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should the central bank still be involved in inclusion. our response in the bsp is yes, we should. we cannot ignore the financial consumer. when all is said and done, the purpose of a stable macroeconomic environment is ultimately to improve the consumer β s well - being. in the bsp, we have institutionalized financial inclusion in our strategic agenda. we put in place banking regulations that leverage on technology to increase access to financial products for the underserved and unbanked, strengthen financial consumer protection, and raise financial education and awareness to these new financial products and modes of delivery. we will also pursue the development of our national retail payments system or nrps. the nrps should move the country from being cash - heavy to being β cash - lite β. the nrps is expected to improve transparency, security, and efficiency and reduce costs in financial transactions. ladies and gentlemen, i presented three headlines. first, the philippines bucked the trend in 2015. next, we will continue to be resilient in 2016. and, finally we will endeavor to share the fruits of a strong macroeconomy to a broader cross - section of the economy. these three should be sufficient to make a full page of news. indeed, our country has continued to expand despite the difficult external and domestic operating environment. it has been said that difficulty or adversity builds character. in a way, we can say that the challenges our country has faced so far, and continue to face, have helped build our character. we have also built buffers in the interim. and have become stronger as a nation. but, i also believe difficulties or adversities reveal character. the challenges and difficulties we have faced have revealed that we, as a nation, have what it takes to be resilient. however, ladies and gentlemen, these sources of resilience and buffers, the gains that we have attained so far, all these can only be fully harnessed if you in the private sector will continue to do your part as well. you turn the wheels of industry and business. your actions will help solidify these gains. i hope to see you make headlines of your own. headlines that will help ensure the philippines sustains resilience in 2016 and beyond. thank you. bis central bankers β speeches | benjamin e diokno : financial health for filipinos through financial education speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the bsp financial education stakeholders expo, pasay city, 25 november 2019. * * * national economic development authority ( neda ) undersecretary rosemarie edillon ; department of education ( deped ) undersecretary ann sevilla ; philippine stock exchange ( pse ) chief operating officer atty. roel refran ; educators ; fellow public servants ; development partners ; leaders from the financial services industry and non - government sectors ; friends from the media ; honored guests ; good morning. the bangko sentral ng pilipinas ( bsp ) welcomes you to the 2nd financial education stakeholders expo. thank you for joining this annual event for financial education. in 2018, about 1, 000 financial education experts, practitioners and advocates gathered here in smx for the first ever expo. we envisioned it to bridge different players in the financial education space. we sought to know of their ongoing initiatives, understand challenges, and find opportunities for collaboration and partnerships. we wanted to determine ways forward to achieve shared financial education objectives. in a year, the seeds of collaboration planted in 2018 have started to take root. today we convene again to showcase the progress we have made, and what more we can do together. allow me to share what we can expect from the 2019 expo. the plenary sessions will present how financial education contributes to green and sustainable development. top financial advisors will impart lessons on responsible financial planning, making our money grow and becoming good financial role models. similar lessons will be highlighted in a theater production after the lunch break β this is quite interesting so stay tuned. tomorrow is just as exciting. we will go into breakout sessions, delve deeper into financial education challenges and solutions, and learn more about stock market investing. we will have entertaining sessions like a financial education board game, a financial literacy game show, an awards program, and a raffle draw for all expo participants. there will be special performances from actor ( mr. xian lim ) and a percussion group ( batangas drumbeaters ). so you better be here tomorrow to enjoy the fun! we also have 76 exhibit booths ( 60 exhibitor institutions / entities ) in the other room ( function room 5 ). our expo partners are showcasing their wares, | 0.5 |
david dodge : central bank website of the year remarks by david dodge, governor of the bank of canada, at the website awards event, central banking publications and lombard street research, london, england, 12 march 2003. * * * it is very gratifying to be here tonight to accept, on behalf of the bank of canada, this award for " central bank website of the year. " it has become almost a cliche to point out that " internet time moves faster than normal time. " but i'm reminded of that observation as i accept this award - an award for achievement in a medium that barely existed ten years ago. for that matter, it was only eight years ago - in 1995 - that the banco de mexico, the bank of canada, and a few other central banks launched their first web sites. back then, it would have been hard to imagine just how quickly the web would evolve into the hugely influential medium it is today. it would also have been hard to imagine back then just how far central banks would move towards greater openness and transparency in their day - to - day operations. so it seems significant that these two trends - the push towards more open, transparent communications, and the unexpectedly rapid ascendance of the web - should have coincided. at the bank of canada, our web site has been an integral part of our communications strategy over the past eight years. the web offers us a cost - effective global distribution channel for vast amounts of data, analysis, and commentary pertaining to our main functions - that is, the conduct of monetary policy, the promotion of financial stability, the supply of bank notes, and the provision of central banking services to the federal government. our site also offers a growing amount of purely instructive material. through the use of glossaries, " backgrounders ", and other information, we have made a concerted effort to ensure that every document we publish provides enough context to help non - specialists read and understand it. this is no small challenge, given the admittedly dry and complex nature of much of the material a central bank deals with. we have also developed " inflation and investment calculators " so that our message about the benefits of low inflation is clear to the public. and we use a graphic presentation to explain the transmission of monetary policy. as well, we are currently developing a web - based simulation game, designed to explain the intricacies of monetary policy to high school and undergraduate students. based on our efforts to | β s interest in other languages. the name of this booklet is : ( in espanol, catala, euskara, galego, valencia ) β’ ana y alex contra los falsificadores de billetes β’ l β anna i l β alex contra els falsificadors de bitllets β’ ana eta alex, billete - faltsutzaileen aurka β’ ana e alex contra os falsificadores de billetes β’ ana i aleix contra els falsificadors de bitllets after these introductory remarks it is now a pleasure for me to declare this euro exhibition open. you are kindly invited to come closer to view the exhibition and the children β s booklet. | 0 |
that investigated widespread misconduct issues in its banking industry. financial institutions in singapore are generally well regarded. but we have our share of malpractices too, such as the mis - selling of lehman minibonds and other structured or complex products. 8 financial institutions have a duty to act in the best interests of their customers. however, in our supervisory reviews, we have uncovered lapses in conduct. these cases often reflected misaligned incentives and insufficient attention paid to remediation actions and staff training. 9 even back in 2009, mas issued our fair dealing guidelines. these require financial institutions and their representatives to recommend products and services that are suitable for their target customer segments. the guidelines include supporting customers with clear, timely and relevant information to make informed investment decisions. 1 / 5 bis central bankers'speeches 10 mas expects boards and management of financial institutions to stand behind these commitments. we have recently proposed guidelines to strengthen the accountability of senior managers in charge of key functions within a firm. under these enhanced guidelines, boards must clearly designate the officers who are responsible and those who are accountable for the conduct and business operations in their organisations. the measures will include having a clear governance and oversight framework. 11 to avoid a situation where individuals with a pattern of misconduct and transgressions simply move from one financial institution to another, or what is referred to in regulatory circles as β rolling bad apples β, mas will further require that financial institutions conduct reference checks with the previous employers of their representatives. carrying out reference checks is already a long - standing industry practice. mas β proposal will harden this requirement. 12 mas will also step up our monitoring of financial advisory practices in the industry. one example is our mystery - shopping exercises where we send researchers to β live test β the sales and advisory processes in sampled financial institutions. we will carry out more thematic reviews of financial advisory firms β consequence management frameworks to assure us that investor complaints are investigated in a fair and timely manner. 13 the reality of course, is that no amount of regulations nor supervision can prevent wrongdoings. to try to do so would require a large volume of pre - emptive rules as well as unlimited supervisory resources. both situations are neither possible nor desirable. 14 this is why mas also places importance on our enforcement actions. we will not hesitate to investigate and take errant financial institutions or their representatives to task for breaches of our law and regulations. we have issued prohibition orders against individuals for a range of misconduct, from mis - selling to | the end of september due to the rapid appreciation of the yen and growing concern over price adjustments. however, they recovered after the rebound in u. s. stock prices. the nikkei 225 stock average is moving at around 10, 500 yen. in the foreign exchange market, the yen rose sharply as market participants became less sensitive to a possible market intervention around the time of the g - 7 meeting and as foreign investors continued to invest in japanese stocks. the yen is currently traded in the range of 109 - 111 yen to the u. s. dollar. with regard to corporate finance, private banks remain cautious in extending loans to firms with high credit risks, while they continue to be more active in extending loans to blue - chip companies. their lending attitudes seem to be becoming slightly more accommodative in areas such as terms and conditions for loans. meanwhile, the lending attitudes of financial institutions as perceived by firms in general are improving somewhat, although those perceived by small firms remain severe. in the corporate bond and cp markets, the issuance spreads remain steady and the favorable issuing environment is virtually unchanged on the whole, especially for firms with high credit ratings, although some firms still seem to be taking a wait - and - see attitude in the corporate bond issuance market in view of the rise in long - term interest rates. credit demand in the private sector continues to follow a downtrend, mainly because firms β cash flow remains above business fixed investment and firms are continuously reducing their debts. amid these developments, private banks β lending continues to decline at around 2 percent on a yearon - year basis. the amount outstanding of cp issued is above the previous year β s level. the amount outstanding of corporate bonds issued is around the previous year β s level. meanwhile, according to business surveys, the financial positions of firms in general are improving slightly, although those of small firms remain severe. the year - on - year growth rate of the monetary base continues to be around 20 percent. the year - onyear growth rate of the money stock is around 2 percent. funding costs for firms continue to be at extremely low levels on the whole, although corporate bond issuance rates are increasing slightly reflecting the rise in long - term interest rates. against the above background, the financial developments are summarized as follows. money market conditions continue to be extremely easy. meanwhile, long - term interest rates are at a slightly lower level than last month. stock prices are basically around the same level as last month. growth | 0 |
between investment and saving has declined to its lowest in a long time, which, if you remember your national accounting identities, is directly equivalent to the current account being at multi - decade lows. but the trade balance story is not just a resources story. there has been strong growth in exports of education and tourism. the share of services in australia's exports has increased from 17 per cent in the 1980s to 21 per cent now. the other noteworthy development of late has been the strong growth in manufactured exports. these include pharmaceutical goods and medical devices, and have grown by 15 per cent over the past two years. the other part of the current account is the net income balance. the net income balance is the difference between how much it costs to service the country's foreign liabilities ( for example, interest payments on foreign debt ) and the earnings on australia's foreign assets ( for example, dividend payments to residents from foreign share holdings ). the income balance has widened a little in https : / / www. rba. gov. au / speeches / 2019 / sp - dg - 2019 - 08 - 27. html 3 / 12 8 / 28 / 2019 a balance of payments | speeches | rba recent years, but is around the middle of the range it has been in since the late 1980s at 3. 4 per cent of gdp. i will come back to this later. net foreign liabilities each quarter that australia funds its current account deficit with net borrowing from the rest of the world, we gradually add to the stock of net foreign liabilities ( nfl ) we owe to the rest of the world. as australia ran current account deficits through the 1970s, 80s, 90s and 2000s, that stock of nfl grew, peaking at 60 per cent of gdp in 2009. but since then, reflecting the lower levels of the cad and correspondingly lower net capital inflows, the stock of australia's nfl ( as a share of gdp ) has declined over the past decade to be 50 per cent of gdp currently ( graph 2 ). the decline in nfl as a share of gdp masks some significant changes in the composition of both the gross foreign liabilities and gross foreign assets. graph 2 it is important to stress the need to look at the gross flows and stocks, not just the net numbers. there are large capital inflows and outflows all the time, even when the net capital flow ( or the current account deficit ) is low. as a result | the state ( repayable advances ) and two schemes implemented by the hellenic development bank β a guarantee scheme and a co - financed interest subsidy scheme for new corporate loans. these are expected to reach an overall loan volume of about β¬13 billion, or 7. 7 % of gdp. they come on top of the broader fiscal package in response to the pandemic, including interest subsidies for existing performing loans, bonds and bank overdrafts, reductions and deferrals of tax and social contributions, and labour market support measures. so far, the ecb β s policy measures and the relevant greek policies have supported bank lending to corporates, which has increased substantially, while credit standards have remained broadly stable. a large net flow of loans β above β¬1 billion β was registered in july, supported in particular by the guarantee scheme of the hellenic development bank. at the same time, greek small and medium - sized enterprises continue to have serious concerns about their lack of access to financing. their financing gap remains high, despite the increased availability of bank loans and the decline in interest rates. in order to underpin the recovery, policy support remains necessary to safeguard the continued supply of credit. looking ahead, it is essential to complete the financial sector reforms needed to support the process of npl reduction and guarantee an adequate supply of credit during the recovery. these reforms include improving the e - auctions framework, revising the insolvency framework, reducing the backlog of pending personal insolvency cases before the courts, and clearing called state guarantees on bank loans. the funding provided by next generation eu is an opportunity for greece 2 / 3 bis central bankers'speeches the funding from next generation eu creates an extraordinary opportunity. for the first time in history, the european union will issue common debt to counter a common shock. this will bring fiscal policy more in tune with monetary policy at the european level, and may represent an important step for european integration : we borrow together to recover from the crisis and to invest in our future. all eu countries will benefit from this common response. but to be effective, european measures require careful planning and decisive action at the national level. in time, the need to buffer the immediate impact of the pandemic will be replaced by the need for investment and reform to support a sustainable recovery. as the national support measures are phased out, a well - planned and coordinated approach will be necessary if we want to avoid cliff effects. policies will have to find the right | 0 |
nationals of five countries namely, kenya, tanzania, uganda, rwanda and burundi. in 2008, the five countries had a combined population of 126. 6 million people and a nominal gdp of usd73 billion ( based on eac facts and figures report, 2009 ). in the same year, kenya β s gdp stood at usd26. 9 billion, that is 37 percent of the eac total. it is the dominant economy in the bloc. this enlarged market means potential for increased free trade among members. free trade is expected to lead to rapid expansion of trade and output, which in turn is expected to lead to demand for further investment, employment and gdp growth. these gains result from the dynamic effects of a common market, which have been shown to overshadow the static effects, that is, trade creation, trade diversion and terms of trade effects. the dynamic effects, which are cumulative in nature lead to growth. indeed, the dynamic effects of a common market are often described as the long - run consequences for the economic growth of member countries as a consequence of increased market size and exploitation of economies of scale, increased competition, learning by doing and increased investment. also, the stronger the potential economies of scale are, and the more rapid the autonomous productivity advantages, the more likely the economic integration will lead to growth. thus, the contribution of the eac common market to economic growth and employment will be greater if the economies of scale are possible by increased market size, takes place pari passu with learning by doing. however, higher levels of economic integration that would ensure such benefits are realized require heavy infrastructural investments in the region. with this realization, the eac development strategy sets out the priority programmes for the region focusing on among others, cooperation in infrastructure development. an efficient infrastructure development mainly for eac in terms of roads and railway interconnectivity has the potential to increase from 3. 7 million tonnes in 2007 to over 16 million tonnes by 2030, at an annual rate of growth of 6. 7 percent, according to a study on the eac railways master plan. current eac efforts to develop regional infrastructures are complemented at the continental level by such initiatives as the infrastructure consortium for africa ( ica ), established in 2005 and mandated to support and promote increased investment in infrastructure in africa from both public and private sources. in addition, with the implementation of the eac common market protocol, regional infrastructural projects will | in line with the government β s development agenda. thank you. bis central bankers β speeches | 0.5 |
by 2016 β 17 from 12 per cent of gdp in 1990 β 91. along with stable form of capital flows such as fdi that come with relatively long - lasting interest in domestic entities, foreign portfolio ( both equity and debt ) capital flows have also increased making the economy ( like that of other open emerging markets ) susceptible to enhanced volatility and sudden stop or reversal risks. 9. therefore, as india β like other emerging markets β has undoubtedly benefited from globalisation, we are also more exposed than before to vulnerabilities that come in its wake. our increasing dependence on the external world is reflected in outstanding external liabilities ( both debt and non - debt ), which increased from about 30 per cent of gdp in march 2005 to 41 per cent of gdp in march 2017. india β s net international investment position ( i. e., outstanding assets minus liabilities ) has moved over the period from about β 7 per cent of gdp to β 17 per cent of gdp. this is consistent with a prolonged phase of running current account deficits which have been financed by increasing net liabilities to the rest of the world. with easing of limits over the years, there has been a rise in foreign portfolio capital flows. ( of course, this has to be appreciated in the context of the obvious economic benefits from international financial flows into 2 / 4 bis central bankers'speeches capital scarce countries ). 10. movement of capital in and out of the country is often linked to policy cycles in other countries which throw up the challenges of international policy spillovers. with every new tail event, the churn becomes larger, the volatility ever higher, threatening to overwhelm the modest defences that emerging markets are able to muster. how does one protect policy independence in such a world? do we need meaningful and deeper international policy coordination? or, universal financial safety nets rather than the asymmetric ones available at present only to a small number of countries, which is more reminiscent of apartheid rather than universality. meanwhile, emerging markets that are at the receiving end of global financial turbulence, are systematically denied access to such risk sharing. the time has come to end this sectarian approach and to make the access to swap lines equally available rather than only for the privileged. 2 while emerging markets have shown a degree of resilience to the turmoil of recent years, they remain vulnerable to liquidity and bridge financing gaps that are debilitating even if transitory. 3 against this background, building up | . 19. on the external front, de - globalisation and protectionism are gaining ground as witnessed during the recent global supply - chain shock. it is thus necessary to build and strengthen bilateral trade relations to deal with such challenges. india has recently signed bilateral trade agreements with the uae and australia and more such agreements are works in progress. the average current account deficit to gdp ratio stands at 3. 3 per cent during h1 : 2022 - 23. the slowing global demand is weighing on merchandise exports ; but our exports of services and remittances remain strong. the net balance under services and remittances remains in a large surplus, partly offsetting the trade deficit. consequently, the current account deficit is eminently manageable and within the parameters of viability. 20. on the financing side, net fdi flows remain strong and foreign portfolio flows have resumed since july 2022, with intermittent outflows from time to time the size of forex reserves is comfortable and has gone up from usd 524 billion on october 21, 2022 to usd 572 billion as on january 13, 2023. further, india β s external debt ratios are low by international standards. this has enabled the reserve bank to eschew measures to control capital flows and take steps to further internationalise the domestic currency, even during episodes of significant capital outflows. 21. every global risk - off episode resulted in an appreciating us dollar imposing downward pressures on most other currencies. comparison of the performance 10 of the rupee across successive crisis episodes source : data from bloomberg has been used to evaluate the performance of rupee. tells its own tale. during the global financial crisis, the rupee witnessed its worst depreciation - between april 1, 2008 and march 3, 2009 when it lost 23 % against the us dollar. similarly, it depreciated by 22 % during the taper tantrum between may 01, 2013 and aug 28, 2013. however, the extent of rupee depreciation was lower in each subsequent episode of turbulence. in the initial days of the pandemic, i. e., between february 17, 2020 and april 21, 2020, the rupee depreciated by only 7 %. even during the period of geopolitical tensions emerging out of ukraine in 2022, while the rupee lost 9 % against the us dollar between february 24, 2022 and october 19, 2022, it outper | 0.5 |
prayers and support, too. they say that it can be lonely at the top. from that vantage point, national issues and high - level problems may overshadow the needs and concerns of the bsp community. even when the going gets tough, my fervent wish is that i never lose sight of where i came from. ako ay laking bsp. ang aking husay at lakas ay galing sa bsp. i therefore owe it to all of you to stay connected and to continue serving the bsp community even as we all serve our country with skill, honor, integrity, and accountability. our beloved philippines has a lot of promise before it, and in your good hands, it will continue to thrive and flourish. it is because of this promise that we must relentlessly seek excellence, not for glory or acclaim, but for the sake of delivering the best possible service to the filipino people. i thank president rodrigo roa duterte for this opportunity to serve. mabuhay ang bsp! mabuhay ang ating mahal na bansang pilipinas! 1 in 2016, the country β s gross domestic product ( gdp ) grew by 6. 8 percent. it is higher than malaysia β s 4. 5 percent, indonesia β s 4. 9 percent, thailand β s 3. 0 percent, and singapore β s 2. 9 percent ( source : bsp website available at www. bsp. gov. ph / statistics / efs _ asian. asp ) 4 / 4 bis central bankers'speeches | thomas jordan : the swiss franc β a success story address by mr thomas jordan, chairman of the governing board of the swiss national bank, at the launch of the book der schweizer franken β eine erfolgsgeschichte ( the swiss franc β a success story ), zurich, 3 october 2012. * * * ladies and gentlemen, allow me to begin by welcoming you all to the launch of the book der schweizer franken β eine erfolgsgeschichte. since this book was commissioned by the swiss national bank, i would like to take this opportunity to say a few words as to how it came about. after i have finished, first hans - peter thur, publishing director of nzz libro, and then professor baltensperger, the book β s author, will speak to you. after their comments, and before we close this event with a standing lunch, you will have the opportunity to ask questions. the german theologist, hans von keler, 1 is said to have commented β history is more than what has already happened ; it is the layers of the past beneath our feet, the ground on which we lay our foundations β, and it seems to me to be particularly fitting for today β s book launch. institutions do not just fall from the sky β they are created by people. switzerland β s present monetary and currency institutions have come into being as the result of a gradual process. professor baltensperger β s book is an impressive account of the efforts to establish sound institutions over a period of more than 150 years. many approaches were tried, some proved their worth, while others were abandoned. the establishment of these monetary institutions was not a constant reinvention of the wheel ; rather, progress was evident. the sound institutions that have grown in this way represent valuable capital for our country and have made a significant contribution to switzerland β s prosperity. i feel that it behoves us to become familiar with the history of our monetary and currency institutions. this is true not just for the employees of the snb, but in particular for them. in fact, this was the original idea behind professor baltensperger β s book, namely to improve employees β knowledge of switzerland β s economic history. or, expressed in a different way : to encourage them to β become familiar with the ground on which we lay our foundations β. on the initiative of the former chairman of the board, jean | 0 |
way. the european economy is coming back and recovering from the recession. but monetary policy cannot create long - term growth. long - term growth will be driven by productivity gains, well - functioning economies and a reformed economic and monetary union. it is the responsibility of the democratically elected governments to propose and implement the right reforms. mario draghi has insisted in his press conferences that fiscal policy and structural policy are also important, yet some european countries still continue to pursue austerity. could you tell us your opinion on that? as regards fiscal policy, the discussion in the g7 should not just be about increasing spending, it should also be about improving the quality of the budget. the ecb agrees with the idea that β countries that have fiscal space should use it β, but many countries do not have this fiscal space. reducing unproductive expenditures and cutting taxes or increasing bis central bankers β speeches investment in productive infrastructure, such as education and research, can lead to growth without increasing the deficit. what about foreign exchange policy? the uk pound and japanese yen have been increasing and volatility is very high. what will the g7 do to reduce volatility? the g20 countries have committed not to use the exchange rate for competitive purposes, as confirmed in recent meetings in shanghai and washington. all of us should act in a way consistent with this commitment and which does not add to global uncertainty. emerging markets are slowing down and advanced countries have very low growth rates. what should the g7 and advanced countries do for the world economy? in a low - growth environment globally, there might be a temptation for some countries to grow at the expense of other partner countries. so it is precisely the role of the g7 or the g20 to resist such temptation. there is no β magic bullet β for increasing growth. for the g7, it is crucial to send the message to support domestic demand and focus on those structural policies that will be most conducive to growth. you cannot just rely on other countries. the message that we would like to hear is that β growth starts at home β. bis central bankers β speeches | had and have to say was perhaps often predictable, but more often than not your saying it lent it weight and inspired confidence. moreover, what you once aptly said is absolutely true : β man kann schone sonntagsreden halten. die entscheidungen fallen an werktagen. β you are known to be a hard worker - some would even say a workaholic and you have tremendous β ausdauer β. you never get tired of putting your analysis and convictions across, as has again been demonstrated tonight. we owe you a great deal of gratitude. after august we central bankers will miss you as a colleague, although i believe we have internalised your basic principles. they will therefore still be around as if you are still present yourself. and should we tend to forget them, i am sure that ernst welteke will help me to remind other colleagues of them. sometimes, i wish that we could do the same as they do in the world of sport in the united states. there, when an outstanding player retires, in order to honour him the number he wears on the back of his shirt is never again used by another player. central bankers do not wear shirts with numbers on the back, but if we did, i am sure that we would withdraw your number. retirement is the natural end of one β s career, but it should not be overdramatised. people do matter - and you have certainly shown that - but institutions generally outlast them. in fact, that is what many people work for. luckily, i am convinced that this is the case in central banking. so, the institutions that you have worked to build will go on. meanwhile, as i look ahead to august, i know that while i will lose a colleague, i will still have the same friend. i know that is true for many of us here this evening. i should therefore like to close by simply expressing my thanks for your support over the years both as a colleague and a friend. | 0.5 |
nepal investment summit 2017 special address by dr. chiranjibi nepal, governor, nepal rastra bank 3 march 2017 mr. chair of the session, distinguished panelists, esteemed guests, media persons, ladies and gentlemen, 1. it gives me an immense pleasure to be here to address this session on β financial institutions / alternative investments : creating value for money. β we have organized this summit at a time when the nepalese economy is striving for attaining higher growth and tracing the path for sustainable development. the recent data show a rebound in economic activity. all three major sectors of the economy ; agriculture, industry and services are on the mode of recovery after the lackluster performance last year. the expected rebound reflects the resilience of the nepalese economy to major shocks that it had to bear last year. 2. our macroeconomic fundamentals are sound. this is reflected in a low inflation and balance of payments surplus. the country has adequate level of foreign exchange reserves for meeting country's near and medium - term international obligations. the current macroeconomic and financial situation is supportive for the pursuit of nepal's huge growth potential going forward. 3. nepal has an immense potential in its geography and location. it has a wider scope in developing hydropower, ict, irrigation, health, education, industrial estates, urban development, drinking water and sanitation, electricity transmission lines and agro - processing as well as herbal industries. the nepalese financial sector has also reached a stage of its potential tapping for major investments in these areas. 4. we have national aspiration and international commitment for upgrading our status from the ldc to the developing country by 2022 and achieving the sustainable development goals and graduating to the middle income country status by 2030. for this, the role of financial institutions and alternative investments could be vital for upgrading country's economic status and creating the value for money through investment. 5. the resource that the nepalese financial system has at present is sufficient to meet the working capital need of the infrastructure projects. however, we need foreign investments for the execution and completion of the large projects. 6. the ongoing fourteenth development plan has accorded higher priority to the private sector in managing investment requirement. of the total investment requirement of rs. 2425 billion in the fourteenth plan period, around 55 percent is expected from the private sector. tapping foreign investors and the nepalese financial system is crucially important for meeting the targeted investment by the private sector. ladies and gentlemen, | 7. nepal has followed a liberal foreign investment policy, and a need for investment - friendly environment is recognized everywhere in nepal. recent commitments in the areas of foreign investment show the huge attraction among foreign investors. currently, the stock of fdi stands around rs. 114 billion ( 5. 1 percent of gdp ), which is mainly in the areas of energy, manufacturing, service, tourism, minerals, and financial services. 8. nepal has signed the bilateral investment promotion and protection agreement ( bippa ) with six countries including france, germany, uk, mauritius, finland and india. commitment from these counties covers more than half of the total foreign investment. 9. legal reforms are underway in the areas of investment and exchange regulations. amendment in the acts relating to foreign investment and foreign exchange management will pave ways for foreign investors in nepal. public procurement act has already been amended. new labor act is under discussion. we are also in the process of formulating the ppp act. further, nepal rastra bank has been facilitating foreign investors through flexible approaches in foreign exchange regulations. these reforms will be instrumental in promoting investment friendly environment in nepal. ladies and gentlemen, 10. the number of financial institutions increased significantly after the adoption of the liberal economic policy in 1980s. out of 28 commercial banks, we have 7 joint venture banks. this shows the trust among foreign investors on nepal's institutional and policy framework. 11. nepal's financial system is sound and well regulated. in addition to a low level of nonperforming loans and a wider bank - branch network, the planned hike in paid - up capital of banks is geared to supporting infrastructure financing. the banking industry, which is in the phase of consolidation, is in its capacity building process for large project financing. 12. further, we are in the process of laying the ground work for establishing specialized entities for infrastructure development. a legal framework to establish infrastructure development bank has already been crafted. this will move ahead once the bafia gets the seal of affirmation from the president. the provision for infrastructure bank will also encourage private sector to participate in nation building. 13. our financial policies are directed towards creating real economic value, promoting sustainable development and contributing to long term productivity growth. nrb has made mandatory provisions for commercial banks to invest at least one - fifth of their resources in the designated productive sectors. of which, at least 15 percent of the loan should be extended to agriculture and energy sectors. similarly, a provision of counting bank loans | 1 |
and which has the confidence of local and foreign participants. this is quite a demanding list for several reasons. first, it is quite broad and involves the legal system, the government, regulatory bodies, financial market participants and the professions. secondly, and more importantly in my view, the achievement of a high standard in each of the items on this list takes a very long time. in our case, some of these things took a century to achieve. in many cases, we look back to periods as recent as the 1980s and wonder why we ever thought that we had done enough. that is one of the reasons i have been sympathetic to our asian neighbours. it is inevitable that at an early stage of development of a country, its financial infrastructure will be only partly formed. furthermore, even with the best will in the world, it is going to take time to bring these things up to scratch. when people say that the recent financial and economic instability was the inevitable result of a combination of the free flow of international capital plus inadequate financial infrastructure, there is much truth in the statement. but if that is the case, we cannot expect a sudden return to stability because the second essential component - the adequate financial infrastructure - will take years, or possibly decades - to achieve. the second thing we learnt from the asian crisis, and its spread to other countries, was the necessity of having deep and liquid financial markets. we also learnt it was an advantage to have a floating exchange rate, and to have a capital market that was diversified and not one that was too dependent on the commercial banking sector. this brings me to the australian financial system, to the capital markets and to financial markets more generally. the australian financial system has developed rapidly over the past 20 years or so, with deregulation being a major driver of change. deregulation started in the late 1970s with the gradual removal of controls over bank interest rates. it picked up speed in the early 1980s with the removal of other controls on banks, freeing up interest rates on government securities ( by adopting tender arrangements for new issues ), floating the exchange rate and opening up the banking system, in the mid 1980s, to foreign competition. shortly thereafter, bank supervision was formalised, and the basel framework for capital adequacy of banks was adopted in 1988. the development of the financial markets in australia is not, of course, the result purely of regulatory change. financial institutions themselves have taken the opportunity to develop new markets and introduce new products. for example | . as shown in the chart above, about half of owner - occupier loans have prepayment balances of more than 6 months of scheduled payments. while that leaves half with only modest balances, some of those borrowers have relatively new loans. they wouldn β t have had time to accumulate large prepayment balances nor are they likely to be close to the scheduled end of their interestonly period. there are borrowers who have had an interest - only loan for some time but haven β t accumulated offset or redraw balances of substance. 12 offset and redraw balances are typically lower for investor loans compared with owner - occupier loans. that is consistent with investors β incentives to maximise tax deductible interest. however, in comparison to households that only hold owneroccupier debt, there is evidence that investors tend to accumulate higher savings in the form of other assets ( such as paying ahead of schedule on a loan for their own home, as well as accumulating equities, bank accounts and other financial instruments ). 13 refinancing another option for borrowers is to negotiate an extension to their interest - only period with their 9 / 13 bis central bankers'speeches current lender or refinance their interest - only loan with a different lender. similarly, they may be able to refinance into a new p & i loan with a longer loan term, thereby reducing required payments. based on loans in the securitisation dataset, a large majority of borrowers would be eligible to alter their loans in at least one of these ways. 14 any such refinancing will reduce the demands on a borrower β s cash flows for a time. however, it is worth noting that by further delaying regular principal repayments, eventually those repayments will be larger than otherwise. extra income or lower expenditures what about borrowers who have not built up savings ahead of time or are unable to refinance their loans? the securitisation dataset suggests that such borrowers are in the minority. more importantly, most of them appear to be in a position to service the additional required payments. indeed, the tightening of loan serviceability standards a few years ago was no doubt helpful in that regard. some fraction of interest - only borrowers may have used the reduced demands on their cash flows during the interest - only period to spend more than otherwise. however, the available data, | 0.5 |
axel a weber : the role of forecasting for central banks keynote address by professor axel a weber, president of the deutsche bundesbank, at the conference on β forecasting and monetary policy β, organised by the deutsche bundesbank, freie universitat berlin and the viessmann european research centre, berlin, 23 march 2009. * * * ladies and gentlemen, it is a great pleasure for me to participate in this conference and to be able to share with you some views on what contribution forecasting can make to monetary policy. the role of forecasting in the eurosystem the reason why central bankers have a strong interest in forecasting is straightforward : because of substantial and variable lags in the monetary policy transmission mechanism, central banks cannot influence current inflation and output. given these time lags, it is widely recognised that monetary policy should be forward - looking and take a medium - term perspective. furthermore, the publication of forecasts helps to anchor the expectations of firms and households, thereby making the central bank more effective in fulfilling its objective. as a consequence, forecasts for inflation, output and other macroeconomic variables are an essential input in the monetary policy decision - making process. forecasting also has an important role to play in the eurosystem, albeit a less prominent one than in central banks pursuing an inflation - targeting strategy. the eurosystem β s governing council bases its comprehensive assessment of the risks to price stability and its policy decisions on a broad spectrum of information provided by two analytical tools : the economic analysis and the monetary analysis. the monetary analysis assesses medium to long - term developments in inflation based on the well - established relationship between money and prices over long horizons. monetary analysis takes into account developments in a wide range of monetary indicators including m3, its components and counterparts, notably credit, and measures of excess liquidity. the economic analysis identifies short to medium - term risks to price stability. it includes regular monitoring of a broad set of non - monetary economic and financial variables, such as developments in overall output, labour market developments and financial market indicators. projections of key macroeconomic variables carried out by eurosystem staff are also an integral part of the economic analysis.. of course, differences in strategy mean forecasts play a somewhat different role in the eurosystem than at central banks pursuing an inflation targeting strategy : for example, it is important to note that these forecasts are carried out under the sole responsibility of the eurosystem staff, not | to my mind, assessing risks only in a qualitative, verbal manner strikes a good balance between expressing our view on the degree of uncertainty related to the forecast and, at the same time, showing an awareness of the general limitations of risk assessments. current assessment of economic development forecasting risk and uncertainty is currently of particular interest to central bankers, as forecast uncertainty has reached a comparatively high level. because the scale and speed of the current economic downturn is unlike anything seen in the last few decades, forecast uncertainty can at present be incorporated into econometric analyses to a limited extent only. conversely, β judgement - based risk management β has become extremely important. however, despite an active exchange between modellers and macroeconomic experts, economic forecasts for 2009 and 2010 have repeatedly been revised downward since last autumn as downside risk has been realised both in the euro area and globally. yet from now onwards, with substantial macroeconomic stimulus under way and extensive financial system rescue schemes in place, the risks to the economic outlook in the euro area should become more balanced. on the one hand, confidence and growth effects may be stronger than anticipated as a result of the enormous scale of expansionary monetary and fiscal policies worldwide. on the other hand, there remains, of course, the risk that the economic downturn in the euro area might become more severe than the staff projections indicate, for instance because of negative feedback effects from the financial system. nevertheless, the degree of uncertainty surrounding the outlook for both the economy and inflation remains substantial. in order to fulfil our mandate and to contribute to financial stability and sustainable economic growth, the eurosystem has been providing unlimited liquidity support to the euro - area banking system since october last year. the governing council has decided to continue the non - standard liquidity support beyond the end of 2009 in any case. as a direct consequence of this ample supply of liquidity, the eurosystem has augmented its balance sheet by more than 600 billion euro since the start of the financial crisis in august 2007. at the same time, our monetary policy operations are having a visible effect on overnight money market rates in the euro area. furthermore, the ecb governing council has cut interest rates sharply to unprecedented levels. and we still have room to cut interest rates further. but it is essential to bear in mind that an expansionary monetary policy comes at the price of creating a breeding ground for future risks to price stability. it might therefore prove useful to keep at hand instruments that enable | 1 |
expansionary effect. in order to prevent pressure from becoming too strong, monetary policy has to be tighter than would otherwise have been the case. monetary policy has therefore been given a clearer role in stabilising economic developments. a clear monetary policy target is a necessary complement to the fiscal guideline with a view to ensuring reasonable macroeconomic stability. the operational target of monetary policy as defined by the government is inflation of close to 2. 5 per cent over time. the inflation target provides economic agents with an anchor for their decisions concerning saving, investment, budgets and wages. households, businesses, public entities, employees and employers can base decisions on the assumption that inflation in norway will be 2Β½ per cent over time. the rise in labour costs is an important factor underlying norges bank β s assessment of the inflation outlook and interest rate decisions. if wage growth is too high - both in manufacturing industry and other industries - the internationally exposed sector will be affected in two ways. first, high wage growth will itself reduce earnings and employment. second, the interest rate will be raised. normally, this will lead to an appreciation of the krone, with a further reduction in earnings and employment. this will amplify the impact of high wage growth on manufacturing industry. since the new guidelines on the use of petroleum revenues were introduced in a period when the labour market was tight, the krone was expected to be strong in periods. the interest rate differential between norway and trading partners has resulted in a strong krone. the wide interest rate differential is due to the historically low level of interest rates abroad. the slowdown in global growth has been more pronounced and spanned a longer period than we had expected. the norwegian economy has also felt the effects of this. norges bank has therefore lowered the sight deposit rate from 7 to 5. 5 per cent since 11 december, most recently on 5 march. the interest rate differential has narrowed. since mid - january, the krone has depreciated, partly reflecting expectations of lower interest rates. monetary policy has been relaxed. there is uncertainty associated with developments in many of the factors that will influence inflation ahead, among others the exchange rate. this implies a gradual approach to the conduct of monetary policy. increased spending of petroleum revenues will have implications for norway β s industry structure. high demand for goods and services that require domestic resources, necessitates higher employment in the sheltered sector. this labour has to be recruited from the exposed sector, or through the natural increase | annual real rate of return of 1Β½ - 2 per cent. by way of comparison, the authorities have based their use of petroleum revenues over the central government budget on the assumption that the petroleum fund can generate a long - term real return of 4 per cent. it is unlikely that this rate of return will be achieved if we only invest in bonds. buying a bond means lending money to others. buying equities is the same as investing in real assets. buying equities gives us direct ownership of the means of production in global business and industry. on the one hand, these ownership rights provide high returns when companies are flourishing. on the other, shareholders are the first to sustain losses when companies fail. consequently, the return on shares fluctuates far more than the return on bonds, reflecting the higher level of risk. over the past 75 years, equity returns in the us market have been negative almost every third year. an investor will only invest in high - risk vehicles if it is reasonable to expect compensation for the risk. the compensation for high risk in the stock market is a far higher average return for equities compared with bonds. since 1926, the annual return on us equities has on average been 4. 8 percentage points higher than the return on bonds. also in most ten - year periods, investing in us equities has been profitable, with the exception of the depression in the 1930s and the last half of the 1970s. equity returns have been negative after ten years only in the years between 1928 and 1938, in other words on equity investments made the year before the 1929 stock market crash. it may also be worth noting that equities purchased during recessions - such as in the mid - 1930s and mid - 1970s - brought solid returns ten years later. the picture is the same for most other countries. since short - term fluctuations in equity prices are difficult to predict, it may be a sound strategy to keep the share of equities constant over time. this means buying a relatively large volume of equities when prices are low, and buying a smaller volume - or selling - when prices are high. this is the strategy applied by the petroleum fund. let us now revert to the norwegian economy and norwegian economic policy. the revision of economic policy in march 2001 can to some extent be said to be a consequence of our oil economy. the new guidelines have also changed the interaction between the different components of economic policy. fiscal policy will now have an | 1 |
