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zeti akhtar aziz : reflections on small and medium sized enterprises keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the 7th conference of asia - pacific economic cooperation ( apec ) financial institutions dealing with smes, lanai kijang, 16 july 2010. * * * introduction this conference takes place at a time of great consequence for the financial industry as the world emerges from the recent global financial and economic crisis. attention continues to be focused on supporting this recovery process and to provide more permanent solutions that would ensure sustainable global growth. in relation to this, the development of small and medium sized enterprises ( smes ) is an important and urgent agenda. for emerging economies, in particular in the apec region, this is not only important as a driver of the economic growth process but also that it would achieve a more balanced growth. it is my pleasure to be here this morning to speak at this 7th conference of apec financial institutions dealing with smes, that is organised by the association of banks in malaysia. history has shown that in the 20th century, it was large corporations that drove economic progress ; particularly in the industrial economies. in this century, there is a discernible shift towards the increased importance of smes as drivers of growth. the growing importance of domestic demand and the emergence of new sources of growth and new business models have encouraged the emergence of small and medium size businesses. this trend is particularly pronounced in the apec economies in which the economic activities are now more diversified β with the growing importance of the services sector, with the agricultural sector becoming more advanced and the industrial sector being supported by a supply chain of small and medium scale businesses. in the apec region, smes account for 90 % of the total business establishments and 60 % of total employment. in malaysia, smes constitute 99 % of all businesses and 57 % of total employment. in terms of output, the sme sector in malaysia accounts for 35 % of gross domestic product and 20 % of total exports. the smes have the advantage of having greater flexibility and the ability to adjust more quickly to changes in the market. the smes also have the potential to meet the new challenges to raise productivity and performance. there is therefore enormous potential for smes to create significant positive value for the economy, and thus contribute towards sustainable and balanced economic growth, employment and social stability. this morning allow me to take this opportunity to share with you some reflections on sm
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would actually choose to bail out debt holders in the event of a failure. bis central bankers β speeches form, existing and planned liquidity requirements produced by the basel committee aim mostly to encourage maturity - matched books. while maturity mismatch by core intermediaries is a key financial stability risk in wholesale funding markets, it is not the only one. even if an intermediary β s book of securities financing transactions is perfectly matched, a reduction in its access to funding can force the firm to engage in asset fire sales or to abruptly withdraw credit from customers. the intermediary β s customers are likely to be highly leveraged and maturity transforming financial firms as well, and, therefore, may then have to engage in fire sales themselves. the direct and indirect contagion risks are high. thus, the long - term and short - term liquidity ratios might be refashioned so as to address directly the risks of large sft books. similarly, existing bank and broker - dealer risk - based capital rules do not reflect fully the financial stability risks associated with sfts. accordingly, higher, generally applicable capital charge applied to sfts might be a useful piece of a complementary set of macroprudential measures, though an indirect measure like a capital charge might have to be quite large to create adequate incentive to temper the use of short - term wholesale funding. by definition, both liquidity and capital requirements would be limited to banking entities already within the perimeter of prudential regulation. the obvious questions are whether these firms at present occupy enough of the wholesale funding markets that standards applicable only to them would be reasonably effective in addressing systemic risk and, even if that question is answered affirmatively, whether the imposition of such standards would soon lead to significant arbitrage through increased participation by those outside the regulatory circle. in part for these reasons, a second possibility that has received considerable attention is a universal minimum margining requirement applicable directly to sfts. the financial stability board has already issued a consultative paper, and received public comment, on the idea. under such a regime, all repo lenders, for example, could be required to take a minimum amount of over - collateralization as determined by regulators ( the amount varying with the nature of the securities collateral ), regardless of whether the repo lender or repo borrower were otherwise prudentially regulated. this kind of requirement could be an effective tool to limit procyclicality in securities financing and, thereby, to
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brian wynter : quarterly monetary policy report β latest economic developments in jamaica remarks by mr brian wynter, governor of the bank of jamaica, at the press briefing for the june 2013 quarterly monetary policy report, kingston, 21 august 2013. * * * good morning ladies and gentlemen : in presenting today β s release of the quarterly monetary policy report for the june 2013 quarter i will take the opportunity to share with you the outturn for the quantitative performance criteria which were agreed under the programme with the international monetary fund ( imf ). i will then highlight the bank β s policy actions over the review quarter and some of the main economic developments which had an impact on these decisions. i will also share the bank β s perspective on the near term outlook for some of the main economic variables. also, this quarter β s report includes two special articles : the evolution of jamaica dollar liquidity and its impact on money market interest rates β january to june 2013 and recent developments in remittance inflows, both of which should be of interest. performance under the imf extended fund facility ( eff ) β june 2013 quarter the monetary targets under the eff for end - june 2013 were comfortably met. in particular, the net international reserves ( nir ) amounted to us $ 1003. 2 million relative to the target of us $ 873. 9 million. the target for net domestic assets ( nda ) was also met. information from the ministry of finance indicates that we also met the fiscal and debt targets. in addition, the structural benchmarks due to be achieved during the period were met. against this background, a team from the imf is presently in jamaica conducting the first review of the country β s performance under the extended fund facility ( eff ). their review will inform consideration by the imf executive board in september. approval of the review by the executive board will facilitate the next drawdown from the imf. this will also serve to provide reassurance to other multilateral partners and the financial markets about the government β s commitment to the reforms that are necessary to improve the country β s competitiveness and growth. economic developments in the june 2013 quarter monetary and foreign exchange policy turning to economic developments during the june 2013 quarter, the bank maintained its monetary policy rate at 5. 75 per cent during the june quarter. the monetary policy rate is the interest rate paid by the bank on 30 - day certificates of deposit ( cds ). this policy stance reflected the context
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cent, exhibited this muting effect. despite the significantly lower than expected outturn of inflation for the first four months of the fiscal year, the bank is maintaining the fy2013 / 14 forecast for inflation to be in the range of 8. 5 per cent to 10. 5 per cent. domestic prices are expected to reflect the impact of higher international commodity prices, particularly crude oil, and the pass - through of the depreciation in the exchange rate. additionally, seasonal increases in the prices of domestic agricultural produce are expected to contribute to inflation for the period. however, although the muting effect may well continue, a cautious assessment of the near term risks suggests that inflation may also end up close to the upper bound of the forecast range for the quarter and the fiscal year. these risks largely relate to the administrative adjustments to transportation costs ( which were recently announced ) and, possibly, adjustments to utility costs as well as higher than expected crude oil prices. adverse weather, in the context of a forecast for an above average hurricane season, also remains an upside risk to the forecast. the existence of weaker than anticipated domestic demand conditions continues to be the main downside risk. real gdp growth real gdp is estimated to have contracted in the june quarter, albeit at a slower rate than in the previous quarter. both the tradable and non - tradable sectors are estimated to have declined in the quarter. the contraction reflected the impact of drought conditions, continued weak domestic demand as well as the slow recovery in the global economy which contributed to lower remittance inflows and low demand for jamaica β s goods and services. agriculture, forestry & fishing ; hotels & restaurants and electricity & water supplies were estimated to be the main industries which recorded declines. looking ahead, the bank is projecting that real sector activities will improve in the remaining quarters of the fiscal year. this forecast largely reflects an expected recovery relative to the outturn for the corresponding period of fy2012 / 13 when the performance of the economy was negatively affected by hurricane sandy which was followed by drought conditions and a high level of investor uncertainty related to perceived delays in concluding an agreement with the imf. therefore, the projection for real gdp growth is predicated on improved investor confidence, continued expansion in the global economy and more robust growth in credit to the private sector given the release of resources as a result of reduction in demand from the public sector. against this background, real gdp growth for the september quarter as well as fy20
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are also quite stark ( graph 1 ). most notably, there has been a marked increase in the share of deposit funding. over the past three years, banks'deposit funding has grown by about 15 per cent per annum. as a result, deposits have also increased by about 9 percentage points as a share of overall funding liabilities. there has been strong growth in deposit growth from households as well as businesses. the former reflects the increased saving rate of the household sector, much of which has flowed to the banking sector. the latter partly reflects the strong growth in bis central bankers β speeches corporate profits, particularly in the resources sector. 7 while growth in business deposits has been considerably faster over the past 12 months, household deposit growth has still been a very robust 9 per cent. through late 2009 and early 2010, the strength of growth in deposits reflected, in part, the intense competition amongst the banks for deposits. 8 this saw the yield on deposits rise markedly as the reserve bank has documented in its regular output over the past few years. but that competition appears to have levelled off in recent months, yet deposit growth has still continued at a robust pace. i would characterise the recent growth as being more an endogenous counterpart to the change in the growth and funding composition of the economy as a whole. one might expect that robust endogenous deposit growth to continue for some time yet. graph 1 there has also been a significant drop in the share of short - term wholesale funding, reflecting regulatory and market pressures. the share of long - term wholesale funding has correspondingly risen, as banks have sought to term out the maturity of their liabilities. one noteworthy development that has generally escaped attention is that banks have raised less of this wholesale funding from offshore than has matured over the three of the past four quarters. that is, in net terms, the banks have been repaying their foreign liabilities. the australian banks'use of offshore funding sources was particularly visible through 2009. they were a relatively large share of global bank debt - funding in that year, but that as much reflected the decrease in the number of highly rated institutions, as well as a lack of borrowing by other banks around the world through that period, as it did a pick - up in borrowing by the australian banks. ( that is, it was as much a function of the denominator shrinking as the numerator growing. ) the australian banks are a much smaller share of the debelle g ( 2011 ),
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remains for the economy to grow strongly over the next few years. the quarterly gdp outcomes in the near term are, however, going to be materially affected by the recent extreme weather events. these events significantly disrupted production in both the december and march quarters, especially in the coal industry. the bank β s current estimate β which remains subject to significant qualifications β is that total output in the march quarter will be around 1 per cent lower than it otherwise would have been. given this mainly arises from a disruption to production, the decline in spending is likely to be somewhat smaller than 1 per cent. following the march quarter, we expect a strong rebound in output, as coal production recovers its fall and the rebuilding effort gets underway. over 2011, our current forecast is for the economy to grow by around 4ΒΌ per cent. this is higher than we were expecting three months ago, although this upward revision just reflects a lower starting point because of the decline in coal production in december 2010. beyond the current year, our central scenario remains for the economy to grow in the 3ΒΎ β 4 per cent range. the recent extreme weather events will also have a noticeable effect on the near - term outcomes for inflation. since the smp was released we have been able to make a preliminary assessment of the likely effects of cyclone yasi, primarily on banana and other fruit and vegetable prices. the bank now expects cpi inflation to be around 3 per cent over the year to june 2011, with the combined effect of floods and the cyclone likely to contribute bis central bankers β speeches around Β½ percentage point to this outcome. this forecast represents an upward revision to the one published in the smp, largely because of the expected increase in banana prices. of course, with the price of bananas expected to fall back to more normal levels later in the year as production recovers, there is a period during 2012 when the year - ended inflation outcomes can be expected to be lower than at the time of the smp. looking through these weather - related effects, inflation is expected to gradually increase over the next couple of years to around 3 per cent in late 2012. finally, as always, these forecasts are subject to a number of uncertainties. as is the bank β s usual practice, we will continue to examine the ongoing flow of data on the global economy, domestic activity and prices and assess whether the outcomes remain consistent with our broad outlook. as i said at the outset, developments in global commodity markets and the attitudes of australian consumers
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swaminathan j : msmes - bridging the credit gap through improving confidence in lending speech by mr swaminathan j, deputy governor of the reserve bank of india, at the ceo forum of the federation of telangana chambers of commerce and industry, hyderabad, 16 november 2024. * * * shri suresh kumar singhal, president ftcci, shri r ravi kumar, senior vice president ftcci shri k k maheshwari, vice president, ftcci, mr. meela jayadev, convenor, ftcci ceo forum, chief executive officers gathered here today, ladies and gentlemen. a very good evening to you all. i am delighted to speak to you today on a topic that has always been close to my heartthe critical role of msmes and the importance of building confidence in lending to this vital sector. over the years, i have had the opportunity to work closely with msme units, witnessing both their potential and their struggles. in the early days of my career, as a young officer posted in the bustling peenya industrial area, i saw firsthand the energy and resilience that defined msmes, as well as the unique challenges they faced. later, mid - career, my experience deepened while working in the mid corporates group of sbi, where i further understood how access to timely and adequate credit could transform these businesses. these experiences have made me keenly aware of the importance of bridging the credit gap for msmes - a task that demands not only innovative solutions but also a firm commitment to fostering confidence among lenders and borrowers alike. as you are all aware, the msme sector plays a vital role in our economy, driving entrepreneurship and creating substantial employment opportunities. these enterprises serve as essential support units for larger industries and contribute significantly to the secondary and tertiary sectors. with approximately 6. 3 crore units1, msmes contribute nearly a third of india's nominal gdp and account for over 40 per cent of the country's exports2. more importantly, they play a crucial role in employment, generating over 22 crore jobs3 and holding immense potential to harness india's demographic dividend. thus, the msme sector not only powers economic growth but also uplifts the poor, providing livelihoods and fostering inclusive development across the nation. despite the critical role of the msme sector in the indian economy, a common grouse that we hear from this segment is that they find it difficult to secure timely and
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##erabilities to asset prices, which move very sharply in times of market turbulence. balance sheet adjustments played a critical role in the impairment of financial systems in developed economies, by sharply reducing their capacity to provide finance. in turn, this probably contributed to both the magnitude and persistence of the slowdown in growth. by contrast, while emes were hit by liquidity constraints, which i referred to earlier in the indian context, the stability of balance sheets as a result of a more β traditional β structure helped to preserve the systems β capacity to provide finance. liquidity infusions quickly transmitted through to businesses and helped prevent the escalation from liquidity to solvency problems. the second structural factor in the indian context, in my view, is the capital account management framework. before the crisis, capital controls were generally seen as a hindrance to smooth global integration and a source of inefficiency. the perspective has changed somewhat, with an emerging view that some kinds of capital controls may provide temporary relief from the instability being transmitted from global shocks through high volatility in capital flows. this is still an evolving global debate, but the indian experience perhaps makes some contributions to it. broadly speaking, the indian approach to capital controls is based on a preference ordering. there are virtually no limits on foreign direct investment, apart from some sector - specific restrictions, which are not directly motivated by macroeconomic considerations. this channel is seen as being growth and productivity enhancing. there are virtually no limits on foreign portfolio investment into equities. in this channel, both market risks and exchange rate risks are fully borne by the foreign investor. however, there are limits on debt flows. these are the least preferred, essentially because the domestic borrower is obliged to repay and bears the exchange rate risk. within this category, long - term debt is preferred to short - term debt. external debt obligations can put enormous strain on the capital account if they are redeemed in the face of a global shock. putting some kind of limits on them reduces the vulnerability of the economy to this strain. looking back over the crisis period, when outflows from equity investments were so large, it is easy to imagine that the pressure and the consequent impact on domestic markets would have been far more intense if debt obligations were also being redeemed at the same time. i would describe the restrictions on debt inflows with respect to quantum, tenure and pricing which are currently in place as β strategic β in nature.
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, only marginally up from the previous month. the annual growth in broad money β as measured by m3 β rose to 1. 6 per cent in may, from 1. 3 per cent in april. conclusion the governing council today decided to keep the three key ecb interest rates unchanged. we are determined to ensure that inflation returns to our two per cent medium - term target in a timely manner. we will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim. we will continue to follow a datadependent and meeting - by - meeting approach to determining the appropriate level and duration of restriction. in particular, our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. we are not pre - committing to a particular rate path. in any case, we stand ready to adjust all of our instruments within our mandate to ensure that inflation returns to our medium - term target and to preserve the smooth functioning of monetary policy transmission. we are now ready to take your questions. 3 / 3 bis - central bankers'speeches
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##uate around current levels for the rest of the year, partly owing to energy - related base effects. it is then expected to decline towards our target over the second half of next year, owing to weaker growth in labour costs, the effects of our restrictive monetary policy and the fading impact of the past inflation surge. measures of longer - term inflation expectations have remained broadly stable, with most standing at around 2 per cent. risk assessment the risks to economic growth are tilted to the downside. a weaker world economy or an escalation in trade tensions between major economies would weigh on euro area growth. russia's unjustified war against ukraine and the tragic conflict in the middle east are major sources of geopolitical risk. this may result in firms and households becoming less confident about the future and global trade being disrupted. growth 2 / 3 bis - central bankers'speeches could also be lower if the effects of monetary policy turn out stronger than expected. growth could be higher if inflation comes down more quickly than expected and rising confidence and real incomes mean that spending increases by more than anticipated, or if the world economy grows more strongly than expected. inflation could turn out higher than anticipated if wages or profits increase by more than expected. upside risks to inflation also stem from the heightened geopolitical tensions, which could push energy prices and freight costs higher in the near term and disrupt global trade. moreover, extreme weather events, and the unfolding climate crisis more broadly, could drive up food prices. by contrast, inflation may surprise on the downside if monetary policy dampens demand more than expected, or if the economic environment in the rest of the world worsens unexpectedly. financial and monetary conditions the policy rate cut in june has been transmitted smoothly to money market interest rates, while broader financial conditions have been somewhat volatile. financing costs remain restrictive as our previous policy rate increases continue to work their way through the transmission chain. the average interest rate on new loans to firms edged down to 5. 1 per cent in may, while mortgage rates remained unchanged at 3. 8 per cent. credit standards for loans remain tight. according to our latest bank lending survey, standards for lending to firms tightened slightly in the second quarter, while standards for mortgages eased moderately. firms'demand for loans fell slightly, while households'demand for mortgages rose for the first time since early 2022. overall, credit dynamics remain weak. bank lending to firms and households grew at an annual rate of 0. 3 per cent in may
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roger w ferguson, jr : globalisation - evidence and policy implications remarks by mr roger w ferguson, jr, vice - chairman of the board of governors of the us federal reserve system, to the association for financial professionals global corporate treasurers forum, san francisco, california, ( via videoconference ), 12 may 2005. * * * thank you for inviting me to address the association for financial professionals global corporate treasurers forum. given that this is a global forum, i have chosen economic and financial globalization as my topic today. proponents of globalization cite a wider array of goods and services available for consumers, greater market competition and lower prices, new financial instruments for savers, possibilities for greater and more - productive investments, and strengthened market discipline of government policies. all of these benefits could translate into faster economic growth and higher real incomes for most people. opponents point to lost manufacturing jobs in advanced economies and financial crises in emerging - market nations. some have argued that it is better to put sand in the wheels of the world economic and financial system to prevent such apparently undesirable and unstable outcomes. notwithstanding these concerns, i believe that globalization is, on balance, a positive development for the world economy. perhaps more to the point, i think that globalization is here to stay and that further globalization is inevitable. today, i want to review where we are in the process of globalizing product markets and the factors of production - capital and labor. i also want to speculate about some implications of globalization for policymakers. as always, my views are not necessarily shared by my colleagues in the federal reserve system. globalization of financial markets let me begin with capital or financial markets. as financial professionals, most of you have probably experienced changes in your professional lives arising from financial globalization. besides such experiences, statistics, too, imply big changes. for example, cross - border investments are far larger now than they were twenty years ago. from 1984 to 2003, u. s. investment holdings abroad more than tripled after controlling for inflation, while real u. s. gross domestic product did not quite double. foreign investments in the u. s. rose proportionately much more, by almost a factor of six. 1 because of increased market turnover, cross - border transactions have grown even faster than cross - border holdings. in 2002, the gross value of cross - border equity trades was 80 percent of worldwide equity market capitalization, whereas in 1989 cross - border trades equaled only 18 percent of a much smaller
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the core activity of the financial industry. a point was reached where the main role of the financial system was no longer to hedge existing economic risks and assist trade within and between countries, but increasingly to create and propagate new risks. to be clear, i do not deny that financial liberalisation and financial innovation over the past two decades have made important contributions to the overall productivity of our economies. for example, the securitisation of assets β the transformation of bilateral loans into tradable credit instruments β had tremendous potential for the diversification and efficient management of economic risk. but securitisation also meant that banks and non - banks were able to sell loans β or place them off - balance sheet β immediately after they had been extended. this weakened lenders β incentives to conduct prudent screening and constant monitoring. the resulting decline in underwriting standards and lending oversight fuelled excessive credit growth starting in the second half of the 1990s. at the same time, it created the conditions for its reversal. the credit boom was exacerbated by three multipliers. first, incentives : ill - designed compensation schemes for loan managers and traders reinforced the shortening of their time horizons. second, complexity : increasingly complicated and opaque financial instruments made it difficult for holders of securities to assess the quality of the underlying investments. and third, global macroeconomic imbalances : a chronic shortage of savings in some industrialised economies was made possible by an excess of savings in other parts of the world, a multiplier that was exacerbated during the years immediately preceding the crisis by the sharply rising prices of oil and other commodities. from financial turmoil to financial panic in mid - 2007, suddenly though not unexpectedly, the interactions of perverse incentives, excessive complexity and global imbalances threw the credit boom into reverse. the asset cycle turned, and many of the missing links in the financial chain were exposed. investors suddenly lost confidence. after years of high profits and exceptional risk tolerance, markets became extremely discriminating about financial risk. funding costs for borrowers increased. the spreads on the debt of financial institutions β seen as being clogged with assets of dubious value β widened considerably. uncertainty about the extent of credit write - offs and the future earnings capacity of financial institutions took a heavy toll on the valuation of many revered names. the collapse in mid - september last year of a major financial player, which was directly involved in about 30 large payment and settlement systems worldwide and disposed of a
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- 2016. html from 2014 report by citifx, available at : https : / / www. ecb. europa. eu / paym / groups / pdf / fxcg / 2301 / retail _ fx. pdf? 8b9766f1bbf56797757c4c2cb391f305 https : / / www. gov. uk / government / publications / women - in - finance - charter all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx culture change takes time and sustained commitment from leaders. but these initiatives, coupled with the profound technological and economic changes that i have been discussing, will leave the fx market of 5 - 10 years β time in a very different place to where it was in the pre - crisis era. there has never been a better time to get involved. what is the bank of england doing? just as diversity is essential to the continued success of the fx market, it is also fundamental to the delivery of the bank β s public mission : promoting the good of the people of the united kingdom by maintaining monetary and financial stability. as a public institution, we must aim to reflect the diversity of the public we serve. and the wide range of policy challenges we face in the years ahead means we need those business advantages of diversity just as much as you. choosing the best talent, wherever it comes from, with the broadest set of problem - solving skills, and the greatest capacity to engage in constructive challenge and creative thinking, helping to avoid groupthink and bias, and hence deliver the best possible public policy decision making. promoting diversity and inclusion is therefore a top strategic priority for us, as the governor recently set out in his remarks to the women in banking and finance annual awards. 18 we have signed the women in finance charter and introduced a career returners programme in partnership with women returners. we have set stretching diversity targets, aiming for at least a 35 % female senior management by 2020, and 50 % female representation below senior management. our bame targets are to increase representation in senior management to 13 % by 2022, and 20 % below senior management by 2020. and we have a comprehensive internal inclusion strategy bringing together our initiatives on diversity, wellbeing and community with the goal of building an inclusive culture where colleagues can provide their best work. as part of this, i and my fellow executive
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geographically dispersed, efficient and technologically advanced financial markets in the world. it touches every economy and financial system. and it β s changing fast, with new products and players appearing every day, drawing in some of the smartest people, working to develop better ways to meet customers β needs. the culture and working patterns are changing too β not just because there is a moral imperative to do so, but because it makes hard business sense. diversity is not an option in fx β it β s an imperative. and actually that β s what gives me greatest optimism that we will succeed β because if i had to choose one market to epitomise that hard - edged business instinct, it would be foreign exchange, where ultimately good ideas thrive and objective results speak louder than anything else. so to all of you interested in a career in the fx markets, i say : come and get involved. it β s exciting, important and changing fast. the things that might have put you off in the past are being dismantled β and what β s left is a vibrant and vitally important market where you can really make a difference, both in shaping the future, and in supporting the vital underlying economic activity that relies on it. we need your talent and your skills to help drive change further. i look forward to meeting many of you later, and to hearing from some of the great role models speaking in the later panels. thank you. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx
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probably in a position to share skills with others rather than require assistance. nonetheless, the point remains that emerging markets themselves need to formulate their opinions effectively and to be listened to by the key committees. formulating an opinion requires both technical skills and organisation. the uk has been active in strengthening the regulatory skill set in emerging markets. as a major contributor to the financial sector reform and strengthening ( first ) initiative β a us $ 53m multi - donor capacity building programme for financial sectors in developing countries β we believe that resources must be both forthcoming and targeted appropriately. such targeting requires co - ordination between donors and must be in response to the real needs of a country. to this end we see it as imperative that there is effective follow up to the imf β s fsap missions to channel technical assistance to where it is most needed. it is also important for individual regulators in developed markets to contribute to capacity development elsewhere. the growing interconnectedness of the financial system means it is in our interests to do so. sometimes bilateral links can be valuable, especially where the legal and regulatory systems are similar, in former colonies or territories perhaps. at the fsa we have a practice of receiving secondments from other regulators, which is valuable for us, and we hope for them. perhaps more relevant for singapore is ensuring that emerging markets β concerns and experiences are heard. a thousand different voices can be lost in the clamour so it is important that objections are raised in an organised way, for example through regional organisations. then the international committees themselves must ensure their consultation processes are meaningful and wide - ranging. though this combination of adjusting committee structures, and membership, enhancing technical assistance and encouraging effective consultation we can ensure that regulatory standards are truly global and fit for purpose in countries at all stages of financial market development. conclusion so to return, finally, to my introductory question β is the global regulatory system fit for purpose in the 21st century? β it would be impossible, i think, to respond with a categorical β yes β. there are a number of enhancements which need to be made. in each case there are signs of progress. but there will be a continuing need to push and prod, if we are to overcome the forces of inertia built into the existing cumbersome system. the new chairman of the financial stability forum will find a sizeable agenda of work in his in - tray.
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europe ( for example, denmark, germany and the united kingdom ), the authorities had intervened precisely to avoid the collapse of banks that were in difficulty ( bear sterns, northern rock, ikb and roskilde ). in the light of this assessment, it is legitimate to ask why the failure of lehman brothers was not prevented. various theories have been put forward in this regard. the one i find most credible is that there was a political veto, at the highest levels, against the use of public funds to rescue an investment bank. indeed, right after the bank β s failure was announced, the us secretary of the treasury himself confirmed that, β i never once considered that it was appropriate to put taxpayer money on the line in resolving lehman brothers β. 1 the timing of the lehman crisis also played a key role. only a few days later the us treasury had taken on the sizeable debt of fannie mae and freddie mac, a decision which was criticised in the press. straight after this step was taken, it appeared that the us treasury did not want to be charged with using β i never once considered that it was appropriate to put taxpayer money on the line in resolving lehman brothers β, dow jones, 15 october 2008. public money and practising what has been called a kind of β financial socialism β. there is no doubt that the pressure of public opinion played a role. we could stop here, with a negative assessment of the political decision taken by the us administration, which proved to be wrong. however, perhaps the problem might be more complex than that. as subsequent events have shown, in particular when the first rescue package was rejected by the us congress, opposition to providing the financial sector with public funds came not only from within the government, but also from parliament. the members of the us congress, many of whom face voters at the beginning of november, feared that such a decision would compromise their re - election. there was opposition to rescuing lehman brothers, therefore, not only from within the administration, but also from congress and, more broadly, from public opinion. in other words, the decision was largely the result of a democratic process. ultimately, it was the us citizens who did not want to rescue lehman brothers. this analysis is not restricted to the lehman brothers case alone. even in countries where bankruptcies were successfully avoided through intervention, the decision was fiercely criticised by the respective parliaments and public opinion. in some cases, it was only possible to take the decision because
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areas of supervision which the different panels will no doubt delve further into. may i wish everyone a most fruitful and interesting meeting. i do hope that all visitors in this meeting will also be able to set aside a little time to enjoy singapore β s lively sights and sounds. 5 / 5 bis central bankers'speeches
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at around 250 %, having risen by 100 % points since end - 2008. nearly 70 % of that increase is attributable to corporate debt. β’ there are concerns that part of the corporate borrowing has been used to pay off existing loans, rather than being channelled towards productive activities. β’ many of the chinese firms having difficulty servicing their debt are from the heavy industry sector facing excess capacity. china has the fiscal resources to backstop its financial sector β s liabilities and thereby stave off a systemic financial crisis. but the debt overhang will weigh on corporate investment and present a further headwind to growth. indeed, with continuing producer price deflation, the real debt burden will keep rising, even as profitability falls. in a good scenario, the debt ratio stabilises at the current level, and then gradually declines as nominal gdp rises faster than credit ; in other words, china grows out of its debt problem. bis central bankers β speeches however, this requires that enterprises that are no longer viable are unwound in an orderly manner. β’ earlier this year, chinese authorities announced plans to reduce excess capacity in the steel and coal sectors. β’ the government has also issued directives to banks to stop extending loans to firms that are persistently loss - making, while providing credit to competitive companies which are experiencing temporary difficulties. the road to addressing china β s debt vulnerabilities is long and fraught with risks along the way. but if recent efforts are sustained and economic growth does not tank, the prospects are good for an orderly and gradual deleveraging. structural reforms more than the moderation in economic growth or even the vulnerabilities in the financial system, it is the outcome of the structural reform effort that will be decisive for the long - term prospects for the chinese economy. the third plenum reform blueprint of 2013 provides a comprehensive roadmap for china β s full transition to a market economy. it is a thoughtful, coherent, and well - conceived plan. while implementation has been slower than expected in some areas, china has probably made more progress in structural reforms than any major economy during the last few years. but much work still lies ahead. take for instance fiscal reform. china has taken several steps to improve the sustainability and transparency of its public finances, especially at the local government level. β’ changes to china β s budget law last year have helped to bring more government spending on - budget. β’ local governments are now allowed to raise funds in
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it increases the opportunities of spreading corruption and bribery. dear audience, i would like to commend the fruitful coordination and cooperation between the appropriate entities of ministries, security and judicial authorities, and financial and non - financial institutions for combating money laundering. i would like to present a briefing on accomplishments achieved during the last year, the most important of which were : the kingdom achieved tangible progress in its aml procedures, in the framework of the follow - up process that followed the mutual assessment process. the kingdom submitted the first follow - up report to the menafatf in february 2012. the report includes the new and updated legislations issued and the actions taken to cope with the implementation of all international standards and practices issued recently. bis central bankers β speeches the kingdom amended the anti - money laundering law issued by royal decree no. ( m / 31 ) dated 11 / 5 / 1433h to cover many domestic and international requirements and developments. its implementing regulation was updated as well. here, i would like to highlight that the national aml legislation was finalized in line with international developments and standards. the kingdom hosted a number of conferences, symposiums and training courses on combating money laundering. the most important of which was the fifteenth mena - fatf general meeting held in april 2012 in jeddah. in september 2012, the investigation and public prosecution authority, in cooperation with mena - fatf, also hosted a symposium on β the role and responsibility of public prosecution agencies and judicial organs in combating money laundering and terrorism financing β. in september 2012, sama, in collaboration with the secretariat general of the cooperation council for the arab states of the gulf, organized a workshop on updating fatf recommendations to combat money laundering, terrorism financing and weapons proliferation. all supervisory authorities in the kingdom, including sama, continued their efforts in performing periodical inspections in the area of anti - money laundering over entities under their supervision in accordance with the concept of the risk ratio standard to increase efficiency of control and supervision operations and benefit from the capabilities available in various fields to ensure the application of instructions and regulations. dear audience, bearing in mind the risks posed to our economy by money laundering and emphasizing its supervisory and control role, sama issues continuous instructions and updates regulations and guidelines to cope with domestic, regional and international developments. we stress here the necessity of compliance with regulations, standards and instructions related to anti - money laundering ; the implementation of policies to monitor operations ; and reporting money laundering activities to th
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ben s bernanke : junior achievement finance park brief remarks by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the grand opening of the junior achievement finance park, fairfax, virginia, 19 october 2010. * * * financial education helps young people cultivate a sense of financial responsibility. it is essential for their personal well - being, and for the effective functioning of our economy. junior achievement was founded in 1919 and continues to be one of the world β s largest and fastest - growing organizations dedicated to educating youth in financial literacy, work readiness, and entrepreneurship. it is committed to relevant, hands - on learning for students from kindergarten through high school. it serves 10 million students each year in 121 countries β about 50, 000 of them here in the washington, d. c., area. i applaud junior achievement β s mission, which is to inspire and prepare young people to succeed in a global economy and cultivate their understanding of the principles of market - based economics and entrepreneurship. we are here today to discover junior achievement β s finance park in fairfax county. it is the 15th such facility in the united states and will serve 14, 000 students annually. the program offers an intensive six - week classroom curriculum, followed by a capstone day at the finance park where students participate in a practical personal budgeting simulation. this experiential facility helps students build financial skills that are essential to a successful financial future. students immerse themselves in reality - based decision making. they practice essential household skills by developing a budget that includes housing, transportation, food, utilities, health care, investments, philanthropy, and banking. the opportunity will enable them to better navigate real - life decisions. i applaud the ongoing partnership among junior achievement, schools, and businesses in the greater washington area. as states and school districts around the country continue to integrate personal finance instruction into their curricula, organizations like junior achievement can provide important services to both students and teachers. thank you for inviting me to participate in today β s event.
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tight monetary policy as well as the benign global price environment for ukrainian exports in the first half of the year, and the record harvest of grain crops in the second half of 2018, the hryvnia strengthened by 1. 4 % over the year. this is the sign of stabilization in the foreign exchange market of ukraine. at the same time, ukrainians now trust the nbu β s ability to smooth out excessive market fluctuations. this is proven by the fact that even russian aggression in the kerch strait and the imposition of the 1 / 3 bis central bankers'speeches martial law have not caused any major panic on the foreign exchange market. we highlighted developments on the foreing exchange market and continued to be active in the market, thus preventing panic among market participants and households. the stronger hryvnia allowed the nbu to increase international reserves throughout the year by purchasing foreign currency on the interbank market. external financing became another source : ukraine received a new program of cooperation with the imf, which lays the groundwork for further strengthening of macrofinancial stability. as a result, usd 2. 4 billion was added to the reserves by international partners ( the imf, the eu and the world bank ). the resulting amount of international reserves is the highest in five years, at usd 20. 8 billion. the last time we saw such figures was in the fall of 2013. the financial sector is showing good performance as well. the banking system is not only resilient, capitalized, and transparent, but also profitable β for the first time in five years. consumer confidence in the banking system is on the rise. hryvnia household deposits increased 15 % last year. banks are finally doing more lending, with hryvnia household loans up 31 % last year. in addition, we can currently talk about a certain recovery in corporate lending. our priorities in achieving these results were identified by the nbu β s medium - term strategy. approved and unveiled in the spring of 2018, the strategy identifies seven key goals of the nbu : 1. low and stable inflation. 2. stable, transparent, and effective banking system. 3. resumption of lending. 4. effective regulation of the financial sector. 5. free flow of capital. 6. financial inclusion. 7. modern, open, independent, and effective central bank. the nbu β s activities aimed at achieving these goals were what made possible the comforting highs and record - high figures of
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by introducing tough capital controls. the exchange rate started to play the role of a nominal anchor for expectations, and went on to become the main instrument for curbing inflationary pressures and ensuring macro - financial stability in ukraine. 3 / 7 bis - central bankers'speeches the nbu also adjusted the operational design of its monetary policy, taking a set of crisis measures to mitigate risks to financial stability. specifically, the liquidity of the financial system was boosted significantly. due to the strong psychological pressure caused by the war, changing the key policy rate was unlikely to stabilize expectations and maintain control over inflation. from february through may 2022, the nbu postponed key policy rate decisions, keeping the rate at 10 %. in addition, in the earliest days of the war, the nbu deployed a wide range of measures to support financial institutions and borrowers, so as to stabilize the financial sector. moreover, to ensure the uninterrupted funding of critical public expenditures, the nbu has been supporting ukraine's state budget via purchasing government debt securities. so far, the nbu has purchased government bonds worth a total of uah 315 billion ( around $ 10 billion ). i expect that everyone in this room understands that this mix of a massive injection of liquidity via the budget and banking system, a fixed exchange rate supported by interventions and capital controls, and a freezing of the key interest rate helps the banks, businesses and households to adjust to the new reality in the short - term, but this mix is not sustainable in the long - term. that's why we started to adjust our policies. first, the nbu started to withdraw liquidity support measures for banks. second, at the beginning of june, the nbu raised the key policy rate considerably, to 25 %, to boost the attractiveness of assets priced in the national currency, and ease pressures in the foreign exchange market. then, as depreciation pressure remained too strong to withstand, in late - july the nbu made a one - time 25 % adjustment to the official exchange rate. relatively tight monetary conditions and this re - pegging of the exchange rate have helped weaken the pressure on ukraine's fx reserves. together with an acceleration of international aid inflows, this has allowed to maintain our reserves at a relatively comfortable level. all of these steps have helped us to avoid monetary destabilization so far. in september, inflation in ukraine stood at 24. 6 per cent. other countries have
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bank weaknesses. they cannot fail in their oversight and risk managerial duties, just as supervisors cannot fail in their on - site and off - site supervision. in this respect, i am a strong believer that good governance is the corner stone of a stable financial sector. we must create a banking community that does not tolerate imprudent business practices and lax systems and control. these are the sins of the past. thailand, for instance, is carefully fostering a new business culture with the right values. on our part, the bank of thailand has since march 2002 announced guidelines supporting the practice of good corporate governance of banks'board and management to ensure that they look after the interests of their stakeholders in an effective manner. these rules are not ground - breaking ; they are just simple common sense. but we need to communicate clearly to the private sector what our expectations are and what the consequences are if the efforts fail. ladies and gentlemen, the cost of financial restructuring in thailand was, after all, too enormous in figures and too painful in real terms to allow us to continue with our old way. in addition to changing the corporate culture, we are also amending a few key laws to solidify the foundation of our financial infrastructure. the new financial institutions businesses act will empower banking authorities with the necessary power to supervise financial institutions on a consolidated basis and to take appropriate actions against weak banks, with the provisions of prompt corrective actions. the deposit insurance act will support a deposit insurance system to limit the loss of public money and reduce the moral hazard inherent in the current guarantee system. we must ensure that when a bank failure does occur, despite all preventive measures and utmost efforts to prevent it, depositors are taken care of fairly, and the bank's shareholders accept their due share of burdens. moreover, we have drafted the financial sector master plan to foster an efficient, stable, and competitive financial sector, guiding the development of the financial sector over the medium term. all these initiatives were undertaken with the objective of providing the right framework for effective supervision in order to develop a sound and strong banking sector. in this regard, i trust that the discussions in the next two and a half days will be very constructive, providing more insights on these issues, as well as other controversial debates - such as the role of governments and lender of last resort. allow me to say a few words on the substantial progress made by various international bodies in crisis prevention. the imf has taken a leading role, revamp
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it to the parliament. ladies and gentlemen, now let me turn to the issues that directly impact the banking industry : what might be the implications for financial institutions as a result of the measures discussed earlier, and what are the challenges ahead for the banking sector? i would like to point out a few : first, in the new financial landscape following the implementation of the master plan, we anticipate a structural change in the banking sector with more industry consolidation and emergence of financial conglomerates, embraced by the β one presence β principle. such processes should lead to larger size and falling number of financial institutions. although not a sure ticket to success, size will allow the working of economies of scale and scope - to eliminate redundancies in administrative and operational functions, reduce costs from more diversified portfolio of clients and enhance income from provision of wider range of services. for the first time ever in the thai banking history, banks will have the opportunity to do all these and grow through consolidation and / or forming a financial group. up until now cost cutting and income enhancement, for example, were possible only through reorganization and re - engineering within the same organization. of course, there were cases of mergers in the history, but they were mainly out of necessity to solve the problem of some weak banks, not as a calculated move for growth. therefore, in my opinion, the first major challenge in the next couple of years for banks is to reap the benefits from such an opportunity offered by the master plan. in doing so, a bank β s board and senior management must give its full attention and be fully committed to articulating a strategic plan, successfully integrating their operations, streamlining various business processes, as well as finding their niche markets or areas of comparative advantage. second, banks must prepare themselves for the new basel accord. most banks in thailand will start with the standardized approach in the calculation of their regulatory capital, because of the reasons i talked about earlier. adopting the standardized approach does not require much preparation, since it is quite similar to the existing accord, with only some differences in the risk weights of some assets. however, if banks stay on the standardized approach for too long, they will not be as risk sensitive as those which adopt the irb approach, resulting in higher risk and higher need for capital, which means that they will not be able to compete well as internationally active banks. therefore, the ultimate goal for those who wish to compete internationally would be to move to the irb approach, after
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how certain proposals made in the ongoing public debate, which might suggest that the focus of monetary policy should be shifted towards short - term growth or employment objectives, can be fulfilled without violating the primary objective of maintaining price stability, thus ultimately producing an overall deterioration in prospects for economic growth and employment. monetary policy needs a forward - looking, medium - term orientation. it would be overambitious and therefore risky to steer the economy in the short term. fine - tuning would more likely lead to instability than stability. a medium - term orientation takes into account the fact that monetary policy affects the price level only with variable, usually long and unpredictable time lags. for example, a large proportion of the substantial reduction in interest rates during the second half of last year will still have an impact on the euro area economy. to maintain price stability, we have chosen a distinct monetary policy strategy, one that reflects the special circumstances that exist at present as well as those likely to prevail in the foreseeable future. it ensures as much continuity as possible with the strategies previously pursued by the ncbs. at the same time, it gives due consideration to the unique situation which will prevail in the early years of monetary union. this strategy rests on two β pillars β : a prominent role for money as expressed by the announcement of a reference value for the annual growth of m3 and a broadly based assessment of the outlook for price developments, and the risks to price stability in the euro area as a whole. monetary developments can provide useful information about future price developments and thereby act as an important compass for the conduct of monetary policy. there is broad consensus that, in the medium to long term, the development of the price level is a monetary phenomenon. consequently, the governing council of the ecb has announced a quantitative reference value for m3 growth, which has been set at an annual rate of 4Β½ %. under normal circumstances, substantial deviations from the reference value would tend to indicate future risks to price stability. however, monetary policy does not react to deviations of monetary growth from the reference value in a β mechanistic β way. in the first instance, such deviations will be thoroughly analysed to infer any signals which they may send about the prospects for price developments. if this analysis points to a threat to price stability, monetary policy will react in a manner appropriate to counter this threat, rather than attempt to eliminate the deviation of monetary growth from the reference value in the short term.
