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thus those economies will likely lack growth momentum for the time being, from a longer - term perspective ; however, growth rates are expected to pick up again. bis central bankers β speeches of course, uncertainties remain high regarding the outlook for overseas economies, such as consequences of the government debt problem in the united states, the debt problem and efforts to restore financial soundness in europe, outcomes of structural reforms to address problems such as excess production capacity in the manufacturing sector in china, and efforts to address structural problems in other emerging and commodity - exporting economies, all of which warrant attention. however, even bearing in mind such uncertainties, the baseline scenario is that overseas economies will continue to pick up and japan β s exports will accordingly increase moderately. developments in employment and income from the perspective of a sustainable recovery in domestic demand, i would like to talk next about developments in employment and income. as mentioned earlier, japan β s economy is expected to recover moderately in a virtuous cycle among production, income, and spending, and will achieve the 2 percent price stability target. to this end, it is critical to have an improvement in income in order to underpin private consumption. looking at current employment and income developments, supply and demand conditions in the labor market continue to recover steadily, albeit moderately, due partly to resilient domestic demand, and the unemployment rate has declined to the level observed prior to the lehman shock, of around 4 percent ( chart 6 ). this improvement in supply and demand conditions in the labor market has started to influence nominal wages. the year - on - year rate of change in nominal wages per regular employee has become slightly positive, partly reflecting growth in summer bonuses for the first time in three years and an increase in overtime pay. in addition, the year - on - year rate of growth in hourly nominal wages per parttime employee has been modestly accelerating ( chart 7 ). going forward, as the improvement in supply and demand conditions in the labor market continues, nominal wages are expected to be put under upward pressure gradually. while scheduled wages per employee have remained negative year - on - year, due partly to an increase in the proportion of part - time workers, if these stable wages start to increase, this will contribute to a sustainable increase in household spending. amid increasing corporate profits, partly due to ongoing initiatives through cooperation among the government, workers, and employers, we anticipate an increase in scheduled wages, including an increase in base wages. developments in business fixed
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entities. the fatf considers that if implemented effectively and with respect to applicable human rights provisions by countries and the private sector, targeted financial sanctions are an important means to deprive terrorist and proliferation financiers of their funds, thereby protecting citizens from the threats of crime, terrorism and weapons of mass destruction. in order to be effective, however, these measures also have to be implemented and enforced in practice. 1 / 2 bis central bankers'speeches as an international financial centre, mauritius is committed to protecting its financial services sector from abuse. as a member of the united nations, mauritius has given effect to the sanctions regime under the un security council resolutions as well as the fatf recommendations 6 and 7 though the enactment, in may 2019, of the united nations ( financial prohibitions, arms embargo and travel ban ) sanctions act 2019 β the un sanctions act as it is more commonly referred to. the un sanctions act imposes a number of obligations on financial institutions, namely β prohibition against dealing with funds and other assets ( asset freeze ) of a designated or listed party ; prohibition against making funds and other assets ( and financial services ) available to, or for the benefit of listed parties ; reporting obligations and reporting of suspicious information, amongst others. the un sanctions act further requires financial institutions to implement internal controls and other procedures to enable a financial institution to effectively comply with the un sanctions act. it is therefore imperative for financial institutions to have adequate policies and procedures, systems and controls in place to enable the financial institutions to, amongst others, β identify the existing accounts, transactions, funds or other assets of designated persons and entities ; immediately freeze any identified funds or other assets held or controlled by designated persons and entities and prevent designated persons and entities from conducting transactions with, in or through them. as the central bank of the country and the aml / cft regulator for the banking sector, the bank of mauritius must safeguard not only the financial stability and soundness but also the integrity of the banking sector. non - compliance with the aml / cft obligations, including the targeted financial sanctions, will therefore, be severely dealt with by the bank. on those notes, allow me, ladies and gentlemen, to leave the floor to our panel of distinguished speakers who will guide you on the implementation of these obligations. i thank you for your kind attention and wish you a fruitful workshop. 2 / 2 bis central bankers'speeches
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that monetary policy operates against an everchanging backdrop of ideas about the way the economy works, a theme that lies at the heart of my lecture. first, it is now widely accepted that there is no long - run trade - off between output and inflation. both theory β following friedman and phelps β and practice β particularly in the 1970s β showed that permanently higher inflation does not bring faster growth or higher employment, and may well reduce both. but in the post - war period views were different. in 1959 the radcliffe report on the workings of the monetary system seemed to support the idea of a permanent trade - off. the objectives of monetary policy included, it argued, β a high and stable level of employment β and β reasonably stability of the internal purchasing power of money β. but it went on, β β¦ there are serious possibilities of conflict between them. β 4 second, the rate of inflation in the long run is determined by monetary policy, not by microeconomic factors. again, that is now taken for granted, but much effort was devoted to the imposition of detailed direct wage and price controls in the 1960s and 1970s. nicholas kaldor, adviser to harold wilson, wrote in 1971 that β it is also far more generally acknowledged β even by conservative prime ministers β that the process of inflation is'cost - induced'and not demand - induced ', with the evident implication that it can be tackled only by an incomes policy'β. not many whitehall advisers would give that answer today. third, in the short run monetary policy does affect output and employment and so has the potential to be an effective stabilisation tool. reflecting a post - war consensus that monetary policy was rather ineffective, however, the radcliffe report concluded that β β¦. there can be no reliance on this weapon [ interest rate policy ] as a major short - term stabiliser of demand β 5 it is now accepted that monetary policy lies at the heart of any attempt to stabilise the economy. the source of monetary policy β s influence over output and employment lies in frictions, which mean that prices and wages do not adjust instantaneously to clear markets whenever demand and supply are out of balance. firms change prices only irregularly in response to changes in demand ; wages adjust only slowly as labour market conditions alter ; and expectations are updated only slowly as new information is received. such frictions generate short - run relationships between money, activity and inflation. 6 the nature of frictions goes right to the heart of
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non - bank money might be the next big thing. or they might be a flash in the pan. i don β t have a bet here β i am a central banker not a venture capitalist. my job, as a central banker and regulator β in all of this β is to ensure that financial innovations, including new forms of digital money, do not impair the bank of england β s ability to maintain monetary and financial stability. this shouldn β t be confused with preserving the status quo. financial stability is n β t about protecting incumbent banks or other existing firms from competition. instead financial stability seeks to ensure that people and businesses can rely on essential financial services β like the ability to make a payment or the ability to get a loan β in bad times as well as good. a regulatory framework earlier this week, the bank of england published a discussion paper that examines the implications of stablecoins for its financial and monetary stability mandate. in it we present an illustrative scenario to examine the implications of the emergence of stablecoins and other new forms of digital money. the discussion paper models what would happen if a large number of households and businesses moved their deposits from banks and into a stablecoin or central bank digital currency ( cbdc ). contrary to some press headlines, even such a dramatic shift does not inherently constitute a financial stability risk as long as it happens in an orderly manner. in fact findings show that the implications of this in the long term for the ability of households and businesses to get a loan are relatively modest β although there is considerable uncertainty around this result. as such, while other risks may arise during a transitionary phase, the most significant risk arises from the potential for stablecoins in particular to undermine confidence in money and payments, and hence in the wider financial system. as we discussed a few minutes ago, the risk of a loss of confidence in the credibility and stability of private money is not theoretical. loss of confidence in private money can be a major threat to financial stability. but it is equally true that private money can be made acceptable as a widespread means of payment β indeed, as i covered earlier, the vast majority of money held for transactions in the united kingdom is already private. so, with the right regulation, a stablecoin could potentially be made safe for wide - scale use. our existing regulatory framework seeks to ensure that the public is able to trust the reliability and stability of the money it uses every day. banks are subject to extensive rules and
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##medies suggest themselves : less extreme monetary policies on all sides with some thought given to adverse spillover effects when setting policy, and better global safety nets to mitigate the need for countries to self - insure through reserve buffers. bis central bankers β speeches operationalizing coordination : some suggestions in an ideal world, umps such as qe or qee should be vetted by an independent multilateral agency for their spillover effects. for instance, following a complaint by an impacted country, the independent assessor could analyse the effects of such policies and come to a judgement on whether they follow the rules of the game. policies where the benefits are largely domestic, while the costs fall largely abroad, would be especially carefully scrutinized. and if the assessor deems the policy reduces global welfare, pressure should be applied to stop such policies. the problems with such an idealistic process are easy to see. where is such an impartial assessor to be found? and if a truly independent assessment came to the conclusion that certain policies were in violation, how would such a judgement be enforced? a more modest proposal perhaps then, it would be better to settle for a more modest proposal. central banks should not just worry about the immediate flows of capital to other countries from its policies, but the longer run reaction such as competitive easing or sustained exchange intervention that this would bring about. this would allow central banks to pay more attention to spillovers even while staying within their domestic mandate. at the same time, we should reduce the incentive for countries to engage in a repeat of substantial reserve accumulation by building stronger international safety nets. an interesting proposal from the imf is a liquidity line from the imf, where countries are pre - qualified by the imf and told ( perhaps privately ) how much of a line they would qualify for under current policy β with access limits revised every year after the article iv discussions and any curtailment becoming effective 6 months later. such a pushed line could overcome the problem that no country wants to approach the fund because of the associated stigma. conclusion the current non - system in international monetary policy is, in my view, a source of substantial risk, both to sustainable growth as well as to the financial sector. it is not an industrial country problem, nor an emerging market problem, it is a problem of collective action. the sooner we recognize that, the more sustainable world growth we will have. bis central bankers β speeches
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sector. in times of economic crisis, continued access to finance for small businesses is essential. they are at the heart of the economy. development finance must operate counter cyclically, which means fighting the credit crunch around the globe, in particular in emerging europe including southeast europe, and that is exactly what efse does. but apart from this financial dimension, efse is still taking on other roles in contributing to financial sector development in southeast europe : we appreciate efse β s role as a responsible investor. as such, efse promotes responsible lending practices in the region, refraining from promoting consumer lending or speculative activities. why is this crucial for financial sector development? the financial crisis was in part caused by irresponsible lending practices, in particular by credit technologies employed in the subprime market, the very origin of the current crisis. against this background, there is indeed the valuable lesson to be learnt that responsible finance is a must to ensure a sound financial system. last but not least, i am proud to say that i, as well as my other colleagues from the central banks of the efse partner countries, are all members of the efse advisory group. as such, we are involved in efse β s work. but it is more than a sole advisory board, serving efse as an information source to stay abreast of financial sector developments in the region from a policy maker β s perspective. it provides a platform for regional exchange on financial sector issues. thus, it is a crucial vehicle to strengthen integration and cooperation in southeast europe, which in these current times of turmoil has never been so important. no southeast european country has the resources or the means to make it out for the current crisis alone. thank you for your attention.
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svb was much faster than expected β much faster than lcr calculations take into account. which raises the question : should the lcr be calibrated differently? should we assume higher outflow rates? and do we need to improve our stress tests? we might also ask ourselves if there are shortcomings in the way we look at interest rate risk and the mismatches banks have on their balance sheets. in europe, the basel standards for interest rate risk have been introduced through the institution - specific pillar 2 requirements, and they apply to all banks. the recent turmoil underlines the importance of this regulation, as well as the need for continued vigilance. are we sure that the underlying assumptions for customer behaviour and deposit duration are conservative enough in today's digital world? banks should monitor very closely the assumptions they make when managing interest rate risk and adjust those assumptions if there is reason to do so. 2 / 4 bis - central bankers'speeches and finally, should unrealized losses β that is the difference between market value and the valuation based on historical cost β should those unrealized losses be better reflected in the capitalization of banks? and should we look at how instruments that are not marked to market daily are reflected in liquidity buffers? it would be for example useful to tighten the use of these assets as high - quality liquid assets. these are all valid questions that i think should be addressed. so that we can learn everything there is to learn from what happened at svb. let me now turn to this side of the atlantic, where we had our own shattered windshield. shattered by credit suisse, a bank that had suffered from a series of mismanagement problems in recent years, and that experienced previous outflows of deposits at the end of 2022. here, too, we witnessed a rapid succession of events. it took, almost literally, only one tweet to lead to the downfall of credit suisse. deposit outflows quickly followed, the share price fell and the cds spread spiked. in the end, the swiss national bank provided additional liquidity assistance, and credit suisse was sold to ubs. finma, the swiss supervisor, came with a write - down of credit suisse's at1 securities. the bank was not bailed out. instead capital providers contributed significantly to its restart, exactly as intended by the new legislation after the global financial crisis. at the same time, things did not go as smoothly as
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we had hoped. the decision by finma took investors by surprise. despite the fact that the possibility of such a principal writedown had been included in the relevant at1 prospectuses and mentioned on the bank's investor relations page. and despite the fact that investors had been informed that extraordinary public support could lead to such a write - down. to me, this shows that we need to reflect on the role and functioning of at1 instruments in determining the capital position of banks. another lesson we can learn from both svb and credit suisse is that internal controls, risk culture and governance are root causes that may bring up other deficiencies in a bank in a later stage. if there are several passengers pulling at the wheel as the car is about to drive off a cliff, airbags and seatbelts aren't going to help you. so banks need to be aware of their decision - making procedures and promote a healthy company culture in order not to hamper effective governance and strategic steering. that's why i firmly support that risk culture and governance are priorities in the banking supervision by the ssm. looking at everything that has changed in the european banking sector since 2008, i think we are in a different situation now. european banks have stronger capital positions and the change in interest rate environment is in principle good news for the banks business models. also, european supervisors are well aware that the ongoing, fast - paced changes in monetary policy conditions are increasing our banks'exposure to interest rate risk. within the ssm, we therefore started assessing interest rate risk as early as the second half of 2021, when the first signs of inflationary pressure emerged. and in 2022, interest rate risk was included in our supervisory priorities. so these are all positives. 3 / 4 bis - central bankers'speeches but there is absolutely no reason for complacency. interest rates are still rising, and this leads to risks related to funding costs and interest rate sensitivity, or credit - related risks. and the high level of debt and interconnectedness in the system creates vulnerabilities, as well as a large number of unknown unknowns. not to mention the long - term structural challenges we face, like climate change, the transition to a sustainable economy and the ongoing digital transformation. this means that we need to remain vigilant. in the first place, this goes for the banking sector itself, which needs to make sure that its capital positions, risk management and governance strengthen its res
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given these conditions, we deem that the monetary policy provides the necessary support to stimulate the aggregate demand. bis central bankers β speeches
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2. the greek economy on a growth track the greek economy is currently on a growth track. this was made possible thanks to the completion of the second review and its positive effect mainly on confidence and liquidity. the fact that the economy β s growth dynamics has gained traction is primarily reflected in the positive path of gdp as well as in the improvement of short - term indicators : real gdp grew y - o - y by 0. 4 % in the first quarter and by 0. 8 % in the second quarter of 2017. overall, in the first half of 2017 real gdp increased by 0. 6 %, year - on - year. real gdp growth in the second quarter was mainly driven by an increase of 9. 5 % y - o - y in exports of goods and services, as well as by a rise in public ( 3. 3 % ) and private consumption ( 0. 7 % ), whereas gross fixed capital formation had a negative contribution, largely on account of delays in public investment programme disbursements. industrial production increased y - o - y by 1. 7 % in july 2017 for the tenth consecutive month. overall, between january and july 2017 industrial production increased by 5. 3 % relative to 1 / 6 bis central bankers'speeches the corresponding period of 2016. the volume of retail sales in the first half of 2017 rose by 2. 4 %, year - on - year. the positive momentum of the economy is also mirrored in the labour market, which has been showing signs of improvement since mid - 2014, on the back of structural reforms which allowed for a shift towards more flexible forms of employment. in more detail, employment rose y - o - y by 2. 4 % in the second quarter of the year, while the unemployment rate stood at 21. 2 % in june 2017, down from 23. 5 % one year earlier. the improved economic outlook and the completion of the second review contributed to a decline in greek government bond yields to their end - 2009 levels, thereby facilitating greece β s return to international markets on 25 july. at the same time, the yields of corporate bonds issued by the non - financial sector declined considerably as well. furthermore, fitch upgraded greece β s credit rating, citing sustained recovery and reduced political risk. other key developments that should be pointed out are : the successive reductions in the emergency liquidity assistance ( ela ) ceiling for greek banks, the increase in deposits, the attainment of the operational targets set so far for banks
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beneficiaries of the unprecedented generation of stock market wealth have been those with the skills and the work style to work in high - tech companies, who are rewarded with stock, and those with the courage to invest in high - tech sectors. this observation leads to several questions. first, how skewed is the distribution of gains from the stock market? if gains are indeed skewed, what then is the actual dynamic of the wealth effect? when does an unequal participation in equities become sufficiently broad - based to influence the path of our economy? i think of these questions as providing the microeconomic underpinnings to our macroeconomic performance. finally, we have seen a run - up in margin debt, particularly during the last two months of 1999 and the first month of 2000. i believe that the federal reserve should not foster the impression that we are targeting the equity market by adjusting our one tool in the margin area, namely initial margin requirements. however, given our obvious interest in macro - stability, it is useful to understand more fully what has motivated this recent run - up in margin. some argue that it reflects a desire on the part of investors to capture some capital gains, while others are quick to point out that, as a percentage of market valuation, margin has not increased dramatically. according to another theory, margin borrowing is the realm of the small investor whereas large investors finance equity purchases through other means. in any event, prudent margin procedures are an important part of sound business practice. i expect that those extending margin credit, especially the major clearing firms, as well as investors, and the public at large, would continue to recognize that conservative margin practices are in their own interest. observations and open issues : international markets let me turn now to the role of international developments in policy. our mandate gives priority to price stability and maximum sustainable employment, which i think are the right elements for us to consider in policy deliberations. therefore, i believe that international economic considerations, like stock market valuations, should receive only the focus merited because of their implications for the us economy. certainly, developments in the international sector, in particular a large and growing current account deficit, might indicate that there are imbalances in the economy of the united states. similarly, movements in the exchange value of the us dollar might transmit pressures on inflation, but they also are an important transmission mechanism for monetary policy. however, managing the external balance and the exchange value of the
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investment capital, and valuations in the stock market are one determinant of the cost of capital for businesses. therefore, equity prices affect business fixed investment, a major driver of our economy. given the economic importance of equity prices, it is reasonable for policymakers to monitor developments in this market even if we do not β target β specific values. we have seen in other economies that the bursting of bubbles in financial markets can create unsettled conditions that affect real economic activity. therefore, the maintenance of sound equity market conditions is of concern to policymakers, though how that can be accomplished is often far from clear. my questions about equity markets center on the issue of valuation and the wealth effect. economists propose numerous approaches to determining the β correct β level of equity prices. one such approach compares equity market valuations ( namely earnings - price ratios ) to the return on fixed - income securities, generally the 10 - year us treasury bond. but many observers have suggested that this measure of the β correct β stock market valuation may no longer be accurate. some suggest that the nature of equity markets has changed with the introduction of new instruments that allow for the better management or sharing of risks. therefore, these observers assert that lower premiums over risk - free returns are appropriate and that old relationships between earnings - price ratios and the return on treasury instruments no longer hold. others argue that, in this world of knowledge - intensive industries, accounting treatments do not accurately measure true economic earnings, and therefore measures of β correct β stock valuations do not capture economic reality that market participants see. these assertions are interesting, but they need further investigation. in addition, with respect to proper valuations, we know that many businesses are using options as a form of compensation to employees and that the value of these options is not being recorded as compensation at the time they are granted. we roughly estimate that accounting for the value of options granted would have reduced reported income for s & p 1, 500 firms nearly 10 % in 1998. the same adjustment would have reduced the growth rate of reported income for s & p 1, 500 firms almost 2Β½ percentage points per year, on average, during the 1996 - 98 period. when looked at with these refinements, the current earnings - price ratios appear even more out of alignment with historical experience. when one considers the performance of the stock market during the recent past, it is clear that the gains are not evenly distributed, even among stock market investors. some of the greatest
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is therefore crucial that forthcoming updates of the stability programmes make sufficient headway towards safe budgetary positions in the countries concerned. for all countries it is paramount that pro - cyclical policies be avoided in the current economic upswing. productivity, growth potential and monetary policy over the last fifteen years the euro area has witnessed an almost steady deceleration in the growth rate of labour productivity. this deceleration can be explained by underlying developments, some of which are welcome, whereas others are less favourable. first, it is the effect of some welcome progress in labour market reforms and wage moderation over the last decade. although it is seldom stressed in public discourses, these measures have contributed to remarkable results. over the last eight years ( the period in which the single monetary policy has been in place ), employment has risen by 9. 2 percentage points and the unemployment rate has declined by 1. 9 percentage points. let me also stress that if i compare the 8 years after the euro was set up with the 8 years before the euro, we created 11. 73 million jobs after the euro and only 2. 65 million jobs before the euro. second, and less welcome, the decline in productivity is partly the result of capital investments not keeping up with the pace of job creation. the still existing rigidities in product and labour markets that impair effective competition and flexibility, and more generally the presence of regulatory restraints on business, have prevented firms from investing more strongly in the adoption of new information and communication technologies, which could be effective tools to reduce costs and improve productivity. ultimately, the growth rate of the actively working population and the pace at which technological progress is implemented in the production process are the critical determinants of the growth rate of potential output. it is extremely important, especially at this juncture, to strengthen the reforms aimed at increasing employment, fostering competition in the product markets and creating an environment favourable to the development and implementation of new concepts and technologies. all individuals need to have the opportunity to get appropriate training. in a knowledge economy the wealth and prosperity of european citizens depend on their education, training and skills and the extent to which these skills can flourish in a flexible economy open to innovation and change. there are sometimes calls upon the central bank for more expansionary monetary policy as an incentive to increase productivity. i shall make two points on this. first, monetary policy cannot enhance the trend growth rate of productivity and potential output. a loose monetary policy would just create high inflation and inject
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volatility into the economy. on the contrary, a monetary policy geared to delivering low and stable inflation contributes to creating a favourable macroeconomic environment for employment creation and investment decisions. price stability reduces interest rate premia, and thus the cost of capital, and allows wage and price - setters to focus on productivity, costs and competitive factors, rather than wasting resources on protecting themselves against uncertainty about future inflation. second, the negative productivity developments i have just discussed have not only been a drag on economic activity, they have also put significant temporary upward pressure on inflation, especially after 2001. the increase of unit labour costs due to mediocre productivity, combined with other supply shocks such as oil price increases, have contributed to a level of inflation over the threshold of our definition of price stability of less than 2 %. had we not had a highly credible monetary policy, we would not have been able to anchor solidly medium and long - term inflationary expectations in the euro area and we would have had to pay a significant price in terms of growth and job creation. developments in monetary aggregates and their impact on inflation let me now turn to the important role played by the monetary analysis in the ecb β s monetary policy strategy and interest rate decisions. as you know, we are cross - checking the results of our economic analysis with those of our monetary analysis. allow me to recall that the strong long - term relationship between monetary growth and inflation is one of the best documented empirical findings in economic literature. many studies have documented this relationship in the euro area, demonstrating that it is particularly close over longer horizons. i will add that the national currencies that had the highest level of credibility prior to the introduction of the euro and against which the euro has been benchmarked, all relied on a monetary policy framework embodying a role for monetary analysis. given the ecb β s mandate to maintain price stability, the necessarily medium - term orientation of its strategy to do so and the continuity between the most credible national currencies and the euro, assigning an important role to the analysis of monetary developments is both necessary and very useful. the monetary pillar of the ecb β s monetary policy concept has contributed importantly to the success of our monetary policy and to the anchoring of long - term inflation expectations. in recent years, money has grown strongly while, at the same time, inflation developments have remained under control. this begs the question of how the ecb has interpreted strong monetary growth. the
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key failed institutions in the recent financial crisis β bear - stearns and lehman brothers β were not banks. it is hard to see why this fact suggests that permitting commercial banks to combine their activities with those of investment banks would be a stabilizing factor for the banking system. bis central bankers β speeches g - sifis. in the united states, the dodd - frank act has provided the fdic with the orderly liquidation authority ( ola ) β a regime to conduct an orderly resolution of a financial firm if the bankruptcy of the firm would threaten financial stability. and the fdic β s single - point - ofentry approach for effecting a resolution under the new regime is a sensible proposed implementation path for the ola. closely associated with the work on resolution mechanisms is the living will exercise for sifis. in addition, there are the proposed g - sib capital surcharges and macro stress tests applied to the largest bhcs ( $ 50 billion or more ). countercyclical capital requirements are also likely to be applied primarily to large banks. similarly the volcker rule, or the vickers rules in the united kingdom or the liikanen rules in the euro zone, which seek to limit the scope of a bank β s activities, are directed at tbtf, and i believe appropriately so. what about simply breaking up the largest financial institutions? well, there is no β simply β in this area. at the analytical level, there is the question of what the optimal structure of the financial sector should be. would a financial system that consisted of a large number of medium - sized and small firms be more stable and more efficient than one with a smaller number of very large firms? that depends on whether there are economies of scale in the financial sector and up to what size of firm they apply β that is to say it depends in part on why there is a financing premium for large firms. if it is economies of scale, the market premium for large firms may be sending the right signals with respect to size. if it is the existence of tbtf, that is not an optimal market incentive, but rather a distortion. what would happen if it was possible precisely to calculate the extent of the subsidy or distortion and require the bank to pay the social cost of the expansion of its activity? 35 this could be done either by varying the deposit insurance rate for the bank or by varying the required capital ratios for sifis to fit each bank β s risk profile and
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should be involved in what activities, and who should supervise the resultant organization and its component parts are genuine and important policy issues that should be debated and decided by the congress. to simply dismiss them as turf issues misses the point, i think, and chokes off that debate. conclusion in conclusion, i hope that my remarks have helped you to better understand the forces affecting our banking and financial system. equally important, i hope that i have given you a good feel for the challenges these forces have created for bank supervision, how we are meeting these challenges today, and how we may deal with them in the future. even more importantly, i hope that i have convinced you to support enthusiastically h. r. 10! in all seriousness, it really is time that we modernized our financial system and got on with the business of serving consumers and maintaining a healthy, stable, and competitive banking system.
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action framework which provides a time bound setting to deal with problem banks. β’ adopted measures to improve access of smes to financing through lower reserve requirements and relaxed - but still prudent - regulations on bank branching, risk weights, single borrower β s limit, connected lending and documentation. indeed, the continuing partnership between the bsp and the banking sector has produced very positive results in 2006. economic and monetary policy outlook moving forward, let me share with you our views on the likely economic prospects for 2007. with resilient personal consumption, strong exports performance and robust services and industry output, gdp growth is expected to rise to 5. 7 - 6. 5 percent for 2007. if our fiscal position continues to improve, we can look forward to stronger, more sustained long - term growth. inflation is seen to continue to slow down in 2007, with the government target of 4 - 5 percent likely to be achieved, in the absence of new shocks. nevertheless, there are certain risks to inflation that need to be carefully monitored and assessed, including oil prices, possible impact of el nino on agricultural output, wage adjustments, and possible liquidity expansion. the bsp will continue to keep a vigilant eye on these risks so that it could move pre - emptively against threats to price stability. on the external front, dollar inflows from ofw remittances and foreign investments are expected to remain strong. this should continue to boost our external payments position and enable us to further build up our international reserves. these conditions, in turn, underpin our expectations of a strong peso in 2007. in fact, we are now our reviewing foreign exchange regulations, with further liberalization as our goal. going forward, we will continue to support various legislative initiatives to foster the development of our financial markets, including the creation of a centralized credit information bureau system to improve the quality of financial information available to investors, enhance private sector access to credit, and minimize exposure to risks of financial intermediaries. we are hopeful that the bill will be approved by the bicameral committee and signed into law by the president as soon as possible. the bsp will also continue to support additional legislative initiatives to hasten the development of the philippine capital market, including the amendments to the bsp charter, corporate recovery act, revised company investment act, and the personal equity retirement act. in the banking sector, we expect further expansion of bank resources, improvement in banks asset quality through npl disposal,
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really de novo uk banks, because i think these figures speak for themselves. we have, however, said and done less on ease of exit. by β exit β here we mean the point at which a firm becomes unviable and can no longer sustainably meet obligations to customers using its own resources. while this often ultimately ends in winding - up proceedings, outside of fast failures there is much that can be done beforehand to β ease β their passing1. a reliably safe exit process is a vital corollary of ease of entry, as it allows us to be more accommodating to new entrants. the exception to this, and it is a very important one, is on the form of exit we call β resolution β β led by my colleagues dave ramsden and sasha mills and their hard - working team in the resolution directorate, with extensive support from pra supervisors. on this type of exit we have done and said a lot, not all of it palatable to everyone in the audience but all of it designed to reduce the risk of the cost of bank failures falling onto the taxpayer rather than investors. resolution β which in the case of smaller banks entails a bank resolution process β provides a backstop for the financial system for failed firms, with resolution reserved for larger firms because of the greater scope their failure has to cause collateral damage. quietly, we have done a lot of work on forms of exit that see banks leaving the market before the backstop is needed. in fact, the pra has over the past 8 years facilitated the orderly and solvent exits of 15 banks and 45 insurers. that these firms ( as well as many more credit unions ) exiting has gone largely under the radar and without impacting financial stability is a sign of success, and of a healthy functioning market. almost all of these orderly exits have followed a wind - down or run - off process, which our supervision teams have worked intensively on with firms in order to execute them successfully. but despite the benefits of a safe and orderly exit process for firms before they get to the point of resolution or insolvency, this strategy has not been set out as a prominent feature of our approach for firms. for instance, the team running our recent check - up of the pra found that supervisors of smaller mid - sized firms generally spend a small fraction ( 3 % ) of their time on orderly exit planning in normal times. perhaps partly as a result of this, the business
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bonds 1985 - 2016 % β international interest β iceland rates on indexed long - term treasury bonds ( 5 - 10 years ). international interest rates are the simple average of rates for the us ( from 1999 ), the uk, and germany. the icelandic data are compiled from data on initial offerings of treasury savings bonds and yields on housing financing fund bonds and indexed treasury bonds. the figure from 2016 is the average through mid - november. sources : bank of england, us federal reserve bank, central bank of iceland. this development began long before the financial crisis. the crisis, the ensuing economic contraction, and the monetary easing in response to the crisis amplified this tendency still further, and long - term real rates are now at an absolute historical low. in part, this is related to the business cycle position in larger advanced countries and could turn around in coming years. however, it is unlikely that the decline in real rates over the past few decades will reverse to any large degree in the near future. one of the main theories in conventional economics is that monetary policy cannot affect real variables β including long - term real interest rates β except temporarily. although this is something of a simplification, and it is possible that monetary policy that is either far too tight or far too loose over a long period could have more of an impact than this, particularly in an economy with major imbalances, the theory is nevertheless a close enough approximation under normal circumstances to take account of it here. the period under scrutiny is too long for monetary policy to have had a substantial impact on developments. furthermore, it is clear that the tendency to cut interest rates is not limited to individual countries ; it is an international pattern, although it surfaces to varying degrees in different countries. therefore, the explanations will most likely be found in factors affecting the propensity to save, the willingness to invest, and weaker growth in potential output globally. all three of these have contributed to lower real rates over this period, although reduced growth in potential output might be more recent. the aging of the population, increased public saving in emerging countries ( including the accumulation of foreign exchange reserves ), and increased income inequality within countries are among the factors that have contributed to the increase in the propensity to save. declining relative prices of investment products and increased uncertainty and risk aversion, particularly during the aftermath of the crisis, have negatively affected the willingness to invest. but how does iceland fit into this picture? as chart 1 indicates, developments here have been
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has pulled in this direction as well, as i mentioned, and in a historically important development, inflation expectations are close to target by most if not all measures. if this continues, monetary policy will have greater scope to mitigate the impact if positive developments give way to negative shocks. and according to the bank β s baseline forecast, the outlook is good : continued strong gdp growth and full employment ; a current account surplus throughout the forecast horizon ; the prospect that icelanders will soon own more assets abroad than foreign nationals own in iceland ; and inflation at target for the entire period. one can ask, in view of this, why some observers are so dissatisfied with monetary policy. i will discuss this in more detail later on. but there are significant risks, and we must be on the watch for them. there is an obvious risk of economic overheating. the labour market could spiral out of control. economic policy mistakes could take place β for instance, if fiscal policy begins to pull too strongly in a different direction from monetary policy. we have seen the repercussions of this before. i will now turn to the main topics of my speech today : the level of interest rates in their long - term context, the foreign exchange market, and possible changes to the monetary policy framework. level of interest rates during the run - up to the recent parliamentary elections, there was considerable discussion of the level of interest rates in iceland. if we are to come to a sensible conclusion on whether the nominal interest rate set by monetary policy is appropriate or not in terms of inflation, inflation expectations, the business cycle, a plausible estimate of the equilibrium real rate, and foreign interest rates, it is important that the discussion be based on facts. when we consider the interest rates that are most important for households and businesses β i. e., longer - term real interest rates rather than the rates decided directly by the bank β it is also important to realise to what extent monetary policy can affect those rates. the answer to this is that monetary policy only has a short - term impact on long - run real rates that are ultimately determined by underlying economic fundamentals, not least the interactions between the propensity to save and the impetus to invest. let us now examine a few facts of importance in this context. first, it should be noted that international long - term real rates have been falling over the past three decades, as can be seen in chart 1. chart 1 : real long - term treasury rates on price indexed
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mohammad bin ibrahim : islamic finance and malaysia β s role luncheon address by mr mohammad bin ibrahim, deputy governor of the central bank of malaysia, at the 21st conference of presidents of law associations in asia : β islamic finance and malaysia β s role β, kuala lumpur, 27 july 2010. * * * allow me to express my thanks to the organizers for inviting me to this 21st conference of the presidents of law associations in asia. it is my pleasure to speak before such a distinguished gathering of legal practitioners from all over asia on the topic of islamic finance. the support provided by the legal fraternity has been important in the advancement and significant growth of the islamic finance industry. the existence of appropriate laws and well - developed related institutional framework has been fundamental to the orderly and sound development of islamic finance in malaysia. and our legal community has been at the forefront of advancing the expertise in islamic finance, enabling and contributing to the dynamism of our islamic financial services industry. the contribution of the legal fraternity has been significant given that islamic financial transactions are driven to some extent of the lawyers β ability to structure legal documentation to conform and consistent with the principles advocated by the shariah. it has now been more than three years since the world β s financial systems were engulfed with a crisis of an unprecedented magnitude in modern history. yet its far - reaching repercussions continue to reverberate around the world today. whilst we in asia, backed by the strong fundamentals of asian economies and swift stimulus measures, were able to rebound quickly and lead the world into recovery thus far, recent developments surrounding the ongoing sovereign debt crisis in several advanced economies have sparked fresh concerns which could imperil global growth, derailing the road to a more robust global economic recovery. this unsettling financial environment prompts a reminder that fundamental changes are gravely needed in the global financial sector. much effort in making these changes are still taking place at various international fora, with most have largely centered on reforming financial regulation and supervision. beyond regulatory and supervisory reforms, there is an increased global emphasis for effective, efficient and responsible financial intermediation that promotes economically, socially and environmentally sustainable development and long - term growth. it is now generally accepted that the overriding objective of global development must be founded on genuine and productive arrangements, leading to the path of sustainable growth and shared prosperity. islamic finance is well positioned to meet this objective. malaysia β s long and experienced journey in islamic finance and the various measures that were put in placed
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engaging each and every canadian 22. applying plain language principle is absolutely important. i was also hinting at this earlier when i mentioned that our communication should be in a language and through a media which is understood by the receiver, otherwise it will not serve the purpose. 23. so, the canadian national strategy for financial literacy lists out three goals, sets out three priorities for achieving concrete action and also makes a pitch for measuring the success periodically through a range of evaluation tools supported by research. overall, the document is very focused and i wish if we could come out with a blue print of this kind after the deliberations at this conference, which can serve as a national reference paper, that would be quite an achievement. i understand this cannot be the final word as several initiatives are being taken in this direction simultaneously. but this paper can certainly help in raising a healthy debate and ultimately help in further fine - tuning the approach for promoting financial literacy in the country. with that, i wish this conference all the success. thank you very much! bis central bankers β speeches
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continued to provide policymakers with valuable new insights. i have come to know you and hold you high regard from various research conferences, and i am very grateful to you for being a member of the bundesbank β s research council. i have always enjoyed our discussions so far, and look forward to hearing the β food for thought β you have brought for us today. 4 helmut siekmann this is something of a home game for helmut siekmann, as, for many years, he held the endowed chair of money, currency and central bank law at the imfs here at frankfurt university, who are kindly hosting today β s event. for some time, helmut siekmann also headed the institute as its managing director, and, since 2018, he has been distinguished professor at the imfs. his body of research spans the entire spectrum of public law. furthermore, helmut siekmann has lent his expertise to legislative projects and also represented both federal and state governments before constitutional courts. he has also written and contributed to numerous publications, and his 2013 commentary on european monetary union, which he edited, carries special weight among his works. and the reason is not only that the book counts more than 1, 500 pages, which makes it well visible on my bookshelf. much more importantly, it has become a standard work for legal experts. professor siekmann, you have also undertaken extensive work on non - standard monetary policy β for instance, most recently, concerning the ruling of the federal constitutional court on the public sector purchase programme ( pspp ) of may this year. it β s no secret that you hold a critical view of the eurosystem β s asset purchases. but i don β t ( tonne ) want to give away too much. footnotes : 1. duisenberg, w. f. ( 1998 ), the escb β s stability - oriented monetary policy strategy, speech delivered at the institute of european affairs, 10 november 1998, https : / / www. ecb. europa. eu / press / key / date / 1998 / html / sp981110. en. html 2. weidmann, j. ( 2020 ), change and continuity, speech delivered at deutsche borse β s new year β s reception, 3 february 2020, https : / / www. bundesbank. de / en / press / speeches / change - andcontinuity - 824754 3. issing, o. ( 2003 )
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30 / 09 / 2020 introductory panel statement | deutsche bundesbank introductory panel statement speech at the institute for monetary and financial stability β ecb and its watchers xxi conference β 30. 09. 2020 | frankfurt am main | jens weidmann 1 introduction 2 christian noyer 3 jordi gali 4 helmut siekmann 1 introduction chere christine, good morning ladies and gentlemen, i am delighted to moderate the ο¬rst debate today. dear volker, thank you very much for your invitation and for organising this conference as a hybrid event. in times like these, we are becoming more and more experienced in communicating virtually. nevertheless, there is always a lingering sense of uncertainty about whether the technical set - up will work properly. before our single monetary policy started, there may also have been doubts about whether the eurosystem could fulο¬l its mandate to maintain price stability. looking back now β on more than 21 years of monetary policy and also β ecb watching β β the eurosystem has delivered on the promise made to the people of europe to keep prices stable. this has been a truly remarkable success. one key element in this has been the clarity of the mandate itself. in late 1998, the ecb β s ο¬rst president, wim duisenberg, outlined the strategy for the single monetary policy in a speech. he started from his conviction that, by maintaining price stability, β monetary policy makes the https : / / www. bundesbank. de / en / press / speeches / introductory - panel - statement - 846034 1 / 5 30 / 09 / 2020 introductory panel statement | deutsche bundesbank greatest possible contribution towards raising the standard of living of europe β s citizens and improving growth and employment prospects β. [ 1 ] this fundamental tenet also inspired the european treaties, which enshrine price stability as our primary objective. so to answer the question raised in the title of our session : the mandate needs no modiο¬cation when viewed from this perspective. at any rate, the eurosystem takes its mandate as a given. and our actions will continue to be geared towards achieving our overriding objective of price stability. however, the treaties are silent on how to deο¬ne or measure price stability. nor do they specify a reaction function for monetary policy or a hierarchy of instruments needed to ensure price stability. nor do they tell us how to communicate with the public. choices like these constitute the monetary policy strategy. given the profound changes
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alan greenspan : the critical role of education in the nation β s economy remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, at the greater omaha chamber of commerce 2004 annual meeting, omaha, 20 february 2004. * * * the united states economy has long been characterized by a strong tradition of entrepreneurial spirit among our business people, a high level of skill among our workers, and an openness by firms and workers alike to intense competition within and beyond our borders. those attributes have given us a standard of living unparalleled for so large a population - and one that has risen steadily over the history of our nation. but with that bounty has also come the inevitable stresses and anxieties that accompany economic advance. one concern that has persisted for some time is the fear that we are irreversibly losing manufacturing jobs because of businesses β efforts to extract rapid gains in production efficiencies and to cut labor costs by tapping the lower - wage economies of asia and latin america. more recently, similar concerns have arisen about the possibility that an increasing number of our better - paying white - collar jobs will be lost to outsourcing, especially to india and china. many of these jobs are in the service sector, and they were previously perceived as secure and largely free from the international competition long faced in the manufacturing sector. there is a palpable unease that businesses and jobs are being drained from the united states, with potentially adverse long - run implications for unemployment and the standard of living of the average american. the issue is both important and sensitive, dealing as it does with the longer - term wealth of our nation and with the immediate welfare of so many individuals and communities. in the debate that has ensued, a large gulf is often perceived between the arguments of economists, who almost always point to the considerable benefits offered over the long term by exposure to free and open trade, and the obvious stress felt by those caught on the downside of turbulence created by that exposure. it is crucial that this gulf be bridged. as history clearly shows, our economy is best served by full and vigorous engagement in the global economy. consequently, we need to increase our efforts to ensure that as many of our citizens as possible have the opportunity to capture the benefits that flow from that engagement. for reasons that i shall elucidate shortly, one critical element in creating those opportunities is to provide rigorous education and ongoing training to all members of our society
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. this proposal is not novel ; it is, in fact, the strategy that we have followed successfully for most of the past century and a strategy that we now should embrace with renewed commitment. over the long sweep of american generations and waves of economic change, we simply have not experienced a net drain of jobs to advancing technology or to other nations. since the end of world war ii, the unemployment rate in the united states has averaged less than 6 percent with no apparent trend ; and as recently as 2000, it dipped below 4 percent. moreover, real earnings of the average worker have continued to rise. over the past century, per capita real income has risen at an average rate of more than 2 percent per year, declining notably only during the great depression of the 1930s and immediately following world war ii. incomes trended higher whether we had a trade deficit or a trade surplus and whether international outsourcing was large or small. the reason for this positive long - run trend in living standards appears to be that more fundamental economic forces are determining real incomes, irrespective of the specific jobs in which they are earned and irrespective of the proportion of domestic consumption met by imports. intensive research in recent years into the sources of economic growth among both developing and developed nations generally point to a number of important factors : the state of knowledge and skill of a population ; the degree of control over indigenous natural resources ; the quality of a country β s legal system, particularly a strong commitment to a rule of law and protection of property rights ; and yes, the extent of a country β s openness to trade with the rest of the world. for the united states, arguably the most important factor is the type of rule of law under which economic activity takes place. when asked abroad why the united states has become the most prosperous large economy in the world, i respond, with only mild exaggeration, that our forefathers wrote a constitution and set in motion a system of laws that protects individual rights, especially the right to own property. nonetheless, the degree of state protection is sometimes in dispute. but by and large, secure property rights are almost universally accepted by americans as a critical pillar of our economy. while the right of property in the abstract is generally uncontested in all societies embracing democratic market capitalism, different degrees of property protection do apparently foster different economic incentives and outcomes. someone who owns a piece of land, but is restricted to a specific use, does not have unequi
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. while the board's proposed rule suggests that it could result in benefits to consumers, i am concerned that the costs of this fee cap revision for consumers - through the form of increased costs for banking products and services - will be real, while the benefits to consumers - such as lower prices at merchants - may not be realized. 5 at its heart, the proposal is unfair to many issuers and in some ways regressive in its impacts. the proposed rule acknowledges the varied size, business models, and product offerings of banks subject to the interchange fee cap and yet aims to achieve " rough justice " by establishing a single cap that applies to all covered issuers. larger issuers - those with the highest transaction volumes, greater negotiating power, and the most efficiencies that come from scale - would continue to have a significant competitive advantage under this rule. even the lower interchange fee may allow them to continue profitably operating their debit card programs. by contrast, smaller issuers subject to the cap - those with smaller transaction volumes, less negotiating power, and fewer efficiencies in scale - would likely be at a significant competitive disadvantage. retail banking is an essential, core function for many smaller issuers, so this pricing dynamic may not ultimately lead them to abandon their debit card programs. but it is certainly possible that banks will be forced to either pass costs through to customers or operate their debit card programs at a loss, which many banks do today. under the proposed rule, a staggering one - third of bank issuers would not be able to recover even 6 / 10 bis - central bankers'speeches the partial costs that factor into the interchange fee cap. for banks that operate debit card programs at a loss, presumably those costs will need to be recovered elsewhere, such as through higher borrowing costs for bank customers or through other fees for services provided, which are also targeted by the banking agencies for elimination. higher borrowing costs or fees could be particularly harmful for low - income customers who may not qualify for credit card products or other alternatives. the fees banks charge for provided services have been criticized by some regulators, but in many instances these fees - including interchange fees - support a bank's ability to offer low - cost or no - cost banking products or services to customers. if finalized as proposed, this revision may force banks to discontinue their lowest - margin products, including options designed to increase financial inclusion and access for lmi individuals and families. i sincerely hope
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in nonbank entities and activities. while the causes of the crisis were complex, i will start by telling part of the tale of how nonbank distress was transmitted to the broader financial system. the story begins with nonbank mortgage companies, which were important originators of subprime and prime mortgage loans, typically securitizing them or selling them to investment banks to be securitized. rumors of troubles among these firms were circulating in 2006 as house prices started to decline, and a large firm filed for bankruptcy in december 2006. 2 then new century, at one point the second largest subprime lender, filed for bankruptcy in april 2007 because its funding had disappeared as a result of fears about losses. many more followed in 2007 and 2008. replacement of nonbank lenders β capacity to process mortgage applications and to fund mortgage loans occurred only partially and slowly. the views expressed are my own and not necessarily those of others at the board, on the federal open market committee, or in the federal reserve system. ownit mortgage solutions, one of the top 20 subprime mortgage originators nationally, filed for bankruptcy on december 28, 2006. virtually all such firms have since either failed or been acquired. bis central bankers β speeches next step : the distress in mortgage markets was amplified in the broader financial system in several ways, including something similar to a bank run but which instead occurred on assetbacked commercial paper ( abcp ) vehicles. these vehicles invested in private - label mortgage securitizations and other long - term debt securities but were funded with short - term commercial paper. buyers of the commercial paper issued by the abcp vehicles withdrew funding starting in the late summer of 2007. the volume of assets in the vehicles was large, about $ 700 billion, and after the run, the ability of the financial system to fund credit through many types of assetbacked securities became constrained. 3 the runs on abcp also put considerable pressure on the banking system because of the liquidity backstops that banks had provided to the vehicles. 4 some of the guarantors also insured mortgage - backed securities, and when doubts arose about the ability of the guarantors to pay claims on mortgage - backed securities, the credibility of their guarantees of municipal securities was also reduced. municipalities then found it more difficult and costly to issue debt even though their activities were otherwise unrelated to subprime mortgages. 5 next, the crisis spread to nonbank finance companies, which made a substantial fraction
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nicholas c garganas : the greek experience speech by mr nicholas c garganas, governor of the bank of greece, at the economist conference on " social security reform in greece ", athens, 14 february 2008. * * * i would like to thank the organisers of the economist conference on " social security reform in greece " for their invitation and for this opportunity to speak on the subject of the implications of ageing populations β a subject of great importance for many countries, especially for greece. a main accomplishment of social policies in the second half of the last century β at least in the case of advanced countries β is that being old is no longer considered synonymous with a low quality of life. that accomplishment has been made possible through the provision of public pensions. in greece, of course, a significant proportion of pensions are still very low, but this can be considered a consequence of inefficiencies and weaknesses in the social security system as it stands at present. yet, as europe β s population ages, a demographic shift will take place in the next forty to fifty years that will pose significant challenges to the pension systems of our countries. the ageing of society will make it increasingly difficult to maintain an adequate level of public pensions for our older citizens. to provide an idea of the demographic changes that are expected to take place in the next forty to fifty years, consider the following projections with respect to greece, issued by the european union β s economic policy committee. these projections cover the period from 2005 to 2050. β’ projection number 1 : here is some good news β people will live longer, so that the population comprised of ages 65 or above will increase by some 60 per cent. β’ projection number 2 : low fertility rates will contribute to a decline of some 20 per cent in the working - age population, defined as ages 15 to 64. β’ putting these two projections together means that the ratio of the elderly population to the working age population β what is known as the old - age dependency ratio β is expected to more than double between 2005 and 2050, reaching more than 60 per cent. this would mean that while there are currently more than three workers for each pensioner, in 2050 there would be only 1. 6 workers per pensioner. thus, greece, like many other european countries, will be confronted with a sharp rise in the old age dependency ratio. this situation, in and of itself, however, need not put pressure on the financing of the country β s
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pension system. in particular, if the proportion of the population of working age that is employed were to rise, this rise could help offset some of the fall in the working - age population. unfortunately, even here the news is not favourable. the employment rate is projected to rise modestly, but not enough to raise the level of employment. in fact, the level of employment is projected to decline by some 13 per cent between 2005 and 2050. to sum up what i have said so far, thanks to advances in health care, people will be living longer, so that there will be a large increase in the proportion of the population aged 65 or more in the years ahead. at the same time, there will be fewer people of working age and fewer people actually working. what, then, are the implications of these demographic projections? for one thing, they imply a sharp fall in greece β s potential gdp growth, perhaps more than halving potential growth between now and the 2030s and 2040s. with more people, and fewer producing goods and services, there will be less output for each of our citizens. for another thing, the projections, if realised, would put enormous strains on our public finances. to give you an indication of the magnitude of these strains, according to projections prepared in 2002, pension expenditures in greece will rise from 12. 4 % of gdp in 2005 to 22. 6 % of gdp in 2050, i. e. by 10. 2 percentage points of gdp. the net increase in total old age - related expenditure ( excluding spending on long - term care, for which no official figures are available ) is projected to be 11. 5 percentage points of gdp, reaching 32. 7 % of gdp in 2050. this situation compares with rises in pension expenditures of slightly more than two percentage points of gdp in both the eu25 and the eu15 over the same period, reflecting the implementation of important pension reforms in many of these countries since the 1990s. consideration of this set of facts yields the conclusion that pension reforms, public expenditure, employment, and growth are interdependent. pensions constitute a major share of public expenditure and that share is projected to rise sharply in the years ahead. moreover, pension systems and labour - market performance have close ties, and these ties have important implications for economic growth. pension systems embed incentives that affect the labour supply of, and demand for, mature workers, while a high level of employment also ensures high levels of contributions into the
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a moment and look at what we do in normal times. in normal times, we auction a given amount of central bank credit, mainly in refinancing operations with a one - week maturity, and let competition among bidders determine the interest rate at which that credit will become available to the banking system as a whole. this means that the liquidity injection is restrained by a policy decision. last autumn, we changed that. as the demand for liquidity by individual institutions expanded abnormally and markets dramatically ceased to allocate liquidity, we have turned that practice around. we have been determining the lending rate β at a very low level β and we stand ready to fill any shortage of liquidity that might occur at that interest rate for maturities of up to six months. this means that we currently act as a surrogate for the market in terms of both liquidity allocation and price - setting. 2 ) the second building block of our new liquidity management approach is the list of assets that we take as collateral. this list was already very large before the crisis, but we have enlarged it even further and now accept an even wider range of securities as collateral. government securities account for only 44 % of the nominal value of securities on the list. the rest are private securities. in contrast to many other central banks, the ecb already intermediated private paper before the crisis and we have even strengthened this aspect in the crisis by accepting an even wider range of private paper. the total value of these eligible securities is currently β¬12. 2 trillion, equivalent to 130 % of gdp in the euro area. this very ample eligibility of collateral has dramatically eased banks β liquidity constraints during the crisis and, ultimately, it has encouraged them to extend new credit or continue rolling over maturing loans. 3 ) the first two building blocks offer unlimited refinancing against a very wide range of collateral. but they can only reach the financial system if they are coupled with the third building block, namely the very large number of counterparties that have always been able to take part in our refinancing operations. even before the crisis, 1, 700 counterparties fulfilled all relevant criteria. this number was higher at the time than for the other major central banks. following the changes to our operational framework in october 2008, this number rose even further. our measures to safeguard the banking system β s access to liquidity have resulted in a considerable expansion of the eurosystem β s balance sheet, which
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securitisation market : causes, roadblocks and how to deal with them β, joint paper, april 2014. see also the communication from the commission on long term financing of the european economy, com ( 2014 ) 168 final, march 2014. bis central bankers β speeches
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. we agreed to do so because this is exactly the sort of initiative that i have been describing above. the lack of integration of short - term securities markets, relative to other segments of the money market, was identified some time ago. competition alone did not allow us to overcome this problem, and while public action may be warranted to remove obstacles to this integration - in particular in the legal field it cannot achieve it alone. co - ordinated action by market participants may be the best means to address this issue, and that is why we welcomed the initiative of the aci and have lent our logistical support to it. conclusions what i conclude from these examples is the following. there are possible ways, in between pure legislative or regulatory action on the one hand, and sheer competition on the other, for promoting the integration of the financial markets. one such way is coordination within the private sector. it is a common experience around the world that where this avenue is used without endangering competition, it can produce the desirable results. our assessment is that this particular avenue has perhaps not been explored as widely as could have been the case in europe. we, at the ecb, are willing to support this co - ordination within the private sector. i insist, however, that initiatives have to come from the market, from you. our role is to acknowledge and help to bring about your full potential. yours is to take advantage - both individually and collectively - of the opportunities open to you. together, we can progress towards a level of market integration that can make eu markets more attractive, more resilient and more effective. this would benefit each market user, it would benefit the financial community as a whole and - even more importantly from my point of view as a central banker - it would help to unleash more growth potential for the european economy.
