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tarisa watanagase : prospects and challenges for the thai economy in dinner talk by dr tarisa watanagase, governor of the bank of thailand, at the british chamber of commerce, bangkok, 30 november 2009. * * * distinguished guests, ladies and gentlemen, first of all, i would like to thank the british chamber of commerce for inviting me to be here tonight. it is my pleasure to join you once again at this prominent annual gathering. last year we had a fruitful discussion on β what determines the future of the thai economy β. if you may recall, i imparted on the audience some words of wisdom for all policymakers, which is to smooth short - term pain, and to achieve long - term gain. last year β s speech took care of the latter part, in which the key message was a call for collective efforts to raise the economy β s potential output in order to achieve sustainable long - run prosperity. we, however, did not spend much time on the former part as we were yet to witness the complete fallout from the collapse of lehman brothers. today, we all know that our get - together last september was at the onset of the greatest economic contraction over the last 60 years. the collapse of lehman brothers on sep 15, 2008 created a gigantic shockwave in the world financial markets with its ripples subsequently evolving into an economic tsunami that wiped out so much economic wellbeing all over the world. its consequences are still being felt today and the focus of policymakers has, therefore, shifted to the immediate task of giving the economy a quick resuscitation and lifting it out of the short - term slump. after the crisis, foreign direct investments from the eurozone have dropped significantly. however, despite the weakness back home, the uk β s net fdi to thailand still managed to register a positive number of approximately 48 million usd for the first three quarters of 2009. it is, therefore, to our mutual benefit for the bcct to have a good understanding of the outlook and challenges for the thai economy from a policymaking standpoint. this will be the mission of my speech today and i would like to proceed in the following sequence : first, i would like to start by giving you an update on the current economic development ; second, i would attempt to draw an outlook for the thai economy for the year 2010 ; and third, i will outline the key challenges that await the thai economy going forward. ladies and gentlemen, as you | tarisa watanagase : creating sustainable financial inclusion welcome remarks by dr tarisa watanagase, governor of the bank of thailand, at 1st afi start - up committee meeting, bangkok, 10 july 2009. * * * deputy governor, director - general, dr. hannig, colleagues, it is a pleasure to welcome all of you to bangkok, which for some of you, i know is a long way from home. thank you for making such an effort to be here. i cannot tell you enough how much your presence and participation in this meeting is appreciated. though we have work to do this morning, i hope that you will also have a chance to enjoy your stay in bangkok, including our sight - seeing tour this afternoon. at the afi public announcement back in april where president babatz and i had a chance to address the meeting as members of our start - up committee, i was delighted to see the kind of positive response and enthusiasm shown by policy makers from a broad spectrum of countries. many of whom, i learned, have decided to jump on board with us, making afi membership grow to more than fifty countries, worldwide. this only confirms that among many agenda laid on the table in international policy forums today, financial inclusion is the one agenda that we can all agree and give our full support to. as i said in that meeting, there are challenges ahead that, together, we must address in a cooperative manner, namely creating sustainable financial inclusion and ensuring the linkage between greater financial access and improvement in wellbeing. please allow me to offer my initial thoughts on the subject. with wellbeing as the ultimate goal of policy makers, many policy building blocks need to be woven together. examples include policies on career development, education, macroeconomic stability and so on. while these policies do not necessarily fall under the mandates of financial regulators, efforts should be made to ensure that policy directions of all relevant institutions, government and private, are aligned. closer to our hearts though, are policies that aim to improve the poor β s capacity to be financially included. in this regard, i believe that there must be at least three key policy ingredients, namely financial access, financial literacy and consumer protection. first, for access, there is a need to ensure that the range of basic financial services provided can address financial needs of the poor in all important aspects of their lives. for instance, we need to consider an β inclusive package β of credits, savings, transfers, and insurance that | 0.5 |
have exports in some other categories ( graph 3 ). many of these are areas where australia does have a comparative advantage and where value added is high. it is by focusing on these comparative advantages that we can best build a strong and successful manufacturing sector, while at the same time living with a high exchange rate. bis central bankers β speeches graph 3 i would now like to turn to the second broad factor that has helped maintain domestic balance during the once - in - a - century investment boom. and that is the increase in household saving. since the mid 2000s, the household sector net saving ratio has risen from around zero to around 10 per cent ( graph 4 ). in today β s money this represents about an additional $ 90 billion that is saved, not spent, by households each year. graph 4 now i know that this increase in household savings has not been universally welcomed by the retail sector. it has caused difficulties for some businesses, including those that based their business models on a continuation of the earlier trends. but consider how the economy might have looked over the past few years had households spent an extra $ 90 billion each bis central bankers β speeches year. it is likely that there would have been significant overheating. the exchange rate would have been higher. there would have been more borrowing from the rest of the world. and both inflation and interest rates would have been higher. i suggest that these are not developments that would have been warmly welcomed by most in the community. so, somewhat ironically, two of the factors that have created difficult challenges for many businesses over recent years β the high exchange rate and increased household savings β are the very same factors that have been critical to australia β s good macroeconomic performance. importantly, these factors have helped australia to digest a huge investment boom without generating substantial imbalances in the economy. at the same time, these factors have prompted significant structural change which, while difficult, is critical to achieving higher overall productivity and higher living standards. there is clearly a lot of change going on in the australian economy at the moment. how you view this change depends critically upon where you stand. however, no matter what one β s perspective, we should not lose sight of the fact that maintaining overall macro balance through this period of change has been a significant achievement. and it is an achievement that has benefited the entire community. the contribution of monetary policy so far i have discussed structural factors, but monetary policy has also played some role in helping maintain this overall internal balance. in | guy debelle : remarks on liquidity address by mr guy debelle, assistant governor ( financial markets ) of the reserve bank of australia, to the australasian finance and banking conference, sydney, 17 december 2013. * * * thank you to fari for again organising a good conference. today i will make a few points about liquidity. i have spoken about this on a number of other occasions, but one year out from the basel iii liquidity regime becoming fully operational, it is timely to do so again. 1 why do we have liquidity regulation? the fundamental answer is that banks engage in maturity transformation. they borrow short and lend long. this is a service which society values. there is a demand for banks to provide liquidity services. depositors place their savings with a bank but want to be able to withdraw some part of their funds at short notice. a corporate treasurer wants to have the company β s funds in an account where they can be accessed quickly to meet the needs of the firm. at the same time, we prefer to have our loans for substantially longer periods of time. it would be particularly inefficient and bothersome if we had to renegotiate our home loan on a monthly basis. more importantly, it would be very difficult to make any sort of long - term planning or investment decision if there were no long - term loans available. this desire for liquidity on the one hand and long - term lending on the other is intermediated by the financial sector and the banking sector in particular. but the maturity transformation this entails exposes the banking sector to liquidity risk. if all the depositors wanted their money back in a hurry, the bank would not be able to meet that obligation without either calling in their loans, which may be contractually impossible, or trying to sell them. the latter is often practically impossible to do at short notice, or even if it is possible, may only be able to be carried out by selling the assets ( such as loan portfolios ) at fire - sale prices. neither of those outcomes is socially desirable. fire sales run the risk of generating contagion to other financial institutions as the price of the asset falls, as they may well hold that same asset too, and / or may use it as collateral in transactions themselves. fire sales also limit the ability of the institution making the sale to make good on its obligations. so there are externalities to the asset that is being sold, as | 0.5 |
line and convert investors into shareholders and creditors. analogously, in mexico, some firms which distribute their products in small retail establishments have facilitated the use of electronic means for cash management and payments, incorporating a significant number of very small businesses in the financial sector. these kinds of initiatives, well - regulated and undertaken with caution, allow families and communities to build savings and start new businesses which increase basic capacities, generate income, and help them fight against inefficiency and poverty. at the same time, formal financial intermediaries can complement and develop these projects to generate permanent customers. conclusion financial inclusion engenders benefits for the population as well as for intermediaries. the lowering of costs through technology can allow the harmonization of popular forms of finance with formal services. we should learn, then, to assimilate financial schemes which originate in society. numerous experiences prove that modifying paradigms and using creativity to extend financial services is not only an activity with enormous social impact, but also, good business. bis central bankers β speeches | s municipalities, a commission agent is the only way formal banking services are provided. 4 in addition, mobile phones have begun to be used as a financial services medium. even if they have not yet become a wide distribution channel, partly due to platform development and interconnection problems, their potential is enormous. with mobile phones, the use of which is widespread across all income brackets, individuals today can carry out various basic operations such as consulting savings balances and making payments to third parties. shared challenges on financial inclusion despite this progress, a lot remains to be done to incorporate those not served by the banks. given the fact that apparently many challenges to financial inclusion come from high costs and low profitability, the use of new technologies and the facilities brought by telecommunications will without a doubt continue to play a key role in augmenting the possibilities of banking penetration in mexico. beyond the factors that drive success is the need for all players to be actively involved in the endeavor of financial inclusion. the authorities should continue to promote the interconnection of services, competition in the banking industry, and transaction safety. in an important way, they should also strengthen the prudential and supervisory frameworks so that previously informal activities become incorporated in a way that safeguards the population β s wealth with due caution. the financial intermediaries, in turn, should keep participating actively in the development of these markets, creating new ways of servicing an ever wider and more heterogeneous public. see the key reasons for which an individual decides not to open a bank account in ibid, p. 22. the cnbv reports the data on coverage by commission http : / / portafoliodeinformacion. cnbv. gob. mx / bm1 / paginas / infoper. aspx agents at the municipal level bis central bankers β speeches in the final analysis, keeping up with the pace of society will continue to be essential to broadening the formal financial system. throughout the world, it has been clear that many market transformations have come from social initiatives or businesses with the imagination, creativity and technology to satisfy savings, lending and payment needs. for example, in many countries, innovations have included the creation of peer - to - peer platforms, which pinpoint matches between those who seek loans with savers who decide to lend. another method, crowdfunding, has become a popular way for firms seeking loans and previously analyzed by the platform to sell their shares on - | 1 |
tier ii and tier iii capital, ceiling on interest rate spread at the time of issue of the subordinated instruments was removed effective from april 1, 2009. ii. stand - alone pds were allowed to categorize a portion of their government security portfolio in the htm category till march 31, 2010. iii. in order to aid stand - alone pds in managing their funding requirement, pds are allowed to borrow from call money market, on an average in a fortnight, up to 225 per cent up from 200 per cent. iv. in the backdrop of global financial crisis and the need to have strongly capitalized entities to ensure financial stability, the minimum nof for stand - alone pds undertaking only g - sec business, was increased from rs. 50 crore to rs. 150 crore and for the stand - alone pds, which intend to undertake other permissible activities, nof is enhanced to rs. 250 crore from the existing level of rs. 100 crore. the enhanced level of nof requirement shall be effective from april 1, 2010. v. pds are allowed to deal in interest rate futures ( irfs ) for both hedging and trading on own account. 45. the rbi is impressing upon the pds to expand their outreach to widen the investor base for government securities and act as market makers for the smaller entities in noninstitutional segment. corporate bond market 46. corporate bond market segment has received intense attention in recent times as it has been identified as one of the growth engines for further development of the indian economy with vast infrastructure needs. a well developed corporate bond market not only enables the corporates to tap the markets for their financing needs and result in efficient allocation of resources but also acts as a much desired supplement for the bank financing thereby reducing the systemic stress. there has been a spurt in the secondary market activity in the corporate bond markets. the secondary market volumes have gone up from rs. 5000 crore in 2007 to about rs. 30, 000 crore in 2009. the bond issuance through private placement in the first half of 2009 β 10 has shown an increase of 25 per cent over the corresponding period previous year, with financial service sector accounting for 71 per cent of the mobilization. the fiis have been allowed to invest up to $ 15 bn in corporate bonds. the actual utilization is however very low. the streamlining of clearing and settlement processes by mandating the dvp settlement of corporate bonds is expected to increase the | paradigm of fin - tech and to chart out the best way of using it. 5. technology has thrown several gauntlets simultaneously on to the banking and financial sectors in recent times. i would like to highlight five of them. 6. first is the cyber security. banks deal with hard cash and money and therefore have always been targets of crime ; while the banks make good use of it for protecting cash and money, ironically use of it by criminals have also increased substantially. today, it systems of banks are the prime target for cyber crimes and if one were to judge by the volume and value of incidents, the menace is steadily growing. it is of great concern β some of the recent incidents at bangladesh bank and several persistent instances in many banks are just the proverbial tip of the iceberg. if we need to provide safe and secure banking, then providing for safe it systems is an undeniable requirement. it is essential that in every it based initiative, security is addressed as a vital component. banks need to bestow greater attention on cyber security. the role of the chief information security officer ( ciso ) assumes great significance. it is heartening to note that all banks have a well anointed set up in the ciso. as i mentioned earlier, criminals have become it savvy ; cyber attacks are becoming highly sophisticated, use specialized analytical techniques and exploit minute vulnerabilities which had hitherto gone unnoticed. continued vigilance and concerted bis central bankers β speeches proactive protective actions are warranted. we have a ciso forum under the aegis of the idrbt ; this forum, along with the ongoing research in idrbt in cyber security should help banks exchange information, react quick enough to outsmart the perpetrators of cyber incidents and build in workable security related enhancements. 7. second are the new technologies that are fast developing. one of the important characteristics of the it world is that it is ever changing and dynamic. cloud based computing, block chain processing technologies and virtualization of it systems are a few examples which hold potential for being used in a big way. the fruits of these would be in the form of safe, trackable and secure digital currency, distributed ledger - keeping and homogenous it systems β all of which would ultimately result in better customer service. banks and idrbt can work together to study these, test them out and adapt for best use. 8. third are the fin tech companies β the new, | 0.5 |
to say β small is beautiful β. i have mentioned earlier that co - operative banks essentially engage in basic banking and they remain in that space. however, co - operative banks, particularly the bigger ones, like commercial banks, often get allured to high value loans and bulk deposits to achieve β economies of scale β. in a country like india, where there is a large chunk of unbanked population, the co - operative banks need to also keep serving the marginal participants as one of their primary objectives and should not be carried away in the race to grow big. governance and regulation of co - operative banks i find from the programme schedule that the conference started with deliberations on β policy, laws, governance & enabling environment β. reserve bank, as a regulator of banking sector is involved with the regulation and supervision of co - operative banks. i would, therefore, prefer to deal with governance and regulatory issues in a greater detail. corporate governance and principles of co - operation corporate governance relates to a system in which the interests of the whole gamut of stakeholders are recognized and conflicts among them are sought to be reconciled. the concept of corporate governance is not much different than the internationally accepted principles of co - operation. one of the cardinal principles of co - operation as accepted by international co - operative alliance ( iac ) is β member economic participation β indicating contributing equitably to, and controlling democratically, the capital of co - operative by the members. equitable appropriation of surplus is one such fine balancing act of reconciling conflicting interest of various stakeholders. unlike commercial entities, profit making is not the goal or end in itself for co - operatives, but it is just a means to achieve the noble objectives of equitable economic development of the society. if a shareholder of a co - operative bank is looking for higher and higher return on equity ( roe ) it may imply that although he is a shareholder of a co - operative institution, his behaviour is more of a shareholder of a commercial entity. on the other hand, if a shareholder of commercial entity has belief in corporate governance and corporate social responsibility ( csr ) he may technically be a shareholder of a commercial entity ; his behaviour would be more akin to a co - operator. what i intend to say is that the word β co - operation β is, perhaps, more of a state of mind than something structural and material. professionalism in governance structure there can hardly be a debate on the desirability of a | the importance of dissemination of credit information, the rbi requires banks / dfis to obtain the consent of all their borrowers - not only defaulters - for dissemination of credit information to enable credit information bureau of india ltd., to compile and disseminate comprehensive credit information. preserving the integrity of the banking system prevention of frauds and implementation of anti money laundering ( aml ) measures are two important aspects of the efforts being made to prevent criminal misuse of the financial system which threaten the stability of financial transactions worldwide. supervisory initiatives keeping in view the emerging scenario under the basel ii accord and the need to use supervisory resources more productively, a beginning towards risk - based supervision ( rbs ) of banks has been made. on the basis of experience gained this will be extended to the entire banking system and will become an essential aspect of pillar 2 compliance. risk management systems i would now like to flag a few issues - some of which are purely exploratory and are raised for debate rather than as a statement of the official stance. as you are all aware, we are positioned at a crucial juncture because the current phase will be the time when risk management skills of financial entities will be put to test. the liquidity overhang in the system coupled with the past downward movement of interest rates seems to have spurred a sense of complacency oblivious of the downside risks of an adverse interest rate movement. it is also apprehended that this attitude has led some banks to dilute their approach to credit risk. the building of the risk elements into the pricing of the credit facilities is reportedly taking a backseat in the pursuit of asset expansion. this may leave banks in a situation where some of the players are not only less prepared to face the reversal of interest rate movement, but are also left with a badly priced portfolio in relation to the credit quality. i would like this aspect to be appreciated not so much as a note of alarm but as a voice of prudence. credit growth should be carefully calibrated with risk measurement and should not be merely seen as deployment of funds at marginal costs in the background of sluggish growth. banks should look ahead at the expansion of credit portfolio in a healthy way, particularly in the background of higher industrial growth, new plans of corporate expansion and higher levels of infrastructure financing. coupled with this are the regulatory requirements of management of market risks, which are becoming increasingly relevant. as we are all well aware, the adverse effects of risk | 0 |
##shing. as i will discuss in a moment, in this context, the bank anticipates a slowing in both the rate of household credit growth and the upward trajectory of household debt - to - income ratios. the recovery in net exports is expected to be modest given the relative weakness in the u. s. economy, canada β s underrepresentation in fast - growing emerging markets, bis central bankers β speeches while underlying inflation is relatively subdued, the bank expects that high energy prices and changes in provincial indirect taxes will keep total cpi inflation above 3 per cent in the short term. total cpi inflation is expected to converge with core inflation at 2 per cent by the middle of 2012, as excess supply in the economy is gradually absorbed, labour compensation growth stays modest, productivity recovers and inflation expectations remain well - anchored. the bank expects a re - acceleration of growth in the second half of the year, consistent with a renewed narrowing of the output gap. we will update the projection in the july mpr. allow me to turn now to the bank β s monitoring of developments in the financial system. although the canadian financial system is currently on a sound footing, the bank judges that, largely because of external factors, risks to its stability remain elevated and have edged higher since december. of the five risks identified in the fsr, i would like to concentrate on three : β first, sovereign balance sheets remain strained in many advanced economies. fiscal strains in the euro - area periphery have continued to build despite continued efforts by the affected countries and assistance from the international monetary fund and the european commission. whether or not a sovereign credit event occurs, these strains could trigger a sharp repricing of credit risk for other governments with high debt burdens, as well as a more generalized retrenchment from risk - taking in global markets, including markets in canada. β second, a long period of low interest rates globally may fuel excessive risktaking. the search for yield could cause risk to be underpriced or lead investors to take on exposures that they may not be able to manage if conditions become less benign. our institutions should not be lulled into a false sense of security by current low rates. β lastly, the high level of household indebtedness has increased financial vulnerabilities in canada. canadians are now as indebted ( relative to their income ) as the americans and the british. the bank estimates that the proportion of canadian households that would be highly vulnerable to an | mark carney : opening statement for appearance before the standing senate committee on banking, trade and commerce opening statement by mr mark carney, governor of the bank of canada, to the standing senate committee on banking, trade and commerce, ottawa, ontario, 22 june 2011. * * * good afternoon, mr. chairman and committee members. tiff and i are pleased to appear today to discuss the bank of canada β s analyses of the economic outlook and the stability of the financial system. we look forward to your questions and the discussion that follows. the bank β s most recent comprehensive assessment of the economy was presented in its april monetary policy report ( mpr ). on 31 may, the bank issued its latest policy rate announcement. these provide the basis for my comments today. please bear in mind that the bank β s next full economic analysis will be published in the upcoming mpr, which will be released on 20 july 2011. i will also take a few moments this afternoon to outline the highlights of the bank β s financial system review ( fsr ), which was released just this morning. the fsr reviews developments in the financial system and identifies potential vulnerabilities. beginning with the economic outlook : the global recovery is proceeding broadly as we had expected in april. the u. s. economy continues to grow at a modest pace, limited by the consolidation of household balance sheets. growth in europe is maintaining momentum, although the risks related to peripheral economies have clearly increased. the disasters that struck japan in march are severely affecting its economic activity and are also causing temporary supply chain disruptions in advanced economies, including canada. although commodity prices have declined recently, they are expected to remain at elevated levels, supported by tight global supply and very strong demand from emerging markets. these high prices, combined with persistent excess demand conditions in major emerging - market economies, are contributing to broader global inflationary pressures. despite the challenges that weigh on the global outlook, financial conditions remain very stimulative. in the short term, economic growth in canada is expected to slow to modest rates, due to a number of temporary factors. these include the supply chain disruptions that will dampen automotive production, as well as the drag from adjusting to higher energy prices on consumer spending in canada and the united states. overall, a broad rebalancing of demand in canada is underway as the economic expansion progresses. business investment is now growing strongly, and contributions to growth from both household consumption and government spending are dimini | 1 |
such a mixed model for the structure of the banking sector or financial sector in general would lend stability through diversity. differing priorities and practices enabled public sector institutions to retain a public sector character and not merely to replicate the functioning of private sector counterparts. the problem of information asymmetry may be moderated if public sector banks co - exist, assuming that they have fewer incentives to withhold information from regulators, and are often subject to legislation relating to the right to information. it is not necessary that a bank or a non bank financial entity should be owned entirely by government or only by private shareholders. a variety of combinations of public and private ownership and control can be considered. in revisiting the issue of regulation in conjunction with competition and ownership, it is necessary to recognise the lessons from public sector banking in the 1970s and 1980s, particularly in developing and emerging market economies. the problems in the past with public sector banking were on due to financial repression attributable to macroeconomic policies, the lack of appropriate global standards of regulation, the existence of monopoly status, and technological obsolescence, in addition to standards of governance in public systems in general, and public ownership in particular. in the context of the global financial crisis, the practices of some entities that were virtually public sector, such as freddie mac and fannie mae, do not provide reassurance that public sector character would in itself be benign. experiences with some banks in the public sector in europe may also be instructive. the temptation to politicise public sector banking may persist, but the need for professionalisation in the public sector should not be underestimated. the new realities consequent upon the crisis indicate the potential for a redefined role for public sector financial institutions, provided that the experience prior to deregulation and privatisation, as well as select cases related to the global financial crisis, are also kept in mind. the use of fiscal and related instruments to supplement regulatory effectiveness could be considered in earnest. information generated for purposes of taxation is likely to be of great practical use for regulators in monitoring financial sector activities. levying financial transaction taxes could be considered, with rates that discriminate against excessive speculation. the cross - border activities of financial intermediation could be brought within the tax net, and thus the regulatory ambit, by adopting the issuance principle ( financial institutions located outside the country would be obliged to pay the tax if they traded securities originally issued within the country ) and the residence principle ( | market, or after receiving complaints from an affected party? or should it rely on monitoring of every innovation and assessing suo motu whether there are harmful effects? often, many innovations look attractive in the short run because risks are back - loaded on some and rewards are front loaded on others. in finance, pressure on regulators to regulate is also back loaded, and is often too late. different industries have different approaches and tools to regulate, and the point at which regulators β jurisdiction is activated varies across industries. for example, in pharmaceuticals, the regulator has to approve ex - ante, while in regard to restrictive trade practices it may be ex - post. in many industries, regulations address issues relating to innovations. for example, in the pharmaceutical industry, considerable experimentation is demanded and ex - ante approvals are required for marketing. in engineering systems, the consistency of innovations with network in which they are to be applied is often required to be certified, by either an industry body or the regulator. in many others, innovations are left to the market test, unless they happen to have ex - post, negative effects, in which case public policy may consider intervening. in brief, there are several industries which have been subject to different systems of regulation, and they have stood the test of time. the financial sector should be able to draw lessons from such experiences, recognising the unique characteristics of the financial sector. such lessons will also help in differentiating between technological, process and product innovations. markets are, indeed, a source of many innovations, but there are examples in many industries where the public sector has been active in promoting innovations. there is merit in central banks encouraging innovations in the financial sector that have the potential to serve the public. i agree with chairman ben bernanke when he said, referring to striking the right balance between consumer protection and responsible innovation, β our goal should be a financial system in which innovation leads to higher levels of economic welfare for people and communities at all income levels β ( bernanke, 2009 ). my submission is that central banks in particular, and regulators in general, could be more proactive in promoting and incentivising appropriate innovations in the financial sector, and drawing on the experience of other industries may be of considerable value in evolving policies towards financial innovations. effectiveness of regulation there is considerable agreement that better and more effective regulation is of vital importance to the financial sector, and that more regulation is not necessarily better. at the same time, the experience | 1 |
supervisor, and that it is guided exclusively by the quality of banks, their manner of management, degree of risk, etc, and not by nationality of individual shareholders. my personal advice that i would like to give to those bankers who are aware that their time is ticking away is this : β’ not to waste time by arbitrarily proclaiming their own selves as national interest, β’ not to organize the purchase of their own shares at bank counters for cash, β’ not to fritter away precious time seeking political connections, even family connections in the country and abroad, but simply to do what the law expects them to do with a view to creating a stable and sound banking system. nbs moves on without turning back! as regards the measures taken by nbs in the field of insurance, i may freely say that we did not β pursue β the supervisory capacity in respect of insurance companies, but rather that such capacity was entrusted to us. however, once we have been given this responsibility, we intend to perform it conscientiously, equally well as we perform control over the banking sector. nbs will take all legally envisaged measures with a view to ensuring the introduction of financial order in the insurance market and its development, as well as the protection of rights and property of policyholders. whether it will be the citizens who, through costlier insurance policies, will bear consequences of unconscientious business practices of closed insurance companies, and to what extent, does not depend on the nbs β it is the rule of law and judiciary system that are now put to the test! if insurance companies - which β invest β up to as much as eur 20, 000 in one square meter of business space, which tie policyholders β deposits with banks to loans to the owner, and buy nail polish using your and my insurance policy funds β do all this with impunity, and, what is more, remain in possession of the real estate acquired in that way, then it is equally justified to raise the question as to whether laws in serbia have equal application to all citizens or the judiciary system may be influenced by money and partisan and β godfather β connections. we all hope for the fastest practicable accession to the eu, with feasibility study as the road leading to that objective. that is why i would like to point out that no bypasses, no shortcuts, or β partial β transitions are possible on that way. what we have failed to do with | β nerves. now, as we all know, the 100 percent coverage may subject both bankers and depositors to moral hazard in the form of willingness to take greater risks to earn higher returns. depositors may encounter moral hazard when they ignore greater risks associated with their choice of a depository institution which offers them higher rates for their deposits. but even though all the drawbacks of the present system of deposit protection are well known, current conditions in the world financial environment and their effects on the turkish financial system have prevented us from making the necessary changes in the existing deposit insurance scheme just now. once we manage to stabilise the macroeconomic environment, we will be able to reduce the 100 percent coverage to internationally acceptable levels. how a powerful and effective supervision could be implemented for the turkish banking system was foreseen many years ago. the system in effect during the 1930s had revealed its inadequacies, but the first step was not taken until 1959 with the establishment of the board of sworn bank auditors. the system was first applied to the turkish economy under the direction of the ministry of finance. the board recruited many valuable employees, trained them, and gained the power to supervise the system. but as i mentioned earlier in connection with the need for additional principles to preserve the soundness of the system, the rapid changes of recent years, their consequences and events occurring in the international environment have underlined the importance of effective supervision. in 1997, the bank for international settlements ( bis ) enumerated the 25 core principles to be used for banking supervision. the need for such principals was well understood after the financial crises in asia and russia. i may say that, during these events, which have been going on for several years, the majority of the turkish banking system has gained great advantages from adopting these changes. these banks have succeeded in keeping pace with the era, especially with respect to technological innovations, strategies for risk - taking and management techniques. besides these advances, there were some factors that damaged the system. these are : 1 ) high inflation. 2 ) high public sector borrowing requirement. 3 ) the lack of an efficient legal framework. in addition, the style of banks β operations and strategies are somewhat different in a high inflation, as opposed to a normal, environment. on the one hand, banks try to sidestep the harmful effects of inflation. on the other hand, they revise their methods of overcoming uncertainty and taking risks. and more important, as the public persists in continuing | 0 |
this later on. but, unlike in banking, for most firms involved in market - based finance leverage is not at the core of the business model. and leverage, or the lack of it, affects liquidity risk as well as solvency risk. in a crisis, when credit is constrained, the unwinding of leverage and the threat of insolvency drives fire - sales of assets which amplify financial stress. unleveraged investors may of course still run if asset prices fall, but they are not forced to do so by the withdrawal of credit. historically, when faced with deteriorating financial asset markets, investors in retail funds, insurance companies and pension funds have on the whole tended to stick fast and run their losses. peak outflows from european investment funds investing in investment grade corporate bonds in the crisis were no more than 5 % in a month. large scale losses to investment funds, insurance companies and pension funds can present very difficult issues and strain the financial system, especially through their knock on effects on other parts of the system. but in and of themselves, they have been less likely to lead to systemic failure compared to major stress in the banking system that provides not just credit but the means of transaction β i. e. the money itself β in our economies. empirical work supports this. see for example, allard and blavy ( 2011 ) : β market - based economies experience significantly and durably stronger rebounds than the bank - based ones ( in particular the more bank - based economies of continental europe ). β carney in contrast, at northern rock over the second half of 2016 retail and wholesale deposits each fell by nearly 60 %. all speeches are available online at www. bankofengland. co. uk / speeches in a major crisis, market - based finance might therefore be expected to be a materially less disruptive way of passing very substantial losses back to end investors than bank lending. this is particularly true in the case of international capital flows where bank lending across borders, particularly short term inter - bank lending, can create an explosive channel of transmission of systemic risk from one jurisdiction to the next if banks do not have the resilience to absorb major losses and authorities are not able to resolve them safely if they fail. it is no accident that the ecb identified market - based finance as an important risk sharing mechanism between euro area countries and encouraged the development of an eu capital markets union. risks in market - based finance i have noted the | individual digital markets rather than one single digital market. this is holding back innovation, growth and, ultimately, jobs. studies 7 suggest that establishing a harmonised and well - regulated digital single market holds the same potential as the introduction of the original one, raising gdp by as much as 4 %. in germany, for example, this could imply an additional 427, 000 jobs over the period 2015 to 2020. some steps have already been taken towards a true single market for the digital economy, but we are not there yet. continuing to the end would provide a major boost to european competitiveness. it is therefore more than worth the effort. ladies and gentlemen, the field of policy which has seen the most far - reaching centralisation in europe is clearly the field of monetary policy, at least for the 18 member states of the euro area. but the mutualisation of monetary policy is not only an issue for the euro - area member states but for all european countries. our extensive trade links imply that developments in the monetary union reverberate in the non - euro - area countries as well, as the crisis has shown very forcefully. the euro area teams up one common monetary policy with 18 national fiscal and economic policies. this approach reflects a currency area composed of sovereign member states. it grants member states sufficient leeway to preserve their diversity, that is, to establish their own business models or to tailor institutions and policies to their own national preferences. at the same time, it leaves the consequences of such decisions with the respective member state and consistently rules out the option of mutualising public debt with other euro - area states. but this set - up also creates vulnerabilities. first, a combination of this kind gives rise to a deficit bias, as it allows the costs of fiscal imprudence to be shifted partially on to others. an unsustainable fiscal situation in one country has repercussions for monetary union as a whole. you can compare this to what economists call the β tragedy of the commons β. just as overfishing creates negative externalities for other countries, excessive public debt harms the euro area as a whole. excessive debt in one member state drives up longer - term interest rates for all euro - area countries. and second, each member state issues debt in a currency it cannot create. hence, a high level of fiscal discipline is needed to ensure that solvency concerns do not spiral out of control. for monetary policymakers focussing on maintaining price stability, | 0 |
governments in the developing world, unfavorable global climatic trend generally coupled by the lack of sufficient technology, human capacity and fiscal space may further limit the scope of policy requirements that could be extended to them. our coordinated and shared response to climate change must entail a systematic re - profiling and redirecting of global expenditures by both governments and businesses to the developing world. let me remind the audience that the bali road map emphasizes the provision of financial and other incentives to, scale up the transfer of clean energy technologies from the developed to the developing world. nations have also agreed to develop programs designed to scale up investment that will lead to the transfer of technologies to developing economies. while the government is going to be important even critical in dealing with climate change, an even more difficult task involves changing the incentives of the billions of individual consumers and companies in the private sector. consumers will need to reduce the use of carbon intense products and businesses motivated to develop alternatives. getting these incentives right and unleashing private sector innovation has to be a big part of the response. in that respect, if properly coordinated, climate change mitigation and growth can both be pursued at the same time. capturing the needs of countries to mitigate the impacts of climate change, new industries are already rapidly developing. the countries that get the incentives right by creating an environment for the development of these technologies designed are on the right path to becoming economic winners in the next great technological revolution. let us also not forget the most important aspect of any program in mitigating climate change, namely not to leave behind the world poor while countries develop and implement marketbased solutions to mitigate climate change risks. mechanisms for adaptation fund to help poor countries cope with climate change should be part of our partnerships for development. to properly define our role, as central bankers, in such a global effect, we need to spell out as precisely as we can the ramification of the macroeconomic impact of global climate change. as we gather in this room today, the world out there is struggling to deal with a crisis not, in my view, unrelated with the problem of global climate change : the unprecedented food and fuel price surge. unfortunately, it happens as the world finance is also in turmoil. the market consequences of all that have kept central bankers across the globe awake at night from time to time. fellow governors, ladies and gentlemen, before i conclude my remarks, let me reiterate that we live in a truly challenging time. viewed from | a policy maker in a developing economy, i must also say that the threat of climate change may go beyond the usual welfare statistics. if left unresolved climate change and the accompanying twin crises may, in due time, put our shared vision of a free, open and democratic globe at risk. let me now end my opening remarks with an expression of confidence that discussions in bank indonesia β s 6th annual international seminar will certainly be prolific and enrich our understanding of the macroeconomic impact of climate change. i am looking forward to this seminar β s policy recommendations. lastly, enjoy your stay in bali! i do hope your stay in this warm and hospitable island of gods fashions you with lasting pleasant memories of indonesia. thank you. | 1 |
sector demand for monetary assets increased. private sector credit growth rates were upward and settled at 14. 0 % in october. credit demand was higher both by businesses and by households ; however, this growth is slow. overall, lending terms offered by the banking system and parameters of capitalisation, liquidity and health are appropriate for funding higher demand for private consumption or investments in the future. latest developments in financial markets continue to be characterised by controlled risk, liquidity and inflation premiums. successive key interest cuts appear to have been transmitted forthwith in the money market. government securities yields in the primary market dropped further, reflecting the key interest rate cut in the economy and the low public sector demand for funding. the key interest rate cut is expected to be transmitted in the future to interest rates on deposits and loans, in accordance with the time lag of the monetary policy transmission mechanism. lastly, a positive development in financial markets at home is the reconfirmation of the actual government bond rating and the country β s stable outlook by moody β s and standard & poor rating agencies. projections for the economic outlook remain subject to high uncertainties, dictated mainly by developments in the global economy. our analysis and estimates suggest continuation of moderate economic growth rates for the reminder of the year and the next year. economic slowdown in our trade partner countries may be reflected in weaker foreign demand and further deceleration of albanian exports. in addition, space for implementing fiscal stimuli narrowed in response to the growing need for maintaining fiscal stability and controlling public deficit and debt levels. consequently, public sector contribution to aggregate demand growth is expected to be downward in 2012. under these circumstances, the extent and speed of recovery of private sector demand will be crucial for the country β s economic growth. as we have stated in earlier communications, bis central bankers β speeches the actual monetary conditions are appropriate to encourage private consumption and investments. * * * taking into consideration the information set out above, in the supervisory council assessment, inflationary pressures remain controlled over the monetary policy relevant horizon. the presence of the negative output gap in the period ahead will be accompanied by low inflationary pressures originating from internal demand. in addition, inflationary pressures from global economy developments are projected to be more moderate, whereas inflation expectations are anchored. these assessments are materialised in annual inflation projections ranging within the target band of the bank of albania for the medium run. at the conclusion of discussions, the supervisory council decided to leave the key interest rate unchanged at 4. 75 % | β hold to maturity β. in other words, this implies the necessity for more flexibility, more diversification and for the existence of efficient risk management structures. a constant concern, which i want to pay particular attention and get your highest interest on it, is the professional development of human skills. i am not making any prejudice about the human resources that are currently working at the banking system, but i would like to point out that the mobilization of capable human resources, devoted to and shaped professionally is vital for the accomplishment of success. to be more competitive and bring new developments, we have to constantly upgrade the skills of each employee at all levels. it is true that the majority of the banks of our banking system represent international well experienced banking groups. however, i would like to emphasize that there is still room for more expertise and qualified human resources, so that the best practices of the international markets are infiltrated in our banking system. in addition, within the framework of this association, i would advocate that the dealers association must very soon come up with a code of conduct, agreed by all its members. while this code is a non - statutory body, with no executive powers, it complements the selfregulation of the market by bringing together the best minds of the market participants and professionals to create a reliable trading practice. concluding, i would say that developing the interbank money and security markets is among the top priorities of the bank of albania. as such, we will make all our efforts to create the necessary conditions to minimize the trading risks, as well as create and support initiatives to active trading in the these markets. i hope these efforts will receive your understanding and more important your cooperation. it will be very satisfactory indeed, that in my next appearance in this platform i will be able to bring concrete results of our common efforts to develop interbank money market and secondary market. concluding my speech, i would like to emphasize once more that no long - term and stable development may exist, without having effective financial markets. the financial market with all its segments, should precede the signals and novelties brought about by rapid dynamics of development of the private sector and the economy in general. thank you all for your attention! | 0.5 |
inclusion pave the way for access to more financial products and economic opportunities for all. conclusion allow me to extend my gratitude to the world economic forum for providing a platform and opportunities for emerging markets, such as the philippines, to showcase our potential. let me end by wishing all the forum delegates a productive and enjoyable two days in manila. we look forward to the great exchanges on clean energy and digital transformation as well as other topics, touching on the drivers of infrastructure development, competitiveness, and inclusive growth. may these dialogue and discussions lead to meaningful partnerships. we are confident that your investments in the country - both existing and forthcoming - will be worthwhile and will yield mutually beneficial outcomes. thank you once again for gracing this occasion. please enjoy the rest of the dinner. 1 65 percent of filipino adults have transaction / formal accounts in 2022, a significant increase from 56 percent in 2021 and just 23 percent in 2017. 2 / 2 bis - central bankers'speeches | they try to disentangle the impact of the single currency and harmonisation policies on financial integration. this distinction is of major relevance with respect to the further process of integration. the authors β focus on banking integration is appropriate with regard to the subsequent analysis of consumption risk sharing, where bank lending is deemed to be a prominent transmission channel. however, it should be kept in mind that there are more financial market segments of interest and that the euro and harmonisation policies might affect them to a different degree. as i have already noted, there is strong evidence that monetary union has fostered integration of markets for equity and long - term debt securities. 4. 3 banking integration and risk sharing as for the authors β concept of consumption risk sharing, let me make two remarks. first, consumption smoothing is measured relative to a panel of 20 european and non - european countries. this reflects the fact that the paper concentrates on differences in consumption growth across countries and, therefore, analyses international consumption smoothing. domestic smoothing is thereby ignored. furthermore, the estimates do not make a distinction between whether consumption smoothing of emu countries takes place within the euro area or vis - a - vis the rest of the world. it is true that, from a welfare point of view, a distinction between intra and extra - euro - area risk sharing does not make sense. however, the authors β conclude that β the increased cross - banking integration due to the euro has improved ex - post the optimality of the currency union by improving risk sharing β. this implies that risk sharing of euro area countries takes place mainly among each other. my second comment concerns the way the authors measure consumption smoothing. the paper regresses international differences in consumption growth on international differences in gdp growth, multiplied by a term including banking integration. a perfect consumption smoothing would imply that asymmetric gdp shocks do not transmit into diverging consumption paths at all. following asdrubali, sΓΈrensen and yosha ( 1996 ) and the modification of melitz ( 2004 ), it might be helpful not to stop here but to have a further look at the individual components of gdp and the respective channels of risk sharing. 3 asdrubali, p., b. sΓΈrensen and o. yosha ( 1996 ), channels of inter - state risk - sharing : united states 19631990, quarterly journal of economics, vol. 111, 1081 - 1110 and melitz, jaques ( 2004 ), risk - sharing and em | 0 |