peaked at about 180 billion euro in the first quarter of this year. in addition, governments are taking action to cushion the impact of energy price increases with support measures, not least for those most affected. on the other hand, high inflation is not only eroding households β purchasing power. high inflation and the uncertainties related to the war are also weighing on their confidence. surveys show that consumer sentiment has deteriorated considerably. households could be putting off purchases for precautionary reasons. the russian attack on ukraine has added new layers of risk. when the attack began, germany and the euro area expected a strong recovery from the pandemic crisis. in our baseline scenario, the impact of the war will depress economic growth. yet it is unlikely to derail the recovery. nonetheless, in the present situation of extraordinary uncertainty, more adverse scenarios also 1 / 3 bis central bankers'speeches have to be considered. in our latest monthly report, we published a macroeconomic simulation exercise. the study suggests that an escalation of the war in ukraine β including a full, immediate stop to russian energy deliveries β could cause the german economy to contract by up to 2 % this year. however, even if the scenario itself were taken for granted, this outcome would still be subject to high uncertainty. and it appears that the past weeks have been used to reduce germany β s dependence on energy imports from russia, which may dampen the impact of an embargo. 3 inflation outlook while russia β s invasion of ukraine is substantially dampening european growth prospects, it is additionally driving up already soaring inflation rates. mainly due to the rise in energy prices, inflation rates in the euro area have climbed to unprecedented levels. additionally, underlying price pressures have also strengthened considerably. in the euro area, the inflation rate stood at 7. 5 % in april. in germany, the rate as measured by the harmonised index of consumer prices even amounted to 7. 8 %. the last time german inflation rates were similarly high was in the early 1980s. in line with soaring energy commodity prices, higher transport costs and supply bottlenecks, import and producer prices have picked up sharply as well. this feeds through to consumer prices. here not only heating oil, gas or fuels have become more expensive but also food and other goods. services inflation also proved very dynamic as services were particularly affected by the measures to contain the pandemic. overall, price rises have become more widespread, and there is still considerable price pressure from | consequence, refinancing stood on a basis that was prone to disruption. admittedly, it was indeed possible to observe similar developments at other large banks. however, the ownership structure of the landesbanken would have suggested other, namely lower risk preferences and a different business orientation. this practice was, in any case, a long way removed from the idea of the landesbanken, in terms of their lending policy, making a contribution to the development of their own federal state. the business policy of such landesbanken had moved a long way from the principle of decentralisation. this explains why these institutions were hit particularly hard by the financial crisis. these trends were evident right up to the brink of the crisis. with the crisis, there occurred the second big event of the past decade from the point of view of the landesbanken. the crisis revealed the vulnerabilities of the business models : with the crisis of confidence in the interbank market, the landesbanken were now faced with major wholesale funding problems and, in several cases, even by considerable needs for write - downs that had to be covered by taxpayers. credit substitution business collapsed. and in the wake of the general deleveraging process, domestic business was rediscovered. 4. from crisis - prone business models to a restructuring of the landesbank sector one thing seems clear to me in this context : for the majority of landesbanken, the issue of stable business lines and structures can be delayed no longer. what therefore has to be done to put less crisis - prone structures in place? the future viability of the landesbanken sector hinges quite crucially on whether it is possible to develop sustainable business models and also on the willingness to reduce capacity surpluses. up to now, there has been only isolated large - scale cost - cutting measures and, at most, selective adjustments to the business models. certainly, there is no master plan for the transition from crisis - prone business models and structures towards a robust reorganised system. nor is it the central bank β s or the supervisors β job to develop the specifics of business models. the supervisors β task in this area is merely to verify the consistency between business and risk strategies, and any structural change should, as far as possible, be subject to market processes and the business rationale of the savings banks and the other supporting organisations. nevertheless, it may indeed be possible to sketch out a few key features of a | 0.5 |
qqe ). the boj has been increasing the monetary base at an annual pace of about 80 trillion yen. it has also been purchasing japanese government bonds ( jgbs ) so that their amount outstanding will increase at an annual pace also of about 80 trillion yen. with a view to encouraging a decline in interest rates across the entire yield curve, jgbs with all maturities, including 40 - year bonds, are eligible for the boj β s purchase and the average remaining maturity of government bonds to be purchased is currently targeted in the range of seven to ten years. in addition to government bonds, the boj makes such purchases as exchange - traded funds ( etfs ) and japan real estate investment trusts ( j - reits ). this balance sheet policy has contributed to an expansion of corporate profits and employment together with a stock price hike and depreciation of the yen, which have helped improve the output gap by about 2 percentage points. the ecb ( as well as european national central banks ) has purchased euro - denominated bonds issued by euro - area governments, agencies, and european institutions since march 2015 in an effort to restore the size of its balance sheet to that of march 2012 β or about bis central bankers β speeches 3 trillion euros. in conjunction with covered bonds and asset - backed securities ( abs ) purchased since october 2014, the monthly pace of the combined asset purchase is set at about 60 billion euros. except for very long - dated assets, the remaining maturity of eligible public sector assets to be purchased must be within two to 30 years. in principle, the assets need to be investment grade ( above bbb β ). this policy may be regarded as a reaction to growing concerns over the potentially weakened effectiveness of monetary easing as a result of the shrinking balance sheet amid a decline in some inflation expectation indicators. although the interest rate applied to a central bank β s asset purchases is generally determined through supply and demand forces in the relevant market, the ecb applies the deposit facility rate of minus 0. 2 percent as a floor rate. with regard to the second common monetary - easing instrument, forward guidance has been adopted by the two central banks with the objective of indicating a future direction for the ongoing monetary easing. this is expected to produce a signaling effect. the most commonly observed form is to signal the intention to maintain a significantly low policy interest rate over a long period. this instrument is supposed to exert downward pressure on the short - to medium - term yield curve | sayuri shirai : unconventional monetary policies of the bank of japan and european central bank remarks by ms sayuri shirai, member of the policy board of the bank of japan, at the panel discussion β monetary policy and central banking : a global outlook β, at the bruegel annual meeting, brussels, 8 september 2015. * * * accompanying charts can be found at the end of the speech. i. introduction thank you very much for inviting me as a panelist to the discussion on monetary policy at the bruegel annual meeting. recently, the directions of monetary policy among advanced economies have become increasingly divergent. whereas the u. s. federal reserve has begun considering normalization of its policy interest rates, the bank of japan ( boj ) and european central bank ( ecb ) continue their large - scale asset purchase programs. as one of the policy makers at the boj, i have closely monitored developments in the global economy and the monetary policies of major central banks. i would therefore like to talk today about the features of monetary easing of the two central banks ( boj and ecb ) as well as about developments regarding inflation expectations in japan and the euro area. let me stress that the views expressed here are entirely my own and do not necessarily represent those of the boj. ii. unconventional monetary policies β common features of the boj and ecb the monetary - easing instruments adopted by the two central banks have several features in common. they are ( 1 ) large - scale asset purchases centered on government bonds, ( 2 ) forward guidance used to indicate a future monetary - easing stance, and ( 3 ) a conditional long - term lending facility ( chart 1 and reference chart ). regarding the first instrument, the large - scale asset - purchase program is referred to as a β balance sheet policy. β this enables a central bank to expand the size of its balance sheet to a predetermined level and to maintain that size over a relatively long period. one of the expected results here is a portfolio rebalancing effect. this policy aims at promoting holders of government bonds to shift away from those bonds and invest in riskier assets, such as loans and corporate bonds, stocks, foreign securities, and real estate, thereby affecting a wide range of markets and energizing economic activity. since april 2013, the boj has adopted an aggressive balance sheet policy by setting a target on the annual pace of the monetary base increase under quantitative and qualitative monetary easing ( | 1 |
- year rate of increase in consumer prices at one point exceeding 10 percent in the euro area and reaching 9 percent in the united states. by contrast, the inflation rate in japan peaked at around 4 percent. while the federal reserve and the ecb rapidly raised policy rates to contain the inflation, the bank of japan has maintained monetary easing and continued to support the economy. recently, the recovery in the euro area economy has slowed moderately. the u. s. growth surprised many by staying firm despite the rate hikes. japan's recovery has remained moderate. what we have heard from japanese firms on their pricing practices a key issue for japan now is if the current higher - than - the - target inflation will abate. chart 2 shows recent and forecasted inflation rates, one excluding the effects of fresh food price changes and the other excluding fresh food and energy. the former, which is closer to the actual makeup of household budgets, was at around 3 percent in fiscal year 2022 and is projected to stay around the level for fiscal years 2023 and 2024, exceeding the price stability target of 2 percent. the prices of food and other frequently purchased daily necessities are rising at even higher rates, making many households feel burdened by even more than the 3 percent rate may imply. this is a serious issue. on the other hand, until recently, it had been a prevailing norm that neither wages nor prices could rise. japan had worked for many years to break free from this, and simply returning to such a frozen state after the current high inflation comes down would not be a desirable outcome either. the bank aims to achieve the price stability target of 2 percent in a sustainable and stable manner, accompanied by wage increases. such an outcome would require walking a fine line in which inflation decreases, but not too far. the japanese monetary policy faces multiple needs : addressing the current inflation, supporting the moderate economic recovery, facilitating a favorable environment for wage increases, and preventing the economy from reverting to a deflationary state. the bank is struggling to find a solution and this is by no means an easy task. in exploring a solution, we must examine various factors at home and abroad. today, let me focus on the question of how firms set prices and wages. changes in firms'wage - and price - setting behavior in recent years are a highly complex matter, but, at the risk of oversimplification, let me try to break them down into four stages ( chart 3 ) | complex and exotic structures. all approvals are reviewed & approved under specific transactional approval process by the derivatives approval & review team ( dart ) at sbp. i know that some people would like to see this fast tracked and we have taken steps to do so. though the specific transactions approved thus far are more complex and include variations of cross currency swaps ( ccs ), irs with embedded option, etc, the total volume in derivatives is still very low. in fx options the pak rupee equivalent is merely 177 million and fras 9. 650 million and so forth. the numbers are still very small despite having grown substantially. the point of going through these statistics is to highlight that there is a lot of work to be done in this area. in conclusion, i would like to say that pakistan has phenomenal opportunities in what has been going on globally in terms of private capital flows in terms of the savings that exist due to reserve accumulation in the region. secondly, we have to be proud of what we have achieved but at the same time we need to remember that there is still a lot more to be done. there are emerging trends of the nexus being developed between the capital markets and the banking sector and other segments of the non - banking sector. however, it is merely a small fraction. moreover, there are clearly lots of lessons that can be drawn from international and regional experiences of how we can foster these interlinkages and safeguard these effectively with the appropriate regulatory framework. i believe with us moving towards basel ii, while also positioning ourselves at the central bank with better supervision of the joint conglomerates, we should be able to offer these safeguards and oversee things more effectively. so i would like to encourage this forum to deliberate more on how we can go about nurturing this and what further steps are needed to promote innovation in the markets. thank you very much. | 0 |
benjamin e diokno : 2021 bsp outstanding stakeholders'appreciation ceremony message by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), for the 2021 bsp outstanding stakeholders'appreciation ceremony, 29 july 2021. * * * ladies and gentlemen, welcome to the 2021 outstanding bsp stakeholders appreciation ceremony. our theme, β pagpupugay at pagkilala : sa gitna ng hamon ng pandemya, β sums up what we are about to do today β give due recognition to you, our partners, who have gone beyond the call of duty in the name of service at the height of the global health crisis. it has been more than a year since the pandemic began, and, with cautious optimism, we can say that the worst is over. though our economy received big blows because of the pandemic, we started to see green shoots of recovery as early as the third quarter of last year. this is because of the whole - ofnation approach that we, which includes each of you, employed. before the pandemic, we are in what we can call as a position of strength, with ample fiscal and monetary buffer that the country used to respond to the crisis. amid the pandemic, we in the bsp opened our toolkit. we cut policy rate to a historic low of two percent and reduced the reserve requirement to 12 percent β all these to boost market confidence and free up more funds for lending to businesses and households. extraordinary times call for extraordinary measures. with legal safeguards in place, we extended lifeline support to the national government in the form of provisional advances worth p540 billion to augment its resources for covid - related spending. in sum, the bsp injected p2. 2 trillion into the financial system, equivalent to 12. 3 percent of the country β s gross domestic product for 2020 as of july 21, 2021. at the same time, we implemented various time - bound regulatory relief measures to enable banks and their clients manage the impact of the pandemic on their finances. these measures range from grace periods for loan payments to capping of interest rates on credit card usage, among others. as we gear up toward recovery, we are also building the foundation of the β new economy β through digitalization and financial inclusion. why finance digitalization? financial technology makes transactions easier and faster, which | outside of members β jurisdictions ; and β’ the methodology and approach for the regional financial risk assessment project. on the matter of the ccmf serving as the central reporting facility, there were questions as to its appropriateness, ability and capacity to manage such a task : β’ does it have the necessary financial and human resources? β’ do they have the required expertise, bearing in mind that this is a research institution? β’ how will the issue of legality and confidentiality be resolved? from recent discussion and exchanges between governors at and after the 27 may 2011 governors β caucus held in bridgetown, barbados it does not appear that we are anywhere near to resolving these issues and a sub - committee of governors was appointed specifically to look into these issues, among others. so, when i was tasked by my supervision department to make this feature address, these were some of the issues that governors were still hotly debating and i became fearful that this very important project may also fall victim to the dreaded caricom malaise. it then dawned on me that the cgbs and not the ccmf may be the only salvation and the ideal rescue vehicle for this project. in 1983, caricom central bank governors envisaged the need for an entity to spearhead the enhancement of regional banking supervision practices in line with internationally accepted standards. hence, the birth of cgbs, an institution charged with charting the way forward for supervisors to maintain above - board practices and equilibrium in regulating financial sectors across the caricom region. since then the cgbs has grown and accomplished much, and as i mentioned earlier, is one of the few caricom institutions that actually produces real work in the true spirit and meaning of regional integration. it is the obvious choice to be the central reporting facility and should be the home of the financial stability project ; financial stability review falls naturally within its bailiwick. what i am saying is that the time has come to legally establish the cgbs as caricom β s supranational financial regulatory authority. such a structured cgbs would eliminate all the concerns governors now have about the appropriateness of the ccmf for this role in particular the concerns on the legality of regional information sharing. presently, the conduct of cgbs members towards each other has been guided by a protocol based on mutual respect and trust. there is a members β handbook and a recently signed memorandum of understanding for regional cooperation though none of these are legally binding. | 0 |
changed its fiscal policy and the riksbank did all it could to defend the currency, raising its steering interest rate to 500 per cent. however, sweden was forced to abandon the fixed exchange rate as an anchor to achieve price stability in november 1992. finland had replaced its fixed exchange rate regime earlier in the autumn. the overheating changed into a severe setback at the beginning of the 1990s. between 1990 and 1994 the swedish gdp fell by a total of 4. 7 per cent. in finland the fall experienced during the same period amounted to 10. 4 per cent. finland was hard hit by the large decline in export brought about by the collapse of the then soviet union. open unemployment in sweden rapidly soared from a level of around 3 per cent in 1991 to 8. 2 per cent in 1993. in finland, the number of unemployed increased from just over 6 per cent to 16 per cent. some of this difference can, however, be due to the slightly different form taken by labour market policy in the two countries and to how unemployment is defined. the deficit in public finances increased considerably ; in sweden it was at worst 12 per cent of gdp in 1993 and the borrowing requirement amounted to almost 17 per cent. the deficit in finland in the same year was 7. 3 per cent of gdp. the crisis in the banking system at the beginning of the 1990s hit both swedish and finnish banks hard. sveriges riksbank, like the bank of finland, found itself in a difficult situation at the end of 1992, following the currency crisis. the decision on a new monetary policy strategy was taken in an environment where confidence in monetary and foreign exchange policy was low. earlier actions in economic policy β resorting on several occasions to devaluation in the cost crises that arose β as well as losing the battle of the fixed exchange rate were some explanations for this. alternative strategies for finding an intermediate or direct target for monetary policy were investigated and the riksbank studies solutions used in other countries. as in the case of finland, we in sweden were not used to working in an environment with a floating exchange rate. the last time sweden had a floating exchange rate was for a few years in the 1930s. the general opinion among both politicians and economists was that a fixed exchange rate was the best solution for small, open economies that were very much dependent on other countries. this opinion has since changed β not only in sweden and finland, but also in many other countries. sweden and finland decided on a new | repo auctions, and secondary market trading at the primary dealer level. turning to today β s function, this is the 5th ceremony bou is hosting to recognize the pd of the year. i wish to acknowledge the role this year β s award winner has played especially in providing more consistent coverage in the primary auction and repo operations and particularly their pricing. ladies and gentlemen, on behalf of the bank of uganda, i wish to announce that standard chartered bank uganda is the primary dealer of the year 2009. i now invite the managing director to receive the award. congratulations. i thank you. | 0 |
yaseen anwar : fiscal and monetary policies speech by mr yaseen anwar, governor of the state bank of pakistan, at national defence university, islamabad, 4 november 2013. * * * respected guests, esteemed servicemen, and students of this prestigious institution, assalam - o - alaikum! i am delighted to be invited to the national defence university to talk about fiscal and monetary policies in general and in the context of pakistan. it is a fact, not many students like economics as a subject. but it is also true that not many subjects impact our lives as does economics. it is therefore not surprising that everyone likes to jump into discussion on economic issues even if their knowledge ( on the subject ) is rudimentary. one just has to flip thru channels on tv to see the variety of views on the subject, which are not always correct or informed. over the years sbp through its various publications and seminars, has been trying to enhance the understanding of the general public on various economic issues. i would like to think that it is partly because of sbp β s efforts, that the general public today is much more aware of economic issues than they were, say ten years ago. i am sure you already have heard a great deal about monetary and fiscal policies, and there may be little i can add to enhance your knowledge on the subject. what i can do however, is to try to bridge the gap between theory and practice. in text books, monetary and fiscal policies appear simple enough and desired objectives can be achieved by manipulating policy instruments. the question arises : β’ why do countries find it so difficult to get their policy mix right? β’ why countries cannot strictly control the supply of money to keep inflation in check? β’ why do countries struggle to smooth out economic fluctuations? β’ why are countries β fiscal accounts always imbalanced? the reason is that policy goals often conflict with each other, and economic variables cannot be determined in isolation. therefore, while it is important to know about the policies individually it is equally if not more important to understand how these policies interact with each other. broadly speaking, monetary policy involves central banks β use of policy instruments to influence interest rates and money supply in order to keep overall prices and financial markets stable. the policy could be β expansionary β, to stimulate economic growth or β contractionary β, to check the rising price levels ( inflation ). fiscal policy, on the other hand, is government β s management of its revenues and expenditures | such as interest rates, central banks around the world used unconventional measures such as quantitative easing ( qe ) to provide cheap liquidity in the market to stem erosion of investor confidence. thus, fiscal and monetary policies are no longer restricted to their traditional roles. in pakistan, however, the situation under which the fiscal and monetary policies have to operate is fundamentally different and far more complicated. first, we have not had sustained periods of political and economic stability in recent history. we have been at the forefront of the war on terror for over a decade now. besides damage to life and property, this participation has resulted in a huge strain on our country β s meager resources, which has not been fully compensated for. second, the power sector crisis has crippled a significant part of economic activity. inappropriate policies, which offered guaranteed equity returns and disregarded what is an appropriate fuel mix for the country, 1 price distortions, expensive and poorly targeted subsidies, inefficiencies in the energy supply and distribution, and low recoveries have resulted in a crisis gripping the power sector. persistent energy shortages have resulted in a decline in the productive capacity of our industrial sector which has lead to an increase in unemployment. third, lack of diversification and innovation in the economy combined with scarcity of entrepreneurial talent has made us depend on a few sectors for economic growth and export earnings, such as textiles. fourth, instead of exploring and developing abundant natural resources in the country, we import a number of essential goods like crude oil, that are, to a large extent, price inelastic ( fyi every $ 5 reduction in price saver us $ 750 million in fx for the year ). fifth, from general public to higher echelons there is a general culture of tax evasion which limits the ability of the government to raise an appropriate amount of revenues. sixth, a sizeable chunk of our munir, kamal a. and khalid, salman. 2012. β pakistan β s power crisis : how did we get here? β the lahore journal of economics 17 : 73 β 82. bis central bankers β speeches economy is in the informal sector which remains undocumented and therefore beyond the tax net. seventh, public sector enterprises instead of being a source of revenue for the government eat up scarce resources every year. finally, we have had the misfortune of sufferings due to natural disasters i. e. floods and earthquakes in the recent past. all these endogenous and exogenous factors | 1 |
as by the need to respond to external demands. the strength of the link between the european economic policy reform process and monetary policy entails the risk that not meeting publicly declared targets will damage the currency's standing. against this background, it is crucial for the future development of emu and the euro that the stability - oriented foundation of emu, e. g. the absolute priority that monetary policy accords price stability or the importance of the stability and growth pact, continues to be upheld. β’ a third angle for a comparison is the approach to european integration itself. after world war ii, the european " core countries " very quickly occupied themselves with the project of european unification, driven by the ambition to promote reconciliation through integration and cooperation. phases of expansion and deepening followed the foundation of the european union at various intervals. considering that european integration is quite a difficult process on the whole and that individual member states'conceptions of the future of the union diverge, the tenacious progress of this integration process is indeed extraordinary. austria entered the european integration process at a relatively late stage. while the effort to join a larger europe - first as a member of the european free trade association efta, and later as an ec member - was soon part of austria's integration program, whole - hearted participation in european integration was a while in coming. i believe that now that austria is a member of both the eu and the euro area, it has taken this decisive integration step. the enlargement of the european union β a step of great significance for europe and for austria β will place our country even more squarely at the heart of this integrated europe, geographically speaking. opportunities and challenges for austria β s economy from the austrian economic perspective, emu is tantamount to a 35 - fold increase in the size of the common currency area to over 300 million consumers. this opens up new perspectives and the opportunity to proactively address the challenges of globalization and heightened competition. the new framework benefits first and foremost the small and medium - sized enterprises ( smes ) in industry and trade, the pillars of growth and employment in the austrian economy. to illustrate the change, according to the most recent figures, some 60 % of austria's imports came from euro area countries in 2001, and some 56 % of its exports were delivered to the euro area. foreign trade with the euro area has, of course, been greatly facilitated by the single currency and by cost savings as a result, above | klaus liebscher : the euro and european integration β an austrian viewpoint luncheon speech by dr klaus liebscher, governor of the austrian nationalbank, at the international bankers forum, luxembourg, 9 april 2002. * * * introduction it was with great pleasure that i accepted your kind invitation to address such a distinguished audience and to speak about the austrian experience with european integration. in former times, luxembourg has had a very turbulent past - often triggered by the habsburgs - with countries taking turns in slicing pieces off the grand duchy. after world war ii, however, luxembourg together with the other founding countries of what is now the european union ( eu ) symbolizes the building of a united europe carried out in a spirit of negotiation and dialogue. for me as an austrian citizen, luxembourg also stands for all of the benefits especially smaller countries can derive from the eu. it may still be the tiniest state of the eu according to size but luxembourg is also one of its most prosperous ones. the grand duchy is one of the three institutional centers of the union and very often feeds new elements into the debate of and about the eu and as a result helps bigger countries to reach agreement. thus, luxembourg enjoys an influence in the eu beyond its small size and is an example of european co - operation at every level. successful euro changeover since march 1 of this year, all legacy currencies of the euro have been phased out and new euro banknotes and coins have become the legal tender in 12 of the 15 member states of the european union ( eu ). today, more than 300 million citizens in europe share the same currency. the process of monetary integration as laid down in the maastricht treaty has found its tangible expression and culminating point in the everyday life of the citizens of the euro area. from my point of view this historic cash changeover has been completed very successfully with the broad - and often enthusiastic - support of the european citizens. the changeover of the old national banknotes and coins of the 12 countries of the euro area has been a highly challenging project - and its success has far exceeded our expectations. this is also true for austria, where we had an exceptionally successful cash changeover. the austrian population accepted the new currency with unforeseen enthusiasm from the very beginning. before the introduction of euro banknotes and coins, the public - not only in austria - had some concern about potential inflationary effects due to the rounding up of prices, long queues in shops because of | 1 |
sensitive to high deficits and growing public debts. one should bear in mind that the scope for using fiscal stimuli is rather limited in countries with high levels of foreign debt since increasing public consumption leads to a further increase in foreign debt and higher cost of borrowing. serbia β s foreign debt is already relatively high β almost 80 % of gdp and any further increase in fiscal deficit would only lead to its further rise. it is probably more opportune in such circumstances to consolidate fiscal policy and thereby open up the room for a more efficient implementation of the monetary policy on the way to recovery. allow me to reiterate β fiscal and external imbalances are often connected and, represent the key factors for the assessment of macroeconomic sustainability and the risk premium of any country. therefore, any valid strategy of recovery, i. e. exit from the economic and fiscal crisis, must take into account the effect of such growth on the external and fiscal balance of the country. only growth which leads to the achievement and maintenance of external and fiscal balance in the medium and long run is sustainable growth. only this growth can lead to a sustained decrease in serbia β s risk premium and hence cheaper credits for the serbian state, corporates, banks and households. and that is precisely why it is better to have low but sustainable rather than high and unsustainable growth rates. bis central bankers β speeches the argument that serbia should persevere on the path of investment and export - led economic growth and that the key role in its achievement should be played by structural reforms and fiscal consolidation was also suggested by standard & poor β s in its official statement in march 2011 when serbia β s credit rating was improved from bb - to bb : β the increase of serbia β s credit rating reflects the agency β s belief that the implementation of economic policy in serbia has improved and that the country has gained a new momentum when it comes to fiscal consolidation, structural reforms and economic rebalance. β the national bank of serbia, on its part, shall continue to strive towards stabilising inflation at a low level and preserving a healthy financial system, which, i am utterly convinced, represents the best way to help the economy in current circumstances and contribute to the creation of an environment conducive to business and investment. the more effective fiscal consolidation and structural changes are, the more easily will the national bank of serbia achieve its objectives with less monetary policy restrictiveness. bis central bankers β speeches | shop floor / products / services inflation alone, as a key variable, in monetary policy response. for what happened was unprecedented in that with monetary policy focused only on traditional cpi, interest rates were kept low in spite of exploding prices of assets like real estate / property, credit assets, equity and commodities. and this was all made possible because of the huge current account surpluses in china and other emes, and huge private capital inflows into emes in excess of their current account deficit, getting recycled back as official capital flows into government bonds of reserve currency countries, especially the usa, resulting in compression of long term yields which, in turn, translated into lower long term interest rates even for the riskier asset classes mentioned above. this chasing of yield, due to global savings glut, in turn, led to unprecedented underpricing of risk as reflected in the all - time - low risk premia with junk bond spreads becoming indistinguishable from investment grade debt! such a low interest rate environment coupled with luxuriant supply of liquidity, created enabling environment for excessive leverage and risk taking so much so that american household debt exceeded the country's gdp! this, in turn, led to a sort of the so called β ponzi finance culture β where, with personal savings rate at close to zero, consumption spending binge was driven through withdrawal of home equity made possible by omni - present home equity loans rather than through incomes! thus, the entire debt binge was spent in consumption and not investment, leading to a veritable partial deindustrialization of america, as it were, with the possible exception of the services sector. all this while, the us growth story stayed non inflationary due primarily to cheap imports from china, asia and emes. in a refreshing and instructive contrast, in an almost identical macroeconomic environment in the usa in the 1980s, the volcker fed resolutely tightened monetary policy to counter the potentially inflationary impact of unsustainably high fiscal and current account deficits of the usa as a result of which, and also the fact that, unlike this time, there was no savings glut, us interest rates rose almost to 18 - 20 %! this fed action saved the day in as much as the risk premia became very high ex ante avoiding, unlike in the recent crisis, underpricing of risk and the financial meltdown although it exacted its toll in the | 0 |
existing regulatory framework to a particular innovation. two typical examples of such innovations are the ones based on distributed ledger technology ( dlt ) and the ones based on artificial intelligence ( ai ). regarding the former ( dlt ), in september 2020 the european commission adopted a proposal for a regulation as part of its digital finance strategy. regarding the latter ( artificial intelligence ), a proposal for a regulation was adopted by the european commission just recently. the second objective of the sandbox is to enhance legal certainty, i. e. to clearly delineate the scope of the regulatory framework within which an authorised institution may deploy a service, also identifying possible points of friction or needs for additional regulatory initiatives. the third objective of the regulatory sandbox is to promote knowledge. in particular, collaboration with sandbox participants will provide a two - way opportunity to disseminate and build up knowledge around financial technology. this knowledge will give us additional tools in order to inform our regulatory and supervisory approach, as and where appropriate. this can be done either on the initiative of the bank itself, taking into account the relevant risks and the required risk management mechanisms, or in the context of eu legislation initiatives. by way of illustration, in 2020 the bank β s executive committee adopted an act on the terms and conditions for remote electronic identification of natural persons as part of a digital onboarding process. i should stress that the operation of the regulatory sandbox is an innovation, even for the bank itself and a different, supplementary and structured approach to the exercise of its supervisory functions. recognising the challenge that this poses, we will be constantly monitoring and reviewing the procedures that we have put in place, so as to ensure that these objectives are met in the best way possible. in later presentations today, you will have the opportunity to hear details about how to access the regulatory sandbox and how it works. i look forward to your feedback on this new innovation facilitation mechanism that we are launching today. closing remarks 2 / 3 bis central bankers'speeches in closing today β s event, i would like to thank all the speakers and participants for their attendance. in summary, the regulatory sandbox will enable supervised fintech firms to test innovative solutions in a protected environment under the auspices of the bank of greece. thus, it will serve as a further driver of fintech and innovation in greece, in addition to the innovation hub. moreover, the regulatory sandbox will foster the market availability of innovative solutions, while safeguarding financial | candid discussions on policy effectiveness and unintended risks that could arise go a long way in minimising potential policy missteps. while capital flow volatility will remain a key feature of the global financial system, we have to acknowledge that with heightened uncertainties prevailing in the global economy, capital flow volatility would only intensify. for example, in malaysia, two - way capital flows have increased by almost three - fold in the aftermath of the global financial crisis. yes, we have had large swings in capital flows before and we have been able to manage these surges. what worries me, however, is the fact that monetary and financial stability risks posed by large and destabilising capital flows are expanding, evolving and becoming more entangled. we are very familiar with the risks posed by volatile capital flows. at the extreme, capital flows can lead to the build - up of domestic vulnerabilities, such as currency mismatches, external indebtedness and broader financial imbalances. these risks are becoming more entwined and complex than ever before. capital flows undoubtedly complicate efforts to achieve monetary and financial stability. allowing exchange rate adjustment to deal with capital flows may also be too simplistic. 1 / 3 bis central bankers'speeches while capital flow risks have become more complicated, the issue faced by policymakers remains unchanged β that is, how can we better manage these risks and yet maximise the benefits that come with capital flows. the experience of our economies in dealing with capital flow volatility underscores the need to ensure our economic fundamentals are robust. while this is necessary, it is not sufficient. we have seen how external developments that are beyond our control, such as taper tantrum and trade tensions, could trigger periods of sharp capital flow volatility in emerging economies with severe consequences. there are β innocent bystanders β who are gravely impacted. it is therefore imperative that collectively, we continue to urge the global community to better manage the risks arising from financial openness. more needs to be done at the international level to have, to quote imf md christine lagarde, β safer capital flows ". nevertheless, we have to recognise that it is not easy to expect change at the international level. it will definitely take time. while the global community continues to debate and explore possible solutions to manage spillovers and spillbacks of policies in advanced economies, our economies will have to continue to grapple with | 0 |
developed the liquidity, infrastructure and ecosystem that are capable of serving the financing, investment and risk management needs of corporates and investors alike. there are many factors behind the success of hong kong as a china gateway and an offshore rmb hub. our " one country, two systems " institutional arrangement is critical : it facilitates cross - boundary cooperation between mainland and hong kong authorities, while allowing hong kong to maintain a market environment that is familiar to market participants from the rest of the world. 2 / 5 bis - central bankers'speeches the design of these products and service offerings are also conducive to international participation. investors using these connect schemes can continue to follow common offshore market practices and rules that they are accustomed to, and leveraging their established legal and operational set - ups in hong kong, without the need to open onshore accounts and engage onshore agents. all these are familiar factors. i would, however, argue that hong kong's robust regulatory regime has played a crucial, if understated role. for our fellow mainland regulators, the various connect schemes in effect allow investors that are not directly under their purview to access the mainland market. mainland authorities would need to have confidence that such investors are properly regulated in hong kong. consider how much emphasis that mainland authorities put in market stability and order, the trust that they have in hong kong's regime is remarkable. likewise for international investors : the fact that they are now investing in a market β the mainland market β without actually having connected to that market shows how much they trust that hong kong regulators have done their homework for them, and that we will make sure that their interest is well - protected and the investment channel will run in an orderly manner. our robust regulation is what underpins this trust and in turn, our success as the hub for all things china. ( ii ) tech and innovation tech and innovation is another area that i believe regulation and market development are complementary and can feed into each other in a virtuous cycle. this is particularly the case for virtual assets. there was a time when virtual assets and the so - called cryptocurrencies were seen as a way to escape from the reach of governments and regulation. some continue to hold this belief, but they are now a minority. two reasons explain this. first is some high profile failures in the industry. many of the causes behind the failures - poor governance, misuse of client assets, etc. β are not new and are exactly the | hksar government is well - positioned to fill the gap by providing high - quality sukuk to meet the strong demand from investors. the global roadshows of the government sukuk will also provide an ideal opportunity for us to reach out to global investors and showcase our credit strengths and islamic finance capability. 16. as the government β s representative under the government bond programme, the hkma is now working closely with the government to prepare for the inaugural issuance of government sukuk. a detailed issuance plan is being devised with reference to international practices and market conditions. according to our current plan, the inaugural government sukuk would be based on the ijarah structure and target institutional investors globally. what β s in it for fund raisers to issue sukuk? 17. as i have mentioned earlier, the key objective of the government sukuk is to play a catalytic role, paving the way for local and international fund - raisers, no matter from the public or private sector, to follow suit. 18. for the potential sukuk issuers sitting here today, you may wonder what benefits you will get by issuing sukuk. well, let me highlight two key benefits here. 19. first, you would be able to broaden your investor base. by issuing conventional bonds, you will only be able to tap conventional investors. but by issuing sukuk, you will be able to get both conventional and islamic investors to participate. in particular, issuing sukuk will help you to gain access to the large pool of liquidity in the middle east and other islamic countries, where investors are progressively looking for shariah - compliant assets in this part of the world. at the same time, more and more conventional investors are also looking to diversify their portfolios into sukuk as a new asset class. so, issuing sukuk would enable fund - raisers to enjoy a wider and more diverse investor base. 20. second, you would be able to diversify your funding sources. with the additional option of sukuk in your arsenal, you can choose to issue either conventional bonds or sukuk, depending on the pricing and liquidity in the market at the time of issuance. this would provide more flexibility and a more stable source of funding to fund - raisers, particularly at a time when the funding cost of sukuk is more attractive than that of conventional bonds or when there is difficulty in obtaining liquidity in | 0.5 |
banks operating in our jurisdiction. it allowed what formerly were offshore banks to interact actively with the domestic money and foreign exchange markets and with the domestic economy in general. cross - border banking activities decisively picked up. the bank of mauritius act and the banking act were both overhauled and suitably recast to meet emerging regulatory challenges. previously, quite some prudential norms set by the bank of mauritius used to be introduced by way of regulations made by the minister of finance. they sometimes used to be lobbied against in the halls of government. by making the guidelines legal in the bank of mauritius act 2004, the bank does not have to have recourse to government for issuing guidelines to banks and is therefore free pressures from the banking industry and other related parties. so far, the bank of mauritius has issued 35 guidelines to the banking industry. they all have authority. as the financial integration accelerated, cross - border banking activities also accelerated in the 1990s. today, cross - border banking activities account for 60 per cent of our banking industry β s businesses. total banking assets are around 300 per cent of our gdp. the risks and vulnerabilities to our financial industry and the economy are by no means negligible. since the beginning of the new millennium, the bank of mauritius took a number of regulatory and supervisory initiatives a few of which are as follows : 1. the bank entered into mous on cross border supervision and information sharing with 16 of its counterparts. the mous set forth a statement of intent between the bank and its counterparts to establish a framework for mutual assistance, cooperation and exchange of information in the fulfilment of the institutions β respective supervisory responsibilities ; 2. the banking act allows for cross border cooperation in terms of group audit from parent bank of the subsidiaries and branches of foreign banks in mauritius ; 3. besides carrying out onsite examination of overseas subsidiaries of local banks, the bank has also engaged with its foreign counterparts to carry out joint examinations of entities falling under its purview. the banking act allows host supervisors to conduct examinations of banks in our jurisdiction ; 2 / 3 bis central bankers'speeches 4. two years ago a huge financial conglomerate failed in mauritius. the bank of mauritius act and the banking act were amended to enhance both consolidated and conglomerate supervision ; 5. the bank of mauritius attends the supervisory colleges of almost all the subsidiaries and branches of foreign banks operating in our jurisdiction. the bank has a policy of holding supervisory colleges for the two largest domestic banks that have | s research, β the concept of a recognized dealer was somewhat amorphous. an october 1939 bank memo remarked that the term was β not an exact appellation β and noted that β the principal factors which we consider in extending such recognition are ( 1 ) reputation for integrity, experience, and knowledge, ( 2 ) capital at risk of the business, ( 3 ) willingness to make markets under all ordinary conditions and to take positions both long and short, and ( 4 ) large volume [ of business ] of national scope, with the contacts which such trading provides. β β ( garbade, the early years of the primary dealer system, pp. 8 β 9 ). bis central bankers β speeches in the early 1960s, a reporting dealer regime was created, featuring reporting on positions and a public list of the firms that communicated various data to the new york fed. during the 1980s, in considering new firms for primary dealer designation, desk staff increasingly looked for evidence that a firm had a certain share of total customer trading activity. the working threshold was generally 1 percent, with some fluctuations in this level over time. an explicit requirement for primary dealers to participate in treasury debt auctions was added in the mid1980s. in 1992, following the salomon brothers treasury auction scandal, the desk altered its primary dealer requirements and ended its dealer surveillance program, in an effort to eliminate the perception that it had a regulatory relationship with primary dealers and to encourage more firms to become primary dealers. nevertheless, over the following decade, the list of primary dealers contracted, largely as a result of declining profitability and industry consolidation in the mid - 1990s as well as the departure of some japanese financial institutions following losses in their home market. the number of primary dealers declined further with the failure and / or consolidation of several large dealers during the recent financial crisis, but has begun to grow slowly again in subsequent years. the last revision of our primary dealer operating policy, published in 2010, formalized a pro rata treasury auction bidding requirement for all primary dealers, which requires primary dealers to bid for their proportional share of each treasury offering. 11 relative to domestic open market operations and auctions for primary treasury issuance, foreign market operations undertaken with private counterparties to further foreign exchange policy and the investment of foreign reserves are relatively small and infrequent and have a somewhat shorter history. the fed first undertook very limited foreign exchange ( sterling ) purchases in the market during the late 1920s and early 1930s in an effort to | 0 |
that our economic and monetary union was more than a precarious arrangement among nation - states and stands as an important pillar of the european integration project. proof of this can be found in the package of loans with stringent conditionality put together for greece, in the creation of an european financial stability facility with 500 billion euro, and in the adoption of further non - standard measures to defend the monetary transmission mechanism for the whole euro area by buying securities and providing liquidity. we did this in full consistency with our mandate to deliver price stability, and with the determination to overcome the unfounded misunderstanding that purchases of securities could in some inexplicable way be more inflationary than the use of the same securities in regular repurchase agreements. what counts, of course, are the overall development of primary liquidity and the management of short - term money market rates. incidentally, measured in terms of the monetary base, provision of liquidity has decreased from β¬1256. 8 billion on 7 may to the current level of β¬1149. 8 billion and eonia went up from 0. 321 to 0. 398 yesterday. at the same time, market inflation expectations are well anchored bellow 2 % up to 10 years. apart from the determination shown in taking appropriate measures, europe has also recognised that the current episode of the crisis points to the existence of real problems with respect to public finance imbalances and has even exposed some institutional weaknesses in our framework for monetary union, which need to be corrected. consequently, europe has now embarked on the preparation of significant reforms of the euro area governance in the context of the task force created under the leadership of president van rompuy. every good reform starts with a good understanding of the problems. the fundamental point relates to the issue of imbalances in euro area countries. by imbalances, i do not mean just fiscal imbalances, but also imbalances stemming from private sector behaviour. i will concentrate my remarks on the issue of imbalances, starting by analysing their causes and the necessary policies to correct and, preferably, avoid them in the future. finally, i will draw conclusions as to what the experience implies for economic policy and economic governance. 2. imbalances and adjustments in a monetary union there are severe fiscal imbalances in euro area countries. triggered, in particular, by developments in greece, markets have dramatically reassessed their view of fiscal positions leading to sharp rises in bond yield | to ensure that innovations are adopted to increase efficiency instead of becoming a hurdle to financial integration and efficiency. in its catalyst function, the ecb uses its position as β honest broker β to facilitate the harmonisation of standards among market participants and the interaction of the industry with other public authorities. the ecb stands ready to work together with all interested parties in its catalyst capacity to move towards interoperability of any developed services. thank you. 2 / 2 bis central bankers'speeches | 0.5 |
