0. 5 0. 0 0. 0 - 0. 5 - 0. 5 - 1. 0 - 1. 0 sources : statistics sweden and the riksbank table 1. gdp by expenditure annual percentage change gdp by expenditure private consumption government consumption gross fixed capital formation change in inventories exports imports gdp at market prices 1. 5 0. 8 1. 8 0. 3 2. 7 1. 2 3. 0 1. 4 3. 3 0. 6 - 1. 5 5. 1 8. 0 5. 8 4. 5 0. 2 4. 9 - 0. 3 10. 2 6. 7 0. 0 6. 6 7. 5 0. 0 6. 1 6. 6 0. 0 6. 0 6. 7 1. 5 3. 5 3. 2 3. 2 2. 8 sources : statistics sweden and the riksbank
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thomas m hoenig : monetary policy and shifting economic risks speech by mr thomas m hoenig, president of the federal reserve bank of kansas city, at the london school of economics, london, 30 march 2011. * * * introduction the past three year period has been a great challenge to policymakers worldwide, including central bankers. unprecedented steps have been taken to restore stability to the world economy and, just as importantly, to assure a sustained recovery. i certainly support these goals. while i argued for handling the largest financial institutions differently than was done, i supported the federal reserve β s massive liquidity injections designed to staunch the financial crisis. after all, central banks exist in part for just that purpose. however, when the crisis is past, it is incumbent upon central banks to return to another of their responsibilities : creating conditions for a sustained economic recovery that requires looking beyond shortterm goals to long - term consequences. for more than a year, i have advocated, not for a tight u. s. monetary policy, but for one that would begin unwinding those policies put in place during the crisis. in january 2010, as the recovery entered its third quarter, i expressed the view that the federal open market committee should modify its rate guarantee to the market. that is, while agreeing that policy should remain accommodative, i voted against promising β exceptionally low rates for an extended period. β as the recovery continued into the spring, i judged that the federal reserve should gradually shrink its enlarged balance sheet with minimal market disruption by disposing of mortgage - backed securities that were trading in the market at a premium. thus, i voted against replacing maturing mbss with similar or other securities. finally, in the fall, i questioned the long - term benefits of further easing monetary policy during a recovery β and i voted against qe2. today, my view has not changed. the fomc should gradually allow its $ 3 trillion balance sheet to shrink toward its pre - crisis level of $ 1 trillion. it should move the u. s. federal funds rate off of zero and toward 1 percent within a fairly short period of time. then, after evaluating the effects of those actions, it should be prepared to move the funds rate further toward a level that could be reasonably judged as closer to normal and sustainable. i recognize that these actions are not simple to implement. they would impact different economic sectors differently and to varying degrees. they involve tradeoffs in their effects
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gent sejko : albania's economic and financial developments in 2017 introductory statement by mr gent sejko, governor of the bank of albania, presenting the annual report 2017 to the parliamentary committee on economy and finance, tirana, 17 may 2018. * * * honourable speaker, honourable members of parliament the bank of albania views the accountability process as an essential element in its activity. this process complements our institutional independence, enhances transparency and reliability of the bank of albania and improves the effectiveness of our policies. therefore, i have the pleasure of presenting today the work and the achievements of the bank of albania in 2017. i would like to start my reporting with three key messages that reflect the conclusions of our analysis and have been the common thread in our public communications over the past year. first, the economy and financial system in albania marked progress during 2017. the positive development trend is illustrated by the acceleration of economic growth pace, upswing in employment and decline in unemployment, and the improvement of financial balance sheets of the public and private sectors. this progress has brought our economy closer to its potential and has strengthened short and medium - term factors that support economic growth. second, the activity of the bank of albania in the past year has been in line with our legal obligations and the recommendations of the parliament. our policy and instruments have had a positive, across - the - board contribution to our activities : promoting economic growth, through an accommodative monetary policy stance ; strengthening financial stability, through a prudent and proactive supervisory and regulatory policy ; fostering development and enhancing financial system efficiency, through continued financial education, and cooperation and joint initiatives with other foreign and domestic agencies and partners. third, i would like to draw the attention on the fact that, albeit positive development outlook, the albanian economy continues to face medium and long - term development challenges. identification and mitigation of economic and financial vulnerabilities, prevention of potential risks, and continuation of structural reforms to accelerate the growth pace, are among the main challenges we face. our duty, as policy makers, is to draft and implement action plans consistently and persistently, in order to duly address all the problems we face. let me now explain these issues in greater detail the issues, starting with a general overview of key economic and financial developments in the past year. 1. albanian economy and financial system in 2017 year 2017 marked progress for the albanian economy and financial system. according to instat data, the volume of
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that financial conditions in both core and periphery countries return to normal ; and that our monetary union becomes truly single again. it has two indispensable elements : a strong single supervisory mechanism ( ssm ) and a strong single resolution mechanism ( srm ). a strong system of common supervision is key to increase confidence in the health of euro area banks, which has been damaged due to supervisory failures in the past. progress is already well underway here, and the single supervisory mechanism will take over supervision one year after the legislation is adopted. but to ensure that common supervision is credible, it needs to be accompanied by a mechanism that can wind down failing banks without causing financial instability. this is why we need a single resolution mechanism. and it needs to have a strong european dimension to be able to deal effectively with large, cross - border banks. but banking union is not the only example of where closer union is needed. ultimately, the euro area needs to be drawing closer in all fields of economic policy. the recent call from the leaders of france and germany for closer economic union shows that this message is being understood. but it is important that form is fully aligned with substance. in my view, a true economic union means three things. first, it means every country ensuring its national economy functions properly, without external imbalances and high unemployment. we cannot have a strong economic union without strong national economies. second, it means transferring some sovereignty over decision - making to the european level β accepting decisions that are made for the good of the euro area as a whole, even if, at that moment in time, individual countries may disagree with them. third, it means applying the same rules to all members of monetary union. this is not only a condition of fairness between countries, but also a pre - condition for deeper integration. only if there is trust that each member will play by the rules can a union of mutual solidarity become possible. for these reasons, moving towards closer economic union also requires an equivalent deepening of political union. greater authority at the european level must be matched by greater democratic legitimacy. and here both the european parliament and national parliaments have a key role to play. as herman van rompuy has reminded us, national parliaments have become eu institutions. conclusion let me now conclude. the euro area has made much progress in recent years, but it still faces many challenges. solving them requires eu institutions and national governments to work in concert. the ecb has done as much as it
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fiscal side. the prudent fiscal policy that has been implemented since 2002 has made significant contributions to the disinflation process and the economic growth. the ambitious primary surplus targets are at the center of the improvement in fiscal policy. however, i should also underline the progress in institutional and legal framework, such as the introduction of the public fiscal management and control law, the public procurement law and the multi - year budgeting framework. three year inflation targets that are compatible with the three - year budgeting practice are also one of the good examples of coordination between fiscal and monetary policies. another pillar of better economic governance is financial stability. a stable and healthy financial system is the key to sustainable growth through allocating savings to the real sector in a country. law defines financial stability as the auxiliary objective of the central bank of turkey. establishment of the banking regulation and supervision agency, successful implementation of the banking sector restructuring program and the new banking law that brought the legal framework with best international practices were the milestones of legal and institutional reform in the financial sector. no need to say that the improved macroeconomic framework through successful monetary and fiscal policy implementations also contributed much to financial stability. last but not least, i should say that there is also an effective cooperation among the central bank of turkey, the banking regulation and supervision agency, the undersecretariat of treasury, the capital markets board and other public authorities and also with private sector representatives. the fourth and the final set of actions that has been undertaken towards better economic governance is structural reforms. turkey has achieved significant progress in this front, but today, i would like to put a special emphasis on the role of regulatory and supervisory institutions without getting into details. establishment and effective implementations of institutions such as the banking regulation and supervision agency, the turkish competition authority, the energy market regulatory authority, the telecommunications authority and many others have contributed to the development of a competitive, resilient and efficient economy in turkey. it is not surprising that manufacturing, retail, energy and financial sectors have attracted the interest from foreign investors in recent years, as witnessed by over 40 billion usd foreign direct investment in the last two years. the good corporate governance practices have also contributed to the overall economic governance in the country. as a result of the steps taken in the four categories that i have just mentioned, turkey has shown an impressive economic performance after 2001. the consumer price inflation declined to the single - digit territory. the gdp has continuously grown in the last 24 quarters.
