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ratings. therefore, it will be necessary to explore various approaches, such as aggregating bank loans to smes and securitizing them, and issuing bonds that meet international standards of green finance, to indirectly provide these smes with the benefits of green finance. lastly, the bank of korea is also dedicated to enhancing communication with the korean people regarding the importance of green finance. we are committed to fostering a stronger dialogue and understanding between the central bank and the public on matters related to sustainable finance. through this joint conference, i hope we can share insights and ideas on how to promote green finance, develop sustainable industries, and contribute to the achievement of carbon neutrality. i am confident that the discussions and outcomes from this conference will serve as valuable input for policy formulation and implementation. once again, i extend my warmest welcome to all participants, and i hope you have a productive and meaningful conference. thank you very much. 1 for more details, please refer to " main contents of the 1st master plan for the climate change response technology development " ( december 2022, ministry of science and ict ) 2 for more details, please refer to the result of a survey on public awareness of impacts of the climate change on national health. ( october 2022, the survey was jointly conducted by the korea disease control and prevention agency and the korean society for preventive medicine ) 3 for more details, please refer to box 7 of the financial stability report ( december 2022, bank of korea ) titled " comparison of greenhouse gas emissions across countries and assessment of domestic firms'vulnerabilities to climate risks. " 4 for more details, please refer to box 9 of the financial stability report ( bank of korea, june 2023 ), titled " current status of the embodied carbon emissions from the export industry and vulnerability factors of the corporates. " 3 / 4 bis - central bankers'speeches 5 for more details, please refer to box 7 of the financial stability report ( june 2021, bank of korea ), titled " bank stress test to measure transition risk from climate change " and box 7 of the financial stability report ( june 2022, bank of korea ), titled " impact of rising carbon prices on sectoral value - added " 4 / 4 bis - central bankers'speeches
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##gilance is also called for as the korean economy confronts problems that are by no means trifling. firstly the public perception of the actual state of economic activity is by no means as flattering as conventional indicators might suggest owing to the deterioration of the terms of trade and the severe downturn in housing market activity. secondly although overall employment conditions are picking up, youth unemployment is still running at a high level and the improvement in employment conditions for weaker members of society including the self - employed still remains inadequate. it is also very well possible that inflation expectations among the general public will build further as the rate of price increases accelerates. iii. challenges for bok β s monetary policy now i would like to turn to the challenges ahead of monetary policy in confronting the present domestic and international economic environment. conducting interest rate policy efficiently the bank of korea has already begun to undertake efforts to normalize the policy stance by phasing out the measures adopted immediately after the global financial crisis. after keeping its policy base rate on hold for 17 straight months, the bank of korea raised it by 25 basis points from 2. 0 % to 2. 25 % on july 9 this year, taking into consideration the strong possibility of inflation pressure increasing in the latter half of the year with the continuation of the economic upswing. as all of you are aware, the bank of korea decided to maintain the base rate at 2. 25 % in august. ahead of this, on june 24 this year, it cut down the aggregate credit ceiling for the third quarter this year by 1. 5 trillion won. this had been increased in two steps by 3. 5 trillion won to 10 trillion won following lehman brothers β bankruptcy. in this way korea has joined the ranks of those countries around the world that have raised interest rates along with canada, australia, norway and sweden and so on. in fact the imf and the oecd had advised a preemptive hike of interest rate for korea in order to counter upward price pressures. although the policy rate has been adjusted upward, the scale of the increase in interest rates was not very large and, as it had to some extent been factored in, it is likely to have only a limited impact on the financial and housing markets and on the household and corporate sectors. what is more, despite the hike in the policy rate, the current monetary policy stance is still deemed highly accommodative, given the situation of the real economy in terms such as the potential growth and inflation
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. graph 6 6 / 11 bis central bankers'speeches i will return to foreign exchange markets in just a moment, but let me briefly take stock. the upshot of these recent developments is that global financial conditions have tightened a little. the cost for corporations to raise capital through equity and debt markets has increased a bit in the advanced economies. but overall conditions are not tight, with monetary policy rates still low ( relative to most estimates of neutral ) and government bond yields also low. indeed, bond yields are generally lower than they have been for a couple of years. implications for australia over recent months, developments in australian financial markets have been similar in many respects to those offshore. equity prices fell, credit spreads rose, and so did various measures of financial market volatility ; although, some of the more pronounced moves seen late last year have been retraced in early 2019. these changes have again largely been a story of risk premia increasing from low levels and were associated with rising concerns about downside risks, both internationally and domestically. the outlook for the domestic economy has also shifted, and the bank has revised down its forecasts for both growth and inflation. our forecasts continue to project a further gradual reduction in spare capacity in the economy, with the unemployment rate trending lower. that should see wages growth pick up, although only gradually, and inflation is also expected to increase gradually. the bank's statement on monetary policy and the governor's recent speech 7 / 11 bis central bankers'speeches provided comprehensive updates to this picture. 4 in response to this shift in the international and domestic outlooks, market expectations for the next move in the cash rate have switched signs : the markets have assessed that the next move is more likely to be down than up. that has been reflected in lower bond yields, alongside the effect of lower oil prices on market - implied inflation expectations. two - year bond yields in australia have tended to decline by a bit more than in many other major markets ( graph 7 ). part of that change is somewhat mechanical given that in both japan and the euro area policy rates are close to their effective lower bounds. this latest change in australia's interest differential extends the trend decline that has been underway for five or more years. graph 7 over the past couple of months, the australian dollar has depreciated by about 4 per cent on the basis of the trade - weighted index ( twi ). this largely reflects the effect of the appreciation of the yen and
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##tances and maintaining financial corridors and services into the south pacific countries continues to be of importance. in 2019 we established the pacific remittances project with support from the ministry of foreign affairs and trade to address challenges facing remittance services domestically and in the pacific region. we are working with other agencies in new zealand, australia, the pacific and internationally, such as the asian development bank and international monetary fund to make remittances more accessible, safe and cost effective. along with the reserve banks of australia, fiji, papua new guinea, samoa, the solomon islands, timor leste, tonga, vanuatu and other partners we are developing a regional β know your customer β facility. this will help remitters and other businesses to meet their compliance needs. ultimately we hope that it will enable access to financial services for sectors of the pacific region that are in danger of being financially isolated. 19 in doing so we hope to maintain financial corridors and services to enable pacific countries β recovery and growth which in turn supports the financial stability and prosperity of our regional economy. conclusion te putea matua is kaitiaki for aotearoa β s financial ecosystem. we have a clear purpose, vision and values which support us in delivering kaitiakitanga for all new zealanders. this includes 4 / 5 bis central bankers'speeches delivering our mandates holistically with our workstreams on te ao maori, climate risk and south pacific remittances. we β re incredibly proud of our statement of intent published today, and the mahi that is underway to help us achieve our ambitious, but incredibly important, workplans. as i β ve explained today β this work is critical to us continuing to be the central bank for all new zealanders, now, and for generations to come. i β d encourage you to take a closer look at our statement of intent, and see where you can contribute. embrace the concept of matangirua ki matangireia in your endeavours to promote a more inclusive and climate - friendly financial ecosystem. working in unison, we fulfil our ultimate purpose. meitaki ma β ata tena koutou, tena koutou, tena koutou katoa 1 monetary policy : same objectives different challenges 2 monetary policy statement may 2021 3 statements of intent 4 rbnz statement of intent 2021 β 2024 5 rbnz statement of intent 2021 β 2024 6 reserve bank bill 7 te ohanga maori 2018 8 hawke
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k c chakrabarty : empowering msmes for financial inclusion and growth β issues and strategies keynote address by dr k c chakrabarty, deputy governor of the reserve bank of india, at the central bank of india sme conclave, mumbai, 20 december 2011. * * * assistance provided by smt l vadera in preparation of this address is gratefully acknowledged. shri m. v. tanksale, chairman and managing director, central bank of india ( cbi ), smt v. r. iyer, executive director, central bank of india, shri chadrakant salunkhe, president sme chamber of india, shri a. ramesh kumar, md & ceo β asia pragati capfin pvt ltd, sme entrepreneurs, staff members of cbi, distinguished guests, members of the print and electronic media, ladies and gentlemen. it is my pleasure to be here at this conclave on the eve of the conclusion of centenary year celebrations of central bank of india. as you all may be aware, central bank of india, which was established way back in 1911, has a glorious past and would be celebrating its foundation day on december 21, 2011. i take this opportunity to congratulate shri tanksale, cmd, smt iyer, ed, all employees and customers of the bank and all the other stakeholders on completing a remarkable hundred years of exemplary service to the nation. the bank was the realization of the dream of shri sorabji pochkhanawala, a visionary, a philanthropist and a rare breed of people who richly deserve our tributes. it was the first commercial bank which was wholly owned and managed by indians. central bank of india, over the years, has won the trust and confidence of its clients and it comes as no surprise then that it has become one of the most prominent banks in india. but more importantly, the bank had a rich tradition of promoting small and medium entrepreneurship and played a sterling role in the industrial development of the bombay presidency region. however, over a period of time, this zeal of promoting entrepreneurship development appeared to have dimmed a bit and, therefore, i am extremely happy that as their centenary year draws to a close, central bank of india is bringing the limelight back to smes and rededicating themselves to the cause. i congratulate shri tanksale for organizing this conclave on β empowering smes for inclusive growthstrategies and
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these challenges and have emerged stronger from a difficult phase. while the banking sector has responded well so far, there are several challenges that lie ahead. our banking system needs to equip itself to deal with emerging challenges and be prepared to cash in on the opportunities unleashed by higher growth. in dealing with the needs of small and medium enterprises, banks have to look for new delivery mechanisms. they must economise on transaction costs and provide better access to the currently under - served. to serve new rural credit needs, innovative channels for credit delivery will have to be found. the proud history of your bank should inspire you to seek greater heights of professional glory. in the end, i once again congratulate central bank of india and the sme chamber in jointly organizing this conclave. i also convey my best wishes to every employee and entrepreneur customer of your bank on the eve of the conclusion of your centenary year, to your customers and well - wishers, and wish you a great future of growth and development. you have had a glorious hundred years. you now have a great opportunity. may the next hundred be even better! bis central bankers β speeches
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that are crucial for the well - functioning of malaysia β s financial market such as professionalism, integrity, transparency, competition and good internal governance. in addition to this, the bank also enhanced standards for corporate governance, strengthened requirements for klibor rate setting and introduced a code of conduct for the malaysian wholesale financial markets. these are a few recent examples of initiatives aimed at promoting greater professionalism, integrity and quality service to the public, consistent with the hippocratic oath to β do no harm '. to add seriousness in upholding ethical standards and integrity, beginning 1 january 2018, a strengthened transparency framework for our enforcement actions will also be introduced to serve as an added deterrence against misconduct. the recent findings published by the financial services professional board, based on a 2016 survey of malaysian banking professionals, are sobering. 23 % of respondents observed that supervisors reward behaviour derived through unethical means. another 15 % expressly stated that they would act unethically when not being watched or monitored. these disheartening results are a clear manifestation that our journey is far from over and that, much more needs to be done to further strengthen the character within the banking community. there are economic consequences related to ethical choices. it is not a subject of discussion reserved only for the morally enlightened. the consequences are real. they can be dire and they can be expensive. the 2008 financial crisis alone cost the u. s. economy more than usd22 trillion. misconduct costs by banks globally have exceeded usd320 billion since 2008, with usd42 billion incurred in 2016 alone. at the institutional level, there should be a β clear tone from the top β that unethical behaviour will not be tolerated. this culture of β zero tolerance β for unethical behaviour should permeate across all levels of the organisation, including in the process of recruitment, retention and remuneration. as a community, we cannot possibly expect ethical behaviour to be burnished if we persist in retaining, hiring or rewarding people who had acted otherwise. our work environment should also evolve, making it conducive and safe for individuals to speak up on ethically questionable practices. encouraging conversation about ethical behaviour in the workplace can go a long way in empowering all layers in the organisation to serve as an ethical beacon. this can significantly reduce the probability and occurrence of unethical conduct. the third is calling. we should marvel at the deep sense of purpose and identity contained in the medical profession. one
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patrick honohan : the importance of sound information in assessing the health of the irish banking sector address by mr patrick honohan, governor of the central bank of ireland, to the chartered accountants ireland, dublin, 23 november 2010. * * * there is a letter in the archives of the world bank in washington dc on the letterhead of the shelbourne hotel, dublin, dated saturday, june 7, 1958. benjamin king writes back to headquarters on his mission to ireland. this was the first ever such mission sent by either of the bretton woods institutions ( the world bank and the international monetary fund ) since ireland had joined both of them in the previous year. king was in dublin at the invitation of the secretary of the department of finance, t. k. whitaker, who had asked the world bank to help by carrying out a review of the irish economy with a view to a possible borrowing programme for ireland from the bank. but king found that much analysis had already been carried out by the irish administration. indeed, he had been perusing a draft of the document that would change the course of irish policy towards its economic engagement with the rest of the world. β i have asked whitaker β, he writes, β to send you by airmail his report β economic development β. it is over 200 pages and seems pretty good to me. β and it β s not just a document of factual analysis, but addresses challenging policy issues. he notes that β it is also quite tough ( in a velvet - glove sort of way ) with some old - established practices β. with this document, king believes that ireland would be already β halfway toward [ having ] a sensible program β. ireland did not in fact borrow immediately from the world bank but eventually it borrowed a total of us $ 150 million between 1969 and 1975 for a variety of projects, ranging from power generation, to agriculture, to education. the last world bank loan to ireland, to support the then icc ( now bosi β alas closing at the end of this year ) in promoting regional development and employment, was approved in august 1975. the resonances from this 52 - year old letter are particularly sonorous this week, as an imf team scrutinizes another irish plan and maps out another international programme of borrowing by ireland ( with the additional support on this occasion of european institutions ). the 1958 economic policy shift launched a move towards increasing internationalization and β to use a word not yet in use back then
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retail payment system is the natural complement to the introduction of the euro banknotes and coins and it is a necessary step towards the further integration of the retail payment market. the aim of the sepa project is to enable customers to make more efficient cashless payments throughout the euro area from a single account, irrespective of their location. sepa will, in particular, define the technical standards and access conditions to the market. by creating a level playing - field, sepa will ensure that participants are treated equally. this special feature concludes that, while the banking industry has made substantial progress towards a more integrated retail payment market, committing itself to introducing sepa instruments and procedures from january 2008 and to migrating a critical mass of its customer payments by end - 2010, some issues, such as transparency and interoperability, still need to be finalised. ii. 3 eurosystem activities for financial integration the report β s third chapter, β eurosystem activities for financial integration β, provides an overview of the main eurosystem activities in 2006. this chapter shows that the ecb and the whole eurosystem contribute in a number of ways to financial integration and development, building on their expertise and special nature as public institutions which are both active in the market and have intense relationships with market participants. we generally distinguish four activities in this contribution : ( i ) giving advice on the legislative and regulatory framework for the financial system and direct rule - making ; ( ii ) acting as a catalyst for private sector activities ; ( iii ) enhancing knowledge, raising awareness and monitoring the state of european financial integration ; and ( iv ) providing central bank services that also foster european financial integration. i will now provide an example of each of these four activities. with respect to the shaping of the financial system β s legislative and regulatory framework, i would like to mention, as an example, the eu securities clearing and settlement infrastructure. its current fragmentation represents a major obstacle to the further integration of european securities markets. greater integration of securities clearing and settlement systems will be crucial to lowering the posttrading costs of cross - border securities transactions, to exploiting the potential economies of scale and to establishing a european level playing - field. moreover, the clearing and settlement infrastructure directly affects the performance of the major tasks of the ecb, pertaining to the implementation of its monetary policy via the framework for the collateralisation of monetary policy ( and intraday credit ) operations, the safeguarding of financial stability and the promotion of the smooth operation
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benoit cΕure : exchange of views on the ecb β s role in the troika remarks by mr benoit cΕure, member of the executive board of the ecb, before the economic and monetary affairs committee, brussels, 13 february 2014. * * * madam chair, honourable members, let me first of all thank you for your invitation to this exchange of views. the adjustment programmes implemented in recent years in several euro area member states were an unprecedented answer to an unprecedented crisis. this crisis has affected the lives of millions of eu citizens β hence it is only natural that you, as their directly elected representatives, assess what has happened. this crisis has revealed major shortcomings, mainly in domestic economic policies, but also in the architecture of emu β thus the european parliament as an institution with a truly european perspective is an appropriate forum to discuss what can be learnt from this experience. it is against this background that i am grateful for the opportunity today to explain the role of the ecb in the troika, to discuss our assessment of the adjustment process in the programme countries and to draw with you some key lessons from the last four years. the ecb β s role in the troika let me start by recalling the circumstances under which the troika was set up. when a sovereign debt crisis erupted in spring 2010 in the aftermath of an unprecedented global financial crisis, the euro area was caught unprepared. the maastricht architecture had failed to prevent the build - up of excessive imbalances and unsustainable fiscal positions by a number of countries. europe was then ill - equipped to handle a crisis of such magnitude stemming from these developments. there was no framework for dealing with member states losing market access. there was no governance foreseen for such cases. there was no instrument to provide funding. under these difficult circumstances, the member states decided to grant financial assistance subject to appropriate conditionality as part of an adjustment programme. the eurogroup sought to avail itself of the best available expertise to support it in designing and reviewing these programmes. the imf and the european commission in liaison with the ecb with their complementary experience in crisis management, country surveillance and financial stability were asked to take on this difficult task β this is what we know today as the troika. the particular expertise and euro area focus of the ecb, in other words, the views we have on the systemic consequences of the decisions under discussion, were compelling reasons for
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the monetary transmission process. households β inflation expectations, for instance, are related to their purchase intentions and can therefore affect private consumption. furthermore, household expectations on economic variables other than inflation are also relevant to central banks. if conducted at the national level, additional household surveys could focus on and detect idiosyncratic features. in particular, such data may matter for the national mandate of macroprudential policy. in order to gain a more comprehensive picture, the bundesbank has carried out a pilot study for an internet - based household survey on a monthly basis. the focus lies on consumer expectations regarding inflation and developments in the real estate market. the field phase was completed in july. in two sessions of this conference, the findings from several studies by internal and external researchers based on the pilot β s data will be presented to a specialist audience for the first time. as an appetiser, i have the privilege of giving you a sneak peek at key results from core questions of the pilot survey in advance : first, the median of inflation expectations over a twelve - month horizon is 2 % in all three survey waves. that is lower than in similar us surveys and indicates that german consumers β inflation expectations are well - anchored. second, only a small fraction of individuals in germany β namely 3 % to 4 % β expect inflation to fall. and the share of very high inflation expectations is also relatively small. overall, results vary across socio - demographic categories such as income or the level of education in ways consistent with previous studies. third, most individuals in germany think that house prices will continue to rise sharply. roughly 70 % of those questioned answered that they already consider real estate in their neighbourhood to be overvalued ; nonetheless, more than half of these persons expect prices to rise further. fourth, tenants predict stronger house price increases than owners. this interesting difference is consistent with results from our panel on household finances ( phf ). the bundesbank already conducts the phf survey of german household wealth and debt every three years β in 2017, almost 5, 000 households participated. in this third wave, the phf questionnaire was expanded in some areas to include questions on house price expectations, for example. the phf surveys and the recent pilot study have allowed the bundesbank to acquire expertise and experience. going forward, we would very much welcome cooperation with the banque de france on a high - frequency survey focusing on household expectations. in addition, the ecb has recently started to
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anchoring : new insights from micro evidence of a survey at high - frequency and of distributions, bis working papers no 809. 6. coibion, o., gorodnichenko, y., kumar, s. ( seite ), pedemonte, m. ( 2018 ). inflation expectations as a policy tool?, nber working paper 24788. 7. coibion, o., gorodnichenko, y., kumar, s. ( seite ) ( 2018 ). how do firms form their expectations? new survey evidence, american economic review 108 ( 9 ), pp. ( pages ) 2671 - 2713. 8. de guindos, l., communication, expectations and monetary policy, intervention at the ecb policy panel of the annual congress of the european economic association, 27 august 2019. 9. rosenthal, r. and jacobson l. ( 1963 ). teachers'expectancies : determinants of pupils'iq gains, psychological reports, 19, pp. ( pages ) 115 - 118.
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issues. for example, she has signaled the major risk in not addressing climate change saying with humor : β our kids will be grilled, fried, toasted and roasted. β she also militates for encouraging women to seek education and enabling them to be more independent and provide for themselves and for their children. christine lagarde is chevalier de la legion d β honneur since july 2000, and commander of the order of merite agricole. she has an honorary doctorate from katholieke universiteit leuven ( belgium ). madame lagarde will address you today on a thought - provoking topic : eastern europe and romania : the path to prosperity. the format will be the following : after her presentation we will allow three questions from the media and three from our guests. madame lagarde, s β il vous plait β¦ the floor is yours. bis central bankers β speeches
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mugur isarescu : christine lagarde β s visit to romania opening speech by mr mugur isarescu, governor of the national bank of romania, on the occasion of the imf managing director christine lagarde β s visit to romania, bucharest, 16 july 2013. * * * madame christine lagarde, distinguished guests, ladies and gentlemen, today i have the pleasure to welcome again here, at the national bank of romania madame christine lagarde, managing director of the international monetary fund. it β s good to mention from the beginning that she is the first woman to ever lead the imf. timothy geithner, the u. s. treasury secretary at the time, said upon her appointment, on july 5th, 2011 : β lagarde β s exceptional talent and broad experience will provide invaluable leadership for this institution at a critical time for the global economy. β allow me to briefly introduce madame lagarde to you. she was born in paris. her father was an english professor. she spent her childhood in le havre and after graduating high school she went on a scholarship to maryland, usa, attending holton arms school in bethesda. madame lagarde got her law degree at university paris x ( dix ), and holds a master β s degree from the political science institute in aix - en - provence. already a member of the paris bar association, christine lagarde joined the international law firm of baker & mckenzie, becoming its chairman of the global executive committee in 1999. subsequently, she acted as chairman of the global strategic committee in 2004. christine lagarde joined the french government in june 2005 as minister for foreign trade. in june 2007 she became minister of economy and finance, being the first woman to hold the position of finance minister of a g - 7 country. from july to december 2008, she also chaired the ecofin council. in 2009, financial times ranked her as the best minister of finance in the eurozone, considering both her excellent work within the french government and her involvement in the management of the financial crisis. madame lagarde acted with diplomacy as chairman of the g - 20 when france took over its presidency for the year 2011. all these achievements in her current position led forbes magazine this year to rank her among the most powerful and influential women in the world. besides her contribution to official matters, madame lagarde has broader interests and is involved in various fields of expertise as well as global
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these positive survey results should not obscure the fact that the euro β s second decade was rife with crises and problems : a financial crisis, an economic crisis, a european debt crisis, a banking crisis, a double recession and high levels of unemployment. several countries experienced a prolonged period of economic weakness and the necessary adjustment measures brought with them social hardship. figuratively speaking, you could say that the euro had an easy childhood but a difficult adolescence. over the last few years, the eurosystem β s central banks have faced unfamiliar challenges, and not just in their core area of responsibility, which is that of ensuring price stability. during the crisis, they were to some extent forced to act as crisis response units, taking them to the outer 1 / 8 bis central bankers'speeches edge of their mandate for a while. in an interview last week, otmar issing warned : β politicians have it easy. they rely on the ecb to sort everything out. but that isn β t going to work in the long term. β the dialogue between member states has also taken on a harsher tone at times. but monetary union was actually a project intended to encourage european integration and ultimately even bring about deeper international friendship. all the same, i would like to stress that, in many ways, the euro area is in better shape today than it was before the crisis. this is thanks to measures taken by its member states as well as changes to the structure of the monetary union, both of which i will now focus on briefly. 3 reforms in the euro area 3. 1 adjustment progress in the member states the crisis brought home to all of us what being part of a monetary union means and involves. and the way the countries that were hit the hardest by the crisis have tackled the roots of the problems and have regained their competitiveness, for example, is truly remarkable and receives too little recognition. in greece, portugal, ireland, spain and cyprus, for instance, average unit labour cost growth was above the euro - area average in the pre - crisis period ( 1999 β 2007 ). this was a contributing factor to these countries β loss of competitiveness. since the crisis, unit labour costs in all five of these countries have grown more slowly than the euro area average. this has made their economies more competitive. the structural reforms already undertaken are also beginning to bear fruit and have contributed to the upturn. take structural unemployment, for instance, which has gone down by just over one percentage point in the
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the french president emmanuel macron, which have been greeted with a mix of goodwill and scepticism in germany, have provided important impetus for the european debate. furthermore β and this is, i believe, a great achievement β he has created a convincing, lively narrative for the joint european project that citizens can buy into and even be enthusiastic about. it seems clear to me that there will only be progress in this debate if germany and france work in concert and move in the same direction. the bundesbank has also been providing proposals of its own in this debate for a long time now, and it is within this debate that the agenda for the stability of the single currency is being set. from my perspective, three guidelines form the basis of these proposals. 1. the european union should focus more of its attention and spending on tasks that create added value for the citizens of europe. 2. the institutional and economic conditions of the monetary union need to be set up in such a way that the eurosystem can properly fulfil its mandate and does not have to intervene on a regular basis as a crisis response unit. 3. a stable monetary union requires both solidarity and solidity, and it is essential that the alignment of actions and liability be maintained. allow me, if you will, to delve slightly deeper into this last point in particular. the alignment of actions and liability means that the authority to make decisions needs to be linked to the responsibility for the consequences of such decisions. or, in other words, only he who has the power to influence decisions is also prepared to bear the risks that these decisions entail. when it was decided in maastricht to create an economic and monetary union, the member states agreed to pool their sovereignty in monetary matters at the european level. however, under the existing regulatory framework, responsibility for fiscal policy β as for general economic policy β lies with the individual member states, as i have already mentioned. from the outset, there have been measures in place designed to prevent unsound public finances from jeopardising the stability of the single currency. rules on debt have been laid down in the stability and growth pact ; it is prohibited to simply print more money as a way of financing the public sector ; and countries cannot take on each other β s liabilities β the famous no bail - out clause. in principle, though, the member states remain sovereign in fiscal matters. and indeed, this sovereignty is something that they have always confidently championed and
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have the last word on the actions taken β particularly if and when tools are used that are not in the bank β s toolbox. honoured guests : i have spoken at some length on monetary policy and the labour market, on the one hand, and the capital controls, on the other. but i have done so with a purpose, as these are by far the greatest economic challenges facing us at the moment. yet the central bank β s sphere of activity includes many other functions as well, not least those centring on the structure and stability of the financial system. let us hope that, when we convene a year from now for the central bank of iceland β s 55th annual general meeting, we will have resolved successfully the urgent issues now facing us and can turn our attentions to these other areas of activity. in the field of financial stability, emphasis has been on the risks related to the capital controls and on the formulation and implementation of the prudential rules that, in our opinion, must be in place once the controls are lifted. that work is well underway. and as regards risk assessment and contingency planning, the systemic risk committee and the financial stability council will be meeting next month, and the central bank β s financial stability report is scheduled for publication on 22 april. honoured guests : as the chairman of the supervisory board mentioned in his speech, the central bank was relatively successful in working towards its goals in 2014. in addition, a great deal of work was done to ensure the efficacy of the capital controls, the smooth bis central bankers β speeches operation of financial system infrastructure, and the recovery of legacy assets from the crisis, among other things. this would not have been possible without the competent and hardworking people employed by the bank. i wish to thank you all for your efforts. in this context, i would like to stress how important it is that, whatever amendments may be made to the central bank act, the bank must remain a strong institution capable of safeguarding monetary and financial stability in iceland. in order to do so, it must have the independence to apply its policy instruments to this end. it must also be a professionally strong and vigorous workplace where senior management and staff members have a dynamic interactive relationship on matters relating to operations, analysis, and policy formulation. in closing, i would like to thank the central bank β s many collaborators for a successful cooperative relationship over the past year, in particular the ministry of finance and economic affairs and the financial supervisory authority. i
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in the coming years, with persistently low inflation. at the same time it is a major problem that growth does not seem to be generating new jobs to a sufficient extent. this suggests that to a high degree the unemployment is structural. measures must therefore be taken to improve the functioning of the labour market. for further favourable economic development it is also essential that the efforts to reduce government debt are continued. the conditions for monetary policy in the years ahead will then be improved and greater freedom of action will be created for economic policy in the longer term.
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september 28, 2022 ). 4 see 12 u. s. c. Β§ 5365. 5 12 c. f. r. pt. 252, subpart g. 8 / 8 bis - central bankers'speeches
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for this easing is that the elections in france, the netherlands and austria did not yield a positive outcome for eurosceptic parties. to sum up this first part we can say that financial markets are currently in quite good shape, driven by an improved economic outlook, benign political developments and an accommodative monetary policy stance. 3. the financial crisis : monetary policy undergoing change the mandate of the eurosystem states quite clearly that maintaining price stability in the euro area is our overriding priority. that is why we conduct monetary policy. in august, the euro area annual consumer price inflation ( hicp ) was 1. 5 %. this is still below the targeted inflation rate of less than, but close to 2 % per year over the medium term. however, the risk of deflation is now universally considered to be very low. in 2014, things looked different : the euro area inflation was steadily declining and bottomed out at β 0. 6 % in january 2015. but this risk has decreased β also supported by our monetary policy measures. the ecb governing council has been pursuing an accommodative monetary policy stance for a while. since june 2014, a move known as quantative easing has been implemented by the eurosystem in order to bolster financing conditions for banks and the real economy. at the same time credit easing has been extended. the main measures were, briefly : targeted longer - term refinancing operations ( also known as tltros ) that provide financing to banks for up to four years, with the amount that an individual bank can borrow being linked to its loans and lending patterns to the private sector, at extremely favourable ( in some cases, negative ) interest rates ; various asset purchase programmes, grouped under the umbrella acronym app ( expanded asset purchase programme ) : an additional covered bond purchase programme ( cbpp3 ) ; an asset - backed securities purchase programme ( abspp ) ; a corporate sector purchase programme ( cspp ) ; and the large - scale public sector purchase programme ( pspp ) as the main instrument to address weak inflation ; the affirmation that full allotment in regular refinancing operations will continue at least until the end of 2017 ; and in terms of policy rates, a very low interest environment with the main refinancing rate, 2 / 4 bis central bankers'speeches which has stood at 0 % since march 2016, and the negative deposit rate ( negative since june 2014 ; currently β 0. 4 %
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are not captured by monetary aggregates. with these two pillars and the various indicators, monetary policymaking in the euro area may appear complex, but this reflects the complexities and uncertainties which surround the transmission mechanism of monetary policy in modern economies, and, even more so, in the new economic environment created by the changeover to the euro. against this background, the eurosystem must rely on a whole range of indicators and on a variety of models which help to sharpen and crosscheck the analysis. the efficiency of monetary policy does not rely only on a careful analysis of the monetary, financial and economic situation, but also on the ability to explain monetary policy decisions to the public in a convincing manner. in the case of the eurosystem, this is an even more arduous task than usual, as the single monetary policy must cope with a new environment and be explained to a public from different cultural backgrounds on the basis of new indicators and data. our choice is to base this communication on transparency. this means that our external presentation of monetary policy must fully reflect the internal analysis and discussions which take place within the governing council. i can personally assure you that this is the case. our internal discussions are organised in such a way as to ensure a full and thorough assessment of the two pillars i have just described. our external communications fully reflect this. in addition to a well - defined and informed strategy, the monetary policy of the eurosystem must rely on an efficient operational framework, that is, on a set of instruments and procedures necessary for the implementation of monetary policy. thus far, this framework has proved successful in clearly signalling the stance of monetary policy, in steering short - term market interest rates and in providing liquidity to the banking system in an efficient manner. at the heart of the framework are the weekly refinancing operations which were conducted at interest rates broadly in the middle of the interest rate corridor, which is set by the rates on the two standing facilities. a minimum reserve system ensures the existence of a liquidity deficit in the banking system, which is necessary for the conduct of these weekly open market operations. the credit institutions need only comply with the minimum reserve requirement on average within the reserve period. this contributes to the stabilisation of money market developments. a key element for the functioning of the operational framework has been the target payment system. this payment system interlinks the 15 national real - time gross settlement systems and the ecb β s payment system,
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the euro is a powerful factor in restructuring european economies and unemployment is falling as a result of, in part, structural reforms implemented by governments. it is up to economic policymakers in the euro area to pursue liberalisation, flexibility, fiscal consolidation and public efficiency. it is up to consumers and producers to reap all the benefits of this favourable environment.
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. control committees of the national council and the council of states ( 2010 ), the swiss authorities under the pressure of the financial crisis and the disclosure of ubs customer data to the usa, report. haldane, andrew g. ( 2017 ), rethinking financial stability, speech given at the β rethinking macroeconomic policy iv β conference, washington, d. c., 12 october. horton, mark, manmohan kumar und paolo mauro ( 2009 ), the state of public finances : cross - country fiscal monitor november 2009, international monetary fund, imf staff position note, 09 / 25. international monetary fund ( 2014 ), global financial stability report : moving from liquidity - to growth - driven markets, april 2014. junge, georg and peter kugler ( 2013 ), quantifying the impact of higher capital requirements on the swiss economy, swiss journal of economics and statistics, 149 ( 3 ), pp. 313 β 356. page 13 / 14 junge, georg and peter kugler ( 2017 ), optimal equity capital requirements for swiss g - sibs, university of basel, faculty of business and economics working paper, 2017 ( 11 ). moosa, imad ( 2010 ), the myth of too big to fail, journal of banking regulation, 11 ( 4 ), pp. 319 β 333. swiss federal council ( 2011 ). dispatch on the amendment to the banking act ( strengthening the stability of the financial sector ; too big to fail ). swiss federal council ( 2015 ), federal council β s β too big to fail β report. swiss national bank ( 2003 ) financial stability report. swiss national bank ( 2016 ) financial stability report. swiss national bank ( 2008 ), measures to strengthen the swiss financial system, press release. stern, gary h. and ron j. feldman ( 2004 ), too big to fail β the hazards of bank bailouts, washington, d. c. : brookings institution press. stulz, rene m. ( 2008 ), risk management failures. what are they and when do they happen?, journal of applied corporate finance, 20 ( 4 ), pp. 39 β 48. ubs ( 2004 ), handbook 2004 / 2005. page 14 / 14 after the storm : ten years on, how weatherproof is the swiss banking system today? fritz zurbrugg vice chairman of the governing board swiss national bank faculty of economics and management at the university of lucerne luce
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jean - pierre roth : no frontiers in monetary policy β from the fight to avoid internationalisation of the currency to the internationalisation of monetary policy speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the swiss institute of international studies, zurich, 6 may 2009. the complete speech can be found in german on the swiss national bank β s website ( www. snb. ch ). * * * in view of the challenges with which it has been faced, the swiss national bank ( snb ) demonstrated its adaptability time and again. over the past thirty years, for instance, it abandoned its endeavours to prevent the use of the swiss franc as an international currency. moreover, it has gradually incorporated international elements into its monetary policy strategy and its monetary policy instruments. the goal when making these adjustments was always to improve the effectiveness of monetary policy in order to protect the country from any inflationary trend. in managing the current crisis, both the internationalised monetary policy strategy and the internationalised policy instruments have served the snb well thus far.
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should always be looking for ways to make supervision more effective and less burdensome. my point today is a narrower one : that the supervisory authority of the fed has significant collateral benefits in helping it carry out its responsibilities for financial stability. in particular, the information, expertise, and powers that the fed derives from its supervisory authority enhance its ability to contribute to efforts to in both the drexel and ltcm episodes, the federal reserve initially detected the firms β problems through either market surveillance or its interactions with primary dealers, rather than through banking supervision. once the problems were known, considerable information came from the troubled firms themselves ( breeden, 1990 ; mcdonough, 1998 ). however, that information was supplemented, and to an extent validated, with information received from banking institutions under the federal reserve β s supervisory authority. in contrast, in the 1987 crash, when the crisis was not centered on a single firm but instead involved widespread concerns about securities firms β access to bank credit, the fed placed greater reliance on information obtained through its supervisory authority. prevent financial crises ; and, when financial stresses emerge and public action is warranted, the fed is able to respond more quickly, more effectively, and in a more informed way than would otherwise be possible. yogi berra reminded us that prediction is very hard, especially about the future. in that spirit, the federal reserve continues to work actively to prepare for the possibility of financial stress. for example, we have created cross - disciplinary teams of experts - including staff drawn from bank supervision - to monitor financial developments and to consider possible crisis scenarios and the appropriate policy responses. we have worked with other agencies both here and abroad to improve our abilities to communicate and coordinate in a crisis situation. we also continue to take measures to ensure that our communications, information systems, and policy processes will remain viable should critical infrastructure be disrupted. the federal reserve has established a strong record of promoting financial stability, and we will continue to work to ensure the vibrancy and resilience of the u. s. financial system. references bernanke, ben ( 2001 ). " comment, " in frederic mishkin, ed., prudential supervision : what works and what doesn β t, chicago : university of chicago press, pp. 293 - 297. _ _ _ _ _ _ _ _ _ _ ( 2006 ). " hedge funds and systemic risk, " speech delivered at the federal reserve bank of atlanta β s 2006 financial markets conference, sea
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discussion paper no. 11, december. mcdonough, william j. ( 1998 ). statement before the committee on banking and financial services, u. s. house of representatives, october 1. mishkin, frederic ( 2000 ). " what should central banks do? ( 101 kb pdf ) " federal reserve bank of st. louis review, vol. 82 ( november / december ), pp. 1 - 14. _ _ _ _ _ _ _ _ _ _ ( 2001 ). " prudential supervision : why is it important and what are the issues? " in frederic mishkin, ed., prudential supervision : what works and what doesn β t, chicago : university of chicago press. peek, joe, eric s. rosengren, and geoffrey m. b. tootell ( 1999 ). " using bank supervisory data to improve macroeconomic forecasts, " federal reserve bank of boston, new england economic review, september / october, pp. 21 - 32. securities and exchange commission, division of market regulation ( 1988 ). the october 1987 market break : a report, washington : the commission, february. wall, larry and robert a. eisenbeis ( 1999 ). " financial regulatory structure and the resolution of conflicting goals, " journal of financial services research, vol. 16 ( december ), pp. 223 - 45.