partner no sign of banks taking greater risks since the end of 2002, mortgage claims have recorded annual growth rates of up to 6 %. this is quite substantial compared with the rather moderate trend in real estate prices. it appears that the expansion of mortgage claims has not been driven so much by real estate prices, but by the number of loan requests. consequently, the growing demand for loans is more likely attributable to factors other than the expectation of a speculative boom in real estate prices. the crucial question is the following : is the higher demand for loans due to excessively harsh competition among banks that has led to cheaper credit not reflecting the actual risks incurred? how has the relatively strong growth in mortgage loans impacted on bank risks? to answer this question, we took a closer look at the banks β risk behaviour. several indicators led us to believe that banks have hardly engaged in excessive risk taking. while it is true that interest rate margins, i. e. the spreads between mortgage rates and the banks β financing costs, had fallen slightly by mid - 2005, other bank expenses declined at the same time. in the final analysis, therefore, the profit margin was virtually constant or even slightly higher. the profit margin corresponds to the difference between the interest rate margin and the total operating expenses expressed in percent of the loan volume and β to reflect expected risks β of total value adjustments and provisions. the banks β profit margin thus also serves to cover unexpected risks. given that the profit margin has remained constant or moved slightly higher, the banks β risk - taking capacity has not diminished in spite of pressure on interest rate margins. this presupposes, however, that the banks have made realistic value adjustments and provisions. we currently assume that this is the case. moreover, average lending limits for mortgage loans have changed only insignificantly and may be regarded as cautious. for instance, the proportion of low - risk first mortgages β i. e. those mortgages with the lowest lending limit β is over 90 %. the criteria used in extending loans can also be rated as conservative. as a rule, assessments of a debtor β s future solvency are based on considerably higher interest rates than the current ones. mortgage debtors should therefore be able to meet their liabilities even if there is a marked increase in the interest rate level. our analysis focuses on system - relevant banks and on different groups of banks. we rely on aggregated data and on a random sampling of banks or groups of banks. problems with | will also be mutually independent. the hong kong monetary authority will be accountable solely to the hong kong government. the people β s bank of china will not take the place of the hong kong monetary authority and will not set up any office there. as hong kong and the mainland develop increasingly close economic ties in both trade and investment, close co - operation between the two monetary authorities becomes even more important. the two monetary authorities must, therefore, strengthen further the present sound co - operation of central banking functions, including monetary management, banking supervision and the development of the financial infrastructure. the third principle concerns co - operation in prudential supervision. according to the basic law, the hong kong government will continue to supervise financial institutions in hong kong, including financial institutions from the mainland. supervision will continue to be undertaken in accordance with international rules and practices. notwithstanding different business practices in the mainland and hong kong, we have reached consensus on licensing procedures and supervision of each other β s financial institutions. it has been agreed that : financial institutions based in the mainland and hong kong setting up offices in each other β s territory shall be approved on the same basis as foreign financial institutions. the mainland offices of hong kong - based financial institutions shall continue to enjoy the same preferential treatment in the mainland as other foreign financial institutions. mainland financial institutions in hong kong shall not enjoy any privileges. they shall abide by the law of hong kong and be regulated by the relevant supervisory authorities in hong kong. this arm β s length treatment will certainly help to underscore the implementation of the β one country, two systems β principle. the fourth principle is that the people β s bank of china will support the currency stability of hong kong. on behalf of the pboc, i have early this year signed a bilateral agreement with the hkma on the repurchase of us treasury paper. we are prepared to offer liquidity support to the hkma for the purpose of stabilising the exchange rate of the hong kong dollar. we also stand ready to use our foreign reserves to support the hong kong dollar, if necessary. however, i must point out that under no circumstances will china draw on or resort to hong kong β s exchange fund or other assets in any way and for any reason. i mentioned earlier that the basic law states that the exchange fund shall be managed and controlled by the hong kong government. it is also stated that the financial revenues of the hong kong special administrative region shall be used exclusively for its own purposes. | 0 |
##sih. | ringgit - denominated papers in our domestic bond market has contributed towards enhancing its depth and breadth. with these developments, this has positioned malaysia to evolve as an international financial centre for islamic finance. in this regard, islamic financial institutions have a significant role to play. the investment in research and development would strengthen the capability for greater innovation by islamic financial institutions. this would increase the potential for a more diverse range of products and services to meet the changing requirements in corporate, retail and investment activities. given the universal nature of the islamic banking licence, the attention given to the capacity for innovation will become an important defining factor in the progress of islamic finance. with the rapid progress on the issuance of prudential and supervisory standards by the islamic financial services board ( ifsb ), islamic finance is now governed by its own international best practices. the establishment of the islamic financial services board in 2002 was part of the efforts to strengthen the international islamic financial architecture. thus far, two standards have been issued, namely the standards for capital adequacy and the guiding principles for risk management for islamic financial institutions. bank negara malaysia will be implementing these ifsb standards for adoption by malaysian islamic banking institutions. the harmonisation of the prudential standards across borders will also enhance the process of global financial integration in islamic finance. the islamic financial institutions are also able to benefit from maximising their balance sheet structure, by leveraging on the profit sharing investment accounts in addition to their own capital. under the ifsb capital adequacy standard, the total risk weighted assets funded by the profit sharing investment accounts will be deducted in the determination of the overall risk weighted capital ratio of the institutions. apart from the core capital and tier - 2 capital, bank negara malaysia will consider the profit sharing investment accounts to be part of the overall islamic banking capital fund for the purpose of determining the single customer limit. ladies and gentlemen, thus far, there are 7 islamic banking window arrangements that have been transformed into subsidiaries. six have now commenced operations. together with two full fledged islamic banking institutions and the 3 new foreign islamic banking players, malaysia now has 12 islamic banking institutions operating under the islamic banking act. there are also 9 takaful operators, including the 4 new takaful operators that will commence business later this year. with this diversity of players and the larger number of institutions that has been established in the islamic financial system, it is envisaged that the development of the sector will gain further momentum with | 1 |
operational target from the overnight interbank interest rate to the yield on 91 - day bill. i am pleased to underline that, what was a long - overdue shift, has borne positive results in terms of steering short - term interest rates close to the policy rate. the bank introduced the 28 - day bank of mauritius bills in september 2019. presently, a net amount of rs2. 8 billion has been issued to banks. this instrument has contributed significantly to improve liquidity management and ensure a smooth yield curve. there is a fourth element that i wish to highlight. i am speaking of climate change, which is fast emerging as a priority for many countries. the 2019 edition of the annual world economic forum publication lists extreme weather events, natural disasters, and failure of climate - change mitigation and adaptation among the top five threats most likely to occur in the next 10 years. some 42 central banks and other regulatory authorities have set up the network on greening the financial system. this forum focuses on climate risk management in the financial sector and fosters the transition toward a sustainable economy. there is a clear economic case for building resilience to climate change as it may directly affect financial institutions β balance sheets. the bank has included climate change on its agenda and i will encourage all of you to do the same. i intend to engage with banks on this issue in the near future and request them to consider to what extent climate change is, or can be, factored in their decision - making process. 2 / 5 bis central bankers'speeches last but not least, we are constantly improving our regulatory framework to better align it with international standards and reinforce the soundness as well as the attractiveness of our financial industry. the bank is sparing no effort to support the country β s strategy to become a leading regional financial hub. in line with the country β s africa strategy, the development of regional payment facilities will be accelerated to transform mauritius into a gateway for cross - border payments. before proceeding to the second part of my speech, let me spend a few minutes on two specific issues. the quality of macroeconomic statistics is of utmost importance in policymaking. as the official compiler of external sector statistics, the bank has to measure cross - border transactions and reflect them in the balance of payments and international investment position for mauritius. the bank has been conducting an annual foreign assets and liabilities survey ( fals ) with entities from various sectors, which calls for specific information on our country β s foreign assets | harvesh seegolam : banking resilience - global and domestic perspectives keynote address by mr harvesh seegolam, governor of the bank of mauritius, on the maiden edition of the bank of mauritius thought leadership series on β banking resilience : global and domestic perspectives β, 23 july 2021. * * * first deputy governor second deputy governor chairman of omfif members of the bank of mauritius advisory committee chairperson and ceo of the mauritius bankers association ceos of banks ladies and gentlemen a very good morning and afternoon, depending from where you are joining us today. it is my pleasure to welcome you all to this maiden edition of the bank of mauritius thought leadership series. an initiative that the bank is bringing to the banking community and other stakeholders in general, on topical matters in this fast changing world in which we are today living. i wish to thank the omfif for partnering with the bank of mauritius for this inaugural edition. the bank β s thought leadership series will allow us to gain from the precious insights of worldacclaimed experts and personalities on key topics impacting, directly or indirectly, the banking and financial world. it will serve as an ongoing platform to generate ideas on how we need to adapt or re - adapt ourselves and our value propositions. this becomes even more important for highly open small - island economies, like mauritius, dependent on tourism and financial services. the bank of mauritius will make its thought leadership series a regular feature on topical matters. our choice of the theme for the debut of the thought leadership series β banking sector resilience : global and domestic perspectives β is explained by the importance of preserving stability and resilience of the banking and financial system amidst the global covid - 19 pandemic that has struck us since march last year. as a matter of coincidence, i started my governorship at the bank of mauritius with the outbreak of the pandemic. this theme is attracting significant attention globally. the bis, imf, oecd, omfif and many central bankers are relentlessly reflecting on how best to maintain stability and resilience of the banking sector. i am more than determined to continuously engage with our international partners as well as our local stakeholders in this ongoing reflection exercise. my objective has been to ensure that our banking and financial system stands the test of this unprecedented crisis that mauritius is facing. maintaining trust and confidence in the banking sector is a very high priority on my agenda. the more so that sound banks | 0.5 |
the light of the recent events. specifically, the calibration of deposit run - off rates embedded in the lcr and nsfr might need to be adjusted to reflect the increased speed of deposit withdrawals. in addition, one could legitimately ask whether deposit concentration ( which proved to be a key determinant of massive outflows in the svb case ) should play a role in the formulation of the ratios. also, the us cases question whether the current regulatory framework is able to capture the risk of excessive maturity mismatch ( i. e. that the duration of banks β funding sources is not properly matched to that of their assets ). the nsfr was designed with this risk in mind, but does not cover the entire maturity structure. specifically, it pools instruments with maturity of one year or more, hence it is unable to differentiate between these securities, based on svb β s accounting choices, were to be valued at amortised cost, meaning that the bank did not need to record unrealised losses in the balance sheet or in the profit and loss statement ( unless it had been forced to sell them ). recall that the failed us banks were not subjected to the basel standards. board of governors of the federal reserve system, cit., states that in december 2022 svb would have reported a breach of the lcr requirement, but not for the nsfr. similar results are in two posts by g. feldberg, lessons from applying the liquidity coverage ratio to silicon valley bank, yale school of management, march 2023, and silicon valley bank β s liquidity, part two : what about the net stable funding ratio?, april 2023. assets and liabilities with a 18 months ( say ) maturity vs those with a 10 years maturity, or even longer. moving to the supervisory aspects, it is worth recalling that the basel framework requires supervisors to adopt liquidity risk monitoring tools and early warning indicators which should allow them to adopt corrective measures where needed. indeed, supervisors do collect detailed data on liquidity risks, evaluate the soundness of banks β liquidity management and can impose additional requirement within the so - called pillar 2 framework in case they detect shortcomings. 13 however, apparently there is little or no harmonization across authorities in the liquidity indicators and, more importantly, in the methodologies to integrate them in the supervisory process. while pillar 2 add - ons are routinely imposed in the capital framework, add - | knowledge hub, bringing its expertise to key development operations in africa. africa's development is critical to achieving the world bank's own goals of poverty eradication and shared prosperity, but it is also essential to a stable global economy and to providing a future for the hundreds of millions of young people who join africa's 2 / 3 bis - central bankers'speeches workforce each year. finally, it would also help alleviate the inevitable migratory pressures. italy's position β at the crossroads of the mediterranean β makes it uniquely well - placed to play an important role in the development of the african continent. the recently launched'piano mattei'reaffirms italy's commitment to the common goal of fighting poverty, reducing inequalities and promoting sustainable growth, while addressing pressing global challenges such as climate change, pandemics and migration. it demonstrates italy's intention to promote high - impact operations in partnership with africa. banca d'italia is ready to work with the world bank, putting its skills and expertise at the service of promoting development in emerging countries, especially in africa. * * * today's conference is an important occasion for developing comprehensive and effective engagement with african countries. i would like to thank the organizers for putting together an impressive programme. i would also like to thank the keynote speakers, the panellists, the moderators and all of you for attending. i look forward to hearing from president banga, governor kalyalya and governor kganyago. the thematic panels β on energy, jobs and digital infrastructure β will delve into some of the key aspects of any growth process and highlight the strategies needed to stimulate investment in these sectors. if we are to build a more balanced, stable and prosperous global economy, then africa's challenges cannot but also be the world's challenges. while we will not resolve all the issues on the table today, i am confident that our discussions will help deepen our understanding of the complex matters at stake and identify viable ways forward. together, through open dialogue and cooperation, we can move closer to fostering a future that benefits not only africa, but the global community as a whole. 1 the loans granted by the world bank, subdivided into eight ( different ) tranches from 1951 to 1965, amounted to about $ 400 million. the idea of acting on the economy as a whole, and not on single projects β was established on the basis of the'big push'theory, a brainchild of paul rosen | 0.5 |
njuguna ndung β u : consolidated bank of kenya β s new look remarks by prof njuguna ndung β u, governor of the central bank of kenya, at the unveiling of the consolidated bank of kenya β s new look, nairobi, 4 june 2010. * * * eunice kagane, chairlady, consolidated bank of kenya ltd ; mr. david ndegwa wachira, chief executive officer, consolidated bank of kenya ltd ; board members ; management and staff ; distinguished guests ; ladies and gentlemen : 1. i am delighted to have been invited to this auspicious occasion of unveiling the new look of consolidated bank of kenya. allow me at this early juncture to commend the board, management and staff of consolidated bank of kenya for their contribution in the growth of the institution from the reigns of the failed institutions of the 1980 β s to where it is currently. it is a stark reminder of our failures in the past and how we have managed to turn it into an opportunity. the re - branding identity is a significant development aimed at achieving this goal. 2. i am aware that consolidated bank of kenya has come a long way since it was incorporated in 1989 under the financial sector reform program established by the government with the objective of taking over and re - structuring various troubled institutions. the process of rationalising, reorganising and re - structuring of the failed institutions into a viable professionally managed commercial bank was initially expected to take about five years and thereafter its shares were to be sold to the public. however, the institution β s mandate was changed in 2001 to operate as a fully fledged commercial bank offering a full range of both retail and corporate banking services. 3. the banking industry has become very competitive in the recent past and for you to compete effectively within your market niche you need to keep abreast of various innovative technological advancements that will support the service platform of your market niche. it is therefore important that this re - branding is seen not only in terms of a corporate identity but should also reflect an improved service delivery by the institution as well. 4. the government of kenya unveiled the country β s development blueprint, β vision 2030 β in 2008. the vision for the financial sector is to β create a vibrant and globally competitive financial sector, driving high levels of savings and financing kenya β s investment needs β to achieve this, the banking sector is expected to increase efficiency and | banking services reach especially to rural areas to help drive increased domestic savings. 5. in this regard, it is imperative for stakeholders to explore mechanisms to deliver financial services and push forward the financial inclusion frontiers in tandem with vision 2030. as a first step in pushing the initiative forward, the banking act was amended through the finance act 2009 permitting banks to use third parties ( agent banking ) to provide certain banking services on their behalf. i take this opportunity to urge banks to take advantage of the new provision. the agent banking model was designed to assist banks to lower their cost of offering banking services while at the same time improving their earnings as more kenyans are offered an opportunity to access financial services. 6. the kenyan banking sector continues to perform well despite the global financial turbulences and challenges on the domestic front. the sector β s total assets increased by 21 % from ksh. 1. 20 trillion in march 2009 to ksh. 1. 45 trillion in march 2010 whereas deposits increased by 23 % to ksh. 1. 14 trillion over the same period. profit before tax for the sector increased by 33 % from ksh. 12. 8 billion in the first quarter of 2009 to ksh. 17. 0 billion in the first quarter of 2010. this is remarkable, especially against the backdrop of domestic shocks and global financial crisis. 7. despite the impressive performance by banks, customers still have to contend with high borrowing costs. although many banks have responded to central bank β s plea of lowering interest rates, it is our expectation that all the banks should follow to support the economic growth via the support of expanded private sector credit at an affordable cost. on our part, we should now ask the real sector to access and negotiate credit in line with their potential investment. 8. finally, let me reiterate that central bank and indeed the government of kenya will continue to pursue policies that create a conducive environment for growth of the financial sector and encourage the provision of banking services to majority of the un - banked kenyan population at affordable cost. for us to be successful in this, we need to support strong institutional growth and remove underlying constraints that inhibit growth and financial reach. 9. with these few remarks ladies and gentlemen, it is now my honour and pleasure to declare the new brand of consolidated bank of kenya officially launched. thank you and god bless you all. | 1 |
financial markets, allowing domestic and international investors to allocate economic resources more efficiently. and it lowers the cost of global capital market financing for euro area borrowers, including corporations, financial institutions and public entities, thus benefiting firms, households and taxpayers. of course, the international role of the euro also brings challenges, such as greater exposure to global foreign financial developments and potential changes to the monetary policy transmission process. the international benefits of sharing a currency go beyond the monetary sphere. in a world with deep economic and financial interlinkages, international cooperation is essential and we can more effectively promote european ideas and interests by speaking together. indeed, the euro area β s voice has been crucial in strengthening the international financial regulatory framework after the global financial crisis. today, the single supervisory mechanism is the largest banking supervisor globally and successfully contributes to shaping the international supervisory framework. since the global financial and euro area debt crises, however, the euro β s international role seems to have gradually eroded. while its importance as the currency of invoice for international trade transactions has remained broadly stable, its role in global foreign reserves and global debt markets has declined. this decline is a symptom of the fault lines in emu exposed by the crises. concerns about the resilience of the emu architecture and about financial fragmentation underpinned this erosion. indeed, stability, financial depth and liquidity are among the key determinants of an international currency. european policymakers are now paying closer attention and various calls have been made in recent months for the euro to assume a stronger international role. the euro summit of 2 / 4 bis central bankers'speeches december 2018 encouraged work to be taken forward to this end. the international role of the euro is supported by the pursuit of sound economic policies in the euro area and a deeper and more complete emu. and this requires further efforts along the path of deeper integration. completing the economic and monetary union the past 20 years have revealed beyond doubt how challenging ensuring economic prosperity and stability can be. this was true both inside and outside the euro area. nonetheless, these years also demonstrated that such a shared challenge is best faced collectively. to realise in full the benefits of the euro, we need to have the same components that made the euro a reality in 1999. on the one hand, we need national reforms to promote sustainable economic convergence. under any monetary system, higher growth potential can only be achieved through continuous reform efforts. as the convergence process is primarily driven by structural factors, | this is a key responsibility of member states. on the other hand, europe can make a difference by supporting and facilitating such reform efforts. our togetherness represents a unique competitive advantage, and we should capitalise on this. first, we can build on the synergies between emu and the single market. the single market is indeed one of the most powerful tools we have to unlock the mechanisms that will raise productivity. in particular, a genuine capital markets union ( cmu ) would not only ease and diversify access to funds for households and firms, thus fostering investment and innovation. it would also enable risk diversification and thus compensate for temporary drops in activity locally β the so called private risk - sharing β, thereby reinforcing the overall resilience of emu. second, it is essential to complete the projects that we initiated during the crisis, namely the banking union. together with cmu, a complete banking union would deliver meaningful private risk sharing that is currently lacking in the euro area in comparison to the us. but private risk sharing, to be effective, needs to be supported by other policies. we should thus rekindle trust in our economic and fiscal framework, by making it more effective in ensuring sound policy making at national level. these actions can also be further supported at the european level by the recent decisions to launch an instrument for convergence and competitiveness for the euro area. to tackle future cyclical crises, the two layers of protection against shocks β the diversification of risk through the private financial system on the one hand, and public countercyclical support through fiscal instruments at the national and european levels on the other β need to interact in a complete and efficient manner. achieving these reforms is not idealistic, nor utopian if we work together. and at the euro summit in december, leaders renewed their political commitment to strengthen emu. if we want to realise in full the benefits of the euro, we need to capitalise on this commitment and translate it into concrete policy actions. conclusion mr chairman, honourable members of the economic and monetary affairs committee, 3 / 4 bis central bankers'speeches i have used the word β together β several times today. as this is the last time that we will be together in this legislative term, let me add a few words to you personally. i would like to thank you all for the role that this committee has played over the past years. in my first hearing here, i remember saying that was my first exercise in democratic | 1 |
europe is ongoing. the extent to which the act will be effective, will also depend on the budget that the administration intends to provide to the sec. but what europeans in any event need to appreciate, is the comprehensiveness of the us approach. the eu in its turn has launched a major effort to improve its members'corporate governance regimes. also, the eu adopted the regulations which require the use of ias by eu listed companies in 2005. this deadline will require eu member states to step up their transition from national to ias. in addition, the eu supports global convergence through the ias process on important accounting issues, such as the treatment of financial instruments, performance reporting, consolidation and share - based payments. furthermore, expanded rules on auditor independence are being drafted. concluding remarks let me conclude. the subject of my address, accounting standards, transparency and supervision, is fairly complicated and has many aspects. first, although confidence in financial reporting has waned, this is due to many factors, of which accounting deficiencies are only one, albeit important element. moreover, these factors are being redressed where possible. second, accounting standards need to be adapted regularly to new developments in business and finance. this is not easy, given the many innovations being introduced all the time. not only do accounting standards need adjusting, the broader corporate governance context needs to be addressed as well. third, greater transparency, through public disclosure and improving market discipline is vital to restoring public confidence. fourth, although prudential supervisors encourage transparency, this is no panacea. transparency cannot do without adequate supervision and oversight. finally, i haven β t said much today about auditing. but if ever there was a need for high quality auditors, it is now. thank you. | on real - sector developments over the fourth quarter has confirmed our projections for a weak aggregate demand and below - potential economic growth. however, it has shifted to the downside the balance of risks around the projection. low business and consumer confidence, sluggish labour market and tight lending terms continue to weigh on private demand. disposable income increased and consumer balances were liquid. however, consumers are reluctant to spend and tend to save. on the other hand, lack of final demand and unutilised capacities curbed private investments. the latest data on external trade show an annualised 13. 5 % widening of the trade deficit for december. exports of goods continued to trend up but import growth at double - digit paces bis central bankers β speeches led to a higher trade deficit for this period. imports widened as traders intensified their importing activity, one month in advance, awaiting the entry into force of the new fiscal package in january 2014. imports rose 15. 8 %, while exports rose 19. 5 %. fiscal policy was easing in 2013, giving 1. 3 percentage points impulse to economic growth. fiscal stimulus was reflected in higher expenditures and lower fiscal revenues. thus, budget spending increased 4. 7 % in annual terms, while fiscal revenues fell 0. 5 %. however, budget deficit was lower than expected, reaching 4. 8 % of the gross domestic product, from 6. 2 % projected. in 2014, the fiscal policy is expected to be cautious, reducing the budget deficit and fiscal stimulus. in view of this policy, arrears payment will improve the private sector balances and will create better conditions for the recovery of demand. the bank of albania has requested and supported taking of measures to maintain public debt sustainability. in spite of short - term costs, maintaining public debt at subdued and sustainable levels would lead to lower uncertainty, higher space for private sector and higher flexibility of public finances. in a longer term, we deem that an efficient and transparent fiscal rule should be adopted. in response to easing monetary policy and calm liquidity situation, financial markets appear calm in terms of trading and tend to slightly reduce the interest rates. the inter - bank market is characterised by higher volumes and low interest rates. following the seasonal increase at year start, the government security yields tended to fall again in february but did not reach december β s levels. as already expected, deposit and loan interest rates fell over the last months. monetary indicators performed in line with the real - economy developments and | 0 |
participants in their role as submitters and benchmark administrators. and above all, recognizing that every system is in a process of constant evolution. while a transition from polled rates to actual traded rates is a justifiable trend in the post - gfc world, it may serve us well to remember that a traded price is stale, its pricing information is no longer relevant. perhaps we would move towards a more relevant basis for benchmarks in the future. and that would require all of us to be constantly striving to create better benchmarks. | liquidity. to this end, measures enabling non - residents to undertake transactions with authorised dealer banks in india ; providing indian banks with access to offshore markets to undertake non - deliverable transactions etc., have been taken. for the benefits to accrue to pricing ( and therefore benchmarks ) it is necessary that price impulses move freely from onshore to offshore and vice versa. among other things, this may require linked and interoperable infrastructure, common market - makers across the segments and eventually a frictionless channel for investors to move from one market to the other. there is a strong case to work towards a long - term solution to this segmentation d. extra territoriality β a probably unintended consequence of the post - gfc drive towards de - risking otc derivatives markets has been the tendency of developed economies to contain the risk of their entities by attempting to maintain control of regulation and risk management practices of third countries. thus, for example, european banks may not be able to operate through indian financial infrastructure entities ( like ccps, benchmark administrators, etc. ), unless their home regulator accords β equivalence β treatment to the indian infrastructure entities or these entities are endorsed or recognized. such treatment involves ability to call for information, supervise, inspect and ( at least potentially ) impose penalty on indian entities. this amounts to an unfortunate interference in the regulatory architecture in india, especially given the fact that these indian entities meet relevant global best standards, set by committee on payments and market infrastructures ( cpmi ) - iosco. similar extrajurisdictional overreach is hanging over fbil as well. the potential disruption to forex markets, both onshore and ndf, can be rather serious. that such disruption flows from the action of regulators is not in alignment with the post - gfc global consensus on de - risking financial markets. all regulated entities understand the costs and constraints of compliance. it cannot be anyone β s argument that replicating such obligations for every regulator in every jurisdiction is an efficient arrangement. a satisfactory solution to this impending complication needs to be found quickly. 21. as we all understand, a benchmark is as good as the underlying market. developing good benchmarks is eventually dependent on developing deep and liquid financial markets, which is an ongoing and drawn - out process. meanwhile, effort can focus on improving the integrity and credibility of the benchmark process. this requires achieving a balance between good statistical techniques and realistic subjective judgement, of both market | 1 |
richard byles : jamaica's recent inflation performance and outlook statement by mr richard byles, governor of the bank of jamaica, to the standing finance committee of parliament, kingston, 23 july 2024. * * * good afternoon : bank of jamaica welcomes this opportunity to once again appear at the standing finance committee to discuss our conduct of monetary policy. the monetary policy report for the six - month period ending march 2024 was tabled in accordance with the bank of jamaica act. my remarks will largely be focussed on our recent policy decisions, which are aimed at fulfilling our primary mandate of price stability, as well as to update the committee on other relevant developments. recent monetary policy developments over the past three years, bank of jamaica ( boj ) has tightened monetary policy by utilising a three - pronged approach. specifically, the bank has : ( i ) increased the policy rate by 650 basis points to 7. 0 per cent, which resulted in small increases in dtis'loan rates and moderate increases in their deposit rates ; ( ii ) tightened jamaica dollar liquidity in the money market using our open market operations, which led to increases in private money market interest rates ; and ( iii ) utilised our foreign reserves to maintain relative stability in the foreign exchange market. this tight monetary policy stance was appropriate given that inflation had significantly increased from a low of 3. 8 per cent at april 2021 to a high of 11. 8 per cent at april 2022 and, thereafter, remained outside the target range of 4. 0 to 6. 0 per cent for several months. the bank's policy actions were designed to reduce inflation by constraining domestic aggregate demand and minimising the impact of imported inflation by inducing more stability in the foreign exchange market. the incoming data for inflation, inflation expectations, wage increases and the balance of payments suggest that there has been significant success in the fight against high inflation in jamaica. in this context, on 28 june 2024, bank of jamaica ( boj ) announced the monetary policy committee's ( mpc's ) decision to start a gradual easing of its monetary policy stance. the first step involves gradually reducing boj's absorption of liquidity from dtis through open market operations, thereby facilitating : ( a ) the channelling of additional credit to the productive sector ; and ( b ) gradual reductions in money market interest rates. however, the mpc decided to maintain the policy rate at 7. 0 % at this time and | system. measures are also needed to tackle negative systemic developments resulting from the interaction of individual decisions even when well - founded β measures which aim to mitigate negative systemic effects on the stability of financial institutions. such measures would be incumbent upon the financial literacy and skills of the economic agents and, in particular, their 1 / 3 bis central bankers'speeches ability to interpret the signs that result from the intervention of the prudential authorities. as a rule, a reduced capacity to interpret this intervention creates a greater risk of a bubble developing in the market and as a consequence determines a need for more interventionist prudential measures on the credit granting side or on the savings application side, to guarantee financial stability. financial literacy and education are therefore key for financial stability and for the nature of conduct and macroprudential supervision policies. in short, to safeguard financial stability, it is not enough to monitor individual choices or to regulate the conduct of banking institutions with their customers. it is also necessary to monitor the system as a whole, to mitigate the negative externalities of individual actions, as well as the supervision of each financial institution to ensure its financial strength, in particular its capacity to absorb the risks resulting from the application of the resources entrusted to it. the relevance of financial literacy and education has increased even more with the globalisation of markets and growing sophistication of products. widespread access to banking products and services that are ever more diverse and complex and the emergence of new sales channels have all brought new risk sources. we have therefore seen, at international level, the progressive strengthening of the framework of rights granted to banking customers, a broadening of areas of intervention for conduct supervision and more intrusive action by the supervisors. the objective is to encourage the adaptation of products and services to the characteristics and needs of customers and prevent conflicts between the interests of customers and institutions. financial information and education for banking customers has also come to be seen as a structural dimension of banking conduct supervision, complementary to regulation and oversight. more informed customers and with a greater ability to understand the characteristics of banking products and services are generally more attentive and demanding. they are also better prepared to choose banking products and services more suited to their financial situation, needs and risk profile, thus contributing to the efficient operation of the market and to safeguard financial stability. banco de portugal β s conduct supervision strategy banco de portugal began exercising its conduct supervision mandate at the outbreak of the international financial crisis. we have adopted a strategy based on three | 0 |
heavily influenced by the inflation experience in one β s own lifetime, which implies that decades of too low inflation can become embedded in expectations. indeed, we have seen some worrying signs of a deterioration of measures of longer - run inflation expectations in recent years, as seen in table 2. importantly, this sustained undershoot of the inflation target is likely to be a recurring dilemma for the fed and central banks in japan and europe that have had similar experiences over the past decade. this problem of inflation running chronically below the target stems in part from the limited ability of central banks to offset economic downturns due to the lower bound on interest rates in a low - neutral - rate environment. 7 implications for the monetary policy framework the risk of the inflation expectations anchor slipping toward shore calls for a reassessment of the dominant inflation targeting framework. 8 a number of alternative frameworks and strategies have been proposed that hold the promise of better achieving the inflation goal and holding fast the inflation anchor. 9 in this regard, i am very pleased that the federal reserve is undertaking a review of our policy framework this year, a topic that federal reserve vice chairman clarida will discuss in his lunch remarks today. in summary, the phillips curve is alive and well. i wholeheartedly agree with the authors that we 3 / 4 bis central bankers'speeches must not be complacent about inflation expectations becoming unmoored, whether at too high or too low a level. see john c. williams, inflation persistence in an era of well - anchored inflation expectations, federal reserve bank of san francisco economic letter 2006 β 27, october 13, 2006. 2 see more amazon effects : online competition and pricing behaviors, jackson hole economic symposium conference proceedings ; federal reserve bank of kansas city, 2018. 3 see alan s. blinder, economic policy and the great stagflation, academic press, 1979 4 see tim mahedy and adam shapiro, what β s down with inflation? frbsf economic letter 2017 β 35, november 27, 2017, and andrea tambalotti, stefano eusepi, and bart hobijn, condi : a cost - of - nominal - distortions index, american economic journal : macroeconomics, 3 ( 3 ) : 53 β 91, july 2011. 5 see james h. stock and mark w. watson, slack and cyclically sensitive inflation, working paper. 6 see ulrike malmendier and stefan nagel, learning from inflation experiences, | john c williams : discussion of " prospects for inflation in a high pressure economy : is the phillips curve dead or is it just hibernating? " by peter hooper, frederic s. mishkin, and amir sufi remarks by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at the us monetary policy forum, new york city, 22 february 2019. * * * accompanyting tables and figures of the speech. as prepared for delivery. the phillips curve is the connective tissue between the federal reserve β s dual mandate goals of maximum employment and price stability. despite regular declarations of its demise, the phillips curve has endured. it is useful, both as an empirical basis for forecasting and for monetary policy analysis. the paper by peter hooper, rick mishkin, and amir sufi β hms for short β provides an in - depth analysis of key aspects of inflation dynamics in the united states and how they may have changed. this study is particularly timely against the backdrop of an emerging consensus that the phillips curve has become nearly flat. if this is true it would fundamentally alter the employment - inflation trade - offs the fed confronts. there is a lot to like about this paper : it synthesizes existing research, new analysis, and bridges the study of wages and prices. too often these are studied in isolation. but most significant, as someone who has discussed papers at the usmpf that reached the century mark in page count, this year β s paper came in at a relatively svelte 65 pages. i hope this represents a durable structural shift, and isn β t merely a reflection of the fact that this year β s paper has three authors rather than the usual four. the paper covers a lot of ground, so i will only summarize a few key takeaways. first, hms find evidence of asymmetric effects of unemployment on both price and wage inflation, with very low rates of unemployment leading to disproportionately large movements in inflation. that is, the phillips curve is very much alive in very tight labor markets. second, they find that the dynamics of price inflation have changed in important ways ; specifically, it has become less sensitive to the business cycle and less persistent. finally, they draw the policy conclusion that fed policymakers should not be complacent about the possibility of a resurgence of inflation in the context of a tight labor market. in my remarks, i will discuss two issues. first | 1 |
6 4 / 12 / 2019 progress on benchmark reform | speeches | rba one issue that has been generating quite a bit of angst in the region is the impact of the european union's benchmarks regulation ( bmr ). under the bmr, eu supervised entities β including banks and ccps ( central counterparties ) β can only use benchmarks that are registered in the eu. to achieve this status, benchmarks administered outside the eu would need to be in a jurisdiction with a legal framework judged by the eu to be β equivalent β to the bmr, or would need to substantially comply with the bmr. the eu had set a deadline of 1 january 2020, but has recently announced a two year extension. [ 13 ] this is a welcome development, and provides administrators in the region with valuable additional time to comply with the requirements of the bmr. in addition, the eu has recently issued draft decisions recognising the australian and singaporean regulatory regimes as equivalent to the bmr. this means that benchmarks such as bbsw and sor can continue to be used in the eu after 1 january 2022. conclusion there are three main points i would like to leave you with concerning interest - rate benchmarks. first, the end of libor is approaching. market participants should continue preparing for this by transitioning to alternative risk - free rates. second, it is prudent for users of all benchmarks to have robust fall - back provisions in their contracts, not just those referencing libor. isda's work on fall - backs is progressing well, and we encourage all users of interest - rate benchmarks to adopt isda's fall - backs once they are finalised. third, most jurisdictions in the asia - pacific region have chosen to strengthen their credit - based benchmarks. this includes australia, where bbsw remains robust. credit - based benchmarks can coexist alongside risk - free rates when they are supported by liquid underlying markets. users can then choose the benchmark that is most appropriate for their circumstances. endnotes [ * ] i would like to thank ellis connolly for all his work in this area. see bailey a ( 2017 ), β the future of libor β, speech at bloomberg london, 27 july. available at : < https : / / www. fca. org. uk / news / speeches / the - future - of - libor >. i have talked about | this issue previously : debelle g ( 2018 ), β interest rate benchmark reform β speech at isda forum, hong kong, 15 may ; debelle g ( 2017 ), β interest rate benchmarks β, speech at finsia signature event : the regulators, sydney, 8 september ; debelle g ( 2016 ), β interest rate benchmarks β, speech at kanganews debt capital markets summit 2016, sydney 22 february ; debelle g ( 2015 ), β benchmarks β, speech at bloomberg summit, sydney, 18 november. this is in notional value terms. see butler m ( 2019 ), β ending reliance on libor : overview of progress made on transition to overnight risk - free rates and what remains to be done β, speech at the investment association london, 21 february. available at : < https : / / www. fca. org. uk / news / speeches / ending - reliance - libor - overview - progress - madetransition - overnight - risk - free - rates - and - what - remains >. see working group on sterling risk - free reference rates ( 2018 ), β term sonia reference rates consultation β summary of responses β, november. available at : https : / / www. rba. gov. au / speeches / 2019 / sp - dg - 2019 - 04 - 11. html 5 / 6 4 / 12 / 2019 progress on benchmark reform | speeches | rba < https : / / www. bankofengland. co. uk / - / media / boe / files / markets / benchmarks / term - sonia - reference - rates - consultationsummary - of - responses. pdf? la = en & hash = cfd2ab11a3156b31cb15030962eca9987befced8 > see national working group on chf reference interest rates ( 2018 ), β minutes from the meeting of the national working group on chf reference interest rates ( 31 october 2018 ) β, 14 november. available at : < https : / / www. snb. ch / n / mmr / reference / minutes _ 20181031 / source / minutes _ 20181031. n. pdf > see financial stability board ( 2018 ), β interest rate benchmark reform β overnight risk - free rates and term rates β, 12 july. available at < http : / / www. fsb. org / wp - content | 1 |
own staff. this would require strong public secondary education, diploma studies, and postgraduate studies, and not necessarily public vocational education. ( there are examples of such an approach primarily in the it and telecommunications areas. ) β’ the second possibility is state - commissioned education. since investments into human capital promote innovation and bring about other positive effects, state investments into the area are justified as the private sector invests less than is socially optimal. estonia is quite progressive in that field - we spend 6 - 7 % of the gdp on education, which is more than in other transition countries and similar to the respective levels in finland and sweden. β’ even though state - controlled development of human capital requires increased spendings from the national budget, it is relevant that some of the expenditure will be later recovered through additional receipts since rising productivity and employment boost tax revenues. β’ the third option is to secure as efficient as possible operation of the education market in the private sector where people themselves pay for their education. one possibility to contribute to this is, for example, through carefully planned implementation of the system of education capital units that has already been under discussion, in the similar way to the pension insurance system that has been successfully launced. when we know which areas will boost estonia's competitiveness, we should make sure that those who pay for their education themselves would choose the right specialities ( they should be motivated by the fact that their anticipated pay is going to be higher - hence they would be willing to bear higher costs ). currently the problem in estonia is that people choose law and business specialities where the external impact is small, and fewer engineering professions, mathematics, etc. where the external impact is presumably high. β’ probably the main problem here is lack of information. in order to secure improved circulation of information, future students should be systematically informed of the differences in pay and the opportunities of finding employment in different areas - however, pay differences today do not always reflect what is to become in the future. for example, the excessive supply in business specialities compared to other areas should lower entry - level salaries. another area about which students should be systematically informed is the level of schools. if the aim of the upper secondary school is to send students on to higher educational establishments, the percentages of those admitted to universities should be publicised on a permanent basis. this requires the state to take action. β’ developing an integral framework for supporting innovative activities - including measures related to labour quality and promoting innovation as well as venture capital | least three factors : firstly, educated and competent people ; secondly, a well - functioning financial system covering the whole chain of innovation ; and thirdly, a culture favouring innovation and entrepreneurship. β’ is estonian labour really competitive? do we want to be price or quality leaders? if the goal is to be price leaders, our salaries should be as low as possible. if we want to be quality leaders, the situation is vice versa. in order to generate innovation, innovative people have to be raised in estonia, brought to estonia - and kept in estonia, hence the aim should be to create more high - productivity jobs. β’ i maintain that being a part of europe, we should become quality leaders since we have already lost the price leader position to asia. this is undoubtedly easier to say than to do. here we face the threat of outpacing the so - called natural development, which calls for step - by - step industrial development towards manufacturing products with increased added value - such a development is in fact currently under way in estonia. on the other hand, the payback period of such investments is very long and the experience of several countries ( including finland and ireland ) has shown that success often arrives only decades later. consequently - if it is our goal to become a quality leader, development activities in this direction should be launched as soon as possible. β’ here we come to the question, where to start? the answer requires a good prediction or even a vision : which areas have enough potential in estonia that are worth to be given systematic development priority. it is possible that due to its small size estonia lacks any potential for developing high - technology industry since this would require the emergence of clusters. even if we manage to develop our own high - technology industry, sufficiently high - level know - how will most likely emerge only in few fields. however, this does not mean that we should develop just a few areas. according to the principle of risk - spreading, it would still be better to support research and development activities on quite a broad basis. β’ the economic analyses by the central bank consistently emphasise that in order to obtain financial capital required for development, estonia must remain attractive in the eyes of foreign investors also in the future. however, in order to boost the country's competitiveness it would be a good idea to adopt a more carefully planned system of investments into human capital and set up a framework for financing innovation. β’ there are many possibilities to do that. firstly, large companies could train their | 1 |
barry whiteside : the importance of credit unions closing remarks by mr barry whiteside, governor of the reserve bank of fiji, at the 7th pacific credit union technical congress, suva, 7 november 2014. * * * salutations the chairman of the oceania confederation of credit union leagues, the president of the fiji savings and credit union league, members of the board of the oceania confederation of credit union leagues, my fellow governor, loi bakani, bank png distinguished guests, ladies and gentlemen. a very good afternoon to you all! introductory remarks at the outset i thank the organizers for inviting me to deliver this closing address to your congress. i am truly honoured. i guess after four days of meetings, workshops and intense technical deliberations you must all be more than ready to let your hair down and just relax! please allow me a little more of your time. i note from the programme, that you have had an opportunity to delve into some very pertinent and relevant topics. this capacity building forum affirms the important relationship between appropriately resourcing your people and the quality of governance standards. i congratulate the organizers for combining an excellent agenda with distinguished and knowledgeable speakers and i am sure you have much to take away. while i understand it has been a long week and i am standing between the graduation and the exciting cultural event, i would like to take just a little of your time to make a few remarks as you chart the way forward for development, and growth. reassurance of the importance of credit unions just like prime minister bainimarama stated when he opened this technical congress, i echo his sentiments on the critical role that credit unions play. as intermediaries you serve a broad base of members from all walks of life and income levels. the credit union movement continues to be a catalyst for greater financial inclusion. you encourage a savings culture and provide access to financial services and products for those who may face a number of barriers when dealing with financial institutions. in fiji, the large credit union membership accounts for approximately 5 percent of our labour force and this further confirms your importance in the financial system and economy. the key challenge for credit unions β corporate governance failure and absence of internal controls while we all agree on the importance of credit unions, tremendous constraints and challenges to your growth persist. these include poor corporate governance practices, ineffective regulatory oversight, archaic legislation, lack of internal controls and inadequate assessment and monitoring of risks. again the prime minister provided you | by more than the bank had expected, with more muted price pressures across a wide range of goods and services, consistent with the unexpected increase in excess capacity. bis central bankers β speeches β’ total cpi inflation has also been lower than anticipated, reflecting developments in core inflation and weaker - than - projected gasoline prices. β’ total cpi inflation is expected to remain around 1 per cent in the near term. it is expected to rise gradually, along with core inflation, to the 2 per cent target in the second half of 2014 as the economy returns to full capacity and inflation expectations remain well - anchored. β’ despite the reduction in global tail risks as a result of a series of actions by european and american authorities, the inflation outlook in canada is still subject to significant risks. β’ the three main upside risks to inflation in canada relate to the possibility of stronger - than - expected growth in the u. s. economy, higher canadian exports and renewed momentum in canadian residential investment. β’ the three main downside risks to inflation in canada relate to the european crisis, more protracted weakness in business investment and exports in canada, and the possibility that growth in canadian household spending could be weaker. β’ overall, the bank judges that the risks to the inflation outlook in canada are roughly balanced over the projection period. β’ reflecting all of these factors, the bank, on 23 january, maintained the target for the overnight rate at 1 per cent. β’ while some modest withdrawal of monetary policy stimulus will likely be required over time, consistent with achieving the 2 per cent inflation target, the more muted inflation outlook and the beginnings of a more constructive evolution of imbalances in the household sector suggest that the timing of any such withdrawal is less imminent than previously anticipated. with that, tiff and i would be pleased to take your questions. bis central bankers β speeches | 0 |