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than a term rate, and doesn't incorporate a significant bank credit risk premium. we think that bbsw can continue to exist even if credit - based benchmarks, such as libor, are discontinued in other jurisdictions. for many financial products, it will still make sense to reference a credit - based benchmark that measures banks'short - term wholesale funding costs. this is particularly the case for products issued by banks, such as frns and corporate loans. the counterparties to these products would still need derivatives that reference bbsw so that they can hedge their interest rate exposures. in the event that libor was to be discontinued, with contracts transitioning to risk - free rates, there may be some corresponding migration away from bbsw towards the cash rate. this will depend on how international markets for products 4 / 5 bis central bankers'speeches such as derivatives and syndicated loans end up adapting in a post - libor world. the infrastructure is already in place for bbsw and the cash rate to coexist as the key interest rate benchmarks for the australian dollar. the ois market is linked to the cash rate and has been operating for almost 20 years. it already has good liquidity at the short end, and the infrastructure is there for longer term ois. a functioning derivatives market for trading the basis between the benchmarks is important for bbsw and the cash rate to smoothly coexist. such a basis swap market is also in place, allowing market participants to exchange the cash flows under these benchmarks. conclusion there are three main points i would like to leave you with concerning interest rate benchmarks. first, the longevity of libor cannot be assumed. you should be considering today what that might mean for any contracts you have that reference libor. please do not hope that if you wait long enough, all the problems will go away. users of libor should pay close attention to the work being undertaken by isda to establish more robust fall - back provisions on contracts. second, in australia, in contrast to other markets, the changes to enhance the longevity of bbsw are well advanced, and it has been possible to anchor the benchmark to a greater number of transactions. third, users should consider whether risk - free benchmarks are more appropriate for financial contracts than credit - based benchmarks. there is still a place for robust credit - based benchmarks in the financial infrastructure, and we expect that bbsw and the cash rate will be able to coexi
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create safe harbours for experimentation. a number of regulators have introduced regulatory sandboxes that have helped create a virtuous cycle of innovation and sensible regulation, while isolating risks. in malaysia, solutions tested in the bank β s regulatory sandbox enabled the bank to design regulatory safeguards that would allow the implementation of end - to - end electronic know - yourcustomer processes for the provision of remittance services. by dispensing with the need to conduct physical face - to - face verifications, this is expected to significantly expand access to remittance services for customers working and living in remote parts of malaysia, while effectively addressing money laundering and terrorist financing risks. bank negara malaysia also successfully collaborated with the world bank and the money services business industry in malaysia to pilot and adopt solutions that have expanded the reach and reduced the costs of formal remittances. second, policy life cycles will need to be managed more proactively, to allow for policies to be renewed when conditions change. while much is often said about policy stability, policies that fail to keep pace with conditions that are changing far more rapidly than we have experienced before, can be counterproductive at best, and at worst, create greater risks for the system. the sdgs are undeniably one of the most comprehensive attempts to capture the most important global challenges that we face. solutions to these challenges will invariably create new issues for policy makers to consider. this in turn will lead to shorter policy life cycles, and a need for faster policy responses to emerging issues. third, we need better remittance data. it is encouraging that efforts are being taken to ensure the availability of official global data sources on remittance flows. yet, challenges remain in ensuring that the data is both complete 4 / 5 bis central bankers'speeches and comparable. these challenges are compounded by an increasing need for data at a more granular and disaggregated level. for example, initiatives by the united nations capital development fund to survey remittance recipients in the mekong region helped develop a better understanding of relationships between gender and financial inclusion. yet such data is not available in many other countries. with the large and increasing size of intra - regional migration in this region, there are opportunities to collect and share remittance and migration data at the regional level to complement global datasets. this could be advanced through existing regional forums, including various forums at the asean level. without good data, we
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we cannot pretend that there are not very real concerns about the short - term outlook, it is still not unreasonable to think that the world economy will gradually work off the excesses of the boom and that we will in due course experience better conditions than we see just now. that remains the majority view of observers. some medium - term possibilities on the assumption, for the moment, that that view is right, it is worth asking what similarities or differences we might expect in the next half decade as compared with the preceding period of growth in the second half of the 1990s. here are some possibilities that occur to me. 1. overall, us growth will probably be more moderate than it was from 1995 to 2000, which was an exceptional period and contributed to some macroeconomic imbalances. whether that means global growth will also be lower than in the second half of the 1990s, or about the same but better balanced between major regions, is not yet clear. it could be hoped that we might see better growth in japan than we have seen in recent times. we could also hope for the same from europe. better balanced growth ordinarily would be a recipe for less variability in exchange rates and capital flows among the major countries, although such a conclusion would depend on currency alignments being about right to begin with. 2. non - japan east asia will once again be the world's fastest growth area ( in fact, that is already the case ). more specifically, china will continue to emerge as an increasingly big economy and will account for an increasing share of global trade. china has doubled its share of the world export market over the past decade. of course, china is not only an exporter, but an importer as well, which creates opportunities for other nations'firms. china also has some structural challenges, which are still in the process of resolution. 3. prices overall seem likely to be pretty stable, with inflation rates low. in both europe and the united states, core inflation rates will probably be declining for the next year or so, and will by then be quite low. examples of deflation - that is an actual fall in the price level, as opposed to disinflation, a decline in its rate of increase - could conceivably become a little more common around the world in this half - decade. in fact, at present this is particularly noticeable in asia, with several countries ( including both japan and china, the two largest regional economies ) experiencing falling prices over
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speech inflation and the monetary policy framework philip lowe [ * ] governor speech to the anika foundation sydney β 8 september 2022 i would like to begin by thanking everybody who is attending today in support of the anika foundation. it β s been a hard time for young people over the past couple of years, so the foundation β s work supporting young australians is more important than ever. thank you for your support. last year, this event was held online as we were in the midst of the delta outbreak. at the time, the economy was contracting, inflation was below the target band and the normalisation of monetary policy still seemed to be in the distance. a year on, a lot has changed. we are no longer in lockdowns, the economy has performed well, unemployment is at a 50 - year low, inflation is the highest it has been in years and interest rates are being increased quickly. today, i would like to focus my remarks on the pick - up in inflation. after a number of years in which inflation was below target, it is now considerably above target and is expected to go higher still in the short term. the extent of this turnaround in inflation has come as a surprise to many, including us. so, i would like to begin by exploring some of the lessons from this surprising burst in inflation. i will then discuss why, in my view, flexible inflation targeting remains the appropriate monetary policy framework for australia. i will conclude with some remarks on the importance of returning inflation to target over time and how the rba β s recent monetary policy decisions will help achieve this. a very large inflation surprise first, to the very large surprise in inflation. when i spoke at the anika foundation event last year, cpi inflation in australia had been below 2 per cent for a number of years and, in underlying terms, was just 1. 6 per cent ( graph 1 ). today, cpi inflation has risen to 6. 1 per cent and underlying inflation is 4. 9 per cent. these are the highest rates in many years. graph 1 consumer price inflation * year - ended % % headline trimmed mean - 2 - 2 * excludes interest charges prior to the september quarter of 1998 ; adjusted for the tax changes of 1999 β 2000. sources : abs ; rba this lift in inflation has come as a surprise. a year ago, the rba was forecasting that inflation over 2022 would be just 1ΒΎ per cent. now, we are expecting cpi inflation
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suhaimi ali : empowering change through diversity, equity and inclusion keynote address by mr suhaimi ali, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the fide forum 2nd distinguished board leadership series, organised by asia school of business, kuala lumpur, 2 november 2023. * * * assalamualaikum warahmatullahi wabarakatuh and a very good afternoon, distinguished members of fide forum, ladies, and gentlemen first of all, allow me to thank fide forum for the invitation. diversity, equity, and inclusion ( dei ) is a topic that has gained increasing prominence and attention in recent years in the context of workplace culture. it is no longer a buzzword. rather, these are important concepts that reflect ongoing efforts to address systemic discrimination and promote fair opportunities for all. dei has become a household strategy for talent retention, as organisations seek to create a conducive working experience for all employees. companies that are diverse, equitable and inclusive tend to respond better to challenges, win top talent, and are better equipped to meet the different needs of society. as malaysia is a country rich in cultural and ethnic diversity, dei is especially important to ensure that people from all backgrounds have fair access to opportunities in all aspects of life. let me attempt to unpack the term " dei ". first, diversity of demography and thought. building a diverse demography at the workplace means growing a workforce that is characterised by a wide range of demographic factors, including age, race, ethnicity, gender as well as disability and socioeconomic status. acknowledging and embracing this diversity is not only a social imperative but it enables us to develop solutions and policies that cater to the unique and evolving requirements of various demographic groups. the diversity of thought, on the other hand, refers to efforts to incorporate a variety of perspectives, experiences, and skills in problem - solving, innovation and decision - making, whilst encouraging employees to " speak - out " and bring their unique lens to the discussion table. second, equity in pay and opportunities. providing equal pay for equal work, irrespective of gender, race, or other demographic factors ensures that all employees receive fair compensation for their contributions. providing equal opportunities for advancement and career development to all employees, irrespective of their backgrounds is also a strategic necessity. this inclusivity allows organisations to reap the rewards of a talented workforce, enhance productivity and drive organisational success. thirdly,