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, for the time being, the main scenario for the euro area remains that economic growth is expected to return to rates close to potential in the course of 2003. in fact, this expectation is consistent with all forecasts published by international organisations. private forecasters, on the whole, also seem to share the same view. moreover, financial markets have shown signs of stabilisation in recent weeks following a period of considerable turbulence. the expectation of an improvement in economic activity in the euro area is contingent on a recovery of growth in private consumption, supported by a reduction in actual and perceived inflation rates. this expectation is also based on a projected gradual recovery of the world economy and export growth which, together with the low level of interest rates, should help to strengthen investment. nevertheless, the uncertainty surrounding this scenario remains high. it is therefore very difficult, at this juncture, to predict the timing and strength of the economic upswing, both in the euro area and globally. turning to recent price developments, in september annual hicp inflation was 2. 1 %. for october, eurostat's flash estimate indicates an annual hicp inflation rate of 2. 2 %. this increase is again likely to reflect developments in energy prices, although no detailed information is available at present. looking at price developments for the remainder of 2002 and the early part of next year, despite the recent decline in oil prices, some upward impact may occur reflecting base effects and country - specific developments - such as increases in indirect taxes or specific developments in services prices. although difficult to anticipate, particularly due to the volatility of oil prices, a further increase in the annual rates of inflation around the turn of the year and a delay in the return to inflation rates below 2 % cannot be ruled out. however, this further increase should only be temporary. beyond the very short term, we consider that both the euro exchange rate, which has strengthened since early this year, and the overall economic environment are still contributing towards reducing inflationary pressure. moreover, there should also be a further unwinding of the indirect effects of previous increases in oil prices and other factors that have added to the stickiness of the annual rate of hicp inflation excluding unprocessed food and energy prices. however, for inflation rates to fall below 2 % in the course of 2003 and to remain in line with price stability thereafter, as indicated by recent forecasts, it is crucial that oil prices do not increase sharply again and that the upward
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, depending not only on the economic environment, but also on the public interest and trends in the communication and information networks and media, which, due to the development of technology and digitization, are changing, advancing and improving on a daily basis. the constant strengthening of transparency, that is, the promotion and development of communication with the public, including media, is a challenge for the national bank of the republic of macedonia. we work diligently to respond to the challenge, while paying attention to the two points of communication β immediate communication with the public and communication with the media. we do our best to follow the best practices of the european central banking union, which is largely confirmed with the assessments of our transparency. in doing so, we not only struggle to increase intensity, but also quality of our communication. here i would mention the practice of constantly improving the quality of information and analyses we publish, improving the methodological explanations for the statistics that we publish, timely informing of all novelties in statistical surveys, improving the structure of our website, concurrent publishing of statistics and statistical press releases for their explanation, providing international comparability of our data through continuous implementation of international standards. in this regard, we are in the final stage of creating an analytical tool for easier access and search of statistics by all external users. we hope that our commitment is noticeable for you as media representatives, who analyze our work on a daily basis, by following the press releases, data and positions that arise from the central banking operations in the country. for us, you, the journalists, are one of the main conveyors of monetary policy messages to the public. not as our spokespersons, but as individuals and professionals respected by the public, who daily follow our work, which is very often presented in tables, graphs, reviews and data series that almost always require focused reading and analysis before being commented. the same focus is required for our reports, where even footnotes contain important data that 2 / 3 bis central bankers'speeches ensure analytical and studious rather than only informative reporting. accurately and precisely communicated or analyzed data is crucial for timely and professional information to the public. unfortunately, even unintentionally inaccurate or incomplete communication or analysis of central bank data and views, especially in times when the information / news are transmitted at the speed of light, can create undesired environment for the economy, especially if it creates an unreasonable panic among the public. comprehensive and thorough communication requires understanding of many methodological aspects
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petar goshev : macedonia β s prudent monetary and fiscal policy speech by mr petar goshev, governor of the national bank of the republic of macedonia, at the press conference, skopje, 26 march 2009. * * * i. for longer than one decade now, the national bank of the republic of macedonia has been successfully implementing the strategy of retaining the stable foreign exchange rate of the denar, through a successful mix of prudent monetary and fiscal policy. the choice for this strategy is not incidental. macedonia is a small, fully open economy and extremely import - export dependant and unfortunately highly euroized country. historically, it had suffered high inflationary as well as hiperinflationary schocks, which are deeply curved in people β s memory. for such characteristics of the economy and with such negative experiences, the stable foreign exchange rate of the denar has a tremendous importance for the price stability and for the positive expectations of the economic agents related to macroeconomic environment. since none of the stated characteristics of our economy has not been changed, we in the national bank of the republic of macedonia deeply believe that following up with the existing monetary strategy β keeping the stable exchange rate of the denar, as the main anchor in the economy β should continue. this means, i. e. let me repeat once again, that we continue to defend the stability of the foreign exchange rate with all instruments and measures available as of the monetary institution. ii. in accordance with this strategy, during the past period, i. e. starting at end - 2007 and during the whole of 2008, being concerned first of all because of the growing inflation but also of the growing deficit of our economy to the rest of the world, we undertook a number of measures for tightening the monetary policy. however, in the meantime, the world crisis has deepened. in the fourth quarter of 2008 it started delivering to us high β paying invoices β. the demand as well as the prices for our main export products dropped dramatically. this continues even stronger in the first quarter of the this year. at the same time domestic aggregate demand ( stimulated by the wage and pension growth, higher budget consumption and the high credit growth ) was not appropriately and timely accommodated in accordance with the foundations of the economy. the trade as well as the current account deficit were growing, without being followed by the appropriate inflows in both, the capital and the financial account in the balance of payment. practically
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gertrude tumpel - gugerell : the way forward with monetary, fiscal and macroprudential policies speech by ms gertrude tumpel - gugerell, member of the executive board of the european central bank, at the conference β europe after the crisis : resuming the long - term perspective β, organised by the confederation of swedish enterprise and the centre for global studies, stockholm, 11 december 2009. * * * introduction thank you for your invitation to speak here today. in my short intervention, i will focus on the question how post - crisis monetary, fiscal and macroprudential policies in europe should look like. rapid and determined policy action have avoided that things turned worse at the peak of the crisis, but now that the worst seems to be behind us, it is time to look further ahead. notably, we need to reverse what should only be temporary, and implement what needs to be changed structurally, so as to reduce chances of such a crisis from occurring again. monetary policy let me start with monetary policy. after the crisis had intensified significantly, a bit more than one year ago, the ecb responded swiftly and vigorously. in particular, it lowered its main interest rates substantially by 325 basis points between october 2008 and may 2009. the current rate of 1 % is the lowest since monetary union started in 1999. in addition, we have taken a number of non - standard liquidity and credit support measures to mitigate the adverse impact of dysfunctional money markets on the liquidity situation of solvent banks in the euro area and thereby avoid the emergence of a systemic liquidity crisis. to this end, for instance, we provided banks with unlimited liquidity against an expanded list of collateral, while prolonging the maturity of our refinancing operations up to 1 year. from the very beginning, we have made clear that our enhanced credit support measures would be temporary in nature and remain in place only as long as needed. now, taking into account the ongoing improvements in financial market conditions, we arrived at a situation where in fact not all our liquidity measures are needed to the same extent as in the past. therefore, we announced last week some initial steps to gradually phasing out some of these measures. at the same time, we continue to provide liquidity support to the euro area banks for an extended period of time at favourable conditions, as β despite the start of the phasing out β the impact of previously taken measures reach well into the next year. while
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that we can narrow the policy gap between systemic risk assessments and their translation into risk mitigating policy actions, this will ultimately enhance the financial system β s resilience to adverse disturbances. in this sense the political support for these reforms is absolutely essential. conclusion let me conclude. monetary and fiscal policies, through vigorous and swift action at the peak of the financial crisis, have avoided a free fall in economic activity and a further drying up of financial markets. as we gradually seem to be leaving the extraordinary circumstances behind us, monetary and fiscal policies must return to their normal mode of operation. will that normal mode look different from the one before the crisis? as for monetary policy, you can be assured that the ecb will monitor all developments carefully and continue to gradually phase - out at the appropriate time its enhanced credit support measures, without hampering the functioning of financial markets. let me also assure you that maintaining price stability remains our primary objective. at the same time, let me also emphasize that central banks must become more wary of financial market risks and their macroeconomic implications to the overall benefit of achieving the monetary policy objective. as regards fiscal policies, consolidation efforts need to be implemented timely and credibly, and as in the past with a particular focus on the expenditure side. as to macroprudential policies, the recent crisis has strikingly illustrated the interconnectedness that characterizes the financial system. this has reaffirmed the need to strengthen macroprudential policies, i. e. the focus on the systemic nature of risks and their mitigation to reduce the chances on such a crisis from happening again need. finally, let us not forget the importance of self set standards and rules by the financial markets themselves. importantly, the financial industry must be aware of their own responsibility and need to draw the right lessons from the crisis for future practises. thank you for your attention.
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other factors that could affect demand in the near term. it will be the monetary policy committee β s task to decide how to respond to these different short - and long - term prospects, with the aim of keeping inflation close to target. monetary policy instruments are currently being revised, with an eye to improving liquidity management and preparing for a tightening of banking system liquidity concurrent with the central bank of iceland holding company β s domestic asset sales and other possible measures related to capital account liberalisation, which will cause short - term market rates to move closer to the centre of the bank β s interest rate corridor. this could increase the bank β s net interest income. the monetary policy currently being pursued is different than that prevailing before the crisis, owing to the presence of the capital controls and a managed float rather than the virtually free - floating exchange rate regime that was in place before the crisis struck. the policy described in the bank β s december 2010 report β monetary policy in iceland after capital controls β has therefore been implemented in part. it is possible that we could go even further in the near future and create a monetary policy framework that would supplant the joint declaration of march 2001, confirming some of the changes already in place and paving the way for others. if that is done, it is important to remember that there are limits to what monetary policy can achieve. in the long run, monetary policy can affect inflation, and in the short run it can smooth out cyclical fluctuations, particularly when it is credible ; i. e., if inflation expectations remain close to target even during attempts to mitigate recessions. once the slack disappears, however, monetary policy cannot deliver output growth beyond the growth potential of the economy, and any attempts to do so will ultimately lead to inflation persistently above target. by law, the central bank of iceland has two main objectives. the first is to promote price stability, the main task of monetary policy. the second is to promote financial stability. as regards monetary policy implementation, the central bank is independent and stands alone. it is also independent as regards its contribution to financial stability ; that is, its own analysis and decisions on the prudential rules it is tasked with setting ; i. e., concerning liquidity and bis central bankers β speeches foreign exchange risk. in addition, like other central banks, it plays a key role in crisis management through its liquidity facilities and its role as lender of last resort. but it is emphatically not
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market in the current environment has been 10 to 20 basis points lower than mainstream bonds. an increased number of multilateral agencies are issuing sukuks to finance development projects. in addition, both government agencies and the corporate sector have considered the sukuk market as an attractive source of financing. from the investor perspective, there are the benefits of diversification. in a sukuk issue in 2005, 48 per cent of the issuance were subscribed by conventional - based investors. this increased appetite for sukuk reinforced by excess liquidity in the global financial system is part of the reasons sukuks are attractively priced for issuers. extending the linkages to other parts of the world the emergence of islamic financial products, in particular, in the capital market has also promoted greater global financial integration. the bringing together of financial institutions and market players across continents to participate in this expansion of inter - regional investment flows has fostered financial linkages among the major regions. this will not only provide great synergies and opportunities but will contribute towards facilitating international financial stability. just as the old silk road in the 14th century offered a route that facilitated the spice trade from the east to the west, we can now envisage the new silk road which financial flows across borders between the east and west, thereby promoting international financial integration. in this context, the islamic capital market, in particular, the sukuk market has a major role in strengthening this interlinkage. the essence of the new silk road is to provide a route for such flows and promote greater financial integration for the benefit of a wider community. the new silk road should not be envisaged as just a link between asia and the middle east but that which extend to europe and the rest of the world. indeed, we are already seeing the participation of global investors and the international financial community. the participation of a financial centre like london will foster the global growth and international integration of this market. the involvement of regulators and government agencies is also contributing to accelerating this process. malaysia is one of the key intermediary destinations along this new silk road that offers a platform for the origination, distribution and trading of islamic capital market and treasury instruments, including sukuks. malaysia is positioning itself as an islamic investment gateway to asia, with a niche in islamic fund and wealth management. malaysia has developed a comprehensive islamic financial system that operates in parallel with the conventional financial system. of significance, is the inter - connectivity within the system that
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customer relationships. in conclusion, i would like to say that, in our opinion, bank financing remains and will remain the primary way of raising debt in russia for many years to come. we are interested in the banking sector enjoying long - term sustainability and profitability. we want banks to be able to meet the needs of the economy in any situation. in the crisis we underwent last year, we saw that banks are able to do so. and in periods of growth as there is now. i wish you every success. thank you for your attention! 5 / 5 bis central bankers'speeches
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gradually regulatory measures that would discourage rapid increase in lending, encourage banks to lend more in domestic currency and increase transparency toward clients on banks products and services. on the other side, the monetary policy has successfully anchored expectations of very moderate growth in the price level and has supported demand for local currency financial assets by offering sufficient positive real return. as the crisis hit, the first impact in our economy was shown on the balance of payments, reflecting the relationships of our economy with the world. the increase of unemployment and the tightening of financing conditions in the neighboring countries of european union were followed by the decline of albanian emigrants β remittances that live and work in those countries. while the gap between the domestic and external demand was widened, this was accompanied with an increase of current account deficit and the mounting pressure on the exchange rate. at the same time, the banking sector, which heavily dominates the financial system in albania, reduced its funding contribution to the domestic economy as a response to the increasing demand for liquidity, following the deposit withdrawal from the public and an increasing borrowing demand from the government. the combined effect of these developments affected negatively the real sector of the economy, mainly the business sector. in the first quarter of this year, business confidence index fell under its historic average, reflecting a more difficult financial situation. the latter was also shown by the lower - thanplanned realization of fiscal revenues as well as by the decline of loan portfolio quality that banking sector has encountered throughout the period. in the short - term, the public authorities took measures to lessen the impact of the global financial crisis in the economy. through the significant increase of the fiscal expenditures share designated for investments, mainly in infrastructure, the government supplied an important impetus for the support of the real sector of economy to cope with the global crisis effects. the bank of albania has also been active to provide liquidity in the interbank market, with the aim to preserve the stability of the banking sector and to lessen the expected decrease of its intermediation role. we removed quantitative limits in the size of the liquidity injections through our week - long reverse repurchase agreements, and extended the maturity of our injection operations up to three months. following a cut of the policy rate by 0. 5 percentage points in january and the subdued inflationary pressures at home, the monetary policy paid an important attention to the financial stability, by keeping the policy interest rate unchanged throughout the period. 1 through this policy, we intended to maintain strong
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johannes beermann : the euro at 20 - the future of our money introductory statement by dr johannes beermann, member of the executive board of the deutsche bundesbank, at the american numismatic society headquarters, new york city, 22 october 2022. * * * 1 introductory remarks ladies and gentlemen, i would like to thank you very much for your kind invitation and the opportunity to present the deutsche bundesbank's latest book project 1 to mark the 20th anniversary of the introduction of euro banknotes and coins. before we get into what i hope will be an exciting panel discussion with mark gould, let me give you a brief introduction to the work. " money can't buy happiness " as the saying goes. it may come at a surprise to you, then, that science sees this completely differently : the prospect of holding cash in one's hands has been proven to cause the brain to release dopamine, the feel - good hormone also associated with eating, drinking, or taking drugs. even more : it appears electronic payment media don't have this rewarding effect. the way digital payments are processed in the brain is far more complex. as numismatists who deal with money in its physical form, this fact should certainly please you. i was not aware of the happiness - giving effect of money until just recently, when i read the work by the business psychologist julia pitters, who contributed one of a total of 33 articles to the collection being presented here today. personally, i like another insight from her essay even more. she finds that our common european cash can also be said to have an identity - creating effect. using euro notes and coins allows people to identify more strongly with the euro area. euro cash has become perhaps the most tangible symbol of a united europe. today, over 340 million europeans use the euro to make payments. next year, croatia will become the twentieth country to join the euro area. 20 years ago, when euro cash was introduced, people were rather sceptical, especially in germany. many people were unfamiliar with the new currency and looked back on the trusted deutschmark with nostalgia. in the early days of the single currency, the euro was often unjustly accused of having made prices more expensive. the germans have even coined a term for this : " teuro " β a combination of " teuer ", the german word for expensive and " euro ". criticism also came from academia. when the euro was introduced
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consider electronic means of payment to be more in keeping with the times. this divide is also reflected in public opinion about cash. on one side of the spectrum, there is at times talk of cash as a " curse " or a technology of a bygone age. at the other extreme, there are some who believe that we are heading knowingly towards a cashless society β and thus entering a world devoid of privacy and data protection. of course, books on polarising topics need to exaggerate in one direction or the other. when it comes to the multifaceted question of the future of our money, though, i don't think it's particularly helpful to see things only in black and white. 3 the book's key messages ladies and gentlemen, the main thrust of this book is to engage precisely with this often - impassioned debate on the future of our money by presenting and appreciating different viewpoints in an objective and balanced manner. 2 / 4 bis - central bankers'speeches we achieve this by considering the various aspects of money and currency from all manner of angles in the hope that the resulting insights yield a particularly nuanced, and at times even surprising, new overview. a conscious decision was made to cover a broad range of topics : from the history of money in europe to the symbolism and special importance of currency in the context of german monetary union and ultimately of european integration, all the way through to the money of tomorrow in an era of digital transformation. these are illuminated from an economic, philosophical, sociological or β as heard at the beginning β psychological perspective. i am very grateful to each and every one of this book's truly renowned authors for their enlightening contributions. the end result is, i believe, a unique compendium containing 33 individual perspectives. the contributions to the book are divided into three parts. the first covers money and currency in europe. these contributions shed light on aspects of european integration, put the role of cash into an economic and legal context, and explore the history of money. the second part of the book focuses on the special significance of national central banks in supplying cash to the domestic economy. we start by looking at germany and the bundesbank's prominent role in germany's cash cycle. we then broaden our horizons beyond the euro area and embark on a journey through the world's large industrial nations and emerging market economies. national central banks from major g20 countries explore three key issues
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us away from our 2 per cent target - whether above or below. when strong demand pushes the economy against the limits of its capacity and threatens to raise future inflation above the target, the bank will raise interest rates to cool off the economy and mitigate those inflation pressures. when demand is weak, as we saw in 2001, future inflation is likely to ease. so the bank will lower interest rates to stimulate the economy, and absorb economic slack, consistent with keeping inflation on target. the significant easing of monetary policy during 2001 was a key factor behind the strong growth of household demand in the first half of this year. let me now turn to the outlook. in our april monetary policy report, we said that the recovery in the canadian economy began sooner, and was considerably stronger, than anticipated. consumer spending and residential construction were reflecting the stimulus from both monetary and fiscal policy. canada β s export volumes had begun to grow once again, as the u. s. economy began to recover. by the time of our monetary policy report update in july, we were also seeing a rebuilding of inventories and an increase in spending on machinery and equipment. these were suggesting a broadening of the recovery across economic sectors. the july update still reflects our view of the economy. as we said two weeks ago, domestic demand in canada remains stronger than expected, bolstered by the substantial amount of monetary stimulus still in the economy. canada β s record of job creation has been nothing short of remarkable, with almost 400, 000 new jobs since the beginning of the year. this strong job growth is reinforcing the confidence of canadian consumers. in addition, medium and small businesses continue to invest. all this paves the way for higher output and ongoing strong domestic demand. but at the same time, there are downside risks and uncertainties, mostly originating from outside canada. near - term prospects for growth in the united states and the major overseas economies appear to have weakened. private and public sector economists have revised down their near - term growth forecasts for the united states, europe, and japan. this could imply that canada β s exports, which were already slightly weaker than anticipated in the second quarter, could continue to be affected by slower growth in global demand. the geopolitical situation remains quite unsettled. finally, in the united states and canada, we are still working through the corporate governance issues that have contributed to this year β s financial market volatility. history has taught us that during periods
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able to weather major shocks such as the asian crisis, or last year β s global slowdown. indeed, over the period from 1997 to 2001, canada averaged annual economic growth of about 4 per cent, while the u. s. average was about 3. 5 per cent. and while the u. s. economy fell into recession last year, ours did not. although the productivity growth of canadian companies has not been as strong as that of firms in the united states, we have seen encouraging signs that investments in technology and training are leading to greater productivity gains here. indeed, business sector labour productivity in canada grew at an annualized rate of 2. 0 per cent from 1997 to 2001, much higher than the 1. 2 per cent average over the 1990 - 96 period, and only a bit below the revised 2. 3 per cent rate of productivity growth recorded in the united states. as we look forward, we see positive signs for future productivity growth in canada, thanks to the efforts of canadian firms to adjust to new technologies and incorporate them into their business processes. the shocks of 2000 - 2001 indeed, the economy has held up remarkably well when you consider that we have been hit with four major shocks during the past couple of years. first, there was the meltdown in the technology and telecommunications industries, which began in late 2000 and the effects of which are still being felt today. the second was the broader economic slowdown in 2001 that affected, to various degrees, the economies of most countries. third, and overshadowing every other event last year, was the 11 september terrorist attacks. with the first anniversary just passed, this seems like an appropriate time to reflect on the extraordinary events that have buffeted the north american economies since that terrible day, and to review how the bank of canada responded to those events. our most immediate responsibility was to keep canada β s financial system functioning. our next responsibility was to promote consumer and investor confidence. therefore, the bank of canada took extraordinary monetary policy action. on 17 september last year, we reduced our key policy interest rate outside our scheduled announcement dates. between september 2001 and january 2002, we lowered interest rates by a total of 200 basis points to help mitigate the impact of 11 september on an already - weakening economy. it turned out that consumer confidence in canada was not as badly shaken as had been feared. as the immediate geopolitical and economic uncertainties diminished, consumers responded strongly and quickly to the monetary stimulus. interest rate - sensitive sectors
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o β neill has observed, banking requires more than just technical competence. 5 bankers must reproduce their efforts and results with reliability. and, above all, bankers must be honest. they must do what they say and say what they mean. this is necessary for the financial system to be viewed as trustworthy. without that, the financial industry cannot be effective in performing its key roles. cultivating these three traits emphasized by onora o β neill β competence, reliability and honesty β will help enable you to have a personally fulfilling career. the best doctors or lawyers do their work not only because it pays well, but because it is interesting and contributes an important service to society. i hope you feel the same about what you do. and if you don β t, i urge you to consider how your industry can become more professionally fulfilling. what is needed for you to feel better about your work, to sleep more soundly, to worry less about the risk posed to your business by potential misconduct? your professional fulfillment will grow if you also contribute to promoting these qualities in others β that is, by helping to improve the culture of financial services. it is easier to be smart, dependable and trustworthy when you are surrounded by other people who also fit that description. my second message is to reject the idea that a separate regime of ethics or morality applies in banking. i β m sure you have heard this, or perhaps even thought this, at some point in your career. 3 / 6 bis central bankers'speeches let it end there. we often teach our children by asking them if they would engage in that type of behavior at home. this is good professional advice as well. bankers have been criticized for their ethical and moral shortcomings. that criticism has legitimate grievances at its roots. there have been far too many instances in which bankers have not lived up to expectations. but it is also true β and i β m sure you have experienced this β that you have advanced in your careers because you have demonstrated personal attributes that anyone would be proud to possess. i mentioned before honesty, competence and reliability. you could add to that list hard work, perseverance and responsiveness. moreover, if you are like me, your careers will have benefitted from teamwork β the good fortune to work with capable colleagues. individual effort is essential, but success often depends as well on the contributions of others. 6 whatever list you have come up with, make sure that teamwork is among your core
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condones or promotes misconduct. people see something, but do not say something. and, it is so shortsighted. it prevents problems from being addressed while they are small. by not raising their hands, these colleagues are β quietly adding risk to your books [ and ] invisibly enlarging your liabilities. β 8 they are also tacitly encouraging bad conduct by skewing incentives. there may be many reasons for choosing silence over raising your hand. you may face a conflict of loyalties. it β s uncomfortable to tell on a colleague. you may think that the problem will just go away, or that calling attention to a problem will harm the firm. raising your hand is difficult. but, it is also absolutely necessary. as rising leaders in the industry, you need to lead by 4 / 6 bis central bankers'speeches example. in doing so, you will make it easier for others to follow your lead. my final message is a request that each of you commit to a candid assessment of yourselves, your firms and your industry. for adam smith, candid observation was a cornerstone of economic behavior : β we suppose ourselves the spectators of our own behavior, and endeavor to imagine what effect it would, in this light, produce upon us. this is the only looking glass by which we can, in some measure, with the eyes of other people, scrutinize the propriety of our own conduct. β 9 candid self - assessment is essential to knowing where you stand and how you are progressing toward your goal. industry groups here and in other financial centers are working on useful ways to measure culture β consistent with the maxim, β if it β s important, you will measure it. β but, assessment cannot stop there, and it cannot be the job of someone else β such as management, compliance, audit or a regulator. each of us must also be reflective about our own faults. we must also commit to do better going forward. when it comes to making a candid assessment of your group, your firm and your industry, i would like to suggest that you devote significant attention to incentives. i believe that incentives shape behavior, and behavior drives culture. if you want a culture that will support your long - term business strategy, you need to align incentives with the behaviors that will sustain your business over the long haul. there are many ways of encouraging certain behavior through incentives. promotion is quite powerful, as is compensation. they are powerful, in
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deviations were corrected by the economy. otherwise, it would have started pressuring the credibility of the fixed exchange rate. while in the previous monetary system, more fretful analysts might have speculated that the economy would be adjusted through devaluation β the weakening of the currency β s value β which would have allowed inflation to remain higher, luckily this is not an option in the monetary union. there is a greater concern upon making long - term economic decisions in the monetary union : whether the euro area β s central banks ( that is, the eurosystem as a whole ) are able to keep the pan - european average inflation rate at a suitable level. this means that in the medium term, the inflation rate has to remain below but close to 2 %. while in austria or slovenia, or in estonia for that matter, inflation may temporarily differ from that of the euro area, we have to look at the whole picture when making decisions. the ability of the euro area to keep inflation close to 2 % over the entire past decade has inspired confidence. the average inflation rate has remained slightly below 2 % throughout the history of the single currency and annual inflation has mostly ranged within 1. 5 β 2. 5 %. however, we must not be distracted by our success. the euro area β s inflation indicator was over 2 % at the beginning of this year, and, most recently 2. 4 %. this is worrying. bis central bankers β speeches the more detailed picture is, of course, more diverse and future monetary policy measures will also have to take that diversity into account. on the one hand, the european economy is just recovering from a deep economic recession. unemployment is higher than usual, the relatively high debt burden is inhibiting borrowing activity in many countries and the majority of the recent price hike stems from global factors, such as the price growth of energy and food on the global market. the prices of other goods and services, on the other hand, have been posting quite modest growth rates. therefore, the inflation expectations of entrepreneurs and consumers have remained close to the historical average. if the price hike of commodities stops, the increase in the euro area β s prices could remain below 2 % already next year. however, looking at the data from another angle, we can find proof to arguments which insist that the current euro - area interest rate level is not suitable for guaranteeing the low inflation rate that corresponds to the price stability goal. although the general public focuses on the debt crisis of certain
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cleviston haynes : the right mix of solutions to our challenges is within our reach welcome address by mr cleviston haynes, governor of the central bank of barbados, at the 33rd adlith brown memorial lecture, bridgetown, 8 november 2018. * * * it is my honour and pleasure on behalf of the management and staff of the central bank of barbados to welcome all of you this evening to this 33rd adlith brown memorial lecture, which is being held during the 50th anniversary of the annual monetary studies conference. dr. adlith brown, in whose name this series of lectures is dedicated, began her academic journey in 1968, the same year the regional programme of monetary studies was established. dr. browne would eventually become the fourth coordinator of this programme from 1980 β 1984. i did not know her personally, but there is an image in my memory of a slender, active lady at my first conference back in 1981. many complimentary remarks about her contribution to the profession and to this conference have been made by those who truly knew her. as this year marks the golden anniversary of the annual monetary studies conference, i am sure that all of you will agree that she would have been justly proud of this momentous achievement. tonight β s lecture will be delivered by the noted caribbean economist dr. arnold mcintyre. dr. mcintyre has built - up over three decades of regional experience in macroeconomic policy and economic research in small open economies, international trade policy and development and regional integration, as well as working with the regional institutions, namely the caribbean development bank, the organisation of the eastern caribbean states secretariat, the caribbean export development agency, the caribbean regional negotiating machinery ( now the office of trade negotiations, caricom secretariat ) and the caribbean regional technical assistance centre ( cartac ). his current post is deputy division chief, caribbean division 1, western hemisphere department, international monetary fund. his training, exposure and academic acuity renders him more than adequately qualified to speak authoritatively on caribbean economies. although, knowing arnold as i do, he may have been tempted to speak on our shared passion β west indies cricket. in several of our conversations about economic developments, he often says, β ok. let β s now discuss what is truly important. β tonight, however, it is caribbean economies that take centre stage. the focus of tonight β s lecture will be on the critical issues and challenges of strengthening economic growth and resilience in the caribbean. this topic is relevant and
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metrics would be tailored to the needs of the local community. this tailoring is not possible with a uniform benchmark that applies to all banks and all communities. the large differences between assessment areas illustrate the importance of tailoring thresholds. for example, in morgan county, ohio, lmi families are 49 percent of the population, compared with 31 percent in o β brien county, iowa ( figure 4 ). we believe this tailored approach is empirically sound and avoids imposing arbitrary cra performance measures on a bank and its community. in order to ensure it meets standards of safety and soundness, cra lending must be evaluated in the context of the characteristics of the bank and its community. additionally, the proposed retail lending metric would automatically adjust to changes in the business cycle. as many commenters noted in response to the anpr, a uniform ratio that does not adjust with the local business cycle could provide too little incentive to make good loans during an expansion and incentives to make unsound loans during a downturn, which could be inconsistent with the safe and sound practices mandated by the cra statute. industry commenters also expressed concern that discretionary adjustments to the uniform metric are likely to lag behind the economic cycle and undermine the certainty a metric purports to provide. by contrast, the proposed retail lending metrics are calibrated to contemporaneous changes in market conditions, thereby reducing the risk of providing unsound incentives ( figure 5 ). finally, the proposed approach would continue to recognize local context in assessing a bank β s cra performance. if a bank receives the presumption of satisfactory by meeting or exceeding the thresholds, an examiner could consider performance context information, including the bank β s responsiveness to the community β s needs, in determining whether the bank β s performance is outstanding at the assessment area level. likewise, if a bank does not meet or exceed the thresholds, it would undergo a full examination, as it would currently, and could receive any level of rating, including possibly outstanding, based on the full range of performance context considerations and clear qualitative criteria. the metrics would be designed to provide greater certainty, while avoiding rigidity. retail test β evaluating retail services retail services can be extremely important to lmi communities, although they do not easily lend themselves to consistent, comparable metrics. it makes sense to use qualitative criteria related to the responsiveness of a bank β s products and services and its delivery systems
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the proposed test would compare the combined measure of a bank β s community development financing relative to deposits in its local assessment area to a national average, set differently for rural and urban areas, and a local average in the bank β s assessment area. the lael brainard, β the community reinvestment act : how can we preserve what works and make it better?, β remarks delivered at the 2019 just economy conference, national community reinvestment coalition, washington, d. c., march 12, 2019, https : / / www. federalreserve. gov / newsevents / speech / brainard20190312a. htm. - 11 - national comparator would be set differently for metropolitan statistical areas and rural areas to reflect the comparatively lower average levels of financial infrastructure in rural communities ( figure 7 ). the use of a national rural / metro comparator in addition to an assessment area comparator is intended to avoid skewing incentives toward financially dense areas that are already hotly competitive and to reflect the value of community development in underserved areas. the use of these comparators would help provide consistency across evaluations and clarity regarding community development expectations for both banks and communities. it is also important to recognize that community development financing is often provided in areas that do not neatly fit within a bank β s assessment area. community development financing opportunities are not always easy for banks to identify and often depend on working with local nonprofits or governments to help identify projects and put together the complex financing required to bring them to fruition. stakeholder feedback emphasized banks β unique advantages in evaluating community development projects in the states and territories where they operate and providing the smaller - scale, more complex, and often more impactful, investments overlooked by institutional investors. for this reason, and to encourage more activity in underserved areas, it makes sense to give consideration to all of a bank β s community development activities in a state or territory where it has an assessment area. 12 banks want to know in advance that they will get the benefit of cra consideration in order to invest the time and effort necessary to evaluate and structure community development loans and investments. for that reason, we are sympathetic to requests for a timely process by statewide activity outside of a bank β s local assessment area would factor into its statewide community development rating, and regional activities would be considered at the institution level. - 12 - which banks can seek conditional examiner review of particular activities before making
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amando m tetangco, jr : keeping the house in order amid mounting uncertainties speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the foreign correspondents association of the philippines ( focap ) media forum, makati city, 29 october 2014. * * * the last time i joined you in this forum was at end november 2013. since then, the fed taper had become a reality β this week, the fed is expected to announce the end of its asset purchase program. the market frenzy about the onset of the taper was replaced by an eerie calm as soon as it actually commenced. in the six months or so that followed the beginning of taper, the 10 - year us treasury as well as the dxy traded in a relatively narrow band. the second half of the year, however, was not as calm. the market moved from a belief that the fed would raise its target rate sooner than earlier anticipated ( because of strong us data releases ), to a belief that the fed would still keep rates low β for a considerable time β. in either case, the strong usd dollar story had begun to form a solid base β market caused the dxy to start to ratchet up and the 10 - year treasury yield to begin falling precipitously. 1 this fundamental story was not, however, without challenge. there were bumps along the way as the ecb brought short - dated interest rates to negative territory, as tensions in ukraine increased, and as multilateral bodies continued to predict weak global growth ( the imf described it as β mediocre β. ) throughout this period, our own peso gs curve flattened while peso tracked the dxy movements. such irregular shifts in global market behavior confirm the need for economies to insulate themselves from spillovers from these external volatilities. in the bsp, we have long subscribed to the idea that the best way to do this, is to make the difficult and tough choices that would keep our own house in order. this reminds me of the classic children β s story about the three little pigs. the first two pigs took the easier way of building their houses, using straws and sticks, while the third little pig built his house using bricks. on the day the big bad wolf attacked, only the house of bricks stood unscathed. the moral of
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benjamin e diokno : message for the 2021 pds awards message by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), for the 2021 pds awards, manila, 25 march 2021. * * * to the women and men behind the philippine dealing system holdings corporation, my heartfelt greetings and congratulations for organizing this 2021 pds awards. your theme for this year β s awards, β strength in adversity, β is very timely and relevant. the ongoing global health and economic crisis has spared no one. we are now being tested to the core. yet the struggles we face have allowed us to discover a strength that would enable us to rise above everything, to think of better ways and more effective solutions, and to help those who need our help the most. today β s awardees have achieved all these and more. the bangko sentral ng pilipinas salutes their outstanding performance, leadership, and innovation, especially during this very trying time. mabuhay kayong lahat! the bsp is likewise extending its gratitude to the pds group for the services you have rendered despite the pandemic. your collective selflessness has formed part of the foundation that continues to uphold the economy while it runs on a limited capacity. we are not out of the woods yet. the future remains clouded with uncertainty. but we are not discouraged. we remain focused and committed nurture the economy back to its growth trajectory in the face of the current crisis. let me share some insights on the philippine economic outlook for 2021 and the bsp β s policy actions to support the national government β s whole - of - nation approach in addressing the current crisis. multilateral agencies such as the international monetary fund, the world bank, and the asian development bank expect the philippine economy to expand by 5. 9 to 6. 6 percent this year. these are broadly in line with the national government β s forecasts of 6. 5 to 7. 5 percent for 2021. meanwhile, some foreign analysts have rosier estimates for the year, with growth projections ranging from 6. 1 percent to as high as 9. 6 percent. this shared optimism is based on the philippines β macroeconomic fundamentals, which have remained broadly intact, despite the pandemic. these fundamentals include improving quarterly gdp outturn, better business and consumer outlook, ample liquidity in the system, a sound and stable banking
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inflation of non - energy services excluding housing, which is still quite elevated, averaging 3 - 3 / 4 percent over the most recent six months. tightening monetary policy taking into account the different speeds the gears are moving, it is clear that overall demand remains well in excess of supply, and inflation is running far above our 2 percent target. when it comes to monetary policy, we must restore balance to the economy and bring inflation down to 2 percent on a sustained basis. earlier this month, the fomc raised the target range for the federal funds rate to 4 - 1 / 2 to 4 - 3 / 4 percent, the eighth consecutive increase. the fomc said it anticipates " ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. in determining the extent of future increases in the target range, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. " 3 the committee also said it will continue to reduce its holdings of treasury securities and agency debt and agency mortgage - backed securities, according to the framework it announced last may. 4 3 / 5 bis - central bankers'speeches one aspect of inflation that's important for achieving and sustaining price stability is the anchoring of inflation expectations. since 2012, the fomc has clearly and consistently communicated its resolute commitment to its 2 percent longer - run inflation goal and the importance of well - anchored inflation expectations consistent with that goal. 5 this provides a " north star " for our policy decisions and has helped keep longer - term inflation expectations well anchored. 6 according to our most recent survey of consumer expectations, three - year - ahead inflation expectations are now where they were before the sharp increase in inflation that started in 2021, and one - year - ahead expectations have been trending down since the middle of last year. 7 economic outlook declines in commodity and goods prices will not be enough to bring inflation to 2 percent on a sustained basis. we need all the gears turning at the right pace to restore balance between demand and supply in the entire economy. we still have some way to go to achieve that goal. and it will likely entail a period of subdued growth and some softening of labor market conditions. as a result, i expect real gdp growth to come in around 1 percent for 2023. and i antici
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have a negative impact on americans β pension and 401 ( k ) holdings. this tightening of financial conditions would damage the u. s. recovery and result in slower output growth and less job creation. at a time that u. s. unemployment is very high, this is a particularly unacceptable outcome. in the extreme, u. s. financial markets could become so impaired that this would dry up the flow of credit to households and businesses. iii. u. s. dollar swaps in terms of what actions the official sector in the united states has taken or could take with regard to europe, i wish to emphasize that any and all such actions pursued by the federal reserve are motivated by the mandates congress has given to the federal reserve to promote price stability and maximum sustainable employment here in the united states. when the federal reserve system was created by congress in 1913, it was given the responsibility of providing liquidity to the financial system in times of stress in order to shield the economy, to the extent possible, from the severe effects of financial instability on economic activity and jobs. while the economy and the markets have evolved substantially in the century since then, this basic principle continues to guide our efforts today. central banks around the world have an important lender of last resort role. this role is important in order to protect the economy against financial instability. in today β s globally integrated economy, banks headquartered outside of the u. s. play an important role in providing credit and other financial services in the u. s. β providing a total of about $ 900 billion in overall financing within the u. s. for these banks to provide u. s. dollar loans, they have to maintain access to u. s. dollar funding. at a time when it is already hard enough for american families and firms to get the credit they need, we have a strong interest in making sure that these banks can continue to be active in the u. s. dollar markets. banks headquartered outside the u. s., like banks that are headquartered here, make extensive use of dollars in their financing activities. in part, this is due to the fact that the u. s. dollar is the world β s number one currency β a status that brings with it many benefits for our country. it is in the u. s. national interest to make sure that non - u. s. banks that are judged to be sound by their central bank are able to access the u. s. dollar funding they need in order to
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regard. the unique feature of the cbs is that the concept of branch - based banking gives way to the bankbased banking treating the constituent as the customer not of a particular branch but of the bank as a whole. today, 21 public sector banks have embarked on the use of such systems and the number of cbs - enabled branches exceeds 14, 000 as against 14 banks with about 5000 cbs - branches a year ago. some of the banks are reportedly facing teething troubles in this area but i trust every effort would be made to stabilise the system to the satisfaction of all customers. i would urge that an assessment of the efficiency of functioning of cbs in all the banks be attempted to facilitate necessary improvements. the commercial banks have to address various emerging challenges including those arising from large - scale it deployment. these include the impact of cbs, more scientific risk management, better asset - liability management, ensuring effective anti money laundering measures, and the security concerns relating to implementation of it in banks. one issue, which often gets raised in any discussion on technology implementation, is the cost it entails. products such as smart cards, which may not require significant initial capital costs and which can be easily implemented for a large customer base, hold the promise for the future. let me highlight some of the critical factors, which need to be adequately addressed while dealing with it. prime amongst them is the need to ensure appropriate security and integrity of the system. security in it systems is only as effective as the weakest link and as financial intermediaries, the banks have to ensure that security features incorporated in it systems are the best of the breed. with ever - evolving information technology, the security concerns do not remain static and a system of an ongoing critical review of the efficacy of security features and measures needs to be instituted. integrity of the data processed and stored in it systems has to be ensured by the banks at all times and adequate back up, including real time replication, to the extent possible, provided for. another major requirement relates to disaster recovery management and the fail - safe business continuity plans. in today's world, customer expectations are high and ensuring uninterrupted availability of the it resources, even in the event of a rather extreme contingency, assumes significance. the banking community, therefore, needs to put in place appropriate contingency plans and test their adequacy at regular intervals. while the reserve bank is providing a common system - wide communications infrastructure, the ultimate objective should
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high security levels. third, the introduction of the real time gross settlement ( rtgs ) system. it has not only resulted in compliance with the core principles for systemically important payment systems of the bank for international settlements ( bis ), basle but has also paved the way for risk - free, credit push - based fund transfers settled on a real time basis and in the central bank money. we had an occasion to compare our rtgs system with other rtgs systems for placing before our board for payment and settlement systems. it emerged that the indian rtgs system, which has the'y'topology, is considered to be the optimal choice and this topology has also been adopted by several central banks, which have implemented rtgs. our approach towards intra - day liquidity and potential gridlock resolution follow international patterns. an evaluation of the various components of the rtgs system vis - a - vis the critical evaluation parameters set by the bank for international settlements, basle indicates that we are close to the best on most of the parameters. the facility for inter - bank funds settlement through rtgs is available today across more than 23, 700 branches of banks spanning more than 500 centres in the country. while it is reassuring to note that transactions with large aggregate value are being settled through the rtgs system, with average daily settlement amounting to more than rs. 60, 000 crore, there is still scope for routing many more systemically important payments through the rtgs. for the purpose, enhancing the customer awareness at the user level would be an urgent imperative. it is essential that the rbi, banks and large players in the market make concerted efforts in this regard so as to ensure that all large - value customer payments across financial markets, which have systemic implications, flow into the rtgs, such as payments in the equity and debt markets. once the system achieves a critical mass of usage by the participants, a tipping point would be reached and it should be possible for the financial regulators to consider making the rtgs as the preferred mode for specified large - value transactions in the financial markets. fourth, creation of electronic fund transfer systems. it is not necessary that all the fund transactions are settled on a real time basis. it is, therefore, important to expand the reach of other electronic payment mechanisms for small - value customer transactions across the country. towards this end, the reserve bank implemented the electronic funds transfer ( eft ) system in the mid nineties, which was later upgraded as the special
