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dutchess county and long island. indeed, we recently documented the severity of problems on long island in our facts and trends publication. moreover, new jersey had non - prime mortgage activity closer to the national average and now has more delinquencies and foreclosures than is the case for much of the region. as the uneven pattern of nonprime lending suggests, the region is hardly uniform. the housing section fared better in upstate new york than it did in much of the region during the recession. in fact, the housing boom and bust largely bypassed upstate new york, where construction activity is a relatively small part of the overall economy. relative to upstate new york, most areas in downstate new york and northern new jersey more closely tracked the national cycle. sales activity and home prices ramped up during the housing boom, but then dropped sharply. more recently β over the past year β home sales and prices in the region have followed different paths. home prices have generally stabilized across upstate new york, with some parts, such as buffalo, rochester and syracuse, even experiencing price increases over this period. however, home prices have continued to decline in the greater new york and new jersey area. by contrast, the number of home sales have generally increased throughout the region over the past year. but the pattern has been erratic because of various policy changes. in particular, the introduction, initial expiration and subsequent extension of the home buyer tax credit introduced volatility as it boosted, slowed and then boosted sales again. with the final expiration of this tax credit, the recent rise in home sales across new york and northern new jersey may well be short - lived. regional housing trends : focus on new york city i β ll end with a few remarks about new york city β s housing market β a very large market that stands out as unique in many respects. let me remind you of some of these key differences : compared with the rest of the region, and with the rest of the country, new york city has an exceptionally large share of rental housing : 67 percent of homes citywide versus 33 percent for the united states. the market is dominated by multi - family structures, especially in manhattan and the bronx. when these units are owner - occupied, they are more likely to be co - ops than condominiums, and, thus, to have comparatively low leverage rates. new york city has very high housing prices and long construction lags. since the number of homes cannot adjust quickly, rising
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substantially above the nation. since we last met, employment in new jersey has expanded, and while that growth has been quite modest, it is an encouraging sign. in puerto rico, employment reports continue to give mixed signals, showing a see - saw pattern that has yet to add up to a strong rebound. despite these employment gains, unemployment in the region remains painfully high. in august, new york city β s and new jersey β s rates were very close to the national jobless rate of 9. 6 percent. the rate for new york state, which has been improving since the first quarter, is noticeably lower at 8. 3 percent. puerto rico, which has had much higher unemployment than the mainland for the past several decades, saw a modest decline in its jobless rate, but at 15. 6 percent is still showing little evidence of a recovery. regional housing trends in new york and new jersey we focus on housing at today β s briefing because it represents the most important asset that many households own, provides a substantial number of high - wage jobs and is often a key driver of regional as well as national business cycles. i β ll start with a key observation : during this recession, the housing sector contributed less volatility to the regional economy than it did in much of the nation. we have, of course, seen painful losses of homes, construction jobs and housing equity in new york and northern new jersey. this pattern can be seen quite directly in the construction sector, where many jobs were created during the housing boom, but then were lost as the housing market deteriorated. however, our housing markets tend to be less influential in our economy because we are a relatively mature region. that is, we are not adding population as rapidly as some other parts of the country, so housing construction β which tends to be very cyclical β and associated purchases account for a smaller share of aggregate activity here than it does in faster growing regions. in addition, much of our region was spared the worst effects of the non - prime mortgage boom and bust. there was generally lower penetration of nonprime loans into our housing markets, and in general, our region shows better performance, with fewer delinquencies and foreclosures. this pattern was particularly true across upstate new york. however, as can be seen on the new york fed β s u. s. credit conditions maps, there are significant pockets of housing distress around the greater new york city metro area, especially in communities in the bronx,
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these reforms are at different stages, the broader endeavour has been to achieve a greater degree of convergence in banking regulation across jurisdictions with a view to address the issue of regulatory arbitrage. a similar international effort is underway with regard to payment and settlement systems. as you are all aware, the one crucial segment of infrastructure which functioned effectively during the financial crisis was the payment and settlement system infrastructure. payment systems are the channels through which liquidity risks can get exacerbated and could very quickly turn into credit and systemic risks. in this sphere of payment systems, the measures taken by central banks the world - over in strengthening risk management in payment systems by introducing real time gross settlement systems and encouraging the private sector to set up cls bank for pvp transactions for settling foreign exchange transactions is indeed laudable. it was therefore found expedient in the wake of the financial crisis to revisit the existing three sets of standards which have guided the development of risk management standards in payment systems and securities settlement systems. together the two international - standard setting bodies in this area the committee on payment and settlement systems ( cpss ) and international organization of securities commissions ( iosco ) have published the β principles for financial market infrastructures β ( pfmi ) in april 2012. the pfmis replace the three existing sets of international standards set out in the core principles for systemically important payment systems ( cpss, 2001 ) ; the recommendations for securities settlement systems ( cpss - iosco, 2001 ) ; and the recommendations for central counterparties ( cpss - iosco, 2004 ). the cpss and iosco have strengthened and harmonized these three sets of standards by raising minimum requirements, broadening the scope of the standards to cover additional risk factors, and extending the scope to new types of fmis such as trade repositories. the 24 principles outlined in this report are categorized into nine broad categories : ( a ) general organization ( b ) credit and liquidity risk management ( c ) settlement ( d ) csds and exchange - of - value settlement systems ( e ) default management ( f ) general business and operational risk management ( g ) access ( h ) efficiency and ( i ) transparency. additionally cpss - iosco has released the ( i ) the cpss - iosco assessment methodology for the principles for fmis and the responsibilities for authorities and ( ii ) the cpss - iosco disclosure framework for fmis for public consultation with a 60 days comment period. the
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introduction - genesis of the indian banking system the early 1980s were instrumental in the introduction of mechanisation and computerisation in indian banks. this was the period when banks as well as the rbi went very slow on mechanisation, carefully avoiding the use of β computers β to avoid resistance from employee unions. however, this was the critical period acting as the icebreaker, which led to the slow and steady move towards large scale technology adoption. over the years technological innovation in banking was meant to achieve a broader reach in terms of consumer banking and continued inclusive growth, to meet the demands of households and businesses, movement from β class β banking to β mass β banking and quick transmission of information inexpensively and conveniently. we have moved a long way from bis central bankers β speeches the age of mechanization in the indian banks to the present age where banks are successfully experimenting with disruptive technologies. perceived benefits of technology usage it was expected that technology adoption would enable the banking sector to be integrated with the global financial markets, adopt international best practices and ensure delivery of superior customer service. it was also envisaged to result in greater productivity, profitability, and efficiency ; faster service and customer satisfaction ; convenience and flexibility ; and space and cost savings. it was presumed that robust and reliable services would be delivered to their customers at a lower cost, as well as help banks to make better decisions. it usage was also expected to result in improving process integration and flexibility, decreasing operational exceptions that climb through the management hierarchy, thus, freeing up management time for decision making. but has this happened? have the banks been able to deliver what they were expected to deliver with adoption of technology? the answers to these questions are not very encouraging. often the inhibiting factors attributed to this would be poor strategic alignment between business and it strategy, absence of appropriate and re - engineered business processes and delivery models, lack of project ownership, poor risk management, ineffective resource management and missing governance principles. also the human resources in banks were drained as they have not done appropriate business process re - engineering before implementing it projects. further, the banks lacked in possessing business and it plans to leverage technology for increasing business and profits. last but not the least, banks have not used information for mis and decision support systems. complex role of the indian banker - manage financial inclusion and crm the role of the indian banker is very challenging. at one end of his spectrum lies the demand to achieve financial inclusion as nearly 50 % of the country
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supply of liquidity has reduced swiss franc interbank rates. as can be seen in chart 2, risk premia on the swiss franc interbank market have also declined. they fell by more than a half in may while, during the same period, us dollar risk premia on the interbank market in the us rose again. alongside the uncertainty, investor risk aversion has grown over the last few months. as a result, there has been a movement of capital in the direction of investments that are considered to be more secure ( flight to quality ). this is reflected, for example, in a rise in the gold price since february 2010. in may 2010, the gold price in swiss francs reached new heights. the flight to quality has also had consequences for switzerland, since our country has traditionally been regarded as a safe haven for investors. this situation has been reinforced by the fact that, until now, the swiss economy has withstood the crisis better than most developed countries. this has resulted in upward pressure on the swiss franc, which has led to repeated interventions on the foreign exchange market. the liquidity injected into the market in the course of these interventions has reduced swiss franc interest rates, in particular for short term maturities. in addition, the yield on 10 - year swiss confederation bonds fell to below 1. 50 % in may 2010. for the sake of completeness, it should be pointed out that the swiss franc has not been the only currency to appreciate. the yen, the us dollar and the currencies of the nordic countries have also strengthened against the euro. investing foreign exchange reserves as already mentioned by philipp hildebrand, the snb had to implement unconventional monetary policies in order to combat the financial crisis and avert deflation risks. this resulted in an expansion in the snb balance sheet, which took place in two stages. in the first stage, during the crisis, the snb made use of eur / chf swaps, while in the second stage, when it was confronted with the appreciation of the swiss franc, it intervened on the foreign exchange market. as part of these unconventional measures, the snb purchased swiss franc bonds issued by private sector swiss borrowers and temporarily extended the terms of its repo operations. today i am going to focus on the impact that the snb β s interventions have on its balance sheet. in these interventions, the snb purchased euros as well as, to a lesser extent
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thomas jordan : prospects for the swiss economy in 2009 summary of a speech by mr thomas jordan, member of the governing board of the swiss national bank, at the erfa - gruppe, weinfelden, 15 january 2009. the complete speech can be found in german on the swiss national bank β s website ( www. snb. ch ). * * * following a long, strong and broad - based growth phase, the world economy moved into a major recession in mid - 2008. about a year after the beginning of the unprecedented financial market crisis, there was a radical turnaround in the global economic outlook. the european and asian economies were not disconnected from the us, as had been hoped. the swiss economy leans heavily on its export and financial sectors and faces a difficult year. a recession appears unavoidable in 2009. consequently, the skilful deployment of monetary and fiscal policies as well as optimal conduct on the part of business practitioners in switzerland are particularly important. monetary policy can be changed quickly and its impact is relatively rapid through its influence on interest rates and the exchange rate. the snb has reacted resolutely to the deterioration in the economic situation and has reduced interest rates to almost zero. if necessary, monetary policy can be rendered even more expansionary through a series of alternative instruments. in the case of fiscal policy, the focus is on effective automatic stabilisers β first and foremost, allowing the occurrence of temporary budget deficits, together with unemployment benefits and compensation for short - time working. in view of the extent and risks of the current crisis, fiscal policy will need to consider and prepare the deployment of additional stabilisation measures alongside the automatic stabilisers. in addition to the increased focus on economic policy, business practitioners within the swiss economy are also challenged. in the case of banks, it is essential that credit shortages for companies and private households be avoided. moreover, interbank business needs to be strengthened in order to smooth out liquidity imbalances. companies must enhance their innovativeness and use opportunities for opening up new markets. the swiss economy has many structural strengths and this prompts confidence that switzerland will overcome the crisis.
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of the supervisory requirements that may potentially be relaxed within the sandbox. examples of these requirements include security - related requirements for electronic banking services and the timing of independent assessment prior to launching of new technology services. banks intending to access the sandbox are advised to get in touch with the hkma early. my hkma colleagues stand ready to discuss with the banks individually on the appropriate supervisory flexibility that can be made available to them within the fintech supervisory sandbox. 18. further details of the fintech innovation hub and the fintech supervisory sandbox will be announced by the hkma later today. competition from neighbouring centres 19. ladies and gentlemen, i have spent quite some time talking about fintech today. now i would like to talk about the third emerging trend that will impact the development of hong kong as a β brand β for financial services, which is the intensification of competition amongst financial centres. we all recognise that money managers and asset owners are very smart and extremely mobile. they do have a choice on where they park and manage their money and wealth, and they know it very well. therefore, it is not a question of whether hong kong is good or not. even if we are good, it is a question of whether we are better than our competitors, many of whom have high aspirations and are catching up fast. hong kong as a brand for financial services does not enjoy a monopoly or franchise. we must remain vigilant and diligent at all times if we wish to continue to maintain a competitive edge. 20. in this connection, i am pleased to say that, after several years of concerted effort between the hkma, the tma and the financial industry, we have finally succeeded in changing our tax regime to help make hong kong a more attractive platform for multinational corporates to conduct their group cash management and treasury bis central bankers β speeches functions here. however, a good product in itself is not good enough. a good product still requires good and effective marketing. this is what any world class brands always do. so the hkma will, in the months and years ahead, collaborate with the industry to reach out to the corporates on the mainland and overseas to promote hong kong as the hub for corporate treasury centres. this is an ongoing endeavour for which the support of the tma and its members is greatly needed. credibility 21. as i am running out of time, i just wish to have a brief word on the second component of a brand, and that
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speeches 25 aug 2022 welcome remarks at the hkimr - adb - bis joint workshop on " monetary policy spillovers " edmond lau, deputy chief executive, hong kong monetary authority 1. good morning, mr park ( chief economist and director general of the economic research and regional cooperation department, asian development bank ( adb ) ), mr zhang ( chief representative for asia and the pacific, bank for international settlements ( bis ) ), ladies and gentlemen. it is my pleasure to welcome you to this workshop on monetary policy spillovers, jointly organised by the adb, the bis and the hong kong institute for monetary and financial research ( hkimr ). we are honoured by the impressive list of panellists, discussants and speakers today, who will share their expertise on this timely and important topic. 2. since early this year, central banks around the world have tightened monetary policy to fight raging inflation, with the us federal reserve ( fed ) being particularly assertive as it tries to cool down the unwelcome rise in inflation and avoid inflation expectations from getting de - anchored. as global financial conditions tightened, financial markets rattled and many emerging market economies ( emes ) experienced capital outflows given their narrowing interest rate differentials against the us. the crux of the latest situation is, will such gyrations in asset prices and capital flows pose a threat to emes β financial stability? 3. as far as emerging asia ( em asia ) is concerned, the latest situation does not seem too bad. even though the region saw quite notable bond fund outflows since the fed began to raise rates in march, such outflows have yet to cause any significant disruptions. that being said, there is no room for complacency. for one, as the global economy is heading towards a growth slowdown, if not an outright recession, asian emes may be less able to look for support from external demand to cushion the effect of tighter global financial conditions. moreover, capital outflow pressures faced by the asian region may persist, leaving em asian currencies and fx reserves to bear the brunt of global tightening. 4. unfortunately, there are limits as to how much these shock absorbers can shield the domestic economies from tighter global financial conditions. in particular, even though exchange rate flexibility can be a useful shock absorber, research suggests that currency depreciation is not a panacea for cushioning the impact of us rate hikes. as a
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likely, the net impact of taxes and subsidies is close to zero. the absence of any significant carbon pricing has implications. first, it will be significantly more difficult to cut emissions in the absence of spectacular technological advances, which we yet have to see. second, in addition to the cost implied by physical effects of climate change β such as flooding and droughts β the economic cost of mitigation will be substantially higher than if driven by price incentives. regulated energy and emission standards have a significant potential, but are less efficient. third, we have to hope, if we do not promote, that technological advances have a climate - friendly bias. this may well have been the case in recent years as the costs of renewable energy and energy savings have come down substantially and are now competitive. but many of us underestimated the technological advances also taking place in the extraction of fossil fuels, such as shale gas and deep water drilling. as regards financing, climate - friendly investments would have been more attractive in a world of appropriate pricing and regulation of carbon. the absence of such policy action implies that we cannot expect financing to deliver as much as we would like. attracting financing on a large scale requires a strong enabling environment. investors seek the highest risk - adjusted return. but the 1 / 2 bis central bankers'speeches financial sector and financial authorities can and should nevertheless complement the fight against climate change, also with current public policy settings. what are the opportunities from the financial sector perspective? first, lots of profitable climatefriendly investment projects exist already. some on a large scale. in my country of origin, denmark, we have numerous encouraging examples of companies and institutional investors contributing to and benefiting from the transition to a low - carbon economy β both at home and abroad. others on a small scale ; simple efforts to save energy in households and firms. note that the low interest rate environment has shifted the investment balance in favour of upfront efficient capital and against outlays for energy year after year. second, the financial sector has to care about reputational risks. it will get questions from customers and the media. banks begin to check companies for their esg strategies before lending, out of concern for both risks and reputation. third, the financial sector should prepare for potentially stronger climate - friendly policies set by governments down the line. obvious and profitable climate - friendly investment needs often exist in areas of the world with difficult physical, economic or regulatory environments. such barriers can be reduced with technical assistance. these are
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this would be a follow - up to a β report by a study group on market liquidity β which is currently being revised prior to publication. policies ( deemed financial policies ) having implications for financial stability. if information about how the supervisors are behaving is a necessary condition for ensuring that the banks are behaving properly, this code of transparency seems a useful initiative. the code of transparency is still in the process of being finalised, but in its current form it is based upon a sensible if ( to some ) radical framework. akin to what is increasingly being accepted in the realm of monetary policy, the draft code suggests there should be transparency with respect to the supervisors β mandate, the effectiveness of their powers, and their democratic accountability to other bodies. in effect, this code of transparency tries to ensure that the supervisors do their job in implementing the core principles. as noted above, transparency may be a necessary condition to ensure that supervisors carry out effectively their task of implementing the core principles. but it is hardly a sufficient condition. while the imf will be monitoring compliance with the code of transparency ( and also the implementation of the core principles themselves36 ), the influence the imf can exert may be relatively limited unless the country in question has an active programme with the imf. one complementary suggestion that might be helpful is the exercise of β peer pressure β on national supervisors. indeed, given that effective banking supervision is often resisted by the political authorities ( because of connected lending and other reasons ), central bank governors and finance ministers from developed countries might usefully try to put similar pressure on their counterparts in emerging markets. 37 in a similar if more extreme vein, a third suggestion would be to limit more aggressively the β right of establishment β in the world β s major financial centres. in effect, banks without an adequate supervisory framework in their own country would not be able to conduct an international banking business. this may seem radical, but has been a dictum among industrial countries since the 1975 basle concordat. 38 as well, some still more practical issues having to do with the incentives given to supervisors cannot be overlooked. supervisors must be paid adequately to prevent a constant haemorrhaging of staff to the private financial sector. other working conditions must be suitably attractive, including personal legal protection from litigation arising from official decisions. and lastly, supervisors must be properly trained and their training continuously updated to reflect new circumstances created by a changing financial world. the establishment at the bis of the
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, the bank of albania is currently in the process of reviewing the regulatory framework which will ensure the appropriate implementation of the said law. in this framework, the preparation of the respective impact assessments for each proposed regulatory amendment in close consultations with the market participants remains one of the objectives of the bank of albania in the near future. these new analytical tools will certainly improve policy - making by placing a greater emphasis on the clarification of costs related to the enforcement and implementation of the adopted regulatory acts through the conduct of the respective cost - benefit analyses. at the same time, the use of these assessment techniques will enhance the transparency of policy - making by ensuring a better communication of the regulatory and supervisory authorities with market participants. let me conclude by thanking mr. bossone and mr. brogi from the convergence program as well as ms. wesseling from the committee of european insurance and occupational pensions supervisors for being among us today. it is my deep conviction that their presentations will prove to be highly beneficial and insightful to all participants. i wish you a fruitful and interesting workshop. thank you.
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which, in turn, also has the potential to lower cash usage, which can be quite costly for banks and for society as a whole. who drives sepa? having discussed what β to sepa β means, let me turn to the question of who is in the driving seat of the sepa process. the creation of sepa is a major european policy objective for the european commission and the eurosystem. thus, we are closely monitoring the developments, assessing the state of preparation and providing guidance to the market where necessary. here, i refer back to the guidance we recently gave in the sdd dossier. also, in the upcoming weeks, we will have a further exchange of views on the possibility and necessity of a migration end - date for the sct and the sdd. notwithstanding the aforementioned political objective, i wish to emphasise that the establishment of sepa is a market - driven project. it is up to the banks to win over their customers and convince them through marketable and user - friendly sepa products and services. likewise, service providers to banks, such as clearing and settlement infrastructures, and information and communication technology suppliers are expected to drive sepa. one of the organisers of this summit, sia - ssb, has underlined its commitment to the sepa project. it is one of the first csms to have published its self - assessment against the eurosystem β s terms of reference for the sepa - compliance of retail payment infrastructures. i expect others to soon follow suit. who will β go sepa β? the expectation is for sepa to be more than a policy vision. it should address the needs of all users of payment services, irrespective of whether they are corporates, smes, merchants, public administrations or retail customers. however, in order to reap the benefits of sepa, users need to β go sepa β. by β going sepa β, i mean be ready to change : change habits, change national practices, even change focus, if necessary. for corporates, sepa is expected to enable bank relationships and account structures to be rationalised. a centralised treasury, better liquidity management and optimised payment processing will be made possible. even for smaller, mainly nationally - oriented corporates, sepa is expected to provide benefits as competition in the banking sector will increase, leading to a broader range of banks and banking services to choose from. however, in order
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caleb m fundanga : trends in central bank governance opening remarks by dr caleb m fundanga, governor of the bank of zambia, at the official opening of the seminar on β trends in central bank governance β, livingstone, 28 - 29 february 2008. * * * his honour the vice president her grace the mayor of livingstone the chairperson central bank governors and deputy governors board members of central banks resource persons distinguished international participants ladies and gentlemen on behalf of the bank of zambia and indeed on my own behalf, i would like to extend a very warm welcome to you all to this important seminar on β trends in central bank governance. β to our colleagues from outside zambia, i wish to extend a special welcome to you to zambia, in particular to livingstone, our tourist capital especially at this time of the year. like the rest of zambia, livingstone is a city of tranquility with an easy - going african charm. apart from the famous victoria falls, there are many other tourist spots such as the mukuni cultural village, curio markets, the game park, the national museum, railway museum, e. t. c. i therefore urge you to find time or indeed stay an extra day or more to sample this special menu that livingstone can offer. like other participants, i am glad to be part of this rare gathering of imminent experts. ladies and gentlemen, this seminar comes at a time when the economic performance of our country has significantly strengthened as partly reflected in the developments in the gross domestic product ( gdp ), inflation, interest rate and exchange rate. at a preliminary estimate of 5. 7 % in 2007, growth in real gdp has been above 5 % for the fifth consecutive year. during the month of january 2008, inflation remained in single digit at 9. 3 %, from 8. 9 % and 8. 2 %, in december 2007 and december 2006, respectively. commercial banks lending rates have also exhibited an investment - supportive trend while the kwacha has remained relatively stable. further, we have observed an improvement in the fiscal operations of the government, which is supportive of the country β s inflation and growth objectives. the financial sector has also been very stable and registering appreciable growth in the recent years. nevertheless, mr. chairman, despite these achievements, our country like so many other developing countries, still faces some challenges. notable among these, is the urgent need to consolidate and build the gains so far attained. in particular, the need to attain sustained price and financial systems stability
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zambia commits to continue supporting the economics department and research programmes at unza and hopes that the university will live up to its obligations under the framework of cooperation to be signed today. we challenge the economics department at unza through the vice chancellor to scale up its research activities in issues of interest to the bank and the zambian economy in general. for this is what this mou entails. we also call upon other industry players in the financial sector to emulate our noble contribution in building human capital and research capacities at this important institution. this is important to ensure that our financial sector operates at the cutting edge of knowledge and innovation. i have no doubt therefore, that such investment will yield returns in the long run as knowledge is a secure investment. i thank you for your attention.
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but even taking out the energy sector, non - energy per capita gdp has almost doubled from around us $ 3, 500 to us $ 6, 000 currently. that is an extraordinary accomplishment. behind these macroeconomic statistics are important changes that are real. what are some of these changes? well, while the labour force has increased by about 100, 000, employment has increased by 140, 000, driving unemployment to the lowest level in decades. with the significant increase in personal incomes, more people are now aspiring to what two decades ago were considered to be middleclass trappings - like cars, foreign travel - and home ownership, which has increased sharply over the past decade. there have also been other important societal changes ; more young and middle - aged people are combining work and study ; small business or self - employment has become more widespread ; and young people are leaving home earlier to live on their own. ( yes, there is a downside, whereby too many of our youth fit into an β at - risk β category ). all these adjustments and improvements have put demands on personal financial management. to further complicate the picture, deregulation and financial liberalization have spawned a rapid evolution of our financial sector. as a result, credit cards which were once confined to a small segment of the society are now being aggressively marketed to the wider population by the commercial banks. customers are being bombarded to contract consumer loans once they have a secure job and their income could be channeled through the financial institution. rapidly changing lifestyles have forced the bulk of the population to open bank accounts, to use atms, to own credit and debit cards and generally to participate actively in the formal financial system. but with the diverse range of product choices, banking has become more complicated. the average consumer is now required to make complex financial decisions between fixed and variable rate mortgages, contract installment loans, choose from a range of checking accounts and select from any number of savings instruments. the net result of the rapid growth of the last decade is that personal consumption has risen substantially, and this is amply reflected in a significant growth in consumer imports. personal savings have not kept pace with the growth in incomes and consumer debt has assumed unsustainable levels. one aspect of this general problem, which is becoming very acute, is that with inadequate savings and pensions too many of our citizens are ill - prepared for retirement. ladies and gentlemen, as our economy evolves and develops, it is to be expected that
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what you live and breathe every day. so if i may humbly say this, ladies and gentlemen, you do not need the governor of the central bank of trinidad and tobago to tell you what your relevance is to the economy of our country. accordingly, i would like to take the opportunity this afternoon to speak about issues related to the new proposed regulatory regime for credit unions, which is expected to come into effect in the coming year. β’ first, i will highlight why the proposed credit union regulatory regime will benefit your members and the entire credit union movement, paying particular attention to some of the areas of concern highlighted in your president β s message on page 7 of your 2013 annual report ; β’ second, i wish to speak about the proposed establishment of a protection fund for credit unions ; bis central bankers β speeches β’ finally, i will seek to address some lingering concerns of the national credit union movement surrounding the impending credit union legislation. prudential regulation of the credit union sector ladies and gentlemen, i now turn to prudential regulation of the credit union sector by the central bank. before i get into the substance of my address this afternoon and before you start to go into the information overload stage that we all get β¦ let me start with what i like to call the latest and the greatest, that is, the most important point i want to leave you with today, and it is this : regulation of the credit union industry will benefit you and it will benefit the people you serve. regulation is needed and it is coming ; embrace it, don β t fear it. regulation will be your best tool for continuing to make every dream count. i know by now many of you would be familiar with the policy proposal document for the credit union bill which was done after consultation with stakeholders like yourself. this document is on central bank β s website and shows you exactly what is the basis for and how the new legislation will work. it is basically a blue print for the entire process. it tells you for instance the objectives of the central bank under the cua which are : 1. to determine the safety and soundness of credit unions and protect members β deposits and shares from undue loss ; 2. to supervise credit unions to determine whether they are in sound financial condition and in compliance with the act ; 3. to maintain confidence in and promote the stability of credit unions and by extension the financial system of trinidad and tobago. it is important you understand these three objectives as they explicitly tell you what our intentions are
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expensive and difficult in practice to create an efficient competition across borders, as the suppliers of financial products must adapt their marketing strategies to each individual country. one might have believed that the internet would break this national fragmentation and open up the way for a demand - based international market for traditional bank services, but so far electronic banking services have mainly been used on a national basis. there are also numerous examples of tax systems discriminating between domestic and international financial transactions, which of course impedes the customers β incentives to use foreign suppliers, even if they offer more favourable terms for the actual service. integration contributes to greater welfare despite the difficulties in moving ahead more quickly with financial integration in the eu, there are estimates that it may be extensive enough in the future to make a contribution of more than one half of a per cent to gdp on an annual basis. the actual figure should perhaps not be seen as exact, but there is reason to expect an unequivocally positive connection between financial integration and real growth on the basis of the development trends observed so far. a larger market makes it possible to benefit from economies of scale and economies of scope. this means increased economic welfare for the financial system β s customers, provided that a sufficient degree of competition is maintained on the market and that there are efficient systems for supervision and oversight to ensure the stability of the system is upheld. if, for instance, european securities funds could operate under the same market conditions as american ones, they could become much larger than they are now. according to the same source as above, this could entail annual savings for european fund savers of 5 billion euro 2 close to 50 billion kronor! more diversified demand a more efficient supply also presupposes changes on the demand side. if the element of national thinking in financial investments were reduced, more savers would also be able to benefit from a broader supply of products. at the same time, it is essential that increased financial exposures towards companies and financial operators in other countries occur in controlled forms, i. e. with a high degree of transparency with regard to the risks attached to them. this is particularly important with regard to financial commitments of normally very long duration, e. g. investments in connection with life insurance. there is reason to believe that the demand for financial services will continue to be a driving force behind the integration process and give a basis for further structural changes in the financial markets. increased corporate financing through securities is one trend that will undoubtedly be further reinforced
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on monetary policy β mopping up β after bubbles burst. or into whether monetary policy could be used to control asset prices as well as doing its orthodox job of steering nominal trends in the economy, which i should say can include taking account of prospective risks of inflation volatility over the medium term. ideas circulating already include minimum margin requirements or capital ratios that vary not only across firms but also through time as credit conditions change. we need calmly to explore whether there are also other possibilities. but let me make this absolutely clear : there are formidable obstacles to finding a solution. in the monetary sphere, a regime of floating exchange rates allows individual countries to pursue their own domestic monetary objectives. but in a world in which capital flows freely, local attempts to control the pace of credit creation, particularly within the financial system, may not work. all of that will need to be thought through. but first we need to concentrate on the immediate challenges. summary in a speech four months ago, i stressed that β we must try to avoid a vicious circle in which tighter liquidity conditions, lower asset values, impaired capital resources, reduced credit supply, and slower aggregate demand feed back on each other β. i identified monetary policy, liquidity policy, and regulatory capital policy as being amongst the instruments the authorities would need to use. that remains the case, as the stress in the global financial system has continued and, in the us at least, evidence of a feedback loop is apparent. each of those instruments is constrained in some degree. that underlines the need for close co - operation between the authorities and the industry, and internationally.