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zeti akhtar aziz : further strengthening of the institutional structure for islamic banking business operations speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the launch of rhb islamic bank berhad, kuala lumpur, 1 march 2005. * * * " building on the strong foundations of a well - developed, comprehensive islamic financial system and strengthening its international inter - linkages and thus its global integration, has enhanced malaysia's potential to be an international centre for islamic finance. our first islamic bank, established in 1983, marked the beginning of the islamic banking and finance chapter for our country. the opening of islamic banking windows by financial institutions in 1993 paved the way for a more effective and efficient distribution channel for lslamic banking services to achieve the critical mass on a nationwide scale. these developments have been reinforced by the progress achieved in the establishment of the islamic financial infrastructure, including the money and capital markets, the regulatory and supervisory structure, and most importantly, the legal and shariah framework. today marks the emergence of a new era, with the establishment of an islamic subsidiary of a banking group as islamic banking in our financial system enters into the third strategic phase of the institutional development of islamic banking and finance in malaysia ". ladies and gentlemen, it is my pleasure to be here this morning on the occasion of the official launch of rhb islamic bank berhad. indeed, today, we are witnessing the first transformation of an islamic banking window to an islamic subsidiary. this transformation reflects the coming - of - age of the islamic banking industry after more than two decades of development. the move grants legal status to the islamic banking business of the new entity, which is accorded a licence for its operations under the islamic banking act 1983. the underlying philosophy of the incorporation of an islamic subsidiary is primarily aimed at further strengthening the institutional structure for islamic banking business operations. the islamic subsidiary will also be able to assimilate the developments in the regulatory and supervisory standards governing the lslamic banking operations. it is envisaged that greater strategic focus and resources as well as higher autonomy and governance will be accorded to the islamic banking business. the islamic subsidiary will be led by a chief executive and a board of directors solely dedicated for the islamic bank. placed under the commercial banking arm of the group, the islamic subsidiary will continue to leverage on the synergies and operating infrastructures of the group, thus achieving cost optimisation for the islamic
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paul tucker : shadow banking β thoughts for a possible policy agenda speech by mr paul tucker, deputy governor for financial stability at the bank of england, at the european commission high level conference, brussels, 27 april 2012. * * * it is excellent that the eu commission has published a consultative paper on shadow banking and is holding this conference today. the commission β s paper fits well with the approach that the g20 financial stability board is taking. the issues here are very important since, as the international community reregulates the banking industry, more activity is almost bound to be booked outside banking. we need at some point to move on to policy. i am therefore going to use today β s occasion to put on the table some thoughts for a possible concrete policy agenda. i am doing so in the spirit of wanting to help nudge this work into its next stage. and i should be clear that the fsb, where our work is led by adair turner, have not yet articulated our collective preferred policy approach. the definition of β shadow banking β employed by the fsb and the eu commission is, paraphrasing, credit intermediation, involving leverage and maturity transformation, that occurs outside or partly outside the banking system. 1 that is very close to the definition i used in a speech two years ago calling for work on shadow banking, except that in addition to leverage and maturity transformation i include β monetary services β. 2 i want to make three broad points about this. first, it is very clear that β shadow banking β is not the same as the non - bank financial sector. this is not a debate about the appropriate regulatory framework for the whole of finance. for example, the vast majority of hedge funds are not shadow banks, and don β t trade in the credit markets or especially illiquid markets. second, non - bank intermediation of credit is not a bad thing in itself. indeed, it can be a very good thing, helping to make financial services more efficient and effective and the system as a whole more resilient. we must remember that as we make policy. but, as we know from this crisis and from previous ones, true shadow banking can weaken the system. regulatory arbitrage, which is always with us, can distort and disguise channels of intermediation. that leads me to my third general point. shadow banking comes in lots of shapes and colours. there are degrees to which any particular instance of shadow banking replicates
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isabel schnabel : interview in die welt interview with ms isabel schnabel, member of the executive board of the european central bank, conducted by ms anja ettel and mr holger zschapitz on 10 february 2020 and published on 11 february 2020. * * * you want to clear up misunderstandings about the ecb. would you say that you are now on a type of peacekeeping mission to mediate between the central bank and the german public? no, that is not what this is about. i am not a mediator between two parties ; i am now a member of the ecb β s executive board. but in my new role as a board member i am committed to seeking greater public understanding and clearing up misunderstandings. for people to constantly hear that the ecb β s policy is harmful to them is misleading and it undermines their trust. this worries me. which misunderstanding do you wish to clear up specifically? the expropriation of savers is the main misconception. even the term itself is legally incorrect. it would imply that the ecb is taking something away from people that rightfully belongs to them. but that is not the case. but rather? the real interest rate β that is, the interest rate adjusted for inflation β emerges from the economy β s growth potential in the long run. sweeping macroeconomic trends β such as demographic ageing and weak productivity growth β have caused a worldwide decline in real interest rates. the ecb cannot change these fundamental developments but can only steer its key interest rates around the trend. if it wishes to fulfil its mandate and stimulate the economy at a time when inflation is too low, it has to lower interest rates even further. if the policy rate then approaches zero, it becomes increasingly difficult to attain its objective with conventional tools. we see this constellation all over the world. you β re suggesting that the ecb is a victim rather than a perpetrator in respect of negative interest rates. are there any robust economic studies that back this up? there are countless studies that estimate the equilibrium interest rate, using various methods and delivering different outcomes. but the trend is clear, it is pointing downward. i understand the frustration about low returns on savings, but that is not the whole picture. borrowers and property owners have benefited, as have the government and employees. analyses have been conducted on what would have happened without the ecb β s loose monetary policy. they found that
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other central banks had cut their instrumental rates on 17 september, on the same day the riksbank decided to lower the repo rate 0. 5 percentage points. an increased risk was perceived of inflation two years ahead being below the target, mainly because business and household confidence in the future might weaken and lead to a slowdown that was deeper and more protracted. the terrorist attacks led to great uncertainty in the financial markets. from what i have now said it will be clear that in recent months monetary policy has taken its cue from declining economic activity. gdp growth has slackened from a level of 3 to 4 per cent in recent years to a rate of between 1 and 1. 5 per cent. meanwhile, since last year the krona has depreciated by around 15 per cent. another consideration is that notwithstanding the low growth of demand, inflation has been surprisingly high. these forces have acted with varying strength on the riksbank β s inflation forecasts in recent months. roughly speaking, when economic activity is slowing β with a given potential growth rate β after a time inflation falls back. a weak exchange rate pulls in the opposite direction, however, and can lead to higher price increases : directly through rising import prices and indirectly by stimulating production for export. in addition, abrupt exchange rate movements are liable to affect inflation expectations, a problem that is accentuated when inflation is springing unpleasant surprises. the krona β s weakening in the early summer, after the riksbank had presented this year β s second inflation report, probably had to do with a combination of slackening export activity and portfolio adjustments. moreover, inflation outcomes in the late spring had been surprisingly high. if higher inflation expectations are allowed to take root and also show up in time in a currency depreciation, public confidence in monetary policy β s systematic commitment to a rate of inflation in line with the 2 per cent target may be shaken. the weakening of the exchange rate in that period was an isolated swedish phenomenon, which made it particularly serious. the krona also weakened in the aftermath of the terrorist attacks on 11 september but the circumstances then warranted a different interpretation. general uncertainty in the financial markets was accompanied by extensive portfolio adjustments after the terrorist attacks. the pattern is clear from similar periods in the past, for example the autumn of 1998 when russia suspended payments on parts of it s government debt and a major american hedge fund collapsed. what happens is that certain currencies weaken, others, particularly large ones, appreciate