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interest rates in the markets of money, loans and savings, indicating the efficiency of the transmission mechanism through the interest rate channel. the ecb β s continued monetary policy normalisation pushed up the interest rates on euro - denominated loans at home. lending activity rose by 7. 3 % at annual level, and continued to be led mostly by corporate loans. it is also important to note that the share of npls in total loans fell to a new low of 3 % in december, indicating that the increase in loan repayment costs did not affect the quality of banks β assets and that financial stability has been preserved even during the multidimensional crisis we have been facing for the past three years. 6 ΠΎf 10 chart 8 lending activity to the non - monetary sector chart 9 npl level and share in total loans, gross principle ( y - o - y growth rates in %, excluding the exchange rate effect ) ( in rsd bn ) ( in % ) household sector corporate sector other sectors npl share in total loans ( rhs ) - 5 households enterprises total - 10 - 15 source : nbs. dec source : nbs. in making the decision on the key policy rate, we assessed that the current tightening of monetary conditions would not have a major negative impact on domestic demand. factors at home, such as the continuation of positive trends in the labour market and the success in attracting fdis, continue to prop up economic growth. on the other hand, economic activity at home slackened in h2 2022 as expected, reflecting subdued external demand, heightened global cost - push pressures and drought which resulted in lower agricultural yields. according to the preliminary sors estimate, serbia β s real gdp growth measured 0. 4 % y - o - y in q4 2022, and 2. 3 % in 2022 as a whole, which is largely consistent with the nbs β s november projection. under our new projection, serbia β s gdp growth rate this year will range between 2. 0 % and 3. 0 %, unchanged from our november expectations. the risks to the projection are estimated to be less pronounced than three months ago, as the uncertainty regarding gas supply to europe has decreased and economic activity indicators for the euro area at end - 2022 and early this year turned out better than expected. assuming that the global economy and, by extension, external demand recover as of the second half of 2023, and in view of the planned implementation of investment projects, primarily
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in road, railway, energy and utility infrastructure, we expect gdp growth to accelerate from 2024 to the range of 3. 0 β 4. 0 %, and return to the pre - pandemic growth trajectory of around 4 % p. a. thereafter. 7 ΠΎf 10 chart 10 gdp growth projection chart 11 contributions to real gdp growth, expenditure side ( y - o - y rates, in % ) ( in pp ) 7. 5 4. 5 4. 3 2. 0 3. 5 3. 3 2. 9 1. 8 4. 0 2. 3 2. 5 2. 1 - 2 - 4 - 2 - 6 - 4 iv i source : nbs. - 0. 7 - 0. 9 change in inventories net exports government consumption gross fixed capital formation household consumption gdp ( in % ) - 1. 6 - 8 ii iii iv i ii iii iv i ii iii iv i ii iii iv 2023 * 2025 * sources : sors and nbs. * nbs estimate. this year β s gdp growth will be led by domestic demand, primarily private consumption and inventories. on account of lower production costs and reduced global uncertainty, as well as relatively high planned government capital investment, as of next year we also expect a relatively high contribution from fixed investment, whose share in gdp should remain close to 23 %. on the other hand, due to the expectedly high imported quantity of key energy commodities β gas and oil, and a cautious approach to euro area growth, net exports are projected to provide a negative contribution to gdp this year. as of 2024 their contribution is expected to turn out mildly positive, consistent with the expected recovery of external demand and the effects of new investment in export - oriented sectors. the current account deficit amounted to 6. 9 % of gdp in 2022 and was by around 2 pp lower compared to our november projection. the better than anticipated outturn was primarily a result of lower than expected energy imports in the last quarter thanks to a global energy price drop, faster real growth in goods and services export and a higher surplus in the secondary income account. the current account deficit was fully covered by net fdi inflows for the eighth year in a row, supporting the sustainability of our external position. the record high fdi inflow remained geographically and project - diversified in 2022 as well and channelled mainly to tradable sectors. you can read more about balance of payment trends in 2022 and factors behind
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service roles and these days many people in professional services work with team members located in other countries. in addition, many tasks, such as accounting and payroll, are being automated. all this has been made possible by technology and by globalisation. the new global technology platforms have also revolutionised services such as retail, media and entertainment, and transformed how we communicate and search for information and compare prices. these changes are having a material effect on pricing, with services price inflation lower than it once was. many firms know that if they don't keep their prices down, another firm somewhere in the world might undercut them. and many workers are concerned that if the cost of employing them is too high, relative to their productivity, their employer might look overseas or consider automation. and, more broadly, better price discovery keeps the competitive pressure on firms. the end result is a pervasive feeling of more competition. and more competition normally means lower prices. https : / / www. rba. gov. au / speeches / 2019 / sp - gov - 2019 - 07 - 25. html 6 / 14 7 / 25 / 2019 inflation targeting and economic welfare | speeches | rba so these are the three important factors that are contributing to low inflation. none of them by themselves is sufficient to explain what is happening, but together they are having a powerful effect. the current high inflation rates in argentina and turkey remind us that globalisation and technology, by themselves, do not drive low inflation. the monetary framework clearly matters too. weaknesses in that framework still result in high inflation. 2. is inflation targeting still appropriate? this brings me to my second question : is inflation targeting still the appropriate monetary framework for most countries? it is understandable that people are asking this question. given the factors that i have just discussed, some commentators have argued that central banks will find it increasingly difficult to achieve their inflation targets. some then go on to argue that central banks should just accept this, not fight it ; perhaps they should shift the goal posts, or even adopt another monetary framework. a related argument is that the very low interest rates that have accompanied the pursuit of inflation targets are pushing up asset prices in an unsustainable way and sowing the seeds for damaging problems in the future. you might, or might not, agree with these perspectives. either way, it is reasonable to ask if we are on the right track : is inflation targeting still appropriate? before i address this question, i would like to
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a time when household balance sheets were already very extended. our judgement was that, given the progress that was being made towards our goals, it was appropriate to use the flexibility in our inflation target to pursue a course that was more likely to be in the country's long - term interest. we could have generated a bit more inflation, but we would have had faster growth in household debt as well. i acknowledge that others might see this trade - off differently. but given the unemployment rate was coming down and inflation had lifted from its trough, we did not see a strong case for monetary easing. towards the end of last year, that assessment began to shift. inflation was turning out to be lower than we had earlier expected and our forecasts for inflation were being marked down. there are a few reasons for this, but the one i want to highlight today is the flexibility of labour supply, as this links back to my earlier discussion of the reasons for low inflation globally. when we prepared our forecasts in mid 2017, we did so on the basis that the share of the adult population participating in the labour market ( the participation rate ) would remain steady over the next couple of years ( graph 7 ). at the time, this was considered a reasonable forecast : while we expected some increase in participation from an encouraged worker effect because of solid employment growth, we thought this would be offset by the ageing of the population. graph 7 https : / / www. rba. gov. au / speeches / 2019 / sp - gov - 2019 - 07 - 25. html 12 / 14 7 / 25 / 2019 inflation targeting and economic welfare | speeches | rba since then, things have turned out quite differently. employment growth has been much stronger than expected and the participation rate has risen by 1Β½ percentage points, which is a large change over a fairly short period. put simply, the strong demand for labour has been met by more labour supply. it is useful to consider the following thought experiment. suppose the participation rate had still risen materially, but by ΒΎ per cent, rather than 1Β½ per cent. all else constant, this would have meant the unemployment rate today would have been well below 5 per cent. this flexibility of labour supply is a positive development and has meant that strong employment growth has not tested the economy's supply capacity. more demand for workers has been met with more labour supply. this has contributed to the subdued wage outcomes over recent times, which in turn has contributed to the
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martin redrado : financial stability and the importance of aml / cft supervision and regulation speech by mr martin redrado, governor of the central bank of argentina, at the fiba annual aml compliance conference, miami, 13 february 2007. * * * all of us in this room share a vision about the need for regional integration. efforts include forums like this one for discussion about opportunities and shared challenges in different spheres of action at the regional level. in my view, these efforts represent an effective mean of adopting international standards and adjusting them to the realities of the continent. regional agreements are extremely valuable as a way of consolidating the implementation of a uniform set of best practices. for those of us who, on top of being central bankers, are also bank supervisors, we must increase our efforts to incorporate the advantages of international standards, with the fundamental addition of a regional perspective. this means a thorough knowledge of the reality of each region to take into account the factors that affect its dynamic. regional realities evolve, and regional demands do not necessarily match the original design and development of international standards. let me give you a practical example : as an international standard, consolidated supervision has existed for over thirty years. the situation with quantitative supervision is pretty much straightforward : standards are uniformly and widely applied. however, there are gray areas on qualitative supervision ( that is the impact on risks of related non - financial activities ), where standards are just being developed and, therefore, the implementation as a tool for supervision is under debate. another concrete case is the implementation of the basel ii accord on capital requirements, particularly on how to compute capital requirements for operational risk ( that is the risk of loss resulting from inadequate processes and systems, or from external events ). we have dedicated sizable resources to managing market and credit risks, and those were wellknown, narrowly - defined. operational risk was anything but well defined since there is a lot of disagreement about the specific contingencies that should be considered under this umbrella. in the basic approach banks must hold capital for operational risks equal to the overall average over the previous three years of a fixed percentage of annual gross income. now, in the standarized approach, banks β activities are divided into several business lines : corporate finance, sales & trading, retail banking, commercial banking. operational risks should be considered for these particular lines of business. in latin america, stress tests determine relatively high regulatory capital charges for operational risk, based on the alternatives foresee
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##n in the new capital accord. in my opinion, the operational risk measure, as it is proposed, does not necessarily reflect our risk of operations. as a consequence, we are working on developing a better measure to reflect operational risk appropriately in latin america. this, again, in no way implies concerns about the soundness of the international standard proposed by the basel committee. on the other hand, it shows a clear commitment to its application : to identify, understand, measure and mitigate risks, at the same time as it also evidences a thorough awareness of the particular situation of our financial systems. these examples provide a framework for introducing the key issue in our discussion today, which is our vision on latin america β s agenda for fighting against aml / cft. we support all initiatives intended to combat money laundering and terrorist financing. nevertheless, any counter - terrorist effort, whether through regulation, control or the gathering of information, that is applied without understanding the idiosyncrasy of the region would be counterproductive. we cannot ignore that the us patriot act is a legitimate and valuable instrument to fight against these global crimes that affect our values and have become a threat to sustainable economic growth. however, by not specifying what appropriate performance with β due diligence β means, it has increased the cost of opening and maintaining correspondent accounts, and this has affected heavily the financial systems of the region and the smaller institutions in particular. this is reflected in the number of correspondent accounts closed in recent years. in the case of argentina, for instance, over 200 correspondent accounts were closed between march 31, 2001 and september 30, 2005. in this period, almost fifty financial institutions, both public and private, experienced closure of correspondent accounts. not one case showed a situation of aml or cft. something along the process is flawed. within the context of our analysis of the situation in the region, we have surveyed the impact of regulations on correspondent business in latin america with similar results. this outcome has nothing to do with the objectives pursued by standards that combat global crimes. on the contrary, should this trend persist, it will result in growing informality within financial circuits, greater political reluctance to cooperate, and a diversion of financial channels towards other more realistic markets. the challenge is always the same : to ensure that those actions designed to combat and prevent crimes, in addition to being well designed, are also effective. one necessary condition for the success of a policy is relying on an evaluation that correctly
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their characteristics, shari β ah compliant financial products can enhance the stability of the financial system. shortcomings in standardization and liquidity management must be tackled, however. cooperation between investors, issuers and regulatory and supervisory authorities is a prerequisite for a successful integration beneficial to all stake holders. luxembourg with its tradition as a specialized financial center will continue its endeavors to establish an international hub for islamic finance.
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remain for the future. i will divide my remarks in three parts. first, the immediate challenge is to implement exit strategies from the current extraordinary monetary and fiscal measures. second, a longer term challenge is to design and implement financial reform that effectively mitigates systemic risk. finally, i will discuss some new ideas advanced within this process of reform. 2. 1 immediate challenge : monetary and fiscal exit strategies first, let me consider the exit strategy from current extraordinary monetary measures. as i mentioned before, there are signs of substantial improvement both in financial markets and in the real economy. these suggest that the eurosystem extraordinary liquidity measures are not all needed to the same extent as in the past. however, unwinding of enhanced credit support must be both timely and gradual. it must be timely because there are risks associated with acting either too early or too late and it must be gradual because the situation is only improving progressively. the process of withdrawal is facilitated by the fact that many of the non - standard measures were designed to phase out naturally over time unless renewed by explicit policy decisions. for other measures, the situation has improved sufficiently for governing council to initiate the gradual process of withdrawal. the cornerstone of the exit strategy is the ecb primary objective of price stability in the medium term. this has guided the introduction of enhanced credit support and will govern the process of withdrawal. as with the monetary policy strategy, the exit strategy cannot precommit governing council to a given timing or sequence of actions. these must be decided with reference to changing economic and financial circumstances. now i wish to briefly address the exit strategy from the current fiscal stimulus. in addition to government measures supporting the financial sector, the extraordinary fiscal stimulus and the so - called automatic stabilisers have substantially deteriorated public finances during the current economic crisis. according to autumn 2009 forecast of the european commission, the deficit ratio in the euro area should reach 6. 9 % of gdp in 2010, while government debt is expected to reach 84 % of gdp in 2010. these significant fiscal imbalances undermine public confidence in the sustainability of public finances, which may place an additional burden on monetary policy in maintaining price stability. as stressed by the ecb governing council, national governments must abide with the ecofin council agreement to communicate timely, ambitious and credible fiscal exit strategies as soon as possible. the fiscal consolidation process should be transparent and should be guided by the rules of the stability and growth pact ( sgp ). current government commitments to start consolidation in
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the fact that we are true to our primary mandate of safeguarding price stability. the governing council will not tolerate inflation. hb : is greece an isolated case? could the same happen to other countries as well? trichet : greece was clearly in a unique exceptionally grave situation before it embarked on its adjustment programme. but i call solemnly upon all countries to implement programmes commensurate to recover sound fiscal situation. hb : what has to be done? trichet : what we must achieve first, are sound and rigorously implemented adjustment programmes fully in line with the commitment of governments to take all measures needed to meet their fiscal targets this year and the years ahead in line with excessive deficit procedures and to accelerate fiscal consolidation and ensure the sustainability of their public finances. hb : do you see any risks for european taxpayers? trichet : our message from the very outset has been that risks for european taxpayers will not materialise if all governments concerned are faithful to all their commitments. they must keep to the rules and commitments. they must behave themselves properly and alert their peers, the other governments, to also behave properly. mutual surveillance is essential. hb : do you now start the same what the central banks in the united states and the united kingdom have already been doing for a while? trichet : that is not comparable. what the federal reserve and the bank of england have done was β quantitative easing β. they were injecting liquidity into the markets and that with the explicit goal of augmenting the overall liquidity. as i said already what we are doing through the securities market programme is not quantitative easing. hb : is the ecb violating the spirit of the treaty of maastricht? trichet : no, not at all. we cannot imagine doing anything that would violate the treaty β not even for a moment. what we are doing is of course in conformity with the treaty β s letter. what we are doing is in full conformity with the spirit of the treaty. hb : why are you now being criticised by the banks? trichet : are we? if so, it is probably because we are doing things that we have not been asked to do by them. that would be proof of our independence vis - a - vis interest groups. that refutes the argument that we have acted as a result of pressure from the banks. i am therefore very pleased to be being criticised by the banks. hb : you don β t see
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denis beau : macroprudential policies to mitigate housing market risks opening remarks by mr denis beau, first deputy governor of the bank of france, at the committee on the global financial system β bank of france conference " macroprudential policies to mitigate housing market risks ", paris, 24 june 2024. * * * ladies and gentlemen, it is my great pleasure to welcome you and all the distinguished speakers at the banque de france, here in paris, to this first - of - its - kind conference on " macroprudential policies to mitigate housing market risks ". the conference builds on the very interesting and useful work of a dedicated study group of the bank for international settlements'committee on the global financial system. the study group published a report in december 2023 that you have probably all heard of. this work has been all the more valuable as experience with macroprudential policy is quite recent in most countries, even if macroprudential policy for housing market risks is gaining ground β be it in the form of borrower - based or capital - based measures. one of the report's strong added values is to draw on the practical experience of 14 countries around the globe, with a combined total of 168 years of experience, to provide us with concrete lessons for macroprudential policy implementation. as we will reflect today, from a practical point of view, on how best to implement macroprudential policy for housing risks, we have to remember that macroprudential policy cannot be considered in isolation. beyond theory, we are now in a time of realworld policy - making with all the challenges this entails, starting with the many interactions real - life macroprudential policy has to take into account. let me highlight two of them in my introductory remarks today. 1. how to adapt? the challenge of the interaction with the macroeconomic environment the first interaction challenge is centered on the question : how to adapt? how can and should housing - related macroprudential policy deal with the current macroeconomic environment? the cgfs report highlights that a majority of countries have set up intermediate objectives for macroprudential policy for housing risks that mostly refer either to borrower or lender resilience or to dampening the cycle. however our understanding of macroprudential tool effectiveness is largely based on the experience from upswings. there is still a lot to learn about the optimal use of macroprudential tools in housing
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speech date : 2021 - 05 - 20 speaker : first deputy governor cecilia skingsley venue : seb ( digitally ) sveriges riksbank se - 103 37 stockholm ( brunkebergstorg 11 ) tel + 46 8 787 00 00 fax + 46 8 21 05 31 registratorn @ riksbank. se www. riksbank. se adapting to new conditions β monetary policy freedom with responsibility * 19 march, 2020. it's 6. 30 am. i am standing waiting for a connecting bus at danvikstull, on my way to the riksbank at brunkebergstorg. the telephone rings. it turns out to be stefan ingves, governor of the riksbank. he says that the federal reserve is offering dollar loans to us and a number of other central banks. we executive board members had already had many conversations both in the office and over the phone during the preceding days. both in sweden and abroad, the pandemic quickly led to a fall in economic activity of historical proportions. it was necessary to ensure as soon as possible that the financial system could manage to maintain credit granting at very low interest rates. a financial crisis on top of a health crisis and the rapidly emerging real economic crisis must be avoided. on the previous thursday, 12 march, the riksbank had decided to offer up to sek 500 billion in loans to swedish banks for onward lending to companies. on 16 march, the riksbank decided to begin broad asset purchases for up to sek 300 billion. and what happened with the dollar loans? the same evening, 19 march, the riksbank was able to publish the information that new dollar loans would be available with effect from the following week. stefan β s telephone message was a small, but clear glimpse of light in the first weeks of the pandemic. belonging to the narrow group with back - up from the us central bank, the federal reserve, regarding dollar liquidity was of central importance during the financial turbulence. the riksbank, like other central banks, had taken a number of measures during the coronavirus crisis to manage the economic effects of the pandemic. but the number of measures also raises new questions. i would like to talk about one of * i would like to thank bjorn lagerwall for his help with writing this speech, and emma bylund, charlotta edler, dag edvardsson, frida fallan,
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of flexible inflation targeting? this type of criticism was raised in a recent external evaluation authored by francesco giavazzi and frederic mishkin. a close adherence to the textbook account of flexible inflation targeting requires a belief that the analytical tools and models currently available have accurately captured the important linkages in the economy. it requires a belief that we as central bank economists have a solid understanding of all important aspects of the monetary transmission mechanism. in my opinion β which is neither very original nor controversial β we are not quite there yet. one such area in which our understanding can be improved concerns the credit markets. a fundamental problem is that we presently lack the analytical tools that accurately capture the role played by credit and house prices in the economy. the research of chairman bernanke and others regarding the importance of collateral constraints and the financial accelerator effects on firms β investment have paved the way for an increased understanding of these complex issues. their research has been extended by others to the household sector β the idea being that as house prices increase, credit - constrained households are able to engage in so - called mortgage equity withdrawals and raise their consumption. in time, insights from these models will help us to better analyze house prices and household debt in integrated, general equilibrium setups. in fact, this is an area into which the riksbank is putting some modelling efforts, trying to understand how credit markets can be integrated with our general equilibrium approach to fluctuations in growth and inflation. in the future we will hopefully be better able to analyze how developments in asset prices influence the future course of inflation and output, and how the monetary transmission mechanism is affected by changing asset prices. until we are confident that our various formal models adequately capture the risks that we in the executive board are concerned about, we will have to continue relying heavily on judgement when taking such effects into account in the conduct of monetary policy. let me reflect a bit on what in my mind has brought about this stance. on the one hand we normally talk about inflation targeting in a two year time perspective, on the other hand there are risks associated with credit and asset prices that may lead to substantial deviations from the forecasted inflation and output paths. the judgement issue then becomes one of meeting or not meeting the target at the two - year horizon versus the risk of costly deviations both within and beyond the normal forecast horizon. such deviations are likely to be low probability events but with high costs in inflation and real terms should they occur. we know that these developments are very
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gertrude tumpel - gugerell : start of the ecb / escb needs analysis programme in belgrade introductory statement by ms gertrude tumpel - gugerell, member of the executive board and of the governing council of the european central bank, at the press conference on the occasion of the signing of the protocol between the european central bank, the national bank of serbia, the european agency for reconstruction and the delegation of the european commission to the republic of serbia, belgrade, 1 september 2008. * * * mr radovan jelasic, governor of the national bank of serbia, mr ambassador lloveras, head of delegation of the delegation of the european commission to the republic of serbia, mr daniel giuglaris, head of the belgrade operational centre of the european agency for reconstruction, ladies and gentlemen, it is a pleasure for me to be here in belgrade today to mark the start of a programme that β i hope β will further the european integration project in the area of central banking. i would like to express my gratitude to the european agency for reconstruction and to the delegation of the european commission to the republic of serbia for supporting this programme, in which the european central bank ( ecb ) and 17 central banks of eu member states will be working closely with our colleagues at the national bank of serbia ( nbs ). speaking also on behalf of our central bank partners, i would like to say that we are very much looking forward to these coming nine months. later during this press conference i will confirm the commitment of the ecb and our partner national central banks to implementing the programme by signing a protocol which confirms the common goals of all stakeholders in the programme. the ecb and our partners in the european system of central banks have an interest in developments in serbia and in the western balkans in general ; these countries form what we call our neighbouring region. we share a common destiny with all of you, and we are being confronted with common challenges, for instance in the pursuit of monetary and financial stability. in order to achieve our common mandates of low inflation and stable financial sectors we need to make sure that some prerequisites are met, most importantly in terms of the complete independence of the central bank from political instructions, in order to permit a firm stability - oriented course of monetary policy. we also know that stability - oriented monetary policies need to be accompanied by coherent policy - making in other economic areas, above all in fiscal policy. this is universally true, in belgrade and
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will cover six areas : 1 ) supervision of banks ; 2 ) harmonisation of legislation in line with the acquis communautaire under the competence of the nbs ; 3 ) liberalisation of capital movements ; 4 ) conduct of monetary policy and foreign exchange rate regime ; 5 ) monetary, financial and balance of payments statistics ; and 6 ) financial services consumer protection. there will be a need to coordinate these efforts, and to produce a coherent picture of the different recommendations. this will be the main task of mr thijs kettenis, policy advisor at de nederlandsche bank, who will be our resident programme coordinator here in belgrade. he is here today, and i would like to wish him full success in this undertaking. the analysis will be carried out by the ecb together with colleagues from the national central banks of belgium, bulgaria, the czech republic, denmark, germany, estonia, greece, france, italy, cyprus, latvia, hungary, the netherlands, austria, poland, romania and the united kingdom. it is a long list of countries, but i felt it was absolutely necessary to mention all of them. i would like to warmly greet the representatives from several of these participating central banks, who have accompanied me here today. of course, the work which confronts all of us in the coming years goes beyond setting benchmarks and recommending solutions in these six areas. we are today marking the start of a strong strategic partnership between our central banks, through which we intend to support and add to the achievements already attained by the nbs up until now. we will be building this strategic partnership on strong foundations. many of our central banks have already established an intensive dialogue with the monetary authorities of serbia β and in some cases this began several years ago. if i may for one moment refer to my personal experience at the oesterreichische nationalbank β before i took up the position in the ecb executive board in 2003 β i would like to recall how intense the cooperation was with the monetary authorities of all our neighbours. the same is true for many of the other central banks involved in this programme. i am sure that we will find you highly motivated partners. on our side, you will find both commitment and enthusiasm. i would like to wish all involved parties the very best of luck.
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' monetary policy strategies, exchange rates play a vital role and, wherever they are not a formal or informal intermediate target, they are at least a key monetary policy indicator. in nearly all cases it is the euro upon which the ceecs'currencies are oriented, or to which they are formally linked. european integration will only be truly successful if it reaches out to the whole of europe. it is the concept of stability orientation that urges us to complete european unification. if we manage the enlargement process successfully, this will also be conducive to our endeavor to guarantee stability for the whole euro area. such a mutual improvement is desirable in a very broad sense : political stability, financial market stability, macroeconomic and β in the particular interest of the eurosystem β price stability. there is no doubt that enlargement will encourage stability, growth and employment in a wider europe. there is a consensus that the accession countries will reap substantial growth and employment benefits from their membership in the european union. still, let me also add a word of caution in this context : it may take quite a while before new entrants will be in a position to fully harvest these benefits. a fair share of realism is called for to avoid disappointment. the countries of central and eastern europe have made successful and impressive progress on their way to eu membership. yet more remains to be done. sustainable monetary, fiscal and structural policy reforms are of prime importance in this context, as they help to establish the required real convergence with the european union β a precondition for smooth accession to the eu. these reforms comprise, for example, sustainable low rates of inflation, sound public finances, stable currencies, flexible labor markets and efficient financial markets. finally, the central and eastern european countries involved in accession negotiations will be confronted with the basic question of how economic and monetary union features in the overall context of enlargement. as far as we can judge today, we see the economic and monetary policy integration of the candidate countries proceeding in three steps : in a first step, the candidates will accede to the european union, then they will participate in erm ii, the exchange rate mechanism of the union, and in a last step, they will introduce the euro as their national currency. let me point out very clearly that the fulfillment of the maastricht convergence criteria is not a prerequisite for membership in the european union. but, of course, this does not mean that the
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financial system to take all over europe. he is therefore in a vanguard position to shed light on some of the challenges we are most likely to face on the road ahead. thank you very much for joining us today. ladies and gentlemen, one of the key tasks central banks have is to ensure stability. regardless of how stability is defined, it is inextricably linked with a longer - term orientation. looking back at the 200year history of our bank last year, we were reminded of the many unforeseen events that had unfolded during the past two centuries. and this will become manifest in an even broader perspective when we celebrate the centenary of the establishment of the republic of austria next year. times change, and time and again we realize how flawed our efforts are at predicting the future. public institutions that are committed to maintaining stability are invaluable because, in a long - term perspective, uncertainty about the future seems to be one of the few constants in life. today, technological innovation is an ever - present factor, but we should be wary of drawing deterministic conclusions from it. structural changes in our economic system have exhibited a remarkable tendency to prove unpredictable. it seems that the only thing we can be certain about is uncertainty. this applies both to the future path of innovation and the future sources of financial crises. former u. s. secretary of defense donald rumsfeld is well remembered for his referral to β known knowns β as distinct from β known unknowns β and β unknown unknowns β. i in economics, these distinctions are well known, although under different names β certainty, risk and uncertainty. for a central bank, committed to representing an anchor of stability, the main orientation points which guide its behavior in an uncertain world are of a macroeconomic nature : economic growth prospects, population trends and the distribution of the fruits of growth. with respect to growth, the recovery in the wake of the financial crisis has been modest by historical standards. strong savings, modest investment activity and a continuing debt overhang have led some observers to expect a period of secular stagnation. i do not share this gloomy perspective, but i agree that we cannot expect a return of growth rates comparable to those seen in europe during the two decades of reconstruction after the second world war. let me turn to population trends to illustrate that unforeseen events do not always imply a need for a downward revision of expectations, but can instead require an upward adjustment. a decade ago
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, as the priority, but rather to target the pass - through from the exchange rate to inflation. the bank β s normal estimate of this is 20 %, meaning about a fifth of the change in the currency β s value shows up in the cpi. the scale of the pass - through varies from time to time, however, and at present it appears to be lower, probably as a consequence of reduced pricing power in a subdued economy. although inflation moved outside the target during the third quarter it has since returned to the target band, as forecast, registering 6 % in september and 5. 5 % in october. we have bis central bankers β speeches therefore not changed rates so far this year, nor have we introduced other policy measures to influence the exchange rate. this contrasts with the responses seen elsewhere. brazil has raised rates by 225 points this year, indonesia by 150 and india by 50 points. central banks have also resorted to less orthodox policies including tightening overnight rates, implementing some capital controls and creating new swap auctions β essentially, opening forward books. comparing the performance of the rand with the currencies of these other countries, we see little evidence that a more activist and experimental approach would have changed the rand β s direction in a meaningful way. furthermore, there are advantages to our approach, not the least of which is a less volatile output, inflation and interest rates. conclusion in essence, south africa is not a fragile country. rather, our system is anti - fragile, like a welldesigned building in an earthquake zone : it moves with the shocks so it doesn β t collapse. β our monetary policy stance is clear and appropriate ; β fiscal policy is vigilant in anticipation of the normalization of interest rates ; β a sudden stop is relatively unlikely for south africa ; β the end of qe is not plainly bad for sa, and could be a good thing if it heralds a return to growth in the advanced economies. thank you. bis central bankers β speeches
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in water management, in roads and ports and in cold storage facilities. south african firms in the agricultural and agro - processing sector have the expertise, the know - how and the capital to invest in food production and processing on the continent. again, there are strong backward linkages between such investments abroad and jobs back home. it is often said that all economic progress is about moving up the value chain, producing ever more complex products. this can only be done through partnership and cooperation between bis central bankers β speeches the state, the private sector and our education and research communities. a major area of focus for the country is the manufacturing sector. manufacturing is important because it is a sector where productivity levels are already relatively high and the sector is able to generate well - paying jobs for millions of people. a major obstacle to faster growth in manufacturing has been a shortage of high level technical skills. that is where you come in. this university is at the cutting edge of producing the type of skills required for our manufacturing sector to move up the value chain, to enhance productivity and grow our exports. the central university of technology is the home of the centre for rapid prototyping and manufacturing. this university, supported by the national research foundation, is investing heavily in research in β additive manufacturing β, also known as 3d printing. 3d printing is likely to revolutionise aspects of manufacturing, lowering barriers to entry and allowing mid - sized economies to compete more effectively with other global players. these are exciting developments and i have no doubt that this university will play a greater role in helping our country to develop its advanced manufacturing sector. in conclusion ladies and gentlemen, despite significant challenges, south africa as a nation is in the process of determining its future ; it is a country that is growing, and with that growth comes opportunities. we must continuously raise the quality of our education system ; continuously keep up with the best developments globally so that we can produce young graduates who are at the cutting edge of the fields that they enter ; young people who will shape the future, drawing on the extraordinary strengths of all south africans. the future is contested terrain, and it will be determined by our vision of what that future could be and what we, together, do. it is largely in your hands now. again, thank you for this honorary doctorate. i humbly accept it on behalf of all south africans who are making a contribution to build a non - racial, democratic and prosperous south africa. thank you. bis central bankers β speeches
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compete in the international bond market. if one is to borrow on the balance sheet, it must naturally be in such a state as to be accepted by the lenders. the swedish institutions have managed this by strict operating rules, which place limits on what the institutions may engage in and allow lenders to ensure that the institutions get involved in what they have said they are going to do and nothing else. however, a not inconsiderable risk capital or guarantees from the owners have also been required. capital adequacy in the swedish companies is shown in figure 3. if β or rather when β the owners β requirements for return on the capital contributed increase this can be problem. mortgage banks capital ratio and tier 1 capital ratio 1998. per cent capital ratio tier 1 capital ratio β’ handelsbanken hypotek 10, 7 10, 0 β’ stadshypotek 13, 1 12, 7 β’ spintab 16, 0 11, 1 β’ sbab 10, 6 6, 9 β’ nordbanken hypotek 10, 5 8, 8 β’ s e b bolan 8, 4 4, 3 during the financial crisis in sweden, the balance sheets were for obvious reasons insufficient to enable the institutions to borrow at competitive prices in the international market. this uncertainty on asset values was all too great for a while. since then, however, creditworthiness has been continually increased, which is reflected in a gradually improved international rating. the swedish housing loan institutions have today around 13 % of their borrowing abroad. traditionally the swedish insurance companies and pension boards have been large purchasers of housing institution bonds. a part of the international borrowing has taken place in europe, in particular in london, while the major part has originated from investors in the usa and japan. an interesting issue is whether the ability to borrow in euro will make the central european investors more interested in swedish risks than before? it remains to be seen. however, obtaining capital in the international market is a laborious and long - term work that requires a systematic build - up of confidence. every new lender must become acquainted with the borrower β s name and history and eventually request a limit in his board. this takes time and the process is not simplified by a common currency. with regard to building up the international investment base, the swedish housing credit institutions have perhaps had slightly different approaches and priorities. having a well - established network of contacts among the european investors is surely not a bad idea the day that the
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##s and notified that it intends to raise this, which in practice will increase the banks β costs for mortgages. the swedish bankers β association β s recommendation to draw up amortisation plans in line with finansinspektionen β s notified requirement may also have an effect. 14 nor is there any shortage of ideas for further measures, including the introduction of countercyclical capital buffers, which they now use in norway. underneath all this is a problem of a more structural nature, namely a supply of housing that has grown slowly and a housing market that is not functioning efficiently. this has most likely contributed to pushing up the price of housing and consequently indebtedness. neither monetary policy nor measures in the field of macroprudential policy can resolve this type of structural problem ; they must be managed with entirely different measures. do marginal differences in the repo rate play a role? in the same way as one can question whether a repo rate that is a few tenths of a percentage point higher or lower plays any role with regard to risks linked to household indebtedness, one can also question whether it has any significance for inflation and unemployment. during the period between december 2012 and december 2013, when the repo rate was unchanged at 1 per cent, i advocated interest rate cuts of 0. 25 percentage points. is it reasonable to believe that such a small cut would have any tangible effect on developments? of course, we cannot know with any great degree of certainty what would have happened if monetary policy had been different than it was, but we can use economic and statistical models to assess the consequences. an analysis using the riksbank β s macro model ramses15 indicates that a repo rate that was 0. 25 percentage points lower during most of 2013 would have meant that inflation would have been a couple of tenths of a percentage point higher today ( see figure 5 ). this may not seem much, but it corresponds approximately to the downturn in inflation we have observed since the start of 2013 and these are important tenths of a percentage point in a situation where inflation has already been low for a long time. 16 the effect could be greater if one took into account the fact that a lower repo rate in 2013 would probably have affected expectations of future monetary policy during 2014 and onwards. moreover, i was not merely advocating a lower repo rate, but also a lower repo - rate path during this period. a lower repo - rate
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differences of opinion about the appropriate definition of price stability or how quickly to return to the target inflation rate when unanticipated events cause a deviation from the target. more importantly, with a common currency, individual countries can no longer benefit from having their national currency operate as a buffer in the event of an economic shock. take the case of a sharp rise in world energy prices. in this instance, an energy - producing country would experience rising incomes, expansionary demand pressures, and perhaps increased capital inflows. countries that are heavy users of energy would experience the opposite effects. exchange rate movements can help smooth the economic adjustment to such a shock, through a rise in the currency of the energy - producing country and a decline in the currency of the energyimporting country. where exchange rate movements are not an option, as within the current euro area, greater price and wage flexibility or greater worker and capital mobility between national economies will be needed in response to the shock. otherwise, the adjustment will be more painful and costly, involving greater fluctuations in national output and employment. europe is still characterized by significant wage and price rigidities and by low worker mobility, which could make the adjustment to shocks more difficult. evidently, the hope is that participation in the currency union will act as a catalyst for action to reduce or eliminate these rigidities. the economic case for a common currency in europe rests mainly on a judgment that buffering differential shocks in the partner countries will be a less important consideration than the benefits from lower transactions costs and from the greater economic certainty because of reduced currency risk. this presumes that the economic structures of these countries are sufficiently alike that any shocks will be felt by all of them at roughly the same time and to a similar degree. a good number of the euro countries probably fall into this category. those that do not may find themselves having to adopt measures to increase price and wage flexibility, as well as encourage worker and capital mobility, to take the place of adjustments in the exchange rate. what are the implications and relevance of the european currency model for canada? canada β s trade links with europe are relatively modest. only 4 % of our exports go to euroland countries and about 7 % of our imports come from there. so the direct economic effects on canada from any developments in europe related to the move to a common currency are likely to be rather limited, at least in the short run. of course, should the new monetary union lead to changes in world trade and finance
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over time, canada would feel an impact, like any other country. but it is difficult to assess the likelihood and extent of any such changes. in the meantime, i hope that canadian businesses trading with europe have made the adjustment to the new currency and are seeking to benefit from the lower costs of operating in europe that go with it. β 4 β one thing that the launching of the euro has done in canada is to generate discussion of the notion that we should be thinking of a north american monetary union with the united states ( and perhaps mexico ). the decline in the external value of the canadian dollar over the past year has, no doubt, heightened interest in the issue. before i get into the arguments, let me remind you that we are talking about a currency union, not just a fixed exchange rate. fixed rates that can be adjusted ( that is, devalued or revalued ) do not eliminate exchange rate uncertainty. indeed, as we have seen recently in asia, in mexico in 1994, and in europe in 1992, when adjustments are resisted, fixed exchange rates can become unsustainable. to obtain the economic benefits that i described earlier, a currency union, not just a fixed exchange rate, is required. * but, as i have also noted, even with a currency union the economic benefits come at a price. and that price is the loss of a degree of political and economic autonomy and flexibility. just how significant would that price be for canada? it is important to remember that, in the case of euroland, the monetary union is a considered, conscious choice that fits into the long - envisioned larger plan of greater economic, social, and political integration. but in north america, there are no parallels to these profound political forces. nor does nafta entail the degree of economic integration involved in the european union. moreover, for canada, any monetary union one might imagine with the united states would not only result in a loss of autonomy over monetary policy but would work very differently from the european monetary union. in europe, there are three large partners of roughly comparable size and eight other medium - and smaller - size participants. any north american monetary arrangement would most likely mean that canada would have to adopt the us currency. for canada, the other major problem with a single north american currency is that we would be giving up the buffer that a flexible exchange rate provides in dealing with shocks that affect us differently from the united states. an important contrast between canada and
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introduction of a regulatory framework for the introduction of a credit reference bureau ; ( v ) development and issuance of anti money laundering guidelines and the establishment of a financial intelligence unit ; bis central bankers β speeches ( vi ) development and issuance of the corporate governance guidelines by the regulators ; and, ( vii ) strengthening the autonomy and enhancing the supervisory capacities of the three financial sector regulatory authorities. through the fsdp, the boz is also working with stakeholders like the institute of directors ( iod ) in enhancing corporate governance among various stakeholders within the financial sector. under the first phase of the fsdp, iod conducted seminars on core principles of corporate governance targeted at executives and senior officials in the financial and business sector. in addition, the iod provided input into the corporate governance model board charter which has been developed with technical expertise from mtn special engagements led by ms mary ncube. the outcome of this work is what will be presented to you today. the presentation will focus on the significant position that boards of directors occupy in the whole corporate governance process and how their role, functions and operations may be reduced into a charter that might guide their work., including ; powers, functions and delegations of the board ; board composition and mix β and the challenge in state - owned institutions ; the chairperson and ceo β and whether they should be different persons and why ; rights and duties of directors β and that ultimately the buck stops here ; the role of the board secretary β and how they can help drive the right agenda ; disclosure of conflict of interest and the challenge of ethical standards ; members β remuneration and expenses β and what is morally right? corporate social responsibility ; and, evaluation of the board β s performance, etc. but why do we need a board charter one may be tempted to ask? i think it is correct to say that second only to the articles of association, a board charter is probably the most important corporate governance policy document which defines the respective roles, responsibilities and authorities of the board and management in setting the direction, the management and control of an organisation. it is a document that is useful to both old and new directors, particularly those who may not be familiar with how a company conducts its business and what is expected of them as directors. in this respect, the charter serves the following functions among many ; one - source reference β a board charter is a one - source document which clearly sets out how the board and directors are to perform their roles. as an induction
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caleb m fundanga : innovation for leadership excellency remarks by dr caleb m fundanga, governor of the bank of zambia, at the eastern and southern african management institute ( esami ) launch of mba alumni zambia chapter, lusaka, 12 february 2010. * * * the eastern and southern african management institute ( esami ) director general, prof. bonnard mwape ; the president, esami mba alumni zambia chapter, mr. christopher mulenga ; the ecobank zambia limited managing director, mrs charity lumpa ; esami alumni ; distinguished invited guests ; members of the press ; ladies and gentlemen. it is a great pleasure for me to officiate at the launch of the esami mba alumni zambia chapter. i wish to take this opportunity to welcome prof. bonnard mwape and other esami staff that have travelled from arusha to come and witness this important occasion. i am particularly delighted to be part of this launch because my first interaction with the esami mba alumni members was during the recent summer school event held in arusha, tanzania, where i was invited to present a paper on β the effects of the global economic crisis on zambia β. indeed my memories of that lively interaction are still very fresh and that is why i graciously accepted to officiate at this function when i received the invitation from the president of the association. ladies and gentlemen allow me to congratulate the president and his team for this excellent initiative of bringing together individuals with a common academic background under the alumni umbrella. i am informed that one of the objectives of the association is to utilise the acquired scholarly knowledge and experience to add value to society through leadership in various projects and initiatives. i know that alumni associations world over have existed for centuries and most of them have one basic principle, that of benefiting members wherever they may be and for free. however i am told that your association other than just carryout activities for the benefit of members will go a step further to do benevolent activities for the benefit of society at large. this is commendable and i am looking forward to see what initiatives you have outlined to advance welfare in our society. mr president, the theme for this launch this evening β innovation for leadership excellency β is indeed very timely and appropriate to the norms and beliefs that i am told your association espouses. it is innovations such as yours that gives us the comfort that you are indeed giving back to society following the huge resources that were invested in
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njuguna ndung β u : money transfer services address by prof njuguna ndung β u, governor of the central bank of kenya, at the official launch of m - pesa international money transfer service, nairobi, 13 october 2009. * * * members of the board of safaricom limited, chief executive officer of safaricom limited β mr. michael joseph, distinguished guests, ladies and gentlemen : it is indeed my pleasure to be with you this afternoon on this auspicious occasion of the launch of safaricom β s mobile based international money transfer service. this service builds up on the very successful and world renowned domestic money transfer service β m - pesa β an extremely important tool for financial inclusion. this service has earned our nation much praise and continues to attract the attention of payments system experts the world over. i congratulate the board, management and staff of safaricom limited for the evident commitment they have shown to the needs of the kenyan market. m - pesa and other similar services offered by other service providers are a revolutionary concept not only in the market place of ideas, but also in the practicalities of technological platforms provided by advancement of technology. it started four years ago, at a time when the market was yearning for practical ideas to facilitate access to financial services to a large section of the un - banked population. four years down the line, virtually everyone on the safaricom platform has an m - pesa account. the service is used to transfer ksh 1. 35 billion per day, a tremendous success by any measure. the launch of the international leg of the m - pesa money transfer service is therefore a natural progression in the value chain. ladies and gentlemen, mobile phone based financial services offer a convenience that is not available in any other consumer channel. in developing countries like kenya, the mobile handset provides the unbanked segment of the population the potential to access all types of financial services ; transactional and informational. in addition, it is the preferred channel because it has so far ensured security, convenience and is cost effective, while the business is conducted in a non threatening environment. the growing number of the un - banked population needs a convenient, safe and affordable means in which to access financial services. at the same time, the growth of micro banking, insurance services, and mutual funds require low cost delivery channels to effectively serve their markets. the β mobile phone opportunity β is the answer. the mobile experience also offers remarkable opportunities
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informal remittances channels to migrate to the use of this reliable, albeit convenient platform to send money home. ladies and gentlemen, in view of the important role of the remittances in our economy, an overriding policy objective for the central bank is to lower costs through competition facilitated by the entry of international money transfer services providers. this will enhance service delivery and enable users of such services obtain competitive remittances rates at substantially reduced unit costs. in this regard, central bank has issued and continues to issue permits to all applicants seeking to enter the international money transfer services market under the legal framework spelt out in the cbk act section 33 a, subject to meeting the set conditions. the safaricom mobile based international money transfer service has been granted with a permit pursuant to this policy objective. at this juncture, i would like to reiterate that while the central bank welcomes innovative products, it evaluates all such products to ensure safety and efficiency concerns are adequately addressed. the central bank has the necessary capacity to properly evaluate and appraise technology driven financial services to ensure they meet international standards. services that involve partnerships with commercial banks have to adhere to the existing prudential and statutory banking sector requirements. we will work closely with commercial banks and other service providers to increase awareness and enlarge the frontier of services. the central bank is also cognizant of the fact that international remittances platforms could be used as money laundering channels. part of our evaluation therefore involves subjecting applicants to a through scrutiny of their aml compliances programmes not only in kenya, but also in the sending jurisdictions. in this regard record keeping and β kyc β requirements must be adhered to as part of the approval conditionality. ladies and gentlemen, the subject of migrant worker remittances and their socio economic significance both for the sending and receiving countries has become a popular topic for governments, payment systems experts and other public policy makers. international remittances bring with them substantial welfare gains to the receiving countries and have huge developmental potential. the world bank estimates that recorded remittances by some 200 million migrants from developing countries reached us $ 283 billion in 2008, up from us $ 265 billion in 2007, while unrecorded flows through informal channels could even be higher. as a share of gdp, remittances constitute about 2 % of gdp. these numbers are almost equivalent to the foreign direct investment ( fdi ) flows, and may