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r gandhi : real estate and housing β a sensitive sector or samvriddhi sector? speech by mr r gandhi, deputy governor of the reserve bank of india, at the β naredco conclave β banking & investment reforms : housing for all by 2022 β, mumbai, 20 august 2014. * * * assistance provided by shri arnab roy and shri lalit kumar is gratefully acknowledged. 1. shri navin raheja, chairman, national real estate development council, shri sunil mantri, president, naredco, members of naredco, ladies and gentlemen, a warm good evening to all of you. i am very happy to be addressing you all at this valedictory session of the naredco conclave on banking & investment reforms. real estate and our economy 2. the term β real estate β is defined1 as land, including the air above it, the ground below it, and any buildings or structures on it. it is also referred to as realty. it covers residential housing, commercial offices, trading spaces such as theatres, hotels and restaurants, retail outlets, industrial buildings such as factories and government buildings. real estate involves the purchase, sale, and development of land, residential and non - residential buildings. the real estate sector is a major employment driver, being the second largest employer next only to agriculture. this is because of the chain of backward and forward linkages that the sector has with the other sectors of the economy, especially with the housing and construction sector. about 250 ancillary industries such as cement, steel, brick, timber and building materials are dependent on the real estate industry. while it is difficult to estimate the exact contribution of the real estate sector to gross domestic product ( gdp ) as it appears in a disaggregated and dispersed form in the national accounts statistics, in view of what is stated above, lot of importance has been placed on the development of real estate in the country by the government. finance to real estate 3. real estate and housing sectors are unique in one respect. it is in these sectors the financing thereof is contributed by every possible source β be in the central government, the state governments, banks, nbfcs, hfcs, mfis, private capital β formal or informal, or individuals β has a hand in it ; still it is insufficient, given the massive magnitude of the needs for housing and real estate sectors in the country. 4. the government of india
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/ investment in real estate by nbfcs registered with reserve bank cover the following : i. deposit taking nbfcs are not permitted to invest in land or building, except for its own use, beyond an amount exceeding ten per cent of its owned fund. ii. since september 2011, deposit taking and non - deposit taking nbfcs with asset size of βΉ 100 crores and above are required to furnish data on their exposure to real estate. iii. while granting finance to housing / development projects, nbfcs also should stipulate as a part of the terms and conditions that the builder / developer / owner / company would disclose in the pamphlets / brochures / advertisements, etc., the name ( s ) of the entity to which the property is mortgaged and that they would provide no objection certificate ( noc ) / permission of the mortgagee entity for sale of flats / property, if required. bis central bankers β speeches iv. the risk weight currently applicable to real estate exposures is 100 per cent. for loans guaranteed by credit risk guarantee fund trust for low income housing ( crgftlih ), nbfc - mfis may assign zero risk weight for the guaranteed portion. v. every non - deposit taking nbfc with asset size of βΉ 100 crores and above shall disclose its exposure to real estate, both direct and indirect. vi. mere extension of date of commencement of commercial operation ( dcco ) in the case of cre projects would not be considered as restructuring, if the revised dcco falls within the period of one year from the original dcco and there is no change in other terms and conditions. vii. further, the general instructions with regard to prudential norms including exposure norms are also applicable to nbfcs β exposure to real estate. nbfcs β real estate exposure 25. as on march 31, 2014, the real estate exposure of nbfcs registered with the bank at around 4. 1 per cent of the total assets of the sector is not significant as may be observed from the table below. further, only few nbfcs are reported to have relatively high exposure to real estate. the number of such nbfcs having exposure of more than 40 per cent of their assets was around 14. as compared to previous years, the exposure shows a rising trend, though. bis central bankers β speeches mortgage guarantee companies ( mgc ) 26. a mention may also be made here with regard to mortgage guarantee
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failing to pay for the negative externalities they created, some changes in the corporate decision - making are expected. the second point is that β there is a strong link between financial stability, on the one hand, and capital and financial discipline, on the other. β a competitive and stable economic framework has to ensure an appropriate balance between rights or liberties and obligations or accountability of entrepreneurs. while many efforts have already been made on the macroprudential side, we should also pay attention to the micro level. when a crisis hits, you have to have your house in order. that means you have to address preemptively your own vulnerabilities. at the heart of any economy lies the capital, which in developing countries is the main factor of production. the quantity and quality of capital ensure the competitiveness of the economy, which creates the conditions for reaching an optimal macroeconomic equilibrium. the segregation between freedom and responsibility at the level of firms seriously undermines the foundation of the market economy and creates deep social disparities. 3 / 4 besides a strong capital base, a fully functional market economy needs strong financial and payment discipline. without these, financial instability would likely appear. * * * and, i would like to conclude by expressing, on behalf of the national bank of romania, our appreciation to all the participants for attending the seminar and to the imf for their constant support in organizing such useful debates. as the purpose of the seminar is to discuss current financial stability challenges and to exchange knowledge in dealing with such challenges, i believe that the objective has been achieved during these two days event. finally, taking into account : first, the issues i have mentioned above ; second, the direct and strong correlation between the capital and the real economy and third, the fact that the distinguished participants who will take part in the next year seminar can offer the possibility to share experience among countries and institutions, i would like to suggest that the 2020 event topic to be β the capital in the real economy as a cornerstone of the financial stability β. 4 / 4
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banks or banking structures or β national champions β were in the interest of the respective taxpayers. the elimination of potential national bias is therefore key. implementation of the european dimension depends on several elements. the first is the appropriate scoping of participating jurisdictions. the establishment of the ssm will bring all banks established in the euro area, and the credit institutions established in those member states which have entered into a close cooperation with the ecb, under the supervision of the ecb. this creates a level playing field. whereas only the most significant banks will fall under the direct supervision of the ecb, less significant banks, while remaining under national supervision, will not be excluded from the ecb β s supervisory reach. 1. national authorities will have to abide by ecb regulations, guidelines and general instructions and be subject to the ecb β s broad oversight mandate over the functioning of the ssm. 2. to ensure the consistent application of supervisory standards, the ecb may decide at any time to exercise direct supervision on less significant credit institutions. 3. the possibility for non - euro area member states to join the ssm emphasises the eu - wide dimension. this also implies that they will have to adhere to the guidelines and instructions issued by the ecb. the design envisaged for the ssm is based on building a strong centre, supported by an adequate allocation of tasks between centre and periphery. the responsibility and decision - making power for the overall functioning of the system will be held by the ecb. its efficient operationalisation, however, will depend on the national competent authorities, whose expertise and proximity to the supervised entities are essential in ensuring that no aspect is overlooked. even in the case of banks directly supervised by the ecb, experts from national authorities will be involved in on - site inspections. these and bis central bankers β speeches other operations should be conducted in the context of joint supervisory teams headed by ecb experts. the conferral of supervisory tasks to the central bank mirrors the prevailing consensus in many jurisdictions. the crisis has actually reinforced this trend of central banks acquiring supervisory responsibilities, benefiting from the synergies between monetary policy and supervision. these first include potential benefits from the sharing of information with regard to monetary policy, the supervision of banks and the oversight of payment systems. second, central banks can draw on expertise in the field of financial stability analysis. third, the institutional independence of central banks, with clearly defined rules of accountability, can positively contribute to the effective conduct of
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##ncy? a common denominator for all policy makers at the moment is the lingering uncertainty. many scenarios are in place, from smooth and orderly recovery, through strong rebound with price pressures, ending to stalled recovery amidst new and more virulent strains. from a central bank perspective, our advantage is that there is still policy room for maneuver, although narrowed. our policy rate is still in a positive territory at a level of 1. 25 %, alternative instruments are available for targeted actions, the level of foreign reserves remains comfortable and the banking system stable with npls ratio of only 3. 4 %, despite the pandemics shock and closure of a bank in the midst of the pandemics. of course we have to be vigilant, and not only of conventional side effects of " too loose for too long " stance, but also of the possible adverse feedback 1 / 2 bis - central bankers'speeches loop between real and financial sector, as well as of the so called " zombification " risk. as complacency is not an option, shielding against those risks asks for further strengthening of the financial safety net, which will remain one of our priorities. thus, although still overwhelmed with the current challenges and the need for further policy support, we must not remain oblivious to the pre β pandemic strivings to increase the potential to grow faster, but in a sustainable and inclusive way. this requires gradual shifting of the focus back to the pre - crisis structural bottlenecks such as the quality of institutions, strengthening the rule of law, investing in human capital and in the potential to innovate, as well as to new structural hurdles that will be left as a legacy of the pandemics, which might not be even well known at the current juncture. clearly, we as central banks cannot play a main role in these segments, but perhaps a supporting one. in this context, despite many burning issues, we have managed to keep the focus on more structural issues such as digitalization by working on the first national fintech strategy, and on green finance by becoming a member of the international network for greening the financial system and conducting the first survey on the current status of the green finance. all these should ensure sustainable and inclusive recovery, while confirming our strong commitment to adopting the eu standards and best practices that should enable faster convergence. thank you! 2 / 2 bis - central bankers'speeches
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as well as the lower inflows and / or larger net foreign capital outflows create serious pressures over the value of national currencies. 2 ) macedonian economy, as we stated, is under a strong influence by the global macroeconomic developments. as almost everywhere in the world in our case as well the inflationary pressures fade and the economic growth decelerates because of the reduced external demand, contracted and more expensive financing sources and increased negative expectations of economic agents. the external sector imposes itself as a main problem of our macroeconomic policy. it is way too vulnerable, due to high presence of exports in sectors exposed to changes in world prices and world demand as well as due to significant reliance on private transfers as source for financing the trade deficit. additional problem is the approach to external financing. it is less available. expenses increased. investors have either lost their capital or they are waiting for better and less risky period. under such developments in the current and capital account of the balance of payments as well as due to generated unfavorable expectations of the economic agents the pressures in the foreign exchange markets become bigger. the fall in the external demand caused reduced activity among export - oriented industrial sector in the macedonian economy. the volume of the industrial output in the last quarter of 2008 registered an annual drop of 7. 6 percent, which intensified during january 2009, thus reaching 16. 7 percent. tightened conditions for credit as well as pesimistic expectations for the length of the recession reflect over domestic demand. initial signs of a deceleration of household consumption growth are registered in trade, in which during q4, 2008 the amount of turnover registered dropped by 5. 1 percent. in circumstances of private sector refraining from investments, the expectations are looking towards deceleration of the investment activity. in any case, the risks for the current projection of the economic growth definitely are in direction of the realization of growth significantly lower then projected, and maybe even that is a high optimism. in conditions of reduced import prices, the inflation continues to slow down, so that the average as well as the annual inflation rate for february equaled 1. 2 and 0. 7 percent, respectively. inflationary developments within the first two months of this year show that inflationary path for this period is under the projected one. such deviations, to a large extent may be explained with the fast decline of oil prices on world markets and with even faster deceleration of food prices. in conditions of risks for
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##nuation of 1 - year refinancing operations or a lower frequency for 3 - month and 6 - month refinancing operations. they should not be seen as the start of a tightening cycle, but rather as an incentive for banks to restructure their portfolios and to resume their market - based funding activities, as a long period of cocooning in the banking sector has microeconomic drawbacks too. looking further ahead, the governing council will continue to set the monetary policy stance by assessing the appropriateness of monetary and financial conditions in view of the risks to price stability. one of the lessons of this crisis is that central bankers should not be guided by excessively narrow inflation targeting but should pay attention to the build - up of financial imbalances, which may not immediately exert pressure on prices, but an abrupt correction of which may put price stability at risk. the governing council can claim that the medium - term orientation of its strategy and its monetary analysis are assets in this respect. a few years ago, at a previous suerf conference, i announced that m3 might abandon us. and indeed, the long - run relationship between m3 and prices proved to show signs of instability. at the same time, i pointed out that monetary analysis was much richer than monitoring m3 only. we now monitor credit developments closely. research at the bis, the imf and within the eurosystem is exploring the leading indicator properties of money and credit aggregates which may be useful in the identification of detrimental asset price bubbles. further research is still needed in order to reach definite conclusions. while monetary policy should play a role in β leaning against the wind β of over - optimism in financial markets, it should however not be over - burdened. interest rate policy on its own cannot guarantee both price stability and financial stability, and should therefore be backed up by prudential policies. 2. fundamental reforms this leads me to the second issue, the fundamental reforms which are badly needed. there is a long list of work in the pipeline of international fora. the financial stability board at g20 level as well as ecofin at eu level have drawn up detailed roadmaps to pave the way for extensive reforms. the authorities must be determined in their drive for better regulation and supervision. as explicitly noted by the basel committee, β the banking sector entered the crisis with an insufficient level and quality of capital, inadequate provisions, imprudent valuations, insufficient liquidity buffers, compensation polices that
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mathematics degree course. it is for this reason that mathematicians are increasingly in demand. with a mathematics degree, you should be able to try your hand in banking and finance, statistics, engineering, computers, teaching, econometrics, biometrics, or accountancy with a unique edge that may not be available to those graduating in other streams. 22. thus, one of the benefits of studying mathematics is the variety of career options that open up. a recent survey has shown that graduates in mathematics and computer science were at the top of the earning lists, six years after graduation. in one such study in the wall street journal ( 2009 ) on the best and worst jobs in the us, it was observed that the top three out of the best two hundred jobs listed in order of income and other factors were careers suited for math majors, namely, mathematics, actuary and statistics. besides other favorable conditions like indoor working conditions and places free of toxic fumes or noise, the study also considers pay, which was determined by measuring each job β s median income and growth potential. another recent survey shows that the top 15 highest - earning college degrees have a common element : mathematics. 23. some of the preferred career options for students of mathematics are : ( a ) mathematics proper as teaching assignment as well as research in the theoretical aspects ; ( b ) actuarial science that develops applied tools using mathematics and statistics and using them in finance and insurance ; it includes a number of inter - related disciplines, including probability and statistics, finance, and economics ; ( c ) computer science, based on the theoretical foundations of computation and their implementation and application in computer systems. students of maths, with their training in logical and precise thinking, are highly prized in this field. ( d ) operations research, developed as an interdisciplinary branch of mathematics to arrive at optimal decisions to problems in maximizing or minimizing things like costs or profits. ( e ) biomathematics or mathematical biology, also an interdisciplinary field of study that helps in modeling natural and biological processes using mathematical techniques and tools. results have been applied to areas such as cellular neurobiology, epidemic modeling, and population genetics. ( f ) cryptography is the practice and study of hiding information. cryptography is considered to be a branch of both mathematics and computer science. 24. while applied mathematics is appreciated and understood by many people, pure maths is considered very elitist. another career and research prospect that has got tremendous boost of late
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irs market without any underlying exposure in the fixed rate long - term loans, then they will obviously be paying overnight and receiving ois fixed rates and, therefore, they lose both on the floating rate side as also on the fixed rate side because during the same period, five year ois rates also increased, though only, by 0. 6 %. we thus see if they have speculated in interest rate markets, rather than hedge, they have lost both ways any which way one looks at it! what i have said about management of rupee interest rate risk applies just as much to floating rate libor - linked long - term foreign currency loans as well and i would, therefore, strongly commend to business and industry to go in for interest rate swap - enabled fixed rate longterm financing both in domestic and foreign currencies. 9. as regards commodity prices, business and industry can use international commodity exchanges to hedge dollar price risk, and domestic commodity exchanges to hedge rupee price risk. in fact, whenever some commodities, like crude oil, are in backwardation ( the futures price being lower than the current spot price ), in addition to buying price protection, business and industry also earn what is known as β rolling β, or β convenience β, yield. bis central bankers β speeches 10. by now, i am sure this learned audience must have got a fairly good sense of the repertoire of derivatives to choose from in management of financial risks business and industry need to contend with day in and day out. however, as regards derivatives, i would like to quote financial times columnist wolfgang munchau and warren buffett who famously described derivatives β as probably the most dangerous financial products ever invented β and β financial weapons of mass destruction β, respectively. i would beg to differ because, to my mind, they are as strong statements as saying that cars and driving are most dangerous because they might lead to accidents! the problem is not so much with derivatives, or with cars, for that matter, but with how we use them!! in this context, as this distinguished audience is well aware, there have reportedly been massive derivatives - related losses incurred by business and industry in india. these losses arose primarily because derivatives were used by business and industry not for hedging, but for speculative, purposes. as reported in the media, huge losses were sustained by business and industry on account of complex structured and synthetic, but so much less transparent, derivatives. in other words, business and industry must
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go in for plain vanilla derivatives which upfront, transparently, and explicitly, disclose cost of hedging strategy rather than arcane, complex, synthetic and structured derivatives which camouflage risk. as regards prudent use of derivatives, the touch - stone that business and industry can use with profit is that any derivatives strategy which promises reduction, or elimination, of hedging cost, or promises enhancing income, is intrinsically speculative and the one that involves incurring hedging cost and promises no income enhancing is intrinsically a hedging strategy. 11. to sum up, such is the insidiousness of risk that its under - pricing is perceived as low, or no risk, and, therefore, economic agents including banks, business and industry are caught unawares and unpleasantly surprised when risk suddenly eventuates. therefore, to my mind, nothing conveys and expresses the risk management mantra more trenchantly than the following : β just as you make friends when you don β t need them, not when you need them and certainly not after you need them, so also you hedge when you don β t need it, not when you need it and certainly not after you need it β. complete internalization and ingraining of this holistic risk hedging culture, attitude and temper by business and industry will, in equilibrium, reduce cost of both debt and equity capital by reducing volatility of roe as markets will perceive them as much less risky and more safe! if i have succeeded in alerting and sensitizing the learned and discerning audience to the financial risk management imperative enough, i will feel vindicated that i have delivered on my dharma today. and, i have no doubt, if business and industry completely internalize and ingrain this mantra and dharma, they will exemplify the following fairy tale ending viz. β and they lived happily ever after β! finally, with the fond hope that i have not unwittingly come across as pontificating on the mantra and dharma of financial risk management, i conclude my address and going forward wish business and industry a truly blissful risk management nirvana! 12. thank you all so very much indeed!! bis central bankers β speeches
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not at the eye of the cyclone of the global crisis. yet, while at the periphery, the effects of the crisis became increasingly stronger on the region, as well. the decline in foreign demand, increased uncertainties, tightening of financing conditions and deleveraging in the region decelerated the economic activity and evidenced a series of structural problems. i would rather not list all the channels and consequences of the global crisis, but i would like to say that withstanding the crisis required revising many conventional policies and practices. first, central banks were obliged to explore untrodden paths. the intensity of the accommodative monetary policy was unimaginable a few years ago. oftentimes, this policy relied on employing non - conventional instruments, which had not been tested before, but now have a legitimate claim to be enlisted in the arsenal of central banks. second, to guarantee the sustainable and long - term development of the economy, special attention was paid to the financial stability aspect, both at system and institutional level. in this regard, a series of supervisory and regulatory policies were adopted. third, interaction between fiscal soundness and economic and financial stability became necessary, thus conditioning the space for action and reaction by public finances. lastly, many development models β relying more on debt and consumption, rather than in investments and productivity β proved to be short lived. these models have required and still require the continuation of radical structural reforms to reconceptualise business models in many countries and guarantee sustainable and long - term growth. while debates continue on the suitability and efficiency of the instruments used to withstand the crisis, it is unquestionable that β overall β these instruments managed to prevent the worst and gradually create premises for further growth of the global economy. the situation described above is true for the western balkans as well. the stimulating economic policies, structural reforms and adjustment of internal and external imbalances have yielded their effects. the economies in the region seem to be set on the growth path, and are now based on a better understanding of the determining factors for the long - term development, and a more comprehensive framework of endorsing policies. the experience gained and the lessons learnt are undoubtedly elements that will help us steer safely, as we navigate our way into the future. as a typical western balkan country, albania is in a similar development stage to its peers. our analyses and forecasts confirm that the albanian economy is on a positive track. economic growth is expected to improve progressively
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coordination may only strengthen, if brexit implications assume the negative dimensions listed above. let me emphasise that, in bank of albania β s vision, the monetary policy oriented toward price stability, and the supervisory and regulatory policy oriented toward financial stability contribute to the sustainable and long - term development, and are complementary to each other. this creed is fully tested by experience, both in the world and in albania. in the long - term horizon, the bank of albania is confident that the investment we have made in promoting financial stability will bear its fruit with regard to sustainable development, and will increase the space for monetary policy manoeuvring. in addition, accomplishing our price stability objective would enhance the confidence in the national currency, reduce volatility and foster transparency in financial markets, thus contributing to the sustainable development of the financial system. meanwhile, in the short - term, the coordination of monetary policy and financial stability often present challenges and compromises. in this context, setting clear priorities, using the right instruments, and communicating transparently central bank actions and objectives are key elements for the success of our work. concluding, i would like to reiterate that i am fully confident that in the course of the day, all the issues i posed above will be elaborated in greater detail. i do believe that the contribution of the eminent panellists and active input from all participants will be an added value in this regard. i wish the best of success look forward with the greatest interest to the outcome of your deliberations. * * * thank you for your attention! 4 / 4 bis central bankers'speeches
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β’ third, all countries are involved in this fight, and there are no winners if illicit financial flows are not dealt with. it is noteworthy that the financial sector is the most common conduit for illicit financial flows. this is largely attributed to the interconnection between national and international financial united nations sustainable development goals ( september 2015 ). available at : https : / / sustainable development. un. org /? menu = 1300. global financial integrity ( 2010 ) illicit financial flows from africa hidden resource for development. available at http : / / www. gfintegrity. org / storage / gfip / documents / reports / gfi _ africareport _ web. pdf. stop it! track it! get it! report of the high level panel on illicit financial flows from africa ( 2015 ). available at http : / / www. uneca. org / sites / default / files / publicationfiles / iff _ main _ report _ 26feb _ en. pdf. bis central bankers β speeches systems, which can thereby provide a wider geographical reach through which illicit financial assets are moved and laundered. the financial sector, therefore, has to be at the forefront of the agenda to stem illicit financial flows. nevertheless, in order to develop and implement policies that would appropriately address the issue of illicit financial flows it is important to appreciate the vulnerabilities of african financial systems. more importantly, to understand how they enable or facilitate the movement of illicit financial flows. most of our economies are characterized by the presence of informal financial systems that are primarily cash based. however, significant gains have been made in increasing the level of financial inclusion, most notably in sub - saharan africa, where countries like kenya and tanzania have embraced mobile and financial products and services. but the overall level of financial inclusion in africa remains low. only a small percentage of the population has bank accounts, and the percentage of those owning insurance policies and securities is even lower. this is relevant given that it serves to hamper efforts to trace illicit financial flows from the continent. weak banking regulatory and supervisory frameworks has largely hindered the effective implementation of initiatives aimed at reducing illicit financial flows from africa. this is reflected at the national level, given that most african countries are yet to fully adopt and implement the 2012 financial action taskforce ( fatf ) recommendations, the international standards on combating money laundering and the financing of terrorism. the fatf standards are a comprehensive framework of preventive measures
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some insights to this process of integration. ladies and gentlemen : anti - money laundering ( aml ) and combatting the financing of terrorism remains a challenge to us all. the heavy cash - based nature of the east african economies, civil conflicts and porous borders make the region particularly vulnerable to money laundering and financing of terrorism. however significant progress has been made across the region in strengthening aml / cft regulatory regimes particularly with the support of the eastern africa anti - money laundering group ( esaamlg ). the growth of mobile phone financial services across the region will also significantly reduce the risk of aml / cft with the tractability of mobile phone financial transactions and reduction of usage of informal financial services. let us all agree that it is the informality of financial markets that will allow bad regimes of aml / cft to thrive β we need then to formalize markets. kenya and tanzania have been incorporated in the financial action task force ( fatf ) public list of countries with deficiencies in their aml / cft legal and regulatory frameworks. bis central bankers β speeches uganda has recently been added to this list. significant progress has been made in both kenya and tanzania in enacting and implementing the requisite aml / cft regimes. nairobi is also this week hosting the fatf regional review group meeting for middle east and africa that will review progress made in kenya and tanzania in addressing aml / cft deficiencies. i am sure that we will continue to strengthen our aml / cft regimes across the region given the strong political commitment and support from government, the private sector and the general public. i expect that this summit will also generate practical recommendations on how aml / cft regimes across the region can be strengthened. ladies and gentlemen : as i draw to a close, i urge you to draw from the varied experiences of the high calibre facilitators and participants in this forum to come up with recommendations that will enhance the east african financial markets β governance, risk and a policy convergence environment. this will in turn enable our envisaged regional financial markets to attract the capital that is required to finance the eac β s ambitious development agenda and also leave no room for informal financial markets to thrive. it is now my distinct honour to declare this summit officially open. thank you. bis central bankers β speeches
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previously that had been the preserve of british manufacturers. the swedish firms took over the domestic market and were even able to export their products. much the same happened with the manufacture of passenger carriages and goods wagons. today we can see similar developments in the it industry. besides the giant ericssson, sweden has many different it enterprises. but growth is still being driven not so much by users of the new communication facilities as by the production of new possibilities. to continue with the comparison, in the next phase people started to travel by rail. a journey from stockholm to gothenburg admittedly took 11 hours and 45 minutes in 1865 but that was nothing compared with a horse - drawn carriage. travelling became quicker and more efficient ; people gained new impressions and learned new things. sweden became smaller. today we travel on the internet by gathering information simply and efficiently from all over the world, largely for the price of a local telephone call. millions of people in all parts of the world are indeed using this facility and in that sense the world has now become smaller. the really important phase, however, was when the railways began to affect processes for production and distribution. previously, production in sweden had been located in the vicinity of iron ore and forests. the units were numerous and not particularly efficient ; transportation was slow. in the county of varmland, for example, there were sixty different sites for the production of iron in 1870. when the railways had been constructed, it was easier to concentrate production to fewer sites ; by around 1900 there were only six sites and they were accordingly considerably more efficient. this is just an example to illustrate how the railways played a major part in sweden β s industrial upswing in the late 19th century. productivity and growth rose. for the information technology, this phase of the process probably lies ahead. the new technology has not yet seriously altered either production and distribution processes or consumer behaviour. progress is still a little hesitant as more and more people use the new technique for surfing and learn the new technology. the potential will also be limited as long as the technique is not entirely user - friendly. it generates pressure for change when the new information technology really catches on, it will probably lead to a rapid expansion and transformation of capital stocks. the entire economy will then be involved in intensive investment and high productivity growth. old technology will be replaced by new and each unit of capital equipment will then require a smaller input of labour. unprofitable units or firms will be closed down, accompanied by new establishments
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9 8. 3 7. 1 11. 0 1. 6 1. 9 0. 0 2012 ( f ) ipom ipom jun. mar. cf may. current account ( percent of gdp ) ( f ) forecast. source : central bank of chile. table 2 world growth ( annual change, percent ) average 00 - 08 ( e ) 2011 ( f ) ipom ipom jun. mar. cf may. world at ppp world at market exchange rate 4. 0 3. 1 - 0. 6 - 2. 1 4. 9 3. 8 4. 1 3. 0 4. 1 3. 2 4. 2 3. 3 4. 4 3. 7 4. 5 3. 8 4. 6 3. 9 united states eurozone japan china rest of asia latin america ( excluding chile ) 2. 3 2. 0 1. 4 10. 4 4. 9 3. 6 - 2. 6 - 4. 1 - 6. 3 9. 2 0. 1 - 2. 0 2. 9 1. 7 4. 0 10. 3 7. 7 6. 4 3. 0 1. 3 0. 8 8. 9 4. 5 4. 2 2. 7 1. 7 - 0. 6 8. 9 4. 8 4. 2 2. 7 1. 7 0. 0 9. 3 5. 0 4. 4 3. 2 1. 5 2. 3 8. 7 5. 0 4. 2 3. 2 1. 5 3. 1 8. 6 4. 9 4. 3 3. 2 1. 7 2. 8 8. 9 5. 2 4. 3 commodity exporters trading partners 2. 9 3. 5 - 1. 0 - 0. 3 2. 9 5. 9 2. 6 4. 4 2. 7 4. 3 2. 7 4. 6 3. 0 4. 6 3. 0 4. 7 3. 2 4. 9 ( e ) estimate. ( f ) forecast. sources : central bank of chile based on a sample of investment banks, consensus forecasts, the imf. and statistics bureaus of respective countries. bis central bankers β speeches figure 3 commodity prices ( 1 ) ( index, may 2010 - june 2011 = 100 ) ( monthly index, 2006 = 100 ) 140 250 jun. 10 oct. 10 feb. 11 feb. 11 jun. 11 jun. 11 jun. 10 oct. 10 energy metals 06 07 08 09 10 11 11 (
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various services provided by the rbi regulated entities like banks, nbfcs and payment system operators. the existing ombudsman schemes are being integrated into a single scheme which will offer the benefit of a single platform to customers for getting speedy resolution of their grievances. this integrated scheme will reinforce confidence and trust in the financial system. 6. the launching of these two citizen centric initiatives today will provide further impetus to our journey towards a more inclusive and responsive financial system. i once again extend a warm welcome to all the dignitaries, participants and viewers. thank you. 1 / 1 bis central bankers'speeches
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t t mboweni : globalisation and implications for monetary policy in south africa speech by mr t t mboweni, governor of the south african reserve bank, at the gala banquet of the independent news & media international advisory board, cape town, 6 february 2002. * 1. * * introduction in december last year, i was invited to give evidence on globalisation before the economic affairs sub - committee of the house of lords, westminster. i was naturally pleased with the invitation and took advantage of the occasion to engage the lords and ladies about how globalisation impacts on the fortunes of developing countries or the so - called emerging markets. all of us use the term globalisation everyday and so do the lords and ladies at the house of lords. everyone has their understanding of what the term is all about and how globalisation impacts on all of us. the lords and ladies wanted to know from me what the positives and negatives of globalisation were on south africa. this evening, at this gala banquet for such a gathering of eminent persons of the international advisory board of the independent media group, i can only highlight certain aspects of globalisation in order to contribute to the table discussions, fully aware that after such intensive meetings all of us want a relaxed evening. i have of late often wondered what the difference in substance is between globalisation and imperialism. after some casual analysis, it seems that the two differ with respect to colonisation, division of the world into spheres of influence and the intensity and level of the dominance of finance capital in the world economy. globalisation could generally be taken to encompass the more liberalised and increased flow of goods, services, capital and finance across national economies. globalisation is therefore not a new phenomenon. the degree of economic integration in the world has been rising over time. technological progress has improved transportation and communications, enhanced information awareness and information processing, and has set the stage for new products and innovations. these developments make it much easier for national markets to be globally integrated. although these markets still do not form a global village, they have become so interdependent that they are changing the environment in which economic activity takes place. this new economic environment has, however, also brought about certain disadvantages, such as large reversals in international capital flows and financial contagion even on those countries with sound economic fundamentals. these developments have led to protests against " global capitalism ". demonstrations against globalisation are particularly strong at meetings of the imf, world bank
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, despite our inability to read the crystal ball of the next crisis, we would presumably have better ammunition to deal with the headwinds and financial turbulences that are yet to come. thank you. bis central bankers β speeches
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erwin riyanto : unveiling macroprudential policy speech by mr erwin riyanto, deputy governor of bank indonesia, at the 10th international conference on bulletin of monetary economics and banking and book launch, jakarta, 8 august 2016. * * * honorable, governor of bank indonesia bapak agus martowardojo former governors of bank indonesia bapak rachmat saleh bapak arifin m siregar bapak adrianus mooy bapak syahril sabirin bapak burhanuddin abdullah chairman of indonesia deposit insurance corporation bapak halim alamsyah directorate general of culture ministry of education and culture bapak hilmar farid head of fiscal policy agency, ministry of finance of the republic of indonesia bapak suahasil nazara head of national library of the republic of indonesia bapak muhammad syarif bando head of national archives of the republic of indonesia mustari irawan former bank indonesia board members distinguished guests, ladies and gentlemen assalamu β alaikum wr. wb, introduction β greeting & objectives 1. it is a great honor for me to be here in this 10th international conference and book launch event. please allow me to divert your attention to review the next book entitled β mengupas kebijakan makroprudensial β or β unveiling macroprudential policy β. this book i believe is not just any other book. it is the first book ever published about macroprudential policy in indonesia. it is one that is meant to educate the public with a better understanding of what is macroprudential policy, why is it important, what are the policy instruments, how it interacts with other policies and who should better have the mandate. 2. since work in the macroprudential field has only gained momentum globally following the 2008 crisis, much of the concepts are still evolving. in this book, we will come across many new financial terminologies that in principle have already been around for some time but have not yet explored. to name a few of the new terminologies are systemic risk, contagion, interconnectedness, shocks, vulnerabilities, idiosyncratic vs cross - sectional risk dimensions and macroprudential. while macroprudential policy and the aforementioned terminologies are more understood by those directly involved in the field, there is a growing need to familiarize the notion to
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bring. this is the mindset for the pursuit of β financial stability β as the new global prudential norm - our efforts are organized towards preventing another systemic collapse of the financial markets. this is very apparent in the global reform agenda where containing β too - big - to - fail β financial institutions and addressing the consequences of inter - connectedness are prominent objectives. basel 3 runs under the mantra of β making banks stronger β. it does so by institutionalizing better quality capital, introducing loss - absorbency parameters for capitalcompliant instruments, improving market transparency and setting prescriptive caps / floors for prudential purposes. on the other hand, new standards completely redefine the risk governance for financial market infrastructures or fmi. this is done with an increased appreciation for contagion risk and the need for stronger it security protocols. consumer protection and financial literacy are now considered prudential norms rather than as optional add - ons. this is because the decisions bis central bankers β speeches and behavior of informed financial consumers are itself effective stabilizers against market shocks. from the perspective of the market, these reforms increase the cost of doing business. granted, these regulatory premia have cost implications ; but it would be costly to have yet another crisis. we should also factor in, that new standards now cover more risks and look at the same risks at a higher prudential bar. the β new market landscape β is defined not only by tighter regulations but by wider coverage of risks and a more definitive handling to mitigate further build - up of known risks into systemic proportions. it can be said that new norms change our understanding of the market - - from allocating scarce resources into one that allocates risk capital. by extension then, the key commodity is information that drives decisions across various options. it is important that reforms are put in place and safeguards continuously updated to uphold the integrity of that information so that it is not abused. excellence starts from core competencies ladies and gentlemen, it should be apparent that the preferred market architecture today is substantially different from what we had in the past. if we aspire to excellence in banking, it must start from developing core competencies. however, let me be clear - - the need for continuing education has not changed ; what has changed is the mindset for achieving β banking excellence β. we still need to know about market, credit and operational risks ; but beyond these, we now need to also appreciate risks that are not so
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benjamin e diokno : empowerment of persons with disabilities through digital financial inclusion speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the43rd national disability prevention and rehabilitation week, 18 july 2021. * * * good day to everyone. the bangko sentral ng pilipinas is pleased to join the celebration of the 43rd national disability prevention and rehabilitation week. this year β s theme of β kalusugan at kaunlaran ng pilipinong may kapansanan, isulong sa gitna ng pandemya β is timely and very much aligned with the thrust of the bsp. the covid - 19 pandemic, while sparing none, has worsened difficulties for our most vulnerable and overlooked segments. socioeconomic gaps, including access to vital services, have widened. empowerment could thus not be a greater imperative. this is why we at the bangko sentral ng pilipinas believe that empowering our kababayan, especially in these extraordinary times, can lead to a better financial future and propel us to post - pandemic recovery and growth. the empowerment of the vulnerable sectors has always been an underlying objective of the bsp β s efforts. for this reason, we are continuously stepping up our financial inclusion efforts to ensure financial services are within easy reach for all filipinos, including persons with disability. with access to a wide range of financial services, filipinos can better manage their finances, seize income opportunities, and build financial resilience. financial inclusion therefore empowers individuals to improve not only their welfare, but also that of their family and community. the need for financial inclusion has been highlighted by the pandemic as people needed to transact digitally. people who had a transaction account were able to safely and conveniently conduct financial transactions through their mobile devices at the comforts of their home. this crucial capability for digital transactions should be within reach by every filipino in the new, and increasingly digital, economy. the bsp has therefore committed that by 2023, at least 70 % of adult filipinos own and use a formal account, and at least 50 % of retail payment transactions are performed digitally. we are optimistic of achieving these targets, even earlier than planned. over the years, the bsp has laid down the foundation for financial inclusion through our regulations and initiatives to build the inclusive digital finance ecosystem
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certainty. changes in the dinar exchange rate against the euro were registered on the second decimal place. gross fx reserves worth eur 13. 5 bn at end - 2020 were higher by eur 113. 2 mn compared to end - 2019. by responsibly managing fx reserves, we also raised the share of gold, as a safe - haven asset, to 13 %, versus mere 5. 7 % in late 2012. owing to the efforts of policy makers to preserve our economy, despite the pandemic, the inflow of foreign direct investment to serbia exceeded eur 3 billion, which was the highest level in the region. this is concrete evidence that serbia has been recognized as a regional investment centre. for our people and our economy, this means more jobs, higher wages and new technologies. dear friends, a year ago, i reminded the public of our long lasting efforts to have dinar bonds of the republic of serbia included in the renowned j. p. morgan family of indices. at the time, i expressed hopes that we would manage to achieve this by mid - 2021. commitment and strategic efforts invariably produce results and, on 11 february, j. p. morgan announced its decision to include our dinardenominated bonds in this prestigious family of indices as of 30 june 2021. this has sent yet another powerful signal that serbia is a safe and desirable investment destination and that it will remain so in the coming years. for us, it is of key importance that our businesses and households have remained confident that the government and the central bank will at all times be there for them, at their side, taking care of jobs, wages, preservation of production capacities and liquidity. what do figures tell us? the number of formally employed persons in our private sector increased by around 42 thousand in 2020. dear colleagues, i believe that it is the task of institutions to make life easier and simpler for people and businesses so that they can use their time, as the most valuable resource, in the best possible way. over the past eight years, the national bank of serbia has demonstrated on its own example that, in terms of innovation and financial services, our country is on a par with the most advanced economies of the world, and sometimes even ahead of them. thanks to the state - of - the - art technology which we were among the first in the world to apply, our payment service users no longer need to go a bank, as they can now make instant payments safely and quickly,
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##vid - 19 crisis broke out prevented a spiral of negative events triggered by psychological effects and panic reactions of market participants from happening. even during the crisis, serbia remained a regional investment centre committed to people, to improving the conditions of life and work, as well as to regional cooperation. nothing connects countries and people better than the economy and common interests! today, we are creating a future to the benefit of the human civilization which can only survive and thrive if it cooperates and works together. challenges remain ahead of us and our job never ends. but my message is that you can always rely on the national bank of serbia, the bank of all our citizens! i wish us all health, knowledge and love for our countries! may we have a successful conference! 3 / 3 bis central bankers'speeches
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what does the ecb say to the fact that, in the context of the second package for greece, governments have nonetheless been talking about solutions such as a debt rollover or a partial debt buyback, which could lead to default? trichet : the responsibility for this lies with the governments. the governments have been warned, in no uncertain terms and using all possible means. i have said so publicly. i have explained in detail to the heads of state and government and to the finance ministers, on several occasions, that, if a country defaults, we will no longer be able to accept its defaulted government bonds as normal eligible collateral. the governments would then have to step in themselves to put things right. that would then be their duty. ftd : what does that mean in concrete terms? trichet : in the event of a decision by the governments leading to a selective default or a default, which, again, we are warning against loud and clear, the governments would have to take care that the eurosystem is presented collateral that it could accept. ftd : when it comes to deciding whether a default has occurred, will the ecb rely, as it has until now, on the rating agencies, or might the decision not be dependent on what they say? trichet : again, it is not the working assumption of the governing council. ftd : let β s talk about the crisis management of the euro area governments. the heads of state and government and the finance ministers give the appearance of being a chaotic bunch. they often create such a cacophony that it inflames the crisis rather than dampening it. what needs to change? trichet : there is an absolute need to improve β verbal discipline β. the governments need to speak with one voice on such complex and sensitive issues as the crisis. it is, of course, complex to take into account the need for sound, shared management of the economic pillar of the economic and monetary union, whilst fully respecting the functioning of the 17 democracies of the euro area. but speaking with one voice in a period of crisis is of essence. and, after all, it is what was possible after lehman brothers at the end of 2008. ftd : some euro area governments have said that chancellor merkel has frequently acted too slowly and has thus made the crisis even worse. is that true? trichet : not in the least. i would see a discussion of this kind as being completely misplaced in
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are β second generation β services, which represent a quantum leap forward in the integration and quality of the euro area core infrastructure, with substantial benefits for financial market integration. iv. eurosystem activities to promote financial integration i now turn to the report β s third chapter, titled β eurosystem activities for financial integration β. it provides an overview of the main eurosystem activities in 2007. the ecb and the eurosystem contributed to financial integration and development in a number of ways, building on their expertise and special nature as public institutions which are both active in the market and have close interaction with market participants. we distinguish between four types of activities [ see slide 24 ]. first, we give advice on the legislative and regulatory framework for the financial system and make rules. a good example is the eurosystem β s contribution to the first full review of the lamfalussy framework last year. the eurosystem reiterated its support to the lamfalussy framework subject to some necessary functional enhancements within the current institutional framework and in particular emphasised the need for intensification of cooperation and information - sharing between supervisors and central banks. second, we seek to act as catalysts for private sector activities. in this regard, we have been instrumental in the success of the short - term european paper, or step, initiative. this initiative aims to promote the integration of short - term paper market through the voluntary compliance of market players with a core set of standards. the outstanding amount of eurodenominated step - labelled securities already accounts for about 30 % of all eurodenominated short - term paper placed by non - government issuers worldwide. third, we enhance knowledge, raise awareness and monitor the state of european financial integration. this report, and the indicators of financial integration that are presented here, are an illustrative example of this type of activity. fourth, we provide central bank services that also foster european financial integration. as an example, i choose our wholesale payment system, target2. the successful launch of this single technical platform in november last year marks a significant milestone in financial integration. target2, replacing target, provides for a harmonised service level, a single price structure, and a harmonised set of cash settlement services in central bank money for all β ancillary β systems, such as retail payment systems, clearing houses and securities settlement systems. all central banks and target users will have migrated to target2 by 19 may this year. v. concluding remarks
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where necessary, to the capital requirements related to some liquidity lines or to the securitisation rules. finally, the crisis has highlighted the need for banks to improve their analysis, measurement and management of liquidity risk. a review of how refinancing risk could arise across all of a bank β s business lines is a priority ; as is an analysis of how refinancing risk interacts with market risk, credit risk and concentration risk. the committee of european banking supervisors and the basel committee, at the global level, are currently reviewing the principles governing liquidity risk management. on a final note, i would like to add that the crisis has highlighted the need to enhance internal control systems and to improve the circulation of information about risks, especially for senior managers. the exceptional case of fraud affecting societe generale has strengthened our resolve in this matter. in france, this should lead to the amendment of regulation 97. 02 on internal control, with provisions on managing operating risk, along with specific efforts to fight fraud. this reform is connected to moves to ensure greater involvement of banks β highest governance bodies in monitoring their internal control systems. all these initiatives draw on the lessons learned from the past, but they are also forward - looking. their purpose is to establish the principles of risk management. these principles do not eliminate all risks, but they enhance the resilience of the system when tensions do emerge. this is the objective of the reforms, which i am sure will contribute to greater financial stability in the long run. * * * the commission bancaire therefore intends to continue its action to enhance management and control of these risks, not only within france but at the international level as well, naturally, within a european banking supervision structure that emphasises real convergence in supervisory practices. the practical implementation of supervisory colleges needs to be stepped up in order to achieve this objective. supervisory colleges are the keystone for the supervision of large cross - border groups in europe. the resolutely european thrust of our action, which is naturally in line with the international development of banking activities and of the sources of vulnerability for financial stability, will lead to the incorporation of a european convergence objective into the mandates of domestic supervisors. from my point of view, this objective will be a major motivation for the supervisory community as a whole.