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as standing for high quality. but international trade is not a process in which only one party gains. each export corresponds to an import, and economies benefit mutually from each other. many goods that are bought in the euro area are made in other countries, far away from their consumers. transport costs have decreased, technology has become universal, information is readily available at low cost, and tastes have been converging. during the last three decades tariffs have halved and over 230 trade agreements between various countries have entered into force. all these developments have resulted in a steady opening of markets in europe and worldwide. in the early 1970s global exports accounted for only one tenth of world gdp, but they have increased to one quarter of world gdp today. this is a reflection of the dramatic deepening of global economic interlinkages in recent years. in my view, it is important to bear in mind that regional trade integration does not hinder global integration, but is in fact one efficient way of fostering it. there is also a more recent phenomenon that is less visible, but even more dynamic, namely global financial integration. by this i mean the integration of local and national financial markets into a more unified international financial market. only a few decades ago, the realisation of an investment project was largely contingent on the availability of capital in the local economy. today the opportunities to raise finance as well as to invest capital are truly global. the substantial number of bilateral investment treaties and the liberalisation of capital accounts have further encouraged cross - border investment. 1 while in the 1970s over 80 % of all countries restricted access to foreign capital, today only 60 % of developing countries and no industrialised countries have capital accounts which are still more or less closed. 2 in the 1970s, worldwide cross - border holdings of assets amounted to only one tenth of world gdp. since then, cross - border capital flows have steadily increased, and countries have now accumulated foreign assets in an amount equivalent to the annual gdp of the entire world. in 2003, euro area residents held foreign capital with a total value of 7. 6 trillion euro, a figure that is somewhat higher than the euro area β s annual gdp. but financial integration is also intrinsically linked to the real economy. over the past 30 years, annual foreign direct investment ( or fdi ) worldwide grew from around 8. 5 billion euro ( 10 billion us dollars ) to almost one thousand billion euro ( about 1200 billion us dollars ). the value of foreign - owned companies around the
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that number can and probably will change over time, but whatever the destination, there will be a variety of ways to get there, with the speed and timing of cuts determined by economic conditions we encounter on the way. the motivation for continuing to cut the policy rate at the fomc's next meeting begins with how restrictive the current setting is. after we cut by 75 basis points, i believe the evidence is strong that policy continues to be significantly restrictive and that cutting 3 / 4 bis - central bankers'speeches again will only mean that we aren't pressing on the brake pedal quite as hard. although monthly core inflation has flattened out in recent months, there is no indication that the pace of price increases for key service categories such as housing and nonmarket services should remain at their current levels or increase. another factor that supports a further rate cut is that the labor market appears to finally be in balance, and we should aim to keep it that way. conversely, based on what we know today, one could argue that there is a case for skipping a rate cut at the next meeting. monthly readings on inflation have moved up noticeably recently, and we don't know whether this uptick in inflation will persist, or reverse, as we saw a year ago. due to strikes and hurricanes, recent labor market data are giving us a cloudy view of the true state of the labor market that won't be clearer for a couple of months. as a result, one could advocate for not changing the policy rate at our upcoming meeting and adjusting our policy stance in a measured way going forward. in fact, if policymakers'estimates of the target range at the end of next year are close to correct, then the committee will most likely be skipping rate cuts multiple times on the way to that destination. in deciding which of these two approaches to take at the fomc's next meeting, i will be watching additional data very closely. tomorrow, we get the labor department's job openings and labor turnover survey. on friday, we get the employment report, which, as i noted, may have misleading payroll data. then next week, we get consumer and producer price indexes for november, which will allow a good estimate of pce inflation for the month. finally, on the first day of the fomc meeting, we receive retail sales data for november that will give us an idea of how consumer spending is holding up. all of that information will help me decide whether to cut
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and access to credit remained restricted for many potential borrowers. consumer sentiment, which dropped sharply last summer, has since rebounded but remains relatively low. in the housing sector, affordability has increased dramatically as a result of the decline in house prices and historically low interest rates on conventional mortgages. unfortunately, many potential buyers lack the down payment and credit history required to qualify for loans ; data for the fourth quarter of 2011 from the national income and product accounts reflect the advance estimate released on january 27, 2012. in january, 5 - 1 / 2 million persons among those counted as unemployed β about 43 percent of the total β had been out of work for more than six months, and 8 - 1 / 4 million persons were working part time for economic reasons. bis central bankers β speeches others are reluctant to buy a house now because of concerns about their income, employment prospects, and the future path of home prices. on the supply side of the market, about 30 percent of recent home sales have consisted of foreclosed or distressed properties, and home vacancy rates remain high, putting downward pressure on house prices. more - positive signs include a pickup in construction in the multifamily sector and recent increases in homebuilder sentiment. manufacturing production has increased 15 percent since the trough of the recession and has posted solid gains since the middle of last year, supported by the recovery in motor vehicle supply chains and ongoing increases in business investment and exports. real business spending for equipment and software rose at an annual rate of about 12 percent over the second half of 2011, a bit faster than in the first half of the year. but real export growth, while remaining solid, slowed somewhat over the same period as foreign economic activity decelerated, particularly in europe. the members of the board and the presidents of the federal reserve banks recently projected that economic activity in 2012 will expand at or somewhat above the pace registered in the second half of last year. specifically, their projections for growth in real gdp this year, provided in conjunction with the january meeting of the federal open market committee ( fomc ), have a central tendency of 2. 2 to 2. 7 percent. 3 these forecasts were considerably lower than the projections they made last june. 4 a number of factors have played a role in this reassessment. first, the annual revisions to the national income and product accounts released last summer indicated that the recovery had been somewhat slower than previously estimated. in addition, fiscal and financial strains in
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you will have opportunities to engage in this work and i hope you will. i look forward to working with you β and to your questions. all speeches are available online at www. bankofengland. co. uk / news / speeches
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supply by the pboc was mainly a passive consequence of accumulation in foreign reserves. the independence of monetary policy has increased noticeably. third, another feature of china's monetary policy is its combination of aggregate and structural considerations. our sound monetary policy not only includes aggregate support, but also has structural characteristics. we have leveraged structural monetary policy tools to enhance the financial support for agriculture, small and medium enterprises ( smes ), the private companies and other structural weak links on the supply side. as a result, finance has now become more accessible, available and affordable. as of end - september 2022, nearly 54 million smes have gained access to inclusive loans, four times that of end - 2017, with outstanding loans hitting $ 3. 5 trillion equivalent ( rmb23 trillion ). the weighted average interest rate on new inclusive loans issued in september was 4. 7 %, down by 180bps compared with the same period of 2017. different structural monetary policy tools can be either long - term or ad - hoc. central bank relending and re - discounts in support of the agrarian sector and smes, which you are all quite familiar with and have an outstanding value of $ 360 billion equivalent ( rmb 2. 5 trillion ), are typical examples of long - term tools. the typical ad - hoc tools that we put in place in recent years, however, include the special - purpose relending facilities in support of scientific and technological innovation, transportation and logistics, equipment upgrading, etc. with an outstanding value of $ 430 billion equivalent ( rmb3 trillion ), these ad hoc instruments have well - defined expiration dates or exit plans. when their policy goals are met, they will be phased out in an orderly manner. 2 / 3 bis - central bankers'speeches last but not least, i would like to talk about the role of structural monetary policy in housing and green finance. china's housing sector is linked to a lot of upstream and downstream industries. therefore, its healthy development is of great significance to the overall economy. the housing market is undergoing some adjustments. joining hands with relevant ministries and local governments, we have tailored policy solutions to local specificities. such tools include cutting mortgage rates and down payment ratios, with an aim of supporting real housing needs. in some previous incidents, some troubled developers were unable to complete pre - sold housing projects on time. in response, we've issued $ 30 billion equivalent ( rmb200 billion ) worth of
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generation shouldering at least some of that burden, especially in light of the sacrifices that previous generations made to give us the prosperity we enjoy today. the choice of which generations should bear the burden of population aging has consequences for economic efficiency as well as for intergenerational equity. if we decide to pass the burden on to future generations - that is, if we neither increase saving now nor reduce the benefits to be paid in the future by social security and medicare - then the children and grandchildren of the baby boomers are likely to face much higher tax rates. a large increase in tax rates would surely have adverse effects on a wide range of economic incentives, including the incentives to work and save, which would hamper economic performance. alternatively, to avoid large tax increases, the government could decide to sharply reduce non - entitlement spending in the future. however, such actions might also have important social costs that need to be taken into consideration. sharing the burden of population aging if, as a nation, we were to accept the premise that the baby - boom generation should share at least some of the burden of population aging, what policy steps might be implied? as i have already noted, from a broad economic perspective, the most useful actions are likely to be those that promote national saving. perhaps the most straightforward way to raise national saving - although not a politically easy one - is to reduce the government β s current and projected budget deficits. to the extent that reduced government borrowing allows more private saving to be used for capital formation or to acquire foreign assets, future u. s. output and income will be enhanced and the future burdens associated with demographic change will be smaller. increasing private saving, which is the saving of both the corporate sector and the household sector, is likewise desirable. corporate saving, in the form of retained earnings, is currently at relatively high levels, but household saving rates are exceptionally low. 3 a broad - based increase in household saving would benefit both the economy and the millions of american families who currently hold very little wealth. unfortunately, many years of concentrated attention on this issue by policymakers and economists have failed to uncover a silver bullet for increasing household saving. one promising area that deserves more attention is financial education. the federal reserve has actively supported such efforts, which may be useful in helping people understand the importance of saving and to learn about alternative saving vehicles. psychologists have also studied how the framing of alternatives affects people β s saving decisions. for example, studies suggest that employees
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of the disease and the effects of measures to contain it. until the public is confident that the disease is contained, a full recovery is unlikely. moreover, the longer the downturn lasts, the greater the potential for longer - term damage from permanent job loss and business closures. long periods of unemployment can erode workers β skills and hurt their future job prospects. persistent unemployment can also negate the gains made by many disadvantaged americans during the long expansion and described to us at our fed listens events. the pandemic is presenting acute risks to small businesses, as discussed in the monetary policy report. if a small or medium - sized business becomes insolvent because the economy recovers too slowly, we lose more than just that business. these businesses are the heart of our economy and often embody the work of generations. with weak demand and large price declines for some goods and services β such as apparel, gasoline, air travel, and hotels β consumer price inflation has dropped noticeably in recent months. but indicators of longer - term inflation expectations have been fairly steady. as output 1 / 3 bis central bankers'speeches stabilizes and the recovery moves ahead, inflation should stabilize and then gradually move back up over time closer to our symmetric 2 percent objective. inflation is nonetheless likely to remain below our objective for some time. monetary policy and federal reserve actions to support the flow of credit the federal reserve β s response to this extraordinary period is guided by our mandate to promote maximum employment and stable prices for the american people, along with our responsibilities to promote the stability of the financial system. we are committed to using our full range of tools to support the economy in this challenging time. in march, we quickly lowered our policy interest rate to near zero, reflecting the effects of covid19 on economic activity, employment, and inflation, and the heightened risks to the outlook. we expect to maintain interest rates at this level until we are confident that the economy has weathered recent events and is on track to achieve our maximum - employment and price - stability goals. we have also been taking broad and forceful actions to support the flow of credit in the economy. since march, we have been purchasing sizable quantities of treasury securities and agency mortgage - backed securities in order to support the smooth functioning of these markets, which are vital to the flow of credit in the economy. as described in the june monetary policy report, these purchases have helped restore orderly market conditions and have fostered more accommodative financial conditions. as
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continued to be characterised by heightened uncertainty. while the external environment has had a more dominant influence on the outlook, domestic factors also played a role. headline inflation is now expected to average 4. 8 % in 2018 ( down from 4. 9 % ) before increasing to 5. 6 % in 2019 and decreasing again to 5. 4 % in 2020 ( up from 5. 2 % in both years ). the forecast for core inflation is expected to average 4. 6 % in 2018 ( up from 4. 5 % ), 5. 5 % in 2019, and 5. 3 % in 2020 ( up from 5. 1 % in both years ). although the forecasts suggest that inflation outcomes will remain within the inflation target range, the mpc is concerned that they are drifting further away from the midpoint of the target band. the mpc deemed the key risks to the inflation outlook to be higher oil prices, a more depreciated exchange rate, and higher electricity prices. although oil prices have retreated from the recent high levels of around usd80 per barrel, they are expected page 10 of 12 to still remain at relatively elevated levels over the forecast period. together with the depreciation of the domestic currency, upside risks to domestic fuel prices and ultimately to inflation remain. the nominal effective exchange rate of the rand has depreciated by almost 9 % and exhibited increased volatility from the first quarter of 2018 to the second quarter. the increased volatility resulted from a deterioration in sentiment towards emerging markets, owing to the combined headwinds of tightening financial conditions, weakening economic growth, and rising trade tensions, which resulted in capital outflows. the rand is likely to continue to be vulnerable to these developments. in addition, electricity prices continue to pose a further upside risk given the uncertainty around the speed at which eskom will adjust electricity tariffs. should these risks materialise, it may become necessary to adjust monetary policy settings in the future to ensure that inflation remains more comfortably inside the target range and closer to the midpoint, and to ensure that inflation expectations are anchored towards the midpoint of the target range. the mpc will not hesitate to act when deemed appropriate. however, in line with flexible inflation targeting, the mpc will also continue to be careful not to overreact to initial price pressures and be guided by its assessment of second round effects of any price pressures, which could contribute to inflation moving too far away from the mid - point of the range
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are not captured well in methodologies required by the current rule specifying a ten - day holding period and a 99 percent confidence interval. the inability of var calculations to adequately measure the risks of certain traded positions may give rise to arbitrage opportunities between the banking book and the trading book because of the lower capital charge that may be afforded trading positions under a var approach that is not optimally risksensitive. the u. s. banking agencies are in the process of developing a notice of proposed rulemaking to implement the market risk revisions in the united states. these revisions will apply to those banks with significant trading activity, regardless of their basel ii status. bridging the gap between regulatory capital requirements and internal bank practice with basel ii, u. s. supervisors are attempting to use the internal risk - measurement and - management information produced by large complex institutions to manage their own risks in such a way as to augment the risk sensitivity and overall meaningfulness of minimum regulatory capital measures. basel ii, by tying regulatory capital calculations to bank - generated inputs, offers greater transparency about risk - measurement and management practices that stand behind the inputs provided by banks and exactly how they are calculated. supervisors, through their analysis of bank inputs to basel ii, will develop an even better assessment of institutions β risk - measurement and risk - management practices. furthermore, the added transparency in pillar 3 disclosures is expected to give market participants a better understanding of an institution β s risks and its ability to manage them. of course, we understand that the extent that internal inputs from bankers can be used in regulatory capital requirements is limited, for a variety of reasons. today β s banks have highly customized models for running their businesses, which of course is entirely appropriate. but, as supervisors, we need to ensure adequacy and enforceability of our minimum regulatory requirements and maintain some consistency across banks. naturally, as we seek to develop a common framework that will work for large complex banks globally, we recognize an inherent tension between our regulatory rules and internal bank practice. we are working to strike the right balance to achieve our goals without making basel ii purely a compliance exercise and creating undue burden. need for strong capital basel ii is intended to improve regulatory capital requirements, especially for large complex organizations, through greater risk sensitivity of regulatory capital and improved linkage to banks β actual capital risk management. that is why we have chosen to adopt only the most advanced options for credit risk and operational risk minimum regulatory capital calculations in the united states
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are appropriate and efficient. that is particularly true if the planned enlargement of the eu, and also of emu, is taken into account. there is a lot of evidence suggesting that the latest amendment of the ec treaty by the treaty of amsterdam ( known as the maastricht ii treaty ) has failed to solve these major problems. all this makes two things very clear : 1. the launch of the euro is a political act, and far more than a mere technical development. it has substantial implications for economic and political structures and responsibilities in europe. 2. the stability of the euro is a major challenge not only to the eurosystem but likewise to the economic and fiscal policies of member states and to the coordination of those policies. to sum up, i should like to emphasise once again that, all in all, the euro has got off to a good start, also in the light of the counterinflationary policy setting. but the acid test still lies ahead. the major opportunities afforded by the euro are accompanied by corresponding risks and challenges. the fate of the euro in the years ahead will hinge crucially on whether member states become aware of this task, and on how they address it. this issue will certainly also play a major role in the forthcoming debates in the uk and other countries on joining the eurosystem. i very much hope that the behaviour of the euro member states will make it easier for the nations and governments in question to reach a favourable decision.
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crisis has opened our eyes to a blind faith in the market that has sometimes prevailed ; however, statism and dirigism are, by no means, the right path to take. instead, i suggest we return to a founding tenet of the social market economy : individual responsibility. bis central bankers β speeches those who take risks must also face the consequences. attaching more importance to reviving this principle would represent major progress β including with respect to the sovereign debt crisis. conclusion ladies and gentlemen, dear members of the international bankers β club, i have touched upon various aspects which i believe to be essential for overcoming the sovereign debt crisis. at the eu summit last week, policymakers decided to adopt a β fiscal compact β designed to strengthen, and in some cases go beyond, the maastricht stability and growth pact. this is, in principle, a good first step, but it has yet to prove its usefulness and effectiveness in β everyday use β. in any case, the bundesbank will not cease to call for the compact to be implemented in a manner which is conducive to safeguarding stability. in this endeavour, we hope for your support. * * * bis central bankers β speeches
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proposals, namely the mandatory certification of smart contracts prior to use. european regulatory developments are underway in other areas and will also be needed to facilitate innovation while preserving financial stability. they include measures in support of digital entities, access to financial data and artificial intelligence. why explore a wholesale cbdc? slide 5 3 / 7 bis - central bankers'speeches our second conviction is that, in order to have a framework that inspires trust in the development of the tokenisation of finance, cebm needs to be maintained as the primary settlement asset for financial intermediaries, which are the most sensitive in terms of systemic consequences in the event of problems. to achieve this goal, central banks need to adapt the form and provision of cebm to reflect the characteristics of transactions in tokenised assets, that is, tokenised securities such as shares, bonds or fund units, to ensure that cebm can be issued, recorded and used for settlement on dlt. this conviction spurred the banque de france to become the first central bank to launch an ambitious experimental programme on wholesale central bank digital currency ( cbdc ) for large - value payments in 2020. exploratory work by the eurosystem on a wholesale cbdc slide 6 this conviction is shared by the eurosystem, which launched its own exploratory work in april 2023 to trial three solutions for the settlement of tokenised assets in cebm. the banque de france's wholesale cbdc solution, based on our own dlt ( dl3s ), is one of the solutions that will be tried out in 2024. the eurosystem recently published the list of participants in the first wave of exploratory work, and we are delighted to test our dlt solution with them. this work supplements the european pilot regime, which is covered by special regulatory exemptions and which is being used to test the issuance, trading and settlement of tokenised assets under real - life conditions. it came into effect in march 2023 and will help us to assess the existence of use cases and determine whether there is genuine demand for tokenisation. it will also enable us to identify the regulatory adjustments needed for market infrastructures to operate on dlt over the long run, using a broad panel of tokenised settlement assets, including cebm. the banque de france is also taking part in several international initiatives, particularly those being spearheaded by the bank for international settlements'innovation hub, which is coordinating projects to explore the future of
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a somewhat similar picture to the us. namely, the increase in aggregate uncertainty around inflation expectations was more pronounced at short - term horizons β say 1 or 2 years, compared to the longer - term horizon of 4 / 5 years. and while the increase in aggregate uncertainty reflected both an increase in disagreement among forecasters and an increase in individual uncertainty, disagreement across forecasters has now largely receded since the peaks of last year. that said, it is important to acknowledge two limitations : we do not yet fully understand how households and business form expectations nor how this maps into their actions. and the expectations channel should not lead to think that monetary policy works like a magical incantation : central bank credibility hinges on concrete actions and their impact on credit and demand. and this impact is tangible. various models developed by the ecb and the banque de france quantify the contribution of monetary policy to the disinflation, estimating that inflation would have been around 1 to 2 percentage points higher in 2023 in the absence of policy rate hikes. the impact in 2024 and 2025 would be even larger, due to the lags of monetary policy transmission. ii. will we succeed in the end? the last mile challenge so what now? shall we simply rest on our laurels and celebrate our success? certainly not. success is not ensured until the end, namely durable convergence around 2 % inflation. unexpected and exogenous shocks could arise along the road. and a number of observers and policy makers have expressed concerns that the last mile of 2 / 4 bis - central bankers'speeches disinflation might be more arduous. disinflation now needs to extend to the " core ", and primarily to services : it will therefore be different, they claim, harder, and with less tailwind from the base effects of energy disinflation. in economic terms, the phillips curve would not be linear and would be less favorable now, leading to a higher " sacrifice ratio ". but as far as the euro area is concerned, there is no serious evidence to support this fear of the " last kilometer ". admittedly, services inflation remains higher at 4 %. but it has started to fall after peaking at 5. 6 % in july 2023 ; historically, its average has generally exceeded the headline target of 2 %, but it is still compatible with it because of slower trend growth in goods prices ( which are now at 1. 1 % inflation ). moreover,
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bsp will remain vigilant over the current inflation dynamics to ensure that the monetary policy stance continues to support economic recovery to the extent that the inflation outlook would allow. it will carefully scan the operating environment with a forward - looking perspective to move in a pre - emptive fashion to address any risks to our price stability mandate. on the financial sector : the bsp will intensify its monitoring and surveillance over its supervised institutions to ensure that they remain resilient to emerging risks and continue to be sound, stable, and inclusive, particularly through the pursuit of enhanced digitization. finally, on the external sector : the bsp will remain supportive of policies that will help strengthen the economy β s resilience to external shocks, including that of maintaining a market - determined exchange rate, keeping a comfortable level of reserves, and keeping the country β s external debt manageable. considering the recent economic developments and significant improvement in inoculation, we are optimistic that there is sufficient support for the country β s recovery this year and in the near term. finally, allow me to end my presentation with these key points : the country β s macroeconomic fundamentals remain sound and bright spots suggest recovery is 3 / 4 bis central bankers'speeches underway. the latest gdp growth suggests that the economy has started its gradual recovery. the currently high inflation is due to transitory factors. banks remain sound and while npl has increased, banks remain highly capitalized. external position is manageable with more than adequate external liquidity buffer and improving overseas filipino remittances. while economic activity has improved, the overall momentum of the economic recovery remains tentative as the threat of new covid - 19 strains continues. nevertheless, the sustained implementation of targeted fiscal initiatives as well as the acceleration of the government β s vaccination program should help boost market confidence and recovery of the economy in the coming months. the bsp believes that sustained monetary policy support for domestic demand should help the economic recovery gain more traction. looking ahead, the bsp affirmed its support to the economy for as long as necessary to ensure the country β s strong and sustainable economic recovery. the bsp β s actions and policy thrusts will continue to be anchored on its core mandates of promoting price and financial stability. toward this end, the bsp will continue to pursue appropriate policy actions responsive to the needs of the time. it will also continue undertaking a range of initiatives to create a more sustainable msme and agriculture financing ecosystem. thank you. 4
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policies that require a measure of perseverance. how then do we promote competition in the financial system in general and in the banking system in particular? how do we expand the competition in the business sector and the mortgage market to also include households and small businesses? in view of the statements made recently, i would like to stress, as unambiguously as possible, that the bank of israel has been working towards ensuring the interests of the public, including the promotion of competition! competition is critical for the existence of an advanced financial sector. without competition, our banking system will not develop, the quality of service provided to customers will be adversely impacted, the consumer will lose confidence in the system and eventually there may also be consequences for stability. therefore, we are in favor of encouraging competition. competition does not contradict stability. let me repeat that in order to make sure that the message gets across β we are promoting competition in the banking system. we have done so in the past and we will do so in the future. how has the bank of israel worked to encourage competition? one of the barriers to competition is the difficulty in switching between banks and the entities that compete with them. the bank of israel is working to remove these barriers and will continue to do so. the zaken committee did not wait for the entry of new players and drew up a list of measures that strengthened the position of households and small businesses and increased the level of competition. the vast majority of those measures have already been implemented by the bank of israel. these include, among others, making it easier to switch banks and providing the possibility of implementing more bank activities on the internet, such as opening and closing of accounts. the banking supervision department recently issued an innovative directive that expands the activities that can be implemented by electronic communication, which has a huge potential for increasing competition between the banks. in general, the bank of israel views bis central bankers β speeches technology as a challenge for the banking system and also as a powerful lever for improving service to customers and lowering its price. the activity of the bank of israel to increase competition for the benefit of the consumer goes beyond making it easier to switch banks. another barrier to switching banks is the fact that a customer β s current bank knows the customer better than the bank he would like to move to and as a result the customer may be apprehensive that he will not be able to obtain loans at a good interest rate from a bank that doesn β t know him as well
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for the greater part, these are matched by liabilities in the form of currency, bank deposits and government deposits. the excess of assets over liabilities is represented by capital and internal reserves. these totalled 2Β½ billion euro at end - 1999. this is the figure to which the term β free reserves β is applied. this is the capital which supports the bank. it is also a buffer against changes in the value of external reserves, arising from movements in the euro vis - a - vis other currencies. relative to the size of our balance sheet, this figure is at the lower end of the scale vis - a - vis other euro area national central banks. the national central banks in the eurosystem no longer conduct foreign exchange intervention. it is fair to ask, therefore, whether they now have surplus external assets. there is a recognition that this question should be addressed in due course. these reserves are subject to call by the european central bank. in all likelihood it will make a further call for additional capital and foreign reserves. it would seem preferable therefore that the issue of superfluous reserves be settled at the general european level rather than taking unilateral action. our external reserves are denominated, for the greater part in us dollars and to a much lesser extent in sterling and yen. there is also a small quantity of gold. the reserves are invested in deposits and securities and are managed by reference to an independent benchmark. the central bank has a very good record in managing large - scale funds. in respect of 1998 we earned a surplus of 225 million euro ( irΒ£177 million ), mainly from investment of reserves and interest. of this, 193 million euro was transferred to the exchequer. banknotes and coin to most people the euro probably remains largely academic until it is available in their pockets. it is still considered a currency in transition. in less than two years from now the new banknotes and coin will have begun to replace national currencies. the impact will be huge at local level ; immediately the euro will become the concern of everybody. may i remind you that the largest banknote will be 500 euro ( roughly Β£400 ) and the smallest coin will be one cent ( which is 4 / 5 of a penny ). there will be seven banknotes and eight coins. our production arrangements are already well in hand. in recent years we have invested more than Β£30 million in new plant and machinery. coin production is under way since last
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the central bank and financial services authority of ireland is the institution charged with contributing to financial stability in ireland under both domestic and eu legislation. the organisation consists of two component entities β the central bank and the financial regulator β each with its own particular responsibilities. the roles are complementary and we enjoy the closest cooperation. the central bank β s responsibilities for financial stability relate to the surveillance of the strengths and vulnerabilities of the overall economy and financial system. the financial regulator β s remit includes surveillance of the financial soundness of individual institutions. both approaches are necessary for a comprehensive assessment of financial stability and our organisational structure facilitates the seamless sharing of expertise. accordingly, colleagues from both the central bank and the financial regulator come together regularly at all levels ( i. e., directors, senior management and staff ) to consider financial stability issues and this joint assessment is published in our annual financial stability reports. financial stability in ireland publication of the financial stability report is only one of a number of ways in which we contribute to financial stability on an ongoing basis. it is generally accepted that price stability contributes greatly to financial stability. as a member of the governing council of the european central bank, i participate in the formulation of eurosystem monetary policy. the irish central bank conducts market operations on behalf of the eurosystem relating to the provision of liquidity to banks in ireland ; we are responsible for the oversight of payments and settlements systems and we contribute to the formulation of the eurosystem β s policies on financial stability. we maintain an open dialogue with the domestic credit institutions in order to review issues affecting the domestic financial system and to facilitate the flow of information between our domestic banks and the ecb. this dialogue has been intensified in recent times through regular and ongoing joint meetings of central bank and financial regulator management with the senior executives of our major banks. furthermore, we continue to develop procedures to assess and deal with any concern of a financial stability nature that might arise. finally, as i have said, we work closely with our colleagues in the financial regulator, who in the course of their regulatory activities have important insights into the operation of the financial system. mr neary will share these insights with you shortly. financial stability report 2007 your invitation mentioned the financial stability report for 2007 specifically. i will outline briefly now the approach and key messages in this report and we are happy to explore any of these issues in greater detail afterwards. since 2000, we have published annually an assessment of financial stability. in similar fashion
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conclude that broad and material changes to the proposals are warranted. as i said, there are benefits and costs to increasing capital requirements. the changes we intend to make will bring these two important objectives into better balance, in light of the feedback we have received. the changes to the endgame proposal have been a joint effort with my counterparts at the fdic and the occ. 1 / 8 bis - central bankers'speeches i intend to recommend that the board re - propose the basel endgame and g - sib surcharge rules. this will provide the public the opportunity to fully review a number of key broad and material changes to the original proposals and provide comment. we will accept public comments on any aspect of the basel endgame and g - sib surcharge proposals. the changes in the endgame re - proposal will cover all major areas of the rule : credit risk ; operational risk ; and market risk. banks with assets between $ 100 and $ 250 billion would no longer be subject to the endgame changes, other than the requirement to recognize unrealized gains and losses of their securities in regulatory capital. 5 these changes reflect the feedback we have received from the public, improve the tiering of the proposal, and better reflect risks. i will also recommend changes to the g - sib surcharge proposal to better align the capital surcharge for a g - sib with its systemic risk profile. taken together, the re - proposals would increase aggregate common equity tier 1 capital requirements for the g - sibs, which are the largest and most complex banks, by 9 percent. for other large banks that are not g - sibs, the impact from the re - proposal would mainly result from the inclusion of unrealized gain and losses on their securities in regulatory capital, estimated to be equivalent to a 3 to 4 percent increase in capital requirements over the long run. the remainder of the re - proposal would increase capital requirements for non - gsib firms still subject to the rule by 0. 5 percent. while these proposed changes affect some of the most important aspects of the proposals, the agencies have not made final decisions on any aspect of the reproposals, including those that are not explicitly addressed in the re - proposal. the public should not view any omission of a potential change in these re - proposals as an indication that the agencies will finalize a provision as proposed. we continue to consider comments already received on the 2023 proposal, and
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adjustments to limit " window dressing " by requiring banks to report indicators as average values instead of on a point - in - time basis. it would also reduce " cliff effects " by calculating a g - sib's capital surcharge in 0. 1 percent increments 5 / 8 bis - central bankers'speeches instead of 0. 5 percent increments. and the proposal would adjust how we measure some systemic indicators to better align them with risk. 6 the goal of the 2023 proposal was to improve the risk sensitivity of the g - sib surcharge. commenters provided helpful feedback regarding the proposal's potential impact on certain types of activities, such as client clearing of derivatives. we are still considering these comments, but let me speak to areas where i will recommend making changes to the original proposal. first, i'll speak to the treatment of cleared derivatives. the proposal would have increased the extent to which client - cleared derivatives contribute to a bank's g - sib surcharge, to promote consistency of the measure. however, commenters argued that the measure might result in higher costs and more volatility for derivative end users and might reduce incentives to provide clients'access to central clearing. while it is important for our capital rules to be risk - sensitive, it is also important that we consider the impact of our rules in the broader market context. central clearing of derivatives is a critical tool that can help improve transparency and reduce systemic risk. to avoid disincentives for client clearing, i intend to recommend to the board that we not adopt the proposed changes to capital requirements associated with client clearing. second, let me speak to changes in the surcharge proposal that i will recommend to keep the measures we use up - to - date. the u. s. g - sib surcharge was set nearly nine years ago, and the growth in the economy since 2015 has meant that g - sibs'measures of systemic risk have increased, even for firms whose share of domestic or global economic activity has not increased. the board noted the potential for this effect in the original 2015 g - sib rule. while it did not provide a mechanism to automatically adjust for economic growth at that time, the board stated that it would periodically reevaluate the framework. as part of the g - sib re - proposal, i intend to recommend that we improve the calculation of the capital surcharges for g - sibs by reflecting
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international competition in terms of geography, in that it is located in asia, which is the driving force behind global economic growth. japan also enjoys sophisticated β soft power, β as exemplified by the credibility of made - in - japan products and courteous service. moreover, as i mentioned earlier, the great advantage at present is that financial system stability is being maintained in japan, unlike in the united states and europe. the results of various surveys including the bank β s tankan ( short - term economic bis central bankers β speeches survey of enterprises in japan ) show that the lending attitude of japanese financial institutions has recovered to a level exceeding the average since 2000, despite the strains in financial markets around the world. in the past, japan alone suffered from the disposal of nonperforming loans, and the weakness in the financial sector dragged down economic activity. however, on the back of their sound balance sheets, i believe that japanese financial institutions at present are able to effectively provide support to firms β strategic efforts. this embodies the strength of japan. if firms and financial institutions reconcile their growth strategies, they will discover ideas and methods for exploring new markets. iv. the bank β s conduct of monetary policy in my remarks today, i first mentioned the outlook for japan β s economy and noted that it is likely to return to a moderate recovery path. in terms of points to be kept in mind concerning the outlook, i then talked about the sovereign debt problem in europe and challenges regarding the medium - to long - term growth potential of japan β s economy. the bank, in recognition of such outlook and risks, has been pursuing powerful monetary easing under the framework of comprehensive monetary easing ( chart 10 ). this framework has the following three pillars. first, the bank sets the policy rate at 0 to 0. 1 percent, which can be deemed a virtually zero interest rate. second, the bank is publicly committed to continuing this virtually zero interest rate policy until it judges that price stability is in sight. and third, as an exceptional measure for a central bank, it purchases from the markets not only long - and short - term government bonds but also risk assets such as cp, corporate bonds, and exchange - traded funds ( etfs ) and japan real estate investment trusts ( j - reits ). a program for purchasing financial assets, called the asset purchase program, started at 35 trillion yen, but has been repeatedly expanded in size on a significant scale. last week, on october 27, the bank decided to
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under pressure. business managers, with little opportunity to raise prices, have moved aggressively to stabilize cash flows by trimming workforces. these efforts have limited the rise in unit costs, attenuated the pressure on profit margins, and ultimately helped to preserve the vast majority of private - sector jobs. to the extent that businesses are successful in stabilizing and eventually boosting profits and cash flow, capital spending should begin to recover more noticeably. such success would likely be accompanied by a decline in elevated risk premiums back to more normal levels and, with real rates of return on high - tech equipment still attractive, should provide an additional spur to new investment. when capital spending fully recovers, its growth is likely to be less frenetic than that which characterized 1999 and early 2000 - - a period during which outlays were boosted by the dislocations of y2k and the extraordinarily low cost of capital faced by many firms. still, the evidence strongly suggests that new technologies will present ample opportunities to earn enhanced rates of return. indeed, reports from businesses around the country suggest that the exploitation of available networking and other information technologies was only partially completed when the cyclical retrenchment of the past year began. many business managers are still of the view, according to a recent survey of purchasing managers, that less than half of currently available new, and presumably profitable, supply chain technologies have been put into use. if the recent more - favorable economic developments continue and gather momentum, uncertainties will diminish, risk premiums will fall, and the pace of capital investment embodying these technologies will increase. as we have witnessed so clearly in recent years, the resulting enhanced growth of productivity will lift our standard of living. the economic and financial developments i have described, of course, have important implications for the federal budget and can help explain a significant portion of the shift in the budget situation over the past year. a year ago, the congressional budget office expected the unified surplus to continue to mount if no new policy actions were taken and to cumulate to $ 5. 6 trillion for fiscal years 2002 to 2011. as you know, if today's policies remain in place, cbo is currently forecasting a cumulative surplus over the same ten years that is $ 4 trillion below what had been anticipated in its baseline a year ago. cbo calculates that the now less favorable economic assumptions - - especially in the near term - contribute nearly $ 1 trillion - -
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york city, 14 july 2015. available at < https : / / www. newyorkfed. org / newsevents / speeches / 2015 / pot150714 >. bis central bankers β speeches conclusion as market participants, regardless of which side of the market you are on, it is important that you are aware of the changes that have occurred, and are still underway, in the foreign exchange market. if you are on the sell side, i am sure that you are well aware of these changes and hopefully, i have provided you with some of the background and motivation for them. in terms of benchmarks, there is a fuller articulation of this in the fsb benchmark report. if you are in the asset management business, you may not have paid so much attention to the details of the fx aspect of your business. but it is important that you also understand the context for the changes that are occurring. some practices and services that you were accustomed to in the past, or maybe were unaware of, may no longer be available, and you cannot expect your counterparty to provide them. the motivation for the changes to the foreign exchange benchmarks is to reduce the incentive and opportunity for improper behaviour by market participants around benchmark fixes. the implementation of the recommendations in the fsb benchmark report, together with the enhanced scrutiny externally and within organisations on fixing transactions, appears to have moved the market in a favourable direction. as we develop the single code of conduct for the fx market, the intention is that the market will move further to a more favourable and desirable location and allow participants to have much greater confidence that the market is functioning appropriately. we need this to occur, as it very much in all our interests to have a well - functioning foreign exchange market. as roberto said earlier, we central banks care as much about this as anyone. as it is in all our interests for trust to be restored to the fx market, i very much trust that you, as market participants, will work with us constructively in this important endeavour. bis central bankers β speeches
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emmanuel tumusiime - mutebile : plans for a common platform integrating east african financial markets speech by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the opening of the stakeholders β workshop on developing the 5 - year financial markets development plan, kampala, 15 august 2007. * * * ladies and gentlemen, i would like to thank you for finding time in your busy schedules to participate in this one day β s stakeholders workshop. earlier this year the 10th eac meeting of the monetary affairs committee ( mac ) approved a financial markets development framework which includes involving stakeholders in the development of a 5 - year financial markets development plan in all the entire member states of the east african community. the harmonized regional plans are intended to form a common platform for integration of the east african financial markets. the bank of uganda was requested to take the lead and co - ordinate these efforts and the executive director operations chairs the financial markets development committee for the region. the original three east african countries have completed situational analysis for their financial markets in line with agreed parameters and have identified issues to be addressed in the various fields such as banking and capital markets reforms, the pension sector reforms, strategies for financial markets development in the areas of rural finance, leasing and additional financial products which should facilitate improved access to finance. this financial sector development plan represents a new approach to trying to address the current limitations in the ugandan financial markets. the small size of the ugandan financial sector is an obstacle to the development of financial systems, resulting in systems that are in place tending to be limited in scope, more expensive and of poor quality. the ugandan financial market has scope to become larger because the economy is fully liberalized and open to the flow of capital to and from foreign markets, participation of foreign financial intermediaries and now the integration efforts with the east african sister countries. you, as stakeholders, must join hands with the bank of uganda not only to help in the integration process of the east african financial markets but also to do your part in developing deepening and widening the financial markets as a way of accelerating economic development in uganda and the east african region as a whole. there are several challenges that have to be confronted : β’ as capital flows freely in and out of the country, the challenge that arises is the maintenance of financial markets stability. β’ increased diversity of financial services and products requires a financially literate consumers who can make informed choices. the consumers ought to