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guy debelle : volatility and market pricing speech by mr guy debelle, assistant governor ( financial markets ) of the reserve bank of australia, to citi β s 6th annual australian and new zealand investment conference, sydney, 14 october 2014. * * * accompanying graphs can be found at the end of the speech. thanks to michelle wright for her help. today, i will talk about a few issues around pricing in financial markets and volatility, or more precisely, the lack of volatility. volatility financial markets have been quiet, maybe too quiet, for much of this year. of course, in saying this it increases the likelihood of it ending sooner rather than later! indeed, since drafting this speech, the vix has risen to its highest level since february. if i had told you that there were heightened tensions in the middle east and eastern europe, uncertainty about the turning point in us monetary policy, a succession of strong us job numbers, uncertainty about the future direction of policy in europe and japan, as well as increased concern about the strength of the chinese economy, you would not be expecting that to make for a benign time in financial markets. but that is what we have seen for much of this year. the graph shows measures of volatility in fixed income, equity and foreign exchange markets. at some point this year, all of these have fallen to historically low levels. there has been little reaction to any of the events i have described. to the extent there has been any, it has been very short - lived. ( graph 1 ) in the past few weeks, volatility has picked up, predominantly in foreign exchange markets, which i will come back to a bit later. but even so it has not yet returned to a β normal β level of volatility. so volatility has been low for a prolonged period of time in the face of a number of events which individually would normally be associated with high volatility, let alone all of them happening at the same time. why is this happening? a number of explanations have been advanced, but i don β t find any of them particularly compelling, mostly constituting, at best, only ex post rationalisations. macroeconomic outcomes for the world in aggregate have been relatively stable and that may be part of the story. world growth has been running at around 3Β½ per cent for the past couple of years and the latest forecasts have it continuing at that pace for the next
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so things have calmed down somewhat. that said, i think most observers and policymakers tend to the view that while some recovery is welcome, the relative β calm β seems a little eerie β perhaps fragile. certainly, these events have posed a few questions for policymakers, at least for the present speaker. among the questions being considered over recent weeks were the following : β’ does the β turbulence β simply reflect the same information that is embodied in the softer global growth forecasts that have been emerging over this period? in other words is it just a noisier version of a signal that is already being received? β’ or has the financial volatility been telling us there has been a significant shock, the effects of which are coming but which we can β t see ( yet ) in forecasts or other data? β’ alternatively, could the turbulence be a shock that leads to a worse global outcome β by leading to a tightening of credit conditions, loss of wealth and confidence, etc., and therefore crimping demand? β’ or is it just a bout of market nervousness that carries little lasting importance? bis central bankers β speeches as always, it is impossible to be sure, but it would not be unreasonable, i think, to draw the tentative conclusion that while these movements did reflect some underlying softening in the global outlook that was already emerging, the reaction was overdone. commodity prices are well down, but actually some prices had been declining for quite a while. iron ore, for example, peaked as long ago as february 2011. moreover, in many cases declining commodity prices reflect additional supply, which usually carries a different β positive β implication for global growth, as opposed to weaker demand. while global growth forecasts are being lowered, at this stage they see higher growth rates than in 2001, which was a relatively mild slowdown episode. of course that is just a forecast β but so far there are not any actual data that invalidate that view. given some recovery in markets of late, it seems too extreme to conclude that this event itself is developing into a significant financial shock with important additional macroeconomic significance beyond the softer global growth already understood to be in prospect. having said all that, i don β t think we should write the episode off as just another bout of nervousness. even if the volatility was not necessarily a reflection of fundamentals, it β s worth ensuring that we have extracted all the information we can from it. in addition, some quite big policy
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william c dudley : job polarization in the region remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the quarterly regional economic press briefing, new york, 30 may 2012. * * * good afternoon and welcome once again to the new york fed β s quarterly regional economic press briefing. i am pleased to have this opportunity to talk with the journalists covering our region β and through you, to the people in our district. this morning i will focus on regional economic conditions, with particular attention to job polarization, which i would define as the expansion of the number of jobs at the upper and lower ends of the wage and skill distribution and a shrinking of job opportunities for those in the middle. we will see how these trends are playing out in our region. as always, what i have to say reflects my own views and not necessarily those of the federal open market committee ( fomc ) or the federal reserve system. national economic conditions the u. s. economy is continuing to slowly recover from the after - effects of the housing boom and bust and the financial crisis. but the recovery has been disappointing. indeed, when we look back at economic forecasts made over the past three or four years it is notable that growth has systematically fallen short of both the federal reserve and private - sector forecasts. despite what has been an unusually accommodative monetary policy by historical standards, the economy has grown at only a 2. 1 percent pace over the last four quarters and the blue chip consensus forecast only anticipates a modest acceleration to a 2. 4 percent rate over the next four quarters. the headwinds retarding recovery are well known. consumers have been deleveraging in response to the large losses in wealth generated in large part by the collapse in home prices. housing activity remains depressed for many reasons. these include the large shadow inventory making its way through the foreclosure pipeline, tight underwriting standards for new mortgage origination, and the sharp slowdown in household formation. although the corporate sector as a whole is now reasonably healthy, there still is a significant constraint on the availability of credit to small business. fiscal policy has become restrictive as state and local governments have cut expenditures in response to revenue shortfalls ; and the uncertainty about how congress and the administration will address the 2013 federal β fiscal cliff β is likely to inhibit hiring and investment by business. global economic growth has slowed as european activity has stagnated
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operate with significant slack. second, measures of underlying inflation show little upward pressure. in fact, one β the federal reserve bank of new york β s underlying inflation gauge β is turning down. this measure uses a very wide set of variables to forecast the underlying inflation trend. third, it is hard to be very concerned about inflation risks when the growth rate of nominal labor compensation is so low and stable. it is noteworthy to me that the employment cost index has risen only 2. 1 percent over the past four quarters and has shown no acceleration. fourth, inflation expectations remain well - anchored. this is critically important because inflation expectations are an important driver of actual inflation outcomes. taking into account the current stance of monetary policy, i anticipate that inflation will decline to slightly below our 2 percent long - run objective over the next few years. so what does this all imply for monetary policy? i currently anticipate that the federal reserve β s federal funds rate target will remain exceptionally low β that is at the current level β at least through late 2014. given our forecast of stable prices and a still slow path back to full employment, there is an argument for easing further. but, unfortunately, our tools have costs associated with them as well as benefits. thus, we must weigh these costs against the benefits of further action. as long as the u. s. economy continues to grow sufficiently fast to cut into the nation β s unused economic resources at a meaningful pace, i think the benefits from further action are unlikely to exceed the costs. but if the economy were to slow so that we were no longer making material progress toward full employment, the downside risks to growth were to increase sharply, or if deflation risks were to climb materially, then the benefits of further accommodation would increase in my estimation and this could tilt the balance toward additional easing. under such circumstances, further balance sheet action might be called for. we could choose between further extension of the duration of the federal reserve β s existing treasury portfolio and another large - scale asset purchase program of treasuries or agency mortgage - backed securities. bis central bankers β speeches conversely, i would be willing to consider tightening policy at a somewhat earlier stage if growth strengthened sufficiently to materially improve the medium - term outlook and substantially reduce tail risks, or if there was evidence of a genuine threat to medium - term inflation, including a rise in inflation expectations. in such a case, i would anticipate that the first step would be to bring
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global financial sector are of a macroeconomic nature. these relate to the potential effects of higher interest rates, a turn in the credit cycle and, possibly, associated declines in real estate prices and aggregate expenditure. the current global environment places a premium on system - wide risk management. the report highlights the importance of making available information about risk as well as the interplay, and need for consistency, between financial reporting standards, risk management practices and the overall prudential framework. the south african financial sector is also exposed to these risks and the planned implementation of basel ii by south african banks will strengthen reporting standards and market discipline. 6. the south african banking industry the south african banking system is sound and stable. banks are well capitalised, and the average risk - weighted capital - adequacy ratio for the banking system as a whole was 12, 3 per cent at the end of july 2006. growth in the total balance sheet of banks remained strong during the past year and by the end of july 2006, the total assets of banks β comprising, amongst other things, money, loans and advances, investment and trading position and non - financial assets β had increased by 20 per cent year - on - year, to a level of r1 939, 5 billion. by the end of july 2006, the south african banking sector had recorded year - on - year mortgagelending growth of 30, 8 per cent to a level of r608, 9 billion. this growth was due to a number of factors including lower mortgage - interest rates, a lower level of inflation, lower income - tax rates and an increase in the real disposable income of households. there was also an increase in speculative buying, known as the β buy - to - let β boom. real estate prices are currently experiencing a slow - down in growth, which suggests some strong resistance from consumers. consumer spending through credit card lending has recorded year - on - year growth of 38, 6 per cent to a level of r36, 9 billion at the end of july 2006, while the growth in installment - sales debtors has also continued unabated, growing by 18, 8 per cent, to a level of r201, 6 billion over the same period. as the regulator of banks, the bank supervision department of the south african reserve bank will continue to ensure that banks β risk - management processes are appropriate for monitoring these activities in the light of increasing household sector indebtedness and the increasing cost
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out differences in living conditions. germany has this in the form of horizontal financial equalisation among the federal states [ landerfinanzausgleich ], as well as transfer payments to the states of former east germany, which are financed by the solidarity surcharge [ solidaritatszuschlag ]. it may well be that one day the political will considers fiscal transfers between the member states of the euro area necessary and desirable. however, that would then require a change conclusions of the presidency, european council in copenhagen, http : / / www. consilium. europa. eu / uedocs / cms _ data / docs / pressdata / en / ec / 72921. pdf. see the opinion of advocate general cruz villalon on case c - 62 / 14, peter gauweiler, et al. and fraktion die linke im deutschen bundestag v deutscher bundestag ( request for a preliminary ruling from the bundesverfassungsgericht ( germany ) ) delivered on 14 january 2015, paragraph 38 ff. bis central bankers β speeches 21 β 22 june 1993, to the european treaties. there is no provision for a transfer union in the current treaty. and whether you like it or not, that applies to the front door as well as the back door. this is something which those who call for more ( financial ) solidarity must realise. more solidarity within europe in this sense would also require more european control. but we don β t yet have a β euro area parliament β with the democratic legitimation for this, or a supranational budget worthy of this name. at the moment i see correspondingly little willingness from national parliaments to relinquish their budgetary powers in order to centralise them at the european level. the flipside of this coin, however, is that member states, with their own national budgets, have disproportionately more individual responsibility. even without financial transfers, there must be reasons why it is more attractive for member states to be part of the monetary union than to stay outside it. in addition, they must be better off in the euro area than out. in concrete terms, membership of the euro should bring more stability and prosperity. in this respect, the monetary union has already taken considerable steps towards integration. but a common internal market and a single monetary policy alone is not enough to achieve this in the long run. with strict
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the financial crisis. it is difficult to do this with precision in general, and it is especially difficult to undertake analysis so soon after the events have occurred with so little data since the policy implementation. however, what we can do is look at how conditions in specific financial markets, and credit volumes more generally, have evolved, and ask whether this information is at least suggestive that the policies that we have implemented have worked to avert a far more severe and detrimental outcome. i will talk first about programs aimed at conditions in specific markets and the responses of those markets. i will then move to a discussion of credit aggregates more generally. i will use losses on lehman brothers'debt securities that resulted from the investment bank's bankruptcy caused one money market mutual fund to " break the buck, " with others also rumored to do so. this situation led to a rapid escalation in money market mutual fund outflows such that short - term funding markets for businesses and municipalities essentially froze. interbank funding markets also stopped functioning, and overnight rates soared to extraordinarily high levels. the federal reserve flow of funds data for four major credit types β residential mortgages, consumer credit, commercial real estate lending, and commercial and industrial loans β to compare credit aggregates in the current cycle to previous recessions generally considered to be credit - crunch periods. in particular, i will compare credit in the current crisis to the 1990 - 1991 episode that, as you might remember, also included a financial crisis. to preview my conclusions, i confess that i was actually rather startled by the pattern of the data. i originally started to look at these data to determine how much worse the credit contraction in this episode was compared with previous episodes. instead, the data suggest that the actual credit contraction in this episode has been quite subdued compared with what might have been expected. so i do think that policies have helped maintain the flow of credit to businesses and households. how well have policies to contain the crisis worked? a market - by - market perspective the policy responses to the financial crisis have been substantial and have occurred on all fronts. fiscal policy and monetary policy, as well as policies relating to government guarantees and safety nets, such as deposit insurance, have been used to improve conditions in the financial sector. in discussing these policies and how they appear to have worked ( or will likely work in the case of more - recent policies ), i will start with policies and programs implemented by the federal reserve before moving to policies implemented
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contracted quite sharply. for consumer credit ( in the lower - left panel ), it matters β in the lead up to the most recent business cycle peak β how we measure it. without home equity lines of credit ( helocs ) and home equity loans, the increase in consumer credit in the lead up to the 1990 and the 2007 business cycle peaks are broadly similar. if we include all helocs and home equity loans, which can be used in a similar way to consumer credit, then lending in the lead up to the 2007 business cycle peak β represented by the thin red line β increases more notably. 14 consumer credit contracted in the 1990 - 91 recession but has remained broadly flat in the current downturn, albeit with a slight downward drift in more recent quarters. for home mortgages, shown in the top - left panel, lending expanded similarly in the lead up to both the 1990 and the 2007 business cycle peaks. in contrast to the other types of credit, the normalization of each series is also made so that the difference between the level of a lending series at any date and the level at the business cycle peak has a percentage interpretation. for example, if a line has a value of 80 at some date before or after the business cycle peak, it means that the level of the category of lending that the line represents is 20 percent below the level of lending at the business cycle peak. likewise, if a line has a value of 110 at some date, it means that the level of the category of lending that the line represents is 10 percent above the level of lending at the peak of the business cycle. note that cash - out refinancing β like helocs and home equity loans β can also be used in a similar way to consumer credit, which is not included in the chart. this type of lending did not contract in the 1990 - 91 recession but has contracted since the peak of this cycle. apart from home mortgages, the drop - off in credit in the 1990 - 91 recession was notably more severe than what has been experienced so far in the current downturn. there are two possible reasons why this might happen. one is that demand for credit turned down more sharply in the 1990 - 91 recession than in the current downturn, but i do not think that this is the reason. the slowdown in economic activity in the 1990 - 91 recession was nowhere near as severe ( either in terms of depth or duration ) as it has been to date in the current
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total banking system while the takaful sector has increased its penetration rate to 14. 6 % of the population. this is indeed very good progress. in the sukuk segment, malaysia is also the market leader with market share of more than 50 % in sukuk outstanding since year 2000. on the bank β s part, the islamic financial services act 2013 was introduced to modernise our regulatory and legal framework in adapting to changing needs of the industry. the issuances of 12 shariah standards set clear shariah parameters to facilitate innovation beyond credit - based products. there are more than 100 competitive financial products β ranging from basic financial services to wealth management ; corporate finance ; and investment banking. meanwhile, investment accounts have spurred greater investment intermediation activities. since its inception two years ago, investment accounts have grown to account for 12 % of total islamic deposits and investment accounts in 2016. its offering has been further intensified through the operationalisation of the investment account platform which has the potential to mobilise capital to various productive ventures effectively. the development of the islamic finance sector is seen not only in the headline numbers, but more importantly in addressing social and environmental concerns. islamic finance has taken the lead in the space of ethical finance where concepts, such as sustainable, responsible, impact investing ( sri ), have been embraced in pursuit of values beyond financial motivation. an important pioneering example in the islamic capital market is the issuance of sri sukuk by 1 / 4 bis central bankers'speeches khazanah that brings greater social impact through the promotion of quality education. just last month, the first green sukuk has also been issued in the country to promote clean and sustainable power supply. while we have come a long way, now we need to think of β what β s next β? from the bank β s perspective, we believe that the way forward to propel the islamic finance industry to the next level of growth β if i may, a β game changer β β should give equal weight to both economic value creation and upholding ethical values. that is why we have embarked on vbi, which is a holistic approach for our industry players to deliver the intended outcomes of shariah that generate positive and sustainable impact to the economy, community and environment. while vbi shares similarities with concepts such as ethical finance, esg ( environmental, social and corporate governance ) and sri, the distinguishing factor is the central position of shariah in determining islamic finance
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investors after a set of tax changes, and subdued credit demand from new buyers as incomes have been squeezed, has masked the effect of looser credit supply to owner occupiers. mortgage rates have fallen materially relative to bank rate, especially at the riskier end of the lending spectrum ( see chart 2 ). and lenders are now prepared to take a bit more risk. mortgage loan to income ratios are rising. households with high mortgage debt make cutbacks in downturns to keep paying the mortgage. more of these households in an economy typically means deeper recessions ( see chart 3 ). that β s why, when it comes to mortgages, the interests of the real economy can be served by guarding against excessive risk taking by lenders. we put in such guards, as insurance, back in 2014. they β re centred on a limit on new mortgage lending at more than 4. 5 times the borrower β s income and on testing of the affordability of a mortgage to a borrower even if mortgage rates were in the region of 7 %. with lenders now prepared to take more risks, those guards are now working. loan - to - income ratios have increased and are now hitting up against them. the proportion of new owner occupier mortgage loans at loan - to - income ratios just below 4. 5 has almost doubled in the past 5 years. almost a fifth of new mortgages now fall into this bucket ( see chart 4 ). in part because of our guards, households β mortgage debt servicing burdens remain very low. only 1. 4 % of households spend 40 % or more of their income servicing their mortgage debts. and even if interest rates were to be at 2 %, that share - at 1. 9 % - would be no more than it has been on average in the past. for example, bunn and rostom ( 2015 ) find evidence that more highly indebted groups of households made larger cuts in spending following the financial crisis. see www. bankofengland. co. uk / working - paper / 2015 / household - debt - and - spending - in - the - uk a loan to income limit, setting out that no more than 15 % of new mortgages can be issued at loan to income ratios of 4. 5 or higher ; and an affordability test, under which lenders consider whether new mortgagors could still afford their mortgage if they switched to the mortgage reversion rate and
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clear. this complexity makes it virtually impossible to fully comprehend the drivers of culture or predict its behavioral consequences. an implication is the need for a long - term, sustained commitment to addressing conduct and culture reform using a wide range of tools that are suitable for a complex problem. evolution of new york fed β s effort in the ten years that followed the financial crisis, we have continued to see a stream of misconduct scandals and cultural failures, and a corresponding increase in significant litigation and enforcement activity, with costs estimated at an aggregate of $ 320 billion worldwide. 3 at the new york fed, our work in advocating culture and behavior reform in the financial sector 1 / 5 bis central bankers'speeches started in late 2013 when our former president, bill dudley, delivered a speech on the β too - big - tofail β problem. in that speech, he argued that β there is evidence of deep - seated culture and ethical failures at many financial institutions. β 4 more recently, our current president john williams concluded that β we have not yet fully addressed the root causes of many of the problems that have plagued the financial sector β and that there was still a β sense of urgency in addressing banking culture. β 5 over the past five years, the new york fed has focused on shining a spotlight on culture, behavior and conduct concerns, and pushed the industry to address these issues through a range of activities : engaging with diverse thinkers on governance, culture and organizational behavior to better understand the complexity of culture reform ; convening academic experts, and leaders in finance and the official sector through conferences and workshops on culture and behavior reform ; 6 facilitating discussions among the supervisory community on assessing and influencing industry culture - related efforts ; building a platform for a partnership between business schools and industry representatives to influence culture reform through training of future leaders in finance ; and publishing a white paper on β misconduct risk, culture and supervision β that discussed a range of market failures that provide a conceptual rationale for intervention by bank supervisors. 7 our white paper also summarizes work of supervisors from multiple jurisdictions around the world who are increasingly focused on the risks posed by poor culture and misconduct, and have developed a broad assortment of new tools and practices for identifying and supervising for misconduct risk. international efforts range from the creation of specialized units of behavioral risk experts to risk culture assessment frameworks to supervisory guidance that directs supervised institutions to develop and promote a sound corporate culture. i view this variation in approach as a feature and not a bug of the official sector focus on culture
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##ration and validation. in general, the availability of sufficiently granular and historical data series for the non - bank financial sector is still lagging behind the situation on the banking side. these concerns notwithstanding, it should be acknowledged that data availability is improving in some areas following some important initiatives of financial regulators and overseers. in europe, trade repository reporting under emir is one example that can shed light on interconnectedness via derivative markets. 5 another european initiative to improve information about sft should go live in q1 2019 with the securities financing transactions regulation ( sftr ) transaction reporting obligation. furthermore, ad hoc, targeted data collections can help improve the calibration of stress testing models and inform further required changes to the regular financial reporting. if properly constructed, such ad hoc data collections can provide deep insights into potential shock transmission channels. 6 i would like to stress that the research community can offer useful advice on relevant data dimensions in this regard and therefore should be actively involved in designing such data collection templates. as far as the second enhancement is concerned, existing non - bank stress test approaches need to better account for interactions between agents. we know from experience that the impact of a stress test event hitting a financial institution is often amplified via its interactions with the rest of the financial system. therefore, failing to account for such interactions may risk overestimating the resilience of single institutions and the system as a whole. some extensions to the traditional stress testing have already been operationalised, at least for the banking system. i would like to emphasise the inclusion of strategic behaviour ( e. g. balance sheet portfolio optimisation in stamp⬠analytical framework of the ecb 7 ), game theoretical approaches to handle strategic responses to shocks and activity of other market participants ( e. g. in the mfraf stress testing framework of bank of canada ), network effects capturing interlinkages ( e. g. in the ramsi framework of bank of england or the ecb top - down stress test model8 ) or feedback loops with the real economy ( e. g. dsge models in stamp⬠). 2 / 5 bis central bankers'speeches third, as their business models and behaviour differ from traditional banks, specificities of nonbank financial institutions have to be considered carefully when designing tools to stress them. both the policy and academic communities are looking into ways to enhance stress testing models for macroprudential policy. stamp⬠is one example. let me mention a few others focusing on integrating
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, particularly, with the emergence of insurance and pension funds as a β durable β investor class for the longterm securities. this became possible due to the sustained efforts devoted to elongation of the maturity profile of government securities. corporate debt market the development of a corporate bond market in india has lagged behind in comparison with other financial market segments owing to many structural factors. while primary issuances have been significant, most of these were accounted for by public sector financial institutions and were issued on a private placement basis to institutional investors. the secondary market, therefore, has not developed commensurately and market liquidity has been an issue. the government had constituted a high level committee on corporate bonds and securitisation ( patil committee ) to identify the factors inhibiting the development of an active corporate debt market in india and recommend necessary policy actions. the committee made a number of recommendations relating to rationalising the primary issuance procedure, facilitating exchange trading, increasing the disclosure and transparency standards and strengthening the clearing and settlement mechanism in secondary market. the recommendations have been accepted in principle by the government, rbi and sebi and are under various stages of implementation. the two stock exchanges, namely, the bombay stock exchange ( bse ) and the national stock exchange ( nse ), as well as the industry body fixed income, money market and derivatives association of india ( fimmda ) have since operationalised respective trade reporting platforms. while all the exchange trades in corporate bonds get captured by concerned exchange β s reporting platform, otc transactions can be reported on any of these platforms. the aggregated trade information across the platforms is being disseminated by fimmda on its website. bse and nse have also started order driven trading platforms in july 2007. in practice, however, trading still continues to be largely otc. sebi has also implemented measures to streamline the activity in corporate bond markets by reducing the shut period in line with that of g - sec, reducing the size of standard lots to rs. one lakh and standardising the day count convention. further, to streamline the process of interest and redemption payments, electronic clearing services ( ecs ), real time gross settlements ( rtgs ) or national electronic funds transfer ( neft ) are required to be used by the issuers. further progress is anticipated in regard to rationalising the primary issuance procedures, which is a critical step for moving away from the pre - dominance of private placements. to
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the economy is to return to a higher path of sustainable growth and development. these are the correction of macroeconomic imbalances, which i have often characterized as the need to live within our means ; the need to respond to, and exploit the competitive forces unleashed by globalization ; and the deleterious economic effects of population ageing and of environmental degradation. these challenges are by no means unique to malta. economies all over the world at different stages of development are similarly affected. they can, and must, therefore, be transformed into opportunities, because economies which are more successful than others in overcoming them will enjoy a significant competitive advantage. in malta β s case the task is particularly difficult because all of these issues need to be tackled at the same time. indeed, undue postponement of the necessary reforms could have serious consequences. the correction of macroeconomic imbalances the maltese economy has been devoting far too many of its relatively scarce resources to consumption. household and government consumption have increased steadily over the past decade from 80 % to 85 % of gdp. the household savings rate has meanwhile declined from almost 16 % to around 1. 5 % of disposable income during the same period. these trends are a source of concern. first, because a reduced savings pool will compromise future economic growth by curtailing investment. indeed, the share of resources devoted to productive investment has shrunk from almost 30 % a decade ago to just over 20 % today. second, because excessive consumption threatens the sustainability of the economy given the high import content of domestic expenditures. the balance between exports and imports of goods and services has been consistently negative over the past decade, averaging 8 % of gdp. while in past these deficits have been made good through inflows of capital from abroad, there is no guarantee that external imbalances on this scale can persist without posing a serious threat to the country β s external reserves and, ultimately, to the maltese lira. and may i at this point remind you that the low and predictable inflation we have experienced in recent years is largely attributable to the pegged exchange rate regime. this has also significantly reduced pricing risks for exporters and investors. it should, therefore, be clear that undue and sustained pressure on the reserves would evoke a monetary policy response which would have pervasive repercussions. there is no doubt that a primary factor behind these macroeconomic imbalances is the state of public finances. malta β s fiscal
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regulatory framework, and iv ) the improvement of the relevant infrastructure for the bond market. 2 owing in part to these projects initiated by the regional authorities, the asian bond market has developed steadily, although still not deep enough and varying across jurisdictions. the second is a project aimed at building a mutual framework of foreign currency liquidity provision in times of crisis, called the chiang mai initiative ( cmi ). the cmi started building a bilateral currency swap network in the region, which involves a contingent claim on foreign currency reserves held by each asean + 3 authority. the cmi has since enhanced its effectiveness by increasing its size and the number of participants. 3 the authorities are discussing expansion of the scope to cover crisis prevention, as well as to assess the sufficiency of the size. to ensure the effective implementation of crisis prevention and liquidity support in times of crisis, it is essential for the authorities to monitor closely the regional economy and financial markets, and exchange their views on respective macroeconomic policies. the asean + 3 authorities thus established their own but independent surveillance unit, called the asean + 3 macroeconomic research office ( amro ), in singapore in april 2011. in addition, the toplevel finance ministers β meeting will be expanded from 2012 to include the region β s central bank governors in the finance ministers β and central bank governors β meeting. remaining challenges however, challenges remain. although there have been improvements in some areas, as i have mentioned, i would like to raise the following five points. ( 1 ) to solve double - mismatch of currency and maturity the first is about the double - mismatch of currency and maturity. this structural issue has not changed fundamentally in the past ten years. according to bis statistics, cross - border credit denominated in local currencies from foreign banks to local residents has grown rapidly in the 2000s ( chart 2 ). however, their reliance on foreign currencies is still large. fundamental vulnerability continues to be found also with respect to maturity mismatch, although the mismatch has reportedly been improving to some extent. 4 ( 2 ) to change bank - centered financial structure and high reliance on foreign institutions second, the bank - centered structure of the financial intermediary function also remains basically unchanged. moreover, asian region β s funding relies heavily on foreign financial has steadily been recognized by investors, although the extent of this recognition varies across the markets. moreover, the fund has been functioning as a catalyst for improving market infrastructure, such
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arrangement ( cbca ) made between the bank of japan and the bank of thailand in november last year has the potential to be expanded throughout asia. in fact, at almost the same time, a cbca was announced between the bank negara malaysia and the monetary authority of singapore. meanwhile, the emeap formed an action group, and has been discussing the promotion of cbcas within the region. ( 4 ) to foster financial innovation the fourth challenge is to develop innovative financial products, appropriate for an aging population in the region. in asia, the population is aging at a steady but faster pace, not only in japan but also in other economies such as china, korea, and thailand ( chart 6 ). financial innovation is therefore essential to offer a flexible variety of enhanced financial products appropriate to the particular stage in the life cycle of the population. in this regard, the development of securitization seems a key factor. i recognize that securitization, especially in its complex forms, has suffered from a negative image since the lehman shock. however, simple, plain - vanilla type securitization products may contribute to the realization of appropriate risk - adjusted returns on financial transactions including lending, leading to more active operations of financial institutions. moreover, as the credit intermediary channel becomes multi - layered to complement conventional lending, the risk tolerance of the financial system would be enhanced through risk diversification. thus, it is important to β reinstall β useful securitization technologies into the system. in this regard, let me mention, for example, asset - based lending ( abl ), which is collateralized lending based on business assets held by firms. by utilizing effectively a variety of their assets, firms do not have to rely on conventional real estate collaterals and personal credit guarantees when borrowing. abl is particularly useful in providing opportunities for firms at different stages in their life cycles, such as during start - up, business expansion, and business transformation, when it is difficult to obtain sufficient financing through conventional in japan, although the amount outstanding of corporate bonds has been increasing, the market size continues to be limited compared to that of government bonds, and we have to admit that the market liquidity is low. there are also a limited number of issuances of corporate bonds with non - investment grades, which has long been an issue in japan. against this background, market participants established the β forum on the activation of corporate bond market β, and have been discussing a number
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collateral damage. i hope and anticipate that trust and integrity again will be amply rewarded in the marketplace as they were in earlier generations. there is no better antidote for the business and financial transgressions of recent years.
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minimum exchange rate has led to a deterioration of economic conditions. we thus expect a much more modest expansion of real economic output this year of just under 1 %. a noticeable weakening in the economy may be expected, particularly in the first half of the year. in the short term, significant underutilisation of production capacity may be expected and unemployment is likely to increase moderately. there is of course a particularly high degree of uncertainty attached to such forecasts. for one thing, they will depend on how the swiss franc exchange rate evolves in the coming months. for another, it is not certain how international conditions will develop. the us economy is more robust today than it was in 2011. the latest gdp figures for the euro area are once again more reassuring, although the situation remains difficult. in addition, the substantial fall in oil prices has had an easing effect. despite all this, the risks β notably the debt dispute between greece and the rest of the euro area, as well as the crisis in ukraine β are not inconsiderable. in the long term, i am confident that our economy will be able to cope with swiss franc appreciation. the currency has been strong in the past, and has a tendency to appreciate. while a strong currency is an expression of a sound economy, it also presents companies with major challenges, as an appreciating franc means higher prices for foreign customers buying from swiss firms. in order to remain competitive, this disadvantage has to be continuously offset by adaptability, quality and innovation. various competitiveness and innovation indicators suggest that swiss companies have been very successful on this score in the past ; the country regularly ranks among the leaders in these categories ( cf. chart 6 ). these findings inspire optimism, however it is important to remember two things. first, we are dealing with averages here. when it comes to managing the new currency landscape, the options available to individual industries and companies will vary greatly ; and so, in turn, will the impact of swiss franc strength. 3 second, the extent of recent swiss franc appreciation presents switzerland β s economy with exceptional challenges which should certainly not be underestimated. but one thing is clear : entrepreneurial thinking is remains important. we have the utmost respect for this entrepreneurialism and for the employees who are being called upon to support these adjustments. inflation outlook let me now turn to the inflation outlook. the snb β s mandate is to ensure price stability in the medium term, while taking
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. as experience has shown, β the constructive ambiguity β with respect to the market interpretation of the no bailout clause embedded in the treaties has not really been effective. the esm could play a larger role in this respect. capital markets union is a natural complement to the banking union. it aims at promoting financial integration and enhancing shock absorption via financial markets by facilitating private risk - sharing whilst reducing opportunities for regulatory arbitrage. cmu should also support the smooth and homogenous transmission of monetary policy. a number of concrete measures are listed in the commission β s action plan to strengthen : securitisation, insolvency regimes, and tax legislation need to be prioritised. cross - border barriers to clearing and settlement should be removed. i welcome the commission β s communication on accelerating the cmu. swift implementation is of the essence. implementation of promises and adherence to new rules is key as a result of these measures, our economic and monetary union is considerably more resilient today than it was at the peak of the crisis. the strengthening of the recovery in the past year, in spite of challenges on several fronts, is testimony to that. yet the strengthened framework can only deliver stability over the longer term if national governments keep their 2 / 3 bis central bankers'speeches promises and adhere to the rules. for economic and fiscal policies this means : structural reforms are necessary to raise productivity and improve the business environment. fiscal policies should be designed so that they support the economic recovery by focussing on productivity - enhancing measures. at the same time, fiscal rules need to be respected to build confidence in the sustainability of national finances. more decisive action by national governments and respect for the rules that we have commonly agreed on is essential for a stronger and safer economic and monetary union. it is also a vital prerequisite for any further move towards shared fiscal sovereignty in the euro area. the five presidents β report has outlined a vision for improving the architecture of emu and provides a roadmap for completing political and fiscal union. let me share with you some considerations on frequently floated ideas : in the long run, sound fiscal policies at national level could be accompanied by the establishment of a euro area fiscal capacity with own resources, central control of spending and democratic control on the european level. this would provide a european automatic stabiliser and could allow financing european public goods. this would lead in the direction of the practice of federations, where spending on functions such as defence or r & d is
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and overcoming costly fragmentation in the european market for cards. consumers and merchants in the card payments market are likely to benefit most from sepa if there is sufficient competition. w. bolt and h. schmiedel : β sepa, efficiency and payment card competition β, working paper series, ecb, forthcoming. so far, a critical factor in the emergence of an additional european card scheme has been the uncertainty surrounding interchange fees. clarity has now been provided through the β tourist test β or β equivalence test β methodology. the market would feel more comfortable with a list of β what is allowed β and β what is not allowed β regarding interchange fees. however, we need to accept that dg competition β s mandate is to act on specific cases and not to define the rules. i am aware of the uncertainty within the banking community on whether the β equivalence test β will from now on be the guiding methodology or whether it will just be an interim solution. of course, i cannot answer this for the commission, but the β equivalence test β is, in my view, one of the possible methodologies, and it has the advantage that the competition authority seems to be comfortable with it. this does not mean, however, that market participants cannot conceive other models and methodologies β but they will clearly have to be in line with competition rules. allow me a final reflection on interchange fees : one can certainly find alternative ways and arrangements for replacing the mifs. however, before entering into complicated undertakings and setting up new structures, a banker should not disregard the possibility of lower interchange fees being translated into higher earnings through the volume effect. recent research work focusing on the spanish market in the period from 1997 to 2007 found evidence that banks were even better off after the intervention of authorities on interchange fees because the increase in the volume of transactions offset the decrease in pertransaction revenue. 6 the market for card schemes is in a decisive stage of development. we are very much concerned about the possibility that small national schemes such as dutch, finnish and irish schemes will be replaced by the international schemes. i would invite the banks behind these schemes to also consider the possibility of joining one of the new european card scheme initiatives. let me clarify once more that europe needs visa and mastercard, since they are currently the only schemes that offer a pan - european card payment solution. but we also need sufficient competition. for the moment, there are three new card scheme initiatives, each with their own strengths and
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to. the eu commission should thus not give italy, france and belgium more time to reduce their high budget deficits? that is matter to be decided by the eu commission. the current situation, however, is not exactly optimal in this respect. the eu commission has rightly censured countries like italy, france and belgium because they have not met their deficit targets. it has, however, not taken any further measures. that increases uncertainty because nobody knows whether the rules are currently being applied in full or not. the eu commission should therefore come to an unequivocal decision that ensures the credibility of the stability and growth pact as soon as possible. that does not fall within the mandate of the ecb. our task is to ensure price stability. this very aim is now thought by economists to be at risk β in december the price level even fell. is that already deflation? the ecb β s definition of it seems so far to have been vague. i would speak of deflation when both prices and output are falling and the problem is getting worse and worse β because people don β t invest or consume when they are waiting for prices to fall further. so far, that hasn β t been the case. however, inflation rates throughout europe are extremely low and far removed from 2 %, from what central bankers define as price stability. we cannot ignore that. but prices have recently fallen simply because oil has become so much cheaper. why is the ecb allowing that to put it under pressure to act? you can β t influence short - term fluctuations in the oil price anyway. a falling oil price is generally a one - off shock, but, first, this time it β s unusually large. second, inflation was too low even beforehand, and inflation expectations are moving further and further away from 2 %, which we aim in our monetary policy to achieve over the medium term. bis central bankers β speeches so you would prefer to ignore the fall in the oil price as you β ve done in the past β but you can β t afford to at the moment? we do indeed want to screen out short - term effects, but it β s becoming more and more difficult to keep to this. in the current environment, the continuous decline in oil prices increases the danger that people will lose confidence in our inflation target. but will the ecb be able to achieve much in any case? even a β¬1, 000 billion government bond programme is forecast to create only 0. 1 to 0
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resale activity have been robust, supported by low mortgage rates and a desire for more living space. stronger foreign demand and rising prices have boosted activity and exports in the oil and gas, mining and manufacturing sectors. business investment intentions are also rising as confidence in the recovery has improved. in all, the level of economic activity at the end of last year was almost 1 percent higher than we had anticipated. however, recent data tell a mixed story about the labour market, which remains a long way from a full recovery. job losses in december and january were sizable. the losses were concentrated in quebec and ontario, in sectors most affected by the restrictions and mainly among part - time positions. but employment was resilient in some other sectors, surpassing levels seen before the pandemic. the near - term inflation outlook has been revised up. we now expect that inflation will move temporarily above our 2 percent target in the coming months, to around the top of the 1 to 3 percent control range. that reflects rising prices for gasoline, combined with adjustments from the prices of numerous goods and services that fell sharply when the pandemic struck a year ago. we then expect inflation to moderate, given excess capacity in the economy. accumulated savings and consumption let β s now turn to the impacts of the pandemic on income, spending and savings. the virus caused unprecedented losses in jobs and labour income. it also reduced household spending. however, extraordinary fiscal support more than offset these income losses, so on balance, household income increased. when you couple this increase with the drop in spending, household savings rose dramatically. this outcome may seem puzzling, but the story behind it largely rests on the pandemic β s uneven impact across sectors and workers. let β s look first at the impact on labour income. about three million jobs disappeared between february and april 2020. high - contact sectors β primarily services β as well as the lowwage workers employed in these sectors β primarily women and youth β were the hardest hit. jobs for workers earning less than $ 16 an hour fell 27 percent in 2020, almost five times the decline in overall employment. together, the hospitality and retail trade sectors explain 30 percent of the shortfall in employment income, while less than 10 percent can be attributed to sectors at the top of the wage scale ( chart 1 ). - 4chart 1 : losses in labour income in 2020 occurred primarily in low - wage sectors share of the total loss in compensation of employees per sector by wage
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is of course no guarantee that if we work really hard we will definitely achieve great success, but at least we will have a chance. if we don β t even give it a try, there is no hope. it does not matter which way you may wish to go as long as you are fully aware that you do have a choice. that choice, which will shape your careers and your whole life, is yours and yours alone. thank you.
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the exchange fund. ( ii ) while we have been weaving esg factors into our investment process over the past few years, the hkma will now adopt a guiding principle that priority will be given to green and esg investments if the long term return is comparable to other investments on a risk - adjusted basis. ( iii ) going forward, we will be more proactive in embracing esg in exchange fund investment in both public markets and private assets, for example, by : ( a ) growing the green bond portfolio by direct investment or investing in green bond funds ; ( b ) on the public equities side, we aim to create esg mandates by adopting esg equities index as benchmark for passive portfolio, or by engaging active equities managers who use an esg filter in equity selection ; and ( c ) in the private markets, we will include green accreditation as a predominant factor for investment in real estate, and will also conduct esg evaluation as a mandatory part of due diligence of all private markets investments, especially in infrastructure area. 17. the third measure is to strengthen our capacity building efforts by launching the centre for green finance ( cgf ) under the hkma infrastructure financing facilitation office ( iffo ). ( i ) the purpose of the centre is to ensure that our financial institutions are equipped with the knowledge, skills, tools and other resources in green finance, particularly with the launch of the green and sustainable banking initiative. the cgf will serve as a one - stop shop in capacity building for the financial industry, especially banks, in the coming months. we are already in discussions with international organisations such as the international finance corporation on how to leverage their expertise on this. 18. apart from these three initiatives, the hkma helped to issue hong kong government β s inaugural us $ 1 billion, 5 - year green bond under the government green bond programme earlier in may. ( i ) we have seen strong demand for this issuance, attracting orders exceeding us $ 4 billion, allowing the green bond to be priced at a tight spread against the us treasury at issuance. the issuance has helped to set an important new benchmark for potential green bond issuers in hong kong and the region. ( ii ) the deal has attracted interests from a diverse group of conventional and green investors. orders were received from over 100 global institutional investors, and 50 % of the green bond was distributed to asia, 27 % to europe and 23 % to
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months. recent public discussions have centered on parity movements. the real exchange rate is, without any doubt, a key variable in resource allocation and in the balance between saving and investment. unlike conjunctures of past decades, in particular those of the mid - 1980s, the chilean economy has dealt with the complex global financial situation from a much sounder standpoint. the sudden global collapse of late last year found us with no big currentaccount or fiscal deficit, nor with a high external debt requiring strong fiscal adjustments with substantial real depreciation that would place the economy in a sustainable medium - term path. on the contrary, the significant contraction of domestic demand, in particular for imported durable goods and inventories, spontaneously and quickly undid the incipient external deficit of the second half of 2008 and interest rates in chile dropped. the chilean economy has continued to show a very solvent net external position. figure 2 cpi and selected inflation measures ( annual change, percent ) - 2 cpi - 2 mar - 03 mar - 04 mar - 05 mar - 06 mar - 07 mar - 08 mar - 09 cpix cpix1 cpi minus foods and energy sources : national statistics bureau ( ine ) and central bank of chile. as we have pointed out on earlier occasions, persistent movements of the exchange rate may have inflationary consequences that must be taken into account when deciding on the monetary impulse. anyway, our floating regime admits intervening in exceptional cases, whenever an overreaction of the exchange rate is detected that is giving misleading signals to the financial markets. in addition, although there is no obvious misalignment of the current real exchange rate from its long - term fundamentals, the present inflationary scenario may accommodate a nominal depreciation that does not compromise our price stability objective. in fact, imported inflationary pressures influence medium - term inflation, so if the recent appreciation of the peso persists, inflationary prospects will certainly moderate, which, as i just stated, has implications on the conduct of monetary policy. from the public finance standpoint, it is hardly obvious that the aforesaid situation could have been avoided with a different mix of credit sources for the necessary fiscal impulse. this, because the level and the structure of interest rates are also important when trying to affect gaps and inflation in the medium term. summing up, the changes we have seen in the macroeconomic scenario since last may lead us to think that, if anything, inflationary pressures are less than were
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workshop fruitful and informative. please feel free to bring to our attention the kind of facilitation that you may need to make this workshop successful. thank you very much.