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1 per cent ( particularly in foreign operations, with an increase of 22 per cent compared to 2006 ), and project financing. retail banking is still a core business for french banks and it played a critical role in stabilising income sources since the beginning of the financial crisis. origination of new loans for non - financial agents remained high. proper pricing of risks according to the credit quality of borrowers is therefore a key issue in france β s highly competitive lending market. by contrast, corporate and investment banking activities had a broadly negative impact on earnings, due to the combined effects of asset impairment and falling profits. losses from asset management vary more significantly from one institution to another. what can we learn from the major banks β first quarter earnings in 2008? earnings are obviously following the same trend as in 2007 and reflect the persistent effects of the risks associated with the subprime crisis, with valuation losses on assets and higher risk - related costs. a compound indicator, such as roe shows a decline in profitability, but it still stands at an average of 14 per cent, compared to 18. 9 per cent for the three largest banking groups in the first quarter of 2007. on this point, i would like to put this decline into context. it follows several years of exceptional profits, which raised questions about their sustainability. despite declining income, the french banking system is still financially sound : the tier 1 solvency ratio based on original own funds stood at an average of 7. 1 per cent for the three largest banking groups at the end of 2007, much higher than the minimum ratio of 4 per cent set under pillar 1 of the basel ii accord. banks increased their solvency ratios in the first quarter of 2008 and the commission bancaire attaches a great deal of importance to this effort. the benefits of business diversification, the effectiveness of the measures taken to limit risk exposures and the satisfactory capital levels have also enabled the major banking groups to remain highly rated by the leading international agencies. 2. the current economic situation calls for vigilance nonetheless, since banks must be ready to cope with new risks that may occur at any time. the sources of risks related to the crisis are being closely monitored, but the french banking system, like any other, cannot be fully protected against new negative developments stemming from the crisis. in today β s globalised financial markets, the contagion of financial turmoil can spread through many channels. therefore, extreme vigilance is called for. for example, let
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programme coordinator from the ecb, and to all participating experts from the ecb, the european system of central banks and the national bank of the republic of macedonia. thank you. bis central bankers β speeches
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dimitar bogov : macedonia β s needs analysis report concerning accession to the european system of central bank and the eurosystem address by mr dimitar bogov, governor of the national bank of the republic of macedonia, on the occasion of the closing of the ipa project β needs analysis programme β with the national bank of the republic of macedonia, skopje, 10 july 2013. * * * dear mr. asmusen, member of the executive board of the ecb dear mr. orav, eu ambassador to the republic of macedonia ladies and gentlemen, distinguished guests, media representatives, it is my great pleasure to inform you that today, at the meeting of the steering committee of the joint eu - funded project with the european central bank on the nbrm needs analysis in the process of its accession to the european system of central banks and the eurosystem, we adopted the final report, the needs analysis report. thus, i may conclude that the project, whose implementation took nine months, ended successfully. the success is primarily due to the commitment to the project and the good cooperation among all stakeholders over the past nine months. so, let me first express my gratitude to the ecb, with which we jointly initiated and organized this collaboration, to the national central banks of the european system of central banks and to their experts who participated and were directly involved in the implementation of the project, as well as to the eu delegation in our country for their support throughout the project duration and of course for providing financial assistance to ensure the implementation of the project. also i would like to stress the benefit for the nbrm from the extraordinary collaboration with the representatives of the ecb and of the national central banks of the eurosystem. considering the role of the central bank in the country's accession to the eu, the national bank of the republic of macedonia has initiated this project in order to prepare for future membership in the european system of central banks and the eurosystem. the road to the eu is a process that requires from us to build strong and effective institutions. this project has exactly that aim : strengthening the institutional capacity of the national bank and harmonization of the standards for the national central banks in the eu by means of revising the current legal framework, the adoption and implementation of new policies and practices and staff training. the implementation of european standards and best practices in the operations of the nbrm is not an end in itself. it will contribute to strengthening of the role of
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share of the currency, a portfolio shift away from the currency, for example, can lead to large capital outflows and / or large declines in the exchange rate. concerns about the effects of changes in portfolio preferences caused both the german and the japanese governments to take measures to restrict the international uses of the deutsche mark and yen, respectively, during the 1970s and early 1980s. concerns that the imbalances in the us economy, including the large current account deficit, could lead to a massive sell - off by foreigners of their holdings of us dollar balances have underpinned concerns of a possible hard landing for the us currency. the international role of the euro let me now turn to the specific focus of this session - the international role of the euro. it is important to note that the ecb has adopted a neutral stance concerning the internationalization of its currency, implying that it neither fosters nor hinders the process. it accepts the view that the international role of the euro is primarily determined by the decisions of market participants. how, then, does the euro stack up in terms of the conditions that determine an international currency? the first factor i mentioned that determines international currency use is a stable currency. the mandate of the ecb is to maintain the purchasing power of its currency. since its inception, therefore, the ecb has sought, and it has attained, stability of its currency. this stability is proof that the institution is performing well. yet, in the quest for stability, monetary policy cannot go it alone. it needs to be complimented by a consistent fiscal - policy stance. indeed, the academic literature has coined a name for the connection between monetary and fiscal policies, calling it β fiscal dominance β. the implication of this connection for the international role of the euro is that, to ensure the future stability of the euro, member states will need to adhere to the stability and growth pact. the second factor determining international currency - status is size. measured in terms of population, the euro area is one of the largest economies in the world, with more than 300 million inhabitants. by comparison, the populations of the united states and japan are about 270 million and 125 million, respectively. the euro area is the largest trading partner of the world economy, accounting for almost 20 % of world exports, compared with about 15 % for the united states and 9 % for japan. the gdp of the euro area is equivalent to some 16 % of world gdp, about 6 percentage points less than the share of
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nicholas c garganas : international role of the euro address by mr nicholas c garganas, governor of the bank of greece, at the conference of the european commission β europe, the mediterranean and the euro β, athens, 4 february 2003. * * * introduction ladies and gentlemen it is a pleasure to participate in an event organised by the european commission. i would like to thank the commission for inviting me to address some of the basic considerations that confront the euro in its emergence as an international currency. let me begin by asking the question : β how does a currency acquire the status of an international currency? β this question is being asked more and more often as the euro takes on increasing importance in the global financial system. the interwar period was dominated by two currencies - the us dollar and the pound sterling - while the postwar world has been dominated by the us dollar. unlike the situation in national economies or monetary unions, where the currency used is determined by government decree, currencies are used internationally because of neither an act of parliament nor an act of god. rather the choice of currencies used for international transactions is mainly the result of invisible hand processes. currencies attain international status because they meet the various needs of foreign official institutions and foreign private parties more effectively than do other financial assets. what factors contribute to the use of a specific money as an international currency? why was the dutch guilder the dominant international currency in the 17th and 18th centuries, the british pound in the 19th and early 20th centuries, and the dollar since the end of the second world war? several factors are essential if a currency is to be used internationally. first and foremost, an international currency must be perceived as sound. to be acceptable, market participants must be willing to hold it as a store of value. this circumstance means that inflation in the country or monetary union issuing the currency must be low and stable relative to those of other currencies. inflation reduces the purchasing power of a currency, discouraging its use internationally. it also leads to exchange - rate depreciation and uncertainty. a necessary condition for the international use of a currency, therefore, is that a currency β s future value in terms of goods and services has to be perceived as predictable and stable. clearly, many currencies meet this test ; yet few emerge as international currencies. therefore, there must be - and there are - additional factors that help determine the internationalisation of a currency. one such factor
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. 2 / 3 bis - central bankers'speeches we are making online and printed versions of the abridged historical booklet available to the general public, in german and in english. after that, the full academic volume and the monographs will be published. based on the publications, we will set up further projects to disseminate the study findings. before i give the floor to you, professor brechtken and professor ritschl, may i express β on behalf of everyone involved in this project β our appreciation and gratitude for all your work. 3 / 3 bis - central bankers'speeches
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joachim nagel : from the reichsbank to the bundesbank welcome address by dr joachim nagel, president of the deutsche bundesbank, at the press conference presenting the findings of the historical research project " from the reichsbank to the bundesbank ", frankfurt am main, 15 march 2024. * * * check against delivery 1 welcome ladies and gentlemen, a very warm welcome to our press conference today, where we will be talking about the study " from the reichsbank to the bundesbank : people, generations and concepts between tradition, continuity and new beginnings ". the two gentlemen who led the research project, professor magnus brechtken and professor albrecht ritschl, will present their research findings to you in a moment. 2 study background the bundesbank commissioned research into the history of the reichsbank in its function as the central bank during the national socialist era. the researchers were also asked to explore continuities in terms of personnel after central bank institutions began anew in the post - war period. quite a few federal ministries and authorities have commissioned similar research projects in recent years. neither the bank deutscher lander, founded in 1948, nor the bundesbank, established in 1957, are legal successors to the reichsbank. nevertheless, the bundesbank is supporting and facilitating historical research on the reichsbank. we were privileged to engage professor magnus brechtken and professor albrecht ritschl for this project, both of whom are internationally renowned and experienced experts. under their leadership, a research team made up of ingo loose, marcel boldorf, christopher kopper, olga christodoulaki, ralf banken, christian marx, boris gehlen, rouven janneck and stefan gruner worked on eight sub - projects in total. the bundesbank encouraged this work, made it possible and provided organisational support. the project was launched in november 2017. it took longer than originally planned, particularly as a result of the covid - 19 pandemic. this is because the team of researchers had to postpone their work for a time because archives were closed and foreign travel was not permitted. now, though, the academic work has been completed and the findings are ready for publication. a full academic volume is scheduled for publication before the end of this year. and there are plans to publish monographs for each of the eight sub - projects by next
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, asia and the pacific will be home to 62 % of the world β s elderly population, with one in four persons aged 60 and above. this will lead to greater demand for health insurance, annuity and other retirement security products. bis central bankers β speeches as the leading insurance centre in asia, singapore is well - placed to serve the burgeoning insurance needs of the region. the insurance industry is one of the brightest stars in the constellation of singapore β s financial sector. the industry has done remarkably well, but its story is not well known. i want to briefly sketch the journey of singapore β s insurance industry from writing pure domestic risks to becoming a regional underwriting hub in just ten years. i will then share our vision and strategies for the next phase of the industry β s growth β to become a global insurance marketplace at the heart of asia. the journey to a regional underwriting hub in the early days, the singapore insurance industry was focused on servicing domestic business, with life insurance being the mainstay. in fact, mas had adopted a closed - door policy to direct insurers since 1990. in 2000, mas liberalised the insurance industry, lifting the closed - door policy on direct insurers and the 49 % foreign shareholding limit in locally owned direct insurers. singapore β s development as a regional insurance hub took off. β’ since 2000, offshore business has been on a steady uptrend, growing an average of 13 % per annum to us $ 5. 4bn in 2012. the share of offshore non - life business has increased from 50 % in 2000 to 65 % in 2012. β’ major insurance groups across different segments of the industry, from direct insurers to reinsurers and brokers, have sited their regional operating and business hubs here. today, singapore is recognised as the leading reinsurance hub in asia. amongst the top 25 reinsurers in the world, 16 have regional hubs here. the market has built up significant expertise in specialty insurance, namely marine, energy, catastrophe, credit and political risks. for example, singapore is the second largest market for structured credit and political risk worldwide after london. the number of global and regional positions in singapore has grown. most underwriting decisions can be made on the ground instead of being referred back to headquarters. this has enabled the singapore market to respond more quickly to clients β needs. most asian risks, including entire large reinsurance programmes and specialty risks, can now be fully placed
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the opportunity to stress - test their systems, assess the responsiveness of existing coverage to losses, and gain an appreciation of potential losses and the need for cyber insurance cover. promote asian demand next, we want to promote insurance demand in asia. asia is already leading the world in premium growth. we seek to catalyse the development of insurance demand in the region via a three - pronged approach. first, enhancing cross - border access to regional markets. the asean economies are working together on a comprehensive insurance liberalisation framework. β’ we aspire to achieve substantial liberalisation by 2020 for all insurance sub - sectors, namely life insurance, non - life insurance, reinsurance and retrocession, insurance intermediation, and insurance auxiliary services. β’ insurers can expect to benefit from easier cross - border provision of services and substantial access across the asean customer base from offices in any asean member country. β’ the framework is expected to be discussed at the asean finance ministers β meeting next year. second, increasing the pool of asian risk data. modelling and loss simulation are key tools to help insurers manage and price their exposures. accurate and timely data are critical for risk models to predict the impact of a loss event. for example, to predict the vulnerability of an insured risk to catastrophes, a wide variety of data is required, such as geographic location, bis central bankers β speeches soil structures, rainfall, construction materials and urban density, just to name a few. however, there is a severe paucity of data on asian risks. singapore is addressing this gap by setting up several research institutions to gather and analyse data in specific areas of risks. β’ for example, the institute of catastrophe risk management ( icrm ) at the nanyang technological university is currently undertaking research projects for flood and earthquake risk assessment in selected asian cities. β’ in addition to collecting and analysing the data, icrm conducts on - site studies and risk assessments of the cities in question, and develops hazard maps and risk models. β’ to ensure that its research is relevant to the industry, icrm actively reaches out to industry players through seminars and workshops. third, increasing risk awareness. mas supports efforts to raise risk management awareness in the region. β’ i am pleased to note that asia β s first association for risk managers, the pan - asian risk and insurance management association ( parima ), was set up in singapore in april, with strong support from the insurance industry. β’ as a platform for
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we live in : ΟΞ±Ξ½ΟΞ± ΟΡι ( panta rhei ), he said. everything flows. in 1789, benjamin franklin took a somewhat lighter view when he joked : β in this world nothing can be said to be certain, except death and taxes β. today, i do not intend to talk about death, nor about taxes. instead, i would like to focus on a few aspects of change and how economists and monetary policymakers grapple with them. this is also a central theme underlying this conference, as i am going to highlight. from the 1980s onwards, advanced economies experienced a period of remarkable economic 1 / 7 bis central bankers'speeches stability. swings in inflation and output growth lessened to such a degree that it came to be known as the β great moderation β. 1 it was around the time of the great moderation that the idea of the inflation targeting framework for monetary policy spread. committing to keeping inflation low, in many cases at around 2 %, helped many central banks to anchor people β s inflation expectations and to successfully manage short - term economic fluctuations. new keynesian models suggested the existence of a β divine coincidence β 2 β that by stabilising inflation, output swings would be minimised as well. this was certainly a period of bliss. and hopes were high that it was only the start of many more years of stability to come. some even dared to ask whether the business cycle had ended. 3 in retrospect, one might be forgiven for thinking that it sounded a bit like the β end of history β for monetary policy. and β also in economics β it appears that such high hopes may be a reliable indicator that very soon, the plot will take a surprising turn for the worse. as we all know, this period of economic calm ended in what today is called the β great recession β. inevitably, several of the convictions underlying the pre - crisis monetary policy framework have been questioned since then. the pre - crisis consensus held, for example, that monetary policy should focus exclusively on using short - term interest rates in order to stabilise consumer price inflation. it was thought that identifying financial bubbles was costly and ineffective, and that monetary policy β s contribution to financial stability should be confined to mopping up the damage once a bubble had popped. now, the debate is on whether to β lean β or to β clean β. should central banks actively use monetary policy also to prevent the build - up of asset price bubbles
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evidence of this relationship for euro area periphery countries. 10 studies by the oecd confirm that a non - negligible percentage of firms in some eu countries can be classified as β zombie firms β. 11 for instance, in 2013, 28 % of capital resources in greece, 19 % in italy and 16 % in spain were sunk in firms that were unable to cover their cost of capital. 3 / 7 bis central bankers'speeches economists fabiano schivardi, enrico sette and guido tabellini have shown how the health of the banking system influences capital allocation. 12 they estimate that credit misallocation in italy reduced annual gdp growth by between 0. 2 and 0. 35 percentage point in the 2008 to 2013 period. what can be done to improve capital allocation? research suggests that effective restructuring and resolution regimes incentivise banks to grant credit prudently and can therefore improve economic growth. 13 progress has been made with regard to the reduction of non - performing loans on the books of euro area banks. but more needs to be done to resolve this issue as quickly as possible. in countries with low - npl banking systems, it would also help to alleviate concerns about the risks which might have to be shouldered when moving to a european deposit insurance scheme. the main takeaway from session i seems to be that levers such as competition policies have to be pulled in order to improve allocative efficiency. this resonates well with the message which the governing council has been stressing for years now : structural policies are key to shifting the economy towards a higher growth path. however, the findings on mark - ups may also have important implications for inflation. here, it may be convenient to distinguish between longer - term and cyclical aspects. if mark - ups have indeed risen in the united states over a long period of time, they should have produced upward pressure on prices, all else equal. along these lines, jan eeckhout may suggest later that the us inflation rate was lifted by about 1 percentage point per year from 1980 to 2014, as the average mark - up rose. 14 thus, absent this effect, inflation would have even been markedly lower in recent years than it actually was. this would render the phenomenon of subdued inflation in the face of a tighter us labour market all the more puzzling. on the other hand, the bundesbank study i just mentioned finds evidence of a procyclical behaviour of mark - ups in european countries. especially during
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, simplifying the system. the tax base for irap can now be drawn directly from the company β s income statement without the adjustments required for business income, independently of the rules followed in drawing up the accounts ( italian civil code or international accounting standards ). this produces not only a simplification of formalities but also greater certainty for firms, by reducing the scope for possible disputes. the restructuring of irap is accompanied by the diminution of some tax credits ( those for small enterprises and the fixed - amount credit in connection with labour costs ) ; and as for ires, accelerated depreciation is no longer allowed. for banks and insurance companies the tax base will include 50 per cent of dividends. sole proprietorships and partnerships will be able to opt, in place of personal income tax, for separate taxation of retained earnings, at the same rate as corporate income tax. for self - employed workers and small enterprises with revenues of less than β¬30, 000 a substitute tax regime is introduced with a tax rate of 20 per cent, exemption from vat and irap, and documentation and accounting simplifications. in addition to the revenue requirement, eligibility for this regime also requires that the taxpayer not have made export sales, not have had any employees during the year, and not have purchased capital goods worth more than β¬15, 000 in the last three years. at present self - employed workers and small enterprises can opt for one of four different, favourable tax regimes, if they comply with a specific set of requirements ( involving amount of revenues, start - up of new business, inclusion within sector studies ). of these regimes, the only one that will remain is that for persons who start up new professional or business activities, and only for the tax year in which the business is started up and the following two. finally, some sectoral tax reliefs are extended to 2008, reducing estimated revenue by β¬0. 7 billion. 4. some evaluations the government has said on more than one occasion that the crucial challenge of italy β s public finances consists in simultaneously bringing down the debt ratio and reducing the fiscal burden on honest taxpayers. to achieve these objectives it is necessary to curb primary current expenditure, which in the past few years has grown at a real rate of between 2 and 2. 5 per cent a year, and to β spend better β by improving the effectiveness and efficiency of public - sector operations. recent fiscal policy decisions do not brake the growth in expenditure. the
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have already contributed, go and demand your money back. we must all act together to stop the spread of this illegal and evil activity. 9. conclusion to conclude, the government and the bank of png has put in place appropriate policies, which have led to improvements in our macroeconomic performance. all of us, the business community and development partners must now build on these achievements to ensure that the gains are passed on to everyone. with one more bank now established in kimbe, this will increase access to banking and financial services for a wider section of our communities. money should circulate easily within this province and outside. with money circulation increasing, the bank of png has introduced a clean banknote policy to ensure our currency maintains its quality, standards, and security. i ask you all to return any soiled and damaged banknotes to the banks to be returned for destruction so that new ones can be issued. do not continue to use old banknotes. the people of west new britain province now have three banks in operation. this is a clear sign of the confidence the banking sector has in the people and the local economy here. you must use the banks and other licensed financial institutions to conduct your financial transactions. they are safe because the bank of png keeps an oversight on them. look after your banks and financial institutions. safeguard them and support them. they provide an important service in the community. banks and other businesses have closed down branches in many provinces due to criminal activities, vandalism and mismanagement. let us ensure that this will not happen in kimbe and the west new britain province. i again urge you all not to lose your money in illegal, unlicensed and fraudulent money schemes. do not invest in fms. you are sure to lose your money that you worked hard to earn and will never get it back. always know that the fms will disappear or die when you stop giving them your money in return for financial promises of billions of kina that will never come. the economic conditions are conducive and future prospects continue to look positive for png. therefore, work on your oil palm, cocoa and coconut blocks, your fishing and forestry projects, and other economic activities. then put your financial gains in the banks and financial institutions that are licensed and supervised by the central bank, where they are safe ; not in money schemes. on behalf of the board and management of the bank of png, i would like to congratulate an
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high lending rates, although they enable large profits to be made in the short run, may damage the long run prospects for the banking industry if they stifle the growth of bank lending to the private sector. since the turn of the millennium, bank intermediation has grown dramatically in uganda. credit to the private sector has risen from 6 percent of gdp in 2000 to 14 percent of gdp today. this is an important achievement which demonstrates that the banking industry has strengthened its contribution to the broader economy. nevertheless, there are still important gaps in the credit market which will have to be closed. in particular, many small and medium scale enterprises still struggle to obtain the finance they need, in the forms which are most appropriate, to support their business activities and investment requirements. part of the reason for this lies with the borrowers themselves, especially with regard to poor business bis central bankers β speeches management. but banks also have a contribution to make in enhancing access to credit by small and medium scale enterprises ; for example by strengthening their capacities for evaluating the business prospects and creditworthiness of loan applicants and by developing new ways of securing loans to business enterprises. although the financial sector in uganda has grown strongly since the turn of the millennium, less progress has been made in terms of diversification. the growth of the non bank financial sector, with the exception of nssf, has been rather disappointing. our insurance industry, for example, is only a fifth of the size of its counterpart in kenya in terms of assets. as our economy expands and becomes more sophisticated, i believe that demand for non bank financial products, such as life insurance, will increase. consequently, unless the financial sector can diversify its product range to meet this demand, customers in uganda might be forced to look to firms elsewhere in the region to purchase financial services. i hope that the forthcoming amendments to the financial institutions act, which will allow banks to undertake bancassurance in partnership with insurance companies and to offer islamic financial products to their customers, together with the liberalization of the pensions industry, will help to stimulate the diversification of our financial sector. with these remarks, i would like to thank the management and board of directors of the uganda institute of banking and financial services for giving me an opportunity to speak at this year β s agm. i also want to wish all of the stakeholders in the financial services industry the best of luck for the next fifty years. we have together overcome enormous challenges in the first fifty years of independence,
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emmanuel tumusiime - mutebile : uganda β s financial sector at 50 β achievements, challenges and expectations for the future remarks by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the annual general meeting of the uganda institute of banking and financial services, kampala, 14 june 2013. * * * the board chairperson of the uganda institute of banking and financial services members of the board of directors of the institute, members of the institute present, ceos of financial institutions and all bankers present, invited guests in your respective capacities, ladies and gentlemen, it is a great pleasure for me to address this agm of the uganda institute of banking and financial services. i will begin by thanking the board and members of the institute for arranging the agm and for their choice of theme : β uganda β s financial sector at 50 ; achievements, challenges and expectations for the future β which is clearly very pertinent for everyone involved in the sector. in keeping with this theme, i want to share with you my thoughts on what i believe are the most pressing challenges facing the financial services industry in uganda today. these are challenges which must be confronted if the industry is to contribute fully to our efforts to transform the structure of the economy and move it towards middle income status. i would like to highlight three issues in particular ; the need to reduce interest rate spreads in the banking industry ; strengthening the financing of small and medium scale enterprises and the diversification of our financial sector. the regional financial sector assessment program, which was conducted in may of this year, showed that bank interest rate spreads in uganda are the highest in the east african region after burundi and among the highest in the world. the interest rate spread in uganda in 2012 was 15 percent, compared to less than 12 percent in both kenya and tanzania. spreads are high mainly because of heavy overheard costs and high profits earned by banks. overheads and profits before tax accounted for 42 percent and 28 percent of banks β gross income respectively in the 12 months ending in march of this year. unless we can reduce spreads, it will be very difficult to bring bank lending rates down to levels which are more affordable for borrowers. to reduce interest rate spreads it will be necessary for banks to cut overheads as a share of their income, by becoming more efficient. the banking industry is very profitable in uganda : the average return on assets earned over the last 12 months was 3. 6 percent. but banks should also recognize that
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β the ecb β s strategy review against the background of the covid - 19 crisis β speech by governor knot at the euro50 group videoconference 15 october, 2020 ( i ) setting the stage in my remarks, i want to take a look at current efforts by central banks to review their monetary strategies. i will do this from a euro area perspective. to set the stage, let me describe how the macroeconomic environment in which central banks operate has changed markedly since 2003, when the ecb last reviewed its monetary strategy. this was the motivation for the ongoing review. the main changes include : 1. the fall in the natural real rate of interest, often called r - star. while notoriously uncertain and dependent on modelling assumptions, estimates of the equilibrium interest rate have declined visibly since the early 2000s ( see chart 1 ). 2. the significant decline of different measures of inflation over the past decade, and particularly since 2014, associated with lower trend inflation and higher inflation persistence ( see charts 2 - 3 ). 3. the broad increase in uncertainty, including on : β’ the nature of shocks hitting the economy ; β’ the effectiveness and transmission of our policy tools ; β’ how agents form expectations of the future and whether their long - term inflation expectations are well - anchored to the central bank β s inflation aim ; and more. the decline in inflation, which is the main variable of interest for monetary authorities, is particularly noteworthy. during the great recession, we used to talk about the β missing disinflation puzzle β, while between 2014 and 2019 we discussed at length the β missing inflation puzzle β. a flatter philips curve might be one explanation for both. but the policy debate and in academic research have shown that the decline in inflation can also been explained by other factors, or other narratives. one such plausible narrative for low inflation is a phillips curve that is alive combined with a fall in trend inflation. this downward trend arguably reflects structural but not necessarily secular factors in the global economy β most notably globalization, digitalization and demographics. although there is no consensus on their relative importance, it is clear that central banks have only incomplete control over the disinflationary impact of these factors. ( ii ) the covid - 19 shock it is in this evolving environment, in which the ecb strategy review has been ongoing, that covid - 19 hit like a meteorite. the covid - 19 shock is an unprecedented, truly exogenous, global shock with markedly different sector
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##al effects. in 2020q2, the shock has caused a historic collapse in output. moreover, the shock has magnified the already heightened uncertainty and has prompted behavioral changes β like the substantial increase in households β propensity to save β which if persistent, are likely to have lasting macroeconomic consequences. the covid - 19 shock has both supply and demand elements, which called for different types of policy responses. as far as monetary policy is concerned, the demand character of the shock required a strong and fast response from monetary authorities to support the economy. ( iii ) instruments with inflation already low for some time before the covid - 19 crisis hit β something the ecb had been uneasy about β monetary policy has already been stretched. in the euro area, as in many other economies, policy rates have been stuck close their effective lower bound. and central banks have come to play a large role in financial markets and in financial intermediation. this has implications for the monetary policy space that we enjoy in the face of this unprecedented shock. it also has implications for the functioning of financial markets, most notably safe assets and bond pricing. a theme of the ecb β s strategy evaluation that has therefore become even more important is to what extent unconventional monetary policies create policy space and thus help to overcome the effective lower bound. to me, the answer is state dependent. for instance, there is ample evidence that asset purchases are more effective at times when market frictions or stress are the highest. as the covid - 19 crisis unfolded, in the euro area this was most visible in the fragmentation of bond markets. it is mainly for this reason that the extension of our asset purchase programme and the pandemic emergency purchase programme were the most logical monetary policy instruments in the first month of the corona crisis. the flexibility embedded in pepp, moreover, allowed it to fulfill its dual purpose, namely to counter the serious risks to ( i ) the monetary policy transmission mechanism ( see chart 4 ) and ( ii ) the outlook for the euro area posed by the outbreak and escalating diffusion of the coronavirus, covid - 19. in parallel, ample liquidity support to banks in the form of tltros / pltros has been important to ensure a stable credit flow to the real economy ( see chart 5 ) but there are clear limits to what monetary policy can achieve in the face of a pandemic that may stretch out. ( iv ) the policy mix this brings me to a central
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help reduce the costs imposed on banks at a time when capital and lending are already under pressure. policymakers should consider additional steps to reduce the possible procyclical effects of deposit insurance costs while still ensuring that riskier banks pay higher premiums than safer banks. one possibility would be to raise the level to which the designated reserve ratio may grow in benign economic environments, so that a larger buffer is available to be drawn down when economic conditions worsen and insurance losses are high. systemic risk authority the policy actions i've discussed would inhibit the buildup of risks within the financial system and improve the resilience of the financial system to adverse shocks. financial stability, however, could be further enhanced by a more explicitly macroprudential approach to financial regulation and supervision in the united states. macroprudential policies focus on risks to the financial system as a whole. such risks may be crosscutting, affecting a number of firms and markets, or they may be concentrated in a few key areas. a macroprudential approach would complement and build on the current regulatory and supervisory structure, in which the primary focus is the safety and soundness of individual institutions and markets. how could macroprudential policies be better integrated into the regulatory and supervisory system? one way would be for the congress to direct and empower a governmental authority to monitor, assess, and, if necessary, address potential systemic risks within the financial system. the elements of such an authority's mission could include, for example, monitoring large or rapidly increasing exposures β such as to subprime mortgages β across firms and markets, rather than only at the level of individual firms or sectors ; ( 2 ) assessing the potential for deficiencies in evolving risk - management practices, broad - based increases in financial leverage, or changes in financial markets or products to increase systemic risks ; ( 3 ) analyzing possible spillovers between financial firms or between firms and markets, such as the mutual exposures of highly interconnected firms ; and ( 4 ) identifying possible regulatory gaps, including gaps in the protection of consumers and investors, that pose risks for the system as a whole. two areas of natural focus for a systemic risk authority would be the stability of systemically critical financial institutions and the systemically relevant aspects of the financial infrastructure that i discussed earlier. introducing a macroprudential approach to regulation would present a number of significant challenges. most fundamentally, implementing a comprehensive systemic risk program financial stability forum ( 2008 ), " report
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of the financial stability forum on enhancing market and institutional resilience : follow - up on implementation ", october 10. would demand a great deal of the supervisory authority in terms of market and institutional knowledge, analytical sophistication, capacity to process large amounts of disparate information, and supervisory expertise. other challenges include defining the range of powers that a systemic risk authority would need to fulfill its mission and then integrating that authority into the currently decentralized system of financial regulation in the united states. on the one hand, it seems clear that any new systemic risk authority should rely on the information, assessments, and supervisory and regulatory programs of existing financial supervisors and regulators whenever possible. this approach would reduce the cost to both the private sector and the public sector and allow the systemic risk authority to leverage the expertise and knowledge of other supervisors. on the other hand, because the goal of any systemic risk authority would be to have a broader view of the financial system, simply relying on existing structures likely would be insufficient. for example, a systemic risk authority would need broad authority to obtain information β through data collection and reports, or when necessary, examinations β from banks and key financial market participants, as well as from nonbank financial institutions that currently may not be subject to regular supervisory reporting requirements. a systemic risk authority likely would also need an appropriately calibrated ability to take measures to address identified systemic risks β in coordination with other supervisors, when possible, or independently, if necessary. the role of a systemic risk authority in setting standards for capital, liquidity, and risk - management practices for the financial sector also would need to be explored, given that these standards have both microprudential and macroprudential implications. in general, much discussion will be needed regarding what can reasonably be expected from a macroprudential regime and how expectations, accountability, and authorities can best be aligned. important decisions must be made about how the systemic risk regulation function should be structured and located within the government. several existing agencies have data and expertise relevant to this task, so there are a variety of organizational options. in any structure, however, to ensure accountability, the scope of authorities and responsibilities must be clearly specified some commentators have proposed that the federal reserve take on the role of systemic risk authority ; others have expressed concern that adding this responsibility would overburden the central bank. the extent to which this new responsibility might be a good match for the federal reserve depends a great deal on precisely how the congress defines
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be attributed to two factors : disagreement across point forecasts and uncertainty around individual point forecasts. 6 uncertainty, which is calculated by first taking the standard deviation of each dealer β s distribution and then averaging these individual uncertainties, provides a sense of how confident respondents are about their individual point forecasts. based on this calculation, the uncertainty around dealers β expectations for the size of the soma portfolio at the end of 2014 is large. in fact, at around $ 500 billion it is almost as large as the entire size of the large - scale asset purchase program announced in november 2010 or the mep announced in september 2011. moreover, this uncertainty has not changed significantly since the start of the purchases in september 2012. the dispersion around individual point forecasts likely reflects uncertainty about both how the economy will evolve and how the fomc will adjust its purchases in response to changes in the economic outlook or changes in its understanding of the efficacy and costs of the policy. disagreement among dealers about the likely amount of purchases is measured as the standard deviation across their average forecasts for the size of the soma portfolio at the end of 2014. in the january survey, disagreement was about $ 250 billion, significantly lower than its level in october. investors β disagreement and uncertainty about the overall stance of monetary policy will reflect their views on the future evolution of both the federal funds rate and the soma see, for example, question 8 in the january 2013 survey of primary dealers. the measures of forecast uncertainty and disagreement discussed here are based on rich and tracy and wallis ( 2004, 2005 ). bis central bankers β speeches portfolio. one way to get a sense of the overall level of policy uncertainty is to convert the soma portfolio into β fed funds equivalents β. 7 with this translation, it is possible to estimate the hypothetical level of the federal funds rate that would provide a similar amount of monetary policy accommodation as both the actual level of the federal funds rate and the size of the soma portfolio. figure 2 shows the disagreement and uncertainty around this measure of policy uncertainty 12 months in the future. disagreement about current policy is quite low relative to the past few years, which likely reflects the effect of forward guidance on expectations about the federal funds rate and the relatively low disagreement about the size of the portfolio that i mentioned earlier. uncertainty, on the other hand, is relatively high and larger than the amount of disagreement. since there is very little uncertainty about the level of the federal funds rate one year from now,
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( july ) : 498 β 514. krishnamurthy, arvind, and annette vissing - jorgensen. 2011. β the effects of quantitative easing on interest rates : channels and implications for policy. β brookings papers on economic activity, no. 2 : 215 β 65. li, canlin, and min wei. 2012. β term structure modelling with supply factors and the federal reserve β s large scale asset purchase programs. β finance and economics discussion series 2012 β 37. washington : board of governors of the federal reserve system, may. rich, robert and joseph tracy. 2006. β the relationship between expected inflation, disagreement, and uncertainty : evidence from matched point and density forecasts. β federal reserve bank of new york staff reports, no. 253, july. vayanos, dimitri and jean - luc vila. 2009. β a preferred - habitat model of the term structure of interest rates. β nber working paper series 15487. cambridge, mass. : national bureau of economic research, november. vickery, james and joshua wright. 2013. β tba trading and liquidity in the agency mbs market. β federal reserve bank of new york economic policy review, forthcoming. wallis, kenneth. 2004. β forecast uncertainty, its representation and evaluation. β tutorial lectures, ims singapore, may 3 β 6. wallis, kenneth. 2005. β combining density and interval forecasts : a modest proposal. β oxford bulletin of economics and statistics 67 ( 2005 supplement ) : 983 β 994. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches
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also be due to highly indebted households reacting more to a given change in income than other households. you would expect this to be the case if households with high debt do not have the same opportunity as others to maintain their consumption by borrowing more. 5 see sveriges riksbank ( 2011 ), the riksbank β s inquiry into risks on the swedish housing market, and hansen, s. ( 2013 ), explanations of the development of household indebtedness since the mid - 1990s, memorandum 1. finansinspektionen. 6 see the article β how are households affected by rising interest rates? β in the december 2017 monetary policy report, and gustafsson, p. et al ( 2017 ), how are household cashflows and consumption affected by higher interest rates? staff memo, sveriges riksbank. see, for instance, floden, m. et al ( 2017 ), β household debt and monetary policy : revealing the cash - flow channel β. sveriges riksbank working paper series 342. sveriges riksbank. 6 greater interest - rate sensitivity creates uncertainty about the impact of monetary policy how total consumption will be affected when interest rates are gradually raised towards more normal levels is difficult to know. interest expenditure will increase, and for some households by a relatively large extent. but the total effect will also depend on what happens in the economy otherwise as regards income from employment, housing prices, expectations, etc. it is difficult to include all such factors, but calculations show that we should expect a given interest - rate increase to subdue consumption for mortgage holders more now than in the mid - 1990s. 8 at least for certain groups, monetary policy therefore has a greater impact on the real economy now than previously. this could justify slower rate hikes than has been the case in similar economic situations in previous years. for other groups of households, on the other hand, the impact of rate hikes is not as great. there is hence an intrinsic tension here. the riksbank has only one policy rate and it is adapted to aggregate demand and the economic outlook in general, and above all to how inflation will develop. higher interest - rate sensitivity and the extent to which it affects the impact of monetary policy will, in other words, be a source of uncertainty. it will, after all, be a challenge to have a situation for a number of years in which interest rates rise β albeit slowly β while
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that has been with us for some time now is the sectoral ( and associated regional ) imbalance within our overall economy. the domestically - oriented sectors have, for the most part, been doing relatively well, whereas those sectors that are exposed to competition within or from the euro area have been under considerable pressure. domestic demand growth has remained relatively robust into this year, but we too are affected by the us slowdown and by the associated weakening of equity prices. and we have had a new problem of our own in the form of foot and mouth disease, the effects of which have gone a good deal wider than just the agricultural sector. these new developments were likely to have a dampening effect on demand pressure within the overall economy, both through their direct impact and through possible damaging effects on confidence. given the fact that we started from a position in which inflation was below target ( and expected to remain so for some period ahead ) ; and given only modest upward pressure β at least so far β on wages and earnings growth, despite the continuing tightness in the labour market ; we judged that we needed to reduce interest rates β by Β½ % β earlier this year in order to meet the inflation target further ahead. and we have made it clear that we will continue to monitor the downside risks very closely, in the context of course of all the other developments affecting our economy. mr chairman, i have discussed the current international conjuncture at some length to illustrate that even though we all have broadly common economic objectives, that does not make them easy to achieve. we all face our own domestic uncertainties and are exposed to the international repercussions of developments elsewhere. financial stability one of the greatest difficulties we face is the problem of how to cope with movements in financial asset prices, including exchange rates. that problem has become an increasing preoccupation with increasing financial wealth in our economies and with global financial integration. in the context of macro - economic stabilisation we can, and of course do, take account of asset prices as best we can in both our projections and our policy decisions. the strength and subsequent weakening of stock markets in all our economies, for example, will have been one of the factors influencing both investment and consumer demand to varying degrees for all of us ; and the behaviour of exchange rates is clearly a factor influencing inflationary pressures in our respective economies, both through its direct effect on prices and indirectly through its impact on net external demand. but while we can try to make allowance
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the toes of monetary policy [ 25 ]. and while there may have been a difference in direction of policy β buying versus selling gilts β the goals were complementary. the aim of our intervention was to prevent financial stability from being threatened by severe dislocations in gilt markets. with the gilt market dysfunctional, monetary policy would have had unpredictable effects and would likely not have fed through to the economy as expected. so stabilising the market also supported the conditions for monetary policy to be carried out as normal. looking ahead surviving this crisis doesn β t mean the fpc can relax. tightening monetary policy after a long period of very low rates has the potential to reveal further financial vulnerabilities. we need to consider how declining asset and collateral values flow through the system, including potential risks that may arise as leverage is unwound. but having built up resilience in the system ahead of time should prove a smart investment. reforms since the gfc mean that the core of the financial system, especially banks, is much safer. and so far banks and insurers have shown themselves to be resilient, notwithstanding the sharp increase in interest rates. the same can be said of households and businesses. rising rates will affect house prices, but the fpc has helped to limit risks from household debt through our mortgage market tools. and by stress testing banks against major increases in corporate defaults we have reduced the risk of the banking system amplifying distress in the corporate sector. in fact we have been including β rates up β scenarios in our stress tests for many years, giving us a forward - looking view of the system β s resilience to increases in interest rates and so the ability to build extra resilience in advance of higher rates materialising. all of this means that while the fpc stays on the case for financial stability, the mpc can get on with its job of ensuring monetary stability. of course the ldi episode highlights the need for vigilance. this is particularly true for marketbased finance β financial institutions outside the banking system. market - based finance has grown rapidly and not been subject to the same regulatory scrutiny as banks. and as monetary policy makers gradually implement qt, financial markets will adjust, perhaps in unexpected ways [ 26 ]. this is a key motivation for our upcoming non - bank exploratory stress scenario, and an ongoing area of focus for us and international counterparts. how we work β and the need for
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still more that research can do to help us deal with these interactions better. that β s where you can help. interactions in practice after the global financial crisis now i β d like to talk about how the theory i outlined has played out in practice. i β ll focus on the period following the gfc, and the events of last autumn. the gfc in 2007 - 2009 presented a huge challenge for monetary policy and financial stability. although it had its origins in the financial system β a combination of excessive leverage, reckless lending, lax regulation and financial engineering β monetary policy was the first responder. as the financial system froze up and demand contracted, central banks around the world had to respond. they did so by slashing interest rates and later launching massive bond buying programmes ( qe ). along with large - scale government support to the banking system, these actions helped to shore up the global economy, avoiding a rerun of the great depression. and while central bank actions were taken for monetary policy reasons, they supported financial stability. initially expected to be temporary, low interest rates stayed with us. between march 2009 and december 2021 bank rate averaged less than 0. 5 %, a tenth of the 1998 - 2008 average, and the 10 year government bond yield fell from 3. 7 % in 2011 to 0. 1 % in july 2020. low interest rates did not just happen in the uk β interest rates across much of the developed world were very low over this period. and while policy rates moved sharply in response to the gfc, long - term trends β a fall in what is known as β equilibrium interest rates β driven by structural factors such as ageing populations and low productivity growth [ 19 ] β helped to keep rates low for a long period. while low short - term interest rates were necessary to support the economy and meet monetary objectives, they also created conditions that could affect financial stability. this is where the fpc comes in. having learned lessons from the gfc, we knew that price stability wasn β t a sufficient condition for financial stability. so the fpc was there to scan for financial stability risks and take preventative action to contain them where necessary. and that is what we did. take the housing and mortgage market, for example. historically, the uk housing market has been characterised by periodic boom episodes, followed by busts with serious consequences for financial stability and economic growth. the period of low interest rates following the gfc threatened to create the conditions for another boom in house