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patrick honohan : regulatory policy development and new regulatory activity introductory statement by mr patrick honohan, governor of the central bank & financial services authority of ireland, to the joint oireachtas committee on economic regulatory affairs, dublin, 15 december 2009. * * * mr patrick honohan was accompanied by martin moloney, secretary to the financial regulatory authority, and joe doherty, head of the central bank β s legal unit. i would like to highlight a number of key areas which currently dominate regulatory policy development and new regulatory activity. 1. resolving the crisis first and foremost in the magnitude of its impact is the resolution of the current banking crisis. the weakened financial position of the banks and the extensive government guarantee provided to their depositors and other claimants clearly calls for exceptional measures here. there has been greatly intensified and, indeed what has been termed, β intrusive β supervision of the operations of the main banks covered by the guarantee. this involves on - site presence on a daily basis by several regulatory staff in each of the institutions covered by the government guarantee. they have been sitting in as observers on key decision - making committees in each of these banks as well as conducting a number of specific investigations and reviews. the government β s crisis resolution strategy involves cleaning out a very large block of troubled property - related loans from the banks β balance sheets and replacing them with nama bonds guaranteed by the government. this will ease the banks β ability to mobilise funds for their ongoing operations. at the same time, since these loans are to be purchased by nama at β long - term economic values β ( not far above current market prices ), the purchases will serve to crystallise losses on the banks β books in amounts likely to be in excess of the provisions already taken. this is likely to give rise to a need for measures to increase the banks β cushion of capital, needed to absorb any future losses. to the extent that needed capital cannot be sourced by the banks themselves, the government has indicated that it will be prepared to make the necessary investments. quantifying the needs and the possibilities is an important task here in which the regulatory staff are centrally involved. 2. ensuring safe and sound finance quite apart from this problem of crisis management, there is the ongoing task of ensuring the safe and sound operation of financial firms in ireland, both those dealing with the domestic market and those primarily concerned with the export of financial services through the ifsc. some of this safety and
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information on the past conduct of staff including internal disciplinary action and any other information relevant to the candidate β s fitness and propriety. this initiative will help to prevent the problem of staff with poor conduct records moving from firm to firm based on anodyne references. aligning incentives with good conduct it is now widely recognized that in the lead up to the crisis, bonuses were too closely linked to short - term revenues, with little weight placed on the longer term risks to the firm. these pay structures incentivized excessive individual risk - taking and left shareholders and ultimately tax payers to absorb huge losses and incur misconduct fines when risks crystalized. moreover, contract theory tells us that high powered incentives work best when outcomes are easily measurable ( such as sales targets ). but more senior roles involve managing many unquantifiable but very important outcomes β such as reputation and risk culture. in the united kingdom, we have taken the following actions to incentivise individuals to consider the longer - term health of the firm : remuneration rules require a substantial portion of bonus rewards to be deferred for up to 7 years for senior managers. this allows for malus ( the reduction or cancellation of unpaid bonus awards ) and clawback ( a contractual agreement whereby the staff member agrees to return paid bonus awards to the firm where risks have subsequently crystallised or instances of individual misconduct have been uncovered ). there is evidence that malus is being increasingly used by firms β malus adjustments within major uk banks has more than trebled from c. Β£100mn in 2010 to c. Β£300mn in 2014. in addition, the prudential regulation authority has made clear that it expects firms to use a balance of both financial and non - financial factors ( such as conduct metrics ) when determining pay rewards and that financial metrics should be appropriately risk adjusted. internationally, the financial stability board is taking action to improve the alignment between remuneration and conduct risk and ( during 2017 ) will consult on : supplementary guidance on the use of compensation tools to address misconduct, and recommendations for consistent national reporting and collection of data on the use of compensation tools. documentation relating to remunerations rules can be found at : http : / / www. bankofengland. co. uk / pra / pages / supervision / activities / remuneration. aspx see the bank of england quarterly bulletin 2015 q4, volume 55 no. 4, page 328, chart
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yuba raj khatiwada : business ethics for a prosperous nepal remarks by dr yuba raj khatiwada, governor of the central bank of nepal, at the programme on β business ethics for a prosperous nepal β, organized by the world forum for ethics in business, kathmandu, 17 january 2014. * * * rt. hon β ble chairman of council of ministers his holiness sri sri ravi shanker jee, distinguished participants, ladies and gentlemen let me thank the organizers for rendering me the honour to speak on ethics in business amid this high profile gathering in the presence of sri sri ravi shanker jee. as i stand to speak on this topic, we have a question to ourselves as to whether we can really apply in our practical life the words we speak and hear at this event here, and adhere to the noble principles and values raised in this discourse. we understand that business ethics are moral principles that guide the way a business behaves. acting in an ethical way involves distinguishing between β right β and β wrong β and then making the β right β choice. while it is relatively easy to identify unethical business practices, it is not always easy to create similar hard - and - fast definitions of good ethical practice. making money is not unethical, but doing the same in an immoral way is unethical. a business company must make a profit for competitive return to its shareholders β capital and treat its customers, employees and other stakeholders fairly. strong returns for shareholders capital should not be achieved at the expense of social, environmental and moral considerations. indeed a business can thrive in the long - term only if it also takes into account the needs of other stakeholders such as governments, employees, suppliers, communities and customers. further, any business should minimize any harm to the environment and work in a way that does not damage the communities in which it operates. in the present day world, many companies maximize profits unethically via unhealthy marketing, slashing employee expenses, lowering product quality or impacting the environment negatively. use of violence, sex, and other unethical means to draw attention to a product or service is an example of unhealthy marketing. such unethical business practices can lead to smeared public relations and a loss of trust and respect to business people from the consumers. distinguished participants, as we have witnessed the birth of new entrepreneurial and so called knowledge based economic age, we have also seen a growing moral and spiritual
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maha prasad adhikari : special address - asian banker's association annual general meeting and conference special address by mr maha prasad adhikari, governor of the central bank of nepal ( nepal rastra bank ), at the 39th asian banker's association annual general meeting and conference " asian banking : roadmap for recovery and sustained growth ", kathmandu, 9 november 2023. * * * honourable finance minister, government of nepal, and chief guest of the program dr. prakash sharan mahat mr. eugene s acevedo, chairman, asian bankers association mr sunil kc, president, nepal banker's association distinguished speakers, moderators, and presenters of the conference distinguished foreign delegates, guests, ladies and gentlemen! warm good morning and namaste, it is my great privilege to have the opportunity to address this 39th agm of the asian banker's association and conference, organized with the theme of " asian banking : roadmap for recovery and sustained growth ". this conference is being organised at a time when the global banking system has been facing immense challenges from a global uncertain environment while recovering from the covid - 19 pandemic. the nepalese banking system is also no exception. therefore, this type of event for discussing such issues would be highly beneficial for all of us. my sincere thanks to the asian bankers association for choosing nepal for its 39th agm and also to the nepal banker's association for organizing the conference while hosting the annual general meeting of the asian banker's association. distinguished guests, ladies and gentlemen the global financial system remained resilient even during the covid - 19 crisis but is now facing challenges. the symptoms were seen earlier this year when some banks faced turmoil in advanced economies. data and statistics showed that asian banks were able to show a high degree of resilience during those periods, though the vulnerabilities still exist. since the banking business is directly related to the economic conditions, the banking community faces similar challenges as the global economy. presently the global economy is still'limping along, with growing divergences'as mentioned by the imf's recent world economic outlook. this indicates that the risk of spillover from the global financial to the domestic market is still prevalent. 1 / 4 bis - central bankers'speeches inflation is now moderated in most of the advanced economies but still well above the central bank's targeted level. some emerging markets and developing economies are still facing a higher inflation spiral.
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. these indirect effects can, to some extent, offset the decline in demand brought about by the fiscal deficit reduction and gradually lead to economic recovery. bis central bankers β speeches a strategy for exiting the crisis and for sustainable growth must be implemented consistently and without delay a national strategy for the orderly reconstruction of the economy it has now become clear that the changes undertaken thus far are insufficient. both the fiscal and the external deficits remain high, implying that the country continues to live beyond its means, by relying on the financial support of its partners. major structural weaknesses in the public sector still remain, even in cases where measures to eliminate them have been legislated. market distortions undercut competition and hamper growth. whilst cost competitiveness has improved, structural competitiveness still lags. it is therefore clear that the difficult task which we have before us calls for a persistent effort over many years. recovery and growth through the mobilisation of the private business sector a strategy for recovery and growth is of utmost priority. failure to tackle the recession could compromise our ability to meet the targets of fiscal consolidation. in the current context, growth requires the mobilisation of the private business sector ; this cannot be achieved as long as the state continues to dominate the economy. nor can it happen so long as the fiscal deficit and public debt are persistently high. moreover, there cannot be growth so long as there is a climate of uncertainty and distrust exists about the prospects of the economy. the prerequisites for growth are therefore : the restoration of confidence and the elimination of uncertainty ; the creation of an environment favouring entrepreneurship ; the transfer of resources from the bloated public sector to the production of goods and services by the private sector and β more generally β from the sector of non - tradable goods and services to that of the tradable. actions for growth as early as in 2010, the bank of greece pointed out the need for a comprehensive action plan for growth, which would run in parallel with fiscal consolidation, specify needed structural policies, and provide a framework for coordinating the growth - enhancing activities of the public sector that do not put the fiscal targets at risk. such a plan is all the more urgent today. it includes the following goals : measures with immediate returns reforms to improve the business environment, including measures to deal with red tape and reduce the administrative burden on businesses, to simplify the regulatory framework, and to restore market competition. a speeding - up of the privatisation programme.
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##economic aggregates for 2012 the available short - term indicators for the first months of 2012 suggest that the recession will continue this year. the bank of greece forecasts an average annual rate of decline in gdp of close to 5 % ; implying that the recession will be less pronounced than in 2011 ; this forecast assumes that the necessary structural reforms will be implemented without delay. the average unemployment rate is projected to increase this year and exceed 19 %, up from 17. 7 % last year. forecast reductions in unit labour costs for 2012 β 13, together with projected price developments, should lead to a marked improvement in competitiveness, thereby contributing to export growth and import substitution. in particular, it is estimated that by the end of 2012, two - thirds to three - quarters of the total cost competitiveness lost over the period 2001 β 2009 will have been recovered and that, by end - 2013, all of the loss will likely have been recovered. the current account deficit is projected to decrease from 9. 8 % of gdp in 2011 to roughly 7. 5 % of gdp in 2012 and that this downward trend will continue in the years to come. the downward trend in inflation will also continue in 2012, with average annual inflation expected to be around 1. 2 %. in 2013 inflation is projected to fall further, possibly to below 0. 5 %. the recession is negatively affecting expectations and fuelling the vicious circle delays with fiscal adjustment and the implementation of structural reforms, negative developments in the real economy and adverse conditions surrounding the provision of bank finance to the economy, apart from their direct impact on incomes and unemployment, are also contributing to uncertainty about the economic outlook. as long as the vicious circle of fiscal contraction - recession - uncertainty continues, the prospects for meeting deficit and debt targets will tend to weaken, thus refuelling negative expectations. some consider the vicious circle to be due to the tight fiscal policy pursued. though not without foundation, this interpretation is incomplete. it fails to take into account that, while fiscal consolidation does bring about a decrease in aggregate demand, it also affects expectations. positive expectations can be generated when : a fiscal consolidation plan convincingly forms part of a credible medium - term programme, aimed at reducing the share of the public sector in the total economy, there is strong evidence that the economic adjustment programme is likely to succeed and that its continuity is ensured, regardless of changes in the political landscape. when these two conditions are in place, positive expectations can take hold, indirectly boosting consumption and investment
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risks and systemic risks all have to be managed, both at the micro level and at the macro level. all markets suffer from the β fallacy of composition β. mistakes at the corporate or bank level will add up to national mistakes, which now may add up to regional or international crisis through contagion. traditional risk management at corporate or sectoral level simply shift risks from one sector to another. risks still remain in the economy as a whole. thus, increasingly in the 1980s, there emerged the awareness that financial sector regulation was all about national risk management. 21. national risk management covers six major aspects : β’ credible policies, with monetary and fiscal policies consistent with each other, and applied consistently. β’ capital account liberalization should be phased appropriately. β’ sound fundamentals include a high domestic savings rate, sustainable fiscal and balance of payments positions, high foreign exchange reserves and prudent debt management. β’ good supervision involves the maintenance of solid capital adequacy and liquidity requirements for the financial sector, as well as regular examination and monitoring of financial institutions and markets. the banking system must have the capacity to avoid excessive credit concentrations and risks, and to manage market risks well. β’ a robust financial infrastructure would encompass an efficient payments and settlements system for domestic and international transactions. in essence, the world is moving towards real time gross settlement ( rtgs ) system, which support delivery vs. payment ( dvp ) and payment vs. payment ( pvp ). rtgs reduces payment risks and allows central banks to monitor flows in domestic currency as well as exposure of banks on a real time basis. β’ a non - distortive incentive structure, such as taxation or regulatory restrictions that would not encourage risk concentrations or excessive leverage in any economic sectors. 22. put simply, managing national risks is equivalent to achieving three objectives. first, lower national gearing, because leveraging adds risks, especially if this is leveraged from external borrowing. the more you borrow abroad, the more you become vulnerable to external shocks. second, the higher the level of domestic savings, which should be reflected in higher bank capital, lower credit / gdp ratio, and higher fiscal surpluses, the greater the resilience to the pain of adjustment to external or internal shocks. third, irrespective of the exchange rate regime, there must be a commitment to a stable currency, and this means strong external reserves, low inflation and a sound banking system. asset prices and the exchange rate regime 23. the
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benefited directly from two of these measures. the first is the granting of easier and greater access to the mainland banking market under cepa from 1 january 2004 and the second is the introduction of personal renminbi business in february. these will in time help to broaden meaningfully, i am sure, the scope of banking business for banks in hong kong. i should add that there are other initiatives being developed, with the aim of positioning the banking system of hong kong to take advantage of further financial liberalisation in the mainland. i hope they can be agreed, announced and introduced soon. short - term risks however, the generally good news in recent months should not blind us to the problems that remain in our economy or to the risks that face us. while the economy has been recovering strongly, it has not been creating as many jobs as we all would like to see. it is also uncertain to what extent the budget deficit will be reduced, as government revenues recover along with the economy. to be sure, the difficult investment environment is not helping us in our attempt to meet the budgeted investment income for the fiscal reserves. disappointments on these fronts may affect market sentiment in the short term, although the determination and ability on the part hksar government in tackling the remaining, structural components of these problems should not be in doubt. furthermore, there is a risk that our financial markets could over - react to external developments, notably stronger than expected monetary tightening in the us, macro - economic adjustments in the mainland and sharp increases in oil prices. although it is unlikely that these external factors would derail our economy, and so this risk seems small, under extreme market conditions, short - term volatility in financial markets could have a bearing on monetary and financial stability in hong kong. in contrast, there are also concerns about the effects of continuing easy monetary conditions within hong kong. during the past few months, economic recovery has resulted in inflows of funds into the hong kong dollar to the extent that the aggregate balance of the banking system has become extraordinarily high ( despite some outflows recently associated with the corrections in the financial markets ). as you know, under the currency board system there is not much that we can do to dampen easy monetary conditions : this is a question that the sub - committee on currency board operations of the exchange fund advisory committee has given a great deal of thought to. if there continue to be capital inflows on the back of sustained growth and confidence
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esma is seeking to establish guidelines so that these entities make public the way in which they incorporate sustainability elements into their valuations. to conclude, allow me to reiterate the importance and scale of the challenge we face. it may sound cliched ; but it is nonetheless true that we are not only talking about our well - being, but the well - being of future generations who may be left with little leeway if we are not sufficiently ambitious. the challenge extends to all agents and sectors, and proof of this is the broad and varied representation here in this room today. the financial sector undoubtedly has a notable responsibility in this challenge. in our capacity as financial authorities and under our mandate, we can and must do everything within our power to properly value, manage and mitigate the risks associated with climate change. the challenge is paramount and the need for coordination β with other national and international authorities β enormous. but i believe that, if we have been capable of structuring an appropriate regulatory response to the international financial crisis, we will also be capable of rising to the challenge here. i think that the measures rolled out from europe will ultimately be an international reference and standard. and we will in this way manage to make the financial sector contribute actively and efficiently to the sustainable transformation of our economy. i trust the following discussions will prove interesting for you. we will talk about the important work by european institutions under way, about how financial institutions are adapting and about the way in which the adverse effects the energy transition may exert should be accommodated, in what has come to be known as the β fair transition β debate. thank you. 5 / 5
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12. 03. 2019 roundtable : β sustainable finance as the driving force of the ecological transition β banco de espana margarita delgado deputy governor it is a pleasure for me to welcome you to the banco de espana for two reasons. first, because i believe the bank should be a forum for discussing and bringing closer to society those financial matters that bear on and affect the well - being of all. the second reason has to do with the matter i shall broach today, which i consider to be particularly important and which is none other than the role finances can and should play in relation to combating climate change. as you all know, this is not a new objective. indeed, at least since the 1992 rio de janeiro united nations summit, combating climate change has been a recurrent objective of international institutions. so, what has changed in the wake of the 2015 paris agreement, and why has climate change also begun to be part of the financial authorities β agenda? mark carney talked about the so - called β tragedy of the horizon β, in the sense that the horizons used in the evaluation of financial risks are shorter than those that should be applied to evaluate climate change. yet these risks may be said to have moved onto our horizon ; both the physical risks owing to the effects of climate change, and above all, the risks of transition towards a sustainable economy. the paris agreement marked a turning point regarding the feeling of urgency in the fight against climate change. along with reflecting the risks, the agreement explicitly acknowledges how important the financial system should be for efficiently channelling the resources needed to transform our economy towards a sustainable model. these two factors, namely the risks and the opportunities and incentives associated with the change in economic model to combat climate change, have grown in significance on international financial agencies β agendas. allow me to mention, non - exhaustively, some of these initiatives : - the work on sustainable finance during the last three mandates of the g20, - the establishment of responsible investment principles by the united nations, - the creation of the financial stability board β s task force on climate - related financial disclosures, - the establishment of the oecd green finance and investment centre, - the sustainable banking network established by the world bank, - within the eu, the european commission β s action plan on sustainable finance - in the central banking and banking supervision environment, the work by the network for greening the financial sector ( ngfs ), of which the banco de espana is a member. in
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of governments to return to sustainable public finances, reduce risk premia in interest rates and thus support sustainable growth over the medium term. for all euro area countries, the 2011 budgets need to reflect the commitment to ambitious fiscal consolidation in line with countries β pledges under the excessive deficit procedures. any positive fiscal developments that may emerge, reflecting factors such as a more favourable than expected environment, should be exploited to make faster progress with fiscal consolidation. the urgent implementation of far - reaching structural reforms is essential to enhance the prospects for higher sustainable growth. major reforms are particularly needed in those countries that have experienced a loss of competitiveness in the past or that are suffering from high fiscal and external deficits. the removal of labour market rigidities and the strengthening of productivity growth would further support the adjustment process of these economies. increasing product market competition, particularly in the services sectors, would also facilitate industrial restructuring and encourage innovation and the adoption of new technologies. we are now at your disposal for questions.
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we are now tilting our corporate bond portfolio towards issuers with better climate scores, with a view to removing the existing bias towards emission - intensive firms. although our current actions in relation to climate change are ambitious, they are still falling short of the paris objectives as they are not sufficient to ensure a decarbonisation trajectory that is consistent with carbon neutrality of our operations by 2050. three areas, in particular, require additional efforts. greening the stock of corporate bond holdings first, the ongoing decline in our balance sheet will visibly diminish the effect of some of our actions going forward. for example, for our corporate bond portfolio we are following a flow - based tilting approach where we adjust our reinvestments of corporate bonds based on a climate score that reflects issuers β carbon intensity, their decarbonisation plans and the quality of their climate - related disclosures. our main steering tool in this process is the tilting parameter β that is, the weight we put on the climate score in our benchmark allocation for new purchases. however, the tilting parameter lost part of its punch when we decided to stop net asset purchases ( slide 5 ). the forthcoming reduction in reinvestments will further significantly constrain the ability of a flow - based approach to decarbonise our corporate bond portfolio at a pace that is consistent with our climate ambitions. the decarbonisation of our corporate bond portfolio depends not only on our tilting parameter but also considerably on the rate at which the firms in our portfolio decarbonise their businesses. for example, assuming full reinvestment, we would achieve only half of the total decarbonisation of our corporate bond holdings by 2030 if firms were to stop taking steps to decarbonise their activities ( slide 6, left - hand side ). this effect depends to a significant extent on the actions of a few high - emitting companies ( slide 6, right - hand side ). together, this implies that by ending our reinvestments, the speed of decarbonisation of our portfolio would slow down substantially and be largely out of our control. a flow - based tilting approach is thus insufficient to achieve our goal. the paris agreement requires a stable decarbonisation trajectory in our portfolio irrespective of our monetary policy stance or companies β individual actions. we therefore need to move from a flow - based to a stock - based tilting approach for our corporate bond portfolio. this means that, absent any rein
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higher lending rates seen in countries with prolonged npl problems weigh negatively on credit demand. higher lending costs drive firms to utilise internal sources of financing, resulting, on average, in the avoidance of large investment projects. a reduction in npls has the reverse effect, improving the willingness, incentives and ability of economic agents to invest in new projects. the practical implications of npls for growth opportunities are evident when looking at european data on bank lending to non - financial corporations and households. the contraction of bank lending is particularly pronounced in countries suffering from high levels of npls. at the same time, member states with high npl ratios have also experienced below average gdp growth, consistent with the below - average propensity to invest that npls generate. the opposite picture is found for the member states that exhibit a lower level of npls. therefore, the effective management of npls is of the utmost importance for a country β s growth opportunities. banks β benefiting from improved asset quality, profitability and liquidity β will be in a better position to reduce the cost of credit risk and lending spreads. this amounts to a pivotal development for the competitiveness of the non - financial corporate sector in an international environment of ultra - low interest rates. it also facilitates the reduction in the debt servicing costs of households that mitigate the impact of reduced household gross disposable income. the above is to the benefit of the real economy as the unlocking of funding and the improved business climate impacts positively on the setting - up of new businesses, investment, employment and growth. in sum, we would move to a virtuous circle where improved asset quality positively affects gdp growth, in turn leading to a further reduction of npls and so on. in conclusion, greece is poised to return to economic and financial normality and to shift to a new, outward - looking and sustainable growth model, based on tradable goods and services. the economic adjustment and structural improvements over the past years have opened up significant investment opportunities. to reap the benefit of these opportunities though, there are certain preconditions : first, the completion of the second review with no further delay ; second, the consistent and determined implementation of the programme in conjunction ; third, a more realistic approach by all parties to the fiscal mix and government debt burden. such developments, together with the cleaning - up of banks β balance sheets will set in motion a virtuous circle, paving the way to the full return of the
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##ly by 25 per cent, intensifying the debt dynamics and contributing to the self - reinforcing nature of the crisis. in the remainder of the periphery β especially ireland, spain and cyprus β it was the banking sector that generated a sovereign crisis, not the other way around as in greece. capital inflows were channeled mainly through national banking systems to help finance construction. private indebtedness financed by the capital inflows surged, leaving the countries prone to the unwinding of the capital inflows. as with the case of greece, the inflows fueled large competitiveness losses as rises in the prices of non - tradables spilled over to the tradables sector, setting the stage for a boom - bust cycle. in these countries, the bust came through the banking systems. what happened was that the large size of the banks relative to national gdps undermined confidence in the sovereigns, creating doom - loops between banking systems and the sovereigns. to explain why this happened, consider the following difference between banks in the united states and those in the euro area. although the largest banks in the euro area and the united states are of roughly the same size in terms of euro - area gdp and u. s. gdp, respectively, the largest euro area banks represent a much larger share of any individual national economy compared with the situation of u. s. banks. consequently, banking crises in individual euro - area countries placed large fiscal burdens on governments, calling into question their solvency and making the use of counter - cyclical fiscal policy infeasible. in light of the exposure of the banks to the debt of their sovereigns, the deteriorating fiscal positions, in turn, affected the banks. the lesson from this experience was clear ; an effective economic and monetary union needs to include a banking union. a crisis - induced economic adjustment the euro - area crisis served two vital purposes. first, it acted as a wake - up call to policymakers in economies that had become uncompetitive. second, it brought to the surface fundamental weaknesses in the eu β s institutional structure. consequently, since the onset of the crisis, policymakers in the stressed countries have made significant progress in addressing fiscal and external imbalances. at the same time, institutional flaws in economic and financial governance are being addressed. in what follows i will first focus on the adjustment that has taken place in greece. consider, first, fiscal adjustment. from 2009 to 2013
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jorgovanka tabakovic : overcoming the pandemic and enabling sustainable recovery address by dr jorgovanka tabakovic, governor of the national bank of serbia, at the swiss constituency seminar " overcoming the pandemic and enabling sustainable recovery ", 3th june 2021. * * * dear colleagues, good afternoon or morning to everyone. first, i want to emphasize that human capital, knowledge and trust are the preconditions and conditions for existence, for lasting and for having development perspectives. isn β t it that human capital, knowledge and trust are the most important in everyday life too - in our families and interpersonal relationships? for it is people who make institutions, companies, states. they both make and represent them. i will present to you, as to my chosen family, how serbia has fought the pandemic. i will talk about : 1. why covid - 19 had a less severe impact on serbia 2. responses by both the nbs and the government 3. and our medium - term agenda. i will start with the outcome. serbia has recorded only a mild contraction of gdp last year, of just 1 %. already in q1 this year our gdp exceeded pre - crisis levels. we often get the how question β what are the key factors behind such a good outcome? 1. first, serbia entered the crisis in an excellent shape β a lot has been done during the last nine years, and here i want to give the deserved credit to our president aleksandar vucic for his vision and dedicated work for a stronger serbia. 2. second, we implemented large and comprehensive packages of both monetary and fiscal policies, but we stayed prudent and kept public debt to gdp ratio well under control. we also increased our fx reserves since the pandemic. 3. third, it is also the timeliness of these packages that kept business and consumer confidence. 4. fourth is the product and geographical diversification of industrial production and exports. 5. fifth is the continuation of all government infrastructure projects. 6. and, on top of that, it is about the successful vaccination process. also, part of the better result is related to a better than initially expected outcome in our main trading partners. during the curtain raiser, managing director madam georgieva said that without synchronized measures, the global contraction last year would have been at least three times worse and this could have been another great depression. fortunately, due to our extraordinary joint
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and judgment, and the pursuit of the congressionally mandated goals that guide the work of the board. in some cases, this approach has led me to depart from the views of my colleagues. at its september meeting, the fomc voted to lower the target range for the federal funds rate, for the first time since we began tightening to combat inflation, by 1 / 2 percentage point to 4 - 3 / 4 to 5 percent. i dissented from that decision, preferring instead to lower the target range by 1 / 4 percentage point. in my statement published after the meeting, i 1 / 9 bis - central bankers'speeches agreed with the committee's assessment that, given the progress we have seen since the middle of 2023 on both lowering inflation and cooling the labor market, it was appropriate to reflect this progress by beginning the process of recalibrating the policy stance toward a more neutral setting. as my statement noted, i preferred a smaller initial cut in the policy rate. with inflation continuing to hover well above our 2 percent goal, i saw the risk that the committee's large policy action might be interpreted as a premature declaration of victory on our price - stability mandate. in addition, with the u. s. economy remaining strong, moving the policy rate down too quickly, in my view, would carry the risk of stoking demand unnecessarily and potentially reigniting inflationary pressures. my dissent was notable in that the last dissenting vote from a fed board member on an fomc vote occurred nearly 20 years ago. my dissent was guided by my view and interpretation of the available data and my understanding of the fed's dual mandate of maximum employment and stable prices, which i will discuss more in a moment. everyone in this room knows that experience is important. my experiences have shaped and reinforced my views on how policymakers can best serve the publicnarrowly, including in monetary policy decisionmaking and the regulation of the banking industry, but also more broadly in thinking about policymaking in support of an agency's mission balanced with its extensive impact on the affected industry and the u. s. economy. a pragmatic approach to policymaking a goal - oriented approach in the past, i have discussed the role of policymaking from the perspective of a federal reserve board member. but taking a step back, there are some broader themes relevant to agency policymaking more generally, themes that are useful beyond the context of the federal reserve. at a
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that follows. in any case, it will not be brief. 2 the fourth issue is the fine line between monetary policy and fiscal policy. measures to take on individual credit risk such as corporate debt are extraordinary steps for a central bank since they come close to the area of fiscal policy which deals with resource allocation at the micro level. i believe such measures are only justified when we are facing a situation where, if left untouched, there is a substantial risk that credit market functions will deteriorate and the resulting weakening of the financial conditions can seriously damage the economy. it must also be compatible with the legal framework provided in each country's central banking law. when such measures are introduced, in order to avoid constraining market functioning where market participants become reliant on such extraordinary measures, it would be important to have an appropriate built - in exit mechanism which reduces the incentive to use the facility as market functioning recovers. additionally, since it is in essence close to the realm of fiscal policy, a clear understanding of which authorities are taking on the risks involved is indispensable. this is also important from the perspective of maintaining public confidence in the financial strength of the central bank. if the central bank's financial strength is perceived to be weakened, concerns may arise, subtly through various channels, with regard to its ability to effectively fulfill its monetary policy mandate. fifth is communication with the markets. without public trust in the organization, a central bank cannot effectively conduct monetary policy. words and deeds have to match. there is much uncertainty with regard to the effectiveness of unconventional monetary policy and extraordinary measures may be pushing the boundary of monetary policy. because of these two aspects, thorough communication with markets and the public becomes all the more important. careful explanations while continuously evaluating both the positive and adverse effects of the steps taken become critical. even during times of a crisis, if central banks take time - inconsistent policy measures, this could rather have negative effects on confidence in the central bank, and as a result reduce the effectiveness of monetary policy. at the end of the day, the central bank needs to communicate its aims and strategies in response to the characteristics of the problem the economy faces, and also needs to take policy measures which are consistent with the communication. i would like to emphasize once again that, especially in a crisis situation, the central banks must make clear their commitment to the stability of financial markets and the financial system, and take decisive policy actions to achieve such goals. concluding remarks the five issues i
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robert holzmann : the central bank of the future - opportunities and challenges opening remarks by dr robert holzmann, governor of the oesterreichische nationalbank, the austrian central bank, at the oesterreichische nationalbank ( oenb ) economics conference and suerf conference colloquium, vienna, 11 june 2024. * * * check against delivery distinguished guests, welcome to this year's oenb economics conference and suerf colloquium. let me start by thanking you all for joining us, both virtually and in person. i would also like to extend my sincere gratitude to the distinguished speakers, panelists and researchers who have agreed to honor us with their contributions to this event. and last but not least, a heartfelt " thank you " also goes to the to all the people involved in the organization of this event. last year, we celebrated the 60th suerf anniversary and the 50th oenb economics conference, but in a different venue. as a belated gift, we are privileged to be back in this beautifully refurbished cashier hall β our kassensaal. as we gather once again for this conference, let's take a moment of reflection and anticipation. last year, our discussions centered around the theme monetary policy in uncertain times : towards robustness and resilience. it was an exploration of the challenges facing our economies amidst the backdrop of unpredictability. in my introductory remarks at last year's conference, i spoke about the " propheticcapacities " of oenb - suerf conferences. this year, i plan to harness this prophetic power as we embark on a journey to discuss and design the central bank of the future β a central bank that is not only reactive but one that is well - equipped to navigate the complexities and uncertainties that lie ahead. some reflections on current challenges as we reflect on the first 25 years of the euro, we cannot overlook the challenges we faced. many of these challenges have left legacies that will continue to shape our future journey : one of these challenges stems from the necessity of employing unconventional monetary policies that arose when we found ourselves at the effective lower bound. the consequence of these policies is the accumulation of vast balance sheets, which now exert pressure on central bank profits. this puts central banks in a delicate position. while our balance sheets now consist of assets yielding low interest rates, commercial banks enjoy a substantial 3. 75 % interest payment through
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of vanuatu to incorporate financial inclusion in its tasks. by extending its role to include financial inclusion, the reserve bank of vanuatu aims to reinforce the bank β s function in promoting monetary stability and sound financial structure and to foster the financial conditions conductive to the orderly and balanced economic development of vanuatu, in line with the reserve bank of vanuatu act [ cap 125 ], part ii, section 3. a lot of ni - vanuatu does not have insurance. this is a sad reality after 32 years of independence. it is now important that insurance especially relating to micro - insurance becomes part of the financial inclusion strategy. i am sure that this topic will be discussed in our workshop and in the next few years i would like to see it integral part of our communities. ladies and gentlemen, the workshop theme β medium term strategy for financial inclusion in vanuatu β is timely. financial inclusion is essential to our efforts in fighting poverty and inequality and being innovative and thinking outside the box is key to achieving greater access. we see it in real life, we see it on tv, we hear it on the radio, and we read it in the newspapers. how people in the rural and outer islands struggle to make ends meet is a sad reality for us. dokowia sang a song about β class six β and the difficulty of finding a job and putting food on the table. hearing young people saying that their parent could not afford to pay for their education fees is difficult to accept. bis central bankers β speeches these are the gloomy realities of how some of our people live. whilst we sit in the comforts of our homes and within the precinct of this luxurious hotel, there are others in our communities that do not have that comfort and living standards that they should have. i am sure that we all have a role to play in financial inclusion and if we all make an effort to play that role well, we can make a difference in the lives of many of our people. after this meeting i would like to see concrete outcomes and i believe that with your experience and expertise it is possible. last but least, i take this opportunity to thank the government, sponsors, presenters and all the participants to this workshop and wish you all a fruitful discussion for the next two days. thank you tumas. merci beacoup. bis central bankers β speeches
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of these organizations have committed a lot of efforts and resources to offer financial education to those who need it but are underserved. i am also delighted for our donor partners who have acknowledged the importance of financial inclusion and i look forward to working with you to expand the financial literacy further. goal number three is aimed at putting in place a simple and transparent mechanism to protect consumers of financial services. i am happy to inform us this morning that at the request of the pacific island financial inclusion working group in a meeting last year at the bis central bankers β speeches reserve bank of vanuatu, i have agreed that vanuatu will take the lead in implementing the consumer protection goal. the reserve bank is currently working with other related government ministries on this. it is highly expected that the application of a proper consumer protection mechanism will enhance the confidence and trust and encourage low income earners and rural dwellers to access readily available financial services. money pacific goal number four, as an overriding goal, aims to reduce, by half, the number of people who do not have access to even the most basic financial services. ladies and gentlemen, to achieve the common purpose of a great inclusive financial environment, all stakeholders need to work together. the reserve bank of vanuatu in collaboration with the financial inclusion programme and the alliance for financial inclusion has purposely organized this workshop as a starting point to facilitate this partnership work approach. i acknowledge the commitments and efforts taken by the national bank of vanuatu, digicel, vanwods microfinance, the department of cooperative and ni - vanuatu business and other small financial institutions not mentioned, for reaching out and making basic financial services available to the low income earners, women and the remote rural community dwellers in deferent islands throughout the country. financial inclusion strategies can be defined as road maps of actions, agreed and defined at the national level that stakeholders follow to achieve financial inclusion objectives. successful strategies coordinate efforts with the main stakeholders, define responsibilities among them, and state a clear planning of resources by, for example, prioritizing targets. a strategy can promote a more effective and efficient process to achieve significant improvements in financial inclusion, and is ideally prepared with the private sector in order to establish and achieve shared, achievable goals for financial inclusion. the reserve bank of vanuatu, like all other central banks in the region, is committed to promote a coordinated partnership work approach between stakeholders to enhance efficiency and to achieve greater financial inclusion in vanuatu. this commitment was materialized in 2011 when the board mandated the reserve bank
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in aggregate demand and, by extension, in inflation. faced with these circumstances, on the ecb governing council we acted rapidly and forcefully. in particular, we announced on 18 march the launch of the pandemic emergency purchase programme ( pepp ), which allows the ecb to purchase public and private sector bonds and other debt instruments. the pepp had an initial envelope of β¬750 billion ( 6. 6 % of euro area gdp in 2020 ) and was scheduled to last until end - 2020. it paved the way for a gradual easing of financing conditions which has continued to date. the targeted longerterm refinancing operations ( tltros ) for the banking sector were also very successful. for example, in the june 2020 operation, participating banks received a total of β¬1. 31 trillion, a record for eurosystem refinancing operations. estimates by banco de espana researchers suggest that the pepp will have had a firstorder positive impact on inflation and on the gdp growth rate in the 2020 - 2022 period. 2 the evidence available also suggests that the tltros have fulfilled the function for which they were designed, as banks have used the financing received to grant loans to the real economy. 3 admittedly, it is difficult to accurately quantify the economic and financial deterioration that would have ensued had the pepp and the rest of the measures not been launched, and therefore to estimate the resulting overall effect on euro area macroeconomic developments. but one of the main effects of the monetary policy measures, in a setting as adverse as that in place at the onset of the pandemic crisis, has been to avoid disruption on financial markets that would have ultimately given rise to a much deeper and persistent crisis. for further details, see p. hernandez de cos ( 2021 ) : β the european central bank's monetary policy : response to the pandemic crisis and future challenges ". speech at the universidad autonoma de madrid ( uam ). see aguilar, p., o. arce, s. hurtado, j. martinez - martin, g. nuno, and c. thomas ( 2020 ). β the ecb monetary policy response to the covid - 19 crisis β, occasional paper no. 2026, banco de espana. see, for example, the october 2020 bank lending survey in spain. there is a summary of the results of the survey for the participating spanish banks in menendez - pujad
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miguel fernandez ordonez : contribution of global banks to financial stability opening speech by mr miguel fernandez ordonez, governor of the bank of spain, at the international capital markets and emerging markets roundtable, institute of international finance ( iif ), washington dc, 17 april 2011. * * * let me start by thanking the iif for giving me this opportunity to present my views on global banks. i will speak from my perspective as spanish banking supervisor. and i should say from the outset that in my country global banks have not given us the most problems. indeed, the main message of my intervention today is that we should not fall into the trap of automatically equating β global banks β with β dangerous banks β in terms of financial stability. this may be an intuitive reaction to the crisis. but it would be a mistaken one, in my view. in fact, based on our experience, i would like to give you some examples of how global banks can make a positive contribution to financial stability. naturally, these are only examples, and i would certainly not presume to have all of the answers on this complex issue. but i hope these examples will be illustrative of the point i am trying to make. first of all, it is true that some global banks have experienced severe problems. we have seen large, complex and interconnected banks and financial companies on the brink of bankruptcy, both here in the united states, and across europe. the taxpayers of some of the most developed countries of the world have been called on to support global banks headquartered in their countries. indeed, after the lehman bankruptcy, it is fair to say that the entire global financial system was put at risk by the difficulties of some banks operating worldwide. it quickly became clear that an unprecedented and unacceptable level of systemic risk had built up over the β boom β years. and that a significant amount of taxpayer β s money had been put at risk as a result. this prompted a forceful, and understandable, reaction from all sides. the public, bank investors, regulators, supervisors and politicians alike all agreed that we needed a profound overhaul of the treatment of systemic risk. i believe that the reactions to this challenge from the g - 20, at the highest political level, as well as from the financial stability board ( fsb ) and the basel committee of banking supervisors ( bcbs ), have been proportionate to the size of the problems and risks we have encountered since the outbreak of the crisis. the costs have
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supply shocks to food, energy, labor, or semiconductors, we have both the capacity and the responsibility to maintain anchored inflation expectations and price stability. see ricardo reis ( 2022 ), β the burst of high inflation in 2021 β 22 : how and why did we get here? β working paper. - 8we are in this for as long as it takes to get inflation down. so far, we have expeditiously raised the policy rate to the peak of the previous cycle, and the policy rate will need to rise further. as of this month, the maximum monthly reduction in the balance sheet will be nearly double the level of the previous cycle. 10 together, the increase in the policy rate and the reduction in the balance sheet should help bring demand into alignment with supply. monetary policy will need to be restrictive for some time to provide confidence that inflation is moving down to target. the economic environment is highly uncertain, and the path of policy will be data dependent. while the precise course of action will depend on the evolution of the outlook, i am confident we will achieve a return to 2 percent inflation. our resolve is firm, our goals are clear, and our tools are up to the task. as of september 2022, the monthly caps on the runoff of treasury securities and mortgage - backed securities are $ 60 billion and $ 35 billion per month, as compared with $ 30 billion and $ 20 billion, respectively, from 2017 to 2019.