establish that the borrowers are sincere about the project, in particular, that the borrowers, or at least the senior management of the borrowing companies, are willing to tighten their belt and share the burden of restructuring. 37. also, lenders must ascertain the amount of the sacrifice required to be made on their part. restructuring proposals could be considered much more favourably if there is no sacrifice on the part of the lender except postponement of the repayment date of the principal. banks would do well to adopt the money lender principle of greater concern in the interest income in such situations if the borrower is servicing the loan regularly. even where the banks has to make some sacrifice by sanctioning the restructuring proposal, there must be some provision for re - compensation when the borrower / borrowing unit comes out of trouble. of course, there are prudential provisions which have to be built up to protect the lender in case of the failure of the restructured unit. bis central bankers β speeches 38. further, our entire approach to restructuring has to be reoriented to show more compassion to the small customers. smes and priority sector advances are an important segment of the economy and viable accounts facing temporary problems in such sectors must not be discriminated against when they request for restructuring. nurturing of viable accounts is in the long term interest of both the lenders and the borrowers. this will not happen automatically. there is a need for a structured mechanism for considering restructuring of retail, sme and agricultural loans just as there is the cdr for considering restructuring proposals for larger accounts. this structure will need to be built in at various levels β at the state, the district, the region and the bank level. the functionaries at various levels will need to be empowered to assess and approve viable restructuring proposals. without such delegation, it would be extremely difficult for the benefits of restructuring to percolate to the smaller accounts. 39. again, for restructuring proposals to be successful in assisting the borrower to tide over temporary difficulties, it is critical that the assessment of the proposal and its approval are completed within a specific time frame, say 90 days. time is very often the very essence in ensuring the turnaround of projects and an elongated process of assessment of the restructuring proposal could itself erode the viability of the project. conclusion 40. before concluding, i would like to emphasise that resources of the banking sector are precious and limited and they cannot be allowed | to be used in an imprudent way. cdr is a necessity especially when economic upturn and downturn are a way of life and part and parcel of business cycles for individual companies. corporate debt restructuring has been in existence for more than a decade in india, and this system has fulfilled its objectives to a large extent. it is a mechanism evolved for preserving the economic values of banks β assets should not be used against its noble objectives. similarly, regulatory forbearances are discretionary tools which should be used only in the most demanding times. it goes without saying that its future success and failure will depend upon the ethics and integrity of its members and the professionals involved in the restructuring process. 41. the restructuring process is a tool for assisting distressed sections of the economy to tide over difficulties which are temporary in nature and due to circumstances beyond their control. for us to justify that restructuring is for the larger benefit of the economy and the society, it is imperative that it is available to all classes of borrowers and is made available in a timely and non - discriminate manner. this will be possible only if we develop the necessary structures, systems and processes to adhere to the above objectives. a viable time bound action plan for implementing all of this is critical and i hope the finance professionals will play a major role in doing this. i wish the deliberations in the seminar all success. thank you. bis central bankers β speeches | 1 |
with the budget themes for 2009 and 2010 of β enhancing growth through competitiveness and diversification β. in collaboration with the development partners, government will provide the necessary support institutions, infrastructure and services conducive to efficient and competitive manufacturing. i would like to strongly encourage zambian firms particularly members of zam to take advantage of the opportunities created under this initiative. mr president, as i conclude my remarks, i wish you and your members a prosperous 2010. i thank you for your attention. | favourable in 2010 due to the rebound of copper prices on the international market as well as the expected increase in copper production as some mines increase production to full capacity and the resumption of production at some mines. the rebound in the international price of copper in the second half of 2009 and the return of foreign portfolio flows resulted in an appreciation of the exchange rate of the kwacha by 4 % at the end of the year. however, fiscal performance in 2009 was weak, mainly due to the global economic crisis, which reduced domestic revenues. despite this, government remained within the programmed domestic financing for the year. december - 2009 inflation revised to 12. 0 % in the budget speech for 2010 presented to parliament on october 9, 2009. distinguished members, the financial sector has remained resilient despite the effects of the recent global financial crisis. currently, the zambian financial sector is characterized by high liquidity levels, reflecting tighter lending standards in the wake of the lessons from the global financial crisis leading to marked decline in private sector lending. as a result, the demand for the relatively risk free government securities has increased causing a decline in yield rates on government securities. the decline in government securities yield rates and relatively low inflation experienced since the beginning of the year should contribute to a decline in banks lending rates and thus stimulate borrowing by the private sector. i am aware that the high interest rates in the country pose a very big challenge for our manufacturers to borrow for recapitalisation and expansion of their businesses. access to finance is essential for the economy to grow and therefore it is necessary that we find ways that could reduce the cost of borrowing to allow key sectors to expand. ladies and gentlemen, i wish to reiterate that the economic fundamentals point to a reduction in lending rates. in a liberalised financial market environment, the central bank contributes to the reduction in lending rates by reducing inflation. the government also contributes by implementing prudent fiscal policy, thus limiting the incidence of crowding out of the private sector by the government. as a result, yield rates on government securities fall. as inflation and yield rates on government securities decline, lending rates are also expected to decline in the medium to long term as the two provide the relevant opportunity cost of lending to the private sector. another factor that commercial banks take into consideration in determining lending rates is the default risk arising from the poor credit culture in the economy in general. in resolving the problem of poor credit culture, the central bank through the financial sector development | 1 |
njuguna ndung β u : reflections on inclusive business in africa keynote speech by prof njuguna ndung β u, governor of the central bank of kenya, at the g20 inclusive business workshop in africa, nairobi, 30 october 2013. * * * representatives of the german and saudi arabian governments who are the cofacilitators ; the g20 challenge partners ; distinguished guests ; ladies and gentlemen : it is my honour and pleasure to join you this morning at this very important workshop where we reflect on inclusive business in africa. before making my remarks, let me express my gratitude to the g20 challenge partners, the conveners of this workshop, for the invitation and choice of nairobi as the venue for the workshop. may i also take this early opportunity to welcome our distinguished guests from all over the world to this beautiful land of kenya, which enjoys a diversity of stunning and captivating landscape, wildlife and culture? i kindly urge you to take part of your time during your stay to enjoy this diversity and to always come back to enjoy it. ladies and gentlemen : the timing of this workshop could not have come at a better time for our continent. africa is composed of developing economies with untapped wealth, a youthful population and low volume of trade with itself due to infrastructure gaps. the binding constraints that the infrastructure gaps have created has not turned around the rich potential that exists in africa. but most of its economies are developing into a class of frontier and emerging economies. the g20 challenge on inclusive business innovation is a global entity that promotes employment through innovative, scalable and commercially viable ways of working with lowincome people in developing countries. this development should be appreciated in this region. ladies and gentlemen : building inclusive businesses holds the key to unlocking africa β s potential. this will integrate the poor into the businesses value chains in various capacities whether as producers, distributors, suppliers or employees. when the challenges of scaling and replicating the businesses are overcome, profitable and sustainable ways of engaging with the low - income segments of the population create sustainable livelihoods and contribute to sustainable poverty reduction. inclusive business models, as is said, aim to β do well by doing good β through creation of more stable jobs that provide sustainable income flows, build technical skills and local capacity at the bottom of the pyramid. if we achieve this we will not only have created inclusive businesses, but also inclusive growth and shared prosperity. this is the dream for africa on shared growth that will support end | ##hip, and notably your commitment in driving and modernizing the financial sector in the region over the last 8 years of my term. let me conclude by once again, thanking the bank of tanzania for the warm welcome and hospitality. with these few remarks, i look forward to fruitful engagement in discharging our mandate in this meeting. thank you. bis central bankers β speeches | 0.5 |
http : / / www. bankofengland. co. uk / monetarypolicy / pages / forwardguidance. aspx. see http : / / www. ecb. europa. eu / press / pressconf / 2013 / html / is130905. en. html. bis central bankers β speeches | developments. the medium term : eventual exit from unconventional policies unconventional monetary policy measures have been of the utmost importance to strengthen accommodative monetary policy, and they will continue to be an important policy tool as long as the economy is in troubled waters. yet it is clear that central bank balance sheets cannot grow forever. in the medium term, when the economy is back on track and solid growth is restored, some unconventional measures will have to be reversed. this eventual exit will but note that many central banks have recently given similar forward guidance about their policy intentions. bis central bankers β speeches pose unprecedented challenges to central banks, and it is our responsibility to prepare for these challenges well in advance. the following three aspects are particularly relevant. first, we must find the adequate timing and sequence of actions. second, we must ready the public for the eventual exit by carefully communicating our exit strategy. third, we must take into account potential international spillover effects of our policies. given the strong international linkages of banks and financial markets, monetary policy changes in one major currency area can have significant global effects. timing finding the right timing is the first key challenge when exiting unconventional policies. exiting too early or too fast may create risks to economic growth and employment. exiting too late or too slowly may create risks to price stability, both over the short and the medium term, and distort the private sector β s incentives to continue balance sheet repair. exit strategies thus need to be designed in a cautious manner. they must be flexible to respond to changing economic conditions. they must involve gradual and steady adjustments rather than occasional and disruptive action. they must provide the right incentives. of particular importance to the design of exit strategies is also the initial composition of a central bank β s balance sheet. as outlined in greater detail before, the fed β s quantitative easing program mainly relies on large - scale asset purchases, especially purchases of mortgage - backed securities and treasury bonds. the exit strategy will therefore have to incorporate a detailed state - contingent plan that formulates when, or under what conditions, purchases of new assets in either asset class will cease and existing portfolios will be sold off. as indicated by the disruptions following the fed announcement in june, market participants expect that these actions will have significant impacts on asset prices and thus the overall economy. moreover, finding the adequate sequence of reversing actions will be critical to keeping disruptions in asset prices to a minimum, and to ensuring the stability of the financial system. 5 | 1 |
fiscal deficits ; rigid exchange rate system and imbalances of payments contain significant risks ; bank clients and bank - enterprise relationship also hold significant risk ; some existing governance problems may require further state financial rescue if not addressed timely ; the lack of autonomy and scientific techniques in pricing loans may give rise to significant financial risk ; the inadequate innovation mechanism may lead to rigidity that constrain competition ; and, a balance needs to be struck between maintaining financial stability and preventing moral hazards. many of the above relate to the legal problems in our financial ecological environment. for instance, looking at the bank - enterprise relationship, the chinese enterprises have high financial leverages with low self - owned capital and relying mainly on bank lending. can banks completely rely on external information or have to resort to internal information to some degree? when default happens, would the legal arrangements be helpful to protect creditor rights and minimize the losses? risks in the economy make the forming of npls unavoidable, yet in the process of disposing of npls, how much control do banks have as the creditors? as for the bank - enterprise relationship should it be control - oriented or be at - arms - length? answers to the above relate closely to legal conditions or β established practices β and concern accounting standard, external auditing, disclosure, law enforcement, and accessibility of market information. in bank - enterprise relationship, in addition to normal checks and balances, the more important thing is whether the banks have a deterrence of last resort against the borrowing enterprises. as a creditor, the bank would wish the borrowing enterprise to fix its problems as soon as possible. even so, it is inevitable that some enterprises go default. in the later case, it is a key issue whether the legal arrangements and claims can be ensured effectively and efficiently in line with the insolvency law. maintaining financial stability and preventing moral hazards are also closely related to the legal environment. without an explicit legal framework for closing and liquidating financial institutions, we may take measures without legal basis and cannot guarantee being β fair and square β in addressing financial stability issues. this may have social stability consequences as the laws do not define clearly the rights and responsibilities of the investors and depositors and that the market participants have no expectation of risks and could not make informed decisions. whether the market participants can and how they should discipline financial markets and financial institutions also demand clarifications on the base of law. ii. issues currently under debate today, i would | to 13. 5 trillion. in the first half of 2009, bill financing, i. e., financing based on commercial drafts, recorded 12. 8 trillion yuan, which amounts to 57. 7 percent of the stock exchange turnover, or 162 percent of the turnover on the interbank borrowing market during the same period. despite the rapid development and growing importance, commercial drafts face a number of problems. these include irregularities in draft acceptance and discount, dishonor by nonpayments, fake drafts, and unregulated innovation. other aspects of the weaknesses include the decentralized markets and inadequate use of information technology. these problems could lead to financial risks, threaten fund security, and hamper the development of the draft market. electronic drafts provide an effective solution to these problems. with the legal foundation and technological support in place, the pbc decided in january 2008to introduce electronic drafts and set up an electronic draft system the system was completed after over one year β s preparation. the new system has three major functions. it is designed to receive and process data of electronic drafts and provide relevant payment and clearing services. it serves as a platform where paper drafts are registered. moreover, the system provides quotations for interbank discount, a service that will be offered later. the development of electronic drafts needs institutional support. to ensure the secure, stable, and efficient performance of the system, as we started the new system, we also released 9 regulations in an effort to regulate the behaviors of participants. the launch of electronic drafts and the new system is of great significance. it helps to reduce, or even eliminate operational risks, lower trading costs, improve trading efficiency, and foster the development of a single national draft market. it will encourage the development of commercial acceptance drafts. with the introduction of electronic drafts, short - term interest rates will better reflect the supply and demand in the market. the new system will provide statistics of higher quality to support policy making. electronic drafts will provide a convenient and low - cost financing channel for enterprises, particularly small - and medium - sized enterprises. it will also shape the way financial institutions manage their draft businesses. electronic drafts and the new system have brought a number of changes. with the latest technology integrated in the new system, the traditional manual mode of draft business will be replaced by an advanced one that is based on computer networks. moreover, finance companies can directly access the draft market through the new system, and the maximum period for draft payment is extended from 6 months | 0.5 |
enrollment rates have picked up noticeably among individuals aged 25 and over. presumably, many of these older students are striving to keep pace with the new demands evolving in the job market. indeed, an important aspect of the changing nature of jobs appears to be that an increasing number of workers are facing the likelihood that they will need retooling during their careers. the notion that formal degree programs at any level can be crafted to fully support the requirements of one β s lifework is being challenged. as a result, education is increasingly becoming a lifelong activity ; businesses are now looking for employees who are prepared to continue learning, and workers and managers in many kinds of pursuits have begun to recognize that maintaining their human capital will require persistent hard work and flexibility. 2 peter cappelli, β are skilling requirements rising? evidence from production and clerical jobs, β industrial and labor relations review ( april 1993 ), pp. 515 - 530 ; and β technology and skill requirements : implications for establishment wage structures, β new england economic review, special issue on earnings and inequality ( may / june, 1996 ), pp. 139 - 154. 3 david h. autor, lawrence f. katz, and alan b. krueger, β computing inequality : have computers changed the labor market, β national bureau of economic research working paper 5956 ( march 1997 ). economists have long argued that more than half of the market human capital produced in a worker β s lifetime is produced on the job4. several decades ago, much of that on - the - job training was acquired through work experience ; today we are seeing greater emphasis on the value of formal education and training programs for workers. developing human capital is perceived by many corporations as adding to shareholder value. if idea creation is increasingly the factor that engenders value - added, then training and education are crucial to the growth of company value - added and profitability. in the private sector, a number of major corporations have invested in their own internal training centers - - so - called corporate universities. some labor unions have done the same. more broadly, recent surveys by the bureau of labor statistics and by the department of education indicate that the provision of education on the job has risen markedly in recent years. in 1995, the bls report showed that 70 percent of workers in establishments with 50 or more employees received some formal training during the twelve months preceding the survey. most often this training was conducted in house by company personnel, but larger firms also | clear, we are still mid - step in implementing it. of course things could go wrong, in transition or in the end - state. the world certainly gives us plenty to worry about. but i am absolutely unwilling to have things go wrong because we have retreated from the reforms agreed over the last eight years. for the avoidance of doubt : what was intended will be implemented. i hear many pleas for β tweaks β. some of these are not quite as modest as is claimed. we are wise to the disguise. but we will of course work to identify and pursue opportunities to give a smoother finish to the reforms, addressing unintended consequences. solvency ii provides one example. it introduced a risk margin : the compensation that a third party would require to absorb the assets and liabilities of another firm that runs into trouble. this provides an extra degree of protection for policyholders, and therefore advances the pra β s objectives. but because of its design under the current legislation, the risk margin is very sensitive indeed to risk - free rates. this level of volatility is not justified by the historical evidence and does not in my view serve a useful purpose. rather, it may be dangerously procyclical. so in the immediate aftermath of the referendum, we invited β indeed encouraged β firms to apply for transitional measures to smooth the impact of the risk margin during a time of market turbulence, and i also very much welcome the european commission β s request for eiopa to review the risk margin β s role more broadly. take the leverage ratio as another post - referendum example of steps we are taking to put a smoother finish on the reforms. the framework was originally introduced to mitigate the risk to financial stability of excessive leverage. in august we decided to exclude central bank reserves from the exposure measure. they do not expose a firm to additional risks : as the ultimate settlement asset, central bank reserves are a unique asset class. leaving reserves in scope would have obstructed the effective implementation of monetary policy. but neither did we want to take them out only to see a reduction in the nominal amount of capital required to meet the uk leverage ratio standard. so in making the change, we made clear that we will recalibrate the standard to offset this impact. the policy intent of our framework is preserved, while the unintended consequence is addressed. in a similar vein, let me say a quick word on the reforms currently being discussed in basel β specifically the review | 0 |
the lower short term expectations which result as well as further easing in labour market tightness. a short term outlook which is broadly characterised by recent trends continuing is consistent with there having been fewer shocks over the last few months. and this more benign environment for forecasting has contributed to the errors on the bank β s largely mechanical short term forecasting models for gdp, unemployment, earnings and inflation becoming more two - sided, although there remain differences in their relative performance. looking beyond spring 2024, i am much more comfortable, notwithstanding the continuing uncertainties, with the profiles and contours of our latest forecasts. this is quite a big change from my position a year ago when the high level of uncertainty and rapidly changing outlook led me to describe our central forecast as more like a β baseline scenario β ; and as a result i was focusing on the performance of the very short term forecasts to guide my monetary policy thinking. the evolution in my position reflects various factors : the improved performance of bank staff β s short - term forecasts ; a more well - founded set of conditioning assumptions, which i will return to ; the balance of judgements the mpc has made in successive forecasting rounds ; and the overall story about the economy that the forecast embodies. to recap, in our latest forecast gdp growth is projected to continue to flat - line through to the end of 2024 as restrictive monetary policy continues to weigh significantly on demand. based on the average relationships over the past between bank rate, other financial instruments and economic activity, bank staff estimate that more than half of the domestic impact of higher interest rates on the level of gdp is still to come through, with the peak impact on growth around the current quarter, although there is significant uncertainty around those estimates. growth picks up gradually through 2025 and 2026 but remains weak by historical standards, rising to only 1 per cent by the end of the forecast period. economic slack opens up with unemployment rising steadily but not sharply. in the modal, or most likely projection, inflation falls to 3. 1 % by the end of 2024 and returns to close to the 2 per cent target by 2025q4. bank of england perhaps the most striking feature of the forecast, from a monetary policy perspective, is that with subdued growth it takes another two years for inflation to return to target. this in turn reflects several significant judgements we have made in recent forecast rounds, all of which push up on inflation. for the avoidance of | bankofengland. co. uk / speeches it has been bolstered by two important institutional innovations since the crisis. the first is the handing of responsibility for the supervision of individual banks and building societies to the bank of england. that has meant a change in approach to supervision, to one that β s prepared to make judgements about risks and act pre - emptively. the second is the creation of a new authority in the bank β the financial policy committee β with new powers, tasked by parliament with monitoring risks in the financial system that could cause problems for the wider economy and with doing something about them. this has been christened β macroprudential policy β. macro because it β s focussed on the wider economy ; prudential because it β s about protecting that wider economy from excesses in the financial system. it is the institutional memory of the financial crisis ; designed to hardwire into the system the vigilance to growing risks and the imagination of their consequences that were so dangerously absent before the crisis. in short, someone has the job of worrying intelligently. is the same movie already playing again? now let β s turn to the movies. the old classic, debt strikes back, in which the spiral of complacency upends the economic galaxy, has been seen many times before. some say the film is being screened again now ; that households are simply addicted to debt and lenders are enabling that addiction. let β s put things in context. since the financial crisis, helped by low interest rates, britain β s households have reduced their debt. nevertheless, we do still have a high level of household debt by historical and international standards. as a share of incomes, consumer loans are actually smaller than they β ve tended to be in the past twenty years. it is mortgage debt that explains why debt levels are so high ( chart 6 ). mortgage debt is high, in large part, because housing costs are high. across the nation, the average house costs 4. 5 times income ( chart 7 ). all speeches are available online at www. bankofengland. co. uk / speeches an imbalance of demand for, and supply of, homes means it β s not just expensive to buy a home, it β s expensive to rent one too. those who rent in the private sector typically spend a third of their income on rent. how much would a first time buyer be willing to pay for a house financed with a mortgage if | 0.5 |
hold at the very low level to which they had been brought in several stages since the autumn of the preceding year. some phasing - out of non - standard measures was announced. however, in may 2010, sovereign debt markets froze in various euro area member states. financial fragmentation took a new and unfamiliar form, with financial conditions and the transmission of our monetary policy varying to a great extent across member states. we responded by introducing the securities markets programme, focused on purchases of government bonds. initially, while the economic impact of the sovereign debt crisis was limited and largely confined to vulnerable economies, the rapid global recovery put upside pressure on energy prices. this drove up inflation also in the euro area. we decided to raise interest rates in bis central bankers β speeches early 2011 given upside risks to the medium term inflation outlook stemming from energy prices and from ample monetary liquidity. however, the sovereign debt crisis deepened and the euro area entered a second recession. the inflationary pressures that had emerged before receded. therefore, we lowered interest rates in a series of steps. stress in sovereign debt markets quickly undermined the wholesale funding conditions of banks based in those member states. to forestall a credit crunch, we introduced refinancing operations with maturities of up to three years, in a context of full liquidity allotment at a fixed rate. as the mutual exposures of banks and their sovereigns fed an adverse, self - reinforcing confidence crisis, investors started to fear that public and private liabilities issued in certain member states would not be redeemed in our common currency. a significant redenomination risk arose. as you know, the integrity of the euro area is an absolute precondition for us to be able to deliver on the mandate prescribed by the treaty and in particular to ensure a smooth transmission of our monetary policy. in order to preserve this integrity, we thus announced our readiness to conduct outright monetary transactions with the specific purpose of removing compensation for that risk from the financial pricing of securities. this announcement reversed the destabilising capital flows that redenomination fears had encouraged in spring 2012. while financial markets had been on a steady course toward normalisation for some months, in late spring and summer of 2013 the euro area money market β not unlike elsewhere in the global financial system β became subject to external shocks. we noted a sustained increase in expected interest rates. this was unwarranted in view of our underlying macroeconomic conditions, and was not in | mario draghi : hearing at the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, before the hearing at the committee on economic and monetary affairs of the european parliament, brussels, 3 march 2014. * * * madame chair, honourable members, this is my last hearing in econ before the end of this legislature. i would like to first of all thank you, sharon, for the way you have guided this committee throughout a challenging period. let me also thank all of you for the frank and fruitful exchanges we have had in the last twoand - a - half years. it has been an invaluable experience for me. in these difficult crisis times, discharging accountability in front of an assembly with a true european perspective has been helpful for the public acceptance of our actions. moreover, the hearings have always been a welcome occasion to discuss the state of economic and monetary union between two genuinely european institutions and to debate about what is the right way forward. i am very much looking forward to continuing this approach with the new econ committee from july onwards. i would like to take the opportunity of this last hearing to take stock of the monetary policy that the ecb has conducted over the last five years and to review what has been achieved in the euro area over the course of these years. let me then also offer our assessment of the challenges that lie ahead and that will await the new parliament and the new commission. before i start to go into detail in these three areas, let me however remind you that the next meeting of the ecb governing council takes place on thursday. in view of the so - called purdah period, you will understand that i will not be able to give detailed answers on our monetary policy stance today. five years of monetary policy β the ecb has delivered in the last five years, the ecb has continued to take the necessary measures with a view to maintaining price stability in the euro area. let me turn back to the first hearing of this parliament β s term which took place with my predecessor in september 2009. at the time, the economy was just bottoming out in the aftermath of the great contraction which had ensued after lehman β s failure. we were witnessing negative inflation rates. in this environment, the outlook was seen to be broadly in line with price stability. inflation was projected to increase toward levels close to 2 %. the key ecb interest rates were kept on | 1 |
admittedly, the conceptual challenges in quantifying, for instance, liquidity risk, are enormous. but we live in a world of second best, and even very approximate measures would do better than nothing at all. thank you. references adrian ( t. ) and shin ( h. s. ) ( 2007 ) : " liquidity and leverage ". journal of financial intermediation. forthcoming. available on the new york fed website as staff report no 328. adrian ( t. ) and shin ( h. s. ) ( 2009 ) : " money, liquidity and monetary policy " forthcoming in american economic review, papers and proceedings. available on the new york fed website as staff report no 360. committee on the global financial system. cgfs papers no 34. " the role of valuation and leverage in procyclicality ". april 2009 ( available on the bank for international settlements β bis - website ). danielsson ( jon ) and shin ( hyun song ) : " endogenous risk " ; london school of economics september, 2002. for an analysis, see kashyap and al. ( 2008 ). kashyap ( ak ), rajan ( r. g ) and stein ( j. c. ) ( 2008 ) " rethinking capital regulation ". paper presented at the federal reserve bank of kansas city symposium. | loi m bakani : the online finance finder portal launch speech by mr loi m bakani, governor of the bank of papua new guinea and board chairman of the centre for excellence in financial inclusion, at the online finance finder portal launch in collaboration with business link pacific ( blp ) and centre for excellence in financial inclusion, port moresby, 11 august 2021. * * * 1. acknoldegements salutations ladies and gentlemen 2. finance finder 1 ) firstly, let me thank you for the warm welcome and kind courtesies extended and for your presence at this important gathering to launch the online finance finder portal, which i understand is the first of its kind in the country. 2. finance finder 2 ) our appreciation to the business link pacific and centre for excellence in financial inclusion for making this project launch a success. let me also thank the financial institutions who took up the invitation to be part of this exciting journey : the commercial banks, micro banks and the finance companies. 3 ) png financial inclusion strategy and policy identify sme lending as a priority area and have taken steps to assist and promote the lending activities in the last financial inclusion strategy 2016 β 2020. 4 ) with the intrusion of the pandemic covid - 19, many businesses have adversely been impacted, especially the msme sector. the situation has also called to utilize technology to access financial services, a shift from the traditional ways of service delivery. 5 ) lack of information is identified as a key problem in having access to financial services for smes in papua new guinea. thesme loan product guidethat was developed by cefi last year was the first step in providing information on sme lending. finance finder is taking it one step further by providing the information available online. financial institutions can update the information on a regular basis to provide updated information always. 6 ) the finance finder portal serves as a tool for customers, i. e. msme owners, to search for the product that meets their requirements or needs in order to grow their businesses. the portal can be accessed through the cefi website, and linked to the business link pacific β s website. 3. other supporting development 7 ) i wish to highlight two important development projects which the bank is developing and will soon to be rolled out : a ) sme accelerator programwith one of the key outputs being the credit guarantee facility. the purpose of this initiative is to ensure the credit | 0 |
- looking investments by distributing funds efficiently. and we need banks that are prudent in their lending. what should be done? policies need to be chosen wisely, away from the extreme, ideologically tainted positions. we should certainly not think that our modern economies can thrive without the catalytic functions of banks and financial markets. on the other hand, we should not fall prey to claims that regulatory reform and limitations of market freedoms will hurt development. policies should aim to enable financial markets to work at the service of the economy β as a supporting function. at the same time, these policies should aim to limit those transactions that only serve profit - maximisation while externalising costs to taxpayers. this might imply somewhat lower volumes of financial market transactions and somewhat lower credit volumes. what does this mean? from the perspective of banking and financial market supervisors, it means that we need to regulate risky trading strategies and risky business models more rigorously. therefore, to give you just one example, we now expect institutions with such approaches to refinance themselves to a greater extent using equity, rather than debt. practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back [ β¦ ] β ( jm keynes ( 1936 ), the general theory of employment, interest and money. macmillan, p 383 ). bis central bankers β speeches from a political perspective, this means that we cannot rely on financial markets to fix structural political problems. for example, if it is felt that the income of low income households is growing too slowly, it is not enough to simply rely on credit institutions to finance investments in the hope that this will create jobs. this is because the financial markets would provide more loans to such households β and if this is not sustainable, it could lead to yet another financial crisis. thus, politics must enable banks and markets to support the economy, not to fix it. finally, let β s turn to capital liberalisation in emerging markets. full capital account liberalisation may not be the best strategy for many developing and emerging economies. a careful analysis of national circumstances is needed here β followed by a careful choice of economic policies. 7 here, too, simply hoping for more finance to lead to more development is a tempting strategy, but not a promising one. as is the case in advanced economies, one | cannot rely on financial markets to fix structural political problems in emerging markets either. that being said, in countries with low savings rates, the additional funds may help to foster investment. in countries without savings restrictions, foreign capital can indirectly support the economy by improving market structures and establishing best practices. in both types of countries, it is crucial to have strong supervisory institutions as well as market regulation to provide the necessary environment for markets to function. the less countries are able to regulate and supervise markets, the more careful they should be with regard to liberalising capital movements. 8 6. conclusion ladies and gentlemen, dreams are an essential element of brain activity. likewise, economic dreams and theories are essential for developing policy strategies. however, both types of dreams become problematic if taken at face value, and without careful analysis. the dreams of finance - led growth and growth through capital liberalisation have turned into nightmares β and clinging to them will do us no good. we need to find a new path to guide our economies into better territory. credit, banks, and financial markets β no doubt β will play a key role in that strategy. but growth will not be finance - led β it will be finance - supported. thank you for your attention. r hausmann, d rodrik & a velasco ( 2005 ) in : n serra & j stiglitz ( eds ) the washington consensus reconsidered : towards a new global governance, chapter 15 : 324 β 355 ; d rodrik ( 2005 ) growth strategies. in : p aghion & sn durlauf ( eds ) handbook of economic growth, volume 1, part a, chapter 14 : 967 β 1014. es prasad & rg rajan ( 2008 ) a pragmatic approach to capital account liberalization. in : the journal of economic perspectives, 22 ( 3 ) 149 β 172. bis central bankers β speeches | 1 |
labour demand and supply are still present along a number of dimensions. all this shows that large structural problems remain and need to be solved. what needs to be done to speed up labour market reforms? this is a difficult question, not least because the euro area labour markets are still very heterogeneous. each country should identify the root causes of its labour market deficiencies and implement appropriate corrective measures. however, there are some areas of reform that apply to many, if not all, euro area countries. improved job mediation, education and training, to mention just a few examples, all help towards making the matching process more efficient. in addition, euro area countries need to ensure that tax and benefit systems make work pay. reforms to tax and benefit systems should increase work incentives, profitability and competitiveness and consequently labour supply and demand. at the same time, it is important to ensure that tax - benefit reforms are undertaken without jeopardising the long - term sustainability of public finances. conclusion ladies and gentlemen. joseph schumpeter taught us that economic development consists of the continuous introduction of new combinations of products and means of production. he taught us that this process involves the incessant mutation of the economic structure from within, destroying the old and creating a new. in today's dynamic, ever - changing economic environment, entrepreneurs have to be all the more innovative and sensitive to new opportunities. the regulatory framework has to be designed in such a way that it allows this to happen by providing the right incentives for innovation, dynamism and economic growth. today's dynamic society also requires an increased ability of markets to adjust smoothly to changing economic circumstances. this is all the more true of a monetary union, where member countries are no longer able to use country - specific monetary and exchange rate policies to address country - specific shocks. in such an environment, other adjustment mechanisms are needed such as price and wage flexibility and factor mobility. structural reforms can contribute to a better functioning of these adjustment mechanisms by fostering integration and competition. the relationship between integration, competition and the single currency works in both directions. the euro itself has already contributed to more integration and competition and will continue to do so in the future. its impact is most clearly visible in financial markets, where a single money market has been created and a deep, liquid bond market has encouraged a surge in debt issuance by the corporate sector. in product markets, the euro has an important impact on the cross - border transparency of prices | the scale to one side or the other and act as a catalyst for promoting the provision of financial services more broadly throughout the euro area. second, faster progress is needed on disclosure and standardisation. for markets to better support the greening of the economy, and to mitigate risks to financial stability, asset prices need to correctly reflect the externalities associated with climate change. at the current juncture, however, financial markets are suffering from various market failures. uncertainty about what actually qualifies as green activity is one of them. common and clear definitions are a fundamental building block for facilitating the market pricing of environmental risks. the adoption in mid - june of the european commission β s taxonomy regulation was an important step in establishing a classification system for sustainable economic activities. but three words of caution are in order. first, the framework is expected to become fully operational only after the adoption of its delegated acts in 2021 and 2022 and so will provide limited guidance at a time when issuance needs are reaching historical levels. during this period, we need to find a way to mitigate the risks of β greenwashing β so as to channel funds to where they are most effective. second, a green taxonomy needs to be complemented by a taxonomy for environmentally harmful activities so that investors can identify transition risks more easily and hence also price risk differentials more effectively. and third, the taxonomy requires granular data for it to be useable. in the absence of corporate - level information, the taxonomy cannot be put into use and many metrics will prove useless. this is clearly visible when looking at environmental ratings for financial products : if available, they are often inconsistent, incomparable and at times unreliable β in many cases reflecting the absence of granular data or the large discretion in the construction of such indicators. indicators from different sources often display a very low correlation ( see figure 8 ). figure 8 financial market pricing of climate risk : correlations of bank environmental scores by bloomberg and refinitiv source : ecb financial stability review, november 2019 based on bloomberg, refinitiv eikon, s & p global market intelligence and dealogic. notes : the bloomberg and refinitiv environmental scores give values between 0 and 100, whereby a higher value indicates a better performance in terms of environmental variables. the full unbalanced sample consists of 49 banks and 23 insurers in the eu and the united states. disclosure of climate - related information should therefore become mandatory and more standardised under | 0.5 |
the appropriate way to address effectively the consequences of the adverse economic environment. the russian invasion in ukraine has elevated further the importance of climate risk due to its interconnectedness with geopolitical risk. the ongoing effort to reduce the dependence on russian energy frontloaded the need to reduce carbon emissions and move promptly towards a greener economy. the banks have a key role to play in this effort through financing the transition as well through providing adequate disclosures to the markets. we therefore expect them to adopt both their business models and risk 1 / 2 bis - central bankers'speeches management frameworks to incorporate climate and environmental risks. the fact that certain banks have started making tangible steps in this regard is a positive development, but there is still some way yet to be travelled. the management of climate risk by banks is on the top of the supervisory agenda. we acknowledge the challenge that this poses especially for smaller banks. however, we do expect them to act more decisively in the said direction. by default, this will ultimately also target the banks'clientele and the submission of detailed climate related information in order to feed the banks'risk management processes. the challenges noted above, require significant up - front investment before reaping the benefits. the banks should proceed without undue delays to the transformation of their business models to address a new challenging business environment. complacency emanating from short term profits is not a viable option. sustainability through transformation is the way forward. thank you. 2 / 2 bis - central bankers'speeches | constantinos herodotou : sustainability, digitization, profitability statement of mr constantinos herodotou, governor of the central bank of cyprus, at fireplace chat " challenges for banks in a new operating environment " at the 10th banking forum, nicosia, 9 december 2022. * * * i would first like to thank andrea for accepting my invitation to participate at today's event and share his valuable insights with us. in the aftermath of the two consecutive crises, the first round adverse effects have been limited for the banking sector. nevertheless, with the level of uncertainty still tilted to the upside, the full extent of the consequences has not yet materialised especially in the area of credit risk. if we were though to draw a lesson from both crises, this would be the significance that technology plays for the banking sector, not only for the conduct of the normal banking operations but also for the sustainability of its profitability. the banking sector has proven resilient and continued to provide credit to the economy. however, the legacy structural weaknesses of the sector remain. at the same time, competition from challenger banks has been increasing. therefore, the banks need to move more decisively in the road to digital transformation. this is presumably the only way if they are to address their structural weaknesses while retaining their competitive advantage against new players in the market. investing in technology can become the catalyst in their effort to strengthen efficiency and build sustainable profitability. it is acknowledged that digitalisation comes together with the favourite topic of any supervisor - risks, and especially cyber risk. this has been duly recognised by all european institutions and authorities and is very high on the supervisory agenda. pivotal role in the efforts to address cyber risk, is the enactment of the digital operational and resilience act. i expect that this will be a cornerstone in the efforts to improve operational resilience of the banking sector. cyber - attacks have increased significantly over the last couple of years with though a limited number of incidents, both in numbers and impact, in the cyprus banking sector. nevertheless, banks should gear up their resilience to withstand the anticipated incidents, while also ensuring that a robust disaster recovery plan and business continuity plan are in place for possible such incidents. at the same time, the banking sector faces the challenges of the adverse macroeconomic developments, which may deteriorate asset quality, leading to an upward pressure on impairments and provisions. prudent provisioning policies and the provision of fast and viable restructurings to customers is | 1 |
properly demonstrate commitment to lowering inflation. in spite of the above - mentioned quite ambitious target, by september 2001, twelve - month cpix inflation had decelerated to 5, 8 % per cent and many analysts thought that the 2002 target would be met fairly easily. to say the least, circumstances changed! the exchange rate depreciation of some 37 per cent in 2001 - that is another interesting story! - mostly in the closing stages of the year, was significantly responsible for pushing up cpix inflation up to a peak of 11, 3 % per cent in november 2002. on 12 september 2002, the reserve bank's monetary policy committee had announced the fourth and final 100 basis points increase for the year of the bank's repurchase rate. as you may well imagine, i was not everyone's most - favourite governor! fortunately, inflationary pressures have abated, partly related to the rand's appreciation since december 2001 and as reflected in the year - on - year change in cpix falling to 6, 6 per cent in july 2003, and the mpc has seen fit to lower the repo rate. on 14 august 2003, following the most recent meeting of the mpc, the repo rate was further reduced by 100bp to 11 per cent effective from 15 august 2003. ( should there be anyone amongst you interested in the factors weighing on this decision, i refer you to the statement of the monetary policy committee which is on the reserve bank website ). whilst a governor is certainly more popular during a declining interest - rate cycle, rest assured there were critics who felt that the bank had not been bold enough and should have, at least, reduced the repo rate by 150 basis points! technically, what the reserve bank is doing could more accurately be described as inflation - forecast targeting. given the roughly 12 to 24 - month lag between interest - rate changes and their having their full impact felt on inflation, the repurchase rate is set at a level judged to be consistent with bringing inflation to within the target range within an 12 - to 24 - month time horizon. i am referring to the intricacies of the transmission mechanism, the clear understanding of which represents the single biggest challenge for any inflation - targeting central bank. inflation targets of 3 to 6 per cent for 2004 and 2005 have been set by the government, and guide current policy formulation. given the lags, current policy changes clearly have virtually no impact on the 2003 inflation outcome ; the focus | t t mboweni : inflation targeting in south africa speech by mr t t mboweni, governor of the south african reserve bank, at the bis / sarb reserve management seminar dinner, south african reserve bank, pretoria, 2 september 2003. * * * it is my pleasure to welcome you, our guests and reserve bank personnel, to a dinner i gladly host in your honour. i know that you have formally been welcomed to the reserve bank this morning by mr plenderleith. but at a seminar of this stature, co - hosted by our good friends at the bank for international settlements, i, as governor, felt it correct to re - iterate a warm welcome. i am especially delighted that we are able to co - host this reserve management seminar as i believe that all of us can learn from each other's experiences regarding this important central - bank function. i know you have had a long day at the seminar and, i believe, a productive one, so i shall keep my speech brief. i have chosen not to focus on reserve management in the south african reserve bank, as the topic was covered to some degree in the seminar this afternoon, but rather to talk to you briefly about inflation targeting. as you probably know, inflation targeting, initially adopted by new zealand in 1990, has been the choice of a growing number of central banks in both industrialised and emerging countries. as on november 2000, authors mishkin and schmidt - hebbel had counted 19 inflation - targeting countries. since then, the numbers have increased. precisely by how many is debatable and will depend on the precise definition of inflation - targeting countries but i note that the merits of inflation targeting continue to be debated in the us. inflation targeting in south africa was formally introduced on 23 february 2000 with the announcement of a 3 to 6 per cent target for 2002. at that time, cpix inflation - the rate we target stood at 7 per cent. ( just for your information, we define cpix as the cpi excluding the interest cost of mortgage bonds, for the historical metropolitan and other urban areas. ) the target range of 3 to 6 per cent set was an ambitious one. whilst there may be debates today about whether the target range was set at the correct level, it is important to note that for both the credibility of the central bank, as well as the management of expectations in respect of inflation being a problem, the target range had to be set at a level which would | 1 |