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war career as a consultant for gchq. he died shortly thereafter, on 7 june 1954, from cyanide poisoning. in 2009, the then prime minister gordon brown made an official posthumous apology on behalf of the β government and all those who live freely thanks to turing β s work β for his β utterly unfair β treatment. 6 turing received a royal pardon for his conviction in december 2013 and in 2017 the β alan turing law β was passed, pardoning the nearly 50, 000 men cautioned or convicted under now - rescinded historical legislation that outlawed homosexual acts. in the uk today, we are fortunate to live in more inclusive times. thanks to groups like the sexual law reform society and stonewall, and initiatives like pride, there has been huge progress towards ending the unfair treatment of people on the basis of sexual orientation and creating a society in which everyone can be their true selves without fear or favour. 7 see https : / / webarchive. nationalarchives. gov. uk / 20091005104048 / http : / / www. number10. gov. uk / page20571 the bank of england aims to be an lgbt + inclusive employer, taking part in the london pride parade every year and flying the pride flag atop its threadneedle street building. the bank has a thriving lgbt + & allies network which was launched in 2006 and now has around 350 members and allies. in 2018, the bank supported the rollout of rainbow lanyards in the spirit of creating a visibly inclusive and supportive environment β these are now worn by more than 1, 000 colleagues. we complete the stonewall benchmarking exercise each year and were pleased to have increased our ranking by over 100 places in 2018. all speeches are available online at www. bankofengland. co. uk / news / speeches the bank of england is committed to ensuring our banknotes are as inclusive as possible. that means celebrating the breadth of human achievement in this great country from science to the arts to statecraft to literature. and it means featuring a range of individuals who reflect the vibrant diversity of uk society. the design of the note let me conclude by unveiling the image for the new turing Β£50 note. the design recognises the breadth and variety of turing β s contributions to science. the table taken from his seminal paper on computable numbers in the foreground is a succinct representation of a turing machine, and the ticker tape
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/ 681. aspx taylor, j ( 2013 ) β forward guidance as an incipient policy rule at the boe and ecb β, http : / / economicsone. com / 2013 / 08 / 25 / forward - guidance - as - an - incipient - policy - rule - at - theboe - and - ecb / tucker, p ( 2013 ) β monetary strategy and prospects β, speech at the association for financial markets in europe flagship conference on financing growth, london. http : / / www. bankofengland. co. uk / publications / pages / speeches / 2013 / 679. aspx bis central bankers β speeches annex : charts chart 1 : uk cpi inflation chart 2 : recoveries across the g7 per cent index ( pre - crisis preak = 100 ) germany france italy uk us japan 2005 2006 2007 2008 2009 2010 2011 2012 2013 sources : eurostat and datastream the pre - crisis peak was : 2008 q1 for germany, france, japan and the uk ; 2007 q3 for italy ; 2007 q4 in the us ; and 2008 q3 for canada. chart 3 : uk labour productivity percentage change on five years earlier - 5 - 10 - 15 - 20 bis central bankers β speeches
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in the real neutral rate means that any given setting of our policy rate will be less stimulative today than it was a decade or two ago. the current policy rate, while certainly providing monetary stimulus, is not as stimulative as it would have been before the crisis. by the same token, an immediate rise in our policy rate back to, for example, the 4. 25 per cent that prevailed before the financial crisis would represent an extreme tightening of policy and would have significant consequences. this is just another way of saying that low interest rates are actually having big effects today, but the headwinds pushing back on that stimulus remain quite powerful. for some savers, ultra - low interest rates do have positive effects. in particular, the value of most assets rises when interest rates decline, supporting gains in household wealth. this effect may not be as obvious as the impact of low rates on savings. but lower interest rates generally mean higher stock and bond prices, as well as increases in the value of real estate, which has been another important source of wealth for many savers, particularly seniors. i realize this may be cold comfort to those people who have to adjust retirement plans to a lower - for - longer world. but the difficult reality is that savers must adjust their plans. that may mean some combination of putting aside more funds, working a little longer than planned or changing the mix of investments. there are no easy answers, particularly for some who have already retired. compounding the challenge is the fact that people are now living longer β life expectancy has risen by about 6 years since the early 1980s. i hope you will agree that this is unambiguously good news. but combining longer life expectancy with low interest rates means that a person starting to save today would have to set aside much more to generate the same retirement income as a person who began saving 25 years ago, if both wished to retire at the same age. lower for longer and companies the other group i would like to talk about today is companies and, specifically, their decisions about business investment. across the global economy, investment spending fell sharply during the financial crisis, and the recovery has been unexpectedly weak. the recent drop in oil and other commodity prices has lowered investment plans even further. when investment slows, it means an economy β s potential output also grows more slowly, which can reinforce the trend toward lower interest rates. in contrast, raising potential output through increased investment can ease the downward pressure
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β return - to - basics β investor demand. following the global financial crisis, investors have become more averse to the unknown risks embedded in complex financial instruments. islamic finance, with its stronger emphasis on transparency, price certainty and risk - sharing, can benefit from this renewed demand for more basic investments, from muslim and non - muslim investors alike. integrating islamic finance with global finance the third, and perhaps most important, challenge that islamic finance must overcome is its present fragmented state. islamic finance currently suffers from low economies of scale. the overall size of islamic assets is still less than 1 % of the global financial system. being smaller and relatively young, islamic finance currently offers fewer product choices for consumers and less comprehensive risk management options for institutions. cross - border investment flows are also constrained by differing interpretations of permissible transactions under bis central bankers β speeches shariah principles. the isolated pools of islamic liquidity in each market restrict opportunities for more efficient allocation of capital across consumers, industries, and jurisdictions. islamic finance must become more integrated with the global financial system. the industry must expand beyond its traditional markets to include a wider range of financial institutions, investors and consumers. this means islamic finance must strike roots in the key international financial centres of the world. these centres can contribute to islamic finance in several ways. first, market liquidity. the broad and deep investor pools in international financial centres offer an opportunity to channel non - traditional sources of funds into islamic finance. in singapore, for instance, several local and foreign issuers have successfully tapped the capital markets using islamic instruments. the demand comes from not just singapore but a diverse group of international investors across asia and europe. many of them are conventional investors, attracted by the credit quality and yields. second, capabilities in global financial markets. islamic finance should leverage on the capabilities and strengths offered by conventional financial markets in international centres, to augment the range of shariah - compliant products. take for example the market for real estate investment trusts, or reits. singapore has grown over the past decade to become the largest reit market in asia outside of japan. building on this strength, players in singapore have established the world β s largest shariah - compliant reit, which draws in conventional and islamic investors around the world. third, opportunities for interaction and collaboration. as islamic finance gains prominence, conventional financial institutions increasingly want to be involved to tap these opportunities. financial centres like singapore serve as intersecting nodes where islamic financial institutions collaborate with their conventional partners to
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, the istanbul exchange market has existed and operated since 1858. it grew out of the activities of non - muslim bankers in the galata district of istanbul. these operators, mostly levantines, jews, armenians, and greeks, used to risk their own capital by extending credit to the government, secured by pledges of future tax collections. even though during the early years of the exchange market β s operation in the 1860 β s, the amount of foreign direct investment in turkey was negligible, foreign capital was being encouraged to form joint stock companies. up until the beginning of the 20th century, the market helped the government find funds to finance its obligations. in 1906, the istanbul exchange market was re - organised and once more became a source of new capital for young private ventures. without giving the whole history of the istanbul exchange market, i want to emphasise that turkey β s experience with free markets did not begin in 1980 but goes back more than a century before. what the reforms of 1980 did accomplish was to institutionalise the markets and put them on a solid legal footing. besides liberalisation, the structural reforms begun in 1980 included measures providing investment and tax incentives. i would like to review these issues briefly. the aims of these incentives were to encourage activities that would earn foreign exchange on the one hand, and to help foreign sources of capital finance investments in turkey on the other. it can be said that by liberalising its capital account and introducing structural tax changes to improve investment returns, turkey issued an invitation to foreign capital. under these new arrangements, the tax incentives aimed at deepening the securities market and encouraging investment in it are of two kinds : - double taxation of dividends was prevented by raising the corporate income tax rate and making it the only tax on dividend income. in addition, the income tax rate for small shareholders was lowered. - for residents, capital gains on shares became exempt from taxation if the security was listed on an exchange. capital gains from the sale of through licensed intermediaries were made tax free. premiums from the issuance of stock are also tax free for stocks listed on a stock exchange that does not distribute dividends to shareholders. there are also tax facilities for government securities. privatization is an important part of our modernisation and liberalisation effort. turkey embarked on a privatization program in the 1980s. turkey β s telecommunications and energy sectors are great targets for global partnership. despite extensive exemptions from the program, by 1994 total proceeds derived from privatization since it began
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figure 1 : contribution to annual cpi inflation food and energy * tobacco and gold * * services basic goods * food and energy : food, non - alcoholic beverages and energy * * tobacco and gold : alcoholic beverages, tobacco products and gold. source : turkstat, cbt. in the first quarter, the increase in food prices lost pace over previous years in response to the significant slowdown in the processed food group and energy prices dropped owing to the lagged effects of the recent decline in oil prices. goods prices excluding food and energy slumped by a lower margin over the first quarter of the previous year. the slowdown in services prices became more pronounced ( figure 2 ). figure 2 : cpi sub - groups ( first quarter percentage change ) - 2 - 4 food energy goods excluding food and energy services source : turkstat, cbt. the unprocessed food group posted monthly price hikes of significant levels in the last quarter of 2007 and the first half of 2008 on account of production losses and cyclical developments all over the world. annual inflation in this group surged to 25 percent. with the reversal of these effects since the second half of 2008, the downward trend in annual inflation of this group gained pace in this quarter ( figure 3 ). meanwhile, the downward trend in the annual rate of increase in food prices is expected to continue in the second quarter as well. figure 3 : food prices ( annual percentage change ) processed food unprocessed food - 3 source : turkstat, cbt. esteemed guests, i would like to further clarify the developments related to services prices as i deem it helpful to focus on them to better understand the significant downturn in the underlying trend of inflation. services inflation, which had remained relatively elevated in the first three quarters of 2008 due to the second round effects of energy and food prices, has eased considerably since the last quarter of 2008 following the sharp contraction in aggregate demand. the cumulative rate of change in services prices during first three months of 2009 was merely 0. 53 percent on lower costs and weaker domestic demand, which is the lowest percentage recorded in the 2003 based cpi index β s history. the slowdown in the growth rate of services prices has spread across all services subgroups ( figure 4 ). the lagged effects of dips in international oil prices had a favorable impact on transport services in the first quarter. rental price movements remained quite below the averages of previous years due to the contraction of domestic demand. the prices of the restaurants and
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where is monetary policy headed? virtual keynote speech at the frankfurt euro finance summit 04. 07. 2022 | virtual | joachim nagel 1 introductory remarks 2 inflation 3 need for monetary policy action 3. 1 how far will key ecb interest rates rise? 3. 2 do we need an anti - fragmentation instrument? 1 introductory remarks ladies and gentlemen, i would like to extend my warmest welcome to all of you here in attendance at the frankfurt euro finance summit. i wish i could have been there with you today at the frankfurter hof. especially since i know that we have all sorely missed seeing each other in person at events like this. however, for today, chancellor scholz invited me to come to berlin for the opening event of konzertierte aktion. i therefore trust you will understand that i am only able to speak to you via video today. konzertierte aktion focuses on the high rates of inflation and the question of what policymakers and social partners can do to combat it. in this context, i believe my role is to contribute the bundesbank β s analytical expertise to the discussion. exchange and dialogue between policymakers and social partners can be beneficial. however, it is also clear that the responsibility for safeguarding price stability lies foremost with the independent eurosystem. the eurosystem is responsible for monetary policy and tasked with safeguarding price stability in the euro area as a whole. and it is precisely this topic that i would like to discuss today : where is monetary policy headed, and what is it doing to bring the high rates of inflation back under control? 2 inflation ladies and gentlemen, just a few days ago, the eurosystem ended its net purchases under the asset purchase programme. the ecb governing council very clearly set out the prospect of multiple key interest rate hikes. the first rise in interest rates will likely be decided at the next monetary policy meeting on 21 july. many consider this to be long overdue in light of the high rates of inflation. to use a house as a metaphor, monetary policy is coming out of the basement and making its way back upstairs. it is now taking the first step on the staircase of interest rates. monetary policy is being pushed to act, above all, by the medium - term inflation outlook. however, the current inflation rates are cause for concern, too. over the past few months, consumer price inflation has repeatedly reached new highs since the introduction of the single currency. and
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##ization of finance. the bundesbank has put this topic on the agenda of the g20 during germany β s presidency last year. one important aspect of this issue we weren β t able to look at in the framework of the g20 is the possibilities and risks that come with the issuance of digital tokens or even digital central bank money. the question whether new technology changes fundamentally the foundations of central banking is increasingly discussed amongst central bankers. agustin, your talk today is highly welcomed because it will contribute to an objectification of the debate and will constitute an important input for our policy deliberations. i am very happy that we were able to attract such a distinguished speaker for this task. fire away. the floor is yours. 1 agustin carstens ( 2013 ). the quest for successful policy responses to sovereign crises. speech at the monetary authority of singapore lecture 2013, 5 february 2013. 2 / 2 bis central bankers'speeches
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inclusive culture and practices. this is about creating an inclusive culture where all employees feel welcome, respected, and valued. this involves fostering an environment where individuals can bring their whole selves to work without fear of judgment, discrimination or bias. focus should be spent on implementing inclusive 1 / 4 bis - central bankers'speeches practices in recruitment, promotions, training, and leadership development to ensure that opportunities are accessible to all employees. inclusive practices also encompass the use of inclusive language, respectful behaviour, and support for diverse perspectives. for boards, dei contributes toward enhancing board effectiveness. diverse boards, with a wealth of individual and collective knowledge and experiences, are better equipped to make well - informed decisions. this diversity enables a broader range of ideas, reduce blind spots and challenge groupthink, thus fostering innovation and adaptability. inclusive board cultures promote open dialogue and active participation, resulting in a more comprehensive understanding of issues and more effective problemsolving. having leaders from under - represented groups also sends a positive message to wider stakeholders that their voices and concerns are heard. ladies and gentlemen, allow me to share some of bank negara's efforts in advocating for diversity, equity and inclusion, and offer several suggestions on how members of the board can drive dei agenda. all these are aligned with the oversight responsibility of the board in promoting sustainable growth and financial soundness of financial institutions, and the board's duty to consider the long - term implications of its decisions on all stakeholders including the general public. to start off with, the bnm board has set a clear " tone from the top " for the bank to develop diverse, equitable and inclusive work practices, culture, and environment. this has translated into the bank's core aim, one of which, is to ensure that we have a strong culture and an engaged workforce that keeps us effective as an organisation in delivering our mandates. having four generations collaborate in an inclusive environment fosters a rich exchange of perspectives that helps the bank deal with complex issues in an evolving global landscape. as an example of dei action, encouraging women participation in the labour force has been a long - standing priority of the bank. in 2010, we invested in building a childcare facility, located near our head office, for mothers and parents to have peace of mind knowing that as they work, their children are well cared. flexible working arrangement is also in place and further enhanced by a policy allowing staff to work remotely twice a week. these flexibilities facilitate a working
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suhaimi ali : empowering change through diversity, equity and inclusion keynote address by mr suhaimi ali, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the fide forum 2nd distinguished board leadership series, organised by asia school of business, kuala lumpur, 2 november 2023. * * * assalamualaikum warahmatullahi wabarakatuh and a very good afternoon, distinguished members of fide forum, ladies, and gentlemen first of all, allow me to thank fide forum for the invitation. diversity, equity, and inclusion ( dei ) is a topic that has gained increasing prominence and attention in recent years in the context of workplace culture. it is no longer a buzzword. rather, these are important concepts that reflect ongoing efforts to address systemic discrimination and promote fair opportunities for all. dei has become a household strategy for talent retention, as organisations seek to create a conducive working experience for all employees. companies that are diverse, equitable and inclusive tend to respond better to challenges, win top talent, and are better equipped to meet the different needs of society. as malaysia is a country rich in cultural and ethnic diversity, dei is especially important to ensure that people from all backgrounds have fair access to opportunities in all aspects of life. let me attempt to unpack the term " dei ". first, diversity of demography and thought. building a diverse demography at the workplace means growing a workforce that is characterised by a wide range of demographic factors, including age, race, ethnicity, gender as well as disability and socioeconomic status. acknowledging and embracing this diversity is not only a social imperative but it enables us to develop solutions and policies that cater to the unique and evolving requirements of various demographic groups. the diversity of thought, on the other hand, refers to efforts to incorporate a variety of perspectives, experiences, and skills in problem - solving, innovation and decision - making, whilst encouraging employees to " speak - out " and bring their unique lens to the discussion table. second, equity in pay and opportunities. providing equal pay for equal work, irrespective of gender, race, or other demographic factors ensures that all employees receive fair compensation for their contributions. providing equal opportunities for advancement and career development to all employees, irrespective of their backgrounds is also a strategic necessity. this inclusivity allows organisations to reap the rewards of a talented workforce, enhance productivity and drive organisational success. thirdly,
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with the experts and innovators in the private sector too. open doors we have been doing this. over the past two years the bank of england β s award - winning fintech accelerator has worked with industry, experimenting with new technology and developing our understanding ramsden, d hm treasury bank of england carney, m hm treasury ( 2018 ) central banking magazine β s initiative of the year all speeches are available online at www. bankofengland. co. uk / speeches in the process. we have carried out a number of proofs of concepts including those using distributed ledger technology, regtech, machine learning and cyber security. the accelerator - run proofs of concepts allowed us to change our mind - set to be less bound by convention in terms of how we run the bank of england, as an infrastructure provider, a payment systems operator and a regulator. we are now looking to build on the success of the accelerator by integrating its key approaches into our business as usual activities. so today i can announce that we have set up a new fintech hub that will sit at the heart of the bank, to consider both how the bank understands and how it applies fintech, relevant to its mission. it is important that we continue to do this with our doors firmly open. so the hub will be a central point of contact for the fintech sector to engage with the bank, and will play an active role in the new hmt / fca / bank taskforce. and it will engage with you to understand and apply these developments to support the next wave of innovation in finance, and ensure that the uk has the right infrastructure to support that into the future. being open in our minds and approach are important steps in embracing and supporting new technology. but we also need to be open to change to fulfil our mission and keep pace with an evolving financial sector. open to change change is already afoot. the open banking standard and psd2 introduce changes to access of account information and initiation of payments, requiring banks to make customer data available to authorised third parties if customers so choose. this may change the way that customers access and operate their bank accounts, such as by making them accessible via a single smartphone app developed by a third party. as the prudential regulator of uk financial services firms, the bank of england needs to be open in how it considers and responds to changes arising in retail banking from this reform. in fact, increasing competitive pressures in retail banking, enabled in part
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and payments services depends upon depositors generally having a high degree of confidence that their funds will in fact be available on demand and it depends upon the cost of the services. in providing the services, therefore, the banks need to strike a balance between deploying their deposits in low - yielding, high quality, liquid assets to meet cash withdrawals, and riskier investments to generate a higher return. in this latter context banks have traditionally played a key role in financing the corporate and household sectors, earning their return by gathering information about, and assessing and monitoring, the creditworthiness of private sector borrowers, especially those who do not or cannot cost - effectively provide the comprehensive, public, information that would allow them to access the capital markets. much of the banks β lending, while nominally at short - term, for example in the form of callable overdrafts, is in practice illiquid and non - marketable. so a further distinctive characteristic of banks is that they typically function with a mismatch between their highly liquid liabilities and their less liquid, non - marketable, assets. there is no need, i think, to labour the importance to the economy as a whole of these distinctive banking functions, or the damage that would be caused if the banks β role - as the repository of liquidity, as the core payments mechanism, and as the principal source of finance to at least a large part of the economy - were seriously interrupted. that in itself helps to explain the public interest in the effective functioning of the banking system, or why banks collectively have been regarded as special. but beyond that, the distinctive banking characteristics that i have described, of liquid liabilities and less liquid assets, give rise to special needs. given the banks β role in the payments system they may need late access to liquidity to square their positions vis - a - vis each other after executing payments instructions on behalf of their customers. this explains why, in their routine monetary operations to relieve shortages in the money - market, central banks in many countries tend to confine their ( late ) lending to banks even when they accept a wider range of counterparties in providing liquidity through open market operations. the same distinctive characteristics make banks especially dependent upon public confidence. bank depositors are not generally in a position to monitor or assess the financial condition of their bank, so that any suggestion that a particular bank may not be in a position to meet its liabilities is likely to lead to the panic withdrawal of
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have contributed to our continuing success at the bsp. you all deserve a round of applause. at the bsp, we move to great lengths to develop our people to be world class central bankers through a continuous program of staff development, strategic training and effective succession. thus, we have developed in our midst a highly qualified successor β i refer of course to deputy governor nestor espenilla, jr., a career central banker for 36 years now, who will assume the post of bsp governor on july 3, 2017. nesting has described his term as β continuity plus, plus. β indeed, we have a firm pipeline of policies and programs across the bsp that we have identified as critical, moving forward. this includes further refinements of our interest rate corridor, the implementation of our national retail payment system, the continuing banking sector reform agenda, and asean integration. we can therefore say that the bsp journey to stability continues. ladies and gentlemen. the philippine economy is in the cusp of a demographic window of opportunity, with our young population holding so much promise to reset and accelerate the country β s growth and development. we sincerely hope therefore that our books β with their lessons of the past β will serve not only inform but also inspire our readers, academics, and future generations of bspers to do their share in our continuing journey to stability. maraming pong salamat! mabuhay ang bangko sentral ng pilipinas! mabuhay ang ating mahal ng bansang pilipinas! mabuhay po tayong lahat! 3 / 3 bis central bankers'speeches
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reform agenda to strengthen their ranks in terms of capitalization, risk management, and corporate governance. this successful collaborative strategy has given the banking system sustained growth momentum. indeed, we have made great strides in various aspects of our operations. ours is a narrative of proactive management and reform to advance our vision for the country. moving forward with all that we have achieved so far, are we then set for the future? well, no environment is ever static. as the central monetary authority, our role is always evolving. this is the de facto norm in central banking amidst the transformation of the global environment, our country β s objectives and its needs. this task is not straightforward, as it has to contend with unexpected financial shocks, political upheavals, and natural calamities. nevertheless, amidst the tides of change, we will continue to remain focused on ensuring price and financial stability in the country. we will find better ways to adapt the flexible inflation targeting framework to the lessons of the global financial crisis β that price stability, on its own, cannot guarantee overall financial stability. thus, sustained monitoring and active surveillance of monetary linkages will consider more granular relationships within the financial market. this will allow us the added perspective of identifying pressures that may be quietly building - up. new tools may be considered based on our very own experience to ensure the delivery of the bsp β s mandate. this requires us to organize ourselves, strengthen our ranks, refine our tools and innovate in our 2 / 3 bis central bankers'speeches approach to ensure that we secure the interests of our stakeholders and keep pace with the shifts in the environment. we will continue to be strategic in identifying a vision and setting down a framework to achieve it. in this connection, an s & p report on the banking system, dated may 14, 2017 makes us proud of what the men and women of the bsp - past and present β have achieved. the report said : β the central bank has a record of supporting sustainable economic growth and responding appropriately to changing economic circumstances. its ability to maintain macroeconomic and price stability through an economic cycle has been tested, including a period of exogenous shocks. " for this i thank and congratulate everyone under team bsp! the journey continues ladies and gentlemen, my term as governor of the bangko sentral ng pilipinas ends in july 2 or 38 days from today. i take this opportunity therefore to thank all institutions, individuals, family and friends who
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and knowledge through seminars and other training programmes. mas will also continue to collaborate with financial institutions, the tripartite partners, and institutes of higher learning to build a strong local pipeline of specialised talent, particularly in areas such as information technology, computing, data analytics. 25 if we can do well in these two key areas, it will position our fx market and participants to capture growth opportunities and serve the needs of the asian markets. conclusion 26 promoting and embedding the code within the global fx market and in singapore, is a journey that we have committed to. we hope that you can support these efforts, from your firms and in your individual capacity as market participants. 27 we have also co - created our medium term business strategies with market participants like yourselves, and we are committed to making them work, and bringing more innovation into the market place. 28 with this, i hope that you will have a productive and rewarding conference ahead. 5 / 5 bis central bankers'speeches
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. aspx 2 swiss re group, 23 apr 2021. https : / / www. swissre. com / risk - knowledge / risk - perspectives - blog / climate - change - cost - asia - pacific. html 3 / 3 bis - central bankers'speeches
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platinum is also a β green β metal. it β s very ecologically - friendly. it β s a key element in catalytic convertors to reduce our carbon footprint. let me end that diversion and continue with the platinum story. did you know that the bulk of platinum that we have today is mined in just two parts of the world : south africa and siberia in russia? they produce two - thirds and one - quarter of the world's platinum supply respectively. another curiosity relating to platinum is the fact that it was not until the 19th century that this rare metal was first used in rather special platinum coins. russia started the fad in 1828. spain produced platinum coins in the 19th century. but we have to wait until much closer to our own times, the 70's, before any more platinum coins come to be issued. the first was a medal issued in israel in 1973, followed by panama in 1976. the russians perhaps come closest to qualifying as β platinum bugs β. the ussr produced platinum coins from 1977 to 1980. perestroika and glasnost did not dim their fascination with the metal and the newly - independent state of russia issued platinum coins from 1992. nearer to us, lesotho issued a platinum coin of half an ounce of platinum in 1981. other countries producing platinum coins include australia, canada, france and portugal. tonight, therefore, we continue the coinage chapter of the platinum story. tonight, mauritius joins this select and fairly exclusive list. we now rank among the three countries in the southern hemisphere to have issued platinum coinage. and we are the only small island developing state to do so. the gold coin we issued last year became one of the fastest - selling coins in the history of the bank β the bulk of the edition was sold out within five days. the value of platinum is greater than gold and so today we are issuing a collectors β coin that goes one better than last year β s gold coin. moreover, bearing in mind the strange story of platinum, the choice of this metal with its special range of qualities and uses may well be claimed to reflect those of the reputation of the great statesman it commemorates, sir seewoosagur ramgoolam : exceptional, precious, rare, durable and, as we can go to pay our respects at his β samadhi β at the national botanical gardens, environmentally - friendly! let me say a word before i conclude about a project that i have at heart. the downward trend in the savings rate in
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michael atingi - ego : launch of the banking industry guidelines for mitigation of fraud and the revised code of conduct remarks by mr michael atingi - ego, deputy governor of the bank of uganda, at the launch of the banking industry guidelines for mitigation of fraud & the revised code of conduct, kampala, 19 february 2024. * * * chair, executive director, and members of uganda bankers'association ; distinguished guests ; ladies and gentlemen, good morning. thank you for inviting me to the launch of the banking industry guidelines for mitigation of fraud and the revised code of conduct. this initiative is a critical stepping stone towards restoring the bedrock of trust and confidence that underpins our financial institutions. " a typology study on internal frauds in the banking sector in uganda ", by the financial intelligence authority in june 2022 showed that fraud was rampant and increasingly sophisticated, with cyber fraud accounting for over 50 % of all high - value fraud cases under investigation and annual fraud losses more than doubling from 2020 to 2021. the banking industry has always faced the pervasive threat of fraud, a shadow that stains its reputation and erodes public trust. this threat manifests in diverse forms, from deceptive schemes by external attackers to criminal activities perpetrated by insiders and outsiders. fraud in the banking system fundamentally undermines the trust principle it relies on. when customers entrust their hard - earned money to financial institutions, they expect it to be safeguarded responsibly. however, when fraud occurs, it erodes this trust, leaving individuals feeling exploited and vulnerable. furthermore, the far - reaching consequences of fraud in the banking industry extend beyond immediate victims. it distorts market mechanisms, diverts crucial resources from productive investments, and can even cascade across entire communities, leading to economic hardship and social unrest. fraud is a termite that relentlessly eats into the foundation of trust upon which banks are built. and today, this threat is more widespread and sophisticated than ever before. cyber / internet - related frauds are rising in uganda, alongside loan scams, impersonation, identity theft, forgeries, and cash suppression. just look at the numbers. globally, losses topped a shocking usd 11 billion last year, led by the growing threat of account takeover ( ato ) frauds. account takeover fraud, where thieves steal login credentials to access victims'accounts and wreak havoc, is increasing in uganda, causing significant financial losses and
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a large part responsible for the problems we are facing today. in particular, i will illustrate how those member states whose competitiveness has deteriorated substantially since monetary union have not managed to take advantage of it. second, i will describe germany β s economic performance during the crisis and the recovery. in particular, i will show how germany served as an import buffer during the economic downturn that followed the financial crisis. now that many countries are struggling with recovery, the more dynamic upswing in germany is providing an important impetus to the rest of europe. finally, i will turn to the challenges that the european sovereign debt crisis is posing to germany. considering that germany is providing a large part of the fiscal contributions to euro area countries with refinancing problems, confidence in germany β s solvency is vitally important in the current situation. germany therefore bis central bankers β speeches has to set an example for implementing sound fiscal policies within the euro area. however, this alone will not be sufficient to resolve the sovereign debt crisis. to secure long - run stability within emu, significantly stronger incentives for sound public finances are indispensible. 2. intra - emu divergences what critics actually have in mind when they talk about germany β s export strength is the existence of current account surpluses which contrast with current account deficits in other emu member states or other countries around the world. i would like to emphasise that neither current account surpluses nor current account deficits are a bad thing per se. current account surpluses reflect net foreign lending and current account deficits net foreign borrowing, and depending on the circumstances, both can be appropriate for a given country. for a country with a declining working - age population, for example, it is quite reasonable for residents to save money for the future and to invest a share of it abroad. by compensating for a shrinking income in the future, the money saved today allows consumption to be smoothed over time. conversely, countries which are undergoing a catch - up process and need financing for the investments might be willing and promising borrowers of foreign funds. consequently, for a proper assessment we have to take a closer look at the underlying drivers of current account surpluses in some euro - area countries and of current account deficits in others. one worrying development is that divergences in current account balances have mostly gone hand in hand with divergences in price competitiveness. whereas germany, as a surplus country, has been able to improve
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), β the search for mexico β s economic progress. β presented at alamos alliance xx, february. based on ppp - adjusted data from the energy information administration, the mexican energy secretariat ( sener ) and the oecd, including residential, commercial, services and agricultural. bis central bankers β speeches unbroken. the monthly proxy for gdp gained ground four consecutive months starting in april, tracing a continued upward trend despite a moderate decrease in august. industrial production shows an increase in manufacturing and construction, although not mining, which has been affected by lower petroleum output. hampered by a contracting pace of public - sector projects, construction is still driven almost exclusively by the private sector. in the third quarter, manufacturing exports kept up a significant growth rate, mainly to a strongly performing united states. additionally, improvement in consumption and an upturn in private investment have been prolonged. pulled by the u. s. economy, mexico is expected to post a gradual economic recovery during this and the next two years. the main risks to this scenario seem to be to the upside. a more robust rebound than foreseen for the united states, the lagged effect of high government outlays on output, and the probable impact of structural reforms, could contribute to this outcome. 7 as with other emerging economies, international volatility has affected financial assets in mexico. over the year, the yield curve shifted downward along with that of the united states, reflecting the perception that u. s. monetary normalization would be gradual and not imminent. since the end of july, however, market sentiment has been moving in the opposite direction, thus reversing some of the flattening of the yield curve. the fed has stated that the normalization process will be data dependent, thus making for more uncertainty ahead. indeed, in recent weeks, magnified global risk aversion has resulted in increases in long - term rates, widening the spread over u. s. yields. additionally, the peso has depreciated, reaching its weakest level so far this year in november. however, the peso has depreciated less than the currencies of many other emerging economies, and markets have been orderly, operating with more than sufficient liquidity. risks of new bouts of volatility remain. further pressure on emerging - market asset prices could occur. interest rates on many developed - market securities, such as high - yield bonds, trade at near all - time lows in the face
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%, which, while still high, is certainly manageable. nevertheless, there is still room for greater consolidation because their cost ratios, while not the highest in the euro area, are still too high. profitability remains weak, although there are substantial differences between banks. while there is a need for more consolidation, preserving a diverse banking system, with both large and local banks, remains important. the banks are blaming low rates for their reduced profitability. yes, they are, but at the same time they are also recognising the favourable effects of low rates on improved economic conditions and the need to change business models and reduce costs. over time, the economic recovery will increasingly support bank profitability. the deposit rate will remain low, but the last series of targeted longer - term refinancing operations ( tltros ) that helped banks have already come to an end. the banks benefitted greatly from these operations, which were heavily subscribed. the transmission of the ecb β s stimulus measures through the banks is working well at the moment. credit conditions have improved sufficiently, so there is currently no need to renew the tltros. and what about the sequencing of monetary policy normalisation? the current sequencing of monetary policy normalisation makes a lot of sense. there is no number, period of time in months or anything like that which will determine when interest rates go up after the debt purchases end. this will happen based on the ecb β s assessment. it will depend on the kind of situation we find ourselves in. and the deposit rate? the deposit rate is the key monetary policy rate. it is the deposit rate that is currently driving monetary conditions and will in the end shape the risk - free asset curve. if the markets were to pick up any change in communication about the deposit rate, it would have the potential to change the policy stance, and we do not want that to happen right now. 3 / 3 bis central bankers'speeches
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18 % of uk banks β domestic lending ; if one excludes the real estate sector, however, the figure is closer to 12 %. and lending to smes accounts for only 4 %. businesses borrow for many reasons not simply for investment, and business investment in the uk as a whole is the result of millions of uk businesses assessing the merits of individual investment opportunities, financing options and other considerations. in 2015, in order to get a better understanding of the supply of finance for productive investment and to support the government β s productivity plan, the bank initiated research into β productive finance β. our aim see imf ( 2015 ) β uneven growth β, world economic outlook, april 2015. the wilson committee was formed in january 1977 with the following terms of reference :'to enquire into the role and functioning, at home and abroad, of financial institutions in the united kingdom and their value to the economy ; to review in particular the provision of funds for industry and trade ; to consider what changes are required in the existing arrangements for the supervision of these institutions, including the possible extension of the public sector, and to make recommendations.'the committee concluded that the availability of funds was not the prime cause of low industrial investment and identified two areas of concern. first, the reduction of new issues of long - term fixed - interest industrial debentures due to high and fluctuating rates of inflation. and second, that the provision of finance for small firms was generally accepted to be unsatisfactory in a number of respects. see moore, p, g'the wilson committee review of the functioning of financial institutions β some statistical aspect ', journal of the royal statistical society, vol. 144 ( 1 ), pp32 - 65. all speeches are available online at www. bankofengland. co. uk / speeches was to get a better picture of whether firms β underinvest β β ie if they turn away profitable investment opportunities and if so what obstacles to investment they face. to do so, we launched a new survey of firms, the results of which are published today. the survey covered a sample over 1, 200 firms. it is representative of the population of uk firms across regions, industries and size. some caveats are required here. in the survey responses there was an under - representation of younger firms. this makes the results less informative about the investment behaviour and financing needs of younger companies, particularly of start - ups. moreover, as this is the first
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dimitar radev : crisis management framework in bulgaria summary of statement by mr dimitar radev, governor of the bulgarian national bank, at the annual meeting of governors and other central bank representatives from the countries of the dutch - belgian constituency of the imf, organised by the national bank of belgium, brussels, 24 february 2017. * * * the closure of the fourth largest bank in bulgaria in 2014 put to the test the country β s financial stability. this incident revealed, among other things, serious limitations in our crisis management arrangements in the banking area and, more specifically, the lack of a proper institutional framework to deal with resolution of systemically important banks. our policy response to the 2014 crisis was incorporated in an 18 - month plan adopted in mid2015, defining concrete actions in three priority areas : an independent assessment of : ( 1 ) the banks in bulgaria ( through an aqr and stress tests that were completed in 2016 ), and ( 2 ) our crisis management framework ( through a still ongoing financial sector assessment, fsap, by the international monetary fund and the world bank ) ; a comprehensive reform of the central bank β s banking supervision and regulation framework and practices, based on the basel core principles ( bcp ) ; introducing the bnb β s new bank resolution functions compliant with the european bank recovery and resolution directive ( brrd ). the implementation of the plan helped build sound foundations for our crisis management framework. its main elements now include : the financial stability advisory council ( fsac ) : a consultative body comprising the minister of finance, the governor of the central bank, and the chairman of the financial supervision commission ; the central bank as the designated resolution authority for banks ; the resolution function of the bnb is outlined in the law on recovery and resolution of credit institutions and investment firms, adopted in mid - 2015, which transposed the brrd in the bulgarian legislation ; a mechanism to fund resolution measures by the newly established bank resolution fund ( brf ) which is funded by contributions from the banks ; the target level of the resources collected in the brf is 2 % of the amount of covered deposits of all banks licensed in bulgaria and must be achieved by end - 2024 ; a comprehensive resolution toolkit directly transposed from the brrd comprising : ( 1 ) the resolution tools ( sale of business ; bridge institution, asset separation, and bail - in ), and the government stabilization tools ( public equity support and temporary public ownership ). progress has been
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for the practical preparations for the implementation, if necessary, of the new rules and procedures. hence, our immediate efforts are aimed at making arrangements and developing solutions that would be valid and efficient in the medium and long term. 2 / 2 bis central bankers'speeches
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room to keep its policy rates steady to provide a further anchor for stability. a second potential source of vulnerability are shifts in chinese economic policies β 1 ) from a growth model that relies on exports and fixed investments to one which is driven by domestic demand, and 2 ) to a more market - oriented ( and weaker ) rmb. early expectations were that the shift to domestic demand would result in significant slowing in chinese growth, which could dampen exports of its trading partners, such as the philippines. more recent forecasts, however, show a somewhat less dire outlook on china due to fiscal and monetary support from the authorities, easing risks of knock - on effects on trading partners and demand for international commodity prices. on the other hand, the policy of a weaker rmb is not expected to lead to stronger competition against our exports because we have a relatively low degree of export similarity with china. 1 should the policies of the chinese authorities indeed bring about more sustainable growth, this should be overall positive for us as it reduces global tail risks. a third risk is brexit. the direct impact to us of a slowdown in the uk would be minimal, given that our exports to the uk account for only 0. 8 pct. of total exports. it is the possibility of second round effects on the eu, however, that is more concerning because exports to eu account for 11. 5 percent of total exports. we therefore need to remain watchful of developments in the uk, particularly during the transition to β exit. β on the domestic front, we have to contend with natural calamities. while no one can fully prepare for the wrath of nature, the country has put in place policies that will help ensure we have adequate supply of staple foods, particularly rice. in short, ladies and gentlemen, the philippines is not immune to risks but our view is that these risks right now are manageable. the balance β short vs. long - term dynamics on balance, the philippines continues to forge an economic growth story that puts emphasis not only on strength but also on long - term stability and resilience. the fact that the philippines has just entered the β demographic window β, in contrast to the aging population of some neighboring economies, undergirds our long - term resilience. we have a young and vibrant population that is both a steady employment and consumer base, that opens up a lot of possibilities for investment. many industries are already burgeoning and seizing the opportunities the demographics present. there
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is fiscal space to pursue infrastructure investments geared towards increasing the productive capacity of the economy. and the new administration has promised to ramp up infrastructure spending. on the part of the bsp, we will continue to be steadfast in delivering on our mandates of maintaining price and financial stability in the economy, thereby serving as the wind at the back of our stakeholders, including investors like you. based on the unctad β s export similarity index. bis central bankers β speeches the philippines presents excellent relative value ladies and gentlemen, the philippines means business. while the challenges to the investment environment appear formidable, our collective vigilance and prudence will help us achieve our objectives of sustainable growth, as well as stability. i trust that the bsp can further engage you in pursuing the economic agenda of the philippines. at the top of my remarks, i said investing is all about relative values. i hope that in the time that had been given to me, i have been able to show you that the philippines presents excellent relative value, an investment choice that will allow you to achieve your target risk / return and more. thank you very much and i wish everyone a productive forum. bis central bankers β speeches
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am using the opportunity at this conference, which is attended by governors and representatives of central banks in the region, to point out a need of a closer cooperation of central banks which could contribute to the economic development of the region. namely, the common long - term objective of all the countries in the region is the membership in the european economic and monetary union. all the countries are on the same road to the european union, some of them progress faster and are well ahead of other countries, while others enter a complex process of meeting the criteria and fulfilling the european standards. the central bank, as a unique monetary institution with the primary task to preserve the financial stability and price stability in the country, also has a very important role in european integration processes and regional cooperation. our region has common objectives and trends, therefore it is natural that we share and exchange experiences. the central banks in the region can cooperate in numerous projects which are highly important for the economy of both the country and the region. in the last 10 years we have tried to implement the monetary policy in a responsible and consistent manner and be a pillar for the entire banking sector and their clients. our goal was to in a transparent way establish the communication with the public by organizing press conferences, through press releases, regular presence in the printed and electronic media, and by issuing bulletins and periodic reports. i am using this opportunity to thank also the representatives of the media for their professional and objective reporting on the activities of the cbbh. i wish to thank also the previous and current governing board for their full support in strategic principles of the cbbh, and to all the vice governors for their significant contribution to the achieved results and to all the employees. in the end, as you know, many foreigners have spent certain periods in bosnia and herzegovina. although i appreciate the contribution and engagement of all of them, the fact is that we quickly forget many of them. however, it is sure that the central bank of bosnia and herzegovina will never forget the engagements of mr. serge robert and mr. peter nicholl. i wish to thank mr. robert, who, unfortunately, is not here today because of illness and thank you mr. nicholl for everything you have done for our institution. thank you all for making our anniversary even more important with your presence, and i wish the guests from other countries to have a nice time in sarajevo and bosnia and herzegovina. thank you for your attention!