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reconcile with the more downbeat tone of activity. year - to - date through august, payroll employment has increased by about 3Β½ million jobs, a surprisingly strong increase given the decelerating spending and declining gdp over the first half of the year. the unemployment rate has fallen, on net, from 4 percent in january to 3. 7 percent in august. possibly the strongest indications that the labor market is tight were the first - and secondquarter readings of the employment cost index ( eci ), which point to strong and broadbased growth in total hourly compensation. the 6. 3 percent reading for the eci in the second quarter was the largest annualized quarterly growth in compensation under this metric since 1982. the most recent reading of average hourly earnings suggested some possible cooling, decelerating from a gain of 0. 5 percent in july to 0. 3 percent in august, although it will be important to see additional data. the deceleration in economic activity thus far this year has coincided with only a slight easing in job openings, on net, since their peak in march. the current high level of - 6job openings relative to job seekers remains close to the largest in postwar history, consistent with a tight labor market ( figure 5 ). businesses that experienced unprecedented challenges restoring or expanding their workforces following the pandemic may be more inclined to make greater efforts to retain their employees than they normally would when facing a slowdown in economic activity. this may mean that slowing aggregate demand will lead to a smaller increase in unemployment than we have seen in previous recessions, but it is too early to draw any definitive conclusions, and i will be monitoring a variety of labor market indicators closely. 8 as we follow through on our plan to move monetary policy to an appropriately restrictive stance, the effect of the increased policy rate and pace of balance sheet shrinkage should put downward pressure on aggregate demand, particularly in interestsensitive sectors like housing. continued improvements in supply conditions and a further rotation of consumption away from goods and into services should also help by reducing price pressures in goods. with regard to non - housing services, the magnitude of price pressure over the next several quarters will depend on an overall slowing in spending as well as the extent to which labor supply improves in these sectors. since pivoting last year, our actions and communications have tightened financial conditions significantly and at a much more rapid speed than earlier cycles. so far during 2022, real 2 - year yields have risen more than
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##che, 7 returns have so far been operationalised and the second tranche of returns on risk management aspects and consolidated supervision is expected to be introduced by next year. the supervisory intervention by the rbi is normally triggered by the deterioration in the level of capital adequacy, npas, credit concentration, lower earnings, and larger incidence of frauds which reflect the quality of control. internal control systems like the central banks in developed supervisory regimes, the rbi also has started placing an increasing reliance on professional accountants in the assessment of internal control systems of the banks and non - bank financial institutions. over the period, the responsibilities of auditors have been delineated not only to make the audit more detailed but also to make them accountable. the methodology and processes used to generate available data as certified by the audit profession would improve the reliability of financial statements as regards their conformity with national accounting and disclosure standards. another area of crucial importance is the strengthening of internal control systems in banks. the reserve bank has, over the years, emphasised the need for having an effective internal control system in banks. banks have also been advised to introduce the system of concurrent audit in β 4 β major and specialized branches. as a result, all commercial banks have introduced concurrent audit since 1993 by using external auditors as a major resource. the banks are now required to set up audit committees to follow up on the reports of the statutory auditors and inspection by the rbi. similarly, immediate action is warranted on reconciliation of inter branch accounts which, if left unreconciled, are fraught with grave risks. substantial progress has been made by banks in reconciliation of the outstanding entries, and the bfs reviews progress in this area at quarterly intervals. operational strength of the indian banking system it is now commonly acknowledged that the indian banking sector has, as a result of the ongoing reforms, emerged strong and resilient. the public sector banks which suffered losses of rs. 3, 293 crore in 1992 - 93 and rs. 4, 349 crore in 1993 - 94, i. e. in the initial years of introduction of prudential norms, have ended the year 1997 - 98 with a net profit of rs. 5027 crore. net npas of public sector banks formed 8. 2 % of the net advances and 3. 3 % of the total assets as at the end of march 1998. evolution of the risk management system financial institutions carry a wide range of risks, including credit, interest rate,
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swaminathan j : embracing meaningful assurance for sustainable growth of the nbfc sector speech by mr swaminathan j, deputy governor of the reserve bank of india, at the conference of heads of assurance of non - banking financial companies ( nbfcs ), mumbai, 15 may 2024. * * * deputy governor shri rao, heads of assurance functions from non - banking financial companies, and my colleagues from the reserve bank of india. a very good morning to all of you. the reserve bank of india has been engaging with its supervised entities regularly over matters of governance and assurance functions, conveying the importance of strong organisational governance and remaining vigilant to ensure the continued stability of the financial sector. assurance functions namely, the risk management, compliance and internal audit, play a very crucial role, as guardians ensuring the regulated entity operates soundly, safely, ethically and within regulatory and legal boundaries. today's conference for the heads of assurance functions is an extension of our efforts, recognising the critical role these functions play in ensuring the robustness and resilience of the financial entity itself as well as the overall financial system. the role played by nbfcs in indian financial sector has been rapidly growing and their share in the credit portfolio has significantly gone up, more so in the last three years. just a decade ago, in 2013, the total credit extended by nbfcs represented approximately one - sixth of the magnitude of bank credit. however, this proportion has increased to one - fourth1, indicating a notable acceleration in credit delivery by nbfcs compared to banks. indeed, nbfcs have emerged as a preferred option for numerous underserved sectors, particularly small businesses and households, due to their ability to provide more feet on street and customer friendly credit solutions. moreover, nbfcs have embraced technology in a big way to further expedite and streamline their reach and credit delivery process. but this has also brought certain systemic risk, complexity and interconnectedness, which is the reason as to why the reserve bank has of late been engaging with this sector more often than before. hence the theme of my speech today is going to be focussing on the need to ensure effectiveness of assurance functions for sustainable growth. as nbfcs expand in both size and complexity, they must bolster governance and assurance functions to maintain a constant vigil over potential risks and vulnerabilities. it is crucial to ensure that the rapid growth and adoption of technology
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the financing environment to be quite accommodative. four factors have contributed to this improvement in financial conditions : low interest rates, a widespread restructuring of corporate liabilities during the past few years, significant cost - cutting and productivity gains, and a substantial narrowing in market - risk premiums. even with interest rates expected to rise and profit growth expected to moderate, the financial condition of the business sector should remain strong and able to support continued expansion. i will discuss each factor in turn. first, firms are continuing to benefit from the accommodative stance of monetary policy. even after the fomc raised the target funds rate to 1. 25 percent a few weeks ago, short - term borrowing costs remain very low. for longer - term debt, the combination of low yields on benchmark treasury securities and reduced risk spreads has kept borrowing costs quite attractive. currently, yields on investmentgrade corporate debt generally are at the low end of levels of the past several decades, despite having risen on balance by about ΒΎ to one percentage point since late spring of last year. for speculativegrade firms, yields have fallen almost one percentage point as spreads contracted sharply. second, in response to low long - term rates and to investors β concerns arising from some high - profile, unanticipated meltdowns, firms have greatly strengthened their balance sheets. many firms have refinanced high - cost debt, a move that has reduced the average interest rate on the debt of nonfinancial corporations by more than 1 percentage point since the end of 2000. businesses have also substituted long - term debt for short - maturity debt to improve their balance sheet liquidity and to reduce the risk of rolling over funds. in addition, many firms - especially in the most troubled industries - have retired debt through equity offerings and asset sales, while others have used their mounting profits to retire debt. as a result, the growth of nonfinancial corporate debt in the past two - and - a - half years was limited to its slowest pace since the early 1990s. these repairs to balance sheets have also reduced the exposure of many firms to rising interest rates, especially in the near term. in particular, the replacement of short - term debt by long - term bonds means that less debt will have to be rolled over in the near term at higher rates. in addition, because much of the long - term debt has a fixed rate, interest payments typically are unaffected over the life of the bond. moreover,
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and as resource utilisation has increased, inflation has also risen towards the target. it is evidently possible to attain a quantified inflation target. when i follow the debate on monetary policy in sweden, the argument keeps cropping up that the two - per cent target for inflation will be impossible to attain as the economy becomes increasingly digitalised. however, one should also look at events in other developed countries with similar targets. because of course sweden is not alone in being affected by digitalisation. there does not seem to be any clear relationship in these other countries between for instance the spread of e - commerce and inflation. however it is possible that the lack of simple correlations in data hides some causal relationship. better indicators of the spread of digitalisation may give other 22 cavallo ( 2017 ). 23 cavallo ( 2018 ). 24 gorodnichenko and talavera ( 2017 ). swedish trade federation ( 2018 ). 26 sveriges riksbank ( 2018b ). 9 results. my point is therefore that it is up to the critics to present proof of why more digitalisation would necessarily mean that inflation was held below the target for a long period of time. in the longer run inflation is determined by the monetary policy that is conducted on average and its effects on inflation expectations. a better explanation for the differences in inflation rates between countries around the world is therefore that they conduct different monetary policies. having a credible benchmark for price setting and wage formation facilitates longterm planning for both individuals and companies. the inflation target is needed in particular when the world is changing rapidly as a result of major upheavals such as digitalisation. the alternative would be a less stable development and poorer opportunities for good economic growth. clear game rules for a smoothly - functioning economy let me summarise my thoughts : my assessment is that digitalisation contributes to a new way of producing, pricing and demanding goods and services. by maintaining a stable rate of inflation close to our target, monetary policy helps this changeover. to do so, we need to understand the development of economic activity, as well as the effects of structural changes in the economy. what we know is that labour markets change. they become more polarized, which makes it more important for people to update their skills to the new circumstances. the game plan for companies is changing. e - commerce can for example mean that companies β prices change more often and become more sensitive to shocks. increased consumer power and greater competition
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glenford ysaguirre : from the global financial crisis to more robust regulatory frameworks and resilient financial systems feature address by mr glenford ysaguirre, governor of the central bank of belize, at the caribbean group of banking supervisors xxix annual conference, san pedro town, 16 june 2011. * * * a pleasant good morning to mr. cleviston haynes β cgbs chair ; representatives from the association of supervisors of banks of the americas ( asba ), the office of the supervisor of the currency ( occ ), the us department of the treasury, the federal deposit insurance corporation ( fdic ) ; members of cgbs ; participants of this, the twenty - ninth annual cgbs conference. ladies and gentlemen, let me join my staff in welcoming you to belize and to the, warm, friendly and scenic location of san pedro, ambergris caye. it is indeed my pleasure to have this opportunity to address this gathering today. i understand that you have a very heavy agenda so my intent is to be very brief and not to stray from the script as is often my wont. as leading entities charged with the supervision of the financial sector, we all carry an enormous responsibility and one that ought not to be taken lightly. today, i see the work of the cgbs as one of the few shining examples of a regional institution that does not seem to be afflicted with that, oh so common and familiar malady i call the caricom malaise. this is that common condition where we meet a lot, talk a lot, agree on a lot, debate a lot, and then we resolve not to do a damn lot. let me give you an example : take our attempt to get members to adopt a single draft model banking act across the region. while unanimously agreed to almost six years ago, it languishes in suspension as formal acceptance by a few jurisdictions is as yet forthcoming with no explanations for the protraction. but, my purpose here today is not to dwell on the negative, but rather to plant an idea whose time i think has come. i hope it will pique your interest sufficiently for you to forgive my departure from the normal feature address format. the theme for today β s conference is very fitting and timely : β from the global financial crisis to more robust regulatory frameworks and resilient financial systems β i like this theme because it is forward looking and is in perfect consonance
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outside of members β jurisdictions ; and β’ the methodology and approach for the regional financial risk assessment project. on the matter of the ccmf serving as the central reporting facility, there were questions as to its appropriateness, ability and capacity to manage such a task : β’ does it have the necessary financial and human resources? β’ do they have the required expertise, bearing in mind that this is a research institution? β’ how will the issue of legality and confidentiality be resolved? from recent discussion and exchanges between governors at and after the 27 may 2011 governors β caucus held in bridgetown, barbados it does not appear that we are anywhere near to resolving these issues and a sub - committee of governors was appointed specifically to look into these issues, among others. so, when i was tasked by my supervision department to make this feature address, these were some of the issues that governors were still hotly debating and i became fearful that this very important project may also fall victim to the dreaded caricom malaise. it then dawned on me that the cgbs and not the ccmf may be the only salvation and the ideal rescue vehicle for this project. in 1983, caricom central bank governors envisaged the need for an entity to spearhead the enhancement of regional banking supervision practices in line with internationally accepted standards. hence, the birth of cgbs, an institution charged with charting the way forward for supervisors to maintain above - board practices and equilibrium in regulating financial sectors across the caricom region. since then the cgbs has grown and accomplished much, and as i mentioned earlier, is one of the few caricom institutions that actually produces real work in the true spirit and meaning of regional integration. it is the obvious choice to be the central reporting facility and should be the home of the financial stability project ; financial stability review falls naturally within its bailiwick. what i am saying is that the time has come to legally establish the cgbs as caricom β s supranational financial regulatory authority. such a structured cgbs would eliminate all the concerns governors now have about the appropriateness of the ccmf for this role in particular the concerns on the legality of regional information sharing. presently, the conduct of cgbs members towards each other has been guided by a protocol based on mutual respect and trust. there is a members β handbook and a recently signed memorandum of understanding for regional cooperation though none of these are legally binding.
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managers and limited liability shareholders to increase risk if their capital stake drops too low β so called gambling for resurrection. these market failures are addressed not just by capital requirements, but by the interplay between capital and the other two pillars of the regime. goldilocks and the three pillars : how much capital is just right? β speech by anna sweeney | bank of england pillar 3 : market discipline pillar 3 is disclosure of information about a firm β s balance sheet risks. market discipline is not wholly absent from the insurance sector either at the inception of or during the course of policies. some policyholders and creditors are able to monitor and react to changes in the creditworthiness of insurance firms. clearly, for those that can, good quality, timely disclosures enhance market discipline. where market discipline is strong, there is less need for stringent regulatory minima. but the strength of market discipline varies widely across the sector, according to the nature of policies and policyholders, as well as being different at the point of purchase and during the subsequent life of a contract β often measured in years not months. moreover, there is another, essential element of the regime that serves to reduce market discipline. this is not a pillar but a net strung between the pillars. large classes of policyholder would suffer significant hardship if their insurer failed, but have either no way of observing that it is courting failure, or no way of switching to a safer firm β often both. annuitants are an obvious example. so such policyholders are offered an unlimited, 100 % safety net by the fscs. certain general insurance products are in the same camp, and not just indemnities covering potentially ruinous liabilities to third parties : indeed, last year we extended 100 % cover to certain building guarantees policies when it became clear that they met the criteria of significant hardship and inability to switch provider. so far so good, and the safety net promotes competition by giving consumers confidence in purchasing insurance and shopping around. but of course the existence of this safety net blunts the policyholder incentive to distinguish between a high risk and a low risk insurer at the point of taking out a policy. paradoxically the stronger the safety net, the stronger the other two regulatory pillars need to be to hold it up. the less the market and policyholders discipline a firm, the more the regulator needs to do it for them, including by policing financial standards. pillar 2 : intervention and risk management pillar 2 contains a range of
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regime based on those principles to the uk market. the government has translated [ 1 ] this into three objectives : to spur a vibrant, innovative, and internationally competitive insurance sector ; to protect policyholders and ensure the safety and soundness of firms ; and to support insurance firms to provide long - term capital to support growth, including investment in infrastructure, venture capital and growth equity, and other long - term productive assets, as well as investment consistent with the government β s climate change objectives. these are consistent and mutually supportive objectives. safety and soundness underpin the other two objectives : the sector can only be internationally competitive if it operates within a robust and reliable infrastructure, which includes the prudential regime as well as things like the legal system ; and only a financially sound insurance sector goldilocks and the three pillars : how much capital is just right? β speech by anna sweeney | bank of england can make a sustainable contribution to long term investment. conversely, an innovative sector, that supports the wider economy through long term investment, is ultimately a sounder one. tailoring will mean reforms to specific aspects of the regime that are not well - designed or imperfectly calibrated for the uk, and are currently distorting incentives and behaviour. the risk margin is probably the best known example. the concept β a margin over best estimate of liabilities so that they are held on the regulatory balance sheet at an estimate of their transfer value β is sound. but in its current implementation the output of the risk margin formula is too sensitive to interest rates [ 2 ], and when rates are low it is higher than it need be to fulfil its purpose. and this has driven a misallocation of capital, away from longevity risk, a misallocation which is relentlessly increasing as volumes of business not covered by transitional measures grow. overall outcome of the review we are working on these and other specific topics, and looking forward to receiving views in response to hmt β s call for evidence which closes later this month. it is important to get these reforms right. but we cannot consider reforms to individual measures in isolation : at the end of the process we have to be confident that the package of measures continues to deliver the right overall level of resilience at firm and sector level and supply of financial services demanded by the economy. that has always been the reality β calibration of individual measures has to derive both from bottom up analysis and top down assessment of their cumulative impact. the fact
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7 bis central bankers'speeches 18 see oecd ( 2014 ), β oecd framework for regulatory policy evaluation β, oecd publishing, june 2014. the framework is a natural follow - up to the recommendation of the council of the oecd on regulatory policy and governance from 2012. 19 see oecd ( 2015 ), β oecd regulatory policy outlook 2015 β, oecd publishing, may 2015. 20 www. mcmasterforum. org / 21 www. financial - education. org / join _ infe. html 22 see stats. bis. org / frame / and boissay, cantu, claessens, and villegas ( 2019 ), β impact of financial regulations : insights from an online repository of studies β, bis quarterly review, march 2019. 7 / 7 bis central bankers'speeches
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hermann remsperger : enlargement of the european union and european and monetary union : maastricht meets copenhagen speech by prof hermann remsperger, member of the directorate of the deutsche bundesbank, at the annual meeting of elec, frankfurt, 7 december 2001. * i. introduction * * the accession of ten central and east european countries as well as malta and cyprus presents the european union with one of the greatest challenges in its history. in june 2001 the gothenburg european council clearly stated that the process of european enlargement is irreversible. it has already been foreseen that the first of the accession countries will participate in the european parliament elections in 2004. what currently looks possible is that there will be a β big bang β, an initial major enlargement involving ten candidate countries. the new eu member states also commit themselves to adopt the euro at a later date. contrary to the united kingdom and denmark there will be no β opt out β clause. this means that two to three years after enlargement of the european union there could already be a far greater number of countries participating in european monetary union. in my opinion, however, it is actual progress in convergence rather than pressure to keep to a political date which should be the prime focus of the ongoing process of integration. i would like to start today by describing some fundamental economic facts concerning eu enlargement. i then propose to outline the challenges for the candidate countries and the current eu member states in the enlargement process. ii. economic background to eu enlargement the accession of twelve candidate countries to the eu first of all means that the population of the eu is set to rise by more than 100 million, in other words by more than one - quarter. however, gross domestic product would not increase by anywhere near as much. the aggregate nominal gdp of the accession countries is currently less than 5 % of gdp in the eu as a whole. in terms of purchasing power parities, the weight of the accession countries would be roughly twice as much. even if this measurement method is used, however, there are considerable differences between them and the current member states. the candidate countries also demonstrate major structural differences with the eu. the share of agriculture in the gross value added is on average more than twice as high as in the eu, where it is around 2 %. sectoral employment also points to the existence of structural discrepancies. in poland, for example, agriculture contributes
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inflows and outflows stress the markets, they could be dealt by using liquidity providing instruments that are regularly used by central banks. this discussion centers around the main macroeconomic impacts, with a special emphasis on inflation, output, and the exchange rate. however, it is worth noting that, from a financial stability perspective, monitoring requires also paying attention to other effects caused by capital flows. accordingly, important areas to monitor, aside from the behavior of the current account and its counter - entry in the capital account, are asset prices and the evolution of global credit. also important is using macro - prudential measures to complement monetary policies. in any case, the current scenario differs distinctively from other periods of booming capital inflows to emerging economies. for example, in the early 1980s there were massive net capital inflows to latin american countries ( figure 7 ). when it reversed, because of an increase in interest rates in the united states, the debt crisis burst and a period of no capital flows to the region started. this type of experiences is precisely the one that makes us be very cautious when confronted with massive capital inflows, because a reversal could trigger drastic output adjustments. later on, in the late 1980s and early 1990s, latin america was again the recipient of substantial capital inflows, which has been thoroughly analyzed in calvo et al. ( 1993, 1994 ). at that time there was also an increase in the current account deficit. today, considering the forecasts for 2010 β 2011 contained in the weo of april 2010, no net inflows are expected for regions as a whole, but what is expected is a reduction in the current account surpluses of emerging economies. although this scenario has not evidently materialized, it presents risks that have to be considered. finally, while in the current setting inflows have been offset by similar outflows, we cannot disregard the possibility of sudden gross outflows or sudden stops of gross inflows, generating severe adjustments in the current account with high costs in terms of output. traditional policy options the first line of defense against massive capital inflows is exchange rate flexibility. frequently exchange rate rigidities and unsustainable defenses of parities that are away from their fundamental value give way to speculation against the foreign exchange regime. the literature on speculative attacks shows how an exchange rate that is inconsistent with the rest of the policy actions can trigger massive capital outflows that end up forcing its abandonment.
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eight months. the outburst of the global financial collapse in september 2008 made us suspend these measures. the evidence at hand indicates that these interventions had an immediate impact on the exchange rate of around 3 %, but on some occasions they also altered its later trend. in latin america, the hoarding of reserves has been used several times. in the first half of the 1990s it was used to deal with strong capital inflows ; in the 2000s it has been used much more frequently ( figure 8 ). intervening the foreign exchange market via reserve accumulation also serves the purpose of improving the international liquidity position, which is a form of self - insurance against external financial turmoil. today other forms of insurance are available, that are more costeffective. for example, this is the case of contingent credit lines of the imf or hedging instruments to hedge against fluctuations in the terms of trade ( borensztein et al., 2009 ; caballero, 2009 ). but the estimated benefits of these forms of insurance vis - a - vis selfinsurance through reserve accumulation do not consider the fact that this latter option has also a stabilizing effect on the exchange rate, because the accumulation is done at a time when the exchange rate is overly appreciated with respect to its fundamentals. furthermore, one can think that the presence of efficient insurance mechanisms may exacerbate capital inflows during boom periods in emerging economies. therefore, these are instruments that can prove beneficial in critical times, but may create some inconveniences in normal or favorable periods. some economies have adopted regimes where limited interventions are applied with some frequency. nonetheless, larger interventions, which are precisely the ones that may have a substantial effect on foreign exchange markets, entail quasi - fiscal costs that must be taken into account. this is another reason to make these interventions only in exceptional circumstances. controls on capital inflows if capital inflows are believed to cause trouble, one solution is to limit them by applying controls. this can be done in economies whose financial systems are not well - developed. as the economy and its financial systems develop, limiting capitals becomes more complex and ineffective, in particular due to difficulties in discriminating which types of flows should be curtailed. also, in economies with high levels of international assets such as chile, it is difficult to control capital inflows because of the need to distinguish between inflows by nonresidents and repatriation of capital by residents.
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and multi - faceted. it is at the heart of the concept of indirect regulation. finally, we have an ongoing debate about " transparency ", on which i am sure that members of the panel will tell you more in a few minutes. by nature, hedge funds are secretive investors. they do not publish information about their positions and strategies. on the one hand, for markets to be fully efficient, some investors must be able to hold proprietary information and make profits on this basis. on the other hand, financial market participants and public authorities responsible for financial stability require information to monitor the risks related to the hedge fund sector. on those remarks, i leave the floor to the panelists, and first to jaime caruana, who has kindly accepted to kick start the panel.
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christian noyer : a central banker β s personal perspective on hedge funds introductory speech by mr christian noyer, governor of the bank of france, at conference on hedge funds, washington dc, 15 april 2007. * * * thank you all for coming. it's a pleasure and a privilege to have you all here to day. special thanks to the imf and john lipsky for organizing this event for us and with us. the purpose of our meeting is to present the special issue of our financial stability review on hedge funds. so i want to say a few words on why we embarked on such a project and how we did it. as you noticed, this issue of our review is mostly based on external contributions. some authors are with me to day and i also want to thank them. we are very happy that we could assemble such an eminent roster of contributors. let me say from the outset that we did not intend to reach a conclusion at this stage. the international community is working on this issue, in particular in the framework of the fsf. the main question is : how can we best reconcile keeping the positive inputs of this activity for financial markets functioning and innovation, while keeping the risks that may be generated for financial stability to a minimum. this is why there is a debate on hedge funds, which we think, is legitimate. we think it is our role as central banks to foster this debate, because we have that ultimate responsibility for financial stability. this being said, i may give some personal perspective and make, as an introduction a few remarks. why are we having this debate at the moment? if we look back five or six years ago, we can see at least three major changes that have contributed to a renewed interest in hedge funds activities : first, the sheer size and very fast growth of their activities and portfolios which have made them major participants in financial markets ( 40 % of the turnover of some major stock exchanges ; between 25 % and 50 % of credit derivatives turnover according to various estimates ). second, retail investors ( as opposed to high net worth individuals ) have β directly or indirectly β got increasingly exposed to hedge fund type investment, and, of course, risk. sometimes, such exposure might be not even known to the individual investor ( e. g. through pension funds ). i was surprised to learn that, in my own country, more than 20 billions euros are to day invested in funds of hedge funds or similar instruments. and third, fast and far
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β new economy β that we envision β that is, a philippines that is economically stronger, more technologically advanced, and more equitable β pushing for new laws, rolling out innovative programs, and building new infrastructure to strengthen and make more competitive the philippine economy. the bills we are pushing are the following : ( i ) financial institutions strategic transfer, or fist, which will allow banks to unload their nonperforming assets to asset management entities ; ( ii ) government financial institutions unified initiatives to distressed enterprises for economic recovery, or guide, which will provide assistance to important distressed firms that are critical for economic recovery ; ( iii ) amendments to the agri - agra law, which will expand the list of industries that banks may lend to in order to meet quotas for support to agricultural development ; 3 / 6 bis central bankers'speeches ( iv ) amendments to the credit information system act, to further enhance accessibility of credit to msmes ; ( v ) amendments to laws on deposit secrecy, to put more teeth to anti - money laundering and tax regulations, as well as to further improve good governance ; and ( vi ) financial consumer protection bill, to improve protection of consumers of financial products and services. the bsp also supports the create bill or corporate recovery and tax incentives for enterprises, as well as additional tax reforms pushed by the executive branch. the create bill seeks to accelerate economic recovery by cutting the corporate income tax and modernizing the fiscal incentives system to attract more job - generating investments. the other proposed tax reforms are those related to ( i ) real property valuation, ( ii ) passive income and financial intermediaries, and ( iii ) mining regime, among others. innovation is high in the philippines β β new economy β agenda. last year, president duterte signed the philippine innovation act, which seeks to enhance government support for innovation initiatives of msmes to boost their competitiveness ; and the innovative startup act, which spells government support for research and development of startup companies. rolling out of programs under these laws are underway as we lay the foundation for our future. the bsp is one with the government in the innovation agenda. we actively promote financial technology ( fintech ), and we adopt technology - driven means to engage with our supervised entities and the general public. two of my personal goals related to digitalization are the following : ( i ) at least half of financial transactions in the country be digital, and ( ii ) at least 70 percent of filipino adults have financial accounts.