the maastricht treaty is, without doubt, the independence of the european central bank and of the participating national central banks : in other words, the independence of the eurosystem. the economic rationale for a central bank which is independent of the instructions and influence of political bodies is rooted in the finding that it is generally easier for such a central bank to keep the value of the currency stable on a lasting basis. that higher degree of monetary stability benefits the economy and society in various ways. it increases planning certainty in the economy, which fosters a culture of long - termism. it makes it easier for enterprises to fund investment decisions in the longer term. that generally results in a stronger long - term orientation in economic decision - making. incidentally, that was one of the key considerations when the new government gave greater autonomy to the bank of england two years ago. a stable currency is, at the same time, an element of social policy. it is often precisely those who are not so well off in economic terms who find it difficult β or impossible β to protect themselves against inflation. finally, money which has a stable value is also a factor of political philosophy. confidence in the currency is, to some extent, confidence in the state and its institutions. that is, at least, the case in germany ; partly owing to our experience of galloping inflation in the first half of this century, but also partly on account of the ideas of economists such as alfred muller - armack and ludwig erhard, who introduced into german economic policy the leitmotif of the social market economy, with a stable currency as one key element. this economic rationale has now resulted in a trend towards greater central bank independence outside of europe as well. that is perhaps also one factor β among others β which helps to explain the high degree of price stability that prevails worldwide at present. one fundamental objection to central bank independence raises the question of democratic legitimacy. is a central bank which is independent of political instructions and influence in keeping with a democracy? i believe that there are two preconditions which have to be fulfilled for an independent central bank to be unquestionably compatible with a democratic system. firstly : the assigning of independence and the mandate has to have been arrived at democratically : at the least, by virtue of an implicit consensus and on an explicit foundation provided either by law, a constitution or by a treaty β like that of maastricht β to which the | - management framework the recent innovations in credit risk transfer and complex structured finance transactions offer opportunities for the development of new markets, improved pricing, and better risk - transfer mechanisms that can improve the efficiency of u. s. and world financial markets. however, innovation also presents risk - management challenges. i believe that these challenges are addressed most effectively through an enterprise - wide risk - management framework that provides a structure for dealing with uncertainty and its associated risks and opportunities. as you may know, the committee of sponsoring organizations of the treadway commission, or coso, has published an exposure draft that sets forth an enterprise - wide risk - management framework, including the definition and components of risk management and the roles and responsibilities of various parties. enterprise - wide risk management is a process that involves people at every level of the firm in setting strategy and making operational decisions based on an analysis of events that may impact the firm. through an enterprise - wide risk - management framework, an entity can better limit exposures within its risk appetite and provide its management and board of directors with reasonable assurances regarding the achievement of the organization β s objectives. recent operational breakdowns at financial institutions underscore the need for enterprise - wide risk management. as organizations expand into more lines of business, inherent conflicts of interest become more likely. conflicts can arise when a firm offers research on fixed - income securities to investors and underwrites the public offerings of the same securities. and problems may occur if an organization offers compensation designed to encourage officers to increase deal volume without regard for reputational, credit, or legal risks. thus, the traditional approach of managing risks only within individual business lines or functions may no longer be effective. viewing risks across the enterprise can help management and the board of directors not only articulate more clearly the β most likely β outcome of a strategy, change in process, or transaction but, more important, focus on a range of possible results to facilitate a discussion of risks and effectiveness of processes to lay off or mitigate those risks. internal controls are an integral part of enterprise - wide risk management. under coso β s internal control framework, directors have responsibility for overseeing internal control processes so that they can reasonably expect that their directives will be followed. directors should also keep up with innovations in corporate governance, and this is one key area in which the legal advisers of financial companies can assist their clients. indeed, legal counsel can help lead the way to developing sound practices in corporate governance. while we are discussing the importance | 0 |
, especially when benefits come at the cost of one β s partners, but, if we aspire to have far - reaching results, this is the right manner and the appropriate moment to react. thank you! bis central bankers β speeches | single voice. in this regard, the bank of albania, assuming a coordinating role, has invited other non - eu countries to contribute in formulating a common regional approach towards the banking union and its effects on these countries. we also argue that it is at the benefit of the ecb, and other monetary and supervisory authorities and eu authorities to bring the cesee countries on board of discussions, like a responsible doctor, who, while providing a strong remedy for his patient, tries to minimize potential side effects. the ecb must consider the potential side effects of its policies in our region. this consideration concerns five important issues : first, the ecb has a large theoretic and empiric expertise on financial stability, monetary and economic analysis ; however, the cesee countries may have a more precise and direct view of potential side effects on their economies ; second, this discussion among the ecb and the cesee must start early, possibly in the design process rather than after the implementation of legislation and regulation. this will allow enough time for cesee authorities to implement legal and regulative amendments to complement eu regulation and adapt its institutional structures in timely manner. the reforming eu deposit insurance and banking resolution mechanisms, for example, will have legislative and regulative implications for economies of the cesee due to dominance of european banking groups in our financial sectors. however, until the ecb and the eu decide on a solution and legislation is eventually approved, we would not know what the potential implications ( like regulatory arbitrage opportunities ), the required legal changes, and the financial costs are for our banking system and our economies. information is clearly in the interest of the cesee countries as it would remove uncertainty and risk among host supervisors ( non - eu and non - euro area ) regarding the effective resolution ( including burdensharing ) of multinational european banks ; third, establishing β resolution colleges β, similar to β colleges of supervisors β, might be an intelligent and efficient way to prepare for extreme situations. these colleges would allow home and host supervisors to discuss ex - ante regarding possible resolution of multinational european banks, with the purpose of bridging differences in the process and burden sharing as much as possible. in principle, some form of supervision could be designed to allow the ecb to share the responsibility of supervising multinational european banks with the host supervisors ( particularly in case of their systemic importance in host countries ). fourth, establishing swap lines of liquidity in euro, between the ecb and the host | 1 |
supervision ( 2015 ), regulatory consistency assessment programme β mexico, bank for international settlements, march. bis central bankers β speeches finally, initial progress has been made in addressing some of the potential risks in the nonbank sector, specifically by imposing limits on leverage undertaken by real estate investment trusts. regarding financial markets, the capital account is totally open, with no restrictions on portfolio capital flows. also, mexico uses a floating exchange rate regime. the policy emphasis has been on the creation of deep spot and forward foreign exchange ( fx ) markets, as well as on enhancing the liquidity of the domestic bond market. mexico β s currency market is the most liquid among those of all emerging economies. 13 mexico does not rely on capital flow management, especially in light of its negative experience with controls during the 1980s. instead, in cases of extraordinary market volatility and particularly amid low liquidity, the country sometimes uses marginal rule - based fx intervention, mostly as a way to send a signal of confidence to market participants. this framework proved itself sufficiently solid during the recent global financial crisis. in particular, throughout 2008 and 2009, banks remained resilient to external shocks, maintaining strong balance sheets. this result reflects the crucial role of a sound macroeconomic framework, including a sustainable and disciplined fiscal position, monetary policy aimed at controlling inflation, and a coherent regulatory and supervisory regime for financial institutions. this does not mean that mexico is free of possible dangers going forward. thus, the need to buttress macroeconomic policy and closely monitor possible risks and vulnerabilities that might endanger financial stability. the world faces an unprecedented situation, given years of abundant liquidity and cheap credit. the risks might not be the same as those in the wake of previous crises, and new pitfalls will certainly appear along the way. the global search for yield in a context of lax monetary policies in advanced nations has led to substantial capital flows to emerging economies, including mexico. in the near term, u. s. monetary normalization could be a precursor of a sudden stop or even a reversal of external funds, and induce a destabilizing drop in asset prices. in the face of this and other risks, the authorities must remain vigilant. conclusions evaluation of macroprudential policies faces significant measurement challenges which make methodological progress necessary. thus, any assessment should be taken with caution. evidence on their effectiveness is still cursory, but much of it points towards the conclusion that macroprudential tools help make | effects, but the difference is negligible in downturns. 5 a second set of cross - country studies, while continuing to indicate material effects from specific macroprudential tools on credit growth, find that impacts from others are minor or even run in the opposite direction. one of them indicates that countercyclical capital buffers may have null or negative effect, while another demonstrates the bearing from capital surcharges on systemically important financial institutions not to be significant. 6 a third group of research, based on individual countries, indicates immaterial or adverse influence on credit expansion from applying certain tools. in particular, one study discovers see, for example, borio, c. ( 2014 ), β macroprudential policy and the financial cycle : some stylized facts and policy suggestions, β in akerlof, g. a., et al. ( eds. ), what have we learned? macroeconomic policy after the crisis, imf and mit. for a thorough discussion of measurement issues, see hansen, l. p. ( 2013 ), β challenges in identifying and measuring systemic risk, β in brunnermeier, m. and a. krishnamurthy ( eds. ), risk topography : systemic risk and macro modeling, nber. for a survey of recent empirical research, see galati, g. and r. moessner ( 2014 ), β what do we know about the effects of macroprudential policy, β dnb working paper no. 440, september, section 4. lim, c., et al. ( 2011 ), β macroprudential policy : what instruments and how to use them? lessons from country experiences, β imf working paper wp / 11 / 238 ; and mcdonald, c. ( 2015 ), β when is macroprudential policy effective? β bis working papers no. 496, march. claessens, s., et al. ( 2014 ), β macro - prudential policies to mitigate financial system vulnerabilities, β imf working paper wp / 14 / 155, august ; and cerutti, e., et al. ( 2015 ), β the use and effectiveness of macroprudential policies : new evidence, β imf working paper wp / 15 / 61, march. bis central bankers β speeches that in the united states, bank capital and liquidity ratios have a much smaller impact than | 1 |
eva srejber : a reunited europe β the roles played by sweden and the riksbank speech by ms eva srejber, second deputy governor of sveriges riksbank, to the baltik financial network, stockholm, 13 february 2002. * * * thank you for inviting me here to speak of and discuss this important subject with such a knowledgeable public. the enlargement will change europe and sweden and will also affect the riksbank. for those of us in western europe, this is an important opportunity to regain the right geographical, economic and historical perspectives. we talk about " eastern europe ", despite the fact that prague and ljubljana lie west of stockholm, we forget that riga and tallinn are actually closer to stockholm than gothenburg. we often still have a mental curtain where the iron curtain once prevailed. now this division will soon be at an end. a hundred million europeans, who lived under a totalitarian communist dictatorship for half a century, can now finally return to a single european community. the political dimension is undoubtedly the most important. the new community confirms democracy and thereby guarantees peace and stability throughout europe, which will in turn provide a good foundation for growth and development. today i intend to say a few words about an important facet of the eu enlargement, namely the economic consequences, which will affect the work of the riksbank more directly. before i go into the major socio - economic contexts, i thought i might begin with an anecdote from a smaller context, a personal experience from one of my most recent visits to hradec kralove, in bohemia, czech republic, the region where my relatives come from. every time i return there i am pleased and surprised at the changes that have taken place, but during my most recent visit last year i was quite astonished. there, in the small provincial town of hradec kralove, with only around 100, 000 inhabitants, they now have a shopping mall worthy of stockholm's smartest shopping area, as well as a couple of large discount stores and a d. i. y. store, all selling goods of better quality but a fraction of the price of those in sweden, and all full of shoppers. when i left the shops loaded up with shopping bags to take home to sweden, i remembered how things used to be, when we in sweden sent parcels to family and friends containing clothing, medicine and even decent soap and washing powder, along with various other things | course of events then lie in talking with bank executives and informing the financial supervisory authority. moreover, our series of financial stability reports can no doubt exert a more continuous influence in this respect. in the longer run the riksbank can also contribute to stability through international cooperation, as well as by participating in sweden in work on new legislation and the promotion of structural changes in various systems. i should like to stress the importance of international cooperation between authorities in different fields, particularly now that problems in one country tend to spread to other countries more quickly than before. the riksbank accordingly participates in the work of the group of ten, the bank for international settlements, the international monetary fund and so on. the recurrent crises in financial markets clearly show that work on strengthening systems is a continuous endeavour and that much remains to be done. banks and other financial institutions have admittedly done a great deal to improve risk management, not least as regards loan portfolios. but the pace of developments in the financial sector is so rapid that neither financial institutions nor authorities can rest on their laurels. it should also be realised that the extensive work in progress on reinforcing the financial system does not mean that in future the system will be completely immune to problems. moreover, our knowledge of phenomena of this type is limited. it may be asked whether it will ever be possible to predict financial crises. the models with leading indicators that are being tested at present tend to be too blunt. they sound the alarm about things that never happen and are silent about those that actually occur. the authorities must therefore focus on doing everything so that banks and other financial systems have such good systems for risk management that the probability of financial crises is reduced to a minimum. we must also work to mitigate any effects and try to ensure that crises which do occur are not as extensive and economically costly as those we have experienced in recent years. the objective, in other words, must be to combine the necessary regulation and supervision of the markets with the benefits that a well developed financial system can confer. the regulation and supervision of financial firms are necessary for various reasons. but these functions must be carried out in such a way that they do not throttle the potential that can contribute to greater prosperity in the global economy. conclusion many countries have deregulated their financial systems in the past two decades. for the first time since the outbreak of world war one, capital is again more or less free to move across national borders. moreover, major changes in communications | 0.5 |
the downturn. telecommunications companies no doubt invested too much in long - haul fiber networks, as firms competed to establish the largest and most complete networks. ( i note, however, that economies of scale in laying fiber together with a low inground rate of physical depreciation imply that once a trench is dug, more fiber should be laid than will be needed for quite a while. ) too many startup internet companies bought too many servers and routers, and the failure of large numbers of high - tech companies contributed to a glut in office space, which is particularly evident in technology centers like san francisco and seattle. undoubtedly the current supply of commercial aircraft is excessive, though arguably much of this sector's overcapacity results from september 11 and structural problems specific to the airline industry rather than from a period of extensive overbuilding. however, the more pressing question is, how many of these putative sectoral overhangs remain relevant today? for high - technology equipment, in my view, overhang effects are probably by this time not of great quantitative importance. in communications, for example, though little additional long - haul fiber is needed at this point, there is probably scope for investment in the sophisticated equipment that transmits signals over the fiber, in the " last mile " of fiber network to customers'doorsteps, and in new wireless technologies and their applications. in the quantitatively important computers and software sector, a key factor is the relatively high rate of economic depreciation to which i alluded earlier. computer equipment purchased before the millennium date change is now four to five years old and may now or soon be in need of replacement. indeed, investment in high - tech equipment grew at more than 8 percent in real terms in 2002 ; investments in computers and software led this gain, but even investment in communications contributed a small part. continued growth in the high - tech equipment sector will be important in any investment recovery. in all likelihood, a continuing overhang exists in nonresidential structures, including some types of industrial structures as well as office buildings. ( prospects for other types of construction, including institutional buildings, utilities, and mining and drilling, appear somewhat better. ) vacancy rates in office buildings remain quite high in most cities, for example, and rents for many types of buildings have been falling. as a result, investment in these types of structures has been declining. two silver linings to this cloud, though faint and of little comfort to the heavy construction | the us economy. for policymakers, the most troubling aspect of this pessimism is our inability to ascertain its cause ( or causes ) : is it geopolitical uncertainty? the aftermath of the accounting scandals of last summer? concerns about the ultimate profitability of new technologies and products? the depressive side of keynesian animal spirits? this pessimism does matter, if for no other reason than because it has the potential to become self - fulfilling. for example, high - tech equipment and software will have to play an important part in any investment recovery this year ; and as we have seen, this category may be particularly sensitive to management beliefs and expectations. time will tell how pervasive these downbeat attitudes are and what effects, if any, they will have on investment and the economy. in any case, the clear lesson of recent experience is that forecasting investment requires close attention to the expectations of those responsible for making capital expenditures. understanding these expectations and their implications is yet another challenge that policymakers must face as we do our best to help the economy toward full recovery. | 1 |
assessing what might drive change and influence outcomes for payment systems, we must start by understanding the public goals. regardless of the mechanism involved, people expect the payments system to possess at least three fundamental characteristics. first, it must have integrity, i. e. transactions must be safe, reliable, and secure. second, it must be accessible and available to all. finally, it must be competitive and efficient, i. e. the cost of making payments should be affordable. to make an effective contribution to the development of payments & settlements and also to increase trade and investment flows nationally and regionally, it is necessary to identify the common themes in the form of public policy goals. in this context, the central banks are called upon to take certain minimum actions to further these goals. 6. 2 however, the manner and intensity of the current involvement of central banks in payment systems development differ from one country to another. the roots of each central bank β s specific pattern of involvement lie in the different institutional structures and traditions of each country. the central banks may accordingly decide on appropriate action, beyond the minimum, which depends on the national and institutional background. 7. importance of regional efforts 7. 1 by and large, central banks in the saarc region and elsewhere are currently involved with payment systems in three main ways, namely, in an operational capacity, as payments system overseers, or as catalysts or facilitators of market and regulatory evolution. 7. 2 as all central banks are aware, markets may encounter persistent impediments to payment systems development and may become unable to produce efficient and safe services. the existence of such impediments would give rise to policy issues for central banks, especially due to their responsibility in achieving the core objectives, such as price stability and financial system stability. these impediments can take the form of legal and regulatory inefficiencies, structural and performance weaknesses of the markets, the outmoded standards and infrastructure used, or the lack of attention by the central banks and regulatory authorities. while it is important for the national central banks to address these issues and find remedial action early, given the increase in trade, investment and crossborder financial flows, it is essential for the region to have a common understanding and apply, where possible, common standards. 7. 3 the design of every payment system requires a series of trade - offs between the different elements of its objectives. the precise outcome of these trade - offs will vary | , because they will be closely based both on national realities and international best practice. this emphasizes the need for close and continuous consultation in each country between the suppliers of payment services and the central banks as the overseer and regulator of the systems. the ultimate target of these consultations is to ensure the easy availability in each country of a payment system that meets the needs of its users, that enables the suppliers to cover their costs, and that does not absorb an excessive proportion of the national resources. that is why many regional payment system development initiatives have sprung up over the last few decades. for example, south african development community ( sadc payments initiative β 1996 ), the western hemisphere payments initiative ( 1999 ) ; the commonwealth independent states payments initiative ( 2004 ) ; and the arab payments initiative ( 2005 ) are some of the well functioning regional payment initiatives. the common objective of all these efforts is to identify possible measures for improving the safety, efficiency and integrity of the regional payment systems. 7. 4 the most demanding factor, common to all, is the rapidly changing global payment system infrastructure that is challenging the existence of domestic and regional payment systems, which are lagging behind. given the increasing sophistication of cross - border transactions, the need to mitigate risks involved in using outmoded infrastructure has to be given priority. the saarc payment system development strategy should therefore be designed to cater not only to the region β s present needs, but also its future demands. 8. how does the saarc payments initiative work? 8. 1 let me briefly set out the proposed institutional structure of the saarc payments initiative. 8. 2 by consensus, hon. governors of the saarc central banks requested the central bank of sri lanka to take the lead in this effort. we are happy to be the catalyst and promoter, but hope that at an appropriate time, this initiative will be driven by the other saarc member central banks. in consultation with the saarc governors, we have already appointed a saarc payments council ( spc ), which is composed of the chairpersons of the national payments councils ( npcs ) in each of the saarc member countries or by senior officials appointed by the governors of central banks in countries which do not have npcs. the npcs or payments committees will coordinate and liaise with all stakeholders in the payments area, in particular, banks and financial institutions, stock exchanges, securities traders, stock brokers, service providers, | 1 |
gabriel makhlouf : publication of the financial stability review 2023 : 2 opening remarks by mr gabriel makhlouf, governor of the central bank of ireland, on the publication of the financial stability review 2023 : 2, dublin, 23 november 2023. * * * welcome to the central bank of ireland for the release of the second financial stability review of 2023. our assessment of the financial stability outlook continues to be shaped by the ongoing adjustment of the global economy to higher interest rates. since our last review in june, inflation has fallen in many economies, but we remain some way from our target. we have not yet seen the full extent of the lagged effect of monetary policy actions on borrower finances or economic demand. in a setting where long - term interest rates have risen since june, despite some moderation in recent weeks, global financial markets remain vulnerable to bouts of volatility. the global economy also remains vulnerable to further shocks. we have already seen a pandemic and a war in europe. humility is therefore a prerequisite to good policymaking. geopolitical tensions, signs of fragmentation of the global economy and extreme weather events are three potential sources of future shocks with consequences for policy. against this backdrop, it is imperative that we maintain resilience while we have scope to do so. what does this mean for an open economy like ireland? this question is top of mind for us at the central bank. the irish economy has continued to expand since the last review, albeit at a slowing pace. the labour market remains tight, with strong wage growth. however, we must also acknowledge that a range of previously - flagged risks are now closer to materialising than in june. commercial real estate prices have now fallen more than 20 per cent since mid - 2020, while slowing exports and corporation tax receipts may mark the beginnings of a weaker global economy feeding its way through to ireland. the lagged effect of monetary policy actions remains a source of uncertainty for the domestic economy, as the financial system continues to pass through higher interest rates gradually to borrowers and depositors. despite these emerging signals of risks crystallising, the domestic household, business and banking sectors continue to demonstrate resilience in aggregate, with a strong labour market being a key factor. low levels of debt, prudent and appropriate macroprudential policy, and the fixed borrowing costs for many are also supporting resilience to the shock. again, we must now acknowledge | gabriel makhlouf : remarks on the occasion of the publication of β love you β remarks by mr gabriel makhlouf, governor of the central bank of ireland, on the occasion of the publication β love you : public policy for intergenerational wellbeing β by girol karacaoglu, 17 february 2021. * * * good morning and good evening. it β s a pleasure to join you at this book launch, and to congratulate the publishers and of course the author, my good friend girol karacaoglu. i β m particularly pleased to have been asked to say a few words on the background and context for the wellbeing work programme ; it β s been a good opportunity to reflect on that part of the journey that β s now about a decade old, although much older overall and in many ways still young. wellbeing has been a focus of economic policy for a very long time but i β ll take 2011, the year girol joined the treasury, as my starting point for today. i became treasury secretary earlier that year, a week after my predecessor β john whitehead β spoke at the publication of a treasury paper on the living standards framework saying, quite rightly, that work on wellbeing was not new but one of the aims of the paper was β to provide some clarity around the ultimate aims of [ the treasury β s ] work β. the framework may not have been new but i felt its time had come, for a number of reasons : economics was going through another intellectual turbulence, at least in the western world, triggered by the global financial crisis and reflecting an emerging recognition that traditional policy approaches were unlikely to be adequate to confront the complex challenges of the modern era, such as the impact of deep international interconnectedness, technological and climate change, along with growing social disconnection and lack of trust in established institutions ; for me it was noticeable that the emerging recognition of the need for different policy approaches was not reflected in the dominant public policy narrative in new zealand at the time. commentators and policy practitioners appeared to be trapped in a frame of reference that seemed to me at best to be outdated ; apart from the treasury β s 2011 paper, joe stiglitz, amartya sen and jean - paul fitoussi β s 2009 report had helped shape my thinking, as had the australian treasury β s own wellbeing framework ( and i recall david gruen coming to wellington in 2011 to talk about their work | 0.5 |
. beyond tech 26. my third reflection is that the key to success is β beyond tech β. ( not β biontech β the vaccine! ) here i am referring to the need to go well beyond technology to create network effects. 27. projects that fill a glaring gap in available services, as was the case with fps for example, may achieve quick adoption more easily. but for other projects that seek to replace current products or practices, adoption could be an issue even if the new product or experience is far superior to what we have currently. 28. let me illustrate this using our cdi initiative. the technology to construct this infrastructure and connect all parties is relatively simple. creating a conducive environment to attract all stakeholders to join is far more challenging. 29. the project team spent most time not on technology, but in creating a commerciallyviable arrangement to ensure that there β s something for everyone : banks can use data to manage credit risks ; data providers can earn fees ; and data owners can borrow more easily and cheaply. so, the key to success for cdi clearly lies beyond technology. we need to find the right commercial incentive for all to benefit and create the network effect. 30. similarly, for the mbridge project, technical interoperability is key but relatively straight forward. the platform now has the flexibility to allow central banks to easily connect through cbdcs or traditional payment systems. but that won β t attract more jurisdictions to join by itself. to do that, the platform needs to account for policy and business challenges. how to build - in different regulatory requirements like anti - money laundering, how to ensure sufficient on - chain foreign exchange liquidity, or how to develop a shared legal framework are all challenging but necessary tasks. the project team will focus on these issues, which are well beyond technology, in taking the project to its next stage. closing 31. the hkma began its fintech journey six years ago. we have come a long way, reached some important milestones, kept pace with our peers, and are now pressing on into uncharted territory. but like everyone else, we are still exploring, experimenting and learning. and as we continue our journey, we will stay radically open - minded, learn from our failures and keep trying, and go well beyond technology to achieve network effects. 32. as i said at the beginning, hong kong will continue on the road of fintech adoption. many exciting developments are taking place, and | pp. 837 - 863. rachel, lukasz and thomas d. smith ( 2017 ), β are low interest rates here to stay? β, international journal of central banking, vol. 13, no. 3, pp. 1 - 42. reifschneider, david and john c. williams ( 2000 ), β three lessons for monetary policy in a low - inflation era β, journal of money, credit and banking, vol. 32, no. 4, pp. 936 - 66. rosengren, eric s. ( 2015 ), β changing economic relationships : implications for monetary policy and simple monetary policy rules β, speech on 16 april, federal reserve bank of boston. rudebusch, glenn d. ( 2016 ), β will the economic recovery die of old age? β, frbsf economic letter 2016 - 03. https : / / www. frbsf. org / economic - research / publications / economic - letter / 2016 / february / will - economic - recovery - die - of - old - age / 19 swedish government official reports ( 2002 ), β stabilisation policy in the monetary union β, the committee on stabilisation policy for full employment if sweden joins the monetary union, final report, sou 2002 : 16. stirling, alfie ( 2018 ), β just about managing demand β reforming the uk β s macroeconomic policy framework β, policy paper, ippr commission on economic justice. https : / / www. ippr. org / research / publications / just - about - managing - demand summers, lawrence h. ( 2018 ), β why the fed needs a new monetary policy framework β, in β rethinking the fed β s 2 percent inflation target β, report from the hutchins center on fiscal & monetary policy at brookings. sumner, scott ( 2011 ), β the case for ngdp targeting : lessons from the great recession β, adam smith institute, london. sveriges riksbank ( 2014 ), minutes of the monetary policy meeting, february 2014. sveriges riksbank ( 2017a ), β the riksbank β s experiences of publishing repo rate forecasts β, riksbank studies, june. sveriges riksbank ( 2017b ), monetary policy report, december 2017. soderstrom, ulf and andreas westermark ( 2009 ), β monetary policy with a zero interest rate β, sveriges ri | 0 |
possibly more β other major international currencies. second, the euro can only be assured of a major role in a multipolar currency world if the architecture underlying the single european currency is sufficiently strong. the task of achieving this cannot be delegated to financial markets and requires appropriate institutional steps. the euro in a multipolar world when the idea of the single currency was first mooted in the 1980s, the global economy was dominated by three countries : the united states, germany and japan. since then, the global economy has seen major changes. with the ongoing integration of global markets, we have witnessed the rise of emerging market economies. china, in particular, has led to a progressive shift in the centre of economic gravity and is expected to overtake the united states in terms of gdp at market exchange rates sometime from 2025 onwards. the us dollar has remained the main international currency, as a result of the predominance of us financial markets and also the inability of several emerging economies to pursue independent policies ( for example by de - pegging their currencies from the us dollar ). but there is little reason to believe that these factors will not change over time. the renminbi, in particular, should be in a position to relatively quickly emancipate itself from the dollar and become a major international currency if the chinese authorities were to consistently pursue capital account liberalisation, greater exchange rate flexibility and all related policy measures in the years to come. the international role of some other emerging market currencies is also likely to increase over time. we are clearly moving towards a multipolar currency world. the question is whether the euro will be one of the poles β so to speak β of the new system. i will not dwell on the advantages for europe of being one of the poles, but rather i invite you to reflect upon what would happen if it were not. to be sure, the euro, like any other currency, would be affected by economic and political developments in the countries issuing the leading reserve currencies, and would suffer severely from external shocks. consider, as an illustration, the recent experience of the swiss franc, a currency which is renowned for its stability. after the onset of the global financial and economic crisis the franc appreciated by 17 % vis - a - vis the euro in 2010 alone, driven by the reallocation of global capital on a massive scale. this has fuelled deflationary risks and slowed economic growth. to counter | . this task poses significant challenges because it requires special skills and the further development of analytical tools. models must be developed to help structure and analyse the vast amount of information collected for risk assessment. as financial stability and macro - prudential analyses are at a relatively early stage, it is advisable to employ a multiplicity of approaches. it goes without saying that the creation of the esrb does not change in any manner the allocation of responsibilities among policy - makers enshrined in the treaty, notably the unambiguous establishment of the maintenance of price stability as the primary objective of the ecb β s monetary policy. at the same time, the assignment of specific tasks related to the functioning of the esrb to the ecb actually enhances its ability to fulfill the task of contributing to the maintenance of financial stability, as foreseen by the treaty. conclusions the current financial crisis has spread across the world at an unusual speed and with surprisingly strong consequences. the fact that the tensions originating from a relatively small segment of the international financial market ( the us market for sub - prime mortgage loans ) evolved over time into a global crisis of a magnitude unseen in decades β wreaking havoc on a number of economies and the lives of millions β may deceive some into thinking that worldwide financial integration has gone too far and that we would better off under financial autarchy. it is therefore worthwhile to recall what the benefits of financial integration are, especially in europe. integrated financial markets help to realise the full economic potential by increasing competition and expanding markets. this results in lower intermediation costs and a more efficient allocation of capital, which in turn raises the potential for increased economic growth. for those european member states which have gone even further by adopting the euro as the single currency, there are added benefits in terms of price transparency, lower interest rates, reduced transaction costs and the elimination of exchange rate fluctuations. these benefits are very substantial. at the same time, the financial crisis has been a rough reminder that, although financial integration improves the access to financial markets and the opportunities for risk diversification, it may also increase the scope for financial contagion across countries. it is therefore paramount that the financial stability arrangements keep pace with the degree of financial integration. such arrangements should be particularly ambitious in the eu and the euro area, which are characterised by a very high degree of financial integration. this is why it is important that we fully and quickly implement the reforms of the european and | 0.5 |
emmanuel tumusiime - mutebile : promoting and strengthening good corporate governance in uganda remarks by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the gala dinner of the institute of corporate governance of uganda, kampala, 26 february 2015. * * * the president, members of council and ceo of the icgu ; distinguished guests ; all stakeholders in the corporate governance fraternity ; ladies and gentlemen ; i would like to thank the institute of corporate governance of uganda, for inviting me to give the keynote address at this first corporate governance gala. it is an honour to address you all at this event. i would also like to commend the institute for the work it is doing to promote good governance in uganda, which is of crucial importance to the development of a modern, competitive market oriented economy. i hope this gala event will contribute to strengthening the culture of corporate governance in our society. recent headlines from around the world have brought the issue of corporate governance to everyone β s attention. numerous scandals have beset the corporate world, not least in the banking industry where large international banks have been fined heavily for various forms of malfeasance, especially in the united states. the common denominator in most of these scandals is that public and private sector officials were not acting in the best interest of their organizations, their shareholders, or employees, and were often acting in violation of the law. they were able to act in this manner because of a combination of inadequate monitoring, a breakdown in internal controls, and often the ignorance and incompetence of directors. in uganda, the problem of weak corporate governance is compounded by an often haphazard appointment process for company boards. unfortunately, the appointment of board members is not necessarily based on merit. hence the caliber of directors is not always as high as it should be. it is also common knowledge that many directors overstep their roles and get involved in micro - managing their company or institution. there is a failure to understand clearly the proper role of a board of directors in the running of a company or institution, and in particular what the oversight function of a board of directors actually entails. the oversight function of the board of directors is primarily strategic. the board must provide the vision and set the tone at the top. it must also be responsible for fiduciary standards and prescribe methods to monitor and control the management so that abuses can be prevented. in addition the board must ensure | prohibited. in this way, when innovations make old rules obsolete, corporate leaders would have to consider not only whether some action would violate the law but whether it would violate a principle of good corporate governance. rules are clearly necessary but they cannot replace ethics and exemplary leadership. timely and regular flow of information to stakeholders is the grease that engenders trust. in elevating the standards of corporate governance in any sector, shareholders must play an active role to engage boards and hold them accountable. but for this to happen, shareholders, and indeed consumers, must have adequate and relevant information on the performance of their organizations. to conclude, i want to re - emphasize that good corporate governance is critical to the health of the business sector, our financial system, and the wider economy. our economy will be stronger if corporate decisions are made with competence and integrity, and if shareholders and the public can appropriately assess the profitability and riskiness of corporations β business activities. i thank you for your attention. bis central bankers β speeches | 1 |
new policy challenges which force us to examine old ideas and develop new ones. so the mpc has been on an intellectual voyage of discovery since it was established. the formation of the mpc unleashed a ferment of intellectual debate and activity inside the bank. it was a thrilling time for those who were closely involved. the committee had to set out how it thought about the world, first of all for itself, and then for the outside world. you can still see evidence of all this activity on the bank β s website β in speeches describing how the mpc saw the world, and in books which set out the mpc β s models of the economy. but the world does not stand still. over the last decade, the committee, and the bank staff who support it, have had to confront some enormous changes in the economic environment. the committee β s thinking has had to evolve to meet this challenge. without going into detail β that would require another speech β let me give you a flavour of some of the questions with which we have been grappling during my own time on the committee alone. first, we have had to understand the implications of some very big movements in asset prices, both domestically and globally. house prices have risen steadily, tripling since 1997, to reach record levels relative to household incomes and rents. share prices soared in the run up to the millennium, then slumped, but have subsequently recovered. there has been a long running debate among central bankers about how they should respond to asset price booms β and possible busts β with some arguing that there is a case for taking pre - emptive action, over and above what might be warranted to meet the inflation target over the normal two to three year horizon. there have been members of the mpc on both sides of this argument. second, there has been an acceleration in the pace of globalisation. the entry into the global market economy of china, india and eastern europe is effectively doubling the world economy β s supply of workers β from 1. 5bn to 3bn. this is having pervasive effects on wages, prices and, potentially, economic relationships in developed countries in ways we need to understand in order to set interest rates. third, the last few years have seen the largest recorded entry of foreign workers to the uk. this has increased the supply capacity of the economy, as well as boosting demand, but the precise scale and likely duration of these effects are very hard to judge. how | studies and provide practical guidance on modalities to scale up blended finance. mas and the de nederlandsche bank ( dnb ) will lead this initiative. i will share more details in my remarks this afternoon before the ngfs discussion panels at this pavilion. 2 / 4 bis - central bankers'speeches the glasgow financial alliance for net zero asia - pacific network will launch an initiative to develop guidance for financial institutions on how they can facilitate the managed phase - out of coal power generation in the asia pacific. mas and the asian development bank will participate in this initiative. second strategy - carbon markets to channel financing towards carbon abatement and removal projects. many entities find it difficult to eliminate their emissions or to even reduce them as quickly as they would like. high quality carbon credits generated by emission reduction and removal projects allow such entities to offset the emissions they cannot get rid of while providing financing for these projects that would otherwise not get off the ground. a well - functioning carbon trading ecosystem is particularly relevant to asia's transition effort. the market for voluntary carbon credits is huge. unfortunately, differences in carbon accounting and credit recognition practices across jurisdictions have led to carbon credits being treated with a degree of skepticism. to build an efficient and trusted carbon market, we will need better and verifiable abatement data, harmonisation in carbon accounting practices, and interoperability between the voluntary and compliance carbon markets. singapore is well - positioned to be a carbon services and trading hub. we have sound infrastructure, good governance, and a premium on trust β critical ingredients for a marketplace. we are located at the heart of southeast asia which is fertile ground to harness the potential of nature - based solutions for carbon sequestration. southeast asia holds more than one - third of the world's mangroves and has about 120 million hectares of land suitable for re - forestation. we are strengthening the carbon credit value - chain by growing project development capabilities : certify and validate project design, and monitor and verify project outcomes. third strategy β good - quality data to support transition finance. credible and comparable data is foundational for the climate agenda. data on carbon stocks, emissions profiles of projects, and historical deal data can provide the market with a proper view of climate - related risks. good - quality data is key to robust sustainability reporting, combating greenwashing, and enabling investors to make effective esg - informed decisions. good - quality data enables solutions such as blended finance and forms the backbone | 0 |
/ 07 / behind - the - scenes - of - central - bankdigital - currency - 512174. - 4preparing for the payment system of the future the federal reserve needs to be preparing for the payment landscape of the future even as we continue to make improvements to meet today β s needs. in light of the rapid digitalization of the financial system, the federal reserve has been thinking critically about whether there is a role for a potential u. s. central bank digital currency ( cbdc ) in the digital payment landscape of the future and about its potential properties, costs, and benefits. our financial and payment system delivers important benefits today and is continuing to improve with developments like real - time payments. nonetheless, certain challenges remain, such as a lack of access to digital banking and payment services for some americans and expensive and slow cross - border payments. growing interest in the digital financial ecosystem suggests that technology is enabling potential improvements that merit consideration. 10 in addition, it is important to consider how new forms of crypto - assets and digital money may affect the federal reserve β s responsibilities to maintain financial stability, a safe and efficient payment system, household and business access to safe central bank money, and maximum employment and price stability. it is prudent to explore whether there is a role for a cbdc to preserve some of the safe and effective elements of the financial system of the present in a way that is complementary to the private sector innovations transforming the financial landscape of the future. the public and private sector play important complementary roles within the financial system in the united states. from fedwire to fednow, the federal reserve has lael brainard β the future of retail payments in the united states β ( speech at the fednow service webinar, washington, d. c., august 6, 2020 ), https : / / www. federalreserve. gov / newsevents / speech / brainard20200806a. htm. - 5over a century of experience working to improve the infrastructure of the u. s. payment system to provide a resilient and adaptable foundation for dynamic private sector activity. 11 in parallel, private sector banks and nonbanks have competed to build the best possible products and services on top of that foundation and to meet the dollardenominated needs of consumers and investors at home and around the world. the result is a resilient payment system that is responsive to the changing needs of businesses, | thomas jordan : real estate, mortgages and monetary policy speech by mr thomas jordan, member of the governing board of the swiss national bank, at the iazi, schweizer immobilienkongress 2009, zurich, 10 november 2009. the complete speech can be found in german on the swiss national bank β s website ( www. snb. ch ). * * * there is a close interrelationship between real estate, mortgages and monetary policy. on the one hand, monetary policy impacts on the real estate and mortgage market. when the central bank reduces interest rates, this eases the burden on household and company budgets and fosters the demand for real estate. on the other hand, monetary policy also takes account of developments on the real estate market because these can affect economic growth, inflation and financial stability. once again, the current financial crisis has thrown these interrelationships into sharp relief. problems in a number of mortgage and real estate markets β in particular in the us and the uk β triggered the financial crisis and plunged the global financial system into a systemic crisis. this impacted on switzerland β s financial stability and made it necessary to create the stabilisationfund for the transfer of illiquid ubs assets. the swiss real estate and mortgage market played a positive role in various measures adopted by the snb to handle the financial crisis. swiss mortgages played a role in securing swiss financial stability in the limmat pfandbrief transactions, whereby big banks improved their refinancing situation by issuing covered bonds. consequently, switzerland β unlike other countries β was able to avoid introducing state - guaranteed bonds. with the drastic reduction in key rates and the subsequent decline in mortgage rates, the burden on households and companies was eased. in this way, the severity of the recession was somewhat alleviated and the risks of deflation reduced. however, the interest rate is now at a historic low and this means medium - term risks for the swiss real estate market and financial stability. experience shows that periods of low interest rates provide scope for excesses on the mortgage and real estate market. consequently, in the current environment in particular, attention should be given to ensuring that past mistakes are not repeated. caution must remain the watchword when granting loans. | 0 |