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stefan ingves : evaluation of the riksbank β s monetary policy and work on financial stability 2005 β 2010 speech by mr stefan ingves, governor of the sveriges riksbank and chairman of the basel committee on banking supervision, to the riksdag committee on finance, stockholm, 31 august 2011. * * * the riksdag ( the swedish parliament ) and the people of sweden must be able to see that the riksbank is doing its job well. it is therefore necessary for them to have good insight into our work and for the riksdag to be able to make regular evaluations of this work. the evaluations are also important for the riksbank to be able to develop and improve its analyses. we have already said on several occasions that we consider it an excellent initiative by the committee on finance to regularly commission highly - qualified external experts to evaluate our work. today, when we are to discuss the second evaluation of this type, i would therefore like to begin by thanking professors goodhart and rochet for carrying out this work on behalf of the riksdag committee on finance. we also welcome the committee on finance β s decision to give the evaluators the task not only of assessing how we conduct monetary policy, but also how we manage the task of promoting a safe and efficient payment system, that is, what we have interpreted as our responsibility for financial stability in sweden. we at the riksbank prefer to present our more detailed views on the evaluation during the consultation rounds, so today i intend to make a few more general comments. regarding financial stability β we need clear legislation and efficient institutions i do not believe that anyone would still doubt that the risk of a financial crisis is a very real risk that we must learn to live with and to manage in the best possible way. it is probably also quite clear what is at stake here β a financial crisis could entail substantial costs for society. we must therefore learn from the experiences of the crisis and ensure that we are as wellequipped as possible to face any new crises in the future. this requires in an initial stage taking an overall approach to both crisis management and crisis prevention work, something that the government β s recently - appointed financial crisis commission has been tasked to deal with. ultimately, the goal is to establish effective legislation and efficient institutions. the financial crisis that we have lived with over the past few years has tested institutions and legislation to breaking point, in sweden and abroad
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caused equity prices to fall sharply, the cost of short - term credit β where available β to spike upward, and liquidity to dry up in many markets. losses at a large money market mutual fund sparked extensive withdrawals from a number of such funds. a marked increase in the demand for safe assets β a flight to quality β sent the yield on treasury bills down to a few hundredths of a percent. by further reducing asset values and potentially restricting the flow of credit to households and businesses, these developments pose a direct threat to economic growth. the federal reserve took a number of actions to increase liquidity and stabilize markets. notably, to address dollar funding pressures worldwide, we announced a significant expansion of reciprocal currency arrangements with foreign central banks, including an approximate doubling of the existing swap lines with the european central bank and the swiss national bank and the authorization of new swap facilities with the bank of japan, the bank of england, and the bank of canada. we will continue to work closely with colleagues at other central banks to address ongoing liquidity pressures. the federal reserve also announced initiatives to assist money market mutual funds facing heavy redemptions and to increase liquidity in short - term credit markets. despite the efforts of the federal reserve, the treasury, and other agencies, global financial markets remain under extraordinary stress. action by the congress is urgently required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy. in this regard, the federal reserve supports the treasury's proposal to buy illiquid assets from financial institutions. purchasing impaired assets will create liquidity and promote price discovery in the markets for these assets, while reducing investor uncertainty about the current value and prospects of financial institutions. more generally, removing these assets from institutions β balance sheets will help to restore confidence in our financial markets and enable banks and other institutions to raise capital and to expand credit to support economic growth. at this juncture, in light of the fast - moving developments in financial markets, it is essential to deal with the crisis at hand. certainly, the shortcomings and weaknesses of our financial markets and regulatory system must be addressed if we are to avoid a repetition of what has transpired in our financial markets over the past year. however, the development of a comprehensive proposal for reform would require careful and extensive analysis that would be difficult to compress into a short legislative timeframe now available. looking forward, the federal reserve is committed to working closely with the congress, the administration
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##sparities are identified, however, national supervisors of outlier banks should be called upon to explain the results to their fellow supervisors, as well as steps they are taking to address situations in which differences may arise from systematic underestimation of risk or manipulation of capital ratios to achieve desired outcomes. any of these options would require the basel committee, international supervisors, and banking organizations to work together to address confidentiality concerns, as well as other jurisdictional issues. some options will surely prove more feasible than others. while we do not prejudge which will prove to be most effective, we do maintain that something of this sort is necessary in order to assure that the benefits for financial stability promised by see, for example, nout wellink ( 2011 ), β basel iii : a roadmap to better banking regulation and supervision, β remarks delivered at the fsi high - level meeting on the new framework to strengthen financial stability and regulatory priorities, st. petersburg, russia, may ; and stefan walter ( 2011 ), β basel iii : stronger banks and a more resilient financial system, β remarks delivered at the financial stability institute conference on basel iii, basel, april. bis central bankers β speeches international capital standards are in fact being realized, as well as to prevent some banks from enjoying competitive advantage through lax application of these standards. at the same time, any of these options will give banking supervisors from the countries represented on the basel committee an opportunity to work together to address the many issues of implementation, interpretation, and evasion that will surely arise under basel iii. thank you for your attention. i would be pleased to answer any questions you might have. bis central bankers β speeches
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inflation is expected to run at 4. 3 % between 2000 and 2001 and 4. 6 % from the beginning to the end of the year. next year it is forecast to slow down to 2. 7 % from the beginning to the end of the year. interest rates the main objective of the central bank of iceland, like those in many other countries around the world, is to promote price stability. an intermediate objective has been to secure the value of the krona. to do so, the bank applies its policy rates, namely the rates of interest that it sets for its transactions with credit institutions. in a scenario of overheating and inflationary risks, the central bank raises its interest rates, as it has been doing in recent times. the bank already took such action in the second half of 1997 and raised interest rates fairly rapidly in 1999 and 2000. over these two years, the central bank raised its interest rates seven times in all, by a total of 3. 6 percentage points. the policy rate is now 11. 4 %, which is very high by international comparison. however, under certain circumstances interest rates have been this high or even higher in various other industrialised countries. broadly speaking, these interest rate rises served a double purpose. firstly, they were aimed at influencing the exchange rate differential with abroad, thereby exerting a direct impact on capital inflows and supporting the exchange rate of the krona. the other purpose was to contribute towards higher interest rates at credit institutions and thereby reduce the expansion in their lending. experience shows that the impact on lending will emerge eventually. all these measures were aimed at reducing consumption and investment. there are many signs that the central bank's interest rate rises are producing results in the form of less activity in the areas of the economy which are most sensitive to interest rates. had the central bank not reacted in this way, it is quite certain that overheating of the economy would have produced a much higher rate of inflation than iceland has known in recent years, with corresponding consequences for the economy. the central bank's tight monetary stance has been quite widely discussed in iceland. questions raised have included its impact on the current account deficit and whether monetary policy was actually achieving its set aims, given unrestricted access to foreign capital and the insensitivity of households and businesses to interest rate changes. the central bank has made special studies of the impact that interest rate rises have on the real exchange rate and current account deficit. research suggests that,
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on primary markets. this was reflected in the sharp reduction in funds requested by spanish banks from the eurosystem. at end - november 2010, funding from the ecb, which in july 2010 stood at β¬150 billion, fell back to β¬65 billion. this means that the spanish banking system absorbs 12 % of the loan from the european central bank, a proportion fully commensurate with its size and importance in the euro area and which represents 2. 5 % of its balance sheet. the immediate future : consolidating the measures taken and putting the reforms on a firm footing in recent weeks international financial market dynamics have continued to be influenced considerably by the high degree of risk aversion and by fragile confidence levels. there has been a resurgence of the doubts β first seen in the case of greece β about the solvency of euro area member states. the uncertainty over the euro area β s fiscal sustainability cannot be explained merely by the economic downturn and its impact on public finances. the measures taken by authorities to avoid the collapse of the financial system have involved, in the case of ireland, guaranteeing the funds lent to the banking system by depositors and wholesale investors. markets are suspicious about the ability of certain small states, with relatively large banking systems, to meet these commitments. the european union has come to the aid of ireland, which has experienced problems precisely because it used substantial amounts of public funds to shore up a banking system bloated with real estate assets, particularly offices and houses in the dublin area. in spain the situation is very different as regards both the public sector and the banking sector. despite the substantial rise in the budget deficit in 2008 and 2009, public debt as a percentage of gdp remains relatively small in comparison with the euro area average, which is 20 percentage points higher. furthermore, the spanish state is committed to ending next year with a deficit of 6 %, more than 5 percentage points lower than in 2009. as for the quality of bank balance sheets, it is well known that non - performing loans have increased in recent years, and also that lending to the construction and real estate development sector was excessive. however, the stress tests have shown not only that banks have the capacity to absorb potential losses arising from extreme and highly unlikely scenarios, but also that most balance sheets comprise healthy assets in the various consumption and investment segments of the spanish economy. despite these fundamental differences, the climate of uncertainty makes it advisable to reaffirm the adjustments promised by