is not only on the weak productivity growth observed so far, but also on the strong wage growth at the current juncture. for germany, the latest wage deals have increased pay levels significantly. and relatively high wage settlements look set to be reached in the forthcoming pay negotiations as well. understandably, the trade unions are looking to achieve lasting compensation for the real wage losses accumulated over the past three years. because inflation compensation bonuses will only be exempt from taxes and social contributions until the end of this year, the trade unions are now stepping up their demands for permanent wage increases. the still high willingness to strike and persistent widespread shortage of labour suggest that wage growth will remain comparatively strong. the longer - term outlook, too, indicates that labour scarcity in germany will remain a key factor driving robust wage growth and thus high inflation in the domestic economy. in the euro area, growth in negotiated wages slowed significantly in the second quarter. however, this was due in part to a one - off effect in germany ( owing to inflation compensation bonuses paid out in the previous year but absent this year ). the persistent labour market tightness in the euro area means that a quick let - up in wage dynamics is unlikely. with wage pressures easing only slowly, the disinflation process is proving to be slow and arduous. right now, inflation is not yet where we on the ecb governing council want it to be. headline euro area inflation stood at 2. 2 % in august, down from 2. 6 % one month earlier. that significant decline mainly came about due to energy prices. whilst it is true that german inflation β as measured by the harmonised index of consumer 3 / 7 bis - central bankers'speeches prices β has reached 2. 0 %, i'm afraid to say that, for the time being, that level is probably not yet here to stay. services inflation in the euro area is still worryingly high, coming in at 4. 1 % at last count. core inflation has eased only marginally, dropping to 2. 8 %. according to the latest ecb staff projections, euro area price inflation will be back at the 2 % mark at the end of 2025. the journey there remains uncertain and include a few bends. for instance, inflation rates are expected to edge somewhat higher again towards the end of this year due to energy prices being in decline in the fourth quarter of last year. overall, though, we have made huge advances towards safeguarding price stability. | s claessens, r j herring and d schoenmaker, a safer world financial system : improving the resolution of systemic institutions, 2010. quoted from a turner, the turner review : a regulatory response to the banking crisis, march 2009. the fsb key attributes specifically mention the supervisory and resolution authorities, the central banks, the finance ministries and the bodies responsible for statutory deposit protection. bis central bankers β speeches october 2012. as the second component, the institutions themselves must submit plans describing how they envisage a potential restructuring and discuss them with supervisors. ideally, the supervisory authority would be able to take these plans out of the drawer in the early stages of a crisis and restructure the institution in cooperation with the resolution authority. this planning process is useful for the institutions as well. according to a recently published survey involving 19 big financial institutions, 40 % of those questioned claimed to have drawn up complete recovery plans. despite the costs involved, the majority of the surveyed institutions see the advantages in this planning process, for example in that they provide a better operational understanding of the business structures. 6 if restructuring is not possible or fails, the third component comes into play, namely that of resolution planning, which is to be developed by the authorities. the purpose of this is to prepare for the effective use of the resolution tools. the resolution of an institution has to be planned in such a way that systemically important functions performed by the institution are continued, the stability of the financial system is not jeopardised, and the use of taxpayers β money is avoided. 3. from standard - setting to the application of the new rules 3. 1 the european commission β s proposal for a directive ladies and gentlemen, these and other standards from the key attributes are a milestone on the road to containing the too - big - to - fail problem. on the one hand, the fact that international consensus has been reached with the backing of top g20 policymakers can be considered a success. on the other hand, a great deal of detailed work remains to be done since the fsb key attributes still have to be transposed into legal texts which, by necessity, have to be much more concrete than the international standard. just how difficult this is may be seen from the fact that the publication of an eu legislative proposal originally planned for the summer of 20117 has since been postponed several times, and has yet to be presented. i do appreciate the fact that, before making a publication, the european | 0.5 |
now improved considerably. almost all banks see climate - related and environmental risks as material financial risks and are adjusting their risk management step by step. [ 9 ] for this the banks are dependent on information from their customers β the forthcoming application of corporate sustainability reporting will provide banks with more reliable and comparable data. that β s good news β but a great deal more work lies ahead. banks need, for example, to further integrate climate - related and environmental risks into their strategic planning and stress tests. if they don β t meet our supervisory expectations, [ 11 ] we can take applicable measures, for example by requiring better risk management or higher capital. good risk management at banks and strong banking supervision thus support climate and environmental policy β but they are not a substitute for it. they are important components in the way our society deals with climate - related and environmental risks. today β s event is about working together for climate neutrality ( β zusammen fur klimaneutralitat β ). for me, this means that : we have a strong consensus in our society on climate - related and environmental objectives. over the next two decades, we want to move step by step to climate neutrality. there are many ways to reach this goal. adjustments in the relative prices of carbon dioxide are an important tool for making it more expensive to act in ways that harm the climate. but regulatory measures and social policies are also needed to ensure that vulnerable groups are not burdened more than necessary by changes in relative prices for co2. the best combination of these measures must be discussed across society and then decided at the political level. these decisions on climate and environmental policy form the basis for our work. banking supervision and regulation do not have climate policy objectives. but they do establish the framework within which banks must properly measure and assess climate - related and environmental risks, and build resilience. that creates transparency and stability at a time when the climate crisis is demanding a major transformation of european economies. stable banks are a key bridge on the road to a more sustainable future. 1. in slovenia, very heavy rain last year caused damage equivalent to 16 % of gdp. in the emilia - romagna region of northern italy floods produced β¬9 billion of damage. see european environment agency ( 2024 ), β european climate risk assessment β, eea report, no 01 / 2024 ; and hancock, a. ( 2024 ), β eu warned of rising risk of systemic financial shocks from continent warming β, financial times | . in particular, they noted that the federal reserve serves certain market segments that may not yet have demonstrated adequate market competition, specifically, providing check and ach services to low - volume banks and providing check services to banks throughout the country that need to collect checks drawn on small, remote banks. the rivlin committee concluded that the federal reserve should continue to provide check and ach services, with the objectives of enhancing efficiency, promoting integrity, and ensuring access. given the federal reserve β s current dominant market position in these services and the risk of disruption if the federal reserve were to exit quickly, this conclusion makes sense. the committee also concluded that we should play a more active role, working collaboratively with providers and users of the payments system, to help evolve strategies for moving to the next generation of payment instruments. future role of the federal reserve as service provider for the longer term, will the conclusion that the federal reserve should be a provider continue to be the correct one? this question hinges in large part on the extent to which the federal reserve β s participation is needed to ensure the smooth functioning of the payments system that achieves the four goals i outlined earlier and whether there are significant barriers to private firms entry into the interbank check and ach markets. in other words, we need to assess whether the federal reserve β s operational involvement in retail payment services would foster or impede competition and progress as the market for these payment services evolves. there has been much debate regarding the extent to which check markets are β contestable, β or truly subject to competition, particularly those segments of the market that only the federal reserve serves. are there significant barriers to competition in these markets? if so, can they be reduced? the federal reserve β s market position in some segments may simply indicate that there is insufficient volume to support more than one bank presenting checks to very low - volume endpoints. if that is the case, does this suggest that a private - sector provider could fill the gap if the fed were to exit this service? if the market will only support one provider, would potential entrants provide sufficient market discipline on that provider to ensure that the terms of its service are reasonable or would regulation be required? one possible barrier to correspondent banks providing services equivalent to the federal reserve β s is their more limited presentment abilities. as i will discuss shortly, we are currently evaluating this issue. private - sector entry into ach appears to face different obstacles. today, the ach service exhibits | 0 |
ravi menon : climate action through partnership, innovation, and finance speech by mr ravi menon, managing director of the monetary authority of singapore, at the climate leaders'assembly, singapore, 30 november 2023. * * * ladies and gentlemen, good afternoon. welcome to the inaugural climate leaders'assembly. on behalf of the cop28 singapore pavilion team, i would like to express our gratitude for the opportunity to co - host this event with bain & co. please also join me in thanking our organiser carbonless, catalyst sponsor aws, and co - conveners conservation international, gaea, and temasek for their contributions. let me begin by briefly reflecting on the state of the planet. it is not in a good place. first, the world is not on track to limit global warming to 1. 5 degrees celsius. to achieve the 1. 5 degrees celsius target, we need to reduce global greenhouse gas emissions by 43 % by 2030, compared to 2019 levels, and get to net zero by 2050. but as of this year, global emissions are still rising, not falling. at this rate, even if all current pledges under the paris agreement are met by 2030, global warming will reach between 2. 1 to 2. 8 degrees celsius by the end of the century. second, climate change is already happening. lives and livelihoods continue to be lost and impacted through climate disasters. we are seeing increased frequency of extreme storms, floods, wildfires, and heat waves. according to the world meteorological organisation, half of the planet has seen a rise in floods, and one third saw a surge in drought events. these are uncomfortable facts - they remind us of the gravity of the situation and the urgency of the task. that is why your presence today and at cop28 is so important. climate change is a global problem, and as global leaders, we must confront these issues with honesty and respond with solidarity. each of us here today comes to dubai with something to offer. we bring scientific knowledge, decarbonisation solutions, funding for a purpose, or a commitment to transition existing business models to more sustainable ones. 1 / 4 bis - central bankers'speeches we represent governments, businesses, financial institutions, technology companies, and philanthropies looking to build partnerships, accelerate innovation, and finance the transition. let me highlight three key themes for the climate leaders assembly, which will guide our discussions today : partnerships innovation finance | appropriate and comprehensive framework for the analysis of the links between money and credit expansion, asset price dynamics and price stability risks that can provide a solid basis for decision - taking and external communication. more generally, addressing the broader issue of how to minimise the risk of financial bubbles occurring requires the involvement of the private sector itself, financial market regulators and supervisors of financial institutions. monetary policy could, under certain circumstances, play a role in containing this risk, but it is certainly not the main instrument to help deal with the emergence, persistence or unwinding of financial imbalances. not least against the background of the market turmoil, we can ask the question : is there anything else that central banks could β or should β do to minimise the likelihood of significant financial market volatility and to strengthen the capacity of the financial system to absorb their consequences? the answer to this question involves various functions and potential actions of central banks, but i would like to stress the contribution which central banks can make by enhancing their monitoring of financial stability, by further developing the pertinent methodologies and models and improving the availability of the relevant data. this is, of course, no easy task. contagion effects and likely non - linearities in both the buildup of imbalances and their transmission across the financial system and to the real economy make the modelling of financial stability risks very complex. moreover, assessing and estimating the likelihood of typically low probability events β the famous β black swans β β is exceedingly challenging. there is no time now to discuss these matters in detail. allow me, however, to make three pertinent remarks in this context : first, all of the financial stability indicators that are currently being developed ( by the imf, central banks and in research institutions ) β be they indicators based on securities prices ( such as credit spreads, distances - to default, volatilities implied by options prices ), or β rule of thumb β thresholds derived from longer - term historical averages, fundamental equilibrium considerations, or from cross - country comparisons β certainly contain important information, but they are also subject to important inherent limitations. therefore, it is necessary to appropriately combine the information contained in various indicators and avoid excessive reliance on single indicators. 10 second, in order to create an internally consistent framework, or model, for analysing imbalances and monitoring financial stability, it is also necessary to identify linkages and channels of contagion within the financial sector β across markets, institutions | 0 |
delisle worrell : challenges and opportunities for barbados β ibfs sector remarks by dr delisle worrell, governor of the central bank of barbados, at the 5th annual international business and financial services sector conference, bridgetown, 10 april 2015. * * * this annual conference is an opportunity to reflect on the challenges and opportunities for barbados β ibfs sector, and to assess how we may improve on our performance and mastery of our circumstances. for all of our history barbadians have made our living as tiny players on a global market. by and large, over time, we have made a success of it, and as a result we now enjoy an enviable quality and style of life. the challenges we face in the ibfs sector are of the same nature as the challenges our economy has always faced in international competition with players much larger than ourselves. the lessons of our past are that you must know your strengths and operate well within them, you must make a game plan based on those strengths, you must arm yourself fully with research and information, you should implement your strategy in a flexible, responsive way, and you should prepare and commit yourself for the long haul. these are the lessons we must apply in facing the new challenges in the ibfs sector. we face new challenges, often referred to by acronyms such as beps, fatca, fapi rules, etc. they are well known and i do not need to repeat them here, but they are serious and they affect our canadian business, which is the bulk of our sector. in responding to the current challenges we are playing to our strengths. our value proposition is that international companies can establish subsidiaries in barbados to perform international transactional services that they would otherwise do in a major metropolis such as toronto or new york. they are able to reduce costs and be more competitive because wages for skilled professionals in barbados are so much lower. they are able to offer the same quality of service because barbados boasts international levels of social and economic infrastructure, and excellent communications with north america, europe and beyond. we have regulatory and legal oversight systems that are constantly being upgraded in light of guidance from the basel committee, the imf, the fsb, the fatf, the global forum and other international bodies. we have a large and expanding network of range dta β s and bit β s. we are constantly expanding our range of products. and we are not a tax haven ; companies operating in barbados, including ibc β s | , like the balance sheet. importantly, he distinguished between central bank purchases of short - term government securities, as the bank of japan was doing at that time, versus purchases of longer - term securities. marvin viewed purchases of short - term securities as ineffective under the zlb, while he saw purchases of longer - duration securities as potentially powerful owing to a β preferred habitat β motive on the part of investors. of course, large - scale asset purchases later became a tool of critical importance for easing financial conditions in the united states and abroad. although the consequences of the predicted y2k glitch were minimal, the zlb became a central issue when the financial crisis hit. thankfully, marvin, along with others, helped lay the intellectual groundwork and created the vocabulary for us to work through some of the most significant issues facing central banks. his work is a true emblem of how researchers play a vital role in informing and shaping the policy discussion. i look forward to the upcoming conversation. thank you. 1 jeffrey c. fuhrer and mark s. sniderman, conference summary, journal of money, credit and banking, volume 32, number 4, part 2, pp. 845 β 69, november 2000. 2 marvin goodfriend, overcoming the zero bound on interest rate policy, journal of money, credit and banking, volume 32, number 4, part 2, pp. 1007 β 35, november 2000. 3 board of governors of the federal reserve system, transcript of the federal open market committee meeting and presentation materials, january 29 β 30, 2002. 2 / 2 bis central bankers'speeches | 0 |
, the current crisis has brought them to the fore. the speed at which the crisis has spread across the globe indicates that the development of coherent and rigorous frameworks for maintaining financial stability came too late for several countries, leading to adhoc and inconsistent policy responses. ladies and gentlemen, over the years, we have witnessed a process of change that has allowed many financial organisations worldwide to adopt more flexible structures whereby they have established a wide range of subsidiaries and affiliates that are engaged in business lines different from the core business of the parent financial institution. we have seen banking activities, asset management or insurance activities that previously were conducted on a stand - alone basis now being provided within one financial group. this trend has steadily gained momentum in the eastern and southern african financial sector. some of these financial groups operate businesses across borders. the main economic and financial benefit which encourages the formation of such groups is the enhanced ability to achieve economies of scale and capture synergies across complementary financial services business lines. these synergies result in improved operational efficiency and effectiveness due to lower costs, reduced prices, and improved innovation in products and services. at the same time the emergence of such groups has brought complex linkages and relationships among economic agents. consequently, they have also necessitated a paradigm shift in supervisory approaches in order to identify, manage and monitor risks. it is evident in our various jurisdictions that current legislation and regulatory tools are not adequate to effectively address the potential risks that threaten the safety and soundness of our respective financial sectors posed by activities emanating from such financial groups. ladies and gentlemen, i do not want to dwell much on what should be addressed by this seminar. i am glad that mefmi and the fsi are conducting this seminar on consolidated supervision for the region at a time that our region is also exploring these topical issues. it is my hope that this seminar will equip participants with relevant skills as senior examiners to develop appropriate policies for their jurisdictions with respect to consolidated supervision as well as prepare them for the daunting challenge of actually implementing consolidated supervision in our various jurisdictions. it is also my expectation that you will leave this forum after three days, with a new mindset and a renewed commitment to practice what you will have learned so that you could contribute to improving supervisory frameworks in our various countries. i trust that the seminar will also provide you with an opportunity to network and establish durable and valuable professional contacts within the region. i wish to take this opportunity, on behalf of the mefm | caleb m fundanga : the history and experiences of the financial sector and regulatory framework in zambia address by dr caleb m fundanga, governor of the bank of zambia, at the co - operative bank capitalisation consultative forum β the history and experiences of the financial sector and regulatory framework in zambia β, lusaka, 3 march 2011. * * * the honourable minister of agriculture and co - operatives, hon eustarkio kazonga, m. p ; the board chairman of the co - operative bank zambia limited, mr mulilo kabesha ; members of the diplomatic corps ; distinguished invited guests ; ladies and gentlemen it is with great pleasure and privilege to speak to you at this very important consultative forum. i have been requested to speak briefly on the history and some of the experiences of the financial sector in zambia. ladies and gentlemen, as you are aware, considerable developments have been recorded in the zambia economy in general and the financial sector in particular, following the liberalization of the economy in the early 1990 β s. these developments include the proliferation of banks and non - bank financial institutions, which have necessitated the review of supervisory policies as well as the legal and regulatory frameworks in order re - align them to the liberalised environment. a significant development relating to the zambian financial sector was the decision to relocate the function of the registrar of banks and financial institutions to the bank of zambia from the ministry of finance and national planning where it was previously located. this decision was taken in an effort to enhance regulatory oversight of banks and financial institutions starting from the licensing stage. currently, all applicants have to be evaluated in line with relevant provisions of the banking and financial services act ( bfsa ) and international best practice such as the basel core principles on effective banking supervision. the intention is to ensure that only applicants who meet these stringent criteria enter the financial system in zambia. this is crucial for fostering confidence and stability in the financial system. mr chairman, you may be aware that in the early stages of the reforms, a number of commercial banks faced serious problems and were subsequently liquidated. the closures were in part a consequence of the reforms. the reforms also highlighted some weaknesses in corporate governance arrangements at most failed banks. however, following improvements in the regulatory and supervisory frameworks, no bank closure has been recorded since 2002 and the banking sector has recorded significant growth. the growth in the sector can also be attributed to prudent fiscal and monetary policies aimed at achieving sustainable macroeconomic stability. | 0.5 |
, we will continue to promote diversity. and we will foster a culture of inclusion based on mutual respect and appreciation. thank you for your attention. 3 / 3 bis - central bankers'speeches | garrison, once the defense hub of the british caribbean, were recently declared unesco world heritage sites. ) a major initiative is on to improve government β s facilitation of business, especially tourism and international business, and to make the system of fiscal incentives more efficient and transparent. barbadians remain confident of the future of our international business and financial centre in an interconnected digital world. the globalisation of commerce and finance is the present reality and the inexorable future of the 21st century, and small international financial centres like barbados play an essential role in improving the efficiency of international transactions and the competitiveness of international firms. there is a small but growing literature on this, bis central bankers β speeches including the forthcoming report on an international conference on this topic which barbados hosted on september 11. barbados bases its appeal to potential investors in our network of double taxation treaties ( dtas ) and tax information exchange agreements ( tieas ), and the fact that our regulatory framework is kept abreast of international standards through reviews by the imf, world bank, the financial action task force on anti - money laundering ( fatf ) and the global forum of the oecd on tax information. in addition the country boasts a small but growing cadre of skilled professionals, and highly competitive support services and infrastructure. barbados β growth strategy, led by our private sector, supported by reformed government services, incentives and infrastructure, will yield steadily improving, sustainable growth over the medium term. however, for 2014 the priority remains economic stabilisation and fiscal consolidation. so far the correction in the fiscal deficit is only about 2 percent of gdp, compared with almost 6 percent correction which is the target for the current fiscal year. the second half of the fiscal year is expected to yield larger gains, as some measures ( such a tax to cover waste management expenses ) are biased towards the second half. in addition, government is tightening fiscal controls with the recent establishment of an independent oversight body for state owned enterprises, and the barbados revenue authority, which began operations in april, is expected to improve the efficiency of revenue administration. the imf and the caribbean technical assistance centre are providing assistance with public financial management and tax policy. the service costs of barbados β sovereign external debt in 2014 are about 7 percent of the country β s foreign exchange earnings on the current account of the balance of payments, and are not expected to exceed 10 percent for the foreseeable future. the domestic financing needs for the target deficit of 6. | 0 |
##cius quote : β the man who asks a question is a fool for a minute, the man who does not ask is a fool for life β. that is why we keep asking. 1 see bis : red book statistics for cpmi countries. 2 see girocard. eu : figures for the first half of 2020. 3 see bis wp 880 : rise of the central bank digital currencies, august 2020. 4 ecb ( 2020 ) : report on a digital euro, frankfurt am main, october 2020. 5 see, for example, bank of thailand / hkma : inthanon - lionrock and mas : project ubin, phase 4 ( cross - border payment versus payment ). 6 see fsb : enhancing cross - border payments : stage 3 roadmap ( october 2020 ). 5 / 5 bis central bankers'speeches | market participants consider this commitment by the eurosystem to be credible. yields on long - term government bonds are at relatively low levels. these low levels reflect a high degree of confidence in the ability of the eurosystem to maintain price stability in the euro area over the longer term. in other words, both inflation expectations and the risk premia associated with inflation uncertainty are low at present, a situation that we wish to maintain. for the bond markets and therefore for companies financing themselves in the market, the high level of credibility attached to the eurosystem is highly beneficial. in particular, the fact that inflation risk premia are low means that companies as well as housing associations seeking long - term financing do not have to pay for the risk that the central bank may not be able to maintain price stability over the longer term. for the economy as a whole, this environment of low costs of long - term financing should be conducive for the private sector to undertake productive investments. companies can also take advantage of the longer planning horizon provided by the knowledge that the cost of capital they employ in their investments will remain stable. i do not have to tell you that this is also of fundamental importance in your sector, i. e. housing. for the last minutes i have focused on the developments in the european financial markets in general rather than what these developments specifically mean for you. i wanted to outline to you the european environment in which you will increasingly be operating. in europe, we are unquestionably moving towards integrated financial markets. clearly, this will have an impact on the financing of housing as well. i have mainly described general consequences and will leave it to you to draw your own conclusions about how this will affect the financing of housing associations. | 0 |
on the recent experiences of the us, and not just because it is the world β s largest national economy in terms of production of goods and services. the us economy is also a dominant force affecting global capital markets, and in the past five years it has been subject to some unusual influences which are still running their course. there has been a remarkable degree of investment in information technology and communication capacity in the us. this has been a feature of other countries too, but it was most pronounced in the us, raising the share of overall business investment in gdp to historically high levels in the late 1990s. expectations about returns to this investment have, until quite recently at least, been very optimistic. for that reason, the us has been a powerful magnet for capital, and much of america β s additional investment has been funded with savings sourced in other countries. associated with that has been a rising level of the us dollar, high levels of domestic asset prices and hence substantial gains in household wealth. that, in turn, helped to support a prolonged period of strength in household consumption spending. all of this contributed to a robust and lengthy period of economic expansion until early 2001. it is striking, moreover, that this long expansion followed a pretty mild recession in the early 1990s, which had itself followed a pretty good expansion in the 1980s. so, in fact, the us has had a good two decades by the standards of other advanced economies, with its performance outstripping those of europe, or japan, with the margin quite wide during the 1990s. this persistent out - performance by the us economy has made it the benchmark for most things economic and financial. the dominance of the us model of market capitalism seemed, by the end of the 1990s, to be unassailable. the role of the financial sector in all this, moreover, was pivotal. us equity and debt markets channeled vast quantities of capital into the corporate sector, and especially the high - tech sector, at quite low cost. in 2000, equity market issuance by us corporates was eight times the rate just three years earlier, at price - earnings ratios which were exceptionally high. this rapid increase in the supply of almost costless equity capital seems to have been driven by the conviction that returns from some of the new technologies would be enormous for their producers and, dispersed across the us economy, their users in terms of productivity. the financial services sector provided the machinery for all this to happen, itself using the improvements in information and communications technology to | further over the course of 2017. the three major advanced economies are all growing above the rate of growth of productive capacity, also known as the potential growth rate. this is clear from the large and ongoing declines in the unemployment rate. the question is how much spare capacity remains in these economies. so far, inflation hasn't picked up much, and neither has wage growth. this might normally suggest that there is still some spare capacity. as this graph shows, estimates of the β full employment β rate of unemployment β the rate of unemployment below which wage growth starts to pick up β in fact suggest that the united states and japan are already at that point, if not below it. so are some of the individual countries within the euro area ( graph 1 ). this full employment rate of unemployment, or non - accelerating - inflation rate of unemployment ( nairu ), is inherently unobservable, so it has to be estimated. it can be estimated a number of ways, and there is a deal of uncertainty around those estimates. often, they come from statistical models which treat every undershoot in the inflation ( or wage growth ) outcome as a sign that the nairu is actually lower than you previously thought. graph 1 it's therefore useful to think about the economics, and the behaviour, underlying the existence of a nairu. it implies that there will still be some people unemployed at the point that firms have to start bidding up wage offers in order to find suitable staff. this is not so surprising when you consider that the labour market isn't homogeneous. there are so many different occupations and types of firms, and these aren't evenly distributed across the economy. so we shouldn't expect labour shortages to appear everywhere at the same time. what happens instead is that they turn up in a few pockets of the labour market, then a few more, and gradually become more widespread as conditions tighten. how quickly this happens depends partly on where the strong demand for labour is concentrated, and how much of the labour force has the applicable skills to perform those roles. so you'd expect wage growth to pick up more β and the nairu to seem higher β if the labour market is highly segmented and workers can't easily shift to the areas of strong demand. more flexible labour markets will, all else being equal, have lower nairus. some of the unemployment underlying the nairu simply reflects people who are between jobs, but will find one soon. ( this is sometimes | 0.5 |
with policy choices, with capital flows supporting or weakening the productive potential of an economy. at the end of the 1980s, australia had a fiscal surplus of 1 % of gdp and a current account deficit of 6 % of gdp. the classic comparison is argentina and australia ; see for instance alexis esposto and fernando tohme, drifting apart : the divergent development paths of argentina and australia. germany : vdm verlag : saarbrucken, 2009. on the whole, the australian case teaches us that a country can absorb large capital flows over very long periods of time, and use these to support high levels of prosperity. this contrasts starkly with the asian examples, where a range of countries likewise achieved impressive gains in living standards, but mostly did so without foreign capital. most of the world β s countries would be happy if they could be asian tigers, and ecstatic if they could be australia. but many of us have a long way to go. what attitude to capital flows would help us on our way? in south africa, we have long favoured the australian option. 15 given ample investment opportunities and limited domestic savings, growth and capital inflows have typically been correlated. in 1985, when the apartheid government was hit with sanctions, access to capital flows was largely cut off. 16 of course, this was not a developmental policy for south africa ; it was a punishment. when sanctions were lifted at the end of apartheid, we looked forward to restoring access to global financial markets. we also appreciated that the end of sanctions did not mean the taps were open. foreign investors all loved south africa, but they would not invest based on warm feelings. and there was going to be a limit on how much investment we could attract, even with good policies. with a low domestic savings rate, if the public and private sectors were both borrowing heavily, this meant we were going to hit a balance of payments constraint. specifically, we anticipated an unsustainable current account deficit, which would weaken the rand and drive up inflation. interest rates would then have to rise to rebalance savings and investment, slowing growth. this was the core problem statement of the macroeconomic strategy adopted by the mandela government in 1996. the goal was to attract more foreign savings, apply some fiscal discipline to improve the country β s south african balance of payments data are available from 1960. the average current account balance for 1960 - 2021 is - 1. 05 % of gdp. the broad pattern, however, is for substantial | recently, in india, a development platform with the promise to reverse several years of sub - par growth and high inflation is being pursued. the lesson to take from this is that we are not helpless in the face of economic disappointment, of high inflation and low growth. for monetary policymakers, with limited tools, this situation provides no attractive choices. but there are many appealing options available for other aspects of policy. for south africa, our present predicament should be read as an invitation to embrace reform. the national development plan provides a compelling basis upon which to build our reform agenda. let us begin to do the work. the contribution of the south african reserve bank to the national development plan is captured in the constitution of the republic of sa and i would like to end by quoting β section 224. the primary object of the south african reserve bank is to protect the value of the currency in the interest of balanced and sustainable economic growth in the republic. β thank you. bis central bankers β speeches | 0.5 |
35 % in the uk and 45 % in the us during the current financial crisis. during the previous century both countries had experienced similar falls, at least four and three times respectively. investment grade corporate bond yields in the uk and us rose by over 300bps in the twelve months to october 2008 ; both countries had experienced at least three similar episodes within the last hundred years. falls in residential property prices in the uk have not been exceptional β though the falls in commercial property values have been, as have declines in us house prices. at the risk of over - simplifying β i would say that declines in asset values leading up to ( and during ) the financial crisis have generally been on the scale of a once - in - every - 25 - year event ; but the financial mess has been ( at least ) on a once - every - century scale. had gearing of financial institutions β and specifically of banks β not been so high ( chart 15 ) the strains that falls in asset value brought would surely have been substantially lower, as would have been the falls in asset values themselves. a bad equilibrium path for the financial sector β or in more everyday language a vicious cycle β is much more likely to exist in a world where financial firms that hold large amounts of risky assets, such as banks, have small equity cushions. the smaller bank capital is the greater will be the concern over bank solvency from a given fall in the value of bank assets. that can trigger a drying up in funding for banks causing a sale of some bank assets that drives their values lower, exacerbating the concerns about the ability of banks to survive. there need be nothing irrational about this process. indeed, there are many examples of bad, but rational, equilibrium paths that markets β and whole economies β can follow. the idea that this is news to economists who use formal models expressed in maths is completely wrong - headed. yet there is a current view that economists who use mathematical models to analyse outcomes where people behave rationally are always led to the panglossian conclusion that things will work out just fine. it would come as a surprise to those who hold this view that two of the most famous economic articles in the last forty years which are routinely taught to economics undergraduates β by george akerlof ( 1970 ) and by diamond and dybvig ( 1983 ) β draw entirely non - panglossian conclusions from formal ( mathematically expressed ) models of collective rational behaviour. i was | . 4 / 6 bis - central bankers'speeches the onus is now on them to provide factual information and convey financial literacy skills in a direct and targeted manner. what could be done to strengthen the network of educational opportunities, enhance the visibility of the services on offer and make measures more effective? in its 2020 " recommendation on financial literacy ", the oecd recommends a national strategy for this. 2 the " alliance for economic education " in germany is also calling for german policymakers to adopt a national economic education strategy. 3 the bundesbank is open to the idea of launching a national strategy for economic education or financial literacy. however, this is something that policymakers have to decide upon. as i see it, they have been not been receptive to the idea of a national strategy so far. the main reason for this is probably that responsibility for education lies with the federal states. as much as a national strategy could promote existing activities, it is now that much more important to make updated resources easy to understand, put them in a realworld context and increase their appeal, especially in order to reach out to people with lower levels of formal education. the bundesbank's money museum in frankfurt is also a hands - on learning environment that is geared specifically to those who know little about money, monetary policy and financial markets. our publication " geld verstehen " ( understanding money ), which is aimed at younger secondary school pupils, conveys basic knowledge in a very understandable manner. the " mit geld umgehen " ( managing money ) media package and an interactive and multimedia e - book round this out. however, i would also like to clarify at this juncture that educational resources are not the one and only way to protect society's most vulnerable. rigorous consumer protection and clear legal regulations are essential to prevent predatory investment, loan and purchase agreements. and, of course, the way enterprises and financial institutions specifically design their products and set their prices in an inflationary environment will ultimately also be key. 5 conclusion ladies and gentlemen, how can the financial literacy of the public be promoted effectively? what skills are needed in order to make sound financial decisions in an inflationary environment? what can motivate people to make adequate provision for the future? how do government programmes need to be designed? what are suitable nudges? 5 / 6 bis - central bankers'speeches in order to answer these and many other questions not only on the basis of anec | 0 |
favorable " " unfavorable " - 10 - 2 - 20 - 30 - 4 - 40 - 6 - 50 - 8 cy90 92 94 96 98 00 02 04 06 08 10 12 14 16 17 - 60 cy 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 notes : 1. figures for the output gap are based on boj staff estimations. 2. figures for the business conditions di are those for all industries and enterprises. there is a discontinuity in the data in december 2003 due to a change in the survey framework. source : bank of japan. chart 3 corporate sector developments in business fixed investment plans ( tankan ) exports s. a. y / y % chg. fy 2016 fy 2017 fy 2018 average ( fy 2004 - 2016 ) real exports ( cy 2015 = 100 ) cy 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 - 2 mar. survey june survey sept. survey dec. survey forecast actual note : the right chart indicates the revision patterns of fixed investment plans. the horizontal axis represents the point of time when the survey is conducted for each fiscal year. namely, the first survey for each year ( march survey ) is on the left, and the last survey ( june survey of the following year ; actual result ) is on the right. the vertical axis represents the year - on - year percent change. all industries including financial institutions. including software and r & d investment and excluding land purchasing expenses ( r & d investment is not included up until the december 2016 survey ). there is a discontinuity in the data in december 2017 due to a change in the survey sample. sources : bank of japan ; ministry of finance. chart 4 household sector private consumption employee income y / y % chg. - 2 s. a., cy [UNK] total cash earnings - 4 number of employees - 6 consumption activity index ( travel balance adjusted, real ) employee income cy10 - 8 06 07 08 09 10 11 12 13 14 15 16 17 notes : 1. for employee income, q1 = march - may, q2 = june - august, q3 = september - november, q4 = december - february. notes : 2. employee income = total cash earnings ( " monthly labour survey " ) Γ number of employees ( " labour force survey " ) 3. figures for the consumption activity index exclude inbound tourism consumption and include outbound tourism | stance becomes more proactive, inflation expectations may not rise smoothly ; in other words, the second step of the mechanism may not operate fully. past experience suggests that there is a certain time lag before actual inflation affects inflation expectations and the length of this lag is highly uncertain. so far, there has not been enough academic literature on the learning process through which firms and households revise their inflation expectations upward when faced with actual price rises. taking into consideration that the experience of 15 years of deflation had become deeply entrenched in people's mindset and behavior, we need to keep in mind that it might take a fair amount of time before actual inflation starts to affect inflation expectations. thus, in a situation where there are various risks and uncertainty is high, with a view to making an assessment of the outlook for prices and being accountable for this, it would not be proper - - and not represent adequate information dissemination by the bank - - to attract excessive attention merely to forecast figures. as also highlighted by federal reserve chairman powell, it is difficult to make accurate forecasts about future economic developments, and too much emphasis should not be placed on the medians of board members'forecasts. regarding the timing of the year - on - year rate of change in the cpi reaching around 2 percent, up until the previous january 2018 outlook report, the bank provided specific descriptions such as that this would likely be around fiscal 2019 ; however, the latest report does not include such descriptions. the bank believes that giving a detailed and articulate explanation on price developments based on a comprehensive assessment - including the mechanism through which the year - on - year rate of change in the cpi increases toward 2 percent and the assessment of risks - - leads to more appropriate communication to the public. iii. the conduct of monetary policy let me now turn to the bank's conduct of monetary policy. the bank has been pursuing powerful monetary easing with a view to achieving the price stability target of 2 percent. specifically, under the framework of " qqe with yield curve control " introduced in september 2016, it facilitates the formation of the yield curve that is considered most appropriate for achieving the 2 percent target judged on the basis of developments in economic activity and prices as well as financial conditions. at the mpm held at the end of last month, the bank maintained the guideline for market operations, in which the short - term policy interest rate is set at minus 0. 1 percent and the target level of the 10 - year | 1 |
equally important for its participants to be able to understand and adapt to the new requirements. to illustrate, one particular rule requires market participants to obtain leis, or legal entity identifiers for purposes of trade reporting. this will improve the usability of trade reporting data and facilitate better data harmonisation across multiple reporting regimes. in fact, when mifid ii commences in january next year, leis will be needed for trades with european counterparties. reforms and culture 16. last but not least, no amount of regulatory reforms, rules and regulations can assure a sound and stable financial system if the conduct and behaviours of firms and individuals are flawed. a culture of strong integrity and high ethics are crucial lynchpins to the safety and soundness of our financial system. the key to achieve this must lie in the various lines of defence in all financial institutions β where business units follow rules and regulations diligently ; and boards and management place importance as well as give recognition to the roles of compliance and audit, supported by appropriate systems of reward and recognition. it must be made clear that doing right and doing good are aligned with doing well. 17. on this note, let me conclude. i am sure that this forum will provide many useful insights and much food for thought. thank you for your attention. 3 / 3 bis central bankers'speeches | enemy of the good. 11. i have mentioned the important work around coherence. taken individually, each set of reforms have been well - considered and for good reasons. for instance, the banking capital and liquidity reforms strengthen the ability of banks to better withstand future shocks ; otc derivative reforms seek to improve transparency, prevent market abuse and reduce systemic risks. the two sets of reforms aimed at achieving a safer financial system, albeit from different angles. however, to ensure that they complement each other without creating unintended consequences, we also need to carefully examine how the different elements will interact. 12. take the example of the impact from the leverage ratio on the capacity of clearing members to offer client clearing services. the leverage ratio is intended to be a non - risk - based backstop to supplement the capital reforms and does not factor in risk offsets. however, for those banks with large client clearing volumes, disallowing client initial margins to compensate for potential future exposure may inevitably create constraints on their leverage ratios. this can dis - incentivise the provision of such client clearing services. this may have created an unintended impact on the market β s incentives and overall ability to centrally clear, which will be inconsistent with the objectives of the central clearing. therefore, in the next phase of our work on the reforms, sector regulators will have to work closely towards greater consistency and coherence with the inputs of all market participants. balancing between domestic market concerns and international market access 13. as each jurisdiction embarks and complete rebuilding its part of the global house, it is also important to consider how domestic rules would operate and interact across borders and against the global standards. 2 / 3 bis central bankers'speeches 14. the recent comparability determination between the cftc and the european commission on platform trading and margins for un - cleared derivatives serves as an excellent example of how authorities have worked together to reach a common agreement and approach, bridging the requirements of two major regulatory regimes. asia - pacific authorities are working closely with one another as well, and also with the cftc and ec, to address cross - border issues. japan β s fsa ( financial services agency ) and australia β s apra ( australian prudential regulation authority ) had also announced their recognition of various jurisdictions β margin requirements for un - cleared derivatives, including singapore and hong kong. 15. it is one thing for the enhanced architecture of the global financial house to be sound. it is | 1 |
) as well as work by many other economists. increasingly i felt that public policy had become stuck in out - dated frameworks and that, to a certain extent, we needed to return to first principles and adopt a multi - disciplinary approach to economic policy - making ; as secretary, i also felt the treasury had a responsibility, as new zealand β s economics and finance ministry, to turn its vision β working towards higher living standards for new zealanders β into a statement of possibility rather than one of aspiration. but we had to start with developing a framework that was intellectually rigorous, that would challenge the dominant policy paradigm, that was robust enough to meet the challenges that would be thrown at it and that could create a new narrative. effective public policy needs an effective narrative ; developing that framework was girol β s job. his enthusiasm for the potential of economics chimed with mine. his intellectual curiosity, and his passion for the living standards agenda rubbed off on many of those he recruited to work on the issues and turn the aspiration to a possibility. that possibility has grown but the journey is not over. today β s book launch allows us to reflect on what has been achieved and to take stock of what remains to be done. as a central banker 1 / 2 bis central bankers'speeches who is concerned with macroeconomic stability, i am particularly interested in the management of risk and the development of what i β ve described as economic resilience, or the ability of communities to manage economic transitions, whether they are sudden shocks or more gradual movements, all of which are at the heart of intergenerational wellbeing and the challenge of our times. thank you for inviting me to the launch and congratulations again to girol. 2 / 2 bis central bankers'speeches | gabriel makhlouf : remarks on the occasion of the publication of β love you β remarks by mr gabriel makhlouf, governor of the central bank of ireland, on the occasion of the publication β love you : public policy for intergenerational wellbeing β by girol karacaoglu, 17 february 2021. * * * good morning and good evening. it β s a pleasure to join you at this book launch, and to congratulate the publishers and of course the author, my good friend girol karacaoglu. i β m particularly pleased to have been asked to say a few words on the background and context for the wellbeing work programme ; it β s been a good opportunity to reflect on that part of the journey that β s now about a decade old, although much older overall and in many ways still young. wellbeing has been a focus of economic policy for a very long time but i β ll take 2011, the year girol joined the treasury, as my starting point for today. i became treasury secretary earlier that year, a week after my predecessor β john whitehead β spoke at the publication of a treasury paper on the living standards framework saying, quite rightly, that work on wellbeing was not new but one of the aims of the paper was β to provide some clarity around the ultimate aims of [ the treasury β s ] work β. the framework may not have been new but i felt its time had come, for a number of reasons : economics was going through another intellectual turbulence, at least in the western world, triggered by the global financial crisis and reflecting an emerging recognition that traditional policy approaches were unlikely to be adequate to confront the complex challenges of the modern era, such as the impact of deep international interconnectedness, technological and climate change, along with growing social disconnection and lack of trust in established institutions ; for me it was noticeable that the emerging recognition of the need for different policy approaches was not reflected in the dominant public policy narrative in new zealand at the time. commentators and policy practitioners appeared to be trapped in a frame of reference that seemed to me at best to be outdated ; apart from the treasury β s 2011 paper, joe stiglitz, amartya sen and jean - paul fitoussi β s 2009 report had helped shape my thinking, as had the australian treasury β s own wellbeing framework ( and i recall david gruen coming to wellington in 2011 to talk about their work | 1 |