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credit growth in the euro area has, for instance, been on the decline since the second half of 2012. bis central bankers β speeches even though more recent surveys undertaken by the eurosystem on bank lending show that credit conditions in the crisis countries have largely stabilised in the first half of this year, around 60 % of the banks report that the current terms and conditions for loans are more restrictive than those prevailing, on average, over the period since 2003. and if businesses or consumers know that they have to pay more for a loan than their credit standing would justify, they will not even ask for credit. that is exactly where the second part of our package of measures kicks in. the two targeted longer - term refinancing operations we have announced for september and december this year will allow banks to borrow, for a period of up to four years, funds in an amount of initially 7 % of their euro area non - financial private sector loans outstanding at the end of april. the focus of our endeavours in this respect is clearly on loans to businesses. that is why residential loans to households have been excluded. between march 2015 and june 2016, all eurosystem counterparties will be able to borrow additional funds. that additional liquidity will, however, be closely linked to the respective bank β s net lending in order to ensure that the money actually goes where it is needed. but many of you may be asking yourselves whether, given that many banks are already repaying the funds raised through the previous three - year longer - term refinancing operations early, there is really any further need for long - term liquidity. we are indeed noting that the terms and conditions under which banks can raise funds on the money and credit markets have eased considerably ( by around 100 basis points ) since july 2012, and that this has slowly reduced their dependence on central bank liquidity. the target balances relating to payment transactions between central banks have fallen by some β¬540 billion, i. e. have been almost halved. these are favourable signs. although financing conditions for banks in the crisis countries have improved dramatically, interest rates on loans to small and medium - sized enterprises ( smes ) in these countries are nonetheless still significantly higher than those in germany or other core countries. the high lending rates in the crisis countries are, of course, due to the higher credit risk there, as can also be seen from the high risk of default and the proportion of non - performing loans in these countries
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is restricted. bis central bankers β speeches the more the key interest rates are lowered and the longer the low interest rate phase lasts, the bigger the risk that one of these undesired side effects materialises. how should we respond to such developments? should monetary policymakers make compromises on their objective of price stability? i don β t think so. and not only because i feel committed to our treaty basis. a basis that we are not authorised to change. even if, in choosing its instruments, the ecb β s governing council cannot ignore the side effects but must precisely analyse the costs and benefits, the monetary policy objective of preserving price stability is always at the forefront ; it is always the primary aim. but that does not mean that we should simply accept these undesired side effects. effective macro - prudential oversight, committed to preserving financial sector stability, is a central building block for a stable monetary and economic union. europe has comprehensively responded to this lesson from the financial crisis and has created the appropriate legal and institutional preconditions, which must now be made a reality by all eu member states. as our experience shows, it is not enough to gear regulation and supervision exclusively to the stability of individual financial institutions. it is rather the close interaction between macro - prudential oversight and micro - prudential supervision that is one of the essential prerequisites for consistent crisis prevention. at european and national level, there are various institutions that can counter some, though not all, of the risks of asset bubbles. one such institution in germany is the financial stability commission, which is tasked with identifying and evaluating risks and recommending mitigating measures. recommendations may be addressed primarily to banking supervisors, which have in recent years acquired a broad toolbox of instruments through the various legislative initiatives. for example, banking supervisors can now respond to a regional property bubble by subjecting banks to higher capital requirements in order to make credit more expensive. thus the ecb, too, through the establishment of the single supervisory mechanism, has macro - prudential powers. while the national authorities remain entitled to use macro - prudential instruments at the national level, they must notify the ecb of their measures in advance. the ecb has the option of tightening national measures. in a sense, this is a protection against a failure to act at national level and hence improves the outlook for a more stable financial system in the euro area. nonetheless, in particular with regard to
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that globalisation has not changed the rules of the game for stability - oriented central banks. globalisation : basic characteristics to start off, let me briefly restate some basic observations with respect to globalisation. notwithstanding the widespread use of the term β globalisation β, there is neither a single definition of what globalisation actually means nor a single key figure for measuring its scale and evolution over time. in my view, a useful working definition of the term β globalisation β is that, quite fundamentally, it describes the ongoing process of the international division of labour. in the wake of this process, the domestic markets for goods and services, as well as the labour markets, are becoming more and more interlinked and interdependent internationally. the process of globalisation has been evolving among developed countries for many decades now. therefore, in contrast to what some observers might think, the current process of globalisation per se is neither new nor particularly unique. rather, it is the logical outcome of efforts to further exploit the benefits of the division of labour on an international scale. however, the pace of this process has been increasing rapidly for more than a decade now. declining costs of telecommunication and transportation have been the main drivers of this development. there have, moreover, been considerable improvements in skill levels in many regions of the world as well as in the product quality of goods and services that are produced in formerly rather underdeveloped countries. additionally, what has changed the face of globalisation is the fact that globalisation nowadays extends to a larger group of countries than in the past. more and more countries which used to have rather closed economies have opened themselves to the world market. thus, new players have entered on to the global stage and are becoming increasingly relevant economic powers and, as a result, competitors to established developed countries. as a consequence, the process of globalisation is leading to a shift in weights in the global economy. this shift is nothing exceptional. in fact, it is a quite natural development, which simply reflects the continuously evolving global economic landscape. let me now come to the subject of globalisation and inflation. globalisation and inflation speaking on globalisation and monetary policy at the current juncture, i feel tempted to refer to the famous song by bob dylan β the times they are a - changin β β. one verse has several great lines of advice for economists : come writers and critics who prophesize with your pen β¦ β¦ β¦ β¦ β¦ β¦ β¦ and don β t
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speak too soon for the wheel β s still in spin β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦. the loser now will be later to win for the times they are a - changin β. it is only some months ago that a lot of writers and critics β prophesized β that, in an era of globalisation, inflation is, and should not be, a cause for concern among monetary policymakers. with the benefit of hindsight, though, they should have followed bob dylan β s advice : β but don β t speak too soon, for the wheel is still in spin β, as inflation has reappeared on a global scale. moreover, in the face of the global financial turbulence of the past months, the debate in the media has switched from being about a β goldilocks environment β to the inherent risks of entering a period of perceived stagflation. considering that β the times they are a - changin β β, as bob dylan put it, a medium - to longerterm perspective is of the essence. taking such a medium - term view, i have always been one of the sceptics with regard to the β globalisation = low inflation β - paradigm, notwithstanding the fact that the notion of β more globalisation equals lower inflation β is shared by many observers β or was, at least, shared by them until a few months ago. what is the underlying reason for this widespread assumption? evidently, since the beginning of the 1990s, the ongoing advance of globalisation has coincided with a marked decline in inflation rates and inflation volatility worldwide. it is not surprising that a causal interpretation has been given to these parallel developments with increased globalisation being seen as the agent that has driven down inflation rates. and, indeed, over the past ten years, price rises in manufacturing imports in the euro area have been rather subdued, thus dampening β other things being equal β the increase in the overall consumer price index. at first sight, this seems to support the view of β opportunistic disinflation β according to which globalisation has been a key factor in lowering inflation rates. however, the past few months, in particular, have shown that there are obvious reasons why many observers should have been more cautious before drawing such conclusions. in fact, globalisation does not necessarily only have a dampening effect on inflation. to the contrary, the opposite might be the case as well ; globalisation might be a major driver of inflationary pressures. the
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economic and monetary union. to do so, we must be willing to accept meaningful changes to the institutional framework. as i have said in the past, a good starting point would be to assign powers to a european finance minister. in keeping with the spirit of the maastricht treaty, the finance minister could coordinate national economic policies in a different way. he or she could ensure that national fiscal policy is conducted with a view to contributing to the achievement of the eu β s objectives. the trouble for politicians is that voters may feel that granting greater scope at the eu level means taking away from national interests. but then there are the 70 years of peace ; there β s free movement across nearly an entire continent ; and there β s the world β s second largest economy. all this shows us that what we sometimes feel may be taking away our national sovereignty is in fact adding meaningful value to our lives. and this is why we should take more time to reflect on the achievements of the past. what β s more, politicians are not the only ones with a role to play. european unity starts with each individual ; it starts with you. you can each reflect on how you could promote europe as citizens, as students and as future leaders. the eu β s crisis response and the banking union dear students, having asked you to reflect on your role within the union, it is only fair to tell you about how i do my part. a large portion of my professional life since 2012 has been devoted to the creation of the european banking union. to understand how the banking union came about, we have to go back to the financial crisis. in the eu, it began as a crisis of the banking system and turned quickly from a financial crisis into the great recession. and many of the troubled banks held large amounts of their own governments β debt. this, together with the fact that some countries were already highly indebted, created a vicious circle. and so the sovereign debt crisis emerged. in june 2012, european leaders announced their intention to create a european banking union. but you may ask : why would a union change things? well, for a number of reasons. first, if we want to foster a healthy european banking market that can also serve the real economy in a downturn, we should make sure banks are all subject to the same rules. and to the same unbiased, intrusive supervision and resolution practices. in 2009, the eu had already started working on common rules for the banking
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spirals in fixed income markets during the covid - 19 crisis β, bis bulletin, no 2, bank for international settlements, 2 april. [ 9 ] vivar, l. m. et al. ( 2020 ), β burned by leverage? flows and fragility in bond mutual funds β, working paper series, no 2413, ecb, may. [ 10 ] vassallo, d. et al. ( 2020 ), β volatility - targeting strategies and the market sell - off β, financial stability review, ecb, may. [ 11 ] according to ecb simulations, assets worth nearly 225 % of the portfolio β s capital had to be sold in order to meet the volatility target. the simulation assumes a leveraged investor with a diversified portfolio including equities, corporate and government bonds. in this stylised model, relative portfolio weights are adjusted on a daily basis to equalise the risk contributions of the constituent assets of the portfolio considering the daily estimates of portfolio variances and covariances. the level of leverage is set in a way to bring the expected portfolio volatility in line with the volatility target. for more details, see vassallo, d. et al., op. cit. [ 12 ] the liquidity effects of initial margins are likely to increase further in the future. today, around two - thirds of non - banks β derivative exposures are not centrally cleared. initial margin requirements remained fairly stable for these contracts during the turmoil. however, as the implementation and application of the over - the - counter derivatives reform progresses, an increasing number of contracts will be moved to central clearing and an increasing number of non - centrally cleared contracts will become subject to initial margin payments. see also fache rousova, l. et al. ( 2020 ), β derivatives - related liquidity risk facing investment funds β, financial stability review, ecb, may. [ 13 ] surveys confirm that variation margin calls led to strained liquidity situations for some non - banks. see the results of the june 2020 survey on credit terms and conditions in euro - denominated securities financing and over - the - counter derivatives markets ( sesfod ). [ 14 ] ecb ( 2020 ), financial stability review, november, forthcoming. [ 15 ] schrimpf, a. et al., op. cit. ; duffie, d., op. cit. ; liang,
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yandraduth googoolye : how african countries can play an active role in the belt and road initiative remarks by mr yandraduth googoolye, governor of the bank of mauritius, at the financial connectivity thematic forum on " how african countries can play an active role in the belt and road initiative ", beijing, 25 april 2019. * * * excellencies good morning and thank you for giving me the opportunity to address such an eminent audience. last october, at the official opening of the belt and road international financial exchange and cooperation seminar organised by the bank of china, i had stressed on africa β s eagerness to be part of china β s vision to enhance cooperation and connectivity among countries that will be part of the belt and road initiative. africa is endowed with considerable human capital, millions of acres of arable land and a myriad of natural resources. therefore, ladies and gentlemen, the combination of china β s capital, technology, market, enterprises, talents and experiences and africa β s abundant resources, huge demographic dividend and great market potential should create economic wonders. testimony to africa β s willingness to support the belt and road initiative is member states of the african union endorsement of β agenda 2063 : the africa we want β, a roadmap for structural economic transformation over a fifty - year time scale. whilst the initiative will undoubtedly enable a smooth flow of goods and services against efficient mechanisms of payment flows, africa must also see to it that adequate and timely resources are geared towards the modernization of financial market infrastructures as well as to the opening and promotion of free trade areas. these will be instrumental in supporting the expansion of the trade corridor between china and africa and in upholding cross - border e - commerce. ladies and gentlemen, a key target of the initiative rests on financial integration and cooperation. besides enhancing financial regulation cooperation, it will increase the scope and scale of bilateral currency swaps and settlements as well as the issuance of bonds in chinese yuan. it is, therefore, to the advantage of countries across africa to encourage commercial equity investment funds and private funds to participate fully in the construction of key projects stemming from the belt and road initiative. the initiative will also push forth an additional currency of choice and set the rmb among the reserve currencies for african countries. a currency that can be used, not only for trade between africa and china, but also for intra - african commercial flows. african central banks and other regulatory entities must fully embrace the crucial
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rundheersing bheenick : becalmed β but still on course welcome address by mr rundheersing bheenick, governor of the bank of mauritius and vice - chairman of the association of african central banks ( aacb ), at the opening ceremony of the 2013 symposium of governors preceding the 37th assembly of governors of the aacb, balaclava, mauritius, 22 august 2013. * * * it is an immense privilege for me to welcome you all today on the occasion of this symposium on financial inclusion on the eve of the 37th assembly of the aacb β the association of african central banks. this is an historic occasion both for mauritius and for the bank of mauritius. we are hosting the assembly meeting and the symposium of the association for the first time in the history of our small island - state. there are indeed many firsts : this is the very first time the aacb is meeting off - shore β away from the african mainland. it is the first time that aacb annual meetings are witnessing such a record attendance ; and also the first time that we are having in our midst the general manager of the bank for international settlements, the president of the african development bank, and the secretary - general of the islamic financial services board. we have all of africa here, and when we include the flagship institution of the g - 20, we have almost all the world represented under one roof, bearing testimony to the growing interest in the happenings on this great continent. and from africa itself β just to give you an indication of the representation β from north africa we have our chairman, governor laksaci of algeria ; from the west we have governor sanusi of nigeria ; from central africa, we have governor nchama of banque des etats de l β afrique centrale ; from the east we have governor mutebile of uganda, and from the south we have governor marcus of south africa β a grand total of 32 governors and heads of central bank delegations representing 44 countries. i welcome you all here today. i wish the meeting great success and hope your stay here will be fruitful and worthwhile for you all. we are here to discuss what is emerging from the g20 financial inclusion action plan to improve the livelihoods of the poor, and to support micro small and medium enterprises, the engines of economic growth and job creation β in much of the world, and not just in africa. at the time governors decided upon the theme of
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risks remain, however, related to a possible worsening of the sovereign debt crisis. financial markets are also now generally less volatile β although we must closely monitor the situation in the spanish government bond market. certainly the doomsday predictions from the fourth quarter of last year seem to have been avoided. we should not forget that, only five months ago, der spiegel, the leading german weekly magazine ran an article entitled β a continent stares into the abyss β, which declared that the end - game for the euro had begun. the front cover of the economist magazine in the same week asked β is this really the end? β, set against an image of a burning 1 euro coin hurtling towards oblivion. what changed in this time? in my view, the explanation is actions taken at three levels. first, member states recognised the seriousness of the situation and implemented major reforms. spain has begun addressing its competitiveness problem with the most significant labour market reform in a generation. it is also improving central control over regional bis central bankers β speeches spending. italy is increasing competition and modernising its public administration to increase its potential growth. the debt exchange in greece was successful, which gives the country a fresh start to address its fiscal and competitiveness issues. ireland and portugal have continued to implement their eu - imf programmes, which are both on track. second, europe has strengthened its economic governance. fiscal rules have been reinforced through the agreement on the fiscal compact, which obliges all euro area countries to run a structural balanced budget. it also shifts the onus for enforcement away from brussels and onto national institutions, encouraging greater ownership. monitoring of economic policies will go deeper through the new β enhanced surveillance β legislation. it allows the commission to send missions to countries experiencing or threatened with financial difficulties and recommend policy changes. this gives the commission the power to demand some reforms that the u. s. federal government could not demand of a u. s. state. euro area firewalls have been strengthened by the decision to increase the total resources to around i trillion us dollars. altogether, this presents a convincing package for markets : a tough new set of rules, a strong regime for monitoring those rules, and a credible safety net to back it up. third, the ecb has played its part by preventing a funding crisis in the banking sector. the two 3 - year ltros launched in december and february have eased bank funding pressures and stopped further deleveraging. this should over time support lending to
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expected to remain at very low or negative levels in the early months of 2015. this heightens the risk of second - round effects on wages and prices that could have an adverse impact on inflation expectations in the medium term. indeed, the latest private sector forecasts have seen substantial downward revisions for all terms. thus, for example, according to the january edition of consensus forecasts, the leading private sector economic forecast publication, the average rate of inflation forecast for 2015 is just 0. 1 %, compared with 0. 6 % forecast for the same period a month earlier. in a macroeconomic context of weak demand, these rates, so far from 2 %, not only endanger the current anchoring of medium - term inflation expectations, but also heighten the risks to price stability and hamper the economic recovery of the area as a whole. economic recovery is even more difficult for countries that are in the process of correcting imbalances that built up in the past, and in particular for those, such as spain, that have suffered competitiveness losses and need their prices and costs to fall relative to the euro area as a whole. to address these risks the ecb has in recent months taken further measures to make its highly expansionary monetary policy even more expansionary. bis central bankers β speeches as regards standard measures, the ecb has reduced the interest rate on its main refinancing operations to 0. 05 %, which is technically the lower bound for this rate. also, the interest rate on the deposit facility, which is the rate at which the cash surpluses that credit institutions hold in their eurosystem accounts are remunerated, stands at negative levels ( β 0. 20 % ), which discourages the accumulation of such balances and stimulates lending. recent actions also include non - standard measures : a new long - term financing facility specifically aimed at promoting greater lending to the private sector ; and two asset purchase programmes, one for asset - backed securities and the other for different types of covered bonds. finally, on 22 january, the ecb announced new monetary stimulus measures. the interest rate applicable to the long - term financing facility, which aims to stimulate lending, was reduced and an expanded asset purchase programme was announced. this programme includes, in addition to the purchases of asset - backed securities and covered bonds issued by the private sector, purchases of bonds issued by euro area central governments, agencies and european institutions. the size of this expanded programme is ambitious, with monthly
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start was achieved with the governance overhaul of the imf, endorsed at the g20 seoul summit. the imf β s move to better reflect the systemic importance of emerging market economies should lead to greater legitimacy. this could also have positive economic effects, such as a mitigation of precautionary reserve accumulation, which can otherwise contribute to the build - up of global imbalances. exercises aimed at analysing spillovers from major countries and regions to the other partners will also gain new legitimacy. more generally, however, i do not see a major reform of the international monetary system on the horizon, as there is no real substitute for the us dollar in medium term. the special drawing right ( sdr ) is not a promising option, and the insufficiently deep and liquid financial markets of emerging market economies will limit the role that their currencies can play in the foreseeable future. a more cooperative system of exchange rate regimes is essential but does not depend on unachievable radical reforms. concerning the third challenge, creating the conditions for growth, the g20 have approved the framework for strong, sustained and balanced growth which, alongside a set of structural reforms, has at its core fiscal consolidation, which could lead to 1 ) internal rebalancing in advanced economies by substituting public stimuli for increased private demand ; and 2 ) external rebalancing by promoting domestic demand in surplus countries and increasing external demand in deficit countries. such needs for rebalancing are sometimes presented in overly simplistic terms, namely that surplus countries should reduce savings and deficit countries should increase them, mainly through consolidation of public finances. the attempt to translate this into target ranges for current account deficits or surpluses failed at the seoul summit. the question is a complex one because it is not sufficient to change savings β behaviour. the solution also has to involve movements in the exchange rate, as explained by john williamson when he denied the possibility of an β immaculate transfer β. 5 in fact, the reduction of domestic savings implies a positive change in the capital balance, which requires a necessary negative development in the current account. the appreciation of the currency is what helps this to happen. this is why, at the g20 toronto summit, members with significant external surpluses committed themselves to strengthening their domestic sources of growth, as well as allowing greater flexibility in their exchange rate policies. at the seoul summit the g20 then pledged to β pursue the full range of policies conducive to
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customer demand for convenience, speed and efficiency. new technical solutions have even further nurtured these developments. given the prevalence of smartphones and other mobile devices, today β s customers are used to doing things on the spot. they want to make payments instantly, anytime, and anywhere, and expect them to be as readily available as instant messages, instant videos or instagram. the epc β s creation of the sct inst scheme came in response to these users β expectations. and instant clearing and settlement infrastructures have already been established, most notably tips. but, in the long run, simply being reachable for incoming payments initiated by other banks β customers will not be enough. i am convinced that banks need to offer even more innovative and efficient solutions for their customers and i would advise them to embrace the instant payments space as an opportunity to remain relevant players in the payments business. one area in which solutions have already emerged is payments between individuals, or so - called person - to - person payments. but we also need solutions encompassing payments at merchants, at the point - of - interaction ( poi ), both physical and virtual. in fact, some end - user solutions for instant payments at the point of interaction are already emerging across europe. but they tend to be limited geographically, meaning that each solution is only usable in one or a few ( neighbouring ) countries. this certainly 2 / 4 bis central bankers'speeches does not point to an integrated european payments market. in addition, in many instances, such regional solutions are not interoperable with each other. for example, although many solutions use qr codes that consumers can scan with their mobile devices, they have not implemented a common standard for these codes. so, there is a clear need for standardisation to enable european consumers to pay eu - wide using interoperable solutions. in this context, the erpb set up a working group to analyse in detail the barriers to the pan - european reach of point - of - interaction solutions. it will report back on the outcome of this work by november 2019. i hope to obtain useful input from this work. because if we do not achieve interoperability among national and regional solutions, as difficult as it may be, we run a serious risk of fragmentation of the european market. let me explain why i am concerned about the risk of increasing fragmentation through national point - of - interaction instant payment solutions. at the moment, users who want to pay effortlessly at european level have
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entities. the fatf considers that if implemented effectively and with respect to applicable human rights provisions by countries and the private sector, targeted financial sanctions are an important means to deprive terrorist and proliferation financiers of their funds, thereby protecting citizens from the threats of crime, terrorism and weapons of mass destruction. in order to be effective, however, these measures also have to be implemented and enforced in practice. 1 / 2 bis central bankers'speeches as an international financial centre, mauritius is committed to protecting its financial services sector from abuse. as a member of the united nations, mauritius has given effect to the sanctions regime under the un security council resolutions as well as the fatf recommendations 6 and 7 though the enactment, in may 2019, of the united nations ( financial prohibitions, arms embargo and travel ban ) sanctions act 2019 β the un sanctions act as it is more commonly referred to. the un sanctions act imposes a number of obligations on financial institutions, namely β prohibition against dealing with funds and other assets ( asset freeze ) of a designated or listed party ; prohibition against making funds and other assets ( and financial services ) available to, or for the benefit of listed parties ; reporting obligations and reporting of suspicious information, amongst others. the un sanctions act further requires financial institutions to implement internal controls and other procedures to enable a financial institution to effectively comply with the un sanctions act. it is therefore imperative for financial institutions to have adequate policies and procedures, systems and controls in place to enable the financial institutions to, amongst others, β identify the existing accounts, transactions, funds or other assets of designated persons and entities ; immediately freeze any identified funds or other assets held or controlled by designated persons and entities and prevent designated persons and entities from conducting transactions with, in or through them. as the central bank of the country and the aml / cft regulator for the banking sector, the bank of mauritius must safeguard not only the financial stability and soundness but also the integrity of the banking sector. non - compliance with the aml / cft obligations, including the targeted financial sanctions, will therefore, be severely dealt with by the bank. on those notes, allow me, ladies and gentlemen, to leave the floor to our panel of distinguished speakers who will guide you on the implementation of these obligations. i thank you for your kind attention and wish you a fruitful workshop. 2 / 2 bis central bankers'speeches
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is vast and fixing it is enormously time consuming. as this audience knows, banking systems and financial services rely heavily on computer systems to manage and deliver services electronically. with the linkage of payment systems globally, a failure of any linked system could have waterfall effects to other systems and a disastrous result to the world economy. the scope of the millennium bug extends far beyond financial services and beyond the traditional notion of large mainframe processing systems. computer systems that control telecommunications, electric utilities, transportation services, and a host of other critical infrastructure systems are vulnerable. the gartner group estimates 50 million embedded - system devices worldwide will exhibit year 2000 problems. embedded chips are used to control elevators, environmental systems, navigational devices, household appliances, safes and vaults, and on and on. the pervasive reliance on computer systems is not constrained to large industrialized countries ; developing countries are also vulnerable, particularly those with older computer systems and software. i think that some β what ifs β cited by the computer information centre in the uk brings a practical perspective of the effect of what could happen in our everyday life as the millennium arrives. β’ the computers in financial services organizations, etc. cannot deliver payments to counter parties, or receive funds from them. gridlock ensues. there β s a collapse in financial markets because of the bad news coming from companies about their inability to trade normally. β’ the power fails, and it is mid - winter in the northern hemisphere and mid - summer in the southern hemisphere. the power company β s production is controlled by innumerable computer chips, which were installed many years ago and no one knows what they do, how they work, nor dare they touch them, because the whole of the plant might come irreparably to a standstill. more personal possibilities : β’ the telephone system fails - - and you β re unable to notify anyone of your pyramiding problems. β’ your medical center β s computer has problems and cannot trace the medicines your elderly mother has been prescribed in the past nor the conditions she has had. a doctor prescribes the wrong medicine and she becomes very ill. β’ you try to draw money from an atm and it refuses, even though you know you have money in your account. your bank β s computer thinks it is january 1, 1900 - - and you weren β t a customer then! as i said, fixing the year 2000 bug is not technically difficult but it is an enormous task that will be frightfully
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which can then serve the purposes of the different internal and external stakeholders, should be highlighted. to properly manage such detailed, comprehensive and complex information, a robust state - of - the - art data system is of the essence, boosting appropriate it tools and solutions able to respond to the challenges ahead. www. bportugal. pt an outstanding example of the advantages of this joint management of micro - databases that i would like to share with you is the recently taken steps towards the creation of an in - house credit assessment system ( icas ) at banco de portugal. this system, which is being fine - tuned as we speak, further explores the informational potential of both the central credit register and the central balance sheet database and will provide banco de portugal with its own internal credit risk assessment system, thus reducing its dependence on external sources. against the background of the recent economic and financial crisis, these systems have recently been gaining importance within the eurosystem, as can be seen by the increasing number of ncbs that have introduced them. in fact, at the current juncture, a more pressing business case for icas stems from monetary policy purposes, for which icas will provide an evaluation of debtors β credit notation. but the benefits of such a system are not exclusive to monetary policy. in fact, there is a broad range of advantages to different business areas, in particular regarding supervision and financial stability. starting with supervision, the credit notations derived from icas could be used not only as a benchmark to gauge those provided by institutions with their own internal notation systems, but also as a way to assess the quality of individual credit portfolios, while potentially contributing to an early identification of specific risks to which institutions may be exposed to. furthermore, the analysis of risks and weaknesses of different economic sectors and the portuguese financial sector β s response to them could also be envisaged, thus providing a useful input for stress - testing. as to financial stability, icas β s data could also be used as a monitoring tool of the developments of the non - financial sector ( and the potential building up of imbalances ), not only as a provider of non - financial corporations β credit risk indicators, but also with the expert judgement of the risk analysts. this tool could serve, at least, two purposes : on the one hand, to assess the fragility of specific sectors of the economy, in particular through the economic and financial analysis of the companies that constitute each of the
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##s ; and ( iii ) disclosing econometric estimation techniques applied to microdata. secondly, i want to emphasize the recent launch of the so - called international network of exchanging experiences on statistical handling of granular data ( inexda, for short ), an international network in the field of microdata. banco de portugal is one of the first participants in this structure, along with banca d β italia, banque de france, deutsche bundesbank and bank of england. the inexda network will provide a basis for exchanging experiences on the statistical handling of granular data which are accessible to external users, and will approach very relevant issues such as the accessibility of data and metadata, techniques for statistical analysis of granular data and data protection, and procedures for output control. furthermore, inexda offers a framework to investigate possibilities to harmonise access procedures and metadata structures, to please see blattner, l. et al. β the effect of quantitative easing on lending conditions β, banco de portugal working paper 8 / 2016. www. bportugal. pt develop comparable structures for existing data, and to further foster efficiency of statistical work with granular data. let me also mention, as a third illustration, the relevance of the funding and capital plans ( fcps ) exercises. these plans - which focus on the solvency, liquidity and profitability of the largest banking groups - include detailed historical and prospective accounting and prudential information ( overall strategies pursued in a 3 - 4 year time horizon ) and are built over harmonized macro scenarios, guidelines and restrictions, thus allowing for full consistency among institutions. on top of its direct relevance for supervision, the analysis of fcps contribute to the prospective assessment of the intermediate objectives of the macroprudential policy ; in addition they can also be used to assess the coherency and sustainability of the projected aggregate trends on credit, funding, financing to the economy, and profitability. as such, this instrument is much suited for the pre - emptive nature of macroprudential policy. lastly, let me also draw your attention to ongoing developments on the collection of loan - by - loan information from banks on the value of collateral and households β income. this information allows the calculation of loan - to - value ( ltv ), loan - to - income ( lti ) and debt - to - income ( dti ) ratios for household mortgages on a regular basis, both at the origin
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to zero. supply of credit, economic activity and inflation. 2 hence, there is a lower bound to nominal interest rates. this lower bound introduces an asymmetry into the conduct of monetary policy. this asymmetry means that monetary policy is potentially very effective in combating high inflation episodes, but less so in combating deflation or even persistently low inflation. 3 in the years that followed the great financial crisis, in a context of significant disinflationary pressures, the proximity of interest rates to their lower bound led the ecb to introduce a set of non - standard measures to provide sufficient monetary stimulus to preserve price stability. among these measures, the asset purchase programme ( app ), the targeted longer - term refinancing operations ( tltros ) 4 and the forward guidance on the future path of interest rates can be highlighted. see, for example, brunnermeier and koby ( 2018 ) for a discussion of the effect of interest rates on banks β profitability and their ability to lend. see banco de espana ( 2019 ) for a detailed discussion. andreeva and garcia - posada ( 2019 ) estimate the impact of tltros on banks β lending policies in the euro area. even though there is a broad consensus that these non - standard instruments have been effective in easing financing conditions and in supporting euro area inflation, economic growth and employment, their expansionary effects did not prevent inflation from remaining persistently below the ecb β s target for much of the last decade. this led the ecb to review its monetary policy strategy in order to search for ways to better fulfil its price stability mandate. 2 main elements of the ecb β s new monetary policy strategy the unanimous adoption in july 2021 of a new monetary policy strategy was an important achievement for the eurosystem. this new strategy has drawn on an immense collective effort by the staff at the ecb and the eurosystem national central banks over 18 months. among the many new developments that this review has brought with it, let me now focus very briefly on three key aspects. for those interested, i provide a more comprehensive description of the new strategy in my article β the european central bank β s new monetary policy strategy β, the euro yearbook 2022. first, the ecb has adopted a new medium - term inflation target of 2 %. this target is symmetric in the sense that positive and negative deviations of inflation from the target are considered equally undesirable
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bostjan vasle : opening address for governor madis muller's lecture opening address by mr bostjan vasle, governor of bank of slovenia, for governor madis muller's lecture entitled " why is inflation so high and so different in different euro area countries? ", ljubljana, 3 march 2023. * * * the spoken word applies. ladies and gentleman, esteemed colleagues, good morning and welcome to banka slovenije, and also to all of you following us over the video link. it is my great pleasure today to have the opportunity to host my dear colleague mr madis mueller, governor of the bank of estonia. * * * the topic of his lecture will be inflation. more precisely, identifying the drivers of elevated inflation and why there are such big differences in the level of price growth rates between member states. according to the latest data, published yesterday, the lowest rate of inflation in february was recorded in luxembourg, 4. 8 %, and the highest in latvia, with 20. 1 %, while the average rate was 8. 5 %. estonia recorded an inflation rate of 17. 8 % and slovenia one of 9. 4 %. these are all - time - high inflation differentials within the euro area. needless to say, these are figures which are uncomfortably high, for households, enterprises and, sovereigns alike. and the increased public concern about inflation is also reflected in the results of the autumn eurobarometer survey, where more than 90 % of europeans ranked the rise in the cost of living as the number one issue of concern. and of course it is also a concern for us central bankers, whose mandate is price stability. * * * that is why we reacted already last year, when inflation increased further after the russian aggression on ukraine, with all its consequences for global markets and prices. let me briefly remind you that just one year ago our policy was still very accommodative, with our main interest rate at - 0. 5 % and expanding programmes of asset purchases, pepp & app. then in april, we changed course, firstly by ending net purchases under pepp, followed three months later with ending net purchases under app. 1 / 2 bis - central bankers'speeches in july, we raised our main interest rates for the first time in about a decade. firstly by 0. 5 percentage point to 0 %, followed by two increases of 0. 75 percentage point each, followed by two increases of
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unsuccessful, the internal long - term debt will be available to u. s. authorities for orderly resolution and recapitalization of the intermediate holding companies. we have calibrated our proposed internal tlac requirements slightly below our proposed external tlac requirements for u. s. gsibs. this slightly lower calibration for internal tlac recalls the difference between local going - concern capital requirements and the gsib surcharge, but the gap is somewhat smaller, reflecting the concerns i mentioned a moment ago. the proposal thus balances support for the preferred resolution strategy of the home resolution authority of the foreign gsib with assurance of u. s. financial stability if that strategy cannot be executed successfully. 12 conclusion my view of shared responsibility for overseeing international banks emphasizes the importance of financial stability even as it allows for benefits specific to international banking. for the reasons i have explained, in the end host countries need to make the judgments on the tradeoffs between these goals. but i have also explained how a strong set of international prudential standards and good institutional relationships among regulators could help tilt this balance toward greater flexibility for internationally active banks. in response to positions akin to what i have presented today, one often hears complaints that the emphasis on financial stability will result in the balkanization of international banking. i would note first that it is not at all clear that developments since the crisis have on net balkanized banking, so much as shifted some international banking assets from the organisation for economic co - operation and development ( oecd ) countries whose banks were disproportionately affected by the financial crisis to banks from some emerging market and developing countries. 13 this development probably reflects both needed changes in some of the oecd nation banks and a logical reflection of the increasing economic importance of the non - oecd countries. second, i wonder how these critics can think that the pre - crisis situation of supposedly consolidated oversight and substantial bank flexibility was a desirable one. at least some of our internal tlac proposal effects this balance principally by not including parent gsib surcharges in the calibration for fbo intermediate holding companies but also by lowering the baseline tlac requirement for u. s. intermediate holding company subsidiaries of single - point - of - entry strategy fbos from 18 percent of riskweighted assets to 16 percent of risk - weighted assets. for a discussion of these points, see claessens and van horen, β the impact of
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banks, noted a consistent increase in the number of financial institutions that support financial education initiatives. bankers who responded to a 2003 consumer bankers association survey reported that 98 percent offer financial literacy programs or work with partners that support such efforts. many bankers participate because they want to be recognized as good corporate citizens ; however, many other bankers have realized that their activities may help them reach hard - to - serve markets such as immigrants or people without a relationship with a bank. organizations, including some of the federal reserve banks, working at the community level have established volunteer income tax assistance ( vita ) sites, where instructors not only help people with their tax returns, but also teach them how to budget their income, pay their bills, and manage credit. these programs are especially noteworthy since preliminary research reveals a considerable number households that receive tax refunds intend to save them or invest them in education and other wealthbuilding activities. building a foundation for financial education children and teenagers should begin learning basic financial skills as early as possible. indeed, improving basic financial education in elementary and secondary schools can help prevent students from making poor decisions later, when they are young adults, that can take years to overcome. in particular, it has been my experience that competency in mathematics - - both in numerical manipulation and in understanding the conceptual foundations - - enhances a person's ability to handle the more ambiguous and qualitative relationships that dominate our day - to - day financial decisionmaking. for example, through an understanding of compounding interest, one can appreciate the cumulative benefit of routine saving. similarly, learning how to conduct research in a library or on the internet enhances decisionmaking. focusing on improving fundamental mathematical and problem - solving skills can develop knowledgeable consumers who can take full advantage of the sophisticated financial services offered in an ever - changing marketplace. while some adults may believe that financial and related mathematical concepts are too complex for younger school children, i was pleased to have an experience that dispels such thinking. in june, i had the opportunity to discuss financial matters with a sixth - grade class that had begun a financial education program sponsored by operation hope, a national nonprofit organization. the children's surprisingly precocious questions demonstrated an ability and a desire to learn more about the fundamental principles of money and banking. this encounter and countless others in classrooms and community centers across the country indicate that, in the long run, better basic education at home and in elementary and secondary schools can provide the foundation for a lifetime of learning. but not
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bank's financial stability role drawing on our experience of this financial crisis, and discussions concerning framework reform proposals and actual instances in major countries. in addition, the bank should endeavor to ensure that the general stance of emerging market countries, including korea, is fully reflected in the course of reaching a global consensus on financial stability. to this end, we have to participate actively in discussions at g - 20 meetings as well as in the financial stability board ( fsb ) and the basel committee on banking supervision ( bcbs ), both of which our nation joined in march. we have to do our best to set the inflation target, to be adopted for the period from next year onward, at an appropriate level. although inflation targeting per se is assessed to have contributed considerably to price stability, both domestically and internationally, the bank must also review any shortcomings in the system based on its past experiences. the bank should make improvements in its operation, if necessary. among the key projects we are now pursuing, i would like to mention two in particular. the running of the new bok - wire +, which went into operation this may, should be stable and seamless. and every effort must be made to ensure the trouble - free supply and circulation of the 50, 000 - won banknotes, to be introduced from june 23. the various other businesses we handle should also be carried out without the slightest slipup. settlement risk needs to be managed still more thoroughgoingly to cope with the expanded participation of non - bank financial institutions in the payment and settlement system. we must take great pains to ensure that the systems introduced for improving the efficiency of liquidity management, such as fungible issuance and prior fixed rate tenders for monetary stabilization bonds, achieve their desired results. in the management of the foreign reserves, we should do our utmost to upgrade risk management further and come up with ways to achieve stable returns in this period of low interest rates worldwide. my dear colleagues, the direction of financial and economic change at home and abroad remains very uncertain. as a result, the central bank's accurate assessment of the situation and selecting of timely and effective policy options are more important than ever for the national economy. carrying out this mission, the bank should arrange its organizational and personnel management in such a way as to maximize its potential. full consideration also needs to be given to a new organization in charge of activities related to the international financial institutions that the country has recently joined to ensure that it plays its role
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and confidence in how the market functions. i expect that cooperative relationship will continue as we see this process through to its conclusion in may next year. bis central bankers β speeches
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simon m potter : implementing monetary policy post - crisis β what have we learned? what do we need to know? remarks by mr simon m potter, executive vice president of the markets group of the federal reserve bank of new york, at a workshop organized by columbia university sipa and the federal reserve bank of new york, new york city, 4 may 2016. * * * i would like to thank antoine martin for his assistance in preparing these remarks. i would like to welcome you to this workshop, organized jointly by the school of international and public affairs at columbia university and the federal reserve bank of new york. we have assembled an excellent set of presenters and discussants focused on the topic of implementing monetary policy post - crisis, who are here to ask important questions such as what have we learned from our experience and what do we need to know going forward? i am expecting an active and stimulating dialogue on a range of topics. as always, these remarks are my own and do not necessarily reflect the views of the federal reserve bank of new york or the federal reserve system. as most of you know, the federal reserve system is engaged in an extended effort to evaluate potential long - run monetary policy implementation frameworks. 1 there are many reasons to take a close look at the issues now. for example, the federal reserve has new tools, like the authority to pay interest on reserves and reverse repurchase agreements with an expanded set of counterparties, which were not available pre - crisis. 2 the money markets in which the trading desk of the federal reserve bank of new york ( the desk ) operates have different dynamics than before, in part because of our large - scale asset purchases. we want to take stock of these changes and ask ourselves what the best way of implementing monetary policy is today and in future environments in a manner that is consistent with the federal reserve β s normalization principles. 3 to make good choices about the monetary policy implementation framework going forward, it is, of course, useful to learn from the past. our task is to assess the strength and weaknesses of existing and previous frameworks, particularly through the lens of what happened during the recent global financial crisis, when central banks were called on to innovate in a number of ways. in addition, the varied experience of other central banks prior to the crisis can also provide valuable insights. what have they learned about what worked well, or did not work so well, with their frameworks? the current framework in the united states looks very
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philip lowe : remarks at reserve bank board dinner remarks by mr philip lowe, governor of the reserve bank of australia, at the reserve bank of australia's board dinner, brisbane, 5 september 2017. * * * good evening. on behalf of the reserve bank board i would like to warmly welcome you all to this community dinner. thank you for your interest in the rba and for joining us this evening. as you are probably aware the reserve bank board had its monthly meeting here in brisbane today, at our offices on creek st. i would like to take the opportunity of this dinner to welcome mark barnaba to the reserve bank board. this was mark β s first board meeting and he brings a wealth of experience in the resources and banking sectors to the table. mark replaces john akehurst who retired from the board last week after a decade of public service in this role. over those 10 years, john made an outstanding contribution to our deliberations. it β s fair to say that he served through interesting times, perhaps a little too interesting : a global financial crisis, the biggest mining investment boom in over a century, and central banks worrying that inflation was too low, not too high. all that, in just 10 years. mark, i hope your time on the board is not quite as interesting! at our meeting today we had the usual review of the global and australian economic and financial data, as well as a thorough discussion of recent developments in queensland. we know that the queensland economy has gone through a difficult period following the wind - down of the mining investment boom, and that the pain has been concentrated in some regional communities. we are also watching the brisbane property market carefully, particularly the effect on prices of the large increase in the supply of new apartments. more broadly, a range of indicators, including employment and retail trade, suggest that there has been a recent improvement in economic conditions in queensland. the lower exchange rate is helping, particularly in the tourism, education and rural industries. an appreciating exchange rate would not be helpful from this perspective. you have probably heard that the board decided today to leave the cash rate unchanged at 1. 5 per cent. this is unlikely to have come as a surprise to many people ; the cash rate has been at 1. 5 per cent since august last year and financial market pricing suggests market participants expect it to remain there for some time yet. as usual, the reasons for the decision were released shortly after the meeting. for some time
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feasibility of this project, and to take a final decision in february next year. afterwards, we intend to launch a broad public consultation of all interested parties. another sign of incomplete integration is that bank interest rates still vary considerably across countries. i should stress, though, that such differences are also partly the consequence of various other factors, such as product characteristics and business practices. some press commentators concluded from the ecb β s report that these high cross - country differences reflected insufficient see morgan, p., rime, and e. strahan ( 2004 ). β bank integration and state business cycles β, quarterly journal of economics, 119 ( 4 ), pp. 1555 - 85. commission of the european communities ( 1990 ) β one market, one money β european economy 44. european central bank, β indicators of financial integration in the euro area β, september 2006. european central bank, β differences in mfi interest rates across euro area countries β, september 2006. competition. this is only part of the explanation. market fragmentation also affects the financial system β s efficiency. again, a comparison between europe and the united states is quite revealing. whereas the cost - to - income ratio of banks in the euro area is 64 % on average, it is only 58 % on the other side of the atlantic. this superior us performance can be explained, at least partly, by a more integrated market and a more harmonised regulatory environment. many of you experience first hand the obstacles that continue to hamper financial integration and cross - border banking in europe. some of these obstacles are related to legal and fiscal differences, while others may relate to the regulatory and supervisory framework. the latter are of particular interest to us considering that a task of the ecb, which is enshrined in the treaty, is to contribute to the smooth conduct of policies by national authorities in the field of supervision and financial stability. financial regulation and prudential supervision have a significant role to play in the financial system : to address market failures and safeguard financial stability. however, it is also true that in an evolving and integrating financial system, banking regulation and supervision need to evolve in order to keep up with developments. this, of course, begs the question whether the european regulatory and supervisory framework has kept pace with the development and integration of european financial markets. there are two aspects to this question : first, whether the current framework may be an obstacle to further financial integration. bankers often see the decentralised institutional set
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an efficient and effective supervisory framework for a more integrated, competitive and developed financial system is crucial for europe β s growth. iv. concluding remarks ladies and gentlemen, a β holistic β approach to this gala dinner should also mean combining the food for thought, which i hope to have provided, with our attention to the more tangible nutritional elements, that is, our dinner. let me conclude by returning to adam smith and some pertinent views of his, as assessed by alan greenspan : β modern economic analysis has confirmed much of what adam smith inferred from a far less impressive set of data. today β s economists generally point to three important characteristics influencing growth : ( 1 ) the extent [ β¦ ] of a country β s integration with the rest of the world, ( 2 ) the quality of a country β s institutional infrastructure, and ( 3 ) the success of its policy - makers in implementing measures necessary for stability β. as i have highlighted tonight, each of these three elements β integration, institutional infrastructure and stability ( both for macroeconomic and financial ) β remain of crucial importance to europe β s economic growth and prosperity. thank you very much for your attention.