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cautious timescale are - in all cases fiscal developments. in the pre - emu period, we will continue targeting inflation. this strategy has gained a substantial degree of credibility in the czech republic since its introduction in 1997. our inflation target for the period beyond january 2006 is set at 3 % ( for cpi ), which should allow us to fulfil the monetary side of maastricht convergence criteria, and at the same time to reflect the long - term real convergence needs of the czech economy. in our experience, inflation targeting is capable of producing a sufficiently strong nominal anchor for the economy, and consequently also of stabilising the exchange rate, obviously in the absence of large external shocks. hence, in favourable circumstances, inflation targeting will allow us to achieve price and exchange - rate stability simultaneously. should circumstances become less favourable, the simultaneous achievement of both will be difficult no matter which monetary strategy is adopted. that is why we do not consider erm2 to be a policy regime superior to the current regime. in line with this stance, we have agreed with the government to stay out of the erm2 mechanism for the time being. we plan to introduce erm2 after conditions for meeting all maastricht criteria within a two - year timeframe have been established. there is still a number of issues to be discussed, let me address two of them. first, is inflation targeting compatible with erm2? second, what is the impact of policy debate about the modifications to the sgp on our forthcoming effort to meet the maastricht criteria? as far as the compatibility of the two regimes is concerned, namely inflation targeting and erm2, the specific arrangements have not yet emerged from our ongoing debate. we believe that relying on the economic analysis and intuition rather than on background legal documents as a guide, there is no need to modify the current strategy significantly. it will be able to deliver both price and exchange - rate stability. however, monetary policy alone cannot guarantee the smooth progress of adopting the euro. it is of crucial importance that the whole policy mix is supportive of this goal. the recent failure to enforce sgp rules in the existing euro area should not be taken as an excuse for postponing fiscal reforms in the new eu member states. on the contrary, it should be interpreted as a warning signal that the maastricht criteria should be met by a sufficient margin prior to euro adoption in order to create an adequate buffer for difficult periods. having
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daily starbucks ) and as a store of value ( making sure you can still afford a starbucks in old age ). historically, those two functions have been in conflict ; β¦ broadly speaking, the money expanders have been debtors and the money restricters have been creditors. β as my last speech here at the omfif was motivated by the anniversary of the bretton woods collapse, i am particularly fond of this observation : β over history, creditors have tended to impose systems that control the supply of money β the gold standard, the bretton woods system of fixed exchange rates, the euro β that prevent borrowers from repaying their debts in debased currencies. the strain of keeping up this discipline is intense in democracies where more people are debtors. the gold standard broke down in the 1930s, bretton woods in the 1970s and the euro is struggling today, as is what might be called the post - bretton woods system of independent central banks and inflation targets. β 4. and now a few humble observations of my own : bis central bankers β speeches a. beginning with the fiscal solutions story, this crisis is a deep crisis of the market economy and of financial systems as managed, regulated, and supervised in just a minority of market economies, most of which can now be found in the eu. the usa might have contained the source of the fire, but for three years it has not played a major role in the eurozone and its main role has turned out to be a stabilizing one. thanks mainly to fed swaps, eu savers and investors do not have to worry about the general liquidity position of the eurozone. i almost pray that forthcoming political events in the u. s. do not alter this situation. b. the solution to this crisis involves controlled de - leveraging and the restoration of european and eurozone competitiveness in the developed world. the need for deleveraging is clear, but the restoration of competitiveness in europe is also a must, despite the fact that the ca of the eurozone and / or the eu is roughly balanced. otherwise, the eu will not be able to restore the real growth rates necessary to stabilize eurozone sovereigns in the context of the chief mandate of the ecb, i. e., in a non - inflationary context. i am afraid this may involve quite a few of my fellow european citizens engaging in a bit of metaphorical trench - digging. hopefully, they will also try
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extent still is, a misperception that the use of cash is costless and seamless. this issue was especially true for malaysian businesses as more than three - quarters of the almost one million small and mediumsized enterprises, the backbone of malaysia's economy, are micro enterprises who are particularly sensitive to changes in cost. to address this, a series of policy packages were then deployed to reduce any cost barriers and elevate the value proposition of digital payment services. of note, interchange fee regulations were introduced for payment cards to ensure the cost of merchants accepting debit, credit and prepaid cards remained fair, transparent, and reasonable. an industry fund was also established to incentivize the deployment of point of sale or pos terminals, including by subsidizing the cost for hardware. the bank also introduced a framework to ensure that the cost of credit transfer services was kept lower than for cheques to better reflect the efficiency gains derived from such services. as a result, significant progress has been achieved by the industry in reducing cheque usage where the number of cheques issued in 2022 represents only a third of its usage in a decade ago. fostering a greater inclusive and more vibrant payment ecosystem managing the cost efficiency of payment systems remains just one of the intricacies in payment system development. importantly, apart from access to payment services at low and reasonable cost, the payment system must evolve to provide consumers with the choices they need and one that can empower consumers to have better control over their financial well - being regardless of their circumstances. amid the high mobile penetration rate in malaysia, the nation has benefitted from the entry of new non - bank players, attune to and providing the choices that consumers are demanding. the surges of interest by these players to provide e - wallet services resulted in a proliferation of qr codes on shop counters and applications on our mobile screens. while this development demonstrated a significant potential in the growth of mobile payments, it warrants the bank to step in to manage the increasingly fragmented landscape. the bank issued the interoperable credit transfer framework ( ictf ) in 2019 that enabled the interoperability of credit transfer services between banks and non - bank emoney issuers. this deliberate approach facilitated much more collaborative competition, or co - opetition, through fair and open access to the shared infrastructure that is the real - time retail payments platform, or rpp. in a market where multiple e - wallet providers exist, rpp
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norhana endut : steering malaysia's payment services - a reflection, evaluation, and exploration keynote address by ms norhana endut, assistant governor of the central bank of malaysia ( bank negara malaysia ), at apsca's conference " next generation payments : consumer and merchant payments, today and tomorrow ", kuala lumpur, 18 october 2023. * * * distinguished speakers and delegates, a good morning to all. i would like to thank apsca for the invitation to deliver the keynote address at this year's next generation payments conference. let me start by congratulating apsca for organising this event and to share that we are pleased for kuala lumpur to host this event. with the theme of " next generation payments : consumer and merchant payments, today and tomorrow ", this event is certainly timely and critical as it brings together traditional players and disruptors within the payments ecosystem for deep conversations and discourse which will chart the way forward for the industry. in envisioning the future of payments in this highly evolving ecosystem, let's ask ourselves what may seem like a simple question β " what does success in innovations look like? ". to answer this question, it's important to look back and reflect our payment journey thus far. the merits of looking backward are the lessons and reflections that we can draw upon to chart the path forward. i would, therefore, like to take the opportunity today to share some insights and lessons from malaysia's journey in developing the domestic electronic payments landscape β to reflect on how far we have come, to evaluate where we are at, and to explore what lies ahead. being an economist, i am very much accustomed to the economic trilemma of managing the policy trade - offs between monetary independence, financial openness, and exchange rate stability. when i stepped into the world of payments, i soon realised that we face a similar trilemma β one which forces regulators and policymakers to balance the trade - offs in pursuing key fundamental objectives of efficiency, inclusivity, and security. enabling a more efficient and cost - effective environment in our early transition to e - payments, where cash and cheques were still in abundance, we observed that users and merchants were not incentivised to adopt e - payments. 1 / 6 bis - central bankers'speeches challenges stemmed largely from managing public perception on the ease and inexpensive use of cash as well as the need to drive change in customer behaviour. often the case, there was and to some
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billion plus people, spread over 600, 000 habitations, covering vast distances, with poor infrastructure and sometimes inhospitable terrain by traditional brick and mortar branches. 39. we need to think laterally, harness technology, adopt effective dissemination practices and reach out to all the people across the country to provide at least minimal banking services. financial inclusion is especially valuable as it will at once promote both growth and equity. i can hardly overemphasize how big a challenge financial inclusion is for banks, for the banking regulator and for the government. working to meet this challenge can hardly be a boring proposition. second challenge : financing infrastructure 40. distinct from other large emerging market economies which are typically demand constrained, india has been, and will remain in the foreseeable future, a supply constrained economy. the biggest supply constraint is of infrastructure β physical, social and urban. it is widely recognized that poor and inadequate infrastructure is adding to production costs, denting productivity of capital and eroding the competitiveness of our productive sectors. 41. the eleventh five year plan targets increase in infrastructure investment from around 5 per cent of gdp in 2006 / 07 to 9 per cent by 2011 / 12. this translates to cumulative infrastructure investment over the plan period of over rs. 20 trillion ( us $ 520 billion ). almost one half of this investment is to be funded through debt, and as much as 43 per cent of this total debt requirement ( 21 per cent of overall planned investment ) is planned to be financed by banks. we have to await the mid - term appraisal of the eleventh plan for an update of the above numbers. regardless of any revision the numbers may undergo, what is clear is that the financing needs of our infrastructure are huge. 42. a big issue in bank financing of infrastructure is the asset - liability mismatch. while infrastructure typically requires long term funding, the deposits of banks, their main source of funds, are relatively short - term. the problem of asset - liability mismatch in long term financing is not unique to india ; banks elsewhere too face the same problem. but in advanced economies, the long term finance space is filled by insurance companies and pension and provident funds. if some of the pending legislation gets through, in india too we can expect new sources of long - term financing to open up. but until that happens, the burden of infrastructure financing will have to be met largely by the banks. in order to partly offset this problem, the reserve bank