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. s. monetary policy unwinding begins in earnest. hence, it is likely that some turbulence may continue. given this scenario, the mexican economy is expected to confront any new episode of uncertainty in a solid manner. however, it is important that creditors as well as debtors remain wary of their fx and interest - rate risk exposures. at the same time, authorities need to remain vigilant in order to ensure that financial markets operate normally at all times. inflation and monetary policy in the last decade, monetary policy in mexico has sought the convergence of inflation toward the 3 percent permanent target. progress in price stability over the same time has been considerable. nevertheless, during the current year, inflation has posted somewhat higher levels, since march surpassing the bank of mexico β s upper limit in the variability interval of plus or minus one percentage point around its inflation target. higher inflation mainly reflects pressures in the noncore component of the cpi, from agricultural prices as well as energy prices and government tariffs. however, the negative supply shock is expected to be transitory. at the same time, moderation in core inflation continues to depend, to some degree, on a positive shock from certain services prices. nevertheless, core inflation has remained around 3 percent during the last few months and is expected to stay around this level during the rest of this year and next. up to now, there is no evidence of secondary effects from recent changes in relative prices. analysts β short - term inflation expectations have increased somewhat, but expectations for the medium and long terms have remained stable, albeit above 3 percent. the bank of mexico expects inflation to return to the variability interval in the second half of this year, and to be very close to the permanent target in 2014. upside risks to inflation prevail, including greater - than - expected hikes to transportation prices, additional agricultural price pressures, given avian flu, low precipitation and reduced water levels in dams, and greater volatility due to uncertainty over u. s. monetary policy normalization. the persistence of higher inflation carries the risk of fueling second - round effects that may contaminate the price and wage formation process. thus, the bank of mexico governing board has warned that it will remain alert to adverse supply shocks in order to keep them from producing these effects so that the process of convergence to the permanent inflation target remains on track. 4 see the bank of mexico β s monetary policy announcement, june 7, 2013. bis central bankers β speeches concluding remarks recent
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pre - covid = 84 % in q4 / 19 / peaked = 95. 5 % in q1 / 21 ) part iv : policy responses the most important agenda for thailand is longer - term structural reforms, dealing with increased investment to improve productivity and competitiveness. to do that, we need to sign more ftas to gain access to the new markets and streamline regulations to ease business burdens. for the bank of thailand ( bot ), our priority is to get the monetary and financial policy right by striking balance between growth, inflation, and financial stability. after covid, the bot raised the policy rate in gradual and measured fashion to 2. 5 %, which is the third lowest country besides switzerland and japan. looking ahead, to adjust the policy rate we also have to look beneath the headlines to ensure that the rate is appropriate for supporting long - term sustainable growth. in terms of credit condition, the credit mechanism is still working. total loan outstanding declined partly from debt repayments, while new loan has been expanding. however, credit allocation is uneven, especially for smes. shrinking credit to smes may reflect risk appetite of banks. the appropriate mechanism to address this problem is a more comprehensive credit guarantee scheme. 3 / 4 bis - central bankers'speeches in the longer term, the bot is laying the foundations for the future financial landscape, particularly digital and green economy to ensure sustainable growth. on digital front, we are issuing virtual bank licenses2, which is intended to encourage a new form of competition in the banking landscape. open data is a potential game changer in trying to increase competition. this policy aims to build a mechanism that allows consumers to exercise their rights to conveniently and securely transfer their data stored at one provider to another so that consumers can apply for and receive better services from any providers. on transition to green economy, we are setting the direction for financial sector to support economic transition towards environmental sustainability ( from brown to less brown ) such as financial products and services that would accommodate businesses, particularly smes, in making their environment - related transitions. 1 seasonally adjusted by bot 2 we expect the virtual bank to commence operation in 2026. 4 / 4 bis - central bankers'speeches
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social science. one reason may be the firms β reluctance to adjust wage upwards, resulting in shortage of supply at the going wage. this reluctance, in turn, may be caused by low marginal productivity of labour, which is a consequence of subdued capital formation over the years, resulting in low capital - to - labour ratio. escaping this vicious cycle of low wage and labour shortage, involves an improvement in labour productivity via higher investment in physical capital. several strategies have been proposed. some argue that raising the minimum wage, despite its costs, can potentially promote investment and improves labour productivity. some prefer to provide direct fiscal incentives for firms to invest. others see public investment as holding the key. the jury is still out as to how successful these approaches will prove to be in catalyzing an investment up - cycle, and ultimately alleviating the labour market issue. fortunately, the currently conducive macroeconomic environment is already providing ample incentives for businesses to invest. financing costs are currently low. strong baht facilitates imports of capital goods. firms stand to gain more from aec integration if they carry out their planned investment in a timely manner. collective efforts by all will also generate positive externalities, and can go a long way in easing the labour shortage problem for all parties. bis central bankers β speeches one fundamental force that may exacerbate the labour shortage problem is the demographic change. slowly but inexorably, the thai society is aging, as the total fertility rate is consistently lower than the replacement rate. the number of people aged 65 and above will double in less than 10 years. as projected by nesdb, by 2030 the working - age population will fall from the current rate of 68 percent to just over 60 percent, making thailand β s old age dependency ratio slightly higher than the asian average. the government can help manage this demographic transition by speeding up the reform of immigration policy, and simplify registration procedure. the initiatives can also fit in with the broader agenda of asean integration, to leverage on regional resources and promote regional economic integration simultaneously. closing remarks let me close my remark by thanking all of you once again for your invaluable contributions to the thai economy. the bank of thailand will continue our work of ensuring a stable financial and economic environment, so that businesses can continue to thrive and individuals can enjoy better standards of living on a sustainable basis. i hope that thailand will continue to be a destination of choice for your investment, and a country of shared opportunity and prosperity
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especially beneficial for local businesses to take advantage of the research facilities available at local colleges and universities. partnerships between private industry and higher - education institutions are an important ingredient in this regard. going forward, i believe these partnerships will become more important than ever β particularly for places like syracuse that continue to experience economic restructuring. fortunately, this region already has a strong higher education industry in place. conclusion to sum up, the incoming data on the u. s. economy has been a bit more upbeat of late, suggesting that the recovery may be getting better established. but, while these developments are certainly encouraging, it is far too soon to conclude that we are out of the woods in terms of generating a strong, sustainable recovery. on the inflation front, the year - over - year rate of consumer price inflation has slowed in recent months, and despite the recent rise of gasoline prices, we expect inflation to moderate further in 2012. here in syracuse, while the recovery to date has not been as strong as we would like, the region β s vibrant health and education sector provides a solid base for longer - term growth. thank you for your kind attention. i would be happy to take a few questions. bis central bankers β speeches
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william c dudley : the national and regional economic outlook remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the center for economic development, syracuse, new york, 12 april 2012. * * * good morning, i am pleased to be here in syracuse at the center for economic development. it is always a pleasure to speak with business and community leaders because of the important role you play in helping to shape the economy of the region. i thank you all for inviting me here today. i try to get out of my office in new york city as much as i can to get a sense of regional economic conditions across the second federal reserve district. i was last here in syracuse in 2010 and, more recently, i traveled to west point and the capital region and long island. these visits are just as important as any trip i might take to washington, d. c., to help formulate monetary policy, or to switzerland, to help shape international bank regulation. each visit within the region helps me to deepen the relationships with the people i represent. i believe that the understanding of issues and concerns that i gain today will help ensure that the fed β s policy decisions reflect the public interest. today, i want to talk a bit about the fed β what we do and why we do it. then i β ll provide some thoughts about the economic outlook nationally and locally. after that, i β ll be happy to answer any questions you have about what the fed does and why, and about the economic outlook. as always, what i have to say reflects my own views and not necessarily those of the federal reserve system or the federal open market committee, also known as the fomc. what the new york fed does by way of introduction, i will briefly review what my colleagues and i do at the new york fed on behalf of the second district. i have the great fortune to serve as the vice chair of the fomc that meets eight times a year in washington to set interest rates and make other decisions about monetary policy. the members of this committee all strive to set policy to advance the mandate given to us by congress to promote the maximum level of employment consistent with price stability. sometimes we have different views on the specific policy choice at hand, and you should view this as completely appropriate : these are hard questions β particularly during difficult economic circumstances such as we face today. in fact, i think we make better decisions as a committee because
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radovan jelasic : social responsibility in serbia and the un β global compact β initiative speech by mr radovan jelasic, governor of the national bank of serbia, at the launch of the united nations global compact initiative ( ungc ) in serbia, belgrade, 6 december 2007. * * * ladies and gentlemen, when did you last visit a hospital that cares for children with mental health disorders? where did you throw the glass bottle after you drank your juice yesterday? is the building you live in accessible to physically handicapped people? have you ever been to the area where roma people live under the gazela bridge? and, at risk of sounding sarcastic, have you convinced yourself again today that all problems in this country should be dealt with by the government and that you have the right to criticize that same government to your heart β s desire? do you think that you as an ordinary citizen have some kind of responsibility for all those events taking place outside your micro cosmos? when was the last time you walked down knez mihajlova street looking up to read the names of legacy donors and asked yourself how we compare to them? have you shaken hands, opened the door, smiled or simply been nice to anybody today? what will our country look like in five or ten years time depends only on us and nobody else. if anyone should make our country more beautiful, it should be us, you and me, and we do not and can not have any excuse not to do something. you and i are those who not only have the opportunity but an obligation as well. we have the good will, and as company managers, some money on our hands too. so β let serbia rise β as dositej said, but not against somebody or something, but for a more beautiful, smiling and, above all else, happier serbia. if you are an enterprise that feels the need to do something more than just pay taxes regularly, which is of course necessary but not enough, then you are in the right place today! we have gathered here today to meet and to get to know one another, to unite people and companies who care, who know how and are willing to do more to better not only their own lives, but also the lives of all the people in our country. as a start, a big step forward will have been made if we who have gathered here today were to unite as people of good will who feel the need to do something more, something better, and
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inflation rates exhibited considerable volatility over the year, mainly as a result of developments in energy prices. overall, labour costs increased moderately and contributed to containing domestic inflationary pressures in the euro area, although the situation varied greatly from country to country. despite significant inflationary shocks in 2006, and the fact that headline inflation was above 2 % throughout most of the year, longer - term inflation expectations remained anchored to price stability. nevertheless, risks to price stability remained clearly on the upside throughout 2006, on the basis of the ecb β s economic and monetary analyses. in addition to the possibility of further oil price increases, several other risks were identified. these included : the risk of stronger - than - anticipated pass - through of past rises in oil prices ; additional increases in administered prices and indirect taxes beyond those already announced ; and, more fundamentally, the prospect of stronger - than - expected wage developments and potential second - round effects in wage and price - setting behaviour. the monetary analysis confirmed, by cross - checking, the assessment of upside risks to price stability. money and credit growth remained very robust during 2006, mainly reflecting the stimulative effects of the low level of interest rates and the strength of economic activity. the persistent underlying rate of monetary expansion since mid - 2004 has resulted in the accumulation of a stock of liquidity which is ample by all plausible measures. a broad - based and comprehensive analysis of these developments pointed to upside risks to price stability over the medium to longer term. to address the upside risks to price stability, the ecb β s governing council adjusted the monetary policy stance in 2006 by raising the key ecb interest rates gradually by a total of 125 basis points, reaching the level of 3. 50 % by december 2006. on 8 march 2007 the governing council decided to raise rates by another 25 basis points because it assessed that upside risks to price stability continued to prevail. the information which has become available since the last meeting of the governing council has lent further support to the reasoning behind the decision to raise rates in march. it has also confirmed that risks to the medium - term outlook for price stability remain on the upside. in addition to potential further oil price increases, these risks relate primarily to stronger than currently expected wage developments in an environment of robust growth in employment and activity. in order to sustain robust economic growth and foster job creation, wage agreements should take into account productivity developments as well as the price competitiveness positions and the prevailing high level of unemployment in many economies
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period ahead, we will monitor all incoming information on economic and monetary developments and assess any impact on the outlook for price stability. the accommodative stance of our monetary policy, together with the significant improvements in financial markets since mid - 2012, should help to support prospects for an economic recovery later in the year and in 2014. on non - standard measures, the governing council decided in may to continue conducting all refinancing operations as fixed - rate tender procedures with full allotment, at least until mid - july 2014. this measure will help to support a smooth transmission of the ecb β s bis central bankers β speeches monetary policy stance. in particular, it will ensure that banks β lending decisions are not impaired by funding constraints. the governing council also decided in may to start consultations with other european institutions on initiatives to promote a functioning market for asset - backed securities ( abs ) collateralised by loans to non - financial corporations. before discussing this issue in more depth, let me briefly comment on the economic outlook. economic activity in the euro area contracted for a sixth consecutive quarter in the first quarter of 2013. labour market conditions remain weak. recent confidence indicators based on survey data have shown some further improvement, albeit from low levels. overall, euro area economic activity should stabilise and recover over the course of the year, although at a subdued pace. the risks surrounding the economic outlook for the euro area continue to be on the downside. the recent tightening of global money and financial market conditions and related uncertainties may have the potential to negatively affect economic conditions. other downside risks include the possibility of weaker than expected domestic and global demand and slow or insufficient implementation of structural reforms in euro area countries. annual inflation in the euro area has continued to moderate, falling from 2. 5 % in 2012 to 1. 6 % in june. looking ahead, the underlying price pressures over the medium term are expected to remain subdued, reflecting the broad - based weakness in aggregate demand and the modest pace of the recovery. inflation expectations nonetheless continue to be firmly anchored in line with the governing council β s aim of maintaining inflation rates below, but close to 2 %. risks to the outlook for price developments are expected to be still broadly balanced over the medium term. upside risks relate to stronger than expected increases in administered prices and indirect taxes, as well as higher commodity prices. downside risks stem from weaker than expected economic activity. consistent with our expectations of low underlying inflationary pressures over the medium
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essentially monetary origins of inflation over the longer term. the second pillar of the monetary policy strategy is a broadly based assessment of the outlook for price developments and the risks to price stability in the euro area as a whole. the governing council recognises that it is important, in parallel with the assessment of monetary growth, to look at a wide range of financial and other economic indicators, including economic forecasts. this systematic analysis of all other relevant information about economic and financial conditions will ensure that the governing council is as well - informed as possible when taking monetary policy decisions. monetary developments can reveal useful information about future price developments and thereby offer an important compass for the conduct of monetary policy. therefore, it is absolutely essential for any central bank entrusted with the task of keeping prices stable to analyse and monitor the developments of monetary aggregates closely. consequently, the governing council of the ecb has announced a quantitative reference value for broad monetary growth as measured by m3, which should, under normal circumstances, give some indication of future inflationary pressure. the choice of m3 as an aggregate is supported by empirical evidence regarding the long - run stability and leading indicator properties of this aggregate. moreover, conceptual arguments pointed to the considerable importance of including in the monetary aggregate those assets which have a high degree of substitutability with narrower definitions of money. therefore, in addition to currency in circulation and deposits, repos, units or shares of money market funds and money market paper as well as short - term debt securities, all of which are close substitutes for more traditional bank deposits, have also been included in this definition. the first reference value for m3 growth has been set at an annual rate of 4Β½ %. this reference value is consistent with the maintenance of price stability over the medium term, while allowing for sustainable output growth and the trend decline in the velocity of circulation of m3. in setting the reference value for monetary growth, the governing council has taken account of various factors and emphasised its medium - term orientation. first, the governing council is committed to maintaining price stability according to the definition enshrined in the treaty on european union. this requires increases in the hicp for the euro area of β below 2 % β. second, the governing council takes the view that a figure in the range of 2 % to 2Β½ % per annum for the trend growth in real gdp in the euro area appears to be reasonable. third, the uncertainties concerning short - term developments in velocity linked to the start of
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data. these returns are analysed on a weekly basis and information submitted to management regularly. these reports, in conjunction with feedback on market activity generated by the multi - disciplinary cell, enable us at the bank to keep a close tab on the financial systems β activities. as the crisis developed, we began sharing some of the data with the treasury as part of the coordinated response that we felt was warranted. we all know the importance of trade channels for a small open economy like ours which basically relies on inward and outward trade to survive. by and large, the availability or nonavailability of trade credit was not directly under the purview of the central bank in as much as this was taken care of by the commercial banks and their network of correspondent banks in all the major countries. but as the crisis began to pinch and as banks became nervous about lending to one other, we saw some signs of potential difficulties for some local banks due to the non - availability, or inadequacy, of foreign exchange credit facilities from their usual sources. the bank immediately decided to make available to commercial banks operating in mauritius a special foreign currency line of credit, aggregating usd125 million, to finance the country β s requirements in trade. that line of credit represented more than 5 per cent of the total resources available to the central bank. this showed how concerned we were and how prompt we were to react to emerging financing difficulties which would have made it impossible for us to keep our economy on an even keel. there were a few other things that we did even before the crisis unfolded. we at the bank were the first to warn about a possible real - estate bubble in the integrated resort scheme sector which prompted a few well - targeted attacks on the governor but did lead to greater caution on the part of banks. similarly, well before the sub - prime crisis had assumed the dimensions it took, the bank had debated the efficacy of allowing all mortgage - related exposures of banks being allowed the lower risk weight of 35 per cent under basel ii. 2. coping with macroeconomic challenges let me now move on to the 2nd theme, coping with macroeconomic challenges. mauritius, as a small open economy, has of course not been immune to the effects of the global crisis. although we weathered fairly well the first - round effects of the global financial crisis and the ensuing economic downturn, the global financial crisis began to impact on economic activity in the country in the second half of 2008, hitting the export
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benoit cΕure : euro cyber resilience board for pan - european financial infrastructures introductory remarks by mr benoit cΕure, member of the executive board of the european central bank, at the second meeting of the euro cyber resilience board for pan - european financial infrastructures, frankfurt am main, 7 december 2018. * * * it is a pleasure to welcome you back to frankfurt. since our last meeting in march, we have been very busy at the ecb and across the eurosystem, and we have made considerable progress in our work to enhance the cyber resilience of the financial sector. the cyber threat facing the financial sector continues to be a challenge. from banking trojans affecting individual customers to systemic threats posed by ransomware and targeted attacks from advanced persistent threat ( apt ) groups, the landscape is evolving on a daily basis. at our previous meetings, we shared with you the eurosystem cyber strategy for financial market infrastructures ( fmis ) 1. this strategy rests on three pillars : individual fmi resilience, sector resilience and strategic regulator - industry collaboration. i am pleased that in the last few months, the ecb and the eurosystem have made significant progress in putting in place the building blocks for enhancing the cyber resilience of the european financial ecosystem and operationalising the strategy. we have developed two key tools to improve fmi resilience : the cyber resilience oversight expectations ( croe ) 2 and the tiber - eu framework3. the croe serves three key purposes : ( i ) it provides fmis with detailed steps on how to operationalise the cpmi - iosco guidance on cyber resilience for financial market infrastructures4, ensuring they are able to make improvements and enhance their cyber resilience over a sustained period of time ; ( ii ) it provides overseers with clear expectations against which to assess fmis under their responsibility ; and ( iii ) it provides the basis for a meaningful discussion between the fmis and their respective overseers. the public consultation on the croe provided some very useful feedback, which we carefully considered, and the final version was published earlier this week. the central banks of the eurosystem will work closely with the various financial infrastructures to enhance their cyber resilience, with the croe serving as a good basis for this work. enhancing cyber resilience is of crucial importance. equally important, however, is to test whether the enhancements that have
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necessary, we could cut interest rates further. we could increase the volumes in our asset purchase programme. we could further improve the conditions for our targeted longer - term refinancing operations, the tltros. we have definitely not exhausted all our options. we have scope to take further action, and we will take further action should it become necessary. but it β s also clear, as i said, that the negative side effects are becoming ever more pronounced. what β s more, in the current environment, with interest rates very low for longer, fiscal policy would have a much bigger impact on the economy than would otherwise be the case. in an emergency, would helicopter money be an option for the ecb, meaning that the central bank would give money to euro area citizens? helicopter money is not something we are considering. but there β s something else i β d like to make clear. we just decided on a package of measures in september. that β s not something you can do every month or two. we shouldn β t undermine the package now by speculating about possible next steps. the package is appropriate and we believe that it will be effective. criticism of the package was particularly loud in germany β just as it has been of the ecb β s actions more generally over the past few years. can christine lagarde as ecb president repair the relationship with germany? germany is of course very important for the ecb. germany is the biggest country in the euro area, and the biggest economy. we need to pay attention to what is happening in germany and to the public mood. i β m sure that president lagarde will manage to build up a good relationship. she has already said that she wants to review the ecb β s strategy. what does that mean in concrete terms, and what would you consider to be the priorities? it will certainly cover various aspects. one aspect is price stability β what price stability means and how we define it. it will also cover the symmetry of our aim. our reaction function is another aspect β in other words, how we react when we don β t meet our objective. i β m sure the discussion will be a lengthy process. it β s not something that can be decided in one or two governing council meetings. will it be an extensive undertaking like it was last time, back in 2002 β 03? we will certainly be gathering a great deal of information and input. just look at what the federal reserve is doing. it
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β s future, naturally if the countries concerned fail to take appropriate action. in the face of a challenge of this nature, it is crucial to implement the new version of the pact for stability and growth in a stringent manner. the pact is essential from the standpoint of the economic and monetary union β s cohesion, and in that connection it is one of the keystones of confidence in europe β s economic stability, thus one of the keystones of investment and growth. so it is necessary to work with determination on budget consolidation and on bringing down the public debt in order to take on the challenge of an ageing population and to safeguard the credibility of the european budgetary framework. mr president, ladies and gentlemen, europe is facing today five major challenges. three of them are major challenges that equally apply to all the long industrialised countries. the last two others are specific to europe and do not exist anywhere else in the world. the diagnosis is now clear as regards the first three challenges β the challenge of new technologies, the challenge of globalisation, the challenge of population ageing β which does not mean either that they are easy to solve β¦ for the first challenge, facilitate the deepening and broadening in the whole economy of science and technology, in particular - but not only - of information technologies. for the second, organise the new economic framework stemming from the generalisation of the market economy and the very fast economic development of asian emerging countries. for the third, draw the consequences of population ageing in order to ensure the sustainability of public finances. the us, canada and other industrialised countries must tackle the same issues. but in addition β and this is a unique situation in the world, a privilege and at the same time a great historic responsibility β europe must face two other challenges. on one hand, europe has engaged into a long - term process aimed at ensuring its unity on the basis of a voluntary union between states. these states share in common some elements of their sovereignty and have already decided to create a single market with a single currency. this is a very ambitious historic transformation. on the other hand, europe must a the same time meet the challenge of a rapid geographic expansion of an immense historical magnitude. we were still 12 countries when the maastricht treaty was negotiated. we are now 25, and virtually already 27. in europe, are therefore intertwined a unique β vertical β economic and political transformation and a geographic β horizontal β expansion of an immense significance. five
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gent sejko : lending to and funding the albanian agriculture sector address by mr gent sejko, governor of the bank of albania, at an event, organized to discuss on lending issues of the agriculture sector in albania and launch the initiative on albania agribusiness and tourism support facility ( aatsp ), tirana, 26 january 2022. * * * your excellency prime minister, honourable madame ministers, honourable head of albania for the ebrd, dear friends and colleagues, let me first to thank you for the invitation to participate in this event, organized to discuss on lending issues of the agriculture sector in albania and launch the initiative on albania agribusiness and tourism support facility ( aatsp ) mechanism. the bank of albania has continuously welcomed the transparent and constructive dialogue amid public authorities, private sector, banking industry and international partners, to address issues which serve to unclog the potential development and welfare growth of albania. in particular, allow me to emphasize the fact that β despite the considerable progress in the last years β the albanian agriculture sector, overall, and branches related with it - agritourism and agribusiness β are still far from the full utilisation of both resources and potentials they have. in figures, almost half of the albanian population lives in rural areas and around 1 / 3 of labour force in the country are employed in agriculture sector. yet, this sector generates less than 20 % of value added in the economy, while productivity of labour force employed in agriculture and their income per capital are half of other branches of the economy. in my view, the sustained and balanced development of the country clearly needs a higher attention to agriculture sector, for improving its production capacity coupled with the growing of rural area population β s welfare, and in turn promoting social equity. the agricultural sector faces many and complex problems of development. at a considerable degree, these problems are out the competence and expertise sphere of the bank of albania. however, i believe that the topic of our today β s discussion : support with funds and loans to the agricultural sector, deserves a higher attention by the banking system. currently, agricultural sector benefits only 1. 7 % of the funding that banks provide to private business. this ratio has not change over the last decade, despite the novelties that banking system has offered to lending market, while it remains far from the real needs of this sector. specific lending issues to agricultural sector have been identified, from some time now
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supply side that constrain the sme β s access to finance and other banking products and services. on the demand side, these issues can be tackled through a more systematic documentation and disclosure of information by smes and better business planning. on the supply side, bankers β reluctance to lend to smes can be addressed through innovative credit assessment tools and techniques like credit scoring and better capacity building efforts for the financial service providers. among various stakeholders that have to play their role for sme development, i think, state bank of pakistan and commercial banks both need to play a proactive role in improving access to finance for smes. as far as sbp is concerned, it has taken a number of important initiatives for improving access to credit for sme sector. these measures include a provision of specialized prudential regulations ( prs ) for smes, refinance schemes for smes, credit guarantee scheme for small and rural enterprises and cluster development surveys. further, sbp has been assisting banks through a holistic ifc technical assistance and capacity building initiative encompassing areas of strategy formulation, product bis central bankers β speeches development, risk management and hr development etc. for sme lending. presently, bank alfalah ltd. is being supported for capacity building to boost sme banking, while many other mid - tier banks are being considered for similar ifc technical assistance. ifc is in direct dialogue with a number of banks. we hope that this project will revitalize sme lending by participating financial institutions and will be a prototype for other financial institutions which could see financing to smes as profitable business ventures. aside from the boost sme provides to employment and overall growth to the economy, it also provides diversification to a bank β s balance sheet and in turn a stable revenue stream to support long term shareholder value. given the huge potential for this sector, i encourage all the commercial banks to review their sme strategies and assume a greater role in sme lending. ultimately it has to be the private sector which has to take the lead role in lending to the sme sector given their critical positioning and greater capacity in terms of their outreach and availability of funds. as i earlier mentioned, the actual statistics for lending to smes have not been encouraging in recent years. banks β credit to smes has declined over the last 4 years from rs 437 billion in 2007 to rs 248 billion in june, 2012. although, this decline can be partly attributed to adverse economic conditions during the period and
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investment in canada. this leaves the level of economic activity lower than the bank had been expecting. β’ while household spending remains solid, and various indicators in the housing sector continue to rise, slower growth of household credit and higher mortgage interest rates point to a gradual unwinding of household imbalances. β’ the bank expects that a better balance between domestic and foreign demand will be achieved over time and that growth will become more self - sustaining. but this will take longer than previously projected. β’ we are expecting investment growth to contribute to a rebound in the rate of labour productivity growth over the next couple of years. however, demographic factors, bis central bankers β speeches primarily the aging population, are expected to put a drag on the growth rate of trend labour input. this drag will largely offset the effects of rising investment. this is why we expect that the growth rate of potential output will remain fairly stable at around 2 per cent over the next three years. β’ real gdp growth is projected to increase from 1. 6 per cent this year to 2. 3 per cent next year and 2. 6 per cent in 2015. the bank expects that the economy will return gradually to full production capacity, around the end of 2015. β’ inflation in canada has remained low in recent months. this reflects the significant slack in the economy, heightened competition in the retail sector, and some other sector - specific factors. β’ with larger and more persistent excess supply in the economy, both total cpi and core inflation are expected to return more gradually to 2 per cent, around the end of 2015. β’ although the bank considers the risks around its projected inflation path to be balanced, the fact that inflation has been persistently below target means that downside risks to inflation assume increasing importance. however, the bank must also take into consideration the risk of exacerbating already - elevated household imbalances. β’ weighing these factors, the bank judges that the substantial monetary policy stimulus currently in place remains appropriate and last week decided to maintain the target for the overnight rate at 1 per cent. with that, tiff and i would be pleased to take your questions. bis central bankers β speeches
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of houses in canada has been relatively unchanged since 2008. evidence in β debt and ( not much ) deleveraging β ( mckinsey global institute, february 2015 ) suggests that much of the debt in countries in the comparison group is held by relatively high - income households. e. cerutti, s. claessens, and l. laeven, β the use and effectiveness of macroprudential policies : new evidence, β imf working paper wp / 15 / 61, march 2015. ibid. mortgage underwriting standards have also been tightened recently in many countries, as they have implemented the financial stability board β s principles for sound residential mortgage underwriting practices, april 2012. uninsured mortgages are still available with longer amortizations ; the normal maximum is 30 years. the total debt - service ratio is the percentage of gross annual income required to cover annual payments associated with housing and all other debt obligations. the gross debt - service ratio includes only housingrelated payments. other changes to insured mortgages include a minimum credit score, with limited exceptions ; stronger loan documentation standards to ensure the reasonableness of the property value and of the borrower β s sources and level of income ; mortgage insurance eliminated for non - amortizing home - equity lines of credit ; and mortgage insurance now limited to homes with a purchase price of less than $ 1 million. in addition, mortgage and mortgage insurance underwriting principles have been made consistent with international standards. see guidelines b - 20 and b - 21issued by the office of the superintendent of financial institution. bis central bankers β speeches from 14 per cent in 2007 β 08 ( 3 - month growth, annualized ) to around 5 per cent in 2013 β 15. 36 conclusion let me conclude with a few key points from the mountain of facts, graphs and analysis that i have reviewed with you today. as i mentioned at the outset, the purpose of my presentation is to help provide more context for an informed discussion about housing and house prices given their importance to the canadian economy and the financial system. first, real house prices have been rising relative to income in canada and other comparable countries for about 20 years. there are many possible explanations, mostly from the demand side, but also from the supply side. second, in terms of demand, demographic forces, notably migration and urbanization, have played a role in the evolution of house prices, as have improving credit conditions through lower global real long - term
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gains in business efficiency. consumption should also strengthen further over time, in line with developments in real disposable income, increasingly supported by employment growth and improving labour market conditions. the risks surrounding this favourable outlook for economic growth are broadly balanced over the shorter term. at longer horizons, the balance of risks remains on the downside, stemming mainly from external factors. such factors include fears of a rise in protectionist pressures, the possibility of further increases in oil prices and concerns about possible disorderly developments due to global imbalances. with regard to price developments, according to eurostat β s flash estimate, annual hicp inflation was 1. 8 % in april 2007, after 1. 9 % in march. looking at the coming months, barring further increases in oil prices, significant base effects deriving from last year β s energy price volatility will strongly influence the profile of annual inflation rates. on the basis of the current level of oil prices and oil price futures, annual inflation rates are likely to fall somewhat in the months to come, before rising again towards the end of the year to hover at levels around 2 %. over the policy - relevant medium - term horizon, the outlook for price developments remains subject to upside risks. these relate notably to the increasing capacity utilisation in the euro area economy, the possibility of further oil price rises and additional increases in administered prices and indirect taxes beyond those announced and decided thus far. more fundamentally, stronger than currently expected wage developments could pose significant upward risks to price stability, not least in view of the favourable momentum in labour markets observed over the past few quarters. the governing council is monitoring wage negotiations in the euro area countries with particular attention. it is crucial that the social partners meet their responsibilities so as to continue to avoid wage developments that would eventually lead to inflationary pressures and harm the purchasing power of all euro area citizens. in this context, it is also important to point out that wage agreements should be sufficiently differentiated and take into account price competitiveness positions, the still high level of unemployment in many economies and productivity developments across sectors. the monetary analysis confirms the prevailing upside risks to price stability at medium to longer horizons. the underlying rate of monetary expansion remains strong, in a context of already ample liquidity. the ongoing strength of monetary expansion is reflected in the increasingly rapid growth of m3, which in march reached an annual rate of 10. 9 %, as well as in the ongoing high levels of credit growth. monetary and credit
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stability are different, they are complementary and combine to deliver a comprehensive approach to stability issues. there are various joint initiatives between the central bank and financial regulator, where our technical expertise is pooled. examples of this co - operation include our regular macroeconomic stress - testing exercises and publication of the financial stability report ; a regular programme of joint meetings of central bank and financial regulator management with the senior executives of our major banks ; and, finally, the parties cooperate fully in their participation in international fora on financial stability issues. there is also a memorandum of understanding between the central bank and financial regulator on financial stability issues. under this agreement, the central bank contributes to stability through the formulation of monetary policy, oversight of the financial system infrastructure, surveillance of the financial system, and undertaking any official financial operations that might be required in exceptional circumstances. for its part, the financial regulator makes its contribution through its prudential and consumer roles. in addition, a separate joint management committee was established to deal solely with the stability issues. the financial stability committee is the main forum where senior management from both the central bank and financial regulator meet formally to consider financial stability issues. however, in practice, staff at all levels of the organisation come together regularly in an informal way to discuss these matters and to undertake joint work. publication of the financial stability report is one of the ways in which our organisation contributes to financial stability on an on - going basis. a key element of the report is that it represents the joint views of both the regulator and the bank. it is our hope that the wideranging analyses in these reports encourages dialogue among the wider public on financial stability issues and conveys the importance of a stable financial system. in addition, the central bank and the financial regulator jointly hold round - table meetings with senior executives of the main domestic credit institutions as early as possible after publication. the aim of these meetings is to focus attention on the key risks outlined in the report. a key area where co - operation between the central bank and financial regulator has proved most useful is in respect to financial crisis management. the organisation is constantly developing its procedures to deal with potentially disruptive events and this is very much a joint effort between both parties. the central bank and financial regulator have held joint crisis simulation exercises and, more recently, these have involved the participation of officials from the irish treasury. this is in addition to the normal domestic standing group arrangements. this co - operation between both the central bank, financial regulator and treasury department leaves
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sam woods : adapting to solvency speech by mr sam woods, executive director of insurance supervision of the bank of england, to the association of british insurers, london, 9 july 2015. * * * it is a great pleasure to speak to you today. i plan to give another speech in a few months β time, focussed on the history of insurance regulation and supervision here in the uk. but today i will talk about my immediate priority, which is getting solvency ii over the line for go - live on 1 january 2016. the industry has made a tremendous effort to make the transition a successful one. the circumstances have been difficult, with a delay to political agreement on important aspects of the new regime compressing the time that the industry has had to prepare. the delay has also added to the costs of implementation. however, the time has not been wasted and firms have used it to make important improvements to their own risk and solvency assessments, as well as their internal model applications. today i want to make sure that investors and insurance firms understand the approach the bank of england will take to capital under solvency ii. first, i would like to bust two myths : β’ the idea that there is some kind of plan within the bank to use solvency ii to increase required capital across the insurance sector ; and β’ a suspicion that we will somehow keep the current β icas β regime alive after 1 january 2016, rather than embracing the new regime. second, i want to make it absolutely clear that we will give firms plenty of time to adjust to the new regime, and that those firms who wish to make use of transitional measures will be given the freedom to do so. myth - busting i have heard from some a concern that we will use solvency ii to increase levels of capitalisation across the sector, or that we are seeking to load the sector with more capital now so that it is baked into the new regime once operational. let me state very simply : there is no such plan within the bank of england. the reason for this is also simple : we think that our current regime secures an appropriate level of capitalisation for the insurance sector and puts us in a good position to make the shift to solvency ii. the icas regime was introduced in 2004 as a response to the stock market falls and subsequent problems faced by uk firms in the early part of the decade. it is based on sound principles, such as market - consistent valuation of the balance sheet and a
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stability oversight. so in concluding, let me try to draw together some of the principal themes in what i have been saying. i am naturally well aware that there are many positive features to today β s environment. but central bankers are sometimes accused of being pessimists and seeing the glass half empty. in our defence i suppose it is our job to think out what could go wrong and to be ready accordingly. the first message to leave you with is that we are concerned about financial stability because of the potential economic and social costs arising from financial instability. private markets will not always reflect these costs fully and prima facie there is a need for public oversight. second, the degree of complexity and interconnectedness has increased dramatically in recent years. here i would point to market liberalisation, technological advance and the development of a range of new instruments for transferring risk. third, market participants need to be aware that financial stability starts with them. integrity and sensible restraint are the bedrocks of stability. this requires heightened awareness that the leverage in the system as a whole, encouraged by the new risk transfer techniques, contains its own vulnerabilities. fourth, in response to the changing environment, the financial authorities have had to adapt their models and procedures for regulation and oversight. greater disclosure and transparency can be antidotes to the information deficits in an increasingly complex, and sometimes opaque, financial system. international cooperation is at a premium, both in delivering a consolidated view of globally active firms, and in seeking to clarify who is expected to do what when difficulties arise. they need to match this level of technical expertise with the private sector, and to contend with new or heightened risks in such areas as business continuity. fifth, as a central bank, we need to be as clear as we can about the nature of our contribution to the oversight process. at the core is our concern with the maintenance of liquidity, and our capacity to inject it when necessary. much of our financial stability work is aimed at identifying potential liquidity strains, and what responses are likely to be most effective. lastly, whilst the challenges for oversight may be daunting, progress in addressing these challenges is significant. but do not expect a zero risk environment - and do not demand it. fear of failure is the antidote for instability. it will go a long way to underpin the long term health of the financial system. governor lars heikensten β the riksbank β s work on financial stability β :
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the rules that help protect consumers from unauthorized transactions and the various reporting and notice requirements associated with electronic funds transfers that must be made to consumers. the card associations and private - sector rulemaking organizations complement these regulatory protections and disclosure requirements by offering additional rights, protections, and notices. for example, the card associations provide consumers with " zero liability " for certain unauthorized credit and debit card transactions that are processed on their networks. while the private sector plays an important supplemental role in the area of consumer protections and notices, the federal reserve has become increasingly active in this area. for example, we have clarified that consumers have the same general rights under regulation e ( electronic funds transfers ) when their payments are made via electronic check conversion as they do when they pay their mortgage automatically each month. we also are considering how to address concerns about the notices that consumers receive when their checks are converted to electronic payments. we have found that the quality of these notices varies tremendously, creating some confusion among consumers about what they are authorizing. the board is considering whether to revise the commentary to regulation e to include model language that could be used in these consumer notices. we are also considering whether to require, along the lines of current industry rules, a written authorization signed by the consumer when the check is converted at a merchant location. i expect that the need for further clarification of regulations by the federal reserve will only grow as more innovation occurs within the payments system. an important conclusion from this discussion is that the role of the private sector is growing. this is happening in all segments of the payments system, from providing payments services, to setting industry rules or establishing industry technical and operational standards, to providing consumer rights and protections. nevertheless, the federal reserve will continue to have an important role within a more - electronic payments system. we will continue to monitor developments within the payments system to better understand their implications. as a policymaking body, we will continue to promote the integrity and safety of the payments system while also supporting improvements in efficiency and accessibility. we will facilitate private - sector efforts to improve the payments system through a combination of dialogue and leadership. where appropriate, we will work cooperatively with the private sector to identify and remove regulatory barriers to innovation and efficiency within the payments system. and, finally, when necessary, the federal reserve will act as a catalyst to greater efficiency, safety, and accessibility within the payments system. i would be happy to answer any questions you may have.
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apply, in general, to insured depository institutions ; companies that control an insured depository institution ; and foreign banks with a branch, agency, or subsidiary bank in the united states, as well as to an affiliate of one of these entities. under the statute, proprietary trading is defined as taking a position as principal in any security, derivative, option, or contract for sale of a commodity for future delivery for the purpose of selling that position in the near term or otherwise with the intent to resell to profit from short - term price movements. the statute applies only to positions taken by a banking entity as principal for the purpose of making short - term profits ; it does not apply to positions taken for long - term or investment purposes. moreover, the statute contains a number of exemptions, including for underwriting, market making - related activities, and risk - mitigating hedging activities. the implementing rule proposed by the agencies incorporates all of these statutory definitions and exemptions. the statute also authorizes the relevant regulatory bis central bankers β speeches agencies to permit additional activities if they would promote and protect safety and soundness of the banking entity and the financial stability of the united states. the second major prohibition in the statute forbids any banking entity from acquiring or retaining an ownership interest in, or having certain relationships with, a covered fund. again, the statute contains a number of exceptions, including for organizing and offering a covered fund, making limited investments in a covered fund, sponsoring and investing in loan securitizations, and risk - mitigating hedging activities. the statutory definition of a fund covered under the volcker rule is quite broad. the statute also quite broadly prohibits any banking entity that serves as the investment manager, adviser, or sponsor to a covered fund, or that organizes and offers a covered fund, from engaging in certain transactions with the fund, including lending to, or purchasing assets from, the fund. the statute also prohibits otherwise permissible trading and investment activities when there is a material conflict of interest with customers, clients, or counterparties, or when the activity results in an exposure to high - risk assets or trading strategies. these are significant provisions and the agencies have specifically solicited comment on disclosure requirements and other approaches to implementing these parts of the statute. differentiating proprietary trading from market making one of the more difficult tasks in implementing the statutory prohibitions is distinguishing between prohibited proprietary trading activities and permissible market - making activities. this distinction is
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been somewhat higher the last ten years. the target is approximately in line with the average inflation rate in norway in the 1990s. in our view, with its change in monetary policy, the government has recognised low inflation as a benefit in itself. history has shown that high inflation does not result in either sustained economic growth or lower unemployment rates. a track record of low inflation since 1990 has provided norges bank with a good basis for implementing monetary policy even though, as i mentioned, the inflation target was introduced during an upturn. higher interest rates curb demand for goods and services and reduce inflation. lower interest rates have the opposite effect. if evidence suggests that inflation will be higher than 2Β½ per cent with unchanged interest rates, the interest rate will be increased. if it appears that inflation will be lower than 2Β½ per cent with unchanged interest rates, the interest rate will be reduced. there is symmetry here. it is equally important to avoid an inflation rate that is too low, or deflation, as it is to avoid an inflation rate that is too high. when the annual use of petroleum revenues is managed according to a long - term action plan, a policy for which there is currently fairly general political consensus, we should normally be able to use the interest rate as a policy instrument to prevent high inflation. normally, monetary policy should also be a fairly effective means of countering a deflationary recession. stagflation, ie stagnating output and rising unemployment combined with rapid inflation, which characterised economic developments in many countries in the 1970s and 1980s, originates in the supply and output side of the economy or in income determination. if the norwegian economy should ever be threatened by stagflation tendencies, monetary policy must be directed towards maintaining low and stable inflation. at the same time, structural policy and incomes policy should contribute to improving the functioning of the economy, allowing economic growth and employment to pick up. a change in interest rates is not expected to have an immediate effect on inflation. our analyses indicate that a substantial share of the effects of an interest rate change occurs within two years. two years is thus a reasonable time horizon for achieving the inflation target of 2Β½ per cent. therefore, the inflation outlook in two years may be viewed as a derived objective in monetary policy. in some situations, where unexpected events lead to an inflation rate that is too high, it may be appropriate to apply a longer time horizon than two years. for example, reducing inflation to 2Β½ per cent within
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the governments to take steps before we do what we have to do as a central bank. that would be an easy way ; it is not my idea of the ethics of responsibility for those who bear public responsibilities, and this is not in accordance with the text of the european treaties, which require us to fulfil our mission whatever may happen. the eurosceptic parties are gaining strength at each election and it shows that people are fed up with current policies, which are reflected in social decline. isn β t there a risk that the states are politically paralysed? that they are fed up is no surprise! one cannot blame the people for that ; it β s a moral and democratic question. it β s up to the european authorities and the governments to show that they can create growth and push down unemployment β something they haven β t managed to do convincingly since the crisis started. now the risk is that this fed - up sentiment creates a spiral of defiance : if there are no convincing results, people β s confidence in european institutions and in the community construction is undermined. there is no solution without europe : one cannot sustainably boost french growth if there β s no strengthening of german and italian growth. in some area it β s even necessary to have β more β europe. but to achieve this, it β s necessary to restore people β s confidence in europe and to do that growth is needed. hence the symbolic importance of the juncker plan, which shows the determination of the governments to create growth. if syriza wins the election in greece on 25 january, will there be a risk that greece leaves the euro as some in germany seem to be thinking? it β s not a question of greece exiting the euro. what β s at stake in the election lies elsewhere : it β s the composition of the mix of reforms which will allow this country to come out of the crisis once and for all, and to reintegrate the european economies β concert. depending on the result [ of the election ], the reform strategy in greece will be different, that β s normal. that β s democracy, and it β s up to the greeks to decide. greece has fully benefited from european solidarity : whatever the election result may be a discussion is needed between this country and europe to know how these reforms will fit into the european framework and how they will put greece on a path of sustainable growth which will permit the country to repay its debt to europe one day. bis central bankers β
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some ongoing initiatives and projects by the amlc and our partners from the public and private sectors. first. the amlc is closely coordinating with law enforcers, such as the national bureau of investigation and the philippine national police, as they are the primary investigators for predicate crimes. for the first eight months of 2021, the amlc has filed a total of 85 cases, varying from civil and criminal cases and involving over php1. 31 billion and other assets. further, the implementation of the national anti - money laundering and countering the financing of terrorism strategy for 2018 to 2022 β or nacs β continues to progress. the nacs is aimed at coordinating efforts of relevant agencies in combating money laundering and terrorism 1 / 3 bis central bankers'speeches financing. the nacs has also integrated the international co - operation review group ( icrg ) action plan to ensure a whole - of - nation approach in addressing our country β s shortcomings in its aml / ctf system. second. the amlc is sharing its studies with law enforcement agencies and partner covered persons to increase awareness of money laundering and terrorism financing typologies and red flags. these risk assessments, strategic studies, and typologies include the following : 1. first, terrorism and terrorism financing risk assessment, which is an update of the second national risk assessment, particularly on the understanding and assessment of terrorism and terrorism financing risks ; 2. second, foreign terrorist fighters study using suspicious transaction reports ; 3. third, money service business : 2021 money laundering and terrorism financing sector risk assessment, which indicates how certain services and products of msbs are exploited by criminals to facilitate and expand illegal activities ; 4. fourth, real estate sector : a money laundering / terrorism financing / proliferation financing assessment, which examines the potential criminal threat environment and vulnerabilities associated with the real estate sector ; 5. fifth, an assessment of the philippines β exposure to external and internal threats based on suspicious transaction reports for 2018 to 2020, which looks into the country β s risk and exposure to money laundering, terrorism financing, and different predicate offenses by gathering information on the generation, movement, and behavior of illicit funds and by evaluating the threats originating within and outside the country β s jurisdiction ; 6. sixth, an analysis of suspicious transaction reports with possible links to tax crimes, which is a study on the potential exposure of the philippines to tax crimes prior to the inclusion of tax evasion as a predicate offense to money laundering by
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both of which have over a billion in population. financial inclusion and remittances indeed, there are many challenges β and opportunities β in providing access to financial services to migrant workers and their families. the remittances sent home are mostly used for consumption expenditures β 97. 3 % of of households used the remittances to purchase food and other household needs. this helps drive our economy. bsp department of economic statistics more than 10 million ofs sent $ 25. 8 billion worth of cash remittances in 2015, up by 4. 6 % from $ 24. 6 billion in 2014. bis central bankers β speeches another positive development, as indicated by a bsp survey ( ces ), is the rising proportion of households directing remittances received to savings β from 7. 2 % in 2007 to 43. 4 % in the first quarter this year. this is one of the many reasons why philippine bank deposits have been hitting record high levels - it was p8. 5 trillion in december 2014 and over p9. 2 trillion as of december 2015. nevertheless, the challenge and the opportunity is to encourage more investments by of households ; it continues to lag way behind savings. as indicated by our survey, households that allocated part of their remittances for investments, increased from 2. 3 % in 2007 to only 6. 5 % in the first quarter this year. that is over a period of nearly nine years! for institutions, the challenge is to develop and promote products suited to the needs of ofs. financial education is essential for ofs to realize the opportunities - as well as possible pitfalls - in investments. equally important, financial institutions should consider it their responsibility to inform ofs of their rights and protection as financial consumers. the importance of remittances for enhancing the financial stability of ofs and the economic growth of our country cannot be overemphasized. as part of the bsp β s program to develop a more inclusive financial system, we have put in place policies and programs to enable the development of a wide range of products that can cater to the needs of ofs and their beneficiaries. we also continue to implement a nationwide economic and financial learning program where we have a special focus on ofs. in fact, the bsp won the global forum on remittances and development public sector award for 2015 in recognition for what it described as outstanding commitment, innovation and impact in promoting remit
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go. this evidence, which had been accumulating through the summer, led the bank to scale back its previous expectations for economic growth during the second half of 2001 and the first half of 2002. consequently, on 28 august, we lowered interest rates to support domestic demand growth and to keep inflation near the target of 2 per cent over the medium term. the events of 11 september, and their repercussions around the world, added a further major element of uncertainty to the near - term prospects for the global economy and for canada. because of this heightened uncertainty, the bank took the exceptional step of lowering interest rates by one - half of a percentage point on 17 september, outside our regular schedule of fixed announcement dates. we also moved immediately after the attacks, as did other major central banks, to provide additional liquidity to the financial system to ensure its smooth functioning. at times like these, a key factor in preserving confidence in the prospects for our economy is a financial system that continues to work effectively. the ongoing economic effects of last month's shock are very difficult to assess. we know that there was a clear and immediate impact on certain sectors ( such as air transportation and tourism ) and on those industries that rely on cross - border, just - in - time delivery. but how large the total impact will be and how long it will last are very difficult to gauge. what is even more difficult to evaluate at this stage are the implications for consumer and business attitudes. the recent events are unlike anything we have ever experienced in north america. so it will take some time before we can fully understand their consequences. when we take into account the direct effects of the terrorist actions in the united states, their immediate negative impact on business and consumer confidence, and the adjustments necessary to deal with increased security risks, it is now clear that economic growth in canada in the second half of 2001 will be close to zero or slightly negative. this means average growth for the year as a whole of about 1 Β½ per cent. how quickly growth will resume will depend crucially on geopolitical developments and on how soon consumer and business confidence return to normal. by their very nature, geopolitical developments are not easily predictable, although they will likely be more turbulent than usual for some time. also difficult to predict is the evolution of consumer and business confidence. one could think of a scenario where confidence would be restored quickly. in such a case, fairly robust growth could resume by the second quarter of 2002. on
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financial positions of state and local governments. in the federal sector, the taxes paid on huge realized capital gains and other incomes related to stock market advances, coupled with taxes on markedly higher corporate profits, have joined with restraint on spending to produce a unified budget surplus for the first time in nearly three decades. the important steps taken by the congress and the administration to put federal finances on a sounder footing have added to national saving, relieving pressures on credit markets. the paydown of debt associated with the federal surplus has helped to hold down longer - term interest rates, which in turn has encouraged capital formation and reduced debt burdens. maintaining this disciplined budget stance would be most helpful in supporting a continuation of our current robust economic performance in the years ahead. the fact that economic performance has strengthened as inflation subsided should not have been surprising, given that risk premiums and economic disincentives to invest in productive capital diminish as the economy approaches price stability. but the extent to which strong growth and high labor force utilization have been joined with low inflation over an extended period is, nevertheless, exceptional. so far, at least, the adverse wage - price interactions that played so central a role in pressuring inflation higher in many past business expansions - eventually bringing those expansions to an end - have not played a significant role in the current expansion. for one thing, increases in hourly compensation have been slower to pick up than in most other recent expansions, although, to be sure, wages have started to accelerate in the past couple of years as the labor market has become progressively tighter. in the first few years of the expansion, the subdued rate of rise in hourly compensation seemed to be, in part, a reflection of greater concerns among workers about job security. we now seem to have moved beyond that phase of especially acute concern, though the flux of technology may still be leaving many workers with fears of job skill obsolescence and a willingness to trade wage gains for job security. in the past couple of years, of course, workers have not had to press especially hard for nominal pay gains to realize sizable increases in their real wages. in contrast to the pattern that developed in several previous business expansions, when workers required substantial increases in pay just to cover increases in the cost of living, consumer prices have been generally well - behaved in the current expansion. a couple of years ago - almost at the same time that increases in total hourly compensation began trending up in nominal terms - evidence of
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and price stability. ladies and gentlemen, let me again congratulate you on your successful adoption of the euro and extend my very, very warm welcome to the new member of the eurosystem family. warmest welcome cyprus!