of the asian economy will be similar to that of the pre - enlargement eu. in the first half of the 2020s, it will match that of the three north american countries. picturing the world economy in 2040, asia's share in world gdp is forecast to be 42 %, while the shares of north america, europe, and other regions are expected to be 23 %, 16 %, and 20 % respectively. meanwhile, in terms of per capita gdp, as of 2003 asia recorded an average of $ 2, 400 - less than one - tenth of the average $ 29, 000 in north america and $ 27, 000 in europe. by around 2040, however, this difference is likely to be greatly reduced with asian per capita gdp being expected to be one - fourth of the figure in north america or in europe. looking at the big picture by country, in terms of overall national gdp, china is forecast to overtake japan by around 2020 and be on a par with the us by approximately 2040, to account for about 1 / 5 of global gdp. india would overtake japan by about 2030, and by 2050 or so is projected matching europe's 12 % global gdp share. by about 2040, korea's share in global gdp is forecast to have increased slightly to 2 % from 1. 7 % in 2003, while that of japan, due to its relatively slow growth, is estimated to have shrunk to about half its current 12 % share. in terms of per capita gdp, by around 5 / 6 2040, china is expected to be 1 / 4 of the figure in the us or in japan, and 1 / 3 of that in korea, while indian per capita gdp is, like today, estimated to be half of the figure in china. 3. the effect of the rise of the asian economy on the world economy how then will this high growth of the asian economy influence the world economy? it is already having a big impact on the global economy and this will increase in the future. this is because asia can offer an inexhaustible supply of labor to the world economy, which is rapidly integrating under the influence of information technology development and economic openness. a vast market that was once self - sufficient is joining the world economy. a number of effects are expected to arise from the integration of the asian economy with the open world economic order. first of all, labor costs will be reduced. with the | β exchange rates and crises β, reserve bank of australia bulletin, february. ( the full text can be found on the bank β s web site - http : / / www. rba. gov. au ) grenville, s. a. ( 1998b ), β the asian economic crisis β, reserve bank of australia bulletin, april. grenville, s. a. ( 1998c ), the asian crisis and regional co - operation, address to international seminar on east asia financial crisis, beijing, 21 april ( http : / / www. rba. gov. au ). haass, r. n. and r. e. litan ( 1998 ), β globalization and its discontents : navigating the dangers of a tangled world β, foreign affairs, vol. 77, no. 3, may / june, pp. 2 - 6. institute of international finance ( 1998 ), capital flows to emerging market economies, april ( http : / / www. iif. com ). international monetary fund ( 1995 ), international capital markets : developments, prospects, and policy issues, august. international monetary fund ( 1996 ), annual report. - 10 - keynes, j. m. ( 1919 ), the economic consequences of the peace, macmillan and co., limited, london. kindleberger, c. p. ( 1978 ), manias, panics, and crashes : a history of financial crises, macmillan. revised edition 1989, basic books, inc., new york. fortune ( 1998 ), β the great emerging markets rip - off β, 11 may, pp. 68 - 74. mckinnon, r. i. ( 1973 ), money and capital in economic development, the brookings institution, washington, dc. mckinnon, r. i. and h. pill ( 1995 ), credible liberalizations and international capital flows : the β over - borrowing syndrome β, paper presented at reserve bank of australia research seminar, 24 august. ( published in t. ito and a. o. krueger ( eds ), financial deregulation and integration in east asia, university of chicago press, chicago, pp. 7 - 50. ) rees - mogg, w. ( 1998 ), β capitalism of the casino β, the times, 12 march. rivlin, a. m. ( 1998 ), toward a better class of financial crises : some lessons from asia, remarks at | 0 |
to address. we have not flinched from imposing high prudential standards β sometimes above international norms β but have always consulted industry actively to make sure that the prudential outcomes that we want are achieved at minimal compliance cost. likewise, we have worked closely with industry to help create a strong financial ecosystem, deepening and broadening our markets, building critical infrastructure, and developing a skilled and competent financial sector workforce. jpm has been an important partner in our journey together to develop singapore as a dynamic and vibrant financial centre. jpm has made material contributions to singapore β s financial markets with developments such as the launch of the singapore kilobar gold contract with the sgx in october this year. bis central bankers β speeches jpm was one of the lead managers in singapore β s first rmb corporate bond issuance earlier this year, which helped to broaden the range of rmb product offerings in the market. on this note, let me congratulate jp morgan on 50 years of growth in and with singapore. mas looks forward to deeper partnership with jp morgan in further developing singapore β s financial sector. i am confident that your strong presence in singapore will serve you well as you extend your footprint in asia. thank you for being part of the singapore growth story. bis central bankers β speeches | speeches published date : 29 april 2021 " inflation & expectations " - opening remarks by mr edward s robinson, deputy managing director ( economic policy ) & chief economist, monetary authority of singapore, at the seminar on inflation and cost of living in singapore and asia on 29 april 2021 introduction 1. thank you for inviting the mas to join this virtual webinar and live discussion on β inflation and cost of living β, a joint initiative of the sim kee boon institute for financial economics, the imf institute and dbs bank. it is encouraging that academia, industry and an intergovernmental organisation have come together on an important issue of common concern. 2. i recall launching the singapore index of inflation expectations or sindex, as it was known then at smu in january 2012, and it is heartening to see it nurtured over the past decade. the mas is grateful to the skbi for its commitment to this project and to dbs for its generous sponsorship of the dbs - skbi - smu singapore index of inflation expectations, that counts among the key indicators that mas looks at in its economic surveillance. 3. my comments are in two parts. first, i will make some broad observations on the somewhat complex inflation dynamics that confront us since the onset of covid - 19. second, i intend to reiterate the important role that expectations play in driving the behaviour of key macroeconomic phenomena, including inflation. this two - part intervention is meant to bridge the interests and inclinations of the various participants at this seminar β industry, academia and policy. understanding recent inflation developments 4. we just released our april monetary policy statement and macroeconomic review, which contain our latest assessment of inflation on the global and domestic fronts. there are distinct peculiarities about the impact of the covid - 19 shock on price adjustments. let me highlight four broad factors pertinent to price developments during the crisis and beyond. 5. first, price adjustments reflected the impact of the government health measures which imposed a sudden stop to a range of contact - intensive activities. this meant that overall, the adjustments in many countries took place mostly through a sharp retraction in β q β or the level of activity, rather than β p β, or prices. a statistical factor was partly at play here. as activities in some sectors saw near - complete cessation ( for example, recreational services and air travel expenses ), prices in several key consumer services categories were unobservable, such | 0.5 |
ben s bernanke : challenges in housing and mortgage markets speech by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the operation hope global financial dignity summit, atlanta, georgia, 15 november 2012. * * * good afternoon. i β d like to thank john bryant and operation hope for inviting me to speak today. i β d also like to congratulate operation hope and the ebenezer baptist church on the grand opening of the hope financial dignity center, which holds the promise of becoming a tremendous resource for the people of atlanta and sits next to martin luther king β s home church. dr king β s legacy to our society is strong and enduring, and the new center is very much in the spirit of his work. the past few years have been difficult for many americans and their communities. at the federal reserve, we understand the depth of the problem and the need for action, and we will continue to use the policy tools that we have to help support economic recovery. we also know that the burdens of a weak economy and the benefits of economic growth often are not equally shared, and that, to be truly effective, policymakers must take into account how their decisions affect the least advantaged, not just the economy as a whole. my remarks today will focus on an important part of our economy, the housing sector. housing and housing finance played a central role in touching off the financial crisis and the associated recession, and the ensuing wave of foreclosures wreaked great damage on communities across the country. as i will discuss, for the first time in a number of years, the housing sector is improving, adding to growth and jobs. but the housing revival still faces significant obstacles, and the benefits of that revival remain quite uneven. strengthening and broadening the housing recovery remain a critical challenge for policymakers, lenders, and community leaders. the degree to which that challenge is met will help determine the strength and sustainability of the economic recovery and the extent to which its benefits are broadly felt. developments in housing and housing finance the multiyear boom and bust in housing prices of the past decade, together with the sharp increase in mortgage delinquencies and defaults that followed, were among the principal causes of the financial crisis and the ensuing deep recession β a recession that cost some 8 million jobs. and continued weakness in housing β reflected in falling prices, low rates of new construction, and historic levels of foreclosure | statement by jerome h. powell chair board of governors of the federal reserve system before the select subcommittee on the coronavirus crisis u. s. house of representatives june 22, 2021 chairman clyburn, ranking member scalise, and other members of the select subcommittee, thank you for the opportunity to update you on our ongoing measures to address the hardship wrought by the pandemic. since we last met, the economy has shown sustained improvement. widespread vaccinations have joined unprecedented monetary and fiscal policy actions in providing strong support to the recovery. indicators of economic activity and employment have continued to strengthen, and real gdp this year appears to be on track to post its fastest rate of increase in decades. much of this rapid growth reflects the continued bounce back in activity from depressed levels. the sectors most adversely affected by the pandemic remain weak, but have shown improvement. household spending is rising at a rapid pace, boosted by the ongoing reopening of the economy, fiscal support, and accommodative financial conditions. the housing sector is strong, and business investment is increasing at a solid pace. in some industries, nearterm supply constraints are restraining activity. as with overall economic activity, conditions in the labor market have continued to improve, although the pace has been uneven. the unemployment rate remained elevated in may at 5. 8 percent, and this figure understates the shortfall in employment, particularly as participation in the labor market has not moved up from the low rates that have prevailed for most of the past year. job gains should pick up in coming months as vaccinations rise, easing some of the pandemic - related factors currently weighing them down. the economic downturn has not fallen equally on all americans, and those least able to shoulder the burden have been the hardest hit. in particular, despite progress, joblessness continues to fall disproportionately on lower - wage workers in the service sector and on african americans and hispanics. the fed pursues monetary policy aimed at fostering a strong, stable economy that can improve economic outcomes for all americans. those who have historically been left behind stand the best chance of prospering in a strong economy with plentiful job opportunities. and our economy will be stronger and perform better when everyone can contribute to, and share in, the benefits of prosperity. inflation has increased notably in recent months. this reflects, in part, the very low readings from early in the pandemic falling | 0.5 |
. over the next two days, fifteen prominent scholars from eleven countries will present their work on different institutional or national experiences in the inter - war years ; i thank them for being here and look forward to listening to their contributions. i would also like to thank the centre for culture, research and documentation of the bank of 2 / 3 bis central bankers'speeches greece, and its director, mr. panagiotis panagakis. our economic historian and scientific advisor to the historical archive, mr. andreas kakridis, who is the heart and soul of the conference. the staff at my office, our valuable communication section, the security officers, as well as numerous other colleagues at the bank of greece, without whom this conference would not be possible. the bank of greece is committed to promoting historical research, particularly research in economic history. yet the past is most interesting when it informs our understanding of the present and future. policy reactions to the recent financial crisis were shaped by perceptions β and often misperceptions β of the past, particularly the inter - war years. in this context, i am also pleased to welcome several of my esteemed colleagues from other european central banks, who are joining us for this conference. their presence honours us and underlines the connection to the present and future of central banking. we will have much more time to talk about this later today, during our panel discussion. but first, let us turn our gaze to the past and start our journey through the inter - war years. i wish everyone a fruitful conference and look forward to stimulating discussions! 1 page 8 of memorandum by Ξ·. finlayson, relations between the state and the central bank of issue, dated 10. 10. 1928, as found in the bank of england archive, niemeyer papers, ov9 - 206 / 2. 3 / 3 bis central bankers'speeches | - crash in wall street ), tensions in foreign exchange markets and broader geopolitical factors. 5. major challenges looking forward : putting the economy on a sustainable growth path as a result of the painful economic adjustment over the past eight years, macroeconomic flow disequilibria have now been eliminated and reforms have contributed to a substantial improvement of competitiveness. hence, this is a good starting point for the greek economy to embark on a sustainable growth trajectory. however, stock disequilibria β such as the high public debt, the high burden of npls and high unemployment β persist or have even increased during the years of the crisis, acting as a drag on long - term growth. furthermore, a large number of legislated reforms need to be fully implemented and the fiscal policy mix is not supportive of growth. the high level of public debt reduces long - term growth prospects because it increases the cost of capital and generates expectations that future taxes will remain high in order for the sovereign to service the debt, lowering investment. high npls in banks β balance sheets reduce the ability of the banking system to provide credit to healthy firms because capital is trapped in non - viable 3 / 7 bis central bankers'speeches firms. high long - term unemployment leads to depletion of human capital whereas the collapse in investment has contributed to a decline in the stock of productive capital with negative consequences for long - term productivity growth. in order to address the abovementioned challenges the focus of economic policy should be on the following : 1. addressing the public debt overhang. decisive and concrete actions are needed to ensure the sustainability of greek public debt, on the basis of the eurogroup β s decision of june 2017. the bank of greece has put forward a mild debt re - profiling proposal, which entails only a negligible cost for our partners and provides for, among other things, extending the weighted average maturity of interest payments on efsf loans by at least 8. 5 years. this, along with a long - term commitment to structural reforms, could bring greek debt back to a sustainable level in gross financing needs terms, allowing for a smooth return of the country to the international capital markets. 2. implementing the remaining reforms and improving the quality of institutions. academic research on the drivers of long - run growth shows that well - functioning institutions, high regulatory quality and good governance matter for economic growth and enable countries to over - perform in the long run2. this is because institutions and | 0.5 |
ΓΈystein olsen : the role of monetary policy revisited β welcome address welcome address by mr ΓΈystein olsen, governor of norges bank ( central bank of norway ), at the norges bank conference β the role of monetary policy revisited β, oslo, 26 september 2013. * * * it is a great honour and pleasure for me to welcome you all to this norges bank conference : the role of monetary policy revisited. in his famous 1967 presidential address before the american economic association, milton friedman set out to answer three interrelated questions. what should be the role of monetary policy? what can it contribute to achieving the major goals of economic policy? and how should it be conducted to contribute the most? five years after the onset of the global financial crisis, these questions are yet again at the forefront of our minds. the crisis and subsequent recession have presented substantial challenges to monetary policy. central banks have responded with great activism and have resorted to unconventional policies such as quantitative easing and an increasing use of forward guidance. and the crisis has led to a review of monetary policy frameworks. successful as monetary policy has been in safeguarding low and stable inflation, many argue that it should take risks to financial stability into account. moreover, a new set of macroprudential policy tools has been proposed to address systemic risks in financial markets directly. in norway, inflation targeting was introduced in 2001. since 2005, we have published a projection of the future path of our key policy rate. this path reflects our view on the role of monetary policy. we consider an interest rate path to be appropriate when it meets three criteria. first, the interest rate should be set with a view to stabilising inflation at our 2. 5 percent target. second, the interest rate path should provide a reasonable balance between the path for inflation and the path for overall capacity utilisation. this implies that inflation targeting is flexible. notwithstanding new macroprudential tools, we see a need to add a third criterion : the interest rate should be set so that monetary policy leans against a build - up of financial imbalances. at norges bank, we remain firmly committed to our flexible inflation targeting framework. but the global financial crisis has taught us to be both modest and inquisitive. experience with new macroprudential policy tools is limited, and institutional frameworks are still in the making. leaning against financial winds remains subject to debate. it is therefore important that we actively seek knowledge. it is | our obligation as central bankers to continuously search for the best practice for monetary policy. and we do not have to agree with friedman's prescriptions to revisit the important questions he posed. we are privileged to have such a distinguished group of central bankers and academics present at this conference to help us with this task. i am looking forward to learning from what i hope will be both an open - minded and a constructive dialogue about the future of monetary and macroprudential policies. thank you. bis central bankers β speeches | 1 |
inflationary pressures in the medium run. lending to the private sector recorded an annual growth of 9. 0 % in march. its performance, particularly in the recent months, was determined by the low private sector demand for credit and the cautious bank lending behaviour. financial markets were liquid and stable. interbank market rates dropped significantly in april and the trading volume in this market increased. the pass - through of easing monetary policy signals persisted in the lek deposit market as well, as reflected by the lower interest rates. government security yields in the primary market remained at similar levels to the previous month. their increase in the first quarter of 2012 reflects the developments in supply and demand - side structural factors, hence signalling no added inflation premiums. interest rates on lek - denominated loans did not fully respond to the easing monetary policy signals due to the higher credit risk premiums in particular branches of the economy. new information supports our previous projection that the gdp growth will remain below its potential in the quarters ahead, owing to the moderate contribution of foreign demand, lack of fiscal stimulus and sluggish domestic demand. the two main components of the latter, consumption and private investment, remain slow. the incomplete utilisation of capacities, coupled with the slow rise in wages and unit labour costs, are expected to exert contained inflationary pressures in the period ahead. economic agents β inflation expectations are anchored close to the target. they, however, may be subject to the response to global developments in the short run. the gradually subsiding supply - side shocks in the period ahead, the termination of base effects β impact and the extended effect of the bank of albania β s stimulating policy are expected to be followed by an rising inflation trend, thereby approaching the bank of albania β s target in the medium run. the bank of albania has continuously eased the monetary policy in the recent months, aiming at meeting the inflation target in the medium run, and keeping the inflation expectations and risk premiums in the economy under control. this policy has aimed at responding to a situation where the main obstacle to the recovery of private sector demand and foreign direct investment relates to the uncertainty for the future and approach to risk, in the short and medium run. we consider that the provision of a cautious monetary stimulus, bis central bankers β speeches conditioned by the control of risk premiums and safeguard of financial stability, is major contribution the bank of albania can make to the stable and long - term economic growth in albania. * * * based on | mr. brash points out some positive aspects of new zealand β s situation in the world economy address by the governor of the reserve bank of new zealand, dr. donald brash, to the construction liaison group in wellington on 26 / 6 / 98. introduction over recent months, there has been a great deal of negative economic news. in countries as diverse as italy and japan, gdp data for the march quarter have been released suggesting economic activity is slowing down. growth in industrial production in the 14 countries which we monitor most closely in preparing our own economic forecasts was projected to be just 0. 1 per cent in 1998 in the june consensus forecasts, a significant fall from the increase of 3. 8 per cent expected last november, and even a fall from the 1. 0 per cent increase expected as recently as last month. financial markets have been extremely turbulent, with particularly volatile trading in the foreign exchange market and some equity markets. where is the world economy going, and how will new zealand be affected? it is always risky being too definitive in answer to questions of this kind, because in reality nobody can know the answers with any confidence. but it is particularly dangerous to give answers at this time. if one suggests that the world economy is in for a very rough ride, and new zealand with it, one is accused of undermining confidence and making the situation worse. if one points out some of the positive aspects of new zealand β s situation, one is accused of being hopelessly unrealistic. today i will try to be totally realistic. you may not agree with me, but i will not gild the lily. the implications of the situation in asia are serious for new zealand in our december 1997 monetary policy statement, we estimated that growth in our trading partners would average 1 per cent less than otherwise over 1998 / 99 due to the events in asia, and in releasing that document i commented that the most obvious risk to our economic projection was that the difficulties in asia would turn out to be even more serious than we assumed at that time. in the intervening six months, the situation has indeed become markedly worse. whereas in november 1997, the consensus forecasts projected japan β s industrial production to grow by 1. 6 per cent in 1998, the comparable estimate in june 1998 is minus 4. 0 per cent. whereas in november 1997, the consensus forecasts projected korea β s industrial production to grow by 8. 2 percent in 1998, the comparable estimate in june 1998 is minus 7 | 0 |
yi gang : remarks - financial street forum 2022 remarks by mr yi gang, governor of the people's bank of china, at the annual conference of financial street forum 2022, beijing, 21 november 2022. * * * party secretary yin li, mayor yin yong, managing director kristalina georgieva, general manager agustan carstens, ladies and gentlemen, good afternoon! let me begin by extending my congratulations to the beijing financial street on its great development achievement over the past 30 years. under the leadership of the cpc central committee and the state council, and with the vigorous support of the cpc beijing municipal committee and the beijing municipal government, the financial street has blazed a trail with chinese characteristics and played a key role in china's economic and social development over the past three decades. today, i would like to take this opportunity to share with you some of my observations on issues related to monetary policy. first, china's monetary policy has provided significant support to the real economy. this year, the chinese economy is faced with some challenges and downward pressure due to covid - 19 and some external shocks, and we have recalibrated monetary policy in a timely fashion so as to provide greater support to the real economy. according to the deployment of the cpc central committee and the state council, we have made use of a host of policy instruments and cut the required reserve ratio ( rrr ) by 25bps. the drop in loan prime rate ( lpr ) has translated into lower financing costs for the real economy, and broad money m2, social financing and new rmb loans have all maintained pretty robust growth. measured by economic performance, china's macroeconomic policy has proven to be well - calibrated. we have kept the economy stable, preserved price stability at home despite surging inflationary pressure worldwide, and maintained a fine balance between internal and external equilibrium. china's gdp grew by 3. 9 percent year on year ( yoy ) in q3. the cpi increased by 2. 1 percent yoy in october and its annual growth rate has stayed at around 2 percent over the past five years. since the beginning of the year, the rmb has seen some depreciation against the us dollar but of a smaller scale compared with other major currencies. the value and purchasing power of rmb has been basically stable. second, while providing significant support to the real economy, the pboc has not substantially expanded its balance sheet. | zhou xiaochuan : development of china β s inter - bank market address by dr zhou xiaochuan, governor of the people β s bank of china, at the opening ceremony of the shanghai clearing house, shanghai, 28 november 2009. * * * mayor han zheng, distinguished guests, dear colleagues, ladies and gentlemen, good morning. today, we gather here to celebrate the establishment of the shanghai clearing house. this is a milestone in the development of china β s inter - bank market. on behalf of the people β s bank of china ( pbc ), i β d like to extend warm congratulations on the founding of the shanghai clearing house. i also thank the shanghai government and people for your gracious support. as a key component of the financial market system, the inter - bank market is playing an increasingly important role in macroeconomic management, fund allocation, pricing and risk management. the people β s bank of china is committed to developing the inter - bank market. over the past few years, efforts have been made to enhance financial innovation, improve the market - based mechanism, and expand institutional investors on the market. the inter - bank market has grown in both depth and width. in 2008, the turnover in the inter - bank borrowing market and the inter - bank bond market totaled 114 trillion yuan, an increase of 560 percent from that in 2003. nominal turnover of interest rate derivatives recorded 924. 32 billion yuan, 6. 56 times that in 2006, while nominal turnover of exchange rate derivatives registered us $ 917. 9 billion, 7. 07 times that in 2006. transactions on the inter - bank foreign exchange market also multiplied. the rapidly developing inter - bank market needs more efficient and secure clearing services. in june, the pbc launched the net value clearing service for spot over - the - counter ( otc ) transactions in the inter - bank foreign exchange market, which effectively reduced bilateral credit sizes and lowered clearing costs. the centralized clearing of otc transactions is an international issue. centralized clearing systems for over - the - counter spot trading and derivatives transactions of foreign exchange and interest rate products have been set up in advanced countries and in emerging market countries such as brazil and india. more importantly, following the financial crisis, countries have reached consensus on controlling financial transactions risks. countries agreed that lowering counterparty risk and ensuring effective supervision and regulation are the key to ensure secure and orderly development of the otc derivatives market, which can be best achieved through centralized clearing. in april, | 0.5 |
richard h clarida : the federal reserve's review of its monetary policy strategy, tools, and communication practices speech by mr richard h clarida, vice chairman of the board of governors of the federal reserve system, at the conference on β monetary policy strategy, tools, and communication practices β ( a fed listens event ), hosted by the federal reserve bank of chicago, chicago, illinois, 5 june 2019. * * * good morning, and welcome to day two of the federal reserve system conference on monetary policy strategy, tools, and communication practices. 1 i think you will have to agree that the presentations and discussion yesterday were uniformly thoughtful, substantive, and stimulating, and today we will have another impressive lineup of speakers and panelists addressing timely topics that are relevant to our review. and let me convey on behalf of chair powell, the board of governors, and the reserve bank presidents, a sincere and deep appreciation to all the participants on this program, especially the authors of the seven outstanding papers, for the time, thought, and energy that went into preparing their contributions. yesterday professors eberly, stock, and wright provided us with a thorough and thoughtful evaluation of the federal reserve β s monetary policy strategy, tools, and communications since 2009. they conclude that the policy tools that the federal open market committee ( fomc ) relied on β " level policy β and β slope policy, β to use their terminology β helped restore the u. s. economy to health and bring it close to the statutory goals of maximum employment and price stability assigned to us by the congress. as was noted several times yesterday, in recent years forecasters and policymakers have been surprised by the decline in the unemployment rate and the size of the sustained ongoing gains in payroll employment. fomc participants β estimates of the longer - run normal rate of unemployment in the summary of economic projections illustrate this point β they have drifted lower over time as labor market conditions have improved and inflation has remained quiescent. 2 the paper by professors abraham and haltiwanger provided us with an innovative search - andmatching model to estimate labor market slack β which complements the standard estimates based on unemployment gaps and phillips curve relationships. on that same general topic, the panel discussion of national and community leaders moderated by governor brainard provided a valuable perspective on the labor market that could not otherwise be gleaned from the aggregate statistics we often consult. of course, notwithstanding what is taught in many u. s. | ) usually mirror one another over the cycle. in the current episode, these two measures have diverged to a greater degree than has been typical in the past. this divergence is likely related to another defining feature of this expansion, the investment boom which has raised the level of net investment to the point where the capital stock is expanding rapidly, raising capacity and preventing the increase in demand from overtaking supply. the unemployment rate is signaling that the labor market is tight ; but the capacity utilization rate indicates that supply and demand are well balanced, at least in the industrial sector of the economy. as a result, there has been some upward pressure on wages, but no pass - through to higher price inflation. firms report an absence of pricing leverage because nothing gives a firm pricing power like excess demand and there is no apparent excess demand for u. s. firms, especially in the global market place where there is plenty of slack abroad. the most intriguing explanations of the recent favorable performance are structural changes which may have expanded the limits to productive capacity and trend growth. these possibilities come in two forms : structural change in the labor market which lowers nairu and structural change in the product market, specifically higher productivity growth, which, at least temporarily also lowers the nairu, and which pushes out the limit of trend growth. one explanation for why we can sustain stable inflation with lower unemployment is the worker insecurity hypothesis. according to this theory, corporate restructuring, globalization, and technological change have increased workers β insecurity about their jobs. as a result, workers have been willing to accept some restraint on their real wages in order to increase their prospects of remaining employed, leading to a more moderate rate of increase in wages than would otherwise have occurred at any given rate of unemployment. while this is consistent with a decline in the nairu, we cannot very precisely test the worker insecurity hypothesis itself. but it does fit some of the facts of the current labor market experience. my conclusion is that nairu has declined, even taking into account the role of temporary factors, though i cannot pin down definitely the source of the decline. i am simply adjusting my estimate to the data. the worker insecurity hypothesis is a possible explanation. an example of a product market structural change would be an increase in trend productivity growth. this is clearly the most intriguing of all the potential explanations, because it ties together so many puzzles. it can explain why we are in a midst of an investment boom, why the profit share | 0.5 |
michael s barr : measuring cyber risk in the financial services sector opening remarks by mr michael s barr, vice chair for supervision of the board of governors of the federal reserve system, at the conference on measuring cyber risk in the financial services sector, boston, massachusetts, 17 january 2024. * * * thank you for the opportunity to welcome you to day two of the second annual conference on measuring cyber risk in the financial services sector. 1 i'd like to thank the staff who organized this gathering from the massachusetts institute of technology, the federal reserve bank of richmond, and the federal reserve board. cyber threats are constantly evolving, and we can expect them to become increasingly disruptive as technology advances and our financial system becomes more interconnected. in the past few months, ransomware attacks have disrupted the ability of some financial institutions to offer a variety of banking and market services, including treasury clearance and settlement and access to online banking and atm operations. these incidents were resolved without significant disruption to the broader market, but they are stark reminders of the potential for cyber incidents to generate broader, even systemic risks, and the importance of addressing these risks. cybersecurity preparedness has become increasingly important for banks. banks must take action to uncover vulnerabilities in their systems and remedy those vulnerabilities before attacks occur. but focusing on cyber defense is not sufficient. it is important that banks also focus on resilience to successful cyber - attacks, including by developing and regularly testing business continuity plans. the federal reserve and other banking agencies work to make sure that banks and service providers are appropriately focused on cybersecurity and operational resilience. supervisors will continue to reinforce the need for appropriate risk management. reliance by banks on third - party service providers has grown considerably in recent years, and with that reliance comes the potential for greater cyber risk. 2 it is ultimately the responsibility of banks to manage their third - party risk, and we have historically seen gaps in this regard. last year, together with the other bank regulatory agencies, the federal reserve adopted guidance on effective management of third - party risk, based on the size and complexity of the bank and nature of the third - party relationship. the guidance provides some specific examples throughout the lifecycle of a third - party relationship, which should be helpful for banks as they strengthen their management of these risks. forums like today's conference are critical to improve how we think about and measure the presence of cyber risk in financial markets. the ability to | better measure cyber risk will allow banks and supervisors to improve their understanding of the direct and indirect costs of a cyber disruption. an incident poses direct costs on an affected bank and its customers, as well as indirect costs to other market participants who are connected to the affected bank. for instance, researchers at the new york federal reserve bank recently modeled how a cyber incident could be transmitted through the 1 / 3 bis - central bankers'speeches u. s. financial system under a variety of circumstances. 3 the authors estimate how the impairment of a single large bank, a group of smaller banks, or a common service provider could be transmitted through the payments system and result in significant spillovers to other banks. spillovers to the broader financial system are estimated to be especially large when attacks are timed to maximize damage, further highlighting challenges that arise with protecting against cyber risk. in addition, the researchers estimate that the potential impact of a cyberattack is systematically greater during stressed financial conditions. this indicates that we need a deeper understanding of how cyber risk interacts with traditional challenges to financial stability. 4 many of the participants in today's conference are working on research that will advance our knowledge of cyber risk and financial stability, and i am looking forward to continuing to follow work in this area. despite progress in recent years, techniques to quantify cyber risk are still at a nascent stage, in part because of a lack of good data. better data on cyber threats and vulnerabilities will enable us to identify and assess threats to banks and the financial system. in addition, improved data on interconnectedness between financial institutions and service providers will help identify and measure the impact of an incident on the broader financial system. the ability to quickly identify patterns, connections, and vulnerabilities will enable quick response, and may mean the difference between a controlled event and one that has a serious impact. we are supporting efforts to further study this subject through public - private coordination groups. in addition, cyber incident reporting will provide better data on the frequency, severity, and locality of cyber incidents that will enhance our collective ability to respond to these events. i am heartened to see that many of the attendees and speakers at this conference come not just from the united states, but also from around the globe. today's globalized financial system and the global nature of cyber threats demand international coordination from both participants and regulators. in closing, i look forward to hearing more about what you all accomplish during the remainder of the conference, | 1 |
already made in operationalizing the crisis management framework in bulgaria. the key actions so far include : regular meetings of the fsac to assist in developing common policies, better coordination and exchange of information with a view to maintaining stability and further developing the financial markets ; launching a new department within the central bank with operational tasks and responsibilities in the area of bank resolution ; collection of the first contributions from the banks into the brf, which will amount to nearly 1 / 2 bis central bankers'speeches bgn 300 million, including the upcoming 2017 installments ; approving the resolution plans for the foreign subsidiaries belonging to banking groups operating in bulgaria. we have already planned the next steps, which will further build on recent progress. our efforts are focused on the following groups of measures : expanding the fsac mandate, including for better coordination of agencies β contingency planning in response to situations threatening financial stability ; creating capacity for the practical application of resolution tools, more specifically the sale of business, the bridge institution and the bail - in tools, if needed ; prioritising the resolution planning for domestic systemically important banks ; this process is presently underway but their resolution plans are not yet adopted ; addressing financial and legal restrictions on liquidity support by the central bank, taking into consideration both the existing currency board regime and the eu state - aid rules and procedures for public support to banks. we plan to apply the above measures along with further strengthening banking supervision, reducing bank nonperforming loans ( npls ), and further developing the overall financial sector safety net. to this end, we are in the process of preparing : an action plan for further banking supervision reforms with a focus on developing supervisory rules and procedures and the relevant it infrastructure to improve compliance with the bcp ; a strategy for reduction of npls, including the use of macroprudential supervisory review tools to promote sound bank practices for loan loss provisioning ( following the ifrs but also specifying certain supervisory expectations ), npl write - downs, and collateral valuation ; a joint bnb - mof strategy for liquidity assistance to solvent banks facing liquidity pressure, that would ensure compliance with the central bank requirements for the highest quality of collateral. after the problems in 2014, all key elements of the crisis management framework are available now in bulgaria. this framework is built on sound foundations and is fully consistent with the most recent eu legislation in the credit institution resolution area. in spite of the progress achieved, much remains to be done, mainly | last century the newly created euro replaced the deutsche mark as the reserve currency of the currency board in bulgaria. to sum up, our own experience is part of the global history of alternating monetary policy regimes. it motivates our interest in both the history and future of monetary unions. as central bankers we do look forward to the papers and discussions today, since the historical perspectives therein should also bring out rather relevant contemporary insights for policy. after the covid19 outbreak disrupted our usual ways of communication and in - person contacts, this may be among the first international conferences on financial and economic history to take place physically again. to be more precise β almost entirely physically β since some of our speakers have had to deal with last - minute unforeseen circumstances and will present their research remotely. thus, today we will have the opportunity to appreciate a series of papers and presentations, 1 / 2 bis central bankers'speeches commencing with the keynote speech by thomas mayer. he will lay ground by pairing the two main functions of money. on the one hand, money is a means of transaction that stores value over time and space while being a standardised unit of account to record this exchange. on the other hand, the printing or minting of money has been a potent funding instrument and a symbol of the state. therefore, we expect to hear what motivates sovereign states to choose to adopt a common currency in a monetary union. we have seen in history how newly established states are eager to reaffirm independence in their internal political discourse by creating a national currency, but then resort to pegging to global currencies if, for example, in need to rein inflation or gain overall policy credibility. sometimes they even adopt a foreign currency as their own unilaterally, as demonstrated by recent examples in close parts of europe ( kosovo and montenegro ). after the introduction and the keynote, the conference explores four directions of thought on the topic of monetary unions in history. a panel is devoted to each of them. the first panel will explore the link between monetary unions and economic integration by offering a glimpse in their history. the second session will focus on twentieth century monetary unions following the great and continuous economic stress of the first world war. the third panel will examine monetary unions as facilitating tools for greater customs and economic integration within the comecon and the austro - hungarian empire. finally, the last session will address the question to what extent the political relations transcend in the monetary unions as well illustrated by the great | 0.5 |
demand during a boom typically leads to rapid rises in prices and unregulated rents. eventually, of course, the amount of housing supplied responds to changes in demand. so, how did the economic expansion and contraction affect new york city β s housing market? for a mature city, the city saw an unusually strong boom in housing sales, construction and prices. this expansion actually began in 1996 and continued even in the aftermath of the 9 / 11 attack. since 2007, however, new york city β s market has turned down. this decline started later than the nation β s and prices have fallen less sharply. now, prices appear to have stabilized. this pattern can also be seen in manhattan β s rental market. after a long period of rising rents, the market weakened substantially from 2007 to 2009, and rents have rebounded moderately in 2010. new york city has not been spared from the high rates of mortgage delinquencies characteristic of this recession. manhattan β s delinquency rates are elevated although they remain markedly below the national average. by contrast, pockets of distress are much more prevalent in the outer boroughs, all of which have delinquency rates, per owner - occupied unit, above the national average. the relatively mild recession and the recovery in the city are lending support to both home prices and sales. also positive, compared with the rest of the country, are the city β s low mortgage leverage rates and a low share of homes with underwater mortgages. nevertheless, several risks to home prices in the city remain. these risks include the ongoing completion of a considerable number of new apartment buildings β ones that were started at the end of the boom. another risk comes from the slow pace of job growth in highpay sectors ( including the securities industry ) in new york city. finally, during the boom, prices rose substantially faster than rents. going forward, this disparity could exert downward pressure on home prices as renting has become a more affordable alternative. conclusion in sum, after a recession that was milder than in many parts of the country, the region is showing signs of a modest recovery in new york, but little growth elsewhere. the housing sector played a pivotal role in the recent national downturn. in the region, the fact that housing activity has a smaller weight in the regional economy helped to limit the recession β s impact on many communities. going forward, given housing β s significance to the well - being of people in our region and beyond, | economy can succeed without a high - quality see, for example, james m. poterba ( 1995 ), β balanced budget rules and fiscal policy : evidence from the states, β national tax journal, vol. 48 ( 3 ), pp. 329 β 36. see richard mattoon and leslie mcgranahan ( 2008 ), β revenue bubbles and structural deficits : what β s a state to do? β working paper no. 2008 β 15 ( chicago : federal reserve bank of chicago, july ) ; and david l. sjoquist and sally wallace ( 2003 ), β capital gains : its recent, varied, and growing (? ) impact on state revenues, β state tax notes, august 18. bis central bankers β speeches workforce, particularly in an age of globalization and technical change. cost - effective k - 12 and post - secondary schooling are crucial to building a better workforce, but they are only part of the story. research increasingly has shown the benefits of early childhood education and efforts to promote the lifelong acquisition of skills for both individuals and the economy as a whole. the payoffs of early childhood programs can be especially high. 7 for instance, preschool programs for disadvantaged children have been shown to increase high school graduation rates. 8 because high school graduates have higher earnings, pay more taxes, and are less likely to use public health programs, investing in such programs can pay off even from the narrow perspective of state budgets ; of course, the returns to the overall economy and to the individuals themselves are much greater. additionally, in a dynamic economy in which job requirements are evolving more rapidly than ever, individuals already in the workforce need opportunities to improve their skills throughout their lives. there are many ways to provide such opportunities. for example, community colleges and vocational schools train and retrain workers, often in close collaboration with private employers, and in many cases they perform this function at a relatively low cost. although helping workers acquire up - to - date skills is always important, it is especially critical now, when long spells of unemployment are threatening the longer - term employability and productivity of many. conclusion tonight i have highlighted some of the fiscal challenges faced by elected officials, both in new york and in other regions. in the past few years, the weak economy has significantly reduced government revenues, which in turn has forced governments to make difficult decisions on spending and taxes. an improving economy should help, but state and local finances will remain under pressure for some time. moreover, states and localities | 0 |
more efficient for market participants. by enhancing a stable infrastructure and enabling pan - european harmonisation in the settlement of payments and securities, we supply a core component for the provision of innovative products and services at the domestic euro area level. and we also support the aims of the capital markets union. impetus for the development of standardised pan - european instant payment solutions with psd2, the sepa instant credit transfer scheme and tips, the retail payments market in europe has the building blocks it needs to provide innovative pan - european payment services. however, adopting the instant credit transfer scheme and connecting to tips as a passive participant or reachable party so that customers may receive instant payments is just a preliminary step. it is also not enough just to provide the core sepa instant credit transfer as a faster alternative to the sepa credit transfer. providers also need to tap into the potential of growing payment volumes, both at physical points of sale / points of interaction in shops and in e - commerce and they need to offer domestic pan - european solutions that are safe, efficient and easy to use. 2 / 3 bis central bankers'speeches what we are seeing is that global providers are successfully tapping into this potential, using the pan - european sepa schemes β or cards β as the basis for end - user solutions that appeal to customers. there is nothing wrong with that β as long as our regulatory requirements are respected and there is competition and diversity in the payments market. but will there be sufficient competition and diversity in the european payments market in the long run if we continue as we are doing now? what is the biggest challenge for payment service providers in europe? is it the harmonisation and integration measures introduced by central banks and regulators, or is it global competition? might it not be more future - oriented to aim to deliver strong and resilient domestic european payment services in general and truly pan - european instant payment solutions in particular, rather than defending national legacies or creating new regional or group - specific solutions? conclusion the eurosystem wholeheartedly supports the creation of an innovative single payments market for the euro through its market infrastructure projects and policy work. we invite actors in the payment service industry to work with us on a future - oriented approach to pan - european innovative retail payment solutions. this will enable us to safeguard a competitive and diversified payments market β for the benefit not only of generation z, but of all individuals and businesses making euro payments across europe. i wish you a fruitful discussion and an enjoyable conference | investment vehicles, and how much risk will eventually flow back onto the balance sheets of banks. moreover, until conditions in the us housing market show signs of improvement, the possibility of further tensions surfacing in structured credit markets cannot be excluded, especially if credit quality were to deteriorate in the broader us mortgage market. as the adjustment process in the financial sector over the coming months is likely to prove challenging, the financial system could be more vulnerable than before to the crystallisation of other risks that have been identified in previous issues of the fsr and which remain relevant. specifically, these risks are related to the following facts and developments : first, within the euro area, the substantial increase in household sector indebtedness together with signs of vulnerability in some housing markets adds to the credit risk facing euro area banks in the short to medium term. second, the surge of leverage in parts of the corporate sector, especially that associated with lbo activity, raises the possibility of an adverse turn in the credit cycle involving a rise in the default rates of the most heavily indebted firms. third, although so far the hedge fund sector was relatively unaffected by the recent market turmoil, some uncertainties remain regarding hedge funds β exposures to credit markets, as well as their leverage and liquidity risk. finally, outside the euro area, persistently wide global imbalances continue to pose a risk that they will be unwound in a disorderly manner. this could bring about further tensions in global capital markets and, if this risk were to materialise, it could pose a challenging test for the risk management and loss - absorption capacities of key financial institutions. all in all, the risks to euro area financial system stability have materially increased over the past 6 months. there are, however, several mitigating factors : the economic outlook remains broadly favourable and, although pockets of vulnerability can be identified, the balance sheets of households and firms are largely in good shape, supporting the overall creditworthiness of the non - financial sector. moreover, the capital positions of core financial firms are also generally sound. this overall positive assessment of shock - absorbing capacity should not provide any grounds for complacency given the heightened uncertainties. in an environment where balance sheet conditions could unexpectedly change, vigilance is of the essence and financial institutions in particular should step up their efforts to effectively manage the risks that may lie ahead. in this respect, recently launched initiatives and measures that are being taken, both by policy | 0.5 |