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based on the lessons of experience. we need to build a safe and enterprising banking sector that supports growth while preserving financial stability. we need to nurture financial markets and institutions within clearly defined and effectively supervised boundaries. doing all of this is the basic thrust of the international reform agenda currently under discussion to which i now turn. v. international reform initiatives β will they make banking boring? 19. the reform initiatives in the wake of the crisis are intended to rein in the β irrational exuberance β of the banking sector, keep it safe and healthy, and make banking an aid for growth and macroeconomic stability. what is relevant to our discussion here is that none of these measures is aimed at making banking boring ; on the contrary, several of them will likely make banking more challenging and thereby spur innovation of a more value adding and sustainable variety. in order to enable an appreciation of this, let me provide a brief synopsis of the various initiatives under discussion from the macro and micro perspectives. the macro perspective 20. one clear lesson of the crisis is that regulation and supervision at the institution level is necessary, but not sufficient. even if each institution is healthy and safe on a stand - alone basis, systemic risk can build up because of procyclical, herd behaviour β what economists call the fallacy of composition. it is therefore necessary to supplement micro - prudential regulation with macro prudential oversight. 21. at a macro level, to address procyclicality and contain leverage, three important initiatives are underway : ( i ) development of capital buffers that banks would be required to maintain to counter cyclical effects ; ( ii ) requirement for institutions to set provisions on a dynamic basis, i. e. building up buffers in good times to be drawn down in bad times ; and ( iii ) developing a metric to contain excessive leverage in banks to supplement the risk based capital ratio. 22. a somewhat original idea proposed by prof. raghuram rajan, currently under discussion, is to require institutions to maintain β contingent capital β to tide over systemic crisis or idiosyncratic problems. this proposal will potentially require banks to issue long - term debt instruments that would automatically covert to equity under specific triggers. this contingent arrangement will accordingly enable banks coming under stress to quickly buffer their capital without imposing any cost on tax payers. all this will not, of course, be costless. the challenge is to design the contingent capital provisions in a way that optimally manages
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put under an imf programme as we were in a position to meet and repay all our foreign obligations. we have since emerged from this turbulence much strengthened and on a solid and steady growth path. indeed, this is one debt that the country will not be able to repay. malaysia will always be indebted to you, yang amat berhormat, for your leadership and your vision. ladies and gentlemen, the financial sector in our region has now reached a new stage of development. over the years, the role of the financial system has evolved, facilitating the various stages of development and growth. increasingly, the financial services industry is also becoming a source of growth, especially as several countries in the region are moving towards a knowledge - based and services - led economy. in the process, the dynamic changes taking place are also being driven by technological advances and an increasingly competitive environment. as financial restructuring and reforms progress to a more advanced stage, financial institutions are also moving on to make the necessary adjustments to become more productive, innovative, and strategically more focused. efforts are now focused not only on the creation of a sound and resilient financial sector but towards institutional development and capacity building of the financial sector to elevate it to a higher level of performance, efficiency and excellence. this represents an important phase in the development of the financial sector as highlighted in our 10 - year financial sector master plan that was released almost three years ago. it represents an important development prior to moving towards a more deregulated and liberalised environment. in this context, we are envisaging forward - looking financial institutions that will be able to face the challenges of financial liberalisation and globalisation as we progress into our next stage of development. in this context, leaders need to be visionary to see future trends focused on organisational vision, to stay competitive and be able to adapt rapidly to changes. in addition leaders need to take into account the corporate social responsibility so that the profit mindset is balanced against the objective of longterm sustainability. when we talk about enhancing leadership capability we are talking about leaders who are continuous learners, who are on the cutting edge of excellence, leaders who have strong convictions and beliefs, and yet having humility and recognising the need to reinvent themselves and inspire their organization to adapt to the new challenges and changes. this is vital if the financial services sector is to forge ahead and remain at the forefront of new innovations, an element that is critical to securing long - term
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competitiveness. we need the remarkable force of corporate leaders to fuel the drive towards long - term growth and stability. we need dynamic leaders to push the frontiers of excellence β leaders who are constantly learning and possess the courage to take on new challenges. in this process, avenues for continuous learning must be actively sought. the establishment of iclif is part of our commitment towards providing such an avenue to enhance our leadership capability and develop world - class leaders in the financial services sector. towards this endeavour, the centre is currently in the process of developing a unique leadership competency model that will analyse and understand what makes for great corporate leaders in our regional context. at the same time, the centre is putting together a world - class global leadership development program ( gldp ) with leading consultants and drawing faculty from the best schools in the world. the global leadership development program represents ground - breaking design in terms of an executive education program. by drawing faculty from not just one or two, but up to five leading institutions, the centre will be able to combine the best ideas and thoughts in the world on the various key leadership issues and concerns. the centre β s role will not be to replicate the roles of institutions of higher learning, but rather to facilitate and provide specific, directed and targeted learning based on the requirements of our industry. in addition to its board of directors, the centre will also be governed by an international advisory panel comprising eminent personalties. in the process, participants will benefit from the best of all worlds in terms of the latest thinking on leadership issues. it is envisaged that the centre will also serve to complement and supplement the existing capacity building facilities in the financial and corporate sector to become a regional centre of excellence for leadership training in finance. the centre aims to reinforce the notion that investments in human capital, including the pursuit of leadership excellence, is a continuing process in this ever - changing environment so as to enhance the calibre of our human capital in the financial and corporate sector in meeting the challenges ahead as we advance forward in this new millennium.
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standard scenario. as the outlook report discussed such risks in detail, here i would just like to touch upon the following two issues. first is the global economic developments, especially in the us, which is expected to play a key role for japan β s recovery in the near future. ( needless to say, from the us point of view, japan β s economy might be regarded a risk factor. this is a clear evidence that we are living in a world of interdependence ). looking at the us developments in recent months, a large gap has been witnessed between macroeconomic data showing signs of recovery and the soft stock market. if we look at global financial and capital markets, the effective exchange rate of the us dollar reached its peak in january and has been depreciating significantly since then. such foreign exchange rate movements reflect recent changes in global capital flows such as a decline in direct investment into the united states in favor of the euro zone. these developments warrant careful monitoring as they could have a global impact. second is the vulnerability of japan β s economy to exogenous shocks and stresses. since the 1990s, the economy experienced sharp downturns triggered, for example, by concern over the financial system, withdrawal of fiscal support, and the global economic slowdown. we should always be prepared for such exogenous shocks but, given the present condition of the financial system, we should be especially aware that japan β s economy is currently vulnerable to major shocks. 3. monetary policy by the bank of japan against the economic and financial background that i have just described, the bank took a series of easing measures in february and march last year, stepping into an unprecedented policy area in the history of central banking. among the several pillars of this new monetary easing framework, the most important is the change in the target of money market operations. the target was changed from the overnight call money rate, that is the interest rate for the shortest term, to the outstanding balance of current accounts held at the bank of japan which represents the quantity of liquidity. this change was introduced to explore the possibility of further monetary easing even after short - term interest rates, the starting point of the transmission mechanism of monetary policy, had effectively fallen to zero. this framework is often called β quantitative easing. β let me share with you some facts and figures to show why these are unprecedented monetary easing measures in the history of central banking. first of all, the call money rate declined to very close to zero at
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that, theoretically, in the face of the zero interest rate constraint, there is a role for fiscal policy in increasing demand. the outstanding balance of government debt has reached nearly 140 % in terms of gdp. but, if fiscal funds obtained from the issuance of new debt are used effectively to boost aggregate demand, the associated growth of income and production would lower the level of government debt in terms of gdp. to the contrary, if used in an inefficient way, fiscal spending funded by debt would restrain longterm growth prospects. it is difficult to judge a priori which scenario is more likely to happen, because, in the end, it all depends on which policy the public will support. i have so far discussed demand - side policy. what about structural reform, which has been actively talked about? β structural reform β means different things to different people. a very general definition could be to regard it as supply - side policy to improve productivity. improving productivity is always crucial because the long - term growth path depends on productivity growth. to that end, resources such as labor, land, and capital - have to be reallocated in the most efficient way to adapt to a changing economic environment. it is a quite orthodox policy indeed. the reallocation of resources is required at various levels such as inside a corporation, among corporations within the same industry, among various industries, and among various regions. in the end, the non - performing loan problem in our country is the reflection of such inefficient firms and industries. efforts to improve productivity are important. however, if demand is not created to meet an increase in supply capacity, the output gap will widen further. in addition, there is a risk that, before seeing an increase in supply capacity, a deflationary impact may emerge as competition, inevitably induces firms to exit from the market. on the other hand, however, if policy efforts to promote future growth are seen to be promising, it could lead to an increase in the current demand partly through a rise in stock prices. taking the example of business investment, it is the key for improving productivity and, at the same time, is in itself a demand. therefore, it is quite important to promote competition and improve the domestic environment for such investment. given that the ultimate goal of such investment is to fulfill private consumption demand, it is equally necessary to remove public concern over the future so that consumption can increase. these things are easy to say but difficult