has been that ( 1 ) given the extremely accommodative financial conditions, the level of interest rates is to be raised if japan's economy is to follow a path of sustainable growth under price stability, and ( 2 ) the pace of increase in interest rates should be determined in accordance with improvements in the economic and price situation without any predetermined view. so far, weak inflationary pressures have given the bank latitude in conducting monetary policy. the actual interest rate adjustments have therefore been slow based on a thorough assessment of the future path of the economy and prices and its likelihood, as well as both upside and downside risks. the bank's basic thinking in this regard will remain the same in the conduct of future monetary policy. that is, while confirming that the japanese economy remains likely to follow a path of sustainable growth under price stability and assessing relevant upside and downside risk factors, the bank will adjust the level of interest rates gradually in accordance with improvements in the economic and price situation. we believe that, from the long - term perspective, the conduct of monetary policy in such a manner will prevent the risk of larger swings in economic activity and prices from materializing and will help to realize sustainable growth under price stability. conclusion japan's economy is expanding moderately. corporate activity has been increasing due partly to strong exports, as can be seen here in the kansai region, and the positive influence is clearly spreading throughout the wider economy as evident in the declining unemployment rate. in order for japan's economy to continue sustainable growth in the face of various challenges including the declining population, it is crucial for all regions and industries to persist with their efforts to innovate. since, along with the kanto and tokai regions, the kansai region is pulling japan's economy forward, i fully anticipate that your originality and inventiveness will continue to play a leading role. as for the bank, we will continue to support your efforts through our conduct of monetary policy. | overseas ( chart 8 ). funding costs for japanese firms have been at extremely low levels, even as overseas interest rates have increased significantly. firms'funding demand for working capital has increased recently in reflection of the resumption of economic activity and raw material cost increases. in this situation, financial institutions have maintained an active lending stance and firms'financial positions have continued on an improving trend, including for small and medium - sized firms. ii. price developments i will now turn to price developments in japan. the latest figure for the year - on - year rate of change in the cpi for all items excluding fresh food, which is for september, was 3. 0 percent due to rises in prices of such items as energy, food, and durable goods ( chart 9 ). the rate of change is projected to increase further toward the end of the year, partly because prices of a wide range of products were raised in october, which starts the second half of the fiscal year in japan. the cause of the rising inflation rate is that cost increases due to a rise in import prices, which reflects higher international commodity prices and the yen's depreciation, have been passed on to prices of items. that said, the inflation rate is expected to decelerate gradually from the beginning of next year. international commodity prices are lower than a while ago, and the effects of the pass - through to consumer prices of cost increases led by the rise in import prices are likely to wane. the bank forecasts that the rate of change in the cpi will be at around 3 percent for this fiscal year but then around 1. 5 percent from fiscal 2023. projections that inflation will fall below 2 percent are made not only by the bank but also by others, including the imf and private - sector economists ( chart 10 ). of course, as with the outlook for economic activity, the outlook for prices is subject to high uncertainties, including developments in international commodity prices and foreign exchange rates, both of which have brought about upward pressure of costs to date. in addition, although japanese firms had long been cautious about raising prices, those for a wide range of products have been raised recently. close attention to firms'price - setting behavior going forward is warranted. how firms'wage - setting behavior will evolve is also important. in this regard, it is projected that labor market conditions will tighten as the output gap improves ( chart 11 ). in particular, labor demand in the services industry is expected to recover | 0.5 |
of areas : biotechnology and other advanced technologies, new industrial clusters linked to recycling and other environment - related technologies, as well as regional city revival, sightseeing, medical care, and nursing services. to strengthen such trends, regional financial institutions are expected to play a new role in their regions. in this regard, the thinking behind their business decision - making in the past needs to be radically overhauled. for example, decisions about whether or not to assume particular risks should be based on a close examination of the nature of projects at hand rather than depending unduly on traditional collateral or guarantee - based methods. they should also raise their levels of expertise at providing advisory services relating to the smooth management of projects. this in turn will lead to the revitalization of regional financial institutions themselves. once the blanket protection of demand deposits is removed, financial institutions will no longer be able to count on support from the authorities. in principle, they will have to rely entirely on their own intellectual resources and creativity in dealing with the tasks facing them, including the nonperforming loan problem. it is conceivable, however, that there may be financial institutions, which are keen to rebuild their financial base, but which may not be able to strengthen their capital positions within the limited time frame without outside assistance. to deal with this possibility, injections of public funds which may be executed without reference to systemic risk should be considered apart from the measure stipulated in article 102 of the deposit insurance law. i am aware of a variety of learned opinions calling for caution in establishing another system of capital injections. bearing these opinions in mind, i hope that we will somehow manage to find a way to design an appropriate new framework - one that will function as the last public support to the efforts of the private sector. in closing, let me reiterate our determination to support the efforts of the private sector and to exert ourselves to the full to achieve sustainable growth. | recovered to a level closer to what can be considered normal. another problem related to severe balance - sheet adjustments is the breakdown of the market economy β s natural selection mechanism. the role of financial institutions to channel funds to productive enterprises can be obstructed when those institutions have significant amounts of impaired assets. suffering from severe balance - sheet problems, institutions may find themselves with no other choice but to keep borrowers on life support, which prevents them from extending new loans to more promising businesses. such patterns were observed in japan during the financial crisis of the late 1990s. the market selection mechanism broke down, and the survival of the fittest no longer applied to the world of business. so - called zombie firms were supported by zombie banks. strong evidence of this phenomenon is found in a study i conducted with nakajima and kiyota, the main conclusion of which i have included in the next slide. by conducting a large - scale panel analysis at the firm level, this research was able to show that during the period of the financial crisis of 1997, the total factor productivity of surviving firms was actually lower than that of exiting firms. 6 2. 3. impact of information and communication technology the third force that is shaping the global economy is the impact of information and communication technology ( ict ). i argue that ict has in fact been a polarizing force both in the labor and product markets. furthermore, the effects are not confined to specific industries, but are more or less ubiquitous and far reaching. labor markets the reason ict impacts the labor market is that it can be applied to a variety of moderately skilled tasks, and consequently displaces workers from those tasks. for example, banks used to be inundated with paper. payments were made in checks, slips of paper were made to record transactions, which were in turn tracked on paper ledgers, and ticker tapes provided up to the minute market information. banks employed hundreds or even thousands of clerks to literally push the paper around their offices, just to keep track of their operations. clerks were skilled in the sense that they had to know what was the important information on those pieces of paper, and in which books such information was to be written down. ict changed all this. now, virtually all bank transactions are processed electronically with minimal intervention from human workers. as a result, the bank clerk has become extinct, or at least an endangered species. such changes occurred not only in banking but in all industries. any task that could be programmed | 0.5 |
we plan to conclude the review by the first quarter of 2018. conclusion today i have discussed the context for the upcoming capital review and outlined a number of 7 / 9 bis central bankers'speeches key issues that the reserve bank will be considering over the coming year. capital policy has multiple dimensions and trade - offs and we will welcome your views as we consult on the various aspects. we will assess the current framework and recommend policy changes in the context of international developments, new zealand β s risk profile and the reserve bank β s regulatory approach. in doing so, we will be guided by principles that broadly promote conservatism and simplicity. we will ensure that the quantity and quality of banks β capital remain consistent with promoting a sound and efficient financial system. thank you for the opportunity to share these ideas with you today. 1 β financial system inquiry β final report β ( 2014 ). 2 for further discussion of the reserve bank β s adoption of the basel iii standards, and the rationale for minimum capital requirements more generally, see the bulletin article β the reserve bank β s application of the basel iii capital requirements for banks β ( 2015 ). 3 basel iii monitoring report ( february 2017 ) β. 4 these figures are for the 100 β group 1 β banks under the basel quantitative impact study definition, i. e. banks with tier 1 capital in excess of β¬3bn, who are well diversified and are internationally active. β group 2 β banks, which are the 110 other banks that participate in the qis, reported a median cet1 ratio of 13. 9 %, with a 25th and 75th percentile of 11. 4 % and 18. 3 %. 5 see, for instance, the bulletin article β bank farm capital : does it cost the earth? β ( 2011 ). 6 the australian housing risk weight is in the process of being increased to an average of 25 %. 7 data as at most recent pillar 3 regulatory disclosure. sample includes anz, cba, nab, wbc ( australia ), bmo, cibc, rbc, scotiabank, td ( canada ), danske, nordea dk, jyske, nykredit, sydbank ( denmark ), anz, asb, bnz, wnzl ( new zealand ), handelsbanken, nordea group, seb, swedbank ( sweden ), barclays, co - operative, hsbc, lbg, nbs | we need to understand how the idiosyncrasies and relative conservatism of new zealand β s approach to the basel framework affects the headline capital ratios of new zealand banks compared to peer country banks. the basel committee regularly publishes reports that compare banks β capital levels on an unadjusted basis. the most recent report3 has the large internationally active banks reporting a median common equity tier 1 ( cet1 ) ratio of 12. 1 %, with 25th and 75th percentiles of 10. 9 % and 13. 8 %. at the same date, our four largest banks reported a weighted average cet1 ratio of 10. 5 %, putting them, on an unadjusted basis, in the bottom quartile. for the entire new zealand banking system, tier 1 capital ratios have also been at the lower end of international comparisons. however, such comparisons can be misleading as countries have implemented the basel framework in different ways. the reserve bank has made a number of amendments to better reflect new zealand risks, for instance our farm lending adjustments raise the average risk weight on banks β exposures by around 20 β 30 percentage points compared to a usual implementation of the irb framework. 4 risk weights on residential mortgages are also higher than for a range of peer countries, as seen in table 1. the relatively cautious approach adopted in new zealand with regard to risk measurement means that, on a like - for like basis, new zealand β s relative capital position should be higher than the headline ratios suggest. the question is by how much. table 1. housing risk weights for selected countries ( large banks ) 2 / 9 bis central bankers'speeches country weighted average risk weight australia 23. 5 % 5 canada 7. 2 % denmark 13. 9 % new zealand 28. 3 % sweden 6. 8 % united kingdom 11. 7 % source : pillar 3 reports6 apra has also applied the basel framework on a relatively conservative basis. 7 taking into account differences in the calculation of capital and risk - weighted exposures, apra estimated that the australian major banks β cet1 capital ratios, as at december 2015, would be 3. 5 percentage points higher if calculated on a more internationally comparable basis. running a similar analysis on the new zealand framework, we estimate that cet1 ratios are roughly equivalent to at least an additional 1 to 2 percentage points of cet1 capital under an internationally normalised regime. this adjustment would place our four largest banks in the second | 1 |
made over the last few years. it would be a shame to undermine that now. 4 - fourth, we need to recreate what keynes called β opportunities to invest β. too often, markets are constrained by obstacles, regulations and bans which act as a disincentive for investment. if we are going to apply a keynesian economic model, then we need to apply it to the full, and avoid distorting his thinking. structural reform doesn β t have to be painful ; on the contrary, it often creates a brighter future, and opens up opportunities to those who have none. 5 - fifth, we need to incorporate the structural changes in the financial sector into our prudential oversight. we need to adapt to a new environment where asset managers play the dominant role in capital allocation and asset price formation. this means changing the way we think, as well as our methods of analysis and action. in this context, the french model of integrated supervision is particularly apt. 6 - lastly, number six, we need to refocus financial innovation on the long - term. today, literally billions of dollars are spent finding ways to shave a few nanoseconds off arbitrage transactions between two trading platforms. at the same time, investors struggle to find secure long - term financing tools for public infrastructure, even though experience has shown that the private ( and social ) returns of this type of investment are much higher. β infrastructure bonds β have been shown to offer return / risk ratios that are often higher than those on traditional assets. the g20 has rightly made this issue a priority and is looking for ways to strike a better balance between incentives and initiatives, through regulation and financial engineering. bis central bankers β speeches | major central banks and supervisors are on the verge of applying. stephen hawking once famously said about the internet : β we are all now connected [ β¦ ] like neurons in a giant brain β. this could also apply to the finance of tomorrow in an interconnected world. each of us β whether regulators or professionals β is at least a neuron ; we need to be connected to other neurons to produce innovative ideas. similarly, no country or financial institution can adequately respond to the challenges of this changing world on its own : we must definitely join our efforts to build our future. thank you for your attention. 1 acpr study on the digital revolution in the french banking and insurance sector, march 2018. 3 / 3 bis central bankers'speeches | 0.5 |
the following measures to support responsible investment : _ _ _ ( a ) we have already incorporated esg factors in our credit risk analysis of bonds ; we have required our external managers of the hong kong equity portfolios to comply ( b ) with the principles of responsible ownership promulgated by the securities and futures commission in 2016 ; we have invested two tranches of us $ 1 billion each in the managed co - lending portfolio ( c ) programme ( mcpp ) run by the ifc. a substantial part of the mcpp will target sustainable investments across emerging markets ; ( d ) we will further grow our green bond portfolio, through direct investment or investment in green bond funds ; ( e ) we will participate in esg - themed public equities investments through external managers in passive or active mandates targeting esg benchmark indices ; and ( f ) we will accord green accreditation as a predominant factor in investment in buildings in our real estate portfolio. 6. instead of setting a quantitative threshold or target for green investments, we believe our present approach is a more pragmatic and likely to be a more effective way of promoting green and esg investments. we will continue to work with like - minded investors to promote focus on good esg practices in managing their investments. in the interest of transparency, the hkma will also consider an appropriate framework for disclosing the exchange fund β s green and esg investment efforts without arousing market sensitivity in the process. capacity building in green finance : centre for green finance ( cgf ) 7. hong kong is already one of the major green finance hubs in the world. last year a total of us $ 11 billion of green bonds were issued and arranged in hong kong. earlier this morning, the hkma, as the implementation agent of the hk $ 100 billion government green bond programme, announced that a roadshow will be held for a potential green bond offering. under the outline development plan for the guangdong - hong kong - macao greater bay 2 / 3 bis central bankers'speeches area, hong kong is the designated green finance centre in the area. with the launch of the green and sustainable banking initiative and the rapid growth of the green bond market, hong kong possesses enormous potential to become a leading green finance hub in the world. however, in pursuing our aspirations, there is a pressing need to upgrade our capacity and expertise in green finance in the financial industry. 8. with this in mind, the hkma will set up shortly a new centre | jaime caruana : basel ii and corporate governance issues speech by mr jaime caruana, governor of the bank of spain and chairman of the basel committee on banking supervision, at the 2nd islamic financial services board ( ifsb ) summit 2005 : the rise and effectiveness of corporate governance in the islamic financial services industry, doha, 24 may 2005. * * * introduction and overview i would like to thank his excellency governor abdulla khalid al - attiya and the qatar central bank the hospitality and professor rifaat and the islamic financial services board for inviting me to speak this evening before such a distinguished gathering. it is a great honour for me to be here at what i am sure will be a most successful and rewarding summit. i consider it a privilege to have the opportunity to share with you some thoughts on two timely and important topics : corporate governance and the basel ii capital framework. my contribution to this important conference comes with a degree of humility. although i understand that some of the roots of islamic finance can be traced back to my own country during the time it was known as al - andalus, i cannot claim to be an expert in islamic finance, and i certainly would not presume to talk about the specificities of islamic banking before such a knowledgeable audience. suffice it to say that we all know that there are differences between islamic banking and what we normally refer to as β conventional β banking. however, i do think that we share some important broader perspectives, particularly in relation to the two issues i will address today. more rigorous risk management anchored in strong corporate governance, enhanced transparency and sound minimum capital requirements that reflect the risks that banks face are vital elements for any financial system to promote confidence and foster financial stability. on top of that, common standards in these areas can help to improve the integration of the international financial system. it is certainly true that the special features of islamic banking may not be fully addressed by the traditionally broad international standards developed by organisations such as the one i chair β the basel committee on banking supervision. i believe that it would be neither appropriate nor possible for the basel committee to seek to fill such gaps. that is why i am very pleased to see organisations such as the ifsb addressing issues related to the soundness and stability of the rapidly growing market for islamic financial services worldwide. the exposure drafts that you have issued with regard to risk management and capital adequacy for institutions offering islamic financial services help to fill a very important | 0 |
mohd razif bin abd kadir : malaysiaaβ¬β’s life insurance industry speech by mr mohd razif bin abd kadir, deputy governor of the central bank of malaysia, at the official launch of axa affin life insurance berhad, kuala lumpur, 30 january 2007. * * * it is indeed an honour to be here this morning to witness the launching of axa affin life insurance berhad. the launch of axa affin life insurance berhad today marks an important development where two players from different financial industries, i. e. affin holding bhd and axa asia pacific holding ltd., forge a strategic alliance to attain synergy for mutual business advantage. i wish to congratulate both companies on this momentous event. ladies and gentlemen, the financial landscape had undergone tremendous transformation in the last decade. the life insurance industry continues to sustain strong performance amidst challenges in a competitive environment. the evolution in the financial landscape saw a shift in customers'preference, emergence of more complex products and increasing diversity in delivery channels. the growing acceptance by the insuring public for financial protection in the form of insurance coverage has gained prominence especially for investment linked products which currently commands a market share of more than 40 % of new business. this period also witnessed the growing importance of bancassurance as a channel for marketing life insurance products. the life business written via the bancassurance channel currently accounts for almost 50 % of the new business written in the life insurance sector. this potential is further supported by a survey conducted in 2004 which i believe remains relevant. the survey revealed that customers, despite the availability of banks'virtual network, prefer to visit branches to conduct their dealings ; there is a high level of confidence and trust generally placed by the public in banks ; and the strong preference among consumers for insurance products with a high savings content that enhances the complementary elements of insurance and banking products. this development provides significant competitive advantages for financial institutions and insurance companies which have partnered and adopted an integrated approach to market their financial products by leveraging significantly on the banking network. with close to 3200 bank branches located throughout the country, the banks'customer base constitutes a significant market potential. furthermore, the insurance and takaful penetration ratio is currently only at 44 % of the malaysian population. in this regard, there is huge potential that is left remaining untapped. despite the tremendous benefits that can be reaped from bancas | assistance. allow me to now share malaysia β s experience in the development of the sukuk market in our islamic finance marketplace. the islamic capital market in malaysia has been systematically developed to ensure accessibility whilst ensuring the protection of investors and efficiency in the intermediation process. the initiatives to develop the market are also strongly backed by the legal and shariah framework which is further supported by a robust financial infrastructure, including the settlement and bond information system that enables malaysia to provide a complete sukuk issuance and trading platform. since the first sukuk issuance in 1990 by a multinational corporation in malaysia, the sukuk outstanding in the malaysian marketplace is now us $ 158 billion. in 2002, the malaysian government issued its inaugural global sovereign sukuk, raising us $ 600 million, which became an international benchmark for the issuance of global sovereign sukuk. the marketplace has now been liberalised to allow for multilateral financial institutions, multinational and national corporations from other jurisdictions to issue both ringgit and nonringgit denominated sukuk in our sukuk market with increasing foreign investor participation in such issuances the sukuk market in malaysia has seen wide ranging innovative structures and a greater diversity in the type and maturity of the sukuk. a landmark issuance is the us $ 750 million exchangeable sukuk musyarakah in 2006 by khazanah, the government β s investment corporation for the purpose of selling a stake in telekom malaysia. it marked the first issuance of its kind, incorporating full convertibility features common to conventional equitylinked transactions. a further notable issuance was the pioneering retail exchange - traded sukuk to raise funds for a transportation project that allowed retail investors the opportunity to have direct access to the sukuk and thus a stake in a massive infrastructure development in the country, therefore broadening the range of low - risk investment products available to such investors. in terms of maturity, the ringgit sukuk market has seen issuances of maturities to 30 years which were well received by the financial market. regular sukuk issuances with different maturities by the malaysian government has also created a benchmark yield curve for market reference, of which is complimented by the establishment of a number of indices for non - ringgit and ringgit denominated sukuk that serve as benchmarks to track the performance of sukuk. these initiatives have progressively contributed towards creating a | 0.5 |
market. the heavy reliance of the banks on property lending is well known : residential mortgage lending, in particular, accounts for 35 % of the total domestic loans of the retail banks. property prices have fallen sharply since the asian crisis, and the effect of sars was to produce a further downward spiral. in the three months from march to may, property prices are estimated to have fallen by 8 %. it is not surprising therefore that the figures for negative equity reported to the hkma by the banks have shown a significant increase from the 83, 000 cases ( representing $ 135 billion of loans ) recorded at the end of march. the negative equity problem affects the banks in various ways. most obviously, it poses an increased credit risk since loans in negative equity have a greater tendency to go into default ; and if they do, the banks will suffer a loss since the loans are no longer fully covered by the value of collateral. negative equity also has a deterrent effect on the demand for new loans since it makes property a less attractive asset to hold, and by locking in existing homeowners reduces market turnover. more generally, it has a pervasively depressing impact on consumer confidence and is thus a drag on the economy and on loan demand as a whole. what is encouraging however is that despite the current difficulties faced by homeowners most of them have made every effort to continue to service their loans. although the overall mortgage delinquency ratio has edged up in recent months, it remained at a relatively comfortable 1. 16 % at end - may. the arrears for loans in negative equity are higher, as you would expect, but even so the delinquency ratio of around 2. 5 % is reasonable under the circumstances. nonetheless banks need to keep a watchful eye on the situation, and adopt a proactive and helpful approach to restructuring mortgage loans when borrowers start to exhibit signs of financial distress. what they should be trying to avoid is a repeat of the problems with credit cards, where many borrowers chose bankruptcy as a way out of their problems. the dynamics of the two products are different, but the warning signs are there. as might have been expected, credit card charge - offs did increase during the sars crisis as rising unemployment prompted a renewed increase in bankruptcy petitions. but the latest news on this front is somewhat more encouraging. the number of petitions continued to rise going into the first week of june, but has since fallen back and the daily average for june | crockett, to deliver the fourth hkma distinguished lecture. mr crockett, please. | 0.5 |
, we have stepped up efforts to engage with a wide variety of stakeholder groups beyond our traditional partners. our goals are to reach canadians directly and increase public knowledge of and participation in our activities in order to broaden understanding of our work and to build trust. a number of activities to engage the public are upcoming or already underway. these include an online campaign to involve the public in the 2021 renewal of our inflation - targeting framework. we also just concluded a campaign inviting the public to nominate an iconic canadian to be featured on the next five dollar note. let me stop there. senior deputy governor wilkins and i would now be happy to answer your questions. 4 / 4 bis central bankers'speeches | was inevitably some uncertainty about the prospects of the new regime and the new currency that it issued. the circulation of swiss dinars in kurdish controlled iraq during the 1990s was a market solution to the problem of devising a medium of exchange in the absence of a government with the power to issue currency. changes in the relative price of swiss and saddam dinars show that the value of money depends on beliefs about the probability of survival of the institutions that define the state itself. v. case study 3 : monetary policy in japan and the zero bound on interest rates my third case study shows that institutional arrangements need to be consonant with the underlying economics, or failure will result. recent experience in japan has led to the rebirth of interest in monetary policy when official interest rates are constrained by the zero lower bound. official shortterm interest rates in japan have been approximately zero since the beginning of 1999. of particular interest in this context is the question of how responsibilities should be divided between the central bank, on the one hand, and the finance ministry, on the other. guy debelle and stanley fischer ( 1994 ) introduced the distinction between instrument and goal independence of central banks. that distinction has become the standard framework within which to analyse the optimal constitution of central banks. but such a distinction presumes the existence of a source : compiled by the central bank of iraq, based on data collected by the united nations world food program. policy instrument that is uniquely available to the central bank. that instrument is the level of official short - term interest rates. but when interest rates are constrained at their lower bound of zero, the position is much less clear. indeed, i shall argue that in such circumstances both instrument and goal independence are impossible. rather when interest rates are at their zero lower bound, policy relies on successful cooperation between central bank and finance ministry. i shall assume that, when interest rates are zero, monetary policy takes the form of open market purchases or sales of government securities using central bank money. a well - known policy prescription, which has become known as unconventional monetary policy, is that the central bank should buy long - term government bonds rather than the more conventional shortterm bills. the bank of japan did indeed follow this prescription. the logic of such a proposal is as follows. long - term bonds are likely to contain a significant premium to compensate investors for their lack of liquidity - the fact that, in practice, investors face significant costs when switching between bonds and goods. when the central bank offers to | 0 |
and processes by which internal operations are assessed. senior executives need to emphasize compliance and qualitative measures over short - run cost efficiency, and need to articulate the presence of adequate quality controls and audit processes to identify risks and take timely, corrective actions where needed. corporate leadership needs to communicate performance expectations that hold all business lines accountable to strong procedural controls. bis central bankers β speeches if errors occur or internal processes become challenged, servicers must act swiftly and responsibly to contain the damage to consumers and markets. going forward, the servicing industry must foster an operational environment that reflects safe and sound banking principles and compliance with applicable state and federal law. this is a primary responsibility of the servicing industry, but regulators now have to be prepared to monitor servicing functions on an ongoing basis to ensure confidence is restored and take enforcement actions, when necessary, to address significant failures. i β m not going to outline for you the consequences of these failures. you know them all too well. suffice it to say that when servicers misapply payments, lose paperwork, file incorrect foreclosure affidavits, or simply do not answer the phone or make available knowledgeable staffpersons, there are consequences to the consumer. with few adequate remedies to provide meaningful recourse in the event errors occur β after all, it β s not as if consumers have a choice regarding who does their servicing β many consumers find themselves captive to practices that have emphasized speed and aggressive timeframes over responsiveness, accuracy, and completeness. so something is wrong. here we are in 2011, looking at high levels of foreclosures on the horizon, looking at significant failures in process, and nothing much has changed since 2007. i always thought this dysfunction was going on for too long β but i β m someone who thought the successive waves of foreclosures in 2007 amounted to a virtual tsunami. in my mind, massive foreclosures were always a sign of an equally massive market failure. well, now it seems to me we have reached a point where this sign of failure is hindering our economy β s ability to rebound. in addition to improvements that individual servicers need to make, we also have to find a way to fix broader problems in the industry and make it functional. in my november remarks, i began the conversation about a flawed business model that creates misaligned incentives in ways that are more difficult for any one company to change on its own | asserted that fixed - rate mortgages would be more difficult, or perhaps even impossible, to obtain without the gses'portfolios. but, again, we see little empirical support for this argument. we have found no evidence that fixed - rate mortgages, for example, were difficult to obtain during the early 1990s when gse portfolios were small. indeed, the share of adjustable - rate mortgage originations averaged slightly more than 20 percent in 1992, when gse portfolios were small, and averaged 34 percent in 2004, when gse portfolios were large ; these data suggest that the size of the gses'portfolios is unrelated to the availability or popularity of fixed - rate mortgages. as far as we can tell, gse mortgage securitization, in contrast to the gse's portfolio holdings, is the key ingredient to maintaining and enhancing the benefits of the gses to homebuyers and secondary mortgage markets. and mortgage securitization, unlike the gse portfolio holdings, does not create substantial systemic risks. * * * we at the federal reserve remain concerned about the growth and magnitude of the mortgage portfolios of the gses, which concentrate interest rate risk and prepayment risk at these two institutions and makes our financial system dependent on their ability to manage these risks. although fannie and freddie have chosen not to expand their portfolios significantly this past year ( presumably at least partly in light of their recent difficulties ), the potential for rapid growth in the future is not constrained by the existing legislative and regulatory regime. it is a reasonable presumption that rapid growth is likely to resume once fannie and freddie believe they have resolved their current difficulties. 6 without changes in legislation, fannie and freddie will, at some point, again feel free to multiply profitability through the issuance of subsidized debt. to fend off possible future systemic difficulties, which we assess as likely if gse expansion continues unabated, preventive actions are required sooner rather than later. limiting the debt of fannie and freddie, while comparably expanding their role in mortgage securitization, would be consistent with the original congressional intent that these institutions provide stability to the secondary market for home mortgages and liquidity for mortgage investors. indeed, in 1989, before the rapid expansion of its portfolio, freddie testified before the congress that the need for safe and sound operation and provision of affordable mortgages to homebuyers was inconsistent with | 0.5 |
##checked use of the financial system by criminal organisations risks undermining individual institutions and ultimately entire financial systems. when banks or financial institutions become part of a criminal network, they lay themselves open to loss from fraud if they do not screen out undesirable customers or if their own officers are compromised. in the face of the above economic, financial and political threats, the international financial community has recognised that public confidence in such institutions, and hence their stability, could be undermined if they became associated, even inadvertently, with criminals. in order to prevent the escalation of money laundering, the following measures have been undertaken : i. the government has enacted the prohibition and prevention of money laundering ( ppml ) act 2001 which has criminalized money laundering and provides for the forfeiture of property by offenders ; ii. boz has issued directives to all regulated financial institutions on combating money laundering to ensure that the potential threats posed by money launderers are limited ; and iii. boz has also developed a supervisory framework aimed at conducting targeted inspections to ensure banks and nbfis are complying with the anti - money laundering legislation and directives. 5. 3 improvement of credit culture in order to improve the credit culture in the country, the boz issued the credit data ( privacy ) code and the credit reference services ( licensing ) guidelines to facilitate the establishment of credit reference bureaux ( crbs ). the guidelines were gazetted on 30 january 2006. subsequently, the first credit bureau, namely, credit reference bureau africa limited ( crbal ) was licensed on june 5, 2006 and was launched on january 11, 2007. the main task of a crb is to provide lenders with factual information upon which they can base their lending decision. while crbs facilitate sharing of information without approving or disapproving credit, or collecting debts they also assist consumers understand the responsible use of credit and help lenders in identifying good payers from defaulters. once fully operational the credit bureau will : i. allow for increase in credit extension because of better risk profiles ; ii. reduce credit processing costs and times as well as loan write - offs ; iii. lower borrowing costs ; and iv. enhance the credit culture, which in turn will allow for the provision of the much needed finance for the development of various sectors. 5. 4 cost of banking services β’ it has been observed that the zambian banking industry has one of the highest operating costs when compared to other countries in sub | the transformation of the bh banking sector that i have refereed to. raiffeisen opened in sarajevo just last july, only nine months ago. they have since opened a branch in banja luka and are in the process of opening more branches in the rs, in brcko and in many other towns in the federation. today, they are taking a big step into herzegovina by buying hrvatska postanska bank. they have very quickly become a bank that is operating over the whole territory of bh as well as in most of the neighboring countries. i congratulate them on the major role they are playing in transforming and strengthening the banking sector in bh and wish them every success with their new partner. | 0 |
encompassing special requirements for systemically important banks in the areas of capital, liquidity and organisational structure. these key measures are compatible with the approach discussed by the financial stability board. besides those proposed by the commission of experts, other measures being considered at the international level include the breaking - up of big banks, the prohibition of certain activities such as proprietary trading, and the taxation of balance sheets and transactions. the snb fully supports the proposals put forward by the commission of experts to date. the overall direction is correct. what is important now are the details of the measures. our position is clear. it is essential that capital requirements be significantly increased and that they rise in line with the degree of systemic importance of a bank. this is the only way to ensure that the banks internalise the risks which, until now, they have been able to pass on to the general public, to some extent. moreover, progressive capital requirements should create an incentive for banks to reduce their systemic importance, with its associated risk potential. allow me to point out that the tightening of capital regulations and the introduction of a leverage ratio that occurred at the end of 2008 were not aimed at reducing the systemic importance of the big banks to an acceptable level. these measures were much more a response to regulatory shortcomings revealed by the recent crisis, which were insufficiently conservative backing of risk with capital ( particularly in the trading book ) and the lack of a countercyclical component in capital requirements. as regards more stringent liquidity requirements for systemically important banks, specific measures have already been implemented. the liquidity requirements have been thoroughly revised by finma and the snb in collaboration with the big banks, and will come into effect at the end of this month. the final key measure, which is aimed at organisational structure, is also important. the organisation and legal structure of systemically important banks must be adapted to ensure that an orderly liquidation is possible should it become necessary. in particular, it must be possible for systemically important functions to be maintained without the bank as a whole having to be rescued. clearly, this is not easy to achieve. the implementation of this measure must take into account the challenges posed by the considerable complexity and cross - border activities of the big banks. it must be credible and robust β both operationally and legally. an unworkable approach in this area could have fatal consequences in the next crisis. the snb will continue pushing hard for a genuine alleviation of the β too | jean - pierre roth : recent economic and financial developments in switzerland introductory remarks by mr jean - pierre roth, chairman of the governing board of the swiss national bank and chairman of the board of directors of the bank for international settlements, at the end - of - year media news conference, zurich, 14 december 2006. * * * as stated in our press release, the swiss national bank is raising its target range for the three - month libor with immediate effect by 0. 25 percentage points to 1. 50 β 2. 50 %. the snb intends to hold the rate in the middle of the target range for the time being. economic activity in switzerland is very robust. next year, the economic trend is likely to continue favourable, albeit somewhat less pronounced. this will have a positive effect on the labour market. the national bank is expecting real gdp to grow by just under 3 % in 2006 and by around 2 % in 2007. declining oil prices have pushed back inflation. average inflation for 2006 is likely to stand at 1. 1 %. by lifting the target range, the national bank ensures that the inflation outlook will remain favourable, even in view of the high level of utilisation of economic resources. on the assumption of an unchanged three - month libor of 2. 00 %, it expects annual inflation to reach 0. 4 % in 2007 and 0. 9 % in 2008. if the economy performs as expected, the snb will further pursue its strategy of gradual normalisation of its interest rates. the economy is currently in excellent shape and has clearly strengthened during the past two years. at the monetary policy assessment at the end of 2004, we had suspended a normalisation of the interest rates after previously having lifted the three - month libor from a low point of 0. 25 % to 0. 75 % in june and september. the three - month libor remained at that level up to december 2005 when we made the decision to resume the normalisation process, given the improved economic outlook. today's decision β an interest rate hike for the fifth time in succession β confirms the stance we have taken. international environment the change in the international environment with the most tangible impact since the monetary policy assessment in september concerns the price of oil. the current oil prices are clearly below the highest level of 78 dollars per barrel of brent crude which was reached in august. will we see higher oil prices again? there is no real conclusive answer to this question. what we have witnessed is nonetheless | 0.5 |
andreas dombret : global currency blocs β is the euro a burden or a competitive advantage? opening address by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the europe symposium of the cdu economic council, brussels, 3 december 2013. * 1. * * introduction ladies and gentlemen thank you very much for inviting me to the cdu economic council β s europe symposium. i am delighted to be here and to have the opportunity to talk to you. as regards the theme of the symposium β global currency blocs β there is one thing we can state with some pride, and that is that the euro has become the second pillar of the international currency system. 2. the euro as the second pillar of the international currency system for practically all purposes, the euro is the second most important currency in the world β a role it took over from the deutsche mark. in some respects it has even surpassed the deutsche mark, for instance in its share of global currency reserves. obviously, the us dollar remains the world β s leading currency. jeffrey frankel from harvard university did recently point out that the us dollar β s leading role is not a law of nature and that the day may come when it would have to succumb to a rival. however, in his words, β today is not that day. β it would probably be presumptuous, in fact, to believe that the euro might steal a march on the dollar in the medium term. nonetheless, as the second pillar in the international currency system it fulfils an important role β it provides support and stability. at the same time, the euro gives international investors additional options in a very liquid market. however, one thing is undeniable, and that is that the problems in the euro area at present have weakened the euro β s standing. we need to deal with these problems if the euro is to play a lasting role as a stabilising factor in the international currency system. the reforms in the individual euro - area countries are an important step in this direction. another step is the reforms in the institutional framework of monetary union, principally the work on a banking union. these measures put the euro area well on the way to rendering itself less vulnerable and remaining an attractive destination for international investors. after all, in the final analysis robust economic health in the euro - area countries is crucial to the future role of the euro. 3. competitiveness in europe and one thing which is | ) collateral. in that way, banks transform illiquid and lower - quality assets into high - quality liquid assets in a process known as collateral transformation. the opportunity cost of this trade is currently 50 basis points : the spread between the main refinancing rate and the deposit facility rate. banks thus have a solid financial incentive to self - insure against liquidity risk in the market. lowering the spread to 15 basis points has the potential to reduce the opportunity cost and provide incentives to shift from market to central bank funding. the good thing is : we have enough time to observe how market activity evolves over the coming years. in particular, we have to evaluate the trade - off between the potential reduction of volatility and less market activity with possibly higher collateral transformation. 5 closing remarks ladies and gentlemen, let me conclude. while our balance sheet will gradually shrink, excess liquidity will remain significant over the coming years. accordingly, while some volatility cannot be ruled out, short - term money market interest rates are expected to continue evolving in the vicinity of the deposit facility rate. over the next two years, we will closely monitor three key aspects until our next sched β uled review : first, we will assess the development of money market activity, including in the medium - term segment. second, we will analyse possible fluctuations of short - term interest rates and their influence on the transmission of monetary policy. and third, we will scrutinise the degree of collateral transformation. let me be crystal clear : an adjustment of our operational framework was necessary to reflect structural market changes. is that framework now set in stone? i don β t know yet. but in the past, we have shown our capability and flexibility to adapt to changing market conditions. let β s be open to this, now and in the future. 1. see fratianni, m. and j. von hagen ( 2001 ), the konstanz seminar on monetary theory and policy at 30, european journal of political economy, vol. 17, pp. 641664, for a full account of the history of the konstanz seminar. 2. borio c. and p. disyatat ( 2010 ), unconventional monetary policies : an appraisal, manchester school, university of manchester, vol. 78 ( s1 ), pp. 53 - 89, september. 3. bindseil, u. ( 2004 ), monetary policy implementation : theory, past, | 0.5 |
to actually build a functioning machine based on it. thirty years on, while we 1 / 3 bis - central bankers'speeches still lack a fully functional and reliable quantum computer, we seem to be actually getting closer and closer. as the cybersecurity threat is serious but there are potential ways to fend it off, we cannot afford to wait. implementing quantum - resistant cryptography tools before quantum computers become practically operational is crucial for data longevity. sensitive data that are encrypted using today's technology could be stored now by malicious agents and decrypted later, once quantum tools become available ; upgrading cryptographic tools as soon as possible is therefore necessary to ensure long - term data security. this is especially relevant for financial institutions. their core business is ultimately based on the ability to create, manage and use sensitive data, and it is not unlikely that the quantum revolution will hit the financial sector faster and more intensively than other industries. awareness of the need to act is growing. in the spring of this year, the european commission published a'recommendation on a coordinated implementation roadmap for the transition to post - quantum cryptography '. in the us, the national institute of standards and technology ( nist ) officially released its first set of finalised post - quantum cryptography ( pqc ) algorithms last month. this is a major step forward. in the g7 finance track, the italian presidency identified quantum computing as one of the key strategic cyber issues facing us. it may affect multiple policy areas, including national security, competitiveness, ethics, and skill development. while solutions to achieve quantum security are starting to become available, there are factors that can make market players reluctant to adopt them quickly. these include uncertainty about the actual urgency of the quantum threat, the fact that a common transition approach has not yet emerged, and the fragmentation of investments, responsibilities and regulatory frameworks across jurisdictions. the g7 has launched several technical initiatives to foster coordination among the main stakeholders. with today's workshop, we aim to engage key experts in g7 countries, with a view to developing a shared understanding of the most urgent issues, a potential roadmap to address the transition to quantum resilience and, to the extent possible, an agreed policy agenda. we are fortunate today to have speakers and attendants from a wide range of backgrounds : academia, government institutions ( including lawenforcement agencies ), central banks, international organisations and the finance industry. this promises to be | antonio fazio : regulation and supervision in financial markets presentation by antonio fazio, governor of the bank of italy, at the frankfurt european banking congress 2004, panel discussion on β regulation and supervision in financial markets β, frankfurt, 19 november 2004. * 1. * * development and integration of financial markets in the euro area the introduction of the single currency has given a decisive impetus to financial integration in europe. the integration of the money market has been rendered possible by the creation of target, the european payment system. the launch of the new - generation system based on a single platform is scheduled for 2007. the euro has had a particularly significant impact on the european market for private - sector bonds ; there has been a considerable increase in the number of even medium - sized firms placing issues outside their home country. the home - bias of equity portfolios has diminished. in the main industrialized countries the medium - term growth in the quantity of money, and hence in the volume of bank deposits, is in line with that in nominal gdp. the faster rate of expansion in the aggregate volume of financial assets, that is the process of financial deepening, is the outcome of the direct relationship established on the financial markets between the firms and the public sector issuing securities, on the one hand, and the investors purchasing them, on the other. in italy, between 1995 and 2003 the volume of funds raised directly on the financial markets by firms issuing shares, bonds and other instruments grew from 20 billion euros to 65 billion. the amount of households β financial wealth consisting of corporate securities increased from 180 billion euros to 470 billion, that is from 19 to 36 per cent of gdp. similar developments have taken place on other markets. the stability of the banking system, the protection of the savings it intermediates and their efficient allocation are entrusted to the banking supervisory authority, as well as to market discipline. in order to strengthen, in this new context, the safeguards for savings invested in securities, steps must be taken to ensure more effective controls on financial markets and firms issuing securities, if necessary by forging europe - wide links. 2. banks and financial markets during the 1990s the large - scale process of consolidation and consequent growth in the size of banks encouraged the spread of the universal bank, which combines retail and wholesale business and simultaneously performs both commercial and investment banking services. the banks themselves have greatly stepped up their role in the distribution of third - party financial products, insurance policies, investment funds and corporate bonds. credit risks | 0.5 |