i would like to thank sarah breeden, victoria cleland, karen jude, nick maclaren, harsh mehta and ali moussavi for their help in the preparation of these remarks. 3 / 3 bis - central bankers'speeches | and predictable, rate. that, in turn, will encourage more rational, longer - term, economic decision - making and investment, which will help indirectly to improve underlying, supply - side, performance. similarly, today β s macro - economic orthodoxy requires fiscal policy to be directed to restricting government borrowing to levels that can be sustained into the medium and longer term, without either forcing up real yields or implying the prospective need for progressively rising tax rates - which could otherwise damage the development of private sector economic activity. now in some respects we have made considerable progress over the past two years and more. inflation in many countries - including virtually all the industrial countries but not confined to them - is now consistently lower than it has been for ages. that in itself has contributed to lower interest rates and to the lower nominal bond yields that i have described. but, in addition to that, fiscal consolidation, which has lowered the combined government deficits of the g7 countries from around $ 600 billion in 1994 to around $ 540 billion last year, has helped to reduce real yields, notwithstanding the continuing demand for capital from the developing world. and the really good news is that this macro - economic discipline has been accompanied by sustained economic expansion, with world gdp as a whole growing at an annual rate of some 3Β½ - 4 %. now of course there have been quite marked differences in the performance of individual countries within this overall picture. some of the transition economies have seen a brutal contraction of output which is only now beginning to stabilise. and there have been marked fluctuations in the growth rates of some of the emerging countries. growth in parts of asia, for example, is now moderating, cyclically, to a more sustainable pace, while parts of latin america continue to recover from the set - back they suffered two years ago. among the industrial countries, too, economic developments have diverged over the past two years. in the united states and in this country, for example, inflation has been contained to around 3 % with continuing growth and low or falling unemployment. and this pattern looks set to continue. in japan and on the continent of europe, on the other hand, while inflation has been even lower, activity has been disappointingly weak, and unemployment on the continent at least has risen to quite frightening levels. and while there is now the prospect of a moderate pick - up in activity in these countries, that is not yet assured. japan, which is in many respects a unique case, faces substantial fiscal consolidation | 0 |
and management of three banks. several institutions were forced to liquidate or merged with strong institutions. if these actions were not taken these banks would have collapsed with disastrous effects for the financial markets. ( b ) several development financial institutions have either been closed, wound up, privatized, converted into a bank, restructured and adequately capitalized for eventual sale to the private sector. ( c ) an independent assessment of the financial sector by a joint world bank - imf team has concluded that the financial soundness indicators of pakistani banking system are robust and can withstand exogenous shocks. observance of internationally accepted standards and codes has found to be quite high. ( d ) minimum capital requirements of banks have been raised twice during the last four years to weed out weak banks and allow mergers and consolidation to take place so that fewer but stronger banks operate in the system. ( e ) stringent measures have been laid and enforced on classification of non - performing loans, loan loss provisioning, tier 1 and tier 2 capital adequacies, write off of unrecoverable debt and allocation of capital against market risk. ( f ) three different sets of regulations specifically tailored to manage the risk profiles of corporate, consumer and sme lending have been issued by the state bank in consultation with the banks and businesses. central bank autonomy central banks are required to promote the establishment and operation of a safer and sound financial system i. e. the framework of prudential regulations and supervision as well as payment and settlement systems. central banks also play a critical role in crisis management through provision of emergency liquidity assistance. finally, price stability has to be assured to lay the foundation for long - term sustainable growth. for these functions to be performed effectively the central banks require a degree of autonomy. state bank of pakistan has gradually won a substantial amount of autonomy and independence during the last several years. the laws governing the bank have been modified from time to time to provide adequate decision making authority and powers in respect of the conduct of monetary policy, banking supervision and regulation, exchange rate and foreign reserves management and payment and settlement system. a monetary and fiscal coordination board has been set up to coordinate monetary and fiscal policies. an independent board of directors consisting of seven eminent individuals drawn from various walks of life oversees the activities of the bank and formulates policy guidelines. the ministry of finance has only one representative on the board and exercises a single vote in decision - making. the governor and the board cannot be removed by the | ##nation - facts - causes - and - cures bank of england, 2014, may 2014 inflation report, http : / / www. bankofengland. co. uk / publications / documents / inflationreport / 2014 / ir14feb. pdf banks j., r. crawford and g. tetlow, 2010, β what does the distribution of wealth tell us about future retirement resources? β, a report of research carried out by the institute for fiscal studies on behalf of the department for work and pensions. barro r., 2009, β rare disasters, asset prices, and welfare costs β, american economic review 2009, 99 : 1, 243 β 264. bis central bankers β speeches bernanke b., 2005, β the global saving glut and the u. s. current account deficit β, remarks at the sandridge lecture, virginia association of economists. broadbent b., 2012, β costly capital and the risk of rare disasters β, speech given at bloomberg, london, http : / / www. bankofengland. co. uk / publications / documents / speeches / 2012 / speech581. pdf bunn p. and m rostom, 2014, β household debt and spending β, bank of england quarterly bulletin no. 304. eggertson g. and p krugman, 2012, β debt deleveraging and the liquidity trap : a fisherminsky - koo approach β, the quarterly journal of economics ( 2012 ), 1469 β 1513. doi : 10. 1093 / qje / qjs023. elsby m, b hobijn and a sahin, 2013, β the decline of the us labour share β, brookings papers on economic activity, fall 2013. friedman m. and a. j. schwartz, 1963, β a monetary history of the united states 1867 β 1960 β, national bureau of economic research joyce m., n. mclaren and c. young, 2012, β quantitative easing in the united kingdom : evidence from financial markets on qe1 and qe2 β, oxford review of economic policy, volume 28, no. 4, pp. 671 β 701. karabarbounis l and b neiman, 2013, β the global decline of the labor share β, quarterly journal of economics, 129 ( 1 ), 61 β 103, february 2014. keynes j. m., 1930, β a treatise | 0 |
β total assets. still, these credit exposures have been growing rapidly, more or less in line with the growth of the notional amounts. the leading role played by u. s. commercial and investment banks in the global otc derivatives markets is documented in a bank for international settlements survey of last june. this survey estimated the size of the global otc market at an aggregate notional value of $ 70 trillion, a figure that doubtless is closer to $ 80 trillion today. once allowance is made for the double - counting of transactions between dealers, u. s. commercial banks β share of this global market was about 25 percent, and u. s. investment banks accounted for another 15 percent. while u. s. firms β 40 percent share exceeded that of dealers from any other country, the otc markets are truly global markets, with significant market shares held by dealers in canada, france, germany, japan, switzerland and the united kingdom. despite the world financial trauma of the past eighteen months, there is as yet no evidence of an overall slowdown in the pre - crisis derivative growth rates, either on or off exchanges. indeed, the notional value of derivatives contracts outstanding at u. s. commercial banks grew more than 30 percent last year, the most rapid annual growth since 1994. although episodes of extreme volatility have produced declines in the most highly leveraged contracts, the growth of the more β plain vanilla β products has continued apace or even accelerated. the reason that growth has continued despite adversity, or perhaps because of it, is that these new financial instruments are an increasingly important vehicle for unbundling risks. these instruments enhance the ability to differentiate risk and allocate it to those investors most able and willing to take it. this unbundling improves the ability of the market to engender a set of product and asset prices far more calibrated to the value preferences of consumers than was possible before derivative markets were developed. the product and asset price signals enable entrepreneurs to finely allocate real capital facilities to produce those goods and services most valued by consumers, a process that has undoubtedly improved national productivity growth and standards of living. nonbank, as well as bank, users of these new financial instruments have increasingly embraced them as an integral part of their capital risk allocation and profit maximization. it should come as no surprise that the profitability of derivative products has been a major factor in the dramatic rise in large banks β non - interest earnings and | mr greenspan discusses financial derivatives and the risks they entail speech by the chairman of the board of governors of the federal reserve system, alan greenspan, before the futures industry association, boca raton, florida, on 19 march 1999. by far the most significant event in finance during the past decade has been the extraordinary development and expansion of financial derivatives. this morning i should like to evaluate the scope of these markets, the nature of the risks they entail and some of the difficulties we encounter in managing those risks. at year - end, u. s. commercial banks, the leading players in global derivatives markets, reported outstanding derivatives contracts with a notional value of $ 33 trillion, a measure that has been growing at a compound annual rate of around 20 percent since 1990. of the $ 33 trillion outstanding at year - end, only $ 4 trillion were exchange - traded derivatives ; the remainder were off - exchange or over - the - counter ( otc ) derivatives. the greater use of otc derivatives doubtless reflects the attractiveness of customized over standardized products. but regulation is also a factor ; the largest banks, in particular, seem to regard the regulation of exchange - traded derivatives, especially in the united states, as creating more burdens than benefits. as i have noted previously, the fact that the otc markets function quite effectively without the benefits of the commodity exchange act provides a strong argument for development of a less burdensome regime for exchange - traded financial derivatives. of course, notional values are not meaningful measures of the risks associated with derivatives. indeed, it makes no sense to talk about the market risk of derivatives ; such risk can be measured meaningfully only on an overall portfolio basis, taking into account both derivatives and cash market positions, and the offsets between them. clearly, the degree of counterparty credit risk on derivatives depends critically on the extent to which netting and margining procedures are employed to mitigate the risks. in the case of exchange - traded contracts, of course, daily variation settlements by clearing houses strictly limit, if not totally eliminate, such counterparty risks. in the case of otc derivatives, counterparty credit exposures are far larger, though still a very small fraction of the notional amounts. on a loan equivalent basis, a reasonably good measure of such credit exposures, u. s. banks β counterparty exposures on such contracts are estimated to have totaled about $ 325 billion last december. this amounted to less than 6 percent of banks | 1 |
history of high inflation and problems with government finances β all the high - interest countries were treated in much the same way. the situation in sweden β s financial markets then improved as the measures for consolidating government finances began to bite, prospects for sweden β s economy brightened and international developments became more stable. during 1995 the swedish krona became markedly stronger and long - term interest rates declined. this trend continued during 1996, when the riksbank rapidly lowered the repo rate. at the end of 1996 the level of the tcw exchange rate index was 114, which was inside the riksbank β s estimated interval for long - term equilibrium. for about two years, from the summer of 1996 to the summer of 1998, the krona stayed inside a relatively narrow interval in relation to the german mark, about 3 per cent around a mean level of 4, 40. in effective tcw terms, however, the krona weakened. there are good reasons for supposing that this was due to other factors than problems with credibility. the link between exchange rate movements and the long - term interest rate differential was no longer discernible, which indicates that the krona β s path now had less to do with aspects of credibility. the main explanation for the weaker exchange rate in this period lay rather in cyclical differences. stronger economic growth in the uk and the united states caused the dollar and sterling to appreciate against the krona. turbulent autumn in the autumn of 1998 the krona weakened again, mainly, in the riksbank β s opinion, on account of international turbulence. growing financial problems during 1998, culminating after russia β s suspension of debt payments and the near failure of an american hedge fund, increased the risk aversion of international investors and prompted a flight to more secure assets. this hit the krona even though the economic fundamentals in sweden were mostly good. one reason why the general increase in risk premia weakened the krona was probably the persistently high level of external debt. other countries with large foreign debts were similarly affected. in sweden β s case, however, some part was also played by domestic factors ; the krona tended to weaken, for example, at the time of the general election in september. when the financial market turbulence then subsided around the turn of last year, the krona strengthened once more. this suggested that low inflation and the rapid consolidation of government finances were again playing a relatively larger part in exchange rate movements. the stronger krona | promote maximum, inclusive employment and price stability β are closely related to the topics that we will be discussing today. the decisions that we at the fed face on interest rates and other matters must be, and will be, informed by the perspectives that all of you bring to the table today about how to help young people thrive. those decisions will be better decisions after we have heard you and gained a better understanding of the challenges and possible solutions. thank you again for the opportunity to hear your views, and i am really looking forward to our discussion. 1 / 1 bis central bankers'speeches | 0 |
to 2. 5 percent, and will depend on factors that include a bank β s size, complexity, and interconnectedness, as measured by a variety of indicator variables. 8 these progressive surcharges are effectively a type of price - based regulation, and therefore should have the advantages i just noted. to be clear, this taxation aspect of capital requirements is not their only appeal, or even their primary one. even if it were almost costless to impose higher capital requirements on bigger banks β so that doing so provided essentially no disincentive to bank size β it might still be a good idea to do so, for purely prudential reasons. in other words, capital requirements serve as both a prudential buffer and a tax, and can be a useful regulatory tool for both reasons. see hughes and mester ( 2011 ) for a recent contribution to the literature on scale economies in banking. see bcbs ( 2011 ) for a description of the methodology. bis central bankers β speeches however, a proponent of size caps might reasonably reply : β fine, but how do i know that these surcharges are actually enough to change behavior β that is, to exert a meaningful influence on the size distribution of the banking system? β after all, the analogy between a capital requirement and a tax is somewhat imperfect, since we don β t know exactly the implicit tax rate associated with a given level of capital. some view capital requirements as quite burdensome, which would mean that even a 2 percent surcharge amounts to a significant tax and, hence, a strong incentive for a bank to shrink, while others have argued that capital requirements impose only modest costs, which would imply little incentive to shrink. 9 this uncertainty about the ultimate effect of a given capital - surcharge regime on the size distribution of banks could potentially tip the balance back in favor of quantity - based regulation, like size caps. and indeed, if we were faced with a static, once - and - for - all decision, i don β t think economic reasoning alone could give us a definitive answer as to whether caps should be preferred to capital surcharges. this ambiguity is in some sense the central message of weitzman β s original analysis. one way to resolve this tension is to refrain from putting ourselves in the position of having to make a once - and - for - all decision in a setting of substantial uncertainty. rather, it might be preferable to try to learn from the incoming | 2017 ). β public trust in government : 1958 - 2017, β webpage, pew research center, www. people - press. org / 2017 / 12 / 14 / public - trust - in - government1958 - 2017. tucker, paul ( 2017 ). β what is macroprudential policy for? making it safe for central bankers, β speech delivered at β financial systems and the real economy, β a conference sponsored by bank negara malaysia and the bank for international settlements, held in kuala lumpur, march 31, https : / / www. bis. org / publ / bppdf / bispap91 _ keynote. pdf. | 0.5 |
innovation in these industries. according to the u. s. census bureau, 97 percent of the country β s land mass is rural, and about 60 million americans call a rural community their home. 1 to put that number in perspective, the rural population of the united states is larger than the combined populations of the new york, los angeles, and chicago metro areas. if we were talking about the economies of those great cities, we β d stress their regional differences, the complexities of demographic change, and the distinct challenges each city faces to remain vibrant and innovative. when the focus shifts to the rural economy, however, the discussion tends to be overly broad and simplistic. the diversity and complexity of our vast rural communities too often gets lost β and i think that needs to change. there are challenges in rural communities. we know them all too well. there is a notable gap in access to broadband. as of 2016, 31 percent of americans in rural areas were not able to access broadband compared to just 2 percent of americans in urban areas. 2 this can have a significant business impact on ag producers β for example, limiting access to internet - based cattle auctions or inhibiting the ability of dairies to leverage technology to remotely access animal nutritionists to formulate feed to maximize milk production. 1 / 3 bis central bankers'speeches many rural schools struggle to attract and keep qualified teachers who can teach stem and advanced math classes. these subjects are vital to preparing our children for the opportunities and challenges of a more competitive and technological workplace. 3 one in five people in rural areas have a bachelor β s degree, compared to one in three in urban areas. 4 this educational disparity helps explain why the employment - to - population and labor force participation rates in rural areas are lower than in many urban areas. 5 another contributing factor to low rural labor force participation is the opioid crisis, which the entire nation is struggling to overcome. policymakers need to be aware of and be willing to confront these issues. but let me be clear : i am optimistic about the future of rural america. the narrative of rural decline is too sweeping and brushes aside the diversity of the rural experience. just as many cities thrive while others struggle, there are deteriorating rural communities and rural communities that are thriving and growing. so let β s build on these successes and highlight a few of the positives. following six years of steady population losses, up through 2016, the rural population appears to have stabilized. and while | and dynamic, and subject at times to unpredictable shocks, such as a global financial crisis or a pandemic. at those times, forecasters have to think outside the models. this work also takes large doses of courage and humility. and, finally, judgment. to complement this rigorous process, there has to be good judgment, based on knowledge and experience. perhaps the most important legacy of the past century for the division of research and statistics is the resilience, the creativity, the energy, the rigor, and the commitment with which r & s has risen to the many challenges it and our country have faced in that span of history. on behalf of the board and the fomc, thank you for that, and hearty congratulations on your first 100 years of service to the public. 2 / 2 bis - central bankers'speeches | 0.5 |
me to highlight a number of thailand β s fundamental strengths that underpin this positive outlook. first, our corporate sector remains competitive with accumulated robust savings and profitability. this fact is well evidenced by their healthy balance sheets and their ability to explore investment opportunities overseas. net profit of most listed companies in the second quarter 2012 turned out be positive despite damages inflicted by the floods. with strong financial positions and more trade liberalization, an increasing number of firms have gone overseas, as indicated by a marked increase in thai direct investment from $ 3 billion in 2007 to $. 10. 6 billion in 2011. second, supportive fiscal and monetary policy has helped enhance growth while continuously strengthened stability in the thai economy. this achievement has been attributable to responsive fiscal and monetary policy, together with market - friendly regulations aimed at keeping the economy operating close to its potential. the rapid recovery from the great floods last year amid global economic uncertainty has revealed the importance of fiscal stimulus and government efforts in restoring public confidence. at the bis central bankers β speeches same time, the expansionary monetary policy stance has helped accommodate business restoration process. third, thailand has a strategically well placed - location for international investors to benefit from rising asian integration. the rise of china and the asean economic community ( aec ) evidently provide enormous opportunities for businesses operating in thailand to expand and prosper from enlarging market size and integrated regional supply chain. automotive and electronics industries are prominent examples that have long gained competitiveness after establishing complex supply chain - hub in thailand and obtaining a critical foothold in the region. finally, the thai financial system has been resilient to the global financial crisis. and the key reason for the banking sector β s resiliency is that our financial system remains relatively non - complex. the financial transactions are derived from real economic activities, and hence risks are understandable and manageable, with lending to domestic companies accounting for 70 percent of loan portfolio and the rest is mainly mortgage loan. the direct exposure of thai banks to european countries is also very small. investments and loans made by thai banks to europe are only 0. 3 percent of total assets, while claims on thai banks by european countries are even smaller at 0. 03 percent of total liabilities. nevertheless, we will be watchful of the second round impact of the eu crisis, particularly via impact on exports that could impact asset quality. apart from the existing solid fundamentals outlined above, thailand is currently striving to develop a more efficient financial system to | prasarn trairatvorakul : economic and financial cooperation between china and thailand opening remarks by dr prasarn trairatvorakul, governor of the bank of thailand, at the luncheon to inaugurate the bank of thailand beijing representative office, beijing, 6 april 2012. * * * your royal highness ( princess maha chakri sirindhorn ), your excellencies, distinguished guests, ladies and gentlemen, the bank of thailand is humbly grateful to your royal highness princess maha chakri sirindhorn for graciously presiding over this luncheon to inaugurate the bank of thailand beijing representative office. the bank of thailand is privileged and honoured to celebrate this auspicious occasion at the residence of the ambassador of thailand here in beijing among a group of honored guests who have been part of the long - standing sino - thai relations. today β s event provides a unique opportunity to celebrate not only the present achievements, but also to pay tribute to history of the friendship between china and thailand that has spanned over 700 glorious years since the tang dynasty and the sukhothai era. our cooperation first began in the form of trade, which remains to this day the strongest tie between our two nations. along with the flows of trade from china came the cultural heritage, which is why our cultural linkage is deeply rooted β in all aspects of the arts, culture and cuisine. your royal highness, ladies and gentlemen, the long - standing relations between our two economies have provided a solid foundation that shaped our modern economic and financial relationships. trade value between our two countries has grown tremendously over the last decade. with the highest growth recorded among our major trading partners, china has now become thailand β s largest export destination and the second largest trading partner. for more than 30 years, thai businessmen have invested in china and i understand that we are the first of the asean countries to invest in china. chinese investment in thailand has also increased significantly and china is now the fourth largest foreign investor in thailand. thai commercial banks have long had a presence in china to better respond to the needs of their customers in china, namely bangkok bank, kasikorn bank, and krung thai bank. likewise, bank of china and icbc, the two largest chinese banks, are already operating in thailand. in addition to these bilateral relations, our cooperative spirit has also extended to the multilateral frameworks. please allow me to name just a few important ones. | 0.5 |
securitizers and loan purchasers ( " assignees " ) liable for the actions of mortgage originators. the securitization market is critical to increasing the resources available to fund home purchases and great care should be taken to ensure that investors in the securitization market can quickly and accurately assess and mitigate the risks, including the compliance risks, of mortgages sold in this market. such laws should be very clearly delineated to ensure that they do not have a detrimental impact on the ability of lenders to securitize loans. specifically, assignees must be able to conduct due diligence and determine whether an originator has complied with the law, so that they can evaluate and price for any risks. finally, the bill would enhance hoepa's protections by prohibiting abusive practices, such as prohibiting the financing of single - premium credit life insurance. hoepa's points and fees trigger would be lowered and additional fees added. these potential actions merit discussion, and we welcome the opportunity to continue to work with congressional staff on these and other provisions in new legislation. conclusion the board is engaged in several activities to assist consumers, and continues to develop rules that will improve consumer disclosures, address unfair or deceptive practices, and help consumers facing default and foreclosure. we look forward to working with congress to enhance consumer protection laws while maintaining access to credit. | than subprime borrowers but still pose more risk than prime borrowers ), the serious delinquency rate has also risen, to 3 percent from 1 percent only a year ago. these patterns contrast sharply with those in the primemortgage sector, in which less than 1 percent of loans are seriously delinquent. higher delinquencies have begun to show through to foreclosures. about 320, 000 foreclosures were initiated in each of the first two quarters of this year ( just more than half of them on subprime mortgages ), up from an average of about 225, 000 during the past six years. foreclosure starts tend to be high in states with stressed economic conditions and to rise where house prices have decelerated or fallen. adjustable - rate subprime mortgages originated in 2006 have performed the worst, with some of them defaulting after only one or two payments ( or even no payment at all ). relative to earlier vintages, more of these loans carried greater risks beyond weak borrower credit histories β including very high initial cumulative loan - to - value ratios and less documentation of borrower income. the recent increase in delinquencies and foreclosures has created personal, financial, and social distress for many homeowners and communities. we encourage servicers of securitized mortgages to reach out to financially stressed homeowners. keeping families in their homes is a matter of great importance to the federal reserve. in fact, the twelve federal reserve banks are working closely around the country with community and industry groups dedicated to reducing homeowners'risks of foreclosure. each of the reserve bank community affairs offices provides significant leadership and technical assistance in this area. i am also pleased to serve as the federal reserve's representative on the board of directors of neighborworks america, which has a program to encourage borrowers facing mortgage payment difficulties to seek help by making early contact with their lenders, servicers, or trusted counselors. neighborworks'center for foreclosure prevention center recently launched a national advertising campaign to raise awareness about its 24 - hour national hotline that connects struggling borrowers with homeownership counselors. since the launch of the campaign this past june, the daily call volume has almost doubled from 1, 000 to almost 2, 000 calls a day. the board's response to problems in the subprime market the federal reserve has primary rule | 1 |
of 22 december 2011 on the macro - prudential mandate of national authorities β ( esrb / 2011 / 3 ) : https : / / www. esrb. europa. eu / pub / pdf / recommendations / esrb _ 2011 _ 3. en. pdf see recital 24 of regulation no 1092 / 2010 of the european parliament and of the council on european union macroprudential oversight of the financial system and establishing a european systemic risk board : the ecb and the national central banks should have a leading role in macro - prudential oversight because of their expertise and their existing responsibilities in the area of financial stability. national supervisors should be involved in providing their specific expertise. the participation of micro - prudential supervisors in the work of the esrb is essential to ensure that the assessment of macro - prudential risk is based on complete and accurate information about developments in the financial system. accordingly, the chairpersons of the esas should be members with voting rights. one representative of the competent national supervisory authorities of each member state should attend meetings of the general board, without voting rights. in a spirit of openness, 15 independent persons should provide the esrb with external expertise through the advisory scientific committee. https : / / eur - lex. europa. eu / legal - content / en / txt / html /? uri = oj : c : 2016 : 202 : full & from = en 5 / 9 the banking sector should be activated or deactivated. accordingly, other sectoral financial regulators are given responsibilities for activating their own tools. in particular, the banco de espana is now empowered to require that banking institutions establish countercyclical capital buffers by credit segment, limits on concentration in relation to economic activity sectors, and limits and conditions when underwriting new loans ( in terms of loan - to - value, loan - to - income and debt service - to - income ratios, and also the maturity, the currency in which the operation is denominated and whether the interest rate is fixed or variable, among others ). these new instruments complement those previously available to the banco de espana and included in the european legislation : 11 the countercyclical capital buffer, the systemic risk buffer and the buffer for systemic banks, among others. in addition, this year saw the creation of the macroprudential authority financial stability council, whose main goal is to contribute to the promotion of coordination and the exchange of information on financial stability issues among | by the impact of house price declines alone. this may be because highly leveraged households reduce spending to pay down debt, and because highly leveraged households may no longer be able to access credit, thus reducing consumption. bis central bankers β speeches during the boom explain most of the subsequent differences in house prices and bank loan losses. 8 the recent financial crisis was started in much the same way as many other crises, that is, by a huge property price bubble that was financed by massive credit expansion by banks. 9 such dramatic falls in house prices as were experienced during the crisis were followed by widespread fragility in the financial sector as borrowers β balance sheets became stressed. once the falls became large enough and a sufficiently large number of borrowers were affected, a full - blown financial crisis ensued. house prices, financial crises and fiscal stability unfortunately, the irish housing bubble was not an atypical event. it is therefore of interest to look more generally at property price booms and financial stability to see what the consequences of the bursting of a housing bubble are. in this section i look first at the consequences for the broader economy before looking at their impact on governments β fiscal positions. macroeconomic effects of housing bubbles financial crises associated with speculative boom - bust episodes have been traced back as far as the holy roman empire in the 17th century. 10 not all of these, of course, relate to property bubbles, although many do. indeed, there is ample historical evidence of house price boom - bust cycles and their economic effects. work by the imf11 found that approximately 40 per cent of house price booms were followed by busts, 12 resulting in, on average, 30 per cent house price declines, and lasting for approximately four years. reinhart and rogoff ( 2009a ) find that the cumulative decline in real house prices, from peak to trough, is in excess of 35 per cent over an average period of 6 years, although declines of 50 and 60 per cent have also been recorded ( figure 4 ). 13 so house price booms frequently end in a bust. but how frequently do they end in a financial crisis? reinhart and rogoff ( 2009a ) in their celebrated study of financial bubbles show that house price increases are indeed common prior to banking crises ( figure 5 ). bordo and jeanne ( 2002 ) find that financial crises are generally triggered when house prices have peaked, or immediately after they have started falling. of 15 advanced economies over the period 1970 β 2002 | 0 |
the conduct of monetary policy overseas economies inflation policy interest rates y / y % chg. united states germany france % united states euro area - 2 - 4 cy 80 - 1 cy 85 notes : 1. in the left - hand chart, figures are based on national statistics compiled by the oecd. 2. in the right - hand chart, figures for the united states are the federal funds target rate or the medians of the target ranges. those prior to july 1995 are monthly averages of the effective federal funds rate. figures for the euro area are the rates on the deposit facility. sources : haver ; bloomberg. chart 11 ii. outlook for economic activity and prices and the conduct of monetary policy wages business and employment conditions in the tankan di, % points inverted, di, % points inflation and base pay increase - 60 y / y % chg. business conditions : " favorable " employment conditions : " insufficient " - 40 cpi inflation employment conditions ( right scale ) base pay increase - 20 - 20 - 40 - 60 cy 88 business conditions ( left scale ) business conditions : " unfavorable " employment conditions : " excessive " - 1 - 2 cy 88 notes : 1. in the left - hand chart, figures are for all industries and enterprises. there is a discontinuity in the data for december 2003 due to a change in the survey framework. 2. in the right - hand chart, figures for cpi inflation are for all items less fresh food, excluding the effects of the consumption tax hikes, etc. the figure for base pay increase for 2023 is from rengo's fifth aggregation. sources : bank of japan ; ministry of internal affairs and communications ; japanese trade union confederation ( rengo ) ; central labour relations commission ; institute of labour administration. ii. outlook for economic activity and prices and the conduct of monetary policy chart 12 phillips curve before and after the pandemic cpi ( less fresh food and energy ), y / y % chg. 23 / q1 since the outbreak of the pandemic ( from cy 2020 onward ) period under qqe ( pre - pandemic, cy 2013 to 2019 ) - 1 - 5 - 4 - 3 - 2 - 1 note : figures for the cpi ( less fresh food and energy ) exclude temporary factors ( see note in chart 4 ). sources : ministry of internal affairs and communications ; bank of japan. output gap ( 2 - quarter lead, % ) chart 13 ii. outlook | the past 25 years from a broad perspective as described, the bank has devised various monetary policy measures, with japan's economy facing the challenge of deflation and the need to transform the mindset and behavior based on the assumption of low inflation, as the aftereffect of deflation. however, since the conduct of these measures had no precedent, practice may have preceded theory in some respects. in this sense, there remains some room for further analysis regarding, for example, the positive effects and side effects of the measures. furthermore, although i spoke earlier about macroeconomic developments during the past 25 years in a very simplified manner, in practice, the various factors are intricately intertwined, such as problems in the financial system after the bursting of the bubble economy, rapid advances in deregulation and globalization, and demographic changes. moreover, the series of monetary easing measures has been implemented in response to such developments in economic activity, prices, and financial conditions. therefore, the positive effects and side effects of the easing measures should be understood and examined in the context of interaction with these developments. based on these considerations, the bank decided at its monetary policy meeting last month to conduct a review of its monetary policy over the past 25 years from a broad perspective ( chart 7 ). the purpose of the review is to further deepen the bank's understanding of the interaction between monetary policy, economic activity, and various other factors, and to gain insights that will be useful for future policy conduct. the bank intends to steadily work on this project and spend a sufficient amount of time of around one to one and a half years, drawing on the knowledge it has gained from its experience to date and the research that has accumulated in the academic community in japan and abroad. ii. outlook for economic activity and prices and the conduct of monetary policy so far, i have described the basic thinking on and history of monetary policy. i would now like to change the subject and talk about the outlook for economic activity and prices and the conduct of monetary policy for the time being. i will begin with an overview of developments in economic activity and prices in japan, based on the outlook report that was just published at the end of april. outlook for economic activity and prices japan's economy has picked up ( chart 8 ). currently, what is driving the economy is pent - up demand ; that is, the materialization of demand that had been suppressed during the pandemic. this consists mainly of demand for services, including | 1 |
. the other 94 percent are open for business as usual, providing various financial services. looking at the impact on a nationwide level, japan β s core payment and settlement systems, including the bank of japan financial network system, or boj - net, have been consistently functioning as normal since the earthquake struck. in financial markets, the tokyo stock exchange has been open for business as usual. like electricity, water, gas, railways, and roads, the financial and settlement systems are critical infrastructure that supports people β s lives and economic activity. if the financial and settlement systems as a whole had ceased to function normally, the adverse effects on people β s lives and economic activity probably would have been even greater. the robustness of the financial system that we have seen this time was attributable to the hard work and solidarity of the people involved after the earthquake struck. i would also like to point out that the steady efforts of those involved in normal times, such as in developing business bis central bankers β speeches continuity plans and carrying out street - wide disaster exercises, greatly contributed to this robustness. iii. bank of japan β s responses next, i would like to explain how the bank of japan reacted to the disaster. continued provision of financial services what the bank of japan did first was to continue providing financial services as usual. in that regard, it was vitally important to maintain the financial functions that serve as a lifeline in the affected areas. on the financial front, the first urgent need faced by people in the affected areas is to secure cash to purchase the necessities. the day the earthquake occurred, i promptly asked, jointly with the minister for financial services, financial institutions to take appropriate measures to accommodate the needs of those affected by the disaster, such as permitting the withdrawal of deposits even in cases where depositors had lost certificates of deposits or passbooks. moreover, the bank of japan strived to provide cash to the disaster areas in a prompt and sufficient manner day after day, including holidays, to meet the cash needs of people in those areas. in fact, the amount of cash provided to the affected areas was three times larger than in normal times. the bank of japan has also been taking all possible measures as the central bank to support affected areas by responding to various related financial needs such as exchanging banknotes and coins that were damaged by the earthquake and tsunami. the bank of japan β s operations in the tohoku region, including our branches in sendai and fukushima and | they are currently quite stable. enhancement of monetary easing the third response was to take policy measures on the monetary policy front, by enhancing monetary easing. it so happened that the monetary policy meeting was scheduled to be held over two days starting from the next business day after the earthquake. as the bank of japan deemed it desirable to examine the possible effects of the disaster on japan β s economy and finances and promptly announce a guideline for money market operations, thereby ensuring stability in public sentiment and in the financial markets, it shortened the duration of the meeting to one day and decided on enhancement of monetary easing on march 14. what we feared most immediately after the disaster was a situation in which a deterioration in business sentiment or an increase in investors β aversion to risk would lead to an increase in various risk premiums, thereby adversely affecting economic activity. since the autumn of 2010, the bank of japan has started to purchase various assets, including risk assets such as cp, corporate bonds, exchange traded funds ( etfs ), and japan real estate investment trusts ( j - reits ), under the comprehensive monetary easing framework. this time, the bank of japan decided to increase the amount of the asset purchase program, by doubling the purchases of assets from about 5 to about 10 trillion yen. this measure appears to have helped to reassure financial markets. iv. confidence in financial infrastructure that concludes my explanation of what we did in the month following the earthquake. as the situation is still evolving and we do not yet have sufficient information, it is too early to draw any lessons at this juncture. nevertheless, it does seem worthwhile to share our impressions with one another while our memories are fresh, ahead of full - scale examination of the issue in the future. i myself have thought many things, but if i were to choose one, it would be the importance of ensuring that people retain confidence and trust that financial infrastructure will function normally. in the week following the earthquake, rumors spread mainly among some foreign financial institutions that tokyo financial markets would close. while hard to believe, there was also a groundless rumor that the bank of japan would move its computer center to osaka. extreme anxiety can in itself induce self - propagating market reactions. fortunately, such rumors gradually dissipated. several factors contributed. the first of these was the strong commitment shown by those involved. for my part, i explained to overseas authorities, through an impromptu conference call with g - 7 finance ministers and central bank governors and on other occasions, | 1 |
, either at home or at work. of those, about 80 per cent reported having made an online purchase and almost 60 per cent reported an online transfer of funds to a family member or friend. a surprisingly high 60 per cent of people with internet access said they pay most of their bills online. we also tried to find out what things prevent people from making even greater use of online payments ( graph 3 ). the graph we have here shows the answers for online bill payments, but we also collected responses for online purchases and transfers. graph 3 bis central bankers β speeches first of all, to explain the large bar at the bottom : we were asking people what would make them happier to use online bill payments, but what we found was that more than a quarter of respondents were already satisfied and didn β t think they could be improved. beyond that, by far the biggest factor preventing people from making more use of online bill payments is the risk of fraud. this was even more marked for online purchases, where around half of respondents identified risk of fraud as a factor discouraging greater use. in fact, the level of satisfaction is lower for online purchases overall than for online bill payments and transfers. probably this reflects a lower degree of comfort with online purchases using methods like credit cards and paypal, compared to making bill payments using bpay and internet banking transfers. adoption of the other two new waves of payments technology β contactless payments and mobile payments β is much lower than online payments. only around 3 per cent of survey respondents had made a contactless payment in the last month. less than 10 per cent of respondents had ever made mobile payments. where they had, the main purpose was for phone - related purchases such as ringtones or games ( graph 4 ). most of the other mobile payments made were effectively internet payments made using a smartphone. graph 4 in short, the survey doesn β t seem to point to any major dissatisfaction with payments services in australia, but it sheds some light on why payment - use patterns are as they are, and some possible areas of improvement that can be looked at further. we β ll be publishing a fuller analysis of these results later in the year. results of the initial consultations as i said earlier, we β ve had significant interest shown by a wide range of industry and other players in response to our initial request for comments. a number of interested parties have provided us with written submissions, and many more have made themselves available for informal discussions with rba staff. i | costs. taking this further, it may be possible, in time, for government to dispense with agencies'transactions accounts and the associated daily sweep, allowing agencies to draw their daily spending requirements directly from the government's core accounts at the reserve bank. this could offer savings by avoiding fees currently applied on existing transaction accounts as well as increase administrative efficiency. finally, the ability to send more complete remittance information with a payment could reduce costs for australian businesses making payments to the government by including remittance information within the payment message rather than sending the information via a separate channel. it could also reduce the amount of back office work required by government agencies in trying to align payments with relevant information. open banking the government announced in may that it accepted the recommendations of a review into the design, operating model and regulatory framework for open banking in australia, and will implement them in stages over the next few years. [ 3 ] like npp, open banking represents a significant advance in banking arrangements, giving consumers of banking and financial services the right to access and https : / / www. rba. gov. au / speeches / 2018 / sp - ag - 2018 - 08 - 23. html 5 / 7 23 / 08 / 2018 the reserve bank's government banking business | speeches | rba share their banking data with third parties, including other payment service providers. the changes will increase competition for services. the reserve bank, as a banking service provider, will be participating in the open banking arrangements and is already considering ways by which our customers, along with third parties, can access their own banking data, consistent with the recommendations in the review. it is, of course, a decision for government agencies as to how they will utilise open banking. as with any new service offering, the reserve bank is consulting its customers with regard to the potential advantages for their business. at the very least, government agencies may use open access arrangements to centralise the collection of their banking data, particularly where they hold accounts at more than one financial institution. this would help to streamline the flow of their banking data to their financial management systems and provide better reporting for analytical purposes. whatever the case, the reserve bank, as a service provider, intends to play a role as a holder of data that government agencies can access from services currently provided by the reserve bank and as a receiver of data from commercial providers of banking services to government agencies. this would reduce reporting and analysis costs for the government as well | 0.5 |
( fdi ), official development assistance ( oda ), and portfolio investment flows. closer home, kenya is the third largest recipient of remittances in sub - saharan africa, and it received us $ 4. 0 billion in 2022, an increase of 8. 3 percent compared to 2021, which represents over 3 percent of kenya's gdp. remittances have had massive impact on the lives and livelihoods of the recipients. take for example, esther from kenya, who worked in saudi arabia as a housekeeper for 7 years from 2012 to 2019. she was able to achieve 70 percent of her financial goals while in saudi arabia and at the same time managed to build a 2 - bedroom stone house in kabete, kenya, educate her 3 children and take care of her mother's as well 1 / 3 bis - central bankers'speeches as other relative's needs. kenya's digital landscape enabled her to achieve this by providing a platform for transactions ( m - pesa ) and for savings ( m - shwari ). esther is a return migrant and believes that she would have achieved 100 percent of her financial goals had she stayed longer. however, the cost of sending remittances remains high especially in certain corridors. according to the world bank's data, the cost of sending us $ 200 averaged between 5 percent and 10 percent worldwide, far exceeding the sustainable development goal ( sdg ) target of 3 percent. as a result of the high costs, remittance tickets remain sizeable. in the case of kenya, the adoption of technology and innovation has reduced costs allowing for smaller bite - sized remittance tickets. kenya's 2021 diaspora remittance survey revealed that 32 percent of remittances are through mobile money operators, due to the convenience, speed, and lower cost. still, a lot needs to be done to reduce costs towards the sdg target. remittances are used by recipients largely for daily expenditures, and not for investment and growth. the 2021 diaspora remittance survey revealed that the purchase of food and household goods, medical and education expenses, rent, and household utilities constituted 49 percent of remittances. this indicates that the huge reservoir of human and financial capital that represents the diaspora remains largely untapped. the diaspora should be an important bridge between the host and the home countries. for instance, india success story in the information technology ( it ) industry is anchored on the diaspora. india | supervisory responses, the oversight and control of our supervisory function will be more centralized, with shared accountability by senior board and reserve bank supervisory staff and active oversight by the board of governors. supervisory concerns will be communicated to firms promptly and at a high level, with more - frequent involvement of senior bank managers and boards of directors and senior federal reserve officials. greater involvement of senior federal reserve officials and strong, systematic followthrough will facilitate more vigorous remediation by firms. where necessary, we will increase the use of formal and informal enforcement actions to ensure prompt and effective remediation of serious issues. in summary, the federal reserve β s wide range of expertise makes it uniquely suited to supervise large, complex financial institutions and to help identify risks to the financial system for additional information, see board of governors of the federal reserve system ( 2009 ), β federal reserve issues proposed guidance on incentive compensation, β press release, october 22. we are currently conducting a horizontal review of compensation practices at the largest firms. as a whole. moreover, the insights provided by our role in supervising a range of banks, including community banks, significantly increases our effectiveness in making monetary policy and fostering financial stability. while we await enactment of comprehensive financial reform legislation, we have undertaken an intensive self - examination of our regulatory and supervisory performance. we are strengthening regulation and overhauling our supervisory framework to improve consolidated supervision as well as our ability to identify potential threats to the stability of the financial system. and we are taking steps to strengthen the oversight and effectiveness of our supervisory activities. thank you. i β d be pleased to respond to your questions. | 0 |