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of internal operations. the third priority is to build a stronger business connectivity by tapping wider business prospects. the takaful industry in malaysia is poised to benefit from various national economic plans including the national energy transition roadmap and new industrial master plan, alongside the'ekonomi madani : memperkasa rakyat'framework. in tapping these opportunities, the future direction of takaful demands a broader perspective and commitment to address issues of scale, expertise and risk appetite. diversification and expansion, beyond the current concentration in personal lines ( e. g. motor and fire ) are essential. this would mean building own capabilities and knowledge to venture into unfamiliar risks, where coordination and cooperation are key alongside innovation - involving various disciplines of shariah, product, risk, strategy and actuarial ; and often with the support of retakaful and reinsurance players. malaysia has an enabling ecosystem with growing demand for islamic finance, either from individuals or businesses to support various economic needs. today, halal industry is also at the centre stage of many jurisdictions in the world, supported by the shift in demand globally from both muslims and non - muslims towards ethical consumption. takaful operators should leverage on the halal ecosystem and meeting the takaful needs for property and business protection to complement the wide range of trade finance solutions for importers and exporters. joint efforts in targeted financing initiatives such as the itekad for smes also provide an opportunistic avenue to foster collaboration to tackle the pain points of accessibility, trust, affordability and protection against unforeseen events. for the retakaful players, it is imperative to capitalise on malaysia's strength and ecosystem for business outreach to asian region and beyond. more countries are 3 / 4 bis - central bankers'speeches working on the necessary regulations to enable takaful offerings and scaling up the contribution of the sector. retakaful players in malaysia, with ready expertise and capabilities could provide capacity to support growth and expansion of the takaful industry in other markets. ladies and gentlemen, as we stride forward, the three sets of priorities i have explained earlier on value - based offerings, exemplary conduct and business connectivity calls for transformative actions, to chart a future direction of the takaful industry that is agile and responsive to the evolving needs of the modern and digital society. having a wide pool of high - calibre, knowledgeable and skilled workforce is paramount to drive these priorities. the
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sentence in the modern version of the hippocratic oath is particularly resonating : β i will remember that there is art to medicine as well as science, and that warmth, sympathy, and understanding may outweigh the surgeon β s knife or the chemist β s drug. β ultimately, to make sense of what we do in our profession, we cannot shy away from its purpose. to echo the words of the poet william butler yeats : β though the leaves are many, the root is one. β as a community of bankers, we should have one overriding root purpose β to serve and steward our community. the services we offer are to serve the larger interest of the community. we do not originate a loan merely to meet business targets, but to enable individuals to own homes, businesses to create jobs and for overall societal wellbeing finance exists for society, not society for finance. we can no more detach ourselves from this social purpose than we can separate humanity from humans. it ought to be an inherent part of us, our profession β s dna. this sense of identity and purpose should ground all our pursuits. it is also the thread that ties all 3 / 4 bis central bankers'speeches functions of banking together. whether you are in the credit, compliance, it, risk management or audit functions, you share a common purpose to society and duty to serve the public interest. as we reflect back over the centuries, the first banks in the ancient world made grain loans to farmers and traders who travelled between cities. during the 15th β 18th century, banks also catalysed the financing of international trade, subsequently ushering in a new age of maritime discovery and exploration. the banking world then served the real needs of the economy. however, the creeping commodification of finance over the years has gradually blurred the nature of finance, with excessive risk accumulation driven by greed and perverse incentives. serving the needs of the real economy is key. that is why issues such as financial inclusion, financial literacy and financial planning are so important to us as our nation progresses. as professional bankers, we should think beyond profits and understand how to meet the evolving needs of the economy. like the medical profession, we cannot begin to prescribe a solution without first diagnosing the needs of the customer. as an industry we should aspire that one day, consumers may walk into a bank, safe in the knowledge that bankers will always have their best interest in mind. that each encounter with the
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are directly linked to the outstanding quantity of assets, dates back to the early 1950s. 4 for example, in preferred - habitat models, short - and long - term assets are imperfect substitutes in investors β portfolios, and the effect of arbitrageurs is limited by their risk aversion or by market frictions such as capital constraints. consequently, the term structure of interest rates can be influenced by exogenous shocks in supply and demand at specific maturities. purchases of longer - term securities by the central bank can be viewed as a shift in supply that tends to push up the prices and drive down the yields on those securities. in the context of such an analytical framework, the effect of an asset purchase program also depends on investors β perceptions of the future path of short - term interest rates as well as their perceptions of the timing and pace of the central bank β s eventual unwinding of its asset purchases. thus, central bank communication may play a key role in influencing the financial market response to such a program. recent empirical work provides a rough gauge of the quantitative effects of longer - term securities purchases. 5 for example, event studies have investigated the short - term response of asset prices to announcements by the federal reserve and the bank of england regarding their respective asset purchase programs. and regression analysis has been used to estimate statistical models that embed predictions from a specific theoretical framework. table 1 summarizes the response of selected financial variables on four dates associated with the federal reserve β s first round of asset purchases. on november 25, 2008, the federal reserve announced that it would purchase up to $ 600 billion in agency mortgagebacked securities ( mbs ) and agency debt. on december 1, chairman bernanke provided further details in a speech. 6 on december 16, the program was formally launched by the fomc. 7 on march 18, 2009, the fomc announced that the program would be expanded by an additional $ 850 billion in purchases of agency mbs and agency debt and $ 300 billion in purchases of treasury securities. as is evident from the table, these announcements were generally associated with a substantial decline in the 10 - year treasury yield and the yield on 10 - year treasury inflation - protected securities ( tips ) as well as in rates on agency mbs and corporate debt. turning now to the macroeconomic effects of the federal reserve β s securities purchases, there are several distinct channels through which these purchases tend to influence aggregate demand, including a reduced cost of credit
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october ), available a t www. dnb. nl / en / publications / research - publications / occasional - studies / nr - 7 - 2018 - an - energy - transition - riskstress - test - for - the - financial - system - of - the - netherlands. return to text 14 for instance, see melissa dell, benjamin f. jones, and benjamin a. olken ( 2012 ), β temperature shocks and economic growth : evidence from the last half century, " american economic journal : macroeconomics, vol. 4 ( july ), pp. 66 β 95 ; solomon hsiang, robert kopp, amir jina, james rising, michael delgado, shashank mohan, d. j. rasmussen, robert muir - wood, paul wilson, michael oppenheimer, kate larsen, and trevor houser ( 2017 ), β estimating economic damage from climate change in the united states, " science, vol. 356 ( june ), pp. 1362 β 69 ; and maximilian auffhammer ( 2018 ), β quantifying economic damages from climate change, " journal of economic perspectives, vol. 32 ( fall ), pp. 33 β 52. return to text 15 see network of central banks and supervisors for greening the financial system ( 2020 ), ngfs climate scenarios for central banks and supervisors ( pdf ) ( paris : ngfs, june ). return to text 16 see, for instance, simon dietz, james rising, thomas stoerk, and gernot wagner ( 2021 ), β economic impacts of tipping points in the climate system, " pnas, vol. 118 ( august ). return to text 17 see, for instance, ecb ( 2021 ), β firms and banks to benefit from early adoption of green policies, ecb β s economy - wide climate stress test shows, β press release, september 22. return to text 18 see, for instance, network of central banks and supervisors for greening the financial system ( 2021 ), progress report on bridging data gaps ( pdf ) ( paris : ngfs, may ) ; and the communique ( pdf ) on the third g - 20 finance ministers and central bank governors meeting, held july 9 β 10, 2021. return to text 19 see gary gensler ( 2021 ), β prepared remarks before the principles for responsible investment β climate and global financial markets β webinar, β washington, july 28. return to text 6