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but that β s for the others, that β s for the politicians to decide. 4 / 4 bis central bankers'speeches
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relevance. yes, low interest rates are holding back banks β profitability, but our monetary policy is stimulating the volume and strengthening the quality of bank lending so well that its overall impact on banks is, for the time being, positive. if growth is to rise significantly and interest rates return progressively to levels more favourable to savings, economic policies must make a more active contribution. what does that mean in practice? budgetary margins for manoeuvre can be used, where they exist. but in most countries of the euro area they are limited or non - existent. in france, for example, where public debt is verging on 100 % of gdp, another delay in reducing deficits would mean taking an unconsidered risk with business and household confidence. in all of our countries, however, the mix of revenues and expenditure could be made friendlier to investment. and a comparison of current growth rates in the euro area shows a clear advantage for countries that have implemented the most ambitious structural reforms, most notably in their labour markets. 1 / 2 bis central bankers'speeches weak growth, high unemployment and low rates are not inevitable. they reflect the legacy of the crisis but are also a consequence of economic policies that are lacking in ambition. the ecb will continue to protect the euro area from financial shocks, but the monetary climate will not always be so favourable. and the global economy could present new risks. it β s time to draw β and act on β the appropriate conclusions. 2 / 2 bis central bankers'speeches
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tiff macklem : release of the monetary policy report opening statement by mr tiff macklem, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 25 october 2023. * * * good morning. i'm pleased to be here with senior deputy governor carolyn rogers to discuss today's policy announcement and the bank of canada's monetary policy report ( mpr ). today, we maintained our policy interest rate at 5 %. we are also continuing our policy of quantitative tightening. inflation has come down a lot since the summer of 2022, but as every canadian knows, inflation is still too high. we held our policy rate steady today because monetary policy is working to cool the economy and relieve price pressures, and we want to give it time to do its job. but further easing in inflation is likely to be slow, and inflationary risks have increased. let me expand on these themes and talk about the implications for monetary policy. global economic growth is slowing as expected as higher interest rates and tighter financial conditions restrain demand. but the composition is a bit different than we forecast in july. the us economy has been surprisingly strong, while china has slowed more than expected. at the same time, geopolitical tensions have increased. the russian war of aggression against ukraine continues, and hamas attacks in israel have ignited conflict in israel and gaza. these wars are causing incalculable suffering. they are also hurting the global economy and adding uncertainty to the outlook. in canada, the economy has slowed, and the data suggest demand and supply are now approaching balance. with the economy expected to move into excess supply this year and with growth anticipated to be weak for the next few quarters, price pressures should ease further. we expect inflation to ease gradually and return to the 2 % target in 2025. but we're worried that higher energy prices and persistence in underlying inflation are slowing progress. since our july mpr, we've seen clearer evidence that higher interest rates are moderating spending and rebalancing demand and supply. economic growth has slowed over the past year, averaging about 1 %. household credit growth has softened, and so has demand for housing and many durable goods. more recently, we are seeing the services sector slow as well. with consumer spending expected to remain subdued through most of 2024, we've revised down our growth outlook. growth in gross domestic product is forecast to remain below 1 %
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report of sweden, we consider that the present swedish law is still not compliant with the requests needed for the swedish central bank to enter the euro. the same of course holds true for the uk. some mixed signals emerged from some accession countries, the most lately being the czech republic and most alarmingly poland. independence of central banks is, as you know, declined at least in two different forms. on the one hand, the independence of the institution, but also the independence of the people working in the institution, the so - called personal independence. the institutional independence has again two functions. one is the operational independence. each central bank must have all the instruments at its disposal and at its free disposal in order to execute all operations related to a central bank's core activity, in particular in the area of monetary policy, foreign exchange, as well as payment systems. on the other hand, i think the financial independence is also increasingly attracting attention. it means that a central bank ought to rely on a robust balance sheet in order to underline its independence. but financial independence also applies to the personal independence of the people running the central bank. i think that as a luxemburger i should not give anyone a lesson in this respect. the treaty has made the ecb responsible and accountable for the maintenance of price stability over the medium term. that is why it also has been shielded from political pressures. medium term price stability should not be sacrificed to meet short - term objectives linked to political and electoral considerations, risking to weaken the stability of the currency. 5. consensus building the second important element in the functioning of the european monetary institutions is the underlying principle of decision - making, namely consensus building. the approach of seeking a broad consensus rather than to resort to voting in my opinion has the following advantages. β’ it is shielding from pressures arising from national authorities ; β’ it allows continuous, multilateral check of time consistency and policy direction within the council, thus imposing a discipline on monetary policy and β’ it is countering any public suspicion that national bias may inform policy decisions. i think this approach has been a key element in the efficient functioning of the governing council of the european central bank up to now. it is representative of an european culture of decision - making which has served us well until now. therefore i think it ought also to be pursued in the perspective of accession countries adopting the euro in the medium term. now finally a word about monetary policy strategy. the monetary policy of the eurosystem,
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yves mersch : after the emu rescue β which way for europe? speech by mr yves mersch, governor of the central bank of luxembourg, at a lecture in memory of mr pierre werner, organised by the official monetary and financial institutions forum ( omfif ), london, 14 october 2010. * * * your excellencies, ladies and gentlemen, neither the european coal and steel community treaty of 1950, nor the 1957 treaty of rome dealt extensively with currency. this might have been because convertibility after world war ii was not very wide - spread and capital controls were the norm. belgium was one of the first countries to establish free movement of capital but only within a dual exchange rate regime. this particularity had been one of the reasons for luxembourg to emerge as a financial activities center for europe. the principle of fixed exchange rates had been a feature of the international framework for currency stability after world war ii for the economies of europe, north america and japan. the bretton woods system was based on gold and the us dollar as the predominant monetary standard and worked for several years with almost no frictions. by 1968 a new era of currency instability threatened when market turbulence forced the revaluation of the german mark and the devaluation of the french franc. these developments clearly revealed the weaknesses of the bretton woods system as well as the threats to the common market and specifically the common agricultural policy. ideas of a new european currency framework gained momentum and luxembourg β s prime minister werner, also minister of finance, was asked to steer a committee mandated to design the path to an increased economic and monetary integration of the six then members of the european economic community. that report, finished on the 8 october 1970 and sent to the ministers of finance in the first instance, laid down the achievement of economic and monetary union by 1980. the youngest member of the committee and the only one still alive is prof. dr. hans tietmeyer. it was he who at the first meeting of the governing council of the ecb insisted on the seating arrangements to be changed from countries in alphabetical order to members β family name in alphabetical order. in doing so, he was truly loyal to the spirit of the werner plan. in deed, if it took another 20 years after the werner plan deadline before a single currency was established β, for reasons that would take another conference to explain β it is worth revisiting the werner report finalized 40 years ago. we can call it truly visionary. although many
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operate efficiently without endangering sound fiscal positions in the longer term. moreover, governments are encouraged to push ahead with reforms relating to the size and structure of public expenditure and revenue, which will also create room for tax cuts and absorb the fiscal costs of population ageing. in the field of structural reforms allow me to refer briefly to the adoption of the broad economic policy guidelines. if implemented in a determined manner, structural reforms will contribute to expanding the euro area's potential for non - inflationary growth and to reducing its high level of unemployment. we are now at your disposal for questions.
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kishori j udeshi : a bit of tomorrow keynote address by ms kishori j udeshi, deputy governor of the reserve bank of india, at the bfsi conclave 2005 on technology solutions for business transformation, mumbai, 7 june 2005. acknowledgements for inputs are due to s / shri a k hirve, s ganesh kumar and a madhavan. * * * the topic for today β s conclave is β technology solutions for business transformation β and i have chosen to speak on β a bit ( banking and information technology ) of tomorrow β. i do not consider myself as being even computer savvy. but one does not have to be an it professional to think of how it can bring about business transformation. for this, all that the banker needs is to have vision, conviction and the courage to change. it is for the it professional to make it possible. the entire world is looking at india for its it services. let us take a harder futuristic look. while indian industry and agriculture contribute almost equally to gdp, industry gets four times the gross loans and advances from banking system than what agriculture gets. is there no potential for a transformation here and can it not provide the solution? india has around 6 lakh villages. bank penetration is around 18 villages per branch. imagine if a bank were to set up an information kiosk to cater to a cluster of say 2 to 3 villages, what would be the outcome? there is no limit to the extent of usage of such a kiosk. the farmer can know, at the click of the mouse his bank balance, entries of debit and credit in his account, outstanding loan amount, interest rate, interest charged to the account, commodity price movements, weather, expected yield and income, direct credit of receivables into his account, direct payment for purchases without involving cash and lot of other value added services, all in his native language. such kiosks could, through arrangements, even double up as vending machines. the possibilities are immense. the constraints only are adequate and quality power supply. but we have to be optimistic. and if you think that farmers are uneducated and this is grandiose thinking let me quote from c. k. prahalad1 : β the most telling comment was from a farmer captured on video by the researchers : β i did not know how to hold a mouse β four months later : β even if they take away the computer,
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klaus liebscher : the role and functioning of the european system of central banks ( escb ) speech by mr klaus liebscher, governor of the austrian national bank, at the 5th legal alumni web of the salzburg seminar ( lawss ) symposium, salzburg, 6 july 2004. * 1. * * introduction i gladly accepted the invitation of the alumni web of the salzburg seminar to speak to you about the architecture and the functioning of the european system of central banks, addressing, in particular, the role of the oenb in this framework. in early 1999, the adoption of the single monetary policy by the ecb marked the successful transition to stage three of economic and monetary union ( emu ). the introduction of euro banknotes and coins as legal tender concluded the process of establishing a single monetary area, which at that point finally became a tangible reality for all european citizens. it is no exaggeration to say that the birth of the euro was a truly historic event. for the first time in history, a group of independent countries has relinquished its sovereign power to issue money to a newly created supranational institution and given up its national currencies to adopt a common currency. virtually over night, the euro became the single currency for 11 - and since 2001, when greece introduced the euro, for 12 - sovereign member states of the european union. together, these countries with a population of some 300 million represent an economic area comparable in terms of economic power to the u. s. market. economic and monetary union and the euro have been a success story : exchange rate risks between the member states of emu have been eliminated and there has been considerable progress in disinflation and economic convergence in the euro area. the euro is well on its way to firmly establish itself as an internationally renowned currency, thus becoming a solid cornerstone of the international monetary system. looking back, we can say that austria β s accession to monetary union represented a major step for the oenb, just like for all central banks of the participating countries. the integration into the escb with the european central bank ( ecb ) at its helm was an entirely smooth process. the national central banks of the euro area countries thus formally relinquished their monetary sovereignty. since january 1, 1999, the sole responsibility for the single monetary policy has been vested in the governing council of the ecb, which is independent and not bound by any instructions. let me underline at this point that the division of responsibilities
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of our prerogatives should be to integrate developing and transition economies in such a way that they can maximize the benefits of globalization, while minimizing the costs. this implies, specifically, helping these countries attract sufficient sustained private capital flows, while strengthening measures for crisis prevention and better crisis management, supporting policies and structural reforms that facilitate development, and helping secure sufficient external funding to sustain their growth and poverty reduction. while not being a β development β institution in spirit and by design, the fund β s role in the developing countries has nevertheless become an essential and integral part of the efforts of the whole international community to advance development. especially by launching the hipc ( highly indebted poor countries ), the prsp ( poverty reduction and strategy papers ) and the prgf ( poverty reduction and growth facility ) initiatives, the fund substantially reframed its role in low - income countries, making poverty reduction and growth the key objectives and modalities for programs supported by the fund. while the prgf relates strictly to the fund β s role, the hipc and the prsp initiatives guide the cooperation with developing countries, the fund, and also the world bank. i see the fund β s role in developing countries and especially its financing role as catalytic rather than substantial. the fund should allocate only a limited amount of financial aid to developing countries in support of their progress towards macroeconomic stability and financial soundness. turning to transition economies, i believe that we often overlook the strong track record both the imf and the world bank have established in these countries. while the bretton woods institutions were caught as much by surprise by the collapse of communism as everybody else, their involvement in these countries was instrumental to their integration into the world economy. at the beginning of the 1990s, the majority of transition economies had some form of imf involvement via a fully - fledged imf program or technical assistance. the imf together with the world bank worked hard to stabilize the economies of these countries, devise economic policies and build modern institutions, thus transforming many of these economies into today β s very successful market economies. owing to a common history and its geographic location, austria has a particular interest in the stability and economic progress of the transition economies. austria had already started in the late 1980s to develop extensive economic ties with the transition economies, which have increased substantially over time. strong trade linkages, very high levels of foreign direct investment and support for their integration into either the eu or other international institutions have
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was a relationship to be sure but it was all very informal ; the terms supervisor and supervised would have sounded out of place. there were no hard and fast requirements and the approach was minimalist in style. for example, through the granting of waivers on the publication of balance sheet data. originally set up in 1914 to manage difficulties in payments between countries at the start of world war one. fforde, john. the bank of england and public policy : 1941 - 1958, cambridge, cambridge university press, 1992, p. 750 a short - term debt instrument issued by a company that is guaranteed by a commercial bank, often used to facilitate trade. fforde, p. 755 all speeches are available online at www. bankofengland. co. uk / speeches and yet, as in the 1890 barings episode, you can see in this activity elements which persist in supervision today. for instance, while i do not wish to offer any formal comment on the state of mark carney β s eyebrows, in my experience a meeting with mark is always a useful way to focus the mind. it is worth remarking that during this period there was a genuine window of opportunity to extend the boundaries of banking supervision undertaken by the bank and legislate accordingly. however, after a year β s negotiation, it came to nothing and instead of a banking act 1957, the banking sector would have to wait until 1979 before the bank involved itself more formally in the affairs of firms and, crucially, on a statutory basis. in the period up to the 1970s, there had been β no recent case of depositors losing their money. there was little public interest in the subject and there had been no troubles that might have led to a demand for the bank β s help β. this set of circumstances changed abruptly when the secondary banking crisis engulfed the city in the period 1973 - 5. in short, very rapid and uncontrolled growth in the fringe ( i. e. not primary ) banking sector came home to roost when the first oil shock hit in 1973, delivering a blow to the economic prosperity enjoyed by the uk since world war ii, reducing the value of bank assets and revealing a significant mismatch of borrowings and lending that resulted in a liquidity, and subsequently solvency, crisis. the secondary banks were especially affected, having been able to expand their balance sheets rapidly using wholesale markets, much as northern rock did just over thirty years later. the number of affected
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us dollars last year. in the first two months of this year, fdis jumped by 8. 0 percent to 1. 7 billion us dollars. this underscores investor confidence in the philippines β long - term growth prospects. all these came on the back of a whole - of - government approach to pandemic recovery. complementing the national government β s recovery efforts, the central bank implemented its own covid - response measures. we ensured adequate liquidity in the financial system and helped bolster domestic economic activity. through our various response measures, the central bank has injected approximately 41. 9 billion us dollars into the financial system. that β s equivalent to about 11. 3 percent of gdp. the economy β s strong growth in the first quarter, together with the improved employment situation, provides scope for the bsp to scale back our pandemic response. we have thus begun the normalization process, guided by the inflation and growth outlook, state of public health, and domestic and global risks. in normalizing, we are mindful of the need to safeguard economic recovery on one hand and to control inflation on the other. achieving that balance requires a well - calibrated and well - communicated exit strategy to avoid substantial market volatility, reduce spillovers, and continue the recovery momentum. last may 19, we raised the key policy rate from a historic low of 2. 0 percent to 2. 25 percent. also last month, the national government already paid in full its advances from the bsp worth 54o billion pesos or approximately 10 billion us dollars. before the pandemic, the philippines β debt - to - gdp ratio remains manageable and much lower compared to other economies. the increase in our debt over the last two years was due in part to the massive cost of vaccination and healthcare, and also in part to the government β s infrastructure development agenda. under the β build, build, build β program, big - ticket infrastructure projects were rolled out. these are worthwhile investments intended to increase the economy β s capacity and boost growth ahead. if our economy continues to grow between 6 and 7 percent in the next few years, the philippines can easily outgrow its public debt. besides a manageable fiscal situation, another fundamental strength of the philippines is its healthy external accounts. our hefty gross international reserves acted as a buffer during the pandemic. a reliable source of foreign exchange is remittances from overseas filipinos. with
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financial inclusion is one of the foundations of the philippine development plan 2017 to 2022, ambisyon natin 2040. ). the ultimate goal is to reach the unbanked and underserved populace. fintech can be leveraged to achieve this. jack ma, founder and executive chairman of alibaba expressed this by saying, β fintech or techfin is to rebuild the system with technology β¦ to solve the problem of a lack of inclusiveness. β we believe in leveraging on digitization so that it is responsive to a broader economy. this is why we are also closely working with the national government for the adoption of a biometricbased foundational id system. build, build, building together ladies and gentlemen, this forum is an opportune time to encourage each one here β pillars of society, movers and shakers in the banking and financial industries, to all work together. the philippines is increasingly populated by young, tech - savvy β millenials. β this growing customer - base prefers streamlined processes and products and services that can be accessed via electronic services. this market is on the lookout for new offerings. we can therefore capitalize on this opportunity by allowing fintech to come into play. the bsp is supportive of fintech innovations and see much potential in this area. indeed we are, as the forum β s briefer says, in an β energized backdrop. β i have said in several speeches before that fintech is borderless with varied and plenty players. this, constant engagement with fintech innovators, other regulators and industry players is important. this is to foster a deeper understanding of risks, gauge market conduct expectations 4 / 5 bis central bankers'speeches and inculcate appreciation for financial inclusion goals. i reiterate this today. on behalf of the bsp and the monetary board, i thank the organizers for the opportunity to share our initiatives with you today as we work toward a better philippines. mabuhay ang pilipinas. mabuhay tayong lahat. 5 / 5 bis central bankers'speeches
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provision measures have improved system liquidity in the past weeks and stabilized broad funding conditions. however, risks to the growth outlook continue to be tilted to the downside and currently a ushaped recovery is expected. the challenge, therefore, is to provide tangible boost to the economy through the appropriate combination of fiscal response and monetary measures. rest assured, macroeconomic policy measures are in place to address downside risks associated with the covid - 19 pandemic. in line with this, the bsp will continue to work with market participants and relevant government agencies to ensure that its policy responses remain timely and appropriate particularly during these challenging times. thank you. 2 / 2 bis central bankers'speeches
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. it is fitting that we are implementing these changes just a week after the assumption into office of president benigno aquino iii. he stood for change and received an overwhelming mandate from our people with a landslide win. palakpakan po natin si presidente benigno aquino iii! ladies and gentlemen, let us unite and join president aquino in making the changes our country needs to become a better place for all. as our theme says, let us keep β moving forward through stronger partnerships. β indeed, we should take our theme to heart, given the many challenges and uncertainties ahead. why do i say this? first, we are looking at varying and uneven pace of recovery across the globe. given global interdependencies and linkages, it could lead to slower growth over the medium term. second, the potential heavy influx of capital inflows, as risk appetites perk up, can also complicate monetary management. additionally, the rebound of the global economy could create upward pressures on commodity prices and fan inflation. there could be positive surprises to investor confidence, which could foster a stronger - than - expected improvement in market sentiment and prompt a strong rebound in investment and demand. third, there are risks to the inflation outlook. for these reasons, the bsp is watchful of emerging signs of inflation that could be disruptive to consumption and investment, and ultimately have a corrosive impact on the economy. one clear strategy in addressing these challenges is to forge and nurture greater partnership between the bsp and its stakeholders, through open communication. this is where your inputs, through your responses in the business expectations survey, come in. your responses enable us to discern public expectations on the general direction of economic indicators, particularly inflation, a crucial element in the bsp β s monetary policy settings. as in a jigsaw puzzle, each institution represents a piece whose absence will leave gaps that could adversely affect our proper appreciation of particular scenarios. this could potentially lead to weak or even wrong policies. it is important therefore that we keep on working together to gain clear perspectives that give rise to appropriate and timely policies. indeed, sound macroeconomic policies provided our economy with some insulation against the worst global crisis in post - war history. among the key elements that enabled the bsp to calibrate well - informed and well - guided policies during the crisis was the constant supply of information from you, our partners in the bsp β s programs. for this, we
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13 percent of gold, then, at the very least, the value of vas is us $ 1. 0 trillion. exactly which va will be worth us $ 1. 0 trillion, we actually do not know. the other question is one of consumer protection - the extent to which the government and the central bank must educate the public and say, " we are allowing this to happen, but these are very risky assets. you should not put in money that you really need for many important things. " ongoing dialogue between regulators and market players in this ese, we would like to be updated on the adoption and usage of vas in the philippines. what exactly is happening on the ground? what are they being used for? to what extent should regulation apply? 2 / 3 bis - central bankers'speeches right now, our view is [ that ] the moment vas meet fiat currency or deposits, clearly, you have to be regulated. exactly what the form of regulation will be is, of course, evolving. our view is one of caution. when did we freeze the issuance of vasps? about six months ago. our view is a cautious one, but regulation should be open to potentially good uses. therefore, if you ban it, then you are not in a position to move in that direction. we hope that we can gain some insights from our speakers. i hope that we can have a fruitful, balanced, and productive discussion ahead. as i already said, the central bank is open to it but very, very cautious. the more we learn, the more we can handle it better. thank you very much, and i hope that it will be a very good afternoon and [ an ] interesting discussion. 3 / 3 bis - central bankers'speeches
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svein gjedrem : the conduct of monetary policy introductory statement by mr svein gjedrem, governor of norges bank ( central bank of norway ), at the hearing before the standing committee on finance and economic affairs of the storting ( norwegian parliament ), oslo, 23 may 2005. the charts in pdf - format can be found on the norges bank β s website. please note that the text below may differ slightly from the actual presentation. the statement is based, among other things, on norges bank β s annual report for 2004, inflation report 1 / 2005 and the assessments published after the monetary policy meeting of the executive board on 20 april. * * * i would like to take this opportunity to thank the storting for again inviting me to appear before this committee on behalf of norges bank in order to report and answer questions on monetary policy in connection with the storting β s deliberations on the government β s credit report. the introductory statement is based on the bank β s annual report, but is also updated based on the executive board β s assessments for the period to the preceding monetary policy meeting. flexible inflation targeting monetary policy in norway is oriented towards low and stable inflation. this is the most important contribution monetary policy can make to sound economic developments in the long term. the inflation target provides enterprises and households with an anchor for future inflation expectations. when there is confidence in the inflation target, monetary policy can contribute to stabilising developments in output and employment. norges bank operates a flexible inflation targeting regime so that variability in inflation and variability in output and employment are given weight when we set the interest rate. monetary policy influences the economy with long and variable lags. norges bank sets the interest rate with a view to stabilising inflation at the target within a reasonable time horizon, normally 1 - 3 years. the relevant horizon will depend on disturbances to which the economy is exposed and how they affect the path for inflation and the real economy ahead. we have increased the transparency surrounding the basis for monetary policy decisions in recent years. norges bank β s statements following its monetary policy meetings, press conferences, the inflation report and speeches provide an account of economic developments that are of importance to the executive board β s assessments and interest rate decisions. all publications are available on our website. underlying each interest rate decision is a monetary policy strategy drawn up by the executive board every four months. the strategy is published directly after it has been approved
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the petroleum sector to record - high levels. the level of investment in this sector in 2014 was as high as total investment in domestic non - oil industries. the positive spillovers to the oil service industry and other business sectors have been substantial, in particular through the past decade. norwegian employment has remained high and unemployment low, even when the financial crisis hit in 2008. it is estimated that 1 out of 9 jobs in norway are linked to the oil industry. bis central bankers β speeches fiscal rule it was established at an early stage that norway β s oil and gas resources belong to the norwegian people. the tax system for the petroleum industry was designed to make sure that the bulk of the large revenues, the economic rent from the petroleum sector, would accrue to the state. petroleum companies pay a surtax of 51 percent of profits, on top of the normal corporate tax rate of 27 percent. the government also has direct ownership shares in the most profitable oil fields. however, policymakers β handling of norway β s newly discovered petroleum wealth got off to a rather bumpy start. during the first 25 years of oil production, norway experienced two deep recessions. both downturns were rooted in hugely optimistic income expectations. in the 1970s, the public sector was the big spender, and the government had to tighten policy later on. in the 1980s, a credit - fuelled consumption boom in the private sector led to necessary cut - backs after the oil price plunge in 1986. these two episodes of turbulence made clear how vulnerable a small open economy is to terms of trade disturbances, as well as to short - termism and exuberant expectations. to prevent the same mistakes from being made again, fiscal institutions were set up in the 1990s. among the most important of these are the oil fund and the fiscal rule. chart : the fund mechanism the norwegian parliament passed the act relating to the oil fund in 1990. under the act, the net fiscal surplus, including oil revenues, is transferred to the fund, and invested in international markets. a main purpose of the fund mechanism is to make the actual spending of oil revenues transparent. towards the end of the 1990s, inflows to the oil fund increased, and there were expectations of considerable petroleum revenues in the future. there was increasing political pressure to spend more. in a climate of high inflows and even higher expectations, it was demanding to restrain fiscal spending. at the same time, it was clear that future pension obligations would be substantial
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that have financial system vulnerability. iii. policy issues concerning slow post - financial crisis recoveries thus far, i have explained the three issues central banks now face in the conduct of monetary policy. next, i would like to raise some policy issues from a longer - term perspective. in the wake of the global financial crisis, economic recoveries around the world have been modest relative to past recoveries despite the implementation of unconventional monetary policy. for the past year or so, academic and central bank circles have actively discussed how to interpret this fact. such discussions have been initiated by lawrence summers β revisit to the β secular stagnation thesis β advocated originally by alvin hansen in the late 1930s. various views have been raised regarding the causes of slow post - financial crisis recoveries ; for example, the persistent weakness on the demand side of the economy and the low productivity on the supply side. there have been wide - ranging interpretations and views on secular stagnation. in light of the discussions over slow post - financial crisis recoveries, i would like to raise three policy issues. the first issue is to what extent central banks should consider the impact on the supply side of the economy in conducting monetary policy. as a backdrop of the slow recoveries following the global financial crisis, it has been pointed out that the interaction between demand and supply has gained importance. that is, the weakness in demand impairs the supply side mainly by discouraging workers from participating in the labor market and dampening firms β investment in capital stock and in research and development. furthermore, a decline in expectations about future economic growth may cause insufficiency of demand. that said, the conventional view takes the supply side, such as the potential growth rate and the natural rate of unemployment, as a given in the conduct of monetary policy. how would the mechanism of slow recoveries affect such a conventional view? the second issue is with regard to what monetary policy tools are desirable under a low natural rate of interest. if the natural rate remains at a relatively low level over the medium to long term, compared with in the past, as suggested by the secular stagnation thesis, then the nominal interest rate is likely to stay around zero. furthermore, even after the normalization of interest rates, the nominal rate might fall back to zero or to a very low level. in that case, would unconventional monetary policy continue to be important even β beyond the exit β? moreover, would it eventually be regarded as conventional in an economy
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in the night, which in turn explains why non - economists are often unaware of any microeconomic problems β, avinash dixit ( 2014 ), microeconomics : a very short introduction, oxford university press, p. 2. such as, among others, the successful publication by william goetzman, money changes everything. how finance made civilization possible ( 2006 ) or the β money and beauty β exhibition held in florence just over ten years ago. for the general point, see ogawa, masakata ( 2006 ), β exploring possibility of developing indifferent public - driven science communication activities β, journal of science education in japan 30. 4 ( 2006 ) : 201 - 209. one of the most recent books on the art of science popularisation offers a compelling comparison between the simplification required by popularisation in order to be understood by the lay public and heisenberg β s famous uncertainty principle, according to which whatever is gained by increasing the precision with which we measure the position of a particle is lost in terms of the accuracy with which we can measure its initial speed and vice versa. gouthier, d. ( 2019 ), scrivere di scienza. esercizi e buone pratiche per divulgatori, giornalisti, insegnanti e ricercatori di oggi, codice edizioni, torino pag. 51. scharrer l, rupieper y, stadtler m and bromme r. ( 2017 ), β when science becomes too easy : science popularization inclines laypeople to underrate their dependence on experts β, public understanding of science, 26 ( 8 ) : 1003 - 1018. doi : 10. 1177 / 0963662516680311. j. kruger and d. dunning ( 1999 ), β unskilled and unaware of it : how difficulties in recognizing one β s own incompetence lead to inflated self - assessments β, journal of personality and social psychology 77, 1121 ( 1999 ). francisco, frederico & goncalves - sa, joana ( 2019 ), β a little knowledge is a dangerous thing : excess confidence explains negative attitudes towards science β, ssrn electronic journal, 10. 2139 / ssrn. 3360734. roger penrose, la strada che porta alla realta ( the road to reality ), in the β col
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reducing the efficacy of the critical role played by this market in supporting the broader financial system. i am glad that you are all here today to work with us to begin to identify the best solutions to the problem of fire sale risk in the context of the tri - party repo market. i urge you to participate actively and express your ideas candidly. i am confident that we will come up with the best solution to this problem by working together. bis central bankers β speeches
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, 2023. 3 / 4 bis - central bankers'speeches 6 in addition, the committee said it will continue to reduce its holdings of treasury securities and agency debt and agency mortgage - backed securities, according to the board of governors of the federal reserve system, plans for reducing the size of the federal reserve's balance sheet, may 4, 2022. 4 / 4 bis - central bankers'speeches
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ΓΈystein olsen : the conduct of monetary policy introductory statement by mr ΓΈystein olsen, governor of norges bank ( central bank of norway ), at the hearing before the standing committee on finance and economic affairs of the storting ( norwegian parliament ), oslo, 19 may 2020. * * * accompanying slides of the speech. please note that the text below may differ from the actual presentation. when i appeared at the hearing before this committee this time last year, the norwegian economy was growing at a solid pace and the policy rate was on the rise. the policy rate was raised three times in 2019, from 0. 75 percent to 1. 50 percent. there was no longer any need for low interest rates to support economic activity. after several years of solid economic growth and falling unemployment, capacity utilisation was assessed to be somewhat above a normal level in 2019. inflation was close to the 2 percent target. gdp growth slowed through autumn, and towards the end of 2019 the norwegian economy was assessed to be close to the peak of the business cycle. there were prospects that the policy rate would remain close to 1. 50 percent ahead, inflation would continue to be close to the inflation target and unemployment would remain low. we envisaged that growth would slow in the years ahead, partly as a result of weaker prospects for petroleum investment. none of us at that time could have foreseen that a virus would change the picture completely and lead the norwegian and the global economy into a deep decline. chart : a historically deep decline the economic outlook has changed dramatically in a short period of time. activity in the norwegian economy has fallen abruptly owing to the coronavirus pandemic. the virus outbreak and the extensive measures taken to contain it have led to production halts and lower activity across a range of businesses. unemployment has risen to very high levels. mainland gdp is projected to fall by around 5 percent in 2020. we have not seen a contraction like this since the war years. chart : an abrupt and deep decline in the global economy the countries around us have also been severely affected. measures taken to contain the spread of the virus, combined with changes in behaviour and uncertainty about developments ahead, have resulted in substantial declines in output across economies. in early march, we expected moderate economic growth among trading partners. now a deep decline appears likely this year followed by a gradual rebound. the subsequent path of developments is, however, highly uncertain. the authorities in many countries have implemented powerful fiscal policy measures
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. 10 indeed, the u. s. manufacturing sector is healthy. the recovery from the pandemic downturn has been remarkable, especially in comparison to the great recession. the sector is currently producing at 3 percent above its pre - pandemic level. and, importantly, october marked 18 consecutive months of increasing manufacturing see erik brynjolfsson, daniel rock, and chad syverson ( 2021 ), β the productivity j - curve : how intangibles complement general purpose technologies, β american economic journal : macroeconomics, vol. 13 ( january ), pp. 333 β 72. see paul a. david ( 1990 ), β the dynamo and the computer : an historical perspective on the modern productivity paradox, β american economic review, vol. 80 ( may ), pp. 355 β 61. the relationship between competition and innovation is complicated and a matter of some debate. see philippe aghion, nick bloom, richard blundell, rachel griffith, and peter howitt ( 2005 ), β competition and innovation : an inverted - u relationship, β quarterly journal of economics, vol. 120 ( may ), pp. 701 β 28. in addition, see the discussion of the literature in rachel griffith and john van reenen ( 2021 ), β product market competition, creative destruction and innovation, β cepr discussion paper no. dp16763 ( washington : center for economic and policy research, november ). see ryan decker, john haltiwanger, ron jarmin, and javier miranda ( 2014 ), β the role of entrepreneurship in u. s. job creation and economic dynamism, β journal of economic perspectives, vol. 28 ( summer ), pp. 3 β 24. - 9employment. if manufacturing were to return to its role as a productivity leader, productivity for the total economy would grow noticeably faster. looking ahead, productivity plays an important role in our thinking about the outlook. productivity growth raises the nation β s per capita income and, one hopes, the welfare of the typical household. as i mentioned earlier, productivity growth may also help lower prices. if we can make more with less, firms can lower the cost of the final product and still remain profitable. for this reason, it is heartening to see all the innovation happening in the motor vehicle industry and throughout the economy. it is hard to know exactly when all the benefits will show up, but we know the historical evidence suggests they
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of a development agenda of future priorities and contextualise the future of payment system oversight. ladies and gentlemen, since the establishment of the ccbg a decade ago, methods of effecting payments and other financial transactions have quickly become sophisticated with a trend towards execution in real time electronic media. all this is taking place because consumer confidence is growing in these instruments and mechanisms, which have been supported by growing confidence in sadc member countries β economies in general and stability of the national financial systems in particular. it is therefore the expectation of the bank of zambia that this conference will discuss this trend and its implications, particularly with regard to limited accessibility to technology and technicalknow how of consumers in sadc member countries. other themes i am sure you will deliberate upon include confidentially of financial information, money laundering and terrorist financing. effective payment system oversight needs to be promoted so that public confidence in the safety and soundness of the national payment systems is maintained. understandably, this is a new area and in most member countries work is still exploratory. i therefore urge you all to double your efforts in this regard and deliver on this very important central bank responsibility. ladies and gentlemen, another new area is that of mobile phone enabled payment services. this development has a huge potential to help the sadc region leap frog a number of financial sector development challenges particularly those related to improving access and availability of financial services. this is because mobile phone based services, particularly those focused on low - value payments where swift and convenient service is the primary goal could be a practical solution for sadc member countries. the challenge therefore is how well we all respond without damaging this sprouting and potentially cost - effective delivery channel for financial services, which can be damaged with over regulation or lack of mitigation for the risks its poses. ladies and gentlemen, i wish to conclude by reminding all delegates that it is my hope that at the end of the conference all of you will have obtained a better understanding of payment systems best practice. equally important you will also have obtained a clearer view of the purpose of payment systems within a developmental context and the need for concerted efforts in balancing our responses in a manner that is supportive of the objective of attaining economic inclusion and growth, regional economic co - operation and integration. with these remarks, i declare the conference officially open and wish you successful deliberations. i thank you.
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privilege to call upon his honour the vice president of the republic of zambia, mr rupiah banda to deliver the official opening speech for the seminar. your honour sir! thank you.