you. references 1. anarfo, e., abor, j. y., osei, k. a., and gyeke - dako, a. ( 2019 ). monetary policy and financial inclusion in sub - sahara africa : a panel var approach. journal of african business 20 ( 4 ) : 549572. 2. mehrotra, a., and yetman, j. ( 2015 ). financial inclusion issues for central banks. bis quarterly review, march. 3. morgan, p. j. and pontines, v. ( 2014 ). financial stability and financial inclusion. asian development bank institute ( adbi ) working paper no. 488. july. 4. sahay, r., cihak, m., n β diaye, p., barajas, a., mitra, s., kyobe, a., mooi, y. n., and yousefi, s. r. ( 2015 ). financial inclusion : can it meet multiple macroeconomic goals? imf staff discussion note sdn / 15 / 17, september. 5. un capital development fund ( uncdf ). financial inclusion and the sdgs. available at https : / / www. uncdf. org / financialinclusion - and - the - sdgs 6. world bank ( 2018 ). financial inclusion overview. october 2. https : / / www. worldbank. org / en / topic / financial available at inclusion / overview # 1 7. yetman, j. ( 2017 ). adapting monetary policy to increasing financial inclusion. bank of morocco β cemla - ifc satellite seminar at the isi world statistics congress on β financial inclusion β, marrakech, morocco, july 14. | in india from the perspective of strengthening financial stability. it was, in that context, considered appropriate to stipulate a lower limit of 49 per cent for the first five years, after which the extant fdi limits would kick in. corporate governance and exposure norms 30. corporate governance and prudential exposure norms are important aspects of new bank policy ; more so, in the context of allowing corporates to own banks. the guidelines for licensing of new banks deal on the subjects extensively. the guidelines mandate the nofhc to have at least 50 per cent independent directors on its board and they should have special knowledge or practical experience in economics, finance, accountancy, banking, insurance, law and some such fields. the nofhc shall not have any credit and investment ( including equity / debt capital ) exposure to any entity belonging to the promoter group except those held under it and the new bank cannot take any credit and investment ( including investments in equity / debt capital ) exposure on promoters / promoter group entities or individuals associated with the promoter group or the nofhc. financial inclusion 31. one of the main planks of licensing policy is to assess how the banks would serve public interest. the guidelines require the promoters to address how the bank proposes to achieve financial inclusion, comply with the priority sector lending targets and minimum 25 per cent branch presence in rural unbanked centres. the project report and the business plan of each applicant will be evaluated to make an assessment about these aspects. fairness and transparency of licensing process 32. the fairness and transparency of the licensing process are no less important given the enthusiasm shown by the corporate houses, nbfcs and public sector entities to get banking licence. i may also add that there were suggestions from certain quarters for auctioning of new bank licences. no doubt, banks are for public good. but, banks are special. they are highly leveraged financial institutions. they are the conduits for monetary policy transmission and constitute the core of payment and settlement system. they accept uncollateralized deposits from members of public and their deposits are insured. the purpose of issuing new bank licences is to serve public interest. auctioning of bank licences is unheard of in any jurisdiction. nevertheless, issues relating to fairness and transparency were to be dealt with. it was, therefore, decided to place the names of the applicants for bank licences on the rbi β s website after the last date of receipt of applications. accordingly, rbi disclosed the names of | 0.5 |
a profit of $ 15. 8 billion. β’ prior to that in fy2012 / 2013, recorded a loss of $ 10. 6 billion. 31. why so volatile? fluctuations in mas β profit figures from year to year is almost entirely due to currency translation effects, i. e. exchange rate fluctuations between s $ and major currencies. β’ when s $ appreciates against major currencies, there is translation loss when assets are reported in s $ β’ likewise, when s $ depreciates, there is translation gain β’ but these gains and losses mean little for international purchasing power of our ofr which is denominated in foreign currencies. 32. focusing on overall profit figure therefore misses larger point about mas β underlying investment performance. 33. investment gains on mas β foreign assets have in fact remained relatively stable for last five financial years. β’ holding s $ exchange rate constant to strip out translation effects, foreign investment gains amounted to s $ 10. 4 billion in fy2014 / 15, comparable to foreign investment gains of s $ 10. 6 billion in fy 2013 / 14. helping singaporeans manage their finances 34. a key area of focus for mas in last two years has been to help singaporeans better manage their finances. a multi - pronged effort : β’ encourage prudent borrowing β’ facilitate retail access to simple, low - cost investment products β’ spur competitive pricing for life insurance products β’ educate consumers on financial matters let me elaborate on each. first, mas has put in place various measures to encourage prudent borrowing 35. many safeguards already exist. bis central bankers β speeches β’ amount of unsecured credit that fi can extend is limited to four times monthly income of borrower. β’ limits on both loan - to - value and loan tenure for both housing and motor vehicle loans extended by fis. β’ individuals purchasing property are constrained on their total debt service ratio. 36. mas announced new unsecured credit rules two years ago. β’ fis will not be allowed to grant further unsecured credit to borrower whose aggregate unsecured debt exceeds borrowing limit for 3 consecutive months. β’ this limit has been set at 24 times borrower β s monthly income, and will be lowered to 18 times from 1 jun 2017 and 12 times from 1 jun 2019. 37. vast majority of singaporeans manage their debt well. β’ less than 2 % of unsecured credit users affected by industry - wide borrowing limit. β’ nonetheless | is one of being a clean, trusted and efficient financial centre supported by a talented workforce and strong rule of law. this reputation has been built over the years and must be protected diligently. 35. with the rise in ml / tf risks globally, singapore must be proactive in playing our part to combat these threats. to be effective, we need to forge a strong collective effort with every stakeholder doing its part. in this regard, a good regulator - industry partnership is one essential thrust of our aml / cft strategy. 36. on this note, i wish you a successful and fruitful conference. 5 / 5 bis central bankers'speeches | 0.5 |
degree of economic challenges that we currently face in fiji. for instance, papua new guinea and samoa have better levels of foreign reserves in months of imports than fiji has. yet their lending rates are higher. i wish to take this opportunity to thank the commercial banks for their understanding and support in our effort to address the economic challenges before us. with the credit ceiling in place, the reserve bank has allowed liquidity to rise. liquidity has risen by over $ 50 million since february this year. in addition, we are reducing the statutory reserve deposits by one percentage point from 1st of may which should pump an additional $ 29 million into the system. this should take liquidity to a very comfortable level. we are already seeing the impact of this easier liquidity on wholesale deposit rates which have fallen sharply to 5 percent from around 15 percent late last year. with this liquidity condition, one would expect commercial banks and other lending institutions to pass this lower cost of funds through to lending rates. and here i must congratulate westpac for taking the lead and reducing its lending rates. lower rates will help support growth and investment in this difficult time. in support of investment and growth, the reserve bank now considers commercial banks β lending to investment, small and medium size businesses and to exporters to be outside the credit ceiling. since december last year, the reserve bank has approved over $ 70 million of loans above the credit ceiling. economic projection as you know, we project that the economy will fall by 2. 5 percent this year. there are some important factors that will determine the final outcome. first, what happens to tourism is important. there are mixed signals coming from this important industry. the latest visitor arrival figure shows a decline of around 7 percent in january compared to january the previous year. a survey we conducted recently of a few major hotels show a low occupancy rate of around 30 percent and not much higher going into their forward booking. the second factor is gold. the current forecast does not include any gold production. but with the change in ownership of the vatukoula mine, we hear that production may commence in june. the third factor is the possible industrial action by the trade unions. it appears to me that all trade unions are seeking strike mandates. i hope that the situation is amicably settled. the fourth is the uncertainty in the european union β s support for the important sugar industry reform. we all hope that the discussion in brussels this week is fruitful for fiji. | it with the high standards demanded by the international community. the lack of proper tools is another reason for our low productivity. given the oversupply of labour in our economy, we tend to be labour intensive in our industries. our ratio of capital to labour is quite low. unfortunately, this equates to low productivity. it does not necessarily be so. we can still have labour intensive industries but higher productivity. this means that productivity must be internally driven by organisations or firms themselves. the introduction of performance contracts in the civil service is a classical example. another problem faced by us is the lack of up - to - date and appropriate technology. we still find some industry with outdated or inappropriate technologies. our sugar mills are an example. there are some industries that have taken advantage of the latest technologies and adopted international best practices, such as fiji water. of course, adopting new technologies cost money and a business case needs to be made. but those that have been able to adopt new technology have reaped good results whereas the others have lagged behind. in this regard the rationalization of telecommunications charges. they will help lower our cost of doing business and catalyze innovation to the industries. another factor is the skills in our workforce. education and retention of skills are important. because of our size, we have a limited pool of skill people. but to make it worse, we are losing them all the time. this is a graph of our emigration trend. they average around 5000 people a year. developed countries like australia, new zealand and canada reap the benefits of our training. its aid in reverse. but it is a free world! these countries themselves loose labour to other countries. global labour movement is intensifying and the global war on talents is fierce. the world is now the market place. fiji therefore must look elsewhere to fulfill its short - term skills requirements. this will add to our costs. but we cannot afford to wait around until we have the right skills. on the flip side, we are just beginning see the positive side of labour transfers with our soldiers in kuwait, care givers in the united states and rugby players in japan. one of the direct results of this export is the phenomenal rise in the remittances that we now receive from our workers and families abroad. last year it rose to about $ 315 million and counting. this blessing has come at the right time with our exports performing well below potential. how can we raise productivity? who should do | 0.5 |
actions, to complete the transition that began over 30 years ago and to make our country a full - fledged and respected member of the european family. and before i finish, i want to say a few words about the specific challenges surrounding bulgaria's entry into the euro area. they go in three directions : the most important thing, as i already mentioned, is our example. in a situation of multiple crises, it is quite normal for the bulgarian citizens to be worried and easy to manipulate. it is our responsibility, by example and arguments, to reassure and guide them in the process of joining the euro area. education - in the short and long term. explain, elucidate, enlighten. every single day, among the people, in their language. we owe this effort to the bulgarian citizens so that they can feel at ease and make the right decisions for their future. involvement β just because we have the right arguments and messages does not mean that they have been heard by the people. succeeding in point 2 requires that we reach every person. and for that we need general mobilisation of efforts - of institutions, the business, non - governmental organizations. we must all work together to achieve the desired result. and in conclusion, an important lesson that i always try to convey to my students - good results always and everywhere come from our own efforts. contrary to what we are constantly told, a happy life is not a consequence of avoiding challenges and looking for the easiest way. on the contrary. it is a consequence of facing events free from selfinterest and taking difficult actions consistent with our values and our mission. are we ready to do it? i believe so and i am looking forward to being together in our quest for a better and fairer bulgaria as a full member of the big european family. 3 / 4 bis - central bankers'speeches thank you for the attention! 4 / 4 bis - central bankers'speeches | ##ence in the cash system and its vulnerability to outages of power, data and roading networks. given the increased likelihood of extreme weather events in the future as a result of climate change, this resilience needs to be enhanced. we will continue to explore synergies between inclusion and stability as we develop our approach to financial inclusion. we are doing so in concert with our council of financial regulators partners, for which'financial inclusion'is one of 5 priority themes. 2 / 2 bis - central bankers'speeches | 0 |
emmanuel tumusiime - mutebile : the uganda securities exchange β s efforts in deepening and broadening capital markets speech by prof emmanuel tumusiime - mutebile, governor of the bank of uganda, at the nation media group shares cross - listing luncheon, kampala, 19 october 2010. * * * the chairman, nation media group, mr. wilfred kiboro the chairman, capital markets authority, uganda, mr. haji twaha kawasse the ceo, uganda securities exchange, mr. joseph kitamirike the ceo, nation media group, mr. linus gitahi directors and staff of nation media group, shareholders, investors, distinguished guests, ladies & gentlemen i am pleased to have been invited to attend and make key remarks at this luncheon commemorating today β s cross listing of east africa β s premier media house, the nation media group. i want to commend and appreciate nation media group for the gesture. the building block of the success of the uganda securities exchange that we witness today is largely attributed to government and we must applaud its efforts in creating an environment in which the economy can thrive. together with the government, the role of the bank of uganda in particular consists of providing a supporting environment for rigorous economic activity through sound and coherent macroeconomic policies. the central bank β s efforts towards supporting macroeconomic environment have centered on preserving price stability. ensuring a reasonably low level of inflation helps reduce uncertainty in economic decisionmaking so that individuals and investors have a reliable basis for long - range decisions and plans. the bank β s efforts to keep inflation in check have so far been successful. a continuing commitment to prudent macroeconomic policies builds confidence in uganda as an investment destination and boosts the country as a whole. the use has played it role in providing an efficient, well regulated exchange that has made the investment process as simple, affordable and transparent as possible. however, the underlying investment decision is dependent upon perceptions of the future performance of uganda as a whole. in conclusion, i wish to highlight some critical factors that will govern the progress of the use going forward. firstly, will be the steadfast commitment to taking a regional and global view for purposes of deepening and broadening our capital markets. secondly, our regulatory and enforcement structures should be responsive to today β s market place. in conclusion, i want to congratulate the nation media group β s board of directors, the management and staff for this monumental achievement | william c dudley : the national and regional economic outlook remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the center for economic development, syracuse, new york, 12 april 2012. * * * good morning, i am pleased to be here in syracuse at the center for economic development. it is always a pleasure to speak with business and community leaders because of the important role you play in helping to shape the economy of the region. i thank you all for inviting me here today. i try to get out of my office in new york city as much as i can to get a sense of regional economic conditions across the second federal reserve district. i was last here in syracuse in 2010 and, more recently, i traveled to west point and the capital region and long island. these visits are just as important as any trip i might take to washington, d. c., to help formulate monetary policy, or to switzerland, to help shape international bank regulation. each visit within the region helps me to deepen the relationships with the people i represent. i believe that the understanding of issues and concerns that i gain today will help ensure that the fed β s policy decisions reflect the public interest. today, i want to talk a bit about the fed β what we do and why we do it. then i β ll provide some thoughts about the economic outlook nationally and locally. after that, i β ll be happy to answer any questions you have about what the fed does and why, and about the economic outlook. as always, what i have to say reflects my own views and not necessarily those of the federal reserve system or the federal open market committee, also known as the fomc. what the new york fed does by way of introduction, i will briefly review what my colleagues and i do at the new york fed on behalf of the second district. i have the great fortune to serve as the vice chair of the fomc that meets eight times a year in washington to set interest rates and make other decisions about monetary policy. the members of this committee all strive to set policy to advance the mandate given to us by congress to promote the maximum level of employment consistent with price stability. sometimes we have different views on the specific policy choice at hand, and you should view this as completely appropriate : these are hard questions β particularly during difficult economic circumstances such as we face today. in fact, i think we make better decisions as a committee because | 0 |
marion williams : the current turbulence in the us financial markets and its implications for barbados comments by dr marion williams, governor of the central bank of barbados, on the current turbulence in the us financial markets and the implications for barbados, bridgetown, 24 september 2008. * * * while the current turbulence in the us financial markets is unlikely to have a significant impact on barbados immediately, as the us economy slows or goes into recession as it copes with these difficulties, the result could be a slowdown in the growth of the barbados economy going forward. recession in the uk and some european economies would also impact adversely on our tourism prospects and our investment inflows. however, the barbados financial system should remain sound although there may be some loss in value ( realised and unrealised ) on us dollar fixed income securities held by financial institutions, including the central bank, as securities β prices in the us markets tumble. however, such losses in value are not expected to be significant in relation to the overall portfolios of these institutions, particularly over the medium term and especially for those who tend to hold short to medium term securities to maturity. for non - bank institutions with us equity portfolios, long - term investors would have some tolerance to the current volatility in the equity market but may record unrealised losses in the short term. for some institutions in the international financial business ( or offshore ) sector who trade more aggressively in us stocks and in fixed income securities and more especially in derivative instruments, particularly those who may have been doing active business with those us financial institutions involved in the us financial melt down, realised losses may be recorded. this is likely to be mitigated by the actions of the us government to bail out these institutions. details of the bailout are not yet clear, but it is expected that there will be free access to assets placed with these institutions where funds are held in an agency or custodial capacity on behalf of overseas investors. funds held in the capacity of agent by these us institutions should retain their agency status and should not be affected by the financial losses of these institutions. administrative hurdles during the adjustment period may however hamper immediate access. any problems of access to funds held in an agency capacity are expected to be short - lived if the bailout goes through. in any event, the investment activities of the offshore sector are segregated from the local banking system. in the interim, investors in overseas markets should be cautious about the external financial advisers, consultants and cu | ##stodians they choose. barbadian investors holding direct deposits with commercial banks in the us can take comfort from the fact that the federal reserve bank appears to be taking a protective stance and is unlikely to allow any large us commercial bank to fail. certainly, the decision of morgan stanley and goldman sachs to convert their status to that of a commercial bank ( from that of investment bank ) suggests that this is the market sentiment. there is much discussion about the moral hazard effect of such support as it reduces the incentive to increase the level of care required of these institutions. in the us system, ordinary depositors are assured us $ 100, 000 in federal deposit insurance per depositor per bank. in barbados, deposit insurance is also in place up to an amount of bds $ 25, 000 per depositor per bank. this was put in place in 2007. it applies to part iii companies, as well ( that is, merchant banks, trust and finance companies ). in the meanwhile, the business of local financial institutions with their overseas correspondent banks continues. such overseas correspondent banks are assured of liquidity support from the federal reserve bank in the us. the central bank of barbados also provides liquidity support to domestic banks but there is no reason to expect that this will be called upon as our banks ( except for possible losses in value on their us dollar securities ) have not been directly impacted by the developments in the us market. it is expected that investors may turn to safe havens. barbados is generally viewed as a well regulated domicile. over the longer term and into 2009, given the size of the bailout by the us government, we can expect larger us fiscal deficits, possibly a further depreciation in the us dollar and a likelihood of a longer us recession than was anticipated. the likelihood of a global slowdown also becomes greater. the international credit markets are likely to be hesitant to lend for a while until markets settle. however, given the healthy level of barbados β foreign exchange reserves, this is unlikely to be significant for barbados at the level of official borrowing at this time, but foreign investors into barbados who were depending on borrowing on the international markets may be put on pause. the one positive outcome of all this is that if there is a global slowdown as expected, and therefore lower demand for oil, oil prices should contract. | 1 |
( mfis ), especially in the regions, brings to the fore considerations for beefing up communication delivery in the regions in situations where information, education and clarification are necessary. the bank of ghana is currently in the process of establishing regional public affairs offices manned by trained pr practitioners to link the head office up with local media who seek information and clarification about the bank β s operations, grant interviews or carry through some media - related activity, and boost the media relations programmes of the bank. this would make it easier to know the local media and be immediately available to receive enquiries from them for the purposes of channelling them appropriately for action to be taken. distinguished guests, ladies and gentlemen, the bank of ghana has the noble intention of nurturing the microfinance sector in ghana because of its huge potential to push the financial inclusion agenda forward and alleviate poverty among the majority of our people. we see microfinance companies ( mfcs ) as agents and catalysts for the realisation of the dream of economic prosperity. to demonstrate the commitment of the bank to the effective supervision of licensed mfcs, officers of the bank have been stationed at our regional offices. this is meant to enhance the monitoring and follow - up of licensed mfcs as well as for the surveillance and early detection and resolution of unlicensed mfcs. furthermore, a new system of reporting called the offsite surveillance electronic system ( ooses ) has been introduced to automate the off - site review and analysis of prudential returns submitted by mfcs. ladies and gentlemen, the bank has additionally intensified its financial literacy campaign to accurately inform and educate the public on the activities of unlicensed mfcs. going forward, the passing by parliament of the banks and specialised deposit - taking institutions bill, and the ghana deposit protection bill, will be crucial to our efforts to ensure that confidence is maintained in the banking sector. the two bills will, among other things, offer protection for the small depositor, and deal extensively with the problem of unauthorised deposit taking business. bis central bankers β speeches the bank of ghana will continue to provide a sound regulatory environment for the mfi sector while expecting mfcs to engage in prudent activities aimed at protecting customer depositors, maximizing profits and providing meaningful financial services to the rural poor at affordable prices. mr chairman, ladies and gentlemen, the bank of ghana would like to assure the community of the bank β | , as the sole regulator of the mobile money sector, the central bank will ensure that right things are done by the various players in the sector. we will continue to regulate and monitor activities within the space and ensure that all participants play by the rules. the bank of ghana has a key responsibility to safeguard the integrity of the financial system to underscore the trust that is central to financial deepening and development. it is therefore critical to ensure the confidentiality of transactions, privacy of data collected by operators in this space ( including personal and financial data ), the security of transactions, and smooth operations of all stakeholders and regulators providing complementary services in this space. 12. the interoperability that exist between e - zwich, bank accounts and mobile money wallets, offer participants an endless opportunity to develop various value added services to the public. let me therefore challenge fintechs to work closely with banks, non - bank financial institutions and especially rural and community banks to come out with several other products and services that will further bring banking and financial transactions closer to the public. i see endless opportunities with this financial inclusion triangle and i hope the players also realise the enormity of opportunities it presents. 13. to conclude, i wish to thank all stakeholders who in one way or the other have helped in the full implementation of the interoperability project and to say that the future of ghana β s financial inclusiveness and cash - lite society is well within reach. 14. thank you for the attention. | 0.5 |
used by them, iii ) the estimate of certain parameters such as loss given default ( lgd ), iv ) the operational integration of the approaches implemented in the daily management of risks and v ) the governance principles applicable to these approaches. until the end of 2007, the commission bancaire will monitor the implementation of the corrective measures requested of the institutions. following this process, the commission bancaire will take a formal decision as to whether or not to authorise the institutions in question to adopt the advanced approaches of basel ii on 1 january 2008. for institutions with foreign entities, this authorisation is granted, where appropriate, following an exchange of information with the host supervisors, i. e. where the institutions β subsidiaries are established. while many counties, such as france, have entered into the effective implementation phase of basel ii, the recent financial turmoil has once again drawn attention to this framework, leading some observers to call into question its overall rationale. this turmoil has new characteristics as it is a credit crisis in a market environment with particular implications concerning contagion channels. risk transfer operations, in particular securitisation, and the interaction between funding liquidity and market liquidity risks have played new or at any rate greater roles than before. i am nevertheless convinced that the reform of the capital adequacy ratio rightly remains a crucial element in the regulatory response to the problems facing us today. i would now like to explain why i am convinced of this. 2. the current financial turmoil confirms the need to concretely implement basel ii. this turmoil may very legitimately raise questions about several of the major provisions of basel ii, such as the use of rating agencies or the internal approaches developed by banks to assess credit risk. the risk associated with a regulatory capital ratio that is more sensitive to risk, and therefore potentially pro - cyclical, has also been advanced in some quarters. i shall, however, give five main reasons showing that these questions do not cast doubt on the benefits provided by the implementation of basel ii. firstly, unlike the present solvency ratio, the pillar 1 of basel ii stipulates down a specific calculation of regulatory capital to set against credit risk transfer transactions ( such as securitisations and credit derivatives ). this is essential in the framework of the β originate and distribute β model currently used by many financial institutions and that consists in transferring as quickly as possible the risks associated with the loans extended and not retaining them as in the past. the treatment | approaches, from standardised approaches to internal ratings - based approaches ( irb ), specifically developed by each credit institution. the approach must be chosen by each institution under the control of the supervisor, in relation to size and level of sophistication ; β the supervisory review process ( pillar ii ), which gives supervisors a key role in assessing the risk profile and the quality of risk management of each institution as well as the corresponding minimum regulatory capital ratios ; β market discipline ( pillar iii ), which enhances public disclosure requirements. these three pillars, whose technical aspects i shall not discuss today, constitute an ensemble aiming mainly to : i ) improve banks β risk management, ii ) align regulatory capital more closely with the actual risks incurred by banks, iii ) enhance the role of supervisors, as well as iv ) that of market discipline and therefore, ultimately, v ) strengthen financial stability. the implementation of such a framework, embracing a broad spectrum of possible approaches for banks and covering a large array of risks, is no simple matter and accounts for the current variety of national situations, including within the g10 : japan for example implemented basel ii in 2007, eu member states are set to do so in 2008 and the united states in 2009. the magnitude of this task is particularly vast since basel ii, in view of the very nature of its objectives that i have just recalled, will be applied in a very large number of countries. the latest study by the fsi on the application of basel ii, published in september 2006 and conducted among 115 countries, shows that 82 non - basel committee member countries intend to implement the new framework, in most cases as of 2008 or 2009, and in some cases at a later date. fully aware of the practical aspects of implementing a more modern, complete and risk - sensitive prudential framework, the basel committee published, in july 2004, i. e. directly in the wake of the new capital accord, a document entitled β implementation of basel ii : practical considerations β. recognising that the adoption and application of basel ii may not be a short - term priority for a certain number of supervisory authorities of non - g10 countries, the committee encouraged the latter to develop their own approaches and implementation timetables. given that the necessary legislative and regulatory changes and human resource requirements have to be identified, the application of basel ii will necessarily be a gradual process throughout the world. this is especially the case since technical decisions often have to be taken on the exact choice regarding | 1 |
difficult at times because of lack of financing, although the gses have just announced a pilot program to facilitate such purchases. in addition, many reo properties may not be appropriate for reo - to - rental programs, either because they are in very poor condition or because they are not part of a sufficiently large cluster of properties to allow for economies of scale in their management. for a discussion of some of the tradeoffs that policymakers might take into account in considering whether to expand these efforts to reduce the overhang of empty and foreclosed homes further, see board of governors, β the u. s. housing market β ( see note 1 ). the inventory of reo for sale is roughly 140, 000 units above its 2004 level, while the inventory of vacant homes for sale is roughly 600, 000 units above its 2004 level, per federal reserve staff calculations based on data from corelogic and the housing vacancy survey. more precisely, federal reserve staff estimate that about 75 percent of reo properties are in neighborhoods where the median house values and incomes are greater than 80 percent of the medians for the metropolitan area. data on median home values, income, and commute times are from the 2000 census, available on the u. s. census bureau website at www. census. gov / main / www / cen2000. html. bis central bankers β speeches nevertheless, reo - to - rental programs appear to have some potential for success. as of early november 2011, about 60 metropolitan areas each had at least 250 reo properties for sale by the gses and the fha β a scale that could be large enough to realize efficiency gains. 17 atlanta has the largest number of reo properties for sale by these institutions, with about 5, 000 units. the next - largest inventories are in the metropolitan areas of chicago ; detroit ; phoenix ; riverside, california ; and las vegas, each of which have between 2, 000 and 3, 000 units. as i noted, not all reo properties are appropriate for rental, but many do appear to be physically adequate and potentially attractive to tenants. the number of properties suitable for rental is bound to increase, as the number of properties currently in the foreclosure process is more than four times the number of properties in the reo inventory. other options can help with foreclosed houses that have low value and are in poor condition, homes that are not likely to be dealt with adequately through the private market. for | of economic research, march ), www. nber. org / papers / w16848 ; and, john v. duca, john muellbauer, and anthony murphy ( 2011 ), β house prices and credit constraints : making sense of the u. s. experience ( pdf ), β research department working paper 1103 ( dallas : federal reserve bank of dallas ), http : / / dallasfed. org / research / papers / 2011 / wp1103. pdf. for more discussion of the effects of low household equity on the ability of homeowners to improve their financial positions, see christopher mayer, karen pence, and shane m. sherlund ( 2009 ), β the rise in mortgage defaults, β journal of economic perspectives, vol. 23 ( winter ), pp. 27 β 50. bis central bankers β speeches losses while continuing to lend. on the margin, though, some lenders might be inclined to respond to losses by tightening credit terms or being more cautious about extending loans rather than by raising additional capital. 7 in short, housing problems affect the homebuilding industry, of course, but also have much broader effects β on neighborhoods and communities, on homeowners, on the financial system, and on the vitality of the economy as a whole. this observation underscores the importance of efforts to improve the condition of the housing market. availability of mortgage credit so why has the recovery in housing been so slow? one important factor is restraints on mortgage credit. since its peak in 2007, u. s. home mortgage credit outstanding has contracted about 13 percent in real terms. in prior recoveries, mortgage credit had begun to grow four years after the business cycle peak β but not this time around. 8 one reason for the very slow recovery in mortgage credit, despite monetary policy actions that have helped drive mortgage rates to historically low levels, is that many lending institutions have tightened underwriting conditions dramatically, relative to the pre - recession period. 9 given the lax standards during the credit boom, some tightening was doubtless appropriate to protect consumers and ensure lenders β safety and soundness. however, current lending practices appear to reflect, in part, obstacles that are limiting or preventing lending even to creditworthy households. for example, mortgage originators appear to be reluctant to extend credit to some potential borrowers who could meet the underwriting standards currently set by the governmentsponsored enterprises ( gses ). indeed, fewer than half | 1 |
and particularly china, the increase in trade surpluses and its corollary, the worsening of the us imbalance, exerts upward pressure on the currencies while swelling foreign exchange reserves increase the costs of an appreciation vis - a - vis the us dollar. does this configuration correspond to a mutually advantageous and sustainable situation? in this second session, bill white, economic adviser at the bank for international settlements, will clarify these paradoxes in the light of the work carried out by the latter organisation, which makes a vital contribution to the analysis and promotion of macro - financial stability. in the third session, which will tackle economic policy adjustment and responses to the increase in global imbalances, we will examine private and public players β ability to adapt to the current situation. can the behaviour of private agents, through a change in their savings or the redirection of capital flows, lead to a spontaneous decrease in global imbalances without engendering destabilising adjustments on the financial markets? more specifically, can greater foreign exchange flexibility in certain areas, and particularly the emerging economies, help to restore some balance? in europe and japan, we expect an increase in potential output following structural reforms on financial, product and labour markets. beyond the mechanical effect of a reduction in the growth differential, what would be the impact on capital flows? in the united states, bearing in mind the savings behaviour of private agents, what lever should be used in addition to the tightening of the policy mix to substantially improve the savings - investment balance? lastly, could international institutions play a bigger role in the management of global imbalances? in this third session, otmar issing, former professor at the university of wurzburg and member of the executive board of the european central bank, will explore the avenues for finding a way out of the current global imbalances notably by presenting the analyses developed by his institution in the areas of fiscal and foreign exchange policy and structural reform. the last session will focus on the consequences of these developments for international financial stability against the backdrop of the liberalisation, the increase in and redirection of capital flows. the emerging economies have on several occasions borne the brunt of erratic capital flows. the asian crisis of 1997 thus brought to light the risks associated with the accelerated liberalisation of short - term capital flows, particularly where prudential supervision structures were inadequate. what is the appropriate global financial integration policy for an emerging economy? for mature economies, the ltcm investment | currently being achieved through the social responsibility pact. the β macron act β, which allows working on sundays, for example, is certainly a positive step. however we have not done enough on the labour market, and i hope that the other reforms will see the light. we need a more flexible minimum wage and more room for negotiated arrangements in firms and branches, like in germany. public finances will only be sustainable and credible if the reduction in the structural deficit continues, in particular through a downsizing of the public sector. structural reforms must gain momentum in order to support growth. interest rates will eventually rise and the governments that have not implemented the necessary reforms will find themselves in a difficult situation. your second term as governor is coming to the end. what were the highlights? c. n. naturally, the financial crisis. the most important event has been the creation of the banking union. it is the most significant step since towards a united europe and is exactly in the spirit of how the founding fathers of europe wanted the eu to evolve since the introduction of the euro. the role of the governor of the bdf like that of the president of the bundesbank will increasingly be that of an important player on the european field, and much less at the national level. in germany, we tend to believe that the role of national central banks is shrinking. c. n. at the banque de france, some of my colleagues thought that one day the ecb could replace us. i told them that it would not happen as we are in a federal system with a relatively small centre. within the governing council we take common decisions but most of the work is done by the national central banks. but from now on we will have to work differently, for example, instead of looking for the best payment system for france, we must look for the best payment system for the euro area as a whole. in this respect, our best partner has mostly been the bundesbank. but the relationship seems to have become more distant? bis central bankers β speeches c. n. no, certainly not. the bundesbank remains our number one partner. we may start with different approaches on some of the issues in the governing council but in the vast majority of cases we have the same responses. it is with the bundesbank that we have developed most of the projects for the euro area, with which we organise conferences, and with which we cooperate in the international field. this cooperation is beneficial for both of us | 0.5 |
reality is that innovations will always move ahead of rules. the key is in understanding whether a particular innovation or new business model is simply a regulatory arbitrage. if so, we should deal with that directly such as by bringing that activity within the regulatory ambit or even banning it altogether. another consideration is whether an innovative business model while purposeful will create incoherence or inconsistency of treatment. in such a case, a review of that regulatory policy may be necessary. there is no one - size - fits - all supervisory answer. it simply means that as regulators, we need to keep abreast with technological developments. only then, can we exercise thoughtful judgment. the fact that many financial regulators including the mas have allowed regulatory sandboxes to be set up highlights a preparedness to allow innovative financial models to first be tested within defined parameters. harnessing technology to strengthen supervision 21 there is a growing area of technology use that will be directly relevant to financial supervision β regulatory technology ( or regtech ). this is the use of advanced technology systems and algorithms to enhance risk management and regulatory compliance. 22 many financial institutions have embraced regtech, such as : predictive analytics being used in stress testing ; artificial intelligence and machine learning - powered systems to identify money laundering risks ; and cognitive computing and behavioural algorithms to detect suspicious trading and possible misconduct. 23 on the supervisor β s end, the mas is developing our own β suptech β to improve and sharpen our surveillance and analytical capabilities. since about a year ago, we have set up a dedicated unit for suptech within our data analytics group. 24 the aim is to make greater use of technology and β smart tools β to guide our financial surveillance and supervision functions. to do so, building the infrastructure for our data analytics projects is important. we are putting in place an mas private cloud. this will serve as the foundation to provide computing power to all data analytics projects in mas. there are a number of ongoing system - enhancement projects around data storage, accessibility and usability. but importantly to fully benefit from the insights of a broader set of high - frequency real - time data, in both structured and unstructured formats, our supervisors will also need to acquire strong digital fluency in various data analytics and visualisation tools. 25 only then can we harness the full computational capabilities from better data analytics to sharpen our surveillance and understanding of different risks, and to support more effective decision - making. there is also a | for release on delivery 11 : 10 a. m. est december 18, 2020 strengthening the financial system to meet the challenge of climate change remarks by lael brainard member board of governors of the federal reserve system at β the financial system & climate change : a regulatory imperative β hosted by the center for american progress washington, d. c. december 18, 2020 i want to thank the center for american progress for inviting me to join you in discussing climate change and the u. s. financial system. 1 let me start by noting these are my own views and do not necessarily reflect those of the federal reserve board or the federal open market committee. climate change and the transition to a sustainable economy have important implications for the financial system. the financial system can be a powerful enabler to help the private sector manage climate - related risks and invest in the transition. it is vitally important to strengthen the u. s. financial system to meet the challenge of climate change. meeting the challenge of climate change climate change is one of the major challenges of our time. 2 there is growing evidence that extreme weather events related to climate change are on the rise β droughts, wildfires, hurricanes, and heatwaves are all becoming more common. 3 climate - related events are already adversely affecting the lives of many americans. the economic and financial impacts are also increasingly evident : we are already seeing i am grateful to morgan lewis, beth kiser, carrie johnson, diana hancock, and nami mukasa, as well as norah barger, angelyque campbell, benjamin dennis, carol evans, joseph firschein, michael kiley, molly mahar, nancy riley, glenn rudebusch, john schindler, susan stawick, kevin stiroh, nicholas tabor, and aurite werman of the federal reserve for assistance in preparing this text. see intergovernmental panel on climate change, global warming of 1. 5Β°c. an ipcc special report on the impacts of global warming of 1. 5Β°c above pre - industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty ( geneva : intergovernmental panel on climate change ), https : / / www. ipcc. ch / sr15 /. see wmo task team, global warming and hurricanes : an overview of current research results ( princeton : geophysical fluid dynamics | 0 |
for consent and approval for the display of mcb β s highly valuable artefacts. mr christopher murray, ceo, of hsbc ( mauritius ) ltd also kindly agreed to offer precious rarities for display in the museum. without their invaluable contributions, the museum would have been far less telling of our history. thank you, mr pierre guy noel. thank you mr christopher murray. we have a very long relationship with both the royal mint and de la rue. may i extend my warm thanks to royal mint and de la rue for having agreed to display in the museum a number of highly valuable items. we have in our midst messrs owen griffiths, ms marina carter and mr jean - marie huron. in 2015, i met with mr owen griffiths and we agreed on the publication of a book that bears the title, β from piastres to polymer β. it β s a comprehensively researched work on the history of banknotes of mauritius. the book is under print and before this year is out, we will have the pleasure of reading it with enthusiasm. i thank the honourable madam speaker of the national assembly for having granted the permission to re - print the 1966 sessional paper on the bank of mauritius. i also thank the prime minister β s office for having granted the permission to use the updated coates of arms of mauritius on the cover of the sessional paper. i thank the honourable prime minister for having so kindly accepted to grace the inaugural ceremony of the bank of mauritius museum. on behalf of the board of directors of the bank, myself included, i wish to thank you all for your presence. thank you. | . for monetary policy to be effective, especially in a world of changing economic structures and heightened uncertainty, it is essential that the central bank has a well - defined objective and that it expresses clearly and unambiguously its commitment to do everything that is needed to achieve that objective. yet by itself this may still not be sufficient, as this commitment must also be perceived as credible by all the actors affected by the decisions of the central bank. i think that almost eight years since the introduction of the single european currency, it is fair to say that the ecb has been successful in demonstrating this type of credible commitment. for this success, it was instrumental that the ecb decided early on to adopt and announce a quantitative definition of price stability, namely to keep hicp inflation below but close to 2 % over the medium term, as a clear yardstick which serves two purposes. on one hand, it clarifies and quantifies the notion of price stability, as mentioned in the maastricht treaty, which, therefore, represents the benchmark to assess our performance over the medium term. on the other hand, the quantitative definition of the price stability objective guides and helps to anchor private sector expectations of future inflation rates to a clearly defined objective. the commitment to pursue a publicly announced explicit price stability objective is important for a successful monetary policy. however, it is not on its own sufficient. it will lead to the appropriate anchoring of expectations only if policy is implemented in a credible manner, that is, in such a way that markets and the public are convinced of the central bank β s commitment and ability to conduct policy effectively. in other words, ex ante commitment must be confirmed ex post. this requires the central bank to respond in a timely and determined manner to shocks to price stability, and to effectively communicate its policy actions, so that markets and the public understand the rationale behind these actions and their consistency with the objectives and the strategy adopted. in an environment of increased uncertainty and structural change, the potential for making mistakes increases. an undesirable, and possibly substantial, decoupling of inflation expectations from the central bank β s objective can occur if the policy response to inflation is not sufficiently determined β or is perceived not to be. if inflation expectations were to become β unanchored β, a much tighter monetary policy would have to be pursued to secure price stability, and high inflation is likely to be accompanied by an economic slowdown or recession. these arguments are supported | 0 |
njuguna ndung β u : putting banking at the centre of the economy β s sustainable growth remarks by professor njuguna ndung β u, governor of the central bank of kenya, at the opening of the kba 3rd annual banking research conference, nairobi, 25 september 2014. * * * the chairman, kba governing council ; members of the kba governing council ; banks β chief executive officers ; distinguished participants ; ladies and gentlemen : it is my honour and pleasure to join you this morning at this very important conference that focuses on the role of the banking sector in the economy β s growth. it is therefore my singular pleasure to be invited to open the kba third annual banking research conference and to make some remarks at its commencement. first and foremost, i would like to commend the kba for its consistency in hosting the annual banking research conference. this is further evidence that the banking industry is keen on having its operations and strategic focus informed by analytical work. this being the third annual conference, the body of knowledge that the process has generated is without a doubt going to be beneficial to all stakeholders. research and its output is a β public good β. the broader benefits arising from knowledge cannot be restricted to those who have a direct interest in the research. research that improves the policy environment benefits all and indeed the economy at large. this year β s conference theme of β putting banking at the centre of the economy β s sustainable growth β is an example of this point. several papers focusing on finance and economic growth have confirmed the causal relationship. it is on that basis that i consider this conference β s theme on sustainability of this relationship to be inspiring, given that it provides an opportunity for deeper reflection taking us beyond the general finance β growth nexus. the kenyan economy has an ambitious real output growth target of at least 10 percent to enable the realization of the aspirations of vision 2030. the high and sustained growth targets will only be achieved through increased investment and increased productivity. the banking industry must intermediate and provide the funding required for the investment but even more important is long - term finance with attractive terms. ladies and gentlemen : the presentations lined up for this conference give me confidence that we are embarking on a conversation that will lead to the consolidation of the gains to the economy from the dynamism of the banking industry. let me make a quick reflection over the five areas around which the conference presentations focus ; β’ firstly, increasing support for agriculture is important and in the right | interest of determining how credit affects aggregate demand, a clear understanding of what motivates the private sector to seek bank credit enables the industry to react in a timely manner. and by identifying constraints, it can propose modalities for overcoming them. at the top in this agenda is to link it to investment. is our investment constrained by credit? we need to know more. ladies and gentlemen : the body of research work arising from the conference β s theme will obviously not be definitive ; but it will surely provide a good platform for reflection on the many ways through which the banking industry is readying itself towards further enhancing its role in the economy β s progress. there is also a possibility that ideas will emerge which have a quick response that can be put into practice in the short run ; furthermore, there is an opportunity to pick areas for further investigation. i am confident that the banking industry, that has remained stable on the back of the steady growth seen over the past decade, will continue to play an important role in supporting the various economic sectors through provision of credit. with an asset base of ksh. 2. 70 trillion as at the end of december 2013 compared to ksh. 2. 33 trillion as at the end of 2012, the industry is clearly maintaining the growth path. similarly, customer deposits grew by 14 percent in the period from ksh. 1. 71 trillion to ksh. 1. 94 trillion. the banking industry β s asset growth of 16 percent between 2012 and 2013 at a time when the economy β s real growth rate was less than 5 percent points to the possibility of the acceleration of the growth momentum emanating from finance. that growth will be accelerated once the overall cost of doing business that is being addressed, declines. this will ensure that the underlying asset quality accompanying the growth in the banking industry remains good. as a country, we are making strides in ensuring that financial inclusion is enhanced. the finaccess 2013 survey results revealed that kenya β s financial inclusion landscape has undergone considerable improvement. the proportion of the adult population using different bis central bankers β speeches forms of formal financial services was at 66. 7 percent in 2013 compared to 26. 4 percent in 2006. this is a notable achievement. the proportion of the adult population totally excluded from financial services has declined to 25. 3 percent in 2013 from 38. 4 percent in 2006. similarly, the proportion of kenyans accessing informal financial sources dropped from 35. 2 percent in 2006 to 7. 8 percent | 1 |