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jean - claude trichet : the successful entry of cyprus into the euro area speech by mr jean - claude trichet, president of the european central bank, at the conference β welcoming cyprus to the euro area β, nicosia, 18 january 2008. * * * ladies and gentlemen, it is a great pleasure for me to attend this conference celebrating your adoption of the euro. let me first congratulate all parties involved in the successful cash changeover that took place at the beginning of the year. it has been going smoothly. none of this would have been possible without the excellent performance of the cypriot economy during the convergence process. 1. cyprus β s economic achievements on the way to the euro 1 today β s euro celebrations are the result of the successful macroeconomic policies that the cypriot authorities have pursued in recent years. cyprus has made significant progress in both nominal and real convergence, owing to successful policies β namely, well - managed monetary and exchange rate policies combined with a range of structural reforms. in the last decade, hicp inflation in cyprus has been contained, averaging 2. 2 % in 2007, with the only exceptions being in 2000 and 2003, when inflation rose mainly because of increases in energy prices as well as vat harmonisation. short - term as well as long - term interest rates have followed a declining trend in recent years to levels in line with those of the euro area as a whole. this suggests that market participants have confidence in cyprus β s macroeconomic and fiscal developments as well as in its monetary and exchange rate policies. the process of nominal convergence has been accompanied by robust economic growth. real gdp growth in cyprus has been well above that in the euro area in recent years. real output growth has been underpinned by domestic demand, and in particular by strong private consumption and, importantly, by strong fixed capital formation. cyprus β s gdp per capita ( in ppp terms ) progressed from around 74 % of the 1996 average of the 12 countries which initially joined the euro area to around 84 % in 2006 : this is a significant improvement, and may it continue that way. in spite of its remarkable progress towards nominal and real convergence, cyprus has not experienced major imbalances : price and cost competitiveness developments have been favourable since 2004. the fiscal balance ( the deficit - to - gdp ratio ) has been improving since 2004 and stood at - 1. 2 % of gdp in 2006. looking at the financial side, cyprus is experiencing substantial financial deepening, which has been
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conditioning assumptions, not just forward interest rates, and any of these can change. our understanding of the economy evolves over time and the economy itself is always subject to unforeseeable shocks. empirically, the behaviour of the economy matters more for interest rates than prior forecasts. in addition, the mpc isn β t solely concerned with inflation anyway, still less its most likely rate at a fixed point in the future. that means that the target horizon for inflation is generally longer than the earliest point at which policy can affect it β there is therefore no single, unique path of interest rates that will do the job. it also means that the horizon itself can vary. i will therefore conclude with something of an apology. for those in the audience wanting me to give a direct and unequivocal promise as to when bank rate will change, you will, i β m afraid, be disappointed. i can β t. but you should look on the bright side. if there is any value in listening to people like me, it is to help you with what is the best way to try and predict future interest rates - to forecast the economy yourselves ( which is probably more interesting ). after all, if the future were perfectly predictable we wouldn β t have to bother trying. references broadbent ben, 2014, β unemployment and the conduct of monetary policy in the uk β, speech given at the federal reserve bank of kansas city 38th economic symposium, jackson hole, wyoming. campbell john, 1995, β some lessons from the yield curve β, journal of economic perspective, vol. 9, no. 3. eguren - martin f. and n. mclaren, 2015, β how much do uk market interest rates respond to macroeconomic data news? β, bank of england quarterly bulletin. gabaix xavier 2012, β variable rare disasters : an exactly solved framework for ten puzzles in macro - finance β, quarterly journal of economics, volume 127, issue 2, pp. 645 β 700. joyce m. and a. meldrum, 2008, β market expectations of future bank rate β, bank of england quarterly bulletin. macaulay frederick, 1938, β some theoretical problems suggested by the movements of interest rates, bond yields, and stock prices in the united states since 1856 β, national bureau of economic research, pp. 33. mankiw g., and l. summers, 1984, β do long - term interest rates overreact to short - term interest
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it was deemed necessary to help other member states. this is quite understandable in the short term. however, in the long run it is dangerous if countries with a debt problem can expect to receive help no matter what. this can raise the spectre of a dangerous spiral of more and more assistance and less and less confidence in the will of the affected countries to amend their ways. routes to a stable monetary union and such a loss of confidence is just what we are facing right now. the public, and also the markets, have lost faith β in politics, but also in the architecture of monetary union. the question is : how do we go about restoring confidence? let me begin by stating clearly what won β t work. confidence cannot be sustainably restored by putting more and more money on the table β for instance, by constantly ramping up the rescue funds. this strategy ultimately has its limits β be they political or financial. and the proposal of circumventing financial limits by switching on the printing presses is dangerous. of course the resources of a central bank are, in theory, nearly limitless. using them to finance sovereign debt, however, does not solve problems but instead creates new ones. such an approach would endanger the key foundation of a stable currency : the independence of a central bank that is dedicated to price stability. this would throw overboard the very things that need saving. and, as i said earlier : money can β t buy you confidence. the only thing that can be bought is time. with the efsf and the forthcoming esm, instruments to do just that have been created. however, this bought time must also be used to eliminate the root causes of the crisis. from this we can derive three main things that, in my opinion, need to be achieved. firstly, government budgets need to be put back in order. this goes for all euro - area countries, but is particularly incumbent on those countries which have time and again put off the necessary adjustments. efforts are apparently being made at the political level to step up pressure from other member states and the european commission. secondly, the countries affected by the crisis need to conduct structural reforms in order to become more competitive and to promote economic growth. such reforms are, naturally, difficult and painful. the irish case shows, however, that they are possible, and the german case shows that they pay off in the long run. and, thirdly, we need a stable architecture for monetary union. instead of constantly
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bundesbank, in its current forecast for 2012, is expecting germany β s economy to grow by 0. 6 %. however, since the domestic factors for an upswing remain intact, we expect germany to turn onto a recovery path before the end of next year. supported by an expansionary monetary policy and a growing global economy, growth in 2013 should then return to 1. 8 %. this means that, in the next two years, the german economy β s capacity utilisation would therefore be normal. a probable average increase of 2. 5 % for this year is likely to be followed by a return to a much lower cost of living in the coming two years, which the bundesbank currently expects to be 1. 8 % in 2012 and 1. 5 % in 2013. bis central bankers β speeches this forecast, of course, is based on the assumption that the sovereign debt crisis will be gradually overcome and will not continue to escalate. this crisis is, and will remain, the single greatest risk to the financial system and the real economy. for this reason, i would now like to take a closer look at the sovereign debt crisis, focusing on three questions. first, what actually caused the crisis? second, how do we contain the crisis? third, where do we want to go with monetary union in the long run? the causes of the sovereign debt crisis unsound economic developments had apparently been brewing in several euro - area countries for many years. these include, in particular, excessive lending, asset price bubbles and a loss of competitiveness. these structural deficits were the breeding ground for the sovereign debt crisis. the actual weak link at the launch of monetary union, however, was the combination of a single monetary policy and decentralised fiscal policy. monetary policy is set at the european level β by the european central bank. by contrast, responsibility for fiscal policy rests with the individual member states, ie at national level. this severance of responsibilities was already at the centre of the debate when monetary union was being established. in a currency area with a decentralised fiscal policy, the member states have an increased incentive to borrow. any country that goes deeper into debt does not face the consequences by itself, as these are spread across the entire currency area β for example, through every country β s interest rates increasing. the founding fathers of monetary union therefore created a framework of rules to prevent, or at least correct, such unsound developments : the stability and
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can see in the results achieved, as well as in attained and improved macroeconomic stability. as so far, the national bank of serbia will remain committed to achieving its objectives, contributing to the resilience and stability of the domestic financial system. thank you for your attention. i now pass the floor to vice governor diana dragutinovic.
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some time already, indicating confidence in the national bank of serbia β s monetary policy. owing to better export performance, high fdi inflows and greater interest of foreign investors in long - term government securities, the dinar strengthened vis - a - vis the euro by 4. 2 % in 2017. the central bank β s interventions in the foreign exchange market aimed at preventing excessive appreciation of the dinar provided an additional boost to the country β s foreign exchange reserves, whose level, judging by all relevant indicators, is more than adequate. last year was also very successful in terms of fiscal policy results. for the first time since 2005 a fiscal surplus was recorded ( around 1. 2 % of gdp ), while the share of public debt in gdp was slashed by more than 10 pp in 2017 alone. nbs β s monetary policy easing, better positioning of the country in the international financial market, stronger investor confidence, credit rating upgrades and a sharp fall in the country risk premium ensure cheaper sources of funding and reinforce serbia β s fiscal position. against the backdrop of gdp recovery, low and stable inflation, a relatively stable exchange rate and vigorous fiscal consolidation, positive tendencies were recorded both in the corporate and household sectors. a fall in the unemployment rate and rising wages were accompanied with growth in household loans and rising savings. the volume of new household loans increased by 21. 7 % compared to 2016, with almost 71 % concerning dinar loans, which reflects households β confidence in the domestic currency. households were also offered a new form of safe investment after the republic of serbia issued a new financial instrument β savings bonds. the issuance of savings bonds enables citizens to invest in the safest financing instruments and encourages further development of the government securities market. the financial position of corporates improved, as reflected in their almost two and a half times higher positive net financial result compared to 2016. in addition, the lowering of interest rates led to acceleration of credit activity in the corporate sector. excluding the exchange rate effect, total corporate loans ( domestic and foreign ) went up by 5. 7 %, despite considerable clean - ups of bank balance sheets owing to npl write - offs, assignment and restructuring. the serbian financial sector remained stable in 2017 as well, as signalled by all key indicators. given the bank - centric nature of the financial sector, banks β financial soundness and ability to perform their main, financial intermediation function is key to maintaining financial stability. banks operating in serbia rely predominantly on domestic
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