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fabio panetta : keeping cyber risk at bay - our individual and joint responsibility introductory remarks by mr fabio panetta, member of the executive board of the european central bank, at the fifth meeting of the euro cyber resilience board for pan - european financial infrastructures, frankfurt am main, 16 december 2020. * * * at the last meeting of the euro cyber resilience board for pan - european financial infrastructures ( ecrb ), we were all in the same room at the ecb premises in frankfurt am main. that was on 27 february 2020, when we launched the cyber information and intelligence 1 we already knew this was a critical step in addressing cyber sharing initiative ( ciisi - eu ). threats. but we did not know just how timely it was. shortly after that meeting, the first wave of the coronavirus ( covid - 19 ) pandemic led to strict containment measures across europe. while the upcoming vaccine roll - outs are a light at the end of the tunnel, mobility restrictions are likely to remain in place for some time. these restrictions have confronted us all with unparalleled challenges in our personal and professional lives. in response, the world has taken a giant leap forward in terms of digitalisation. and when the public health situation finally improves, we will not go back to the old normal. working from home has become the norm for many of us. we have adjusted our way of life. and while we will certainly enjoy regaining our ability to move and interact freely, we will also learn lessons from the pandemic and see benefits from how we adapted to it. the digital transformation is here to stay. but for digitalisation to contribute to economic resilience beyond the pandemic, cyber resilience will be paramount. otherwise, digitalisation may increase risks rather than reduce them. today i will argue that this applies to the financial sector in particular and i will discuss the necessary policy response. digitalisation and the resilience of the financial sector : lessons from the pandemic digitalisation is transforming financial services and consumers β behaviour2. as our recently published study on the payment attitudes of consumers in the euro area ( space ) 3shows, almost half of euro area adults now prefer to pay digitally. and the more europe β s citizens rely on digital payment initiation β be it by card, credit transfer or direct debit β the more europe β s businesses rely on the underlying financial infrastructures or the clearing and final settlement of these
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mr duisenberg β s speech at the 11th frankfurt international banking evening speech by the president of the european central bank, dr w f duisenberg at the 11th frankfurt international banking evening in frankfurt on 20 may 1999. it is indeed an honour for me to have been invited to say a few words here this evening at the frankfurt international banking evening. at the same time, it is more than a challenge and a rather daunting task. speaking after hans tietmeyer is almost like preaching after the pope. moreover, i believe it is well known by now that the members of the governing council of the ecb speak with one voice. so, what does that leave me to say? some have taken this principle of β speaking with one voice β to mean that there would only be one spokesperson for the ecb. that is a misunderstanding. each of the members of the governing council of the ecb has a voice and makes use of it. it is essential for the decisions and views of the governing council to be explained comprehensively throughout the euro area as well as outside it and multiple expression is one way to do it. this is particularly so in these early years following the introduction of the euro. after i had given a speech in german, theo waigel once observed, β the euro speaks german. β he was right, of course, but the euro actually speaks the languages of all the other countries in the eurosystem. we speak with one voice but, if need be, in eleven languages. this evening we are speaking english, although hans quoted an advertisement in dutch in which i appear. i shall presently also speak two sentences in german. incidentally, hans could also have referred to another advertisement in which a puppet - according to some people, a president of the ecb look - alike - is doing some basic arithmetic. he calculates that if 1 euro is 2 guilders and 20 cents then 2 euro are 4 guilders and 40 cents. at the ecb our sums are rather more complicated than that, but hans rightly argued that central bankers cannot be replaced by computers. neither should the second advertisement be taken as an argument for replacing central bankers by puppets, especially not with their strings being pulled by ministers of finance. we, the members of the governing council of the ecb, speak with one voice, but not all voices are identical. how can they be, since they belong to different individuals? we are not in the business of producing clones. earlier this
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in human capital, within the year. until now, it has been difficult to link hr strategies to management strategies because there have been no benchmarks for comparison with other firms, and management has not been equipped to set key performance indicators ( kpis ). by making human capital investment more transparent, the new government measure is expected to make it easier for management to set concrete targets and formulate strategies to realize them. furthermore, the measure has the potential to accelerate corporate growth, as both investors and employees can use the information to evaluate firms in terms of growth potential, among other factors. c. toward a virtuous cycle of growth and distribution as such efforts gain momentum, i think that they will lead to sustainable economic growth and accelerate the shift to an era in which employees are better equipped to choose which firm they wish to work for. regarding distribution, average income per household decreased from 6. 17 million yen in 2000 to 5. 52 million yen in 2018, but this includes the effect of population aging ( chart 18 ). looking at households other than the elderly, while average income fell from 6. 78 million yen in 2000 to 6. 10 million yen in 2012, it subsequently rose to 6. 59 million yen in 2018, prior to the outbreak of covid - 19. to bring prosperity to japan's super - aging society as a whole, it will be crucial to further raise the income level of workers. one of the unintended consequences of structural labor shortages is that employees will have greater power to choose which firm they wish to work for. consequently, managers are expected to implement growth strategies that enhance the appeal and growth potential of their firms and adopt more dynamic hr policies, including greater investment in human capital to foster employee development, higher compensation levels, the use of stock options, and putting in place more robust pension plans. individuals, too, will be expected to enhance their skills to increase their added value. they will need to expand their sources of stable income and build a post - retirement nest egg by investing in financial assets focusing on the long term, on diversification, and on regular contributions. household financial assets in japan amounted to approximately 2, 000 trillion yen as of the end of september 2021. however, cash and deposits accounted for by far the highest proportion of the total, at 54 percent, with stocks and investment trusts representing a mere 15 percent. the situation in the united states is quite the opposite, with cash and deposits accounting for 13 percent and stocks and investment trusts
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percent for the services sector. this is considerably lower than the 18. 8 percent in manufacturing and 9. 0 percent in services in germany and the 12. 7 percent and 7. 6 percent in the united states. 6 japan has historically excelled at process innovation, but with advances in digitalization, the country now lags far behind in this area as well. among u. s. firms, digitization ( converting analog or paper - based data into digital format ) and digitalization ( digitalizing individual business operations and manufacturing processes ) have streamlined and made more efficient the workforces of existing businesses while creating new employment opportunities in growth businesses. it seems to have been difficult for these mechanisms to gain traction among japanese firms, and this has led to delays in digitalization. however, advanced economies are pursuing digital transformation ( dx ) not chiefly to reform the cost structure but rather to move toward a business model in which data creates value. meanwhile, the expansion of cloud - based services has lowered hurdles to digitalization, for instance, by enabling lower - cost and faster implementation. this, i believe, provides firms with the opportunity to step up the pace of transformation of their business models and make significant headway into new stages of growth. furthermore, for japan to take the lead in areas such as digitalization and climate change response, the growth of startups that can carry forward such initiatives will be critical. the number of japanese startups has been on the rise in recent years. however, japan's entry and exit rates remain low compared to other advanced economies ( chart 14 ). a survey of japanese oecd, oecd science, technology and industry scoreboard 2017, november 2017. entrepreneurs reported " fear of failure " as the biggest reason for the low number of business start - ups in japan. 7 it is important to foster an environment that is supportive of second chances, by for example expanding the safety net, and thereby promote a positive approach to taking on challenges. few startups experience significant growth in japan - - the country has only six unicorns, that is, unlisted startups valued at over 1 billion u. s. dollars. by comparison, there are 488 unicorns in the united states, 170 in china, 37 in the united kingdom, and 25 in germany. 8 in addition to talent and a customer base, funding is essential to promote the growth of startups. yet the volume of venture capital investment in startups in japan remains tiny compared to the
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. there may also be a state in which the economy is overheating but the inflation rate is low. the bubble period in the second half of the 1980s is a typical example. the rate of change in the cpi remained below 1 percent for three years starting from 1986, but nobody refers to that period as one in which japan was in a state of deflation ( chart 15 ). in short, what is necessary is to check economic activity, prices, and the financial environment in a balanced manner from the perspective of realizing sustainable growth. reality of inflation expectations the second issue regarding the overcoming of deflation concerns inflation expectations. counter to the view that economic growth is necessary to overcome deflation, we hear the argument that the priority should be to lift inflation expectations in order to improve the economy, and that this is exactly what a central bank should do. the mechanism underlying this argument is that lifting inflation expectations in the private sector will lead to a decline in the real interest rate, which is derived by subtracting the inflation expectation rate from the nominal rate, which will in turn stimulate the economy. nonetheless, in an environment where neither prices nor wages have risen for a number of years, it is not realistic to believe that the general public β s inflation expectations will go up all of a sudden, or that we can manage to lift these expectations somehow. we can think of a situation where inflation expectations alone go up β for example, when the economy is hit by oil shocks β but this is not exactly the same as the overcoming of deflation that we seek. according to the opinion survey that i have just mentioned, the fact that most of the respondents viewed the price rise as β rather unfavorable β suggests that there is a possibility of wide acceptance in the public realm that it is normal for prices not to rise, or that price rises cannot be tolerated. in fact, looking at detailed consumer price data for the last 15 years or so, in the united states, those items for which prices pick up at the rate of 2. 5 β 3. 0 percent have the largest weight, whereas in japan, those items for which prices pick up at the rate of 0 β 0. 5 percent have the largest weight ( chart 16 ). on the whole, the cpi is slightly less than 0 percent, but this is due in part to the fact that, compared to the united states, there are a few items β such as televisions and personal computers β for which, for bis central
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tarisa watanagase : what determines the future of the thai economy? speech by dr tarisa watanagase, governor of the bank of thailand, at the british chamber of commerce luncheon talk, bangkok, 17 september 2008. * * * chairman bain, ladies and gentlemen, i would like to thank chairman bain for inviting me once again to join this gathering of distinguished members and guests of the british chamber of commerce. i look forward to our annual get - together in this warm and friendly atmosphere and especially welcome the opportunity to update and exchange views on the thai economy and its outlook. my talk today will cover three parts. first, i would like to focus on recent developments and prospects of the thai economy in the near term. in the second part, i will share with you my perspectives on the important factors that i believe will determine the future of the thai economy. to close, i will touch on the preparations that we should be making for the future of the thai economy, focusing particularly on the central bank β s role in achieving price stability to support long - term growth. ladies and gentlemen, notwithstanding news headlines, most of us are aware that the overall economic atmosphere continues to be business - as - usual. nevertheless, the current tension and ongoing uncertainty on the thai political scene has posed worries for some investors on the prospects of the thai economy for the rest of 2008 and 2009. confidence has already weakened somewhat on both consumer and business ends. evidently, the business sentiment index or bsi, surveyed by the bank of thailand, which has lingered below the 50 benchmark, slid further in the past few months. in addition, tourism has been adversely impacted by travel warnings as the thai political developments made global news. this latest dent on confidence has added to the list of challenges facing the economy since the end of last year, including inflationary pressure from volatile oil and commodity prices, tightening domestic monetary policy, as well as potentially more downside risks to global economic growth in light of recent us economic developments. the headline and core inflation in july rose at decade - high rates of 9. 2 and 3. 7 percent from a year ago, respectively. the rising inflation largely stemmed from soaring oil prices. at their worst, oil prices set new records almost on a daily basis, led by a combination of growing demand for fuel of emerging markets, geopolitics of the oil - exporting countries, and the depreciation of the us dollars. even though, in august,
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of these questions are likely to be no. policy actions are needed as i have tried to illustrate so far, financial integration gives rise to several challenges related to the supervision of cross - border banks. most importantly, i have argued that the present supervisory arrangements are not designed to prevent the cross - border externalities that financial crises may result in. this, of course, is a growing problem in an integrated world. furthermore, i have argued that there are deficiencies in how the supervision of internationally active banks works in practice, which can partly be explained by limitations in legislation and partly by supervisors not being sufficiently coordinated. in my opinion all this gives us good reasons to reflect on how to take actions for revising the present regulatory frameworks. we need to find ways for countries to cooperate closely and establish mechanisms for coordination and conflict resolution. motives for a coordinated financial supervision most of what i have said so far is probably pretty uncontroversial both in terms of the analysis of the challenges of integration and of the need for action. however, it may be more difficult to reach agreement on how to move forward. a number of alternative solutions have been brought into the debate. for example, proposals such as prohibiting foreign branches from doing business domestically or extending home - country responsibility have been discussed. my take on this, as i said in the beginning, is instead to gradually move towards the creation of a common international body with a mandate to conduct supervision of banks with substantial cross - border activities. the simple rationale is that the creation of such a body is the only way to fully manage the conflicting national interests. also, such a body would have several other benefits. a single authority supervising cross - border banking groups instead of several would most certainly increase the comprehensiveness and the effectiveness of the supervision. for the firms subject to supervision, it could mean that the regulatory burden would eventually be reduced considerably. in a european context, the idea of a european organisation for financial supervision ( eofs ) may at a first glance seem overly idealistic, and to be honest, in some respects it is. one can argue that it would be virtually impossible to make countries give up parts of their sovereignty to a supranational authority. however, looking at this from a european perspective, there is hope. within the european union there is already a framework for supervisory and regulatory cooperation, based on the common legislative process in the form of eec - directives and regulations. moreover some institutional arrangements for supervisory cooperation are
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has strengthened the links between nordic, baltic and american exchanges. the driving force behind this merger is primarily economic in that it confers considerable economies of scale. clearing involves balancing mutual claims and liabilities. settlement involves the transfer of money and securities between transacting parties. the changes in securities markets are also connected with regulations. the eu directive mifid aims to strengthen competition, improve client protection and promote the integration of the european securities markets. the directive has paved the way for new types of trading facilities in europe. 2 a reasonable assumption against this background is that the map for share trading in europe will be re - drawn. share trading will be channelled to the market places that offer the best rates and the lowest tariffs, which signifies good liquidity. distinct tendencies are also present in the clearing and settlement of securities transactions β the processing that follows a trade as such. an example of far - reaching integration in this field is euroclear, which settles securities transactions in five markets in europe and recently acquired sweden β s central securities depository ( vpc ab ). euroclear β s new system will be able to settle cross - border securities transactions just as smoothly as national transactions are settled today. alongside market solutions, the european central bank is working on a completely new system for linking up the national systems for securities settlement. in recent years, moreover, clearing services provided by central counterparties are being used to a growing extent. the role of central counterparties is a topical issue in the united states as well as in europe, not least because the global financial crisis has highlighted the advantages. more about that later. a number of central counterparties are already operating in europe in clearing of derivatives as well as of shares and interest - bearing securities. in sweden there is a central counterparty β nasdaq omx derivatives markets β for derivative instruments that are traded on omx. there was until recently no central counterparty for spot transactions in swedish shares and interest - bearing securities. with the creation of new trading facilities in europe, however, clearance of swedish shares through a central counterparty is now possible. 3 in october it was announced that a central counterparty service will also be provided in future for spot share transactions on omx nordic exchange stockholm. the tendencies i have just mentioned indicate an explosive development. what will be its consequences for the swedish financial infrastructure? the swedish systems will indeed be wholly or partly replaced by or linked up with systems elsewhere. this means that to a growing extent,
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seppo honkapohja : 1st hundred years of the bank of finland speech by mr seppo honkapohja, member of the board of the bank of finland, at the finnish economic association xxxvii annual meeting, helsinki, 12 february 2015. * * * the bank of finland was established in 1811, by an imperial decree of emperor alexander i. we are the fourth oldest central bank operating today. only the swedish riksbank, the bank of england, and banque de france are older. the bank of finland is also more than 100 years older than finland β s political independence, which was achieved only in 1917. in this speech i will tell you about the first hundred years of the bank, including its old main building where we have this reception. the first task of the bank of finland was to separate the finnish financial system from sweden by issuing ( rouble - and kopeck β denominated ) notes, and by granting credits to finnish landowners and merchants. the bank of finland was originally established in the city of turku, in the south - west of finland, and moved to helsinki, the new capital of the country, in 1819. initially the bank operated out of a house owned by commercial counselor sederholm, and then moved to the senate house. a purpose - built building was completed on tallinmaki, nikolai street, in 1883. i will shortly tell you more about the main building. despite the efforts of the bank of finland, swedish money remained widely used in finland until 1840, when finland went on the silver standard ( following russia ), and the remaining swedish paper money was withdrawn from circulation. after this milestone, the notes issued by the bank of finland became the dominant means of payment in the country and the circulation was effectively controlled by the bank of finland. finland obtained its own currency unit, the markka in 1860 β i. e. well before the country became independent. this happened in the aftermath of the crimean war and the international financial crisis of 1857 β 58, when the rouble was seriously destabilized and went off the silver standard. in 1865, the head of the financial department of the finnish senate, j. v. snellman, obtained from tsar alexander ii the permission to link the markka to the silver standard independently of the rouble and finland β s monetary system was thus effectively separated from russia β s. most european countries moved to the gold standard in the 1870s
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anita angelovska bezoska : journalists are one of the main transmitters of monetary policy messages address by ms anita angelovska bezhoska, governor of the national bank of the republic of macedonia, at the journalist workshop - 2018, organized by the national bank of the republic of macedonia, skopje, 25 december 2018. * * * distinguished media representatives, welcome to the fourth journalist workshop hosted by the nbrm. i am glad to see you in greater numbers this year, which is confirmation of your interest in the topics that will be the focus of today β s event. allow me to take a brief look at several basic, yet important aspects of central bank communication : 1. why is central bank transparency and communication important and needed? 2. how has central bank communication evolved over the years? what were the challenges in the period after the outbreak of the global crisis and how were they addressed globally? 3. challenges in central bank communication in the republic of macedonia. a comparison between the current and the past transparency level and central bank communication shows an exceptional transformation in this segment. the need for strengthening central bank transparency was brought to the fore for the first time in the 1990s, implying enhanced communication with the public, including the media. this change is associated with the concept of central bank independence, or the independence of the monetary policy from fiscal policy. namely, high inflation in the 1970s, feed by the inflationary bias of the discretionary fiscal policy, drew a clear distinction between monetary and fiscal policy objectives and instruments by granting a high level of central bank independence, on the one hand, and setting fiscal rules, on the other. the aim was to eliminate any monetary financing of governments and their excessive borrowing, which, as witnessed in the past, could lead to high price volatility. alongside the concept of enhanced independence, greater central bank responsibility was required, which is also achieved with greater transparency. this required introduction of different communication and information on the policy conduct, and on central bank data and positions, assessments and expectations for the economic variables. at the end of the last century, the central bank community realized that besides performing its function effectively, it can also fully achieve its independence, only if it applies higher level of transparency and developed communication within its mandate. yet another factor that emphasizes the need for greater central bank transparency is the financial market liberalization in the 1990s. the perception and theory that the monetary policy is more effective if the central bank systematically surprises the markets has long been left
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sabine lautenschlager : the leverage ratio β a simple and comparable measure? speech by ms sabine lautenschlager deputy president of the deutsche bundesbank, at the evening reception of the deutsche bundesbank / safe conference β supervising banks in complex financial systems β, frankfurt am main, 21 october 2013. * 1. * * introduction ladies and gentlemen, i am very happy to welcome you to the guest house at the deutsche bundesbank β s central office. it β s a pleasure to have you here. although you will have noticed that our premises are located somewhat outside of the city centre, it β s only a ten - minute walk to the goethe university β s campus from here. this isn β t just convenient for those of you who decided to walk from the university to the headquarters of the deutsche bundesbank. having a walking distance between the bundesbank and the goethe university also facilitates exchange and cooperation between the two institutions, which both have a strong stake in financial market and regulation research. i value this exchange very highly and i am convinced that cooperation in this field is indeed a very good idea. i therefore also would like to thank the safe center at the goethe university, who has organised this conference together with the deutsche bundesbank. i would also like to extend a particularly warm welcome to all of the contributors to today β s conference sessions. the conference asks a very fundamental question : how can we, how should we supervise banks given that the financial system is inherently complex? many books were and still will be written to examine this question comprehensively, and they will offer different and sometimes contradictory answers ; at least, that is my prediction. i nevertheless want to share my fundamental view of this topic with you. so, how can or should supervisors deal with complexity? i am convinced that in a complex world β first β supervisors need a toolbox with different instruments to cope with this complexity, and β second β those tools will not generally be that simple. as i β m sure you are aware, i am not an academic but a practitioner. and as a practitioner i β ll give you a practical example to make my point. i β d like to talk about a measure you all know very well : the leverage ratio. it β s not really a new concept, but it β s certainly a fashionable one. it has been claimed to be a simple fallback measure for dealing with an increasingly complex banking system, a kind of panacea for complexity
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eurosystem 2. 2. 1 communication about monetary policy objectives the price stability focus and the quantification of price stability as year - on - year increase in the harmonised index of consumer prices ( hicp ) below but close to 2 % over the medium term is one defining element in the eurosystem β s strategy. empirical research shows that in countries where central banks have adopted an explicit inflation objective. inflation is lower, inflation persistence is reduced and long - term inflation expectations are not correlated with lagged inflation. 1, 2 interestingly, long - term inflation expectations are also less responsive to macroeconomic news and monetary policy announcements than in countries where no explicit inflation objective has been announced. 3 for the euro area, the short time span since the beginning of emu does not yet allow for an in - depth empirical analysis comparable with these studies. however, empirical work has found that inflation persistence has been lower in those euro area countries that had an independent central bank and a clear price stability objective already before monetary union. 4 survey results for the euro area furthermore indicate that our definition of price stability is well understood and perceived as being credible. however, there are some indications that the general understanding of the monetary policy strategy could be further improved. 2. 2. 2 communication about the monetary policy stance central banks devote significant resources not only to explaining their objective and the general strategic framework to the public, but also to communicating the current policy stance. a fatas, i mihov and a rose ( 2006 ), quantitative goals for monetary policy, forthcoming, journal of money, credit and banking ; a t levin, f m natalucci and j m piger ( 2004 ), explicit inflation objectives and macroeconomic outcomes, ecb working paper no 383. l benati ( 2006 ), investigating inflation persistence across monetary regimes, mimeo. r gurkaynak, a levin and e swanson ( 2006 ), does inflation targeting anchor long - run inflation expectations? evidence from long - term bond yields in the us, uk and sweden, federal reserve bank of san francisco working paper no 2006 - 09. g coenen and a levin ( 2004 ), identifying the influences of nominal and real rigidities in aggregate - price - setting behaviour, ecb working paper no 418. this is achieved through a wealth of different communication tools, but one important aspect is the communication on the days when decisions are taken. owing to the high degree of predictability in the case of both the
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the long shadow of high inflation 32nd frankfurt european banking congress 18. 11. 2022 | frankfurt am main | joachim nagel 1 introduction 2 inflation in the focus of public attention 3 scarring effects of personal experiences 4 monetary policy must act decisively to attain price stability 5 conclusion 1 introduction ladies and gentlemen first, i would like to thank you for the invitation. it is a pleasure and an honour for me to speak here to such a distinguished audience. β a situation where ordinary people in their ordinary course of business are not thinking and worrying about inflation. β [ 1 ] this is how alan blinder once defined price stability. unfortunately, we are far from that : almost everybody is thinking and worrying about inflation these days. the goal of price stability is currently being missed. that β s what the numbers tell us, and people are experiencing it first - hand. for many, soaring prices are the most pressing problem in their daily lives. accordingly, price developments have become the focus of public attention. the eurosystem is committed to price stability. we must ensure that high inflation rates do not become entrenched, and that they return to our target of 2 % in the medium term. we therefore have to act decisively. and that is exactly what we are doing in the governing council. i will go into more detail in the second part of my speech. but will high inflation also disappear from people β s minds once it has disappeared from the measurement of consumer prices? or could the present experience of unusually high inflation rates leave a lasting mark on people β s behaviour? what economic research has found on these questions and why it matters for monetary policy will be my first topic. 2 inflation in the focus of public attention to understand the impact of current price pressures, it is important to recall where we have come from. a long period of low inflation rates lies behind us. in low - inflation environments, households and firms tend to pay only little attention to inflation dynamics. [ 2 ] they have less incentive to track inflation closely as its relevance for economic decisions is relatively small. but the environment has changed fundamentally : inflation has returned with a force that hardly anyone thought possible. this year we are experiencing the highest inflation rates in decades. in germany, the annual inflation rate has reached double digits. the last time this happened was in 1951, more than 70 years ago. in this new environment, households and firms can no longer afford to ignore inflation. everyone is worried about their next gas and electricity bills and
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. translating this vision into reality then requires our collective efforts, steered by strong and capable leadership. on that note, i wish you a productive forum ahead. 4 / 4 bis central bankers'speeches
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financial markets and the rapid pace of financial convergence, the investment management function within insurers needs to be flexible, risk - focused, and equipped with professionals who are able to respond to the exigencies of the marketplace. an important component of the new risk - based capital and supervisory framework is the notion of supervisory target capital levels which insurers will be required to maintain under the risk - based framework. this is new to our environment, and has been a matter of some concern to insurers which may view it as an additional capital burden. although the risk - based capital regime will more closely align economic capital with regulatory capital, it is important to recognize that it necessarily derives its application from industry - wide tests which cannot fully address risks that are specific to an individual institution. the supervisory capital target therefore serves to provide an early signal of emerging difficulties so that appropriate intervention measures can be taken to prevent a further deterioration of conditions which would warrant more drastic and costly actions. for insurers that already adopt robust internal approaches to capital management, the introduction of the supervisory target level in itself should not significantly alter existing capital management strategies. insurers that do not yet have such systems in place, will be encouraged to develop them, and thereby enhance their own resilience to adverse changes in business conditions. the bank is mindful that developments internationally on this front remain extremely fluid. work is still in progress on the international financial reporting standard for insurance contracts, the solvency ii initiative in the european union, and the development of cornerstones for solvency assessments by the international association of insurance supervisors. the bank will therefore continue to maintain an open consultative approach in proceeding with this initiative to preserve our ability to respond appropriately and to ensure its smooth implementation. going forward, greater attention will be given to market conduct issues, which recent experience in other markets has shown to be an increasingly important factor in promoting confidence in the insurance and takaful industries. financial markets cannot operate efficiently and effectively unless market participants act with integrity. this needs to be reinforced with adequate information to consumers and investors to make informed decisions. in today's information era, the business environment has changed dramatically, and with it, the expectations of consumers and investors have also increased. the industry needs to adapt accordingly. policy initiatives by bank negara malaysia in the area of market conduct will continue to focus on achieving complete, true and plain disclosures to consumers, thereby equipping consumers to make informed decisions essentially through consumer education initiatives, and
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upper end of the inflation target range. yet at the same time, a slowdown in economic growth β at least in the event that it is demand - driven and results in a negative output gap β means that the central bank has to be mindful not to exacerbate the cyclical moderation by unduly tightening monetary policy. procyclical monetary tightening can negatively impact on economic growth and employment, and over time could contribute to financial instability. it is worth noting that the nature of the inflation pressures faced by african central banks may itself be changing. a recent imf study showed that while, in the past, inflation cycles tended to be heavily influenced by domestic supply shocks, the role of foreign exchange, money supply and domestic demand shifts has gradually increased over time. 4 it is therefore likely that demand shocks ( global, regional and local ) matter increasingly more for inflation rather than supply - related ones. ever - increasing trade and financial integration has been beneficial to growth and development in sub - saharan africa over the past decade or two ; it has also brought greater dependency on and responsiveness to international economic and financial see β on the drivers of inflation in sub - saharan africa β by anh d. m. nguyen, jemma dridi, filiz d. unsal and oral h. williams, monetary fund working paper series wp / 15 / 189, august 2015. bis central bankers β speeches trends, and with it also the need for greater cooperation and exchange of information among african countries, including their central banks. so how should central banks in africa respond to these new challenges? first of all, there is no β one size fits all β policy response. because of the structural differences between african countries β such as their oil exporter / importer status, the diversification of their production, the degree of development of their respective financial sectors, and the health of their public finances β they are not equally vulnerable to the current global challenges. as mentioned earlier, the outlook for both growth and inflation in the region β s member states shows significant divergences. the imf, for example, forecasts that inflation in several countries β mostly members of the cfa zones but also some oil importers, like kenya β is expected to remain muted, or even to decline, in 2016. several other countries, however, including many of the largest economies of the continent, are likely to see inflation drifting higher or remaining around uncomfortably elevated levels. nonetheless, common themes may be emerging
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. accessing data is perhaps the easy part. the first hurdle is deciding how the outlook for domestic and global economy impacts on future inflation. to clear this hurdle requires the team to interpret current economic conditions and events, and to apply judgement about the likely future path of the economy. there are many factors that the team must consider, and they are often moving in different directions, making judgment on how they will affect future inflation that much more difficult. at the end of it all, committees rely on judgement in making the call whether to cut, increase, or keep interest rates unchanged. monetary policy decisions in the sarb are made by the monetary policy committee ( mpc ). the mpc currently comprises six members, being the governor, the three deputy governors, and two other senior officials of the sarb. every decision of the mpc is an outcome of in - depth discussion and debate. even a'no change'decision is a policy decision. i should also note that the monetary policy decision is not a one - off event ; it is a continuous process which culminates in the mpc meeting where decisions are finally taken. we are constantly talking to each other, discussing what we see and how we interpret what we see. there is a sizeable literature on the relative efficiency of committee - based decision making. a committee tends to pool information and ideas from a group comprising different skills and views, and it also provides insurance against extreme preferences and outcomes. so, there is an additional benefit that participation in the mpc schools challenge potentially offers learners. and that is that those learners get an opportunity to develop or put their social skills into practice. by social skills i mean the ability to interact with fellow human beings. literature shows that the ability to interact with fellow workers, successfully working as a team remains among the most important skills in the modern economy. this is because technology has yet to successfully simulate human interaction. the ability to listen to the views of your colleagues, question or debate the issues they raise and attempt to persuade them otherwise has a broad societal benefit, way beyond application in policymaking. in that sense, the ability to engage with the ideas of fellow workers and collaborate with them will, for a long time to come, remain one of the prized skills by employers. the mpc schools challenge is therefore a contribution by the sa reserve bank towards improving the understanding by young south africans of how the economy works, why high inflation is bad for an economy and how the monetary policy committee makes
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policies instruments. the society needs to be aware of these instruments, understand them, evaluate stimuli and incentives, and properly respond to them. the important role of consumer behaviour for the policies success is clearly evidenced in the β rational expectations β theory. a simple intuition behind this theory is that rational individuals shape their expectations using the available information optimally. they respond to new information by adopting their behaviour to maximise welfare. in this case, individuals β equipped β with financial literacy read and understand developments in economic policies and respond to them rationally. this mutual understanding would drive the economy towards the desired direction. the central bank adjusts its policies in response to the actual behaviour of agents, who would adjust their behaviour in line with the central banks policy. for this interaction to happen, both the public and the central bank need to speak the same language and understand each other unequivocally. money management needs this two - way understanding and the active role of individuals. consequently, the trust and confidence of the public is earned, monetary policy objectives are achieved and its reliability is enhanced. thirdly, i would like to underline that financial education of individuals establishes a more stable society on one hand and a stronger and secure banking system on the other. efficient and ongoing financial education is a path trotted by millions of individuals and families in their endeavour to achieve financial goals and accumulate wealth. the positive effect of this process is reflected in a stronger economic and financial stability for the entire society. the banking system has its role to play in this process, mainly through lending to businesses and households. as a regulator, the bank of albania gives its share of contribution ensuring that banks strictly abide by legal and regulatory obligations in relations with their customers. on the other hand, financially literate customers, contribute to the bis central bankers β speeches development of the banking system with their increasing demand for financial products and services. therefore, the result is clear : higher efficiency, lower charges, better services and healthier and safer banking system. fourthly, i would like to highlight that financial education, over time, improves the living standard in the long run, including retirement age. in a recent analysis, the essential reason why an individual needs to amplify his financial literacy is that this investment will help him to reach his money management objectives. although personal objectives may vary from an individual to another, on financial education point of view, improvement of society β s living standard is guaranteed and confidence for the future is boosted. financially literate
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that causes eventual massive bank runs. this channel is particularly pronounced for developing economies, where contagion is faster due to their weak financial literacy, the historical lack of bank failures, and the presence of weaker institutions. in this context, the resolution regime serves as a tool for restoring market discipline and avoiding the risk of contagion. in essence, resolution is an integral part of banking supervision applied to the final stage of a bank β s life, should measures taken during the standard or intensive supervision stages fail to improve the situation of a distressed bank. the drafting of the resolution regime was accompanied by the strengthening of the supervision regulatory requirements, which aim to increase the resilience of the bank and strengthen the financial market structure to avoid the moral hazard. in the wake of the crisis, experts have reached the conclusion that there is no bank model that would perform well or poorly in times of crisis. different models of failing banks showed that the issue stemmed from undertaking high risk, financing with short - term instruments and insufficient protection offered by capital, even where minimum requirements were met. this conclusion has been reflected in higher supervisory requirements for quantity and quality of capital and liquidity, limits on the leverage ratio and maturity mismatch between assets and liabilities. the banking sector needs to comply with these requirements within a defined medium - term framework. regulatory measures are also accompanied by the consensus on the need for structural reforms in the financial system, namely, separation of risk - bearing financial speculation activities from deposit collection activities, and issues related with too big to fail banks, by discouraging their excessive growth. the biggest lesson of the financial crisis was that micro - prudential supervision of banks was not sufficient to safeguard financial stability because the system as a whole behaves differently from individual parts. in an effort to make themselves safer, financial institutions may undertake such behaviours that collectively damage financial stability. the banking activity takes place through its own cycles, known as financial cycles, which may deteriorate the business cycle of the real economy. banks are exposed to collective macroeconomic shocks, which weaken them, at the same time, thus affecting financial stability. the understanding of this lesson dictated the need for macro - prudential supervision in addition to the micro - prudential one. among the most effective instruments of macro - prudential supervision are the requirements for capital buffers to counter the creation of systemic imbalances, as well as capital buffers for systemic banks, which being large enough, may cause social
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reached its highest levels since the interwar years and the banking industry was mired in problems. the challenges of operating a fixed exchange rate regime in an oil economy became increasingly evident. in 1992, the policy of setting a specific target for the krone exchange rate was abandoned. monetary policy would still aim to maintain exchange rate stability, but the absence of a clear and verifiable objective was a weakness. internationally, a new approach to monetary policy was gaining ground. through the 1990s, a growing number of central banks were tasked with pursuing the goal of low and stable inflation. the introduction of the inflation target in 2001 was an important milestone for norges bank. the inflation target gave monetary policy an effective nominal anchor in a world of free capital movements. inflation had been under control since the early 1990s and confidence in the value of money strengthened further in the years thereafter. economic restructuring in norway during the first 15 years of inflation targeting, the norwegian economy was in a unique position. but the upswing could not last forever. the sharp fall in oil prices since summer 2014 will put the economy to the test in the period ahead. the norwegian economy has enjoyed an exceptionally long summer. winter is coming. norges bank : historical monetary statistics for norway. bis central bankers β speeches the norwegian economy is well equipped to tackle the challenges. the defence mechanisms of economic policy are better suited today than when oil prices fell in the mid - 1980s. at that time, current oil revenues were largely spent over the government budget. when oil prices plummeted, the budget was severely tightened. today we have accumulated savings of more than five times the government budget. in the 1980s, the banks had little equity capital. many of them failed when faced with loan losses, which in turn amplified the economic downturn. in recent years, banking regulation has been enhanced. banks have built up their capital levels, which puts them in a better position to fulfil their role as providers of credit during a downturn. bis central bankers β speeches towards the end of the 1980s, both interest rates and unemployment reached a high level at the same time. there is little likelihood that this will happen again. since the inflation target was introduced, it has been easier for monetary policy to have a countercyclical effect. when inflation expectations are firmly anchored, monetary policy should also be geared towards stabilising output and employment. inflation has been low and stable for a quarter century. this is now of benefit to us all. the
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may have been somewhat higher earlier this year than we had assumed. when demand for goods and services is high, as it is now, firms can in turn pass on higher costs for labour, energy and intermediate goods to domestic consumer prices. some firms may take advantage of the good times by raising prices a little more than necessary in order to increase margins. chart : low and stable inflation is a public good the political authorities have mandated norges bank to keep inflation low and stable. we are also mandated to help keep employment as high as possible and to promote economic stability over time. low and stable inflation is important for the economy to function well and is a prerequisite for predictability. i don β t think any of us want to return to the great inflation of the 1970s. inflation also tends to become more variable at high levels, making it more difficult for both businesses and households to plan ahead and make financial decisions. by keeping inflation low and stable, we contribute to maintaining economic activity and employment at a high level. 2 / 3 bis central bankers'speeches high and variable inflation rates also have distributional implications. as an unexpected rise in prices will not automatically be followed by an increase in wages and benefits, the result will be a reduction in purchasing power, particularly for those with low incomes and small margins. norges bank cannot influence international commodity prices or water reservoir levels. inflation caused by these factors is beyond our control. but we can take steps to prevent inflation from becoming entrenched. higher interest rates have the effect of reducing demand for both labour and goods and services, thereby pushing down wage and price inflation. in addition, higher interest rates can contribute to strengthening the krone, which can in turn curb the rise in prices for imported goods. chart : household debt has increased as the policy rate is raised, residential mortgage rates will rise. norwegian households are highly leveraged. over the past 30 years, household debt as a percentage of disposable income has doubled. with higher debt, increased interest rates will have a stronger impact on household budgets and, combined with the high level of inflation, will curb growth in household consumption ahead. in just under a year, we have raised the policy rate five times. this means higher interest expenses for two out of three households. both in terms of hard cash and as a percentage of disposable income, interest expenses will increase most for households with the highest incomes, which is also the group with the highest debt to income ratios. as
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has made possible large savings in resources and improvements in services in the payment sector. we have reduced internal administration and reinforced banking and financial supervision. the governing board and bis central bankers β speeches the board of directors agree on the objective of eliminating most of the bank β s network at the provincial level. we have not ceased to recruit staff, using transparent and merit - based procedures, including innovative methods, to select highly qualified young people. women account for 35 per cent of all personnel and 23 per cent of employees with managerial responsibilities ; both percentages are rising. we promote gender equality in recruitment, in the assignment of positions and in career progression. we will continue to do so in the interest of good administration. i wish to convey my personal thanks and those of the governing board to the managers, directors and all the staff who work for the bank of italy, proudly performing their public duties with discipline and honour, as the constitution requires ; capable, when times are hard, of an outstanding, self - sacrificing commitment of effort, skill, passion, dedication and openness to change. the bank and the country know they can count on them. monetary policy in the euro area conditions on the global financial markets have improved, but the world economy has yet to return to a steady growth path. the economic situation differs markedly in the main regions. the major emerging countries are still growing at rapid rates. among the advanced countries, the united states appears to be gradually returning to the rates of growth that characterized the most recent expansions. in japan, aggressively expansive policies, not devoid of risk, are seeking to stimulate economic activity. the euro area is struggling to pull out of recession : demand is dampened by the immediate effects of public and private deleveraging in many countries ; cyclical weakness is spreading to the economies not directly exposed to the sovereign debt crisis. recovery in the euro area requires help from every sphere of economic policy. including by recourse to β unconventional β instruments, monetary policy has made an essential contribution to averting serious consequences for financial stability ; it has safeguarded price stability. the tools of intervention have been chosen based on the characteristics of the financial system, the origin of the tensions and the institutional structure : we have aimed first and foremost to support the liquidity of the banks, which in the euro area, more than elsewhere, play a pre - eminent role in financing the economy, and to prevent sovereign debt market distortions from impeding the proper transmission of monetary policy.