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of clearly - defined and fully monetized cost structure hampered the adjustment of savings ratio. it is therefore important to expedite the reform of the public sector and the transformation of the government functions. v. observations on low household saving ratio in the u. s. the u. s. household savings ratio in recent years went through two phases : before the mid1990s, it ranged between 7 - 10 % ; after 1997, it declined remarkably with pronounced β twin deficits β, especially trade deficit. some attributed the low savings to the so - called β euphoria β on the u. s. economic performance since the mid - 1990s. specifically, in late 1980s and early 1990s, after the collapse of the central planning system of the former soviet union and eastern europe, growth in those regions steadily slipped. in the 1990s, the japanese economy was also trapped in prolonged stagnation, and eu β s economic performance was lackluster due to structural problems including rigid labor market. the u. s., as the largest economy, boasted the optimal economic system that was seemingly unparalleled in the world. the only remaining challenge, in terms of economic system, came from asia ; after 1997, the asian economies suffered heavy blows. in contrast, the us economy demonstrated strong flexibility and resilience, and recovered rapidly from the 9 / 11 attack and the burst of it bubble in recent years. all these augmented the euphoria sentiment in the market, which in turn influenced the saving behavior of the u. s. residents. however, the unprecedented magnitude of the current financial crisis is expected to dramatically dampen such euphoria sentiments. the time series show that this round of low savings and high consumption in the us commenced in mid - 1990s. in contrast, the savings ratio of east asian countries only surged after the asian financial crisis and china's savings ratios did not begin to increase until 2002. the difference in time distribution indicates that there is no significant causal relationship between the two. vi. options for adjusting saving ratio global savings imbalance exists for many reasons. it seems inappropriate to link savings ratio only to exchange rate, and it is also unrealistic to resolve long - term issues in the short run. one should, instead, adopt a broader and more comprehensive mindset in examining the imbalance of savings. first, a comprehensive set of prescription is needed. although the u. s. can β t sustain the growth pattern of high consumption and low savings
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national wealth as the east asian countries but lower savings ratios. this can be attributed to the cultural differences in the region, where people have a higher propensity of consumption and tend to quickly use up all their salaries. third, family tie is strong in the east asian countries, and families shoulder social responsibilities such as providing for the elderly and bringing up children. fourth, according to the life cycle hypothesis by franco modigliani, more money is saved to meet future pension and healthcare needs as the share of working age population increases. when we study the phases of economic growth, in times of exceptionally high economic growth, most of the incremental income will be saved, resulting in an unusually high savings ratio. china fits in the above - mentioned two conditions for a high savings ratio. japan and the u. s. can also demonstrate the contribution of these factors in determining savings ratio. similar to the u. s., japan is a developed country with high per capita income. the social security systems in the two countries have their respective weaknesses. however, japan β s savings ratio is much higher than that in the u. s. this can be largely ascribed to cultural, family value and demographic feature in japan, which are fairly similar to those in other east asian countries. some argue that an inadequate social security system leads to high savings ratio. though logically sound, this argument lacks adequate empirical support. moreover, it is based on the assumption that human behaviors are rational and people increase their savings for future healthcare and pension needs. in fact, such an assumption does not necessarily stand. high savings ratio in oil - producing countries has different reasons. endowed with rich oil resources that far exceed their normal demand, these countries naturally accumulate their wealth in the form of savings. the elementary textbooks on economics always start with β supply, demand and prices β, which lead the readers to believe that certain prices ( e. g., exchange rate and interest rate ) can determine the behavior of savings and consumption. however, the fact is that the level of savings ratio is influenced by a wide range of factors, and it can β t be adjusted simply by changing nominal exchange rate. factors such as national tradition, culture, family structures, demographics and social security system can β t be changed in the short term. as a result, it may take a long time for policies to yield intended impacts. iii. implications of the asian financial crisis for savings ratio in the east asia savings in the gdp are composed of resident
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##ncies, the governing council of the ecb intervened by unveiling, late in the summer of 2012, a new instrument, termed β outright monetary transactions ( omts ) β. with the omts, the eurosystem would undertake large - scale purchases of government debt under strict conditionality. although in fact it never became necessary to activate this instrument, its mere announcement led to much calmer conditions in euro area financial markets and to receding fragmentation, demonstrating the commitment of the ecb to do β whatever it takes β β to use the famous phrase of president draghi earlier that summer β to save the euro. subsequently, the euro area faced very low inflation rates, far below 2 %. again, the eurosystem initiated a multidimensional policy reaction, aiming to counter the fragmentation of financial markets in the euro area, which was fed by the sovereign debt crisis, as well as to revive the lending activities of banks. the eurosystem carried out targeted long - term refinancing operations ( tltros ), on favourable lending terms for those banks with the strongest credit expansion to the real economy, continued to cut key interest rates, and employed forward guidance. additionally, a large - scale purchase programme of private and public sector securities ( app ) was initiated in late 2014 and is unprecedented in scale at β¬2. 5 trillion last month. purchases 1 / 5 bis central bankers'speeches under the app are expected to run until the end of the current year, after which time the eurosystem will continue to reinvest the proceeds from securities maturing in its portfolio. to a large extent, these measures have helped improve financial conditions and the inflation outlook, and boost the recovery in the euro area1, while potential side - effects from the monetary policy easing, in the form, say, of excessive asset valuations or excessive risk - taking by market participants do not seem to have materialised. given that inflation pressures continue to be moderate in the euro area, substantial monetary policy stimulus shall continue to be provided in several ways, until the governing council assesses that developments regarding inflation are compatible with the eurosystem β s mandate. challenges for the future looking ahead, one main challenge relates to the formulation of monetary policy strategies by central banks in the aftermath of the crisis. will the strategies eventually converge to the pre - crisis status quo or will the β new normal β reflect some of the lessons learnt over the previous years? β’ according to the first approach, central
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steps toward increased data and transparency in the u. s. treasury market. earlier this year, finra began releasing daily aggregate data on treasury market transactions, and at this conference last year, the u. s. department of the treasury announced plans to release trace transaction 1 / 2 bis - central bankers'speeches data for on - the - run nominal coupons. however, even with this progress, gaps in transparency remain. in march, the treasury markets practices group ( tmpg ), which is sponsored by the new york fed, put out a white paper on data availability and transparency in the u. s. treasury market that identified several gaps, particularly in the dealer - to - client cash market and the repo market. looking at the gap in the cash market specifically, there appears to be opportunity for improvement in providing transparency around transaction - level data. i am looking forward to the increased transparency in on - the - run transaction data that i mentioned earlier. looking further ahead, we should consider whether to take additional steps toward increased transaction transparency across the treasury universe, especially for the less liquid segments of the treasury market, such as the off - the - run market, where transparency is currently limited. the off - the - run market was the center of much of the dash - for - cash selling of treasuries that occurred in march 2020, yet there is little data on off - the - run trading available to the public, making it challenging for academics and others to study such stress events in detail. as we think about increasing transparency, it is important to exercise continued prudence, as there can be reasonable concerns about public transaction data, such as potential challenges that data may create around intermediating certain large trades. however, the success of public trace data transparency in the mortgage - backed securities and corporate bond markets provides guidance on how data can be shared without negatively impacting the market, such as displaying data with appropriate mitigation measures like time delays and capped trade sizes. in fact, academic research has generally found that the introduction of trace data transparency in these markets resulted in increased competition and reduced transaction costs. additionally, we can learn more about how to structure public releases of data on less - liquid securities by studying the future release of on - the - run transaction data. greater transparency into treasury market activity can support the market's many important roles : as a risk - free benchmark for financial instruments ; as a liquid investment and source of safe collateral ; as a channel
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kerstin af jochnick : a springboard for the monetary policy meeting in september speech by ms kerstin af jochnick, first deputy governor of the sveriges riksbank, at a meeting at danske bank, stockholm, 21 august 2012. * * * it has become something of a tradition for us members of the executive board of the riksbank to hold a speech at the end of august about the current economic situation and developments during the summer. i think that this is a tradition worth upholding. true, not many people here today manage to completely cut themselves off from world events during their holidays. we still manage to maintain a watchful eye on the inflow of news and statistics. however, although i believe that many of us follow the economic news coverage during the summer months, it may be useful to have a round - up of what has happened. it provides an overview and can act as a β springboard β for starting work in the autumn. a natural starting point for me is the assessment of economic developments described by the riksbank in the monetary policy report published in early july. i therefore intend to run through this assessment briefly and comment on my own thoughts at the meeting in july. i shall then try to summarise developments since then. of course, this concerns to a large extent the crisis in the euro area, although some interesting statistics have also been received. i will also mention the on - going discussion on libor and stibor as this has been a major news item during the summer. i have chosen to call this a β springboard β for the monetary policy meeting in september. this is not intended to direct one β s thoughts to sporting achievements, which can easily happen, given that the olympics are still fresh in our minds. what i mean to indicate is that this is a status report on which to base the start - up of a new process, which for the riksbank is a process that will lead to a new joint economic assessment. i will not be presenting this type of assessment today. this will be released in connection with the next monetary policy meeting on 5 september. the assessment in the july monetary policy report great uncertainty over future developments perhaps the most difficult question we had to deal with at the most recent monetary policy meeting was how an unexpectedly strong outcome in sweden at the beginning of the year should be viewed in relation to increased concerns over poorer developments in the euro area. when we executive board members gathered
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loans. as the ratings have set the tone for how the instruments are assessed, the downgradings have meant that the financial markets more or less lost confidence in anything that might contain subprime loans. finally the banks were also affected but it was not only hedge funds that had invested in subprime loans. the banks β investment companies had also done so to a great extent. the buyers of the investment companies β certificates are usually risk averse investors who are choosing between buying short government securities and corporate certificates. when it became clear, or even when there was reason to suspect, that subprime loans were among the investment companies'assets, the demand for certificates fell drastically. investors instead chose to buy short government securities, which meant that interest rates on these fell. one could say that the investment companies suffered a classic bank run. the parent banks were now forced to fulfil the liquidity guarantees they had made earlier. at the end of july the german bank ikb announced that it had suffered major losses through an investment company that had invested in subprime loans. some weeks later another german bank, sachsen landesbank, experienced similar problems. see also the committee on the global financial system ( 2006 ) : β housing finance in the global financial market β, cgfs papers, no 26. subprime loans comprised an estimated 13 per cent of the total mortgage stock in the united states in 2006. the banks then began to hoard liquidity and distrust spread throughout the bank system. banks that had investment companies did not want to lend money as they might need it themselves to meet their own guarantee obligations. even banks without investment companies were unwilling to lend money as it was uncertain where in the bank system the credit risk was actually located. it was impossible to gain a clear insight into the complicated cdo structures. consequently the interest rates on the interbank markets soared. parallel to this, scepticism towards the credit rating agencies'ability to grade structured products increased, and this concerned not only products containing subprime loans. several central banks decided at this point to intervene in different ways in the interbank market. in general, the interventions contributed to reducing interbank rates towards desirable levels for shorter durations. for the longer durations the difference between the interbank rate and the risk - free rate remained substantial. the unwillingness to lend money was a hard blow to institutions dependent on financing from the market. for example, the british mortgage lender northern rock
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grass - root organization closely connected to women and households. so far, the scheme has been running quite successful as evidenced by the wide access of the poor households to the credit support ( 98 percent of the credit funds was used to help the poor families ), the high success ratio of projects ( over 90 percent of micro credit recipients benefited from the support ) and high ratio of loan recovery ( nearly 95 percent of the loans were recovered except for situations when natural disasters or catastrophic accidents fall ). micro credit directly provides funds for the poor and employed women to start up production activities, thus creating a favorable condition for them to shake off poverty through reemployment and engagement in new business. micro credit scheme has also transformed the perceptions of the poor and employed women about jobs and contributed to their improved understanding of self - development based on dignified living. micro credit has generated technical services and training opportunities for the poor women to increase their production knowledge and skills, strengthen their perceptions about commodity economy and market competition, resulting in their broadened horizon and improved adaptability to the changing environment. apart from the above - mentioned economic gains, micro credit has also benefited women on the political front. it has improved reliance of women in the rural areas on local political organizations which have helped awaken their sense of involvement in the course of economic construction and self - rule by the villagers. so far, 4860 women β s economic cooperatives have been established in the poor areas in shanxi province with the support of micro credit scheme, and a large number of capable women have been elected into the β two committees β in the rural areas ( the villagers β committee and the local party committee ), promoting development of political civilization in rural china. in today β s situation when massive men and women aged young are floating out from the rural areas to the cities, it is of profound significance to strengthen micro credit support for those women remaining in the fields. in mainland china, apart from the micro credit support under the initiatives of the women β s federation, the government has also applied relevant international experiences to help reduce poverty. for example, in 1993, the chinese academy of social sciences started to introduce micro credit schemes on a pilot basis in certain poor areas in china by referring to the experiences of bangladesh in poverty reduction. so far, micro credit business has already conquered the following three stages of development in mainland china. first, business launching on pilot basis ( from early 1994 to october 1996 ). at this stage, micro credit business was mainly
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high financial leverage of enterprises, an increase in interest spread can quickly translate into high financial costs for enterprises and big impact on the economy as well. another situation that may arise is that banks may be reluctant to give loans when facing risks and uncertainties in creditor protection. the resulting macroeconomic impact is evidenced by the japanese experience. reluctant to lend is a common phenomenon around the world. for instance, last year the loan to deposit ratio in hong kong was less than 50 percent. the ratio in china was about 70 percent. if financial bills issued by development banks were counted the ratio could be as high as 80 percent. if the banks cannot extend loans with confidence due to uncertainties in the financial environment and have to lower loan to deposit ratio as a result of new risk management requirement and banking supervision, the impact on growth, employment, and the goal of achieving a wealthy society should not be underestimated. while if neither increasing spreads nor withholding lending is feasible, the result may be that npls grow and accumulate and new actions are required. when it comes to absorbing npls, i would like to cite an analogy. when you think the tail of your cat needs a trim, you β d better cut it once and for all. if you cut it one time after another, each time both you and your cat have to endure pain and struggling. unfortunately this is a high probability event. hungary, a country that started reform much earlier and experienced radical transition, has had to cut the β tail β three times so far in reforming its banks. very few countries can claim success after just one operation. even the very few that had succeeded had to endure the painful cost of high inflation. in sum, the impact of financial environment on macroeconomy is an issue that deserves special attention. vi. emerging international consensus and standards the legal issues concerning financial ecology have always been at the center of attention in the evolution of the views of international organizations and the emergence of international standards. at the g20 ministers meeting held on november 20 - 21, 2004 in berlin, germany, the g20 issued a paper entitled financial institutional building, which summarized the consensus among the g20 members on the priorities of institution building in the financial sector. out of all of the elements, the g20 first stressed the importance of improving the legal framework, and pointed out that implementing and enforcing credit rights ( such as collaterals ) protection can contribute to improving financial services and deepening financial markets. in order to strengthen the
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swedes would not be able to resist the attraction of the euro. as an emu supporter, i can of course see the advantages of the euro, but to believe in a general, spontaneous transition would be going too far. this meant that the idea of a'euroisation'was also a bad argument in the debate prior to the start of the emu. if the swedes are to be won over to the idea of the emu, we should be emphasising the facts. personally, i believe that it will be easier to arouse interest in a discussion based on facts, when the euro banknotes and coins appear next year. globalisation requires stable game rules after this in - depth foray into the world of the euro, i shall return to the more general issues following on from the current internationalisation process. this creates, as i said earlier, the right conditions for a more rapid economic growth, but it does not offer any guarantee that this will be the case and it is important to remember this. the swedish economic crisis at the beginning of the 1990s is still fresh in most of our memories. that experience provided a clear illustration of the importance of pursuing a long - term, credible economic policy. however, it also showed the importance of building up properly functioning institutions to oversee the financial markets when deregulated. in sweden it was evident that the supervisory authorities were not prepared for the reality that would prevail after the deregulation of the credit markets in the 1980s. similar conclusions can be drawn from the crises in for example mexico and asia. these also show clearly that countries wanting to participate on the international capital markets must meet the requirements for openness and provision of information. this is positive, not only because it facilitates access to international capital, but also because the requirements make it more difficult for the governing elite and pressure groups to line their pockets at the expense of the majority of the population, if they want to take part in international society. the crises during the 1990s have also demonstrated that problems in one country can spread to other countries at a much greater speed than before. for this reason, some people would like to see an inbuilt time lag in the markets, for instance by introducing a tax on financial transactions, to reduce the damage to individual countries when capital moves rapidly across borders. this idea is based on most of the transactions on the international financial markets being pure speculation. naturally, there is some harmful speculation that needs to be counteracted
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for the rapid industrialisation that took place during the latter part of the 19th century, when sweden joined the global economy in earnest. we know that there was great mobility within the international economy of that time, described for example in vilhelm moberg's books about the swedish emigrants. many of us have relatives in the usa as a result of the massive emigration, when more than one million swedes left the country to seek their living elsewhere. this process was made easier when the obligation to carry a passport was abolished in 1860 and it became easier to move across sweden's borders. there was also considerable migration within sweden. today's labour market cannot compare to this in terms of flexibility! another important element in the dynamic economy of that time was the development on the financial markets. the rapid industrialisation of sweden would hardly have been possible without functioning capital markets that ensured savings were channelled where they were most needed. the deregulation of the swedish interest rate markets in 1864 was important for this capital transfer, but was not sufficient to enable large - scale industrialisation in sweden. this required, in addition, access to the international capital market. i shall let the major swedish railway project began in the mid - 1800s explain why. the state paved the way abroad sweden was sparsely populated with vast distances, which made railway construction relatively expensive, compared with large parts of europe. in addition, the railways tied up investment capital for a long period of time. as there was a shortage of long - term savings in 19th century sweden, they were forced to seek financing abroad. in 1857 the swedish national debt office ventured out onto the international capital market. the first railway loan was issued in germany and comprised the start of an era with extensive capital imports to sweden lasting more than 50 years. this provided sweden with access to capital for productive investments on a scale that would scarcely have been possible otherwise. the central government borrowing paved the way abroad for other borrowers, such as municipalities, mortgage institutions and industrial companies. the large swedish banks were to a large extent given the task of acting as intermediary in bond loans and thus had the opportunity to develop contacts with foreign banks. the integration of the financial markets increased. for sweden, this meant that our manufacturing companies could make use of the greater access to capital and lower interest rates in industrially - developed europe. gothenburg, with its proximity to the british goods and capital markets, played an important role here. for instance, the skandinavis
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been at record high levels, and the labor market is in a state that is close to virtually " full employment, " as evidenced by the fact that the unemployment rate has declined to 3 percent. against the backdrop of such tightening of labor market conditions, wages have been increasing moderately. base pay increases, which had not taken place for many years under deflation, were achieved for three consecutive years. in the financial markets, excessive yen appreciation was corrected and stock prices have risen significantly. it is certain that the bank's monetary easing has played a large role in economic recovery. in order to achieve the price stability target of 2 percent in a stable manner, it is necessary to drastically change people's deflationary mindset and raise their inflation expectations - - that is, people's perception of future price developments - - to 2 percent. on this point, qqe has been effective in raising such expectations. as mentioned in the bank's " comprehensive assessment, " inflation expectations rose significantly through summer 2014, after the introduction of qqe in april 2013. furthermore, the expansion of qqe in october 2014 played a role in supporting inflation expectations ( chart 8 ). these facts indicate that, under qqe, the expansion of the monetary base in combination with the commitment to achieving the price stability target have affected people's perception of prices by bringing about a regime change in monetary policy, and have contributed to raising inflation expectations. second, the main reason for not being able to achieve the price stability target of 2 percent despite such a positive turnaround in economic and price developments is that inflation expectations, which had increased significantly due to a regime change in monetary policy, weakened again. after the introduction of qqe, the year - on - year rate of change in the cpi reached 1. 5 percent in april 2014 and inflation expectations increased steadily. thereafter, however, mainly reflecting weak aggregate demand following the consumption tax hike, a decline in crude oil prices, and the global economic slowdown as well as turmoil in global financial markets, inflation expectations started to decline after having been flat for a while, with the observed inflation rate decreasing. the mechanism of formation of inflation expectations in japan has tended to be largely adaptive after the prolonged deflation, in that such expectations are influenced by the course of the past inflation rate. going forward, in order to achieve the price stability target of 2 percent, inflation expectations need to be raised once again by adopting more powerful measures. third, it
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the 1930s. not surprisingly all advanced economies, being stressed by the worst financial and economic crisis since world war ii, are called to reflect on the weaknesses of their economic and financial structures and on the appropriate reforms to redress their medium and long term macroeconomic and macro - financial strategies. this is the case in the united states. this is the case in japan. it is the case in the european union and in the euro area as well. my plan for tonight is precisely to assess the institutional framework of the euro area by highlighting the origin of the tensions we are currently experiencing and the plausible solutions that would help to restore market confidence and consolidate the building blocks of emu. thucydides ( 431 bc ) : the history of the peloponnesian war ( translated by richard crawley ). as its name suggests, β economic and monetary union β has two attributes : one is β economic β and one is β monetary. β the monetary attribute of our union refers to the ecb, its mandate and its independence. the β economic β aspect of our union comprises the fiscal regime enshrined in the stability and growth pact ; the national frameworks of economic policy, including macroeconomic policy and financial supervision ; and the system of mutual surveillance. the developments we are currently witnessing in europe β s economy have to do with its β economic β functions. they have essentially three origins : unsound fiscal policies in a number of member states ; inappropriate macroeconomic and supervisory policies in a number of member states ; and overall an inadequate system of surveillance. this is the triangle that lies behind the current situation. and let me make this very clear : the triangle does not include monetary policy. * * * the β monetary β side : price stability in the euro area the β m β side of the emu is relatively straightforward to assess. the treaty assigns the ecb the primary responsibility for maintaining price stability in the euro area over the medium term. we now have almost 12 years of experience with the euro : this is a sufficiently long span of time to provide an evaluation of how successful the ecb has been in delivering on its mandate. you all know that from the outset the ecb has set itself a very clear numerical benchmark, which is a public and transparent yardstick. the ecb β s governing council has defined price stability to be an annual rate of inflation in the euro area of below 2 % over the medium terms. the governing council has also declared that, in pursuing its
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the " fellow researcher " program which allowed the bank β s executives to collaborate with experts from central banks of other countries such as the united states, canada and poland, and i hope we will soon be able to extend this cooperation to african researchers. in addition to our institutional publications, a series of working papers were drawn by the bank staff, and are gradually becoming a reference for research in various areas directly or indirectly related to our missions. moreover, the bank organizes a series of timely or regular scientific meetings, such as the international days of macroeconomics and finance, which we hold each year. ladies and gentlemen, a mere glimpse into the conference program can show us how proud africa can be of its diaspora, which has succeeded in positioning itself in the best universities in the world. this great potential can be harnessed by integrating some africa - specific issues in its research agendas, and strengthening the ties with the african academic institutions. national authorities, for their part, have an important responsibility in this respect. they are called upon to put in place enabling frameworks that are flexible enough to attract this diaspora and benefit from its skills. in our view, it also falls upon the international cooperation to strongly support africa through this path, by systematically expanding its programs and including a component dedicated to enhancing research capacities. this becomes all the more important today as africa has launched a major project of economic integration, namely the african continental free trade area, whose success is determined by taking into consideration other related fields, particularly research and teaching. ladies and gentlemen, in conclusion, i would like to highlight the great interest aroused in our country by holding such a scientific conference which brings together many eminent researchers and professors here present today. i take this as a gesture of support and encouragement, but also as a sign of confidence in the future of research both in morocco and africa. i wish full success to this conference and i thank you all for your attention.
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a budgetary effort of around 6 percent of gdp, we still struggle to put our education system on track to provide the skills adequate for the labor market and to develop research and innovation. amid an increasingly competitive world, constantly reshaped by deep - seated changes which alter the classical paradigms, investing in research and innovation is no longer a luxury, but a necessity. it is the path towards achieving the rapid and sustainable growth africa needs to meet the aspirations of its population, especially the youth. it is also the only alternative to prevent the divide with the advanced countries from widening further. in areas such as economy and finance, there is a huge need for cutting - edge research that takes into account the specificities of africa. no one can deny the laudable initiatives and projects focusing on africa, such as the one carried out between 2007 and 2014 by the u. s national bureau of economic research ( nber ), nor the establishment, within prestigious universities, of centers dedicated to africa. however, the continent should enhance its own skills and develop its national capacities. central banks are particularly aware of this challenge. monetary policy decision - making requires a thorough understanding of the economy and its performance drivers. to this end, we need to build up models which draw on the most recent advances in economics, while taking into account our realities, oftentimes different from those of advanced countries. as such, we are facing two major challenges. the first one is related to the lack of knowledge as to the mechanisms underlying the functioning of our economies, on which we can capitalize. we therefore called upon to develop our own formalization of the economy from scratch. the second challenge is that economic modeling requires reliable and regular data. this entails significant financial and human resources that are sorely lacking in statistical institutes in several countries. in this respect, i think that central banks, owing to their autonomy, can play an important role in research development and have a ripple effect on its ecosystem. this is exactly what we are trying to do in bank al - maghrib. in fact, we have always put research and human capacity building at the core of our strategic plans. thus, alongside the various operational entities, we have set up since 2007 a division dedicated to research, whose task is to reflect on all strategic matters and issues related to the bank's missions. several cooperation programs were developed with the national and international academia, as well as with many central banks around the world. more particularly, we have launched
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imagine, as an extreme example of a focused approach, a regime based on a single risk - insensitive capital requirement. that would be very simple, but the requirement would probably have to be set very high to satisfy us that it provided the same level of resilience as the current regime. a streamlined approach, on the other hand, might include simpler versions of current pillar 1 and pillar 2a risk weighted capital requirements with broadly the same calibrations as are applied today. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice we therefore face a trade - off between simplicity and calibration. a focused approach would impose the fewest requirements, but those that were applied might have to be conservatively calibrated in order to maintain resilience. a streamlined approach would lead to less conservatively calibrated, but more complex requirements, when compared to the focused approach. figure 1 illustrates this trade - off, along with a second trade - off between simplicity and minimising barriers to growth. this second trade - off arises because a focused approach would be very different to the requirements a growing firm would face after it moved out of the simpler regime. it might therefore be more difficult for a small firm to grow out of a focused regime, as it would effectively have to gear up to meet a whole new set of requirements. figure 1 : illustration of the characteristics of a β focused β and a β streamlined β approach in practice, there are a spectrum of approaches we can take between the extreme cases of a very focused approach which is like the requirements we have in place for credit unions, and a slightly streamlined approach which is almost the same as requirements for larger banks and building societies. and different approaches might work better for different sorts of requirements. for example, the right approach for capital requirements might differ from the right approach for liquidity requirements. what this way of describing different approaches provides us with is clarification of the choices and trade - offs we face. the discussion paper asks for your views about how these trade - offs should be managed. if a fully focused approach based on a very small number of conservatively calibrated requirements represents one extreme, all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice and a modestly streamlined approach which trims a few elements from the current rulebook represents another,
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yourself the question β how would the financial system have fared if covid had hit in 2007? β to appreciate the importance of the resilience that has been built up over the last decade. combining a financial crisis with a health and economic crisis would have been profoundly damaging. the building society sector has of course been a very important part of this picture. with more than 25 million members and an average cet1 ratio of more than 26 %, the building society sector was well placed to weather the storm from a financial resilience perspective, extending more than Β£66 billion of new loans in 2020 and offering a peak of more than 300, 000 payment deferrals to customers in financial difficulty. from an operational perspective, societies also adapted quickly to lockdowns and home - working arrangements, with almost all society branches continuing to serve their members through the pandemic. but the disruption caused by covid - 19 has shown why it is critically important for firms to identify the key services they provide and invest in their resilience. societies β like all of 1 / 5 bis central bankers'speeches us β have witnessed an acceleration in technology innovation over the last year. continuing to build on these developments and incorporating them into operating models will be important, both for the sector β s operational resilience, but also for serving the evolving needs of the sector β s members. as we sit here today, the outlook looks better than we might have expected a year ago. but a considerable amount of uncertainty remains, not least as many of the bridging measures put in place by the authorities begin to roll off. though it may now look less likely, additional financial and operational pressures may still be on the horizon, and we will be monitoring that closely. but in the meantime i thought it might be worth us raising our sights a little and having a look at some of the regulatory issues that lie on the other side of the bridge : strong and simple, leverage, mrel and mortgage floors. strong and simple i β ll start with strong and simple. avid followers of my speeches β of which i am regularly assured there are at least three across the country, one of whom is robin β might recall that in november last year i gave a speech titled β strong and simple β. indeed, it turns out that robin is such an avid reader of my speeches that he has themed this entire conference day as β strong and simple β! i β m not quite sure what to make of that
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francois villeroy de galhau : the role of banking in a sustainable global economy speech by mr francois villeroy de galhau, governor of the bank of france, at the world conference of banking institutes, london, 17 september 2019. * * * ladies and gentlemen, i am delighted to be with you today. the topic that you have asked me to address β β the role of banking in a sustainable global economy β β prompts us to think about the future. however, let me first say a few words about the present. the current context is one of increased uncertainty, which is already weighing on growth at the international level. two threats are contributing to this : above all, trade tensions coming from the us, and second β of course β brexit. needless to say, this situation is not sustainable. it is the responsibility of politicians more than central bankers, to restore confidence. the latest example of this uncertainty is the spike in oil prices after the attack last saturday on saudi arabia β s oil infrastructure. it is too early to rush to hasty conclusions ; we should closely monitor the consequences on the oil market, which is characterised by a rather flexible supply and a subdued demand. oil price has significantly decreased since june, by about 20 %. if it lasts, this latest oil shock could increase inflation and hamper growth. in my remarks today, i will briefly start with brexit before addressing two of our shared challenges for the future : digital transformation and green finance. i. the prospect of brexit and our future relationship let me say from the outset that brexit is and remains bad news, not only for the united kingdom, but also for europe. but we respect the british choice, whatever it turns out to be. at this stage, both the british and europeans are faced with great uncertainty surrounding the outcome. we are still hoping for a deal, but we have to be ready for a no - deal and all the risks it entails. supervisors both at national and european levels have encouraged and monitored the implementation of contingency plans by the financial industry : on our side, we are ready. let me add one word on the future relationship between the uk and the european union. after brexit, we will obviously no longer belong to the same european club, but we will hopefully remain close partners and friends. the uk will continue to participate in international forums β such as the g7, g20 fsb, bis, etc. β
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where cooperation will be much needed to face our common challenges such as financial stability, digitalisation and the regulation of bigtechs, as well as the challenge of green finance. in a context where the multilateral order is being put at risk, let me express the wish that the uk, together with the eu, may resolutely strive to renew multilateralism. on our side of the channel, our collective response to brexit may possibly be a further integration of europe, with the new and promising commission led by ursula von der leyen, rather than isolationism or paralysis. europe should build on its most valuable assets : the euro, which is celebrating its 20th anniversary this year, the single market and its shared social and environmental model. ii. making the digital leap with lucidity let me now turn to our shared common challenges. digitalisation is shaking up the way we live and consume, opening up a world of possibilities for corporates and customers alike. worldwide, it clearly represents both an opportunity and a challenge for banks, as well as for supervisors. new players are becoming increasingly important. fintechs do not have the capital resources to disrupt incumbent banks and can even be acquired by them. by contrast, bigtechs do have the potential to fundamentally redefine financial intermediation : they have strong brand recognition, a 1 / 4 bis central bankers'speeches worldwide customer base and privileged access to cutting - edge technologies. this new situation is a major challenge for regulators and supervisors. of course, financial regulation should remain technologically neutral : the basic principle β same activity, same rules β must apply. this is a good thing for the level playing field. however, beyond traditional financial regulation, international cooperation should be developed in four areas, four cornerstones of the regulation of digital finance. first, cybersecurity is a sine qua non for a reliable and sustainable digital future. it was a clear priority of the g7 french presidency this year. second, regarding data protection, financial supervisors and authorities in charge of privacy have to invent new ways of cooperation to address data issues that have become central to financial services. third, regarding competition and anti - trust policies, situations where β the winner takes most β while staying outside the scope of financial regulation should be adequately anticipated and addressed. and fourth, fair taxation, thanks hopefully to oecd work. β stable coin β projects, including facebook β s libra, are a case in point. β
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fixed investment. however, such cases are still limited, with a large number of firms placing priority on reducing interest - bearing liabilities by using their increased profits, and taking a " wait - and - see " attitude toward investment commitments. although many firms are increasing business fixed investment, this is being kept within the limits of their cash flow. as pointed out earlier, firms have been cautious about increasing inventories during this recovery phase. the persistent decline in bank lending is also indicative of firms'hesitancy about making forward - looking commitments. firms became concerned about business risk and financial risk management, having experienced highly volatile economic conditions during the 1990s and financial system instability during the second half of that decade. their incentives to reduce interest - bearing liabilities and increase their capital bases as much as possible are therefore understandable. expanding business lines is not so easy for firms in the current situation where, faced with price - sensitive consumers, they have difficulty in raising product prices in order to pass on the rise in materials and intermediate goods prices caused by the surge in commodity prices at home and abroad. there may also exist some concern about the impact of changes in the economic environment, such as those caused by the low birth rate and rapidly aging society. however, corporate management will not continue to appeal to uncertainty about the economic outlook to justify its hesitancy in making positive commitments for long. amid rapidly changing technology and increasing competition, firms know that they need to maintain high profitability in the medium term by continuously and swiftly reallocating their management resources while continuing to invest in highly profitable areas. the economic environment surrounding firms is now well suited to encourage such commitments. in the labor market, deregulation and changes in people's attitudes and lifestyles have combined with firms'need to adapt to changes in the industrial structure and to improve profitability, with the result that the number of non - regular employees has increased. although indicative of firms'unwillingness to commit themselves to hiring longer - term regular employees, such developments, in so far as they illustrate the increased flexibility of the labor market, also suggest that firms have become better able to adapt to change. in addition, some firms have started to invest in highly profitable areas. they have been studying consumer needs so as to provide attractive new products and new services, and this has contributed greatly to private consumption, which has continued to be firm despite sluggish growth in income. a breakdown by household spending behavior shows that spending is increasing in a wide range of
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##y of banks β business functions, especially in the bank / non - bank spectrum. the difference is not arbitrary but reflects real structural differences between regions. in particular, it would be unrealistic to always assume that β one size fits all β : we should not put carnivorous lions and herbivorous elephants in the same cage. we should also follow a well - balanced approach that properly recognizes the synergetic cross - effects of item - by - item regulations. an appropriate criterion should be the combined effects of all item - by - item regulations. simply focusing on the β marginal effects β of individual measures may be misleading, even though they have good individual rationale. at the same time, we should be aware of a possible trade - off between the long - term benefits and short - term costs of stronger regulations. such regulations may indeed enhance financial stability and economic prosperity in the long run, but the hasty implementation of stringent regulations may hamper a fragile recovery, such as we find ourselves in now. let me stop here for further discussion. thank you for your kind attention.
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leasi papali β i scanlan : financial inclusion and mobile banking in samoa address by mr leasi papali β i scanlan, governor of the central bank of samoa, at the official opening of the workshop / information exchange on β financial inclusion and mobile banking in samoa β, apia, 20 january 2010. * * * at the outset, i would like to thank all of you for accepting our invitation to participate in today β s workshop on mobile money and mobile banking, which are two key strategies for implementing what is known as financial inclusion. i would also like to extend a warm welcome to our partners on financial inclusion in the pacific, mr. tillman bruett and mr. michael mccaffrey of the united nations capital development fund β s pacific financial inclusion program. as stated in our invitation letter, you have been identified as individuals and representatives of organizations with the potential to make a significant contribution to financial inclusion and financial literacy ; especially those of you with an interest in mobile telephones and financial services businesses in general. i trust that the free exchange of your valuable knowledge and experiences, will not only greatly benefit the other participants of today β s workshop but also financial inclusion ( as a whole ) in samoa. in july 2009, i attended a pacific regional meeting in fiji to discuss the advent of microfinance in the pacific. at this meeting, i was introduced to the concept of financial inclusion, and i was subsequently convinced of its relevance and importance to samoa. as you will be hearing from mr. tillman bruett, financial inclusion is simply described as the extension of financial services, at affordable costs, to reach those that are classified as the β unbanked β. these are people who have little or no access to formal financial services generally, not only as a result of the lack of financial education, but also due to their rural and isolated locations or low incomes. the purpose of the many financial inclusion strategies that are being implemented around the world, is to connect these β unbanked β people with the formal banking system, to enable them benefit from the various financial services that are available, and thus help equip them with the confidence to make informed financial decisions. financial inclusion has the potential to play a very important role in samoa β s economic development. traditionally, much of the efforts of the central bank of samoa ( like most other central banks in the world ) have been concentrated on promoting financial and economic stability, on the β macro β level. unfortunately
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economy will be hugely beneficial. it will allow better financial access to our low - income community in the rural and isolated areas as well as to improve and speed up our payments system. in launching an automatic teller machine ( or atm ) for one of the commercial banks yesterday, i acknowledged the benefits of having and maintaining bank branches out in the rural areas, as these will help increase access to financial services. it is expected that some of these rural branches will not be financially viable in the short term. but, in the longer term, as more people become more financial literate, business activities will increase and thus help generate more revenue for these bank branches. financial literacy and financial inclusion also has great potential to address several issues specific to the economy of samoa, like reducing the current relatively high costs of remittances into the country. today β s exchange of information on mobile money and mobile banking kick starts the central bank β s involvement in financial inclusion. to this end, i would like to acknowledge, with appreciation, the kind assistance of the pacific financial inclusion program of the uncdf and ausaid in assisting the bank in its new role by co - hosting and co - sponsoring today β s workshop and information exchange. ladies and gentlemen, i encourage you to share generously your knowledge and experiences in your specific fields of expertise so that we are able to put together an effective and secure mobile money and banking network for samoa. because you may not have sufficient time to fully cover the important topics that you are going to discuss, i hope that at the end of the formal part of the workshop, we can all relax and continue the dialogue over some refreshments. with these brief remarks, i would now like to welcome to the podium our information exchange co - ordinators, mr. tillman bruett and mr. michael mccaffrey, of the uncdf pacific financial inclusion program. thank you for your attention. soifua.
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3 million recorded in 2001. the 2007 inflows were largely in form of foreign direct investment, borrowing from nonaffiliates ( loans and trade credits ) and portfolio investment. we believe that the introduction of economic reforms led to a substantial increase in private capital flows, which regrettably, we have not been able to capture on a regular basis due to budgetary constraints. mr. chairman, history has taught us that high volatility in private capital flows, if not properly monitored and managed, can induce financial and macro - economic instability in the domestic economy. evidence from south east asia indicates that capital flows engendered a financial crisis in that region in 1997 and 1998. in light of this evidence, the results of the foreign private investment and investor perception survey are intended to assist the government to effectively monitor private capital flows. accurate and reliable data on private capital investment will be helpful in understanding recent developments in the zambian economy. better information on investor perceptions will assist government in designing policies that will attract more investment into our economy. further, the results of the survey should prove useful to the private sector and other stakeholders. on the whole, the importance of timely and reliable information on capital flows in the design of appropriate policy responses by government and thus enhancing macroeconomic stability can hardly be overemphasised. adequate and consistent information on capital flows will also greatly improve balance of payments statistics for zambia and serve as an early warning system for government on potential international financial crises and other external shocks. mr. chairman, zambia, like many other developing countries, has inadequate capacity to collect, analyse and disseminate data and information on foreign private capital investment. compared with other countries in the african sub - continent, zambia has serious gaps with respect to data on foreign private capital investment. for instance, while we are now at the second phase of the survey, uganda, tanzania and malawi are in the sixth, fourth and third phases, respectively. this only reveals to us the critical need to conduct this enterprise survey more regularly. to this end, i wish to direct that, as a way forward, the balance of payments statistics committee conducts this survey annually. the bank of zambia, in collaboration with government and other balance of payments statistical committee member institutions will do everything possible to ensure that the collection of this vital information is done on an annual basis. accordingly, it is my hope that participants at this workshop will appreciate the importance of this survey and find the results useful. distinguished guests, i am
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importers ) of foreign exchange can trade transparently. following the introduction of this system, there has been a significant improvement in the supply of foreign exchange on the market owing to the confidence in the system by market participants, efficient flow of information among all players and improved external sector performance brought about by increased copper output and unprecedented high world copper prices in recent times. these developments have contributed to the relative stability of the kwacha against major currencies and thus moderating inflationary pressures. in addition, the containment of growth in money supply has contributed to this outcome. furthermore, the anti - dollarisation campaign that the bank of zambia waged some two and half years ago has had an equally important role to play in the observed relative stability of the kwacha against major currencies. however, continued relative stability of the exchange rate of the kwacha against major currencies is heavily dependent on longer term initiatives for sustained improvement in the supply of foreign exchange. among these strategies is a sustained increase in export earnings through the stimulation and maintenance of a strong export sector. ladies and gentlemen, let me now turn to the other part of the topic, namely, the process of foreign payments. the bank of zambia has issued directives that put limits on cash transactions in foreign exchange with authorised dealers. for instance, bureaux de change cannot transact in excess of us dollars 1, 000 or equivalent foreign currency per transaction per day with any one individual. this arises from their primary purpose of being money changers. the corresponding limit for commercial banks is us dollars 5, 000 or equivalent foreign currency per transaction per day for account holders and us dollars 1, 000 or equivalent foreign currency for non - account holders. it is important to stress that these limits for commercial banks pertain to cash transactions only. account holders and nonaccount holders alike wishing to transact above these limits can do so by choosing other modes of payments, such as, direct transfers, drafts, etc. any remittance in excess of us dollars 5, 000 has to be channelled through commercial banks and the person remitting the funds is required to support the transaction with appropriate documentation for statistical purposes, as well as guarding against money laundering and financing of terrorism. the convenience of making foreign payments from kwacha bank accounts has also been improved by introduction of new products. one such product is the visa based electronic debit card where holders of such cards can access their kwacha balances from anywhere in the
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transactions in t2s is expected by midmay 2011.
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to conclude longer - term repo transactions on the one hand, and to purchase foreign currencies and swiss franc bonds on the other. by simultaneously intervening in the money, foreign exchange and capital markets when necessary, a strong and broad - based monetary policy impact can be generated, without leading to any major distortions in the markets concerned. allow me here to add a few remarks on our foreign currency and bond purchases. purchase of foreign currency the aim of our buying foreign currency is to prevent an appreciation of the swiss franc against the euro. this is the key component of our unconventional monetary policy. it is important to emphasise that we do not engage in foreign exchange interventions in order to bring about a depreciation of the swiss franc, but to prevent any further appreciation of the franc in its role as a safe haven currency. therefore, the reproach we occasionally hear that the snb β s policy is encouraging an international depreciation race is unjustified. a look at exchange rate movements shows a clear appreciation of the swiss franc during the course of the financial market crisis ( cf. chart 1 ). so there can be no question of the snb conducting a beggar - thy - neighbour policy. we give ourselves a great deal of latitude with regard to our foreign exchange interventions. there is no fixed threshold beyond which we become active ; we simply decide in accordance with the situation at hand. and markets should not become used to a certain level of intervention. we feel that this approach promises the highest possible impact, which in turn will allow us to phase out the strategy more easily when the time comes. furthermore, we do not comment on the volume of our foreign currency purchases. the purchases of foreign currency have fulfilled their purpose β and with these i am referring to our first unilateral interventions in the foreign exchange market since 1992. the appreciation of the swiss franc against the euro, which is particularly dangerous for the swiss real economy in this crisis, has been halted, and the volatility of the eur / chf exchange rate has eased considerably ( cf. chart 2 ). if necessary, we will continue to intervene in the foreign exchange market to prevent an appreciation of the swiss franc against the euro. the snb occupies a strong position in this regard. with interest rates at the zero bound and our policy of quantitative easing, we have an advantage over market participants who are expecting an appreciation of the swiss franc. for our interventions
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increases in activity and employment have been accompanied by very low inflation rates. the fall in oil prices has prompted declines in the general level of prices over much of the past year. yet core inflation, the indicator that excludes energy and fresh food prices, has moved on a rising course over the year. and while still at moderate levels, this indicator β s recent trajectory suggests the risks of entering an overly prolonged period of very low inflation have progressively been dispelled. while in july the overall price index posted growth of 0. 1 %, influenced by fuel prices, inflation at the end of the year is expected to be around 1 %. in any event, the still - high spare capacity in the economy presages a gradual recovery in inflation over the next two years. the factors underpinning the recovery the path of recovery of growth and employment has essentially been underpinned by the restoring of macroeconomic and financial equilibria, which were severely eroded in the crisis. progress has been visible in the correction of the external imbalance, the deleveraging of households and firms, the redressing of fiscal balances towards levels more compatible with the sustainability of public finances and the restructuring and consolidation of the banking sector. unemployment, too, is showing clear signs of a correction. the reforms undertaken within spain, along with the headway in economic and monetary union and the application of the highly expansionary monetary policy by the ecb, have proven key to restoring confidence and providing for the progressive absorption of the imbalances. by way of illustration, the proportion of spanish public debt held by nonresidents has risen from 30 % in 2012 to 44 % at present, an increase indicative of the improved confidence in our economy, but also of its dependence on the perception abroad of the soundness and continuity of our recovery. despite what has been achieved in growth, employment and restoring equilibria, we are far from having overcome all the factors of vulnerability. doubts over the continuity of the macroeconomic, fiscal and financial rebalancing drive might curtail and lead to backtracking from these achievements. we must not forget that the legacy of the crisis is still burdensome. our unemployment rate remains above 22 % ; households and firms are speedily reducing their high debt, but public debt as a proportion of gdp has increased by over 60 pp since 2007 ; and the economy β s financial dependence on the external sector remains high, with a net debtor position of close to
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fiscal consolidation process, measured by the change in the primary structural balance, will be very limited, in line with the latest updated stability programme, which anticipated that the fiscal policy stance would be essentially neutral in the 2015 β 2018 period. naturally, any slippage in growth or rise in financing costs would hamper fiscal consolidation, making the process more demanding. in 2016, according to the draft state budget, the planned reduction in the deficit will stem firstly from lower public spending, whose ceiling for the year as a whole, excluding that derived from local and regional government financing arrangements, will entail a reduction of 4. 4 % in relation to that set for 2015. the key expenditure - side measures are the 1 % increase in the remuneration of public sector employees and the refund in 2016 of the remaining 50 % of the extra salary payment eliminated in 2012. with regard to public employment, a standard 50 % replacement rate has been established for public - sector vacancies, rising to 100 % in priority sectors. overall, these measures would lead to growth of 2. 7 % in wage expenses in the state budget relative to the 2015 budget outturn projection. the restrictions on current expenditure on goods and services are maintained, with a 14 % reduction. notable with regard to the social security system is the 0. 25 % revaluation of pensions, in keeping with the provisions of the 2013 reform. the projected growth in spending on contributory pensions in relation to the initial 2015 budget is rather higher, at 2. 8 %. this is as a result of the foreseeable increase in the number of pensions and of the substitution effect in terms of new pension claimants as opposed to deregistered pensioners, meaning that the weight of pensions spending relative to total consolidated spending of the state and social security system rises to 38. 5 % ( 37. 8 % in 2015 ). mention should also be made of the reduction in spending on unemployment benefits, by 21. 9 % relative to the initial 2015 budget. this is due to the fall in unemployment and in the coverage rate of the contributory benefit, which is partly offset by a shift in beneficiaries to non - contributory benefits, such as reinsertion scheme income and economic assistance under the activation programme for the unemployed. finally, a further decline in the interest burden on government debt is foreseen as a result of the reduction in interest rates. on the revenue side, the main measures include the application of the second
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user costs. digital currencies, including central bank digital currencies ( cbdcs ), present opportunities but also risks associated with privacy, illicit activity, and financial stability. the introduction of bitcoin and the subsequent emergence of stablecoins with potentially global reach, such as facebook β s libra, have raised fundamental questions about legal and regulatory safeguards, financial stability, and the role of currency in society. this prospect has intensified calls for cbdcs to maintain the sovereign currency as the anchor of the nation β s payment systems. moreover, china has moved ahead rapidly on its version of a cbdc. with these important issues in mind, the federal reserve is active in conducting research and experimentation related to distributed ledger technologies and the potential use cases for digital currencies. given the dollar β s important role, it is essential that the federal reserve remain on the frontier of research and policy development regarding cbdcs. as part of this research, central banks are exploring the potential of innovative technologies to offer a digital equivalent of cash. like other central banks, we are continuing to assess the opportunities and challenges of, as well as the use cases for, a cbdc, as a complement to cash and other payments options. there continues to be strong demand for u. s. currency, and we remain committed to ensuring the public has access to a range of payments options. we have been conducting in - house experiments for the last few years, through means that 1 / 3 bis central bankers'speeches include the board β s technology lab, which has been building and testing a range of distributed ledger platforms to understand their potential opportunity and risk. this multidisciplinary team, with application developers from the federal reserve banks of cleveland, dallas, and new york, supports a policy team at the board that is studying the implications of digital currencies on the payments ecosystem, monetary policy, financial stability, banking and finance, and consumer protection. to enhance the federal reserve β s understanding of digital currencies, the federal reserve bank of boston is collaborating with researchers at the massachusetts institute of technology in a multiyear effort to build and test a hypothetical digital currency oriented to central bank uses. the research project will explore the use of existing and new technologies as needed. lessons from this collaboration will be published, and any codebase that is developed through this effort will be offered as open - source software for anyone to use for experimentation. the objectives of our research and experimentation across the federal
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. while we have worked hard and over long hours to achieve these developments, the real challenge for all of us must be in providing a better tomorrow to future generations. the bsp has long held the view that financial education, financial inclusion and consumer protection form the triumvirate that holds the key. each mutually reinforces the other. while financial inclusion and consumer protection do require regulatory intervention, financial education will have to be a commitment that all of us puts forward. cmip has already invested itself into this agenda by pursuing a passion that became an advocacy that is now a program. the institute has taken great steps but it cannot end here. let us use this 1st national convention as a springboard for setting milestones of performance going forward. will you simply want to have more graduates of the cmitap? or will you measure yourselves against what the graduates themselves can do individually and collectively as part of the cmip family? how do you pay forward the investment that you have made for yourself? how does this investment pay off when working with your students, interacting with office colleagues or operating with fellow market practitioners? how can cmip contribute to the development of the philippine capital market in resolving longstanding issues? how will you ensure financial stability knowing that your individual actions may have macro - prudential consequences? there are many questions that can be raised. what is clear is that the answers must come from you, just as other stakeholders must have their own answers. pause and take time to recognize what you have already achieved. but i enjoin all of you to use that success as a commitment to a better tomorrow. i do not have any doubt in our collective ability to make a better tomorrow for future generations. i also am firm in my belief that financial education is a key element in developing markets and instilling systemic stability. cmip has taken major strides forward to - date. and i look forward to hearing, seeing and being part of your future successes. maraming salamat po. mabuhay ang cmip. mabuhay ang ating bansang pilipinas. bis central bankers β speeches
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to be taken off the balance sheets, the banks recapitalised and sufficient trust built up so that banks can start lending again. there is no easy solution for achieving this, and no simple blueprint. countries will differ as to how they tackle this problem. but as long as banks are unwilling to lend, and demand remains subdued, the recovery cannot happen. the recent stress - tests conducted on us banks indicated that while banks still remain under pressure and some require further recapitalisation, the worst of the bad news may be behind us. 4. 3 fortunately our banking system is still allowing credit to flow, although much stricter lending criteria are being applied by banks. but unlike in europe and the us, our interbank market is working normally, the capital adequacy ratios are strong, and no bank has had to approach the south african reserve bank for any extraordinary assistance. although exchange controls irritate many, in this case the existence of these controls, in conjunction with appropriate supervision of the banks, spared us the need to have to find ways to bail out and recapitalise our banks. 4. 4 secondly, there has to be an improvement in banking regulations and supervision. those elements of the financial system that have been able to avoid regulation must be brought into the regulatory net, and ways must be sought to ensure that regulation does not promote procyclical behaviour on the part of the banks. but we have to be mindful of the danger of over - regulation. there is always the danger that a crisis can spur excessive regulation and stifle the ability of banks to operate normally in the future. a fine balance will have to be achieved between the dangers of over - regulation and allowing banks to undertake normal lending operations. we are likely to see a return to the more traditionally type of banking for some time. 4. 5 third, there have to be appropriate policy responses to restore growth. the g - 20 statement underlined the need for continued concerted and exceptional monetary and fiscal policy stimuli. with respect to monetary policy, in many countries, despite the low policy rates, banks are charging much higher spreads over the policy rates because of higher perceived risks. at the same time, households are trying to repair their balance sheets which have been adversely affected by declines in house and equity prices. in other words, the monetary transmission mechanisms are impaired, and what usually works in a relatively predicable way under normal circumstances, may not work in the same way
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under current abnormal circumstances. the further danger we face is that as the balance sheets of the central banks expand rapidly, down the line there may be inflationary pressures. central banks will have to be ready to absorb this excess liquidity, but without killing off the recovery. 4. 6 the g - 20 recognises that even within the framework of a co - ordinated response, local conditions will shape the nature of the response of individual countries. while many countries responded with substantial interest rate reductions, these responses were carried out in the context of very low inflation in many instances, and the need to provide liquidity to ailing banking sectors. while the response of the south african reserve bank may appear to be less strong than in many other countries, it should be borne in mind that we started out with a relatively high inflation rate and a relatively healthy banking system. we are seeing a slowdown in the rate of inflation and, although it is relatively sticky, we still expect to be back within the target over the medium term. this has allowed for a 350 basis point reduction in the repurchase rate to date. a continuation of this slowdown of inflation, in part a result of the widening output gap, may allow for further monetary easing. 4. 7 as part of stimulus packages, many countries have focused on increasing expenditure on infrastructure. this cannot happen overnight. we have been fortunate that our infrastructural expenditure programme has been accelerating for the past few years, and has therefore come on stream at a time when it is most needed. this has been most fortuitous. anyone travelling on our national roads will have been frustrated by the inconvenience of the scale of the road upgrades, but we have to remember the positive side : that this infrastructural expenditure is helping to underpin domestic expenditure. furthermore, such expenditure will help to increase the potential output of the economy over time, and therefore raise the sustainable long term growth rate. according to national treasury estimates, public sector infrastructure expenditure is expected to average 9, 7 percent of gdp over the coming three fiscal years, compared to 4, 5 per cent in the 2005 / 6 fiscal year. during the current fiscal year, total expenditure by the sa national roads agency ltd ( sanral ) on roads is estimated at r19, 6 billion, compared to r2, 2 billion in 2005 / 06. i am sure your truck drivers will be pleased when all this construction is completed. 4. 8
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be achieved in a more speedy and secure manner through images of cheques instead of the physical movement of cheques to the clearing house for exchange. the modernisation of the cheque clearing and settlement process started in november 2002 when all cheques issued by banks were standardised and the use of magnetic ink character recognition cheques was introduced. since then, banks started exchanging code lines through the mauritius automated clearing and settlement network. the project on cheque truncation was first discussed at the port louis automated clearing house committee in september 2005 and a steering committee was set up in august 2006 for the project implementation. it was initially envisaged to develop the application for image based cheque clearing at the bank. however, given the resources required to develop such a system and the fact that a number of cheque truncation system applications existed on the market, it was decided in april 2008 to purchase an off - the - shelf solution. the request for proposal was prepared and the bank organised an international competitive bidding process where suitably qualified vendors were invited to bid for the project in june 2008. while all this was happening β some skeptics might say, while nothing was actually happening β the value of cheques cleared has been steadily rising from rs187 billion to reach rs254 billion last year. what this means is that some five million transactions that could have been done instantly now take three to five days to be cleared in a very inefficient and antiquated matter. that is the heavy price that all of us in mauritius, banks, customers, economic operators have paid needlessly. it is a matter of regret for me that we are lagging behind, while bank negara malaysia which started the same project in 2006, has already implemented it in 2008. closer to us, botswana and madagascar already have cheque truncation as part of their payment systems. modernisation of macss the macss, a real time gross settlement system, provides the means for real time interbank payments and is used to settle cheque clearing positions of the port louis automated clearing house for the final settlements of the contribution network payment to the accounts of the mauritius revenue authority and for settlements for the central depository system. the pressing demands of the growing financial sector and increasing cross - border transactions poses new and complex challenges to the current payment system infrastructure. the need for a more dynamic, flexible and business - friendly payment system capable of better resisting systemic shocks and providing for international exposure is increasingly
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felt. in that respect, the bank has decided to replace the existing maccs application with new application based on best international practice and built on a more resilient architecture, supporting multi - currency transactions with extended settlement windows and providing for low cost messages. the core application is operational as from 14 january 2009 and all advanced features will soon be implemented. online reporting and monitoring system the bank sees also a need to enhance the data collection, collation and dissemination process by developing an online application available across banks. banks currently report information to the bank through mails or hardcopy documents. recognising the drawbacks of the existing system, the bank decided to launch the central database system ( cds ) initiative in july 2007 designed to bring all data used for analysis and decision making into a single repository. the cds would also provide a customised dashboard for management to retrieve crisp information for decision - making purposes. the cds initiative would also be extended to licensed cash dealers and moneychangers with a view to exercising a closer monitoring of the market. our efforts to modernise the payments, clearance and settlement system have taken many twists and turns over the last two years. my determination to push these projects through has not flagged. and this must be done ; and must be done fast, in the interests of the efficiency of the banking sector and of the economy generally. the new platform of standard bank serves both as an encouragement and a reminder for us that status quo is definitely not an option in this rapidly - changing world. i therefore congratulate standard bank for yet another milestone and wish you every success with this new suite of products. i hope it will help you to live up to your promise to deliver corporate and business banking β at your [ client β s ] finger tips with its 24 - hour availability, anytime, anywhere β¦.. and access to β¦ entire β¦ banking portfolio ( s ) across products, countries and currencies β and all this with a single login. thank you for your attention.