however, that the new legislation should ensure that the business of such institutions is conducted in a safe and sound manner, conducive to the orderly growth of the financial sector, whilst contributing to poverty reduction in both rural and urban areas. comment on the dedicated banks bill and the co - operative banks bill may be provided until the end of january 2005. ( iii ) anti - money laundering the financial intelligence centre act, 2001 ( fic act ), imposes duties on certain institutions to introduce anti - money - laundering measures, to train their employees, to report suspicious transactions to the financial intelligence centre ( fic ) and to retain client information. the banking sector has therefore begun a concerted campaign to comply with the fic act and to fulfill the sector β s obligations in terms of local legislation and international guidelines. in may 2002, south africa applied for membership of the financial action task force ( fatf ), an intergovernmental body that develops and promotes policies, nationally and internationally, to combat money laundering. south africa was granted fatf membership in june 2003. as from february 2003, banks and several other institutions have been reporting suspicious transactions that may involve money laundering to the fic. banks have to make detailed reports of all unusual and / or suspicious transactions to the fic. in addition, banks have to report the number of such reports to the registrar of banks. although this has been a challenge for banks, resulting in additional system and resource requirements, banks have shown a commitment to comply with their duties. the bank supervision department has an obligation to monitor compliance by our banks with the fic act and other anti - money laundering guidelines. in order to ensure compliance with the requirements of the fic act, a circular was issued in december 2002. the circular provided guidelines on the types of measures that banks had to implement in order to prevent them being used to launder the proceeds of crime. in terms of the circular, each bank has to furnish the bank supervision department with a detailed plan, with time frames by which the bank intended to achieve full implementation of and compliance with the fic act and the fic regulations. the initial deadline of 30 june 2004 by which banks had to verify the identities of some 17 million clients was extended to a range of new deadlines, starting on 31 october 2004 for high - risk clients and ending on 30 september 2006 for the lowest risk clients. the bank supervision department, in its role as a supervisory body, will continue to monitor progress | daniel mminele : policy implications of some key market developments address by mr daniel mminele, deputy governor of the south african reserve bank, at the financial markets department β s annual cocktail function, pretoria, 3 march 2015. * * * introduction ladies and gentlemen, good evening. thank you for attending this year β s financial markets department cocktail function. it has almost become tradition for me to take stock of major global and domestic market developments that occurred during the past year, and to briefly reflect on their implications for south africa. in the past, we also used this event to brief you, our partners in financial markets and other stakeholders, on key projects undertaken, changes and innovations introduced in the financial markets department. this year, though, i would like to take a slightly different approach. rather than providing a detailed review of operations over the past year, i will look at what i think are potential challenges that market participants and policymakers are likely to be confronted with in the period ahead. given the time constraints, i will focus on the policy implications of some key market developments. you will, however, not be deprived of information about recent developments and activities of our financial markets department. i have the pleasure of announcing the launch of the newsletter called fmd update, copies of which will be available tonight. the newsletter will also be available on the bank β s website. what has not changed and will not change is the importance of central bank interaction and communication with the markets, especially in light of the new views on the role of forward guidance in its various forms. forward guidance, in more formal or less formal ways, appears to have graduated from what was essentially a crisis - fighting instrument to now being advocated by some as part of the standard toolkit of central bankers, even in normal times. recent experience has shown how sensitive financial asset prices have become to changes in signals over future policy. we therefore continue to value our ongoing interaction with yourselves as market participants, as you are in essence part of our transmission mechanism of monetary policy. monetary policy divergence, the stronger us dollar, and global imbalances but let me get back to market issues and policy. one of the key trends observed over the last few quarters has been the steady appreciation of the us dollar against the backdrop of divergent monetary policies in advanced economies. at first glance, such a recovery in the us currency seems consistent with the improvement in us economic prospects. us gdp growth continues to outpace that of the eurozone and japan, | 0.5 |
household spending ; and businesses had successfully worked off the overhang of inventories that had emerged at the end of 2006. in addition, strong demand from abroad was providing considerable support to our exports. the fomc recognized that less accommodative conditions in some financial markets posed a threat to the strength of future economic growth. nonetheless, our primary concern remained the upside risks to inflation. shortly after the august fomc meeting, however, financial market conditions deteriorated considerably further, following events that shook investor confidence, particularly in complex structured credit products. the disruptions to nonprime mortgage markets became more severe and problems even extended to high - quality loans, as rates for prime jumbo mortgages jumped after the secondary markets for them shut down. importantly, the disruptions also spread beyond the mortgage markets. most notably, investors'concerns about exposures to subprime mortgage credit risk caused them to shun commercial paper that might be backed by such assets, in both europe and the united states. this aversion, in wendy dunn and william wascher, of the board β s staff, contributed to the preparation of these remarks. turn, meant that commercial banks that had written backup liquidity lines for commercial paper programs or had other connections with these programs might have to make good on their actual or implied support by extending credit. with leveraged buyout credit and some mortgage originations also possibly staying on the balance sheet unexpectedly, the banks faced substantial, but uncertain, calls on their liquidity and capital. all this uncertainty led the banks and other short - term lenders to turn very cautious ; interest rates on bank deposits and other sources of credit beyond just a few days rose steeply, funding in money markets became concentrated in the very short term, and concerned and uncertain lenders generally became much less willing to extend the credit needed for liquid and efficient financial markets. why the financial markets behaved as they have is a complex story that we will be sorting out for a while. for our purposes this morning, i will concentrate on the consequences for household and business borrowers and for the economy. in particular, i expect that the financial market turmoil of the past few months will leave an imprint on the cost and availability of credit to many household and business borrowers. the greatest effects have been on credit related to residential real estate ; in addition to the problems with nonprime and jumbo first mortgages, second mortgages and home equity lines of credit that many households have been using | susan s bies : north american monetary policy - key developments in recent times speech by ms susan s bies, member of the board of governors of the us federal reserve system, at the canadian american business council's rbc distinguished speakers series, embassy of canada, washington, dc, 12 november 2002. * * * it is a great pleasure for me to be here with you today. certainly, the theme for today's session - - " north american monetary policy " - - ought to provoke some lively discussion. let me start with the usual disclaimer - - my remarks reflect my personal views and should not be taken as an official view of the board of governors or the federal reserve system. as you know, the fomc last week chose to lower the target federal funds rate 50 basis points to a forty - year low of 1 - 1 / 4 percent and also indicated that it viewed the risks to the economy going forward as balanced. of course, the macroeconomic developments over the last few years that have brought us to this point have been quite remarkable, and i'll offer some perspectives on some of those key developments in a moment. over this same period, there have been some quite important developments in the art and science of central banking, and it seems useful to pause here at the outset to take stock of this evolution in central banking practice in the united states. though barely a single page in length, last week's fomc announcement embodied all of the key structural elements of the current monetary policy framework in the united states. the text of the announcement provided a rationale for the decision in terms of the fomc's twin objectives - - long - run price stability and sustainable economic growth. the policy decision itself involved a specific setting for the key monetary policy instrument - - the target federal funds rate. and the goals of central bank transparency and accountability were served by a discussion of the committee's views about the important forces impinging on the economy at the present time and its sense of the balance of risks to the economy in the future. all three of these key elements of the monetary policy framework - - the fomc's objectives, primary policy instrument, and emphasis on transparency - - have undergone significant change in recent years. as indicated in the original version of the federal reserve act in 1913, the federal reserve was founded " to furnish an elastic currency " and to promote " more effective supervision of banking. " it wasn't until | 0.5 |
savenaca narube : a brief overview of developments in fiji β s financial system and economy opening address by mr savenaca narube, governor of the reserve bank of fiji, at the official opening of bank of south pacific limited β s new nadi office, nadi, 19 february 2008. * * * your excellency, the papua new guinea high commissioner to fiji, mr. peter eafeare ; mr garth mcilwain, managing director, bank of south pacific ; mr kevin mccarthy, general manager, branch network ; mr. greg watson, general manager, bsp fiji ; distinguished guests ; ladies and gentlemen : introductory remarks good morning to you all. it seems just like a few months ago when i had the pleasure to welcome bank of south pacific into fiji at their renwick road branch in suva. i remember that opening very well. it is not often that you are offered a full bowl of kava first thing on a monday morning. but i remember that occasion well because of what was happening in the country at that time. the military had taken over government only two weeks before that. the situation in suva was still tense and no one was really sure what was going to unfold. it was therefore remarkable that bsp made the decision to open its first branch irrespective of what was happening in fiji. it was a bold but right decision. it clearly reflects three things. first, bsp likes to have their official openings in the morning. i have been to many openings of bank branches and agencies. i believe that they were all in the evenings. somehow, morning works for bsp. perhaps morning openings signal the new dawn or the new beginning. so, i am pleased to be here in this new dawn to open bsp β s first western branch here on main street in the jet - set town of nadi. secondly and on a serious note, this expansion after only one year of setting up shop in fiji clearly signals bsp β s commitment to the country. they have made their intentions clear. they are obviously here to stay. they have a long term view of their presence in fiji. and i warmly welcome that and congratulate them on their commitment and determination. it β s a vision that we can all embrace. nothing much is gained from being short term. visions are realised with courage and by looking far beyond the horizon. thirdly, this expansion reflects bsp β s continuing confidence in the economic | hotels and the reduction in the length of stay. most other economic sectors declined in 2007. there was a small growth in exports while imports in the january to november period of 2007 declined due to the depressed state of the economy and the restrictive policies that we had put in place. foreign reserves foreign reserves increased in the second half of 2007 rising to 4. 3 months of imports at the end of the year and this is encouraging. however, the major reasons for this performance were the decline in the economy particularly in investment and the credit ceiling which has slowed down credit considerably. we still need to do a whole lot more to get our exports increasing at a respectable rate. but unfortunately we are still not doing enough at this time on this important front. our balance of payments will continue to come under pressure. time is clearly not on our side. we must move immediately. in 2008, the economy is expected to grow by 2. 2 percent. but that was before cyclone gene. we are still evaluating the impact of the cyclone and flooding on the economy. but based on past natural disasters, we can expect a reduction in the modest growth rate projected for 2008 unless there are other offsetting developments. this obviously would frustrate our efforts to restore growth this year. there is also a real fear that the world economy will enter a recession or even a depression this year. the impact of the sub prime loan in the us is spreading into europe and is coming down to asia. how these global developments impact fiji will depend on how they affect our major markets. tourism numbers and remittances may be affected. there is also the possible impact of the movements in exchange rate. inflation inflation is becoming a bit of a worry. inflation jumped to over 7 percent at the end of last month β the highest since 1998. this was due to the higher oil prices, some increase in duties from the national budget and some disruptions in local supply of vegetables. furthermore, the disruptions in supply of market items caused by cyclone gene are bound to push inflation higher in the next few months. we are therefore revising our inflation projection for the end of this year. we are caught in what economist term β stagflation β where the fiji economy has declined but inflation is rising. it β s not a good place to be. however, in our view, the fundamental causes of this flare up in inflation should be temporary. the future path of oil prices will largely determine inflation in the medium term. so if oil | 1 |
jens thomsen : european bond markets before and after the euro speech by mr jens thomsen, member of the board of governors of the national bank of denmark and chairman of the efc - subcommittee on eu government bonds and bills markets, at the european government bond summit, brussels, 25 october 2006. * * * my remarks will focus on reflections related to the integration process that the european bond markets has experienced in the post - emu era. in particular, i will highlight the successful evolution of european government bond markets following the introduction of the common currency. the establishment of the european monetary union on january 1, 1999, paved the way for a more integrated european bond market. in the pre - emu era, different euro area countries'government bond yields differed substantially. as an example, yield spreads against germany in the 10 - year government bond segment ranged up to 700 bp in the 1990's ( see slide 1 ). yield spreads were however expected to decline along with the introduction of the euro primarily due to the elimination of exchange rate risk. prior to 1999, attempts were made to anticipate the magnitude of the post - 1999 yield spreads between emu member states. sparsely evidence from other currency areas provided some insight in relation to such anticipations. the provincial bond market in canada was one such candidate area to use for comparison as the canadian provinces had some similar characteristics to the forthcoming emu countries, including no explicit rules for mutual or federal bail out. the spreads between bonds issued by different canadian provinces and canadian government bonds were much lower than euro area spreads prior to the euro ranging " only " up to 60 bp. notwithstanding declining spreads, the canadian evidence indicated that the euro area spreads would not completely disappear ( see slide 2 ). 1 considering the post - 1999 era in retrospect, the euro area spreads have indeed declined significantly since the introduction of the euro ( see slide 3 ). in fact, euro area spreads are small today and actually lower than the ones observed between canadian provinces. this may be due to a higher level of liquidity in the emu countries'issues as well as somewhat better credit ratings among emu countries. regarding the credit ratings, they may be influenced by the generally larger tax bases of central governments in addition to lower labour mobility in europe which causes tax bases to be more secure. the convergences of yields among euro area countries have not yet been observed as markedly for the 10 new eu member states even though erm2 members clearly have experienced lower spreads | bank of england since i started working there. everyone who knew peter has their own fund of these stories and you can and should read many of them in the online condolence book set up by the university of birmingham. to give one personal memory of peter β s wonderfully warm and encouraging approach : in our final year at brasenose we each had to do a long essay and present it to the rest of the class. i wrote mine on the european monetary system, then in its first phase ; it was my first exposure to analysing an active policy tool. i recall that it turned out to be rather heavy on institutional detail about the ems and rather light on the economics and efficacy of exchange rate regimes. at the end of my presentation peter, first, went out of his way, as he always did in response to any presentation, to compliment me on all the efforts i had put in. only after that, did he then, in his characteristically gentle but incisive way, set out several avenues i might follow in developing my analysis of nominal versus real adjustment. in doing so peter drew on a whole host of references and models that he could call on from memory, some of which i β m sure found their way into modern international economics, the textbook peter wrote with shelagh heffernan, his first wife, who died in 2010. the ieo β s report is available on the bank of england website, as is the bank β s response. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice peter seemed to be focused on the most important and relevant policy issues of the time β he always wanted to learn more about the world and to suggest ways that economics and economists could improve it. and he conveyed that enthusiasm and ambition to each student intake and to his colleagues. peter β s review of β what β s the use of economics β, the book of proceedings from a conference organised and edited by diana coyle, another former student who gave the second of these lectures, held at the bank of england nearly a decade ago, is peter at his kaleidoscopic best and as relevant now as when he wrote it. 2 for me as an undergraduate student in the early 1980s it was incredibly stimulating to be learning from peter about keynes β, hicks β and leijonhufvud β s contributions to disequilibrium economics, all framed by peter β s | 0 |
same. with this realization, i suppose i am ready for life after central banking. there are many activities i want to pursue ( including possibly more golf with friends ) and new adventures to look forward to, after july 2. but today, my heart is full. for this, i thank all of you. thank you for this testimonial, your kind words, your wishes for my good health and your friendship. maraming salamat! mabuhay ang bsp! mabuhay ang pilipinas! mabuhay po tayong lahat! 4 / 4 bis central bankers'speeches | ben s bernanke : brief remarks speech by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the united states - mexico chamber of commerce annual gala, washington dc, 12 may 2011. * * * good evening. i am very pleased to join the united states - mexico chamber of commerce at this gala dinner as its members look back on another year of working to build the mutually beneficial trade and investment relationship between our two countries. the ties between mexico and the united states, both economic and cultural, are close and enduring β in no small part, i am sure, because of the nearly 40 years of effort by the chamber. thus, i am especially honored to join agustin carstens, the distinguished governor of the bank of mexico, in receiving your good neighbor award. thank you very much. muchisimas gracias. i have benefited from many years of contact and shared experiences with agustin and his colleagues at the central bank of mexico. some years ago, i had the opportunity to visit the bank of mexico. as an economist, i found the visit very stimulating. but i must confess that i enjoyed the trip as much for the cultural excursions as for the economics. i remember in particular the beauty of diego rivera β s monumental mural in the national palace in mexico city. as with so many things, i credit my wife, anna, who has a graduate degree in latin american literature, for my greater - than - average appreciation for the arts of mexico and the other latin american nations. perhaps agustin might also credit his spouse, the writer catherine mansell carstens, for an appreciation of culture that encompasses both of our nations. i met agustin not long after i came to washington to serve on the federal reserve board. he was then a highly regarded deputy managing director of the international monetary fund. in late 2006, not long after i became chairman, he became finance minister of mexico, and last year he succeeded guillermo ortiz as governor of the bank of mexico. we have had many opportunities to meet and share views about the u. s., mexican, and global economies. my appreciation for his wisdom and insight as an economist and policymaker has grown with each encounter. our productive and, i hope, mutually beneficial relationship reflects the close relationship of the united states and mexico. our countries are tightly linked through trade. the united states is by far mexico β s largest trading partner, accounting for about two - thirds of total mexican merchandise trade. | 0 |
β, beyond the data, climate. gov, 10 january. 4. elderson, f. ( 2022 ), β the european climate law and the european central bank β, keynote speech at the lustrum symposium organised by the dutch financial law association, 1 december. 5. ecb ( 2020 ), guide on climate - related and environmental risks β supervisory expectations relating to risk management and disclosure, november. 6. ecb ( 2022 ), walking the talk - banks gearing up to manage risks from climate change and environmental degradation, november. 7. see for example brunetti, c. et al. ( 2021 ), β climate change and financial stability β, feds notes, board of governors of the federal reserve system, 19 march. 8. schnabel, i. ( 2023 ), β monetary policy tightening and the green transition β, speech at the international symposium on central bank independence organised by sveriges riksbank, 10 january. 9. elderson, f. and i. schnabel ( 2023 ), β how green is our balance sheet? β ecb blog post, 24 march. | europe. there are many facets to this challenge, as the broad and ambitious agenda for this conference shows. i look forward to the discussions. 1 human capital, knowledge in databases, organisational capital and brands are examples of assets not covered in the national accounts. see also european central bank ( 2018 ), β investment in intangible assets in the euro area β, economic bulletin, issue 7, november ; and european commission ( 2017 ), β unlocking investment in intangible assets in europe β, quarterly report on the euro area, vol. 16, no 1, pp. 23 β 35. however, in ahmad, n., ribarsky, j. and reinsdorf, m. ( 2017 ), β can potential mismeasurement of the digital economy explain the post - crisis slowdown in gdp and productivity growth? β, statistics working papers, oecd, the authors conclude that, while mismeasurement may occur, its magnitude cannot alone explain the slowdown in measured gdp growth or multi - factor productivity growth after the crisis. 2 see the box entitled β the role of digitalisation in shaping developments in potential output and the output gap in the euro area β, in european central bank ( 2018 ), β potential output in the post - crisis period β, economic bulletin, issue 7, november. 3 see european central bank ( 2018 ), β digitalisation and its impact on the economy : insights from a survey of large companies β, economic bulletin, issue 7, november. 4 see the box entitled β the role of digitalisation in shaping developments in potential output and the output gap in the euro area β, in european central bank ( 2018 ), β potential output in the post - crisis period β, economic bulletin, issue 7, november. 5 see gamberoni, e., giordano, c. and lopez - garcia, p. ( 2016 ), β capital and labour ( mis ) allocation in the euro - area : some stylized facts and possible determinants β, working paper series, no 1981, ecb, november. 6 see international monetary fund ( 2018 ), β capitalizing on knowledge - based capital β, euro area policies β staff report for the 2018 article iv consultation with member countries, june, p. 18. 7 there is substantial uncertainty surrounding estimates of the net impact of new technologies on employment. for instance, the world economic forum article on β understanding the impact of digitalization on society | 0.5 |
financial infrastructures β which can be leveraged to financiallyinclude more clients at the β bottom of the pyramid β. back in 2000 when the bsp started issuing microfinance - related regulations, hardly any bank was into microfinance. today, we have 176 thrift and rural banks serving over 1. 2 million microfinance clients with outstanding loans of php 11. 4 billion β or an average of nine thousand five hundred pesos. these microfinance loans now include different types β for starting and growing microenterprises ; for micro - agriculture ventures ; and for housing. these are all designed for low - income households with varied financing needs. at the same time, microfinance banks have opened 2 million microdeposit accounts with nearly four billion pesos in deposits. in addition, 39 banks licensed as microinsurance agents are now serving 1. 4 million clients. big banks, on the other hand, are participating in the microfinance market by providing wholesale loans to retail mfis or to msmes through their subsidiaries. i am also pleased to report the progress being made by other mfis outside the bsp β s supervision in moving the industry forward. among others, a survey indicated that bis central bankers β speeches 16 microfinance ngos with a combined network of 2, 190 branches have p11. 6 billion in outstanding loans served to 2. 5 million borrowers β or an average of p4, 640. 00 per borrower. on the other hand, data from the cooperative development authority ( cda ) indicate that 67. 9 percent of the 10, 675 reporting coops are providing financial services to 6. 5 million members. it is clear : there is great potential for mfis to accelerate the development of microfinance with appropriate, effective and responsive services. we have been monitoring this. among others, 35 banks have set up 517 micro - banking offices ( mbos ) in 334 municipalities ; 64 of these municipalities are served only by an mbo. bsp regulations issued in 2010 enabled the creation of mbos β these are small banking units where microfinance clients can conveniently access a range of banking services, including loans, microdeposits and microinsurance. the e - money regulations issued by the bsp in 2009 have also produced positive results : 52 microfinance oriented banks now provide e - banking and e - money services. they see the value of e - money as a | amando m tetangco, jr : generating more winners in microfinance speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the launch of the 2015 citi microentrepreneurship awards, manila, 22 may 2015. * * * today we launch the 2015 citi microenterpreneurship awards or cma, a groundbreaking program that has allowed us to discover the creativity, tenacity and generosity of filipino microentrepreneurs across our country. we just heard the testimony of ms. teresita valdez, one of about a hundred cma awardees so far. their stories inspire, inform and motivate those who want to go into business. the challenges they faced and how they overcome seemingly insurmountable odds strengthen the resolve of other entrepreneurial filipinos that they too can succeed in the microfinance sector. indeed, our microentrepreneurs represent a gold mine of lessons and information that has been helping us transform and improve the lives of millions of filipinos through microfinance. ladies and gentlemen. a significant factor in our growing harvest of successful microenterprises stories is a regulatory environment that enables microfinance institutions or mfis to provide appropriate products and services. microentrepreneurs succeed when the regulatory framework is well - defined ; enables various mfis β whether banks, coops and ngos β to deliver a range of microfinance services to their niche markets ; and encourages institutions under our supervision to cater to microentrepreneurs, a market which β traditional β bankers tend to sidestep due to perceived high credit risks and transaction costs. in this connection, the bangko sentral ng pilipinas has issued clear guidelines and codes of conduct, so that banks can viably provide an array of products designed to fit the peculiarities of microfinance clients. i can say we are on the right track. the philippine regulatory framework for microfinance has been consistently ranked as one of the best in world by the economist intelligence unit ( eiu ). more recently, the eiu ranked the philippines as the top country in asia, and the 3rd in the world, with the most conducive environment for financial inclusion. the eiu further notes that countries like the philippines with a long tradition of microfinance have better institutional and | 1 |
rate will pass through to banks β lending and deposit rates. norges bank closely monitors developments in the banking industry and the financial system. innovation and competition can bring better and cheaper services, but can also bring risks associated with, for example, cybercrime, data protection and financial stability. there is also the risk that some participants gain substantial market power. important work is underway at an international level to adapt regulation, supervision and oversight to the new landscape. norges bank supports this work. two of the main considerations are that society as a whole must reap the benefits of the new solutions, while the associated risks must be contained. we also want to be a driver behind changes that enhance the efficiency and safety of the payment system. an example is the work on developing real - time payment solutions, which today allow payments to be sent within seconds to the payee β s account. we are also considering whether norges bank should take on a more operational role in the real - time payment infrastructure. in our work, we have to take a precautionary approach and keep a close eye on the potentially far - reaching implications for the financial system of some of the changes underway. we must ask ourselves whether measures will be needed so that we can continue making payments in norwegian kroner efficiently and securely in the future. chart : central bank digital currency a key issue is whether norges bank should launch a central bank digital currency ( cbdc ). 13 unlike central bank reserves, which is electronic money for use solely by banks, a cbdc will be available to everyone, just like cash. and unlike e - money platforms or cryptocurrencies, a central bank will stand behind it and guarantee its value. if we introduce a cbdc at some point in the future, the purpose will be to safeguard confidence in the monetary system and to promote an efficient and secure payment system. we are also aware of a possible challenge : in principle, cbdc could cause disruption. like other new means of payment, it will compete with today β s deposit money. but unlike the other means of payment, money issued by a central bank will likely be perceived as a very safe alternative. that means it could replace a share of bank deposits β especially in turbulent times, which could engender serious spillovers to the wider economy. a basic premise of our work is that a cbdc must not significantly weaken other operators β possibility to provide credit. the purpose must be payment, not store of value | measures when overly large risks appear to be building up in the financial sector, but that the main responsibility must lie with other methods of regulating the relationship between capital and risks. the emphasis here is on regulatory frameworks and supervision. putting all of the responsibility on monetary policy would probably mean such high interest rates that they would have seriously negative repercussions for the real economy. moreover, the argument remains that it is difficult to determine when a credit boom changes from being beneficial for growth to becoming a risk that can trigger a financial crisis. i nevertheless think that the crisis has taught us that when we conduct monetary policy we must also follow a number of variables that are linked to the build - up of risk in the financial markets, primarily credit growth in different sectors of the economy. the fact that monetary policy alone cannot prevent financial crises does not mean that we can only look at an inflation target and otherwise disregard what a long period of low interest rates may entail with regard to risks in the financial system. this is also the view the riksbank has expressed in recent years, occasionally, one must say under strong criticism from both academics and various other parties in society. monetary policy can alleviate the consequences of the financial crisis the financial crisis has meant that the focus normally placed on monetary policy has been transferred to the measures taken to safeguard financial stability. monetary policy cannot be used to resolve acute problems in the financial markets. this requires a different type of measure, as i have already described. what role can monetary policy then play in the current situation? how has the riksbank formulated monetary policy during the autumn to counteract the negative events? on 8 october the riksbank took part in a joint action with other central banks to alleviate the consequences of the financial crisis. the riksbank, together with the bank of england, the ecb and the federal reserve, announced cuts in their monetary policy rates. the advantage with this type of coordinated action is that it reinforces confidence and increases the chances of the rate cut having positive effects. the riksbank cut the repo rate by 0. 50 percentage points in this action. at our most recent ordinary monetary policy meeting on 22 october the decision was to cut the repo rate by a further 0. 50 percentage points, to 3. 75 per cent. the riksbank adjusted its forecast for the repo rate path downwards, compared with that presented at the beginning of september. the members of the executive board were unanimous regarding both the repo | 0 |
system now stands on much more solid ground. it is primarily in connection with the third challenge, of reintegrating iceland into international capital markets, that more work needs to be done. but even in this area we have made significant progress. gdp growth, a balanced economy, a treasury surplus, and the central bank β s foreign currency purchases have created good conditions for the liberalisation of the capital controls. the credit ratings of the sovereign and the commercial banks have improved. the sovereign regained access to foreign credit markets some time ago, and the banks have opened a crack in the door. but even though we have made significant progress, the game is not yet won. debt levels are high, rendering borrowers vulnerable to shocks, and the capital controls are still in place. iceland β s macroeconomic balance is good, but fragile. on this score, we face three relatively important risks : first, that the interactions between labour market unrest and the turnaround from output slack to a positive output gap could undermine price stability and turn the current account surplus into a deficit ; second, that lifting the capital controls could turn out badly, with negative implications for exchange rate stability, inflation, and financial system stability ; and third, that the global economic situation could turn against us. therefore, we must avoid complacency, and we must be vigilant if we are to safeguard our recently achieved stability and face down the three challenges that i have mentioned just now. in some respects, formulating monetary policy is complex at present, as it has been at times in the past. the central bank β s interest rates were lowered by 0. 75 percentage points in the final two months of 2014, in response to rapidly falling inflation and the decline of inflation expectations to the target. since then, inflation has dropped still further, falling below 1 % in december, triggering the submittal of a report to the government on inflation below the deviation threshold. even though inflation is now below 1 %, the central bank β s key interest rate has been unchanged at 4. 5 % so far this year. there are a number of reasons for this. first of all, the extremely low inflation rate is due partly to the abrupt drop in global oil and commodity prices in the second half of 2014. this drop could prove temporary, but even if not, it is beyond the scope of domestic monetary policy. furthermore, it can be assumed that real wages will rise if the decline in oil prices proves long - lived, but the impact | the outstanding foreign - denominated loans taken to finance them β by 65 b. kr. as of the end of february. but we mustn β t rest on our laurels ; we need sizeable reserves as we prepare to lift the capital controls. i mentioned uncertainty surrounding the estimation of potential fx outflows once the controls are lifted. but one thing is certain : if the failed banks β estates were given a green light tomorrow and could convert all of their kronur to foreign currency, and the same happened with the offshore overhang, there is no way we could safeguard stability, let alone bolster confidence, except perhaps after a long time has elapsed. the central bank of iceland has designed a model intended to assess the impact of various developments in the balance of payments over a long horizon, including capital account liberalisation measures. when applied to this instance, the model reveals that our entire foreign exchange reserves would be wiped out β and more besides β if they were used to shore up the exchange rate. this would never be done, of course, and therefore the currency would depreciate sharply. it is clear that if residents were free to exit at the same time, they would participate in the run on the currency, and confidence would evaporate quickly, leaving us with a new currency crisis to grapple with. of course, this is an extreme scenario in some respects, as the estates β isk assets, for instance, are not all liquid at this point in time, and a portion of the offshore kronur could be patient capital. but it gives an indication of the kind of problem we are dealing with. therefore, we need other solutions that safeguard stability and prevent additional burdens from being placed on the sovereign or the icelandic people. such solutions do exist, and a large group of experts β foreign consultants ; the task force for capital account liberalisation, which works for the steering committee on the capital controls ; and experts from the central bank and the ministry of finance and economic affairs β has been working hard on developing them in recent months. i would like to take a moment now and thank all of these people for their tireless efforts and excellent work. it would be premature to publicise solutions at today β s meeting. moreover, it is not within my purview to do so on my own. the liberalisation of the capital controls is a collaborative project undertaken by the central bank and the government, which actually means that elected representatives | 1 |
and international trade encouraged investment and supported productivity. technological advancements also lifted global productivity, shrank distances and lowered costs. the entry into the global trade system of vast new labour markets in china and eastern europe pushed down the prices of many traded goods. global supply chains grew rapidly, minimizing costs by linking the global economy through heightened specialization and trade. these supply developments all fostered a period of solid growth, low inflation and low interest rates. but these forces are now shifting. the failure to adequately share the benefits of growth has fuelled populism that is causing countries to turn inward. support for globalization is stalling or even reversing, and productivity growth is trending down. and as the growth in the working - age population slows and businesses find it harder to hire workers, there could be persistent upward pressure on wages. if higher wage costs are not matched by improvements in productivity, the costs of production will increase. almost three years of the pandemic and the invasion of ukraine by russia have also highlighted some of the vulnerabilities of interconnected trade. the pandemic made clear that relying too much on highly specialized supply chains can have downsides. and russia's weaponization of its natural gas supply has underscored the risks of assuming all countries share the same interests in peace and prosperity. rising geopolitical tensions, more broadly, have underscored the fragility of some business relationships. in the future, it seems likely that supply chains will be shorter, more diversified and more resilient. trade will likely narrow to more trusted partners. these changes will increase resilience but at the cost of efficiency. and through this adjustment, production costs could rise, increasing price pressures. over the long term, it seems likely that we won't have the same disinflationary forces that we've had for the past 30 years. these potential developments could make it harder to bring inflation back to the 2 % target and keep it there. but how much harder is very difficult to say. these are fundamental uncertainties we'll need to confront in the years ahead. but by constantly focusing on achieving the 2 % inflation target, our monetary policy framework is well designed to address uncertainty and adapt to new developments. if the inflationary forces going forward are stronger than we expect, we will start to see inflation coming in above our forecasts. and we will adjust our policy settings to achieve the 2 % target. if, | time, other parts of the economy were experiencing excess demand as consumers bought goods to replace the services they couldn't get. but the inflationary impact of excess demand for goods was larger than the disinflationary forces in close - contact services. as a result, our inflation models that focus on the average or aggregate imbalance between demand and supply in the economy had a hard time predicting the rise in inflation. third, supply disruptions are more inflationary when the economy is overheated. for the last 30 years, supply shocks - typically energy - have tended to have a temporary effect on inflation. a run - up in oil prices, for example, would boost inflation for a year or so, but oil prices would typically plateau or reverse, and inflation would come back down all by itself. since it takes more than a year for the full effect of monetary policy to work through the economy, central banks have tended to look through the direct impact of supply disruptions on inflation. that means we don't respond by raising interest rates. this year, the inflation response was different. as i've already mentioned, we were faced with a series of negative supply shocks just as the economy was reopening. and 2 / 5 bis - central bankers'speeches the effects of these supply shocks on prices and inflation was faster and more pronounced than usual. businesses, flush with customers, weren't worried about raising their prices. so they passed on the higher input costs more quickly to final goods prices. and customers, eager to finally buy what they wanted, paid the higher prices. as a result, the impact on inflation of the energy and agricultural price shocks was faster, larger and more widespread than our models suggested. in sum, since we started inflation targeting in the early 1990s, we have not been hit by large negative supply shocks at the same time as our economy was overheating. the lesson from 2022 is that even if long - term inflation expectations are well anchored, when the economy is in excess demand, businesses raise their prices more quickly and by more when their costs increase. all three lessons are linked, and we have taken them to heart. you don't get 8 % inflation because one thing went wrong. our experience in 2022 is that surprises can combine and interact with each other, resulting in outsized effects on inflation. i'd be pleased to talk more about these lessons and how we are adapting in our discussion, but now i want to look | 1 |
_ _ _ _ _ _ _ _ _ _ | with other macroeconomic policies, led to an almost continuous growth of the foreign reserves, which today are at the highest historical level and directly strengthen the exchange rate stability. confirmation of the soundness of the policies implemented by the national bank is a historic step in providing access to european central bank β s foreign exchange liquidity. the key to the successful attainment of the goals of the national bank so far is its strong institutional capacity which has been built for years. only a highly professional and independent institution can successfully deal with the hart times, which are not rare here. the latest example of this is the covid - 19 pandemic, which although a struggle for human health and life, is also a struggle for policymakers to maintain macroeconomic stability and reduce the impact on the economy. therefore, i would like to express my gratitude to all current and former colleagues and collaborators, who with their contribution have contributed to what we are today β a modern central bank that operates in accordance with the latest and highest international standards and best international practices and stands out as a positive example in the central banking community. 1 / 2 bis central bankers'speeches congratulations on the 29th anniversary of the monetary independence! 2 / 2 bis central bankers'speeches | 0 |
nestor a espenilla, jr : strength without agility is mere mass speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the 11th ing - finex chief financial officer ( cfo ) award ceremony, 20 november 2017. * * * for the past eleven years, finex in partnership with the ing bank has conducted a methodical nationwide pursuit for the country β s top chief financial officer ( cfo ). β the agile cfo β β is a change enabler, one that goes beyond tradition, quickly adapts, thrives and succeeds in the ever evolving financial environment. the search has ended. we will have the distinct privilege of the great reveal in a while. it β s quite exciting. nevertheless, as i look around this room, i can see many agile leaders of philippine commerce, banking and finance whose swift and responsive initiatives have contributed to shaping the business environment into the robust and thriving one it is today. finex president benedicta du - baladad, ing - manila branch managing director and country manager hans b. sicat, ms. judith v. lopez, overall chairperson of cfo of the year award committee β¦ former ing - manila branch managing director and country manager consuelo d. garcia, ladies and gentlemen, good afternoon. in the printed format of this message, i placed the following title : β strength without agility is mere mass. β this is a direct quotation from fernando pessoa, portuguese poet, writer, literary critic, translator, publisher and philosopher. the quote stirred me as i thought of our economy β s strength. we enjoy today a robust macroeconomy owing to strategic and comprehensive reforms boldly taken through the years. but while we have touted the economy β s strength, and lauded its resilience, we have not said much about its pro - active agility. ladies and gentlemen, i am pleased to say that our economy is not only strong and buoyant. it is also infused with dynamism and responsiveness. it is not passive. a strong and agile economy the philippines sustained its strong macroeconomic fundamentals. it is one of the fastest growing economies in asia, registering a 6. 9 percent growth on gross domestic product ( gdp ) in the third quarter of 2017. the inflation outlook remains manageable. inflation has averaged 3. 2 percent in the past ten months. | durmus yΔ±lmaz : global challenges and local response β monetary policy in turkey address by mr durmus yΔ±lmaz, governor of the central bank of the republic of turkey, at a congress organised by the turkish economic association and the international economic association, istanbul, 25 june 2008. * * * dear guests, first of all, i would like to welcome you all to turkey. i am delighted to be here to address such a distinguished audience in istanbul. i would like to thank the turkish economic association and the international economic association for organizing this congress. let me start my talk with the words of josiah charles stamp, one of the former governors of the bank of england in 1920s : β it is easy to dodge our responsibilities, but we cannot dodge the consequences of dodging our responsibilities. β this quote will also be the theme of my speech today. distinguished guests, although globalization had started in the second half of 1980 β s, it has not yet reached its peak and we are still witnessing its evolution. as thomas friedman β s once said, globalization is making the world flatter. we witnessed record high growth rates around the world in that period ; although there was also notable variation in the growth performances across countries. it will not be wrong to argue that globalization could be a powerful tool that may contribute to sustained development if it is combined with compatible policies. however, we should also keep in mind that globalization also presents some challenges and thus, it has made the job of policy - makers more difficult. firstly, i would like to underline the concept of financial globalization. thanks to financial liberalization and improvements in information and communication technologies, significant amount of capital has been flowing into developing countries, especially to those that offer high growth potential β helping these countries achieve relatively high growth levels. in the post - war period when globalization was not a popular buzzword, high growth rates were also observed in a number of countries, usually in the south asia. however, these countries had something in common, which was high rates of savings. in countries like turkey, where more than half of the population is 30 years old or younger and where savings rates are comparatively low ; foreign savings, and therefore capital inflows are needed to maintain high levels of growth. in this respect, financial globalization has contributed to the convergence process among countries. financial liberalization has also led to amplification of new and more complex financial products. as a side effect, these financial products have introduced new risks and | 0 |
of 0. 5 % in the previous quarter. the outcome for the second quarter reflected positive contributions from both domestic demand and net exports. the most recent survey indicators point to a broadly similar pace of real gdp growth in the third quarter of the year. overall, we expect the economic recovery to continue, albeit dampened, in particular, by weaker than expected foreign demand. domestic demand should be further supported by our monetary policy measures and their favorable impact on financial conditions, as well as by the progress made with fiscal consolidation and structural reforms. moreover, the decline in oil prices should provide support for households β real disposable income and corporate profitability and, therefore, private consumption and investment. however, the recovery in domestic demand in the euro area continues to be hampered by the necessary balance sheet adjustments in a number of sectors and the sluggish pace of implementation of structural reforms. the risks to the euro area growth outlook remain on the downside, reflecting in particular the heightened uncertainties regarding developments in emerging market economies, which have the potential to further weigh on global growth and foreign demand for euro area exports. increased uncertainty has recently manifested itself in financial market developments, which may have negative repercussions for euro area domestic demand. bis central bankers β speeches according to eurostat, euro area annual hicp inflation was β 0. 1 % in september 2015, down from 0. 1 % in august. compared with the previous month, this mainly reflects a further decline in energy price inflation. on the basis of the information available and current oil futures prices, annual hicp inflation rates will remain very low in the near term. annual hicp inflation is expected to rise at the turn of the year, also on account of base effects associated with the fall in oil prices in late 2014. inflation rates are foreseen to pick up further during 2016 and 2017, supported by the expected economic recovery, the pass - through of past declines in the euro exchange rate and the assumption of somewhat higher oil prices in the years ahead as currently reflected in oil futures markets. however, there are risks stemming from the economic outlook and from financial and commodity market developments which could further slow down the gradual increase in inflation rates towards levels closer to 2 %. these risks are being closely monitored by the governing council. turning to the monetary analysis, recent data confirm solid growth in broad money ( m3 ), notwithstanding a decline in the annual growth rate of m3 to 4. 8 % in august 2015 from 5. 3 % | mario draghi : ecb press conference β introductory statement introductory statement by mr mario draghi, president of the european central bank, and mr victor constancy, vice - president of the european central bank, valletta, 22 october 2015. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. i would like to thank governor benicia for his kind hospitality and express our special gratitude to his staff for the excellent organization of today β s meeting of the governing council. we will now report on the outcome of our meeting. based on our regular economic and monetary analyses, and in line with our forward guidance, the governing council decided to keep the key ecb interest rates unchanged. as regards non - standard monetary policy measures, the asset purchases are proceeding smoothly and continue to have a favorable impact on the cost and availability of credit for firms and households. the governing council has been closely monitoring incoming information since our meeting in early september. while euro area domestic demand remains resilient, concerns over growth prospects in emerging markets and possible repercussions for the economy from developments in financial and commodity markets continue to signal downside risks to the outlook for growth and inflation. most notably, the strength and persistence of the factors that are currently slowing the return of inflation to levels below, but close to, 2 % in the medium term require thorough analysis. in this context, the degree of monetary policy accommodation will need to be re - examined at our december monetary policy meeting, when the new euro system staff macroeconomic projections will be available. the governing council is willing and able to act by using all the instruments available within its mandate if warranted in order to maintain an appropriate degree of monetary accommodation. in particular, the governing council recalls that the asset purchase programmer provides sufficient flexibility in terms of adjusting its size, composition and duration. in the meantime, we will continue to fully implement the monthly asset purchases of β¬60 billion. these purchases are intended to run until the end of september 2016, or beyond, if necessary, and, in any case, until we see a sustained adjustment in the path of inflation that is consistent with our aim of achieving inflation rates below, but close to, 2 % over the medium term. let me now explain our assessment of the available information in greater detail, starting with the economic analysis. euro area real gdp increased by 0. 4 %, quarter on quarter, in the second quarter of 2015, following a rise | 1 |