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interaction with inflation has to do with fiscal effects on potential output. lower tax on productive capital or companies may lead to more companies being established and thereby raise potential output. similarly, lower tax on labour or increased educational inputs may generate an increased supply of labour and also influence wage formation. these are examples of the numerous ways in which changes in tax and expenditure systems are likely to modify economic opportunities and promote conditions for good growth without the attendant capacity shortages that generate price pressure. current fiscal policy the trade - off between monetary and fiscal policy β the policy mix, as we economists like to say β has improved considerably in the present decade. the rapid accumulation of government debt has ceased and the stock is now being reduced. while the consolidation of government finances has made the fiscal stance restrictive, it has been possible to lower interest rates and this in turn has stimulated investment, economic activity and employment lately. this is accordingly a considerable improvement compared with the early 1990s, for example, when factors such as very weak government finances led the riksbank to keep interest rates up at a time when government debt was rising markedly. government debt and budget balance per cent of gdp. 1999 and 2000 forecast government debt - 5 budget balance - 10 - 15 source : national institute of economic reasearch in the june inflation report we noted that as a result of measures proposed in the budget bill, during 1999 and possibly also in 2000 fiscal policy would probably be more restrictive than the riksbank had assumed earlier but would still become successively more expansionary. the restrictive economic effect of fiscal policy was accordingly judged to be less marked than in the period 1994 β 97. our scenario assumed, however, that there would be no further tax cuts next year. we foresee a government financial surplus somewhat above 2 per cent of gdp but have thus assumed that it will be used to repay government debt. in 2001, on the other hand, we assume that any surplus in excess of 2 per cent of gdp will be transferred to households. the swedish debate about tax cuts and increased spending has become more intense as the government budget moved out of the red and is expected to show continued and growing surpluses in the years ahead. that is hardly surprising. we had exactly the same debate in the 1980s as soon as the budget deficits had been eliminated. some comments are therefore called for. one comment concerns the formulation of the budget target. a medium - term average implies that in good years the surplus should be above 2 per cent and by most standards the coming
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be prone to technical exposure to unauthorized implementation or modification of data and program at either the network, platform, database or application level. a classic example of this type of controls is the use of user id and password. supervisor should be able to analyze and evaluate the effectiveness of both physical and logical access control in accomplishing financial institution's information security objectives. integrity supervisory objective an objective of it supervision in an integrity area is to ensure reliability and completeness of system functionality in order to verify that data is processed in an accurate and timely manner. supervisory areas therefore, supervisors need to review and assess whether financial institutions have sound application control in place. in this regard, they should have control built in the procedure and programmed in the system to ensure the integrity of input, process and output. in a large financial institution using various applications, a sample of applications including core banking applications and management information system ( mis ) would be examined for control adequacy. data and system integrity can reflect the effectiveness of system development, acquisition and change control procedure. therefore, it is necessary to cover those areas in the scope of supervision. availability supervisory objective an objective of it supervision in an availability area is to ensure financial institutions'readiness for being able to run business without interruption during an occurrence of disruption. supervisory areas in this regard, supervisor must review and assess the scope of business continuity plan which should be established in an enterprise - wide basis. also, the best way to determine how well the plan works or which portions of the plan need improvement is through testing. we encourage financial institutions to test the disaster recovery plan at least once a year. finally, financial institutions should have a procedure in place to update the plan regularly. 4. it examination and risk assessment objective the objective of it examination and risk assessment is to assess a financial institution's it management and operation to ensure accuracy and reliability of information system as well as its alignment with the financial institution's business objectives which can eventually bring in the safety and soundness. it examination process there are three main steps to be taken when performing it examination. 1. pre - examination this step is the process of gathering the information about the financial institution on which we will conduct examination. the information including business nature, objective, policy, plan, it infrastructure and organization chart can be obtained from previous examination reports, internal database and external sources. at this step, it examiners will coordinate with onsite examiners to share information and identify areas of concerns. with all of the
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, we look forward to the pdic and the bsp being able to address examination findings and violations with expediency β¦ especially those involving unsafe and unsound banking activities. this is consistent with the thrust of the bsp and the pdic to promote and strengthen good governance practices in supervised banks to ensure the stability of the banking system at all times. we look forward therefore to exploring new projects and expanding existing initiatives with the pdic to realize our shared goal of delivering a better quality of life to filipinos through a sound and responsive banking system. mabuhay ang bsp at ang pdic! mabuhay ang ating mahal na bansang pilipinas! maraming salamat sa inyong lahat! bis central bankers β speeches
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benjamin e diokno : the bangko sentral ng pilipinas economic briefing - the philippines in 2022 speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the american chamber of commerce ( amcham ) general membership meeting, manila, 17 march 2022. * * * officers and members of the american chamber of commerce, good afternoon. thank you for inviting me to your general membership meeting. let me update you with, first, our country β s recent economic performance ; second, the bsp β s support to the economy ; and lastly, our near - term macroeconomic prospects. on the economy β s latest performance β¦ after five consecutive quarters of decline, the economy rebounded strongly in the second quarter of last year with a growth of 12. 0 percent. since then, the country has managed to sustain this growth. in the last quarter of 2021, the economy grew by 7. 7 percent, resulting in a 5. 6 - percent full - year growth, which is above the government β s target range of 5. 0 to 5. 5 percent. the employment situation has improved. unemployment rate fell to 6. 4 percent in january 2022 from the peak of 17. 6 percent in april 2020. moreover, the 43. 02 - million employment posted in january 2022 represented a 1. 77 - million net employment gain from the level in january 2021. manufacturing activities are gaining traction. the purchasing manager β s index ( pmi ) increased by 1. 3 percent to a three - year high of 52. 8 in february 2022 following easing of quarantine protocols. the covid - 19 situation is improving β i. e., new confirmed covid - 19 cases are falling, vaccination rate is rising, and hospitalization rate has declined. headline inflation stood at 3. 0 percent in january and february 2022, the midpoint of the government β s average inflation target range of 2. 0 - 4. 0 inflation expectations remain well anchored. inflation projections of private - sector economists and multilateral agencies for 2022, 2023, and 2024 all fall within the government β s target range of 2. 0 to 4. 0 percent. the country β s external sector remains manageable. the sustained rebound in key economies has spurred external demand. fdis rose by 54. 2 percent to usd 10. 5 billion in 2021, which
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2021 kuroda haruhiko governor of the bank of japan introduction i. developments in economic activity and prices and the bank's policy responses to the impact of covid - 19 ii. continuation of quantitative and qualitative monetary easing ( qqe ) with yield curve control iii. policy actions to conduct further effective and sustainable monetary easing conclusion i. developments in economic activity and prices and the bank's policy responses to the impact of covid - 19 chart 1 recent developments in economic activity and prices pace of economic recovery economic activity by sector ( real gdp, level ) s. a., cy 2019 average = 100 s. a., cy 2019 = 100 consumer price index ( cpi ) y / y % chg. effects of the " go to travel " campaign - 5. 2 % - 10. 0 % - 2. 6 % effects of the consumption tax hikes and free education policies energy excluding the effects of the above temporary factors cpi ( less fresh food ) manufacturing accommodations, eating and drinking services 20 / q1 services for amusement and hobbies - 1 t ransport nonmanufacturing q2 q3 q4 jan. jul. july jan. jul. july jan. - 2 cy 14 15 16 17 18 19 20 21 notes : 1. in the middle chart, figures for manufacturing are the " indices of industrial production " and those for other sectors are the " indices of tertiary industry activity. " figures for nonmanufacturing exclude accommodations, eating and drinking services, services for amusement and hobbies, and transport. 2. in the right - hand chart, energy consists of petroleum products, electricity, and gas, manufactured & piped. figures for " effects of the consumption tax hikes and free education policies " from april 2020 onward are based on staff estimations and include the effects of measures such as free higher education introduced in april 2020. sources : cabinet office ; ministry of economy, trade and industry ; ministry of internal affairs and communications ; bank of japan. i. developments in economic activity and prices and the bank's policy responses to the impact of covid - 19 chart 2 the bank's measures in response to covid - 19 supporting corporate financing special program to support financing in response to covid - 19 purchases of cp and corporate bonds : amount outstanding of about 20 tril. yen at maximum ( previous amount outstanding of about 5 tril. yen ) special funds - supplying operations to facilitate financing in response to covid -
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october 6, 2021 bank of japan hopes for the japanese and u. s. business communities : economic recovery from the covid - 19 crisis and efforts to address climate change speech at the 58th japan - u. s. business conference ( via webcast ) kuroda haruhiko governor of the bank of japan introduction it is an honor to have the opportunity today to address the representatives of the business communities at the japan - u. s. business conference, which started 60 years ago. for the first time in about 20 years, japan is renewing its banknotes. the person chosen for the portrait on the new 10, 000 - yen note is shibusawa eiichi, an entrepreneur known as the " father of modern japanese capitalism. " shibusawa was passionate about private exchanges between japan and the u. s. and in 1909 led a group of about 50 entrepreneurs on a visit to the u. s. they met with then president william taft, thomas edison - - the " king of inventors " - - and other prominent figures in various fields, and realized that the u. s. economy enjoyed remarkably high growth. 1 shibusawa's business mission to the u. s. was the starting point for a series of exchanges between the business communities of the two countries ; such exchanges continue to this day, including through this business conference, and have contributed considerably to the development of both economies. it is encouraging to see you all continuing to have a dialog even during the covid - 19 pandemic. today, i would first like to share my views on the characteristics of the u. s. and japanese economies, which come to light when comparing responses of the two to the same shock - the pandemic. i will then talk about my hopes for the japanese and u. s. business communities in addressing climate change, which is one of the important common challenges for the coming decades, while outlining the bank's recent policy actions to address this issue. i. the u. s. and japanese economies since the outbreak of covid - 19 the u. s. and japanese economies both have faced the shock of the pandemic, which is larger than anything experienced in the postwar era ( chart 1 ). economic activities of both countries declined sharply across the board in the first half of 2020, and real gdp for the april - june quarter contracted significantly by almost 10 percent from the pre - pandemic level in 2019. however,
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speeches at the same time, we will continue to roll out other elements of our climate strategy. in the course of next year, we will conduct a supervisory stress test with a focus on c & e risks. in addition, we will carry out a full supervisory review of banks β practices for incorporating c & e risks into their risk frameworks, and gradually roll out a dedicated supervisory review and evaluation process methodology that will eventually influence banks β minimum capital requirements. but this is not the end game. gradually we will start treating climate - related risks like any other risk and include them in all relevant supervisory requirements. conclusion let me conclude. the final results of the ecb β s benchmarking of banks β disclosure and risk management practices for c & e risks suggest that, as things stand, european banks may be largely misaligned with the economic transition path towards carbon neutrality by 2050. the probability of them having to face sudden build - ups of prudential risks in the thirty years from now to the paris deadline is considerable. the safest way to mitigate this risk is for banks to step up their risk management capabilities and clearly map their transitioning strategy. banks should develop transition plans compatible with eu policies implementing the paris agreement that include concrete intermediate milestones from now until 2050, and disclose progress towards these goals on an annual basis. to support this effort, transition plans should become a legal requirement. the realities of the climate crisis are everywhere. on a macroeconomic level, there is no doubt that a combination of physical and transition risks has started to emerge. only by introducing mandatory transition plans can banks β lofty intentions for the next 30 years be turned into concrete actions now. such mandatory transition plans can help avert the tragedy of the horizon. but this next step in risk management needs to be taken today. we don β t have thirty years ; we don β t even have ten years. in the earth β s timescale, all we have between today and 2050 is a blink of an eye. 1 european commission ( 2021 ) strategy for financing the transition to a sustainable economy. 5 / 5 bis central bankers'speeches
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the year 2050, but rather on the intermediate points in time : 2025, 2030, 2035, 2040. why? first, because detailed plans featuring milestones have been widely used by banks to manage other risks β a clear example of this is the crucial role that disposal plans for non - performing loans played in reducing the legacy asset burden in the european banking sector. and second, because our benchmarking shows that banks systematically fail to establish a clear link between their stated carbon emissions goals for 2050 and their concrete actions in the present and medium term. indeed, we see that some banks that declare carbon neutrality by 2050 have no strategy in place to reduce their exposures to carbon - intensive industries by 2030, nor have they made any progress in assessing their role in financing the transition of such companies. even if banks comply with our supervisory expectations for the management and disclosure of c & e risks, that does not automatically mean that they have a paris - compliant transition plan. this is why i believe that having in place a formal, legally binding requirement to adopt such transition plans will push banks to go beyond the mere point - in - time measurement of c & e risks and to embark on a thorough assessment of the structural changes that are likely to occur within 3 / 5 bis central bankers'speeches the industries they derive their business from. long - term planning such as that involved in transition planning is a novelty as far as the risk management practices of most european banks go. as such, some novel elements will need to be in place to, on the one hand, support banks β efforts, and on the other, allow for a robust challenging of these plans by competent authorities. there are two elements that i think are particularly crucial for this next stage for banking supervision. first, we will need to have in place science - based european transition scenarios. so far, we have been advising banks to refer to the international energy agency β s reference scenarios. but these are global scenarios and they do not reflect the ongoing developments within the european legal framework. instead, banks can rely on the work already developed in this realm by the network for greening the financial system ( ngfs ), which has been designing scenarios to assess the potential future impacts of climate risks under different climate policy actions. these scenarios are already a de facto international standard for central banks and supervisory authorities when performing climate stress test and scenario analysis. as suggested by the european commission β s new sustainable finance strategy, the ngfs
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signal the economy was picking up. unfortunately, the data throw up these kinds of puzzles all the time, making it hard to rely on them as guides for monetary policy. at a more fundamental level, it doesn β t make much difference if we use growth or employment in our taylor rule, a point made by academics assessing our policy decisions. page 11 of 14 they find that the sarb cares about jobs as well as growth, and does not behave as if it cared about inflation and nothing else. 7 we can also measure our policy stance with reference to something called a β neutral real interest rate β, which in recent years has increased. this makes it more difficult to cut rates without inducing inflation. a part of the rise in our neutral rate has come from higher global rates, which affect us because we have to borrow from foreigners to finance our current account deficit. a larger part of the rise comes from an increasing risk premium. the risk premium is the price that lenders demand for putting their money here in south africa instead of somewhere else they perceive as safer. our risk premium has increased by about three - quarters of a percentage point over the past five years. if risk subsides again, perhaps because we borrow less or invest more to grow faster, we will have more monetary space and might cut rates responsibly. ladies and gentlemen, to conclude, let me make a point frankly. we don β t have balanced and sustainable growth in south africa. with annual gdp growth rates under 1 %, we barely have any growth. indeed, adjusting for the increase in our population, we have been getting poorer for half a decade. we also don β t have balance or sustainability. government β s debtto - gdp ratio is moving steadily higher, and with bailouts for state - owned enterprises, there are real risks we will soon have one of the highest debt levels amongst our emerging market peers. because we have borrowed so much from abroad, we pay a rapidly rising amount of interest to nonsouth african creditors, and this is contributing to a large current account deficit β again, one of the biggest in our peer group. 7 bold, s. and harris, l. april 2018. β identifying monetary policy rules in south africa with inflation expectations and unemployment β. sa - tied working paper 7. available at : http : / / satied. wider. unu. edu / sites / default / files / pdf / wp - 7 - 2018 - bold. pdf.
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burden ( 92. 9 as % of gdp in fy00 to 57. 7 % by fy07 ). current challenges. pakistan is at a critical cross road. on one hand, there are achievements to be recounted. the country β s smooth, though protracted, transition to democracy and the preceding few years β economic performance that managed to excite foreign interest in pakistan lends us confidence that pakistan has strong economic potential and can attract global capital. on the other hand, there remain key economic risks and challenges that the country faces. unless addressed holistically these could threaten economic prospects ; a luxury pakistan can ill - afford given the geopolitical context and the emerging global challenges. re - emergence of twin deficits has complicated monetary management. borrowings from sbp induce expansion in reserve money and government β s high recourse to banking system potentially crowds out private sector credit. these complications introduce volatility in overnight and other interest rates weaken the monetary policy transmission mechanism and hurts investment potential. growing demand for goods and services, both from domestic sources and from abroad has helped domestic industry, but has also enhanced import reliance. over fy03 - 07, import growth ( including oil ) averaged 24. 7 % outpacing export growth ( 13. 4 % ) leading to a widening external current account deficit. during this period, capital inflows funded fully the external current account deficit and the residual helped in building foreign exchange reserves ( growing by $ 5. 6 billion over fy03 - 07 ). even if oil prices fall and foreign inflows are restored, sustainability of external account will remain under stress as export growth may be impacted by the global slowdown. containing both the external and the fiscal account imbalances is one of the challenges for the government. solutions, strategy and structural reforms : future agenda. so what is the solution in this situation? the answer is to conduct counter - cyclical policies to curb demand pressures by dealing with the root cause of deficits ; the sustainable and enduring solution is not only how to finance these deficits but more importantly how to introduce structural changes to reduce these deficit in a sustainable manner, while reflecting on approaches to meet the country β s development requirements. to resolve macroeconomic imbalances on a sustainable basis and meet the growing development requirements, there is need to as high priority focus on enhancing national saving rate, which is a basic ingredient to increase the productive capacity ( possible only through well sequenced structural reforms
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the securitization of assets, have enabled intermediaries to better diversify and manage risk. financial derivatives have revolutionised global capital markets. the emergence of substantial markets in forward, futures, options swaps and other derivative instruments has significantly altered the conduct of borrowing, investment and risk management activities. the significant economic benefits of financial derivatives include : ( i ) permitting the unbundling and trading in risks, ( ii ) the ability to hedge price risks and to synthesise investments with greater efficiency and lower costs, ( iii ) and an increasing liquidity of and trading in financial assets. i would expect this process of constant innovation to continue in the decade ahead. first, because innovation is a natural feature of modern financial markets. the expansion of the credit derivatives in the last five years illustrates how fast new instruments cans develop and expand. and, second, because markets are still incomplete, in the sense that some risks cannot be efficiently hedged or transferred in the current environment. b incomplete markets and intergenerational risks one interesting example is demographic risk, and more generally, the efficient transfer of risk between different generations. currently, markets may not be well equipped to deal with intergenerational risk that simultaneously affects different generations living at the same time. many developed countries are going through a demographic transition, sometimes called the old age crisis. according to the world bank β s 1994 report for instance, by 2030 there will be 1. 4 billion people in the world aged over sixty, versus 500 million in 1990. so, we are experiencing a transition to an economy with many more aged dependents relative to the active workforce. it seems to me that the old age crisis will prompt us to invent institutions to deal with this kind of risk or maybe to create additional investment products. for instance, the increase in life expectancy could generate risks that are not efficiently hedged in the financial markets or that are to difficult to manage by households. beyond pure demography, some risks could be more efficiently shared between generations. in his stimulating book β β the new financial order β - robert shiller suggests to expand the principles of financial management β to include the society as a whole β. for example, he advocates the creation of β macro markets β on which long - term claims on national incomes and occupational incomes as well as for illiquid assets such as real estate would be traded. one of his most thought - provoking ideas is β intergenerational social security β. current old age
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and with the expectations of savers. prompted by the increase in life expectancies and the need to prepare for retirement, savers are adopting increasingly long - term investment horizons : they are more 2 acpr, 2015 annual report, october 2016. page 4 sur 7 concerned with the security of their investments than with liquidity. taking inspiration from the new euro - croissance policies, it makes sense to offer savers new, complementary forms of saving products that are less liquid and include some form of long - term capital guarantee, and that allow them to take advantage of the higher returns offered by equities over the long run. we also need, at the very least, to avoid any tax distortions that might penalise these products more than liquid and risk - free investments. given the current low rate environment, the acpr is taking care to ensure that insurers remain alert to the risks of adverse developments and take appropriate measures to counter them. for this reason, as part of the 2015 preparations for the own risk and solvency assessment ( orsa ), it asked insurers to conduct an in - depth analysis of the impact of persistent low rate scenarios on their solvency, finances and ability to meet their commitments. in addition, this year eiopa is conducting a europe - wide stress test. for france, the scope of this exercise is particularly broad : the acpr has extended it to cover 90 % of the market, compared with the 75 % specified by eiopa. unlike bank stress tests, insurance stress tests are not β fail or pass β and as a result will not lead to the application of additional capital requirements. the findings, to be published by mid - december, will make it possible to determine precisely how exposed the insurance market is to the risks linked to the low rate environment. the orsa exercise and stress - tests will enable the acpr to identify weaknesses, and we fully intend to discuss any counter measures to be put in place with the establishments concerned. lastly, there is the proposal, under the draft sapin law, to extend the powers of the french macroprudential authority, the hcsf, to the insurance sector. there is no point trying to turn this into a controversy ; indeed doing so would only be counterproductive for the protection of policyholders. let me say this page 5 sur 7 unequivocally : there is no threat to the savings of french investors, and no question of making changes to
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employment in a country. it is easier to compare prices, so you as a consumer can make better decisions on how to spend your money. in the same way, companies can also make informed investment decisions β resources can then be allocated in the most productive way and the productive potential of the economy will increase. price stability is also key to social stability. in an inflationary environment, prices tend to change in an unpredictable way and the value of people β s savings may fall. typically, the poorest groups in society often suffer most from inflation as they have only limited possibilities to protect themselves. throughout history, high rates of inflation, or deflation, have often created social instability. the pack consists of an animated video, leaflets for students and a more detailed booklet for teachers. it has been designed to be user friendly and easy to understand and we sincerely hope it will be a useful aid to those students and their teachers. i would like to thank all those here who were involved with the project. in particular, we are very grateful to caroline mchale and the business studies teachers association of ireland for their involvement in developing this pack. i would also like to thank norah martyn from marian college who, along with the students from her school, provided valuable guidance and knowledge during the development of this at a european level. we were very happy that an irish teacher and school were so directly involved in the development of this pack and i am delighted that norah could be with us today to see the final product. minister, i am very grateful for your own support in launching this with us. i would like to express my thanks to you and to the department of education and science for this support, not only today but also during the development of this information pack. this has been very important to us and to this project. ta an - athas orm go raibh baint ag an mbanc ceannais le hullmhu an leagain ghaeilge den phacaiste eolais. ba choir dom a ra libh freisin go bhfuil se ar fail i ngach ceann de theangacha oifigiula an aontais eorpaigh.
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john hurley : schools β information pack on price stability speech by mr john hurley, governor of the central bank and financial services authority of ireland, at the launch of the schools β information pack on price stability, dublin, 24 january 2006. * * * a aire agus a dhaoine uaisle. dia dhibh go leir agus cead mile failte romhaibh go dti an banc ceannais. minister, president of the business studies teachers association and guests, you are all very welcome to the central bank. i am delighted that you could be with us today as we launch this new schools β information pack, price stability : why is it important to you. i am particularly happy to also welcome the students and their teachers today from marian college, st. mary β s cbs, st. vincent β s secondary school, scoil caitriona and st. mary β s college. they have come from various parts of the country to be with us today. i hope you β re not missing too many important classes as a result! developed by the european central bank and the 12 national central banks of the euro area, including, of course, our own central bank, this is a unique initiative. for the first time, the central banks of the euro area have produced a single cross - border education pack. it is being distributed to 50, 000 secondary schools, not only in ireland, but throughout the 12 countries that share the euro as their currency. i would like to say at the outset that i am delighted that the central bank has an opportunity to be involved in this way with the education of irish students on issues which are relevant in all our lives. while setting monetary policy and ensuring price stability may not seem on the surface to be one the most interesting of topics for young adults, i can assure you that it has a significant impact on the lives of each and every one of the 300 million people of the euro area. this information pack, i hope, helps to make it a little more interesting than you might expect and maybe even a little bit enjoyable, if that is possible! now, i β m sure that many young students will probably think, β well, price stability is not actually that important to me β¦ β but in fact, stable prices and low inflation are a guarantee that your pocket money or savings from your summer or weekend jobs can buy you the things you want throughout the year. stable prices also help promote economic growth and
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deployed to any bank at any given time to ensure timely regulatory action when necessary. despite the measures taken by the cbn, there have been concerns in recent times about the health of the nigerian banking system occasioned largely by the system β s exposure to the capital market and the effect of the global financial crisis as well as exposure to oil marketers and ministries, departments and agencies ( mda ). while there is no doubt that the banks were challenged in the face of these developments, there is no evidence, thus far, that our banking system is facing a crisis as has been reported in some newspapers recently. all reports purporting to suggest that some named banks are not sound or shaken are unfounded and we urge journalists to exercise caution and show more responsibilities in reporting and quoting unofficial sources. our view is that there are stress points in banks β balance sheets ( margin loans, proprietary positions, oil marketing names, unsecured large exposures ) and these are being dimensioned. an appropriate resolution framework will be developed in consultation with reputable independent advisers, and the market will have information on steps being taken at appropriate junctions in the process. we reiterate that, based on the totality of information available to the regulator, there is no basis for suggesting that the system is at risk. we also re - affirm our commitment to stand behind every financial institution and work with its board and management to ensure a smooth resolution of any issues that may arise as an outcome of the diagnostic process. no bank will be allowed to fail. going forward, the cbn will strengthen the regulatory and supervisory framework and enhance monitoring of the operations of the dmbs to ensure that they remain safe, sound and healthy to support the macroeconomic objectives of the government, in general, and monetary policy, in particular. to this end, the cbn will continue to ensure the maintenance of public confidence through appropriate disclosure and would reinvigorate the policy of zero tolerance on all unprofessional and unethical conduct. banks would also be required to further strengthen their risk management process, while the present supervisory methodology of risk - based and consolidated supervision with special emphasis on macro - prudential regulation and sound stress testing practices would be pursued more vigorously. more and rigorous emphasis would be placed on the implementation of the code of corporate governance for banks in nigeria. banks that have not fully complied with the requirements of the code would be encouraged to do so. for the avoidance of doubts, enforcement of the code of conducts
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though rising is doing so at a decelerated rate and we are confident will soon commence a fall. security concerns in food - producing regions and infrastructure challenges also demand attention. the cbn has implemented a number of policy reforms to address some of these various pressures and, while i am confident enough today to talk about some of our early success, i am at the same time extremely mindful of our ongoing challenges. 1 / 2 bis - central bankers'speeches we still have work to do in solving all our problems, however, we do have a determined pathway and a sequenced approach to tackling all challenges ahead, working hand in hand with our key stakeholders including investors, banks, businesses β and, notably, our counterparts on the fiscal side. we have recommitted our stance to orthodox monetary policy, and it is heartening to see the efforts being put up have started yielding results especially in terms of rebuilding trust and confidence in our economy and the leadership. in summary, this week has been extremely productive, and we are eager to translate our discussions into tangible outcomes as we return home. 2 / 2 bis - central bankers'speeches
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roots that are broad and deep in the region. to echo comments tom hoenig made at the groundbreaking on this site three years ago, let us dedicate this bank to the service of our nation, this great city of kansas city, and the other important cities, towns, and rural regions in the heart of america that define the 10th federal reserve district.
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stability of those institutions. they essentially ignored the tier 1 and total risk - based capital ratios in regulatory requirements. in the fall of 2008, there was widespread doubt in markets that the common equity of some of our largest institutions was sufficient to withstand the losses that those firms appeared to be facing. this doubt made investors and counterparties increasingly reluctant to deal with those firms, contributing to the severe liquidity strains that characterized financial markets at the time. finally, the crisis validated the concerns expressed by some academics and by policy staff at the bank for international settlements that the effectiveness of capital regulation was limited by its exclusively microprudential focus. capital requirements had been set with reference solely to the balance sheet of a specific firm. the risk weights assigned to the firm β s assets were calculated with reference to ordinary times, whether through a supervisory determination or a combination of supervisory formulas and a firm β s own modeling. this microprudential focus did not take into account the potential impact of a shock to the value of widely - held assets β whether exogenous, caused by the distress sales of such assets by a large firm suffering particularly severe problems, or, as in the financial crisis, a lethal interaction between these two factors. the limits of the microprudential approach were particularly evident with respect to very large, interconnected firms. there would be very substantial negative externalities associated with the disorderly failure of any such firm, distinct from the costs incurred by the firm and its stakeholders. the failure of one large firm, especially in a period of stress, significantly increases the chances that other financial firms will fail, for two reasons. first, direct counterparty impacts can lead to a classic domino effect. second, because losses in a tail event are much more likely to be correlated for firms deeply engaged in trading, structured products, and other capital market instruments, all such firms are vulnerable to accelerating losses as troubled firms sell their assets into a declining market. reform of capital regulation in the post - crisis period it is obvious that the post - crisis regulatory system will not be as dependent on capital requirements as the pre - crisis regime. dodd - frank itself is testimony to this fact, as are a number of changes already made by the bank regulatory agencies. there is now increased emphasis on market discipline, liquidity regulation, activities restrictions, and more effective supervision, in addition to capital requirements. reforms for money market funds and the triparty repo market, as well as more general attention to wholesale funding models
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louis kasekende : overview of the ugandan economy remarks by dr louis kasekende, deputy governor of the bank of uganda, at the closing of the ugandan business journalists training workshop by thomson reuters foundation, kampala, 5 march 2010. * * * distinguished guests, ladies and gentlemen good afternoon it is my singular honor and great pleasure to deliver closing remarks at the journalists β training. i would like to congratulate all of you for having completed this training program. your participation is an indication that you are ready to enhance your skills through such professional training programs. at the bank, we consider financial reporting as a key ingredient in the process of financial markets development. in the globalised world, efficiency in the financial markets is mainly driven by free flow of information, which investors can rely on for making their investment decisions. there is, therefore, a growing need for the emerging economies to continuously improve on the efficiency of information flow in order to compete internationally and attract foreign capital flows. this can only happen when the players get the right information. i wish to emphasize the important role played by professional business journalists in the development of financial markets. irresponsible and inaccurate reporting can cause instability in the market place and ruin investment prospects. i am sure with this training, focusing on ethical and responsible reporting in financial markets is a step in the right direction. as uganda β s financial sector appears on the radar screen of global investors, industry players and professionals rely on what they read, hear or see and this is largely posted by journalist in different forms of media. i would argue that responsible reporting in the current world where β sentiment β is key in driving financial markets is imperative to national economic development as well as to the stability of financial markets. this is a key component of the financial markets competitiveness and attractiveness not only to the foreign players but also to the domestic investors. the global meltdown in financial markets has reminded us all of the importance of financial and business journalism. arising out of these a number of profound questions as to the quality of that form of reporting have come up. the most common question that has been posed is β did the financial reporters fail to put the financial system under proper scrutiny? as you improve your skills please draw lessons from this past experience. it goes without saying that financial markets thrive on information, it is, therefore, critical that information is disseminated accurately, in a timely manner and in a well structured format. it should be relevant and more importantly
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, well balanced to enable market participants make well informed investment decisions. the end goal for carrying out such training workshops and subsequent ones especially by quality trainers like the thomson reuters foundation is to build a pool of professional business journalists in uganda who will promote efficiency and development of financial markets in uganda. at this stage let me congratulate use ; the organizers of this workshop for bringing together a group of the most distinguished and experienced practitioners in the field of journalism to pass on their experience and skills as well as sharing best practices and initiatives in business journalism with their ugandan counterparts. i wish to encourage ugandan journalists to always strive for excellence and professionalism in their reporting. let me also thank the thomson reuters foundation ; a global leader in financial reporting, for playing its part and for partnering with ugandan institutions in having successfully produced at least 15 certified journalists from this training. the onus now remains with the ugandan journalists who have acquired the skills to put them to best use as they play their part in the development of financial markets in uganda. i wish to pledge bou β s continued support through the 5 - year fmdp project to uplift skills levels in our financial markets as we strive to improve efficiency and disclosure for the benefit of the investors. it is my belief that skills that you have acquired will improve on your business reporting and demystify financial markets operations for the good of ordinary ugandans. with those remarks, it is now my pleasure and privilege to declare this training workshop officially closed. thank you.