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be reenergised. in this regard, agreements on a " critical minerals corridor " and a " food corridor " for safeguarding food security are necessary. such arrangements have to be fair and equitable. second, there is a need to develop cooperation in areas of common interest and urgent needs such as climate change where no country can devise strategies on its own. 4 / 6 bis - central bankers'speeches smooth and orderly green transition is necessary to avoid disruptions to economic activity and loss of growth potential. while the investment needs for smooth green transition are large, the actual financial flows to green projects are highly skewed and are, by and large, concentrated in advanced economies. as a result, there is a need to enhance green capital flows to emes. at the same time, we have to be mindful of potential financial stability implications of green transition. third, improving infrastructure remains key to long - term growth. while investment in hard infrastructure ( roads, ports, airports, electricity, water ) is important, there has to be equal emphasis on creating soft infrastructure ( education, health, legal, financial, institutional ). skill enhancement and increasing female labour force participation are key to enhancing effective labour supply and potential growth of the region. fourth, india's experience has shown how digital public infrastructure ( dpi ) can be utilised for advancing financial inclusion and productivity gains through cost reductions. our sustained engagement in the india stack and the unified payments interface ( upi ), especially during the pandemic and thereafter, has given us the confidence that digital public infrastructure can become a critical part of global public good when scaled up beyond national boundaries. the linkage of indian upi and the fast payment systems of a few other countries drives home the potential of the upi to become an international model for cross - border payments. fifth, new technological developments like artificial intelligence ( ai ) and machine learning ( ml ) can bring about significant improvements in efficiency and productivity of businesses. necessary safeguards, however, need to be put in place to prevent the misuse of technology. in particular, global financial market regulators need to be vigilant about the possible misuse of ai and ml in perpetrating financial fraudulence. conclusion the global economy stands at crossroads. challenges remain in plenty, but new opportunities are also knocking at the door. together, the course we take from here will decide our destiny in times to come. we need policies that are attuned to the new realities
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india β s capital account management β an assessment 1 1. in the previous fedai annual day address in november 2020, governor shri shaktikanta das had observed that cac will continue to be approached β as a process rather than an event β. what i will do in this address is to expand on that theme and bring into focus some of the important issues on which, in my opinion, further public debate is warranted, to continue along this process of capital account convertibility. what is capital account convertibility? 2. the balance of payments ( bop ) of a country records all economic transactions of a country ( that is, of its individuals, businesses and governments ) with the rest of the world during a defined period, usually one year. these transactions are broadly divided into two heads β current account and capital account. the current account covers exports and imports of goods and services, factor income and unilateral transfers. the capital account records the net change in foreign assets and liabilities held by a country. convertibility refers to the ability to convert domestic currency into foreign currencies and vice versa to make payments for balance of payments transactions. current account convertibility is the ability or freedom to convert domestic currency for current account transactions while capital account convertibility is the ability or freedom to convert domestic currency for capital account transactions. the tarapore committee ( 2006 ), for instance, defined speech delivered by deputy governor shri t rabi sankar on the fifth foreign exchange dealers β association of india ( fedai ) annual day on october 14th, 2021. it was delivered via virtual platform. capital account convertibility as the β freedom to convert local financial assets into foreign financial assets and vice versa. β 3. the degree of bop convertibility of a country usually depends on the level of its economic development and degree of maturity of its financial markets. therefore, advanced economies ( aes ) are almost fully convertible while emerging market economies ( emes ) are convertible to different degrees. why is capital account convertibility important? 4. free capital mobility, or internationalization of capital markets, is commonly recognized as an engine of global growth. specifically, benefits of internationalization of capital markets are well accepted, in terms of broadening the investor base for recipient country financial assets, improved liquidity in financial markets and positive pressures for market infrastructure and market practices. international capital markets, by enabling access to a global savings pool and to different currencies, can potentially reduce borrowing costs, facilitate better risk allocation
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treatment of securitised assets, as well as disclosure, separation and other requirements for the various roles that banks take on in a securitisation transaction. the guidelines seek to define clearly the roles, responsibilities and risks that banks retain or undertake, when they participate in a securitisation transaction. they also ensure that banks hold appropriate capital against the risks they accept. thus, a bank that has securitised its assets will be granted capital relief only where the transfer of risks and rewards of the securitised assets has been effective and complete. the internet and its impact on the securities industry the second major issue is the impact of technology and the internet on capital markets. in the securities industry, the internet has caused fundamental change, slicing the value chain more and more finely, and recombining it in novel configurations. functions previously offered as a package by brokers, such as analysis and advice, recommendation and order routing, are being separated and broken up. new entities, such as aggregators or navigators, have emerged, offering hitherto - unseen types of services. these changes will bring major benefits to the industry and investors. firstly, the internet has fostered a free flow of investment information. with a surfeit of news, financial institutions are rethinking their business models. research and analysis previously available to be published as notice 627. to be published as notice 628. similar guidelines will be issued to finance companies and merchant banks. only at substantial fees to institutions and high net worth individuals are gradually becoming available to online retail investors as well. 6 secondly, the internet offers increased business opportunities and potentially limitless reach. thirdly, the internet offers increased scope for cross selling financial products. successful online firms like charles schwab and e * trade are leveraging on their huge customer base to diversify into banking, bill payment and other areas of services. 7 lastly, do - it - yourself finance facilitated by the internet allows institutions to cut whole layers of customer administration costs. the internet is reducing the cost of capital, at the expense of the spreads that intermediaries traditionally enjoyed from a proprietary informational edge. this reduction of what has been called β knowledge float β will benefit both lenders and borrowers. but at the same time, the internet means new challenges. the same borderless nature can mean footloose customers and businesses. cyberspace so blurs physical distinctions and facilitates convenient access that financial institutions can uproot
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final principle deals with overseas websites. mas will apply the same licensing principles to overseas websites which specifically target singapore residents, as it does to local websites. this is to ensure that foreign and local internet players are treated on the same regulatory basis. portals which reproduce investment research reports should ( a ) attribute the report sources accurately, ( b ) should not exercise editorial control over, or modify contents of reproduced reports, and ( c ) should not endorse or otherwise comment on the reports. the webpages of such entities should contain disclaimers to the effect that the views expressed are not those of the entities. websites providing prospectuses and application forms in a passive manner should display disclaimers to the effect that they do not have the intention of inducing investors to subscribe for securities. going forward several of the new licensing principles can be implemented based on the existing securities industry act and licensing framework. others will require amendments to the legislation. the new provisions will be included in the forthcoming financial advisers act and the omnibus securities and futures act, and announced in 2001. mas has already received a number of new applications which fall under the proposed securities licensing framework. these are currently being evaluated. as i have just discussed the licensing principles broadly, interested parties should approach mas to discuss the details of the revised licensing framework in relation to their business models. mas will also be seeking further comments from relevant industry players on these changes. conclusion the vitality and dynamism of global capital markets have ushered in challenging times for the financial services industry. with technology breaking down geographic and sectoral boundaries, links between markets, institutions and instruments will flourish. experience in developed economies show that financial services, notably stock trading, can take rapidly to the internet. this should be no surprise. as an economist online finance survey recently described, financial institutions deal in a product - money - that has long been accepted as β virtual β. unlike a piece of clothing, account - holders are happy to accept their money represented as figures on an atm screen, or by a credit or smart card. 13 the new financial landscape calls for a tripartite, complementary response from regulators, industry and investors. the mas as regulator will foster healthy market practices, while maintaining a sound overall investment environment. at the same time, in a democratised environment, investors need to recognise that there is little substitute for self - education, and thereby exercise greater caution in making individual investment decisions. finally, industry participants need to set high professional standards and observe an exemplary
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rates faced by investors, nonfinancial firms and consumers. lower rates are also transmitted across the asset and maturity spectrum. there is significant evidence that the fomc β s policies have been helpful in reducing financing costs rates paid by firms and consumers and, more generally, in supporting aggregate demand in the face of substantial economic headwinds over the past six years. it should be noted that economic activity picked up momentum in the second half of 2013. overall, real gross domestic product ( gdp ) grew at a bit under a 3 - 1 / 2 percent rate in the second half, up from an average pace of growth of about 2 percent over the previous three years. moreover, we β ve seen some more solid consumer spending, which should provide further impetus to overall growth this year. in the labor market, job growth has been solid and the unemployment rate is down to 6. 7 percent. that is well below the 8. 1 percent rate that bis central bankers β speeches prevailed when we instituted the latest round of large - scale asset purchases in september 2012. however, we aren β t out of the woods yet. the harsh weather of this past winter β by which i mean the north american polar vortex β makes the recent data difficult to interpret. that said, some of them have been on the soft side. balance sheet scars from the financial crisis are still weighing on the economy. fiscal policy is a restraint on economic growth. and economic activity abroad is not robust. the good news is that all of these headwinds appear to be dissipating. but risks remain. and we still have large resource gaps. for example, the unemployment rate is still well above the 5 - 1 / 4 percent rate i think it should be in the long run. at the same time, inflation is only 1 percent β well below the fomc β s longer - run target of 2 percent. accordingly, monetary policy is highly accommodative, and needs to remain so for some time. given these developments, the fomc began adjusting the mix of its tools in december. the committee, however, is maintaining the overall highly accommodative stance of policy. the committee modestly reduced the pace of its monthly asset purchases from $ 85 billion to $ 55 billion in three separate $ 10 billion steps. in addition, with the unemployment rate approaching the 6 - 1 / 2 percent threshold that was established in december 2012, the committee decided it was time to update its forward
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been particularly sluggish. furthermore, the weakness in gdp growth began before the bulk of the effects of higher energy prices hit the economy and before the disaster in japan happened. this timing, along with the continued softness of most economic indicators into the early summer, indicates that the slowing in output growth was not all due to temporary factors. even with slightly firmer economic data that have come out recently, the sense of building momentum seems absent. rather, the headwinds facing consumers and businesses are even stronger than we had thought. against this backdrop, the outlook has weakened substantially. last june my colleagues on the fomc and i were projecting real gdp growth would be around 2 - 3 / 4 percent in 2011 and 3 - 1 / 2 percent in 2012. as i alluded to a moment ago, some of the recent incoming numbers β on manufacturing activity and automobile sales, for example β have improved. even so, our latest forecast made in early november revised down our outlook for 2011 by a full percentage point and projected gdp growth at just 2 - 3 / 4 percent in 2012 β barely above most analysts β views of the potential rate of output growth for the economy. such growth bis central bankers β speeches rates certainly are not strong enough to make much of a dent in the unemployment rate and other measures of resource slack. indeed, the fomc β s latest forecasts are for the unemployment rate to remain above 8 - 1 / 2 percent through 2012 and to fall only to about 8 percent in 2013. without new developments or changes in policy, i don β t believe the u. s. economy is poised to achieve escape velocity anytime soon. inflation outlook under 2 percent what about inflation? large increases in energy prices pushed headline inflation β as measured by the 12 - month change in the total personal consumption expenditures price ( pce ) index β up from about 1 - 1 / 4 percent last fall to almost 3 percent this summer. these higher prices certainly took a bite out of households β budgets. but they did not portend a permanent ratcheting up of inflation. core pce inflation β which excludes the volatile food and energy components and is a better predictor of future overall inflation β has been just 1. 7 percent over the past year. furthermore, prices for energy and many other commodities have softened of late. and with the unemployment rate still high and capacity utilization low, resource slack continues to exert downward pressure on prices. in addition, measures of longer - run inflation expectations
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njuguna ndung β u : the agent banking model remarks by prof njuguna ndung β u, governor of the central bank of kenya, at the launch of ecobank kenya β s rapid transfer product, nairobi, 17 june 2010. * * * mr. peter kanyago, chairman, ecobank kenya ; mr. anthony okpanachi, managing director of ecobank kenya ; board members ; management and staff ; distinguished guests ; ladies and gentlemen : i am delighted to have been invited to the launch of the new rapid transfer product by ecobank. i am informed that this new product will provide ecobank customers with a fast, convenient, reliable and secure way to transfer funds at all ecobank branches across 27 african countries, making ecobank a truly β pan african bank β. allow me at this juncture to commend the board, management and staff of ecobank kenya for the introduction of this new product that will not only enhance customer service but also boost trade across the african continent. the launch of rapid transfer product is indeed another milestone for the banking industry and demonstrates ecobank β s commitment to financial innovation. it is noteworthy that since ecobank kenya β s entry into the kenyan market in june 2008, the bank has grown its branch network from 9 to the current 20 branches including the head office. this indeed shows the level of confidence that the board and the management of ecobank have in the kenyan market. despite the various local and global turbulences experienced over the past two years, the banking sector continues to exhibit resilience and has remained strong. the impressive 2009 end year performance has been largely supported by growth in deposits, injection of capital, retention of profits and also declining costs of doing business supported by technology. during the period ended april 2010, the sector β s assets stood at kshs. 1. 5 trillion, with gross loans and advances at kshs. 799. 5 billion. deposits increased to kshs. 1. 1 trillion supported mainly by branch expansion, receipts from exports and remittances from abroad. at the same time, the banking sector registered a pre - tax profit of ksks19. 5 billion, in the four months to april 2010 compared to shs 48 billion in the twelve months of 2009. the sector is therefore likely to achieve better results this year compared to the previous year. despite the impressive performance by banks, customers continue to shoulder the heavy burden of high transactional costs. this historical burden has to
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to pay instantly across borders by connecting several fast payment systems from around the world ( including eurosystem β s tips ). β’ longer - term and more global projects could pave the way for new avenues. the bis x and the imf xi are actively thinking about integrated platforms, which would bring together tokenised central bank money, tokenised deposits and tokenised financial assets. in particular, the bis β blueprint for a unified ledger holds strong promises, as it would make cbdcs natively interoperable and would significantly ease cross - border payments. we look forward to playing our part in this project. meanwhile, we continue our experiments, together with the bis, the imf and national central banks. after the mariana project conducted under the aegis of bisih, i am pleased to announce that the banque de france will soon take part in the mas β guardian project. our common experiment, β les gardiennes β, will deal with multi - cbdcs and potentially tokenised deposits in cross - currency and cross - border repos. * * i will conclude with one of our contemporary architects, frank gehry, who was one of the very first to make use of computer capabilities in order to design iconic buildings. he once said β architecture should speak of its time and place, but yearn for timelessness β. this is precisely what we, central banks, are striving to achieve once more, together with private partners. thank you for your attention. page 5 sur 4 menon, r., the future of money, finance, and the internet, speech, 9 november 2021 please refer for instance to villeroy de galhau, f., big techs in finance β a bildungsroman that is far from over, speech, 9 february 2023 and regulation and innovation : the yin and yang of the financial sector, speech, 5 july iii banque de france, wholesale central bank digital currency experiments with the banque de france, new insights and key takeaways, july 2023. iv european central bank, eurosystem to explore new technologies for wholesale central bank money settlement, press release, 28 april 2023. v european central bank, survey n eurosystem plans for trials and experiments on new technologies for wholesale central bank money settlement, 13 october 2023 vi european central bank, eurosystem proceeds to next phase of digital euro project, press release, 18 october vii european commission, proposal for a
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macao has been procyclically issuing supervisory guidance on risk management, internal control with a view to maintaining the stability of our financial system. to align with international understanding and standards, guidelines on anti - money laundering ( aml ) and countering the financing of terrorism ( cft ) have been promulgated and seriously enforced. we have close cooperation with other regulatory authorities and international agencies in all these aspects. as a result, all our regulatory efforts are being kept up - to - date with the requirements of internationally accepted standards. for instance, the aml / cft guidelines have recently been revised by the monetary authority of macao. the move arises from the recommendations of the mutual evaluation raised by the asia / pacific group on money laundering ( apg ) and the offshore group of banking supervisors ( ogbs ). the opinions of practitioners and findings in the course of aml / cft inspections have also been taken into account. we emphasize on the enhancement of customer due diligence ( cdd ) measures to be undertaken by banks and insurance companies. particular attention is paid to offshore companies who are required to implement proper and stringent account opening and subsequent monitoring procedures. to this end, i am very pleased to see that this seminar has been organized to offer a very valuable opportunity for financial institutions of macao to acquire a more indepth knowledge of the institutional arrangements of international business companies and the practices and methodology required in exercising cdd measures on offshore companies. today, we are privileged to have mr. baker with us to share his versatile and professional experience. it is a timely arrangement that mr. baker is here today to impart to us insightful thoughts and valuable experience in this respect when the msar is striving to diversify its economic activities. i am very sure that participants will benefit much from our knowledgeable speaker whose input is certainly conducive to enhancing the reputation of our financial industry. thank you!
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to snowballing effect impairing the functioning of the entire financial system due to interconnectedness. good governance ensures customers β and other stakeholders β trust in banks and non - banking financial intermediaries. d. among the financial intermediaries, banks occupy a special place due to their centrality in the transmission of monetary policy and the functioning of the payment and settlement systems. they also are the beneficiaries of deposit insurance which may weaken their incentive for strong management monitoring as well as monitoring by other stakeholders including depositors. good corporate governance would ensure strong internal controls which would offset the weakened incentive for monitoring. a robust and stable banking system is an absolute necessity for a well functioning economy. corporate governance β international experience academic literature suggests that post 2000, significant developments happened in the corporate governance framework internationally. for e. g., in the us, corporate scandals including enron and world com resulting from failure in corporate governance, led to sarbanes β oxley act with an aim to improving the accuracy and reliability of corporate disclosures by way of enhanced oversight role of boards, corporate responsibility, certification of accuracy of financial transactions by top management, setting standards for auditor independence etc. however, it is widely acknowledged that even the enhanced framework could not mitigate the weaknesses which played a significant role in contributing to the global financial crisis ( gfc ). there are ongoing debates regarding the manner in which flawed governance practices played their part in the crisis. while poor implementation is blamed by some, systemic failure of corporate governance is attributed by others as the cause. oecd and uk financial bis central bankers β speeches regulatory council share the view that the shortcomings were not with the corporate governance codes / principles per se, but were in their implementation. governance and ethics lack of ethics too played a significant part in the erosion of governance standards in institutions. values and culture define ethics. ethics are principles that recommend proper conduct, help distinguish right from wrong and drive people to do the right thing even when no one is looking. while ethical behaviour is a minimum requirement for any dealing or transaction, it becomes all the more essential for financial intermediaries, and particularly for banks, for whom trust is the cornerstone. honest and prudent behaviour by banks and other financial intermediaries is integral to their reputation and public confidence in the system. however, the conduct of financial institutions that caused the crisis does not suggest any measure of enduring interaction between ethics and banking. in fact, financial markets and entities
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amando m tetangco : the transformation of the philippine retail payment system speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the national retail payment system ( nrps ) event - signing of psmb charter and ach agreements, manila, 31 march 2017. * * * we are pleased that you have joined us this morning to witness two ground - breaking events that will transform the philippine retail payment system to become truly inclusive and eventually serve all payments transactions across the country. the first is the signing of the charter of the β payment system management body β or psmb under the national retail payment system framework. the psmb is a critical and unique entity that will serve as a strong foundation of a modern, digital retail payment system in the philippines. it is industry - led, bringing together and organizing all direct clearing participants in all important retail payment systems, into a self - governing body that will assist the bsp in overseeing the national payments system. as a fine example of public - private partnership, the bsp and the payments industry will work together to promote the sound development of the payment system based on the principles of cooperation, good governance, healthy competition and consumer protection. the second is the signing of the expression of interest to establish and activate within this year two specific automated clearing houses ( achs ) that are being prioritized because of their huge potential to immediately provide digital payment solutions to current payment challenges being encountered by government, by businesses, and by ordinary consumers. the first ach will be called β peso net β which is a batch electronic fund transfer credit payment scheme. this can be the electronic alternative to the paper - based check system but it will also be more inclusive in terms of participants and users. the peso net supports bulk payment transactions of various users. for instance, it will enable companies, including the government, to conveniently pay salaries and invoices to the bank account of choice of their employees and suppliers. employees and suppliers will therefore no longer be compelled to open and manage several accounts just so they can receive and make payments affordably. the second ach will be called β instapay β, a real - time low - value push payment scheme for transaction amounts up to p50, 000. this is a new retail payment system designed to facilitate small value payments that will be especially useful for paying for toll fees and tickets,
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real, authentic and has produced real results. working together, i am sure that the ppmi and the bsp can, and will continue to foster economic growth though the promotion of electronic payments. we shall continue to work together in establishing a safe, efficient, and reliable retail payment system to make our country more competitive in this digital age. congratulations everyone on the launching of instapay. maraming salamat! mabuhay tayong lahat! 2 / 2 bis central bankers'speeches
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in january setting out what is agreed and what remains to be decided. in principle, the creation of the ecb in 1998 ( in advance of stage iii ) or thereafter need not affect the other activities of eu central banks, whether they are in or out of the euro - area, provided they do not conflict with the ecb β s achievement of monetary stability. but it seems very likely that some of the activities of the national central banks, and especially those who are members of the euro - area, will change character as emu develops ( if it does ). that is partly because questions will undoubtedly be asked about costs. one american commentator has recently pointed out that the total cost of the us federal reserve system today is well under a third of the total costs of eu central banks. on that issue, as i have demonstrated, i believe we at the bank of england have a good story to tell. but the introduction of the euro would also have major implications for payments systems and financial markets generally, which are bound to push national central banks closer together. at the same time, functions further from the core of central banking, and especially those which could be performed as well or better by the private sector, are likely to move out of the central banks. as for monetary policy, if you will permit me one last quotation, one which should appeal to this audience, alex cukierman said in his extensive study of central banking, β a governor who is backed by an absolutely and relatively strong research department carries - 11 - more weight vis - a - vis the treasury and other branches of government β. 4 the same will be true within the european system of central banks, so i envisage national central banks keeping their capacity to analyse the state of their domestic economy. however, it ought to be possible, over time, for the ins to capture some economies of scale, and to develop centres of excellence in central banks around the union, with expertise in particular areas of work. it is unlikely to make sense to have 15 ( and certainly not 25 ) teams of economists analysing the causes of changes in the velocity of eurom4. but i do not wish to give the impression that emu, even if it comes about on something roughly approaching the current timetable, will be the β end of history β as far as european central banking is concerned. i suspect that central banks in europe will continue to display great diversity, and will continue to evolve in different directions, and at
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of us : for users, the system and the bank itself. the report highlighted that a new economy and new demographics demand a new financial system. this system must be resilient, fair and dynamic. we have prioritised five areas of work : we are enhancing the payments system for the digital age ; we will champion a platform to boost access to finance for small businesses ; we will support the transition to a carbon - neutral economy ; we will develop a world - class regtech and data strategy ; and we will facilitate firms β use of technology. https : / / www. bankofengland. co. uk / speech / 2019 / victoria - cleland - national - inclusion - week - launch - event - at - house - of - lords https : / / files. londonandpartners. com / business / resources / london - fintech - scene - 2017. pdf https : / / www. innovatefinance. com / news / uk - fintech - investment - flying - high - in - h1 - 2019 / https : / / www. ukfinance. org. uk / system / files / summary - uk - payment - markets - 2018. pdf https : / / www. bankofengland. co. uk / report / 2019 / future - of - finance all speeches are available online at www. bankofengland. co. uk / news / speeches today, i will focus on how the bank will support a more resilient, innovative and competitive payments system for uk households and businesses : we have a vision that payments will become cheaper, instantaneous and more seamless, including across borders. at the heart of this is the uk β s real - time gross settlement ( rtgs ) service which settles around Β£650bn of payments each working day, close to a third of the uk β s annual gdp. not much business can be done without it, and most consumers are ultimately reliant on it. i will tell you shortly about our leading - edge work to renew this service, but this is not all we are doing. we are also pursuing a number of even more far - reaching strands which together have the potential to transform the current payments landscape. i want to share a few of these with you today. first, cross border payment is for many a long standing frustration - often badged as slow ; inefficient and expensive for both financial institutions and end users. in 2018 we
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need for european financial institutions to make a substantial capital enhancement based on its estimate of potential losses of 200 billion euros that european financial institutions could suffer in the event of a collapse in the prices of government bonds of peripheral countries such as greece. however, given the current weakness in stock markets, it is not easy for financial institutions to increase capital on their own. as a result, concerns about counterparty risk have increased, causing some financial institutions to reduce interbank market trading activities. in addition, uncollateralized interbank trading, particularly of term instruments, has been declining, leading to an increase in funding costs for european financial institutions, mainly for longer - term and u. s. dollardenominated funds. in a comprehensive set of additional measures agreed at the end of october, the eu decided to require european financial institutions to attain a core tier 1 capital ratio of 9 percent by end - june 2012, after accounting for market valuation of sovereign debt exposures. it was also decided that when financial institutions are unable to increase capital by themselves, national governments should provide support or, if they are unable to do so, the efsf should do so. it would have been easier to come up with a solution if the problem had been contained to fiscal deficits, as was the case for greece at the beginning. the appropriate response would leverage here refers to, for example, β guarantees β to be provided by the efsf, which could amount to many times over what the facility can directly lend. if approved, the efsf could be given more flexibility over the measure to prevent a crisis from spreading to major euro area member states. in addition, it has already been decided to make the efsf a permanent institution and set up in mid - 2013 the european stability mechanism ( esm ) with the aim of facilitating a smooth restructuring of government debt issued by countries in financial difficulties. it has also been reported that discussions are underway to bring forward the starting date of the esm by a year. bis central bankers β speeches have been to increase government revenue and reduce expenditure in the short term, while pushing through a wide range of economic reforms in the medium to long term aiming to achieve sustainable growth. however, when it comes to measures to stabilize the financial system, things become much more difficult, because the impact on international financial markets cannot be ignored. a major factor currently destabilizing international markets lies in the daunting situation of having to deal with two crucial issues simultaneously
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exporting economies on the basis of the perception that it is a relatively safe international currency. moreover, in some emerging economies, cross - border capital flows have reversed, leading to a decline in stock and bond prices as well as foreign exchange rates. the main reason that instability in international financial markets has increased is a lack of confidence in measures undertaken by the eu to resolve the fiscal and financial problems in europe. as i will explain in the next section, the problems in europe are unlikely to be resolved in the short term. therefore, international financial markets are expected to face continued strains for a while. ii. the fiscal and financial problems in europe so far, i have presented an overview of the outlook for global economic and financial developments. now, i would like to take a closer look at the fiscal and financial problems in europe, which have become the epicenter of the growing strains in international financial markets. 1 before i go into details, i would first like to make sure that the difference between the eu and the euro area is well understood. the eu is an economic partnership between 27 countries and constitutes the world β s largest economic zone. it has a population of about 500 million and accounts for more than 20 percent of global gdp. people and money can move without restrictions in the region. the euro area, on the other hand, is presently comprised of the 17 eu member states that have adopted the single currency called the euro. countries with large economies, such as germany, france, italy, and spain, are among the members of the euro area. the area has a population of about 330 million and accounts for about 15 percent of global gdp. it is an economic zone almost as large as the united states. i will follow the standard practice of distinguishing between β core countries β ( such as germany, france, the netherlands, and belgium ) and β peripheral countries β ( such as greece, ireland, portugal, spain, and italy ). this speech is based on information available as of october 31, 2011. bis central bankers β speeches a. the three problems faced by the euro area the fiscal problems in the euro area have now reached a critical stage. looking back, the fiscal problems of greece surfaced in spring 2010, followed by those of ireland in fall 2010 and portugal in early 2011. as these countries β with large fiscal deficits and / or government debts β faced a sharp increase in the cost of funding, they had no choice but to ask the eu and the imf to provide them with
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credits generated from the verifiable reduction of emissions can improve the economic case for many transition projects. mas has published a working paper with mckinsey that outlines how highintegrity carbon credits can be generated from future emissions reduction due to the early retirement of coal - generated power and replacement with cleaner energy sources. such transition credits can potentially enable a broader market - driven financing mechanism and help to crowd - in private capital at scale. we will be sharing concrete initiatives on scaling these financing mechanisms and announcing new partnerships to take them forward. finally, resilience. with long coastlines and heavily populated low - lying areas, southeast asia is one of the world's most vulnerable regions to extreme weather and rising sea levels. singapore can play a useful role in pioneering and scaling urban solutions to build climate resilience. let me highlight some examples. to address rising temperatures, we have piloted the use of cool paint on flat facades to reduce the amount of heat they absorb in the day and emit at night. we are exploring the use of smart sensors to collect wind flow data for more robust environmental models which enables achieving cooler temperature with better ventilation. to address sea - level rise and heavy rainfall, we are strengthening local capabilities and expertise. we have set up a coastal protection and flood resilience institution ( cfi ) singapore. this is a multi - institutional and inter - disciplinary research centre to advance domain knowledge as well as explore innovative solutions. to address potential disruptions in food supplies due to climate change, we have taken steps to build a more sustainable and resilient agri - food system. for example, we have plans for a high - tech agri - food hub that can raise food production capacity to up to three times of current levels. this future hub will harness technology for efficient waste management and reduce water consumption by capturing rainwater for farming use. in short, the singapore pavilion aims to foster active partnerships across businesses, research institutes, civil society, youth groups, and government agencies. it aims to connect across countries and sectors to drive change and create impact. 3 / 4 bis - central bankers'speeches i invite you to be a part of this collaboration and wish you a fruitful experience at the singapore pavilion and at cop28. 4 / 4 bis - central bankers'speeches
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ravi menon : singapore - catalysing climate solutions of the cop28 singapore pavilion speech by mr ravi menon, managing director of the monetary authority of singapore, at the launch of cop28 singapore pavilion, singapore, 30 november 2023. * * * ambassador kamal vaswani, ladies and gentlemen, good morning. welcome to the launch of the singapore pavilion at cop28 in dubai. every cop is more important than the previous one, simply because with each passing year the world is running out of time. according to the latest ipcc report, the world needs to reduce greenhouse gas emissions by 43 % by 2030, compared to 2019 levels, this is what is necessary to keep temperatures from rising above the 1. 5 degrees celsius threshold. but greenhouse gas emissions are still rising not falling. average global temperatures are already 1. 1 degrees celsius above pre - industrial levels. the negotiations that take place at cop to foster new climate commitments are thus critically important. but it is out here β in pavilions like these - where commitments are turned into action, where individual contributions coalesce into collective impact. the singapore pavilion aims to serve as a platform for such collective action to catalyse climate solutions. later today, singapore will co - host with bain & co the inaugural climate leaders'assembly. we have convened leaders from the private and people sectors to brainstorm ideas and develop initiatives. singapore is committed to achieving net zero emissions by 2050. but our contribution to climate action is not just to remove the 0. 1 % of global greenhouse gas emissions that we account for. more importantly, it is to collaborate with partners from around the world to galvanise resources and incubate and scale solutions for climate action. and singapore is well placed to do this. as an aviation and maritime hub, singapore can play a role in developing the infrastructure and networks for promoting cleaner fuels and decarbonisation. as an international financial centre, singapore can help to mobilise the financing necessary to support asia's transition towards a low - carbon future. as an urban metropolis, singapore can be a test bed for innovative solutions ranging from measures to reduce urban heat to fortifying defences against rising sea levels. the pavilion's programme will span these three big themes : decarbonisation, finance, and resilience. 1 / 4 bis - central bankers'speeches let me start with decarbonisation. as a major air and sea transportation hub, singapore can play a key
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regain responsibility for its own public finances. the government, parliament and electorate of each euro - area country must be bis central bankers β speeches responsible for ensuring that their economy is competitive and performs well, that the country generates growth and employment under its own steam, that its government finances are sustainable in the long term, and that excessive public deficits and debt are eliminated so that the country can absorb cyclical shocks without external assistance. far - reaching reforms are needed to achieve this level of stability. all this is challenging, but shouldn β t it really be a matter of course? after all, these are the prerequisites for a stable monetary union. to achieve these aims, to set the right incentives for sound policymaking, we need to lend more weight to the no bail - out principle again. the collective action clauses on recently issued government bonds are a step in the right direction, enabling a bail - in of bond creditors in the event of serious solvency problems. only then will the market have a disciplining effect on government budgets. but as the crisis has shown, the success of this approach of national responsibility hinges on one condition : ensuring that public finance problems do not derail the whole financial system. two things can at least help to ensure that this condition is fulfilled : in the medium term, banks should be obliged to set aside sufficient capital to back government bonds, and they should also be subject to limits on large exposures to governments. such limits have been applied as standard to corporate loans for a long time now. this would make banks more resilient to public finance problems, encouraging them to adjust their demand for government bonds more closely to the level of risk involved. any government with an unsound fiscal policy would face rising interest rates on its bonds. kenneth rogoff, former chief economist at the imf, even views adequate capital backing for government bonds as a far more effective debt brake than the rules of the fiscal compact. incidentally, putting an end to preferential treatment of government debt over corporate loans would also make lending to enterprises more attractive again. and you could all benefit from that, even though there are currently no signs of constraints on lending to enterprises in germany. quite the opposite : credit standards for corporate loans were actually loosened slightly in the first quarter of 2013. however, bank balance sheets don β t just reflect government finances but also developments in the real economy. the reforms i β ve described will therefore also make the banking system more stable. the
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yves mersch : competitiveness of europe and european financial markets panel contribution by mr yves mersch, member of the executive board of the european central bank, at the 30th edition of the workshop " the outlook for the economy and finance ", villa d'este, cernobbio, 6 april 2019. * * * to increase competitiveness is the main driver for higher potential growth. member states have to pursue politics and establish institutions that stimulate the dynamics of a competitive private sector. in most euro area countries potential growth has remained too low, however. labour market rigidities and inefficient business environment conditions seem to be major impediments. in particular, labour supply is held back by policies which do not sufficiently motivate to take up jobs and do not tackle skill mismatch or labour shortages. moreover, investment could be strengthened through fostering competition, improve the business environment and reduce uncertainty e. g. through improving the quality and efficiency of public institutions more generally. despite favourable economic and financing conditions, structural reform progress has been rather limited, including in several of the weakest countries. the trend of insufficient structural reform implementation observed in particular since 2014 has continued during the last year. only a few countries have engaged in more far - reaching structural reforms, most notably greece and france. some countries even reversed recent reforms that had been designed to improve the smooth functioning of the economy, most notably in the areas of labour markets and pension systems. overall, reform efforts were not in line with reform needs. these policy areas concern national competencies, but in a single markets cross - border spillover effects are generated. governments therefore need to act at national levels, enhanced through procedures, rules and harmonization at eu level. against the background of limited reform effort and in spite of the robust cyclical upswing, overall risks and vulnerabilities in many cases have only moderately declined since last year. the commission β s annual assessment of country specific recommended reforms finds only limited progress. 1 the progress made is evaluated using five categories : β no progress β, β limited progress β, β some progress β, β substantial progress β and β full implementation β. β no progress β means that the member state concerned did not even β credibly announce β measures that would aim to address the policy recommendation. out of 73 country specific recommendations ( csrs ), none saw full implementation, and substantial progress was made in only two cases. for the overwhelming majority of csrs ( more
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yves mersch : the changing role of central banking speech by mr yves mersch, member of the executive board of the european central bank, at the lamfalussy lectures conference of the lamfalussy award at magyar nemzeti bank ( the central bank of hungary ), budapest, 4 february 2019. * * * john von neumann, the hungarian - born mathematician, once said : β there β s no sense in being precise when you don β t even know what you β re talking about β. i saw alexandre lamfalussy in many different roles over the course of 30 years, and i always admired his capacity to be extremely precise because he was professionally knowledgeable. it is therefore a great honour for me to be awarded a prize in memory of a man who made such an important contribution to european integration. during many years representing my country of origin in the belgian constituency at the imf, i witnessed the intellectual strengths of the hungarian representatives, especially from the central bank. i therefore feel particularly flattered to have been awarded this prize by the magyar nemzeti bank and its president, mr matolcsy. i also want to express my thanks to governor ewald nowotny of the oesterreichische nationalbank, who is also a firm believer in the need to bring the people of our continent together without nations trying to dominate each other. indeed, i feel very humble and modest in this environment. i was lucky to be able to develop my views and opinions when accompanying my highest political authorities in their meetings for more than 20 years. moreover, my family provided me with two solid foundations : resistance to illiberalism during world war ii, and the respect of the rule of law. i have been veering between what benoit mandelbrot called β the two poles of human experience β, one driven by my legal background and the deterministic system of order and planning, and the other inspired by my lifelong experience with finance and the stochastic or random systems of irregularity and unpredictability. trying to straddle the two poles with insights from political science brings me to today β s theme : the changing role of central banks. mandelbrot said of the great financial crisis : β financial economics, as a discipline, is where chemistry was in the sixteenth century : a messy compendium of proven know - how, misty folkwisdom, unexamined assumptions and grandiose speculation.