a comprehensive financial reform agenda, coordinated by the financial stability board ( fsb ), to address the exposed weaknesses, to promote global financial stability, and to enhance financial and economic integration. since then, fsb member countries have made unprecedented progress on these objectives. canada and the united states have signed three major trade liberalization agreements over the past 50 years : the 1965 auto pact, the 1988 canada β u. s. free trade agreement and the 1994 north american free trade agreement, which also included mexico. the banking system did, however, require significant liquidity support because of the severe disruption to global funding markets. m. carney, β exporting in a post - crisis world β ( speech to the greater kitchener - waterloo chamber of commerce, waterloo, ontario, 2 april 2012 ). bis central bankers β speeches i β ll start with a brief overview of important reforms to the global banking system and to shadow banking β which refers to credit intermediation activities outside the traditional banking system β that have made the financial system as a whole safer. 4 then, i β ll zero in on two reform areas that need more work : global banks that are β too big to fail β and over - thecounter ( otc ) derivatives markets. finally, i β ll say a few words about a third policy issue that is critical for supporting financial integration β cross - border payments. reforming the financial system led by the g - 20, the fsb and the international standard - setters are developing and monitoring the implementation of the required regulatory standards. 5 their successful reform efforts have helped rebuild trust in financial integration that was severely damaged by the crisis. a significant accomplishment is the basel iii framework, which has made global banks much stronger and more resilient. the framework, which requires banks to hold more capital and liquidity and imposes a backstop leverage limit, has largely been finalized. 6 although the deadline for full implementation is not until 2019, many jurisdictions, including canada, are well ahead of schedule. 7 as for shadow banking activities, they represented key sources of financial instability during the crisis through faulty subprime mortgage securitization and runs on money market funds and repo markets. the fsb is creating a comprehensive approach to monitor and assess these non - bank credit intermediation activities. regulatory standards have been developed for several of the activities. for example, standards exist for securitization, specifically risk retention and disclosure ; money market funds, including liquidity and | initiatives taken at the federal level and in quebec and british columbia will add to canada β s gdp growth. however, the lowering of projected government spending in ontario is sufficient to more than offset all of these, so that fiscal policy now represents a net downward revision to our growth outlook for 2020, of about 0. 2 percentage points. governing council is of the view that monetary policy needs to maintain a degree of accommodation sufficient to offset these various headwinds until the economic outlook improves. the economy has slowed and some excess capacity has re - emerged, although this excess capacity is not generalized across the entire economy. indeed, the service sector remains very strong and is creating many new jobs, and there continue to be a lot of job vacancies. furthermore, global and canadian financial conditions have eased a good deal since our january report. for example, five - year fixed mortgage rates have declined by more than 60 basis points. all of this suggests that there is good reason to believe that the economy will pick up in the second half of the year. governing council therefore believes that this positive outlook is consistent with the current interest rate setting. in our rate decision, we chose to remove the reference to the need for interest rates to return into a neutral range, which we have revised to 2. 25 β 3. 25 per cent. we had originally added this reference to neutral to remind people what policy normalization could look like. in the current situation, we feel it is important to emphasize that we will continue to evaluate the appropriate degree of monetary policy accommodation as new data arrive. in particular, we are monitoring developments in household spending, oil markets, and global trade policy to gauge the extent to which the factors weighing on growth and the inflation outlook are dissipating. with that, senior deputy governor wilkins and i will be happy to take your questions. 2 / 2 bis central bankers'speeches | 0.5 |
r basant roi : review of the financial sector in mauritius address by mr r basant roi, governor of the bank of mauritius, at the seminar on financial sector assessment programme, pointe aux piments, 8 september 2003. * * * hon. minister of economic development, financial services and corporate affairs mrs ann rennie, deputy mission chief ladies and gentlemen good morning i am pleased to be here in your midst, this morning, for the opening of this seminar on the financial sector assessment programme. over three years ago, on may 26, 2000 the financial stability forum had issued a press release in which it categorised mauritius in the third and last group of countries regarding their perceived degree of supervision and co - operation. the categorisation was carried out on the basis of a survey, including questionnaires that were, according to the press release, forwarded to supervisors the world over. we were not even aware of this survey. yet, mauritius was categorised in the last group. worse, mauritius was never given a hearing before its categorisation in the last group. in spite of all the statements of good intention made in the press release, some damage had already been inflicted to the image of mauritius as a financial services centre. voices against this approach were raised at various international meetings of governors of central banks. subsequently, the imf was urged and, rightly so, by the financial stability forum to take a lead role in the assessment of jurisdictions β adherence to international standards. the imf held a consultative meeting to hear the views of outside experts from onshore and offshore centres and international agencies. this initiative was formally and fully backed by mauritius. the world bank joined in with the imf. the assessment of mauritius by the joint imf / world bank mission has been fair and just. the fsap mission has given the authorities of mauritius a fair hearing. the assessment has been thorough and has been carried out in a manner that should help all of us here to further strengthen the soundness and safety of our financial sector. a careful reading of all the recommendations made in the report does allow us to spotlight certain areas that are really vulnerable to risks. with a financial system like ours that is fully integrated with the world β s financial system we cannot afford to take lightly the vulnerabilities highlighted therein. despite certain disagreements that we have had with the fsap mission β s views, i must say that the quality of the recommendations is very | mohammed iqbal belath : africa and the indo - pacific β the new economic mainspring welcome address by mr mohammed iqbal belath, second deputy governor of the bank of mauritius, at the second meeting of the official monetary and financial institutions forum ( omfif ) in africa, hosted by the bank of mauritius, port louis, 5 november 2012. * * * governors deputy governors members of the management board of omfif members of the advisory board of omfif distinguished guests ladies and gentlemen a very good morning and warm welcome to you all! i feel privileged to deliver this welcome address on the occasion of the 2nd meeting of omfif in africa, which demonstrates the growing importance of the dark continent on the global map. the continent has come a long way from its ruthless, poverty - stricken and unstable political environment. today, africa is looked upon as the continent full of opportunities, the place where we may say the β next big things to unfold β. the hosting of this meeting in mauritius is a premiere for the bank and i will like to salute the vision of governor bheenick to put our bank on the radar of official monetary and financial institutions forum. the 1st meeting in africa, the inaugural one, was held a year ago in pretoria at the south african reserve bank, when the sarb was celebrating its 90th anniversary. the 2nd meeting is being held at the bank of mauritius, which is celebrating its 45th anniversary this year. perfect symmetry? sheer coincidence? i β d rather not venture to know the venue for the 3rd meeting in africa!!! leaving aside the perfect symmetry of these anniversaries, i believe that it is the ideal time to be in africa and to deliberate of the topic of the meeting : africa and the indo - pacific : the new economic mainspring. the us secretary of state, hillary clinton, first coined the term β indo - pacific β officially in october 2010, in honolulu, in a geopolitical sense, to elucidate developments in the asia pacific region. her husband, former president bill clinton, on one of his innumerable trips to africa, declared and i quote β we are living in the most interdependent time in history. the evidence is all around us. wealth and talent now cross borders that are more like nets than walls but so do less positive forces. the financial crisis that started in the united states and swept the globe proved just how deeply our social and economic fates are intertwined β | 0.5 |
news conference berne, 14 december 2017 fritz zurbrugg introductory remarks by fritz zurbrugg in my remarks today, i would like to address some of the developments currently taking place in the field of financial stability. i shall look at the big banks first before turning to the domestically focused banks. i will conclude with a few words on the new banknote series. big banks as thomas jordan has already noted, the international economic environment has continued to improve since the last news conference in june. conditions on the financial markets have remained stable. premia for bank credit default swaps, for instance, have barely changed since june. premia have thus settled at lower levels again following the turbulence in 2016. against this positive backdrop, both of switzerland β s big banks remain on track to meet the requirements of the β too big to fail β regulations with respect to resilience. this first pillar of the regulations covers requirements pertaining to the going - concern loss - absorbing capacity of systemically important banks. both credit suisse and ubs already comply fully with the final 1, risk - weighted requirements. however, further improvement is needed with respect to the leverage ratio. both of the big banks have also made progress on the second pillar of the regulations, β resolution β, which covers the orderly restructuring and wind - down of a bank that can no longer function as a going concern and is thus deemed to have become a gone concern. with a view to managing such a crisis scenario, credit suisse as well as ubs have increased their gone - concern loss - absorbing capacity by issuing further bail - in instruments, which can be converted into equity in the event of impending insolvency. as we explained in our financial stability report published in june, since the β too big to fail β regulations came into force, 1 final requirements refer to the requirements that will apply after expiry of all transitional provisions, and in particular to the qualitative requirements for going - concern capital. page 1 / 3 berne, 14 december 2017 fritz zurbrugg news conference credit suisse and ubs have also taken important organisational steps to improve their resolvability. despite these positive developments, the two big banks still need to make further progress if they are to fully comply with the second - pillar requirements. this applies both to their gone - concern loss - absorbing capacity and their resolution planning. full compliance with all of the β too big to fail β requirements will further strengthen the big banks | β going and gone - concern loss - absorbing capacity as well as improve their resolvability in a crisis. both of these sets of requirements must be addressed if switzerland β s β too big to fail β problem is to be solved. domestically focused banks i would now like to turn to the domestically focused banks. these institutions β biggest risks continue to stem from the mortgage and real estate markets. i will make three points in this regard. first, imbalances on the mortgage and real estate markets persist. although mortgage growth has remained relatively low in 2017 β as in the previous year β developments on the real estate market show a somewhat different picture : price growth in the residential property segment 2 had been falling since 2013, but recently transaction prices have started to pick up again. moreover, with the exception of a few quarters ( including the third quarter of 2017 ), prices in the residential investment property segment have risen markedly since 2013. as prices over this period have increased more strongly than fundamentals such as rents, risks have accumulated in this segment ; it is thus especially vulnerable to a substantial correction in the medium term. this situation is compounded by brisk construction activity in the rental apartments segment, which could lead to oversupply. signs of this can already be seen in rising vacancy rates. second, the risk appetite of domestically focused banks remains high. this is particularly evident from the affordability risk data. the share of new mortgages with high loan - to - income ratios has risen significantly in recent years and has reached a historical high. the interest rate risk of domestically focused banks likewise remains high, while their interest margin continued to decline in the first half of 2017. as long as there is pressure on margins, incentives for domestically focused banks to increase risk - taking will remain substantial. third, notwithstanding the risks in the macroeconomic environment and the banks β high risk appetite, snb stress tests continue to suggest that, overall, domestically focused banks β resilience remains adequate. thanks to robust capitalisation, most of these banks would be able to absorb the losses likely to be incurred in adverse scenarios ; given the risks i have outlined, this is welcome. in the future, too, it will be decisive for the stability of the financial system that banks hold sufficient capital to cover the risks on their books β irrespective of ongoing margin pressure. 2 single - family houses and privately - owned apartments. page 2 / 3 berne, 14 december 2017 fritz zurbrugg news conference the | 1 |
- called greenspan ( or any other kind of ) β put β here ; the focus would be not asset prices, but the outlook for spending in the economy and so inflation. this is obviously rather different from a similarly nasty shock producing severe disorder in a banking system that was carrying unduly concentrated exposures of some kind. for a central banker, banks matter because their liabilities are used as money, they are at the centre of the payments system, and they carry an associated asset / liability maturity mismatch. 6 banking system distress is therefore typically characterised by a liquidity run. faced with that, a central bank β s instrument β used, where necessary, in collaboration with its regulatory and finance ministry partners β is to supply the system chaplin g, emblow a and michael i ( 2000 ), β banking system liquidity : developments and issues β, bank of england financial stability review, december 2000, pp 93 - 112. with an increased quantity of its money, without necessarily changing its price. given the need to take collateral to protect against risk, and to charge a premium to create the right incentives, establishing a routine framework for such operations without creating moral hazard remains β work in progress β for the international central banking community. 7 so it would seem that there is a good deal to welcome in the greater dispersion of risk made possible by modern instruments, markets and institutions. but there are most certainly qualifications to such an apparently alluring conclusion. b ) the banking system β s residual risk, stress testing and transparency the banking system retains risk in a number of ways, both pre - and post - risk transfer, and its aggregate balance sheet has in fact expanded considerably. 8 pre - risk transfer, banks and dealers hold, or finance, warehouses of portfolios of loans to households and corporates on their way to securitisation, 9 meaning that the banking system can still find itself β holding the parcel β when the music stops. post - risk transfer, some risk is contingently retained by virtue of banks and dealers financing the acquisition of risk by hedge funds and others. this entails counterparty credit risk and, taking account of collateral, is akin to writing out - of - the - money put options. so, for me, the question is not so much β where is the risk? β, as β in what circumstances could risk flow back to the banking system? β ; and β do banks have enough capital and liquidity to absorb such flows without | banks, as monetary institutions. but as i noted earlier, non - banks β including money funds and finance companies β turned to central banks for liquidity during the 2007 β 08 crisis. the prevalence of non - bank banks as they used to be called, or shadow banks as they are now known, was a deep faultline in the international financial system. things cannot be left where they are. the status quo was deeply unsatisfactory, and if we do nothing it will be made worse by the re - regulation of the banking system, which creates powerful incentives to reinvent the economic substance of banking beyond the perimeter of prudential regulation and supervision. the authorities internationally, led by the fsb and with the active involvement of adair turner and myself, are debating how to tackle the phenomenon of β shadow banking β. a preliminary, but i hope substantive report will go to g20 ministers and governors in october. and in the uk, we will be helped by the fpc β s responsibility to advise the government on when the perimeter of regulation needs to be altered. deposit insurance and resolution the reforms of deposit insurance are hardly less important. in the uk, there is a push towards the deposit insurer, the financial services compensation scheme, being able to pay out within 7 days. the bank attaches very high priority to this indeed. there is still work to be done. it will entail costs for banks. the weaker standard of 20 days being contemplated by the eu is a serious mistake. that will eventually become apparent when, somewhere in the eu, depositors in a failed bank protest that they are suffering severe hardship from being cut off from their current account for weeks. those are circumstances in which there would be calls for the state to step in to prevent the closure of ailing banks. this highlights the biggest hole in the old social contract β the absence of a regime for resolving distressed banks in a way that avoids both taxpayer support and systemic disorder. how to go about doing this was the principal subject of my speech here two years ago. much has happened since. next month, the g20 financial stability board will publish a consultative document on the resolution of systemically important financial institutions ( sifis ). it will cover resolution instruments ; cross - border co - operation ; and steps needed to reduce obstacles to resolution inherent in the organisation and practices of firms themselves. i will confine myself today to just a few words on the third of those planks. however good the bis | 0.5 |
in the demand for goods and services in the economy. and this requires completely different measures than those of monetary policy. these measures must influence the functioning of the labour market and create a beneficial environment for new businesses and corporate sector growth. of course, this does not prevent the riksbank from contributing as far as possible to other economic policy targets being attained ; this is quite in line with the preparatory works to the sveriges riksbank act. the condition for this is that our own target of a low and stable inflation rate is not jeopardised. the fact is that developments in recent years show that the task of ensuring inflation remains in line with our target is hard enough. there have been repeated structural changes that have been difficult to parry completely with interest rate adjustments. it is rarely possible to forecast structural changes well in advance, much less to estimate their quantitative effects on inflation. they can therefore often lead to inflation deviating from the target level. as i mentioned earlier, over the past ten years there have been a number of changes of a structural nature that have almost all contributed to holding back inflation. 3 / 7 when the riksbank uses changes in its key rate to affect inflation, this is mainly by way of influencing aggregate demand. to put it simply, we usually put the brakes on when economic activity is rising and we accelerate when it is falling. inflation targeting should thereby often be able to contribute to smoothing the business cycle. it is also possible that it can reduce fluctuations in unemployment. however, it is not reasonable to believe that the fluctuations in economic activity can be eliminated entirely. it is therefore seriously misleading to make the riksbank responsible for the difference between actual unemployment and what could potentially have been attained if it had been possible to abolish fluctuations in economic activity. what we can hope for is a slightly more stable development, which we appear to have attained over the past ten years, although it is too early to draw any completely certain conclusions. the policy is flexible another question which arises in the discussion now and then is how mechanical or how flexible the policy should be and how it should then be assessed. the riksbank currently conducts what is known as flexible inflation targeting. we are definitely not what my british colleague mervyn king would call β inflation nutters β. the focus lies not merely on stabilising inflation under any circumstances ; as long as there is fundamental confidence in the policy, that we will have low inflation in line with our target, we also | conforming to normal financial practice. therefore, excessive rates will invite supervisory scrutiny. during our onsite examinations last year, we identified instances of unfair practices in charging of interest by many entities. these include charging interest from the date of loan sanction or agreement execution rather than from actual disbursement of the loan, charging interest from the date of the cheque for loans disbursed through cheques, despite handing over the cheque to customers much later, and levying interest for the entire month instead of the period for which the loan was actually outstanding. additionally, some nbfcs collected advance instalments but calculated interest based on the full loan amount. wherever such practices came to light, rbi has initiated action including directing these supervised entities to refund such excess charges. however, as heads of assurance functions, it is incumbent upon each of you to serve as custodians of conscience within your respective organizations and ensure that there are no such unfair practices prevalent in your entities which may be detrimental to your customers. importance of meaningful assurance assurance endeavours, especially internal audit and compliance should transcend mere box - ticking exercises and delve into addressing root causes of the issue. by going beyond surface - level checks, assurance functions can uncover the fundamental factors contributing to problems, allowing for more effective and sustainable solutions to be implemented. this proactive approach not only helps mitigate risks but also enhances organizational resilience and fosters a culture of continuous improvement. we have also observed that there are some misguided or intelligent interpretation in the market to circumvent regulations, which poses a significant threat to the integrity of the financial system. when individuals or regulated entities start interpreting regulations to their advantage or for their gain, it undermines the effectiveness of regulatory frameworks and compromises the stability and fairness of the market. such practices erode trust and confidence in the financial sector, potentially exposing consumers, investors and the broader economy to risks and vulnerabilities. rbi's supervision will review the substance of such transactions over their legal form. should we encounter instances of such circumvention of regulations, we will not hesitate to initiate appropriate supervisory action, as has been demonstrated in some of our recent actions. conclusion 4 / 5 bis - central bankers'speeches before i conclude, i would like to highlight the importance of assurance functionaries keeping themselves abreast of all the latest developments. in the rapidly evolving landscape of finance and regulation, new challenges, risks | 0 |
financial education programs or through corrective measures against financial institutions, has been and will remain a priority of the cbk in the coming years. * * * as far as internal developments are concerned, cbk has also continued during 2022 with the advancement and development of its professional capacities in all areas of its operation. despite the created situation and not very favorable conditions in the international markets, the central bank of the republic of kosovo has managed to maintain its financial stability and good performance of the institution, generating a positive financial result. cbk remains committed to continue its activity in the service of the stability and development of the country's economy, creating the conditions for the development of a stable financial infrastructure, in line with contemporary developments in this field, including the development of new segments of the financial system such as the capital market, which requires extensive interinstitutional cooperation. * * * finally, allow me, in my personal name and on behalf of the central bank of the republic of kosovo, to express my sincere thanks to the valuable staff of the central bank of kosovo and to thank them for their work and dedication in carrying out their work duties during this period. thank you and stay healthy! 5 / 5 bis - central bankers'speeches | the deficit in 2014 came about as a result of the greater adjustment made at the central and local government levels, since most of the regional governments exceeded the targets set. the budgetary improvement was also the consequence of a similar - sized contribution by revenue and public spending ( once the impact of the financial assistance to the banking system is stripped out of spending ). the tax take progressively picked up during the year, in step with the cyclical improvement and the change in the composition of gdp. in turn, the budgetary consolidation measures and the cyclical improvement in the economy have brought about a decline in the public spending / gdp ratio, largely owing to the improvement in spending once interest on debt is discounted. interest payments as a proportion of gdp held at a similar level to 2013, despite the significant decline in the treasury β s financing costs, owing to the increase in public debt. the public debt / gdp ratio rose in 2014 to 97. 7 %, thereby meeting forecasts. the latest updated stability programme ( which confirms the deficit targets to 2017 ) presages a continuing increase in debt this year to 98. 9 % of gdp, with a reduction commencing in 2016, although the better growth now projected for 2015 may improve these projections. bis central bankers β speeches private - sector deleveraging secondly, there has been headway in correcting private - sector indebtedness. spanish household debt stood at end - 2014 at 71 % of gdp, 10 pp above the euro area average, when in 2010 we were 20 pp above it ; non - financial corporations β debt stood at the end of last year at 92 % of gdp, 8 pp above the euro area average, when in 2010 the gap was 35 pp. in the coming years, the nominal growth of the economy will make for a readier adjustment and will ease the pressure still exerted by past debts on new financing flows. indeed, new lending was seen to expand in 2014, and this has continued into the opening months of 2015. labour market and competitiveness thirdly, some of the most visible and significant features of the current phase of recovery are the high rate of job creation and the reduction in unemployment by almost half a million people during 2014. the pick - up in employment is partly related to firms β greater capacity to adapt their working conditions to the cyclical and competitive situation. this environment has helped usher in a period of wage moderation and an adjustment of relative costs relative to the euro area as a whole, which largely | 0 |
requires the simplification of the financial and economic system for applying theoretical models. emerging technology allows us to observe details and model the system as it really is, helping assess interactions among firms, individuals, and market participants. technology that deals with unstructured data, including text, images, and audio, has evolved quite rapidly. it could also be applied to broader areas, such as the analysis of market sentiments and expectation formation. paradoxically, the more technology evolves, the more human aspects draw attention. these are closely linked to the actions of individuals and institutions. a deeper understanding of micro behaviors would help us better predict macro - economic and financial outcomes. i hope this g20 high - level seminar has provided you valuable insights to shape the future of the digital age. thank you for your attention. 1 / 2 bis central bankers'speeches 2 / 2 bis central bankers'speeches | events linked with other parts of the world. so, that is still the story, and what has happened is that, indeed, we have seen different movements now in the dollar, appreciating also for reasons. because it β s always, markets are very good at doing that, or market analysts, at rationalising what markets are doing. there are, of course, very good narratives explaining why the dollar has been going down and up and now is going up. so you β re reasonably comfortable with where the euro is at the moment? yes. another risk out there is iran. this is a slightly tricky one, of course, because europe now has to deal with the prospect of sanctions on companies that deal with iran via payments. if it β s involving payments, it β s going to involve the ecb one way or another. presumably the ecb takes a view on this situation? as you know, there have been sanctions already before. they were lifted after the agreement, and we β ve gone through that period without major consequences, particularly for the central banks. i am not really expecting that whatever happens in that sphere will have a very meaningful impact on what we will do. there is a big summit next month, of course, of leaders. it β s an important one because there β s a new european parliament next year. what β s not agreed at this summit next month might not be agreed for quite some time to come, depending on how parliament changes. you put out some pretty bold proposals for the way the monetary union needs to move in a speech today. how confident are you that any of this is really going to happen? that was not the perspective of my speech. as i explained, i talked as a technocratic adviser, saying what technically would be necessary to really move towards a very solid monetary union, working smoothly, and reducing doubts about the solidity of the whole project. i put forward some technical proposals, but i didn β t discuss on purpose the political economy feasibility of what i was saying from a technocratic perspective. it β s for governments to make their choices, of course. i do think that the vested interest of all countries is to move forward, deepening the monetary union, but it β s in the hands of the governments. yes, somebody else β s job, because you β re going to move on. now, eight years in β and just briefly, if you can β if you had to change one thing, if | 0 |
next steps it β s worth briefly reviewing those that were taken to overcome the crisis. the first part of the response β which was both global and european β entailed immediate crisisfighting measures. facing unprecedented turbulence in the financial sector, governments in the g20 signalled their commitment to working together and coordinating their financial and fiscal policies. and they provided substantial state support to stabilise the banking sector and protect deposits. central banks also played a key role in responding to the instability in the system, including by adopting numerous non - standard measures. the ecb started by providing the necessary shortterm liquidity in the form of fixed - rate full allotments, extending longer - term liquidity facilities, and 1 / 7 bis central bankers'speeches expanding its collateral framework to maintain the transmission of monetary policy throughout the euro area. it also launched an asset purchase programme to bring the economy onto a path of inflation leading back to price stability. crucially, the action of the central banks was based on the understanding that, without financial stability, central banks are devoid of the necessary basis to transmit monetary impulses to the real economy. the second crisis - fighting measure was a forceful regulatory response to enhance banks β resilience. this started with a reform of the existing international rules agreed in basel which, in particular, led banks to increase their levels of capital and liquidity. to limit the damage in the event of another crisis and contain the costs for sovereigns, we introduced resolution frameworks including bail - in tools. the banking recovery and resolution directive ( brrd ), in force since 2016, is a crucial regulatory change in europe that ends the culture of bailouts by the public sector, and introduces the culture of bail - ins. banks β capacity to absorb losses has been enhanced, with minimum requirement for own funds and eligible liabilities ( mrel ) being set at eu level, and total loss - absorbing capacity ( tlac ) for large banks being set at global level. these new rules aim to ensure that banks can fail and be resolved in an orderly fashion, and to shift the burden of crisis resolution from taxpayers to private creditors. the crisis also shattered the mistaken belief that an exclusive focus on price stability and the soundness of individual institutions would be sufficient to safeguard financial stability. that β s why we expanded the policy toolkit to include instruments designed to address any buildup of imbalances in certain parts of the system, leading to the birth of macroprudential policy | policies in an economic and monetary union in europe, collection of papers. committee for the study of economic and monetary union, luxembourg, 1989, january, p. 101. financial dominance is not a new concept. an early reference is fraga, a., i. goldfajn, and a. minella ( 2003 ), β inflation targeting in emerging market economies β, banco central do brasil working paper series, 76, section 4. 2. 2. bis central bankers β speeches to fill the gap. monetary policy has limited discretion here as it cannot independently judge the solvency of its counterparties β and remember, we have 2194. at the macro level, if supervisory policies allow banks to grow too rapidly, and then deleverage too slowly, it can also push the central bank into doing more. 6 since monetary transmission becomes impaired, the monetary β impulse β has to be strengthened compensate for the diminished β outpulse β coming out of banks. many of our non - standard measures during the crisis, such as our long - term refinancing operations ( ltros ), have essentially performed this function. moreover, weak micro - supervision and the resulting high level of non - performing loans can also trigger conflicts with other policy areas. for example, when bad banks or asset management companies are set up to deal with legacy asset problems, as happened for example in slovenia and spain, it is essential that the line between the duties of fiscal and monetary authorities is not blurred. central banking is about providing liquidity for solvent institutions, not about providing capital for insolvent ones. thus, the capitalisation of asset management companies in any country should preferably be shouldered by the private sector, and if this is not possible, by the fiscal authority. we have also seen in the euro area, however, that fiscal policies can face their own dominance problem related to financial policies. this stems less from supervision than from inadequate resolution frameworks. the key issue is that if national fiscal policies are expected both to stabilise the business cycle and to bail - out the banking sector, incurred and contingent liabilities become unsustainable in a banking crisis. in the euro area the total commitment to bank rescue packages amounted to 26 % of 2008 gdp. thus, fiscal policy can quickly become overburdened as well. and here again, a too weak financial framework can trigger conflicts in other areas. if fiscal policy is forced to contract when it is needed to smooth the cycle, | 0 |
not decoupled from interest rate developments in other countries. a rise in foreign interest rates normally pulls in the direction of a weaker krone. a weaker krone pushes up prices for imported goods. when inflation is already high, as now, this increases the risk of inflation becoming entrenched, which we must take into consideration when setting the policy rate. if the fx market loses confidence in our commitment to tighten monetary policy when inflation rises, the krone may depreciate further. confidence in the inflation target is a precondition for monetary policy's ability to dampen fluctuations in the economy and to support high employment. 3 / 5 bis - central bankers'speeches in the long term, there is no conflict between the objective of price stability and high and stable employment. ensuring that inflation remains low and stable is the most important contribution monetary policy can make to promoting high employment over time. we cannot keep employment permanently above potential by keeping the policy rate low. the level of employment over time is determined by structural conditions such as labour force composition, the tax and social welfare system and wage formation. in the short term, however, there may be a conflict between how quickly we should aim to bring inflation back to target and the aim of high and stable employment. when we set the policy rate, we weigh these considerations against each other. inflation is now markedly above the target. we could have raised the policy rate higher and faster than we have so far. inflation might then have come down faster. the reason we are taking a while to bring down inflation is that our job is also to contribute to high and stable employment. we do not want to restrain the economy more than that required to tame inflation. chart 8 : prospects for lower price inflation and somewhat higher unemployment the bank's forecasts in march indicate that inflation will move down towards 2 percent over the coming years. if developments turn out as projected, inflation will return to target with little rise in unemployment. there is substantial uncertainty about the outlook. the future policy rate path will depend on economic developments. problems in some us and swiss banks have led to large movements in global financial markets over the spring. the authorities in these two countries have intervened to reduce the risk of contagion to other institutions and markets. the turmoil has had only a limited impact on funding costs for norwegian banks and mortgage finance companies. norwegian banks are profitable, solid, and have ample liquidity. they are well positioned to cope with higher losses and market stress | above 10 %, tier 1 to capital to rwa ratio and capital to total assets ratios should be above 5 %. banks has been scaled down to around 20 percent, from 50 percent in cy00. the net effect of the liberal licensing policy and consolidation is that today pakistan has 39 banks ( down from 46 in 1997 ). excluding the five large banks, of which the largest bank is government owned, there are around 20 banks among the remaining 35 banks, which together hold a mere 9 percent share in the banking system. while large banks are improving their performance and converging on bottom - line performance indicators under increased competition, small banks are gradually losing ground because of the lack of scale and operational efficiency. enhanced competition and the need to substantially grow the lending portfolio to remain commercially viable would eventually pose problems of existence for small banks. recognizing the system risk, sbp has stiffened its licensing policy and regulatory capital requirements and has increased the paid up capital requirements for banks to $ 100 million. 4 positioning themselves accordingly, a few banks have injected fresh capital or amalgamated with other financial institutions to meet these requirements. a wave of mergers and amalgamation has become a business reality in pakistan and over the last five years, 21 financial institutions have been merged / acquired. this has involved a buy - in of foreign banks by the local banks, merger of smaller banks and dfis, merger of investment banks with commercial banks and so on and so forth. in order to eventually have a stronger banking system, pakistan is striving for further consolidation of the banking sector and it is with this in mind that the sbp has approved in principle additional five strategic mergers : 1. standard chartered bank ( scb ) is acquiring union bank which had sometime back acquired bank of america and emirates international bank. following this scb will emerge as a local subsidiary 2. merger of rupali bank pakistan operations with and into arif habib rupali bank 3. merger of atlas investment bank with and into atlas bank limited after its acquisition of dawood bank ltd. 4. merger of habib bank ag zurich pakistan operations with and into metropolitan bank 5. merger of picic and picic commercial bank going forward, sbp β s strategy is to allow new entrants by way of strategic partnerships with licensed banks and to encourage additional mergers and acquisitions. this will help evolve a stronger and robust banking system to meet the challenges of the increasingly complicated financial environment. the competitive environment might also force financial institutions to specialize in | 0 |
peter praet : interview in the telegraaf interview with mr peter praet, member of the executive board of the european central bank, in the telegraaf, conducted by mr martin visser and ms dorinde meuzelaar on 12 december, and published on 20 december 2016. * * * how optimistic or pessimistic are you about the european economy? we see moderate but strengthening growth ; that is better than it was a while ago. the main welcome surprise is the increase in employment, which is boosting people β s disposable income. how can you call this a surprise? we have had to wait for more jobs for so many years. of course, that is a fair point. but that is because of the excessively high growth expectations before the crisis. in europe, there was a wide gap between overly optimistic expectations and reality. as a result, people were spending borrowed money. governments were not overly concerned about the sustainability of their debts. the cause of this expectation gap was a decline in productivity. sectors that had borrowed on the basis of excessive growth expectations ran into difficulties. and it then takes a long time to recover from the crisis? indeed. everyone needs time to bring their balance sheet back into shape. year after year, the ecb and the european commission β s projections were far too optimistic. you always thought that things would be better in the coming year. did that not fuel scepticism? perhaps. in 2011 the european economy found itself in a second recession. we did not see that coming, as most analysts didn β t. italy has even undergone three recessions. that explains why, eight years after the outset of the crisis, citizens are becoming impatient. but there is now a danger that they will be tempted by simplistic solutions. how much progress have governments made in restoring their economies? not enough. some countries have undertaken a number of reforms, greece being a case in point. but it had to make up so much lost ground that it is by no means finished yet. but there are also countries that are showing signs of reform fatigue. which countries are those? you see that everywhere. we will have to see what happens in 2017, but 2016 was not a good year as regards economic reforms. are you referring to italy and france? yes, but not only. some reforms have been made there in respect of pensions and the labour market, but there is still a large backlog | explicit role for financial conditions in monetary policy so far i have discussed the pre - crisis consensus view on monetary policy and asset prices from a general perspective. the events of the past two years have already generated farreaching reflections on this issue. 11 let me mention three avenues. first, the crisis has clearly demonstrated that the economic costs of the unravelling of imbalances can be overwhelming, notwithstanding extraordinary policy action β involving both monetary and fiscal policies. recent empirical research has explored more systematically the role of monetary policy in shaping the duration and depth of recessions. 12 when no distinction is made with regard to the nature of the downturn, expansionary monetary policy is found to be consistently associated with shorter recessions. however, when considering recessions that occur in combination with financial crises, monetary policy does not have a consistent effect on the duration of recessions. these results undermine confidence in one of the arguments buttressing the pre - crisis consensus view, namely that monetary policy can forestall the negative effects of the unravelling of financial imbalances. second, the crisis has highlighted the fact that asset price misalignments can have different consequences depending on the specific market in which they arise. it may well be true that, in periods of booms in asset prices, expected capital gains are so large that interest rate movements of a standard magnitude would not be sufficient to alter investor decisions. the origins of the recent financial crisis, however, are not in equity prices, but rather related to real estate and to the abnormal growth in securitised credit backed by residential or commercial properties. leveraged financial intermediaries have also played an important role in the recent financial crisis. in this context, recent research has highlighted the fact that even small changes in policy rates can have non - negligible implications for financial institutions, which tend to systematically finance illiquid long - term assets through short - term borrowing. even small changes in short - term interest rates can affect their profitability, forcing them to close some leveraged positions and, potentially, to partially correct any financial imbalances fuelled by such leveraged positions. 13 l. christiano, c. ilut, r. motto and m. rostagno ( 2008 ), β monetary policy and stock market boom - bust cycles β, ecb working paper no 955. see, for example, kohn ( 2008 ) and trichet ( 2009 ). see also white ( 2009 ). international monetary fund | 0.5 |
building systems. low - energy materials and processes will be used and observed. and onsite renewable energy will be utilized. in line with the bsp β s efforts toward digital transformation, the new bsp complex will also use technological advancements to promote a digital lifestyle without taking away personal interactions within members of the community. 1 / 2 bis central bankers'speeches we are grateful for the efforts that aidea put together in this master development plan. the amount of hard work and the thought process involved in the development of the plan show how well you understood our intention to capture the messages of strength, stability, sustainability, and resilience. we are glad to welcome you onboard, and like your concept for the main building, this day marks two hands reaching out for the filipino β yours and ours. the bsp which will rise here will not just be a regular government office but embodies bsp β s vision and aspirations for the country. what will rise here is a bsp complex that is greener, better, smarter, and for the people. thank you, everyone. may we all enjoy this wonderful day! # 2 / 2 bis central bankers'speeches | benjamin e diokno : message for the signing ceremony for architecture and engineering design services for the new bangko sentral ng pilipinas ( bsp ) complex speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the signing ceremony for architecture and engineering design services for the new bsp complex, manila, 27 february 2022. * * * good day, everyone. a year ago, we envisioned a new bsp complex to rise here at the new clark city β one that will become a global benchmark for a smart, green, and modern facility that promotes environmental sustainability and efficiency. to transform that vision into a master development plan, the bsp searched for the best architectural and engineering design which will bring our vision into fruition. the architectural and engineering design will cover the development of 21. 32 hectares of land for the construction of a new bsp office building, bsp data centers, command centers, museum, academic buildings, sports complex, and commercial stalls in the non - restricted and semirestricted zones of the new bsp complex. the design will incorporate a water feature and several greeneries that will allow a comfortable, relaxing, and healthy atmosphere for the employees and visitors of the bsp β one that is available for the entire community. the design will welcome people with open spaces that have extensive and robust security to safeguard the bsp β s currency production, data center, and it systems. today, i am pleased to inform you that after undergoing very stringent procurement processes, we have found the design we were looking for. the conceptual design which aidea, ( pronounced like β idea β ) presented best represents our vision of a smart, green, and modern bsp. the development plan embodies inclusivity, reflective of the bsp β s drive for financial inclusion. with easily accessible, and pedestrian - and bicycle - friendly circulation paths, we are constructing a new bsp complex that is β for the people. β furthermore, a museum and a sports complex will help nurture this inclusive environment. the bsp recognizes the impact of climate change in the country β s financial system. thus, we are integrating sustainability principles in all ways possible, especially in this infrastructure. this design resonates well with our sustainability agenda. it incorporates sustainable and green design elements and introduces multi - dimensions of sustainability, wellness strategies, and technologies. there will be smart | 1 |