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by the end of the year, we will also set up the platform for inter - bank market for gyro money and cash, which will have a positive effect on daily liquidity of commercial banks and reduce the costs and increase the safety of cash transport in bosnia and herzegovina. bosnia and herzegovina is preparing for issuing bonds to regulate the internal debt issue, primarily the issue of old foreign exchange savings. those would be the first bonds to be issued by the state and the cbbh will participate in the process as a fiscal agent β it will carry out the settlement of securities to be issued by the state. today, we will sign the agreement on direct payment operations with serbia and montenegro, which will influence the reduction of commercial banking payment operations costs in this region. in the previous period, the cooperation with the institutions of bosnia and herzegovina, primarily with the presidency, the parliament and the council of ministers, was at extraordinary level. the independence of the central bank of bosnia and herzegovina, institutional, financial, personnel, was respected by all, which helped a lot to this monetary institution to achieve such significant results. the cooperation of the cbbh with international financial institutions, especially with the imf, the world bank, the bis, the ebrd, was at a high level. the usaid was involved in the most significant projects of our institution, by helping, both in material and personnel respect, their successful completion, which we sincerely thank them for. the eurosystem has just finished the central bank of bosnia and herzegovina needs assessment programme. the purpose of this project is the assessment of the situation in seven areas of operations the central bank, with the comparison with the standards of the european system of central banks. the programme applies to the functions of the central bank related to the coordination of activities of the agencies in charge of licensing and supervision, economic analysis and research, financial stability, internal audit, monetary policy within the currency board arrangement, payment systems and statistics. in the report prepared by the eurosystem experts, it is stated that Β« the cbbh is one of the most stable state institutions and has high reputation as a professional, independent and technically efficient organization which has achieved, in the previous 10 years, a significant progress in developing functions assigned to it. Β» it is our objective to join the european system of central banks, when b & h is ready to join the european union, and β later on β to introduce the euro as our own currency in accordance with eu treaty requirements. i
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the interests of all member states and deeply connected to their future prosperity. second, for europe to realise fully its future potential, it needs the right rules and the right institutions. europe requires a solid form of governance to ensure that the actions of individual countries are oriented towards the common good. our current arrangements have not yet fully met this standard. they are now being improved. it is a continuous process which will call for treaty changes if necessary. as this process will take time, we need to start planning today for the europe of tomorrow and the europe of the day after tomorrow. bis central bankers β speeches third, the underpinning of a more integrated europe is the emergence of a true european public debate. as one would say in german, die schaffung einer europaischen offentlichkeit. europeans today are highly interconnected via economic and social linkages. yet our fragmented national public discourse does not necessarily permit citizens to understand fully these connections. a true european public debate would help us deepen our interest in each other, bridge our linguistic differences and care more about what is happening across our borders. these are the three main themes on which i will focus tonight. but before i talk about the europe of the future, i would like to talk about the europe of today. to reflect on the relationship between member countries and europe. and to touch on the challenges we collectively face in tackling the crisis. 1. europe and germany building deeper union between france and germany in the service of europe has been an important theme of my own working life. in this time, i have been profoundly influenced by the german commitment to a stability culture. in the 1980s, i was seen in my own country as the strongest advocate of the β franc fort β policy. this policy was designed to be part of the modernisation of the french economy through a β competitive disinflation β policy. in the 1990s, i worked side - by - side with hans tietmeyer and horst kohler to contribute to the foundations of the euro in the maastricht treaty. this work was to ensure that, among other things, the european central bank ( ecb ) would be based on the principles of independence and the pursuit of price stability. then in 2003, i had the honour of moving to frankfurt to become president of this institution. it was a great personal satisfaction to join an institution that embodied my deep - seated beliefs in central bank independence, price stability and economic discipline. over this
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jean - claude trichet : tomorrow and the day after tomorrow β a vision for europe speech by mr jean - claude trichet, president of the european central bank, at the humboldt university, berlin, 24 october 2011. * * * ladies and gentlemen, it is a great pleasure to be invited to speak here at the humboldt university this evening. one can only be honoured to be in the university of hegel, heinrich heine and the nobel prizewinning physicists albert einstein and max planck β not to mention 27 other laureates. but it is with the ideas of the university β s founder β wilhelm von humboldt β that i would like to begin my remarks. as a frenchman who has lived in germany for the past eight years, i note with interest that the mother of the university β s founder β marie - elisabeth colomb β came from a french huguenot family who also made that eastwards move. her family had emigrated to berlin following the revocation of the edict of nantes, a reminder that european integration is a process that has been with us for centuries. wilhelm von humboldt himself was deeply engaged with the question of how to create the conditions for individuals to flourish within a society. his answer involved removing the conditions for mutual harm. in some ways, this speaks to the challenges of european integration. the individual member states of the european union ( eu ) also seek to flourish. their actions are interdependent and can both benefit and damage each other. removing the potential for mutual harm is essential for collective prosperity. this dialectic between the individual and the community is at the core of the european project. it is the dialectic between the individual nation states and the community of nations. and it presents some of europe β s most fundamental challenges. i would like to reflect today on how to address these challenges β to look forward and offer a perspective of where europe could go. in particular, i would like to develop three propositions. first, while the reasons for european unity have often been presented as deriving from past conflicts and past divisions, forward - looking motivations are in my view decisive. the unique construction of europe β with strong local identities and large, integrated markets β is a source of great strength in the new, globalised world we face. it allows europeans to plant deep roots and build strong communities. at the same time, we can fully benefit from economies of scale and the free flow of trade and investment. for this reason, european integration is profoundly in
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end - use restrictions. fourth, in this world where we have all become increasingly cautious and careful about possible risks arising from money - laundering and terroristfinancing, islamic financial institutions enjoy a head start in mitigating these risks. unlike conventional banks which rely on documentary evidence and usually have impersonal, arms - length, passive relationships with the majority of their clients, islamic banks have more stringent know - your - customer requirements. the reason for this difference is quite commonsensical. conventional banks rely on a fixed pre - determined return framework and are, therefore less concerned about the character and credibility of their clients. they are often, more preoccupied with the underlying securities and assets. on the other hand, islamic banks are engaged in a quasi - partnership profit - loss sharing framework and therefore have to know their clients, their businesses, as well as, their sources and uses of funding in order to satisfy themselves about the authenticity and legitimacy of their counterparties. thus, they would be in a much better position to detect, prevent and disengage quickly from suspicious transactions compared to conventional banks. in addition to normal audits, islamic banks have to conduct shari β ah review of their transactions for ensuring shari β ah compliance. this review will catch any funds mobilized or used for haram ( prohibited ) activities. this unique feature of islamic finance as possible prevention of money β laundering has not yet been widely disseminated and its potential not fully recognized. the financial services authority of the uk, whom i consider an extremely conservative and competent regulatory agency, after considering all the pros and cons, has finally embraced islamic banking and issued the first ever licence to the islamic bank of britain which is now operational. further, they have authorized islamic investment funds which are a welcome move. in germany, one of the state governments has raised funds by issuing an islamic suck. in the uae, a number of long term infrastructure projects were financed by islamic financial institutions as the relative advantages of islamic modes of finance outweighed the costs in comparison to the conventional modes. naturally, if there is so much rapid growth, a question that should arise in everybody β s mind is : what is happening on the legal, regulatory, accounting and auditing and governance fronts of islamic finance? are these keeping pace with this growth and are we making sure that the supporting infrastructure are in place to avoid any pitfalls or hazards in the future? this is quite a legitimate concern and i would like to share with you
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information gaps by expanding workers β networks, providing legitimate information, and identifying new job opportunities. but finally, the pressure that community - based organizations exert on financial regulators must continue. access to credit is an enduring challenge, and the obstacles and problems β all the β broken windows β you see on the block β must be reported and explained. they must be understood by the federal policymakers who are responsible for enforcing our country β s laws and regulations in the realm of access to credit ; by the federal policymakers who engage in the conduct of monetary policy ; and by the federal policymakers whose actions contribute to the shaping of the landscape for financial services in this country. your voices β whether you are reporting, documenting, monitoring, analyzing, proposing, or even protesting β must be heard. your voices are crucial to alerting policymakers to the significant developments and emerging trends in the nation β s communities that must be confronted β and confronted in a swift and decisive way β if we are to make prosperity a national agenda that touches every american. thank you. bis central bankers β speeches
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impacting both the financial health of banks and the quality of their assets. the non - bank financial sector has grown considerably in both size and significance ; however, it is not as tightly regulated as the banking sector. last but not least, the overvaluation of real and financial assets could increase the probability of abrupt and widespread corrections in asset prices and thus transform into a systemic risk. having said that, it is important to highlight that a number of monetary policy measures implemented by monetary authorities also contributed to alleviating the impact of the low interest rate environment on the banking sector. examples include the introduction of a two - tier system for remunerating credit institutions'excess reserves, as well as the remuneration on tltros linked to the achievement of lending targets. finally, banks'profitability was underpinned by increased asset values and stronger economic outcomes. as mentioned above, in the counterfactual, the consequences on bank lending and loan servicing would have been severe, with adverse implications for banks'revenues and cost of credit risk. the same applies to the non - bank financial sector. 3 / 7 bis - central bankers'speeches is it already decided that central bank balance sheets must remain large forever? what are the tradeoffs of a large structural bond portfolio? let me first say that these issues are part of the review of the ecb's operational framework and are still under discussion at the governing council. these issues have to be addressed in a holistic way. we plan to publish the outcome of our deliberations in spring. the views i will express today do not necessarily reflect those of the governing council. starting from the balance sheet, we expect that, in the steady state, the eurosystem balance sheet will be significantly smaller than it is today, but still larger compared to its pre - crisis levels. although demand for reserves from banks is volatile and hard to forecast, there are reasons to anticipate that, in the steady state, banks will demand a materially higher level of excess reserves than before the financial crisis, due to the following : first, supervisory regulation, which is likely to translate into increased demand for liquidity. second, banks, in the wake of the global financial crisis, have maintained a precautionary stance. to guard themselves against liquidity and counterparty risks, they show hesitance about lending each other. this places obstacles to the efficient redistribution of reserves not only across, but also within jurisdictions, giving rise
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again, thank you for your participation in today β s event. 3 / 3 bis central bankers'speeches
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markets union by relaunching it as an investment and financing union could be one of the low hanging but high producing fruit. this links to technology. some of us may have very high expectations concerning the potential of generative artificial intelligence ( ai ) for boosting productivity and economic growth. on the other hand, some, like daron acemoglu ( recall robert gordon ), are less optimistic. in any event, it does appear quite probable, or at least possible, that the spread of generative ai is going to have profound ramifications for labour markets, businesses and societies at large. increasing attention has been given to the potential effects of ai on the financial system and financial stability. in his brilliant keynote speech yesterday, professor danielsson warned us how overreliance on autonomous ai systems could pose risks to the integrity and stability of the global financial system. i share his concern. central banks need to keep pace with developments in emerging technologies and the data economy. at the bank of finland, we have for quite some time already been using machine learning algorithms in several core analysis functions, such as nowcasting, or short - term gdp forecasting. the same goes for payment and settlement system simulations and financial stability analysis. together with the finnish financial supervisory authority β the fin - fsa β we recently established a cross - organizational centre of excellence in advanced data science. its nicely self - confident name is ace, the analytics center of excellence. dear friends, let me conclude. this weekend, eu citizens will vote in the european parliamentary elections. many crucial issues are at stake in these elections. 4 / 5 bis - central bankers'speeches first and foremost is european unity in the face of russiaΒ΄s threat and, more generally, in a world of heightened geopolitical challenges. our support to ukraine must be unwavering, and we must work on several fronts to enhance european security. we must also continue our fight against climate change. second, strengthening the eu economy is of the utmost importance. only a strong economy can bring sustainable prosperity, security and stability. maintaining price stability is the central banks'best contribution to enhancing a predictable and conducive environment for the long - term investments needed for digitalisation and the greening of our economies. europe's weak productivity performance calls for raising the level of ambition of the next commission. there are no shortcuts. in addition to r & d, we must foster reforms to support productivity growth, including policies improving access to
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we know there will soon be legislative action from the european commission, which is expected to help in the expansion of instant payments. we are looking forward to this action, later in summer, as it is to address impediments and enhance public confidence in the instrument. broader adoption of instant payments is, in my view, crucial for the payments landscape, particularly in greece where the instant feature can become a game changer in the effort to reduce the use of cash β which remains significant in the country. seamless cross - border use of the instrument, now made possible by tips, and strengthening of legal certainty ( to be addressed by new eu legislation ) are of essential importance. the adoption of instant payments in greece can bring clear benefits : speed and efficiency, facilitation of various commercial transactions, removal of red tape, rationalization of public sector procedures, reduction of tax - evasion. we are therefore supportive of all relevant work done at the level of the eurosystem and the european fora. such issues, together with many other topics, will probably be the subject of your proceedings during this conference. in the area of payments, cooperation and interaction of central banks with the private sector is key, and this conference is suitably designed to bring both sides on the stage and set the ground for a fruitful dialogue. i hope the city of athens will provide the surroundings for productive discussions and interesting conclusions in the following days. again, a warm welcome to all of you. and my best wishes for success in this year β s conference!
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1. 2 - 1. 4 - 1. 6 - 1. 8 united states / 0 31 / 22 / 0 28 / 22 / 0 28 / 22 / 0 26 / 22 / 0 24 / 22 / 0 21 / 22 / 0 20 / 22 / 0 17 / 22 / 0 14 / 22 / 0 12 / 22 / 1 10 / 22 / 1 08 / 22 / 1 05 / 22 / 0 03 / 23 / 0 2 / euro area source : c. hoynck and l. rossi ( 2023 ), β the drivers of market - based inflation expectations in the euro area and in the us β, mimeo, bank of italy, rome. note : 5 - year inflation swap rates ; changes with respect to 3 january 2022. figure 12 inflation ( monthly data ; 3 - month annualised percentage changes ) us uk ez - 5 - 5 source : eurostat, uk office for national statistics and us bureau of labor statistics. note : ez denotes the euro area.
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/ 5 bis - central bankers'speeches inflation stood at 4. 8 % in september. in other words, price pressures are now broadbased. there is also some evidence to suggest that inflation in the euro area will remain high for the time being, with the latest ecb staff macroeconomic projection putting it at 5. 5 % next year. while most forecasts assume that inflation rates will move towards 2 % again in the medium term, merely converging on this target cannot be enough for the eurosystem β after all, it is vital to achieve the 2 % rate in the medium term. moreover, forecasts could lull us into a false sense of security. past projections have, after all, underestimated actual price dynamics on multiple occasions. caution is therefore warranted here, especially as uncertainty is extremely high and risks are clearly tilted to the upside. for example, tensions in energy markets could persist for longer than assumed in the forecasts. still - high commodity prices might be passed on to consumers on a greater scale than usual. wages could rise more sharply than previously anticipated. 3 monetary policy needs to step up to the plate to safeguard price stability in this situation, all eyes are focused on monetary policy, and rightly so. whilst it may not be able to lower gas prices or make butter cheaper, what it most certainly can do is prevent high inflation from becoming entrenched. this could happen if households, enterprises and wage bargainers keep expecting higher inflation rates in the future. monetary policy in the euro area now needs to step up to the plate β and that's what we are doing. the ecb governing council initiated the lift - off in interest rates at our meeting in july, and in september we followed this up with an even bigger interest rate hike. these decisive interest rate steps are important for achieving price stability, which is why i very much welcome the decisions. but it is also clear that we cannot stop here. short - term real interest rates are still very low, in some cases even negative. in other words, monetary policy is not yet dampening inflation, but is still driving it. further steps along the path to monetary policy normalisation need to be taken, then. how large the individual interest rate steps will be and how far we raise interest rates will be dependent on the data. it is also important to look into the high levels of bond holdings. these currently amount to almost β¬5 trillion and continue to exert considerable downward pressure
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member bank of the system. special attention will be paid to control on specific lending procedures and review of re - rating made and of provisioning performance for non - performing loans. furthermore, the bank of albania has included in its priorities of 2006 the project on creating the credit register, a facility that will help the process of controlling and verifying loan borrowers. i would like to clarify that the banking system stability is of special priority for us, therefore we remain committed to carry out precisely all the recommendations given by the imf β s report of financial sector assessment program ( fsap ) over 2005. i think that the concept of bank is inevitably related with the concept of confidence. for me confidence is transparency, transparency and only transparency. i deem that enhancement of transparency is a primary condition that leads to increased access of the population to your business. this increase implies deposits increase, credit extension, more competition and more effective financial intermediation. above all, enhancement of transparency means more opportunities and lower costs to your clients. think for a moment that the quantity of money circulating and β sleeping β outside banking channels is still high. turning back to my discussion in the last meeting organised by the world bank and the puglia region, i would like to emphasize that more than half of remittances enter the country through unofficial channels. according to balance of payments statistics of 2005, it speaks about a potential close to eur 700 - 800 million. i believe this fact does not need any comment. out of our surveys the causes are different. however, high fees applied by the banks are often brought up as a motive why individuals do not prefer banking service. on the other hand the increased circulation of money through banking channels requires enhanced prudence for preventing money laundering and terrorism financing. the combat against money laundering is an ongoing challenge that relates to the major problems our country is facing with, such as : cash economy, fiscal evasion, and economy informality. therefore, at the beginning of the year we undertook a partial examination on 7 banks. it resulted out of the examination that in general banks have the proper structures and policies on fighting against money laundering and terrorism financing. however, we also observed some deficiencies having to do with staff training and better knowledge of legal framework. taking into account what i said earlier, i believe that you understand the massage i want to transmit to you today, that is not only banking business extension, but also significant contribution to reducing cash and informality in the economy
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. recently we have made some concrete steps in this direction. therefore, the banking system is more extended geographically and richer in products. increase of assets, rise in the number of clients, modern infrastructure and other developments have made our contribution to cash reduction in the economy be significant. i believe that the above accomplishments, combined with determined administrative measures, will contribute to the closure of informality gates one by one in the economy. however, i observe unexploited space particularly in terms of : increasing opportunities for more electronic payments ; the last year overturned the ratio in the favour of electronic payments, when their level reached the figure of 320 thousand as compared to the number of 300 thousand of payments effected at the windows. this is an encouraging sign, urging us to better focus on this direction. channelling periodic settlements for utility services through bank accounts ; more concretely aec, alb telecom and water supplying should be related to the banking system so that their services are settled electronically. compulsory transfer of salaries of private sector β s employees through the banking system ; the so - far experience with the private sector resulted successful, while even some big private operators are applying this method efficiently. i think that the obligation to transfer salaries through the banking system will significantly decrease the evasion existing on income tax and social insurance contributions. i personally think that it is just the time to enhance popularity for imposing the creation of a banking culture and education. the obligation of each individual for opening a bank account in addition to an important massive service the state does to the population, is more than necessary. more concretely, i propose that new cards be associated with a bank account number. in conclusion, it is understandable that for being successful in the long run, more focus is needed on all the problems i briefly treated above. more loans, more prudence in the supervision, more qualified services, more free prices, less cash in the economy, more banking business, will all lead to more access of the population into your business. i deem that this is an essential prerogative that ensures sustainable long - term development of the albanian economy.
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longer than paper β and will therefore be more economical. these bank notes are also green. their environmental footprint is smaller than that of the old currency made from cotton - based bank note paper. once these new notes are removed from circulation, they will be recycled into other products right here in canada. since the new notes were unveiled last june, bank of canada staff across the country have been training the millions of cash handlers and tens of thousands of police officers about how to check the security features of the notes. this training, of course, is ongoing. the rcmp continues to be a strong and committed partner in the fight against counterfeiting. reports of the death of cash are greatly exaggerated : our research shows that cash is used for more than half of all shopping transactions. canadians need a currency they can trust. bis central bankers β speeches that is why we are launching today the most secure and advanced note series in the bank β s history. in short, these new bank notes are a 21st century innovation in which all canadians can take pride. we are honoured to launch them here at mars, with its links to past glories, current successes, and the promise of future canadian medical innovation. bis central bankers β speeches
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β the monetary policy report and monetary policy report update β if inflation persistently misses the target. this increases our accountability to canadians. finally, we refined the way we measure core inflation. refinements to core inflation i want to take a minute to explain what core inflation is, and why it is important. the bank's inflation - control target applies to the annual increase in the total consumer price index. but we use core inflation as a guide to help us predict where overall inflation is likely to be in the future. in calculating core inflation, we exclude the prices of those goods and services that tend to be the most volatile ; that is, subject to temporarily wide movements both up and down. previously, we would strip out all food and energy items from the cpi basket of goods and services when we calculated core inflation. but not all components of food and energy are volatile. similarly, there are other prices in the economy that are highly volatile. so we found it helpful to focus just on the volatile components in order to do a better job in predicting the future path of inflation. let me give you an example that explains why core inflation is important. in late 2000 and early 2001, energy prices were shooting higher. anybody who drives can remember paying a lot more at the gasoline pumps a year ago than now. natural gas and heating oil prices were also rising sharply. these prices were being reflected in the overall inflation rate, which moved above 3 per cent for the first time in almost 10 years. this prompted some commentators to call on the bank to raise interest rates. but the core rate of inflation was telling us that these higher energy prices were not significantly feeding into other prices. the core rate suggested that inflation would fall back around the midpoint of the target range, once the surge in energy prices either levelled off or reversed itself. in fact, this is exactly what happened. it would not have made sense for us to raise interest rates in the face of these temporarily very high prices for oil and gas. so even though total cpi inflation was high in the first half of 2001, the weakening economy indicated that downward pressure on inflation was coming. we expected core inflation to fall by the end of the year, as indeed it did, and to fall further in 2002. that led to our decision to lower, not raise, interest rates. in the last few months, we've seen rapid declines in volatile components, such as gasoline, fuel oil, and air fares. this means total consumer
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during which this correlation has been weak or even negative. last year, for example, after the announcement of the transmission protection instrument ( tpi ), expectations for the future policy rate increased sharply from around 1 % to 3 %. risk premia in sovereign bond markets, however, remained broadly unchanged ( slide 14, right - hand side ). these developments suggest that other factors were also at play. one of these factors is financial market participants β attitude towards risk, over and beyond changes in expected default losses. there is a growing literature suggesting that risk tolerance by global investors can explain a substantial portion of movements in asset prices. [ 26 ] monetary policy, in turn, is often an important driver of risk tolerance. this can be seen in corporate bond markets, where credit spreads can be decomposed into a component measuring firms β expected probability of default and an β excess β bond premium. the latter has been shown to be a powerful proxy of the risk - bearing capacity of leveraged financial intermediaries. [ 27 ] the evidence shows that changes in the excess bond premium can explain virtually all of the conditional response of credit spreads to a change in monetary policy. the reason is that monetary policy tightening typically reduces intermediaries β risk - bearing capacity, thereby raising the compensation they require for warehousing risk, over and beyond changes in the quality of borrowers β balance sheet. this is precisely what we have seen in the euro area. in the first half of 2022, the increase in the excess bond premium accounted for 80 % of the total increase in corporate bond spreads ( slide 15 ). by october, it still accounted for around two - thirds of the rise in credit spreads. portfolio rebalancing channel in reverse the partial reversal of the portfolio rebalancing channel of asset purchases is likely to have amplified this transmission mechanism compared to previous tightening cycles. indeed, over the course of last year we observed significant portfolio shifts, resulting in large volumes of securities being sold in the secondary market in a short period of time. non - bank financial institutions, for example, have offloaded a notable part of their holdings of lower - rated corporate and sovereign bonds that they had acquired during the period of asset purchases ( slide 16, lefthand side ). regulatory constraints and internal value - at - risk measures implied that leverage - constrained intermediaries which usually absorb these sell orders were facing higher costs for holding more inventory. as a result, intermediaries demanded higher compensation for bearing exposure to
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negative territory in the course of 2008, the annual growth in the draw - downs of credit lines has been increasing up to the third quarter of 2008. this is based on information derived from the eurosystem β s bank lending survey. favour remuneration on equity and human capital, rather than long - term investment. this is not in line with the macroeconomic objectives. this is why we insist that the profits made in these months by the banking sector β which were obtained thanks to the interventions by the policy authorities to keep the system going, and thus ultimately by the taxpayers β should be used to increase the capital rather than to reward the banks β managers and shareholders. this applies not only to banks that have received direct assistance through guarantees and public capital injections, but also to the indirect benefits obtained as a result of low interest rates. 5. conclusion the pre - crisis period was marked by unsustainable credit policies by the banks and, more generally, by the financial system. these policies were encouraged by inadequate supervision and slack prudential regulation, and also by the excessive influence the financial system had on regulatory mechanisms. this caused the biggest crisis of the post - war period. we must find a new equilibrium in which the financial system truly supports the real economy, encouraging a flow of balanced credit. the adjustment may not be immediate and it needs to follow a gradual path in order to arrive, in due course, at a new point of balance that allows a restoration of confidence not only among investors but also taxpayers. everyone must play his or her part. the regulatory authorities have to agree quickly on the new system parameters, in consultation with the private sector. macroeconomic policy must promote conditions for a gradual adjustment, in line with the objective of sustaining economic growth and the restoration of a financial market that efficiently performs its primary role as an intermediary. market players must understand that the future cannot be a simple return to the past, to the pre - crisis situation. if we fail to reach the new equilibrium in due course we will have wasted not only the crisis but also the resources of taxpayers that have been used to save the system. this can only backfire on the system. figure 1 changes in credit standards applied to the approval of loans or credit lines to enterprises ( net percentages of banks contributing to tightening standards ) notes : the net percentage refers to the difference between the sum of the percentages for β tightened considerably β and β tightened somewhat β and the sum of the percentages for
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, our union needs both : risk reduction mechanisms and risk sharing. as i just said, for crisis prevention to be credible, we should implement fiscal discipline β including the present rules of the stability and growth pact β but we should also have the instruments needed to cushion the effects of asymmetric shocks that may arise suddenly, regardless of all the efforts a member state can make. it is time to forget about ideological trench warfare. let me share with you four areas where practical progress is needed : first, bolstering private risk sharing. the simple and obvious way to achieve this is to build the capital markets union within the financing union that i mentioned earlier. we are still lagging far behind the united states where capital markets are capable of absorbing around 40 % of a state - specific shock. what is more, a genuine financing union would further 2 / 3 bis central bankers'speeches increase the efficiency of monetary policy by ensuring better circulation of liquidity in the euro area. second, edis. we have made significant strides with the first two pillars of the banking union, the single supervisory mechanism ( ssm ) and the single resolution mechanism ( srm ). we still need β and it should be our priority β to strengthen the srm with a sovereign backstop to the single resolution fund and a simplified decision - making process tailored for emergency cases of resolution. now, there needs to be some form of compromise to move forward on the third pillar, edis, as well. a suitable and pragmatic approach could be a first step focused on providing the liquidity needs of the national deposit guarantee schemes, as proposed by the european commission last october. we don β t need from the start an integrated european guarantee. third, sovereign debt restructuring. it is legitimate and important to ask ourselves how to make the euro area better able to withstand sovereign debt crises in case they happen. in this regard, enhancing market discipline can be part of the solution β the proposals to set up a sovereign debt restructuring mechanism build on this idea. however, we have to be very cautious and make sure that it does not become part of the problem. when rules are rigid, market expectations may prompt sudden chain reactions or speculative attacks and put financial stability at risk. and nobody should underestimate the β transition problem β on the existing debts if such a policy were to be announced. fourth, the institutional architecture of the euro area. if we make progress on the substance ( the three instruments i mentioned ), there is a
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david dodge : global economic forces and the need for adjustment remarks by mr david dodge, governor of the bank of canada, to the chambre de commerce du montreal metropolitain and the federation des chambres de commerce du quebec, montreal, quebec, 21 june 2006. * * * since the start of the millennium, developments in the global economy have led to important changes throughout the canadian economy and to serious challenges for many sectors and regions. because nobody can anticipate precisely how the world will unfold, the best we can do is to ensure that our economy is as flexible as possible. what i want to do today is look briefly at how the canadian economy has adjusted so far and talk about what public policies - including monetary policy - can do to promote economic flexibility. let me start by listing the main global developments since 2000. first, china and india have emerged as economic powerhouses. second, global economic growth has been extraordinarily strong. third, we have gone through a period marked by an unusually high amount of monetary stimulus, which central banks are now in the process of reducing. at the same time, we have seen a persistent and growing current account deficit in the united states, mirrored by large and growing current account surpluses elsewhere, especially in asia and among many oil - exporting countries. these developments have had significant consequences for the canadian economy. the strong global growth, especially in china, india, and the united states, has led to sharply higher prices for many of the primary commodities that canada produces. the emergence of china and india has also led to intense competition for many manufacturers, as well as lower prices for various consumer durable and semi - durable goods. the higher prices for many of our exports, coupled with lower prices for imported goods, have led to an improvement in our terms of trade and rising incomes for canadians - particularly for producers of commodities, including metals and energy products. in this environment, we have seen a rapid increase in the external value of the canadian dollar. it is clear that we must all adjust to these developments and be ready to take advantage of the opportunities presented by the strong global economy. of course, adjustment is easier said than done. and it is important to acknowledge that adjustment is often very difficult on a personal level. the adjustments over the past three years have been particularly difficult because of the speed and size of the movements in relative prices. this has been a double - edged sword. on the one hand, some firms are facing
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stock exchange and the china financial futures exchange was opened exactly one year ago and is the first trading venue outside china for chinese investment products in renminbi. ceinex uses the deutsche borse's infrastructure and provides investors with the enticing option of gaining access to the chinese capital market during european and us trading hours. in addition to the formation and expansion of close and dynamic economic ties, activities that promote mutual understanding are another integral part of the renminbi's internationalisation strategy. mutual trust is established by regularly exchanging information in the fields of politics, business and academia, and this is an important factor for successful cooperation with chinese partners. in mid - october this year, for example, a delegation of members of the renminbi initiative group frankfurt headed by the deutsche bundesbank and the hessian ministry of economics travelled to beijing and shanghai for talks. this was in connection with a workshop in beijing organised by the sino - german center of finance and economics, which boasted high - ranking participants from the people's bank of china, academia and the financial sector. the sino - german center, which is part of the goethe university in frankfurt, is a research centre that conducts independent research and promotes interaction and improved mutual understanding by means of education and training. the sino - german center opened in september 2015 and i am proud of the fact that the bundesbank, as a member of its board of trustees, is actively contributing to its success. 4. what conclusions can be drawn? ladies and gentlemen the inclusion of the renminbi in the imf's special drawing rights basket marks a milestone in the internationalisation of the chinese currency. there can be no doubt that this is a great political and economic triumph for china as well as an endorsement of the path to openness that the country has been treading with great determination since the end of the 1970s. however, there is still some way to go if the renminbi is to become as important as the other four key currencies. foreign investors'access to the onshore capital markets in china, which is still restricted, is a case in point and underscores the necessity for chinese policymakers to continue to resolutely press ahead with the opening - up and liberalisation of the chinese markets. thank you very much for your attention. 3 / 3 bis central bankers'speeches
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francois villeroy de galhau : what responses to terms of trade shocks in poor and vulnerable countries? speech by mr francois villeroy de galhau, governor of the bank of france, at the bank of france - ferdi ( fondation pour les etudes et recherches sur le developpement international ) conference, paris, 24 january 2017. * * * good morning and welcome to all in the auditorium of the banque de france. it is a great pleasure to welcome you here with patrick guillaumont, president of ferdi and coorganiser of this conference, to whom i extend my warmest greetings. i would also like to welcome jan gunning, professor emeritus at the free university of amsterdam, as well as all the speakers who honour us with their presence. the banque de france has established research partnerships with several foundations and universities : the paris school of economics, the toulouse school of economics and the fondation nationale des sciences politiques. the partnership with ferdi ( fondation pour les etudes et recherches sur le developpement international ), which we are pleased about, focuses on extending and enriching discussions and research on monetary and financial issues related to development, including : the financing of development, in particular the mobilisation of domestic and international savings, the competitiveness of african countries and exchange regimes and strategies, regional integration in africa, which was the theme of our first conference in 2014, the β curse β of commodities in low - income countries, and the management of the dutch syndrome and the terms of trade cycles, i. e. changes in the relative prices of exports compared to imports : this is the theme of today β s conference. the subject chosen is highly topical, following the very sharp drop in commodity prices, in particular oil prices, between mid - 2014 and early 2016, the effects of which on exporting countries had been underestimated, both by the countries themselves, but also by the international financial community. thus, the economic growth forecasts for sub - saharan africa made by the main international organisations were revised downwards only very late. in january 2016, the imf still expected sub - saharan africa to grow by 4 % in 2016 and by 4. 7 % in 2017, but the forecasts in the october 2016 global economic outlook were only 1. 4 % for 2016 and 2. 9 % for 2017, almost solely as a result of the recession in the oil economies. the ivorian economy
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outs by national governments, because it would become more common to resolve banks rather than save them. hence, the private sector would bear the cost rather than the taxpayer. any residual fiscal burden on sovereigns would be contained through a federal fiscal backstop. the shift of supervision from the domestic to the european level, at which supranational interests are pursued, should also eliminate national bias and the associated supervisory forbearance that the financial crisis has brought to the fore. with hindsight, in the past supervisors were often lenient towards β national champions β, constrained either by their mandates or by other national pressures, or perhaps both. supervisors should be free from local pressures and interests ; they should be able to independently assess the situation of individual banks in a systemic context. from a monetary policy perspective, the banking union can relieve monetary policy of some of the tasks undertaken during this crisis, notably that of repairing and bypassing a clogged bis central bankers β speeches transmission channel. early supervisory action limits the necessity to access central banks β financing, including non - standard measures. reasons and benefits for entrusting the ecb with the ssm all of these reasons were the driving forces behind the establishment of the ssm. let me now spend a moment on the reasons why the ecb is being entrusted with these centralised supervisory tasks. first of all, there are legal reasons. given the need to establish the ssm quickly, a treaty change, which would take several years, was not really an option. article 127 ( 6 ) of the treaty on the functioning of the european union provides that the council by unanimous vote may β confer specific tasks upon the european central bank concerning policies relating to the prudential supervision of credit institutions. β but a treaty change in the future should not be ruled out. second, the decision was guided by practical reasons. over the years, the ecb has built up a unique expertise in analysing financial institutions and markets. in other words, the ecb has the means and, in conjunction with the national authorities, in most cases coinciding with the national central banks, the technical capability to carry out this complex task. moreover, most of the national central banks already have prudential competence. key principles for the implementation of the ssm let me now describe how the ssm will function. one of the conditions for the success of the ssm is that it ensures a truly european perspective. it is a myth that politically protected
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to create sufficient variation in the data. by standard econometric arguments, this will indeed allow better identification of the relevant, unknown deep parameters for future policy conduct. when presented with this line of arguments, however, a policymaker β s instinctive reaction is that they cannot possibly be right. β’ first and foremost, any experimenting with the economy would inevitably and fatally run the risk of destabilising expectations. indeed, the result that it is optimal to experiment with the economy was originally obtained within models in which the public played a purely passive role and the behaviour of the policymaker could not alter the public β s beliefs and expectations. β’ second, when this assumption has recently been relaxed in models in which the public is allowed to learn from the behaviour of the policymaker, 19 the result was overturned. optimal policy becomes distinctly conservative, in the sense that policymakers should be wary and respectful of the fundamental fragility of the macroeconomic equilibrium to any perturbation that policy experiments could introduce. in a nutshell, the initial, radical result in favour of monetary policy experimentation has been reversed. the fragility of the earlier result β and the transience of many such results, in the history of the theory of economic policy, which had appeared rock - solid at first sight β is a memento to policy practitioners. this, of course, poses an issue concerning the right balance between creativity and pragmatism in our policy - making institutions. isn β t it the case that an excessive intellectual conservatism might end up leaving our policy - making institutions β behind the curve β, clinging to dead theories, and unable to cope with the new challenges of an ever - changing world? to be sure, highly innovative ideas will not systematically be proven wrong : heliocentrism β a revolutionary paradigm when it was first expounded β finally and definitely displaced previously dominant geocentrism. we should be careful not to censor research just for the sake of intellectual conservatism. however, the intrinsically entrepreneurial nature of research, whatever the specific field of endeavour, means that the incidence of failure is bound to be high. failure in economic policy means potential for economic damage. a safe principle that has always worked in the past is that the introduction of new ideas and concepts into a central bank β s monetary policy framework should be evolutionary, as opposed to revolutionary. historically, a typical example of this has been the introduction, towards the end of 1999, of
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mr brash : will the reserve bank choke the recovery? address by dr donald t brash, governor of the reserve bank of new zealand, to the auckland regional chamber of commerce & industry, auckland, on 21 march 2000. * * * introduction ladies and gentlemen, i was invited to give this address after a number of pretty aggressive attacks on the reserve bank, on monetary policy, and on me personally in the auckland media in late january and early february, after the bank increased the official cash rate from 5 per cent to 5. 25 per cent in the middle of january. who does don brash, an unelected bureaucrat whose name appeared on no ballot paper in the last election, think he is, to be making such important decisions? why does don brash refuse to engage publicly with any of the media on the issue? why is new zealand the only oecd country that β persists in intervention to fuel another self - induced recession β ( this from the auckland chamber of commerce itself, using the same words after our increase in the official cash rate in january, and again after the further increase last week )? wouldn β t life be much better if we simply did away with such intervention, and allowed pure market forces to determine interest rates? hasn β t the reserve bank, and the way in which it has run monetary policy under the reserve bank act of 1989, caused new zealand β s huge balance of payments deficit, and won β t pushing up the official cash rate simply make matters worse? why did the bank increase the official cash rate as the economy was just beginning to emerge from the recession? surely it was inappropriate to tighten policy when the government statistician has shown that inflation in the latest year was below the mid - point of the 0 to 3 per cent inflation target? why does the reserve bank claim the right to be the sole judge of how fast the new zealand economy can grow? isn β t it possible that new zealand, like the united states and other developed countries, can now grow faster than before without inflation? these and other questions poured forth β and this despite the fact that january β s modest increase of 25 basis points had already been fully priced into financial markets ( as indeed last week β s adjustment to the ocr had been also )! some questions based on misunderstanding i welcome the opportunity to respond to these questions this morning. some of them raise important issues, though i think it is fair to say also that others simply reflect misunderstandings.