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arbitrage between instruments and between markets. if a clear arbitrage opportunity is left unexploited, someone is most likely to take advantage of that opportunity to gain profits, thereby bringing about a price correction. assuming the presence of private economic agents in pursuit of profits, this understanding is quite reasonable. of course, this understanding is based on the following strong premises : ( 1 ) investors behave rationally, and ( 2 ) information that would affect prices becomes available instantly and there is no information disparity in the markets. therefore, it is not difficult to find cases where this understanding is not applicable in reality. however, i feel that this theory is significant in that it provides the basic perspectives for the functioning of financial markets. supposing that an arbitrage opportunity is apparently present, the theory would be the basis for discussions on issues such as why that occurred, whether the market is just taking time to adapt and adjust and an autonomous adjustment can be expected, and whether the situation should be artificially corrected by implementing some sort of measures. ii. mutual feedback with the actual markets the significance of traditional theory on financial markets is generally accepted not only in academia, but also among many market participants. however, as i have mentioned, there are quite a few phenomena in actual financial markets for which such theory might not provide a satisfactory explanation. it is believed these difficulties are attributable to various factors ; three of which i will explain now. difficulties in utilization of market data practical hurdles are one of the factors that make it difficult for traditional theory to be fully adopted. in relation to asset prices, there often are constraints in utilizing data in practice. specifically, expected inflation rates and term premiums included in long - term interest rates are not directly observable, even though they are widely accepted concepts. estimated figures should be seen with a considerable margin as there is no consensus on modeling and formulation. in addition, there are cases where data availability is a high hurdle in practice. apart from data that are not observable, which i have just described, there are those that are not collected, those that are regarded as private information and are not for general use, and those that are hidden and therefore their usefulness is not known. on this point, it should be noted that, against the background of the evolution of information processing technology such as natural language processing, image recognition, and machine learning, as well as improvements in the performance of computers, a trend towards utilizing
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the customer? ( ii ) who controls the transactions? has there been any worthwhile attempt to resolve them in a mature way? i would urge upon the banks and msps to get their acts together very quickly. on behalf of rbi let me assure you that we stand committed to the success of this collaboration and would remove all genuine obstacles! enabling cross border payments through the medium of mobile phones 15. should mobile initiated cross border transactions be enabled? to my mind there cannot be a uniform standard for this. the issue is country specific and each country has to take its decision based on need, issues and threat perception. as far as india is concerned, even during the worst forex crisis, the country was careful about the quality of inflows. secondly, we have had rules that required all forex flows to be routed only through banking institutions or others specifically authorized to undertake forex transactions. given this background, even if we had to agree mobile phones can only be used to trigger the transfer of funds from overseas by a non - resident to the beneficiary β s bank account in india. the banks will have to be responsible for ensuring quality of funds, kyc, etc. we have in fact permitted banks to enable cross border bank account to bank account remittance through the medium of mobile subject to clearance from the local regulator. at the beneficiary end, we have enabled loading of funds received from overseas under the money transfer service scheme ( mtss ) scheme on to a prepaid payment instrument issued by a bank, which could include a mobile wallet, to the recipient of the funds. conclusion 16. before i conclude, let me reiterate that the mobile phone is a potent tool to facilitate financial services and thus financial inclusion. it has the potential but the security and cost aspects have to be addressed. the medium of mobile has to sub - serve smaller transactions and must become cheaper. the reserve bank has for well considered reasons opted for a bank - led model as it is a complete model for delivery of a wide range of services. just as you cannot have tele - medicine without a doctor, you cannot have mobile banking without a bank! the bc model would help to complement mobile banking, as customers need to approach bcs / atms only for hard currency requirements and conduct other banking transactions from anywhere from their mobile phones, provided of course, there are no tele - connectivity issues! as mentioned earlier, it is the social responsibility of everyone, who has
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supervisors, and regulators - who are being pressed to reevaluate how we meet our responsibilities. although the safety net necessitates greater government oversight, in recent years rapidly changing technology has begun to render obsolete much of the examination regime established in earlier decades. regulators are perforce being pressed to depend increasingly on greater and more sophisticated private market discipline, the still most effective form of regulation. indeed, these developments reinforce the truth of a key lesson from our banking history - that private counterparty supervision remains the first line of regulatory defense. the speed of transactions and the growing complexities of financial instruments have required a focus more on risk - management procedures than on actual portfolios. indeed, i would characterize recent examination innovations and proposals as attempting both to harness and to simulate market forces in the supervision of banks. the impact of technology on financial services and therefore, of necessity, on supervision and regulation is the critical issue that frames the supervisory agenda as we move into the 21st century. in today β s more complex world, the diversity of financial product choices facing consumers and businesses is truly astonishing. the complexity, as you know, has provided consumers with more choice but presented new challenges as well. in modernizing our banking laws and making them more consistent with marketplace realities, the congress ensured that the financial services industry can expand and innovate with far fewer artificial constraints. how various financial providers choose to exploit these wider opportunities will be among the more interesting dynamics of the years ahead. what will the financial services industry look like in whf β s 40th year? given the rapidity of innovation and technological change, that is impossible to predict with any certainty. accordingly, none of us can, a priori, lay out an optimal model either for financial services providers or for financial regulators. for policymakers, supervisors, and regulators, i would only suggest some general guidelines for the coming years : proceed cautiously, facilitate and participate in prudent innovation, allow markets to signal the winners and losers among competing technologies and market structures, and overall - as the medical profession is advised - do no harm. we are all fortunate to have the opportunity to be a part of this remarkable transformation of the financial services industry into one that provides more useful financial products and services to a broader spectrum of consumers and businesses. as i see it, the possibilities for education and debate will abound in coming years, and you and your colleagues are well positioned to continue to provide leadership in addressing the broad spectrum of issues that will
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##ralised structure. the different roles of the ecb and the ncbs can be characterized by the following analogy : the ecb is the β captain of the team β, and ncbs are team members. turning to how the ecb and the ncbs share the tasks in the regular cycle of the eurosystem β s monetary policy decision - making process, i would like to highlight the following : 1 β’ first, the preparation stage involves both ncb and ecb staff as well as the eurosystem committees. the aim being to gather information and agree on technical contributions that may be of relevance for the decision - making process. the exchange of information within the eurosystem has been crucial in this respect. in this context, committees provide fora that allow best practices and expertise to be shared at the technical level, foster cooperation within the eurosystem and ensure regular and fruitful interactions between the ecb and the ncb staff. β’ second, the decision stage involves the executive board and the governing council of the ecb. the executive board prepares the meetings of the governing council. this includes drawing - up the meeting agendas and preparing the necessary documentation. the decisions on all euro area monetary policy related issues are then taken by the governing council. β’ third, the implementation stage, involves the ncbs implementing the decisions in a decentralised manner and ensuring that the governing council β s guidelines are followed. in this context, ncbs have been fully involved in the development of the eurosystem β s infrastructure and in the implementation of monetary policy, thereby contributing their valuable expertise and experience in running the daily tasks and operations of a central bank. in particular, ncbs play an important role in eurosystem tasks that require a high degree of specialised expertise. let me explain this in more detail using the area of payment systems as an illustration. for example, target, the real - time gross settlement ( rtgs ) system for the euro, started operations in january 1999 at the same time as the launch of the euro. by see p. moutot, a. jung and f. p. mongelli ( 2008 ), β the workings of the eurosystem, monetary policy preparations and decision - making β selected issues β, ecb occasional paper no 79. tradition, the ncbs have been actively involved in the operation of payment systems, each in their national environment. the central bank community soon realised that an enhanced target system was needed to maximise efficiency and
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woods architecture was not designed to cope with the instability and volatilities of the kind that i referred to earlier. having said this, it has to be recognized that, particularly after the asian crisis, there has been some progress in strengthening the structure of the old architecture. various high level forums such as g - 7, g - 33, g - 20 and international institutions such as imf, world bank and iosco have been busy in analyzing the past experience and in introducing ways and means of imparting greater transparency, early detection, better supervision, higher capital requirements, more sustainable exchange rate regimes, stronger standards and codes, and involving the private sector in resolving crises. some improvement has also been effected in imf financial facilities, such as contingency financing facility, to provide quick and higher access in the event of a crisis. however, it is also clear that these efforts, while having improved our understanding of the causes and consequences of financial volatility, and perhaps also helped in devising some precautionary measures, do not amount to a new international financial architecture which can cope with the new realities. i am also not sure that given the large volumes involved and short period over which a crisis can manifest itself, whether workable international solutions to the weaknesses in the present architecture are feasible within a reasonable time? my third point is that today - whether we like it or not - most of the responsibility for coping with the burden of instability and volatility is that of the country itself. from our own experience in india, i believe that there are three fundamental requirements for a country to prevent a financial crisis : β’ careful monitoring and management of exchange rates without, - i emphasis without - a fixed target or a pre - announced target or a band. flexibility in exchange rates is essential, but so as the ability to intervene, if and when necessary ; β’ a policy to build a high level of foreign exchange reserves which takes into account not only anticipated current account deficits but also β liquidity at risk β arising from unanticipated capital movements ; β’ a judicious policy for management of the capital account. short - term banking capital for financing investments and growth has to be avoided, while foreign direct investment and portfolio investment have to be encouraged. the point is simply that in respect of foreign direct investment and portfolio investment, there is a β cost β involved for the foreign investor in quickly reversing such flows. this cost is not present in respect of fixed
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timothy n j antoine : launch of results of financial literacy and financial inclusion survey remarks by mr timothy n j antoine, governor of the eastern caribbean central bank, at the launch of results of financial literacy and financial inclusion survey, basseterre, 18 september 2023. * * * salutations members of the monetary council members of the eccb board of directors dr. didacus jules, director general of the oecs commission ms. lilia buruncic, director for the caribbean, world bank and team ms. helen gradstein and team from the united nations capital development fund ( uncdf ) dr. valda henry, deputy governor ms. tracy polius, chief director ( policy ) mrs. c. teresa smith, director of the research, statistics and data analytics department heads of department, management and staff mr. imran williams, project manager and oecs project team, now the director of finance in the government of saint lucia mrs. gail gray - phillip, head of uwi global campus, st. kitts and nevis mr. edwin st. catherine, ceo, data point solutions inc. and team specially invited guests students members of media fellow citizens and residents of the eccu introduction greetings from your eastern caribbean central bank! we work for you. 1 / 4 bis - central bankers'speeches today, we are pleased to share the results of our inaugural financial literacy and inclusion survey. we could not undertake this effort without partnerships. consequently, at this juncture, i wish to highly commend all those associated with this survey, especially mrs. c. teresa smith and dr. leah sahely from the eccb, and the entire project management unit at the oecs commission led by mr. imran williams, now the director of finance in the government of saint lucia. i wish also to acknowledge the technical and financial support of the world bank under the caribbean digital transformation project ; mr. edwin st. catherine whose company, data point solutions inc., executed the survey ; and all the persons who participated in the survey. why did the eccb commission this survey? here at eccb, financial inclusion is a strategic priority. financial inclusion refers to access to a range of financial services including banking, credit and insurance. investopedia defines financial literacy as the ability to understand certain financial issues and use financial skills for personal financial management such as budgeting and investing. in a region which boasts high levels of adult literacy ( high 90 per
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randal k quarles : brief thoughts on the financial regulatory system and cybersecurity speech by mr randal k quarles, vice chairman for supervision of the board of governors of the federal reserve system, at the financial services roundtable 2018 spring conference, washington dc, 26 february 2018. * * * thank you very much for having me here at the financial services roundtable β s spring meeting. i am pleased to speak with you all about our financial regulatory system : both the broad principles that have been directing my approach to evaluating the regulatory system, as well as cybersecurity, which is a topic of great import to financial system participants and their regulators. efficiency, transparency, and simplicity of regulation as i have said before, we have an opportunity to improve the efficiency, transparency, and simplicity of regulation. we have spent the past decade building out and standing up the postcrisis regulatory regime, and as a result we have made critical gains. the financial system is undoubtedly stronger and safer. we have robust capital and liquidity levels, an effective stress testing regime, and improved resolvability of our largest firms. but at the same time, it is our responsibility to ensure that those rules are effective. and if we identify rules that are not working as intended, we should make the necessary changes. with the benefit of hindsight and with the bulk of our work behind us, now is a natural and expected time to evaluate the effectiveness of that regime. our efforts toward implementing those principles are underway. federal reserve board staff members continue the review that i have previously outlined. the goal is to consider the effect of past regulatory initiatives on the resiliency of our financial system, on credit availability and economic growth, and more broadly, their costs and benefits. i am confident that that review will reveal some clear ways that we can improve the core post - crisis reforms. cybersecurity let me now turn from regulation to supervision, and more specifically, to the topic of cybersecurity, which continues to be a high priority for the federal reserve. the federal reserve is committed to strategies that will result in measureable enhancements to the cyber resiliency of the financial sector. given the dynamic and highly sophisticated nature of cyber risks, collaboration between the public sector and private sector toward identifying and managing these risks is imperative. while we know that successful cyber attacks are often connected to poor basic information technology hygiene, and firms must continue to devote resources to these basics,
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the npl problem. at the same time, it is very important for the bank to improve its promotion of smooth corporate financing and its implementation of money market operations to strengthen the transmission mechanism of monetary easing, against the background of the banks'weak financial intermediary function, which is an important route for the transmission of the effects of monetary policy. in light of this, the bank has decided, as a temporary measure, to examine the possible purchase of asset - backed securities ( abss ), including asset - backed commercial paper, mainly backed by those assets related to small and medium - sized firms. abss are marketable securities into which pools of specific assets such as accounts receivable held by firms are converted. the abs market in japan is still in the process of development. however, nurturing the development of the abs market is expected to provide various merits in corporate finance, in particular enabling small and medium - sized firms to exploit an alternative route of raising funds to bank borrowing. the bank hopes that the transmission mechanism of monetary easing will be strengthened through the bank's support for the establishment and development of financial markets that will be able to provide new financing channels. the bank is currently working on a specific design for the abs purchasing scheme which would contribute to the development of the abs market, gathering opinions from market participants. financial markets are basically expected to be initiated by the private sector and to evolve autonomously. for this reason, the bank's outright purchases of private debts such as abss are unprecedented measures for a central bank. therefore, the bank will determine the specific design of the purchasing scheme, considering the following : to what extent the purchase will strengthen the transmission mechanism ; whether or not the purchase will distort market mechanisms ; and how to maintain the financial soundness of the bank and ensure its ability to conduct monetary policy in the future. iv. purchase of stocks held by commercial banks although the measure does not fall directly within the province of monetary policy, the bank started to purchase stocks held by private banks in november 2002, with a view to further reducing the market risk pertaining to these stocks. the total amount of stocks purchased as of april 10, 2003 was 1, 209. 0 billion yen. the purchasing of stocks is one of the actions taken by the bank aimed at the early restoration of the soundness of the financial system. such restoration of the soundness of the financial system is considered indispensable in strengthening the transmission mechanism of monetary policy. conclusion japan
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rule as setting the policy rate so that the inflation forecast was at the midpoint of the target band at some specific horizon, say two years. it was also often argued that for reasons of enhancing credibility, there should be some form of β penalty β on the central bank if inflation moved outside the target band ; in effect, the edges of the band should be viewed as an β electric fence β, to be avoided if at all possible. previous discussions of the role of forecasts at the rba can be found in stevens g ( 1999 ), β economic forecasting and its role in making monetary policy β, rba bulletin, september, pp 1 β 9, and stevens g ( 2004 ), β better than a coin toss? the thankless task of economic forecasting β, rba bulletin, september, pp 6 β 13. excluding the effect of the gst and mortgage interest payments, the average inflation rate has been 2. 6 per cent. graph 1 this form of inflation targeting, however, never seemed particularly attractive to the rba. while we are committed to ensuring that inflation outcomes are consistent with the mediumterm target, we have not felt the need to set the cash rate so that our inflation forecast at a specific horizon was exactly 2Β½ per cent. nor have we felt that the edges of the target are like an electric fence. we have, from the outset, had a more flexible approach than this. since the current framework was adopted, our two - year - ahead inflation forecast has on occasions been below 2 per cent, and on other occasions it has been above 3 per cent. 3 and in terms of actual outcomes, year - ended cpi inflation has been outside the 2 to 3 per cent range a bit more often than it has been within the range. this more flexible approach has two advantages. the first is that, in the event that inflation turns out to be unexpectedly too high or too low, the central bank has some flexibility about the pace at which inflation is returned to the target range. provided the central bank β s commitment to medium - term price stability is credible, this flexibility can deliver better outcomes for the real economy. the second advantage is that this flexibility provides greater scope to take into account not just the central forecast, but also the medium - term risks around that forecast. let me try and make this a little more concrete by asking you to think about an economy that experiences a positive supply shock, say an improvement in productivity or lower world prices for
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speech central bank of the republic of turkey prof. sahap kavcΔ±oglu, governor cbrt 89th ordinary meeting of the general assembly 30 march 2021, ankara esteemed shareholders, distinguished guests on the occasion of this meeting, i would like to express my pleasure to be here with you today as the governor of the central bank. i believe that we will duly fulfill our responsibility with all my colleagues at the central bank in the period ahead, and i wish that the new period will be beneficial to our country, our nation and our bank. today, we are holding this meeting under safety measures due to the coronavirus pandemic going on for the past year, which has deeply affected both our daily lives and world economies. i salute all the stakeholders and audience attending our general assembly meeting either in this hall or in front of their screens. the pandemic that has been going on for over a year has caused, among other things, economic challenges and uncertainties all over the world. as you know, the measures that have been put in place to curb the spread of the pandemic since the first quarter of 2020 have adversely affected growth performance of economies all over the world. for this reason, countries have tried to mitigate the potential impact of the pandemic on their economies through expansionary monetary and fiscal policies. at this point we see an improvement in the global growth outlook and an increase in international commodity prices on the back of positive developments in the vaccination process, in addition to expansionary policies. however, despite the ongoing vaccination efforts, the ongoing uncertainties regarding the vaccination process and the course of the pandemic keep the risks to the global economy alive. distinguished guests, at my first general assembly meeting, let me briefly share with you some important issues regarding the monetary policy. under the duties and powers set forth by law and in line with its main objective of achieving a permanent fall in inflation, the central bank of the republic of turkey will continue to use the monetary policy tools effectively. we are strictly committed to the medium - term inflation target of 5 %, defined as price stability and set jointly with the government. we are going to use the monetary policy tools appropriately to achieve this target. i would like to underline that we are determined to bring inflation down to 5 % in 2023 and keep it there permanently, consistent with the medium - term framework we set out in the january inflation report. i am aware that the
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low inflation environment that we target is a prerequisite for sustainable economic growth as well as employment growth. we will remain determined and resolute to reach this target with our corporate capacity, strong analytical capability and sense of responsibility. the central bank will continue to use all available instruments independently and effectively in pursuit of its primary objective. in the period ahead, the one - week repo rate will remain our main policy tool, and we will continue to implement the monetary policy within a simplified operational framework. the inflation - focused monetary policy will be our strongest weapon that will serve as a shield against global fluctuations and financial market volatilities. our determination to fight with inflation will secure the strength and prestige of the turkish lira. in the current period, high levels of inflation and inflation expectations require a tight monetary policy stance. the monetary stance will continue to be determined in view of inflation developments and inflation expectations, and at a degree of tightness that will rapidly restore the disinflation process and ensure its sustainability until we achieve our medium - term targets. until there are strong indicators that point to a permanent fall in inflation, we will continue to set the policy rate at a level above inflation, in a manner to maintain the strong disinflationary effect. to sum up, we will make our decisions with a data - centered perspective, taking into account all macroeconomic data flow, inflation in particular. in the new period, we will make the best use of our corporate capacity to ensure a permanent fall in inflation. it should be noted that the stability to be achieved in the general level of prices will positively affect macroeconomic and financial stability through the fall in country risk premiums, the start of reverse currency substitution, the uptick in foreign exchange reserves, and a permanent decline in financing costs. accordingly, it will set the ground for a sound and sustainable increase in investments, production, and employment. dear shareholders, in the upcoming period, implementing the reforms set out in the economic reform package announced by our government will be crucial to reinforcing confidence and stability and thus, to achieving both a permanent fall in inflation and sustainable growth. on the other hand, like before, we will continue to use our communication channels actively to enhance the effectiveness of our policies and get the views and suggestions of our stakeholders. in line with the transparency and predictability principles, we will share our decisions with the public. as i end my speech, i would like to thank you all for your participation.
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likely slip below the target rate as well. 5 a simple example helps illustrate this problem. say that 80 percent of the time, the lower bound on interest rates does not constrain policy and the central bank aims for a 2 percent target inflation rate. during these β good β times, an inflation - targeting central bank aims to keep inflation near 2 percent. but, 20 percent of the time, the economy falls into a recession that β s severe enough that the lower bound constrains policy. assume that during these periods, inflation averages only 1 percent. so, 80 percent of the time inflation averages 2 percent and 20 percent of the time inflation averages 1 percent. the resulting average rate of inflation is about 1. 8 percent. as a consequence, inflation expectations are likely to become anchored at the long - run average of 1. 8 percent, below the desired 2 percent target. but, that β s not the end of the story. this downward shift in inflation expectations has a secondround effect on real interest rates, the economy, and inflation. when policy is constrained by the effective lower bound, the downward shift in inflation expectations raises the real interest rate, further diminishing the degree of monetary stimulus, making the downturn worse and reducing inflation even more. even in times when policy is not constrained, the expectation of belowtarget inflation in the future affects current decisions, putting additional downward pressure on inflation. in other words, monetary policy is always swimming upstream, fighting a current of toolow inflation expectations that interferes with achieving the target inflation rate. a number of alternative monetary policy frameworks have been proposed that aim to tackle the problems associated with the lower bound on interest rates. although they differ in many ways, it is useful to divide these proposals into three broad categories. the first option is to maintain the basic framework of inflation targeting and to rely on a combination of aggressive conventional and unconventional policy actions when facing economic downturns to limit the deleterious effects of the lower bound. this carries with it the risk that inflation expectations become anchored at too low a level. the second option is β average - inflation targeting, β whereby the central bank purposefully aims to achieve an above - target inflation rate in β good β times when the lower bound is not a constraint. properly designed and implemented, such an overshoot can offset the inflation undershoot during β bad β times so that the longer - run average inflation rate and inflation expectations are in 2 / 3 bis central bankers
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john c williams : monetary policy strategies for a low - neutralinterest - rate world remarks by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at the 80th plenary meeting of the group of thirty, federal reserve bank of new york, new york city, 30 november 2018. * * * as prepared for delivery i would like to start by thanking tharman for the invitation to participate in this panel of esteemed current and former policymakers. i am also pleased to continue the long tradition of hosting the group of thirty at the federal reserve bank of new york and very much look forward to this morning β s discussion. in my remarks, i will focus on the following question : what long - run monetary policy strategy is best suited to anchor inflation expectations, foster price stability, and promote maximum employment? i emphasize the phrase β long - run β because i will focus on the features of a systematic policy framework, rather than tactical policy decisions. this topic is not only of academic interest : as was recently announced, the federal reserve is embarking on a review of its long - run monetary policy framework. 1 i will argue that the global decline in the neutral rate of interest over the past quarter century poses significant challenges to maintaining wellanchored inflation expectations in a standard inflation - targeting regime. i will then lay out some alternative policy strategies that have the potential of providing a solid anchor for inflation expectations β even with a very low neutral interest rate β while preserving broad continuity with current inflation - targeting practice. now that i am already way out on a limb, i should emphasize that my remarks reflect my own views and not necessarily those of the federal open market committee or anyone else in the federal reserve system. as a starting point, it β s useful to travel back in time to the 1980s and 1990s, when inflation targeting was introduced. the problem at the time was high and variable inflation that contributed to macroeconomic instability and unmoored inflation expectations, which in turn fueled high and variable inflation. to break this vicious cycle, numerous central banks instituted inflation targeting, or variants thereof, with a focus on bringing inflation down to a low level and fostering the establishment of stable, well - anchored inflation expectations. this strategy worked extraordinarily well in the decade preceding the global financial crisis, as central banks were able to achieve remarkably low and stable inflation, leading to a positive feedback loop between low inflation and well - anchored inflation expectations. today, we
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benoit cΕure : triparty settlement interoperability speech by mr benoit cΕure, member of the executive board of the european central bank, at the signing ceremony for the memorandum of understanding on triparty settlement interoperability, frankfurt am main, 15 july 2013. * * * ladies and gentlemen, it is a great pleasure to host today at the ecb, the signing ceremony for the memorandum of understanding on triparty settlement interoperability, and to be together with key representatives from the european repo council ( erc ), and the repo market infrastructures who have worked together on this initiative for many years now. i have seen in the memorandum of understanding that triparty settlement interoperability is conveniently abbreviated to β tsi β so i will take advantage of this shorter form in my remarks today. the aim of the β tsi initiative β, as you are all well aware, is to bring together borrowers and lenders, regardless of where the underlying liquidity or collateral is held, thereby avoiding the build - up of silos in the market. in order to place the tsi initiative in context, let us reflect for a moment on the european repo market, which has grown significantly since the beginning of the financial crisis. as you are all aware, the repo market plays a vital role in the financial system, as a source of funding and more generally, for the provision of market liquidity. the euro repo market is particularly large and has increased significantly in importance in recent years. after an initial slowdown in interbank repos at the onset of the financial crisis, icma erc surveys have shown the value of euro area repos increase significantly from 4. 6 trillion eur in 2008 to 5. 6 trillion eur by the end of 2012. in the context of these figures, the importance of tsi to further improving the efficient working of the repo market can be clearly seen. i am extremely pleased that so much progress has been achieved on the tsi over the last few months because it is an initiative that has been strongly supported by the eurosystem over the years, and in particular through the ecb contact group on euro securities infrastructures, cogesi. indeed, in a workshop later today, we will discuss a report on collateral eligibility requirements prepared by cogesi ( and to which i understand a number of persons in this room have contributed ) β and we will see that the tsi initiative can help
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roger w ferguson, jr : the role of central banks in fostering efficiency and stability in the global financial system remarks by mr roger w ferguson, jr, vice - chairman of the board of governors of the us federal reserve system, at the national bank of belgium conference on efficiency and stability in an evolving financial system, brussels, 17 may 2004. * * * it is a great pleasure for me to open this conference. our agenda is filled with addresses by distinguished speakers and research papers of uniformly high quality on topics of keen interest to central bankers. indeed, few subjects are more important for central bankers than the efficiency and stability of the financial system. many of the papers to be presented and discussed over the next two days focus on the behavior of private institutions operating in financial markets. i thought i could complement these presentations by discussing the efforts of an important class of public institutions - - central banks - - to foster efficiency and stability in the financial system. before proceeding, i should note that my remarks today represent my own views, which are not necessarily shared by my colleagues on the federal reserve board or on the federal open market committee. in previous discussions, i have found it useful to offer a working definition of financial instability that seems most relevant from a public - policy perspective. although difficult to define precisely, financial instability, in my view, connotes the presence of market imperfections or externalities in the financial system that are substantial enough to create significant risks for real aggregate economic performance. over the past few decades, economic research has identified a variety of imperfections inherent in markets, such as moral hazard, asymmetric information, and externalities. on occasion, these imperfections can become so widespread and significant as to result in outcomes that threaten the functioning of the financial system and adversely affect real economic variables. history suggests that these imperfections reach this advanced and disruptive stage when they are exacerbated by large external shocks. such outcomes include panics, bank runs, severe market illiquidity, and excessive risk aversion. these outcomes are highly undesirable for society because they can be accompanied by a variety of economic distortions : financial prices can diverge sharply and for prolonged periods from fundamentals, and their correction is likely to impose great cost on society ; the availability and pricing of credit may be too lax at times and at other times too restrictive relative to underlying macroeconomic conditions. as a result of these distortions, spending and real activity may undergo much wider swings
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mark carney from the bank of england put it - avoid a climate - driven β minsky moment β. we need to be at the point where central banks and supervisors see scenario analysis and stress testing of these risks as a given. the point where the board and senior management of institutions engage in managing these risks, not because we tell them to, but because it β s a fundamental part of their prudential responsibility. opportunities so yes, the gloom and stories of despair may continue if we do nothing. but all over the world people, institutions, governments and companies are stepping up to the plate. because we need to. and because with change, comes opportunity. opportunities for businesses and professionals. many of these opportunities have already been seized, especially here, despite β or thanks to? β the fact that the wildfires blaze and herald the need to change. california, the world β s 5th largest economy, is a global leader in climate change mitigation efforts with bold climate goals and actions. its climate goals include : - reducing greenhouse gas emissions to 40 percent below 1990 levels by 2030 fout! onbekende naam voor documenteigenschap. - providing 100 percent of the state β s electricity from clean energy sources by 2045 reducing methane emissions and hydrofluorocarbon gases by 40 percent and adding 5 million zero - emission vehicles to california β s roads by 2030 renewable energy in california has matured : solar and wind are cost - competitive with fossil fuels. california is the clear leader in clean tech patent registration in all major clean technology categories. for every one patent registered in texas, the state with the second - most patents registered in 2018, california had 3. 5 patents. and 58 percent ( $ 3. 4 billion ) of all us investment in clean technologies was invested in california. innovations from industry large and small are helping us to mitigate these dangers and transform our economy. and of course it is not only the state of california that is stepping up : it is estimated that by 2021, one quarter of total store sales in the u. s. ( $ 150 billion ) will be sustainable products. the number of companies across the world who issue some form of sustainability report continues to increase. sustainability reports are now issued by 94 % of the world β s 250 largest companies. and this month the issuance of green bonds burst through the $ 1tn mark worldwide. not only is there a rising volume, the demand still exceeds the supply
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in the current environment : is our operational resilience keeping up with the faster pace of digital developments? when it comes to fintech, i think covid - 19 has also accelerated existing trends there too. the future development of fintech is a function of technological innovation and changing consumer preferences. covid - 19 did not immediately bring new technology, but it may have moved consumer preferences more towards digital. people kept contact with each other via zoom and face time and skype. school children all over the world followed online lessons. online retail went through the roof. from there, it may only be a small step to paying with whatsapp, or getting a mortgage from quicken loans. so covid - 19 may have influenced digitalization in many different ways. if there is anything the covid - 19 pandemic has taught us here, it is that adoption of new technology is non - linear. when technology is already available, sometimes it takes only one event to cause a sudden and decisive shift in consumer preferences. this adds all the more urgency to the big questions already on the table before the pandemic. 1 / 3 bis central bankers'speeches how will fintech impact the business model of traditional banks? what role will bigtech firms play? when the lines between banks and technology firms become more and more blurred, who is responsible for security and financial stability? do we understand the algorithms that are being applied increasingly in banking? how do new technologies influence cyber and financial crime? are supervisors sufficiently equipped, in terms of knowledge and staff, to keep up with developments? where are the holes and obstacles in regulation? what does it mean for the level playing field when regulated and unregulated entities compete on the same markets? how can supervisors themselves use the new technologies to improve supervisory practices? and last but not least, there are social issues involved in digitalization. not everyone can keep pace with the current tempo of digitization. digital exclusion of vulnerable groups of consumers, like the elderly or people on a low income, is a serious issue nowadays. this is only a subset of a vast area of questions that are relevant to the stability of the financial system. but i have total confidence this panel of eminent experts will be able to answer these questions shortly. this brings me to the last issue i would like to raise. how should supervisors respond to these changes? there used to be a time when financial supervision was viewed as basically reactive. the idea was that, by nature,
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ardian fullani : overview of albania β s latest economic and financial developments speech by mr ardian fullani, governor of the bank of albania, on the monetary policy decision - making of the bank of albania β s supervisory council, tirana, 30 april 2013. * * * today, on 30 april 2013, the supervisory council of the bank of albania reviewed and approved the quarterly monetary policy report. based on the most recent monetary and economic developments in albania, and following the discussions on their outlook, the supervisory council of the bank of albania decided to keep the key interest rate unchanged, at 3. 75 %. the supervisory council deems that the current monetary conditions are adequate to meet bank of albania's inflation target in the medium term. the present interest rates and liquidity situation in the economy provide simultaneously the necessary monetary stimulus to boost domestic demand. let me now proceed with an overview of the economic developments and key issues discussed at today β s meeting. * * * according to instat data, economic activity in albania increased 1. 6 % in 2012. the albanian economy showed signs of weakness during the past year, reflecting an overall uncertainty in the internal and external environment. nonetheless, against the backdrop of unfavourable developments, the main indicators of domestic and external balances remained within healthy parameters. during this period, inflation ranged within the bank of albania target band and indicators of banking system soundness improved. maintaining these balances provides the right macroeconomic premises for sustainable and long - term growth. referring back to the performance of inflation, instat data reveal that consumer prices rose on average 2. 5 % in the first quarter of 2013. inflation continues to be determined by food prices ; their contribution accounts for about 90 % of headline inflation. moreover, food inflation was offset by the lower inflation of non - food consumer goods. inflation of this category reflected the downward oil price, following its decline in international markets. also, the price fall of long - term consumer goods provided downward effects, whereas prices of other consumer goods did not change significantly. from the macroeconomic perspective, inflation continues to reflect the weak pressures from the aggregate demand - side and the absence of supply - side shocks. below - potential growth of aggregate demand leads to underutilisation of production capacities and generates weak pressures on increasing wages, producer prices and profit margins. under these circumstances, internal pressures on consumer prices appear weak, as reflected by the low core inflation. on the other hand, imported inflation was subdued due to
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by the bank of albania. lastly, the supervisory council reiterates the need to continue and deepen structural reforms, which boost productivity and enhance the competitiveness of the albanian economy. these reforms pave the way for expanding the economic potential and should be seen as the main instrument supporting sustainable and long - term growth for albania. bis central bankers β speeches
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to address this issue, sbp has introduced a livestock insurance scheme for borrowers to mitigate risk of loss of livestock due to disease, natural calamities & accidents. to ensure diversity of agri. financing institutions, sbp has included microfinance banks and islamic banks into the agri. indicative target scheme of sbp. the agricultural credit advisory committee ( acac ), which is the apex consultative forum for agri financing with representation from all the relevant federal & provincial departments, farming community, banks and experts, has been re - activated. the acac met on 17th february 2014 which supported my six - point agenda to boost agri financing. this includes : β launching of the 2nd round of financial innovation challenge fund ( ficf ) under the ukaid - sponsored financial inclusion program, to promote innovative techniques in agri and rural financing ( for which we have gathered today ). β further, the acac approved my proposal of upward revision in the agri credit disbursement target from rs. 360 billion to rs. 380 billion for the current year, which is 13 percent higher than the actual disbursement of rs. 336 billion in last year. bis central bankers β speeches β sbp is going to launch a country - wide internship program for 100 top graduates in agriculture to be funded under the adb β s improving access to financial services endowment fund. β banks have been assigned targets for outstanding agriculture portfolio and number of borrowers to have high impact of financing at grass roots level from the current year. β sbp has made agricultural finance a key indicator of performance of banks which will be reflected in their supervisory ratings. β and, finally a working group of acac has been formed to review the state of affairs of small farmers financing and make recommendations for improving financial access to small farmers. recognizing the economic significance of rural smes, state bank has revised the prudential regulations for sme financing to put focus on β s β part of smes. further, following incentives for sme exporters have been introduced in the export finance scheme ( efs ). β banks will allocate at least 10 % of their efs limits for smes. β for smes availing export finance under the performance - based system, the mark - up rebate has been increased by 0. 5 percentage point. β further, to incentivize banks to provide more financing to smes their spread has been increased from 1 % to 2 %
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circulars, covering key areas arising from consumer financing, including disclosure standards, business conduct, underwriting standards, complaints handling, cooling - off periods, sale of third party products, fair debt collection practices, pricing and loan documentation, etc. 3. establishment of electronic cib. 4. fixation of minimum rate of return on deposits. 5. issuance of guidelines for internal controls for cheque payments. 6. issuance of guidance on sale of third party products. 7. issuance of operational guidelines for credit card business in pakistan. 8. issuance of operational guidelines on atms. 9. issuance of guidelines on collection of utility bills. 10. issuance of guidance on priority to senior citizen and pension disbursement through banks. turning to the issue of institutional arrangements for strengthening of consumer protection policy and swift grievance redessal, sbp has established a consumer protection department ( cpd ). under the current regulatory framework, all banks are required to establish comprehensive dispute resolution mechanisms while maintaining proper records of such disputes. sbp also inspects the bank β s records and processes for resolving complaints during its annual on - site inspections. one of the most inevitable traits of financial consumer protection is consumer trust which can only be ensured through initiatives such as, financial education, appropriate disclosures & non - exploitative competition. therefore, sbp frequently make use of print and electronic media to create awareness for the general masses regarding the probable threats of financial fraud to clients. moreover, targeted awareness sessions are held for various groups including financial service providers, trade bodies / associations, chamber of commerce & industries, consumer associations, ngos, students and faculty members of universities. last but not least, i believe that financial consumer protection could be best achieved if the financial service providers develop and adopt more responsible business practices, encompassing their entire product value chain. the responsibility should be exercised, starting from product design to the delivery of the product to the clients. besides, they should have a swift and effective grievance handling mechanism for satisfaction of their clients. ladies and gentlemen! in the end, let me invite stakeholders like consumer associations, trade bodies, banking ombudsman, financial and legal functionaries, banks and competition commission to come bis central bankers β speeches together in eradicating financial consumer malpractices for building an inclusive and stable financial sector in pakistan. wa aakherun dawana annil hamdolillahe rabbil aalamin. bis central bankers β
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sabine lautenschlager : caution should be the life of banking introductory statement by ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the single supervisory mechanism, at the association for financial markets in europe ( afme ) board meeting, frankfurt am main, 22 march 2017. * * * ladies and gentlemen, taking risks is at the heart of any healthy business, including banks. after all, it is the job of banks to take and allocate risks. but as walter bagehot said : β adventure is the life of commerce, but caution is the life of banking β. i agree with him. banks are far too important for the economy to indulge in adventures. they enable business by providing loans to companies or by helping them to tap the capital markets. and they also facilitate business by providing services in fields such as payments, mergers and acquisitions, and global trade. banks help the economy to grow and prosper. but they can also badly hurt it ; we saw that in the financial crisis. that β s why banks need to be cautious. in practical terms that requires, among other things, sound risk management. and this sets the scene for my short statement today. the topic is risk management. i will begin with some smaller, or rather bank - specific, risk management topics and end with a few big issues. sound risk management depends on good data. it also depends on firm - wide risk aggregation and reporting. those who take decisions must be in the picture. but are they? well, in the crisis we learnt that decision - makers often were not. it systems, data architecture and related processes were not up to the mark. against that backdrop, we assessed how banks aggregate data and report risks. the yardstick was a set of global best practices that were defined by the basel committee on banking supervision. these are known as the bcbs 239 principles. the result of our review : many banks do not meet the global standards. as usual, we will therefore be very explicit on how these banks should improve. and we will closely monitor the progress made by the respective banks to ensure that they meet relevant standards. ladies and gentlemen, good risk data is one thing. but processing such data is another matter. and that leads me to my next topic : internal models. many large banks use these models to calculate their risk - weighted assets, which then serve as a basis for calculating capital
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one indeed. 2. 5 billion adults, just over half of world β s adult population, do not use formal financial services to save or borrow. 2. 2 billion of these unserved adults live in africa, asia, latin america, and the middle east. of the 1. 2 billion adults who use formal financial services in africa, asia, and the middle east, at least two - thirds, a little more than 800 million, live on less than $ 5 per day. ( source : β half the world is unbanked β, 2009, financial access initiative ) however, some of the critical indicators for access to finance in india along with benchmark indicators for selected high - income oecd member countries ( table 1 ) reveal that while there have been improvements during 2001 β 08 but it is still very adverse as compared to oecd economies. ( ii ) non - availability of appropriate banking technology till a few years ago. lack of proper physical infrastructure, digital connectivity, etc. in some parts of the country. if financial inclusion is to take place, it can only be through information and communication technology ( ict ) based models. ( iii ) lack of proper business models. banks still perceive this as a burden and an imposition and not as a viable business model. ( iv ) lack of cost effective scalable delivery models. there is no facilitating and effective delivery model especially when problems are encountered. business correspondent ( bc ) based delivery model is still in the evolutionary stage. ( v ) the costs of administering low value transactions and of financial intermediation are perceived to be on the higher side. ( vi ) planned, strategic and concerted efforts were lacking. it requires massive efforts from all stakeholders. strategy 11. what has been our broad strategy for achieving planned, sustained and structured financial inclusion? it is through a planned approach to the entire gamut of issues whose detailed steps are enumerated below : ( i ) we have advised banks to formulate a board approved financial inclusion plan ( fip ) for the next three years. we have not imposed a uniform model so that each bank is able to build its own strategy in line with its business model and comparative competitive advantage. ( ii ) fips must be integrated with the normal business plans of the banks. we have freed interest rates and have also allowed banks to charge their customers for other transactions. we believe that banking to the poor is a viable business opportunity but a cost - benefit analysis needs to be done by
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have helped the stressed banks. the lcr should not be considered a tool in isolation to measure and address liquidity and funding risks. to the contrary, the 1 / 3 bis - central bankers'speeches turbulence this spring shows that the basel framework β which has regulatory and supervisory pillars β needs to be seen and be implemented, in its entirety. for example, in the ecb, the check of regulatory measures such as the lcr is complemented by additional supervisory liquidity risk monitoring. a third and important lesson from the recent episode is that trust issues can develop and spread more quickly in the digital age. bank runs can happen faster than in the past. this makes it even more important to have bank managers'commitment to sound bank business models, because they are a precondition for trust. bank management matters in establishing trust in business models. we need a tough rulebook which allows supervisors to check and react to bank management - related issues. priorities for the banking package coming to the topic of today, what should we focus on for finalising the eu banking package? two key priorities emerge from the above learnings. first, only strong rules will lead to strong banks. i am particularly concerned about those areas where the legislation proposals for the capital requirements regulation ( crr3 ) would deviate from basel iii β especially on the risk - weights for loans to unrated corporates. these deviations lower the impact of the output floor on banks'required capital. in fact, on average, all proposed deviations together would more than halve the effect of the introduction of the output floor on banks'required regulatory capital, and even lower the required regulatory capital for some banks compared to the status quo. it is of particular concern that in some of the proposals these deviations are even suggested to be made permanent. watering down the safeguards provided by agreed global standards now would send a detrimental message not only on the future resilience of eu banks, but also regarding the eu's commitment to international agreements. a similarly concerning issue is the intention by some trilogue parties to reintroduce prudential filters on the accounting of unrealised losses on government bonds. these have been in place in the eu until the end of 2022 on account of a systemic exemption during the pandemic crisis. they need to be strictly limited to exceptional crises times and now is not the time to reintroduce them. as a second priority, i call on you to empower and
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yi gang : green finance and climate policy opening remarks by mr yi gang, governor of the people's bank of china, at a high - level seminar on " green finance and climate policy ", co - hosted by the people's bank of china and the international monetary fund, 15 april 2021. * * * madame managing director, ladies and gentleman, good morning and good evening. it gives me great pleasure to co - host this high - level seminar on β green finance and climate policy β with the imf. i wish to begin by extending a warm welcome to all the participants on behalf of the pbc. the international community is forming a broad consensus on tackling climate change. china has announced the goal of peaking carbon emissions by 2030 and achieving carbon neutrality by 2060, also known as the 30 / 60 goal. this requires a comprehensive economic transition, and green finance can be an accelerator in this process. the pbc attaches great importance to green finance. in 2016, we led the effort in drafting the guidance on building a green financial system and developed a specific timetable and a roadmap for this purpose. by making sure that all the policies are implemented, we have put in place an initial policy framework for green finance. as a result, china β s green finance market has since enjoyed fast development. by the end of 2020, green loans and green bonds in china totalled 1. 8 trillion us dollars and 125 billion us dollars respectively, ranking as the world β s largest and second largest. more than 40 carbon neutral bonds have been issued, with a total volume of over 10 billion us dollars. the 30 / 60 goal has set a higher bar for the financial sector. to meet this goal, we need to overcome a host of challenges. first, on the society front, public awareness of emission reduction has to be raised. second, on the market front, the carbon market has to play a greater role in price discovery. only when carbon emission is priced in, can we achieve effective resources allocation. china β s carbon market is still in its initial stage, and its financial nature needs to be further clarified. third, on the institutional front, climate information disclosure needs to be improved. the disclosure should be expanded to cover listed companies, financial institutions and other market players, and move from a voluntary to a compulsory basis. fourth, on the risk management front, there needs to be greater attention to the fossil fuelrelated transition risks. fossil fuels, mainly coal
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makers. the federal reserve β s strategies for improving the payment system also aspire to achieve greater end - to - end efficiency in cross - border payments, an historical pain point for end users. in support of this interest, and following an exhaustive season of consultation with industry leaders, we are currently in the midst of a multi - year effort to adopt the iso 20022 payment message formats for the fedwire funds service. this body of work reflects the emergence of iso 20022 as the global standard in payment systems, and seeks to achieve greater efficiency and interoperability in cross border payments for financial institutions and end users. moreover, the structured and robust nature of the iso 20022 message format provides an opportunity to enhance the information content carried in a payment message, including remittance information to support straight through processing of corporate payments, and to promote greater innovation across a common message suite. finally, for both the long term competitiveness of our financial institutions and end users, and for the primacy of the dollar as a global settlement currency, it is imperative that the anchor element of our nation β s payment system remains well integrated in an increasingly global marketplace. with detailed planning well underway, by the end of 2017 we expect to announce iso 20022 message format specifications and an implementation timeline. while i recognize that i am speaking principally to an audience of securities professionals, i appreciate your indulgence of these critically important and strategic payment themes, especially given the inter - connectedness and mutual dependencies that exist across payment, clearing, and settlement infrastructures. closer to your world, and as previously mentioned, we migrated the fedwire securities service 3 / 5 bis central bankers'speeches in november 2015 to a new hardware and software platform. this undertaking was, by far, the largest element of the fedwire modernization program and the most significant change to the federal reserve β s wholesale services in a generation. if you heard nothing of it, or have subsequently forgotten, that is the greatest affirmation of success. notwithstanding the significance of this accomplishment, the conversion was β like for like β, meaning no new service enhancements for customers or in support of policy interests. in parallel to system - wide efforts to advance strategies for improving the payments system, we have therefore embarked on a corresponding set of strategies for improving the fedwire securities service ( sifss ). the formation of these strategies actually commenced before the modernization even concluded in consultation with a range of stakeholders including securities issuers, depository institutions,
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too have potential difficulties in operating successfully in a negative interest rate environment. they often provide liabilities β that is, promises of future pension payments or insurance payments β at nominally fixed rates. if they can only invest in negative yield instruments, their profits could be imperiled. such possible profit squeezes could also prompt financial institutions to take on inappropriately risky assets to earn an apparently positive bis central bankers β speeches return. these concerns are present to some extent at very low rates, but they are magnified at negative rates of interest, a point made by ben bernanke in his 2004 speech on the topic. 9 a special case in the united states concerns the 2a - 7 money market mutual funds, which are more prevalent in the united states than in europe. money market mutual funds are institutions that offer a floating rate of interest to shareholders that is intended to maintain the value of a share in the fund equal to par, or very close to par, at all times. with negative interest rates, and in the absence of a sponsor that is willing to subsidize shareholders in the fund, such a financial institution would not be able to return a dollar invested today to a shareholder the next day. in such circumstances, the fund must disband, as it has β broken the buck. β recent sec reforms specify that prime institutional funds be offered only shares expressed as floating net asset values in 2016, but retail and treasury - only money funds will retain a fixed nav share structure, and therefore will still be subject to this complication in an environment of negative nominal rates. 10 6. signal of deflation another complication centers on the signaling effects i mentioned earlier. when implementing negative rates, central banks recognize that the signaling effects of their action may be unpredictable. the inference drawn by people could be a negative one. for instance, people could infer that the central bank itself has low expectations for inflation and is lowering nominal rates into negative territory as a way to β ratify β the low expected inflation environment. such an inference would complicate the central bank β s effort to achieve its objective because it could encourage and entrench the public β s expectations for deflation. 11 that could complicate the potential exit from the negative rate regime. 7. public acceptance as with all public policies, negative nominal rates must be acceptable to the public if they are to be a useful tool for central banks. certainly, avoiding severely negative rates, especially for retail depositors, would tend
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will gradually begin to see the fruits of this work. this relates, for example, to reviewing the banks β choice of models for calculating risk weights and the degree of freedom for the banks to make their own assumptions in the models, as well as setting stricter requirements to ensure that the data used as input in the models is of sufficiently high quality. another approach involves discussing and developing proposals for regulatory floors of different kinds, for example risk - weight floors like the one we have for mortgages in sweden today or floors that cover the total capital requirement that is also in place today. finally, it is a bis central bankers β speeches question of tightening up supervision and improving transparency concerning risk weights. it is probable that the assessment of the banks risk weights will be broadened and eventually become a permanent part of the undertakings of the basel committee. as in the case of the leverage ratio, there are those that claim that these measures will reduce the banks β incentives to effectively manage their own risks. however, in my opinion it is question of avoiding a regulatory framework that gives the banks incentives to use their own models with the aim of reducing their risk weights and their capital requirements more than can be justified by the risks in their operations. it is important to find solutions to this problem as it will otherwise be difficult to restore the credibility of the frameworks and thus of the banks. basel iii is also relevant to the swedish banking system once basel iii is in place around the globe, the safety margins in the global financial system will be greater than previously. this will benefit everyone, even sweden, partly by reducing the risk of global crises and partly by reducing the risk of crises spreading to sweden and other countries through the links that exist on the financial markets. at the same time, the problems and risks that the international regulatory initiatives aim to deal with correspond to those that swedish authorities have identified in sweden. the basel iii framework will therefore also have a direct positive impact on financial stability in sweden. let me give you a few concrete examples : β’ stricter risk - based capital requirements will increase the ability of the swedish banks to cover unexpected losses, in both their swedish and foreign operations, thereby increasing the banks β resilience. β’ the leverage ratio will provide a complementary picture to the risk - based capital requirement and means that authorities and investors will be better able to assess a bank β s capital situation. having a quantitative requirement for the leverage ratio sets a limit for a how low the swedish banks β capital can fall in
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many parts of the world. the idea is that a bank should have sufficient capital to cover unexpected losses. compared with previous basel regulatory frameworks, basel iii entails higher requirements for how much common equity tier 1 capital the banks must have and stricter and more uniform regulations on what may be counted as common equity tier 1 capital that is capital of the highest quality. basel iii also introduces two kinds of capital buffer as a further element of the risk - based capital requirement that could be said to lie β on top of β the minimum requirements. the buffers are intended to provide safety margins before the banks begin to use their minimum capital holdings. in the case of systemicallyimportant banks there is also an extra capital requirement over and above the minimum requirements. how large this supplement is depends on how systemically important the bank is. for global systemically - important banks the extra requirement will begin to apply from next year. for the last 12 months there has also been an agreement in the basel committee on the short - term liquidity measure, the lcr. in brief, the lcr means that the banks must have a large enough buffer of high liquid assets to be able to cover their cash outflows during a 30 - day long stressed scenario. the aim is to strengthen the banks β resilience to short - term liquidity stress. the lcr will come into force no later than 1 january 2015, but some countries are already applying it. in sweden, a stricter version of the lcr has been applied since 2013. leverage ratio complements the risk - based capital requirement as i mentioned earlier, the basel committee has made a lot of progress on the leverage ratio this year. in january the committee agreed on a common method for calculating the ratio. the leverage ratio can be described as measure of how much of a bank β s assets the bank funds using its own capital. like the risk - based capital measure, the leverage ratio aims to increase the ability of the banks to cover losses. however, unlike the risk - based capital measure, the leverage ratio does not take differences in risk between a bank β s different assets into account. the basel committee has been criticised by those who claim that introducing the leverage ratio creates a regulation that favours risk taking, as the measure deals with the banks in the same way irrespective of the risks they take. however, the leverage ratio is intended to bis central bankers β speeches complement the risk - based capital measure and to act
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steven maijoor : managing climate and environmental related risk stepping up the pace speech by mr steven maijoor, executive director of supervision of the netherlands bank, at the morningstar sustainable investing summit 2023, amsterdam, 12 october 2023. * * * i was with my family in greece for the summer holidays. one evening we walked through a street in athens with restaurants lined up along the street, and there was a man trying to lure tourists into his restaurant. when he approached us i told him we had other plans, but somehow i wanted to know how he was doing. so i asked him. and what i did not expect was that he started ranting, a complete stranger, about how the summers had become unbearably hot, and that the number of tourists was already declining as a result. he was very depressed about the whole situation and he confided in me that he was seriously considering moving to norway. i was shocked and sad because i saw he really meant it. and the hard truth hit home again that the climate crisis is here and now, and it is affecting the lives of real people. and on top of that, it is affecting our economies. and when it affects our economies, it affects our financial sector as well. financial institutions are exposed to climate and environmental risk. think for instance about the risk of a flood in the western part of the netherlands. don't forget we are below sea level here. serious flooding could increase a bank's credit risk following damage to collateral such as houses and other buildings. and this would then require a bank to draw on its capital reserves. that's what we call physical risk. and then there is transition risk as well. transitioning to a net - zero society will likely lead to adjusted or new government policies. it could also lead to technological advances, or changes in market sentiment and market preferences. the transition to a net - zero economy creates risk for financial institutions that are highly exposed to sectors of the economy that are unprepared. governments, for example, could impose higher taxes on greenhouse gas emissions. as a result, the revenue of an energy - intensive company could decline. and this could impact the company's creditworthiness and its ability to repay outstanding debts to banks. physical and transition risks are not only related to climate change. financial institutions are also exposed to risk stemming from the degradation of nature, and actions aimed at preserving and restoring it. nature provides services that are essential
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are still in search of a β friend β to negotiate with the bank. as mentioned above, i understand that above all the reason behind might be our poor tradition in addition to the high degree of informality and a lot of other objective and subjective reasons. however, i think that the cause might be even the lack of detailed clarifications, and lack of informative publications, and lack of the propaganda in the public environment as well as in media. i think that in the propaganda spaces in the media more space should be given to the clarifications of special products, while launching of new products should be accompanied by standard advertising campaigns. dear participants, allow me that before closing my speech to express again my high appreciation on the albanian association of banks, ensuring that governor of bank of albania will always be its decent partner in the long path of institutional co - operation. i sincerely hope that this meeting of banking associations is an important step towards establishing a fruitful regional co - operation. i am personally committed, in future contacts with my colleagues of the region β s countries, to dedicate a special room to this co - operation, hoping that i will find on them a well - understanding and full support. i again wish you successful and fruitful proceedings of this meeting. thank you.