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supervisory point of view. another significant challenge is that non - bank financial intermediation, in particular the most innovative ones, often fall outside the traditional regulatory perimeter. this regulatory gap can create a blind spot for supervisors, as non - bank financial entities may engage in activities that could pose systemic risks without adequate oversight. it is vital that we strike a balance between regulating non - bank entities to mitigate risks and allowing them to innovate and provide essential financial services. in this regard, the rise of fintech companies adds another layer of complexity to this interconnected landscape. fintech firms often collaborate with banks to offer innovative financial services. their rapid growth and evolution present regulatory challenges, as 2 / 4 bis - central bankers'speeches they can bridge the gap between traditional banking and non - bank financial intermediation, transforming traditional risks into new or different ones, that are harder to grasp. therefore, recognizing and addressing these interconnections and the related risks is crucial. however, we cannot wait for the regulatory framework to address this issue. while we recognize the importance of a thorough legislative process in crafting robust and lasting rules, banking supervision often requires proactive measures to stay ahead of evolving market dynamics, as we are presently witnessing. thus, as we await the establishment of a clearly defined regulatory framework, as supervisors, we are compelled to address the challenge of ensuring thorough and efficient supervision across these interrelated sectors. this responsibility becomes even more critical as we gear up for the implementation of the micar and dora regulations, which will introduce new dynamics in the financial landscape. the ssm is then tasked with fostering collaboration and information - sharing with other relevant authorities, to ensure a coordinated response and consistent oversight across the financial spectrum. this process will entail adaptability, proactive issue identification and resource allocation to address priorities. it will be crucial to follow the risks wherever they may arise. this will indeed pose a significant challenge for the ssm and the supervisory board. in this context, continuing the dialogue with the market will be crucial. the bank of italy initiated this process some years ago, developing three integrated channels of dialogue with the market : milano hub, the regulatory sandbox and the fintech channel. it is clear that as we celebrate the first ten years of the ssm regulation, we stand at a crossroads. in a continuous learning - by - doing process, we are still open to discussing further improvements in our supervisory review and evaluation process, as the last strategic retreat meeting
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. in other words, a financial system that would be a source of strength during stressful periods. a key pillar was building resilience in the banking system. this effort was remarkably successful. over the course of the decade, capital and liquidity at the largest u. s. banks more than doubled. we began a program of rigorous annual stress tests to ensure the banking system was capitalized against severe recessions and financial market turmoil. the great recession also underscored the critical importance of the nonbank sector. here, too, the authorities have undertaken a number of steps to build resilience, although much remains to be done. in 2020 the financial system was again tested, facing a truly unprecedented shock as the pandemic brought the global economy to a standstill. investors scrambled for safety and liquidity during the " dash for cash. " financial markets came under extreme pressure. ultimately, the authorities had to support financial markets again as part of the extremely forceful monetary and fiscal response to the public health emergency. the banking system, however, was now far more resilient than it had been before the reforms and thus well positioned to absorb the shock. 2 / 4 bis - central bankers'speeches we cannot take the resilience of the financial system for granted, however. the multiple shocks we have seen over the past year or so - including the extreme volatility in commodity markets following russia's invasion of ukraine and, of course, surprisingly high and persistent inflation as well as the associated increase in interest rates - stressed a range of bank and nonbank financial institutions. three general observations stemming from the recent banking turmoil given the efforts to build resilience in the banking system over the past decade and a half, two natural questions are, why did silicon valley bank ( svb ) and two other sizable u. s. banks fail this spring, and why did credit suisse - a global systemically important bank ( g - sib ) - require a government - supported rescue acquisition? we are committed to learning the lessons from the u. s. bank failures for our program of supervision and regulation. i will offer three observations about the events. the first observation is that it is very difficult to resist the natural human tendency to fight the last war. in 2008 we saw banks come under stress from outsized credit losses and insufficient liquidity. such losses appeared possible in the early days of the 2020 crisis, although they ultimately did not materialize. in our stress tests,
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jerome h powell : financial stability and economic developments speech by mr jerome h powell, chair of the board of governors of the federal reserve system, at the bank of spain fourth conference on financial stability, madrid, spain, 29 june 2023. * * * today i will briefly discuss the current economic situation and the stresses that emerged in the u. s. banking system earlier this year. i will then turn to the evolution of the financial system since the great recession and conclude with a few general observations. i will highlight how global efforts to boost resilience in the financial sector over the past decade have been an important success. i will also discuss how recent developments have revealed residual vulnerabilities that we are going to address, and the need to be vigilant for emerging risks. u. s. economic growth slowed significantly last year, and recent indicators suggest that economic activity has continued to expand at a modest pace. growth in consumer spending has picked up this year, and some indicators in the housing market have turned up recently. at the same time, activity in the housing sector remains far below its peak in early 2022, reflecting the effects of higher mortgage rates. higher interest rates and slower output growth also appear to be weighing on business fixed investment. the labor market remains very tight. over the past three months, payroll job gains have been robust. the unemployment rate has moved up but remains low. there are some signs that supply and demand in the labor market are coming into better balance, including higher labor force participation, some easing in nominal wage growth, and declining vacancies. while the jobs - to - workers gap has declined, labor demand still substantially exceeds the supply of available workers. inflation, however, remains well above our longer - run goal of 2 percent. over the 12 months ending in may, total personal consumption expenditures ( pce ) prices are estimated to have risen 3. 9 percent ; excluding the volatile food and energy categories, core pce prices likely rose 4. 7 percent. inflation has moderated somewhat since the middle of last year. nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go. since early last year, we have raised our policy rate by 5 percentage points. we see the effects of our policy tightening on demand in the most interest rateaβ¬ β sensitive sectors of the economy, particularly housing and investment. it will take time, however, for the full effects of monetary
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the important policy variables : the probability of experiencing a crisis, the expected loss in output given a crisis occurs, the likely effectiveness of whatever policy tool is being considered in reducing both the probability of the crisis and the associated output loss, and the cost of the policy itself. analytical tools must also be capable of assessing policy leakages. the imf is doing good work in this field ( imf, 2013b ) and contributions from academia are increasing in number and comprehensiveness ( angelini et al., 2012 ; bianchi and mendoza, 2011 ; jeanne et al., 2013 ; munakata et al., 2013 ) but more needs to be done to construct the apparatus necessary for calculating, reliably, the full welfare implications of macroprudential policy. 7. could macroprudential policy have helped mitigate ireland β s financial crisis? the story of the irish crisis is, at this stage, well - known to most. let me simply point to three figures, to which policymakers, the public and banks themselves had access prior to the crisis : i. overall bank lending increased 178 per cent between 2002 and 2007 ii. at the same time, house prices increased 85 per cent and iii. commercial property prices increased 66 per cent based on these figures, it seems clear that alarm bells should have been ringing. what could macroprudential policy have done? allow me to focus on one, admittedly timevarying, measure. as of 1 january 2014 new european union legislation gives national authorities the right to demand that banks hold, in addition to all other capital, an additional counter - cyclical buffer up to 2. 5 per cent of risk - weighted assets. the primary aim of a counter - cyclical capital buffer is to ensure the banking system has enough capital to protect the financial system from periods of excess aggregate credit growth that are associated with the build - up of systemic risk. activation of the counter - cyclical capital buffer is typically guided by deviations of aggregate credit as a share of gdp from its long - term trend. this is often called the credit gap. threshold values of the credit gap are used to define the range of the gap at which the buffer should be deployed. if the gap is below the lower threshold, the counter - cyclical capital buffer is zero. if the gap is above the upper threshold the counter - cyclical capital buffer should be set at its maximum of 2. 5 per cent of risk - weighted assets. between the
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the low nominal interest rate environment, debt servicing cost as a percentage of disposable income remained unchanged at a relatively low level of 6Β½ per cent. the monetary and credit aggregates have also been increasing at rates consistent with strong domestic demand. year - on - year growth in m3 picked up from 17, 1 per cent in june 2005 to 19, 9 per cent in july and 19, 0 per cent in august. total domestic credit extension grew by 18, 0 per cent in july and 18, 3 per cent in august. twelve - month growth in bank loans and advances to the private sector remained above 20 per cent, with increases in mortgage advances reaching 26 per cent in august. the latter reflects continued buoyancy in the housing market, although the rate of increase in house prices has fallen steadily since september 2004. strong domestic demand and high international crude oil prices have impacted on the current account of the balance of payments. although the deficit on the current account of the balance of payments as a percentage of gdp contracted to 3, 4 per cent in the second quarter of 2005, data for july and august indicate a possible widening of the trade deficit in the third quarter. the current account however remains financed by capital inflows, and the international liquidity position of the bank increased to a level of us $ 16, 1 billion at the end of september. world inflation is expected to be negatively affected by higher oil prices. the imf now predicts that world inflation in 2006 will average 3, 7 per cent, compared to the april forecast of 3, 1 per cent for the same period. nevertheless this is lower than the revised 3, 9 per cent average expected for 2005 and 2 / 3 indicates that world inflation appears to be well contained. world growth is expected to be sustained at a robust rate of 4, 3 per cent in 2006 although it has moderated somewhat since last year. not all developments have been negative from an inflation perspective. although inflation expectations have deteriorated moderately, there is no evidence that this has impacted on wage settlements. unit labour costs in the first half of this year increased at rates within the inflation target range, measuring 4, 6 per cent and 5, 3 per cent in the first two quarters of this year. the nominal effective exchange rate of the rand depreciated by 0, 3 per cent since the last meeting of the mpc, but it has been relatively stable over the period. the volatility that did occur was to a large extent
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' speeches range of entities, including service users, to carry out the programming of such functions other than core payment functions themselves. this point warrants attention. simplification of payment arrangements through creation and discharge of financial liabilities the second area of focus is efforts to proceed with the simplification of payment arrangements, which have involved the creation and discharge of financial liabilities. for example, many of the fast payment systems introduced overseas in recent years feature real - time gross settlement between banks. this is a byproduct of technological advancement allowing for the elimination of the process involving the calculation of net positions, and further, the replacement of obligations between banks, resulting in the simplification of arrangements for the creation and discharge of liabilities. if we take a step back and think, we realize that quite a few of the existing arrangements have been shaped amid technical constraints in the past. one such case involves correspondent banking arrangements for cross - border payments, in which funds were transferred from the payer to the payee through multiple entities, creating and discharging liabilities in the process. attempts to utilize stablecoins issued by the private sector and wholesale central bank digital currency ( cbdc ) for interbank settlement in cross - border payments can be considered to have stemmed from the idea that simplifying the existing banking arrangements would significantly enhance efficiency. emergence of novel domains of economic activities the third area warranting attention is the emergence of novel domains of economic activities. given that payments discharge any financial obligations resulting from economic activities, it goes without saying that economic activity and payments are closely related to each other. with various economic activities taking place online, online payments will become even more prevalent. recently, the terms web3 and web 3. 0 have become familiar to the ear. while the implications of these notions may differ from person to person, the web3 foundation founded by gavin wood, who coined the term web 3. 0 - defines it as " a decentralized and fair internet where users control their own data, identity and destiny. " how such ideas will evolve in reality and how economic activity will be shaped under those circumstances have yet to be seen. in considering the evolution of payments, it is necessary to also bear in mind how novel domains of economic activities will emerge alongside this evolution. the roles of central bank money the evolution of payments that i have just mentioned carries the potential to bring about enhanced user convenience, new business opportunities, and ultimately, economic growth. even amid such notable evolution
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haruhiko kuroda : evolution of payments - payment systems for " neoteric individuals " remarks by mr haruhiko kuroda, governor of the bank of japan, at the fintech summit fin / sum 2023, tokyo, 28 march 2023. * * * introduction i am delighted to be given this opportunity to speak to you at the fin / sum 2023. the main theme of this year's fin / sum is " fintech, the era of'neoteric individual. " while the term " neoteric " is open to interpretation, i will be speaking today within the context of " moving forward " or " evolution. " in a world where information proliferates owing to widespread access to the internet and smartphones, the diverse decisions and actions of consumers - neoteric individuals - are based on the vast array of readily available information. consequently, diversification of user needs related to financial services has increased rapidly ; continuing to merely provide uniform services is no longer sufficient for meeting the various user needs. under these circumstances, financial services are undergoing continuous progress and innovation as they capture cutting - edge technologies and business ideas. the field of payments, an example of financial services, is no exception. my first opportunity to speak at the fin / sum was in september 2019. even if we focused exclusively on the period since, efforts by the private sector toward realizing novel payment services have proven to be remarkable. unbundling of services and functions of the notable developments in payment services, some have drawn my attention in particular, the first of which is progress being made in the unbundling of services that have been provided as tightly coupled thus far. to give an example, with fintech businesses utilizing payment functions provided by banks through an open application programming interface ( open api ), moves to innovate customer services as well as develop a convenient and comfortable user experience are growing increasingly common. shifting our focus to overseas, various stablecoins circulated on permissionless blockchains are emerging. this can be considered an unbundling of two payment functions : one for issuing liabilities, or put differently, settlement assets, and the other for recording interest in settlement assets. this unbundling also applies to " programmability, " a popular term these days. while additional functions such as conditional payments have thus far been provided by the entity in charge of the payment functions, the unbundling of functions allows for a wide 1 / 3 bis - central bankers
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include : the nz dollar, bank bills, nz government securities, and local authority / soe stock. in addition, access to the bank β s overnight facility will be extended to major nz dollar settlement systems. prudential policy : banks turning to prudential policy, the global financial crisis has prompted a major review of policy internationally. in new zealand, the financial crisis highlighted shortcomings in the banks β management of funding and liquidity rather than credit losses of the sort seen in the major economies. a heavy reliance on short - term foreign borrowing by the nz banks meant they were vulnerable to the sort of liquidity shock experienced in late 2008 β early 09. while the banks β funding shortfall was met through parent funding and the reserve bank β s expanded liquidity facilities, the experience underlined the need for banks to lengthen the maturity of their liabilities relative to assets, in order to reduce their vulnerability to such shocks. to address these issues, the reserve bank introduced a new prudential liquidity policy for banks in april 2010. this policy requires that the banks hold sufficient eligible liquid assets to meet one - week and one - month liquidity mismatch ratio requirements. in addition, the banks must meet a core funding ratio requirement of at least 65 percent. core funding consists of customer deposits ( weighted by size ) and market funding of one year or greater to maturity. the core funding ratio requirement will rise to 75 percent by mid 2012. the banks have already made good progress in lifting their core funding ratios to be well in excess of the 65 percent minimum requirement. internationally, the moves to strengthen banking regulation are being led by the basel committee on banking supervision ( bcbs ), made up of banking supervisors from the major economies and convened by the bank for international settlements ( bis ). the bcbs has developed a number of proposals under the broad β basel 3 β label which are expected to be agreed at the upcoming g - 20 meeting in november. the proposals are focussed on strengthening banks β minimum capital and liquidity requirements. these include higher tier 1 capital requirements, a greater emphasis on common equity in tier 1 capital, and a leverage ratio to act as a backstop to the risk weighted capital regime. other proposals include more explicit liquidity requirements ( similar to those described above for new zealand ), arrangements for greater international coordination of supervision and revisions to international financial accounting standards. the crisis has shown that existing accounting standards are problematic for financial institutions in a number of areas such
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second, the evidence to date suggests that, following the global crisis, households and businesses are considerably less willing to take on new debt. credit growth remains very subdued. we believe that this diminished appetite for debt will remain for some time as people and companies work to gradually strengthen their financial positions. third, unlike the situation over much of the past twenty years, new zealand is now facing an upward sloping yield curve β longer term interest rates are higher than short - term rates. this means that fixed rate mortgages are now more expensive than floating or very short - term fixed rate mortgages. this has seen many borrowers shift back to floating rates over the past two years. as a result, as we move the ocr higher it is likely to have more β bite β than it did previously. liquidity management as the global financial crisis broke, a key policy response from the reserve bank was the expansion of liquidity facilities that we provide to banks and other financial institutions, including a broadening of acceptable collateral instruments. this expansion of facilities was needed to ensure that the financial system remained liquid and that institutions could continue to make payments as required without creating undue stress in the interbank market. in particular, as the banks β access to global markets became very restricted in late 2008 β early 2009, the reserve bank provided access to term funding secured over mortgage backed securities. the banks also increased their use of parent funding during this period. with the crisis behind us, we have been reconsidering the appropriate role and scope of the reserve bank β s liquidity facilities. the crisis has demonstrated the value of liquidity support for fundamentally sound institutions in the face of systemic market disruptions. while it is important that institutions provide for their own liquidity in the first instance, it is clear that central bank liquidity facilities are an essential backstop at times when shocks to confidence cause market liquidity to dry up. key requirements for central bank facilities are that : their pricing encourages a return to normal market trading ; they are targeted at system liquidity, not individual institutions ; and they are fully collateralised. in light of the gfc experience and the bank β s broader mandate to promote the efficiency of the financial system, we intend in the future to adopt a somewhat broader approach to liquidity management than was the case prior to the crisis. the range of securities that we accept as collateral will be wider than in the past in order to help support liquidity in a number of key financial markets. such markets
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ernst welteke : cross effects between monetary policy and financial markets lecture by mr ernst welteke, president of the deutsche bundesbank, held at the belgian financial forum in brussels, 14 june 2001. * * * ladies and gentleman, it is a pleasure for me to speak today on β cross effects between monetary policy and financial markets β to such a distinguished audience here at the belgian financial forum in brussels. the heading looks like an obvious choice for a central banker. the issue of cross effects is of ongoing interest for policymakers and market participants alike. the introduction of the single currency and concomitant changes in integrating european financial markets have brought these cross effects even more into the spotlight. not least, the bis has β in its latest annual report β devoted considerable space to these issues. furthermore, β i trust you will grant me the quote β β irrational exuberance β in major stock markets has reinvigorated the debate about financial market prices and their appropriate role in monetary policy. i the european central bank ( ecb ) has been given a clear mandate to keep inflation in check. in choosing the monetary policy framework for the euro area, the governing council has kept this concept to the fore. open market operations and the standing facilities play a prominent role. thus, in terms of monetary policy in the euro area, the european central bank makes ready use of financial markets to get its policy across into the real economy β just as any other modern central bank does. monetary transmission is a complicated and permanently changing process. it is not yet fully understood and is therefore always a field of fruitful research. conceptually, the transmission process can be broken down into two stages. changes in official interest rates first affect financial markets. those markets react fast. in the next stage, a policy move makes itself felt in the broader economy, thereby exerting the desired influence on consumer prices. that is by no means a straightforward process. and it takes time. these time lags explain why the eurosystem adopts a medium - term perspective when shaping monetary policy. those parts of the european financial markets that are crucial for the transmission of the eurosystem β s monetary policy are already integrated to our satisfaction. the wholesale market for interbank liquidity in the euro area is now a single european money market. any change in official interest rates first affects the money market. then rates along the entire yield curve adapt. in addition, equities are repriced after a policy move
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jurgen stark : reflections on the maastricht process from one of the architects dinner - debate by dr jurgen stark, vice president of the deutsche bundesbank, at droege & comp. ltd., london, 3 june 2003. * * * the creation of economic and monetary union and the introduction of the euro meant that we in continental europe have achieved the highest degree of monetary policy integration. for the inhabitants of a country which was not one of the founding states of the european economic community and which has a great historical past of its own, this process, this political β euro project β, may perhaps be difficult to appreciate. however, emu is only the latest development in european monetary and exchange rate cooperation, which, in turn, is part of a much broader process initiated in europe 50 years ago. the euro cannot be fully understood unless there is an appreciation of this process. only with this in mind can we begin to grasp how countries with different languages and traditions, which have enjoyed amicable relations during various periods in history but which have also fought against each other in many cruel wars, could eventually take the momentous decision to entrust monetary policy to a supranational decision - making body : the governing council of the eurosystem. it is no exaggeration to state that with the creation of the single market and its completion marked by the introduction of the euro banknotes and coins in 2002, we have launched the most comprehensive and challenging economic reform project in the history of continental europe. this has been a particularly clear demonstration of european policymakers β ability to take decisive action. in less than a decade emu has evolved from a remote and unlikely possibility to reality. apart from all the difficulties and challenges we are facing at present with weak growth, high unemployment and increasing budget deficits no one outside continental europe should underestimate the magnitude of what has been achieved in monetary union to date. the europe of today should not be confused with europe 10 or 15 years ago. we have liberalized and deregulated markets. however, more needs to be done. the convergence process which permitted the creation of emu has brought about fundamental changes which are irreversible. admittedly, economic performance in continental europe is weak at present. however, the european economy is more resilient to economic shocks than ever before. the process of european integration has decreased the likelihood of asymmetrical shocks. in particular, unwarranted monetary and exchange rate
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functions. the key lies in preserving the benefits of innovative initiatives and activities whilst ensuring that they do not result in negative externalities. this comes in the forms of its strong paradigm in governance, disclosure and transparency, as well as the emphasis that innovations are anchored in the objectives of shariah and thus are for the benefit of the people. importantly, islamic finance has the disposition to facilitate financial deepening without financial excesses through the fundamental shariah requirement for islamic financial transactions to be supported by an underlying economic activity and for socially - responsible financial innovation. moreover, the profit - sharing and risk - sharing characteristics of islamic financial transactions strengthen the incentives for islamic financial institutions to undertake the appropriate due diligence on the islamic financial transactions to ensure that the profits are commensurate with the risks assumed. the shariah board of islamic financial institutions additionally serve as a rigorous process of endorsement of the experts, thus representing a vital institutional safeguard to ensure that the inherent strengths of islamic finance are fully realised. this ensures that the products are offered with the intention to achieve real benefits for the investors. it would therefore reduce the tendency for extreme behaviour in the financial system. more recently, the world β s attention had shifted from troubled banks to troubled countries with rising sovereign risks, leading to further rescue packages and increased anxieties over contagion to financial markets in other parts of the world. whilst these challenges continue to be addressed by the developed economies, the emerging economies have emerged from this crisis with stronger growth performance. the asian region in particular, has entered the crisis with solid economic fundamentals and more resilient financial systems and institutions. this has in turn substantially limited the consequences of the contagion. with the internationalisation of islamic finance in this decade, it has further reinforced the trend of greater financial integration in emerging economies. this has reinforced the changing global pattern of financial and economic integration as financial and economic linkages strengthened between the emerging economies. in the more recent period, with the enhanced international dimension of islamic finance, it has become an increasing form of intermediation that has facilitated economic linkages between emerging economies. in addition, it has also drawn the participation by the more established financial centers to forge stronger financial linkages with the dynamic growth regions of asia and the middle east. indeed, this would contribute towards more efficient mobilisation of funds across regions, reinforcing the significance of islamic finance as an increasingly important channel for a globally more inclusive economic development. in the aftermath of
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relatively more intrusive supervisory oversight. it also involves having wide - ranging policy tools, including macro - prudential policies, to mitigate and manage the risks emanating from excesses in the financial system. as the experience in the advanced economies has shown, the source of imbalances can arise in a number in segments of the economy, including from the household, the financial and the public sectors. this underscores the importance of prudence ; to ensure that growth is underpinned by sustainability and not excesses. a further lesson is to build buffers during the good times to better position us to withstand future shocks. equally important for policy in the emerging economies is to put in place the necessary foundations for long - term growth. this involves few areas of significance. the first is to create a competitive environment that allows for greater economic flexibility. this includes reforms for a sequenced and gradual removal of distortions prevailing in the economy, lowering the costs of doing business, and to streamline the involvement of the public sector in businesses. the second is to accord importance to investments in modern infrastructure, and to enhance technological readiness that will enable the economy to prepare for the changing economic and financial landscape. another area of significance is to ensure balanced and inclusive development. indeed, in the emerging economies, this is becoming increasingly urgent as the benefits of rapid development have not been evenly distributed, and income inequality has risen further even in the developed economies. going forward, economic empowerment will increasingly bis central bankers β speeches depend on access to technology, high quality education, healthcare and social security systems. equally important is greater financial inclusion. without policy intervention, the trend towards greater inequality could potentially intensify. in malaysia, many of the necessary policy strategies for long - term growth in these areas of significance are already at various stages of implementation, with considerable progress being made in certain areas. as the technological gap between the emerging and the advanced economies converges, it will become increasingly critical for an emerging economy such as malaysia to transition from growth based on capital accumulation, to growth based on productivity improvements. in addition, the rising global inter - connectedness characterised by the emergence of highly intricate networks such as the increase of global manufacturing supply chains, increases the susceptibility of industries to both cascading failures, as well as to the rapid re - orientation of business competitiveness through disruptive innovations such as in the mobile computing industry or the possible rise of additive manufacturing. to advance forward in this direction
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economic projections for real gdp growth reported by blue chip economic indicators moved down from 2. 9 percent in march 2007 to 2. 1 percent in march 2016. 4. see robert f. martin, teyanna munyan, and beth anne wilson ( 2014 ), β potential output and recessions : are we fooling ourselves? β ifdp notes ( washington : board of governors of the federal reserve system, november 12 ). 5. see olivier blanchard, eugenio cerutti and lawrence summers ( 2015 ), β inflation and activity β two explorations and their monetary policy implications, β imf working paper wp / 15 / 230, 2015 ( washington : international monetary fund ). 6. see, for example, β new oecd indicators trace productivity growth slowdown pre - and post - crisis. β 7. see robert j. gordon ( 2016 ), the rise and fall of american growth : the u. s. standard of living since the civil war ( princeton, n. j. : princeton university press ). 8. see erik brynjolfsson and andrew mcafee ( 2014 ), the second machine age : work, progress, and prosperity in a time of brilliant technologies ( new york : w. w. norton ). 9. see ryan a. decker, john haltiwanger, ron s. jarmin and javier miranda ( 2016 ), β declining business dynamism : what we know and the way forward, β amercian economic review, vol. 106 ( may ), pp 203 β 07 ; ryan decker, john c. haltiwanger, ron jarmin, and javier miranda ( forthcoming ), β where has all the skewness gone? the decline of high - growth ( young ) firms in the u. s. β european economic review ; and jorge guzman and scott stern ( 2016 ), β the state of american entrepreneurship : new estimates of the quantity and quality of entrepreneurship for 15 us states, 1988 - 2014, β nber working paper series 22095 ( cambridge, mass : national bureau of economic research, march ). 10. see lucia foster, john haltiwaner and c. j. krizan ( 2001 ) β aggregate productivity growth : lessons from microeconomic evidence β in new developments in productivity analysis, charles hulten, ediwn dean and michael harper, eds. ( cambridge, mass : national bureau of economic research, march ). 11. see steven davis and
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federal reserve's periodic survey of consumer finances ( scf ) suggest that a higher level of education significantly increases the chances that a household will use an electronic banking product. in particular, in 1998, the typical user of an electronic source of information for savings or borrowing decisions had a college degree - a level of education currently achieved by only about one - third of u. s. households. the most recent data from the survey reveal a good news - bad news picture of the financial status of households, providing evidence that we need to reach further to engage those who have not been able to participate fully. for example, while the median real net worth for all families increased 17 - 1 / 2 percent between 1995 and 1998, this trend did not hold true where the head of the household had a high - school level of education or less, family earnings were less than $ 25, 000 annually, or the ethnicity of the respondent was non - white or hispanic. that families with low - to - moderate incomes and minorities did not appear to fully benefit from the highly favorable economic developments of the mid - 1990s is, of course, troubling, and the survey results warrant a closer look. in the details, we find that families with incomes below $ 25, 000 did increase their direct or indirect holdings of stock, and more reported that they had a transactions account. however, they were less likely to hold nonfinancial assets - particularly homes, which constitute the bulk of the value of assets for those below the top quintile according to income. at the same time, one encouraging finding from surveys conducted by the bureau of the census is the increasing homeownership rates for minorities. for example, the homeownership rate for blacks increased from 42. 9 percent in 1995 to 48. 6 percent through the second quarter of 2001. the homeownership rate for hispanics also rose, from 42. 0 percent in 1995 to 46. 1 percent through the second quarter of 2001. this trend may be a sign of improved access to credit for minorities. other recent findings of the scf include a rise in families'median level of debt burden, financial stress ( defined as debt payments that represent more than 40 percent of income ), and incidence of late payments on debt. the findings showed increases in each of these categories across all income and age groups, with the highest levels of financial stress among households headed by people 65 and older and earning less than $ 25, 000 annually.
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the results of their decision is that our organisations have been facilitating the inspire2live conferences for twelve years now β with a two - year interruption due to covida second parallel between my world and yours, dear guests, is also quite obvious. i'm looking at an international company of highly trained professionals, who cooperate 1 / 4 bis - central bankers'speeches across several borders to serve a societal goal. like your work, our work also has a societal goal and requires international cooperation. we share insights, raise questions and engage in debate with our colleagues from the eurozone, and on a wider scale with those from the worldbank, the imf and many other international organisations. and like you, we prefer to debate on the basis of evidence. scientific evidence. just like cancer research is the most fruitful when it can profit from cooperation of many researchers like you, from all over the world, just so our mission of stable financial institutions and sustainable welfare profits from international scientific cooperation. these parallels in your and our work, make me feel slightly less overwhelmed, standing in this stately hall filled with so many eminent academics. a third parallel is related to the substance of our work, of your work and mine. this is the parallel i would like to turn into the main subject of this opening speech. your subject of study - the treatment and prevention of cancer - has an economic value in addition to its intrinsic value. a healthy economy benefits from a healthy population. the past two years we have seen that the reverse is also true : a population suffering from a pandemic will suffer from economic consequences - not that i expect that you are eager to listen to a professor of economics telling you that your work is essential'because of its economic value'- your work is intrinsically essential of course. and here i would again like to thank you all, for your collective and unbridled commitment to global healthcare. with this speech i would like to try to substantiate this'thank you '. 3. why and how does a central bank take health into account? our core task as a central bank is β as i mentioned earlier - to contribute to financial stability and sustainable welfare for all dutch citizens. although there obviously is a relationship between economy and health, we must admit we cannot quantify or clearly specify this. but we did learn some things from the pandemic. central banks and other institutions have found a way of dealing with uncertainties by developing alternative economic scenarios.
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##ntial supervision. the exchange of information is not, therefore, a one - way street ; it results in a beneficial symbiosis of macroprudential and microprudential knowhow, which will strengthen germany as a financial centre. regarding the low - interest rate setting : how will you collaborate specifically on this issue? hufeld : this issue demonstrates the importance of our cooperation. we can draw a reliable and comprehensive picture of the situation only if we take due account of both the relevant macroeconomic and macroprudential factors and the individual insurers β particular circumstances. and the ongoing period of low interest rates naturally also plays an important role in the financial stability committee. we must, therefore, grapple with a difficult subject at the very outset of our collaboration. however, i am sure that will only strengthen our cooperation. dombret : the current low - interest rate setting is making itself felt in all financial sectors. credit institutions and insurers must take this into account in their business plans. as the bundesbank has, for some years, been observing the effects of the low - interest rate environment on the financial system and, not least of course, on life insurers, i expect our cooperation with bafin to prove fruitful in this field, too. another key issue from both a macroprudential and a microprudential perspective is that of systemic relevance. the financial stability board ( fsb ) recently ranked nine insurers as global systemically important insurers ( see link below ). how important do you think this step is? dombret : the publication of this first list of global systemically important insurers marks another step on the path towards a more stable financial system. banks are not the only entities that can be systemically important β market infrastructures and insurers can be, too. the main factors determining an insurer β s systemic importance are, first and foremost, its interconnectedness within the financial system and the size of its non - traditional and non - insurance business. i therefore fully support the fsb β s recent move. however, it is clear that we still have a considerable way to go. we must now specify and finalise the regulatory consequences associated with this ranking. that will not be easy. just think of the challenge of creating, for the first time, a harmonised international basis for imposing potential capital surcharges in the insurance sector. hufeld : it is good
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of clearly - defined and fully monetized cost structure hampered the adjustment of savings ratio. it is therefore important to expedite the reform of the public sector and the transformation of the government functions. v. observations on low household saving ratio in the u. s. the u. s. household savings ratio in recent years went through two phases : before the mid1990s, it ranged between 7 - 10 % ; after 1997, it declined remarkably with pronounced β twin deficits β, especially trade deficit. some attributed the low savings to the so - called β euphoria β on the u. s. economic performance since the mid - 1990s. specifically, in late 1980s and early 1990s, after the collapse of the central planning system of the former soviet union and eastern europe, growth in those regions steadily slipped. in the 1990s, the japanese economy was also trapped in prolonged stagnation, and eu β s economic performance was lackluster due to structural problems including rigid labor market. the u. s., as the largest economy, boasted the optimal economic system that was seemingly unparalleled in the world. the only remaining challenge, in terms of economic system, came from asia ; after 1997, the asian economies suffered heavy blows. in contrast, the us economy demonstrated strong flexibility and resilience, and recovered rapidly from the 9 / 11 attack and the burst of it bubble in recent years. all these augmented the euphoria sentiment in the market, which in turn influenced the saving behavior of the u. s. residents. however, the unprecedented magnitude of the current financial crisis is expected to dramatically dampen such euphoria sentiments. the time series show that this round of low savings and high consumption in the us commenced in mid - 1990s. in contrast, the savings ratio of east asian countries only surged after the asian financial crisis and china's savings ratios did not begin to increase until 2002. the difference in time distribution indicates that there is no significant causal relationship between the two. vi. options for adjusting saving ratio global savings imbalance exists for many reasons. it seems inappropriate to link savings ratio only to exchange rate, and it is also unrealistic to resolve long - term issues in the short run. one should, instead, adopt a broader and more comprehensive mindset in examining the imbalance of savings. first, a comprehensive set of prescription is needed. although the u. s. can β t sustain the growth pattern of high consumption and low savings
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even recklessly falsified accounts, which undermined the credibility of the financial sector. these problems can be attributed to a number of reasons, yet the principal ones include the failure in implementing capital rules, unsound corporate governance, feeble market control, and negligent oversight and law enforcement. the low cost of violating rules and regulations can only result in further trampling on laws. therefore, regulators must have the courage to fight, to ensure strict enforcement of laws, and to resolutely safeguard the sanctity of laws. for more than two years, the banking and insurance regulators have been 2 / 4 bis central bankers'speeches seriously dealing with institutions accountable for violating laws and regulations, imposing penalties of more than 8, 000 person / times, and confiscating more than rmb6 billion from relevant institutions. a series of stringent regulatory measures have been taken to crack down on falsified asset categorization and accounting fraud, and more than rmb4 trillion of nonperforming loans have been disposed of. sixth, we should be determined to change the distribution of financial assets. at present, china β s bank savings deposits amount to over rmb78. 7 trillion, and asset management products, which are essentially similar to bank deposits, total more than rmb60 trillion. in addition, we have an equally considerable sum of corporate deposits and enormous idle funds in the society. how to transform such funds into long - term stable sources of investment capital through institutional investors, is an important yet urgent issue that must be addressed. we should vigorously develop various institutional investors including publicly offered funds, privately offered funds, insurers, trusts, and wealth management companies. in this way, we can change the investor composition dominated by retail investors and foster a market atmosphere favorable to long - term investment and value investing, while raising the scale of stable funds in the market as well as the efficiency of investment conversion. in terms of pension funds, we can draw on the experience of other countries to construct three pillars, namely basic social security funds, enterprise annuities, and commercial insurance, in a bid to raise the scale of china β s pension funds in the capital market to the world average. seventh, we must firmly prevent the resurgence of structurally complex products. china boasts the largest new capital inputs among all economies in the world, but it is a challenging task to raise the efficiency of fund utilization. the key is to avoid the diversion of investment out of
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cannot be achieved if the vision β s three core objectives, namely : enhancing financial system stability, efficiency, and expanding financial inclusion are not addressed. β’ without expanding inclusion to financial services, there is a case for expanding quality access and affordable, appropriate and sustainable financial services and products to majority of the population. this will inevitably increase their access and usage of financial markets and products that will encourage savings / investments and allow capital / asset accumulation. safe havens for savings by the poor reduces their vulnerability to periodic economic and social shocks and enhances their productive capacity. bis central bankers β speeches β’ the three national financial access surveys for 2006, 2009 and 2013 have clearly demonstrated that kenya β s financial landscape has changed considerably over the period 2006 β 2013. the financial system is now offering a wider range of financial services and products to more kenyans, covering a wider geographical spread, and even going beyond its borders more than ever before. these developments are attributable to expansions in financial sector infrastructure ( including innovation in products and adaptive institutional outreach ) and advances in technology. ladies and gentlemen : i am delighted to note that we have added the spatial mapping of financial services providers to the finaccess surveys by digitally mapping out all the financial access touch points in the country. this affords us more in - depth knowledge on how to address the challenges we face in expanding financial inclusion and ensure that the majority of our populace access and use affordable, appropriate and sustainable financial services. some of the insights we have gained from the mapping exercise include : β’ kenya enjoys better financial access compared to countries in the region. the percentage of the population living within a 3km distance of a financial access touch point is 58. 7 % for kenya, 44. 1 % for uganda, 42. 7 % for nigeria and 28. 3 % for tanzania. in terms of financial access touch points per 100, 000 people ; kenya has 161. 7, uganda 63. 1, tanzania 48. 9 and nigeria 11. 4. β’ financial services touch points tend to be located in economically active regions of the country : more in urban than in rural areas. in these areas use of portfolios of financial services is more prevalent. β’ financial services touch points locate away from areas of high poverty levels, for instance, 69 % of all financial access touch points are located in areas with the least likelihood of poverty even though only 30 % of the population live in those areas. β’ kenyans have greater access to mobile phone financial services providers compared
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##amlg, we remain resolutely committed to fighting the double evils of money laundering and financing of terrorism. allow me for the next few minutes to wear my central bankers β hat as a regulator of the banking sector. from where i sit, i am acutely aware, that money laundering is a threat to both the integrity and stability of the banking sector and even the forex bureaus themselves. further, with increased globalisation, our banking systems are increasingly under close scrutiny by our international trading partners particularly with regard to anti money laundering legal and regulatory frameworks. ladies and gentlemen : in kenya, as i have alluded, we are in the process of enacting a comprehensive anti money laundering legislation. however, this is not to say that there are no measures in place at the moment to deter money laundering. the central bank, as both regulator and supervisor of banking institutions, has played a key role in ensuring that systems to combat abuse of the banking sector by criminal elements are in place. in 2000, the central bank of kenya issued guidelines to all commercial banks pursuant to the banking act on β know your customer β and β customer due diligence β procedures. the guidelines vest responsibility on the board of directors and management of banking institutions to : β’ establish appropriate policies and procedures to ensure the effective prevention, detection and control of possible money laundering activities and terrorism financing. β’ train staff in the prevention, detection and control of possible money laundering activities and terrorism financing. β’ ensure adequate identification of customers, their source of funds and the use of the said funds. the guidelines were reissued in 2006 following a review that took into account international developments and experiences of financial institutions in implementing the 2000 guidelines. key changes included : β’ strengthening of customer due diligence procedures. β’ providing additional guidance on identification of suspicious transactions by commercial banks. β’ introduction of guidance on customer due diligence procedures for non face to face transactions that have gained increased prominence with the growth in internet and telephone banking. we know that the rapidly changing technologies and the introduction of new financial products remains a major challenge which requires financial institutions and regulatory bodies to constantly remain vigilant of possible abuse of new products by criminals. the central bank continues to monitor adherence to the existing guidelines through its surveillance mechanisms and adopting them to the changing environment. kenyan banks have faced a number of challenges in implementing these guidelines. i am sure that these are challenges also shared in some of the countries represented here. in particular, some customer due dil
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reuters, β the high road to a responsible, open financial system β carney, m ( 2017b ), remarks at the banking standards board panel β worthy of trust? law, ethics and culture in banking β geithner, t ( 2014 ) stress test. random house haidt, j ( 2012 ) the righteous mind. vintage books. kouzes, j and posner, b ( 2010 ) the truth about leadership. john wiley & sons. maxwell, j ( 2007 ) the 21 irrefutable laws of leadership, thomas nelson ng kok song, p ( 2014 ) contemplative leadership, meditatio paulson, h ( 2010 ) on the brink : inside the race to stop the collapse of the global financial system. business plus. warsh, k ( 2009 ) speech given at the council of institutional investors spring meeting β the panic of 2008 all speeches are available online at www. bankofengland. co. uk / speeches
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reflections on leadership in a disruptive age speech given by mark carney, governor of the bank of england regent β s university london monday 19 february 2018 i am grateful to jennifer nemeth for her assistance in preparing these remarks. all speeches are available online at www. bankofengland. co. uk / speeches i. introduction i was asked to reflect tonight on leadership and values. this is somewhat dangerous territory, and certainly one that creates a target - rich environment for critics who can spot gaps between preaching and practising. indeed, a review of a recent book on leadership and values suggested that it β s very publication signalled overconfidence β the complacency before the storm β and cautioned that ceos and investors ought to be wary of the β curse of authorship β. there are countless examples of pride coming before the fall in finance. think of those who dubbed the period before the global financial crisis the β great moderation β. or the four most expensive words in the english language. but, because we can learn from experience, and because leadership lies at the heart of regent β s university β s mission - literally β developing tomorrow β s global leaders β - i will forge ahead. i will begin by reviewing the main activities of leaders and the core attributes of leadership. i will try to address what leadership is and isn β t and whether it β s inherent or can be developed. i will conclude with some perspectives on the challenges and opportunities you will face leading in our disruptive age. ii. leadership activities it β s important to distinguish between what leaders do and who they are. of the many things leaders must do, i would emphasise three : 1. finding and developing the right people ; 2. setting priorities ; and 3. catalysing action. of these, arguably the most important is focusing on finding and developing the right people. developing the right people starts with recruiting widely. the bank of england has embraced the perspectives of those such as the leading venture capitalist, sir ken olisa, who stresses that : β tackling [ diversity ] is a business imperative and not an hr policy. β ten years ago the bank β s graduate intake was comprised largely of economists drawn from just 11 universities. last year, we hired from over 40 post - secondary institutions with half of the intake having studied sciences, business, law and the humanities. of the 700 experienced professionals we hired in 2017, almost half were women and a quarter came from bame backgrounds
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and the united states has been much greater during this recovery than is typical following severe recessions. additionally, in europe, financial strains have been acute, helping to push the region back into recession. in the united states, spillovers from europe and a still - depressed housing market also help account for our tepid recovery and elevated unemployment. as i will discuss a bit later, japan has fared somewhat better, but faces significant challenges of its own. see greg howard, robert martin, and beth anne wilson ( 2011 ), β are recoveries from banking and financial crises really so different? β international finance discussion papers 1037 ( washington : board of governors of the federal reserve system, november ), http : / / www. federalreserve. gov / pubs / ifdp / 2011 / 1037 / ifdp1037. pdf. bis central bankers β speeches the role of emerging asia in contrast to the advanced economies, emerging market economies, particularly in asia, recovered sharply from the global downturn, in part by using countercyclical fiscal and monetary policies to bolster domestic demand. based on the research i referred to earlier, the recovery in the asian economies appears on pace with what we might have expected, given the severity of the previous recession. this swift recovery has not only benefited asia, but the global economy as well. lately, however, the momentum in the emerging asian economies has weakened, in part as their exports to europe and the united states have slowed. exports to china from other countries in the region have also weakened, partly because of the unwinding of china β s earlier stimulus programs, but also because china β s exports to the advanced economies have slowed, thus lowering its demand for imported parts and components. for the moment, emerging asia is offsetting weakness in external demand through accommodative monetary and fiscal policies. but ultimately, it would be desirable, both for the region and for the global economy, if emerging asia were able to rely less on temporary policy stimulus and more on a fundamental rebalancing of growth toward domestic demand. to be sure, progress toward rebalancing has already occurred, as evidenced by the substantial reduction in current account surpluses in the region since the onset of the global crisis. however, some of this adjustment likely reflects cyclical factors, and, moreover, the aggregate current account of emerging asia remains substantially in surplus. greater reliance on domestic demand would not only help shield asia β s economic growth from the
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weakness in the advanced economies ; it would also boost the well - being of its citizens by enabling them to consume a greater share of the output they produce. moreover, transforming emerging asia into an independent engine of global growth would put the global economy on a much surer footing, thus helping to achieve the group of twenty nations β commitment to strong, sustainable, and balanced growth. what about japan? finally, i would like to turn to japan, whose experience combines elements of both its emerging asian neighbors and of other advanced economies. like other asian economies, japan shares a history of current account surpluses and export - dependent growth. also like other asian economies, the japanese economy bounced back faster from the global financial crisis, at least prior to its tragic earthquake and tsunami, than most advanced economies, and more robustly than in any japanese recovery since the mid - 1970s. strong exports to the rest of asia supported this rebound. however, japan has not been immune to the slowdown in trade affecting the region. japanese exports have flattened out since about the middle of 2010, contributing to a negative trade balance for the first time since 1980. like its neighbors, japan will need to look for alternative engines of growth. notwithstanding its similarities to emerging asia, the japanese economy faces fiscal and demographic challenges similar to those of other advanced economies in europe and the united states. japanese government spending helped propel the economy β s bounceback from recession, but it has also added to public debt, which the international monetary fund now projects will rise to 237 percent of gross domestic product ( gdp ) this year, the largest among the major advanced economies. 2 along with this high debt, aging of the population and slow gdp growth pose important concerns for fiscal sustainability. see international monetary fund ( 2012 ), β taking stock : a progress report on fiscal adjustment β, world economic and financial surveys, fiscal monitor, table 3 : general government debt, 2008 β 13, p. 17 ( washington : imf, october ), www. imf. org / external / pubs / ft / fm / 2012 / 02 / fmindex. htm. bis central bankers β speeches to date, the savings of japanese household and firms have been more than enough to finance the government deficit ; indeed, interest rates on government debt have fallen to near record lows. accordingly, japan, like the united states, has the scope to carry out fiscal consolidation plans that address long - run sustainability issues without endangering near - term growth prospects.