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urged accounting standard setters to develop a single set of high - quality accounting standards. a global set of accounting standards is desirable from the perspective of both investors and regulators since it improves the comparability and transparency on a global basis. this contributes towards sounder investment decisions and thus to a more efficient allocation of resources as well as overall functioning of capital markets. moreover, the financial crisis clearly revealed the shortcomings of different accounting rules on both sides of the atlantic, as differences in rules contributed towards a lower degree of confidence in financial reporting. for all these reasons, the ecb welcomes the ongoing efforts of the accounting standard setters to achieve fully compatible, high - quality accounting standards in a direct response to the g20 request. however, we are concerned to hear that the fasb and the iasb are still far from reaching a consensus on key accounting concepts, such as the classification and measurement of financial instruments. the iasb has confirmed a β mixed measurement model β that measures financial instruments both at amortised cost and fair value. in contrast, the us standard setter, the fasb, is determined to move towards a β full fair value model β, claiming that only fair value provides decision - useful information to investors. i have already mentioned in my intervention how the financial crisis has blatantly revealed the flaws with this measurement and how in certain circumstances, namely when markets are dislocated, applying full fair value accounting to the financial statements of the banking sector raises financial stability concerns and does not provide decision - useful information to investors. just to re - emphasise, the ecb strongly opposes a full fair value approach. in this context, convergence should not come at the expense of high - quality accounting standards. finally, with regard to recent assertions made by the iasb and fasb that convergence is on track, i would like to highlight that we are not so optimistic. in this regard, putting in place a reconciliation mechanism that simply discloses figures at amortised cost and fair value for each item on the balance sheet would certainly not achieve the aim of convergence. as regards governance, which improvements do you envisage in relation to the elaboration of accounting rules? first, i would like to stress that the ecb fully supports the concept of β independent accounting standard setting β. in their april 2009 declaration on strengthening the financial system, when identifying the main areas of concern in the accounting area, the leaders of the g20 never challenged this concept
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an β impossible dream β. while i accept that there are conceptual and practical difficulties in fostering the stability of the financial system, i do not share this pessimism. we have only to consider the substantial cost of the recent financial crisis to realise that we can and should do better! in my view, two main prerequisites have to be fulfilled in tandem in order to sustainably achieve a higher level of financial stability. the first is to continuously strive to improve our knowledge about the sources of financial instability. clearly, the complex, continuously evolving financial system will never allow us to prevent all crises for all times. but, in general, the more information we have on the structure and dynamics of the system, the more accurately we can design its regulation, and the less uncertainty there will be about the β optimal β mix of regulatory instruments. the second prerequisite for improving financial stability is to recognise that financial stability is a question of will, or more precisely, of political will. in other words, even perfect information on the sources of financial instability might prove insufficient if the collective will needed to translate this information into practical measures is not present. conversely, even with imperfect knowledge, financial stability is attainable if we are willing to take precautionary measures commensurate to the extent of our ignorance. for instance, a regularly updated q & a section covering relevant topics around snb and swiss monetary policy. bis central bankers β speeches my optimism that financial stability is achievable rests partly on the fact that, in the case of switzerland, identifying the main sources of potential financial instabilities is rather straightforward. a first source is the β too big to fail β ( tbtf ) problem β that the swiss banking sector has several banks with balance sheets that are large in relation to gdp. a second key source of risk resides in the substantial imbalances that have been building up in swiss real estate and mortgage markets and the high exposure of domestically focused banks to these markets. let me mention here that other possible system - wide sources of risk discussed on the global level, in particular those in the β shadow banking β sector, are considered less of an issue in switzerland. one reason is that shadow banking assets in switzerland carry low to moderate bank - like systemic risks. another reason lies in the fact that bond funds and other investment funds, which make up 60 % of shadow banking assets in switzerland, are supervised by finma. 8 switzerland has made considerable progress in addressing its
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negative equity, scenarios whereby expenses exceed income for a prolonged period of time are conceivable. such extreme scenarios not only preclude any profit distribution to the confederation and the cantons, but can also raise even more fundamental issues about the ability of a central bank to pursue a monetary policy oriented towards price stability. to summarise, large - scale central bank balance sheet expansions are associated with increasing risks. at the current juncture, the longer - term risks associated with a massive, uncontrollable expansion of the snb balance sheet would have been out of proportion to the benefits of continuing to enforce the minimum exchange rate. this does not mean that the snb will refrain from expanding its balance sheet further, should it prove necessary. rather, it clarifies that this policy option should be used only when the benefits clearly outweigh the costs. fiction iii : the snb has unlimited power the drastic actions taken by central banks since the financial crisis β flooding financial markets with liquidity on an unprecedented scale, injecting billions to save banks from failing, or, in the case of switzerland, intervening heavily in the foreign exchange markets β have led to the widespread perception that central banks have unlimited power. on the one hand, this perception is based on the fact that central banks are entrusted with the note - issuing privilege, i. e. they can β print money β. in view of the current difficult debates about austerity and deleveraging, the tendency to overrate the power associated with this privilege is probably natural. yet this view overestimates its actual power, for printing money bis central bankers β speeches can only resolve short - term liquidity issues. in the long term, it creates no value and merely generates nominal price increases. on the other hand, the perception that central banks are all - powerful is also based on the fiction that their independence renders them immune to democratic controls. it is a fact that today, most central banks are granted significant independence. this holds also for the snb, which, by law, is functionally, institutionally and financially independent, as well as with regard to personnel issues, from the federal council, the federal assembly and any other body. 4 there are compelling reasons for this delegation of monetary policy power to an independent central bank : it is a fact both in theory and practice that an independent central bank better fulfils its mandate, namely, ensuring price stability and thereby contributing to sustained economic developments
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behalf of the governing council, on the occasion of our last monetary policy decision meeting earlier this month. as regards liquidity - providing operations, the governing council decided to conduct them in the second quarter of 2011 on the same conditions as in the first quarter of 2011. this means that we will continue to apply fixed - rate tender procedures with full allotment in all our refinancing operations at least until mid - july. ii. interaction between banks and sovereign debt let me now turn to the specific topics you have asked me to address and start with sovereign debt. i should like to emphasise once again that the right way to avoid the risk of sovereign debt crises in an economic and monetary union is through sound national macroeconomic policies and strengthened economic governance. at the same time, the governments have considered that a permanent crisis management mechanism would be useful. from the side of the european central bank, the design of such a mechanism is essential for it to provide a positive contribution to financial stability in the euro area as a whole. i would like to highlight two aspects : first, the mechanism may in no way weaken the incentives for sound fiscal and macroeconomic policies pursued in all member states. it must in particular not weaken incentives for preemptive fiscal and macroeconomic adjustment by countries concerned, thereby avoiding moral hazard. second, given that the euro area is characterised by an exceptionally high degree of economic and financial integration among countries, the mechanism should be able to employ a range of instruments to be effective in stemming against contagion in situations of acute market instability. if indispensable, supporting countries while still keeping some market access, may be an appropriate way and would imply a prudent use of funds. in this context, i continue to consider secondary market interventions as a helpful tool in this context. regarding the institutional method to set up the esm, the ecb, like the parliament, supports the largest possible recourse to the union method. it would welcome that, on the basis of the experience gained, the esm could become a union mechanism at the appropriate point in time. in the meantime, the ecb encourages that the assessment of circumstances leading to the activation of the esm and the conditions on financial assistance entail an appropriate involvement of union institutions, thus benefiting from their expertise and their union - wide perspective. turning to the issue of bank resolution, the presence of sound bank resolution mechanisms, limiting the costs associated to a bank failure in the case of a cross
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inflation to levels that are below, but close to, 2 % over the medium term. regarding fiscal policies, an ambitious and coordinated fiscal stance remains critical, in view of the sharp contraction in the euro area economy. measures taken in response to the pandemic emergency should as much as possible be targeted and temporary in nature. the three safety nets endorsed by the european council for workers, businesses and sovereigns, amounting to a package worth β¬540 billion, provide important funding support in this context. at the same time, the governing council urges further strong and timely efforts to prepare and support the recovery. we therefore strongly welcome the european commission β s next generation eu proposal, which is dedicated to supporting the regions and sectors hardest hit by the pandemic, to strengthening the single market and to building a lasting and prosperous recovery. it is important for the european leaders to quickly agree on an ambitious package. in order to reach its full potential, the european union β s recovery and resilience facility will need to be firmly rooted in sound structural policies conceived and implemented at the national level. well - designed structural policies could contribute to a faster, stronger and more uniform recovery from the crisis, thereby supporting the effectiveness of monetary policy in the euro area. targeted structural policies are particularly important to rejuvenate our economies, with a focus on accelerating investment in priority areas such as the green and digital transitions. we are now ready to take your questions. 3 / 3 bis central bankers'speeches
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central bankers'speeches and once again, thank you everyone for participating in this forum. let's also give ourselves a round of applause. maraming salamat po! see you all in 2024. 2 / 2 bis - central bankers'speeches
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parents of elementary school pupils. schools now request this program which runs parallel to the classroom teachings of elementary pupils. at the same time, 12 banks joined hands to launch the kiddie account program. while these banks were no stranger to children β s accounts, they all agreed on the need to make saving affordable, accessible and convenient to attract more kiddie savers. after negotiations that took nearly two years, the 12 banks agreed on a common denominator : children are welcome to open accounts with them with a minimum deposit of only 100 pesos or less than us $ 3. 00. and to further help make saving a habit, bank representatives also go directly to schools to service children β s deposits. so far, so good : thousands of new accounts are being generated by the kiddie account program and withdrawals are minimal. since children exert influence in household decisions, we hope that their habit of saving will rub off on other members of the households, including the adults. based on the results of the bsp β s household finance survey, only 20 % of philippine households maintain bank accounts. we are therefore looking at this program as a way to help raise the savings rate in the philippines. i understand that yesterday many of our foreign delegates visited the aurora quezon elementary school to observe how financial lessons are taught and to hear how banks are implementing their kiddie account programs. did you find it useful? that is good to know. ladies and gentlemen, our continuing journey takes us through uncharted territory. nevertheless, we are encouraged by positive feedback β from the pupils who start saving regularly, to the teachers who say they learn life lessons from the program. also a positive is the 2011 citi financial quotient survey where the philippines showed sustained improvements in its score. nevertheless, we have a long way to go and a lot more to learn. it is for this reason that we look forward to this regional meeting on child and youth finance for asia and the pacific. i hope therefore that our conference today will be successful and fruitful. finally, we thank the child and youth finance international for bringing this regional meeting to manila and for taking the lead in the global movement to promote the habit of saving among schoolchildren. we also commend their design props today β the multi - colored bis central bankers β speeches balloons and throw pillows. it reminds us that while we are tackling a serious subject, we should not forget that our intended beneficiaries should find it fun to find
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andres sutt : macroeconomic co - ordination and fiscal policy in the expanding eurozone statement by mr andres sutt, deputy governor of eesti pank ( bank of estonia ), at the conference β thinking euconomy - wirtschaftspolitik europaisch denken β, berlin, 3 may 2006. * * * the enlargement of the european union with the clear message that all countries without an opt - out clause will, in the future, be also members of the emu, is a most welcome and forward - looking approach in view of an ongoing globalisation and integration processes in the world. eventually, the adoption of the single currency by all member states provides clear benefits for the union as a whole. from the macroeconomic point of view it would support further economic integration and higher growth rates by fostering trade and investments. therefore, euro area enlargement will provide tangible benefits for all european citizens over time. the main policy challenge for both the current and prospective euro area members is to ensure that the best use is made of the monetary stability provided by the framework of the european system of central banks ( escb ). from the perspective of the new member states, the issue at stake is how to maintain the economic structure supportive for sustained growth and rapid real convergence. strong fiscal stance is instrumental in this regard. convergence programs of the new member states should include ambitious medium term objectives to ensure that not only the maastricht criteria are met, but most importantly, the emergence of excessive deficit situations is avoided and the risks of taking recourse to exchange rate adjustments after joining the erm2 ( and, eventually, the euro area ) are minimized. the well functioning single market for all goods and services, including infrastructure networks, as well as pursuing the national reform programmes in the context of the reinforced lisbon agenda is the other pillar for the success of the euro area and for the new member states in particular. estonia has been a de facto member of the euro area since the inception of its independent currency in 1992. fixing the local currency to d - mark, and later to the euro meant that the monetary policy decisions were not made in estonia. estonia's currency board regime implies prudent fiscal stance that has been largely adhered to since 1992, resulting in our general government having accumulated a relatively large net asset position of around 10 percent of gdp. a solid budgetary position and early deregulation of product and capital markets implies that estonia has been
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of the estonian banking sector is currently above 22 %. the capitalisation of the subsidiaries of the banks operating in estonia is absolutely sufficient to cope with loan losses markedly bigger than the current estimated 2 % level without including additional capital. the credibility of the banks operating in estonia is thus not threatened by a possible increase in the share of so - called bad loans in the loan portfolio in the course of this year compared to the current 5. 2 %. the integration of the banking system with the scandinavian and european markets, which is one of the most important factors supporting stabilisation, is another issue. the banking groups operating in estonia are able to manage capital and liquidity in a flexible way at group level. the integration of the banking system consists in the readiness of banking groups to promptly channel money flows to various subsidiaries and branches according to need. the integration of banking is supported by cooperation in the nordic - baltic region. i am convinced the daily information exchange and cooperation agreements of our region set an example of ensuring financial stability for the entire european union. in the final months of 2008, sweden initiated support schemes, which have had a very positive impact on banking groups as a whole, i. e., national support measures have been implemented from group level also on subsidiaries and branches. in this context, estonia has in the eu actively supported the principle that the implementation of rescue packages must not discriminate against other member states. 2009 economic policy priorities in estonia now i would like to say a few words about the current monetary and economic policy situation and the most important priorities for 2009. by now it is clear that the estonian enterprises and households have thoroughly changed their behaviour and expectations over the past half a year. in this respect, a big part of the adjustment process has already taken place and estonia's primary macro vulnerabilities have considerably decreased. the current account, i. e., the difference between investment and savings, has practically balanced and the financing of the economy's current expenditure is ensured by current income. in addition, estonia has no problems with financing its external debt. companies and people in estonia have taken serious steps to pave way for getting through the global crisis and recovering growth. therefore, the state needs to implement some important macro - level objectives to support the recovery of economic growth. here i mean, above all, the readiness to join the euro area as well as medium - term and long - term stability of fiscal policy. in the current situation, accession to the euro area
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economic analysis : a perspective. the economic journal, vol. 95, supplement : conference papers, pp. 21 - 41.
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incentive not to be overly transparent about borrower risk. [ 3 ] for his part, the investor cannot ensure that the originator is acting in their best interests. after the financial crisis, securitisation was blamed for passing bad loans on to unsuspecting investors. the financial crisis has highlighted potential weaknesses in the securitisation process, which are particularly relevant for very complex securitisations. these include insufficient transparency and insufficient risk management systems and valuation procedures. as a result, securitisation markets have been stigmatised in public perception. however, with appropriate structure and regulation, securitisation may have a positive long - term social value. securitisation markets complement other long - term wholesale funding sources for the real economy. this allows enterprises to diversify their sources of funding. by gaining indirect access to investors on the capital market, small and medium - sized enterprises can particularly benefit from this. securitisation can also open up space on banks β balance sheets, thus creating leeway for further lending to the private sector. a market for prudently designed asset - backed securities may potentially improve the efficiency of resource allocation in the economy and ensure better risk sharing. [ 4 ] this occurs due to the transformation of relatively illiquid assets into more liquid securities, often sub - divided into several tranches with varying levels of risk. as a result, the costs of capital may be lower and economic growth may be higher. from the perspective of central banks, given appropriate structure and regulation, securitisation can play a significant role in supporting both monetary and financial stability. for example, in certain cases, high - quality asset - backed securities could ensure better transmission of monetary policy, since a greater fraction of enterprises get access to credit markets. in terms of financial stability, greater diversification in bank liabilities may make banks β lending decisions less dependent on the business cycle. and it may reduce borrowers β exposure to refinancing and liquidity risk. this could strengthen banks β resilience and reduce systemic risk. but how do we ensure that there is appropriate structure and regulation in the markets for securities? in this context, following the financial crisis, the financial stability board proposed a set of measures aimed at greater resilience in securitisation markets. [ 5 ] amongst other aspects, there was coordination in the development of policies for improving transparency and aligning incentives in securitisation. furthermore, a recent report of the
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many have identified trusted intermediaries with access to the target group to deliver financial education. this approach can be effective, provided that the goals of the intermediary are aligned with the financial education goals, and that the staff are properly trained and incentivized to provide financial education. countries need to design programs to ensure people can make sound financial decisions, select financial products, which best suit their needs, and know how to use related channels, such as atms or mobile banking. however, more research and evaluation is necessary to further explore the relationship between financial literacy and financial inclusion, and to identify the impact of financial education initiatives on financial inclusion. ladies and gentlemen, with respect to technological advances, digital technologies are important for inclusion, as they enable innovative and lower - cost business models for providing financial services, making it viable to reach the poor. about 260 million unbanked adults in the developing world receive private sector wage payments in cash. switching to digital payments could potentially save significant time and resources for businesses and workers alike. likewise, agricultural payments present another chance to expand access to the formal financial system, as roughly 440 million unbanked adults in the developing world are paid in cash for farm goods. by moving away from cash and using digital payments to distribute social benefits and wages, governments can reduce costs and leakage. in the developing world, about 120 million unbanked adults receive government transfers in cash, according to the world bank β s global findex database 2014. at the same time, more than 31 million unbanked adults in emerging countries are paid government wages in cash. digitizing these payments could bring millions of adults into the financial system for the first time. likewise, 355 million adults in developing countries with an account send or obtain domestic remittances in cash or over the counter. further, 1. 3 billion adults with an account in developing countries pay their trash, water, and electric bills in cash, and over half a billion adults with an account in developing countries pay school fees in cash. access to digital payments generates opportunities to provide more convenient and affordable payment options. as we continue to adopt innovative financial inclusion models, we need to be positioned at the forefront of these developments in order to identify and manage the associated risks. more importantly, we need to be equipped with thorough knowledge of innovative business models to develop an enabling ecosystem for innovative financial inclusion to flourish in a safe and stable manner. ladies and gentlemen, allow me now to share with you some of
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regulatory, concentration and reputational. 8. in the case of nepal stakeholders including the nrb and fiu - nepal, have been proactively working to implement the preventive measures of financial crime, so as to investigate and disseminate the cases of money laundering and terrorist financing ( ml / tf ) to law enforcement agencies ( leas ). fiu - nepal received 45, 93, 5817 ttrs'and 887 str's in fy 2017 / 18 and out of the total strs'that has been received ; almost 312 were disseminated to the leas. i hope that fiu - nepal and leas will continue to coordinate to further investigate the cases for prosecution and convictions. i understand that fiu - nepal has already installed the goaml system for strengthening the receiving, reporting and dissemination mechanism of information and reports from commercial banks and is now reporting under the test environment. i am confident banks will soon move to live environment of goaml in reporting of str and ttr to fiunepal. 9. hence, leadership of government of nepal and joint and coordinate efforts among the regulators, bfis, leas, fiu, civil society and support agencies such as isp, telecommunication companies, vendors, etc. including with the public private partnership can play an important role to control the financial crime and help to maintain the financial stability in country. ladies and gentlemen, 10. at last, but not least, i would convey my best wishes that the conference will be successful and reach a concrete conclusion about the implementation of robust mechanism of aml compliance. in addition to this, i believe that, this program will able to help improve your knowledge on the risks associated with of ml / tf. it will also help to further continue discussions on plan of action to help prepare for the upcoming mutual evaluation scheduled in 2020. 11. with this note, let me close my remarks by congratulating and thank you all for your gracious presence and attention. thank you.
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prolonged low global demand, and adverse feedback loops between the real economy and financial markets may engender the global economy fall into deflation. 12. the global risks of deflation are clearly much more pronounced than before, whose vicious and self - reinforcing dynamics β in the form of higher real interest rates, falling nominal gdp, and rising unemployment β are notoriously difficult to combat once they become deeprooted. ladies and gentlemen 13. notwithstanding headwinds from ( i ) the taper tantrum episode in 2013, ( ii ) the economic slowdown in china, ( iii ) the continued fall in commodity prices, ( iv ) the normalization of us interest rate policy, and ( v ) the increased volatility in global financial bis central bankers β speeches markets, the indonesian economy has thus far held up well, emerge with its economic standing intact, standing out among the fastest growing and stable emerging economies. 14. certainly, this has been made possible owing to mix of prudent and consistence monetary and fiscal policies, exchange rate flexibility β while managing to enact a comprehensive set of bold reforms, which mutually reinforce each other to bring in macroeconomic stability while nurturing stronger growth. 15. growth has continued at a solid pace and remains among the highest in emerging market. private consumption remains solid with domestic demand compensating for the slowdown in the external sector. 16. inflation is well contained at 3. 35 percent ( yoy ), which is within the target of 4Β±1 percent for the year. well - managed inflation expectations, lower exchange rate passthrough, and a small negative output gap, have all contributed to lowering core inflation. 17. indonesia is convincingly in an era of structurally lower inflation, in my view. this was evidently reflected from the trajectory of consumer price inflation ( cpi ) which have been converging towards core inflation. 18. the stability over growth strategy demonstrated in monetary policy tightening since mid - 2013, fuel subsidy reform, and greater exchange rate flexibility, have helped improve the external position. in 2015, the current account deficit falling to a healthy level at 2. 06 percent of gdp, from β 3. 00 percent of gdp in 2014. 19. furthermore, international reserves continued to be sufficient at us $ 105. 9 billion as of end - 2015, which is equivalent to 7. 45 months of imports and official debt repayments. ladies and gentlemen 20. going forward, indonesia β s economic outlook remains solid
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prospect and the direction of the indonesian economy ahead. i do hope that you would share the same view. thank you. references badan koordinasi penamanan modal ( bkpm ), investment policies statement, june 2009. badan pusat statistik ( bps β statistic indonesia ), several press releases and publications. bank indonesia, various monetary policy review, quarterly monetary report and press releases. international monetary fund, world economic outlook, 2009. joint asian development bank β world bank report, improving the investment climate in indonesia, may 2005. moccero, diego. improving the business and investment climate in indonesia, economics department working paper no. 638, oecd, september 2008. mulya, budi. the need to strengthen indonesian financial market, delivered at jica β s seminar on β the challenge in developing indonesia β s financial market β, held in nikko hotel, jakarta, 11 december 2009. raldi hendro koestoer, promoting regulatory reform for investment in indonesia, office of coordinating ministry for economic affairs, republic of indonesia ( cmea - ri ), presented at apec high level conference on structural reform, 8 β 9, september 2004, tokyo, japan. world bank, global competitiveness report, 2000 edition up to 2009 β 2010 editions. world investment prospect 2009 β 2011, unctad. world bank, investing in indonesia β s institutions for inclusive and sustainable development, country partnership strategy for indonesia fiscal year 2009 β 2012, 2008.
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and approved the building of 500, 000 housing units in all regions of the kingdom over the coming five years with allocations of rls 250 billion. the limit of housing loans extended by the real estate development fund was increased from rls 300, 000 to rls 500, 000 which will hopefully provide more houses for citizens and constrain the inflationary pressures stemming from the increase in house rents. you also ordered setting a minimum wage of rls 3, 000 for all saudi government employees, allocated a monthly amount of rls 2, 000 for job seekers, and raised capital of the saudi credit and saving bank by rls 30 billion. the number of family members covered by the social security was increased from 8 to 15 with an allocation of rls one billion for that purpose. the government subsidies for charity associations rose by 50 percent to rls 450 million annually, and needy families β sons and daughters were supported to join bis central bankers β speeches universities through allotting them a portion of seats, facilitating their admission requirements, and exempting them from some tuition fees. this package of honorable royal decrees will enhance the standard of living of the least - income segment of population and promote its ability of saving and, thereby, raise its future productivity and income, and reduce poverty, to which you always attach considerable attention. in the health care arena, you ordered supporting the ministry of health with rls 16 billion in order to carry out the expansion of a number of hospitals and health centers. you increased the maximum limit of the ministry of finance β s financing program of private hospitals from rls 50 million to rls 200 million. this would hopefully enhance health care services in the kingdom. under your wise leadership and continuous guidance, the supreme economic council continued to accomplish a number of development steps aimed at restructuring and reorganizing the economy and streamlining regulations and legislation in order to promote the rise of the level and competitiveness of the economy, achieve the optimum operation of the production factors and provide an attractive environment for domestic and foreign investment. as a result, the investment environment has improved. according to the β doing business report 2012 β issued by the world bank, the kingdom ranked twelfth among 183 world countries in terms of ease of business performance. the executive board of the international monetary fund noted that the kingdom was well posed to encounter the global financial crisis. however, the sound supervisory and regulatory frameworks significantly contributed to strengthening the capacity of the financial sector to withstand the crisis. the board stressed that
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severe when exuberance had evaporated and prices had corrected, which is often the time when the system is most risk averse. we aim to develop this approach over the next three years, starting with the 2016 stress test. along with a regular assessment of data and indicators it will be a key part of a forward looking, data driven approach to setting the uk β s countercyclical capital buffer for banks. we have set out more details in a recent bank paper. 2 as always, one issue will be assessing the costs and benefits through time in so far as that is practicable. another is where to set the countercyclical capital buffer in different parts of the cycle to enable it to be relaxed at times of stress. a third will be how far in advance one needs to act. if you thought that the impact of changes in the ccb happened with a lag, that there were benefits in a ccb above zero that could be relaxed, that risks were building or that there were benefits to moving policy gradually, these would point to moving earlier rather than later in the cycle. this approach is intended to maintain the resilience of the system over the cycle. but, clearly, requiring banks to hold more capital will very probably also have a dampening effect, leaning against the cycle. the third approach to time varying macroprudential policy i mentioned would take this further. it would set policy with the explicit objective of pushing back on the cycle until the level and perhaps the composition of credit was judged to be more acceptable in risk terms. this of course would be a bigger β call β for the macroprudential authority than targeting resilience. again it requires a very careful assessment of costs and benefits. i do not think the macroprudential policy framework should β start β there ; the starting point should be maintaining resilience. but given the history and the objective of maintaining financial stability, i do not think that the macroprudential authority can foreswear making such calls when necessary. indeed, the fpc has implicitly already done this in taking action on the flow of high loan to income mortgages. in taking this action, the fpc took a view on the risks if the distribution of mortgages shifted towards a large share of high loan to income loans. we intended to limit the risks arising from increasing household indebtedness and the macroeconomic vulnerabilities this creates. the action was forward looking β
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same time, consistent with the existing political and legal facts on the ground in europe. this decentralised structure is not set in stone. neither financial market integration nor the supervisory architecture has yet reached its final stage in europe. the current set - up nevertheless represents a sustainable foundation that was not shaken even by the tremors of the financial crisis. europe has done very well with this evolutionary approach which can be expanded further as market evolves. in my view, the cooperative supervisory model has good prospects of providing a stable setting for financial market regulation both now and in the years to come. a redesign of the supervisory architecture does not just concern the level at which competencies for supervision of individual institutions are allocated, however. what the crisis has done, in fact, is to broaden the perspective of the institutions responsible for financial stability in terms of paying greater attention to macroprudential issues. not so very long ago, financial stability analysis often had the reputation of being a β fashionable β subject. but the scale of global financial crisis and the force with which it hit the real economy have made it abundantly clear how important it is to have a more detailed understanding of how institution - specific and systemic factors interact. as you know, central banks have been concerned with analysing financial stability for some years now. i strongly support the attempts to gear the regulatory and supervisory system more closely to macroprudential principles. it is in the interests of all the financial market players to press ahead with the debate on the substance, objectives and operational framework of independent analysis of financial stability. ladies and gentlemen : we have here a distinguished panel of three panellists who are playing a leading role internationally and within europe in the evolution of the supervisory architecture. i am certain that the next one and a half hours will provide us with a stimulating debate on the future direction taken by the supervisory structure in europe.