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average inflation rate for personal consumption expenditures over the next 10 years has remained close to 2 percent. surveys of households likewise show that longer - term inflation expectations have been relatively stable. in the financial markets, measures of inflation compensation at longer horizons ( computed from the spread between yields on nominal and inflation - indexed treasury securities ) have moved down, on net, this year but remain within their historical ranges. with long - run inflation expectations stable and with substantial resource slack continuing to restrain cost pressures, it seems likely that inflation trends will remain subdued for some time. the objectives of monetary policy to evaluate policy alternatives and explain policy choices to the public, it is essential not only to forecast the economy, but to compare that forecast to the objectives of policy. clear communication about the longer - run objectives of monetary policy is beneficial at all times but is particularly important in a time of low inflation and uncertain economic prospects such as the present. improving the public β s understanding of the central bank β s policy strategy reduces economic and financial uncertainty and helps households and firms make moreinformed decisions. moreover, clarity about goals and strategies can help anchor the public β s longer - term inflation expectations more firmly and thereby bolsters the central bank β s ability to respond forcefully to adverse shocks. 4 the federal reserve has a statutory mandate to foster maximum employment and price stability, and explaining how we are working toward those goals plays a crucial role in our monetary policy strategy. it is evident that neither of our dual objectives can be taken in isolation : on the one hand, a central bank that aimed to achieve the highest possible level of employment in the short run, without regard to other considerations, might well generate recent empirical studies assessing the magnitude of shifts in the sustainable rate of unemployment β the portion of unemployment not attributable to temporary cyclical factors β include barnichon and figura ( 2010 ), dickens ( 2009 ), dowling, estevao, and tsounta ( 2010 ), fleischman and roberts ( 2010 ), fujita ( 2010 ), lindner and tasci ( 2010 ), and kuang and valletta ( 2010 ). see bernanke ( 2007 ). unacceptable levels of inflation without any permanent benefits in terms of employment. on the other hand, a single - minded focus by the central bank on price stability, with no attention at all to other factors, could lead to more frequent and deeper slumps in economic activity and employment with little benefit in terms of long - run
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the equity of substantially all of aig's regulated subsidiaries. example, nonconforming jumbo mortgages β cannot be securitized and thus carry much higher interest rates than conforming mortgages. some lenders have reduced borrowing limits on home equity lines of credit. households also appear to be having more difficulty of late in obtaining nonmortgage credit. for example, the federal reserve's senior loan officer opinion survey reported that as of july an increasing proportion of banks had tightened standards for credit card and other consumer loans. in the business sector, through august, the financially strongest firms remained able to issue bonds but bond issuance by speculative - grade firms remained very light. more recently, however, deteriorating financial market conditions have disrupted the commercial paper market and other forms of financing for a wide range of firms, including investment - grade firms. financing for commercial real estate projects has also tightened very significantly. when worried lenders tighten credit, then spending, production, and job creation slow. real economic activity in the second quarter appears to have been surprisingly resilient, but, more recently, economic activity appears to have decelerated broadly. in the labor market, private payrolls shed another 100, 000 jobs in august, bringing the cumulative drop since november to 770, 000. new claims for unemployment insurance are at elevated levels and the civilian unemployment rate rose to 6. 1 percent in august. households'real disposable income was boosted significantly in the spring by the tax rebate payments, but, excluding those payments, real after - tax income has fallen this year, which partly reflects increases in the prices of energy and food. in recent months, the weakness in real income together with the restraining effects of reduced credit flows and declining financial and housing wealth have begun to show through more clearly to consumer spending. real personal consumption expenditures for goods and services declined in june and july, and the retail sales report for august suggests that outlays for consumer goods fell noticeably further last month. although the retrenchment in household spending has been widespread, purchases of motor vehicles have dropped off particularly sharply. on a more positive note, oil and gasoline prices β while still at high levels, in part reflecting the effects of hurricane ike β have come down substantially from the peaks they reached earlier this summer, contributing to a recent improvement in consumer confidence. however, the weakness in the fundamentals underlying consumer spending suggest that household expenditures will be sluggish, at best, in the near
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risks in the economy to be spread out, shared, and more efficiently managed. and the third lesson is the need to have in place an effective mechanism of economic and financial surveillance to identify potential risks, especially those relating to financial sector and capital flows issues, which are the two most important risks for emerging markets. all three lessons are now well known. and we have seen conscious efforts by national governments and ifi β s such as the imf to take heed of these lessons. in asia, at the national level, we see a region - wide move toward a more flexible exchange rate regime, with a disciplined framework in the conduct of monetary and fiscal policies. as for the financial sector, after the initial restructuring and consolidation, the framework of policy has moved towards risk - based supervision, to an adherence to international standards, and to the undertakings of formal financial sector assessments either under fsap or within the country β s own financial stability evaluation framework. at the international level, the imf has also come up with many new and important initiatives. as for the financial sector, its financial surveillance process has been deepened with the introduction of fsap and the surveillance of international capital markets under the financial stability forum, and the publication of the global financial stability report. more importantly, the recent initiatives on the new direction of financial sector surveillance is another important step in understanding the linkages between macroeconomic stability and financial vulnerabilities. the new direction aims to integrate financial sector analysis and issues with the article iv process, and then to link the bilateral surveillance with multilateral surveillance. in our view, this is an ambitious undertaking, but is a move in the right direction. the challenge, as we see it, will come from the implementation process, especially on the issue of what should be the adequate scope in terms of issues to be covered, choice of countries, and the analytical approach to be used. these are important questions that will need to be worked out, taking into account resources at the fund. our view is that the initial move on the new direction should not be overly ambitious. it is better for the process to move forward gradually, focusing first on the most systemically important economies. but as far as emerging markets economies are concerned, if surveillance is to be effective in preempting crisis, then i think one question that can be asked is whether the improvements that we are now seeing, as well as the new direction to be taken, are adequate or credible as a mechanism of
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would like to thank the independent evaluation office for the invitation. thank you.
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the annual average growth rate has remained somewhat above most estimates - at least until recently - of the longer term trend rate of some 2ΒΌ % - 2Β½ %. the number of people in employment has recently reached an all - time high in the uk as a whole ; and it is very close to its all - time high also here in scotland. and the number of people claiming unemployment benefit is at a 27 - year low both in the uk as a whole and, again, up here north of the border. meanwhile retail price inflation - on the government's target measure - has averaged 2. 5 % over the past 10 years. that is exactly in line with the present inflation target which recognises that consistently low inflation is a necessary - though not in itself a sufficient - condition for sustainable growth. and that of course is the universal central banker's mantra! that's the good news. the bad news, of course, is that over the past two years the imbalance within our overall economy which i referred to when i last spoke to you - between the internationally - exposed sectors including much of manufacturing industry, and more recently some parts of the financial services industry, which have been under intense pressure, and the more domestically - oriented sectors, where i don't say things have been easy but where the pressures have been less severe that imbalance has persisted, and indeed it has got worse. the grim fact is that there is nothing that we in the uk can do directly to address the global economic weakness which has been at the heart of our problem. in order to keep overall demand in the economy moving forward in the face of the slowdown overseas, which has depressed both financial sentiment and business investment in this country, as well as net external demand, we had no choice but to seek to buoy up the other elements of domestic demand. without that we, too, would have seen negative growth in this country. in terms of monetary policy that in effect meant cutting interest rates - to 4 % - their lowest level for 40 years - in order to sustain the growth of consumer spending. and we were subsequently helped by the chancellor's decision to increase public spending. that's something which, as a central banker, i'm supposed to frown upon - and it clearly is important for the stability and efficiency of the economy that it is kept within bounds over the medium and longer term in line with the chancellor's golden rule. but i must confess to you that it is
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makers and greek citizens. before giving the floor to the distinguished speakers, please allow me to thank the researchers who have worked for this study, eliamep and its president, professor loukas tsoukalis, and last but certainly not least, professor jean pisany ferry, who is the keynote speaker today. 1 see, among other, blanchard and giavazzi 2003, boeri 2005, fiori et al. 2007. 2 / 2 bis central bankers'speeches
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) collateral. in that way, banks transform illiquid and lower - quality assets into high - quality liquid assets in a process known as collateral transformation. the opportunity cost of this trade is currently 50 basis points : the spread between the main refinancing rate and the deposit facility rate. banks thus have a solid financial incentive to self - insure against liquidity risk in the market. lowering the spread to 15 basis points has the potential to reduce the opportunity cost and provide incentives to shift from market to central bank funding. the good thing is : we have enough time to observe how market activity evolves over the coming years. in particular, we have to evaluate the trade - off between the potential reduction of volatility and less market activity with possibly higher collateral transformation. 5 closing remarks ladies and gentlemen, let me conclude. while our balance sheet will gradually shrink, excess liquidity will remain significant over the coming years. accordingly, while some volatility cannot be ruled out, short - term money market interest rates are expected to continue evolving in the vicinity of the deposit facility rate. over the next two years, we will closely monitor three key aspects until our next sched β uled review : first, we will assess the development of money market activity, including in the medium - term segment. second, we will analyse possible fluctuations of short - term interest rates and their influence on the transmission of monetary policy. and third, we will scrutinise the degree of collateral transformation. let me be crystal clear : an adjustment of our operational framework was necessary to reflect structural market changes. is that framework now set in stone? i don β t know yet. but in the past, we have shown our capability and flexibility to adapt to changing market conditions. let β s be open to this, now and in the future. 1. see fratianni, m. and j. von hagen ( 2001 ), the konstanz seminar on monetary theory and policy at 30, european journal of political economy, vol. 17, pp. 641664, for a full account of the history of the konstanz seminar. 2. borio c. and p. disyatat ( 2010 ), unconventional monetary policies : an appraisal, manchester school, university of manchester, vol. 78 ( s1 ), pp. 53 - 89, september. 3. bindseil, u. ( 2004 ), monetary policy implementation : theory, past,
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regard, if i may comment on some general lessons to be learned by most professional coming out of the global financial crisis, it is that codes of behaviour are important but minute regulation is almost impossible. for example, i am not sure that there is any particular rule that should say to a lender that it is inappropriate to require from a borrower monthly payments which exceed the monthly income of that borrower. this was happening in the sub - prime mortgage market. it was influenced by the fact that the lenders β compensation was based on the volume of credit he originated and not on the quality of the credit. it would seem that general codes of behaviour rather than explicit rules are important here since one cannot anticipate every situation, nor can we devise a rule for every possible eventuality. in the caribbean and in barbados in particular, generally speaking our commercial banks and finance companies have been quite compliant. banks and finance companies in barbados have tended to be well regulated and have observed the guidelines issued by the central bank. in addition the board of the central bank at the end of 2008 took the decision to position itself to extend some aspects of regulation and consequently access to liquidity support facilities to finance companies as well, so we have broadened our coverage. to conclude, the nexus between regulation and compliance is a mutually supportive one. regulations, guidelines, standards and codes must first be appropriate, relevant and up - todate but compliance with the guidelines is critical to the reliability, comparability and international acceptance of financial statements and for verifying the financial status of companies in the corporate world generally, but especially in the financial world. barbados has done relatively well in this regard. our recent challenges have originated from outside, but the overall level of compliance has been for the most part, exemplary. however, we must be vigilant, and it is important that this is so of the entire corporate world.
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still generally believed that the idea of self - regulation is a useful one, but that it cannot be totally relied upon. many self - regulatory bodies began in an environment where they set the rules which governed them. in time it became clear that this was not enough and oversight bodies were established in most jurisdictions to oversee the implementation of the rules and to provide a forum for appeal to a higher body. regulation however requires a sensitivity to the stage of development of the market and to the norms of market behaviour, and emerging and embryonic markets may require that a balance be struck between the need for markets to achieve rapid development and the need for these markets to remain stable. most developed country markets did not have a highly controlled regulatory environment into which they launched themselves. emerging markets seem to be managing to achieve this balance as evident by the relative stability of markets in latin america and the caribbean. professional bodies have become very important contributors to the stability of the regulatory framework and guidelines issued by many professional bodies have tended to become the accepted norm. indeed the term β generally accepted β is a term used to describe gaap guidelines or principles. as the world became more globalised efforts have intensified to make guidelines and principles in each area of discipline internationally acceptable, since companies and institutions were now operating globally. the merging of accounting rules and ias, fasb and gaap into ifrs regulations are an example of this global trend. in this way self - regulatory organizations and professional organizations have had a tremendous impact on the regulatory world in promoting uniformity, reliability and comparability of information across the globe. today regulatory guidelines and guidance notes issued by professional bodies governing operations across the globe on a broad range of topics have been widely encouraged and accepted. however, compliance with guidelines can become an issue in itself β as i am sure this seminar has illustrated as entities and countries are at different stages of development. even the basel guidelines, particularly basel ii guidelines are a case in point. because of the wide differences in levels of development and sophistication, it was necessary to have 3 levels of basel ii, standardized and irb and advanced irb. generally, because compliance is voluntary, what has happened is that reputational risk is increasingly being used as an enforcement tool and has become very important, since a statement by an international organisation that an entity or even a country is not compliant is itself a damaging statement. this was taken to inordinate lengths at the time of the oecd saga in 1999 in respect of offshore
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, domestic demand has a more significant role in driving the growth. the stronger domestic demand and growth in the services and agriculture sectors have benefited the sme sector since the majority of the smes are operating in these sectors. however, the rising international prices of energy and commodities have confronted economies globally with rising costs and intensifying inflationary pressures. this has prompted several emerging economies to restructure their fuel subsidies in an effort to create more efficient economies and to achieve more sustainable fiscal positions. this has been followed by the consequent adjustments in consumer prices as the gap between international market prices and domestic prices narrow. in malaysia, petrol prices were adjusted by 40. 6 % while diesel prices by 63. 3 %. this adjustment would be reflected in the consumer price inflation in june, which is expected to exceed 6 %. beginning 1 july, electricity tariffs have also been raised by up to 18 % for households and an average of 26 % for some commercial and industry users. while domestic inflation is expected to remain elevated for the remaining part of this year and early next year, it is expected to moderate in the second half of 2009. in the current international environment, the policy response needs to be contextualised to the conditions prevailing in each individual economy. in those economies that are experiencing overheating and strong demand conditions, there is greater clarity in terms of the need for policy to rein in demand. however, for economies that are experiencing moderating growth, the risks to growth and inflation need to be carefully evaluated. in addition, consideration needs to be given to the deflationary impact of the fuel price increases on consumption. trends in consumption and the conditions in the labour market will provide signs of potential second round effects following rising costs and the extent to which a generalised price increases are occurring. in such an environment, smes need to consider repositioning of business strategies and to find new markets and avenues of growth. reengineering of processes would also be required to better manage the higher cost conditions. the key is for the smes to use their inherent flexibility and agility to create new products and reorient the business. given that the current inflationary pressures is a global phenomenon, with many of our trading partners and neighbors having similar or higher inflation rates, the inflation is unlikely to erode malaysia's comparative advantage. in this more challenging economic environment, sustaining growth will also require concerted efforts by the public and private sectors to reduce costs and become more efficient and more
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zeti akhtar aziz : enhancing smes β awareness on access to financing keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the banking industry seminar β enhancing smes'awareness on access to financing β, kuala lumpur, 9 july 2008. * * * introduction it is my pleasure to be here this morning to speak at this seminar, to enhance greater sme awareness on access to financing organised by the association of banks in malaysia. the development of a strong and dynamic sme sector is a priority on the national agenda. it is part of the efforts towards creating sustainable and balanced economic growth. the reasons for this are clear. smes account for 99 % of the total business establishments in malaysia and for 56 % of total employment and contribute about 32 % to gross domestic product and 19 % of total exports of the nation. over the recent five years, smes have also increased their contribution to growth. in several developed countries, smes contribute at least half of the gross domestic product. taking smes in these economies as a benchmark, there is clearly significant potential for smes in malaysia to increase their contribution to the economy. my remarks today will focus on three areas. firstly, the implications of global economic and financial developments on the malaysian economy, and in particular on businesses and smes. secondly, on the strategy adopted by the government and bank negara malaysia to develop the potential of the sme sector as a source of economic growth. and finally, the further measures that need to be implemented by the banking institutions and the smes in a more challenging environment of rising costs. economic and financial developments going forward, the international economic and financial environment is expected to remain challenging with slower global growth and continued uncertainties in the international financial markets. the moderation in global growth is also occurring in an environment of increasing inflation arising from the higher energy and commodity prices. the malaysian economy has been on a steady growth path averaging about 6 % in the recent three years. in 2007, the economy expanded by 6. 3 % and has continued to register a strong growth in the first half of 2008. this stronger growth has been achieved despite the more challenging external environment and increased uncertainties in the international financial markets. one of the important contributing factors has been the successful transformation of the malaysian economy in this recent decade which has resulted in a more balanced and diversified growth, in which the services and agriculture sectors have become increasingly more important drivers of growth. in addition
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the regulatory challenges which have to be addressed by the regulators. in meeting these challenges, the local banks must make best use of the existing resources to minimize the cost of full compliance. they can build on their existing data bases and leverage on the default data available in institutions such as the credit information bureau. they can benefit from data pooling within the industry. all these resources must be harnessed. it is important that the banks do not lose sight of the long term benefits of basle ii of better capital allocation and consequently, better pricing, because they are embroiled in the details necessary to meet the deadline. the ultimate objective is financial stability. i am sure that this dialogue that we have initiated today will result in a fruitful exchange of views on this important subject and will help to consolidate our implementation plans on this long journey that we have all commenced. i therefore wish you all a very stimulating and useful discussion and a very successful seminar. thank you.
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efficient risk management framework and the adequacy of resources to mitigate risk. against this background, therefore, basle ii is synonymous with good risk management, not only of the core risk of credit default, but of a wider range of risks such as market risk and operational risk in pillar i. together with the mutually reinforcing pillars ii and iii, of regulatory review and market discipline, basle ii represents a formidable tool to insulate banks against inherent risks in the highly leveraged business of banking. in this process, we must be mindful of the fact that basle ii has been built on the experiences and risk parameters of developed, sophisticated economies. through customization to suit conditions and markets in emerging economies, which have fundamentally different characteristics, the principles of basel ii should be appropriately adapted to suit such conditions. the β one size fits all β solution of basle i will not suit the complexities of basle ii. the markets in which we operate have their own peculiarities and their own cultures. promoting international best practice in such a culture is, indeed, a challenge which demands a fundamental change in credit cultures, attitudes, and policies. the will to change is important and in the case of banking institutions, has to be mandated, if it is to be in the best interests of the major stakeholders, the depositors. full implementation of basel ii is, indeed, demanding for banking institutions and regulators alike. capacity building is an imperative on both sides, as is the framework for good risk management built on risk models. the supervisory capacity to assess and validate these models must be enhanced and developed. the magnitude of the investment in technology by the banks must be justified in a business sense. we must ensure that the cost of compliance does not outweigh the benefits from basle ii. emerging market economies are very vulnerable to the reputational risk of non - compliance. therefore we must take one step at a time. the infrastructure for compliance - legal, accounting and market - must be established and is an essential pre - requisite which underlies the success of these initiatives. the implications on the several sub sectors of our economy from basle ii will have to be examined carefully with regard to access to finance and the pricing of risk. uneven playing fields may arise as a result of the internationally active foreign banks adopting more advanced approaches, thereby improving their competitiveness over their local counterparts. will the models developed by the foreign banks be relevant for the risks in our markets? these are
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, for example, allowing merchants to enhance profitability by selling goods and services online, or indeed driving exports. however, the benefits go hand in hand with new risks and invites new thinking on how to preserve fundamentals such as consumer privacy and security, as well as how to preserve monetary and financial stability. amidst this background, we must consider how policy - makers can best support the development of a fintech ecosystem, but doing so in a safe manner. how are we as a regulator embracing these challenge? like many other central banks, we have already embarked on a digital journey. considering our role in the oversight of the financial system and preserving financial stability, we must look forward and anticipate emerging trends so that we can react proactively. accordingly, we have widened the list of the strategic objectives of the national bank that now explicitly incorporate support of technological progress and financial innovations, as well as financial literacy as important tool for protection of consumers in the fintech environment. regulators cannot control nor predict what innovation will look like in the future. however, given the benefits it brings, regulators can contribute to the development of a fintech ecosystem by creating an enabling environment for the entry of new products or 2 / 4 bis - central bankers'speeches new players into the financial services market. usually, regulation is seen as a significant challenge for fintech - led transformation. in this context, together with the ministry of finance, we have put a lot of effort to significantly update payment services regulation, which is currently going through a legislative approval process. the new legal framework for payment services embodies objectives that seek to foster innovation while ensuring a level playing field for all players, including newcomers. an important step in the same direction are efforts for digital identity verification of consumers that has a significant potential to drive greater levels of financial inclusion and financial accessibility. regulators can enable, encourage and support innovations in financial services, by providing regulatory certainty and clarity. considering this, in the national bank we established the so - called " innovation gateway ", to serve as a central point of contact and communication channel between innovators in the financial industry, the central bank, and other relevant authorities. to better understand the fintech state of play in our economy we conducted the first national survey and prepared a feasibility study, which clearly underline the opportunities and benefits that fintech can bring to our country, as well as the barriers that need to be overcome for further development. the main conclusion of the feasibility study that follows the survey
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the euro area was more modest, with the policy interest rate falling from 4. 75 % to 2 % over the same period. since mid - 2004 the fed has raised its policy rate by a cumulative 375 basis points, while the ecb started to raise rates only in late 2005 and since then has increased them by 50 basis points. against this background, i would like to address the following questions : how can these differences in the pattern of policy rates in the two currency areas be explained? do they reflect differences in the monetary policy strategies adopted by the two central banks or deeper differences in the structure and dynamism of the two economies? the observation that the policy rate has been much less volatile in the euro area than in the us can certainly not provide reliable information on the strategy of the two central banks, nor can it prove that the monetary policy of the ecb has been too gradual, or not sufficiently active. to answer these questions, it is crucial to assess policy moves against the prevailing state and structure of the respective economy. some early research undertaken by ecb watchers already addressed this topic. 1 some more recent work undertaken by ecb staff has provided further insights that i believe are worth discussing today. the common theme of this work is that the causes of the different behaviour of policy rates in the euro area and the us over the last years can mainly be found in the following two factors. first, shocks of a different nature and pattern have hit the two economies, generating an unfavourable trade - off between inflation and output in the euro area, while the us economy was supported by rather strong productivity improvements. second, the structure of the two economies is very different β mainly with respect to the degree of market flexibility β producing different effects in the two areas in response to similar shocks, with specific implications for monetary policy. this interpretation does not deny the presence of some differences in the policy framework adopted in the two currency areas. for instance, the ecb β s primary objective of price stability and its mediumterm orientation imply scepticism regarding the appropriateness and efficacy of fine - tuning policies. in addition, the importance of monetary analysis in providing early warnings of price instability in the future, the strength of the central bank β s reaction to inflation expectations and the response of the yield curve to policy changes would indeed normally translate into differences in the setting of the policy instrument. however, these factors seem to be of minor importance when dealing with the specific criticism that has been voiced
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##ification in order to boost the role of tax as the source of development financing. these three potentials that emerge in 2016 will, if it is effectively and optimally empowered, strengthen and boost the benefits from the existing domestic resource potential, specifically human and natural resources. in indonesia, the role of tax in the development financing only reached 11 % of gdp in 2015, which is lower compared to that achieved by a number of countries in the region such as singapore and malaysia that achieved around 14 % of gdp. we are the sizeable population represents a huge market potential to support domestic demand through household consumption. moreover, this huge market potential will readily serve to be the driver for more sizeable added value if it is subsequently followed by an increase in domestic production activities. optimizing potential, strengthening resilience bank indonesia β s annual meeting 2016 in this context, the demographic bonus that is represented by a larger number of productive - aged population compared to senior citizens and children will serve as potential from the labor perspective and a large consumer base in line with the growth of the middle class in indonesia. this demographic bonus will, if adequately managed, provide opportunities for indonesia to become more prosperous. we also specifically noted the importance of women β s participation in economic development. the population of women in the world today comprise of more than a half of the world β s population, but their contribution to the economy is still far below their potential. many studies have shown that the performance of the economy will increase when women β s potential in the labor market is properly utilized. however, it should be noted that the demographic bonus which will reach its peak in the next fifteen years will lose its momentum after those period, which is in line with the increasing dependency level of the population ( figure 16 ). as a consequence, we are raving against the time in utilizing each aspect of the potential. efforts to increase women β s participation in the economy also serves as a challenge for indonesia. data show that female labor participation compared to male labor in 2016 declined and was lower than in neighboring countries ( chart 17 ). this is a challenging figure since the potential of indonesian women to contributing in the economy is quite substantial, especially in reviving the real sector. figure 16. dependency ratio figure 17. ratio of female to male labor force % ratio to male 1. 00 0. 90 0. 80 0. 70 old - age child 0. 60 total source : hayes, adrian and diahhadi setyonaluri. 2015.