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discussing and adopting these acts by the national assembly. this also applies to the most important laws β the law on the euro adoption, and the law on the bnb. the draft law on the euro adoption is about to be finished. the draft law on the bnb has been finalised, according to the set timeline. it will be approved by the bnb governing council at its next meeting that will take place on 13 april, i. e. in about a week from now. as the bnb is not entitled to direct legislative initiative, we are going to immediately submit this draft to the ministry of finance so that they move it on to the national assembly. therefore, 2 / 5 bis - central bankers'speeches when we speak of the legal framework, it is not so much about our readiness with drafted laws, but about whether we will have a working parliament and political will. if these are present, the legislative programme can be fully completed in the next few months. the fourth group of tasks deals with the technical preparations and the entire logistics of the process of accession to the euro area. with regard to this group of tasks, not a small part of the burden falls on the bulgarian national bank and commercial banks. we are working intensely and systematically to fulfil this group of tasks. i will give a few examples to illustrate this. as a central bank, we have already received the full documentation on the minting of the bulgarian euro coins. you probably know that at the end of last year, together with the minister of finance, we signed a memorandum on this issue with the european commission and with the eurogroup that represents the euro area member states. under this memorandum, we have received the full set of documents from the european commission and we are preparing for the first tests of minting the bulgarian euro coins. the programme for development and renovation of our system of cash centres is well under way. the new cash centre in plovdiv opened a bit more than a year ago, another cash centre is about to open in pleven, and we have already initiated the project for acquiring a site and starting the construction of a new cash centre in varna. the adaptation of the payment systems is also going as planned and in close cooperation with the european central bank. of course, i can give numerous technical and logistic examples but i will leave it at that. the same applies to commercial banks'preparations, which are running relatively smoothly. we are monitoring and guiding this process
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##ised, including in the report on bulgaria that the oecd presented yesterday. it gives clear messages that key indicators for our banking sector, such as capital adequacy and liquidity, are above the average level not only for the european union, but also for the oecd countries. institutional convergence is therefore not an exercise in itself. it brings significant positive results. fiscal consolidation means restoring our more than 20 - year track record of drawing up and exercising a disciplined budget, which was somewhat lost in the last two years. fiscal consolidation is important both in the short term and in the medium and long term. in the short term, it is important because it is the main macroeconomic tool at our country's disposal to contain and reduce inflation, which, as stated, is the only criterion for joining the euro area that we do not meet. even outside the context of the euro area, fiscal consolidation is important, with a view to avoiding the macroeconomic imbalances we witnessed only a few years ago. one channel for the creation of such imbalances is the increasingly open conflict between the fiscal expansion of the past two years and the ongoing global trend of monetary policy tightening. the two policies must work in sync. the medium and long - term aspect of the fiscal consolidation topic is related to the structural reforms to be carried out in the country. a disciplined regular budget with a realistic medium - term macroeconomic and fiscal forecast will provide the framework needed to accelerate structural reforms in relation to investment, the labour market, perhaps the most serious medium - term risk to our economy, education, social security, social assistance, health care, not forgetting of course energy security. to conclude, let me summarise what i want to say. bulgaria is not in a bad position, yet, in terms of joining the euro area. a large and important part of the road has already been covered through the accession of our country to the european banking union and of the bulgarian lev to the european exchange rate mechanism. in order to complete this process successfully, several groups of tasks need to be completed. first, it is necessary to meet the nominal convergence criteria, with a focus on inflation, which is actually the only criterion we are currently not meeting. second, it is necessary to fulfil pre - accession commitments in the 4 / 5 bis - central bankers'speeches areas of the non - banking financial sector, anti - money laundering measures, the management of state - owned enterprises, and the ins
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draw a parallel between the sterling club of the 1930 β s and the efta of the 1960 β s. both included the uk and the nordic countries. efta was of course a trade bloc unlike the sterling club, and it was a different time, but in both instances britain and finland were joined by a form of special economic relationship. * * * the contacts between our countries have been frequent on many levels, including the highest. in 1963, soon after the finnish associate membership in efta had been achieved, the uk prime minister harold macmillan visited finland. president urho kekkonen hosted a dinner in his honour. in his dinner speech, kekkonen told a story, which tested everybodyΒ΄s sense of humour. he spoke about the arrival of the british bishop henry in finland. this happened more than 850 years ago for the purpose of converting our ancestors to the christian faith. " the attempt failed ", kekkonen stressed, β for the bishop was killed here with an axe. but our ancestors were not ungrateful killers. proof of this is that they later realized the good and honest intentions of the bishop, and made him the patron saint of finland. this course of events β at least its latter part β would probably in britain be regarded as fair play ", kekkonen told the visiting british prime minister. efta was seen by many as only an intermediate stage in european integration. already in 1961, the british and danish applied for membership in the eec, closely followed by norway. the neutral efta states sweden, austria and switzerland applied for association. due to our geopolitical position, finland was not able to follow the same course of action. the eec was seen, already then, as more than just a trade area, and rightly so. this political dimension precluded the finnish participation at the time. but the enlargement negotiations failed twice in 1963 and 1967, mainly due to the Β¨non! Β¨ to british membership by french president de gaulle. meanwhile, finland took prudent steps towards the west, and in 1968 we became a member of the oecd, the successor to oeec, that had been established for the delivery of marshall aid. we also participated in the nordek negotiations of 1968 β 70 aiming for a customs union or an economic community between the nordic countries. these negotiations did not lead to an agreement. in france, president georges pompidou followed de gaulle and edward heath
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, too, together with ireland. to compensate for its geographic distance from the continent, finland has wanted to be in the institutional core. a word about central banks : although britain never joined the single currency, the bank of england is a member of the european system of central banks, where we co - operate on many things, even if not monetary policy. there and elsewhere i have had the opportunity to work together with the bank of england governors mervyn king and mark carney. the bank of england is an institution highly respected also by us at the ecb. * * * ladies and gentlemen : we are now entering a new phase in the economic and political relationship between the uk and finland, as the uk has decided to leave the eu. the eu gave us - the finns and the british β a new platform, where both countries have worked together daily for our common interests and been like - minded on many issues. the brexit vote in the 2016 referendum was a surprise and also disappointment for most finns. there is still a lot of uncertainty. today, more than a year after the brexit vote, we still donΒΉt know the overall framework of our future relations. this tells much of the complexity of the situation. but whatever is the final outcome of the brexit process, finland and the uk will remain close european partners. our common interests in many issues will not disappear and we must find ways to collaborate, drawing inspiration from the long history of our good bilateral relations. thank you for your attention. 5 / 5 bis central bankers'speeches
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times, be steep and sudden, resulting in possible disruption in the real sector and therefore there is a need for containing excess volatility in foreign exchange markets. further, sterilisation costs may have to be often shared between the fisc, the banking sector and the central bank balance sheets. while, to meet the surge in capital inflows, liberal capital outflows are recommended, they do not, in fact, take place at the time when they are liberalised. further deepening of financial markets may help in absorption of large capital inflows in the medium term, but it may not give immediate succour at the current stage of financial sector development in many aemes, particularly when speed and magnitude of flows are very high. second, significant improvements have taken place in developing local currency markets, especially bond markets. however, the operations of large players in financial markets in some asian economies tend to respond more to their global needs than that of host country. further, some multinational non - financial corporates operating in these economies may have large treasury operations, and their operations, could often make the assessment of risks in financial markets somewhat difficult. while supervisory skills in many aemes have been strengthened, new instruments, especially derivatives, new players such as hedge funds, and large otc operations tend to diffuse and relocate risks making their assessment for policy purposes sometime difficult. third, the banking sector has been strengthened and non - banking intermediation expanded providing both stability and efficiency to the financial sector in many aemes. yet, sometimes aligning the operations of large financial conglomerates and foreign institutions with local public policy priorities remains a challenge for domestic financial regulators in many aemes. further, competition in financial sector is somewhat limited in many asian economies. large players in developed economies compete with each other intensely, while it is possible that a few of them dominate in each of asian financial markets. a few of the financial intermediaries could thus wield dominant position in the financial markets of these countries, increasing the concentration risk. performance of the indian economy there is widespread and intense interest in the indian economy, but merely by way of recollecting, it is useful to mention some features of the economic performance. first, the average growth rate of the indian economy over a period of 25 years since 1980 - 81 ( financial year beginning april ) has been about 6. 0 per cent, with the growth rate averaging 9. 1 per cent during the last two years. second, the economy
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svante oberg : my views on the riksbank and financial stability speech by mr svante oberg, first deputy governor of the sveriges riksbank, at a meeting with the swedish bankers β association, stockholm, 7 june 2011. * * * my term of office as deputy governor of the riksbank is drawing to a close and i have announced that i will not be available for a new period of office. after almost six years on the executive board of the riksbank, it feels natural for me to now reflect on the experiences we have had and what these may mean for the future. earlier in the spring, i presented my view of the riksbank and monetary policy. and now it is the turn of our other important main task, namely financial stability. in particular, there are three issues i would like to argue for : the riksbank and finansinspektionen ( the swedish financial supervisory authority ) should be merged the governor β s role should be strengthened the riksbank should have a sufficient foreign currency reserve. i will begin my speech by looking back on the years prior to the most recent financial crisis, the risks we saw β and the ones we didn β t see. i will continue by describing the financial crisis and the measures we adopted during the crisis. i will then address the future and the work that is underway as regards reforming the framework of the financial sector. finally, i will take up the three issues i have just mentioned and explain the reasons for my views on these issues. for the sake of clarity, let me also add that the opinions i will be expressing in this speech are my own. they are not necessarily shared by my colleagues in the executive board of the riksbank. the years prior to the financial crisis when i first arrived at the riksbank, i did not suspect that we were about to experience one of the worst international financial crises of our times. i had been through two previous crises. the first of these was the deep recession at the end of the 1970s and start of the 1980s, when, through a series of devaluations, sweden attempted to restore the competitiveness it had lost due to the severe price and wage inflation of the 1970s. the second was the crisis we experienced at the start of the 1990s. this was a fairly typical financial crisis, starting with the deregulation of the credit market and leading to a banking crisis, a deep recession and large public finance deficit
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the overnight call money rate is stronger than the overnight money market rate. in addition, the call money market is a pure inter - bank market and, hence, better reflects the net liquidity situation. reserve bank of india ( 2011 ), report of the working group on operating procedure of monetary policy ( chairman : deepak mohanty ), march. bis central bankers β speeches since may 2011, the liquidity conditions can be broadly divided into three distinct phases. after generally remaining within the reserve bank β s comfort zone during the first phase during may β october 2011, the liquidity deficit crossed the one per cent of ndtl level during november 2011 to june 2012. this large liquidity deficit was mainly caused by forex intervention and increased divergence between credit and deposit growth. the deficit conditions were further aggravated by frictional factors like the build - up of government cash balances with the reserve bank that persisted longer than anticipated and the increase in currency in circulation. accordingly, the reserve bank had to actively manage liquidity through injection of liquidity by way of open market operations ( omos ) and cut in cash reserve ratio ( crr ) of banks. this was supported by decline in currency in circulation and a reduction in government cash balances with the reserve bank. as a result, there was a significant easing of liquidity conditions since july 2012 with the extent of the deficit broadly returning to the reserve bank β s comfort level of one per cent of ndtl ( chart 7 ). bis central bankers β speeches since its implementation, the systemic liquidity has been in deficit mode, which has helped in better transmission of policy rate to various segments of money markets. first, the overnight interest rate has been more stable since its implementation ( chart 8 ). second, the repo rate and weighted call rate are far more closely aligned under the new operating procedure than earlier ; implying improved transmission of monetary policy in terms of movement in call money market interest rate ( chart 9 ). bis central bankers β speeches third, the call money rate in turn is observed to be better aligned with other money market interest rates after the implementation of new operating procedure than before ( chart 10 ). conclusion let me conclude. our experience shows that the development of money market and refinements in operating procedures of monetary policy have moved in tandem. financial sector reforms along with reserve bank β s emphasis on development of various segments of financial market enabled shifts in operating procedures based on direct quantity - based instruments to indirect interest rate - based
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emerging india : a land of stability and opportunities keynote speech by shri shaktikanta das, governor reserve bank of india delivered at the symposium on indian economy 2023 organised by institute of indian economic studies at the tokyo chamber of commerce and industry, tokyo, japan on november 9, 2023 i am delighted to participate in this symposium on indian economy organised by the institute of indian economic studies ( iies ), tokyo. i understand this event is being organised by the iies after a gap of 3 years due to the intervening period of the covid - 19 pandemic. earlier this year in march 2023, prof. sakakibara and mr. sugaya had visited the reserve bank of india in mumbai when we discussed about my participation in this symposium. i would like to convey my sincere thanks and gratitude to prof. sakakibara and the iies for inviting me to participate in this event today. 2. the global economy continues to face multiple macroeconomic and geopolitical shocks. the prediction of a global recession has not come true but there are indications that global growth is slowing down amid tightening financial conditions and still elevated inflation. even as the fallouts of the pandemic, the war in ukraine and the unprecedented tightening of monetary policy reverberate across the world, the recent developments in west asia have added to the litany of challenges for the global economy. policymaking in this scenario becomes extremely challenging with difficult trade - offs β growth versus inflation ; price stability versus financial stability ; and current exigency versus future sustainability. there is always a risk of doing too little or doing too much. in such a scenario, i would like to start with the reserve bank of india β s approach to policy making during this turbulent period. our approach 3. to protect the economy from the relentless shocks in the recent period, our endeavour has been to remain proactive, pragmatic and prudent in our policy response. we were conscious of the fact that an overdose of monetary medicine, while relieving the pain in the short run, could give rise to increased vulnerability and fragility over a period of time. following the onset of the covid - 19 pandemic, we injected liquidity, but almost every measure of liquidity injection was for a limited period and was targeted. by doing so, we avoided the pitfall of a liquidity trap. further, our lending standards were not diluted in terms of our counterparties ( banks
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there are no plans to reuse these prototypes in the subsequent phases of the digital euro project. we have run a public call for expressions of interest for joining the prototyping exercise. all interested parties had to fulfil several " essential capabilities " that were outlined in the call, e. g. data protection / privacy compliance. we assessed which providers best matched the " specific capabilities " required for specific use cases. see ecb ( 2022 ), " ecb selects external companies for joint prototyping of user interfaces for a digital euro ", mip news, 16 september. 13 users will have the option to choose whether the conversion of commercial bank money or cash into digital euro, and vice versa, should take place manually or automatically. for the automatic option, we are investigating a waterfall functionality that would allow users to make or receive payments in digital euro above the holding limit by linking a digital euro account to a commercial bank account. when receiving a payment, this would allow automated conversion of retail cbdc in excess of a holding threshold into a bank deposit held in a linked commercial bank account chosen by the end user. similarly, a reverse waterfall would ensure that end users can make a payment even if the amount exceeds their current digital euro funds. additional liquidity would be pulled from the linked commercial bank account and the transaction would be completed in digital euro at its full value. 14 the eurosystem's sepa migration impact assessment noted that, in the context of the growing technical complexity of payment services in europe, one of the lessons that can be learnt from the sepa project and the implementation of the revised payment services directive ( psd2 ) is that technical standardisation and development of the scheme would ideally be completed before legislation to mandate its use is introduced. 15 for instance, the eurosystem might only be responsible for issuing the digital money, without providing the settlement infrastructure or intervening in distribution β the " issuance model ". alternatively, in an open access model, the eurosystem would only provide the settlement infrastructure and set access rules ; every entity that fulfils these 6 / 7 bis - central bankers'speeches rules could then use the infrastructure in their own way. while they give the market room to innovate, these two models may not achieve widespread distribution to end users or sufficient interoperability, which would hamper the end - user experience and financial inclusion. one could also imagine an alternative distribution model in which the eurosystem would provide the
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transparency for banks, and the public, and it will help to ensure a level playing field. so, while it is ultimately up to the banks to deal with npls, we supervisors play a role too. it β s our job to address vulnerabilities in the banking sector. npls are probably the single biggest challenge β and of course they are a drag on the entire economy. and while i am convinced that the ecb has led the way with its work on npls, we are not the only ones who can and should take action. european finance ministers agreed, in july this year, on an action plan to tackle npls. also, national governments can help to resolve the npl problem by reforming their legal and judicial systems. in some countries, it can take quite a long time to recover npls in court. this is something that can only be addressed at national level by national governments. npls are a joint problem, and we need to make a joint effort to resolve it. each party has to play a role : banks, supervisors and politicians. in line with our mandate, we supervisors have done and will continue to do what is necessary. thank you for your attention. 2 / 2 bis central bankers'speeches
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and implement reforms fast. the natural tendency for most politicians is to favour gradual adjustment. β gradualists β say that in case of fast changes the risk of possible policy mistakes is higher, leading to losses in physical and human capital. opponents of that view, including myself, certainly acknowledge those risks. but we feel that the costs of delayed action may sometimes outweigh its benefits, as postponing the inevitable and failing to accept the changed reality will lead to additional unnecessary costs. one should not want to keep alive old structures that clearly cannot be sustainable in the changed world for longer than necessary. this is a waste of limited resources and reduces long - term productivity. there is a saying that β a crisis should not be wasted β β negative shocks to an economy should lead to productivity gains. our experience shows that quick decision - making and decisive policy actions can shorten the period of uncertainty that also weighs on economic activity. people and entrepreneurs in countries with delayed reforms overreact, leading to a higher level of risk aversion than necessary. overshooting in risk aversion results in lost jobs and postponed investments. bis central bankers β speeches estonia, for example, lost almost 20 % of its gdp during the crisis. by now we have regained the pre - crisis level, contrary to many countries that preferred to delay the necessary reforms. some of them still face years of decreasing economic output. in summary, i would like to stress that prolonged fiscal consolidation and structural reforms can lead to unnecessary costs to the society. some countries have chosen to delay the pain and take only gradual steps with their structural reforms, but this has in fact resulted in a reduction of the overall economic activity to the extent that might be no less than the shortterm cost of a quicker adjustment. the difference is that they are still not done and cannot hope for a rebound that might otherwise be there. bis central bankers β speeches
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requirements of the regulatory framework. we would kindly ask you and your shareholders for dedication in this process, not only to find the necessary human and financial resources, but also the most appropriate forms for a quick, transparent, and consistent handling of non - performing loans. we need to bear in mind that lending carries along risks that are difficult to identify at the time of disbursement. these risks are determined not only by the quality of bank lending procedures, but also by significant external factors, including the performance of the economy. this uncertainty permeates the current phase our banking sector is going through. therefore, it is indispensable that bank management structures and their shareholders commit the necessary financial resources to cope with the possible additional costs in the future. for shareholders, this implies not only retention of profits in the bank, but also adding new capital in case of need. remember that it also represents a more general trend in the banking industry globally, with a number of new forthcoming standards that provide for improving the quality of bank capital and increase of its size. our banks should gradually begin to adapt to these new standards. for senior managers, strengthening the control systems of the bank activity remains a primary objective, especially for those activities that generate the main revenues and expenses arising from the activity. risk management structures should be really empowered and have a stronger voice in decision - making. banks should continue to further improve the efficiency of their operations, including the establishment of a better control over the costs of the activity. setting priority activities for your institution will allow you to identify new investment needs as well as those activities that use bank resources inefficiently ; they should, in turn, be restructured. this process will positively affect the financial performance of the institution, and will allow the implementation of other active policies in areas that benefit the activity of the bank. we all know that banking is an activity based on trust. for this reason, the bank β s services to customers should be β first class β across the entire bank network. this means that customers should be served correctly, timely and transparently. banking services should be provided in accordance with the clients β financial literacy, in any case highlighting, the benefits and the risks that customers may incur as they use your bank products. in the context of its role as the supervisory and regulatory authority of banking operations, the bank of albania will continue to carefully monitor and address the challenges facing this bis central bankers β speeches activity. our regulatory framework and supervisory and operational
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changes, as future economic developments are uncertain. the stand we take regarding the development of the repo rate at our monetary policy meetings is based on the information available at the time the decision is made. our considerations can and should change if the economy develops in a manner different to that we had expected. this is further described in the box entitled, β changes in the riksbank β s forecasting methods β, inflation report 2005 : 1, in irma rosenberg β s speech β the riksbank and monetary policy β at danske bank, 29 september 2005 and in lars heikensten β s speech, β thoughts on how to develop the riksbank β s monetary policy work β, at the swedish economics association on 22 february 2005. managing risks in monetary policy decisions as monetary policy must be based on uncertain forecasts of the future, there is a need to manage the risk that the economy will develop in a way different to what was expected by the central bank. the former federal reserve governor alan greenspan called this the risk management approach to policy. given this way of thinking, our inflation reports contain a special section where we discuss alternative scenarios for inflation and the real economy and the probability that these will materialise. it is the forecast of inflation and the real economy taking into account the risks of alternative scenarios that forms the basis of our monetary policy decisions. of course, it is not appropriate for a risk analysis to take into account all imaginable risks ; not even all those that would have dramatic consequences if they were to materialise. for instance, it is not reasonable, in my opinion, to allow monetary policy decisions to be governed by the risk of global imbalances, as we are unable to affect this development through our own monetary policy. 3 on the other hand, i consider that it is important to always take into account risks that arise from the monetary policy conducted, even if it is sometimes difficult to quantify these risks and calculate their consequences. one problem faced by many central banks with inflation targets, and which relates to this, is the risk of unfavourable developments in property prices and household indebtedness as a result of a long period of expansionary monetary policy. sweden is no exception here. both cyclical and structural factors justify the growth rate in household debts and property prices being high over a period of time in sweden and there is thus reason to take this into account in the normal analysis and forecasting work. rising house prices lead to
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in the event that the state did acquire shares, the agreement stipulated that the preference shares would be converted to common stock with extra voting rights if they were not redeemed within three years. the internationalisation of the financial system β a challenge cross - border banks generate a particularly negative external effect. if a cross - border bank experiences problems in one country, the costs incurred are distributed between the countries in which the bank operates. from the authorities β point of view, the problem is that it is difficult today to prevent a systemic risk that arises and develops in another country. the principle that is applied in the eu today, the so - called home country principle, states that it is the authority in the country where the company concerned has its registered office that is responsible for supervision. this means that if a bank has a branch in another country the authority in the bank β s home country is responsible for supervision, but if a bank has a subsidiary bank in another country then the authority in the country concerned is responsible. the crisis has demonstrated that the home country principle in its current form is inadequate for preventing cross - border risks. an example inspired by the situation in the baltic countries may clarify the problem that cross - border banks pose to national authorities. assume that we have a swedish bank that borrows in foreign currency on the international market. the bank then forwards this money to a subsidiary bank in another country. the subsidiary in turn lends the money to an end customer. if we now assume that the borrower is unable to repay the loan, for example because he has borrowed in a currency other than the one he has his income in, then the subsidiary bank may find it difficult to repay its loan from the parent bank. the parent bank may then in turn find it difficult to repay its loan. this means that the liquidity risk in foreign currency ends up in sweden although the lending that created the risk took place outside sweden β s borders. the best solution for limiting the liquidity risk is that the central bank or the supervisory authority in the country where the risk develops takes action. however, if the authority in this country does not deal with the situation we must ask ourselves whether the situation poses a serious risk to the swedish banks and, if so, whether we should act, for example by introducing a reserve requirement in foreign currency for the swedish bank. action on the part of the riksbank is a second best solution, but this alternative is probably still better than doing nothing at all. we will
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yandraduth googoolye : how african countries can play an active role in the belt and road initiative remarks by mr yandraduth googoolye, governor of the bank of mauritius, at the financial connectivity thematic forum on " how african countries can play an active role in the belt and road initiative ", beijing, 25 april 2019. * * * excellencies good morning and thank you for giving me the opportunity to address such an eminent audience. last october, at the official opening of the belt and road international financial exchange and cooperation seminar organised by the bank of china, i had stressed on africa β s eagerness to be part of china β s vision to enhance cooperation and connectivity among countries that will be part of the belt and road initiative. africa is endowed with considerable human capital, millions of acres of arable land and a myriad of natural resources. therefore, ladies and gentlemen, the combination of china β s capital, technology, market, enterprises, talents and experiences and africa β s abundant resources, huge demographic dividend and great market potential should create economic wonders. testimony to africa β s willingness to support the belt and road initiative is member states of the african union endorsement of β agenda 2063 : the africa we want β, a roadmap for structural economic transformation over a fifty - year time scale. whilst the initiative will undoubtedly enable a smooth flow of goods and services against efficient mechanisms of payment flows, africa must also see to it that adequate and timely resources are geared towards the modernization of financial market infrastructures as well as to the opening and promotion of free trade areas. these will be instrumental in supporting the expansion of the trade corridor between china and africa and in upholding cross - border e - commerce. ladies and gentlemen, a key target of the initiative rests on financial integration and cooperation. besides enhancing financial regulation cooperation, it will increase the scope and scale of bilateral currency swaps and settlements as well as the issuance of bonds in chinese yuan. it is, therefore, to the advantage of countries across africa to encourage commercial equity investment funds and private funds to participate fully in the construction of key projects stemming from the belt and road initiative. the initiative will also push forth an additional currency of choice and set the rmb among the reserve currencies for african countries. a currency that can be used, not only for trade between africa and china, but also for intra - african commercial flows. african central banks and other regulatory entities must fully embrace the crucial
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our ability in the efforts to the green the financial sector. 2 / 3 bis - central bankers'speeches of course, the new risks we are facing do not mean that the classic ones have just disappeared. the uncertain macro - financial environment, coupled with persistent geopolitical tensions continues to shape the outlook for the european banking sector. hopefully, the relaxed atmosphere we have created will contribute to open discussions. but before getting back to meetings tomorrow, please enjoy the evening and dinner in ljubljana together. thank you. 3 / 3 bis - central bankers'speeches
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, in normal macro - economic discourse, β neutral β is a factual assessment of the stance and is not synonymous with β right β ; in certain cases policymakers wish to have a loose, in other cases a tight stance. one way to set this idea within the esrb conceptual framework might be to say that the macroprudential authorities would need to lower their risk tolerance in booms and thus activate contractionary policies early ; symmetrically, they would increase their risk tolerance as booms turn to busts, and thus provide accommodative policy and support growth when the cycle weakens. but whatever the specific phrasing, a more prominent cyclical element would, in my view, be welcome. the use of macroprudential tools, especially the more wide - ranging ones such as the countercyclical buffer, should always be carefully considered in this light. timing is essential. we may or may not be able one day to fine - tune the prudential stance so as to define an β optimal policy rule β over the cycle but, as a minimum, we should be alert to the risk that the countercyclical buffer may end up to be used like a procyclical one. β better late than never β is a poor guide to countercyclical action ; the hippocratic injunction to physicians, β first, do no harm β, is more apt. an objective evaluation of the stance, and a cyclical benchmark against which to measure it, would be most useful in this respect. this is an important reason why i look forward to any progress in this field, whether we can ever fine - tune macroprudential policy or not. my third and final point on conceptual issues is that, ideally, the prudential stance should also account for the interaction of macroprudential policies across countries. euro - area countries are deeply integrated. during stress periods, this may lead financial instability in one country to propagate to other countries, if an inaction bias prevails ; the same holds, again symmetrically, for the effect of contractionary measures. how, and to what extent, this can be done is, i think, a matter for further potentially valuable reflection. before concluding, let me add that a different issue is sometimes raised about the relationship between monetary and macroprudential policy. this is an important and complex issue and it would not be possible for me to discuss it here at any meaningful length
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luigi federico signorini : macroprudential policy - effectiveness, interactions and spillovers welcome address by mr luigi federico signorini, deputy governor of the bank of italy, at the fourth annual macroprudential policy group research workshop, rome, 10 october 2019. * * * it is my pleasure to welcome you to the fourth macroprudential policy group research workshop. we are honoured to host an event that has become one of the most important opportunities to discuss macroprudential policy in europe. i would like to thank the organisers, the keynote speaker, the contributors to the four sessions and the panellists for the roundtable that will conclude the conference this afternoon. the papers to be presented today cover a wide array of topics and will help us to understand crucial features of the transmission mechanism of macroprudential policies. they take stock of the experience accumulated in recent years across the euro area. they also strive to contribute to the development of a measure of the prudential stance, an endeavour that i have always advocated as essential for the conduct of macroprudential policy. let me spend a few words on this point. the concept of stance should convey information on the overall impact of the policy instruments that have been implemented, on their adequacy in meeting policy objectives given the identified risks, and on the required policy orientation. a credible stance would help to enhance policy communication, reinforce transmission channels and counter potential inaction biases. certain steps towards setting a framework for a macroprudential stance in the eu have been taken. a notable contribution is a recent european systemic risk board publication, which proposes a β risk - resilience β framework to define the macroprudential stance. in that framework, the amount of systemic risk faced by the financial sector is compared to the level of resilience against negative shocks stemming from microprudential provisions, regulatory aspects or public safety nets, and the additional resilience created by the active macroprudential tools. the macroprudential stance is defined as loose or tight depending on whether the difference between risk and resilience is above or below some pre - specified level that measures the risk tolerance of the authorities, and thus, the β neutral β policy stance. this is an interesting framework and i certainly welcome it as a good starting point for a policy discussion. it is a high - level framework, however, and certain concepts need further development. without any claim to being exhaustive, i
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the euro area as well as cyprus have reached the pre - pandemic real gdp level within 2021, while a similar path has been recorded in the labour dynamics with the labour force participation having reached pre - pandemic levels. this has been achieved by the formulation of ample policy support. the ecb took a series of policy decisions aimed at achieving favourable financing conditions and alleviating the economic hit on households and businesses. more specifically, the ecb enhanced its asset purchase programme ( app ) with the introduction of the pandemic emergency purchase programme known as pepp, the size of which was 1. 85 trillion euros, in order to lower borrowing costs and re - establish 1 / 3 bis - central bankers'speeches favourable financing conditions within the eurozone. focusing on cyprus, the total amount of net asset purchases in government bonds reached β¬6, 86 billion euros at the end of february, 90 % of which was purchased by the cbc. at the pepp announcement, amid severe market fragmentation, the cyprus 10 year sovereign bond yield increased to 2, 21 % while within a quarter of these eurosystem bond purchases dropped by 1, 25 % ( reaching 0, 96 % in june ), exemplifying the benefits of these purchase programmes. furthermore, the cypriot banking system benefited from the use of tltro iii, as well as from the easing of macro prudential measures, in order to support access to credit. it should also be noted that through the explicit assurance to maintain supportive monetary policy for as long as needed, through our monetary policy forward guidance, the ecb is decisively strengthening the efforts to boost economic activity. turning to the current challenge that we are faced with, the russian invasion of ukraine has moderated expectations of a continued strong gdp expansion in the eurozone and cyprus, at least in the short - term. there is increased uncertainty about the economic impact, owing to the length and breadth of the conflict, the degree of severity of currently enacted sanctions and the extent of possible economic retaliation by russia. against this background, the world economy is experiencing a double hit by complex supply and demand shocks. economic impact in cyprus is expected to be channelled through the foreseen surge in oil prices, the trade in goods and services, such as minerals of oil and fuel, cereals, tourism, transportation and it services, and a negative impact on a specific part of professional services ( lawyers and accountants ), while significant confidence effects cannot be ruled out. a
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of the european continent. a small island with a part of it under occupation, thrives thanks to its extroversion and its people, who despite having been put to the test so many times in the past, have never stopped creating, evolving and moving forward. i have no doubt that together with our european partners we will take all the necessary actions to overcome this challenge as well, guided by our common core values and principles. as the great french novelist victor hugo said, " changez vos opinions, gardez vos principes ; changez vos feuilles, gardez intactes vos raciness " " change your opinions, keep to your principles ; change your leaves, keep intact your roots ". here in cyprus we often say that " a captain is proven capable when she is in a storm ". and hence, i consider ourselves lucky since our ecb captain steering us through both the covid and geopolitical storms is christine lagarde, a leader of undoubted capacity and experience, whom i thank again for being with us today and would like to invite her to the podium to share her thoughts with us. 3 / 3 bis - central bankers'speeches
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speech of mr harvesh seegolam, governor, bank of mauritius at the workshop on countering terrorist financing risks in the non - profit organisation sector thursday 25 november 2021 le meridien hotel mauritius madame zitha, co - chair of fatf β s africa middle east joint group mr hotte, team leader of eu aml / cft global facility dr beekarry, director general of independent commission against corruption and co - chair of the aml / cft core group mr yerukunondu, first deputy governor of the bank of mauritius and chairperson of financial services commission mr purmessur, permanent secretary at the ministry of financial services and good governance experts joining us from the eu aml / cft global facility heads of competent authorities members of the press ladies and gentlemen a very good morning to all of you. i am particularly pleased to address you this morning at this workshop, which is part of a series of workshops facilitated by the eu aml / cft global facility since last week. this initiative reaffirms the ongoing commitment of mauritius in its sustained fight against money laundering, terrorist financing and proliferation. the theme of the workshop - β countering terrorist financing risks in the non - profit organisation sector β β is indeed a topical one which remains high on the agenda of fatf. it is a subject matter which all countries are currently very closely working on as the npo sector remains very prominent globally. similarly, in mauritius, in line with our action plan which was spelt out by the fatf in february last year, we have been working on all identified deficiencies, including those under immediate outcome 10, that concerns the npo sector. through the high - level political commitment and enhanced collaboration between all competent authorities, we have been able to successfully demonstrate to the fatf joint group, the icrg and the plenary that we have largely addressed all action items well ahead of our specified timeline. this journey has however required a lot of efforts across various levels. it has entailed, amongst others, the development of appropriate national aml / cft strategy encompassing amongst others, an overhaul of the aml / cft legal and regulatory frameworks, implementing comprehensive risk - based supervision frameworks, enhancing regional and international cooperation, consolidating capacity building, training and outreach programs. in this process, the core group, which has now been entrenched in the legal framework, was set up under the chairmanship of the financial secretary
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fatf list heralds a new era where new challenges await us, such as ensuring sustainability of progress achieved and continuously adapting ourselves. building resilience in aml / cft matters should be at the forefront of the agenda of all competent authorities. over the past two decades, the fatf has been driving regulatory change to improve safeguards against money laundering, terrorist financing, and the financing of weapons of mass destruction. these standards are constantly being revamped to address new and emerging risks. through the mechanisms which we have set up, we will continue to undertake the necessary reforms on an ongoing basis. we will continue to work closely with our key partners, including the essamlg and international counterparts in this process to ensure compliance and effectiveness ; thus, maintaining the sustainability of reforms over both the medium and long term. ladies and gentlemen, turning to the topic of today, npos are uniquely positioned to harbour vulnerabilities that make criminal exploitation more likely, particularly for terrorism financing. cross - border terrorist financing risks, the abuse of cash and remittance systems are areas of concern for the npo sector. this is where at the level of the bank of mauritius, we are sparing no efforts in our actions to ensuring that banks and financial institutions work very closely with us to identify, mitigate and address any such risks. it becomes even more important given the risks that it may cause to financial stability as well in the country. to this end, the directorate of aml / cft at the bank of mauritius is being constantly equipped with the necessary know - how and expertise. this is to ensure that regulated entities take appropriate actions to mitigate their aml / cft risks effectively and comply with aml / cft obligations. in the area of technical compliance, mauritius was rated as non - compliant for recommendation 8, i. e non - profit organizations in the mutual evaluation report of 2018. today, we have moved to a largely compliant rating after taking various initiatives such as the introduction of amendments to strengthen laws applicable to npos, monitoring of the npo sector and the conduct of a npo risk assessment, in line with the requirements of the fatf. we recall that the risk assessment was carried out with technical support from the eu - funded global aml / cft facility consultants, our partner on our aml / cft journey. the results of the risk assessment show that the overall inherent risk of terrorist financing abuse of npos in mauritius is low - medium
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domestic credit. the central bank will shortly appear before the oireachtas finance committee in public session to discuss the variable rate mortgages bill ( 2016 ), which proposes to give the bank the power to cap variable mortgage rates charged by lenders. out of respect to the committee and its deliberations, i don β t intend to make extensive comment on the bill here, other than to say that the central bank will fully explain its reservations about the bill at the committee hearing. in a nutshell, we believe that the bill would conflict and interfere with our monetary and prudential mandates, while having counterproductive effects for borrowers. furthermore, the central bank has a prudential regulation and consumer protection mandate, but is not a competition authority, and that is an important distinction. there is a competition authority in the country, namely the competition and consumer protection commission, with which the bank engages and exchanges to the fullest extent of our respective mandates. the same distinction applies at european level, where the european commission is the competition 1 / 5 bis central bankers'speeches authority while prudential supervision of banks is entrusted to the european central bank. naturally, however, we will work both to the letter and spirit of any law the oireachtas may ultimately pass. in the meantime, it may be useful to explain precisely what our role is in relation to mortgage interest rates. our job is to ensure transparency for borrowers and facilitate switching. this is why, earlier this year, we strengthened our disclosure requirements on lenders. the central bank directed lenders to give sufficient notice when they change the interest rate they charge, to explain in layman β s terms the rationale for such changes, and to facilitate their customers who are in a position to switch to a different mortgage or to a different lender. when lenders do not honour these consumer protection obligations, when they fail to point out to their customers the options open to them, or worse, when they mislead or bring their customers to pay more interest than they should, the central bank acts forcefully. and to emphasise that point, the central bank has driven all mortgage lenders to review their mortgage books to ensure that all borrowers who should have been on tracker mortgages are on tracker mortgages, and compensated accordingly if incorrect rates were applied. as part of this programme of work, we have just reprimanded and fined springboard and ordered it to pay redress for serious failings in
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perspective on the central bank and welcome your questions. 1 www. centralbank. ie / press - area / speeches / pages / macro - financialperspectives. aspx 5 / 5 bis central bankers'speeches