asian economies. co - operation has been in the area of enhanced regional surveillance, standardisation of systems and documentation, regional capacity building programmes and regional swap facilities. this strengthened co - operation enhances the foundations for realising the potential that the region possesses. ladies and gentlemen, in a world where uncertainty has become a permanent feature of the environment, the challenge before us is to be able to increase our tolerance level to the shocks and changes that may occur. building tolerance levels involves enhancing our capacity, strength and resilience to cope with the changed environment. precautionary measures can be taken to reduce the risks and vulnerabilities. despite uncertainties and unstable conditions, initiatives can be taken to achieve sustainable performance. in the current environment, the pressure is for greater market orientation and liberalisation on the premise that competition would lead to pricing that would facilitate a more efficient allocation of resources. this, however, is not the only objective that is to be achieved. consideration needs to be given to the objective of promoting growth, financial stability and social stability. some of these objectives are conflicting and need to be carefully balanced, taking into account the trade offs. increasing the tolerance level amidst a volatile environment the pursuit of efficiency and competition has to be balanced with the objective of attaining soundness and preserving stability. given the unique characteristics and peculiarities of emerging economies, the transition to a more liberalised environment would demand appropriate sequencing of measures to be taken. factors commonly ascribed as key in achieving and safeguarding financial stability include sound macro - economic management, effective regulatory and supervisory framework, greater transparency and disclosure of information, increased market discipline, dynamic accounting and auditing standards as well as the existence of strong corporate governance. for emerging economies, the requirements extend beyond these factors to include other areas, namely the development of the necessary financial infrastructure that supports a strong foundation that is able to provide depth and breadth to the financial system and economy as a whole. of equal importance, is the need to develop alternative sources of funding, such as the equity and bond markets, not simply to ensure a more balanced allocation of financial and economic resources within an economy but more importantly to attain greater diversification within the financial system, hence ensuring the efficient distribution of risks within the system. in addition, the integrity and credibility of the payments system and effectiveness of regulation and supervision would require the support of a comprehensive set of legislations, one that would need to evolve in tandem with the developments that are taking place in the financial landscape. it is | zeti akhtar aziz : emerging trends in asia and their implications for malaysia keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the the asian banker summit 2003, β post - asian financial crisis : securing financial stability β, kuala lumpur, 16 september 2003. * * * ladies and gentlemen as we advance into the 21st century, sustainable performance demands resilience to the economic cycle, resilience to unstable market conditions and overall resilience in an environment of rapid change. to prosper in this new environment, we need to have the capacity to withstand the entire business cycle, to survive the increased volatility in the financial markets and to have the capacity and agility to adjust to the changes taking place. sustainable performance is key in achieving long - term relevance and success. to achieve this, it is important to look beyond the short - term perspective and build the capacity and the resilience to meet the new challenges that are emerging in this new environment. it is my honour and pleasure to be invited to this asian banker β s summit 2003. let me join the organisers in welcoming you to kuala lumpur. it was exactly five years since the countries in east asia have emerged from the financial crisis, when stability in the financial markets was restored and the economic recovery resumed. asia has now emerged as the fastest growing region. despite a more difficult external environment, the asian region has demonstrated resilience. the new trends emerging in asia point to significant transformation taking place in the economies in asia. these trends have contributed toward increasing the growth prospects for the region. today, my remarks will focus on these fundamental trends that have emerged in asia and the promise that they hold for the prospects for this region. i would also like to take this opportunity to share with you the implications of these trends for malaysia and the strategies and responses that we have adopted in addressing the challenges that we are faced with in this more difficult environment. emerging trends in asia : economic transformation in asia asia β s resilience can be traced to several important trends which have contributed to the economic and financial transformation of the region. the dynamic transformations taking place in our region are significant and varied. the region accounts for more than half the world β s population and 23 % of the world economy. the growth for the region as a whole is forecast to be one and half times higher than the global average. of significance, is the trend towards greater integration in the region on several fronts | 1 |
an address by francois groepe, deputy governor of the south african reserve bank, at the payments innovation conference sandton convention centre, johannesburg 5 october 2017 the south african reserve bank β s perspective on a changing and innovative payments environment introduction fellow deputy governors, other distinguished guests, ladies and gentlemen. it gives me great pleasure to welcome you to the first payments innovation conference organised by the south african reserve bank ( sarb ), which we are hosting in collaboration with domestic and international payments stakeholders. this conference takes place at an appropriate time as innovation and technology have the potential to spur growth and development. according to ey β s fintech adoption index1, south africa boasts financial technology ( fintech ) adoption levels of 33 %, which is in line with the global average. the survey respondents expect this type of adoption to increase to an average of 52 % globally, with south africa counting among the countries with the highest intended use among consumers at 71 %. the purpose of this conference is therefore to develop deeper insights into emerging innovations in the payments ecosystem, which we hope will provide a better understanding of regulatory frameworks, stimulate debate, and spur development within the payments space in support of our country β s developmental objectives. ey. 2017. β ey fintech adoption index 2017 β the rapid emergence of fintech β. available http : / / www. ey. com / publication / vwluassets / ey - fintech - adoption - index - 2017 / $ file / ey - fintech - adoption - index - 2017. pdf. page 1 of 9 at my address today will focus on the sarb β s perspective on the changing and innovative payments environment. we are in an era of unprecedented exponential change, where rapid advances in technology have the potential to fundamentally change financial services. the international organization of securities commissions ( iosco ), for example, reports that, in 2014, there were 1 800 fintech companies with a total funding of us $ 5. 5 billion. this has risen to over 8 800 fintech companies with investment of us $ 100. 2 billion by 2016. 2 technology β s impact extends beyond mere services. it also allows for the democratisation of communication and information, and thus for the transfer of power to the end user. countries and institutions were previously the main controllers of communication and information due to high barriers to entry, such as information asymmetries and the large capital investment that was required to facilitate access. this has fundamentally changed | steven vanackere : one year after the 2023 market turmoil - outlook for banks and key supervisory take - aways keynote speech by mr steven vanackere, vice - governor of the national bank of belgium, at the european association of cooperative banks ( eacb ) high - level roundtable on the occasion of the eurofi conference, gent, 21 february 2024. * * * distinguished guests, ladies and gentlemen, thank you for the opportunity to deliver this speech at the welcome dinner of the eacb high - level roundtable. i thought it might be a good idea, one year after the banking turmoil of march 2023, triggered by the failure of several us banks and of credit suisse, to give you my perspective on the current outlook for eu banks and more specifically on the lessons to be learnt from this global turmoil. last year, the combination of slow growth, high inflation, and a historically very rapid increase in monetary policy interest rates resulted in unrest in the financial markets, with significant impact on the banking sector. 1. the higher rates reduced the market value of fixed - rate, long - term assets and implied unrealised losses on banks'balance sheets. 2. they increased banks'funding costs and created expectations of higher interest rates on deposits, which added to worries about of a potential more volatile behavior of this stable funding source. 3. they impact the debt burden of households and corporates, especially in jurisdictions with more short - term maturity or variable rate loans. against this background, the quality of banks'credit portfolios and their interest rate and liquidity risks became important points of attention. investors viewed with suspicion the impact of interest rate increases on the profitability and solvency of financial institutions. in the united states, this led to an abrupt and large - scale outflow of deposits from several medium - sized regional credit institutions. these banks had a number of specific vulnerabilities in common, such as a business model focused on a single economic sector or activity ( e. g. start - ups in the tech sector, services related to crypto - assets or banking services for of high net worth individuals ) and a large share of uninsured deposits. even more importantly, inadequate management of interest rate and liquidity risks forced these institutions to recognize large losses in the profit and loss account, undermining depositor confidence. earlier deregulation under the trump administration no longer subjected these banks to the basel minimum standards. finally, it was recognized that | 0 |
mr. thompson considers the topic of risks in banking speech by the deputy governor of the reserve bank of australia, mr. g. j. thompson, at the australian institute of banking and finance inc., new south wales state committee, in sydney on 28 / 10 / 97. introduction i spoke in june in canberra to a joint luncheon meeting of the aibf and two other local organisations. my theme was the many faces of risk in banking. today i would like to expand on a couple of the risks i touched on then, namely : the year 2000 problem ; payments system risk, particularly in relation to settlement of foreign exchange transactions. this also gives me the opportunity to talk about the results from two surveys recently conducted by the rba. year 2000 i think almost everyone is now aware that the year 2000 will bring not only the euphoria which accompanies the arrival of a new millennium - or the approach of it, for those holding on to the view that the third millennium starts in 2001. it also brings potentially major disruption to finance, commerce and almost every aspect of daily life if computers are not able properly to comprehend the move from the year programmed as β 99 β to the one shown as β 00 β. financial institutions are almost totally dependent on computer systems for their continuing day - to - day operations and getting dates correct is a critical element in this. they are, therefore, heavily at risk from the year 2000 problem. the rba is taking a close interest in how this problem is being addressed, both as supervisor of banks ( for the time being ) and with our broader interest in the smooth running of the financial system. the basle committee on banking supervision recently turned its attention to year 2000 risk, and has issued a paper which includes a recommended program of remedial action for all banks. the main phases of this are : ( i ) developing a strategic approach to solving the problem ; ( ii ) creating organisational awareness of its importance ; ( iii ) assessing necessary actions and developing detailed plans ; ( iv ) renovating systems, applications and equipment ; ( v ) validating this renovation through testing ; and ( vi ) implementing tested, compliant systems. the well - prepared financial institution will have completed steps ( i ) to ( iii ). it will now be engaged in step ( iv ) - - renovating systems and applications. the recommended completion date for this work, to allow sufficient time for testing, is the end of 1998. the renovation of critical systems should | ##renuous terms, i will be a little relaxed about my terminology and use β payment infrastructures β also when i mean β financial market infrastructures β, etc. 1 riksbank is launching a new service for settlement of instant payments that we call rix - inst. also, very recent, the riksbank made a decision to take preparatory steps to connect swedish krona to t2 and target2 - securities, t2s. the latter are the eurosystem β s platforms for large - value transfers between banks and settlement of security transactions, respectively. we will now perform an in - depth analysis of all relevant aspects that will provide the basis for deciding whether the riksbank should enter into contractual negotiations with the eurosystem. joining t2 and t2s is expected to benefit the participants of the riksbank β s current settlement services. for instance, they will gain from increased cost - efficiency and harmonisation, that is, alignment with european standards and practices. in the end, that should also lead to improvements for banks β customers. importantly, a decision to connect to t2 and t2s should be taken into account by the swedish banks in their future business and investment planning. my speech today will be about the riksbank initiatives just referred to and the motives behind them. first, however, i plan to take you on a short tour of the history of payments. this is because i believe there are lessons to be learned here. lessons that over time have formed the way that we at the riksbank think about payments and the financial infrastructure in general. as such, they have played into also our recent decisions, of course. looking at the past, the key observations that i make are the following : firstly, for a well - functioning monetary system the trust of money is key. a credible issuer can ensure this. moreover, converging on one monetary unit in a given country, what economists refer to as the uniformity of money, increases simplicity and efficiency. secondly, technological developments, often far away from payments, are an important driver of change. this goes hand in hand with innovation of ideas, humanity β s ability to react creatively to recognised needs. sometimes this can even lead to the emergence of new types of business. thirdly, the private and public sector complement one another by filling different roles. while the public sector provides trust and stability, the private sector takes care of innovation. throughout history, then, occasionally the | 0 |
increased substantially. following the september fomc meeting it rose above 150 basis points. a spike in the spread following a decision to ease monetary policy is not surprising because the primary market may be slower to react. the spread has since retraced to its pre - september fomc meeting level of about 120 basis points. however, the spread remains elevated by historic standards. an important objective of this workshop is to gain a deeper and clearer understanding of the determinants of the primary - secondary spread and its dynamics over time. this spread is influenced by a number of elements, such as the valuation attached to the right to service the mortgages underlying the security, and the annual guarantee fee that is paid to cover the credit guarantee provided by the government - sponsored enterprises ( gses ). the observed widening of the primary - secondary spread likely reflects many factors. part of this widening is due to higher annual agency guarantee fees which are a necessary and overdue re - pricing of the credit guarantee provided to investors. while these guarantee fees differ by mortgage and by seller, the average effective guarantee fee has increased from 20 to 25 basis points to around 50 basis points today. but this still leaves a significant part of the spread left to be explained by other factors such as changes in originators β costs and profits. as you all know, the primary - secondary spread is a technically imperfect measure of the pass - through from primary rates to secondary rates. a new study1, by authors including new york fed staff, adjusts for these factors to come up with a measure of originator2 profits and unmeasured costs, or opucs. the basic picture remains the same, with opucs at historically elevated levels. the paper evaluates a number of potential factors that could help explain this increase. these include the decline in the value of mortgage servicing rights, credit losses and other costs associated with put - back risk, possible changes in pipeline hedging costs and other loan production expenses. it finds a potentially material role for the decline in the value of mortgage servicing rights in particular, but concludes that the increase in the aggregate measure of profits and unmeasured costs is β not likely to be driven exclusively or even mostly by increase in costs β. this suggests that originator profits may have increased. the study examines a number of potential explanations. these include capacity constraints, market concentration, pricing the rising gap between primary and secondary mortgage rates. we interpret originator to include all actors involved in | the national payment systems act ; the prohibition and prevention of money laundering act ; the bank of zambia anti - money laundering directives ; and the bank of zambia corporate governance guidelines. the speed at which changes to these regulatory frameworks can be made is a crucial element of the reform process in regulatory and supervisory arrangements as it improves policy responsiveness. a number of challenges exist in this area including the need to update some of the statutory instruments ( sis ) in order to reflect the dynamics presently characterizing the financial markets. in some cases, new guidelines are altogether needed for regulating new products and innovations such as mobile banking, internet banking and islamic banking. the need for quick and appropriate responses to market developments and innovations while important also need to be balanced by a well designed regulatory framework that ensures the maintenance of a stable and sound financial system. chairperson, the stability and soundness of the financial system is in turn, heavily dependent on the adequacy of capital. it is essential for the right balance to be struck between the need for banks to hold adequate capital to absorb losses and the need to ensure that capital requirements do not unduly constrain from lending to the real economy. it is also important that banks are not so highly leveraged relative to common equity as to create incentives for excessive risk taking. the required capital ratios should therefore be viewed in the context of the high quality capital β core tier 1 and tier ii definitions and should exclude subordinated debt as providing relevant support. distinguished delegates, basel ii provides a pragmatic approach to determining overall capital levels. it introduced a new approach to the definition of relative capital requirements to be held against specific asset categories. the challenge in this approach is in deciding what an optimal level of capital is especially in light of massive scale of economic losses now being suffered as a result of the banking system collapse. however, any theory of optimal capital level will have to strike a balance between the increased cost of financial intermediation which result from higher capital requirements and the benefits of the decreased probability of bank failure and economic harm which will be achieved. recent developments have established a prima facie case for higher minimum capital requirements. the challenge will be for supervisors to manage the transition to higher capital requirements in a phased approach and take into account the need to avoid procyclical pressure on bank capital adequacy under conditions of economic downturn. zambia has adopted basel ii for implementation although work is still on - going in this area. the enhanced approaches to capital that | 0 |
desired culture. through our supervisory process, we have seen that a number of firms have started this process by developing or refining employee surveys and 360 feedback processes to target issues of behavior and bis central bankers β speeches culture. some firms are incorporating case study discussions into training programs to highlight ethical dilemmas and decision - making. some are revamping senior level promotion criteria to reinforce what are the desired characteristics and behaviors of leaders. these efforts are at various stages in terms of their depth, breadth and maturity. supervisors will need to see how these frameworks evolve, and more importantly, see evidence of how these efforts yield results in the form of more open and routine escalation of issues, consistent application of β should we β versus β could we β in business decisions, rigor in identifying and controlling of conduct risk, and how compliance breaches factor into compensation. measurement and accountability for progress in developing a healthier culture across the industry is paramount to us as supervisors and central bankers. an important measurement of progress is employees β assessment of their firm β s culture. to this end, we encourage the industry to harness the various individual efforts that have been initiated at a number of firms in order to develop a comprehensive culture survey. this anonymous survey would be fielded across firms each year by an independent third - party and the results shared with supervisors. having a common survey instrument would promote benchmarking of, and accountability for, progress on culture and behavior. a core element of any firm β s mission and culture must be a respect for law. federal reserve guidance advises that banks should strive to β [ m ] aintain a corporate culture that emphasizes the importance of compliance with laws and regulations and consumer protection. β 4 to maintain such a culture, senior leaders must promote effective self - policing. if audit uncovers an instance of fraud in one unit, the firm β s leadership should ask, β where else could this behavior occur? β if the press reports fraud at a competitor in a particular business line, the same self - assessment should apply. β could this happen to us, could we have a similar problem here? β when fraud is detected, boards and senior leaders must ensure that they are informed promptly, and that a thorough inquiry is undertaken at once. the senior leaders of financial firms, and those who report to them, must also be proactive in reporting illegal or unethical activity. early self - reporting sends a powerful message to employees and to regulators about a firm β s respect for law. | jean - pierre danthine : are central banks doing too much? translation of a speech given in french by mr jean - pierre danthine, vice chairman of the governing board of the swiss national bank, at the foire du valais, martigny, 9 october 2014. * * * the speaker thanks fabian gunzinger for his valuable support in drafting this speech. he is also indebted to irma cruz, till ebner, peter kuster, claudia strub and the snb language services for their assistance. introduction in recent years, central banks have been active in their attempts to mitigate the financial crisis and its aftermath, and they have also assumed a more prominent role in the regulatory efforts to prevent similar crises in the future. this has led many commentators to ask the question i raised in the title of this speech : are central banks doing too much? the short answer to the question β you may not be surprised β is β no β. the measures which central banks have taken since the beginning of the financial crisis in 2007 are a direct consequence of the severity of the crisis itself. first, conventional central bank measures β cutting interest rates, providing liquidity and acting as lender of last resort β were required to prevent the collapse of the financial system. second, the use of various unconventional measures was a responsible step to support weak recoveries, given the shortage of available alternatives. and third, a reinterpretation of central banks β financial stability mandate towards a more active role in crisis prevention is necessary to reduce the need for another round of extensive crisis management in the future. this, in a nutshell, is the main argument of my speech today. in what follows, i will elaborate on the rationale behind the conventional and unconventional measures that central banks have adopted to mitigate the crisis, and explain why central banks need to play an active role in the new regulatory framework which is being implemented in response to the crisis. central banks may not exactly have a reputation for being big innovators. but just as the foire du valais has developed into french - speaking switzerland β s pre - eminent fair over the past 50 years by successfully combining innovation with its core strengths, central banks have evolved over the past few decades by remaining focused on their core mandate β price stability β while adapting to a changing environment and being open to learn new lessons when they present themselves. the financial crisis was such a moment, and a reinterpretation of central banks β | 0 |
global index, only a small number are from buy - side market participants. at the global level, there is acknowledgement that more can be done to demonstrate to the buy - side community the benefits of the code, and to articulate more clearly the benefits of adherence. for example, the code helps the buy - side understand the practices that your counterparties abide by, and helps to inform what you should expect from the relationship, and in turn, who you may want to transact with. the code also provides a useful opportunity for the buy - side to benchmark your internal processes against global standards of best practices. the gfxc has launched a group that will focus on buy - side outreach to create greater awareness and adoption of the code. this will not be an effort bound by time, but will be a journey and one which we are committed to. in singapore, we have seen strong support from buy - side associations and we will continue to encourage singapore - based buy - side market participants to issue statements to demonstrate adherence. 12 second, to continue the existing work on cover and deal which arose in response to the feedback received from the consultation on β last look β practices, and to strengthen fx disclosures. on this front, further work will be done to understand the role that disclosures play in informing market participants how their trade requests are handled in β cover and deal β arrangements. in addition, the gfxc hopes to develop a framework that can assist market participants to review or develop their client disclosures, and to identify any challenges to appropriate transparency. 13 third, to continue to embed and integrate the code into the fx market. a survey was conducted by the gfxc last year, to assess the industry β s baseline in code awareness and adoption. we plan to conduct another survey later this year, to see how market participants are embedding the code and how practices and behaviours have evolved. this survey will be rolled out across the key fx jurisdictions likely through the fxc network. we look forward to your active participation when the survey is rolled out. from the survey findings, we hope to identify ways to deepen adoption and broaden awareness over time and across jurisdictions. 14 these efforts need the support of you as market participants, and we hope that you can do 3 / 5 bis central bankers'speeches your part in promoting the good practices set out in the code, from your respective vantage points and positions within the fx market. singapore β | s approach 15 last year, i shared that the singapore foreign exchange market committee ( or sfemc ) has taken on the responsibility to promote and encourage adherence to the code in singapore. 16 given singapore β s position as the preeminent fx centre within the asian time zone, it is important for us to continue to take a leading role in adopting the code. 17 one year on, i am proud to share that all sfemc members, across sell - side and buy - side, have issued statements to the code. a significant number of banks operating in singapore have also already issued the statements, with many of them publishing these statements on their websites and public registers. notwithstanding this commendable outcome thus far, sfemc will continue to work with the key industry associations in singapore to further promote and embed the code. for example, we have recently collaborated with the association of banks in singapore to encourage all banks with fx operations in singapore to issue statements by the end of this year. 18 sfemc will also be establishing a public register in the second half of this year, for market participants in singapore to post their statements. this is in response to demand from market participants. 19 sfemc believes that having such a public register in singapore would help in our promotion efforts in getting more market participants, particularly buy - side entities, to issue statements to the code. 20 where your firm has issued a statement, we welcome you to publish your statement on the sfemc public register when this is ready. developing singapore to be an e - trading hub for fx 21 i am confident that the code will further strengthen the integrity and vibrancy of our fx market. this will complement our co - creation efforts with industry players, like yourselves, to grow the fx market further. these initiatives are set out in the financial services industry transformation map ( or itm ), a roadmap that paints singapore β s vision as a leading global financial centre in asia in 2020. 22 in the itm, our action plan includes the following : first, growth strategies by business lines β leveraging global and regional opportunities, and strengthening our position in activities where we already have a strong competitive advantage ; second, innovation and technology adoption β embracing innovation, sharpening our competitiveness and injecting even greater dynamism into the sector ; third, programmes for upgrading skills β expanding and deepening our talent pool. 23 i will briefly share two areas of relevance to this audience. the first area | 1 |
the financial sector not only plays a crucial role in capital accumulation but is also a part of the economy with a distinct value added that contributes to an economy β s growth. beyond that, however, the financial system performs another very important task with regard to economic growth : it not only funds innovations but also helps in identifying them. the financial system therefore helps to further the state of know - how and promotes technological progress. sound economic growth relies upon an efficient financial system. with each advancing stage of economic development, the financial system also refines and increases its complexity together with advancements in the real economy. the massive repercussions and enormous costs for the real economy during the current crisis have demonstrated impressively how important financial stability is for economic performance and welfare : the second phase of the crisis, that is after the lehman brothers bis central bankers β speeches insolvency in september 2008, not only marked the point of conversion to a systemic crisis, causing transactions on the interbank market to virtually ground to a halt, stock prices to plummet and investors to flee to the safety of government bonds. the disruptions of the financial system were also passed on to the real economy. financing conditions for enterprises and households tightened, and as consumers and firms feared what was still to come, expectations in the private sector as well as the outlook for the world economy deteriorated sharply. as a result, manufacturing and trade were at the heart of the crisis and suffered globally, and particularly in the advanced economies, output dropped at rates hitherto unseen in the post - war period. financial stability has therefore rightly become a top priority on the policy agenda, and the increasing role of the g20 testifies to the global dimension of this task. yet the objective is not to avoid financial crises completely. historically, these crises have occurred regularly over time and can be viewed as an element of market economies. in this context, attempts to increase financial market stability should therefore not be understood as an attempt to avoid crises altogether, but as an attempt to increase the system β s resilience and, by doing so, to limit the dire consequences. the usual fear is that stricter regulation may introduce additional frictions and hamper economic growth. the challenge policy makers face when reforming the regulatory framework of financial markets lies in striking the right balance between the stability of the financial system and its efficiency. luckily, both intentions are to a significant degree complementary, and the context is not that of a zero - sum game. well - | all this in mind, one could be forgiven for thinking that it was unethical behaviour which made the financial crisis possible in the first place. financial mis - selling and a focus on shortterm profitability were rewarded, securitisation encouraged opaque and dishonest conduct, and there was no such thing as a realistic assessment of credit risk. there β s another example i could mention to show that the market is incapable of regulating itself and that values, it would appear, still haven β t made an appearance in some quarters of the banking industry. i β m talking about the libor scandal β that is, the rigging of the benchmark london interbank offered rate. bankers colluded to submit fictitious interest rates so as to falsely inflate or deflate libor. this rigged rate then fed into financial transactions all around the world ; many credit or savings products are geared to the libor benchmark rate. so if you ask me whether business needs ethical values, the answer is an unequivocal and resounding yes. and as for the other question i asked just now, my answer would be a definite no. competition, in and of itself, isn β t enough ; we need rules to stake out a clear operational framework. leaving the market to its own devices isn't an option. but the question is whether we can achieve this simply with rules and supervision? many a new approach in the world of banking supervision is designed to do just that, but if there β s one thing i can tell you already, it is that they will never go far enough. because when it comes down to it, values are beliefs which each and every one of us needs to anchor in our own behaviour. and that is precisely the problem which i intend to delve into later in my speech to you today. 3 new approaches to banking supervision traditional banking supervision aims to maintain checks, create trust, and, ultimately, ensure a stable banking system with solvent institutions. however, some new approaches to banking supervision are going one step further, even if only as a side effect. i would like to introduce two of these measures to you now : first, what is known as salary regulation and, second, the task force on behaviour and culture. salary regulation governs the minimum standards for the remuneration systems of german 2 / 6 bis central bankers'speeches financial institutions. during the course of the reforms following the financial crisis, particular attention in this regard was paid to | 0.5 |
safeguarding central bank independence1 javier guzman calafell2 the broad turn towards central bank independence can be traced back to the 1970s and 1980s. many countries were experiencing high inflation. therefore, attention focused on overcoming β time inconsistency β, a problem inherent to monetary policy. this is the risk that policymakers, for political reasons, will aim for short - term gains through expansionary policies, since their costs will not be visible immediately. proposals to enhance central bank independence emerged as a viable device to face these challenges. the case for independence has strong underpinnings, but there has been growing doubt over its merits. this was initially a consequence of the monetary policy response to the 2008 financial crisis, particularly in the largest advanced economies. first, amid low inflation, some argued central bank independence was no longer justified. second, as major central banks implemented quantitative easing measures, there were concerns these institutions would end up shaping fiscal policy, which is beyond their remit. third, greater central bank involvement in financial stability raised doubts about entrusting them with too many endeavors, and on the consistency of these tasks with independence. fourth, detractors of independence identified it as an obstacle to coordinate monetary and fiscal policies, while also worrying about the distributional implications of quantitative easing. this is a slightly edited version of an article prepared for β global public investor 2019 β, published by the official monetary and financial institutions forum ( omfif ) on june 12, 2019. deputy governor at the banco de mexico. the views and opinions expressed in this document are the sole responsibility of the author and do not necessarily represent the institutional position of the banco de mexico or of its board of governors as a whole. these arguments are paradoxical. in the absence of an adequate and timely reaction by fiscal and structural policies in the aftermath of the financial crisis, monetary policy became the only tool to bolster the world economy. there are also strong indications that, without independence, central banks would probably not have been able to undertake the measures needed to face the crisis. furthermore, the above - noted question marks about the merits of central bank independence can be easily refuted : independence is still needed in a low - inflation environment. inflation declined partly as the result of the recessionary effect of the financial crisis. there are other factors helping to contain inflation, but their future potential impact is uncertain. trade - offs with financial stability goals have always existed, as well as incentives to consider them. consistency of public finances with | central banks β goals is the key issue for proper coordination between fiscal and monetary policies. this does not imply, though, that central banks should be stripped of their independence. over the long run, the distribution of resources owes mostly to fiscal, structural and institutional factors. fresh criticisms against central bank independence have come to the fore recently. these are politically motivated and their dissemination across both advanced and emerging market economies is alarming. they are again the result of developments following the financial crisis and have found widespread support among those disenchanted with globalization. this is particularly worrying in emerging markets, since their institutional frameworks are more vulnerable to tensions. failing to protect central bank independence would cost the economy dearly, especially in emerging markets. their central banks β primary mandate β price stability β would be jeopardized. it could entail a return to time - inconsistent monetary policies, with potentially severe macroeconomic and financial implications. many arguments support central bank independence. to deal effectively with price pressures, institutions need a long - term perspective, insulated from political considerations. they should be able to respond quickly to changing conditions, and have the technical competence and credibility to do so. central bank independence has been key to stabilizing long - term inflation expectations and overcoming episodes of distress in many countries. destroying the institutional framework that has made these achievements possible would be irrational. granted, central bank independence must be accompanied by checks and balances. clear and transparent goals must be in place, and central banks must be held accountable. existing concerns cannot be ignored. this is a time to reflect on what actions are needed to improve public understanding of the role of these institutions and the importance of their independence. elected officials usually define central banks β mandates and the mechanisms to ensure accountability. however, central banks should guarantee that policies implemented are fully consistent with their mandates, and continuously evaluate means to enhance their transparency and accountability. | 1 |
as regards, in particular, interbank operations and payment systems. banking supervisors must be vigilant to avoid any particular project bringing additional risks. risks can increase significantly should larger banks be tempted to conquer new markets. the risk of contagion may grow correspondingly, weakening the banking system as a whole. it is therefore imperative that banking supervisors remain vigilant with regard to increasingly complex operations. 8. closing remarks the reconstruction of a banking group, or mergers within a banking group, or the acquisition of subsidiaries, joint ventures and branch offices by banks or their controlling companies should be in the interest of stability of the banking system as a whole. it must, however, be stressed that there are no hard and fast rules, because special circumstances, such as the history of a group and certain practicalities, often necessitate a pragmatic approach. as mentioned earlier, it is not our role, as regulators, to judge the wisdom of management decisions and business strategies beyond ensuring that local and international best practice regarding supervision and regulation are met. the restructuring of the banking industry represents a challenge for bankers and for regulators. besides the strengthening of supervisory arrangements, it is up to the regulators to support the wave of restructuring by continuing to level the playing - field in the banking industry and by eliminating any competitive distortions. this condition needs to be met for restructuring to have its full effects in terms of economic efficiency and proper resource allocation. | . bis central bankers β speeches | 0 |
italy and the others? before the crisis there were marked differences in wage costs and competitiveness, in greece in particular. these persistent differences have created serious tensions within the euro area. macroeconomic imbalance adjustments are not made via the exchange rate in the monetary union. that β s why it β s essential that the labour market and the goods and services markets work well. the bank for international settlements is worried about risks caused by monetary policies that are too accommodative. what β s your reply to that? our main objective is to ensure price stability. the financial crisis has created deflationary risks. our monetary policy measures have played a key role in the economic recovery, which is necessary for inflation to gradually return to levels in line with our objective. the question is knowing whether the central bank has gone too far in its monetary policy easing. now that the gap between growth potential and real activity is narrowing, have we accomplished our mission? at this stage, my reply is no. the economic expansion that is under way is not yet feeding through into higher inflation. we are not changing our priorities, but we must take into account the improvement in economic conditions when calibrating our measures. should an end date for qe be announced? no new decision has been taken since the governing council meeting on 7 september. we had concluded that a very accommodative monetary policy stance would remain essential to our mission and that we would decide in the autumn on the calibration of our purchase programme for the period beyond the end of the year. 2 / 2 bis central bankers'speeches | - hand side ). surveys point to continued employment growth in the coming months. put differently, one of the key channels in policy transmission β if not the most important one β is currently not working as usual. [ 31 ] structural factors, such as the rise in sick leave, the higher share of services in value added and a shortage of workers, are contributing to this. but demand is playing a key role, too. in the services sector, for example, the share of firms reporting demand as a factor limiting business remains close to historical lows. a tight labour market, in turn, increases the bargaining power of workers in an environment in which wages are already expanding at a historically high pace. if wages increased by more than currently projected, paired with potentially lower productivity, firms would be more likely to pass on higher labour costs to consumer prices. this risk is corroborated by evidence that, as inflation increases, prices and wages become less sticky β that is, they are adjusted more frequently, as the cost of keeping them unchanged increases ( slide 15, right - hand side ). in such an environment, whether a wage - price spiral will unfold will ultimately depend on the ability and willingness of firms to absorb higher unit labour costs in their profit margins. this, in turn, depends on the economic environment in which firms operate, and hence on monetary policy. recent work by ben bernanke and olivier blanchard has examined the role of labour market tightness for the united states. [ 33 ] their work suggests that unless the ratio of vacancies to unemployed workers falls back below its pre - covid level, inflation is unlikely to return to target in the next three years. policy implications and conclusions all in all, the risks to the inflation outlook are tilted to the upside, reflecting both supply - and demand - side factors. the question is how monetary policy should take such risks into account. the imf has recently issued a clear recommendation : if inflation persistence is uncertain, risk management considerations speak in favour of a tighter monetary policy stance. there are two reasons for this. first, the costs of protecting the economy from upside risks to inflation are comparatively small, as the policy rate can be brought back to neutral levels faster than if policymakers acted under the assumption of low inflation persistence ( slide 16, left - hand side ). second, it is very costly to react only after upside risks to inflation have materialised, as this could destabilise inflation expectations and thus require a | 0.5 |
credit spreads have narrowed for both investment - grade and high - yield bonds, markets are functioning in an orderly manner, and credit provision to the economy has held up. however, the covid event is not behind us yet. many households and businesses remain under pressure. according to the latest international monetary fund forecast, the global economy is projected to contract sharply by 4. 9 percent in 2020, a much worse outcome than during the 2007 β 08 financial crisis. while some indicators suggest a rebound in activity, the path of recovery remains highly uncertain. banks entered the current crisis in a much stronger position than they did the global financial crisis. they are much better capitalized and more liquid than back in 2008. this is a direct outcome of the g20 regulatory reforms adopted in the aftermath of that crisis and measures taken by the banking industry, which have improved the resilience of the core of the financial system. this has allowed the banking system to absorb rather than amplify the current macroeconomic shock. it has also enabled banks to play a central role in measures to support the flow of credit to the economy. a number of stress tests carried out recently in fsb jurisdictions have confirmed that banks are able to continue lending even in the face of this 1 / 4 bis central bankers'speeches extreme shock. less than two weeks ago, we at the federal reserve concluded that our banks would generally remain well capitalized under a range of extremely harsh hypothetical downside scenarios stemming from the covid event. even with that demonstrated strength, however β given the high levels of uncertainty β we took a number of prudent steps to help conserve the capital in the banking system. we know that the financial system will face more challenges. the corporate sector entered the crisis with high levels of debt and has necessarily borrowed more during the event. and many households are facing bleak employment prospects. the next phase will inevitably involve an increase in non - performing loans and provisions as demand falls and some borrowers fail. the official sector is providing a rapid and coordinated response to support the real economy, maintain financial stability, and minimize the risk of market fragmentation. the fsb is overseeing international cooperation and coordination of the responses of financial authorities to the covid event. too - big - to - fail reforms have made banks more resilient and able to support the economy this brings us to the fsb β s evaluation of too - big - to fail reforms. i should note at the outset that the analysis was conducted before the onset of | are critical to the future of the banking system : i. human capital investment ; and ii. forward looking leadership. human capital investment requires a new model : learning that adapts and is continuous the approach towards talent development and career learning is rapidly shifting. traditional learning systems are no longer sufficient. data from a recent study revealed that the β ability to learn and progress β is the principal driver of a company β s employment brand among millennials today. yet, only one - third of millennials believe employees are using their skills well, and 42 % say they are likely to leave because they are not learning fast enough. we must reinvent and modernise the existing model of human capital investment if we are to recruit, develop and retain 1 / 3 bis central bankers'speeches the very best of talent. prioritising and channelling greater resources to the talent development function are important first steps. currently, the average annual training expenditure for the banking industry is around 3 % of employee payroll, in contrast with international comparisons of around 4 % to 4. 5 %. the malaysian banking industry β s allocation for training and development is still below global benchmarks. it is, however, not enough to solely focus on outright spending. equally important is the quality of training investments. in my mind, this begins with transforming existing corporate learning systems to enable continuous lifelong learning and ongoing skill acquisition. the banking sector ought to have an β on demand, ever ready β learning system that empowers talent to take ownership of selfdevelopment. this means diversifying from the traditional form of structured learning that only takes place at rigid fixed intervals. aspiring talent ought to be empowered to personalise learning content according to individual preference and pace. indeed, knowledge should be accessible to all who seek learning. learning should take place at any time. learning should be democratised. the rise of innovative digital content providers such as coursera, codecademy and edx has further increased the viability and attractiveness of an β on demand, ever ready β learning system. edx, for example, includes over 130 economics and finance courses offered by prestigious providers such as harvard, mit and imf. in short, both the quantity and quality of human capital investment matter. agility is also a key aspect. human capital investment must adapt and evolve with its operating environment. the fintech wave has taught us an important lesson ; opportunity favours the bold and the wellprepared. more so in times of change. experience has | 0 |
particular, how monetary policy affects investment spending by firms. given that investment is an important element in the complex transmission mechanism of monetary policy, and given the continuous change of economic behaviour and institutional structures, a continuous interest of the central bank in this kind of research can easily be motivated. despite the best efforts of economists working in various research institutes and in central banks, it remains, however, imperfectly understood. this is, of course, to a large extent due to the volatility of investment itself, which is many times higher than that of gdp. by choosing it as the theme for its second international conference the bank wants to encourage further research in this field of economics. in that respect, after the pioneering work of dale jorgenson, analysing the investment decision in a neo - classical framework, and who will speak about taxation issues today, two major strands in the literature have been developed, which examine the implications of capital market imperfections and uncertainty for investment behaviour. our distinguished invited speakers, lenos trigeorgis, jean - bernard chatelain, charles himmelberg and julian franks, will give an overview of these subjects in their contributions. the first strand shows that in the presence of information asymmetries firms with weak balance sheets may become financially constrained in the sense that their cost of external funds substantially increases or that they are unable to attract external funds. in these circumstances, the effects of a change in the monetary policy - controlled interest rate will not only be transmitted through an increase in the user cost of capital but also through their impact on the financial structure of the firm. indeed, an increase in policy rates will result in larger interest payments, hence a worsening of the firm β s cash flow and its ability to self finance, and in a decrease in the value of assets that could be used as collateral for new loans. as a consequence, firms that are likely to be more exposed to problems of asymmetric information, will react more to a monetary tightening. variations in the availability of credit as a result of changes in monetary policy may act as an important channel of transmission, since these financial frictions amplify the effect of changes in the policy - controlled interest rates. in order to assess the monetary policy stance it is important for the policy maker to know whether these frictions are present or not. a second recent strand in the theory of business investment addresses the impact of uncertainty on investment. the main insight from this literature is that a firm, being uncertain | about the future and knowing that investment is a sunk cost, may choose to postpone investment in order to obtain further information about future market conditions. one can show that, in this case, the required rate of return to undertake the investment project increases. it is clear that, hereby, uncertainty introduces additional frictions in the investment decision process, which are likely to temper the effect of a change in the policy - controlled interest rates. therefore, also in this respect, the monetary authorities need to evaluate the precise timing and magnitude of these frictions, which are caused by uncertainty. as to the requirement to use micro data, it is known that aggregation can blur identification of important parts of the behaviour of economic agents. so, studies at the aggregate level often fail to find an economically significant relation between investment and the user cost of capital, a relation of the utmost importance for the transmission of monetary policy. this failure is attributed in literature to the so - called simultaneity bias. using micro data allows alleviating these problems. moreover, micro data allow analysing important economic questions that cannot be addressed using aggregate data sets. this is precisely the case if one wants to identify the existence of financial frictions, because here the individual balance sheet position of the particular firm matters. next, i want to review the importance of the launch of the euro and of the ecb β s price stability policy for investment behaviour. the introduction of the single currency three years ago provoked fundamental changes in the environment in which the public and the private sector operate. first, the most apparent change has been the elimination of exchange rate risks. together with the lower transaction costs and more transparent markets, this has created new opportunities for companies within the euro area. second, the euro has given impetus to the process of financial integration by enhancing the widening and deepening of the euro area financial markets. this evolution may appear to be beneficial for firms, which were or still are financially constrained and unable to execute all their investment plans. especially young and risky firms often suffer from insufficient tangible assets, that might serve as collateral for external funds, and / or develop activities that are highly risky in terms of future returns. since these are typically the enterprises which tend to bring new technologies to the market, financial market deepening, as triggered by the euro, may contribute to boost investment and economic growth. although with the launch of the euro, the exchange rates of the currencies of the euro area countries became irrevocably | 1 |