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dr. sabirin talks about efforts to save indonesian banks presentation by the governor of bank indonesia, dr. syrahil sabirin, at the indonesian executive circle ( iec ) forum in jakarta on 7 april, 1999. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 1. it is a great honor for me to be here today to speak before this forum, the indonesian executive circle. this afternoon, i would like to share with you some thoughts on the recent developments of the indonesian banking industry - how the current situation and problems came about, what alternatives were available to deal with them, and how i see the prospect of our banking industry in the coming future. 2. the problems we are currently facing, including the banking problems, came onto the surface after and as a result of the currency crisis beginning in mid 1997. the magnitude of the currency crisis perhaps has not been matched by any other countries in modern time. as you know, from a pre - crisis level of around 2, 430 rupiah per us dollar in early july 1997, the rupiah weakened to reach a low of just under 17, 000 in june 1998. this represents a loss of about 85 % of the rupiah β s value at its worst point. clearly, no economy could survive such a hard blow without serious harmful repercussions. and it was only to be realized that a crisis of confidence, which was what indonesia has really been suffering from, could do such a dramatic impact. the sharp decline in national output, massive increase in unemployment, and the deterioration of confidence on indonesia β s financial institutions, corporations, and economy in general are among the impact. 3. to the banking sector, the currency crisis, and subsequent events, have produced two major repercussions, directly or indirectly, namely : loss of confidence on banks that resulted in bank runs, loss of deposit base, and liquidity problems. β closing down of 16 banks in november 97. run down of banks β capital base. in this case the effects of the crisis were transmitted through the following ways : Β½ the sharp depreciation of the ru
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heavily influenced by the inflation experience in one β s own lifetime, which implies that decades of too low inflation can become embedded in expectations. indeed, we have seen some worrying signs of a deterioration of measures of longer - run inflation expectations in recent years, as seen in table 2. importantly, this sustained undershoot of the inflation target is likely to be a recurring dilemma for the fed and central banks in japan and europe that have had similar experiences over the past decade. this problem of inflation running chronically below the target stems in part from the limited ability of central banks to offset economic downturns due to the lower bound on interest rates in a low - neutral - rate environment. 7 implications for the monetary policy framework the risk of the inflation expectations anchor slipping toward shore calls for a reassessment of the dominant inflation targeting framework. 8 a number of alternative frameworks and strategies have been proposed that hold the promise of better achieving the inflation goal and holding fast the inflation anchor. 9 in this regard, i am very pleased that the federal reserve is undertaking a review of our policy framework this year, a topic that federal reserve vice chairman clarida will discuss in his lunch remarks today. in summary, the phillips curve is alive and well. i wholeheartedly agree with the authors that we 3 / 4 bis central bankers'speeches must not be complacent about inflation expectations becoming unmoored, whether at too high or too low a level. see john c. williams, inflation persistence in an era of well - anchored inflation expectations, federal reserve bank of san francisco economic letter 2006 β 27, october 13, 2006. 2 see more amazon effects : online competition and pricing behaviors, jackson hole economic symposium conference proceedings ; federal reserve bank of kansas city, 2018. 3 see alan s. blinder, economic policy and the great stagflation, academic press, 1979 4 see tim mahedy and adam shapiro, what β s down with inflation? frbsf economic letter 2017 β 35, november 27, 2017, and andrea tambalotti, stefano eusepi, and bart hobijn, condi : a cost - of - nominal - distortions index, american economic journal : macroeconomics, 3 ( 3 ) : 53 β 91, july 2011. 5 see james h. stock and mark w. watson, slack and cyclically sensitive inflation, working paper. 6 see ulrike malmendier and stefan nagel, learning from inflation experiences,
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- based approach to increase flexibility and effectiveness of implementation ; and support for optimal supply and demand of foreign exchange. in line with these initiatives, as well as the continued national economic recovery and the increasing need for hedging on securities holdings, average daily dndf transaction volume increased from usd99. 1 million in 2021 to usd112. 7 million in 2022 ( as of november 11, 2022 ) - ( graph 23 ). meanwhile, bank indonesia continues to expand the use of the lcs, including through the establishment of the national lcs task force in may 2022, as a form of synergy and national commitment to accelerate the use of the lcs. furthermore, we also expanded the scope of lcs cooperation with thailand by including dndf in the cooperation. the lcs framework was also strengthened and developed into local currency transactions ( lct ), which include not only current account transactions but also capital and financial account transactions, including as a transaction settlement mechanism in the context of implementing cross - border qr code cooperation ( qris cross - border ) with thailand and piloting with malaysia. these various measures supported an increase in lcs transaction volume from an average monthly amount of usd211. 2 million in 2021 to usd354. 0 million in 2022 ( as of october 2022 ) β ( graph 24 ). graph 23. daily average dndf transactions graph 24. lcs monthly volume usd million usd million 112. 7 99. 1 211. 2 1 2 3 4 5 6 7 9 10 11 12 1 2 3 4 5 6 7 9 10 11 daily average volume daily average volume 2021 daily average volume 2022 ( up to 15 nov 2022 ) source : bank indonesia 354. 0 bank indonesia continues to develop financial instruments as a source of economic financing and to strengthen risk management in synergy with the financial sector authorities and market players. synergy in the coordination forum for financing development through financial markets ( fk - pppk ) was strengthened, among others, through the development of asset securitization with underlying lending / financing for msmes, the development and piloting instruments of sustainable financing and derivative transactions ( environmental, social and governance / esg ). the synergy was also strengthened by developing programs to expand retail investors through the financial literacy education program ( like it ), which this year focused 1 2 5 6 7 8 9 10 11 12 1 2 malaysia thailand monthly average total volume 2021 source : bank indonesia 5 6
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a number of channels. when interest rates rise, it becomes more costly to take up loans and more profitable to save and to postpone consumption and investment. a rise in interest rates will also reduce demand, because the value of houses, leisure homes, cars and shares decreases. household wealth declines. a rise in interest rates may also strengthen the krone. a stronger exchange rate will curb the rise in prices for imports, which directly and indirectly account for 40 per cent of goods and services in the consumer price index. a stronger krone weakens earnings and reduces activity in enterprises in the internationally exposed sector. this has an impact on enterprises β capacity to pay, wage growth and price inflation. we do not expect a change in interest rates 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. hence, the key rate is set with a view to achieving an inflation rate of 2Β½ per cent two years ahead. the social partners will take account of the inflation outlook in their wage negotiations. if there are prospects of higher inflation, the nominal wage increases will be higher. at the same time, higher wage growth means higher inflation. developments in the labour market and wage formation are therefore important for interest rate setting in norges bank. it is also important to be aware that developments in labour costs may influence inflation, growth and employment differently in a system with a floating exchange rate that in a system with a fixed exchange rate. in our open economy, with a floating exchange rate, it can be assumed that an increase in wage growth of one percentage point without any monetary policy response will gradually translate into a corresponding increase in price inflation unless wage increases are anchored in higher productivity. when norges bank concludes that the key rate should be changed, the change will in most cases be made gradually. this is because there is normally uncertainty about the situation in the economy, potential disturbances to the economy and how fast an interest rate change will affect price inflation. but we will not always take a gradualist approach. a rapid and pronounced change in the interest rate is appropriate if, for example, heightening turbulence in financial markets or a cost - push shock resulting from negotiations indicates that confidence in monetary policy is in jeopardy. norges bank analyses the inflation outlook in separate inflation reports, which are published three times a year. further assessments are presented every sixth week in connection with the executive board's monetary policy meetings. higher interest rates curb demand for
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which may pose potential risks for each of our banking sectors. i hope you will enjoy your stay at islamabad and continue deliberations in the forthcoming sessions of the seminar. thanks. bis central bankers β speeches
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. it is this which provides the primary rationale for the regulation of the financial system by a public agency. this regulation is prudential in nature ; it is intended to ensure that financial institutions are soundly manged and thereby to protect their depositors, or other customers such as holders of insurance policies, and also to protect the overall stability of the financial system. the regulatory framework in uganda uganda has four separate financial sector regulators which each regulate and supervise a specific set of financial institutions or financial markets. these four regulators are the bank of uganda, the insurance regulatory authority, the capital markets authority and the retirement benefits regulatory authority which regulate, respectively, deposit taking financial institutions, insurance companies, the capital markets and the pension sector. we have separate regulators rather than one single multi - sector financial regulator mainly because there are qualitative differences between the four main types of financial markets in terms of the objectives of regulation and especially with regard to the supervisory methodologies and techniques employed by the regulators. consequently, there would be little to be gained by combining the regulation of, for example, banks and financial markets, within one single regulatory agency. this is the case in most countries, where banking regulation and supervision is separate from that pertaining to non - bank financial institutions and markets. each regulator in uganda conducts its supervisory and regulatory operations according to the requirements of a specific piece of legislation. deposits taking financial institutions are regulated under the financial institutions act, 2004 and the micro deposit taking institutions act, 2003 ; insurance companies are regulated under the insurance act, 2017 ; capital markets are regulated under the capital markets authority act and its subsequent amendments ; the pensions industry under the retirement benefits regulatory authority act, 2011. hence all of the four financial sector regulators conduct their operations within a legal framework which has been legislated for by parliament, and which sets out their statutory responsibilities, objectives and powers. the primary objectives of each regulator depend on the characteristics of the financial market that they regulate. for example, the majority of the liabilities of banks are customer deposits. banks also dominate the financial sector and perform crucial functions in the economy, such as transacting payments. consequently the primary objectives of the bank regulator, the bank of uganda, is to safeguard the interests of depositors, so that they do not lose their savings as a result of reckless bank management or fraud, and to protect the overall stability of the banking system ; i. e. to prevent a banking crisis which would be extremely disruptive for the economy. in
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this implies that if only banks and other financial institutions could lower their lending rates and expand the volume of their lending, substantial numbers of businesses in the economy would be able to borrow money for investment in order to boost their output while servicing their debt and increasing their incomes. while i remain uncomfortable with the high lending rates and believe that they should be reduced sustainably over time, i dare say that access to credit is not the ultimate binding constraint on economic growth. we must think holistically about the challenges holding back the power of finance to transform our economy. proper diagnostics must reveal the problems that constrain agricultural finance before we devise durable solutions. we must examine the borrowing capacities of the businesses in our real sector. on one hand, financial institutions are challenged to rethink their views of bankable projects so as to design page 4 of 8 solutions for potential borrowers at their level. on the other hand, formal sector creditworthy businesses, which have been the main clients of commercial banks, comprise a small share of the economy. informal business and micro - enterprises abound and their capacity to utilize credit effectively is constrained, including by inadequate business and technical skills, the high costs of inputs, and unpredictable market conditions. fortunately, some financial institutions have started tackling these problems through business incubation programs. moreover, through automation and adoption of new technologies for delivering financial services, it is possible for banks to reduce their operating costs, and pass on the savings to borrowers through reduced lending rates. i am also optimistic that banks will exploit the potential of bancassurance to exploit synergies with insurance to design products for the riskier borrowers. indeed, i am anxious to learn from the speakers about uba β s plans to de - risk financing and investment in agriculture. i must applaud the uba for embracing the role that can be played by the financial sector in transforming our people into a non - agrarian workforce and urban - dwelling page 5 of 8 populace. but i must add that it will take a comprehensive approach by all sectors to bring about this transformation. indeed, the fruits of higher labour productivity in nonagriculture sectors, and higher living standards in urban areas enjoin the government to develop the manufacturing and service sectors in order to absorb the youths who are migrating from rural areas. research conducted by the international growth centre has shown that it is possible for uganda to industrialise through prioritization of high productivity services or non - traditional β industries
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bbb - bbb + a - a - a - international ratings standard & poor's central bank of trinidad and tobago 2. macroeconomic fundamentals non - energy gdp / per cent / 2007p 6. 7 6. 7 5. 0 6. 6 6. 7 agriculture - 15. 3 - 34. 2 - 9. 2 - 0. 9 - 5. 9 manufacturing 12. 0 5. 2 12. 6 9. 4 8. 0 construction 23. 4 8. 1 13. 4 4. 3 5. 2 finance, insurance & real estate 7. 3 21. 7 0. 4 1. 2 10. 5 8. 4 8. 3 7. 8 8. 2 8. 3 non - energy gdp of which : memo : contribution of financial sector to total employment central bank of trinidad and tobago 3. financial system soundness indicators total assets ( tt $ bn ) 62. 8 71. 2 82. 9 92. 9 103. 9 annual growth in total assets ( % ) 11. 2 12. 9 16. 5 11. 9 11. 8 asset quality : nonperforming loans to gross loans ( % ) 2. 6 3. 7 2. 7 2. 7 1. 4 4. 0 29. 9 5. 2 36. 1 3. 6 25. 0 4. 6 31. 8 4. 8 33. 9 19. 1 18. 3 18. 8 18. 6 17. 9 earnings and profitability return on assets ( % ) return on equity ( % ) capital adequacy : core capital to risk adjusted assets ( % ) central bank of trinidad and tobago 4. banking system credit : domestic and offshore trinidad & tobago / per cent / dec - 05 dec - 06 domestic 76. 0 75. 3 79. 3 caricom 20. 0 16. 3 14. 6 of which : barbados dec - 07 2. 8 2. 3 2. 5 dominican republic 0. 6 0. 4 0. 3 grenada 0. 6 0. 5 0. 4 jamaica 4. 6 2. 9 2. 0 st. lucia 5. 0 4. 7 4. 5 suriname 0. 5 0. 5 0. 4 belize 0. 6 0. 5 0. 1 guyana 0. 5 0. 4 0. 4 rest of the world 4. 0 8. 4 6. 1 3. 0 6. 0 4. 4 100. 0 100. 0 100. 0 of which : united states of
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the inflation report and the financial stability report along with the monetary policy committee meeting dates are presented in the appendix. meeting dates have been determined by taking into account such factors as official holidays, national and religious festivals, and the data flow calendar. exchange rate policy and foreign exchange buying auctions along with inflation targeting, the central bank will continue to implement a floating exchange rate regime in the upcoming period. in the floating exchange rate regime the fx rate is neither a target, nor a policy tool. the only variable that the central bank sets as target is inflation and the main policy tool to achieve this target is short - term interest rates. therefore, the central bank targeting a variable such as fx rate, growth or current account deficit is out of the question. the central bank shares with the public the general framework of the current exchange rate policy and fx buying auctions in the press releases it has issued each year since the start of 2002. as also stated in these press releases ; ( i ) in the current floating exchange rate regime, exchange rates are determined by supply and demand conditions in the market and the central bank does not have any exchange rate target. ( ii ) since there is no exchange rate level to maintain in countries with floating exchange rate regimes, the level of foreign currency reserves is much less significant compared to countries with fixed or flexible exchange rate regimes. however, especially in emerging economies such as turkey, a strong fx reserves position is significant in removing the unfavorable effects of potential internal and external shocks and boosting confidence in the country β s economy. in addition, taking into account the foreign debt payments of the treasury and the need to gradually reduce the number of high - cost remittance accounts in the long - term, which are peculiar to turkey and make up a significant part of the liabilities side of the central bank β s balance sheet, the central bank holds foreign exchange buying auctions to build up reserves at times where foreign exchange supply constantly increases compared to foreign exchange demand. ( iii ) the economic transformation process experienced after the 2001 crisis has enabled significant achievements in macroeconomic stabilization and helped reduce the β dollarization β effect created by unstable macroeconomic policies and high inflation in the past. despite some deviations from this main tendency due to exogenous shocks and changes in risk perceptions, decisive implementation of economic program has always enabled a return to the main tendency. this process, combined with favorable developments in the balance of payments, has supported the increase in foreign exchange supply in the economy
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trend change in prices. as a measure to prompt an improvement in the aggregate supply and demand balance, in terms of interest rates, the bank has kept the policy rate at the effectively zero level. to encourage a further decline in longer - term interest rates in the money market, the bank introduced in december 2009 a new funds - supplying operation, through which funds with a maturity of three months are provided at an extremely low interest rate of 0. 1 percent, and the total amount of loans to be provided through this operation was set at approximately 10 trillion yen. the total amount of loans was increased to 20 trillion yen in march 2010. in terms of funds provision, the bank has been providing ample funds through various fundssupplying operations, including the new operation. furthermore, the bank has made its stance clear that it will consistently maintain the extremely accommodative financial environment. as for inflation expectations, the other determinant of prices, the bank has, to prevent people β s expectations for prices from declining, clearly showed its stance, in the form of the β understanding of medium - to long - term price stability β, that it is critical to achieve a positive year - on - year rate of changes in the cpi. to overcome deflation and achieve a sustainable economic growth with price stability, the bank will continue to consistently make contributions as central bank.
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##ity provisioning and u. s. dollar swap line arrangements. these measures have worked as a bulwark against a global negative feedback loop. unlike the gfc, the spread of covid - 19 has been a shock to the real economy. nevertheless, a risk common to both the gfc and the covid - 19 crisis was that the erosion of market confidence would trigger a negative feedback loop. however, liquidity provisioning this time was conducted decisively. many central banks enhanced swap line arrangements and conducted u. s. dollar funds provisions and asset purchases, while the imf promptly reinforced its emergency financial assistance. i believe that these actions were driven by common concern over risks, built upon the experience of the gfc. the second key element of the covid - 19 policy responses is the coordination of fiscal and monetary policies, implemented to stabilize the economy and the financial system. this was seen at the time of the gfc, but the coordination this time has been more prompt and comprehensive. amid the rapid decline in income due to the impact of covid - 19, governments have implemented large - scale economic measures, including income support and loan guarantees to firms and households, while central banks have introduced powerful monetary easing measures aimed at supporting corporate financing and stabilizing financial markets. regarding corporate financing support in particular, fiscal measures provided credit enhancement through government guarantee programs, while monetary policy provided liquidity. as fiscal and monetary policy measures fulfill their respective roles, business operations and employment have been underpinned through the smooth functioning of financial intermediation. the third important element centers on regulation and supervision. namely, while financial institutions had already been increasing their robustness in line with international financial regulations, financial authorities swiftly implemented the necessary measures. the strengthening of international financial regulations in the wake of the gfc has led to financial institutions building up ample capital and liquidity. this worked as intended, providing a backstop against the negative feedback loop, as the financial sector absorbed the shock to the real economy rather than exacerbating it. moreover, i believe the deferral of the full implementation of the basel iii standards by one year and encouragement for banks to use their capital and liquidity buffers, among other measures, have contributed to securing the smooth functioning of financial intermediation. ii. what will be required of future policy responses next, i would like to consider what will be required of future policy responses. there continues to be considerable uncertainty reflecting the resurgence of the spread of co
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β stress test β when it was conducted early last year β illustrates the importance of combining analysis by credit experts, forecasts and scenario design by macroeconomists, and hands - on judgments by supervisors in assessing the financial condition and potential vulnerabilities of large financial institutions. while considerable steps have been made in the wake of the financial crisis, the federal reserve intends to do a good deal more. the federal reserve also will continue to strengthen and expand its supervisory capabilities with a macro - prudential approach by drawing on its considerable data reporting, gathering, and analytical capabilities across many disciplines. in the areas in which we are collecting data through the supervisory process on measures of interlinkages and common exposures among the largest financial firms we supervise, we are developing new analytical tools that may lead us to change our information requests from supervised firms. the federal reserve is exploring how to develop analytically sophisticated measures of leverage and better measures of maturity transformation from information that we can collect from the supervised firms in the supervisory process and from other available data and analysis. we envision developing a robust set of key indicators of emerging risk concentrations and market stresses that would both supplement existing supervisory techniques and assist in the early identification of early trends that may have systemic significance and bear further inquiry. this kind of approach will require data that are produced more frequently than the often quarterly data gathered in regulatory reports, although not necessarily real - time or intraday, and reported soon after the fact, without the current, often long, reporting lags. these efforts will need to actively seek international cooperation as financial firms increasingly operate globally. the potential benefits of additional data improved data are essential for monitoring systemic risk and for implementing a macroprudential approach to supervision. the financial crisis highlighted the existence of interlinkages across financial institutions and between financial institutions and markets. credit risks were amplified by leverage and the high degree of maturity transformation, especially outside of traditional commercial banking institutions. moreover, supervision traditionally has tended to focus on the validity of regulated firms β private risk - management systems, which did not easily allow comparisons and aggregation across firms. one key feature of the recent crisis was the heavy reliance on short - term sources of funds to purchase long - term assets, which led to a poor match between the maturity structure of the firms β assets and liabilities. such maturity transformation is inherently fragile and leaves institutions and entire markets susceptible to runs. indeed, a regulatory, supervisory, and insurance framework was created during the great depression to counter this
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even during the conflict period, the northern province accounted for 10 percent of the paddy production, 40 % of red onions, 10 % of chillies, 14 % of green gram and 25 % of ground nuts. these statistics indicate that there would be many viable income generating activities which could be promoted to upgrade the livelihood of the people, with the assistance of the banking sector. it has been estimated that 129, 000 fishermen, representing 20 percent of the total number of fishermen in our country, live in 219 fishing villages in the northern province. in the year 2006, the total fish production from the north stood at 25, 900 mt, representing 12 percent of the country β s total production. these facts also indicate that the income generating activities in the fisheries sector too could be developed substantially in the coastal areas with the provision of appropriate banking facilities, particularly for multi - day boats, fishing gear and other ancillary needs such as ice plants, and storage facilities. over the past several years, the central bank has also initiated several credit schemes applicable throughout the country, aimed at promoting regional development and poverty alleviation. in particular, work has commenced on a new poverty alleviation micro finance project to cover conflict - affected districts. approximately 3, 000 beneficiary groups with more than 12, 000 low - income families have already been organized within the jaffna peninsula under this project. we have also fast - tracked the agro - livestock development loan scheme, which is another scheme that could provide increased benefits to this province. my dear friends, during the several recent visits that i made to jaffna, i always made it a point to meet with the chambers of commerce officials, bankers, teachers, students, villagers, fishermen and many others. we received many valuable suggestions from them. in particular, we received too very useful ideas to open a central bank β s provincial office and to arrange for a special northern regional development fund for the northern province. i am glad to announce today that we will implement both such initiatives in the coming months. my dear friends, i thought it may also be appropriate to use this opportunity to make a special appeal to the sri lankan tamil diaspora, living in all parts of the world. the decades long conflict which sapped our combined energies in various ways, is finally behind us. therefore, it is now time for all of us to get together and rebuild our nation, in particular, the areas that have suffered. we, on our part, are keen to
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complex or too important to fail. see e. g. adrian and shin ( 2010 ) : β the changing nature of financial intermediation and the financial crisis of 2007 β 09 β. see e. g. shin ( 2012 ) : β global banking glut and loan risk premium β. see e. g. acharya, schnabl, and suarez ( 2010 ) : β securitization without risk transfer β. see e. g. haldane ( 2010 ) : β the $ 100 billion question β. bis central bankers β speeches in a market environment where the price of a bank β s own debt funding is insensitive to the risks the bank takes and decreases with the bank β s size, the bank has a strong incentive to further increase its leverage by taking on even more debt and continue to grow in size. the implicit subsidies also have important implications for the level - playing field in the banking sector. currently, the competitive distortions, manifested in differences in funding costs between systemically important banks and other banks, are significant. however, our goal must be that no bank is perceived as too big to fail. as stephen cecchetti recently noted, β there should come a day when the basel committee β s list of globally systemically important banks, or g - sibs, is blank β. 7 lack of a systemic aspect there was clearly also a lack of a sufficient macro - prudential aspect to banking supervision and regulation prior to the crisis. the fundamental problem is that banks themselves do not have an incentive to fully internalize the social cost stemming from their own contribution to system wide risks into their business decisions. 8 in the absence of substitutive regulatory and supervisory measures in the years preceding the crisis, systemic risks built up in the form of ever larger, more complex and more leveraged financial institutions. regulatory response to the crisis what has already been done? in response to the crisis, a number of international and eu wide regulatory reforms have been launched. two reform areas have been particularly relevant to the work of the high - level expert group ; capital adequacy and liquidity requirements ( basel iii as implemented in the eu through the crd iv / crr ) and recovery and resolution ( as in the commission β s proposal ). if effective, the new and still evolving capital adequacy requirements can go a long way to reduce incentives to take excessive risks across different banking operations and the use of excessive leverage
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financing the european economy. as a result, complete separation similar to the former glass - steagall act in the us was not required. as the deposit bank and the trading entity are allowed to co - exist within a holding company structure, the banking group could still market all of the services, from its different constituent units. concluding remarks the reputation of banks and the public trust that they rely on has been severely dented during the latest financial crisis. this has hurt not only banks themselves but also the economies and societies of europe and the whole western world. trust and public acceptance must now be restored, and the proposals which the high - level expert group has submitted for the consideration of the eu commission will contribute to this end. achieving this important aim will benefit the banking industry and our societies at large. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches
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2. 2 %. second, when looking forward from now until the early part of 2003, although recent developments in oil prices have lowered short - term price pressures, there are still some factors that could keep annual inflation rates above 2 % for several months to come. yet this short - term outlook is related both to base effects and to indirect taxes and administered prices, i. e. to temporary developments. third, when looking beyond the short term, we consider that both the overall economic environment and the euro exchange rate, which has strengthened since early this year, will contribute further towards reducing inflationary pressure. moreover, we expect the indirect effects of previous increases in oil prices and other factors to further unwind. although wage - related risks remain in place, they are judged less likely to materialise as long as the economic environment does not change substantially. the assessment which guided today's monetary policy decision was that, overall, the prospect has strengthened for inflation to fall below 2 % in the course of 2003 and to remain in line with price stability thereafter. our decision should also help to improve the outlook for the euro area economy by providing a counterweight to some of the existing downside risks to economic growth, thereby supporting confidence. the most likely scenario is that economic growth will gradually recover in the course of 2003 towards rates more in line with potential. falling inflation should support real disposable income and, together with a reduction in the gap between perceived and actual inflation rates, should underpin private consumption. moreover, we expect an improvement in world demand. this, and the low level of interest rates, should benefit investment. let me point out that, with today's decision, the key ecb interest rates have reached a very low level by historical standards. the governing council will continue to monitor closely all factors that may affect the prospects for inflation in the euro area. the outlook for the euro area economy will also very much depend on visible progress in other policy areas. regarding fiscal policies in the euro area, i would like to reiterate that budgetary discipline strengthens the conditions for sustainable growth of gdp and employment. therefore, sound fiscal positions, as enshrined in the treaty and further developed in the stability and growth pact, are in the interest of all the member states. given the disappointing fiscal developments in some countries and the challenges which have emerged to the eu fiscal framework, we welcome the moves to correct or prevent excessive deficits, i. e. the implementation of
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european central bank : press conference - introductory statement introductory statement by mr willem f duisenberg, president of the european central bank and mr lucas papademos, vice - president of the european central bank, at the press conference held in frankfurt, 5 december 2002. * * * ladies and gentlemen, the vice - president and i will now report on the outcome of today's meeting of the governing council of the ecb. we continued our in - depth assessment of monetary, financial and economic developments and the discussions we had in early november on the appropriate stance of monetary policy, taking account of the new information. overall, since our last meeting, the arguments in favour of a cut in the key ecb interest rates have strengthened. the evidence that inflationary pressures are easing has increased, owing in particular to the sluggish economic expansion. furthermore, downside risks to economic growth have not vanished. as a result, the governing council has decided to lower the key ecb interest rates by 50 basis points. at today's meeting, we also reviewed the reference value for monetary growth, which has an important role under the first pillar of the ecb's monetary policy strategy. the governing council has decided to leave the current value unchanged at an annual growth rate of 4Β½ % for the broad aggregate m3. this decision was taken on the grounds that the evidence continues to support the assumptions which have formed the basis of the derivation of the reference value since 1999, namely those relating to trend potential output growth of 2 - 2Β½ % per annum and to a trend decline in m3 income velocity of Β½ - 1 % per annum in the euro area. we will issue a separate press release this afternoon explaining in greater detail the background to this decision. when comparing current developments with the reference value, it is important to remember that the reference value is a medium - term concept. short - term movements of m3 do not necessarily have implications for future price developments. moreover, deviations of m3 from the reference value must be analysed in conjunction with other real and financial indicators in order to understand their implications for price stability. turning to the most recent data, in the period from august to october 2002 the three - month average of the annual growth rate of m3 was 7. 1 %, unchanged from the previous three - month average. m3 growth has been influenced considerably by portfolio re - allocations in an environment of general uncertainty and particularly by stress in financial markets. at the same time, it also reflects
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turn affect the rates that they can offer borrowers. thus, the ideas underlying the bank - lending channel might reasonably extend to all private providers of credit. further investigation of this possibility would be quite worthwhile. conclusion i have taken you on a whirlwind tour of several decades of research on how variations in the financial condition of borrowers, whether arising from changes in monetary policy or from other forces, can affect short - term economic dynamics. the critical idea is that the cost of funds to borrowers depends inversely on their creditworthiness, as measured by indicators such as net worth and liquidity. endogenous changes in creditworthiness may increase the persistence and amplitude of business cycles ( the financial accelerator ) and strengthen the influence of monetary policy ( the credit channel ). as i have noted today, what has been called the bank - lending channel β the idea that banks play a special role in the transmission of monetary policy β can be integrated into this same broad logical framework, if we focus on the link between the bank's financial condition and its cost of capital. nonbank lenders may well be subject to the same forces. let me conclude by offering you best wishes for a stimulating and enjoyable last day of the conference. policymakers and scholars both will benefit from your efforts. references almeida, heitor, murillo campello, and crocker h. liu ( 2006 ). " the financial accelerator : evidence from international housing markets, " review of finance, vol. 10 ( september ), pp. 1 - 32. aoki, kosuki, james proudman, and gertjan vlieghe ( 2002 ). " houses as collateral : has the link between house prices and consumption in the u. k. changed? " economic policy review, federal reserve bank of new york, may, pp. 163 - 77 β β β β β β β β β β β β β β β β β β β β β β β - ( 2004 ). " house prices, consumption, and monetary policy : a financial accelerator approach, " journal of financial intermediation, vol. 13 ( october ), pp. 414 - 35. avery, robert b., and katherine a. samolyk ( 2004 ). " bank consolidation and the provision of banking services : small commercial loans, " journal of financial services research, vol. 25 ( april ), pp. 291 - 325. bernanke, ben s. (
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economic growth. a few years ago, the dallas fed identified an opportunity in texas to support community partnerships, specifically in education and workforce development. working across different sectors and industries brings its own set of unique challenges. each brings different goals, operations, and even terminology to the discussion. we know that collaboration is necessary, and it is achievable. advance together provides the structure, ongoing support, and investment from external partners to support communities in strengthening their collaborative work. it takes time and skill to build deep and trusting partnerships. it also takes time and resources for communities to agree upon a common understanding of complex, local needs like improving college and career readiness or developing pathways to living wage employment. this work requires that all partners move in the same direction, toward those common strategies and goals. when communities collaborate effectively, the results can lead to broader access to economic opportunity. at team introductions we are here today to celebrate the success of our pilot participants ; i'd like to reintroduce each of them : the big country manufacturing alliance is building awareness and creating accessible pathways to well - paying manufacturing careers through training, recruitment, and retention. the deep east texas college & career alliance supports rural and firstgeneration college students in attaining postsecondary credentials that employers seek in their workforce. the education partnership of the permian basin is developing a cradle - to - career continuum of support by working to improve early childhood outcomes and college and career readiness in the region. the travis county 2 - gen coalition is expanding practices and policies to support dual generations of parents and children in education attainment and achieving long - term financial stability. conclusion as we begin today's celebration, i'd like to recognize the vision of the dallas fed team for creating this incredible opportunity for our partners. i'd also like to thank our advance together partnerships for their hard work and progress. i also want to recognize them for the work that they will continue to accomplish in their communities as they move forward. this work is challenging and will continue to build pathways to a more inclusive economy. 2 / 3 bis - central bankers'speeches 3 / 3 bis - central bankers'speeches
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andrew g haldane : haircuts remarks by mr andrew g haldane, executive director, financial stability, of the bank of england and member of the financial policy committee, summarising a forthcoming paper in the journal of monetary economics β complexity, concentration and contagion β, 1 august 2011. * * * the views are not necessarily those of the bank of england or the financial policy committee. i would like to thank marnoch aston, benjamin nelson, sujit kapadia, vasileios madouros, priya kothari and andrew mason for comments and contributions. during the summer months, i have my hair cut slightly shorter than during the winter months. this helps keep my head a little cooler in the summer heat and my ears a little warmer in the winter cold. anyone who has seen them will know this is a smart strategy for my ears, to say nothing of my head. this strategy is explicitly counter - cyclical. when the temperature goes up, my hair - length comes down and vice - versa. i am not alone. national statistics show that expenditure on haircuts increases as temperatures rise. the financial system also makes choices about haircuts. the haircuts in question are the amount of collateral a borrower places with the lender over and above the face value of borrowing. but collateral haircuts tend to behave rather differently to personal haircuts. they fall when the financial temperature is increasing and rise when the chill sets in. this strategy is explicitly pro - cyclical. it will tend to result in financial markets being hot - headed in the summer and frozen - eared in the winter. table 1 demonstrates this pattern. it compares haircuts on a range of financial instruments used to back borrowing β so - called securities financing. they are shown on two dates, before ( june 2007 ) and after ( june 2009 ) the financial crisis. haircuts rose by up to 90 percentage points in the space of these two years, as the scorching pre - crisis summer gave way to a frozen crisis winter. in other words, haircuts exhibited a rather dramatic procyclicality over the course of the crisis. table 1 : typical haircut on term securities financing transactions ( per cent ) june 20071 june 20091 medium - term g7 government bonds medium - term us agencies aaa - rated prime mbs asset - backed securities aaa - rated structured products aaa - and aa - rated investment grade
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to 13 percentage points. since the β excess β inflation relative to the 2 % target is a little over 5 percentage points, that suggests that, in practice, we have ended up accommodating around half the impact of the shocks on inflation. in terms of the outlook, a key issue that the committee faces in deciding the appropriate stance of policy is the extent to which the current elevated levels of inflation will persist into the medium term. our most recent projections, conditioned on market interest rates, existing fiscal plans and the futures prices of commodities, are shown in chart 10. the central view is for inflation is to rise further in the near term as recent commodity price increases pass through, but then to fall back, particularly in 2012 as the rise in vat to 20 % drops out of the twelve - month comparison. it then continues to ease back, reflecting the continuing β though uncertain β drag from the margin of spare capacity in the economy. a number of factors will determine the rapidity of that return to target. profit margins have been squeezed during the recession and businesses are likely to want to rebuild these as the recovery proceeds. but the real purchasing power of wages has also been severely squeezed and employees may also seek to recoup some of that. ultimately this is about how the costs of the recession and the deterioration in the terms of trade associated with higher real import costs are shared out 7, but during the adjustment phase it may be manifested in temporarily higher wage and price inflation. consistently above - target inflation, whatever its cause, may also lead people to believe that it will remain high in the future. that in turn may lead them to set higher wages and prices to compensate and thus to the elevated level of inflation persisting. measures of inflation expectations for the year ahead, for both households and businesses, have moved upwards, though no more than one would expect given the outlook for inflation ( chart 11 ). measures of inflation expectations further ahead, which might be more indicative of a fundamental shift in perceptions of the inflation climate, have though mostly remained well anchored ( chart 12 ). but this is something we are watching closely, in particular for any signs that higher inflation expectations are leading businesses to raise pay and prices. there are elements of all these mechanisms present in our latest projections, but there is a risk that they will turn out to be more powerful than in our central view. and, as noted earlier, there is the risk of further increases in the prices of commodities, especially that of oil
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. banking credit and foreign direct investments are the two main financing sources of private sector β s long - term investments slowdown in albania. in this light, the bank of albania deems that businesses and banking system have room for closer collaboration and better mutual understanding to support crediting. financial markets operated under liquidity terms and showed low interest rate fluctuation. indicators related to soundness of the banking system are positive and stable, and adequate to enhance financial intermediation. interest rates in the domestic currency trended downward in april and may, notably in inter - bank and deposits markets. this tendency was followed by increased inter - bank trading and lek deposits. on the other side, the relatively high yields rates of government treasury bills, since the beginning of year, seem to considerably factorise structural changes in primary market and do not transmit added inflationary pressures. in the light of the bank of albania β s analysis on the expected fiscal and monetary developments, this trend may return in the second half of year, along with the improved demand and supply ratios for public sector securities. basic projections on the expected economic performance in the future continue to align with our previous estimations for an economic growth, but below its potential. economic slowdown in albania β s trade partner countries is expected to impose a sluggish foreign demand during the rest of year. given the lack of room for a substantial fiscal stimulus, the main drivers of domestic demand will be the consumption and private investment, which have shown few recovering signal so far. overall, the expected economic developments at home and abroad are expected to condition a slow rise in consumption prices at home. real and monetary sectors convey low pressures on prices ; also, inflation in global markets is expected to be low, whereas inflationary expectations are anchored. the gradual subsiding supply shocks and the termination of base effects impact are expected to be followed by a slight rising inflation trend in the second half of year. at a high probability, consumer prices inflation is expected to remain below the target over the medium run. these circumstances, in the absence of unexpected shocks, encourage the further bis central bankers β speeches maintaining and strengthening of the monetary policy β s stimulating nature. the reconfirmed commitment of the government to continue the fiscal consolidation process even in the next review of budget, as well as the calmer situation in global markets, will pave the way to review the monetary policy position. * * * based on the analysis of the information set out above, the supervisory council
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solution to this problem is a priority in the verge of increasing global demand and energy prices. speeding up the privatization process of the remaining state assets is another important step forward. special attention should be paid to structural reforms, particularly property rights and legal framework. in our opinion services, construction and in particular agriculture will remain driving forces of the gdp growth in the coming years. therefore i would strongly agree with any initiative that encourages fdi β s in these sectors through attractive laws and other measures. i believe fdi β s are very important for providing long term stability of the foreign sector. moreover the productivity growth that usually follows fdi β s inflows will play e significant role in reducing current account deficit. our economy needs more foreign direct investments hence country credit ratings constitute a chief priority for our economy. it is my belief that fdi β s represent a regional rather than an individual challenge for the south east europe. countries in the region must coordinate their efforts toward creating a regional market. regional infrastructure projects will significantly increase attractiveness and competitiveness as well as international financial market awareness toward our region. it will improve confidence and provide necessary economic incentives to enter in the region leading to higher fdi β s inflows for each economy. inflation our economy has experienced a relatively long period of stable prices. annual inflation figure as measured by the consumer price index, for the last 12 months is reported at 2. 4 percent. both monetary and fiscal policies have been important factors in keeping inflation low. however, recently inflation pressures have accelerated. the fast growth of credit to economy, the steep increase of oil prices, administrative increase of energy prices, as well as other risks have the potential to create inflationary pressures and pose risk to elevate inflation expectations. bank of albania will take all necessary actions to ensure an inflation rate of 3 per cent with a tolerance band of Β± 1 percent, in the short and long run. interest rates during the recent years interest rates have dropped reflecting the ease of monetary policy. this has been a general trend for all financial assets either in lek or foreign currency. on average banking system applies 9. 7 percent for loans in domestic currency. the yield of 12 month government securities dropped at a minimum of 5. 74 percent in june 2006. however, following the last decision of the bank of albania and latest trends in global markets, a modest increase in interest rates has been observed during the last three months for both domestic and foreign financial instruments. we expect this trend to persist within
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of national strategies that promote financial inclusion are critical to enhancing access to a diverse range of financial products to the unbanked in kenya, the mandate of the government to enhance the deepening of financial markets by fostering access, efficiency and stability is captured under kenya β s vision 2030. the central bank β s approach to achieving its role under vision 2030, is centered on the promotion of an enabling legal and regulatory framework that fosters the development of a diverse range of financial service providers, while guaranteeing its dual mandate of financial stability and financial integrity. central to this objective has been the licensing and regulation of microfinance banks. the first microfinance bank in kenya was licensed in may, 2009. this paved the way for 11 other microfinance banks which have been licenced to date. the 12 licenced microfinance banks have made a significant contribution to financial inclusion in kenya. this is evidenced by the number of active deposit and loan accounts as at december 2015 which was 931, 585 and 342, 481 respectively. in value terms, this represented bis central bankers β speeches ksh. 40. 5 billion in deposits and ksh. 46. 9 billion in advances. further, microfinance banks had a footprint of 109 branches and 1, 154 agents as at december 2015. while commendable achievements have been made in the past 6 years, the microfinance sector in kenya still has considerable opportunities and challenges that institutions need to tackle in order to realize their full potential. key amongst these challenges include the high cost of credit, inadequate products and services, and weak consumer protection frameworks. microfinance institutions must be willing to make a difference if the full benefits of microfinance and financial inclusion are to be realized. microfinance institutions must be prepared to employ innovative delivery channels to reduce their operational costs, and thereby enhance their reach and efficiency. an essential element in this process is recognizing the characteristics of the customers of these institutions and tailoring lending mechanisms to meet their situations. policymakers, on their part, should support the development of appropriate support infrastructure to facilitate the last mile delivery of suitable financial services. therefore, the development of proportionate, risk - based, regulations by policymakers is critical to guaranteeing the development of a dynamic, robust and sustainable microfinance framework for a country. the starting point towards this collaborative structure is a consultative process to developing a forward - looking framework for regulation and supervision of microfinance institutions. developing
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scientists, programmers, software developers and design thinkers. the challenge, of course, is not specific to fintech firms ; it also affects us as regulators. however, based on our discussions with fintech firms, the race for acquiring such skills sets is pronounced for fintechs, especially if they are still in their 7 information and communication technology 8 johannesburg centre for software engineering ( jcse ) ( wits university ) and the institute of information technology professionals south africa ( iitpsa ), 2019, south african ict skills survey page 6 of 9 early phases of development and / or maturity. it is less so for big - tech firms with wellestablished markets. access to refined financial services data finally, we turn to the importance of data, specifically refined and granular data. it has become cliche to say that β data is the new oil of the economy β. as the digital economy continues to be embedded through the use of mobile devices, the use of social media platforms, and generally increasing activities over the internet and online commercial platforms, we will increasingly create and leave behind β digital bread crumbs β of unprecedented volumes. never before have we seen such volumes of data. and for the first time in human history, we also now have evolving tools and techniques at our disposal through cloud - computing, ai and machine - learning methods to handle such volumes of data. however, in this new digital economy, the availability of, and access to, data related to, for example, transactional payments or specific customer behaviour, has become a key competitive driver. access to both structured and especially unstructured data can provide significant competitive advantages to those who own it. fintechs in particular are exploring the use of big data to produce new services such as product comparisons and tailored solutions based on consumer - specific data. while big data presents new opportunities, the scope of available data, and how to govern access to that data, poses new challenges for the financial services industry and regulatory authorities around the world. as a result of the above, access to refined data is a key issue that regulatory authorities have to deal with. examples of addressing it through open banking and open finance efforts are increasing in many jurisdictions. for south africa, it is important to land on the policy imperatives for such efforts. there are a number of open questions for authorities. these include ( but are not limited to ) : should incumbents be required to share their data with fintechs? page 7 of 9 should the standards for sharing
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at which banks don β t lend to each other. bank funding markets have changed enormously. banks no longer take sufficient short - term wholesale deposits to form the basis for a robust transaction - based libor benchmark. as a result libor is overly reliant on expert judgement rather than actual transactions. and global markets remain overly reliant on libor, a benchmark that may not exist beyond 2021. that reliance is neither desirable nor sustainable. that β s why authorities internationally have worked with market participants to identify alternative benchmarks based on actual transactions. these are overnight rates β a relatively pure read on risk - free rates in each economy. in sterling, the market has chosen sonia, a benchmark now administered by the bank of england. in april we implemented reforms to sonia that boosted the volume of transactions captured by a factor of three to Β£50bn per day. these areas are : the role that β cover and deal β and similar trading models play in the fx market ; how market participants adjust their pricing on e - trading platforms and when trading by voice ; and, disclosures regarding last look practices. all speeches are available online at www. bankofengland. co. uk / speeches the focus now is on transition. market participants in every sector and market that use libor now need to come together to identify and resolve issues, change business practices, and adopt alternative benchmarks. in sterling, over 90 institutions, including banks, law firms, corporates, asset managers, trade associations and infrastructure firms, are directly involved in this effort supported by the bank and fca. transition to sonia will bring a number of benefits. market participants can have the confidence that sonia faithfully represents conditions in a deep underlying market. they can also be assured that sonia β s design is robust to future changes in money markets because, if necessary, sonia β s data inputs can evolve. near risk - free rates like sonia are a better reflection of the general level of interest rates than libor β which is affected by fluctuations in the perceived credit quality of banks ( as well as other technical factors as seen recently ). interest payments for benchmark users should be less volatile as a result, especially in times of stress, and products referencing sonia should provide a better hedge for duration risk. over time the private sector will develop a wider range of products referencing sonia. futures contracts have already been created. we can expect floating rate notes and loans referencing sonia to follow. the end point should be an
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, but as a measure of the extent to which the growth of demand is held consistently broadly in line with the underlying - sustainable - growth of supply - side capacity. the past ten years have in fact been a period of unusual stability in that broader sense for the uk economy as a whole. inflation has been consistently low throughout that time - close to, and recently modestly below, our present 2Β½ % target. but that has not been achieved at the expense of consistently high interest rates, and weak growth and high unemployment, as many people initially feared that it would. in fact nominal interest rates have been as low as most of us can ever remember ; the overall economy has grown consistently for 40 successive quarters without interruption at an average annual rate of some 2ΒΎ %, which is comfortably above its long - term trend ; and the number of people in employment has risen fairly steadily to close to an all - time high, while the rate of unemployment has fallen to a more than 25 - year low. the overall picture is much the same for the west midlands region. i don't have regional data for real economic growth, but using the deflator for the uk economy, your region grew from 1992 to 1999, at an annual average rate of 2. 7 % - very close to the rate for the uk as a whole. the number of people in employment in the region has also increased, with the employment rate now close to a 10 year high and in line with - in fact marginally above - the average for the uk of 74. 6 %. and the rate of unemployment - on the claimant count basis - at 3. 5 % is very close to its 25 year low. that's still a bit above the uk average rate, of 3. 1 % but it's very much better than the 10 % rate of a decade ago. now i know it hasn't felt like that for everyone - particularly for internationally exposed businesses and their employees and for the regions in which such businesses are more heavily concentrated including the west midlands with its relatively high concentration of manufacturing businesses. i am well aware that many of them - perhaps many of you - have been having a rough time over the past few years. although the uk economy as a whole managed to avoid recession, uk manufacturing output fell from a peak nearly two years ago by around 7 % and employment in uk manufacturing fell by 225, 000 people, or some 6 %. to put that into perspective, manufacturing output fell from