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. in the meantime, lending has improved and fragmentation within the euro area has practically disappeared. but could new tltros be needed all the same? if these loans have a residual maturity of at least one year, the banking supervisor categorises them as long - term financing. the first tltro tranche expires in june 2020. this will start to have effects on the net stable funding ratio as of mid - 2019. the banks are aware of this and they have been preparing themselves for it. it is premature to decide on a new tltro now. as of january, the ecb no longer wants to make net asset purchases but only to replace maturing securities. how exactly will that be done in practice? the principle is that we take a market - neutral approach. in december we will discuss the guidelines for our reinvestments. you have said that forward guidance on monetary policy will become the ecb β s most important instrument in 2019. this will also increase dependency on the markets. how long will this go on for? forward guidance is particularly important as long as the economy still requires support and the central bank β s policy rate is at its effective lower bound. significant monetary policy stimulus is still needed at present. we expect the key ecb interest rates to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2 % over the medium term. in due course, when monetary policy begins to normalise and uncertainty abates, forward guidance will also lose importance as a monetary policy instrument. will the first step be to increase the interest rate on the ecb β s deposit facility from β 0. 40 % or the interest rate on the main refinancing operations from 0. 00 % β or both at the same time? the rate on our deposit facility is currently decisive for the market rate, and so for the transmission of our monetary policy signal, because the banks are operating in an environment of excess liquidity. as that situation will continue for some time to come, the deposit facility rate remains the most important monetary policy instrument. however, it is still too early to discuss any adjustment to our key interest rates and their constellation. let β s look beyond monetary policy. what do you see as the most serious deficiencies of the euro area? 3 / 4 bis central bankers'speeches the franco -
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german agreement on a fiscal capacity is welcome and also has important political significance for european integration. building up the esm rescue fund is more urgent. we also need to complete the banking union and the capital markets union without undue delay. the banking union envisages a common deposit insurance scheme. germany has serious misgivings that this would amount to risk - sharing. a common deposit insurance is essential for the completion of the banking union and to underpin the confidence of all depositors in the financial system. this protection of deposits up to β¬100, 000 will be funded by contributions from banks. but this scheme is just one of the components that are necessary to make the banking sector more resilient and safeguard financial stability. it is of the utmost importance to implement the rules for bank resolution which stipulate that at least 8 % of banks β liabilities should be made up of instruments that could absorb losses in the event of bank failure. in my view, all of these instruments should be either equity or subordinated bonds so that all customer deposits would be effectively protected. we have now talked a lot about problems. let β s now ask what you see as the greatest achievement of the euro? citizens have overwhelmingly embraced the euro. people appreciate how it brings europeans closer together. many aspects of everyday life have become easier, such as doing business or travelling. the level of acceptance is high in all euro area countries. let β s look ahead : your term of office expires at the end of may. do you have any regrets? i am confident that the sustained convergence of inflation to a level below, but close to, 2 % over the medium term will proceed. i will be here for another six months, and i expect to see further progress towards our aim by the end of my mandate, but i will clearly have to leave before the normalisation of our monetary policy. to be successful in our monetary policy we need to be patient, prudent and persistent. 4 / 4 bis central bankers'speeches
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the austrian currency because of inflation and state bankruptcy ; now a way had to be found to regain public confidence. the solution was to create the new issuing bank as an institution held by private shareholders. this arrangement was not uncommon at the time. the bank of england, which dates back to 1694, as well as the banque de france and de nederlandsche bank, which had both been founded only a couple of years before the oesterreichische nationalbank, had been set up as privately held joint stock corporations. the advantage of this arrangement was two - fold. on the one hand, the shareholders contributed capital, which was the foundation of the financial strength of the new institution and which the austrian government itself would have found difficult to raise. on the other hand, private shareholders β participation in the management of the bank was thought to pose limits on the government and prevent government from intervening in a way that might prove harmful to monetary stability. thus, the new institution would find it easier to obtain confidence and trust. the shares of the bank were subscribed by a rather broad group of people. indeed, we find many entries with just one or two shares in the list of shareholders. one of many medium - sized investors was the composer ludwig van beethoven. in our museum you can have a look at a share made out to his name. by the bis central bankers β speeches way, this was quite a good investment : between 1818 and 1827, when beethoven died, he earned something between 15 % and 20 % per year on his investment. the nationalbank was not only financially successful for its shareholders ; it also succeeded in stabilizing the value of the austrian florin in terms of silver. the period of calm lasted until 1848, when the people of the empire toppled metternich β s repressive regime. the bank, which was perceived as quite close to the state, faced a run β everybody tried to convert his banknotes into silver coins. in response, the nationalbank resorted to a measure that was a small revolution in itself. to restore confidence, the governing board decided to start publishing end - of - month financial statements. before 1848 nobody apart from a handful of bank officials and civil servants at the ministry of finance had known about the true state of the bank, notably the amount of banknotes in circulation and silver reserves held. now this information was made public. in the following years, the bank never returned to its former secrecy, but recognized the importance of
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klaus liebscher : economic and monetary union ( emu ) - an important pillar of stability for the international financial system speech by mr klaus liebscher, governor of the oesterreichische nationalbank, at the symposium β the role of international institutions in globalisation β, centre for the study of international institutions csi, innsbruck, 16 november 2001. * * * it was with great pleasure that i accepted the invitation to take part in the symposium on β the role of international institutions in globalisation β and to deliver some thoughts about the economic and monetary union and its role in the international financial system. but first of all i would like to congratulate dean prof. chen and prof. socher for their faculty initiatives to set up the β centre for the study of international institutions β. i strongly do hope that this new centre will contribute to a better understanding for the functioning as well as the need of international institutions like the imf, the worldbank, the bis and others safeguarding the economic developments in a world of liberalisation and globalisation. i really do wish you all the success needed for! it has always been the duty of monetary authorities to secure both monetary and financial stability. yet, issues of monetary and financial stability have moved up prominently on the agenda, due to the growth of financial services, both in volume and in depth, the financial crises of recent years or the terror attacks of september, 11. with the globalisation of capital flows the vulnerability of countries to financial crises has increased. international institutions, especially the imf, have in recent years played an important role in crisis prevention and crisis management. the crises in asia and other regions have directed attention towards the phenomenon of financial contagion both from the side of politicians as well as academics. through the global network of financial markets a crisis in one part of the world may quickly spread via a chain reaction to other places, with the potential to destabilise the global financial system. these crises have transformed the international agenda : at the global level plans for a new international financial architecture have abounded and the future role of institutions like the imf and the world bank has been widely and intensively debated. prominent economists like paul krugman, joseph stiglitz, stan fischer, barry eichengreen and, of course the meltzer commission have formulated quite diverse and controversial proposals. in this context i will focus my deliberations to the role of emu and how the euro can provide for more
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recent recovery was marked, for some time, by a reluctance of businesses to do so. a slowing in the pace of job creation resulted in limited new opportunities available to these displaced workers. though these stories sound plausible, restructuring is, in practice, difficult to measure, and alternative measurement techniques have led to very different conclusions about the amount of restructuring that has occurred in recent years. 2 for example, both groshen and potter ( 2003 ) and aaronson, rissman, and sullivan ( 2004 ) construct summary measures of the extent of restructuring. while the groshen - potter measure shows an elevated level of restructuring in recent years, the aaronson - rissman - sullivan measure indicates that the labor market has not experienced an unusual amount of restructuring recently. these authors will present updates of their earlier research at these meetings. taking a somewhat different approach than previous analyses, we attempted to identify those industries that have performed especially poorly since the 2001 business cycle peak and assess whether these underperforming industries have been characterized by restructuring. we judged the performance of each industry according to two criteria : ( 1 ) an industry β s net employment change from march 2001 to november 2004, and ( 2 ) the change in an industry β s share of total employment between march 2001 and november 2004 compared with the change in employment shares exhibited over a pre - peak period of similar length. 3 table 1 ranks the performance of two - digit naics industries since march 2001 according to the first measure of underperformance. in an absolute sense, the poorest performing industries include durable and nondurable manufacturing, the information sector, retail trade, transportation and warehousing, and professional and technical services. moreover, four of those six industries - durable manufacturing, information, transportation and warehousing, and professional and technical services also ranked among the six poorest performers according to the second criterion, which is based on relative performance. table 1 underperforming industries in terms of the change in employment since the latest cyclical peak ( march 2001 ) industry performance ranking1 durable manufacturing nondurable manufacturing information retail trade transportation and warehousing professional and technical services wholesale trade company management utilities natural resources and mining arts, entertainment, and recreation real estate and leasing construction administrative support and waste other finance and insurance education accommodations and food services health care and social assistance note : underlined industries ranked poorly according to both measures of underperformance. a higher rank indicates worse performance. the latter measure helps to distinguish industries that
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that policymakers face. thank you. in rejecting a 4 percent inflation target, bernanke ( 2010a ) suggests that β inflation would be higher and probably more volatile under such a policy β and β inflation expectations would also likely become significantly less stable. β according to bernanke ( 2010b ), β the federal reserve over a long period of time has established a great deal of credibility in terms of keeping inflation low, around 2 percent... if we were to go to 4 percent, and say we β re going to 4 percent, we would risk i think losing a lot of that hard - won credibility because folks would say, well, if we go to 4, why not go to 6... it would be very difficult to tie down credible expectations at 4. β references ball, laurence ( 2013 ). β the case for four percent inflation, β central bank of the republic of turkey, central bank review, vol. 13 ( may ), pp. 17 β 31. barattieri, alessandro, susanto basu, and peter gottschalk ( 2014 ). β some evidence on the importance of sticky wages, β american economic journal : macroeconomics, vol. 6 ( january ), pp. 70 β 101. bernanke, ben ( 2010a ). β the economic outlook and monetary policy, β speech delivered at the federal reserve bank of kansas city economic symposium, jackson hole, wyoming, august 27, https : / / www. federalreserve. gov / newsevents / speech / bernanke20100827a. htm. β β β ( 2010b ). β statement of the honorable ben bernanke, chairman, board of governors of the federal reserve system, β in the economic outlook, hearing before the joint economic committee, u. s. congress, april 14, senate hearing 111 - 583, 111 cong. washington : government printing office. bernanke, ben s., thomas laubach, frederic s. mishkin, and adam s. posen ( 1999 ). inflation targeting : lessons from the international experience. princeton, n. j. : princeton university press. blanchard, olivier, giovanni dell β ariccia, and paolo mauro ( 2010 ). β rethinking macroeconomic policy, β imf staff position note spn / 10 / 03. washington : international monetary fund, february 12, https : / / www. imf
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some of these bottlenecks in the financial sector. innovations in technology that enable ict - empowered financial services platform coupled with conducive regulations have led to a large proportion of the previously unbanked population to be mainstreamed in the formal banking system. central banks in the region are committed to improving access to financial services and products to a much larger number of individuals and small businesses because it is good for management of both monetary policy and the stability of the financial system. bis central bankers β speeches your excellency, ladies and gentlemen ; the overall objective of this conference is to promote the development of smallholder and agri - business inclusive finance. to this effect, the conference brings together : 1. financial institutions to learn about innovative financial tools and products ; 2. farmers organisations that will help solve their members β financial challenges ; 3. central banks, ministries of finance, agriculture and other government agencies seeking to discover how to develop and strengthen an enabling environment, that will enhance financial access and unlock agricultural growth in their respective countries ; 4. ict developers willing to showcase their agri - finance innovations and build a strategic network ; 5. development practitioners and the academia who will share their experiences, get acquainted with new developments and challenges, and strike new partnerships. your excellency, ladies and gentlemen : banks all over the world are concerned with risk mitigation and appropriately pricing these risks. this is more pervasive in the agricultural sector. this forum seeks to address these issues by sharing experiences of innovations that are aiding banks, insurance companies and other financial institutions to safely reach out to such sectors and sub - sectors in sustainable ways. this is the model we would like to learn and enact in our economies. with these remarks, ladies and gentlemen, it is my honour and duty to once again welcome you all to the kenya school of monetary studies, and to our international guests, we feel very honoured to host you. i now wish to invite the chairman of afraca to give his remarks. thank you. bis central bankers β speeches
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##banked or under banked, into the realm of the formal financial sector not only through their lending activities but also savings mobilization. lowering the cost of doing business : several modalities including establishment of three currency centers in towns outside the key kenyan cities to lower cash in transit costs for banks. cbk is also actively pursuing modalities of reducing the cost of establishing branch networks for deposit taking microfinance institutions, in addition to agency mechanism. ladies and gentlemen : as a result of cbk β s adoption of a new approach to regulating the financial sector through dialogue with the players and acting as a development agent, the kenyan financial sector has experienced a structural transformation. this transformation is evidenced by the following achievements : exponential growth of bank branches from 740 in 2007 to 1, 063 as at end of 2010. increase in the number of deposit accounts from 4. 7 million in 2007 to 12. 8 million as at end of 2010. increase in the number of loan accounts from 1. 2 million in 2007 to 1. 8 million as at 2010. bis central bankers β speeches licensing of five deposit taking microfinance institutions with 41 branches as at 31st december 2010, which had opened 1. 01 million deposit accounts with deposits worth kshs. 7. 90 billion ( usd 99m ). increase in the automated teller machines from 1, 012 in 2007 to 1, 940 as at 31st december 2010. banks contracting 8, 809 agents by december 2010. mobile money transfers increased their total transactions to kshs. 2. 3 bn or usd 29 m per day. well over 15 million kenyans have subscribed to mobile money transfers since their roll out in 2007. this is expected to increase especially with the confidence to be generated by the draft e - money regulations recently issued by cbk. mobile phone financial services have generated micro - savings accounts ( mkesho ) to the tune of over 700, 000 accounts with kshs. 678m in deposits. ladies and gentlemen : the structural transformation of kenya β s financial sector has not been achieved on a silver platter. there has always been the task of surmounting prevalent challenges. key among these is the need to balance the goals of financial efficiency, stability and integrity on one side with financial inclusion on the other. the pursuit of these goals requires delicate balancing given their importance. however, as already alluded, balancing of these goals is made easier when regulators embrace their new role of being a market developer in addition to their
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of the population. the national sample survey data ( 2002 β 03 ) revealed that nearly 51 per cent of farmer households in the country did not seek credit from either institutional or non - institutional sources of any kind. a number of rural households are still not covered by banks. they are deprived of basic banking services like a savings account or minimal credit facilities. the proportion of rural residents who lack access to bank accounts is nearly 40 per cent, and the figure rises to over three - fifths in the eastern and north - eastern regions of india. accordingly, our primary objective is to take banking to all excluded sections of the society, rural and urban. a more focused and structured approach towards financial inclusion has been followed since the year 2005 when reserve bank of india decided to implement policies to promote financial inclusion and urged the banking system to focus on this goal. our focus has, specifically, been on providing banking services to all the 600 thousand villages and meeting their financial needs through basic financial products like savings, credit and remittance. the objectives of financial inclusion, in the wider context of the agenda for inclusive growth, have been pursued through a multi - agency approach. in 2006, the government of india constituted a committee on financial inclusion, 5 which made a wide range of recommendations on the strategies for building an inclusive financial sector and gave a national rural financial inclusion plan. government of india has set up the financial stability and development council ( fsdc ), which is mandated, inter alia, to focus on financial inclusion and financial literacy issues. in order to further strengthen the ongoing financial inclusion agenda in india, a high level financial inclusion advisory committee has been constituted by rbi. the committee would pave the way for developing a viable and sustainable banking services delivery model focussing on accessible and affordable financial services, developing products and processes for rural and urban consumers presently outside the banking network and for suggesting appropriate regulatory framework to ensure that financial inclusion and financial stability move in tandem. financial sector regulators including rbi are fully committed to the financial inclusion mission. i will cover this in more detail in a subsequent section. framework for measurement and data analysis requirements β conceptual issues an essential pre - requisite for measurement is to understand the context and framework of financial inclusion. any effort to measure the various dimensions of financial inclusion is not possible without explaining the context and framework. the basic framework for measurement of financial inclusion should cover some important dimensions. first, financial inclusion, financial literacy and consumer protection are the three major planks of financial stability.
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bis central bankers β speeches of experts from both institutions who are scheduled to speak over the course of the next two days, especially madam first deputy governor, i am sure that the seminar will prove to be very useful in sharing of knowledge and experience among the participants. i wish the seminar all success and hope that our guests from the banque de france have a pleasant stay in india and do find time to get a feel of the rich cultural cocktail that this country presents. ladies and gentlemen thank you for your patience. merci. selected references β’ cartwright, peter : the vulnerable consumer of financial services : law, policy and regulation β’ kopke, kerry : a fair bit of confusion : treating customers fairly in south africa http : / / www. bowman. co. za / news - blog / blog / treating - customers - fairly - in - south - africa β’ lumpkin, stephen : consumer protection and financial innovation : a few basic propositions. β’ sergeant review of simple financial products β interim report http : / / www. eacg. co. uk / sergeant - review - of - simple - financial - products - interim - report β’ farnish, christine : the silent majority http : / / www. icaew. com / en / technical / financial - services / regulation - guidance / the - silentmajority bis central bankers β speeches
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of this year, the acpr published a study revealing that an estimated 10 β 20 % of all securities held by french insurers are exposed to risk in relation to the transition to a low - carbon economy. the banque de france and the acpr have set up and are actively coordinating the network of central banks and supervisors for greening the financial system ( ngfs ). launched in paris last december, the ngfs started out with eight trailblazing supervisors but has since grown to include 19 members and five observers, including the sustainable insurance forum ( sif ). we are working hard on two subjects where insurers are in the vanguard : disclosure of current climate risks and the projection of dynamic stress tests based on future risks. a report detailing the network β s first year of work and making recommendations will be presented at a conference in paris on 17 april next year. * * i have called green finance β the new frontier for the 21st century β. today, you are talking about β pushing back the limits of insurability β. these images testify to your pioneering role and evoke your spirit of entrepreneurship and innovation. the risks facing the world in 2018 are unquestionably growing, and we need these qualities more than ever before. thank you for your attention. 3 / 3 bis central bankers'speeches
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are a crucial asset for france, and their critical role in financing the economy can and indeed must grow further. corporate equity is vital to innovation and hence to a vibrant economy, but in mid - 2018 equity was equivalent to just 77 % of gdp in the euro area and 76 % in france, compared with 124 % in the united states. ii. tapping into regulatory opportunities. i would like to start this section off by noting that france β s introduction of a flat tax on capital income on 1 january has not had the slightest detrimental effect on life insurance, despite fears on this score within your industry. i am also delighted that the new pacte bill, which was recently adopted at the first reading by the national assembly, seeks to promote equity investment as well as long - term investment. our discussions in the lead - up helped to shape this legislation, with the result that the bill includes measures to reform β eurogrowth β ( eurocroissance ) life insurance products at long last, setting an ambitious target β with which you are all familiar β of eur 20 billion in outstandings, compared with eur 2 billion at present. accordingly, france β s lawmakers have expanded the tools put in place to achieve this goal. now it is time to deliver. we are entitled to expect a fresh start, with a reset for eurogrowth products and innovative and energetic sales and marketing efforts by your industry, once the framework 1 / 3 bis central bankers'speeches has been simplified. retirement savings, meanwhile, have been the subject of a lively annuity versus lump sum debate. like you, i am glad that the ability to receive annuity payments β and above all the principle of an annuity product β has been maintained across the board, not to defend one industry against another, but because a lifetime income is closer to a retirement product and because this timeframe should support more equity investment. here again, though, it is up to you to take the steps to enable retirement savings to finally take off in france and ensure that your approach to asset / liability management better takes into account the longer durations of these products. the needs are huge, and the goal of increasing assets held in retirement savings products from eur 200 billion to eur 300 billion is well within our reach. i would also stress the need to ensure that policyholders are adequately informed about retirement savings products, especially β as with all unit - linked products β if they do not include a capital guarantee. within europe, the forthcoming
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addition to the flexible monetary policy strategy implemented by the central bank as of the end of 2010, the prudent measures adopted by the brsa accompanied by the safeguarded fiscal discipline strengthened the central bank β s hand. we firmly believe that we will attain very positive results with respect to price stability and financial stability by the end of 2012. along with national macroprudential measures introduced by countries, some international criteria have also been developed for the sake of safeguarding financial stability. for example, the basel iii accords bring about new arrangements reinforcing the capital structures of financial institutions. these arrangements will ensure a more resilient financial sector against unforeseen risks and will contribute to financial stability. the recent efforts clearly point to a consensus among countries on the critical importance of safeguarding financial stability. despite the consensus among policy - makers on the importance of financial stability, the economic literature lacks adequate theoretical and empirical studies on the details of the transmission mechanism from financial stability to macroeconomic stability. at this point, academia is expected to do their share in this respect. the two - day conference will stage parallel sessions, panel discussions and presentations on these issues. banking sector dynamics, macroprudential measures and their impact on macroeconomic stability, systemic risk issue and sovereign debt dynamics are among the topics that will be addressed at the conference. two of our distinguished guests, mr. ricardo caballero and mr. franklin allen, will be delivering speeches. mr. caballero will be presenting a speech on the first day of the conference and mr. allen β s presentation is scheduled for the second day. on the second day of the conference, the panel discussion titled β how did the crisis challenge the central banking as we knew it? what should ( not ) change? β will be held, at which senior central bankers will be sharing their country experiences. i think this panel discussion will be very interesting and beneficial for all the participants. the studies that will be presented throughout the conference will contribute to better understanding of the factors threatening financial and macroeconomic stability and developing policies to achieve these two objectives simultaneously. i believe that the conference will also serve as a forum for the participants for exchanging views. in this respect, i would like to thank the organization committee for their efforts in bringing these very interesting and enlightening studies under this conference. i wish the conference a complete success and i would like to thank all our guests for their participation. bis central bankers β speeches
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an expansionary rather than contractionary impact on economic activity. in sum, while turkish economy contracted sharply during the recent crisis, its well capitalized and sound financial system is likely to support the economic activity along the recovery. in fact, recent gdp releases suggest that economic activity in turkey displayed a solid rebound in the second quarter. therefore, we feel that the worst episode of the crisis is now behind us, which should in turn support turkey β s economic prospects. however, it remains to be seen whether recent improvements in leading indicators will translate into a long lasting and durable recovery, since part of the rebound reflects the impact of the fiscal stimulus packages. the situation is similar across the globe : recovery has started in the global economy, yet the extraordinary policy measures taken since the last quarter of 2008 makes it harder to interpret the underlying trends. given the elevated levels of unemployment and ongoing de - leveraging process, the recovery is likely to be gradual. distinguished guests, let me close my speech by turning to the main theme of this session. overall, i am encouraged to recognize initial signs of recovery but also i am anxious that the green shoots that have sprouted may still expose to a spring frost. β green shoots β may not be vigorous enough and important downside risks still remain. however, unlike a couple of quarters ago, we should also acknowledge that we can now at least talk about upside risks β that is, β blossoming shoots β. thank you.
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the first quarter of 2011, compared with 6 percent of mortgages originated to borrowers in high - income neighborhoods. the higher rates of delinquency suggest that homeownership may have been a riskier proposition over the past decade for households in low - and moderate - income neighborhoods than in high - income neighborhoods. delinquency rates are higher, in part, because borrowers in these communities were more likely to end up in complicated or inappropriate mortgage products, unacceptably often as a result of unfair and deceptive lending practices. but borrowers in these communities may also be more sensitive to house price declines because they may have fewer financial resources outside of housing, and they may have had little equity in the property to begin with. 10 although investing in a home has risks, it also has positive qualities. households may feel more comfortable investing in housing than in other investments because houses are familiar, tangible, and provide concrete ties to the community. regular mortgage payments may serve as a useful savings commitment device. finally, homes pay out a β dividend β in the form of housing services β that is, providing a place to live. the housing services provided by an owner - occupied home β such as control over one β s own space β may be preferable to those provided by a rental. in making a decision about homeownership, prospective buyers need to consider the risks as well as the benefits β in particular, the possibility that house prices can fall and that such declines can have long - lasting effects on their financial well - being. the current decline in national house prices and the preceding run - up were, of course, unusually large even by historical standards. but even during times when house prices were rising nationally, prices fell steeply in certain local markets, such as texas in the mid - 1980s or massachusetts in the for a further discussion of the increase in lending over this period, see, christopher mayer, and karen pence ( 2008 ), β subprime mortgages : what, where, and to whom? β finance and economics discussion series 2008 β 29 ( washington : board of governors of the federal reserve system, june ). houses represented nearly three - fourths of total assets for homeowners in low - and moderate - income neighborhoods in 2007, according to the survey of consumer finances. in contrast, homes typically represented a bit over half of gross assets for homeowners in higher income neighborhoods in 2007. the median combined loan - to - value
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william c dudley : the us economic outlook remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the washington and lee university h parker willis lecture in political economics, lexington, virginia, 1 april 2010. * * * thank you for that kind introduction and the opportunity to speak here today. the past few years have been an extraordinary time for policymakers. we have been very aggressive in providing support to the economy, and it now appears that a sustainable recovery is underway. however, given the headwinds created by the collapse of the u. s. real estate market and its consequent damage to the financial system and household balance sheets, it seems unlikely that the recovery will be as strong as we would desire. as a result, the substantial amount of slack in productive capacity that exists today will likely only be absorbed gradually. consequently, trend inflation, at least over the near term, should remain very low. this is why the federal open market committee ( fomc ) concluded at its march meeting that β... economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period β. what i would like to do today is to explain in some detail the logic underlying this expectation that economic conditions will warrant exceptionally low levels of the federal funds rate for an extended period. this conclusion stems from the observation that the current economic environment is qualitatively different from previous post - world war ii business cycles. most post - war recessions were preceded by high rates of resource utilization and rising trend inflation. this prompted a tightening of monetary policy, which, in turn, dampened interestrate sensitive spending, particularly on housing and consumer durable goods. then, as underlying inflation pressures subsided, monetary policy was eased and interest - rate sensitive spending rebounded, often quite sharply. the current business cycle is different in one key respect. it was preceded by a global financial crisis. the financial crisis was due, in large part, to excessive leverage and excessive investment in real estate assets. it will take time to unwind these excesses. today, i will offer a framework for assessing the forces that have shaped the recent performance of the u. s. economy. this framework will provide context to the fiscal and monetary policy responses to what is now being called the β great recession. β then, i will discuss the economic outlook for the united
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mr backstrom gives his perspective on sweden β s economy and looks at factors that contribute to long - term growth speech by mr urban backstrom, governor of the sveriges riksbank and chairman of the board of directors and president of the bank for international settlements, given at the university of gothenburg on 27 october 1999. * * * a current topic, in the united states and elsewhere, is whether structural changes have made it possible to achieve stronger economic growth than before without generating inflationary tendencies. the term β a new economy β has been coined for this phenomenon. the us economy β s new, improved performance is sometimes said to be due in part to the rapid advances in computer technology and telecommunications. internet is a part of this. progress in these fields has led to better and more efficient processes for production and distribution. this in turn has paved the way for stronger competition, higher productivity growth and thereby lower inflation. consumers, moreover, are better informed than they used to be. productivity growth in the united states does seem to have risen. the imf, to mention one observer, considers that the potential growth rate β the annual growth that can be achieved without boosting inflation β has moved up from 2. 25 % to 2. 75 %. an even higher potential rate has been estimated by others. in sweden, too, most things suggest that labour productivity has risen somewhat faster in the present decade than it did in the 1980s. the shift may be in the order of one - half of a percentage point. this is the change that lies behind the common, but not entirely certain, estimate that nowadays the swedish economy can maintain an annual growth rate between 2 % and 2. 5 %. but swedish data do not yet provide any definite evidence of an improvement in productivity, and hence in potential growth, that corresponds to what has happened in america. it does seem likely, however, that the rapid advances in information technology will also have a major impact on future production and distribution processes in sweden. sweden is well to the fore in internet applications. still, when and to what extent these factors will affect growth in general is not yet clear. but even though appreciable general economic consequences cannot be discerned at present, the tendencies are worth considering. some parallels can perhaps be drawn with the situation over a century ago, when sweden was being transformed fairly rapidly from a poor european country into a dynamic and strongly expanding industrialised economy. there are also lessons to be learned from developments in recent
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stable framework for the subsequent process of industrialisation. it is just this stability in the fundamental conditions for economic activities that was no doubt important for the process that resulted in the industrial revolution, which in itself was full of commercial risks and uncertainties. improvement in opportunities for change but β¦ a similar gloss can be applied to the realignment of economic policy from the second half of the 1980s to the middle of the 1990s. there have been a number of reforms aimed at creating stability and opportunities. the credit and currency markets have been deregulated, components of the social security system have been reformed, a tax reform has been implemented, targets have been established for government finances, price stability is enshrined in law and the riksbank has been given an independent status. all this represents good possibilities of the swedish economy facing a stable future as we step over the threshold to a new millennium. the question is, however, whether the new information technology will be implemented in the far - reaching ways that are necessary in order to reap the really large benefits. let us look at another period in sweden β s economic history when things did not go quite as well. after world war ii, when activity in the industrialised countries recovered and competition grew, partly because trade barriers were lowered, it became necessary to realign production in sweden. the need for change resembled what we are beginning to discern on the horizon today. for much of this post - war period, however, wage costs rose at a rapid rate. profitability in swedish business was accordingly under pressure from two fronts : growing competition from the rest of the world and rising wage costs. firms countered the pressure on profits by rationalising in an attempt to cut production costs rather than by investing in new products. the diminishing profits simply did not provide the stimulus that was needed for a prompt renewal of the capital stock in response to the pressure for change. a process of change involves shedding, but development is equally important. most things still looked good to begin with. the 1960s was a fantastic decade for growth. but the strategy proved to be defensive and stagnation set in during the 1970s. rationalisation has its limits as a means for growth. without renewal, growth normally slows sooner or later. measures are called for in periods of growth but it is easy to be deceived and lean back to enjoy the fruits. the long - term growth trend did indeed begin to turn downwards more markedly than in other countries. economic policy responded
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##fy the volatility. amid the fragile global financial climate, the thai financial markets have been relatively resilient compared to those of other emerging markets, thanks to thailand β s strong external position. current account position last year registered a surplus of 9 percent of gdp, and is projected to remain at that level in 2016. our international reserves have been at a healthy level, standing at around three times of the short - term external debt and 1. 3 times of the total external debt. foreign holdings of the thai government and bank of thailand bond outstanding are less than 9 percent, compared with more than 30 percent in some other emerging markets in the region. external debt of the corporate sector has been relatively low, and mostly belongs to large companies, which manage their exchange rate risk sufficiently well. bis central bankers β speeches while thailand β s financial strength serves as a buffer against external shocks, it is important that the private sector is not complacent and should continue to be prudent in their financial risk management. global financial volatility can definitely trigger two - way movements of currencies and asset prices. as a small open economy, thailand cannot escape, but to find effective ways to live with the global volatility. on the bank of thailand β s part, under the flexible exchange rate regime, currency movement serves as the first line of defense against unexpected external events. we continue to be prudent in using an appropriate mix of policy tools to help prevent excessive volatility of the currency and asset prices. in addition, to build market resilience in the longer run, we embrace on financial market developments, as deep and liquid markets would better absorb large swings in capital flows. we also plan to further relax capital flow regulations to allow more balanced flows in and out of the country, which would enhance stability against short - term speculative flows. ladies and gentlemen, moving from the financial side to the real side, let me share with you the monetary policy committee β s latest assessment to summarize where the thai economy stands at the moment. this year, the thai economy is projected to gradually recover, driven mainly by government spending and the tourism sector. government spending, mainly through small investment projects, has lent support to the recent economic recovery. contribution from large - scale infrastructure projects is expected to become more evident in the latter half of this year. meanwhile, tourism has been an important growth driver, with a broad - based improvement in a number of tourists from china and other
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gather here tonight, i hope we will continue to work together on the route to enhancing competitiveness and sustainable development of thailand. kob khun krub. bis central bankers β speeches
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stakeholders. this will ultimately protect the interest of customers, employees, directors, stakeholders and avoid any unwarranted action from the law enforcing / other agencies. the report of the secretarial audit will need to be annexed with the board report. the board of directors in their report to shareholders will need to explain any qualification / remark made by the company secretary in practice in the secretarial audit. 16. the secretarial audit is intended to be a detailed and meaningful exercise conducted by a professional to verify compliance with provisions of various laws applicable to a company. it is you, practicing company secretaries who will have the responsibility to conduct these audits for which you will have similar powers and rights as statutory auditors. in fact, practicing company secretaries will form part of the key management personnel ( kmp ) of certain class of companies whose appointment, remuneration and removal can only be effected through board resolutions. given the significance of the position and the work involved in the audits, it will be important to ensure that practicing company secretaries inculcate the required expertise and knowledge to conduct these audits diligently and with bis central bankers β speeches integrity. this will benefit the company management, government authorities, regulators, investors as well as other stakeholders with positive effects spreading to the economy. corporate social responsibility 17. β the price of greatness is responsibility β, winston churchill often used to say. there is no reason why it should be any different for companies as well. a new initiative that has been put in place under the ca 2013 relates to corporate social responsibility ( csr ) of companies. under the act, every company with net worth of rs 500 crore or more, or turnover of rs 1, 000 crore or more or a net profit of rs 5 crore or more during any financial year will need to set up a csr committee, which will, inter alia, recommend to the board an appropriate csr policy, indicate the csr activities that the company will undertake and recommend the amount of expenditure to be incurred on the activities. boards of csr companies will need to ensure that at least 2 % of the average net profits made during the three immediately preceding financial years are utilised for csr activities, giving preference to local area and areas around where it operates. in case of non - fulfilment of csr spending, the reasons will need to be indicated in the report of the board in a β comply or explain β approach. the csr policy
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sectors β both retail and industrial β and incremental lending has been much diversified compared to in the mid β and late 1990s, the retail credit as a proportion of gdp has remained quite low ( table 2 ). with the low existing penetration levels and the fact that more than 30 per cent of indians who are below 15 years of age, will enter in the age group of 15 β 64 years over the next 5 to 10 years, the structural opportunity for banks is evident. the younger generation is far more open to consumer loans, financial products like insurance, mutual funds and wealth management and thereby offers a much bigger revenue base for financial - service providers. although significant financial deepening has been taking place in indian economy over the years as seen from the deposit - gdp ratio, bank assets - gdp ratio and credit - gdp ratio, the low levels of penetration in india can provide a medium term structural growth driver for banks. a noteworthy feature discernible in the indian context is that the rise in indicators of financial deepening takes place along with a noticeable rise in the domestic savings rate. this has to be seen in the backdrop of financial sector reforms, rise in total factor productivity and investment boom which has led to acceleration in the growth performance. low dependency ratio and saving nexus in the recent years, a virtuous cycle of growth, saving and investment has been in operation ( table 3 ) and is likely to continue in the near to longer - term being contributed by demographic dividends and decline in dependency ratio. these factors will facilitate both rise in saving and capital formation and are expected to further reinforce the virtuous cycle of growth in future. the existing studies on india suggest a near one - for - one relationship between the dependency ratio and national savings. according to recent studies ( goldman sachs 2007 ), 1 percentage point decrease in the dependency ratio adds 0. 8 per cent to the national saving ratio. rodrik and subramanian ( 2004 ) used estimation results by mulheisen ( 1997 ) on india's consumption behaviour, which shows a one - to - one relationship between the dependency and saving ratios. accordingly in india, a fall in dependency ratio from 37. 1 per cent in 2006 to 34. 6 in 2011 and 31. 7 per cent in 2026 will result in rise in saving from the present level of 37. 7 per cent in 2007 β 08. section 2 : a projection of housing and education loan requirement the vast business potential for banking can be ascertained from a
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, liquidity, and risk management β apply only, or principally, to the largest, most complex, and internationally active banks. these new standards are not meant to apply to, and clearly would not be appropriate for, community banks. we will work to maintain a clear distinction between community banks and larger institutions in the application of new regulations. conclusion to conclude, i would like to reemphasize the importance that my colleagues on the board and i place on the federal reserve β s relationship with community banks. the fed is committed to fair, consistent, and informed examinations that take into account the size, complexity, and individual circumstances of each bank we oversee. we will do all we can to support the banks β safety and soundness and eliminate unnecessary costs. despite economic uncertainties, the condition of community banks is improving. that β s good news not only for banks, but for their communities and the national economy as well. thanks, and enjoy the rest of your meetings. bis central bankers β speeches
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the lessons of the crisis and are determined not to repeat the mistakes of the past. credit metrics are now improving in most banks as problem loans have been addressed and resolved and new credit underwriting has been quite restrictive for a number of years. deposit growth has outpaced loan demand and reliance on wholesale funding has been reduced. capital positions are stronger. the interest margin pressure banks face today is partly due to low interest rates and partly due to weak loan demand, both of which are consequences of a sluggish economy. as the economic recovery gains momentum, however, both of these conditions should reverse and give bankers the opportunity to deploy the liquidity and capital they have amassed to the benefit of their shareholders and their local economies. community bankers are being heard even as they anticipate economic recovery, however, community bankers worry that the burden of new regulations may inhibit their ability to lend in their communities or prohibitively increase the costs of such lending. we certainly understand this concern. federal reserve research over the years has confirmed that the burden of regulations falls disproportionately on smaller banks. bis central bankers β speeches supervisors at the federal reserve bank of minneapolis have recently tried to quantify this effect. to do so, they used survey data to estimate the relative number of new employees that banks of different sizes might need to hire in response to the same regulatory requirement. using call report data from 2011, they estimated in their preliminary analysis that hiring one additional employee would reduce the return on assets by 23 basis points for the median bank in the group of smallest banks, those with total assets of $ 50 million or less. to put this estimate in perspective, such a decline could cause about 13 percent of the banks of that size to go from profitable to unprofitable. as a comparison, given the same increase in regulation, they assume banks between $ 500 million and $ 1 billion would hire three employees and experience a decline of about 4 basis points in return on assets for the median bank. while this is still a significant effect, very few banks in this group would go from being profitable to unprofitable as a result of the regulatory burden. regulatory overreaction to a crisis is always a risk. but this time, i think community bankers have been more successful than they realize in making the case against β one - size - fits - all β regulation. i can β t remember a time when i have seen more regulatory proposals drafted that differentiate between banks based on size or complexity.