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to adapt its facilities to support continuous private liquidity creation. bank capitalization since the crisis began, the capital adequacy of banks around the world has been the subject of intense scrutiny. concerns moved quickly from bank exposures to u. s. subprime debt on to structured products of all types as the crisis spread and, finally, to more traditional credits to businesses and households as the recession took hold. concerns about capital adequacy for banks outside canada were made worse by uncertainties caused by accounting standards, valuation methodologies, and a loss of credibility of the basel ii regulatory capital standard. it was not lost on investors that every single financial institution that failed had a capital ratio well above its basel ii regulatory minimum the day before it went down. as a consequence, investors have demanded ever - higher capital ratios from all banks, creating a dynamic that has exacerbated the recession. in this context, canadian institutions have benefited from several factors : high initial capitalization ( minimums set by the office of the superintendent of financial institutions are well above the basel threshold ), high - quality capital ( with one of the highest proportions of common equity ), the clarity provided by a simple leverage cap, low exposure to structured products, and clear valuation and disclosure standards ( including rapid implementation of the financial stability forum's enhanced disclosure guidance of april 2008 ) ( chart 6 ). writedowns by canadian banks have been relatively moderate to date, reflecting their conservative lending practices and low exposure to highly impaired asset - backed products. but canadian banks, as the principal source of finance in our economy, are still exposed to the risk of a marked deterioration in economic conditions, which would depress earnings and generate losses in their household and corporate loan portfolios. in general, this risk is why banks carry high capital buffers. the macroprudential risk is that these capital buffers may not be allowed to play their intended role in absorbing these losses because of market pressures to maintain inordinately high capital ratios. this could force banks to curb balance sheet growth, causing a tightening of credit conditions that would reinforce the negative impact of the economic downturn on the financial system. reflecting the generalized nature of the financial panic, as the crisis unfolded, canadian banks came under pressure from markets to increase their capital ratios. in response, canadian banks raised significant additional, high - quality capital from private sources. the recent improvement in market sentiment has been reinforced by the release in may of the stress -
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the snb therefore regularly examines, first, whether the ccb needs to be adjusted. depending on how the situation develops, this might need to be an upward or a downward adjustment. second, the authorities are working on the specification of measures that would target risks in the area of affordability. monetary policy and the snb balance sheet : flexibility as the key factor in the case of the ccb, the snb plays an important role because it can make proposals for its activation, alteration or deactivation. however, this instrument does not have any impact on our balance sheet. by contrast, our monetary policy decisions as well as other measures aimed at stabilising the financial system are reflected in the composition and size of the balance sheet. accordingly, it is of key importance for the effectiveness of our measures in the fields of monetary policy and financial stability that we have the option of making flexible use of our balance sheet. there are therefore no statutory limitations with respect to the size or composition of our balance sheet. this flexibility played a major role in ensuring that we remained capable of acting during the crisis, even in very difficult conditions. it enabled us to fulfil our mandate of ensuring price stability and also of making a contribution to financial stability as part of this mandate. let me give you two examples of the way in which we make flexible use of our balance sheet. for topical reasons, i would like to start by talking about the creation of the stabilisation fund. the stabilisation fund, as we called it, was an undertaking which commenced in 2008 and was successfully concluded last year. what was involved? you will recall that in october 2008 a swiss big bank, ubs, was in substantial difficulties. financial stability was threatened and intervention by the authorities was absolutely necessary. consequently, the federal council, the swiss federal banking commission ( predecessor of finma ) and the snb decided on measures to stabilise ubs and thereby strengthen the swiss financial system. the core element in the package of measures was the stabilisation fund, which took over illiquid assets from ubs totalling almost usd 40 billion. the snb funded 90 % by granting the stabilisation fund an interest - bearing loan. for its part, ubs provided the stabilisation fund with equity corresponding to 10 % of the bis central bankers β speeches transferred assets. 1 moreover, to strengthen ubs β s equity, the swiss confederation subscribed to mandatory convertible notes in the amount of
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is likely to have made a significant contribution to europe β s emergence from recession. meanwhile, economic growth in the us firmed and the economy in japan picked up perceptibly. on the other hand, concerns about a number of emerging economies increased. one of the factors resulting in more difficult financing conditions for emerging economies with structural problems was the announcement by the us federal reserve that it intended to reduce its securities purchases. overall, growth in the global economy in 2013 was weak and uneven, and remained marked by uncertainty. will this situation change in the current year? probably only to a limited extent. according to our assessment, although the cycle has probably bottomed out, the challenges remain formidable. i will now outline the international economic position in more detail. bis central bankers β speeches global economic outlook for 2014 in 2014, growth in the global economy is likely to be stronger than in 2013. nevertheless, regional differences will remain substantial. while relatively robust growth can be expected in the us, the signs are pointing to a modest and uneven recovery in the euro area. a slightly stronger economic momentum than in 2013 can be expected in the major emerging economies, but they will not attain former growth rates. we therefore anticipate that expansion in the global economy will be no more than moderate. however, the recovery remains subject to significant downside risks. this is still largely due to the european debt crisis. you may be wondering whether the debt crisis is not already over. the extreme risks have indeed been eliminated. reform programmes introduced in some euro area countries, progress achieved in creating a banking union and measures taken by the european central bank ( ecb ) have clearly brought about an alleviation of the crisis. but the crisis has not yet been overcome β which is hardly surprising, since structural reforms are also required if this is to be achieved. it is important to acknowledge the efforts that have already been made in this respect in the affected countries, and as an onlooker one should be cautious when making recommendations. yet there is broad consensus that additional structural reforms are needed and should be implemented consistently. such reforms should increase the growth potential of the countries affected and allow them to significantly and sustainably reduce their high level of unemployment and debt. additional efforts are also required in the banking sector. consequently, the bank review to be carried out by the ecb is extremely important. only a healthy banking sector is capable of supplying the economy with sufficient credit. however, risks also exist outside the euro area. the
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deepali pant joshi : moving financial capability forward β innovation scale and impact intervention by dr deepali pant joshi, executive director of the reserve bank of india, at the 10th anniversary of the citi - ft financial education summit, hong kong, 7 december 2013. * * * inputs from sushma vij dgm and geetha nair agm are gratefully acknowledged. dear friends, i am honoured to be here today at the tenth anniversary of the summit on financial literacy and thank citi and ft for having me here, and of course, my friend david pilling for the opportunity to share the india experience. david we are out of the woods! i confirm this. as all the people in this room know, financial literacy has emerged as a focus area for policy makers all across the globe, in the wake of the global financial crisis. financial literacy means different things to different people. we in india understand financial literacy differently depending upon the underlying objective to build greater financial inclusion through financial literacy, for maximising welfare, both individually and for society generally. although, we have progressively promoted financial literacy, many challenges remain. these include ( i ) the large excluded sections many of whom may be illiterates especially in the rural or remote areas with difficult physical access ; ( ii ) the need for better supervisory capacity among financial regulators ; and ( iii ) addressing the pervasive β informal β markets that handle lending, insurance, and remittances for those unable to tap into the formal system. this is a tenth anniversary of the summit. in these ten years, india has seen significant changes. as you know, we have a large banking system which comprises besides public sector banks, private sector banks, regional rural banks and cooperatives with significant penetrative outreach. well, these banks are now all on interoperable core banking system platforms which enables us to significantly leverage technology to leapfrog the barriers of geography and distance and tackle issues of voluntary access. we have significantly liberalised our rules on bank branching, we have enabled the use of banking correspondents ( bcs ), some of the mobile companies, such as, airtel and vodafone, partner with banks as bcs. we have also liberalised the dreaded kyc norms to make it easier for a poor person or a migrant to open a bank account. we have enabled e - kyc. our unique identity card, the aadhar, is enabling digitisation of social benefit transfers which will
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β s national program for it ground to a halt after pilot sites reported significant problems. already four years behind schedule, the initial pilot released in london was branded as shambles, as failure to address the culture change issues, coupled with β technical faults β to produce weeks of chaos at hospitals. after several months of working on the problems, the rollout was placed on hold and in sep 2010, department of health announced that efforts to centralize health records were abandoned. over the years many studies have shown high failure rates in the it sector. as per a 2008 study by us government accounting office ( gao ), of 840 federally funded projects 49 % of were poorly planned, poorly performing or both. a 2008 study by the information systems audit and control association that found that 43 % of 400 respondents admitted that their organization had a recent project failure. ( source β the story behind the high failure rates in the it sector ). a 2002 gartner survey found that 20 percent of all expenditures on it is wasted β a finding that represents, on a global basis, an annual destruction of value totaling about us $ 600 billion. a 2004 ibm survey of fortune 1000 cios found that, on average, cios believe that 40 percent of all it spending brought no return to their organizations. a 2006 study conducted by the standish group found that only 35 percent of all it projects succeeded while the remainder ( 65 percent ) were either challenged or failed. many surveys have consistently revealed that 20 to 70 percent of large β scale investments in it β enabled change are wasted. indian context before coming to some conclusions from the above incidents and survey reports let us come to the indian context, where banking has traversed a long journey from the days of mechanization, followed by word processing on standalone pcs onto it based applications. as things stand today the customer related functions in banks are all run on it enabled systems. it is the reach and capacity of information technology that has enabled banks to overcome the constraints of geographical reach, enormously increasing transaction volumes and, to an extent, availability of human resources. banks are gearing up to cater to fast increasing customer needs through it based payment systems, internet based access and technology enabled service delivery modes. while banks keep churning out new projects, an important key to the success of any project / software is exception handling. while routine transactions generally go well executed, it is the exception handling that makes or breaks the software. while testing the software, adequate efforts should be made to prepare exhaustive
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the potential for growth of the greek economy. 3 / 4 bis central bankers'speeches conclusions let me conclude. i have traced the progress achieved so far and mapped the challenges ahead for the third greek adjustment programme. a year ago, european leaders agreed on a set of measures that will secure greece β s future in the euro. if everyone plays their part, i am firmly convinced that at the end of the programme, greece will be better able to reap the benefits of economic and monetary union β a union of 340 million people sharing the same currency β and its economy will be stronger and more resilient. we should not forget, nevertheless, what else we can do to make greece stronger in a stronger europe. let me be clear : europe will not address matters of pressing concern such as security or migration without a strong and sustainable economy. a lot still needs to be done to make our economic and monetary union stronger. the ecb is committed to playing its role as the central bank for the euro area, and thus for greece. thank you for your attention. i look forward to your questions. 1 the ecb β s role in surveillance is enshrined in eu secondary legislation ( β two - pack β regulation ( regulation ( eu ) 472 / 2013 ). 4 / 4 bis central bankers'speeches
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benoit cΕure : strengthening the greek financial system introductory remarks by mr benoit cΕure, member of the executive board of the european central bank, at a public hearing at the european parliament, brussels, 12 october 2016. * * * thank you for inviting me to this meeting of the financial assistance working group. i am grateful for the opportunity to contribute to the dialogue between our institutions on the euro area macroeconomic adjustment programmes. in recent years, this topic has indeed been frequently discussed here by the ecb president and other ecb executive board members, including myself. we have also responded publicly to the many questions you have sent us in writing. maintaining an open discussion with you as the representatives of the people of europe is very important, given the advisory role in the field of surveillance and programme assessment conferred upon the ecb by eu legislators1 and by the esm treaty. you asked me to discuss in particular the third adjustment programme in greece from the ecb β s perspective. let me therefore base my short introductory remarks on the following three points. first, i will recall the challenging situation in summer 2015 when the third greek programme was negotiated. against this backdrop, and this will be my second point, i will review the progress made in the third programme. finally, i will discuss the challenges ahead and emphasise the importance of a continued collective commitment for the success of the programme. in my remarks today, i will mainly focus on financial issues, as i believe this is where the ecb β s advice is of particular relevance. the situation at the start of the third greek programme let me briefly recall the circumstances in which the third esm programme for greece was negotiated. this indeed remains key to understanding where we are now. after the severe and long recession, which started in 2009, the long - awaited rebound of the greek economy got under way in the second half of 2014. however, following the announcement of new parliamentary elections at the end of december 2014, economic conditions started to rapidly deteriorate. increased policy and political uncertainty, partial reversals of previous reforms, the rejection of existing commitments by the new government and the lack of a prospect of continued financial assistance under a programme led to a worsening of the economic environment and of sovereign creditworthiness. this in turn had a strong impact on an already severely weakened financial sector. in particular, between december 2014 and june 2015, deposit outflows amounted to more than a quarter of total deposits. lack of adherence to the second programme
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in many countries and regions. it is therefore important to strive for an early global understanding, before national choices become entrenched. to some extent, every country will choose its own path to decarbonise, depending on national circumstances. however, climate change knows no boundaries. tackling it is a global challenge that calls for strong international cooperation. with appropriate coordination, every country β s effort is reinforced by the actions of all the others. that is why the italian presidency of the g20 chose climate change as one of its key priorities, with a focus on data and disclosure in the finance track. we are also happy that unanimous agreement was reached at the latest meeting of fms and cbgs to upgrade the sustainable 1 / 2 bis central bankers'speeches finance study group to a working group. in order to start this roundtable with a clear picture of the available options, we asked the international energy agency to share their views on how the transition is evolving from a real economy perspective. this is important for identifying the right policies to achieve climate objectives, while at the same time ensuring energy security and affordability for all. it is particularly important in the context of today β s roundtable to clarify the role of the private sector. i am now pleased to introduce mechthild worsdorfer, director of the sustainability, technology and outlooks department of the international energy agency, as our keynote speaker today. ms worsdorfer will present the main results of the iea β s new flagship publication, β net zero in 2050 : a roadmap for the global energy sector β, which will be out tomorrow. i wish you all a very instructive and constructive discussion. ms worsdorfer, the floor is yours. 2 / 2 bis central bankers'speeches
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benefits to both banks and their customers. banks with a greater ability to operate online have higher profitability on average, show improved revenue diversification and increased their share of the lending market. customers benefit from lower service costs β with charges on online accounts being 60 per cent of what they are for traditional accounts β as well as from easier access to banking services. β the governor β s concluding remarks β, banca d β italia, may 2024. see also β the governor β s concluding remarks β, banca d β italia, may 2024. in the new digital world, close cooperation between supervisory and resolution authorities and effective deposit insurance are even more crucial to avoid systemic crises and protect financial stability. the recent turmoil that occurred in the banking sector in the first quarter of 2023 in the us and in switzerland showed how quickly a risk of contagion can materialize in a digital world and how commercial banks are heavily dependent on a fickle base of depositors. the concentration of large deposits held by firms and individuals connected in virtual communities may contribute to synchronised deposit outflows and cause a massive flight of depositors. recent crisis episodes have tested assumptions about the appropriateness of the coverage threshold, stimulating discussions on a possible revision of the existing framework with a view to adapting it to changes in the social and economic systems and financial markets. one possible way forward could therefore be to raise the coverage threshold, also in line with the recent international debate. 11 in fact, observers with a say on these issues, including iadi, have pointed out the virtuous cycle between increasing the level of depositor protection and reducing the likelihood of bank runs. in our view, a higher insurance threshold would help to stabilize banks β funding, which tends to be more volatile in the new environment. the possible increase in contributions for the banking system would be more than offset by the increase in its stability and by the perception of greater safety among depositors and other creditors. 6. the eu β s three milestones : cmdi, edis and the digital euro coming back to the eu, let me underline three points. the review of the crisis management and deposit insurance ( cmdi ) framework in europe is underway. this project is a unique opportunity to address the shortcomings of the current regulatory landscape. the proposal published by the european commission in april 2023 introduces improvements but also contains weaknesses. 12 it is key that the prominent role of the dgss in the financial safety net
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louder than words. the starting point does not require focus on highend islamic financial products such as sukuk and fund management. instead, start where it matters most. embark on initiatives that could assist the low and middle income groups. devise a scheme that could provide alternative for source of funds for the small and medium enterprises ( smes ). start with basic banking facilities ; saving accounts, current accounts and term deposits. provide financing facilities that are simple and easy to understand such as microfinancing and microtakaful. in africa, the retail banking market segment has an enormous potential for growth. currently, less than five percent of individuals aged 15 and above are likely to borrow from a formal financial institution in sub - saharan africa and the mena region. many adults in africa use informal methods to save and borrow. similarly, a majority of smes in africa are unbanked and access to finance is a major obstacle. only 20 percent of african smes have a line of credit from a financial institution. this gap provides abundant opportunities for those who are willing to tap into very promising african financial market by providing shariah - compliant financing facilities to the retail and sme clientele. islamic microfinance facilities can also enhance financial inclusion in africa. the role of government and the central bank. the government has an important role to play. any new industry requires harnessing and nurturing. government β s commitment is key but commitment must commensurate with substantive action. for new entrants to the islamic financial industry, sovereign sukuk issuance by government would be a bold and strategic move. naturally, the private sector will follow suit as there is already readily available pricing benchmark. in the first quarter of this year, 81 percent of the usd31 billion new issuances in the global primary sukuk market were by sovereign and quasi - sovereign issuers. several more debut sovereign issuances are in the pipeline including issuances from united kingdom, luxembourg, hong kong and countries in africa, namely south africa, tunisia, mauritania, senegal and oman. our own experience in 2003 showed that the private sector would start issuing their own sukuk once the government had shown the lead. the act of government issuing its own sovereign sukuk is the single most important initiative to prove its commitment to islamic finance. start with local currencies and follow up with non - domestic currencies when the timing becomes suitable. in malaysia, both the
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need to be patient and organized. with determination and perseverance, the result will surely follow. we need to work in unison. respect diversity. amplify on the collective agreements. seek solutions for differences. in time we should come to an understanding. we have to ensure, always, that islamic finance must remains competitive. it must make sense. the maths must be right. exciting opportunities exist for new and emerging jurisdictions in islamic finance. for africa, islamic finance has tremendous opportunities to support the nation β s development and economic needs. i end my remarks with these words : β actions speak louder than words β thank you. bis central bankers β speeches
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customers'deposits the government is prepared to guarantee. the legislation must also cover more than just the banks β other institutions that receive deposits from the general public must also be under supervision. as i said, deregulation was necessary β it was rather the incapacity of the banks and the supervisory authorities to manage a competitive situation that contributed to the crisis. however, the economic policy conducted also contributed. monetary and fiscal policy were not used to slow down developments at the end of the 1980s, which laid the foundations not only for increased borrowing, but also for the currency crisis. the combination of a fixed exchange rate and large budget deficit was devastating. incentives for increased saving were not actually introduced until the crisis was actually upon us and then they only helped reinforce the decline. it may seem something of a paradox that international organisations, such as the basel committee, are now implementing a number of new regulations β such as basel ii β despite the fact that the old regulations had negative effects and were therefore abolished. however, these are a completely different type of regulation. the old regulations were aimed at prohibition and other strict controls, while modern regulations give the banks plenty of flexibility to offer their services as long as they meet certain fundamental conditions. for instance, basel ii allows the banks to determine their own risktaking to a great extent, as long as they have adequate risk management and capital reserves. the experiences of regulation and the crisis also show clearly how important it is that the central bank can make independent decisions regarding the interest rate according to objectives set by parliament, for instance, to maintain inflation or the exchange rate at a stable level. if there are no guidelines for the interest rate, or if the parties that determine the interest rate have differing interests, it will often be set too low for the purpose of benefiting borrowers, investment and central government consumption. this was the case in sweden during the years of regulation. apart from leading to higher inflation and pressure on the exchange rate, exaggeratedly low interest rates also have a negative effect on the financial sector. if the real interest rate is low, even bad investments appear to be profitable and the banks'credit assessment process will not function properly. a large number of borrowers will then experience unsatisfactory profitability, particularly if the interest rate then increases slightly, and will be unable to pay their loans. the bad experiences from the time before and during the crisis led to the riksbank later being given a very independent role to determine the key interest rate within
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ones. credit regulation was one of these. around half of the swedish banks'lending must be directed to the government and provided at a low interest rate and with a long duration. this was to enable the government to finance ambitious housing construction programmes and budget deficits that arose as a result of investment and social welfare measures. the banks themselves could decide who received the other half of their lending. however, the rate at which the lending could increase was determined by the riksbank through β credit ceilings β. the idea was to keep credit expansion in line with economic developments and thus prevent inflation from accelerating. moreover, the banks were encouraged to give priority to corporate lending so that the investment rate would not be threatened. most of the loans to the private sector were made to large, international swedish corporations. however, it was not only the banks β credit volumes that were regulated ; the price of the credit was also regulated. the riksbank determined both the deposit and lending rates. the charges for various bank services were also regulated. this was intended to prevent unhealthy competition and protect account - holders and borrowers. the banks had to obtain permission to open branches in other towns in sweden. this was to avoid too many banks establishing in one area so that competition became too stiff and profitability poor. in addition to the domestic regulations, there were also a number of regulations regarding crossborder capital flows. these were more or less entirely regulated. companies and individuals were only permitted to invest if they could prove the financial necessity of the investment. foreigners were allowed to invest in sweden without a permit, but these investments might not be financed in the swedish market. portfolio investment abroad was regarded as more transient than direct investment and it was therefore more difficult for a swedish company to obtain permission for this in another country. companies that earned money abroad were obliged to bring it home to sweden as soon as possible and convert it to swedish krona. swedish banks required permits to establish subsidiaries abroad and were on the whole not allowed to open branches abroad. this was because it was easier to control capital movements between parent and subsidiary than between branches, as the latter were not different legal entities. prior to 1986, foreign banks were not allowed to establish in sweden. after this, subsidiaries were permitted and later on also branches. swedes were in general not permitted to purchase shares in companies outside of sweden. those who were already in possession of foreign shares were allowed to exchange them for others or to sell their right to own shares
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had been a significant factor in boosting consolidation. the second paper evaluates the fear that the lower on average, risk - based capital charges on loans to small - and medium - sized enterprises by basel ii adopters would put non - adopters at a competitive disadvantage. this study concludes that the empirical evidence suggests that, indeed, a competitive issue in this market might arise between adopters and large bank non - adopters, both of which make the same types of loans in the same markets. this potential effect must be addressed. but the study also concludes that, on the basis of empirical review, the types of small business loans generally made by community banks - relationship - based loans, which community banks do so well - are so different from the types of loans made by larger banks, and so differently priced, that the competitive effects on community banks of basel ii application to large banks are likely to be insignificant. two other studies, exploring the competitive effects in the residential mortgage and credit card markets will be available in the next few months. the results of all four studies will be reviewed when we conduct later this year another quantitative impact study on the revised basel ii now being developed. and, again, if updates of the completed studies or the analyses in the new studies demonstrate competitive problems, we will modify the proposals to address them. summary in summary, the banking system is in a strong and profitable position to finance the credit demands of the current expansion. as that expansion continues, both large and community banks will have to once again look beyond their core deposit base to fund those demands. the competitive environment for banks, especially community banks, will continue to intensify. both history and current behavior suggest, however, that community banks can innovate and meet these competitive challenges. the merger trends of both large and small banks will undoubtedly continue, but both public policy and new entry will also continue to limit concentration in local markets. if evidence shows that a bifurcated application of basel ii would distort competitive markets in the united states, the agencies are pledged to make whatever modifications are necessary to either the proposal or the current capital rules. and, finally, once again : ken, i wish you a productive and enjoyable retirement.
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##os ) whose issuance increased sharply in 2018 and has since moderated somewhat. many large banks originate leveraged loans with an intent to distribute, often to clos. while the direct exposures of the banking system in the form of loan portfolios and warehousing exposures can be monitored, there are also indirect exposures, including through bank investments in clos and credit lines, which bear vigilance. by contrast, nonbank exposures are harder for us to track. to date, the default rate on leveraged loans has been at the low end of its historical range, and corporate credit conditions have been favorable, with low interest expenses and low expected default rates. however, if spreads rise sharply or economic conditions deteriorate significantly, we could see downgrades, refinancing challenges, rising delinquencies and defaults, and losses to investors. recognizing that financial imbalances played a key role in each of the past three u. s. downturns, policy should seek to moderate financial vulnerabilities when they are likely to materially exacerbate an economic downturn, leading to deeper declines in output and higher levels of unemployment. both economic theory and econometric evidence point to the risk that excesses in corporate debt markets could amplify adverse shocks and contribute to job losses. overindebted businesses may face payment strains when earnings fall unexpectedly, and they may respond by pulling back on employment and investment. the slowdown in activity lowers investor demand for risky assets, thereby raising spreads and depressing valuations. as business losses accumulate, and delinquencies and defaults rise, banks are less willing or able to lend. this dynamic feeds on itself, potentially amplifying downside risks into more serious financial stresses or a downturn. 3 / 4 bis central bankers'speeches recognizing this feedback loop between financial imbalances and the macroeconomy, in addition to strong through - the - cycle regulatory requirements, our toolkit includes a countercyclical capital buffer ( ccyb ). the ccyb is intended to require the nation β s largest banks to build capital when conditions are favorable to sustain resilience for times when there is elevated risk of above - normal losses, which often follows periods of rapid asset price appreciation or credit growth. ccyb requirements are intended to lean against rising risks at a time when the degree of monetary tightening needed to achieve the same goal could be inconsistent supporting
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charles i plosser : economic outlook speech by mr charles i plosser, president and chief executive officer of the federal reserve bank of philadelphia, to the rotary club of wilmington, wilmington, delaware, 29 march 2012. * * * the views expressed today are my own and not necessarily those of the federal reserve system or the fomc. introduction thank you for inviting me to speak to the rotary club of wilmington. in planning for today, i learned that wilmington β s business and community leaders have been gathering under your auspices at this location since 1914, longer than any other rotary club in the world. from one organization that is almost a century old to another, that is quite an achievement. since the federal reserve is nearing its centennial in december 2013, i thought i would give you a little background on our nation β s central bank before i talk about my economic outlook. while many americans hear about the fed in the news every day, not everyone knows how we work or how we are structured. congress created the federal reserve system in 1913. to balance political, economic, and geographic interests, the system was designed with 12 independently chartered regional reserve banks throughout the country, overseen by a board of governors in washington, d. c. the federal reserve bank of philadelphia serves the third district, which includes delaware, the southern half of new jersey, and the eastern two - thirds of pennsylvania. the reserve banks distribute currency, act as a banker β s bank, and generally perform the functions of a central bank, including serving as the federal government β s fiscal agent. a central bank also guides the country β s monetary policy. in the u. s., the body within the federal reserve that makes monetary policy decisions is the federal open market committee, or the fomc. the committee includes the seven members of the board of governors in washington β there are currently two open posts β and five of the 12 reserve bank presidents : the president of the new york fed and four other presidents, who serve one - year terms on a rotating basis. this structure ensures that our national monetary policy has its roots not just in washington or on wall street, but also on main street and across our diverse nation. whether we vote or not, all reserve bank presidents attend the fomc meetings, participate in the discussions, and contribute to the committee β s assessment of the economy and policy options. each of us prepares for the meetings by gathering information throughout our districts, around the nation, and, in some
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did decline somewhat, slowing price increases, but unfortunately, they have been rising again and crude oil prices are now over $ 100 a barrel and gasoline prices are rising. oil prices have added a great deal of volatility to the overall price index. at times, sharp spikes in oil prices raise overall inflation, which is then reversed when those prices increases moderate. yet, since early 2009, when oil prices fell to about $ 60 a barrel, the trend has been upward. moreover, inflation rates that remove the effects of energy and food have been drifting upward as well from their lows of 1 percent or less in late 2010 to about 2 percent or a little higher today, depending on the particular index. thus, we must monitor these inflation trends with some care and be prepared to take appropriate actions as necessary. the public has the right to expect the central bank to keep inflation near its target of 2 percent over the medium to longer term. inflation often develops gradually, and if monetary policy waits too long to respond, it can be very costly to correct. measures of slack such as the unemployment rate are often thought to prevent inflation from rising. but the lessons of the 1970s show that is not the case. as you may recall, we ended up with both high unemployment and high inflation, which became known as the misery index. that is not a place we want to find ourselves again. bis central bankers β speeches monetary policy before discussing where monetary policy might go in relation to economic conditions, it might be helpful to review just how much accommodation we currently have in place. as you know, the fed has kept the federal funds rate near zero for more than three years to support the recovery. we have also conducted two rounds of asset purchases that have more than tripled the size of the fed β s balance sheet and changed its composition from short - term treasuries to longer - term treasuries and housing - related securities, mostly mortgagebacked securities. many of these actions were taken at the height of the financial crisis and the ensuing deep recession. yet, since then, as i have indicated, the economy has been healing, if somewhat more slowly than we would like, and the financial crisis has substantially abated. of course, problems remain, but things are not nearly as bad or as gloomy as they were in 2009 and early 2010. at its latest meeting in march, the federal open market committee continued to hold to its statement that economic conditions were β likely to warrant exceptionally low
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to more market oriented policy tools. in respect of the latter open market operations ( omo ) were introduced almost five years ago and are now undertaken routinely. in respect of the direct controls the bank has begun to rationalise reserve ratios in the commercial banking system. changes will take place only when monetary conditions permit. you may be aware that commercial banks earn no income on cash reserves and this represents a cost to banks and must be recovered in the spread between loan and deposit rates. a reduction in the reserve requirement will lead to either lower deposit rates or lower loan rates or some movement in both that will lead to a narrower spread. thus the reduction in the reserve requirement from 21 per cent to 18 per cent β which is effective from the reserve week beginning today - will lead to a fall of about $ 376 million in the amount that commercial banks need to hold in cash at the central bank. to ensure that there is no impact on current liquidity conditions these funds have been re absorbed with a simultaneous issue of government securities to the commercial banks. the central bank expects that the reduction in the cash reserve ratio initially will impact the loan rates in the banking system so that borrowing costs will be lower. capital market developments over the long period of expansion the domestic capital market has been able to meet the needs of domestic firms as well as the public sector when the need arose. over the last two years the domestic capital market has witnessed what some have termed the internationalization of the market as trinidad and tobago has emerged as a regional financial centre. several regional governments and quasi - public sector entities have raised us dollar financing on the domestic market. indeed between 1999 and 2000 us $ 195 million was raised by regional governments ( barbados, belize, st. lucia ) on the domestic capital market while tt $ 6, 640 million was also issued in bond financing over the same period to local companies and para statal companies ; all this points to the growing ability of the domestic capital market to supply long term funding. these developments augur well for our capital market but as the volume of transactions grow there must also be some additional institutional changes. as more governments and regional corporations enter this market, the absence of an independent benchmark measure of risk, the pricing of these securities, the absence of good credit analyses β all point the need for the establishment of a regional credit rating agency. perhaps the time is right and it may well be a good idea for the private sector interests to explore the feasibility of the establishment of such an institution. implications
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all the market participants. if the secondary market is to work : β’ institutional investors will need to look for opportunities for profitable trading and not simply accept the traditional β buy and hold β culture. β’ banks and other financial institutions, who are the main holders of government paper, will need to see the profit - making opportunities in promoting the sale of government securities to end - investors. β’ the central bank has the responsibility for fostering credibility in the auction process, and maintaining efficient clearing and settlement systems. currently only the securities issued in auctions since 2004, are currently included in the depository managed by the central bank and listed on the stock exchange. the bank needs to be appointed registrar for government bonds issued before 2004 and is working with trustees to effect this. when this exercise is completed, bondholders will be asked to deposit their bond certificates with the bank in exchange for an electronic deposit record of their bond holdings. this process will increase the volume of bonds available for trading on the stock exchange. β’ government, for its part, must guarantee a regular and predictable supply of primary issuance so that institutions could be assured of replenishing their positions after selling securities from their portfolios. one way of ensuring supply, is to bring public entities into the auction mechanism instead of relying on bank financing or the underwriting process. β’ the sec has the mandate for preparing and enforcing the rules and regulations pertaining to the secondary market. these include regulation of the market intermediaries, market surveillance and transparency and reporting requirements and market conduct regulation ; the latter includes trading rules and arrangements aimed at preventing improper trading practices such as market manipulation and insider trading practices. so the launch today is just the beginning. we all have our work cut out for us and we all need to work closely together, if we are to create a liquid and vibrant secondary market for government securities. i told you earlier that most developing countries shun this step because it involves the creation of new institutions as well as important behavioural changes. but, if we want to have a developed capital market ; and if we want to be an international financial center we need to make a quantum leap from occasional primary issuance and a few isolated β over the counter β trades to a formal secondary market that gains credibility among local as well as international investors. as this is the carnival season, it is perhaps fitting to take stalin β s advice β we can make it if we try β.
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10 %, compared to only 3 % in 2013. at the same time, the number of ibg transactions increased by 36 % in 2014 compared to 19 % in 2013. consequently, malaysia β s cheque usage had fallen from 6. 6 per capita in 2013 to 5. 8 per capita in 2014. this is indeed an encouraging development. australia, the united kingdom, sweden and norway. norway, sweden, denmark and finland. bis central bankers β speeches to reduce the country β s reliance on cash usage, the bank has issued the payment card reform framework ( framework ) which took effect in stages beginning 2 january 2015. the framework aims to ensure that the cost of accepting payment cards is fair and reasonable, whilst creating an enabling environment for the wider acceptance of payment cards, especially by smaller merchants. over the next six years till 2020, together with the banking industry we plan to expand the payment card acceptance network from about 240, 000 terminals to 800, 000 terminals and further accelerate the use of debit cards. these measures, if implemented successfully, will lessen the need for cash payments. while this target seems ambitious, we can achieve this milestone with collective efforts by all. cash and cheques are still the main modes for bill payments in malaysia whilst efforts are being made to facilitate the wider acceptance of payment cards, bill payments in malaysia are still predominantly made with either cash or cheques. in malaysia, bill payments made via electronic channels 3 are still relatively low at 2. 4 transactions per capita 4 in 2014 compared to more than 10 transactions per capita 5 in countries with successful electronic bill payment platforms such as australia. malaysia has an online bill payments model where merchants need to maintain multiple banking relationships in order to receive bill payments from customers who bank with different banks. merchants, especially smes, find it difficult and costly to maintain multiple banking relationships. as a result, only about 1, 000 merchants are currently registered to accept online bill payments via the individual banks β proprietary bill payments system. therefore, there is still tremendous potential for greater efficiency and cost savings through the consolidation and expansion of the online bill payments market in malaysia. enhancing the efficiency, accessibility and convenience of online bill payment via jompay jompay addresses the limitations of the current bank - centric model by establishing an open electronic bill payments platform which leverages on the combined infrastructure and network of the entire banking industry. with jompay, merchants only need to maintain a banking relationship with one bank, in order to receive bill payments
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jens weidmann : central bank communication as an instrument of monetary policy lecture by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at the centre for european economic research, mannheim, 2 may 2018. * * * 1 introductory remarks professor wambach, ladies and gentlemen i would first like to thank you very much for inviting me to speak here at the centre for european economic research as part of the β first - hand information on economic policy β series of lectures. when i hear the phrases β economic policy β and β hand β, i can β t help but think of harry truman β s famous demand for a one - handed economist. by always assessing everything β on the one hand... on the other hand β, the economists clearly got on the then us president β s nerves. in this case, it goes without saying that β first - hand information on economic policy β has little to do with β one - handed β economists. no, β first - hand β in this sense means β directly from decision - makers β. with that definition in mind, as bundesbank president and member of the ecb governing council, i should obviously talk about monetary policy. it has now been seven years since i delivered my first speech as bundesbank president, and i have given a few more in the meantime. i haven β t been keeping count, but the database of public speeches on the bundesbank website now contains more than 150 entries. not all of my speeches, but a large number of them, are partially or even primarily about matters of monetary policy. speeches have become a vital means of communication for monetary policy decision - makers. the six members of the ecb executive board alone have given 150 public speeches over the past year. and speeches are just one means of communication. other channels of central bank communication are interviews, press conferences, and regular publications of reports. close attention is paid, in particular, to the ecb president β s introductory statement at the beginning of the press conferences following ecb governing council monetary policy meetings. ecb watchers scrutinise every word. changes in communication are very keenly noticed and analysed. and it is not only what is said but also what is left unsaid that can send a message. β one cannot not communicate. β from that perspective, this well - known quote by communication theorist paul watzlawick also applies
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analysis. after a period of sharp decline, euro area economic activity has been expanding since mid2009. according to eurostat β s first estimate, euro area real gdp increased, on a quarterly basis, by 0. 2 % in the first quarter of 2010. while adverse weather conditions, in particular, dampened growth in the early part of the year, the latest economic indicators suggest that a rebound took place during the spring. looking ahead, the governing council expects real gdp to grow at a moderate and still uneven pace over time and across economies and sectors of the euro area. the ongoing recovery at the global level and its impact on the demand for euro area exports, together with the accommodative monetary policy stance and the measures adopted to restore the functioning of the financial system, should provide support to the euro area economy. however, the recovery of activity is expected to be dampened by the process of balance sheet adjustment in various sectors and weak labour market prospects. this assessment is also reflected in the june 2010 eurosystem staff macroeconomic projections for the euro area, according to which annual real gdp growth will range between 0. 7 % and 1. 3 % in 2010 and between 0. 2 % and 2. 2 % in 2011. compared with the march 2010 ecb staff macroeconomic projections, the range for real gdp growth this year has been revised slightly upwards, owing to the positive impact of stronger activity worldwide in the short run, while the range has been revised somewhat downwards for 2011, reflecting mainly domestic demand prospects. the june 2010 eurosystem staff projections are broadly in line with forecasts by international organisations. in the governing council β s assessment, the risks to the economic outlook are broadly balanced, in an environment of unusually high uncertainty. on the upside, the global economy and foreign trade may recover more strongly than projected, thereby further supporting euro area exports. on the downside, concerns remain relating to renewed tensions in some financial market segments and related confidence effects. in addition, a stronger or more protracted than expected negative feedback loop between the real economy and the financial sector, renewed increases in oil and other commodity prices, and protectionist pressures, as well as the possibility of a disorderly correction of global imbalances, may weigh on the downside. with regard to price developments, euro area annual hicp inflation was 1. 6 % in may 2010, according to eurostat β s flash estimate, after 1. 5 % in april. the rise in inflation
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to be affected over the medium term by the process of ongoing balance sheet adjustment in the financial and the non - financial sector, both inside and outside the euro area. in the view of the governing council, the risks to this outlook remain broadly balanced. on the upside, there may be stronger than anticipated effects stemming from the extensive macroeconomic stimulus being provided and from other policy measures taken. confidence may also improve more quickly, the labour market deterioration may be less marked than previously expected and foreign demand may prove to be stronger than projected. on the downside, concerns remain relating to a stronger or more protracted negative feedback loop between the real economy and the financial sector, renewed increases in oil and other commodity prices, the intensification of protectionist pressures and the possibility of a disorderly correction of global imbalances. with regard to price developments, annual hicp inflation stood at - 0. 1 % in october, according to eurostat β s flash estimate, compared with - 0. 3 % in september. the current negative inflation rates are in line with previous expectations and reflect mainly movements in global commodity prices over the last year. in the coming months, annual inflation rates are projected to turn positive again, also relating to base effects. thereafter, over the policy - relevant horizon, inflation is expected to remain positive, with overall price and cost developments staying subdued reflecting ongoing sluggish demand in the euro area and elsewhere. in this context, it is important to re - emphasise that inflation expectations over the medium to longer term remain firmly anchored in line with the governing council β s aim of keeping inflation rates below, but close to, 2 % over the medium term. risks to this outlook remain broadly balanced. they relate, in particular, to the outlook for economic activity and to the evolution of commodity prices. furthermore, increases in indirect taxation and administered prices may be stronger than currently expected owing to the need for fiscal consolidation in the coming years. turning to the monetary analysis, the annual growth rates of m3 and loans to the private sector declined further in september, to 1. 8 % and - 0. 3 % respectively. these concurrent declines support the assessment of a moderate underlying pace of monetary expansion and low inflationary pressures over the medium term. in the next few months, the annual growth rates of monetary aggregates will most likely be affected downwards by base effects that are associated with the intensification of the financial turmoil one year ago. more fundamentally, however, the growth of m1 and m3
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federal reserve system and the ecb, for reassurance. one of the sources of uncertainty for insurers ( and others, too ) is interest rates. in particular, quantitative easing, or qe, which affected the entire yield curve. aren β t interest rates gradually eluding market participants β expectations, leading them to wonder what sort of market equilibrium will exist at these rates? what constraints could affect the ecb β s decision - making? isn β t this a strong driver of cycles and uncertainty? market participants can see the benefits of central banks managing the yield curve, because it fosters economic activity and stability. it is true that part of how interest rates are set is eluding market mechanisms. nevertheless, we have to put this discussion into perspective. on the one hand, it β s nothing new : by design, monetary policy always has an impact on interest rates. on the other hand, since the start of qe and in all market segments, including sovereign debt as well as corporate debt, the ecb has always taken care not to suppress the price formation mechanism. as an example, this is one of the reasons why the ecb does not purchase more than 33 % of a sovereign issuance. central banks now have a strong influence on the entire yield curve, over a very long horizon. the counterpart to this is to be transparent towards the market and to provide visibility and predictability concerning how we are going to act. that β s the purpose of our forward guidance, 1 / 5 bis central bankers'speeches which clarifies our reaction function. forward guidance is not an unconditional commitment about what we are going to do. that β s not something we would be able to do and we wouldn β t be credible, as we necessarily react to new information flows we receive. it does, however, provide clarity about how our monetary policy incorporates these information flows. if we explain this reaction function to the markets clearly enough, then they can incorporate it into the price formation mechanisms. and we feel that this has worked rather well. the markets find the way we conduct forward guidance useful. today, particularly in the united states, there is a debate about whether forward guidance should be abolished and replaced with completely opportunistic policy that could be fairly arbitrary. this discussion makes sense when monetary policy normalisation is at a more advanced stage. after all, our monetary policy before the crisis did not include forward guidance and that seemed perfectly normal to everyone. once monetary policy
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benoit cΕure : interview in risques interview with mr benoit cΕure, member of the executive board of the european central bank, in risques, conducted by messrs jean - herve lorenzi, francois - xavier albouy, arnaud chneiweiss, pierre - charles pradier and philippe trainar, on 4 february 2019 and published on 2 april 2019. * * * is it true to say that we β re in a more risky world today than we were ten or fifteen years ago? we β re in a period of political and technological change. this change is accelerating, especially in the field of technology, and market participants are probably underestimating it. in certain industries, including the financial industry, rapid technological change can lead create risks as well as opportunities. political risk is also evolving ; it β s moving into developed countries. i β ve just returned from meetings in south africa with african central banks. my african colleagues were saying : β we africans have always known that we had to manage economic and developmental challenges and challenges stemming from political transition. but that was in an environment where we had some stability and an overview of what was happening in europe, the united states and china. but now the instability is coming from the united states and, to a certain extent, from europe and china. so now we have to learn to become a pillar of stability ourselves. β that line of thinking, which is new for africa, is one we in europe have been following since 1957 : how, with our own economic and political tools, can we become self - sufficient and a pillar of stability ourselves? ever since frank knight β s work in the 1920s, economists have made a distinction between risk ( which is based on quantifiable probabilities ) and uncertainty ( which doesn β t lend itself to being quantified ). to take up this distinction again, you could say that we also find ourselves in a world where there is more uncertainty than risk, because the issues have become political in nature : uncertainty about the relationship between the united states and china β with all its trade, security and intellectual property consequences ; uncertainty about brexit β¦ market participants are at a loss to form opinions in these circumstances. in fact, everyone is! this creates nondiversifiable risk which has no market price and leads to heightened anxiety. so it β s not surprising that markets are turning to the public sector, in particular central banks such as the
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the supplying capacity of the same products in the past. in that context, the oft - discussed output gap seems to have an aspect of an indicator of the mismatch between supply and demand. what is important is the corporate effort to make potential needs into actual demand. in addition, to support such firms β efforts, the systems or mechanisms should be reviewed so as to ensure the flexibility of japan β s economic structure according to the changes in society and in the global economy. for example, the rate of establishment of new firms and the rate of closure of the existing firms in japan are less than half of those in the united states, suggesting that the metabolism of japan β s economy is low. while consideration from various angles would be necessary in order to improve such a situation and prepare a mechanism through which production resources transfer smoothly to areas with strong needs, from the standpoint of a central bank, i will emphasize the role of financial markets, financial institutions, and institutional investors. the financial markets facilitate an efficient fund allocation according to profitability and potential of firms as well as risks, thereby play a role in enhancing the metabolism of the economy. in that regard, a more efficient fund allocation will be possible if versatile markets exist and various fund providers assess the profitability of firms and others. therefore, to develop versatile and efficient financial markets is likely to play an important role also in raising the productivity of the economy as a whole. concluding remarks needless to say, economic growth is eventually achieved by the power of human will. in that regard, in nagoya, there are many firms that have taken various changes in the environment as new opportunities and have achieved high growth by responding to the changes. recently, there have been moves to develop and expand the production of high - value - added products including energy saving automobiles, which is reassuring. if such efforts are stepped up, it would pave the way to a sustained growth path for japan β s economy. the bank will do its utmost to support your such efforts from the standpoint of a central bank. thank you.
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far more diversified today than in the past, so that brexit is just one factor among many in determining overall economic performance. still, we view brexit as a major downside risk for the irish economy and will be closely monitoring developments in the uk economy as the full impact of brexit takes hold. let me now turn to the primary goal of my speech, which is to discuss the potential implications of brexit for the configuration of the european financial system, with a primary focus on the euro area. if the uk - eu negotiations deliver an agreement that effectively preserves the single passport for uk - resident entities selling into the eu, the net impact of brexit on the structure of the european financial system might be quite minor. however, in scenarios in which uk - resident firms are no longer treated as equivalent to eu firms for regulatory purposes, it is likely that significant migration of financial activity from the uk to the eu will occur. in particular, it is plausible that a larger fraction of trade in euro - denominated financial instruments will take place inside the euro area, with ancillary implications for the location of financial lawyers, professional services firms, central counterparties, clearing services and settlement services. in order to more easily meet regulatory requirements, there may also be shifts in the organisation of the banking groups. in addition, we may expect to see non - eu banks looking to set up subsidiaries in the eu and eu - resident banks possibly converting uk branches into subsidiaries. 1 / 2 bis central bankers'speeches in the post - brexit environment, it is unlikely that financial activity will cluster in a single location in the euro area, since no individual location offers a close substitute to london. an open question is whether the decentralisation of the european financial system will impose significant efficiency costs. once a location is established as a dominant financial centre, there are many selfreinforcing factors that help it to maintain a hegemonic position. most obviously, a deep labour market for financial - sector workers and a localised stock of intangible financial knowledge are highly attractive both for new financial firms and new entrants to the labour market. however, if a shock fundamentally disrupts this equilibrium configuration, it does not follow that a new dominant location will inevitably emerge, since there also countervailing factors that work against the concentration of activity in a single location. this point is especially relevant in the context of the euro area, given the diverse characteristics of its
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. in crisis times, rapid implementation is crucial. as concerns global governance, i insist on the absolute necessity to reinforce macroeconomic policy surveillance of systematically important countries and economies. the imf has to play a fundamental role in such monitoring, coupled with responsible and active peer surveillance. finally, central banks have a fundamental role in ensuring monetary and financial stability from a long - term perspective. the world economy can count on central banks to continue to act as anchors of stability, which are more needed than ever. the european central bank, for its part, will continue to be an anchor of stability and confidence. thank you for your attention.
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, the weaknesses were exposed and investors suddenly lost confidence. after years of exceptional risk appetite and high profits, the pendulum swung in the opposite direction, as markets became extremely sensitive to financial risk. in september last year, the crisis escalated sharply, turning a large - scale crisis of confidence into a global financial panic. financial intermediaries restored liquidity buffers, tried to economise on capital and to scale down their balance sheets. they sold assets and tightened lending conditions. banks and other financial institutions drastically reduced their exposure to the risks that they had imprudently accumulated during the phase of financial euphoria. financial intermediation and loans to companies were curtailed in the wake of a forceful process of β deleveraging β. this was the point when important spillovers of the financial crisis set in. we saw the almost immediate spillover from the financial sector to the real economy. the credit squeeze and loss of confidence started to take a toll on the real economy, and a negative feedback developed between the financial sector and the real economy, and has since become a major feature of economic and financial developments. almost simultaneously, the crisis that originated in the advanced economies spilled over to the emerging market economies. since the fourth quarter of 2008, virtually all economies β both those of the industrialised countries and the emerging markets β have faced synchronised business cycles in many parts of the world. the ecb β s response to the financial crisis since the start of the financial turmoil, central banks around the globe face unprecedented challenges. we at the ecb and other central banks have reacted swiftly, flexibly and decisively. the ecb took the lead with some exceptional decisions as early as 9 august 2007. we have, since then, modified our operational framework and used an exceptional set of non - standard policy tools. these tools, combined with the bold action taken by euro area governments over recent months, have played an essential role in preventing a collapse of the financial system and in bolstering confidence. i would like to emphasise that despite this upheaval and our exceptional measures, our objective remains unchanged : to preserve price stability over the medium term, and that β s what guides our policy. in so doing, we support the conditions for financial and economic stability. the crisis has not changed this objective. interest rates as regards interest rates, the ecb β s governing council has reacted promptly and decisively to the intensification and broadening of the global financial turbulence. we have
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