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. stage 1 is where firms reflect higher import prices in their selling prices. stage 2 is where they reflect the increase in general price levels in wages they pay. stage 3 is where they reflect higher labor costs in their selling prices. stage 4 is where firms'pricing policies become more diverse, facilitating firms'exploration of strategies of selling more attractive products and services at commensurate prices in addition to those of selling good products and services at low prices. this stage may provide firms with broader options for attaining higher productivity. some might argue that firms have always endeavored to develop products and services that are attractive to customers and to set prices at levels commensurate with the value, and that this has been the case regardless of whether firms have entered stages 1 to 3. while i believe this to be true, let me examine if there could be a development which could facilitate and encourage a broader range of firms to make further efforts. in recent months, the import price index has declined more than 10 percent compared to a year ago, and thus if the firms just stop at stage 1 - - a pass - through of higher import prices - - the japanese economy may revert to the former deflationary state. on the other hand, if a virtuous cycle begins in which both stage 2 - - wage hikes - - and stage 3 - - a pass - through of higher labor costs to selling prices - - progress, moderate inflation may be sustainable. however, if wages increase just as much as prices rise, this will not make people better off in real terms. living standards would rise if the wage - price cycle ushers in stage 4 - - firms diversifying pricing strategies and pursuing broader options in adding higher value to their products and services as well as in enhancing productivity - - and if the gains from the enhanced productivity are shared with stakeholders. stage 1 corresponds to imported inflation, or what we call " the first force, " and stages 2 and 3 correspond to homemade inflation, or what we call " the second force. " 1 stage 4 does not necessarily correspond to inflation if firms'pricing is commensurate with the increased value added to their products. judging from what we have heard from firms, progress seems to be mixed in each of the four stages at present. regarding stage 1, a survey of small and medium - sized firms showed that many firms could pass on only a portion of higher import prices. there was similar feedback from a large japanese firm in the basic materials
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in market operations and other bank transactions should be made open to non - bank entities. if we look at examples overseas, it appears that the ecb will carry out its market operations only with banks. in the united states, however, the federal reserve conducts market operations with so - called primary securities dealers, many of which are securities companies that do not have accounts at federal reserve β 6 β banks. a key point in considering this counterparty issue is whether the emphasis is on interbank transactions or open market transactions. if a central bank primarily conducts interbank transactions, the counterparty will naturally be the banking sector. yet it seems that the global trend is a growing preference by central banks for open market transactions. in japan, the bank selects counterparties according to its own eligibility criteria from among banks, securities companies, tanshi companies ( money market broker - cum - dealers ), and other institutions that have accounts with the bank. in the final analysis, i think that the rational solution to this issue is not to restrict counterparties to banks, but choose them from a wider range of entities in order to achieve swift and certain permeation of policy effects and adequate control of counterparty risk, while taking into account such factors as changes in the financial structure. it is certainly essential that the money market, where the central bank makes transactions, be sufficiently developed in both qualitative and quantitative terms. in this regard, japan will soon have a fully fledged fb market with the introduction of a public auction system for fb issues. as such open market transactions expand, leading to diversification of financial services providers, the bank will review its selection of counterparties in the bank β s market operations. c. corporate bonds and equities the third question is whether the bank should purchase corporate bonds and equities in view of the critical state of the japanese economy. this argument is based on the fact that the stock market was at one time supported by the public sector β s purchase of equities. it is also the view of the advocates of such intervention that, if the bank is concerned about risks, it can ask for government guarantees. first of all, i would like to emphasize that a central bank can create liquidity but not capital. there is intrinsically a definite limit to the extent to which a central bank can take on private - sector risk. assuming such risk and compromising the quality of its assets might impair the bank β s credibility, which is needed to fulf
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anita angelovska bezoska : let's get digital speech by ms anita angelovska bezhoska, governor of the national bank of the republic of macedonia, at the nbrm β s 11th conference on payments and market infrastructures β let's get digital β, ohrid, 6 - 8 june 2018. * * * distinguished guests, ladies and gentlemen, it is my great pleasure to welcome you to the 11th edition of the conference on payments and market infrastructures hosted by the national bank of the republic of macedonia. the organization of this conference has been traditionally supported by de nederlandsche bank for which we are very thankful and over time, this initial bilateral cooperation attracted involvement of other central banks and ifis. in this context, i would like to extend our appreciation to banco de portugal for its contribution in the past editions, as well as to the bank of italy, the national bank of belgium and the national bank of serbia for their contribution to this conference. also, particularly valuable is the continued participation of the european central bank, the bank for international settlement and the european commission given the prominent role these institutions play in the payments area. this year β s conference focuses on digital transformation, a process that is heavily penetrating across all segments of our business and private lives and will take even greater significance in the years to come. the digital transformation in finance has been rapidly evolving with the emergence of fintech sector. according to the ernst & young β s fintech adoption index, one - third of consumers utilize at least two or more fintech services and they are becoming increasingly aware of fintech as a part of their daily lives. the fintech adoption index for services offered by fintech organizations under five broad categories β money transfers and payment services, financial planning tools, savings and investments, borrowing and insurance, indicates that money transfers and payment services are continuing to lead the fintech change, with adoption standing at 50 % in 2017 and 88 % of consumers anticipating of doing so in the future. thus, the global payments industry is currently undergoing a paradigm shift driven by rapid advances, the influx of new technologies and evolving consumer behavior as digital generations come of age. the emerging fintech enhances the transformative power of digital payments via innovation. the irruption of digital payments relates to its many opportunities. embracing payments digitalization has the potential to substantially reduce the costs, increase the efficiency and enable broader access to payment services. with the rise of new payment digital technologies developed by
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β s chairman of the board. global investor. with regard to the specific topic of my lecture this evening, i expect the gic to demonstrate leadership in the coming months to help shape an agreement with the governments of the most important mature countries on a set of guidelines for swfs that will hopefully help to address the challenges i discussed this evening. to summarise, swfs have become an important source of capital flowing from the periphery to the core of today β s global economy. as such, they can play a constructive role in mature markets. at the same time, swfs pose a challenge to the international community. the challenge is to preclude an outcome where the activities of swfs trigger policy responses in mature markets that ultimately lead us down the path of financial protectionism. it is in the interest of mature markets and developing countries alike to avoid such an outcome. a set of guidelines addressing the threat of politically driven investment decisions and resurging state involvement in the global economy represent the best currently available option to respond to the challenge of swfs. let me close with a broader swiss perspective. switzerland has in absolute terms the sixth largest current account surplus in the world. last year, foreign investments by swiss companies and swiss individuals generated net income receipts equivalent to 12 per cent of our gdp, or approximately chf 60 billion. in other words, we are experts at making profitable cross - border investments. this means that we have as strong an incentive as virtually any country in keeping global financial markets open. references bernanke, benjamin s. 2006, " global economic integration : what's new and what's not? ", speech held at the federal reserve bank of kansas city's thirtieth annual economic symposium, jackson hole, wyoming, august. coeure, benoit, 2007, " faut - il avoir peur des fonds souverains? ", forthcoming, les cahiers, le cercle des economistes. cox, christopher, 2007, " the role of governments in markets ". speech at harvard on 24th october 2007 ( http : / / www. sec. gov / news / speech / 2007 / spch102407cc. htm ). genberg, h., mccauley, r., park, y. and persaud, a. 2005, official reserves and currency management in asia : myth, reality and the future. london, centre for economic policy research. gourinch
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ben s bernanke : the economic outlook and monetary and fiscal policy testimony by mr ben s bernanke, chairman of the board of governors of the federal reserve system, before the committee on the budget, us house of representatives, washington dc, 9 february 2011. * * * chairman ryan, ranking member van hollen, and other members of the committee, i am pleased to have this opportunity to offer my views on the economic outlook, monetary policy, and issues pertaining to the federal budget. the economic outlook the economic recovery that began in the middle of 2009 appears to have strengthened in the past few months, although the unemployment rate remains high. the initial phase of the recovery, which occurred in the second half of 2009 and in early 2010, was in large part attributable to the stabilization of the financial system, the effects of expansionary monetary and fiscal policies, and the strong boost to production from businesses rebuilding their depleted inventories. but economic growth slowed significantly last spring and concerns about the durability of the recovery intensified as the impetus from inventory building and fiscal stimulus diminished and as europe β s fiscal and banking problems roiled global financial markets. more recently, however, we have seen increased evidence that a self - sustaining recovery in consumer and business spending may be taking hold. notably, real consumer spending rose at an annual rate of more than 4 percent in the fourth quarter. although strong sales of motor vehicles accounted for a significant portion of this pickup, the recent gains in consumer spending appear reasonably broad based. business investment in new equipment and software increased robustly throughout much of last year, as firms replaced aging equipment and as the demand for their products and services expanded. construction remains weak, though, reflecting an overhang of vacant and foreclosed homes and continued poor fundamentals for most types of commercial real estate. overall, improving household and business confidence, accommodative monetary policy, and more - supportive financial conditions, including an apparently increasing willingness of banks to lend, seem likely to result in a more rapid pace of economic recovery in 2011 than we saw last year. while indicators of spending and production have been encouraging on balance, the job market has improved only slowly. following the loss of about 8 3 / 4 million jobs from 2008 through 2009, private - sector employment expanded by a little more than 1 million in 2010. however, this gain was barely sufficient to accommodate the inflow of recent graduates and other new entrants to the labor force and, therefore,
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options to improve the payments landscape. we continue to conduct research to fully understand technological innovations and their associated benefits, risks, and tradeoffs. we must also fully understand any related implications for federal reserve payment infrastructure and policy outcomes. researchers cover a wide range of policy areas, including payments policy, privacy considerations, financial inclusion, financial stability, and monetary policy implications. because new digital assets are currently focused on tokenization of certain traditional or even new types of money, tokenization is a research theme for the federal reserve and for central banks globally. while this topic is relevant to cbdc research work, it will also inform other issue areas β including discussions about stablecoin regulation, novel banking activities supervision, and efforts to improve the current payment system. technologists at the board and the reserve banks have been conducting focused research and experimentation to provide insight into technical capabilities and risks associated with digital assets, including cbdc, and the programmable platforms that could support payment infrastructure improvements. these experiments give the researchers hands - on experience with new technologies and allow the federal reserve to examine the application of emerging technologies in retail, wholesale, and cross - border use cases. - 13 the federal reserve board continues to collaborate closely with international counterparts on issues related to digital payments. this includes engagement with multilateral institutions, such as the bank for international settlements, g7, financial stability board, and bilateral engagements with other central banks. this work reflects the interconnectedness of the global financial system and allows us to follow actions taken by other jurisdictions and understand any related implications for the united states. conclusion as the money and payments landscape evolves, i continue to stress the importance of looking ahead and analyzing potential changes that may emerge well into the future. this can be done most effectively by understanding the broad range of options that could be leveraged to improve payments, including technology, improvements to existing payment infrastructure, and policy options and their implications. given the breadth of activity in this space, i believe that policymakers must specify the problems they are trying to solve, understand the range of alternatives that could address any problems, including policy and technology options, and thoroughly analyze the associated risks and tradeoffs. for all of the federal reserve β s involvement in this work, i support a responsible approach to innovation that recognizes the role of private sector innovations, benefits from the strengths of the u. s. banking system, and focuses policymakers on thinking about payment and financial system infrastructure and effective policy. to achieve this, i support a clear regulatory
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perspective of someone from a small, rural, agricultural community, who has worked as a community banker and as a state regulator. those aren β t typical experiences for a fed policymaker. this diversity is a strength, as congress recognized by creating a role on the federal reserve board designated for someone with community banking experience. i am the first to serve in this capacity, and i strongly believe that our economic and financial system is strengthened when we consider the implications of our regulatory decisions for bankers on main street as well as on wall street. i approach our monetary policy deliberations in a similar way. our actions in response to the recent pandemic have clearly benefited from this perspective, as we understand how the varying state and local approaches have affected economic conditions across the nation. in closing, it is appropriate that during this election season we honor the women who secured 1 / 2 bis central bankers'speeches that right, first in kansas, and then through their campaign to ratify the 19th amendment. the greatest tribute to those women, and the best way to honor their legacy, is to vote. another way is through public service, and i would strongly encourage all β but in particular women β to consider serving in government at the local, state, or federal level. it is the most challenging, but by far the most rewarding work that i have done, and i hope you will consider serving as well. thank you again for this honor. 2 / 2 bis central bankers'speeches
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to someone else if they sold their holdings. private persons were not allowed to take unlimited currency out of the country. amounts above the regulated limit β which was low β required permission from the riksbank. it was necessary to show evidence that the money would be used for personal aims and not for investment or other financial purposes. private persons were not allowed to hold accounts abroad. of course, considerable resources were required to administer all of these regulations. my description here shows clearly how thoroughly regulated the swedish financial system was. furthermore, the regulations applied over a long time. they were for a good purpose. the aim was to create stable markets for credit and foreign currency, secure and sound banks and also to achieve redistribution of wealth effects through prioritising economic policy measures. however, the result was the removal of necessary incentives for the banks to develop their operations in a professional manner and it also reduced the opportunities to compete, which prevented new banks from entering the market. thus, short - term stability was attained at the cost of the build - up of long - term tensions, which would gradually result in a crisis. the emergence of a market economy β¦ the idea behind the regulations was good, but they led to the central government having too much control over the banks β operations. this put the banks β functions out of operation. the banks β most important task is to borrow money from the general public and then lend it to companies who wish to invest. they must therefore be able to assess the creditworthiness of their borrowers. however, the regulations that had prevailed for almost forty years meant that the banks had not needed to develop thorough credit assessment competence. the central government had controlled their risk - taking. the limits to lending growth also meant that they could choose to only provide credit to the customers with the highest credit ratings. loan losses were thus small. in addition, there was little competition and little incentive to develop new services. the swedish banks had too many employees and lived in an environment that must with hindsight be regarded as sheltered. after enduring the crisis, the number of employees had been reduced by one third, but at the same time turnover had increased. however, during the 1980s the regulation structure was slowly eroded. the banks β balance sheets were full of government bonds that they had been forced to buy at non - market prices, and the credit flows began to move increasingly towards the unregulated sector outside of the banks. developments in the international financial markets made the currency regulation increasingly difficult β
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. the countries that have succeeded are those that have developed a virtuous circle of activity, productivity and employment. if one link is missing, the reforms implemented elsewhere will not have their expected effects. we know that france has vast labour pools in market services. we also know that by their very nature, most of these jobs cannot be moved abroad. however, many obstacles still lie in the way of their development. it is too often difficult, even prohibited, in france to produce or sell services. there are a number of causes for these obstacles. first, there is a desire to protect existing activities and to ensure that the professional quality of service provided is upheld. second, regulations aim to prevent excessively harsh working conditions. all of these reasons are legitimate in themselves. but, taken together, they considerably restrict supply even though β as foreign examples have shown β demand is potentially sizeable. these restrictions also encourage the substitution of labour by capital and therefore result in growth that is both constrained and has an insufficient employment content. they are sometimes based on a notion of working rhythms that is out of step with the functioning of a modern society and technological progress. they are very costly for the economy. and, lastly, they do a disservice to those they set out to protect. the main victims are those for whom access to employment requires flexibility, adaptation, and freedom to choose working hours, i. e. primarily young people and women. a complete overhaul of all the legal and regulatory conditions governing a wide range of commercial and services activities therefore appears to be an urgent priority. lastly, in order to increase france β s productivity, a shift towards technology - and sciencebased activities is essential. to do so, research and development ( r & d ) efforts must be encouraged. in this respect, while the share of public r & d expenditure is comparable or even greater than that of the country β s main trading partners, private sector r & d investment remains well below that in germany, the united states or japan. the creation of poles of competitiveness in 2005 and the industrial innovation agency in 2006 contribute to achieving this strategic objective. these recent initiatives should be pursued in order to expand the poles of competitiveness, attract researchers and companies, and integrate smes and startups that do not benefit from the resources available under these innovation drives. in the main, these reforms are currently underway or being examined in our country. it is thus becoming possible to create lasting conditions for stronger and more employment -
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##ing in this respect. the financial authorities β second objective should be to constantly verify the relevance of safety nets. regulators must, of course, ensure that their supervisory mechanisms are adapted to an evolving financial sector. the gramm leach bliley act adopted last year by the united states illustrates this concern, which has resulted in a new allocation of the roles of the different american supervisors. as regards the european union, the integration of national financial systems within a large, efficient market is the ultimate objective of the regulatory harmonisation. since 1977, when the first banking coordination directive was laid down, two key principles have constantly been applied : β’ on the one hand, the β european passport β gives the right of establishment and freedom to provide services within the area. β’ on the other hand, supervision on a consolidated basis entrusts the consolidated supervision of banking groups to the home country, in cooperation with the host country. these are the two pillars of our european prudential framework. they are the basis for a clear definition of the respective roles of and close cooperation between national supervisors. thanks to these principles, prudential supervision within the eu has for many years been conducted in a decentralised and cooperative manner which has proved its worth. in this respect, national supervisors are well prepared for the integration of the different national financial systems. the same principles broadly apply for the supervision of insurance companies and insurance firms. as for cross - sector pan - european complex institutions, we believe that a similar combination of specialisation and intense cooperation is the best solution. lastly, the third objective of financial authorities must be to achieve a new balance between regulations and market discipline the first generation of prudential rules - chiefly a raft of prudential ratios with the cooke ratio as its symbol - was devised at the end of the 1980s under the aegis of the basel committee, the iosco and the iais. as financial activities evolved, these quantitative standards were gradually supplemented with a more qualitative approach based on risk management and market discipline. i would like to emphasise that far from being at odds, these two approaches are complementary and inseparable. financial participants must be encouraged to take more responsibility in mutual surveillance in order to encourage market discipline. this means that they must adopt more transparent procedures. however, regulators and supervisors still have an essential role to play in ensuring the stability of financial systems which is necessary to the common good. β’ maintaining a balance between market discipline and regulations should lead to a more flexible approach
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mr. stals asks whether the east asian financial crisis can be repeated in south africa address by the governor of the reserve bank of south africa, mr. c. stals, at a breakfast meeting organised by life line west rand in krugersdorp on 29 / 4 / 98. 1. background to the east asian crisis it is now history that the economies of a number of east asian countries collapsed in the second half of 1997 and created disruptive turmoil in financial markets around the world. the countries most affected were indonesia, the republic of korea, malaysia, the philippines and thailand. a number of reasons were provided for this collapse which shocked the world economy, particularly because it occurred in those countries that were the most successful in achieving their economic development objectives during the past thirty years. the main reasons included : β’ a substantial build - up of foreign liabilities - - particularly of a short - term nature - took place over the protracted period of rapid economic growth ; β’ the financial sectors were not properly supervised and regulated, with the result that banking institutions accumulated large amounts of non - performing loans, not provided for in capital and reserves ; β’ there were unjustified governmental interventions in the normal working of the financial markets. financial institutions were, for example, instructed to make loans to preferred clients at low interest rates ; β’ governance within private sector institutions, public corporations and government departments was of low quality and, in the case of some countries, undermined by corruption ; macroeconomic policies did not adjust to the changing environment ; markets were liberalised without concurrent adjustment in internal economic structures ; money supply and bank credit extension increased almost unchecked ; interest rates were kept artificially low, and exchange rates were not allowed to adjust in accordance with changes in the overall balance of payments situation. β’ the final collapse was triggered first in thailand, when foreign investors lost confidence in the economy and started to withdraw part of their more liquid investments from the country. the authorities were very slow to react to the threatening crisis. as became evident at a later stage, important information on the deteriorating economic situation was withheld from the markets and vital statistics were, in some cases, deliberately not released. in the end, the international monetary fund, the world bank, a number of the governments of industrial countries, and the international investment community, had to provide a massive amount of financial support - - more than us $ 120 billion - - to assist these countries. the countries themselves also had to implement painful corrective measures that will
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, over time, restore equilibrium in their economies. these programmes inter alia provide for : β’ relatively restrictive monetary policies that must prevent further depreciation of the currencies to protect domestic institutions with outstanding foreign liabilities from further losses, and must eventually reduce inflation ; β’ the restructuring of the financial sectors through predetermined reform agendas in each country. public sector rescue operations must be supported by cost sharing sacrifices from the private sector, and prudential regulations for financial institutions must be tightened ; β’ improvements in public and corporate governance and a strengthening of transparency and accountability ; β’ a reduction in the dependence of public sector budgets on external funds, and fiscal provision for the costs of restructuring and recapitalising banking systems. the devastating effects of the crises can be illustrated by a few statistics from some of the affected countries. according to a recent world bank report, prices of key commodities, such as rice, increased by 25 per cent or more in indonesia, leading to food riots and major demonstrations against the government. unemployment is rising sharply and will increase the number of people living below the poverty line from 23 million to 40 million during the course of 1998. in korea, bankruptcies and unemployment are on the rise. eight of the thirty biggest conglomerates ( chaebol ) have filed for liquidation. unemployment is expected to increase from 500, 000 last year to 1. 2 million workers soon. in thailand, the slump in industry is severe. monthly sales of motor vehicles, steel, consumer electronic goods and durable consumer goods are now running at levels of 35 to 75 per cent down on last year. industrial output growth is expected to decline by about 50 per cent. in terms of the latest world economic outlook of the international monetary fund, the global economic growth rate for 1998 will be reduced by the east asian crisis from a previous forecast of 3Β½ per cent to not more than 3 per cent in 1998. this will have an adverse effect on world trade, and also on the export prospects for countries such as south africa. it further deteriorates the outlook for an early economic recovery in japan, and also holds adverse effects for many emerging market economies. 2. the south african situation the south african economy was so far relatively little affected by the east asian crisis. the foreign exchange market, and particularly the exchange rate of the rand, came under pressure for only a few weeks in october last year. prices on the johannesburg stock exchange were more directly affected, although the declines registered at that time were wiped
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of factors, especially local and regional developments. in an integrated economy like ours, small bank lenders are affected by national business conditions, just less so than lenders to large firms. formal risk management in banking the large institutions, with their declining overall asset quality, understandably have pioneered more - formal risk - management techniques designed to capture quantitatively the changing riskiness of exposures and presumably induce more rapid responses to such measures. this is the latest development in a changing balance of power between lending officers and risk - control officers. the lending officers, in a competitive economy, may tend to be more interested in getting business than in evaluating risk. before the most recent period, risk officers often have not been heard clearly enough and early enough, perhaps because they have not had the quantitative justification for rejecting weak credits until it is too late. the revolution in credit - risk management, a revolution that is still in process i might add, is the growing ability to measure risk. better ability to quantify risk has begun to give the risk manager new authority in the credit - granting process. it has also given the credit risk manager the ability to make the case for absolute and relative riskiness even during periods of expansion and optimism. making such a case may not necessarily reduce credit availability at banks for riskier borrowers ; it does mean that banks can more knowingly choose their risk profiles and price that risk accordingly. supervisors using such techniques - leveraging off the banks'measures of risk - - can also better evaluate the risk taken by banks relative to the banks'control systems and capital positions, and respond accordingly. and evident increasing transparency will let uninsured creditors, especially subordinated debenture holders, also leverage off the banks'improved risk measures, bringing to bear additional market discipline and hence enhanced risk oversight by counterparty. perhaps more critically, better risk management and the associated quantification have the real potential for reducing the wide attitudinal swings that are associated with the historical cyclical pattern in bank credit availability to which i referred earlier. formal procedures for quantifying credit risk as an integral part of the operational loan process imply - - and in the long run, virtually ensure - - a process for recognizing, pricing, and managing risk. risk quantification should lead to tighter controls and assigned responsibilities. the risk effects of lending officers'decisions can be recognized in a more timely fashion, thus reducing the cyclical attitudinal swings in banking. i would like to
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in the field of retail payments, the degree of the eurosystem β s central banks β operational involvement varies across countries. most central banks provide payment services to public institutions. some central banks also offer processing facilities to commercial banks by participating in private retail payment systems and / or operating an own retail payment system. the completion of the sepa project calls for a specific effort of those central banks that are significantly involved in retail payment operations. they should lead by example, notably by supplying the new european payment instruments to their clients and by ensuring that the retail payment system they operate complies with the interoperability principle enshrined in the sepa project. 2. 2. acting as a facilitator of market and regulatory evolutions turning to the involvement of the eurosystem in payment systems issues as a facilitator of market and regulatory evolutions, it is fair to say that this mode of action has been mainly used in the field of retail payments to support the sepa project. the sepa project was launched in 2002 by the european banking community under the aegis of the eurosystem and the european commission. the banking industry has taken on the responsibility of delivering the sepa products, in particular the specifications of the new european instruments. the european commission, which grants a great importance to the sepa project in so far as the latter contributes to the achievement of the common market and the completion of the lisbon agenda, has elaborated a legal framework for payment services in the european union. it made public, in december 2005, a directive proposal that should be adopted at the european level before being transposed in national laws by 2008. since 1999, the eurosystem β s central banks have been actively promoting, at european and national levels, the establishment of a sepa. they proposed a vision which is now shared by all stakeholders, contributed to a constructive review of the banking community β s deliverables and cooperated with the european commission to address legal and regulatory impediments. while the design phase of the sepa project is almost completed, the next challenge is to ensure that migration towards the sepa is well - organised and delivered. because the starting point in each country is different, migration plans to the sepa will primarily have to be organised locally. this should naturally lead to a further involvement of the eurosystem β s central banks at national level, at least to help co - ordinating the efforts of the wide range of stakeholders.
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countries. 1 this upward trajectory continued, and even accelerated in some cases, in the subsequent period. then the crisis occurred, and the chinese economy slowed abruptly. but the authorities responded forcefully and china β s economy returned to very strong growth quite quickly. and so the trends in place up to the middle of 2008 had resumed within a year. the rapid growth in chinese, indian and other emerging world demand has been stimulating demand in the global economy, despite the weakness in demand from the β north atlantic β group of countries. this gives a boost to a country like australia : our economy β s increased exposure to asia β the part of the world where much of the growth is occurring β plus the high terms of trade make for an expansionary macroeconomic event. at present australia β s at that time, my predecessor noted that structural factors such as the industrialisation of china had led to β the largest cumulative increase in our terms of trade since the early 1970s β. see macfarlane ij, β opening statement to the house of representatives standing committee on economics, finance and public administration β, canberra, 17 february 2006. bis central bankers β speeches terms of trade are about 85 per cent above their 20th century average. the amount of additional income accruing to production in australia from that is 15 per cent or more of annual gdp. even allowing for the fact that a substantial fraction of this income accrues to foreign investors that own large stakes in many of australia β s resources companies, this represents a very large boost to national income. these expansionary forces are at work on an australian economy that was widely regarded as very fully employed by early 2008, and that experienced only a fairly mild and short downturn thereafter. as of today, measures of capacity utilisation are not as high as at the end of 2007, and unemployment is not as low as it was then. nonetheless, the degree of slack in the economy overall does not seem large in comparison with the apparent size of the expansion in resources sector income and investment now under way. with that general outlook, it follows that macroeconomic policies must be configured in the expectation that there will need to be some degree of restraint. monetary policy has already been exerting some restraint for a while. looking ahead, our most recent analysis ( as published in early may ) concluded that the underlying rate of inflation is more likely to rise than fall over the next couple of years. this central expectation β subject to all the usual uncertainties inherent in forecasting
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of employment generation in the rural sector and enable these sectors to emerge as the main source of growth and employment in rural areas. all these measures will promote competitiveness of the agricultural sector, which is so necessary in the current global context. as regards social sector indicators, notwithstanding some progress in regard to education and health, india is still far behind its east asian neighbours. our social indicators are lower even in comparison with the levels achieved by these countries twenty five years ago, when they first began to grow rapidly. the social indicators also show disturbing gender gaps, large rural - urban differences and wide variation across states. although the literacy rate has improved encouragingly from 52. 2 per cent in 1991 to 64. 8 per cent in 2001 and the overall number of illiterates in the country declined from 329 million in 1991 to 306 million in 2001, there are at least seven major states with more than 15 million illiterates each, accounting for nearly two - third of total illiterates in the country. concomitantly, given india β s comparative advantage in services, it is important that the quality of secondary and higher education in the country is improved so that adequate skills are developed to realize the benefits of the knowledge economy. as regards health, the combined government ( centre plus states ) expenditure on health as a percentage of gdp has stagnated at around one per cent of gdp over the last decade and a half. total public expenditure on health in india remains even lower than many other developing countries such as brazil ( 3. 4 per cent ), thailand ( 2. 1 per cent ), sri lanka ( 1. 8 per cent ), china ( 1. 9 per cent ) and malaysia ( 1. 5 per cent ). low public expenditure in india is to some extent compensated by private expenditure which at 4. 0 per cent of gdp is comparatively higher than all of these countries except brazil ( 4. 9 per cent ). however, low public expenditure is a cause for concern for the vast majority of the population and primary health care remains of poor quality, unavailable and inaccessible. the infant mortality rate in india is almost double that of china ( 63 in india versus 37 in china ) while the maternal mortality rate at 407 is manifold as compared to china β s 56. hospital beds ( per 1000 population ) at 0. 7 for india are less than one - half of other developing economies such as china ( 2. 4 ), thailand ( 2. 0 ) and malaysia ( 2. 0 )
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requested to publish the names of licensed financial service providers in the print media on a more regular basis. developments in banking, currency and payment systems 48. during the quarter under review, there was a continued improvement in the availability of electronic payment options. the number of point of sale ( pos ) terminals increased by 8. 3 % to 1, 119 ( third quarter 2010 : 1, 033 ). the volume of pos transactions also increased by 42. 2 % to 284, 145 ( third quarter 2010 : 199, 817 ). similarly, the values of pos transactions increased by 32. 6 % to k113. 9 billion ( third quarter 2010 : k85. 9 billion ). the bis central bankers β speeches bank would like to urge members of the public to use point of sale terminals as they provide a more convenient, safer, efficient and cost effective way of making payments. 49. further, the number of automated teller machines ( atms ) increased by 4. 5 % to 489 atms ( third quarter 2010 : 468 ). the volume of atm transactions also increased by 5. 1 % to 6, 654, 992 ( third quarter 2010 : 6, 333, 073 ). similarly, the value increased by 17. 1 % to k3, 397. 3 billion ( third quarter 2010 : k2, 897. 6 billion ). 50. the total volume of cheques returned unpaid on account of insufficiently funded accounts increased by 5. 4 % to 4, 428 ( third quarter 2010 : 4, 202 ) cheques while the value decreased by 8 % to k36. 2 billion ( third quarter 2010 : k35. 3 billion ). the bank would like to urge members of the public to always ensure that they fund their accounts sufficiently whenever they issue cheques. this will ensure that they do not face criminal charges under the national payment systems act for bouncing cheques dishonestly or with intent to defraud. economic programme 51. a follow - up international monetary fund ( imf ) mission visited the country from 28th october to 3rd november 2010 to conclude discussions for the 5th review under the extended credit facility ( ecf ) arrangement. the mission had fruitful discussions with the zambian authorities and reached agreement on a set of macroeconomic policies and structural measures for the remainder of 2010 and 2011. 52. the imf executive board meeting was held on 10th december 2010 and completed the fifth review of zambia β
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government bonds rose marginally by 10 basis points to 11. 3 %. 12. the stock of government securities outstanding increased by 5. 6 % to k9, 940. 9 billion at the end of the fourth quarter from k9, 411. 2 billion in the third quarter. this was mainly accounted for by an increase of 13 % in the amount of treasury bills outstanding against a modest growth of 0. 2 % recorded for government bonds. despite this, government bonds accounted for the largest proportion of the outstanding total stock of marketable securities, contributing k5, 439. 4 billion ( 54. 7 % ) to the entire portfolio. total treasury bills in circulation amounted to k4, 501. 5 billion, representing 45. 3 % of the total marketable securities outstanding. 13. investment in treasury bills held by non - residents increased to k497. 0 billion from k8. 8 billion in the third quarter. the increase reflected renewed confidence in short - term government paper. conversely, foreign investment in government bonds decreased to k127. 9 billion from k150. 5 billion recorded in the third quarter, due to net maturities. collectively, total holdings of government securities by non - resident was k625. 4 billion, representing 7 % of total securities outstanding. 14. developments in commercial banks β nominal interest rates continued to be mixed during the reviewed quarter, with the weighted average lending base rate ( walbr ) trending downwards to 19. 4 % from 19. 8 % in september 2010. similarly, the average lending rate ( alr ) fell to 26. 4 % in december 2010 from 26. 8 % in september 2010. however, the 30 - day deposit rate for amounts exceeding k20 million and the average savings rate ( asr ) for amounts above k100, 000 remained unchanged at 5. 6 % and 4. 7 %, respectively. real sector 15. developments in the real sector were satisfactory during the reviewed quarter. this was reflected by higher output of most monitored commodities, and an increase in investment pledges. figures in square brackets are for september 2010. bis central bankers β speeches food reserve agency stocks 16. the food reserve agency ( fra ) had 982, 784 metric tonnes ( mt ) of maize in stock at end - december 2010, up from 162, 956 mt at end - september 2010, out of which, total purchases from the marketing season amounted to 883, 036 mt. the agency also had
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it is a fact that both the number and the value of cross - border mergers and acquisitions is rising and, as mentioned, will continue further ; at least there is absolutely no reason to assume that the rise in cross - border mergers and acquisitions will abate any time soon. a direct result of these cross - border deals is that the share of foreign banks in domestic european markets has increased substantially, from 20 % of total assets in 1999 to 26 % in 2005. there are several catalysts for the internationalization of european financials, most notably their growth opportunities. indeed, international expansion is one of the most attractive growth opportunities for the profitable, capital rich european banks. with the ongoing integration of european financial institutions and markets, the conduct of financial supervision in europe has moved beyond its primarily national orientation. supervisory rules and regulations are progressively internationally harmonized β basel ii is in this respect a leading example. of course, the implementation of these rules is predominantly performed at the level of national supervisors. the practical consequences of this discrepancy are interesting. let us look at, say, an internationally active bank with subsidiaries in ten other eu countries. such a bank has to deal with at least one home supervisor and ten foreign supervisors. although all these supervisors apply the same general, internationally agreed standards, they may impose their own specific requirements, for example with regard to a firm β s internal control system. the process of financial integration across europe thus suggests we should keep thinking about whether the model underlying financial supervision in europe remains adequate. given that financial integration and consolidation in europe is desirable and will continue, it is essential that supervisory structures remain viable. i therefore believe that further steps are needed to achieve more convergence of supervisory practices in europe. national supervisors are already moving, albeit slowly, towards more convergence of their supervisory practices. this is supported by the approval procedures for basel ii - model validation under the capital requirements directive, art. 129. however, a single european supervisor should not be considered a panacea for the cross - border challenges being faced by europe β s supervisors. i do not need to remind you that many european banks with large cross - border activities have their largest exposures outside the eu β predominantly in north and south america β rather than within the eu. besides, large institutional differences exist between european countries. legal frameworks, deposit guarantee schemes and even aspects of fiscal regimes must be harmonized before substantial integration of supervision can be realized. one can imagine the technical and political complexity of such a
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norman t l chan : hong kong as a private banking hub β a regulator β s vision speech by mr norman t l chan, chief executive of the hong kong monetary authority, at the hkab β hkib distinguished speaker series and hkib fellowship conferment ceremony, hong kong, 12 june 2012. * * * peter ( wong ), anita ( fung ), patrick ( fung ), julia ( leung ), ashley ( alder ), distinguished guests, ladies and gentlemen, good afternoon. i am most honoured to be conferred a fellowship by the hong kong institute of bankers ( hkib ) and would like to thank hkib for recognising my contributions, which are in effect contributions of the hkma, to the banking sector. the achievements of hong kong β s banking industry are attributable to the efforts of many stakeholders. among them is hkib, which has been providing quality education and training to the banking industry for decades. many industry practitioners, and the banking industry as a whole, have benefited from the good work of hkib. on this special occasion, i am also honoured to be invited to speak in hkab - hkib distinguished speaker series. i will be speaking on β hong kong as a private banking hub β a regulator β s vision β. i have chosen this topic because over the past few months, the hong kong monetary authority ( hkma ), together with the securities and futures commission ( sfc ) and the financial services and the treasury bureau, has been working very closely with the hong kong association of banks ( hkab ) on what hong kong should do to take the private banking industry to the next higher platform. i would like to take this opportunity to share with you my views on the steps hong kong needs to take to develop as the premier private banking hub in asia. to start with, i want to talk about some facts relevant to hong kong β s realisation of this aspiration. hong kong β s strengths to be a leading private banking centre wealth in asia - pacific is growing exponentially. according to industry research, the region accounted for half of the growth in global wealth from 2010 onwards. in particular, china was the second top contributor to the growth in global wealth after the us. 1 in 2011, there were about 30 million millionaires worldwide. among these, about 20 % were from asia - pacific. 1 this trend is likely to continue. it is estimated that global wealth will rise 50 % further by 2016
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is broadly unchanged. turning to the monetary analysis, broad money ( m3 ) continued to increase at a robust pace in july 2016, with its annual rate of growth standing at 4. 8 %, after 5. 0 % in june. as in previous months, annual growth in m3 was mainly supported by its most liquid components, with the narrow monetary aggregate m1 expanding at an annual rate of 8. 4 % in july, after 8. 7 % in june. loan dynamics followed the path of gradual recovery observed since the beginning of 2014. the annual rate of change of loans to non - financial corporations increased to 1. 9 % in july 2016, compared with 1. 7 % in june. the annual growth rate of loans to households remained stable at 1. 8 % in july. although developments in bank credit continue to reflect the lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and non - financial sector balance sheets, the monetary policy measures in place since june 2014 are increasingly filtering through to support borrowing conditions for firms and households and thereby credit flows across the euro area. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need to preserve the very substantial amount of monetary support that is necessary in order to secure a return of inflation rates towards levels that are below, but close to, 2 % without undue delay. monetary policy is focused on maintaining price stability over the medium term and its accommodative stance supports economic activity. as emphasised repeatedly by the governing council, and as strongly echoed in both european and international policy discussions, in order to reap the full benefits from our monetary policy measures, other policy areas must contribute much more decisively, both at the national and at the european level. the implementation of structural reforms needs to be substantially stepped up to reduce structural unemployment and boost potential output growth in the euro area. structural reforms are necessary in all euro area countries. the focus should be on actions to raise productivity and improve the business environment, including the provision of an adequate public infrastructure, which are vital to increase investment and boost job creation. the enhancement of current investment initiatives, including the extension of the juncker plan, progress on the capital markets union and reforms that will improve the resolution of nonperforming loans will also contribute positively to this objective. in an environment of accommodative monetary policy, the swift and effective implementation of structural reforms will not only lead to
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essential that we prioritize cooperation, dialogue and diplomacy. given the multitude of conflicts β both large and small β around the world, the last thing we would need is another trade war, particularly between the allies, the european union and the united states. the incoming us administration comes to town with a hawkish trade policy. maintaining a stable trade relationship between the eu and the us β for sure not easy β should be a top priority for policymakers. seldom have trade and security policies been as interlinked as today in europe. simultaneously, we must prepare for possibly turbulent trade relations with the us. europe cannot face such a scenario unprepared, as in 2018. this calls for agility and clear strategic thinking in our decision - making processes. what is also vital during these turbulent times, is the unity of europe. the european commission has both the chance and duty to demonstrate strong leadership within europe now. this unity is supported by the community method in the field of trade policy. while messages on future us trade policy somewhat fluctuate, we need to prepare ourselves for a situation where the eu is threatened by higher tariffs and other trade measures from the us. clearly, a trade conflict harms the economy. in a cycle of retaliation, no one is a winner. hence, a negotiated solution is preferable, but evidently our negotiation position needs to be reinforced by credible potential countermeasures. in this connection, it is worth noting that it is almost certain that european imports of american weapons and lng continue to rise in the coming years, as the european countries increase their defence spending and bolster their energy security. this can be one part of a positive solution for the potential trade negotiations, though europe must avoid again creating unsustainable dependencies. the war in ukraine has made it necessary to strengthen the eu as a strategic entity, although the transatlantic axis remains an anchor stability for europe. the economic sanctions by the eu and the us have weakened russia's capacity to achieve its imperial goals in ukraine, but we must not underestimate its continued capacity to wage the war. consequently, we experience critical weeks and months of uncertainty. and we must prepare our economies and societies to cope with the gathering storm during this winter. slide 4. eu free trade agreements in 2024 : status report due to the prevailing uncertainty about the us trade policy, europe should now invest ever more effort in further developing trade relations with the rest of the world, not least with the emerging and
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build a solid platform for the growth in the rmb market in australia. 4. investment of foreign currency reserves the fourth element of the growing financial relationship between china and australia is a recent decision by the rba to invest some of our foreign currency reserves in china. this decision by the rba represents the first time that the rba will have invested directly in a sovereign bond market of an asian country other than japan. this decision does, however, build on our existing investments in the emeap asian bond fund initiative, which were made in 2003 and 2005. our current intention is to hold around 5 per cent of australia β s foreign currency assets in china. the pbc has approved an initial investment quota and we are currently working through the necessary agreements prior to the investment being made. this decision to invest in china is an important one. it reflects the broader economic relationship between china and australia and our increasing financial ties. it provides greater diversification of our investments and will help with our understanding of the chinese financial markets. over the long run, and particularly as capital account liberalisation occurs in china, the rmb is likely to become one of the major reserve currencies of the region. 5. bilateral investment flows the fifth and final element is an increase in other capital flows between our two countries, including direct investment, portfolio investment and banking flows. these two - way investment flows are still in their infancy, but they have grown rapidly in recent years. according to data from the abs, chinese investment in australia has risen more than fivefold since 2006, with the stock of investment reaching around a $ 20 billion as at end 2011 ( graph 2 ). 3 australian investment in china has also risen significantly over this period, with the stock reaching a $ 17 billion in 2011. it is likely, however, that these data understate the size of bilateral investment, as some funds are intermediated through financial centres including hong kong. a significant share of the growth in chinese investment in australia thus far has been foreign direct investment. this has been largely in the resources sector, although recently there has been some diversification, including into the services and real estate sectors. direct investment has also been an important component of australia β s investment in china including investments in financial services. in recent years, australian banks have increasingly facilitated australian investment in china through their provision of cross - border banking services. all of australia β s major banks β a number of which are represented here today β have a growing presence in
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and hedging instruments are still some way off. so there is much work ahead if the depth of the financial relationship is one day to match the depth of the trading relationship. the pace of reform in china will have an important bearing on how this work progresses. as we know from our own experience, this reform process is a difficult one. and from some perspectives, china faces an even more daunting challenge than the one we faced. because of china β s sheer size, the rest of the world is watching very closely and it has a strong interest in china β getting it right β. china is also facing the task of liberalisation at a materially lower level of per - capita income than was the case in australia. it faces an existing financial sector much larger ( relative to gdp ) than was the australian financial sector at the outset of our liberalisation process. and financial systems everywhere are more globally connected than they once were, so the potential pressures on the chinese system are greater than when australia went through reforms. from my perspective though, a number of the discussions that are occurring today regarding the chinese financial system have a degree of familiarity about them. 4 i would like to mention three of these. the first is the discussion about β shadow banking β. this is very familiar. in the 1970s, australia had a highly regulated banking sector β with regulations on interest rates, the rate of bank balance sheet growth and structure of those balance sheets. the result was rapid growth in other types of financial institutions. indeed, by the early 1980s, the banks β share of the financial system had fallen to 40 per cent from 70 per cent in the early 1950s. we made various attempts to restrict the activities of the β shadow banks β, but whenever we introduced new rules, other entities emerged. china is experiencing this today. finance can be very flexible β those who want to borrow money seem to find a way of connecting with those who have money to lend. in our case, the financial stability problems we had in the for discussions of the financial reform process in australia see the list of references. bis central bankers β speeches 1970s were in those parts of the industry that grew up outside the regulatory net. this regulatory net also contributed to inefficiency in the financial system by limiting banks β ability to respond to the needs of their customers. in particular, the various regulations limited the availability of credit to important parts of the economy. in the end, the only practical solution was to move to a more liberal
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eva srejber : the transmission mechanism speech by ms eva srejber, second deputy governor of the sveriges riksbank, at umea university, umea, 15 may 2001. * * * the riksbank has a statutory duty to maintain price stability. however, it has the power to decide how to operationalise monetary policy and the monetary policy strategy that is to guide the monetary policy decisions. in the annual assessments of the performance of the riksbank made by the riksdag finance committee, both the objective and the strategy adopted have won acceptance. monetary policy is governed by an inflation target expressed as the annual rate measured by cpi is to be limited to 2 per cent with a tolerance interval of Β± 1 percentage point. however, the decision to define price stability as a reduction in the value of the krona by two per cent per year in relation to the basket of goods and services consumed by swedish households is by no means self - evident. in principle, another rate of price increases, other weighted combinations of goods and services, financial assets or currencies could serve as the anchor in relation to which the value of the krona is to be kept stable. when the inflation target was adopted in 1993, conditions did not favour a return to any form of fixed exchange rate. the decision that had to be made then was how best to design monetary policy to cope with the transition from a high to a low - inflation economy while, at the same time, creating suitable conditions for returning to a fixed exchange rate regime. cpi was deemed to be the best known measure of inflation and this was one reason why it was very suitable in a situation where confidence in stable prices was to be attained. an inflation rate of two per cent was considered to be well in line with inflation in the rest of the eu and this was adopted to create a basis for stabilising the nominal exchange rate of the krona in relation to the european currencies. by monetary policy strategy i mean the entire framework used to comply with the ultimate objective that monetary policy is intended to achieve. besides operationalising the target, this concerns, for instance, how the system is to be designed to enable the central bank to influence interest rates and how open and clear monetary policy is to be. it is also about taking decisions on any intermediate objectives and the time horizon in which fulfilment of the objective is to take place. the decision on monetary policy strategy fundamentally rests on conceptions of how
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and property prices which in turn affect consumption decisions. the interest rate channel therefore affects demand for goods and services and thus the output gap with some time lag through many complicated mechanisms. changes in the use of resources or the output gap then affect inflation in turn, with some time lag. the impact of changes in the instrumental rate on demand and inflation may also be affected by the lending rate set by the banks. the channel that is mediated by the behaviour of the banks can be generally referred to as the credit channel. higher interest rates may, for instance, reduce the willingness of the general public to keep funds deposited in current accounts, which have a very low return. deposits have a very low financing cost for the banks and if they have to finance an increased proportion of their lending in another way, the banks may compensate for this by a higher lending rate. however, it is uncertain how the behaviour of the banks affects the impact of monetary policy. changes in the instrumental rate have an effect through the " exchange rate channel " partly by changes in the nominal exchange rate for the krona affecting the relative prices for net export. higher interest rates should thereby strengthen the domestic currency and make domestic goods more expensive relative to other goods and vice versa. higher interest rates thereby dampen export at the same time as import becomes cheaper and increases. lower demand for domestic goods contributes to reducing the use of resources and subduing inflation. a stronger nominal exchange rate dampens consumer prices at the same time since part of consumption is directed towards imports when prices are dampened. however, lower import prices also increase the real purchasing power which per se contributes to increasing purchasing power. in economies with diversified industry an increase in the interest rate thus also leads via the exchange rate channel to lower inflation. the strength of the effect depends inter alia on income and price elasticities and on the composition and size of foreign trade. in certain cases the positive effect on incomes from stronger currency can even predominate and vice versa. changes in the nominal exchange rate probably have less impact on import and export prices if the changes are not considered to be lasting. in a floating exchange rate regime, it is therefore probable that changes in the nominal exchange rate will not have such a great effect as in the case of a devaluation or revaluation in a fixed exchange rate regime. the role of inflation expectations the channels i have now pointed out operate in most cases through demand and the output gap. one channel that is probably very important and
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technology and financial innovation, and strong arguments were being made to the effect that open capital accounts would bring significant benefits. after all, ongoing real economic integration at a global level demanded at least some degree of global financial integration. in turn, freer capital movements, the ongoing cross - border financial integration, and the growth of private capital flows that followed undermined pegged exchange rates and thus contributed to the spread of flexible exchange rate regimes and inflation targeting in many parts of the world, but in the european union this development provided part of the rationale for a monetary union. the current international monetary system and the official part of the global financial safety net largely reflect the contours of the global economy as they were before global financial integration and private capital flows reached the level we have seen in this century. back then, the global macroeconomic problem was related to global current account imbalances and asymmetric adjustment. keeping your own house in order was in most cases both necessary and sufficient for maintaining economic stability in individual countries. imf facilities to lend to sovereigns of debtor countries facing balance of payments difficulties were the most important part of the global financial safety net ( gfsn ). the world we currently live in is different. financial imbalances in both net and gross balance sheets can be more important than current account imbalances and certainly were so in the build - up to the great financial crisis ( gfc ). this is a world of cross - border spillovers and spillbacks. it is a world where, for small and open economies ( soes ), keeping your own house in order is certainly necessary but no longer sufficient, at least not if we restrict ourselves to traditional demand management and prudential instruments. financially integrated small and open economies can still be overwhelmed by large and volatile capital flows driven by push factors. it is a world that needs additions to the gfsn, some of which we partly have β such as fx liquidity provisions to internationally active banks through central bank - swaps β but some of which we do not have. the international community is certainly aware of these issues. the imf has done good analytical work in this area and proposed reforms. work has been done under the auspices of the g20 looking at potential reforms to the international monetary sytem ( ims ), and currently the eminent persons group is working on a report to the g20 to be delivered at this year β s autumn meetings of the imf. but progress in
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great dilemma is whether these institutions are making responsible decisions about economic policies, development programmes, operations and the achieved results ; β’ with regard to the long - term vision dimension, the great dilemma is whether the right directions and future challenges facing auditors are properly determined. hence, approximation of the auditing role with the best and contemporary international standards, learning about specifics and characteristics of the audited entities, and further bis central bankers β speeches intensification of inter - institutional cooperation during the processes are some of the elements having a key role in the work and results of this institution. in conclusion, i am fully confident that, by promoting the above - stated factors, the alsai will continue to perform at its best vis - a - vis the duties and challenges imposed by current developments and will succeed in accomplishing its mission towards the improvement of institutional governance. thanking you for your attention, i wish you success in your work in 2016. bis central bankers β speeches
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christian noyer : the euro area β challenges and responses speech by mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, at a breakfast for the economic club, new york, 18 april 2011. * * * it is a great pleasure to be here today. it is also a privilege to address such a distinguished audience. i would like to take this opportunity to present my assessment of the situation in the euro area, particularly with respect to the difficulties we meet on sovereign debt. three views on the sovereign crisis in europe broadly speaking, opinions and views expressed on the euro area by people outside the eurozone, can be divided into three categories : hostility for, at least very few people, skepticism and support. first, outright hostility. it is unfortunately true that, in some circles, there is a spontaneous and deeply ingrained opposition to european integration. since the euro is the most accomplished part of the integration project, it is only natural that it crystallizes those oppositions. somber predictions about the imminent demise of the euro came predominantly from those deeply anti β european commentators. while those views, like all opinions, should be treated with respect, there is no point in trying to refute arguments which, in great part, are irrational and mainly reflect wishful thinking. second, skepticism. it emanates mainly, but not only, from academic circles. prestigious and well respected economists have been pointing to the fact that the euro is not an optimum currency area. they also underlined that, absent sufficient labor mobility, there was a need for some form of fiscal federalism that current arrangements failed to fulfill by a large measure. those arguments have been made and discussed for some time and deserve careful consideration. obviously, recent turbulences and disruptions in the articulation of national fiscal policies have given them a new relevance. i will come back to this debate in a moment. at this stage, i will simply remind you of some responses that have been consistently formulated over the last decade. the benefits of the euro cannot be assessed exclusively through the lenses of the optimum currency theory. the euro has brought to more than 400 million european citizens unprecedented stability. price stability, obviously, with inflation averaging 1. 97 % over the last decade. and also, yes, financial stability. it is always useful to think of counterfactual when assessing a situation. looking beyond current fiscal turbulences, let us think, for instance,
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encik abdul rasheed ghaffour : revolutionising microfinance welcoming remarks by mr encik abdul rasheed ghaffour, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the global symposium on microfinance, kuala lumpur, 22 may 2017. * * * in biology, the transformation of a species is said to happen in rapid bursts. imagine an ecosystem of marine life along a shoreline. for millions of years, it can remain relatively unchanged. but an extraordinary event β such as a sudden move in sea levels β can alter everything quickly. within decades, fishes, mollusks and plants alike can dramatically change in size and shape. ultimately, those that adapt emerge as the stronger species in the ecosystem. we are gathered here today in the very different context of microfinance. nonetheless, parallels can be drawn with the theme of this event, β revolutionising microfinance β. think of the incredible pace of technological change in recent years. in 2016 alone, machine prevailed over man in the world β s hardest board game. reusable rockets became a reality. twitter helped a nation elect their president. for microfinance, that rapid burst of change is already upon us. it is therefore a great honour for bank negara malaysia to partner with the world bank in hosting this global symposium on microfinance. we are privileged to have so many learned speakers here with us to share their invaluable insights. led by innovation across the globe from bangladesh to brazil, microfinance has allowed previously excluded segments of society to grow incomes, build assets and ultimately improve their standards of living. with poverty eradication taking centre stage in the global public policy agenda, such in the united nation β s millennium development goals, these developments are welcome. here in malaysia, microfinance has been an important part of the development agenda. in 2006, the bank introduced a comprehensive microfinance institutional framework to promote the development of a sustainable microfinance industry. this facilitated greater access to financing by micro - entrepreneurs with no collateral, supported by simple application procedures, minimal documentation and quick turnaround times. the microfinance landscape in malaysia has evolved from being government - driven into one with vibrant private sector participation. at the turn of the century, total financing outstanding of the sector stood at usd35 million ( rm151 million ). since then, it has multiplied by more than 30 times to usd1. 2 billion ( rm5.
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