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support the broader economy. finally, the treasury recently announced a program to assist banks and other lenders in finding markets for their " legacy assets " β that is, real estate - related assets that were accumulated during the housing boom and have since declined in value and become relatively illiquid. uncertainty about the value of legacy assets is weighing on confidence in banks, and so helping banks to dispose of such assets should contribute to their ability to raise capital and increase lending. employing its fiscal policy tools, the government has enacted a multifaceted program of stimulus that will provide direct support to spending and economic activity. in february, the president signed into law a $ 787 billion package that included cuts in taxes and increases in transfer payments for households, lower taxes for businesses, higher spending for infrastructure investments, and additional financial assistance to state and local governments, many of which would otherwise have been forced to cut spending in response to declining revenues. although the exact effects of these measures on the economy are difficult to gauge, they will likely provide a significant boost to activity. according to the congressional budget office, the effect of the stimulus package on the level of real gdp at the end of 2010 could range from about 1 percent to more than 3 percent, relative to a baseline forecast that does not include the stimulus. that additional gdp translates into an unemployment rate by the end of next year that is between 1 / 2 and 2 percentage points lower than it otherwise would be. with the tax cuts already showing up in paychecks, increases in transfer payments already in place, and grants to states and localities starting to flow, the effects of the package on aggregate demand should start to provide some support to activity fairly quickly. thus a broad range of policies are in place to foster recovery. but economic recoveries are also typically shaped by powerful internal cyclical dynamics. indeed, it appears that some of the forces that had been holding down growth are starting to abate. in particular, the recent data suggest that the multiyear contraction in home sales and new construction may be nearing an end. house prices could well continue to fall for a while, and months'supply of unsold homes will likely remain elevated for some time. at some point, however, house prices will begin to flatten out, and fears about buying into a falling market will start to wane. at the same time, the improved affordability of homeownership resulting from reduced house prices, low mortgage interest rates, and government programs ( including incentives
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to lag global demand. these problems have been exacerbated to some extent by a systematic underprediction of demand and overprediction of productive capacity for a number of key commodities, notably oil. further analysis of the range of aggregate and idiosyncratic determinants of commodity prices would be fruitful. i have only mentioned a few of the issues raised by commodity price behavior for inflation and monetary policy. here are a few other questions that researchers could usefully address : first, how should monetary policy deal with increases in commodity prices that are not only large but potentially persistent? second, does the link between global growth and commodity prices imply a role for global slack, along with domestic slack, in the phillips curve? finally, what information about the broader economy is contained in commodity prices? for example, what signal should we take from recent changes in commodity prices about the strength of global demand or about expectations of future growth and inflation? the role of labor costs in price setting basic microeconomics tells us that marginal cost should play a central role in firms'pricing decisions. and, notwithstanding the effects of changes in commodity prices on the cost of production, for the economy as a whole, by far the most important cost is the cost of labor. over the past decade, formal work in the modeling of inflation has treated marginal cost, particularly the marginal cost of labor, as central to the determination of inflation. 2 however, the empirical evidence for this linkage is less definitive than we would like. 3 this mixed evidence is one reason that much phillips curve analysis has centered on price - price equations with no explicit role for wages. 4 problems in the measurement of labor costs may help explain the absence of a clearer empirical relationship between labor costs and prices. compensation per hour in the nonfarm business sector, a commonly used measure of labor cost, displays substantial volatility from quarter to quarter and year to year, is often revised significantly, and includes compensation that is largely unrelated to marginal costs β for example, exercises ( as opposed to grants ) of stock options. these and other problems carry through to the published estimates of labor's share in the nonfarm business sector β the proxy for real marginal cost that is typically used in empirical work. a second commonly used measure of aggregate hourly labor compensation, the employment cost index, has its own set of drawbacks as a measure of marginal cost. indeed, these two compensation measures not infrequently generate conflicting signals
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haruhiko kuroda : innovations in payments and fintech β the central bank β s perspective remarks by mr haruhiko kuroda, governor of the bank of japan, at the forum on payment and settlement systems, tokyo, 17 march 2016. * * * introduction it is a great pleasure to welcome you all today to our forum on payment and settlement systems. i. innovations in payments and fintech recent years have seen a number of developments in financial services, including in the area of payments. innovations that combine finance and new technology, called β fintech, β have become a particular focus of attention. it is clear that there are both supply - side and demand - side factors behind such developments. on the supply side, the advance in technological innovations related to information and communications is progressing. the processing power of computers continues to grow rapidly, and computers can analyze huge amounts of data β that is, β big data β β in a relatively short period of time. there has also been a rapid spread of forms of infrastructure such as the internet and mobile terminals, which are easily accessible to a wide range of people. in other countries β particularly in emerging or developing nations where existing financial services provided by banks have not penetrated sufficiently β new services such as mobile payments are generating large expectations in terms of β financial inclusion β β or the promotion of access to financial services. on the demand side, globalization of the economy continues to progress, and more and more transactions are being made across borders as well as time zones. new forms of economic activities have arisen both here and abroad β such as β e - commerce β and the β sharing economy β β while lifestyles have diversified. reflecting such developments, the needs for financial services are growing increasingly diverse and complex. for example, there is an emerging need for payment methods that are compatible with internet shopping on weekends or at midnight as well as low - value cross - border remittances. there is also a growing need to use forms of information associated with payments by utilizing loyalty cards. as i just pointed out, we can judge that there are factors on both the supply and demand sides which are affecting developments in fintech. if we consider that the financial business has strong characteristics as an β information industry, β then it is not surprising that developments in information technology have a large influence, especially in finance. for example, credit, investment, and risk management are based on the accumulation of a great deal of information and analysis in which new technology has
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in a global context. the recent rise takes place against the background of an increase in financial assets supported by middle - east petrodollars and a growing number of muslims seeking to have their assets managed under religious tenets. an equally important factor that propelled growth in islamic finance is recent advances in financial technologies, namely, structured finance. the islamic finance industry has been able to introduce a scheme of profit sharing instead of prohibited interest payments. this has led the way to the development of a range of financial products, including the islamic bond, or sukuk. islamic finance brings greater diversity the development of islamic finance brings diversity to financial markets and financial transactions. when market players with different sets of values enter a market, they increase the variety of financial transactions, which in turn promotes financial market development and creates business opportunities. at the same time, it has a positive effect on the real economy through more efficient resource allocation. against this backdrop, i have a keen interest in what kind of new financial services islamic finance will provide in the future. to date, islamic finance institutions have provided many products that replicate those of conventional finance while respecting islamic values, where interest, or riba, is prohibited. in other words, islamic financial institutions have successfully provided conventional intermediary functions by utilizing the latest financial technology. i look forward to seeing further developments which will enable islamic finance to carry out new functions that conventional financial instruments can not serve. such innovation will improve the allocation of resources, while operating in accordance with islamic values. there are of course a variety of conventional transactions, but basically, all are a combination of two factors, risk and return. islamic finance is expected to offer further possibilities to finance by adding a new dimension to risk and return, which is islamic values. an example would be the development of microfinance under a framework that places great importance on islamic values such as fairness and equality of social economy and business partnership. islamic finance that offers a broad range of products and services is also important from the perspective of financial market and financial system stability. in principle, in a time of stress, a market with diversified participants and transactions is robust compared to a market of homogeneous participants and limited types of transactions. since the asian currency crisis, asian countries have been striving to create diversity in the source of funds, including bonds, instead of relying heavily on banks. i believe that the growth of islamic finance will also contribute to resolving these problems. challenges ahead islamic finance is making impressive growth and is expected to
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status, many of those countries had immense space and flexibility to grow in an uninhibited environment. further, when the present day rich countries were growing, ( from per capita income of us dollars 1, 000 to us dollars 10, 000 ), they faced very few obstacles in the movement of capital and labour. they did not have to be overly concerned about human or labour rights. they were free to impose trade quotas and grant very visible and obvious subsidies to their local entrepreneurs and farmers. they were not subjected to stringent global standards for copyrights. they were not desperately worried about safeguarding the ozone layer or the environment. they did not have to make too much of a fuss about money laundering. they did not spend expensive professional time and money on compliance tests. they did not have to deal with 24 x 7 media reports. the list goes on. some even had ready access to the natural and human resources of other countries, which they ruled. but today, many low - income countries, despite their potential to grow are functioning in an β international environment β that is β controlling β almost all economic activities. accordingly, they are seriously constrained by these stringent benchmarks, however wonderful they may be, which from a rapid development point of view, poses serious and continuous challenges. for example, at a time when these countries are desperately attempting to break free from the poverty trap, the allocation of resources to them by way of aid inflows by wealthy nations have been reducing. in fact, the net official resource inflows to developing countries were negative in 2005 and projected to remain negative in the next few years as well. in the meantime, although the commonwealth group supported the doha declaration of wto and were moving towards the direction of freest possible flow of multilateral trade on terms fair and equitable to all, while taking account of the special requirements of developing countries, the current multilateral trade negotiations have not been moving in the right direction. hence, it is clear that not only are the present day poor nations struggling in the emerging, highly complex and controlled economic environment, they are also facing reduced resource transfers, and not being accorded special treatment they should be afforded in order to propel them out of poverty. some may however argue that the tremendous benefits of globalization has levelled the playing field and that advantages are available to any and all who care to access, and it is just unfortunate if some persons are unable to take advantage of these conditions. nevertheless, i
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believe we are all aware that weaker communities have lesser chances of access and that situation leads to widening even further, the ever - widening gap. therefore, it is timely and appropriate that this forum addresses the need to impress upon the more wealthy nations to increase aid flows, open out greater trading opportunities, and move towards higher investment and resource build - up in the lower income countries. lest i be misunderstood, let me add that, not for a moment am i suggesting that the progressive steps the world and the international community have taken over the past few decades in developing new standards and norms are in any way, inappropriate or unwelcome. those initiatives were certainly necessary and have been beneficial for the overall advancement of society. but, we must, at the same time, collectively address the ever growing constraints arising out of the inflexibilities and restrictions imposed in the transfer of capital, wealth, skills, knowledge and the imposition of new standards, which may consciously or unconsciously act as subtle barriers to poverty alleviation. your excellencies, honorable ministers, distinguished guests, in order for all of us to appreciate the fact that what i am saying is not something new, let me now quote a principle as set out in the singapore declaration, and affirmed in harare. β our aim is to achieve the freest possible flow of international trade on terms fair and equitable to all, taking into account the special requirements of the developing countries, and to encourage the flow of adequate resources, including governmental and private resources, to the developing countries, bearing in mind the importance of doing this in true spirit of partnership, and of establishing for this purpose in the developing countries, conditions which are conducive to sustained investment and growth β. while this principle enunciates a very laudable and noble philosophy the unfortunate reality may be that the plethora of what we may call β worthy restrictions β, ( albeit they may be for the greater good of mankind ), may be actually but unwittingly assisting to keep the same developing countries in a tighter trap of poverty. the powerful message that emerges from this situation is clear. the present lowincome countries, when they have to struggle in this unsympathetic environment, need more understanding ; greater allocations for funding and investment ; increased direct aid flows ; and tangible support and direct concessions to recognize satisfactory β compliance β. at this stage, i would like to acknowledge a step in the right direction that has been followed
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radovan jelasic : national bank of serbia β european integration challenges speech by mr radovan jelasic, governor of the national bank of serbia, at the promotion of the 4th issue of the regional magazine for eu integration and transition processes β european integration challenges β, belgrade, 13 may 2009. * * * ladies and gentlemen, allow me to welcome you on behalf of the national bank of serbia, and to extend my appreciation for the magazine β european integration challenges β whose very title points to the key challenges we shall be facing in the near future. today i would like to touch on three key issues : first, what does integration to the eu mean for the national bank from the point of view of concrete steps we have been taking so far ; second, what is an β expensive β credit in serbia versus europe, and finally, what measures has the nbs taken so far to lessen the effects of the crisis by drawing on the ample experience of eu countries. in drafting the law on the nbs, law on banks and many other legal regulations special attention is paid to their harmonization with eu regulations so as to create necessary preconditions for the integration of our country into the family of 27 eu member countries. to illustrate, we in serbia did not engage in long debates on why β maintaining price stability β should be the primary objective of the nbs instead of, for example, stability of the exchange rate which is so high on our everyday agenda and which, by the way, means β fixed rate β for many in serbia, or the maintenance of the stability in wages, gdp growth or some such other thing. the answer to this question is obvious enough. there is no alternative as that objective is stipulated by the acquis communautaire. the same applies to numerous other points of law relating to nbs operations which incorporate experiences gained in more advanced phases of development and which guarantees that our legislation will precede practice and enable us to learn from the experiences of others because many countries have been through these phases long before us. whether we shall actually join the eu does not depend on us, because adoption of the so called β european legislation β represents a necessary condition but in itself is not sufficient to guarantee our integration into the eu. allow me to illustrate this point by the following example : constitution of the republic of serbia and the law on the national bank of serbia do specify that the nbs is an independent institution. but here comes the main difference between theory
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radovan jelasic : global compact, social responsibility and global financial crisis speech by mr radovan jelasic, governor of the national bank of serbia, at the regional conference on social responsibility in the chamber of commerce of serbia, belgrade, 4 november 2008. * * * the overwhelming interconnectedness of modern economy on the global scale has been positively confirmed over the last several weeks when the whole world was shaken by turbulences in international capital markets. their effects are evident across all continents and the bout of instability which ensued has again brought to the fore issues like confidence, transparency in private sector operations, the role of the state, profits and bonus payments, as well as the responsibility to educate financial services consumers. i am addressing you here today not only as the governor of the national bank, but also as a representative and a participant in the un global compact, an important initiative launched in serbia with the support of the undp almost a year to date. as you are certainly aware, this initiative promotes socially responsible behaviour, a notion of mounting significance in turbulent times such as these, the role of which shall no doubt grow in future. today, i wish to discuss briefly the effects of the events on the world financial market on serbia and the role of social responsibility within that context. confidence in the financial sector is particularly significant in serbia in view of its turbulent political and economic history. decline in economic activity in developed countries has three main features : 1. in general, people in the west tend to save more, and they save with banks. in serbia, however, there is a saying β he who is bitten by a snake fears a lizard β and, unfortunately, the volume of savings in serbia declined in october. however, by withdrawing their savings deposits from bank accounts citizens manage only to multiply the negative effects coming from abroad, and everybody involved stands to loose : citizens lose out on interest earnings, those needing money get smaller and more expensive loans and the state gets less in tax revenues as gdp declines! 2. decline in economic growth in western countries induces decline in inflation due to weaker demand. but in serbia we have often had stagflation, which means minimum / negative economic growth at increased growth in inflation, primarily induced by insufficiently developed market mechanisms, i. e. monopolies and oligopolies. 3. western governments offer sizeable amounts of money, i. e. implement expansionary fiscal policy. but in serbia, we implement expansionary fiscal
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of non - performing loans, low profitability, and it and cyber security. for european supervisors, preserving the β tough but fair β character is to a large extent a matter of day - to - day supervisory practice. daniele will surely stress this point when she addresses you later. and there are external events such as brexit which demand our attention. i consider brexit to be manageable for banks, but it requires timely, thorough and comprehensive preparations. and because of the uncertainty it involves, supervisors have their own part to play in ensuring a smooth transition to a post - brexit era. it requires us to be responsive and pragmatic as well. therefore, i strongly welcome the commitment shown by ssm supervisors to cooperation and 1 / 6 bis central bankers'speeches open exchange. there is no need for me to go into detail on these subjects. as i mentioned just now, these are topics i very much imagine daniele will touch upon. instead, i wish to review the set - up of the european single supervisory mechanism and offer some ideas as to how it can be developed further. but for that purpose, i find it helpful to remind ourselves of the organisational principle of the ssm. it was not intended to be a single, hierarchical organisation, but rather a supervisory network. there are still many misperceptions on that matter. without doubt, the ecb has key competences regarding the ssm. the ecb assumes responsibility for the overall functioning of the project. and apart from directly supervising the large, β significant β credit institutions, it has also taken over various powers from the national competent authorities, the ncas β one such important power being licensing. but that does not make it a hierarchical undertaking. instead, different modes of cooperation were installed. for example, joint supervisory teams include personnel from ncas that now receive their instructions from the ecb, while inspectors from ncas continue to be directed by their employer. other nca staff again are on secondment at the ecb. the different modes of cooperation also become visible with respect to competences. ncas still have major tasks and competences beyond directly supervising the 3, 200 smaller, β less significant β institutions in the euro area. think of the roughly 1, 500 written procedures from last year : every single decision is approved by the supervisory board, which includes members from 19 ncas, thus boosting the transfer of knowledge from ncas to the ecb and ensuring that decisions
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goods and probably for some final goods as well. but futures markets anticipate that prices of crude oil will increase gradually, which suggests that, once the adjustment to the current level plays out, energy prices will no longer work to restrain total and core inflation. and if a portion of the weakness in goods prices reflects efforts by producers to forestall or correct inventory imbalances, that restraint on pricing will dissipate as firms'corrective actions take effect. so, despite the recent favorable price data, i believe it is still too early to relax our concerns about whether the run - up in price pressures in the spring and summer of last year is truly unwinding and whether it is unwinding rapidly enough to forestall a pickup in inflation expectations. even with the opening of some slack in the manufacturing sector and in homebuilding, labor markets generally seem to have stayed fairly tight, with the unemployment rate at only 4 - 1 / 2 percent. although recent data indicate that labor costs were not rising as rapidly in 2006 as first estimated, labor compensation does appear to have increased more quickly over 2006 than over 2005. last year's increase in compensation also appears to have outpaced overall consumer price inflation. that development in and of itself does not necessarily indicate an increase in inflationary pressures, especially if it represents a process in which real compensation begins to catch up with the rapid increases in labor productivity earlier this decade. what would be problematic would be a pickup in the growth of nominal hourly labor compensation that was passed through to prices over the next several quarters, or one that was not matched, over a sustained period, by a comparable pickup in the growth of productivity. eventually, the resulting faster growth of unit labor costs would pose a serious threat to price stability. core inflation is still higher than it was just a year ago, and, as i noted, some of the very recent decline may result from one - time changes in relative prices rather than an easing in underlying inflation pressures. a very gradual decline in the trend rate of inflation continues to be the most likely outcome, but that path is still by no means assured, and in my judgment such a decline remains critically important to the sustained prosperity of the u. s. economy. in sum, conditions appear to be in place for a good year for the u. s. economy, one marked by growth that is moderate and sustainable and by inflation that will be lower than last year's. the economy appears to be weathering the
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issue warnings where risks are deemed to be significant ; and issue recommendations for remedial action where appropriate. β thank you very much for your attention, i am now at your disposal for questions.
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isabel schnabel : pulling together - fiscal and monetary policies in a low interest rate environment speech by ms isabel schnabel, member of the executive board of the european central bank, at the interparliamentary conference on stability, economic coordination and governance in the european union, frankfurt am main, 12 october 2020. * * * the title of this morning β s session is intriguing in many ways : it speaks of a β new partnership β between monetary and fiscal policy and of the β requested β fiscal support. the title suggests that the environment in which monetary policy operates may have changed in recent years β even well before the outbreak of the pandemic β and that this may have altered the way monetary and fiscal policies interact to deliver stable prices and sustainable growth. and indeed, a few key numbers summarise how radically our world has changed. over the past two decades, the ecb β s main refinancing rate has declined from levels close to 5 % to 0 %. consumer price inflation averaged 2. 2 % from 1999 to the eve of the global financial crisis in august 2008, but only 1. 2 % since then, well below our inflation aim of β below, but close to, 2 % β. these developments raise important questions, especially as the same developments have occurred in many other advanced economies. many people are wondering why central banks, despite record low interest rates, have not been able to deliver inflation rates in line with their aim. a related question is what needs to be done to change this. in my remarks this morning, i will not be able to give definitive answers to these fundamental questions. a deep analysis of these and other issues will be the subject of our monetary policy strategy review that the ecb β s governing council has just resumed after the pandemic - induced pause. but what i would like to offer is a way of thinking about the origins and implications of the current low interest rate environment and how it affects the conduct of both fiscal and monetary policy. i will argue that it would be misleading to speak of a new β partnership β between fiscal and monetary policy. after all, partnership implies a degree of coordination that would be inconsistent with an independent central bank. but i will suggest that, in a low interest rate environment, there are strong complementarities between fiscal and monetary policy that can help lift the euro area economy out of the current low - growth, low - inflation trap. the need for novel monetary policy measures low interest
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. at the european level, it is necessary to complete the institutional architecture of the euro area, bringing the banking union to fruition and strengthening the fiscal framework. on a global scale, there are multiple challenges : the reinforcement of the regulation of non - banking intermediaries, the emergence of new risks ( cybersecurity ) and the creation or expansion of global and regional backstops. finally, the recent tensions in international trade and the recent proliferation of protectionist measures should serve as a reminder for us to defend the benefits of trade liberalisation as a means of strengthening growth in the economy and the reduction of poverty. this defence must be accompanied, on the one hand, by a reform of the rules of world trade so as to include more effective mechanisms to guarantee a more balanced playing field ; and, on the other, by domestic policies ( flexibility of the labour market, a sound social security network, and the creation of educational and training opportunities ) that adequately address the distributive problems that may stem from trade exchanges. it is also worth mentioning the promotion of trade openness in new sectors, mainly services, where the potential profit margin is significantly higher. without further ado, let me introduce the panelists. we are honoured to have with us today three very experienced representatives of the central bank community of the mediterranean region. 4 / 5 mr. abdellatif jouahri, governor of the bank al maghrib. mr. sadiq al - kabir, governor of the central bank of libya. mr. marc - olivier strauss - kahn, managing director and special adviser of the governor. they are very well suited to address the topics of this panel as they have a far - reaching knowledge of the economies of the region and long - dated experience as policymakers. governor jouahri, the floor is yours. 5 / 5
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policy, many advanced economies are still in a situation of zero lower bound. more generally, in most countries the room currently available to face a hypothetical recession is less than that existing at previous similar cyclical junctures. monetary policy also needs re - thinking, on the basis of more long - term challenges for the economy. the natural interest rate has been falling since at least the 1980s. population ageing, by increasing the relative supply of savings, explains most of the fall across several advanced economies. a low or even negative natural interest rate poses new challenges for stabilisation policies. the lower bound on the nominal policy interest rate may more frequently be binding, and not just in episodes of acute crisis. this leads to the conclusion 3 / 5 that non - conventional monetary measures may ultimately be used more frequently than originally expected. in addition, many emerging economies face the gradual tightening of global financial conditions in a context of slowdown in their economic activity. in particular, this context is especially challenging for the economies that receive capital flows. in these cases, economic authorities must foster a stable macroeconomic environment and sound institutions that attract permanent capital flows. the widespread scant room for manoeuvre for the traditional stabilisation tools we have witnessed calls for the development of other policies to relieve monetary policy of the excessive role it has played post - crisis in maintaining financial stability. one of the lessons of the crisis is the importance of including new instruments in the policy toolkit, namely macroprudential policy. therefore, it is essential to identify risks and vulnerabilities to the economy that may stem from the financial system affecting the real economy or vice versa. in any event, it is of paramount importance to develop the appropriate macroprudential instruments covering both bank and non - bank financial intermediation to tackle these risks in order to have a stable financial system with countercyclical buffers that support sustained economic growth. the favorable cyclical juncture at which a number of economies still find themselves is a propitious time for tackling structural reforms aimed at fomenting increase in potential growth. this is especially relevant in the case of advanced economies that have seen a significant decrease in productivity growth in recent years. we should not forget that in the downturn phase of the cycle the introduction of structural reforms is much more costly. the global financial crisis led to a regulatory wave aimed at achieving a more stable international financial system. much progress has been made in this area, but challenges still remain
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first commenced operations in colombo. today, the largest foreign bank operating in sri lanka has moved to jaffna bringing banking to the doorsteps of people in the northern province. this is indeed a historic milestone. this development did not happen by chance. it did not take place automatically. with the liberation of our entire nation in may last year, the government and the central bank have taken determined efforts to expand financial services, facilitate and stimulate economic activities, and develop infrastructure in the north and the east. in fact, i have personally participated at several bank branch openings during the last few months, and our officers have been following up the progress, and these outcomes are a result of such combined efforts. today, i can proudly say that an ever - growing number of financial institutions operate in the north and that these provide diverse financial services, whilst of course we would be the first to admit that a lot more needs to be done. my dear friends, the development and maintenance of essential public infrastructure is an important ingredient for sustained economic growth and poverty reduction. in particular, health, education, electricity, housing and efficient water and sanitation services help lay the groundwork for a productive and healthy population, capable of contributing to sustained economic growth. we all know that as a result of the long and bloody conflict, the infrastructure facilities in the north could not be developed as done in the other provinces. it is due to that fact that, with a view to fast tracking the development in the north, the government has now launched a well - planned, integrated, accelerated development program titled β vadakkin vasantham. β under this program, the government expects to invest approximately rs. 295 billion ( us $ 2. 7 billion ) during the next 3 years, towards rehabilitation and development activities. this program is expected to cover the rehabilitation of roads and other transportation infrastructure, the upgrading of electricity for domestic housing and industry, water supply, agriculture and irrigation infrastructure and the improvement of the manufacturing framework. the government also intends to implement a special poverty reduction program and establish the required social safety net, quickly. my dear friends, as we all know, the speedy resettlement of the internally displaced people has also been a top priority for the government. towards this goal, many extraordinary efforts have been taken. out of the over 300, 000 internally displaced persons who were rescued and had to be temporarily housed in welfare camps, over 217, 000 or 72 % have already been resettled. all those from vavuniya, mann
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. special emphasis was placed on the far - flung areas, in the northern and southern parts of the country, cognizant of the heavy use of cash in those regions. to identify any emerging concerns and facilitate their resolution, a robust feedback mechanism including some strategic surveys was also deployed. third, for the demonetization to be successful it was essential that existing measures on antimoney laundering ( aml ) and combatting financing of terrorism ( cft ) be applied fully. these measures ensured that illicit funds were filtered out, and not exchanged or enter the financial system. commercial banks, forex bureaus, and payment service providers ( psp ) have over the last few years strengthened their aml / cft screening, which proved a strong foundation for the demonetisation. additionally, reporting and monitoring was scaled up, with positive results β during this period cbk conducted 15 targeted inspections on financial institutions, and over 3, 000 suspicious transaction reports ( strs ) were reported for further investigation. fourth, a collaborative approach with other official entities was adopted to buttress the strategy. investigative agencies were brought on board to examine the available information for evidence of crimes. other central banks were also roped in to ensure that escape of counterfeiters and perpetrators of illicit funds through those jurisdictions was thwarted. this approach is akin to an army overwhelming the enemy by attacking on all flanks at once. as the sun set on demonetization on september 30, 2019, inflation, the exchange rate and other key macroeconomic indicators remained stable. there were no last minute panic queues outside banking halls β the awareness campaign had been effective and ordinary kenyans had exchanged their notes in good time. at midnight when the operation was concluded, old series ksh. 1, 000 notes valued at ksh. 7. 4 billion had not been exchanged and became worthless. demonetisation marks a single step in the fight against illicit finance and corruption more generally. sustained efforts are needed to deliver victory. the strong aml / cft filters that were applied will continue to be deployed. the information already gathered will also support further investigations by law enforcement agencies. but most importantly, we have created a launch pad for progress towards using less cash for transactions, as we increasingly embrace the readily available mobile and electronic channels. this will make it harder to launder ill - gotten funds, and for cash - based corruption to survive. the successful conclusion of demonetization is a testament to careful preparation by cbk and close
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, publications, criticisms and proposals coming from a variety of sources but sharing a common element : they are relevant and potentially useful in the formulation of present - day economic policies. the basic characteristics of public knowledge is that it is a free good, available not only to governments but to the society at large. in that respect, it is an important factor shaping attitudes, ideas and conceptions that can legitimize or reject economic policies. external expertise on the other hand refers to the total of skills and technical abilities that are available on demand. the supply of outside knowledge in greece, as in other european countries, the supply of outside knowledge and expertise comes from universities, individual academics, commercial banks, think - tanks and business associations. kepe, the centre of planning and economic research, may also be included bis central bankers β speeches in the list, although institutionally is part of public administration. all of them publish studies on topical issues, regular reports on the state of the economy, policy recommendations, forecasts and evaluations of current policies. the bank of greece is an independent institution with specific tasks and responsibilities, which include safeguarding financial stability and implementing monetary policy. it is therefore an indispensable part of the policy making apparatus and its technical expertise on these issues should be considered as internal to the formation and implementation of economic policy. the institutional importance of the bank of greece is clearly demonstrated by the fact that all memorandi of the crisis bear two signatures : that of the minister of finance, alongside with the governor β s of the bank of greece. in the same context, according to its mandate, the bank of greece should assist and support general economic policy on condition that the bank β s primary goal of safeguarding price stability is not jeopardized. it fulfils this role, acting as an outside source of knowledge on general economic policy issues. this is done mainly through its regular and extraordinary publications and / or public interventions including : β’ the governor β s annual report on the state of the economy ; β’ the biannual monetary policy report, submitted to the greek parliament and the cabinet ; β’ testimonies by the governor before the greek parliament ; β’ articles, speeches, statements and interviews of the governor ; β’ periodical publications ; β’ studies on economic policy relevant issues ; β’ press releases, which provide information and communicate the bank β s position on topical issues. all these activities communicate to the public the bank β s stance on economic issues, which is the outcome of
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would propel malaysia into becoming a vibrant, innovative and competitive international islamic financial services industry supported by high calibre human talent, world - class infrastructure and best international standards. building on what we have, we need to create a global brand to be promoted more aggressively in the global arena. this will be key to penetrate markets as well as to attract global players to our shores, henceforth enhancing the viability and sustainability of malaysia's islamic financial system. malaysia will embark on more strategic promotional and marketing efforts through greater collaboration and smart partnership. mifc will be our global brand. on this note, on behalf of the hosts and organisers, i would like to thank the distinguished panellists and moderators, media and the respected audience for making this forum a success, and i hereby declare the forum officially closed. thank you.
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sets out a number of activities to be pursued through july 2007 in ten key areas. these include efforts related to : free and fair elections, anti - corruption, anti - money laundering, procurement, the office of the auditorgeneral, civil service reform, decentralisation and the role of non - state actors ( notably the private sector and civil society ), the creation of a more conducive investment environment, implementation of the extractive industries transparency initiative and better public service delivery in health and education. the pact also commits the four budget support donors to further harmonisation around the government β s programme β. enforcement of the governance agenda is consequently exercised by the donor community through inclusion of governance requirements in the programmes of assistance agreed with the country ; establishing them as conditionalities and trigger requirements for release of funds ; providing technical assistance to ensure the performance of these elements of the programme, including provision of personnel in some cases. we may note in passing that action on all these requirements is in progress and the related programmes are in varying stages of implementation. civil society is also becoming increasingly important in trying to put pressure on government to deliver on governance issues. in the sierra leone context, special mention may be made of the campaign for good governance, the civil societies organisation, the 50 / 50 group, the lawyers centre for legal assistance ( lawcla ) and other bodies. a recently established chapter of the institute of directors pays particular attention to the improvement of corporate governance. the press has continued to wage a governance campaign, especially with respect to anti - corruption matters. some general remarks the governance debate is a difficult one, not least because of the imprecision of the concept and its multi - dimensionality. this opens room for a range of interpretations and the inclusion of diverse elements, rendering the basis of discussion somewhat fragile. there is also a measure of ambivalence regarding its practical application and suspicion in some case of the motives underlying the significance attached to it by the donor community. its link with poverty reduction is not uncontested, and questions also arise as to whether it is not really the washington consensus and structural adjustment in new clothing. in the african context, there is admission of mis - governance in many areas of state management. in particular, corruption and impunity in public administration, conduct of elections, financial management and judicial processes, are bemoaned on a wide scale. serious observers agree that there is a need to correct the institutional arrangements that create an avenue for some
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of four ( 4 ) commercial banks and others are in the process of joining. this development will go along way to enhance the payment system by facilitating customer payments for utilities and purchases using debit cards. licensing of the inter - bank switching system marks a significant step in bank of uganda β s efforts to widen the financial sector, which will result into the creation of a wider range of delivery channels to banks. as you are all aware continued efforts to improve efficiency and mitigate risks in the payment system resulted into the implementation of a number of initiatives including a real time gross settlement ( rtgs ) system known as uganda national inter - bank settlement ( unis ) in february 2005. as of now, about 80 % of large value and time critical payment transactions pass through the system leaving 20 % to pass through the traditional clearing system. likewise, to broaden the outlet and variety of institutions, which offer financial services, three new micro deposit taking institutions ( mdis ) were licensed in 2005 bringing the total number of licensed mdis to four. the significance of licensing mdis has far reaching impact on promoting the savings culture and thereby fostering the accumulation of funds for investment purposes. bank of uganda therefore encourages the council of the institute of bankers to initiate appropriate educational training programmes from which these new institutions can access information and expertise necessary for their future development. bank of uganda on its part will continue to promote the development of mdis through prudential regulation and supervision so that they conduct their businesses in a manner that ensures safety of depositors β funds. notwithstanding the above developments, the financial sector still continues to face new challenges in their operations including globalization, relatively high interest rates, frauds and forgeries and lately the energy crisis. with respect to globalization, this has resulted into a fast pace of technological advancements in products and systems deployed in the global markets. these technological advancements have dramatically diversified the risk profiles of financial institutions. to address this new development, bank of uganda has compelled all supervised financial institutions to institute credible risk management frameworks which can adequately identify, measure, monitor and control all risks inherent in financial institution business in a timely and ongoing manner. regarding the high interest rates charged on loans, although these have remained relatively stable in the last two years or so and while inflation has been maintained at single digits for over a decade, lending rates have continued to remain at high levels and at times as high as 26 % p. a in some banks. yet, the weighted interest rates on deposits continue to
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contribute to economic growth mission : to foster pn'ce stability and a sound financial system macroeconomic stability vision : to be a centre of excellence in upholding and development, it remains an emerging field in the financial system worldwide. i, therefore, urge all stakeholders to clearly understand islamic banking and finance model ; appreciate its unique tenets that distinguish it from conventional banking and at the same time acknowledge the similarities between the two ( 2 ) models. this will significantly contribute to the effective rollout and growth of the islamic banking sector in uganda. on its part, bank of uganda will continue to collaborate with all stakeholders and ensure that the requisite regulatory and supervisory structures for supporting the growth of islamic banking and finance in this country are robust and conducive for all investors. with those remarks, it is now my honour to declare the workshop on the fundamentals of islamic banking operations officially open. i wish you fruitful deliberations. i thank you. e. tumusiime - mutebile governor bank of uganda kampala mission : to f oster price stability and a sound financial s ystem macroeconomic stability vision : to be a centre of excellence in upholding
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been on the supply side of the credit market rather than on the demand side, with banks turning down loan applications because of concerns about borrower creditworthiness or the realisable value of loan collateral, given the saturated state of the property market. as you are all aware, the bank of uganda had to intervene in crane bank and take it into statutory management in november. the cause of crane bank β s distress was non performing loans, which had risen to more than 20 percent of its total loan portfolio and which left it significantly under capitalised. because it is a systemically important bank, we intend to resolve crane bank in a manner which preserves its core functions and services to customers. fortunately, all of the other commercial banks are meeting their capital adequacy requirements. one of the most important strengths of our banking system, and the key to its resilience, is the strong capital buffers which banks hold. in aggregate, the banking system holds total capital equivalent to 22. 5 percent of its risk weighted assets, which affords it with large buffers to absorb adverse shocks. this conclusion is also borne out by the macro stress tests which the bou carries out on a regular basis as part of its financial stability monitoring and which show that it is the large capital buffers held by banks which is the main source of their resilience to withstand adverse shocks. what are the causes of the rise in npls in the banking system? there are macroeconomic, sectoral and a variety of idiosyncratic factors which have contributed to the problems. on the macroeconomic front, the rise in interest rates in 2015, which was necessitated by inflationary pressures, combined with exchange rate volatility increased the stress on borrowers. at the sectoral level, there have been problems in the commercial real estate sector, where heavy investment in recent years has led to oversupply in the market with the result that occupancy rates have fallen and many owners have not been able to generate sufficient income to service their loans. mounting government arrears to suppliers and contractors has also contributed to npls while borrowers with business in south sudan have suffered losses because of the acute political and economic problems in that country. the idiosyncratic problems mainly pertain to failures among borrowers themselves, such as the diversion of borrowed funds from their intended uses. these factors are not mutually exclusive. for example, a poorly managed business will find it much more difficult to survive a sector
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ben s bernanke : remarks on the squam lake report β fixing the financial system speech by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the squam lake conference, new york, 16 june 2010. * * * the squam lake report β the centerpiece of this conference β is a valuable contribution to the ongoing analysis of the causes of the financial crisis and the appropriate policy responses. 1 i commend the organizers for bringing together an impressive group of scholars both to produce the report and to continue the discussion of these important policy issues at this meeting. i think we all agree on the key questions facing financial regulators : how do we strengthen the financial system and its oversight so as to minimize the risk of a replay of the recent financial crisis? and should a crisis occur, how can we limit its economic costs? the report identifies two core principles that should be among those that guide us in answering these questions. first, financial policymakers and supervisors must consider more than the safety and soundness of individual financial institutions, as important as that is ; they should also consider factors, including interactions of institutions and markets, that can affect the stability of the financial system as a whole. in the jargon of economists and regulators, supervisors need a macroprudential as well as a microprudential perspective. the second core principle put forth in the report is that the stakeholders in financial firms β including shareholders, managers, creditors, and counterparties β must bear the costs of excessive risk - taking or poor business decisions, not the public. the perception that some institutions are β too big to fail β β and its implication that, for those firms, profits are privatized but losses are socialized β must be ended. the federal reserve strongly agrees with both of these principles, and both have been important in shaping our views on regulatory reform. we also broadly agree with the narrative of the crisis offered in the report, which discusses, among other things, the role of subprime lending in the housing boom and bust ; the structural weaknesses in the shadow banking system, including insufficient transparency and investor overreliance on rating agencies ; inadequate risk management by many financial institutions ; and a flawed regulatory framework that allowed some large financial firms to escape strong consolidated supervision and gave no regulator the mandate or powers needed to effectively evaluate and respond to risks to the financial system as a whole. weaknesses in both the private sector and the public sector,
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in the framework for regulation, and in supervisory execution all contributed to the crisis. the crisis in turn led to a severe tightening of credit, a collapse in confidence, and a sharp global economic downturn. the squam lake recommendations what, then, is to be done? the squam lake report provides a substantial set of recommendations. among these are the adoption of a more systemic approach to the supervision and regulation of financial firms and markets ; enhanced capital and liquidity regulation for financial firms, particularly for systemically important institutions ; improved kenneth r. french, martin n. baily, john y. campbell, john h. cochrane, douglas w. diamond, darrell duffie, anil k kashyap, frederic s. mishkin, raghuram g. rajan, david s. scharfstein, robert j. shiller, hyun song shin, matthew j. slaughter, jeremy c. stein, and rene m. stulz ( forthcoming ), the squam lake report : fixing the financial system ( princeton, new jersey : princeton university press ). information collection by regulators and, where possible, the public release of such information ; development of a resolution regime that would allow the authorities to manage the failure of a systemically important financial firm in an orderly manner while imposing losses on shareholders and creditors ; and significant strengthening of the financial infrastructure, particularly for derivatives contracts. the federal reserve has supported legislative changes in all of these areas, and, where possible under current law, has initiated changes along these lines within its own operations. in the remainder of my remarks i will elaborate briefly on these recommendations, with particular attention to how they are currently helping shape regulatory reform and the fed β s own regulatory and supervisory activities. the systemic approach to supervision the report correctly notes that most financial regulatory systems throughout the world are designed primarily to ensure the soundness of individual institutions. while this is an important mission, we agree with the authors of the report that it is not sufficient. the failure of large, complex, and interconnected financial firms can disrupt the broader financial system and the overall economy, and such firms should be regulated with that fact in mind. likewise, the costs of the failure of critical financial infrastructures, such as payments and settlements systems, are likely to be much greater and more widely felt than the costs imposed directly on the owners of and participants in those systems. regulatory agencies must thus supervise financial institutions and critical infrastructures with an eye toward overall financial stability
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christian noyer : challenges and outlook for the global economy 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 press conference, saint - denis, reunion, 14 november 2011. * * * secretary general of the prefecture, elected representatives, consul general of china, representatives of civil and military authorities, ladies and gentlemen, it is a great pleasure to be here today. and not only because it is 20 degrees warmer than paris at the moment, or because i spent the weekend enraptured by the beauty of your island and the friendliness of its people. i am particularly pleased to be here today because it is extremely important for me to have the opportunity to talk directly to local economic players throughout the french territory, listen to their views and explain our actions. above all, in these complex times, such exchanges are tremendously valuable. i would especially like to extend my regards and thanks to the mayor of saint - denis for receiving us in this beautiful venue. i will start by rapidly recalling the crisis to date and the solutions that have been implemented. in the past months we have witnessed a succession of serious and complex events. it is therefore logical that feelings of confusion and uncertainty have developed in society. i will thus attempt to provide some useful insights into the situation that we are currently facing. i would be delighted to listen to your comments or reply to your questions afterwards. * * * the crisis : where do we stand? epicentre no. 1 : the united states between 2006 and 2008 in order to fully understand the current crisis, it is important to realise that it is in fact a new episode of the acute crisis that has been with us since 2006. why 2006? because it was the year in which the us property market started to fall after several years of continued, strong growth. it is perhaps hard to imagine but the turnaround in this market and the problems we are currently experiencing are closely linked. indeed, this downturn greatly affected many low - income households in the united states, who had taken out residential adjustable - rate mortgage loans ( the famous subprime loans ). when the value of their property plummeted, monthly repayments rose sharply, meaning that households were unable to repay their mortgages. this generated losses, albeit very limited at the outset. but how did these limited losses cause the most serious financial crisis since 1929? in fact, subprime loans were packaged into
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particular because government bonds provide a floor to the private - sector funding costs. this is the reason why we launched the smp. bis central bankers β speeches i insist that, through the implementation of all its non - conventional measures β including the smp β the eurosystem has fully played its expected role as a lender of last resort ( llr ), by which i mean that we have and we will intervene to stem liquidity crises that threaten the stability of the banking system. having said that, it is clear that engaging in large - scale asset purchases of sovereign bonds is well beyond what should be expected of a central bank β s role as a llr. moreover, largescale asset purchases are not without risks. while they may help to alleviate upward pressures on long - term interest rates in the short run, they could also affect price and financial stability in the medium - run, by endangering the value of the central - bank money. such risks do not necessarily materialize, but when they do, the repercussions are dramatic. altogether, considering the different tools are potentially at the disposal of policy - makers, it is crucial to gauge the short - to long - run benefits, limits and risks associated with each of them. i do not think that confidence would really benefit from measures that are known to carry non - negligible long - run risks, even if some short - term relief is expected from them. as a way of conclusion, let me shortly consider the progress that has already been made to solve this crisis and list some of the remaining challenges ahead. first, it seems important to welcome the significance of the fiscal stabilization programs many euro - area governments have committed to. as mentioned earlier, this is a necessary step to restore confidence in a sustainable way. although this is a difficult task, the timely delivery of the promised reforms is necessary. second, beyond individual policy actions, the recent progress obtained in the design of a common fiscal governance in the euro area is of the essence. indeed, many important decisions have been taken in that direction : the creation of the efsf and the esm or the agreement on fiscal rules and surveillance mechanisms during the brussels eu summit on december the 8th and 9th are historical steps in the right direction. obviously, most of these newly established institutions, rules and processes would have been unthinkable four years ago. this makes me really optimistic about our prospects for restoring stability and growth in the euro area. thus,
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