of rtgs1, which processes over Β£600 billion of payments every day. until recently only commercial banks had direct access to it, and alternative payment service providers ( or psps ) had to route through them. that made sense in the old financial world arranged around a series of hubs and spokes but it is increasingly anachronistic in the new, distributed finance that is emerging. so we are now making it easier for a broad set of firms to plug in and compete with more traditional providers. responding to demands from fintech providers, the rebuild will provide api access to read and write payment data. in july 2017, we became the first g20 central bank to open up access to our payment services to a new generation of non - bank psps. since then, five have become members and there is a growing pipeline of around twenty firms exploring whether and how to join. wider access will improve services to uk households and businesses and it will bring financial stability benefits by increasing the proportion of settlement in central bank money, diversifying the number of settlement firms, and driving innovation. financing major transitions my second example of how the bank is providing a platform for private innovation concerns the financing of the major transitions shaping the new economy such as the rapid rise of emerging economic powers and the evolving response to climate change. the transition to a low carbon economy, in particular, will require enormous re - allocations of capital and massive investments in infrastructure β on some estimates as much as $ 100 trillion globally over the next decade. firms that anticipate these developments will be rewarded handsomely ; those that fail to adapt will cease to exist. this will have enormous ramifications both the financial system and for financial stability. 2 that β s why the bank is transforming our soft infrastructure. recognising the need for adequate reporting of climate - related risks and opportunities, four years ago the bank helped catalyse the private sector - led task force on climate - related financial disclosures ( tcfd ). the tcfd has now led to a step change in the demand and supply of climate reporting. with over $ 100 trillion in assets now demanding tcfd quality disclosures, a market in transition is now being built. rtgs renewal programme : a blueprint for a new rtgs service for the united kingdom. available at : https : / / www. bankofengland. co. uk / paper / 2017 / a - blueprint - for - a - new - | ##7 and the machinery to monitor progress. we are starting to see some real improvements. but there is a long way to go, and it will need continued investment by the public and private sectors in infrastructure and data and regulatory changes. as i said at the outset, both the frictions and the actions necessary to achieve them vary considerably by payment type and by region. but there are some common priority areas on which we will need to focus in the next phase of the work. first, we need to see further upgrades to central bank and private sector payment systems. more than a dozen countries are developing and upgrading their real - time gross settlement ( rtgs ) systems over the next five years, for instance by expanding access or extending operating hours. as an individual cross - border payment will often involve systems operated by both public and private sector institutions, the cpmi has launched a joint public - private sector taskforce to coordinate plans for the necessary improvements and ensure they coalesce around best practices. second, we need to implement the data standards for cross - border iso 20022 payment messages and develop harmonised standards for application programming interfaces ( apis ). third, we should facilitate and promote interlinking of fast payment systems. there are a range of technological solutions available or in prospect. [ 11 ] but the governance and oversight of interlinking arrangements can be a greater challenge than the technology. cpmi is working on a report to the g20 next year on these governance and oversight issues that could serve as a useful reference for payment system owners and overseers, and it published an interim report for comment last week. fourth, we should pursue more effective, coordinated regulatory frameworks for cross - border payments, and remove unnecessary regulatory frictions. a key priority on regulation in the nearterm will be for the financial action task force ( fatf ), in the first half of next year, to update their recommendation ( which was originally developed 20 years ago ) on detecting and preventing misuse of wire transfers by terrorists and other criminals. a more granular recommendation, which takes into account new data standards and technology, will enable more consistent implementation across jurisdictions and enhance both the efficiency and the effectiveness of aml / cft checks. in addition to fatf β s work here, there are a range of other frictions arising from the regulation of banks and non - banks, and a second public - private taskforce is focused on identifying actions to address these. fifth, we should support authorities beyond | 0.5 |
. in the specific area of cyber security, the rbi has recently conducted phishing simulation exercises for select supervised entities ( ses ) to assess their email security standards and cyber security preparedness. we have also initiated the process of conducting cyber reconnaissance exercises this year. this will provide pre - emptive information on the cybersecurity risk vectors of ses. besides, cyber drills which are conducted periodically are being further enhanced in terms of coverage and periodicity. 20. the increasing use of technology and digital services has led to more incidents of digital frauds and customer dissatisfaction. the recommendations of the rbi working group on digital lending in this area are under examination for issuance of guidelines. 21. in the context of customer service, another area which is engaging the attention of the rbi is the harsh recovery methods used by certain lenders, without having adequate checks and controls over their recovery agents. we have received complaints of customers being contacted by recovery agents at odd hours, even past midnight. there are also complaints of recovery agents using foul language. such kind of actions by recovery agents are unacceptable and pose reputational risk for the financial entities themselves. we have taken serious note of such instances and will not hesitate to take stringent action in cases where regulated entities are involved. such complaints against unregulated entities will have to be taken up with appropriate law enforcement agencies. 22. we have recently set up of a committee for review of customer service standards in the rbi regulated entities ( res ) which would inter alia review the emerging and evolving needs of the customer service landscape, especially in the context of evolving digital financial products and their distribution, and suggest measures for strengthening the overall consumer protection framework. governance and risk management 23. i have often spoken about the importance of good corporate governance in banks and financial institutions. a good governance structure will have to be supported by effective risk management and compliance functions. the cost of compliance to rules and regulations should be perceived as an investment, as inadequacy in this regard can prove to be highly costly. compliance culture should ensure adherence to not only laws, rules and regulations, but also integrity, ethics and codes of conduct. 24. the global financial crisis was preceded by a wave of financial innovations related to securitisation and other innovative financial instruments. these allowed the financial system to grow at a pace that was beyond its capacity to manage, especially from the point of view of the connected risks. given such past experience, prudence demands that introduction of innovations in | with the bank. it is, therefore, crucial that while driving various tech - enabled initiatives, the existing systems and processes do not see frequent disruptions and non - availability. we have already seen instances of the damage that disruptions in technology systems can bring and the reputation risk they carry for financial entities. a casual approach to handling technology issues even as basic as wrongful deletion of a single system file or inadequate care in patch updating often lead to financial and operational losses. 10. the it systems and platforms are also exposed to obsolescence and require frequent upgradation. this calls for adequate investment in it infrastructure by all financial sector entities. this is one of the important focus areas of rbi β s supervision of its regulated entities, especially the banks and the nbfcs. 11. it has also to be recognised that human resource can turn out to be the weakest link in technology enabled financial services. there is thus a vital need for ongoing training and skill building programmes. 12. at end of the day, the bottomline is how technology improves the financial system in terms of efficiency, effectiveness, resolving bottlenecks in economic functions and provide value addition to the customers. collaboration between finance and technology firms 13. large technology companies ( bigtech ) which have entered into provision of financial services could potentially be another source of disruption to the financial system. as you would be aware, such companies, whether from e - commerce, social media and search engine platforms, ride hailing and similar businesses have started to offer financial services in a big way on their own or on behalf of others. these companies have an enormous amount of customer data which has helped them to offer tailored financial services to entities and individuals lacking credit history or collateral. even the banks and other lenders are sometimes utilising platforms provided by fintech companies in their internal processes for credit risk assessment. such large scale use of new methodologies in credit risk assessment can create systemic concerns like over - leverage, inadequate credit assessment, etc. authorities and regulators have to strike a fine balance between enabling innovation and preventing systemic risks. 14. the big techs also pose concerns related to competition, data protection, data sharing and operational resilience of critical services in situations where banks and nbfcs utilise the services of big tech companies. these concerns can also materialise in sectors other than financial services. the provision of financial services through the digital channel, including lending through online platforms and mobile apps, have brought in issues | 1 |
##ender confidence in the system. there was also a significant degree of cooperation among the central banks and governments of major economies, which helped to lubricate the system in its functions in times of financial imbalances ( eichengreen, 1992 ). the gold standard, however, came under severe strain after world war i in the wake of the breakdown in cooperation between countries. the consequence was the depression, competitive devaluations, beggar thy neighbour policies, decline in world trade and high unemployment, at different times in different countries during the inter war period. overall, there was a great degree of instability during this period. the quest for a new international economic order that would restore economic and financial stability in the world gave rise to the bretton woods institutions and the bretton woods currency system. it was not until 1958 that most european currencies became convertible and many currency adjustments took place after the end of world war ii. the anchor now was essentially the us dollar as the reserve currency and the commitment to its convertibility to gold. the international monetary fund was to act as the lender of last resort in case of balance of payment crises. but even this fixed exchange rate system lasted only till 1971. the over - financing of exports, the economic pick up in hitherto war torn countries led to the glut of the dollar ; and the american inflation of the 1960s ; all contributed to the cessation of dollar convertibility to gold. the fixed exchange rate system got abandoned after the smithsonian agreement. the floating exchange rates that then followed meant that the world was left without an easily understood, credible monetary anchor. hence the increasing quest for methodologies promoting financial stability. the other major feature of global financial markets has been the trends in capital flows. a major surge in capital flows started around the 1870s and continued till world war i. this era, which coincided with the operation of the gold standard, has been regarded until recently as the golden era of capital mobility. open trade and open labour markets also characterized this period. in retrospect, there was an effective system shut down after world war i, almost until the 1970s. during the inter war period, the world economic system got characterized by increasing trade restrictions, high tariffs, curbs on capital flows, fixed exchange rates and other rigidities. post world war ii it has taken a long time to open up international trade through the successive gatt rounds and now through the wto. the period after 1973 has been | foreign flows to india which in turn caused downward pressure on the indian rupee. the rupee which was hovering around rs. 55 per us dollar in march 2013 depreciated by about 20 per cent and touched a low of ` 68. 4 per us dollar as on august 28, 2013. however, with proactive measures by the government and the reserve bank, the rupee recovered significantly by november 2013 and turned less volatile ( chart 5 ). let me now turn to the specifics of our policy response. policy response during taper talk phase taking into account the spillovers of global developments on indian markets, the reserve bank the government announced various policy measures since june 2013. the policies can be broadly categorized into : ( i ) currency intervention, ( ii ) monetary policy, ( iii ) trade policy and ( iv ) capital flow management measures. a chronology of policy measures is given in annex ii. currency intervention and monetary policy in order to stabilize the domestic currency market, the reserve bank intervened in the forex market by selling dollars during june to september 2013 ( chart 6 ). bis central bankers β speeches as the downward pressure on rupee continued despite the initial rounds of intervention in forex market, monetary tightening measures were undertaken to stem speculation by making it expensive to build up long positions in dollars. accordingly, the upper bound of the policy rate corridor ( i. e., msf rate ) was raised by 200 basis points and the quantity of central bank liquidity available through the rbi β s overnight liquidity adjustment facility ( laf ) window was restrained. in addition, the level of daily average maintenance of required cash reserve ratio ( crr ) was raised. these had the desired effect of tightening the monetary conditions and raising the effective policy rate sharply to the msf rate ( chart 7 ). bis central bankers β speeches in order to signal the transitory nature of these measures and avoid hardening of interest rates at the longer end, a form of operation twist was tried by conducting outright omo purchase of government securities alongside sale of short - term government cash management bills. this inverted the yield curve, though accompanied by some increase in long - term rates. simultaneously, steps were taken to augment foreign exchange reserves. in this regard, banks were incentivized to mobilize fresh non - resident foreign currency [ fcnr ( b ) ] deposits and swap those directly with the reserve bank. the overseas borrowing limit of banks was also increased from 50 to 100 per cent of | 0.5 |
secondly, it concerns the special contagion risks in the financial system. in a central bank context, these are usually called systemic risks. banks and other intermediaries in the credit market who receive deposits from the general public play a central role in the financial system. they contribute, for instance, to facilitating the mediation of capital by acting as intermediaries between depositors and borrowers. they also create the conditions for more efficient mediation of payments in the economy. the banks β deposit accounts are of central importance for the use of payment cards, credit cards and credit transfers. many banks also participate in the system for the settlement of large - value payments supplied by the central bank. the banks and their account systems are therefore a vital part of the payment system. so if anyone asks why the banks are special, i could reply in the same way as john dillinger, designated by the fbi in the 1930s as public enemy number one, when asked why he robbed banks : β because that β s where the money is. β at the same time, problems that arise in one bank can easily spread to other banks. this spread can occur in different ways. firstly, there can be a direct spread, through the exposures the banks have to one another in the payment systems and in connection with foreign exchange and securities trading. severe chain effects can arise if the customers of a bank suffering problems have their means of payment tied up in the bank. this makes it difficult to make payments to other households and companies. it can lead to liquidity problems that can in turn give rise to loan losses and payment problems for these customers β banks. secondly, the banks are often exposed to the same sorts of risk. this increases the probability that, for instance, a macroeconomic shock may affect more than one bank. the spread of problems between banks can thus also arise as an indirect effect, through expectations that other banks may suffer similar problems to the one first affects, or via more well - founded suspicions of the banks'exposures to one another. the contagion risks mean that problems in one bank can easily lead to problems for the entire bank system. the costs to society of a crisis affecting the entire bank system can be substantial. it is, of course, difficult to calculate these costs. some surveys have indicated that an average production loss resulting from a bank crisis could be around 15 - 20 per cent of gdp. according to some calculations, the collapse of the swedish bank market cost around 5 per cent | . the uncertainty has led to an increase. but, there are also other parallels. this includes in particular the arrangements that made the banks β real risk - taking more abstruse. the banks β formal and informal promises of loans to special investment vehicles meant that the problems quickly bounced back into the banks'balance sheets. in the swedish bank crisis one can say that the finance companies in some respects played a corresponding role to the special vehicle. it was the finance companies that primarily financed the expansion in the construction and property markets. the finance companies largely financed themselves in the short term by issuing so - called commercial papers in the fixed income market. when the property market folded, it was a finance company, nyckeln, which in september 1990 was the first to throw in the towel when it could not renew its financing. other finance companies then followed suit. many of the finance companies were owned by the banks. and the banks were tied by both formal and informal commitments. the losses therefore soon returned to the bank system. in 1991 it became apparent that the banks had substantial problem loans through their exposures to the property branch both directly and indirectly through the finance companies they supported. the bank crisis had become a reality. perhaps you begin to see a pattern now? the structures were a side - effect of the desire to avoid regulation it is also interesting that the abstruse structures, which led to the current financial turmoil and the bank crisis in the 1990s, were in both cases partly due to so - called regulatory arbitrage. the most recent wave of securitisation of the banks β credit portfolios was partly propelled by deficiencies in the capital adequacy rules. through securitisation the banks could easily avoid a lot of expensive capital adequacy. since 2004 a new capital adequacy regime, basel ii, has applied. this is more finely meshed and does not allow the same possibilities to avoid capital adequacy through securitisation. however, it has not yet been implemented in all countries, such as the united states, for instance. the swedish finance companies were in their day the result of regulatory arbitrage. prior to the abolition of credit regulation in sweden, the finance companies were often used as a means for the banks to get round the credit restrictions. this β grey β credit market was once substantial and an important source of additional income for the banks. around 25 years ago i myself wrote quite a lot about this. credit | 1 |
is 57 percent. that means a lot of farmers are still in the process of moving into cities. some of them may have already found a job, but they have not moved their family or found a residence or apartment in the cities. thus, urbanization is still going on rapidly and continues to generate strong demand for steel and cement. the chinese government intends to promote structural reform and optimization, and attaches great importance to environmental protection. therefore, the government has voluntarily undertaken to cut steel and cement capacity by ten percent. up till now, progress has been made in removing excess capacity. we expect the goal can be achieved. on the shift of comparative advantage. the chinese manufacturing sector has shifted a lot of labor - intensive capacity into asean countries. more and more chinese investors are investing in africa and moving some capacity there. therefore, service industry is accounting for an increasingly larger share in the chinese economy, which is a very good phenomenon. but the service industry is not competitive. we have some strong sectors but still need to strengthen the relatively weak sectors, such as education and medical services. on financial stability. this july, a decision was made in the national financial work conference to set up a financial stability and development committee. in the future, the focus will be on four areas. one is the shadow banking issue. we started to deal with it two years ago and have made positive progress. many shadow banking activities have returned to the banking sector and are included in the balance sheet of commercial banks. the second is asset management sector. this is relatively complicated. the cbrc, csrc and circ may have different rules regarding the same asset management activity. we agree with fsb β s guidance for streamlining regulation of the asset management sector. the third is internet finance. a lot of it companies are providing financial services. some have been granted licenses. but some do not have any license, yet provide lending and payment services, and sell insurance products. this may cause competition and financial stability problems. the fourth is financial holding companies. we have observed that some large private - owned companies have got various financial service licenses through m & a. but in the real sense, they are not financial holding companies. they may have engaged in illegal activities, including connected transactions. yet, we do not have the necessary regulatory policies to deal with such cross - sector transactions. going forward, we will further deepen reform, gradually push forward the deleveraging process, and strengthen regulatory coordination to promote healthy development of | su ning : keep good credit records and endeavor to aim for a harmonious society speech by mr su ning, deputy governor of the people β s bank of china, at the launch ceremony of the national credit information education month, beijing, 31 may 2008. * * * vice mayor mr. gou zhongwen, ladies and gentlemen, good morning! welcome to the launch ceremony of the national credit information education month. i appreciate your care and support to the building of china β s credit information system. enterprises and individuals, as the subjects of a credit information system, comprise an important force pushing ahead the building of a credit information system. improved awareness of enterprises and individuals of the credit information system and expanded outreach can help protect the rights and interests of enterprises and individuals and promote the healthy development of the credit industry. it remains a priority in the pbc β s credit information work to popularize the knowledge about credit information, help enterprises and individuals to understand and use credit information to create more transaction and development opportunities. in recent years, under the guidance of the central publicity department and with the support of the ministry of education and other central government authorities and local governments, the pbc has undertaken various credit information educational campaigns and achieved some good results. credit information is no longer a strange word, but has penetrated into the daily life and economic and financial activities of the public, starting to influence behaviors of enterprises and individuals in its unique manner and propelling the building of a social credit system. in order to improve understanding of credit information system and expand its use, the pbc has decided to launch the national credit information education month, in a bid to generate synergy and magnify the results. credit is not something that you are endowed with. if default is not recorded or punished, people will not have the motive or discipline to value creditworthiness, and it is possible that honest enterprises and individuals will turn their back to credit and honesty. as such, the building of social credit is not only to be held up by moral standards, but also be regulated by legal and institutional systems. the credit information system, as an institutional guarantee regulating credit - related behaviors of enterprises and individuals, is the foundation for the social credit system and the cornerstone for the stable performance of a modern financial system. in recent years, the pbc has implemented policy measures of the state council on social credit system building, organized commercial banks to establish a national database covering credit information of both enterprises and individuals, namely the | 0.5 |
the rbi under the banking regulation ( br ) act of 1949. additionally, all public sector banks are regulated by the government of india ( goi ) under the banking companies ( acquisition and transfer of undertakings ) act, 1970 ; the bank nationalisation act, 1980 ; and the state bank of india act, 1955. section 51 of the amended br act explicitly states which portions of the br act apply to the psbs, most common thread across the omissions being complete removal or emaciation of rbi powers on corporate governance at psbs : 1. rbi cannot remove directors and management at psbs as section 36aa ( 1 ) of the br act is not applicable to the psbs. 2. section 36aca ( 1 ) of the br act that provides for supersession of a bank board is also not applicable in the case of psbs ( and regional rural banks or rrbs ) as they are not banking companies registered under the companies act. 3. section 10b ( 6 ) of the br act that provides for removal of the chairman and managing director ( md ) of a banking company is also not applicable in the case of psbs. 2 4. rbi cannot force a merger in the case of psbs as per section 45 of the br act. 5. psb β s banking activity does not require license from rbi under section 21 of the br act ; hence, rbi cannot revoke a license under section 22 ( 4 ) of the br act as it can in the case of private sector banks. 6. rbi cannot trigger liquidation of psbs as per section 39 of the br act. 7. furthermore, in a remarkable exception of sorts, in some cases there is duality of managing director and the chairman β they are the same β implying the md is primarily answerable only to himself or herself. this legislative reality has in effect led to a deep fissure in the landscape of banking regulatory 2 / 8 bis central bankers'speeches terrain : a system of dual regulation, by the finance ministry in addition to rbi. 3 i will now take a few minutes to explain why this fissure or the fault line is bound to lead to tremors such as the most recent fraud. temptation to engage in fraud at the level of employee or employees is always present, in banks ( or in corporations ), be it in public sector or private sector. the question then is whether there is adequate deterrence faced by employees from undertaking frauds and enough incentives for management to put | central bank ( ecb ), the recent comprehensive assessment is an important step toward building confidence in euro - area banks. i wish the ecb great success as it takes on its new responsibilities at the center of the single supervisory mechanism. at the federal reserve, we have devoted substantially increased resources to monitoring financial stability and have refocused our regulatory and supervisory efforts to limit the buildup of systemic risk. this macroprudential approach to promoting financial stability will be an important complement to our other tools for promoting a healthy economy. looking ahead in advanced economies, the current macroeconomic policy mix generally remains one of extraordinary monetary policy stimulus and somewhat contractionary fiscal policy. considering the headwinds that continue to weigh on growth, employment, and prices, this situation is hardly ideal. policymakers face difficult choices as they seek to balance the need for long - term fiscal sustainability with the need to support their economies in the near term. even so, i continue to anticipate that the headwinds associated with the financial crisis will wane. as employment, economic activity, and inflation rates return to normal, monetary policy will eventually need to normalize too, although the speed and timing of this normalization will likely differ across countries based on differences in the pace of recovery in domestic conditions. this normalization could lead to some heightened financial volatility. but as i have noted on other occasions, for our part, the federal reserve will strive to clearly and transparently communicate its monetary policy strategy in order to minimize the likelihood of surprises that could disrupt financial markets, both at home and around the world. more importantly, the normalization of monetary policy will be an important sign that economic conditions more generally are finally emerging from the shadow of the great recession. bis central bankers β speeches | 0 |
viewpoints, professionally and personally. we do live in a global society, where financial developments take place at a rapid pace. therefore, central banks should possess strong and reliable mechanisms of coordination and communication, which may prepare our institutions to cope with such situations. a proverb says : β no matter how long the journey is, one has to take the first step to start off. β this philosophy was made concrete through this twinning project, which along with the assistance in the afore - mentioned areas, was also the first step on the path of our institution to eu standards, as one of the priorities of the stabilization and association agreement. i would like to extend my sincere thanks to the banca d β italia and the banque de france for the outstanding cooperation we have had during the project implementation. i commend the efforts of both honoured institutions and hope that the successful implementation of this project will provide us with an example to involve more in such initiatives in the future. also, i want to extend my thanks to the delegation of the european union for its ongoing assistance and prudence throughout the project performance. i am deeply confident that these are only the first steps towards a close cooperation. i would like to conclude by bringing to your attention a statement of mr. shimon peres, who, listening to his advisor, agassi, who was speaking about developing alternative oil sources in the absence of oil, interrupted him by saying : nice speech, but what are we going to do? in light of this, we should think about what to do in the future. i think that the political coverage of this approximation process is important, with which i mean brussels β probable acceptance of albania β s application for membership in september. this is an important step that would provide additional room for the country β s rapid convergence and for bank of albania β s rapid and irreversible development in line with the models of its european counterparties. bis central bankers β speeches | of correcting foreign trade balance and reduce its influence on the economic growth for 2011. in the aspects of macroeconomic policies, these developments suggest that strong stimulating policies for the economy may be buffered by a rapid increase in imports that accompanies the increase in domestic demand. in the structural aspect, these developments reiterate the need to continue with structural reforms, which should orientate the albanian economy towards a more stable development model and a higher competitiveness in global markets. among other things, these reforms, should aim at establishing a favourable climate to attract stable capital flows as in foreign direct investments or long - term capital inflow. a further increase of aggregate demand enabled the albanian economy to move closer to its producing potential, yet remaining clearly under - utilised. consequently, decreasing pressures on inflation continued to be present even during the second half of the year. average annual inflation was 3. 1 % in the first quarter of the year, dropping by 0. 4 percentage points from its average level of the third quarter and getting closer to bank of albania β s target. during 2010, inflation was influenced by increased administered prices, rising trend of basic goods prices, food products and oil prices in international markets, and underestimating tendencies of the exchange rate. annual inflation increase to 3. 4 % in december was due to increased agricultural products prices, reflecting this increase in global markets. yet, anchored expectations on price stability and disinflation pressures by the real economy balanced the action of the above - mentioned factors of demand on inflation, halting their transition to second round effects and stable inflation pressures. the bank of albania considers that the inflation rate is expected to range within our target of 3 per cent, during the entire year. the increasing effect on the inflation of supply factors is balanced by the negative output gap and existence of non - utilised capacities in the economy. controlled inflation pressures and fiscal policy created space for a gradual increase of the monetary stimulus in the economy during 2010. the supervisory council of the bank of albania decided to reduce the key interest rate by 00. 25 percentage points in july, taking it to the lowest historical level of 5. 0 %. in parallel with this move, the bank of albania supplied the interbank market with the necessary liquidity for a proper functioning of financial markets. in the operational aspect, a change of form of our objective in june served to a better orientation of banking system refinancing with liquidity, resulting in a liquidity premium reduction in the | 0.5 |
β s report on β reconciling risk sharing with market discipline : a constructive approach to euro area reform β, which, as many of you probably know, we discussed in a recent seminar here at the banco de espana. the package of reform measures put forward by the ec cover a broad set of issues, from the completion of the banking union and the design of mechanisms that reconcile market discipline and risk sharing to the establishment of a european union finance minister. the panelists today will share their views and analysis on these central issues. let me briefly reflect upon them. the euro - summit on 15th december 2017 resulted in a renewed political commitment to foster further progress on emuΒ΄s architecture during the first semester of the present year. the aim was to trigger the necessary discussions and achieve material progress in the 3 / 5 months preceding the closure, in spring 2019, of the current legislature of the european parliament. our political leaders assigned priority to the completion of the banking union, with the establishment of a common fiscal backstop for the single resolution fund, and the introduction of a common european deposit insurance scheme ( edis ) with eventual full risk mutualisation. both are essential elements to severe the links between banks and sovereigns and to bolster the ability of the area to deal with large macroeconomic shocks. the development of the capital markets union is surely another key project that deserves to be mentioned at the top of the political agenda. leaders also agree on the need to reduce risks in banks β balance sheets, including β but not only - the stock of non - performing loans, which is still too large in some jurisdictions. current proposals to create sovereign bond - backed securities ( sbbs ) could contribute to reduce current home - bias in bankΒ΄s sovereign holdings if accompanied by regulatory reforms that ensure acceptance by investors. but these reforms should be carefully calibrated to avoid hindering liquidity and price formation in sovereign bond markets. but there are other issues that will require more time to agree and to put in motion. as most of the empirical evidence points out, risk sharing channels are substantially weaker in the euro are than in other monetary unions, but also when compared with large countries inside the euro area, so that a larger share of idiosyncratic or national shocks to income cannot be smoothed out. upgrading the efficiency of risk - sharing channels, both private and public, and better exploiting the synergies among them would provide the euro area with the shockabsorption capacity and the improved access to cross | 23. 05. 2018 β strengthening the economic governance of the euro : short - term priorities and the long - term view β high level seminar. banco de espana luis m. linde governor ladies and gentlemen, let me first extend a warm welcome to you all to the banco de espana. thank you for joining us today in this seminar that addresses the pressing and very important topic of the economic governance of the euro : short - term priorities and the long - term view. i would like to thank the panelists who have been so kind to accept our invitation ; we are very pleased to have among us a long list of distinguished participants that would certainly throw much welcomed light on the discussion. the timing of this conference is particularly relevant. after years of low growth, europe is now experiencing a robust recovery which opens up a window of opportunity to make progress in the governance reform agenda before the next economic downturn unfolds. supported by expansionary monetary policy, real gdp in the euro area has expanded for 19 quarters in a row. stronger price dynamics are yet to materialize, but we are confident that if we are prudent, patient and persistent, our monetary policy measures will be effective in achieving the medium - term goals. price stability is a necessary but not a sufficient condition for achieving sustained and balanced growth. in fact, one important lesson we can draw from the first twenty years of the emu is the need to improve the area β s resilience to large macroeconomic shocks and to increase its stabilization capacity. in this context, we currently find ourselves at a crossroads in what refers to the pace of the governance reform agenda. despite evident progress since the peak of the crisis, the building of a more cohesive monetary union, as proposed in the van rompuy β s report of june 2012 ( the so - called four presidents β report ) and in the juncker β s report of june 2015 ( the so - called five presidents β report ), is, we all know that, a very difficult task. as a matter of fact, there has been no significant step forward since the establishment of the single resolution fund in june 2014. recently, several initiatives have attempted to re - launch the debate on the future of euro area β s governance, including, in december 2017, the european commission β s report on β further steps towards completing europe's economic and monetary union : a roadmap β, or, in january of the present year, the center for economic policy research | 1 |
patrick honohan : progress and developments in relation to implementing the mortgage arrears resolution targets speech by mr patrick honohan, governor of the central bank of ireland, to the joint committee on finance, public expenditure and reform, dublin, 30 april 2014. * * * accompanying data tables can be found on the central bank of ireland website. thank you for inviting me to discuss the progress and developments in relation to implementing the mortgage arrears resolution targets. i welcome the opportunity to discuss the issue and i am also happy to discuss other matters the committee may wish to raise. when i was last before the committee in september i noted that there were indications the mortgage arrears resolution process was working and, while there was still some way to go, momentum was building. based on the evidence of recent months it is evident that the momentum has been established and we are starting to see progress by all banks in working to address mortgage arrears issues. although it is still fair to say that the full resolution across the system will take a significant amount of time. as you are aware under the mortgage arrears resolution targets imposed by the central bank last year the banks are required to meet quarterly targets on the resolution of mortgage arrears. to date we have received returns from the banks for three quarters and we reported the outcomes of our first assessment in november. we have recently concluded our audit and assessment of a sample of the banks β end 2013 target returns, which you discussed recently with the various institutions. based on the information submitted the banks have proposed sufficient numbers of solutions to meet the targets of proposing solutions to 50 per cent of those in arrears and concluding 15 per cent of these cases. the audit effort this time was channelled towards what we viewed as the highest risk areas. we focused on examining the areas and issues which have caused us most concern and areas which the banks must address now if they are to build a sustainable, long - term process to deal with arrears. the audit process involved examinations of individual loan files, based on institution - specific samples, distinguishing for example between situations where a bank could be perceived as still relying on short - term solutions, and where a bank seemed to be relying on what might be called β bulk campaigns β ( offering similar solutions across the board to a range of cases ). all in all, i would summarise our findings by saying that although we have noted, in the course of the audit, a number of areas of | deficiency ( as i will mention below ), by and large, the evidence is consistent with a process which is working more or less to target. a number of key issues emerged in our latest audit, all of which have been communicated to the banks to address. the main issues include : β’ in some banks, communications with borrowers on proposed sustainable solutions were too frequently verbal in nature, and they did not provide sufficient clarity to borrowers on what the ultimate solution proposed was. β’ there is evidence that despite the requirements for proposed solutions to be sustainable in the long - term, short - term loan modifications are still too prevalent in some banks. β’ affordability assessments were often not evident on files reported as sustainable. β’ in a limited number of cases, we found issues of potential breaches of the code of conduct on mortgage arrears ( ccma ) relating to the timing of the letters in advance bis central bankers β speeches of legal proceedings for repossessions commencing. the central bank will commence a review of ccma compliance in the second half of the year and these findings will be taken into account as part of this review. we are communicating the specific issues and actions identified for each bank, including the actions arising in from our wider insights into the effectiveness of the specific banks β strategies to resolve mortgage arrears. while these issues are significant, and it is important that action is taken to address them, they should not impede progress on dealing with arrears cases. we expect the banks to continue to progress cases to sustainable and long - term solutions. we will continue to review the banks β operations and strategies and where there are deficiencies or we think things should be done better we will let them know. addressing mortgage arrears was never going to be a short - term issue. we have always believed it was going to take time to tackle the issues and take a number of years to work out. we are now at a point were progress is evident and, notwithstanding specific areas for improvement by banks, we are moving along the right path. mortgage arrears remain a significant priority for the central bank and we will continue our programme of intensive oversight of the banks β progress. bis central bankers β speeches | 1 |
, but will bring a fiscal stimulus outside of the restrictions of the eu stability and growth pact. hence, it should have an expansionary effect and will contribute to growth and employment, especially in austria and germany. β’ when analyzing the fiscal consolidation in cesee, the rei finds that, despite improvements in the quality of budgets in recent years, large fiscal challenges still remain. especially in the see region, sizeable budgetary adjustments are needed. just a few words on today β s seminar : we will start out with two presentations : bis central bankers β speeches the first one on β cesee outlook, risks and policy priorities β, will be given by mr. jorg decressin. the second presentation by mr. johannes wiegand will deal with β reconciling fiscal consolidation and growth in cesee β. mrs. anna ilyina will then be happy to answer any questions. these presentations will be followed by a panel discussion, to be chaired by my colleague franz nauschnigg. the idea is to have an interactive discussion with the audience. 3 let me now introduce the distinguished panellists : jorg decressin : since early 2014, mr. decressin is deputy director in the european department of the imf. before that, mr. decressin was the research department β s deputy director and was in charge of the imf β s weo ( world economic outlook ). mr. decressin holds a ph. d. from harvard university, a b. sc. from lse and has published on labor and capital market adjustments, deflation, and on fiscal policy and financial integration in europe. johannes wiegand : mr. wiegand is economist in the imf β s european department and was mission chief to kosovo and desk officer for hungary. before that, mr. wiegand has worked in the imf β s research, policy development and review department as well as in the african department, and has published on macro - financial linkages, financial stability and on emerging market vulnerabilities. mr. wiegand holds a ph. d. and m. sc. from the university college london. anna ilyina : mrs. ilyina is chief of the emerging economies division in the imf β s european department since 2013. before that, she was deputy chief of the global markets analysis division and of the financial sector analysis division in the imf β s monetary and capital markets department. mrs. | philipp hildebrand : ( the ) productivity ( imperative ) summary of a speech by mr philipp hildebrand, vice - chairman of the governing board of the swiss national bank, at avenir suisse, zurich, 24 september 2007. the complete speech can be found in german on the swiss national bankaβ¬β’s website ( www. snb. ch ). * * * just a few years ago, the weak growth of the swiss economy was a dominant topic in public debate. for four years now, the economy has been advancing strongly. is this merely a cyclical boom? or has structural change taken place, affecting both productivity and the associated potential growth path? this would have far - reaching implications, not least for monetary policy. a number of factors indicate that structural change is indeed occurring and that this could ultimately result in an increase in the underlying productivity trend. however, time lags and cyclical distortions make it difficult to identify such changes. | 0 |
no matter how uncomfortable may be their short term consequences. β sir philip added : β but in my description of our economic policy stance, i do qualify the term β non - interventionism β with the adjective β positive β. perhaps in the past i have not spelled out the implications of this adjective clearly enough. what it means is this : that the government, when faced with an interventionist proposal, does not simply respond that such a proposal must, by definition, be incorrect. quite the contrary. β generally speaking, or so i would like to argue, the government weighs up carefully the arguments for and against an act of interventionism in any sector of our economy and on the demand or supply side in the light of present and likely future circumstances. the government then comes to a positive decision as to where the balance of advantage lies. it is true that, more often than not, we come to the conclusion that the balance of advantage lies in not intervening ; and, i must confess, i would be alarmed if we didn β t. yet, in all cases, the decision is made positively, and not by default, and it is not the non - outcome of a do - nothing approach. but, there are many examples of the government deciding, usually on the advice of its boards and committees, to intervene, in one way or another, in the free play of market forces. β indeed there are many examples of intervention. we built the airport because, without government intervention, it would simply not have been economically viable. we built roads and bridges. we provided public housing, medical services, the list is long. but we tend to do less than other jurisdictions and so the size of our public sector in relation to gross domestic product is one of the smallest in the world. specifically in the monetary and financial systems, there is significant intervention in the form of the regulation of financial markets and the supervision of financial institutions. this is precisely because we feel that, in the words of sir philip, β the balance of advantage β lies in so intervening and because β imperfections in the operation of the market mechanism [ may lead ] to economic inefficiency β. in very much the same spirit, we intervened in 1996 and built a real time payment system because the private sector was not able to come up with this highly desirable piece of financial infrastructure. we have been intervening since the beginning of 1990 to develop the hong kong dollar debt market, again because the market was considered essential for effective financial inter | joseph yam : competition and cooperation among global and regional financial centres congratulatory remarks by mr joseph yam, chief executive of the hong kong monetary authority, at the aci asia β the financial markets association, hong kong, 11 july 2008. * * * mr wiebogen, mr tan, ladies and gentlemen, it is with great pleasure that i join you this evening to mark the inauguration of aci asia β the financial markets association. on behalf of the hong kong monetary authority and the hong kong special administrative region government, i would like first to offer my congratulations to all those who have worked hard over the last couple of months on the establishment of aci asia. special congratulations are also appropriate to mr wiebogen and mr tan for the foresight and leadership they have demonstrated in this initiative. financial markets in the developed economies have been experiencing considerable stress. at the risk of oversimplifying it, the current financial turmoil can be attributed to financial innovation creating distortions in the financial system, including the compensation schemes for the innovative lot, to such an extent as to lead to a serious erosion of credit standards. it is at a time like this that everybody should be reminded of the importance of professionalism in finance, at all stages of financial intermediation. with its long history and impressive membership, aci has developed very much into an icon of professionalism in finance, contributing to " market development through education, market practices, technical advice and networking events for the financial practitioners of the world ". the association therefore has a very important role to play and faces in the coming years much greater challenge than before in promoting and upholding professional and ethical standards in finance. one interesting, perhaps even perplexing, aspect of the current financial turmoil is that emerging markets, particularly those in asia, have only been lightly affected, so far. one reason is that financial innovation, in the form of credit risk transfer through securitisation by the " originate and distribute " model, has not caught on in asia to the same extent as in the united states. indeed, economies in different stages of financial sector development face different issues, notwithstanding the clear trend of globalisation in finance. correspondingly, in promoting and upholding professionalism in finance, there may be a need for different emphases and approaches, having regard to the different development stages that individual regions and economies are undergoing. but it is also important that these different emphases and approaches should be developed within the framework | 0.5 |
donald l kohn : monetary policy perspectives on risk premiums in financial markets remarks by mr donald l kohn, member of the board of governors of the us federal reserve system, at the financial market risk premiums conference, federal reserve board, washington dc, 21 july 2005. * * * i am pleased to have an opportunity to participate in this conference on the time variation and macroeconomic links of financial market risk premiums. steven sharpe, paul harrison, and hao zhou are to be congratulated for putting together an interesting program that should advance our understanding of this important topic. although your papers concentrate on the equity premium, i would like to take a few minutes today to broaden the discussion to encompass risk premiums in other markets and to highlight the connections between risk premiums and monetary policy. my goal is not to draw conclusions on recent movements in risk premiums but rather to give you a sense of how estimates of risk premiums may influence our policy decisionmaking, to note some of the difficulties that we face in interpreting their movements, and, i hope, to stimulate further research in this already fertile field. 1 at the federal reserve, we pay a lot of attention to financial market prices in the formulation of monetary policy. financial markets are the channel through which our policy affects the economy, and asset prices contain valuable information about investors'expectations for the course of policy, economic activity, and inflation, as well as about the risks around those expectations. an important element in interpreting financial market prices is the identification of the risk premiums they contain. to be clear, when i say " risk premium " i mean the additional compensation required by investors for holding a risky security - - that is, one with uncertain returns - - above the compensation that would be demanded by risk - neutral investors who care only about expected returns. for example, while a risk - neutral investor would demand a certain spread on a junk bond over a risk - free rate of the same maturity as compensation for expected losses, a risk - averse investor likely requires an even wider spread depending on the covariance characteristics of the bond's total return. in the treasury market, risk - - or term - - premiums are generally evident as maturities extend and reflect mostly the interaction of risk aversion and uncertainty about the future path of interest rates. when applied to credit markets, the term " risk premium " is sometimes used in a broader sense to include expected losses, but i am thinking of risk premium | dependence on sources of tax revenue such as stamp duties, capital gains tax and corporation profits tax made total tax revenues dependent to an exceptional degree on profitable economic conditions, high transactions in the property market and asset price appreciation ( chart 2 ). all tax systems tend to do better in such conditions, but the elasticity of tax revenue response to a return to more normal conditions was exceptionally high in ireland. of course tax revenues have slumped, and expenditure has soared in all of the countries affected by the global downturn of 2008 β 9 and the slow recovery that is now in process. ( the taxes and spending programmes that behave in this way are normally seen as stabilizing, and indeed are called the automatic stabilizers. ) but the deterioration in ireland β s fiscal position has been worse than almost any other country. partly of course this reflects the fact that ireland β s home - grown property bubble had risen further and so has fallen further than most ( chart 3 ). but it also reflects the heightened elasticity of the tax receipts. interestingly, when you plot tax and current expenditure as a percentage of gdp, you might miss this ( chart 4 ), masked as it is by the scale of the collapse in gdp β tax receipts fell even faster despite big increases in rates and base especially in income tax as the government tried to make up for the shortfalls elsewhere. that is one of the main reasons why ireland β s exposed fiscal position, with which the government has been struggling for the past two and a half years and which will be the subject of intensified corrective action to be set out in detail in the promised 4 year fiscal programme to be announced shortly, is so exceptional. chart 2 chart 3 chart 4 how could one use accounting numbers to improve the usefulness of the sgp for ensuring sustainable public finances? i have some ideas on this to which i will return after i speak a little about accounting and the irish banks. a full account of the government finances is not complete in ireland without considering the banks. over the past year or more there has been intense interest in figuring out what will be the total cost of the losses incurred in the property bubble. indeed this has been a focus of attention worldwide, with for example the imf β s world economic outlook report devoting attention to the issue in each of its five semi - annual reports between april 2008 and april 2010. interestingly, the estimated losses for the global financial system from this source have oscillated, growing from the first | 0 |
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