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current level for a long time. finally, the package of measures was supplemented by two further initiatives directly designed to promote lending to firms and households. first, a new longer - term refinancing operations programme, with special characteristics expressly geared to boosting the growth of credit to the private sector, was implemented. these operations, which will begin in september this year and will be repeated quarterly until june 2016, will mature in september 2018. this loan term of up to four years for the first bis central bankers β speeches loans requested by banks clearly exceeds the usual time horizons in liquidity management and is much closer to those seen in the extension of credit to the private sector. the cost of funds for banks will be highly competitive because their interest rate has been set at the level for the main refinancing operations ( currently at 0. 15 %, as noted above ) plus a small fixed spread of 10 basis points. the amounts banks may apply for under this programme will be set on the basis, first, of their current level of lending ( strictly credit to the non - financial private sector, excluding that for house purchase ) and, second, of their performance over the coming two years. banks that are more willing to grant credit will have access to a larger volume of funds. to ensure that funds are effectively used for financing the expenses of households and firms, the measure includes a mechanism whereby any banks failing to show lending levels above certain minima ( set on the basis of their track record in the twelve months before the governing council β s decision ) will have to return the funds they borrowed from the central bank. the second credit - related measure adopted was to step up the work currently under way to design a programme for the purchase of asset - backed securities. this market was heavily affected by the crisis, and its underdevelopment in europe is constraining the greater diversification of sources of corporate finance, particularly for smes. initiatives such as this may stimulate the deepening of this market, although they are unlikely to be decisive if not accompanied by further action in equally important areas, such as that of regulation. to sum up, the situation of the euro area justifies the differing conduct of its monetary policy which, as i have attempted to explain, is still at the stage of scaling up its expansionary action, in contrast to the likely winding - down of stimuli prevalent in other advanced economies. this adds complexity and uncertainty to the exceptional situation of abundant liquidity and low interest
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, housing services ( blue line ), and services excluding housing and energy ( red line ). i look at these three categories separately because what has been causing inflation in each of these sectors is somewhat different. understanding the different causes and how they affect the different components could help the fomc predict the future course of inflation. since the fed β s monetary policy report explains why the fed chooses the pce price index to the cpi ( see board of governors, 2000, footnote 1 ). notwithstanding this preference, the fomc relies on a variety of aggregate price measures, as well as other information on prices and costs, in assessing the path of inflation. for an explanation of how the board of governors of the federal reserve system evaluates changes in inflation, see board of governors ( 2016 ). monetary policy affects the economy ( and inflation ) with a lag, the committee is always forward looking. focusing on the price of core goods, the black line in figure 3, you can see how goods prices rose sharply in the second half of 2020 due to both a rapid shift in demand toward goods and unprecedented disruptions to global supply chains. as so many were isolating themselves β especially those of us lucky enough to have jobs that let us work remotely β there was a sharp shift in demand from services ( eating out and traveling ) to durable goods ( like stationary bicycles ) to make our stay - at - home experience more pleasant. the pandemic also severely disrupted the global production and distribution of goods, leading to large backlogs at ports and widespread shortages of materials, most notably semiconductors. the imbalance between supply and demand for goods resulted in a sharp increase of prices. at the end of 2021, once vaccines were developed and deployed and people slowly emerged from isolation, there was a partial shift in demand back to services, and supply chain bottlenecks started to ease. thus, inflation in this category started to come down and has come down substantially. in contrast to core goods, housing services inflation, the blue dashed line in figure 3, has not started to come down yet. housing services prices are estimated using information on rents and measure the price that renters pay, and homeowners would pay, to live in their homes. like core goods, demand in the housing sector underwent a major shift during the pandemic. the surge in work from home shown in figure 4 led to an increase in the demand for bigger homes located in smaller metro areas or further from city
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that facilitate faster and cheaper payments. 1 / 6 bis - central bankers'speeches the scale of the challenge faced by regulators, law enforcement and industry in an environment of almost continuous technological advancement is immense. the interconnected nature of the global financial system and the proliferation of cross - border crime has added a layer of complexity and opaqueness to compound the challenges already faced. recent scandals and exposaΒ©s have revealed many risks. what we have seen is that tackling criminality across borders and stemming flows of money is complex and very difficult. the incentives for bad actors to circumvent obstacles and controls is too great for any single country or authority to be able to combat alone. the risks of financial crime and the abuse of the financial system is going to continue to rise in the coming years. digitalisation, artificial intelligence and further moves to a world online for the next generation means that traditional views and methods of preventing financial crime are obsolete. we need smarter, faster and more agile ways to combat financial crime in the system. however, before concluding on this point, it is not all doom and gloom. the same technological advances will also present more opportunities for transparency, deterrence, detection and disruption. the critical point being that it means we must collaborate and share, follow the risk and not get bogged down in process, and be laser focused on outcomes, not just on outputs. europe's response to the challenges turning to where we are now. the genesis of the new eu aml framework was an acknowledgment that a more collective and coordinated approach is required across the eu member states to tackle these challenges. moving to a single rulebook and setting up a central aml authority was seen as critical to improving aml effectiveness across the union. a key concern has been fragmentation in approaches by different national authorities and not identifying and mitigating risks with a broader lens, in a more coordinated way across europe. the creation of amla is a significant step in the right direction to confront the challenges we face, today and tomorrow. it presents a unique opportunity to grasp the nettle of regulatory fragmentation and eliminate the weak points in the current european aml framework. however, we should not be complacent in assuming that amla's success in combatting money laundering is guaranteed. setting up amla for success most people do not think about designing regulation and supervisory architecture. why would they? it is only something that catches people's attention when something goes wrong
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to ensure it is future - ready. as i have said before, " the code is a cornerstone of consumer protection in financial services in ireland, establishing a set of rules and expectations for how firms should treat their customers and has allowed the central bank to intervene to protect consumers. " the changes we have proposed build on the existing code, reflecting the provision of financial services in a digital world. 1 / 3 bis - central bankers'speeches we have had very active and important engagement with stakeholders on the code, with feedback coming through from across industry, civil society and other government agencies and regulators, as well as from the minister for finance. the feedback we have received has been broadly positive with many stakeholders welcoming the proposals. we are aiming to publish the revised code early in the new year. when implemented, consumers will benefit from a package of protections that reflect how they are accessing financial services today. regulated firms will benefit from a clearer articulation of their code obligations. as you know, we are also making changes to our supervisory model, which we will begin to implement in january. the new model remains risk - based, but is evolving to deliver a more integrated approach drawing on all elements of our mandate ( consumer and investor protection, safety and soundness, financial stability and integrity of the system ). this enhanced approach is based on accumulated experience, on insight, on best practice and is built for a faster moving and more complex financial services sector. firms will hear one consistent voice from the bank, with more coordinated messaging and more streamlined demands across the full span of our regulatory and supervisory mandate. we will promote a more open and transparent supervisory approach. to enable and implement our new supervisory framework we need the right operational approach and organisational structure. we are moving to an organisational structure where our regulatory and supervisory directorates will have teams responsible for integrated supervision across all our regulatory outcomes. importantly, our supervisory model will place consumer protection at the heart of day - today supervision. it will position us better as an organisation to meet our objectives to ensure consumers of financial services are protected in this changing financial landscape, as highlighted by the oecd report. this is why this review by the oecd is so important, as it provides us with recommendations and insights that will support our ambition to transform and will be incorporated into our transformed supervisory approach. the oecd's assessment that the central bank is operating in line with the high level principles is very positive. we also welcome the recommendations on how
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some cyber attacks but does not go without costs. finally, cyber - security is also a global issue : for a more effective response, it is necessary to establish cooperation at an international level and across sectors, well beyond the financial sector. in that perspective, initiatives from the financial stability oversight council ( fsoc ) in the us to improve cooperation between sectors, particularly those dependent on the financial sector, such as the utilities or telecommunications sectors, or the establishment of european network and information security agency are much welcomed. ii. against that background, understanding the threats, organizing protection and prevention as well as the coordination of the private and public actions are prerequisites for effectively fighting cybercrime. the aim of today β s seminar is to reflect collectively on this and to share experience. the first important step is to understand why the financial sector is a popular target of hacker attacks. that β s one of the objectives of the first panel of distinguished speakers. they will attempt to answer such questions as : what are the factors making the financial sector a privileged target for cybercrime? how to identify and quantify cyber - attacks? what impacts of cyber - criminality on financial stability? there is one question we must pay particular attention to : the virtual currencies. recent operations against financial criminality have evidenced that new payment methods using the internet, and linking the virtual sphere with the real sphere, are a privileged way for cyber criminals to launder money. virtual currencies have indeed recently drawn attention from authorities and from central banks in particular. designed as alternatives to official currencies but with no guarantee of reimbursement, they cannot be classified as currencies because they lack legal tender and therefore do not infringe the central banks β monopoly in the issuance of money. however, although they currently do not pose a significant threat to financial stability, they do pose serious questions in terms of money laundering and can be perceived as vehicles for speculative investments. virtual currencies therefore bring challenges to authorities when it comes to regulating them. our speakers on the virtual currencies topic could address such questions as : should the use of virtual currencies be prohibited to protect us from cybercrime and the expansion of money laundering or bis central bankers β speeches terrorism? or is it better to set out the legal, regulatory and ethical issues of the virtual currencies? a round table dealing with financial sector solutions to curb new cybercriminals β strategies will follow. to
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in times of trouble, sovereigns, like financial institutions can be either illiquid, or insolvent, or both. in many cases, the distinction is blurred. when uncertainty is high, sovereigns face liquidity shortages, and they can only issue new debt at constantly higher interest rates. this, in turn, creates doubts about their ultimate solvency, triggering a negative spiral. this process is clearly at work in peripheral europe, especially spain and italy, since the beginning of august. bis central bankers β speeches in short, sovereign solvency is partly endogenous. good fundamentals are an absolute necessity, but not always a sufficient condition. liquidity spirals, when allowed to develop, can lock a country, just like a financial institution, into a bad equilibrium. what is therefore the appropriate policy reaction? we had a continuing debate on that question in 2009 β 2010 when dealing with financial institutions. we are faced with the same question now regarding sovereign risk. the standard answer is twofold. first, get the fundamentals right. for european countries, it means reverting to a sustainable fiscal position which, in most cases, necessitates a significant primary surplus. necessary efforts are greater now since doubts have been created about sovereigns β ability to meet their obligations. and second, when solvency is achieved, there is a need for a liquidity backstop to ensure that bad equilibria will not be allowed to develop. where that backstop is coming from is a key question in the current debate. in most jurisdictions, but crucially not in the euro area, unconventional monetary policies have led central banks to purchase significant amounts of government debt : those purchases amount to 51 % of the total debt issued since 2009 in the uk, 21 % in the us and 7. 6 % in the euro area β where they were fully sterilized. although this was not the primary purpose, this policy stance has contributed to giving markets an insurance, or even an assurance, against a potential dry - up in liquidity. in all countries where significant amounts of debt have been purchased by monetary authorities, long - term interest rates have been kept at very low levels, irrespective of their fiscal situation. by contrast, purchases of sovereign debt by the eurosystem have remained extremely limited and will stay so. our objectives are very circumscribed : avoid disruptions in the monetary policy transmission mechanism. any lasting liquidity backstop has to come from
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sunil mendis : financial system stability and basel ii - the way forward inaugural address by the chief guest mr sunil mendis, governor of the central bank of sri lanka, at the 17th anniversary convention of the association of professional bankers, colombo, sri lanka, 28 august 2005. * * * ladies and gentlemen it is an honour for me to be invited to give the keynote address at this forum of eminent bankers in sri lanka and distinguished persons from the international banking arena. i am happy to see our friends from the reserve bank of india and from the basel committee who will no doubt make this convention very lively for discussion on a subject which concerns us all. as central bankers we have a common interest in ensuring financial stability which impacts upon the macroeconomic performance. further, as monetary policy transmission takes place through the financial institutions for the achievement of its target of economic and price stability, the central bank has the responsibility for ensuring that the financial system as a whole is sound. it should be strong enough to withstand internal and external shocks. we must ensure that our payments and settlements system is protected from the risk of failure at any cost since it is the conduit through which our economic business and commercial activity is facilitated. the causes and consequences of the recent asian financial crises are still vivid in our minds and we from our part, as professional bankers, must endeavor to ensure that they are not repeated. the central banks can use both preventive measures and corrective action to maintain financial stability. a constant and continuous monitoring of risks is a preventive measure. crisis resolution is a corrective action. a strong regulatory regime would ensure the former and a financial safety net is an essential component of the latter. the two supplement each other. the cooperation of all parties concerned in both these actions is of paramount importance in maintaining financial system stability. in sri lanka, as in most emerging economies, we have a bank dominated financial system. therefore, ensuring banking soundness will inevitably lead to financial system soundness. the recent initiatives taken in this regard are significant β we have enhanced capital requirements to reflect the increased leverage in the industry. even regulatory capital is at a comfortable margin above the international norm but is still only 10 % of risk assets which is the absolute minimum should these risks materialize. therefore, increasing the minimum capital requirements would provide a healthy platform for growth and expansion of banking business. however, capital is the last line of defence. the more immediate needs are good corporate governance and good risk management which will steer the
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not addressed, then problems stemming from structural deficiencies are bound to reappear. concluding remarks in a nutshell, the past global growth model proved unsustainable. the lessons from this and previous crises suggest that failure to address long overdue reform challenges promptly might result in a β lost decade β for the global economy. these reform challenges include : achieving a balanced global growth trajectory ; implementing stability - oriented macroeconomic policies ; carrying out structural reforms ; putting in place more flexible exchange rate arrangements ; appropriate financial sector regulation and oversight. only partial progress has been made so far, and the distortions that led to global imbalances are still present. if reform challenges are not met, there is a major risk that global economic activity will remain subdued, high public debt will become more persistent and unemployment will remain high. it is therefore crucial to make headway with our reform agenda, while taking care to ensure that our response to the crisis does not sow the seeds for renewed economic imbalances and financial excesses. thank you for your attention.
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ravi menon : enabling fintech for good opening remarks by mr ravi menon, managing director of the monetary authority of singapore, at the leaders'session at inclusive fintech forum, kigali, 21 june 2023. * * * his excellency paul kagame, president of the republic of rwanda, his excellency hakainde hichilema, president of the republic of zambia, distinguished guests, ladies and gentlemen, good afternoon. i am delighted to be part of this remarkable session bringing africa and asia together on the theme of enabling fintech for good. there is much we can do together, and singapore is proud to be part of this effort. since coming here a couple of days ago, my colleagues and i have been struck by the energy and vitality of this place. technology is transforming the world of finance. fintech presents both opportunity and risk. we want to harness these opportunities while managing the risks. in singapore, when we began our fintech journey 8 years ago, we set four guiding principles for the use of fintech : to increase efficiency ; to manage risks better ; to create new opportunities ; and most important to improve people's lives. eight years later, these principles continue to guide us. as we walked our fintech journey, we learnt along the way. two critical enablers have proven decisive in getting us to where we are : first, building foundational digital infrastructure second, fostering connectivity and collaboration let me say a few quick words about each of them. first, foundational digital infrastructure β systems that allow different users, different solutions, and different devices to seamlessly interact with one another. just as physical infrastructure like roads and railways helped to connect and advance the industrial economy, we need digital infrastructures to enable a vibrant digital economy. what are these digital infrastructures? one, a digital identity, so that we can interact with one another digitally, with trust and confidence, knowing who is on the other side of the transaction. in singapore, we introduced singpass as a digital identity to facilitate secure, consent - based verification for residents to digitally access more than 700 different government services. 1 / 3 bis - central bankers'speeches two, interoperable electronic payments. we need not only digital payment solutions but common payment rails or networks for these different payment solutions to be interoperable. in singapore, we built paynow, an instant payment service. residents can move money to one another's bank account in real - time at
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a storehouse of information on a plethora of topics. we have proactively placed a large amount of information on our website, such as circulars, master circulars, publications and press releases, as also a data base on indian economy. the bank has started the process of digitization of records with suitable software solution with scanning, storing indexing and retrieval features. at the instance of the central information commission, reserve bank of india has formulated a disclosure policy under the right to information act, 2005, in respect of the information held by it. the policy, which contains an indicative negative list / classes of information which the reserve bank considers as exempt from disclosure under the provisions of the right to information act, 2005, has been hosted on the reserve bank of india website. we are probably the first public authority to declare upfront as to what information can be disclosed and what is exempt from disclosure. we believe that such clear enunciation would clear all doubts from the minds of information seekers, and help to bring down the number of requests and also minimize the use of the appellate mechanism. apart from placing the information, as required under section 4 ( 1 ) ( b ) of the act on our website, we are also placing information disclosed under the act, if it is of general interest, on our website in a disclosure log. the number of applications received by us has risen progressively year on year, from 796 in 2005 β 06 ( october β june ) to 5, 087 in ( 2010 β 11 ). our disclosure record has been good, with 78 percent of the requests being met in full and 5 percent in part. only 6 percent requests were declined fully and remaining 11 percent were disposed of in other manner. during the six years of implementation of the rti act in rbi, we received over 18, 000 requests. only about 16 % of the requestors went in for first appeal. the rbi top management and the central board of directors monitor the progress made by us in the implementation of the rti act through monthly, quarterly and annual reports submitted by the concerned division. having said this, it would be pertinent to stress that being the country β s central bank, rbi is the banker to government and banks, regulator and supervisor of the financial system, manager of currency operations, custodian of forex reserves etc., and is, therefore, privy to vital and sensitive information, which cannot be placed in the public domain due to its sensitivity and impact on
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in 2002 to 19. 7 % in 2003. as an intervention currency, the euro was predominantly used in euro area neighbouring countries. turning to private users, the internationalisation of the euro has been most visible when it comes to the role of the euro as an international financing currency. in 2003, the share of the euro in the stock of international issues amounts to more than 30 %. a significant share of euro - denominated securities have been targeted at, and purchased by, euro area investors. in using the euro as an issuance currency, financial institutions and corporations, mainly from mature economies ( usa, uk ), have taken advantage of the greater size and liquidity provided by the increasingly integrated eurodenominated bond markets. with regard to the share of the euro in foreign exchange transactions preliminary results from the 2004 bis triennial survey, point to a notable increase in activity in foreign exchange trading. based on these preliminary results, the euro was the second most actively traded currency in foreign exchange markets worldwide, and accounted for 37 % of foreign exchange transactions, broadly the same as in 2001. globally, the euro continued to be traded predominantly against the us dollar, as 76 % of total worldwide foreign exchange activity involving the euro was with the us dollar. to sum up, the euro has been firmly and credibly established as the world β s second international currency during the first five years of monetary union, and its gradually increased use in several market segments highlights the degree of confidence non - euro area residents have in the euro. the ecb and the international role of the euro this brings me to the stance adopted by the eurosystem on the international role of its currency. i will start by emphasising a key characteristic of the international use of any currency : there is no β sovereign β power that can enforce its use. this is why the international use of a currency is, in essence, a market - driven process. the main economic factors underpinning the internationalisation are : 1. domestic stability, that is a low inflation rate, making the currency attractive as a store of value ; 2. a high degree of openness to international trade and finance. this is a key determinant for the currency β s use as a medium of exchange and a unit of account ; and 3. a developed financial system with deep and liquid markets offering participants a wide range of services and products in terms of borrowing, investing and hedging. against this background, the eurosystem takes a
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gaston reinesch : beyond the horizon of the luxembourg presidency β a central banker β s perspective speech by mr gaston reinesch, governor of the central bank of luxembourg, at the national bank of poland β s biannual eu presidency lecture, warsaw, 27 october 2015. * * * ladies and gentlemen, dear marek, at the outset, i would like to extend my sincere gratitude to the national bank of poland and in particular to governor belka for inviting me to give the national bank of poland β s biannual presidency lecture, which has already earned an excellent reputation and become a wellestablished tradition. it allows to take stock of ongoing developments in the european union ( eu ) and to ponder how it could evolve in the future. i am very pleased to be given the opportunity to address such a distinguished audience here in warsaw today. i. introduction ladies and gentlemen, his royal highness, the grand - duc of luxembourg, during his state visit to poland in may last year, introduced his speech on the occasion of the dinner offered by the president of the republic of poland by stating that he was touched by an invitation to poland β s public radio to pay tribute to radio luxembourg, formerly called β luxy β by the polish people, and that he particularly appreciated the symbolism of this gesture. he stressed that existing ties between nations may not necessarily be material but very often had immaterial aspects. the fact that the grand - duchy of luxembourg became associated with values of liberty and a certain β joie de vivre β by the polish people was for him a source of pride. such reminiscence living in the memories and in the heart of people is priceless. the paths of our two countries did not often cross directly, but we certainly have something in common, notwithstanding our different size and history. to some extent, we share a similar past in the sense that given our geographically strategic location, we too, in a more remote past, have been the target of neighbouring countries that had expansionary ambitions. but our two countries have succeeded in overcoming the greatest challenges, including historical tragedy. the ties between luxembourg and poland have strengthened over time. today, about 5, 000 polish citizens contribute to luxembourg β s multicultural landscape. i am also very glad to say that i recently appointed a polish national who will soon join our legal department. the central bank of luxembourg β s staff is representing 20 different citizenships and more than 50 % of its staff do not have luxembourg citizenship. poland is
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amando m tetangco, jr : the thrift banking industry amid an evolving global landscape speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the annual convention of the chamber of thrift banks, manila, 21 march 2012. * * * the officers and members of the chamber of thrift banks under the leadership of president patrick cheng, distinguished leaders of the banking community, fellow workers in government, special guests from the media, ladies and gentlemen, good morning. on behalf of the bangko sentral ng pilipinas, i commend the ctb for the choice of its convention theme this year. it is simple and straightforward : β thrift banks : partner in national development β. there is a clear understanding of the role you play in our economy. indeed, by accumulating savings of depositors to finance small and medium enterprises β¦ as well as consumer loans, β¦ thrift banks continue to help the economy grow and generate employment. the resources of thrift banks deposits, loans and capital have all grown substantially. a review of industry figures indicate that increases in deposits in thrift banks were matched by similar increases in loans to consumers β¦ as well as to micro, small, and medium enterprises β¦ or what we call msmes. as a result, thrift banks in general are comfortably above the minimum threshold β¦ mandated for msme lending. nevertheless, given that our banks remain quite liquid, thrift banks can help more deserving msmes. the importance of msmes in our country cannot be overemphasized. the msme sector provides employment for most filipinos ; it is, in fact, the backbone of our economy. this is where the members of the chamber of thrift banks can make a lot of difference in terms of moving our economy forward. ladies and gentlemen. our country is poised to achieve solid growth this year β¦ with both our monetary and fiscal engines running. the bsp β s recent monetary policy decisions have kept our interest rates at low single - digit levels. this keeps the cost of money down and provides stimulus for our economy. at the same time, government has been raising more revenues and will be spending more this year for infrastructure, education, and other public services. steady investment inflows provide additional impetus for growth. thus, while the global economy continues to grapple with the adverse impact of the debt crisis in europe and slower
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benjamin e diokno : strengthening the bsp β s collaboration with the academic community opening remarks by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the signing of memorandum of understanding between the bangko sentral ng pilipinas and carnegie mellon university - australia, manila, 2 september 2019. * * * prof. ramayya krishnan, dean, heinz college of the carnegie mellon university ; prof. emil bolongaita, head of the carnegie mellon university β australia ; my bsp colleagues β¦ good morning. the bangko sentral ng pilipinas has been known as one that continuously ensures the continued learning and capacity building of its people. the need to pursue this has become more relevant given the ever changing landscape of central banking and the growing complexity and increasing demands of the banking and financial industries as it embraces digital transformation. currently, the bangko sentral ng pilipinas is pursuing the strategy for technology adoption in regulatory supervision ( stars ) program, which covers real - time market surveillance, digital supervision and examination, data analytics, data collection, and distribution. we are also pursuing the national retail payment system ( nrps ) modernization initiatives, financial technology ( fintech ) innovations to promote financial inclusion, cashless purchase card initiatives, among others. the card production for the philippine identification system ( philsys ) and use of government ereceipts are bsp β s contribution to the e - government master plan of the national government. internally, the bsp is strengthening and updating its systems and processes through the integrated hr information system and strengthening its information security, including data privacy and cybersecurity. these initiatives β to be successful β would require the up - skilling or re - tooling of bsp staff and the re - engineering of the systems and processes of the bsp. however, we cannot do this alone, and this brings me to our activity, and why we are all here, today. the digital transformation initiatives of the bangko sentral ng pilipinas requires collaborations with leading practitioners and experts and globally recognized centers of excellence like the carnegie mellon university ( cmu ) β australia, to ensure its success. the campuses of the cmu have all been acclaimed to be leaders in their respective fields of specialization. in fact, the times higher education has ranked cmu as 24th among the thousands of universities in the world. cmu has also
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broader perspective [ β¦ ]. it requires a well - functioning institutional framework such as the imf, multilateral development banks ( mdbs ), and the g20. β i these words are particularly relevant in the current context. ii. regional responses : the case of europe let me now turn to my second point : regional responses, taking europe as the example. the european union is a unique case of very advanced cooperation between countries at a regional level. the cooperation is obviously multifaceted, but today i would like to focus on three shared economic and social assets of europe : its single currency, its single market, and its unique social model. page 3 sur 6 three european assets : its single currency, its single market, and its unique social model. first, with the euro, we share a solid currency which is recognised worldwide. let me say it straight away : the monetary union can be considered as one of europe β s greatest successes. as you know, the single currency was officially launched with the maastricht treaty in 1992 and introduced in 1999. but maastricht and the euro are naturally part of a broader history : the history of europe, and its singular achievement of making the transition from war to peace. the euro has indeed provided us with a strong symbol of unity among european nations. it is true that there is currently some euro - scepticism and a surge of populism, but, a clear majority of euro area citizens support the euro today ( 73 % according to the latest eurobarometer ) ii [ slide ]. from 12 at the start, the number of participating countries has risen to 19 today. seven additional countries have decided to join the euro since 1999 β most recently lithuania in 2015 β, and none has wanted to leave it. the euro is not a technocratic utopia : it is a political and democratic decision, supported 25 years on, with hindsight, by a clear majority of citizens. the fact is the euro has already delivered material benefits. in line with our mandate, inflation has been kept under control. this directly benefits household purchasing power and helps build confidence in the value of the currency. let us take a historical perspective. in the 18 years preceding the introduction of the euro ( 1981 - 1998 ), inflation gradually declined but remained at 4. 6 % on average, with major disparities across countries. in the 18 years since the euro ( 1999 - 2016 ), inflation has been much more stable, averaging 1.
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and tough financial supervision. it is easy to underestimate this achievement. the idea was adopted less than two years ago. the single supervisory mechanism is now up and running. there is no example in contemporary european history when so much has been achieved in so little time. 2. we have launched a tough and comprehensive aqr and subsequent stress tests that should be completed by the end of this year. for the first time, these exercises will be conducted in a fully integrated way β under the aegis of the ssm β with full accountability of the results. completion should mark a turning point where there will be no more doubts about the sustainability of our banks and credit should resume at a normal pace. 3. in the longer run, a major policy challenge for the euro area is to β reinvent β a new and robust financial integration model. we need sound cross - border capital flows, bis central bankers β speeches because we do not want the eurosystem to intermediate permanently between borrowers and lenders from different countries. developing a safe securitisation process should be a priority, despite the major technical difficulties. ii / β is europe facing the prospect of a lost decade? questions about long - term growth are not limited to europe. what we hear about our continent reflects a more general concern : the possibility of β secular stagnation β in advanced economies. larry has launched this crucial debate. i don β t know whether he was thinking specifically about europe, but, of course, this question is very relevant for us. secular stagnation rests on the assumption that the natural interest rate is negative. this may happen for two reasons : β’ in the short run, we may have a downward shock on demand and an increase in savings resulting from the deleveraging process. i have just explained how we are currently addressing this issue. β’ in the longer run, ageing and slower innovation may push up saving rates and bring down the return on capital. therefore, the ultimate response to the risk of secular stagnation is to improve the return on investment, thus pushing the natural interest rate back into positive territory. again, this is not only a european problem. but we do have difficulties in this regard. structural reforms are not easy. many, however, are currently being implemented. italy is abolishing its provinces, generating savings that will allow for a reduction in taxes and liberalising its labour market. france is on the same track and has reduced taxes on its labour costs as
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the south african economy with that of africa. this will indeed be beneficial through boosting interregional trade, investment and capital flows, and allow the domestic economy to tap into the more vibrant growth rates being experienced in the rest of sub - saharan africa. it is estimated that an effective integration with the sub - continent could add as much as 1, 5 per cent to south africa β s growth rate. furthermore, south africa should capitalise on its comparative advantages, related to physical, financial and telecommunication infrastructure to attract international firms with the aspiration to gain a foothold in africa. a study, recently conducted by the world bank, identified three areas of opportunity to improve this country β s export competitiveness, namely, boosting local competition by opening south african markets to domestic and foreign entry ; promoting deeper regional integration in goods and services within africa ; and alleviating infrastructure bottlenecks. this brings us to the second factor which would meaningfully enhance south africa β s growth potential, namely the forceful implementation of the r1 trillion infrastructure expenditure programme of government. through multiplier effects, and in terms of job creation, especially with regard to the promotion of low - skilled jobs, economic growth can be materially enhanced. several studies have shown that investment in economic infrastructure has the potential to act as one of the most effective policies in terms of promoting economic growth. employment is created during the construction phase of such infrastructure projects, as well as during the operational life thereof. moreover, the key driver of private sector investment is public sector investment as it inspires both business and consumer confidence. a combination of these two driving forces has the potential to easily boost south africa β s growth to rates well in excess of current levels, putting this country on a higher road to economic prosperity, thus hopefully reducing unemployment levels, poverty levels and the degree of inequality. i further believe that it will positively contribute to further restore the dignity of our fellow south africans. south africans at times can tend to be fairly pessimistic. the challenges we face are immense, but not dissimilar in scale and extent to those faced not only by developing economies but also developed economies. i however choose to be optimistic and do believe that we have many factors that do count in our favour and am convinced that with the right policy choices we can go a long way towards successfully addressing the triple challenges of structural unemployment, poverty and inequality. i thank you. bis central bankers β speeches
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close to zero and the major central banks have undertaken around usd7 trillion of quantitative easing. although the federal reserve has discontinued its bond purchase programme, global quantitative easing in 2015 is expected to be greater than at any time since 2011. bank bail - outs during the gfc have imposed enormous costs on taxpayers ( close to 30 % of gdp in the case of ireland ) and at home we saw the large fiscal costs associated with the support for south canterbury finance. sound prudential policies relating to capital adequacy, liquidity management, core funding, disclosure requirements, and stress testing of balance sheets cannot always prevent financial crises and the need for unconventional monetary policy, but they can lower the risk of systemic failure. dincer n, and b eichengreen 2014 β central bank transparency and independence : updates and new measures β international journal of central banking. bis central bankers β speeches vii ) the emergence of macro - prudential policy one of the insights from the gfc was how rapidly instability could develop even though an economy might be growing close to its potential, and be experiencing sound fiscal policy and price stability. an environment of low interest rates, rising leverage, aggressive competition among lending institutions, and a widespread search for yield by investors usually translates quickly into rising asset prices β especially when the global economy is growing at a rapid rate, as was the case during 2003 β 07. when financial crises occur, asset valuations decline and the lower asset prices may be unable to support the debt that financed their acquisition. we are currently seeing considerable appreciation in asset prices ( including fixed income securities, equities, and real estate ) in many countries as a result of extensive monetary accommodation and investors aggressively searching for yield. many central banks and regulatory agencies have turned to macro - prudential policies in an attempt to reduce risks to financial stability, including those associated with an overheated housing market. in view of these concerns, the reserve bank introduced macro - prudential policy in the form of speed limits on high loan - to - value ratio ( lvr ) lending for existing residential property on 1 october 2013. house prices were already significantly overvalued based on historical and international indicators and were accelerating rapidly in auckland and christchurch ( which account for around half of the national market ) and gaining considerable momentum in several other regions. in addition, the ratio of household debt to household disposable income at 156 percent was high, and banks were competing aggressively to provide mortgages to borrowers with
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at banco de mexico enthusiastically join president enrique pena nieto in thanking richard for all that he has done for mexico and to enhance mexico β us relationships, which i am sure he will continue to do. bis central bankers β speeches
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and securities commission ( cnbv ), the insurance and surety national commission ( cnsf ), the national commission for retirement savings ( consar ), and the bank savings protection institute ( ipab ). the council complies with, or is oriented toward complying with, the four principles i mentioned that are essential for these kinds of arrangements to work : the cesf has a clear mandate for performing its duties in this area, specified in the statutes of each of the institutions that comprise it and in its own statutes ; the cesf works in a transparent way and with complete respect for the responsibilities and, if applicable, autonomy of the institutions involved ; and the cesf operates on the basis of a mechanism of accountability, based mainly on periodic reports to the general public. finally, the composition of the council has served as a basis for underpinning the availability of information and the analytical foundation for evaluating the risks that could affect the financial system as a whole, as well as the instruments needed for facing them, although much remains to be done in this respect. given the importance of this entity, the executive has requested congress to approve its incorporation into law. 4. conclusion one of the main lessons from the global economic crisis is that financial stability requires a new policy approach in which two features are particularly noteworthy : 1. macroprudential policy is likely to adopt a more important role than before ; and 2. the achievement of financial stability requires simultaneous and coordinated efforts at the macroeconomic, microprudential and macroprudential levels. although macroprudential policy is not a new concept, the issue at this stage is radically different from the experience of previous years, both in reach and relevance. in particular, the focus today is on the potential for a generalized use of these instruments at a global level and for a greater responsibility in the achievement of financial stability. the problem is that despite an explosion of research in this area, we still find ourselves with many gaps from theoretical and empirical standpoints. a number of measures need to be implemented at the domestic and international levels if these challenges are to be overcome. this comprises research, more and better statistics, building the appropriate analytical capacity, and adjusting national institutional frameworks as needed, among other measures. furthermore, in view of the implications of financial globalization for contagion and regulatory arbitrage, cooperation from the international community is of the essence. it is also important to emphasize that expectations on the role of macroprudential
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to address this risk? some policy makers have argued that public disclosure of information could help reduce the risk of future systemic financial crisis, by preventing the buildup of " excessive " leverage or concentrations of risk. the principal focus of attention, as in the immediate wake of the failure of long term capital management, has been on two quite different types of public disclosure. the first is information that would make it easier to evaluate the overall leverage or risk profile of major hedge funds and their counterparties, and thereby judge their vulnerability to a sharp movement in asset prices. the second is information about the actual positions of individual funds or institutions : information that would make it easier to identify concentrated exposures to specific risk factors, and thereby assess more accurately the potential impact of the failure of a major fund or institutions on the market as a whole. these pose very different challenges and offer different benefits. there are a number of crude measures of overall risk profile that, if disclosed to the market, would give counterparties information they do not now typically get about the risk of failure of the fund. one example is data on the size of daily variations in net asset value, var, or profit and loss over the previous quarter. this type of information would not reveal proprietary information about trading strategies or otherwise create substantial disincentives to risk taking. although these would provide some information on the overall risk profile of the fund, they would be lagging indicators, and they would carry the usual risk of providing false comfort in some circumstances and excessive concern in others. adopting such measures would give the institutions that provide financing and leverage to hedge funds a somewhat greater capacity to judge their direct risk to those funds. but that is not their principal challenge. the institutions already know the positions they are financing, and they can use the usual range of tools to measure the potential exposure, net of collateral, in those positions. and where they do not feel they have adequate information to evaluate the overall risk profile of the fund, they can manage that risk by taking less exposure, by requiring more margin, or by building a greater cushion of protection against overall risk. so the potential gains from a disclosure regime of this type would be limited, at least as compared with the cost of trying to put such a regime in place on the global scale that would be necessary to make it effective. by far the greater challenge is to assess the potential impact of the failure of a major hedge fund on the firm's other exposures and other counterparties. this is
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, or when markets are particularly vulnerable to a more acute decline in liquidity. in this sense, liquidity is like confidence. and, like confidence, liquidity plays a critical role both in establishing the conditions than can lead to a financial shock, and in determining whether that shock becomes acute, threatening broader damage to the functioning of financial and credit markets. what role can policy play in reducing the vulnerability of markets to this type of dynamic? of course, central banks have a range of instruments they can use in the event of a crisis. by injecting liquidity into the system, and thus strengthening confidence, they can reduce the risk that temporary liquidity problems will result in default by otherwise solvent institutions, or damage to the payment system or credit process. but what can policy makers do ex ante to limit the risk of crisis? the most powerful instruments we have are those that affect the strength of the basic, fundamental shock absorbers in the financial system. when capital and liquidity cushions at the major institutions are strong, then markets as a whole are less vulnerable to the adverse spiral of asset price declines, increased volatility, and declining liquidity. and when the operational infrastructure is robust, markets will be able to absorb larger shocks and sharper changes in risk appetite with less risk of broader contagion. these shock absorbers are substantially stronger today than they have been in even in the relatively recent past. these issues are the principal focus of day - to - day supervision and market oversight in the major financial centers around the world. the federal reserve is actively involved in a range of efforts, working closely with the primary supervisors of the major global financial institutions and the critical parts of the financial infrastructure, to encourage further progress. in this context, we are working to put in place a stronger regulatory capital regime and to strengthen the capacity of firms to absorb losses in stress conditions. we are encouraging more sophisticated and more conservative management of credit exposures in over - the - counter ( otc ) derivatives and structured financial products, as well as of exposures to hedge funds. and we are encouraging a range of efforts to modernize the operational infrastructure that underpins the otc derivatives markets, and to improve the capacity of market participants to manage adversity. these efforts will all contribute to a more resilient system, one that is better able to withstand the effects of a major decline in asset prices or deterioration in credit. are there other tools that policy makers and market participants could use
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- 1400 ]. on march 25, 2011, the board issued a final rule requiring lessors to provide consumers with disclosures regarding the cost and other terms of personal property leases. ( section 1100 ( e ) ) no deadline completed. 26. final rule to increase exemption threshold under the consumer leasing act ( regulation m ) [ r - 1423 ]. on march 25, 2011, the board issued a final rule under regulation m ( consumer leasing ) to increase the dollar threshold for exempt consumer lease transactions. these annual adjustments are required by statute. ( section 1100 ( e ) ) no deadline completed. 27. final rule to increase exemption threshold under the truth in lending act ( regulation z ) [ r - 1424 ]. on march 25, 2011, the board issued a final rule to increase the dollar threshold for exempt consumer credit transactions. these annual adjustments are required by statute. ( section 1100 ( e ) ) no deadline completed. 28. final rule revising risk - based pricing notices under the fair credit reporting act ( fcra ) ( regulation v ) [ r - 1407 ]. on july 6, 2011, the board and the ftc issued a joint final rule to revise the content requirements for risk - based pricing notices and to add related model forms to reflect the new credit score disclosure requirements. ( section 1100f ) no deadline completed. 29. final rule implementing combined fcra notices under the equal credit opportunity act ( regulation b ) [ r - 1408 ]. on july 6, 2011, the board issued a final rule amending regulation b to include the disclosure of credit scores and related information if a credit score is used in taking adverse action. the revised model notices reflect the new content requirements in section 615 ( a ) of the fcra, as amended by section 1100f of the act. ( section 1100f ) no deadline completed. bis central bankers β speeches appendix a to statement by daniel k. tarullo, member, board of governors of the federal reserve system before the committee on banking, housing, and urban affairs u. s. senate washington, dc, december 6, 2011 as of december 5, 2011 rulemaking under title xiv 30. proposed rule on escrow account requirements under the truth in lending act ( regulation z ) [ r - 1406 ]. on february 23, 2011, the board issued a proposed rule to expand the minimum period for mandatory escrow accounts for first - lien, higher - priced mortgage loans from one to five
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in response to changes in technology and market needs. let me highlight several key features of the initial service offering. first, we heard strong support for fraud tools within the fednow service to support banks β efforts to mitigate the risk of fraud with instant payments. accordingly, upon implementation, banks will be able proactively to set parameters that limit transaction activity in the fednow service based on banks β knowledge of their own customers. as we gain insights from banks β experience with the initial set of fraud tools, we will explore other tools that may be valuable, including centralized monitoring by the fednow service. second, banks told us they want to be able to ensure they have adequate funds in their federal reserve accounts on a 24x7x365 basis to cover outflows related to instant payments, especially during hours when existing payment services are not open and funds cannot be transferred into federal reserve accounts to cover intraday overdrafts. accordingly, we will develop a liquidity management tool that allows a participant with excess funds in its federal reserve account to transfer funds to another participant who needs the funds on weekends, holidays, and after hours. moreover, we will make the liquidity management tool available for instant payments broadly, including to banks that choose not to participate in the fednow service. participants in a private - sector instant payments service will be able to use the tool to transfer funds from their federal reserve accounts to the joint account at a reserve bank that backs settlement in that service. third, it will be important for the fednow service to be interoperable with the privatesector instant payment service to accomplish the goal of nationwide reach for instant payments. as we have learned from experience with our other payment services, the form and timeline for achieving interoperability will depend on the level of commitment and engagement from stakeholders across the industry, including the operators of other instant payment settlement services, both present and future. in part to facilitate interoperability, the fednow service design will use the widely accepted iso 20022 message standard and other industry best practices. 10 to the extent other instant payment services fully adopt the same publicly available, widely accepted standards, this approach would enable a form of interoperability where banks can route payments through either the fednow service or other instant payment services based on the available path to the receiver. this is similar to the prevailing approach in payment card transactions, for instance. we are also open to collaborating on a form of interoperability where messages can be
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kevin greenidge : the role of pension plans in a growing barbadian economy remarks by dr kevin greenidge, governor of the central bank of barbados, at the eckler investment policy review for pension plans conference, bridgetown, 19 november 2024. * * * good morning. it is my honor to address you at this year's pension investment conference. i extend my gratitude to ms. wade and her colleagues for the invitation to share insights on " the role of pension plans in a growing barbadian economy. " barbados has demonstrated resilience and strength, transitioning from a challenging period to one of sustained economic growth since the second quarter of 2022. this progress is a testament to the dedication and collaboration of our people and institutions, and it has created a solid foundation for us to discuss the critical role of pension plans - not just as instruments of financial security, but as active contributors to national development. the barbadian economy is on firm footing. over the first nine months of 2024, real gdp expanded by 3. 9 percent, led by key sectors such as tourism, business services, and construction. this growth has delivered measurable outcomes : a strengthened fiscal position, evidenced by a primary surplus of $ 581. 9 million ( 4 percent of gdp ). declining unemployment, which fell to 7. 7 percent in mid - 2024. debt - to - gdp ratio down to 105. 6 percent robust international reserves, currently standing at $ 3. 2 billion β providing over 31 weeks of import cover. our progress is underpinned by strategic investments in education, digital transformation, and infrastructure - all of which contribute to the economy's foundation and, indirectly, to the pension landscape by creating jobs and boosting long - term growth potential. in this environment of sustained growth, the pension sector plays a vital role in ensuring financial security for our ageing population while fueling national development. barbados has a proud history of leadership in pensions, from being the first british colony to introduce non - contributory old - age pensions in 1938 to the establishment of the national insurance scheme in 1967. however, modern challenges demand renewed focus : 1 / 2 bis - central bankers'speeches funding deficits : as highlighted in the 2023 financial stability report, over 28 percent of defined benefit plans remain underfunded, with an average funding ratio of 84. 1 percent. shifting demographics : an ageing population and declining birth rates pose longterm sustainability challenges. the imperative is
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clear : our pension plans must be not only resilient, but also innovative, adapting to changing demographics and economic conditions. despite these challenges, opportunities abound. a growing economy creates fertile ground for strategic investments by pension funds, particularly in : climate - resilient and sustainable infrastructure : investments that align with barbados'national priorities, including net - zero carbon goals by 2035, while offering stable, long - term returns. affordable housing and green technology : addressing critical social and environmental needs while supporting economic growth. digitisation and ai : capturing growth in emerging industries that will shape future economic landscapes. the government's recent fiscal reforms, such as the barbados optional savings scheme ( boss + ), offering a secure investment with a 4. 5 percent annual interest rate, present an avenue for pension funds to grow their assets while contributing to national development. initiatives like the reverse auction for series d bonds further enhance liquidity for pension funds, enabling more efficient asset management. we must continue to strengthen resilience through governance and education. the sustainability of pensions also hinges on governance and financial literacy. trustees must remain vigilant, regularly reviewing investment policies to adapt to inflation, market volatility, and evolving beneficiary needs. at the central bank of barbados, we are committed to fostering economic and financial literacy through initiatives like moneysmart and the explainer series ( what it means ; why it matters ). by equipping barbadians with the tools to make informed investment decisions, we enhance the resilience of pension funds and, by extension, the economy. ladies and gentlemen, pensions are far more than financial instruments, they are a promise of security and dignity for our retirees. as we look ahead, let us embrace this moment of consistent economic growth to strengthen our pension systems, ensuring they remain robust, inclusive, and aligned with the needs of future generations. this is a collective responsibility β one that requires vigilance, innovation, and collaboration. together, we can build a future where every barbadian can retire with confidence, supported by a sustainable and well - managed pension system. thank you. 2 / 2 bis - central bankers'speeches
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