income from labor, as a result of an increase in employment and in wages. there was an increase in home prices and in the value of financial assets. outstanding consumer credit ( nonhousing credit to households ) increased by 25 percent over the past three years, as interest rates declined. together with the lower prices on imported consumer goods, against the background of the appreciation of the shekel in recent years, which led to a rapid increase in the import of consumer goods, these all supported the rapid increase in consumption. is the growth in private consumption a phenomenon that is unique to the israeli economy? apparently not. before the global economic crisis, global growth was relatively balanced, in that it was led not only by private consumption, but also by other uses, chiefly investment. in the years after the exit from the β pit β of the crisis, since 2012, in most countries growth has been led by private consumption, while investment has been stagnating. it is worth noting that the first quarter of 2017 looks to be different. in most economies, including israel, the figures for the first quarter are unusual in the sense that investment was again a significant factor in contributing to growth. however, it is obviously too soon to determine that this quarter indicates a change in trend or a turnaround. of course, there are positive aspects to the fact that private consumption increased relatively rapidly. beyond the fact that it has led to an increase in the standard of living in the short term, the increase in private consumption also covered for the more moderate growth of exports and investments, which was at least partially a result of exogenous factors. with the help of 2 / 4 bis central bankers'speeches macroeconomic policy, the increase in private consumption thus contributed to smoothing the business cycle. it enabled the economy to continue growing and to lead to a clear improvement in labor market data as i outlined earlier. however, the fact that growth was led by private consumption also comes with risks. those risks mainly have to do with the question of whether such growth is sustainable, or whether it comes with a risk of a sharp turnaround. the answer to that question has to do with the sources upon which the economic growth rests. as long as growth relies to a greater extent on increased consumer credit, a sharp increase in the future debt servicing burden may put the ability to continue consuming in the future at risk. as long as the increase relies more on an increase in asset prices β the β wealth effect β β and as long | as this turns out to be temporary, the turnaround in prices may lead to a turnaround in private consumption as well, and therefore in activity. a study conducted by arnon barak of the bank of israel research department, which was published this week, shows that in recent years, the main factor leading the increase in private consumption ( according to a long - term comparison estimated in the study ) is the increase in income from labor. the increase in financial asset prices and in home prices made less of a contribution than income from labor. household debt figures show that despite the increase in outstanding mortgages and consumer debt, the debt to gdp ratio and the debt to disposable income ratio increased only moderately. at the macro level, therefore, the risk is moderate. however, the rapid increase of consumer credit in recent years requires closer monitoring on the part of regulators, extra caution on the part of the public and credit providers, and an informed examination of repayment capabilities when providing or taking out credit. the interim conclusion, therefore, is that given the relatively weak state of the global economy, the growth of private consumption contributed to maintaining a strong growth rate and a robust labor market. the fact that most of the increase in consumption relies on an increase in income from labor makes it more stable, but we must be particularly attentive to the part of the increase that is supported by increased credit and asset prices. so if the economy is growing solidly, the labor market is strong, and the engine of growth is private consumption, is there something that needs to concern us? the question is whether growth that relies mainly on private consumption in a small and open economy can persist and be strong enough to reduce the gap in the standard of living relative to the other advanced economies. in this context, it is important to remember a number of facts in relation to the two main uses that have been weak in recent years : investment in the primary industries contributes not only to activity in the short term, but also to future production capacity, and investment in machinery and equipment means adopting the technologies inherent in that equipment, meaning that investment contributes to future growth by increasing production capacity and through its contribution to an increase in productivity. exports make it possible for a small and open economy to exploit its relative advantages and the economy of scale. export industries in general, and also in israel, are therefore characterized by relatively high productivity. how have investments and exports developed in recent years? investment as a share of gdp in israel is low | 1 |
financial obligations ratio incorporates other recurring expenses, such as rents, property taxes, and payments associated with homeowners β insurance and auto leases, that might subtract from the uncommitted income available to households. the federal reserve also calculates separate aggregate financial obligations ratios for homeowners and renters. * * * both the debt - service ratio and the financial obligations ratio rose over the 1990s, but that upward trend has not continued in this decade. the debt - service ratio has been hovering close to 13 percent for three years, whereas the financial obligations ratio, after peaking above 18 - 1 / 2 percent in 2002, has moved down to near 18 percent. the recent stability of the aggregate debt - service and financial obligations ratios reflects largely the evolution of the financial situations of homeowners, who owe more than nine - tenths of all household debt. despite average annual mortgage debt growth in excess of 12 percent over the past two years, the financial obligations of homeowners have exhibited little change as a share of their income because mortgage rates have remained at historically low levels. the enormous wave of mortgage refinancing, which ended only in the fall of 2003, allowed homeowners both to take advantage of lower rates to reduce their monthly payments and, in many cases, to extract some of the built - up equity in their homes. in the aggregate, the cash flows associated with these two effects seem to have roughly offset each other, leaving the financial obligations ratio little changed. indeed, the surge in cash - out mortgage refinancings likely improved rather than worsened the financial condition of the average homeowner. some of the equity extracted through mortgage refinancing was used to pay down more - expensive, non - tax - deductible consumer debt or to make purchases that would otherwise have been financed by more - expensive and less tax - favored credit. * * * by our calculation, both homeowners and renters have seen an increase in the share of income used to cover credit card payments over the past decade. the federal reserve β s survey of consumer finances suggests that renters who have recently purchased homes tend to carry higher levels of nonmortgage debt and, in particular, credit card debt. moreover, credit card debt ratios have been rising among all households because of the use of credit cards for new purposes. the convenience of credit cards has caused homeowners to shift the way they pay for various expenditures to credit card debt. in | as freedom ( oxford, england : oxford university press ). for example, see rafael di tella, robert j. macculloch, and andrew j. oswald ( 2001 ), β preferences over inflation and unemployment : evidence from surveys of happiness, β american economic review, vol. 91 ( march ), pp. 335 β 41 ; and justin wolfers ( 2003 ), β is business cycle volatility costly? evidence from surveys of subjective well - being, β international finance, vol. 6 ( spring ), pp. 1 β 26. high percentage. 4 perhaps people don β t want to admit to survey - takers that they are unhappy, but the explanation preferred by most researchers is that human beings are intrinsically very adaptable and are able to find satisfaction in their lives even in very difficult circumstances. another area of this research bears directly on what i said earlier about the relationship between income and happiness. some years ago the economist richard easterlin showed that, just as would be expected, wealthier people in any given country are more likely to tell a survey - taker that they are happy with their lives than are poorer people in the same country. however, easterlin also found two other things that don β t fit so well with the economic perspective. first, he found that as countries get richer, beyond the level where basic needs such as food and shelter are met, people don β t report being any happier. for example, although today most americans surveyed will tell you they are happy with their lives, the fraction of those who say that they are happy is not any higher than it was 40 years ago, when average incomes in the united states were considerably lower and few could even imagine developments like mobile phones or the internet. second, he found that β again, once you get above a basic sustenance level β on average, people in rich countries don β t report being all that much happier than people in lower - income countries. the finding that people in rich countries don β t report much greater happiness than those in lower - income countries β even though, in any given country, the rich say they are happier than the poor do β is called the easterlin paradox, after its discoverer. 5 now, research in social science is hardly ever the final word, and a large body of more recent research has contested easterlin β s results, finding that people in rich countries may, on average, be happier or more satisfied after all. but this research | 0.5 |
maintaining a capacity to trace and remedy faults. the ultimate purpose of the riksbank β s role as overseer of financial stability is to prevent both conventional and financial crises in the financial system. in concrete terms, the work entails following developments in the financial sector in the short term, primarily in the major banks, and working with structural changes, crisis management and regulation. an important part of the riksbank β s work in this field concerns cooperation with other authorities and companies in the financial sector. the importance of cooperation between authorities and private agents there is considerable common interest in creating resilience in the financial sector, which is based on the agents β dependence on one another. the entire system is dependent on the general public having confidence in the payment system as a whole. cooperation between the agents in the financial markets is necessary to find joint solutions and to be able to benefit from economies of scale. moreover, it is important to ensure joint basic conditions, such as access to electricity, telecommunications, fuel and water. the riksbank has actively conducted discussions in various contexts for some years now to disseminate information on how the payment system functions and how individual agents β attitudes to business continuity and crisis recovery planning affect the system as a whole. these discussions have mainly been conducted in three contexts. one of them is the cooperation for economic security ( soes ), which is called together by the swedish emergency management agency and where the participants include the riksbank, finansinspektionen ( the swedish financial supervisory authority ), the swedish social insurance administration and the national labour market board. another is the financial sector β s private - public sector cooperation body ( fspos ) that is called together by finansinspektionen and consists of representatives of the riksbank, finansinspektionen, the swedish bankers β association, independent savings banks, securities companies and insurance companies. the third discussion forum i would like to mention is the reference group for the payment system called together by the riksbank and consisting of representatives from vpc ab, bankgirocentralen, stockholm stock exchange, the major banks and the swedish bankers β association. part of the work in these working groups has entailed charting the flows and the infrastructure of the payment system. the charting process began as an internal project at the riksbank, with a general review of the payment system β s basic conditions, agents and services. this has since functioned as a basis | willem f duisenberg : perspectives on eu enlargement speech by dr willem f duisenberg, president of the european central bank, on the occasion of receiving an honorary doctorate from imadec university, vienna, 14 october 2002. * * * dear klaus, ladies and gentlemen, it is a great privilege for me to be awarded an honorary doctorate today by such a distinguished institution, imadec university, in austria. it is also a great pleasure to hear the kind words of my colleague and friend, governor klaus liebscher. when listening to klaus liebscher, who has indeed studied my curriculum vitae in great depth, shakespeare's words came to my mind and i thought for a moment he had come to bury me, although he has actually come to praise me. i am afraid that this is the fate of anybody whose retirement comes within sight. nothing but good should be said of the dead, they say. considering that i am still alive, it is even more gratifying to hear nothing but good things about myself ; perhaps with the exception of my addiction to tobacco - an addiction that klaus and i happen to share. there is one thing i should like to emphasise in the laudation. as klaus liebscher has just said, my career has benefited from a β summe von zufalligkeiten β that i have been lucky enough to encounter throughout my professional life. hard work, clear objectives and a predilection for one's profession are necessary but not always sufficient conditions for success ; being in the right place at the right time is likely to provide momentous opportunities that may contribute to making anyone's career more challenging. however, in my reply to klaus liebscher's laudation, i should like to leave the past at rest and focus on the future, just as klaus has done in the second part of his speech. i should particularly like to make a link between klaus's comments about the importance of stability - oriented macroeconomic policies - to which i fully subscribe - and one of the key challenges the european union is facing, enlargement, most likely involving ten new member countries. the enlargement of the european union is a subject that has received much interest in this country in particular, given its proximity to central and eastern europe. indeed, the accession of ten new countries will now place austria in the geographical heart of the european union, although austria has already been at the heart of the european integration | 0 |
##es and ultimate liquidity providers, whatever be the form of the financial market model. the gradual process to introducing structural reforms in the banking sector was a unique experiment undertaken with the key objective of strengthening the banking sector balance sheets and governance frameworks in a non - disruptive manner while managing the given political - economy considerations. the reforms were carefully sequenced in terms of instruments and objectives. thus, prudential norms and supervisory strengthening were introduced early in the reform cycle, followed by interest rate deregulation and gradually lowering of statutory preemptions. the more complex aspects of legal and accounting measures were ushered in subsequently when the basic tenets of the reforms were already in place. more recently, the regulatory framework has also focused on ensuring good governance through " fit and proper " owners, directors and senior managers of the banks. broadly speaking, the evolution of regulatory framework for financial sector entities has been intrinsically derived from the objective of financial stability which has always been an objective for the rbi. a unique feature of the reform of public sector banks, which dominated the indian banking sector, was the process of financial restructuring. banks were recapitalized by the government to meet prudential norms through recapitalization bonds ( no cash payment was made ). the mechanism of hiving off bad loans to a separate government asset management company was not considered appropriate in view of the moral hazard. the overhang of nonperforming loans had to be managed by the banks themselves. the subsequent divestment of equity and offer to private shareholders was undertaken through a public offer and not by sale to strategic investors. consequently, all the public sector banks, which issued shares to private shareholders, have been listed on the exchanges and are subject to the same disclosure and market discipline standards as other listed entities. the cost of recapitalization to gdp has been low relative to experience in other countries. on a cumulative basis it worked out to about one percent of the gdp and the value of the equity rajan, zingales, university of chicago. held by government is much above the amount recapitalized. all these recapitalization bonds have since been converted to marketable securities. the financial system has since expanded significantly across various segments and a number of cross - sector organisational forms combining banks, insurance companies and investment firms have emerged. in respect of certain identified conglomerates based on well defined criteria, there is an inter - regulatory mechanism for focused monitoring and supervision. however, in most | , is audit, it operations, it services outsourcing, cyber fraud, business continuity planning, customer awareness programmes and legal aspects. the guidelines, since issued by the rbi, clearly underlined that implementation of these recommendations needed to be risk based and commensurate bis central bankers β speeches with the nature and scope of activities engaged into by individual banks as well as the level of dependence of the business processes on technology. board level committees in the banks had been mandated to monitor the implementation of these guidelines in their respective banks. while substantial progress has been made in the past few years, i believe that banks still have to travel a lot of distance before the requirements are fully met. given the centrality of technology in the functioning of banks today, this can no longer be treated as mere matter for compliance but has to be viewed as a core business issue. supervisory concerns 9. with computerisation of various activities within a bank, as a regulator and supervisor, we have come to expect much higher capability from banks in generation of relevant management information for decision making purposes. however, one feels that there is a substantial gap between the promise and the delivery. let me highlight a few specific areas. 10. one of the primary areas of concern for the financial world is to ensure that the banking system is not abused by the unscrupulous elements for money laundering purposes. regulations on know your customer / anti - money laundering are robust across jurisdictions. however, we often find banks not having robust systems to comply with the regulations. at the time of on - boarding of the customers, banks are required to assess their customers, their business and expected turnover in their account, source of such transactions etc. in recent times, we have come across several instances of banks having allowed transactions in their customers β accounts without any due consideration to their declared business profiles. the accounts received multiple rtgs / neft inward transactions and several such remittances were sent out of these accounts as well. several accounts were abused to send money abroad in the form of advance import remittances. despite the disproportionate activity in such accounts, the monitoring mechanism of banks fell short of our expectations. i wonder why banks are not able to devise fool proof technology - based solutions to identify such transgressions. as you may be aware, rbi had to impose penalties on 13 banks for non - compliance with extant kyc / aml instructions including failure to categorise their customers in line with their | 0.5 |
svein gjedrem : terms of trade shocks and challenges for stabilisation policy speech by mr svein gjedrem, governor of norges bank ( central bank of norway ), at the symposium in honour of victor d norman, bergen, 7 june 2006. the speech does not contain new assessments of the economic situation or of current interest rate setting. please note that the text below may differ slightly from the actual presentation. the charts in pdf - format can be found on the norges bank β s website. * * * ladies and gentlemen, let me first say that i am glad of the opportunity to speak at this symposium. victor norman has made valuable contributions to our understanding of international economics, both as a researcher and teacher. most economists that have graduated in norway since the early 1980s are familiar with victor β s textbooks. victor has also been a powerful contributor to the public debate for more than a quarter of a century. while international trade and capital flows are key topics in his teaching and research, his involvement in the public debate also include issues like the competitive condition for business and industry, the effective utilization of resources β not least in the public sector β taxation and the tax system, pensions, health care, and many more. substantial improvements in norway β s terms - of - trade looking at economic developments globally and in norway over the last few years, it is reasonable to say that victor β s main fields of interest are more important than ever. trade liberalisation, political changes, technological advances, and a sharp reduction in transaction costs have fuelled a globalisation process that seems to have accelerated over the last 15 - 20 years. as a result, cross - border flows of goods, services and capital are growing at a markedly faster pace than world production. few countries are benefiting as much as norway β and losing as little β in the current environment of freer trade and increased cross - border labour mobility. prices for goods we import are falling in relation to prices for goods we export. norway β s terms - of - trade are improving. the norwegian economy has experienced a strong positive income shock. real national disposable income will increase by 25 - 30 per cent in the period from 2003 to 2006. the impact of the rise in oil and gas prices is particularly strong, but the terms - of - trade gains for the mainland economy have also been high. the situation in norway differs from that of our nordic neighbour countries. sales of swedish and finnish high - tech | they could also be less than $ 50 per barrel. furthermore, even estimating the probability that oil prices will be $ 100 per barrel, or $ 80 per barrel or $ 40 per barrel, is very difficult. this is the essence of uncertainty : it involves risks which cannot objectively be quantified. 2. uncertainty and investment important innovations to the theory of investment decisions were made by economists in the 1980s. researchers such as ben bernanke, robert pindyck, dani rodrik and ricardo caballero demonstrated that decisions by private sector investors to undertake irreversible investments β that is investments with sunk costs β are very sensitive to risk and uncertainty about future prices, costs and other variables which affect the financial viability of the investment. faced with uncertainty about such variables, investors have incentives to delay their irreversible investments in order to wait for more information which will reduce that uncertainty. this is known as the option value of waiting. the greater is the risk and uncertainty about the future path of variables which affect the viability of an investment, the higher is the option value of waiting and the larger are the incentives facing the investors to delay their investment. bis central bankers β speeches what does this mean for uganda? uncertainty has implications for investment in both the oil industry and the rest of the economy. let me start with the oil industry. most of the capital investments in the oil industry are irreversible, especially those involving large scale infrastructure such as pipelines, so the option value of waiting will be a factor influencing investment decisions in the industry. given the uncertainty about long term oil prices, the probability that future oil prices will be too low to enable investments in the oil industry in uganda to be commercially viable over the lifetime of the projects is not zero. you may reasonably take the view that the probability that oil prices will be too low to ensure the viability of investments is small, but it cannot be dismissed entirely. investors in the oil industry face a tangible risk that global oil prices over the long term will render their investments unviable. that risk is higher today than it was prior to the fall in global oil prices in mid 2014. as a consequence, investors in the oil industry face incentives to delay or slow down their investments as they wait to see how global oil prices might evolve. that does not mean that oil companies will not invest in uganda β s oil industry, but it does mean that they will be more cautious about committing resources to irrevers | 0 |
for your attention. 1 daly, k., ( 2016 ), β a secular increase in the equity risk premium β, international finance 19 : 2, pp. 179 β 200. 2 caballero, r. and a. simsek, ( 2017 ), β a risk - centric model of demand recessions and macroprudential policy β, nber working paper no. 23614. 3 bernanke, b., ( 2005 ), β the global savings glut and the us current account deficit β, sandridge lecture, virginia association of economics, richmond, virginia, federal reserve board. 4 caballero, r. and e. farhi, ( 2014 ), β the safety trap β, nber working paper no 19927. 5 see β macroprudential measures in countries subject to ecb banking supervision and notified to the ecb β, ecb. 6 belgium, finland and luxembourg. 7 cyprus, estonia, finland, ireland, latvia, lithuania, the netherlands, slovenia and slovakia. 8 see β ecb contribution to the european commission β s consultation on the review of the eu macroprudential policy framework β, ecb. 9 see β policy recommendations to address structural vulnerabilities from asset management activities β, fsb, 12 january 2017. 10 see van der veer, k., a. levels, c. lambert, l. molestina vivar, c. weistroffer, r. chaudron and r. de sousa van stralen, ( 2017 ), β developing macroprudential policy for alternative investment funds, towards a framework for macroprudential leverage limits in europe : an application for the netherlands β ; ecb and dnb occasional paper, forthcoming october 2017. 11 see β margins and haircuts as a macroprudential tool β, remarks by vitor constancio, vice - president of the ecb, at the esrb international conference on the macroprudential use of margins and haircuts, frankfurt am main, 6 june 2016. 20 / 20 bis central bankers'speeches | euro area. the eonia is expected to go above zero only in 2019 and reach 2 % in ten years - time. on the other hand, market expectations of ten years german and spanish sovereign bonds yields five years from now are respectively 1. 5 and 3. 3 and only move to 1. 76 and 3. 9 when assessed ten years from now ( figure 5, rhs ). indeed, markets expect 10 year bond rates to remain much lower than in the past for a long period of time. 6 / 20 bis central bankers'speeches yield and spreads of euro area countries β sovereign debt have remained stable or even dropped with no signs of turbulence ( figure 6 ). while these developments are supported by the ecb β s expansionary monetary policy, they also 7 / 20 bis central bankers'speeches result from the deep adjustment undergone by the countries that were under stress during the crisis. the change in policies and the structural reforms implemented contributed to a notable reduction both in their external and fiscal imbalances. this has enhanced the overall resilience of the euro area against possible economic and financial shocks. thanks to significant fiscal consolidation efforts, fiscal deficits across euro area countries have been reduced ( figure 7 ). the european commission expects deficits below 3 % of gdp and positive primary surpluses in almost all euro area countries in 2018. the increased robustness of the euro area economy is also reflected in the gradual unwinding of the large current account deficits accumulated by several countries before the crisis. practically all those countries are now showing a surplus and the adjustment was mostly of a structural nature ( see the blue bars, figure 8, lhs ). this turnaround was achieved because the initial dramatic increases in the real exchange rates have largely been corrected ( see figure 8, rhs ). in most former programme countries relative unit labour costs are now below their respective level in 1999. all these positive adjustments have certainly contributed to underpin the evolution of sovereign bonds. 8 / 20 bis central bankers'speeches likewise, corporate bond yields have continued to decline in the euro area ( figure 9 lhs, figure 10 lhs for high yielders ). spreads for the debt of both euro area banks and non - financial firms relative to risk - free benchmarks have decreased significantly since the beginning of the year. similarly to the u. s., this has reflected exceptionally low bond term premia ( figure 9, rhs ). compressed or even negative term premia may however point to potential | 1 |
time, it is of the utmost importance that substantial and far - reaching structural reforms be implemented urgently in the euro area in order to strengthen its growth potential, competitiveness and flexibility. in particular, countries which have high fiscal and external deficits or which are suffering from a loss of competitiveness should embark on comprehensive economic reforms. in the case of product markets, policies that enhance competition and innovation should, in particular, be further pursued to speed up restructuring and to bring about improvements in productivity. regarding the labour market, the priority must be to enhance wage flexibility and incentives to work, and to remove labour market rigidities. the governing council, in line with the ecb β s opinion of 17 february 2011 on the six legislative proposals on economic governance, urges the ecofin council, the european parliament and the european commission to agree, in the context of their β trialogue β, on more stringent requirements, more automaticity in the procedures and a clearer focus on the most vulnerable countries with losses in competitiveness. finally, the governing council welcomes the economic and financial adjustment programme which was agreed by the portuguese government following the successful conclusion of the negotiations with the european commission, in liaison with the ecb, and the international monetary fund. the programme contains the necessary elements to bring about a sustainable stabilisation of the portuguese economy. it addresses in a decisive manner the economic and financial causes underlying current market concerns and will thereby contribute to restoring confidence and safeguarding financial stability in the euro area. the governing council welcomes the commitment of the portuguese public authorities to take all the necessary measures to achieve the objectives of the programme. it considers very important the broad political support for the adjustment programme, which enhances the overall credibility of the programme. we are now at your disposal for questions. bis central bankers β speeches | of increasing demand. to address this challenge, where necessary, it is essential for banks to retain earnings, to turn to the market to strengthen further their capital bases or to take full advantage of government support measures for recapitalisation. in particular, banks that currently have limited access to market financing urgently need to increase their capital and their efficiency. to sum up, based on its regular economic and monetary analyses, the governing council decided to keep the key ecb interest rates unchanged following the 25 - basis point increase bis central bankers β speeches on 7 april 2011. the information that has become available since then confirms our assessment that an adjustment of the very accommodative monetary policy stance was warranted. we continue to see upward pressure on overall inflation, mainly owing to energy and commodity prices. a cross - check with the signals coming from our monetary analysis indicates that, while the underlying pace of monetary expansion is still moderate, monetary liquidity remains ample and may facilitate the accommodation of price pressures. furthermore, recent economic data confirm the positive underlying momentum of economic activity in the euro area, with uncertainty continuing to be elevated. all in all, it is essential that recent price developments do not give rise to broad - based inflationary pressures. inflation expectations in the euro area must remain firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. such anchoring is a prerequisite for monetary policy to make an ongoing contribution towards supporting economic growth and job creation in the euro area. with interest rates across the entire maturity spectrum remaining low and the monetary policy stance still accommodative, we will continue to monitor very closely all developments with respect to upside risks to price stability. maintaining price stability over the medium term is our guiding principle, which we apply when assessing new information, forming our judgments and deciding on any further adjustment of the accommodative stance of monetary policy. turning to fiscal policies, current information points to uneven developments in countries β adherence to the agreed fiscal consolidation plans. there is a risk that, in some countries, fiscal balances may fall behind the targets agreed by the ecofin council for the necessary and timely correction of excessive deficits. it is essential that all governments meet the fiscal balance targets for 2011 that they have announced. where necessary, additional corrective measures must be implemented swiftly to ensure progress in achieving fiscal sustainability. the implementation of credible policies is crucial in view of ongoing financial market pressures. at the same | 1 |
##bearance not become institutionalized, but be tied directly to actions by both bankers and supervisors to address underlying problems. β’ governments are not good long - term asset managers. prolonged government holding of impaired assets is not likely to enhance their value, nor aid in the restoration of market liquidity. β’ governments are not good commercial bankers. delayed privatization of nationalized banks always means higher future costs, and usually inhibits fundamental reform. β’ government - directed lending means future fiscal losses. similarly, efforts to stimulate credit growth by nonmarket forces in the context of a banking crisis at best buy additional time, and usually dig a deeper hole. β’ foreign investment in domestic financial sectors can yield important benefits. foreign direct investment in the banking sector can provide much - needed capital resources, technology and knowledge transfer, and a more diversified capital and funding base in the event of future economic instability. β’ financial sectors are only as healthy as their borrowers. without corresponding corporate sector restructuring, financial sector rescue efforts are likely to be necessary in the future. β’ strong financial systems depend on a reliable and credible legal system. in the absence of a strong legal system, borrowers lack appropriate incentives to repay. β’ there are no " quick fixes " to financial sector problems. remedial actions need to be evaluated in terms of their short - term efficacy as well as their longer - term implications. β’ unbalanced financial systems create vulnerabilities. financial systems that are unduly reliant on banks for financial intermediation are likely to be more vulnerable and slower to recover from the onset of weakness. shallow capital markets limit lending alternatives and delay the recovery of financing to the real sector. the challenges can be daunting, but recent experience both within and beyond asia confirms that a dedicated commitment to financial reform contributes to sustainable recoveries and greater crisisresilience. just as strong financial systems act as stabilizers when a domestic economy is battered, weak financial systems amplify the scope and reach of the problems, making bad situations worse. longer - term financial stability while financial sector rehabilitation will remain a key priority for authorities in asia, longer - term measures need to be put in place to deal adequately with the increasingly complex and dynamic international financial marketplace of the twenty - first century. the threats to financial stability are many, and no one set of measures can be expected to ensure against the recurrence of future problems. financial intermediation is a constantly evolving activity, involving new risks, instruments, | william j mcdonough : toward greater financial stability remarks by mr william j mcdonough, president and chief executive officer of the federal reserve bank of new york, at the bank of thailand, bangkok, 5 february 2001. * * * it is my pleasure to accept the invitation of the bank of thailand to speak to you tonight on how we can promote greater financial stability. in the wake of the asian crisis, authorities in the region have done much to promote increased financial stability, through a variety of measures to strengthen domestic banking systems and corporate sectors, and institute broader improvement in accounting, legal, and supervisory systems. thailand has taken a number of such actions, including efforts, among others, to close troubled financial institutions, attract significant private sector capital ( including foreign capital ) into the banking system, and improve the legal framework. macroeconomic policy adjustments, including the move to flexible exchange rates, have also furthered greater stability. these actions have helped countries recover from large - scale banking crises, and restore solid growth generally. that said, in thailand and elsewhere, the recovery is not yet complete, and much remains to be done. moreover, the restructuring and reform agenda will be challenged by slowing global and regional growth, which may contribute to already apparent signs of increasing reform fatigue within the region. in my view, asia stands at an important policy crossroads, involving a choice between pushing forward market - based reforms that are the only way toward long - term financial stability, or pursuing actions that provide short - term relief at the risk of threatening the hard - won gains of the last three years. the recognition that we have entered a new international financial environment has set in motion a range of efforts dedicated to strengthening the new international financial architecture. my remarks today will focus on what i believe can be done, from my perspective, to enhance domestic financial resiliency, within the context of these international efforts, and particularly on two essential building blocks : a strong financial system and a sound and stable macroeconomic environment. my comments reference the experience of east asia, but reflect lessons that are more broadly applicable. overview of recent recovery given the depth of the problem a little more than three years ago, the asian recovery on the whole has been remarkable, and has largely defied initial expectations that the crisis would cast a long shadow over regional growth prospects. the regional recovery has exhibited a solid " v " shaped trajectory supported by strong performance in the external accounts, and a pickup in domestic demand. banking sectors β faced with unprecedented crisis | 1 |
andrew sentance : the challenges of the β new global economy β speech by mr andrew sentance, external member of the monetary policy committee of the bank of england, at the jersey chamber of commerce, st helier, 25 may 2011. all speeches are available online at www. bankofengland. co. uk / publications / speeches. * * * i would like to thank adrian chiu for research assistance and i am also grateful for helpful comments from other colleagues. the views expressed are my own and do not necessarily reflect those of the bank of england or other members of the monetary policy committee. it is a great pleasure to have this opportunity to speak here today at your annual general meeting lunch and i am extremely grateful to ray shead and the jersey chamber of commerce for inviting me and helping to arrange this visit. for you here in jersey, this event is a first β as i believe it is the first major speech which a member of the bank of england monetary policy committee has given in jersey or any of the other channel islands. hopefully i am blazing a trail for my mpc colleagues to follow in the future! for me, however, it marks the close of a chapter. this is my last public speech as a member of the bank of england monetary policy committee ( mpc ), as my term in office comes to an end this month. i have spent just over four and a half years as a member of the mpc and it has been a most eventful period to be involved with economic policy - making. my period on the committee has been dominated by the global financial crisis and the major global recession it triggered in late 2008 and early 2009. however, the global recession is now behind us, even if we are still feeling some if its after - effects. since the second half of 2009, the world economy has been in a recovery phase and the uk and most other european economies have shared in this return to growth. indeed, the growth of the uk economy has tracked very closely the average performance of the european union through the recession and into the early phases of the recovery, as chart 1 shows. and current forecasts point to a continuation of this pattern this year and next. chart 1 β uk and eu output growth, 1997 β 2012 percentage change in real gdp - 1 - 2 uk ( exc. oil and gas ) * - 3 eu - 27 * - 4 - 5 - 6 * : 2011 and 2012 are imf forecasts. forecasts for the | fund bis central bankers β speeches chart 6 β global primary energy consumption million tonnes oil equivalent oecd non - oecd source : bp statistical review 2010 this pattern of upward pressure on energy and commodity prices has been particularly noticeable since the mid - 2000s and it has had a significant influence on inflation in many countries β particularly affecting the prices of goods. the so - called β china effect β, through which the shift of production to low cost countries held down the prices of global manufactures and traded goods in the late 1990s and the first half of the 2000s, has given way to a period of higher global inflation, driven by rising energy and commodity prices. chart 7 shows how this has affected the rate of inflation in goods prices in the uk, which has picked up significantly in recent years β whether measured in terms of manufactured products at the factory gate or the goods which enter into the consumer basket. chart 7 β uk goods price inflation annual percentage change in prices manufactured goods producer prices cpi goods inflation - 2 - 4 source : ons one of the key challenges facing the mpc and other monetary authorities around the world is judging how far this surge in energy and commodity prices has yet to run and how farreaching its consequences might be. the tendency so far in many countries, including the bis central bankers β speeches uk, has been to treat this phenomenon as a series of one - off shocks. but the driving force behind it β strong growth in asia and other emerging market economies β is proving quite persistent β as chart 8 shows. chart 8 β emerging market growth remains strong annual percentage growth rates of real gdp advanced economies * emerging & developing economies * - 2 - 4 * : 2011 and 2012 growth rates are imf forecasts. source : imf world economic outlook this raises the possibility that some key commodity markets, including the market for oil, could be in a structural position of scarcity for some time yet, leading to further significant upward price movements. for example, in its recent world economic outlook, the imf published an analysis suggesting that current trends in the oil market β with supply unable to keep up with strong demand β could lead to a further 200 % rise in oil prices from current levels over the next 20 years. 5 of course, there is great uncertainty around such predictions. but my judgement would be that this imf analysis is likely to be directionally correct, even if we can β t be precise about the exact timing and scale of upward price movements. this upward shift in energy and | 1 |
delisle worrell : the initiative of the financial stability board on β noncooperative jurisdictions β from a caribbean perspective remarks by dr delisle worrell, governor of the central bank of barbados, on behalf of the caribbean group at breakfast with the managing director of the international monetary fund ( imf ), washington dc, 10 october 2010. * * * the international business and financial sector is vital to caribbean growth the international business and financial sector ( ibfs ) plays a key role in the strategies for diversifying the sources of growth for the small countries of the caribbean. these countries are all very open and dependent on foreign - exchange earnings as the engine of growth and employment. already the ibfs is the principal source of foreign exchange and growth for the smallest countries, and for others it is second in importance only to tourism. yet other caribbean countries look to the sector as a potential source of diversification. all caribbean jurisdictions ground their ibfs sectors on their competitive advantages of geographical location, environmental appeal, a superior quality of life, a relatively stable economic and political environment, and a highly skilled labour force. in addition, well established caribbean jurisdictions like the bahamas and barbados now boast a strong infrastructure of professional and technical skills, in law, accounting, finance and related disciplines, and can provide those services to international financial institutions at highly competitive prices. furthermore, the caribbean is dedicated to the business of high quality institutions operating through fully legitimate channels and in accordance with the best international standards and practices. in order to guarantee the quality of our international financial services caribbean jurisdictions have been fully involved for the past decade in the financial sector assessment programs ( fsap ) and reviews of standards and codes ( roscs ), conducted by the imf and world bank, and actively participate in the work of the financial action task force ( fatf ) and the caribbean regional body cfatf. there are published reports on these reviews available for all jurisdictions. as is inevitably the case, there are, in every case, areas where financial regulation needs to be upgraded and legislation and guidelines need to be revised. there is universal commitment to address the issues identified, as swiftly as resources and skills permit. in this effort the caribbean benefits from technical assistance from the caribbean regional technical assistance centre ( cartac ), the imf, the association of supervisors of banks of the americas ( asba ) and financial supervisory agencies of the us, canada, the uk and others. the caribbean welcomes any further assistance which the | delisle worrell : growing the economy address by dr delisle worrell, governor of the central bank of barbados, at the barbados chamber of commerce and industry β s lunchtime lecture, bridgetown, 27 march 2013. * * * barbadians can and must grow our economy, in order to continue the improvement in the quality of life for our citizens, to provide job opportunities for our enterprising youth, and to enrich our culture and society. growth must be sustainable, by which i mean that it must yield lasting benefit. the jobs we create should be permanent, the additional income we earn must enable us to buy more goods and services this year, and the next, and the year following. that means we must fuel the growth of our economy by increasing the amount of foreign exchange we earn each year. the point of departure for strategising about growth is the question : how may we earn more foreign exchange from tourism, international business services and agro processing and how may we economise on the use of the foreign exchange we earn? let us together examine what we know about these questions. we must become more competitive, not by selling our services cheaply, but by reducing bureaucratic inefficiency, improving access to finance, and upgrading the national work ethic. the world competitiveness index, compiled by the global forum, offers guidance in this regard. these three items are the issues most often cited as obstacles to doing business in barbados. significant gains in these areas will come with commitment to excellence, attention to detail, persistence, and intolerance of substandard service. the institutions are in place to assist us in reaching the goal : the national initiative for service excellence, the productivity council and the public sector reform unit, among others. we must find ways to make them work effectively. central bank has made a commitment to ourselves and the nation to lead the way. i take this opportunity to invite everyone who uses our services to hold us to an international standard of high performance. always ensure that we let you know, up front, when you should expect a response from us or completion of your business with us. if we are excessively or persistently tardy, i am expecting you to be in touch with me directly. we should refine tourism marketing strategies. central bank is assisting this effort by researching local tourism markets within our major source countries, among other studies. this is but one element in the multifaceted strategy now underway | 0.5 |
almost entirely for its own sake and to almost complete exclusion of the larger public policy purpose of sub - serving the hedging needs of the real sector, creating a massive β financial sector - real sector imbalance β and, thus, in turn, become the very antithesis of responsible financial innovation. market segmentation continuing market segmentation in india is the biggest undoing of an efficient, deep, liquid, organically connected, and seamlessly integrated financial market which is also a β sine qua non β for effective, efficient and instantaneous monetary transmission. market fragmentation / segmentation contributes to price distortion and inefficiency. the most tangible and manifest evidence of market segmentation in india is the β dis - connect β between irs, irf and government securities markets as reflected in the irs ( bank credit risk ) yields being 100 to 125 basis points below g - sec yields and irf yields ( when last traded ) being about 70 basis points higher than their fair value, signifying almost complete absence of arbitrage and thus a pernicious violation of the β no - arbitrage β, or what is the something as, the β law - ofone - price, argument β which, as the discerning audience is by now well aware, is the most fundamental basis of β fair value derivatives pricing β. such manifest β dis - connect β militates against the development of a seamlessly integrated financial market with coupling and organic connect between all the three! however, this market segmentation can be credibly, effectively and decisively addressed if the nuts - and - bolts reforms propositioned below, which are, if you will, equally also the necessary, and sufficient, conditions, are synchronously orchestrated in all - at - the - same - time - no - piecemeal - and - no - half - way - house manner : ( i ) for the cogent reasons elucidated in the paragraph 7 above, the totally misplaced temptation, and impatience, to introduce / launch cash settled irf must be firmly, and decisively, resisted. for else, this will, to quote jamie dimon, chairman of jp morgan chase, tantamount to β doing the β easy β and not the β right β thing β and, in the process, replicating an irs genie in the irf / cds markets which then grows so fast so much that it becomes difficult to put it back into the regulatory bottle. | h r khan : understanding psychology for responsible financial behaviour inaugural address by shri h r khan, deputy governor of the reserve bank of india, at the interdisciplinary seminar on psychonomics β understanding the psychology of financial behavior organised by maharshi dayanand college of arts, science & commerce, mumbai, 6 february 2012. * * * the speaker acknowledges the contribution of shri. anand shankar, shri sittikantha pattanaik and shri. surajit bose in preparation of the address. 1. i thank the organizers of the golden jubilee celebrations of the maharshi dayanand college of arts, science & commerce, mumbai for inviting me to deliver the inaugural address at this important seminar. the interdisciplinary seminar on psychonomics : understanding the psychology behind financial behaviour is indeed a very topical subject and especially when the world is realizing the significance of the import of human psychology in the economic behaviour of the markets. it is not often that one gets an opportunity to share thoughts with an enthusiastic group of students and faculty with diverse educational backgrounds and put forth views on psychology in order to explain economics. today, particularly in the context of recent financial crisis, it is well - accepted that psychology does influence many economic decisions which defy pure economic theories. 2. as we all know, during the classical period, economics had an established link with psychology. for example, adam smith, who is considered as father of economics, in his work on the theory of moral sentiments, had described psychological principles of individual behaviour. jeremy bentham, founding father of modern utilitarism ideas, wrote extensively on the psychological aspects of utility. overtime, economists, however, began to distance themselves from psychology as they sought to reshape the discipline as a natural science. by mid - 20th century, psychology lost its linkages with economics. in the 1950s, herbert simons challenged some of the traits of standard economic model of human behaviour, i. e., unbounded rationality, unbounded will - power and unbounded selfishness. he questioned the idea that people have unlimited information processing capabilities. rather he propounded the idea of β bounded rationality β to suggest a more realistic conception of problem solving ability of human beings. it was also suggested that human beings struggle to analyse problems objectively as they view them through a β frame β of personal experience often shaped by social and cultural bias. in mid 1960s, ward edwards, amos tversky and daniel kahneman began to compare their cognitive | 0.5 |
luljeta minxhozi : the contribution of the albanian diaspora to the nation β s economic development speech by ms luljeta minxhozi, first deputy governor of the bank of albania, at the second summit of the albanian diaspora, tirana, 4 march 2019. * * * dear ladies and gentlemen, on this special day, we have come together to share thoughts and discuss on how albanians, irrespective of where they live in the world, may achieve welfare and prosperity. this is a time, in our economic history, when the efforts of individual citizens to ensure prosperity are also considered as social efforts, for our nation to be prosperous and developed. such forums β in which albanians that live abroad come together to discuss, and see that while working for themselves and their families, they help the nation to advance β are signs of a rising national conscience and our modern civilisation. albania has a large diaspora, which is present in all continents and was estimated at 1. 15 million people in 2017, or around 40 % of the population that actually resides within the country. a characteristic of the albanian diaspora is that it is closely related economically with the home country, contributing to increased financial transfers from abroad. these transfers are in the form of : remittances which are net transfers from abroad and are calculated in the balance of payments at around eur 600 million per year, over 2013 β 2017, equal to 5. 7 % of albania β s gdp. income generated from seasonal emigration in the form of temporary employment. this category creates income in the form of primary income - compensation of employees, on average eur 250 million annually during 2013 β 2017. if we add other income unrelated to employment, total transfers from permanent and seasonal emigration ( remittances ) reach around eur 1 billion annually, or around 9. 0 % of nominal gdp. while the share of remittances, in terms of both the level of flows and of the ratio to gdp, is lower compared with mid - 2000s, their annual growth has resulted stable in more recent years, averaging 3 % for the 2015 β 2017 period. through its economic activity, the diaspora contributes positively to the albanian economy in two aspects : the first aspect are remittances and other forms of transfers. these have an evident role on the aggregate demand of albania, for financing households β consumption, and generating savings, which help to fund investments. their contribution to economic growth of albania has been cyclical | been reflected in a relative lack of confidence in europe β s future. however, backsliding into protectionism, as has been called for by some, would be like traveling back in time. there is no other way to reap the potential gains from globalization but to evolve towards further specialization, innovation and diversification into new areas of comparative advantage. in this context, let me mention the moribund doha round, which has even cast doubt on the future of the world trade organization ( wto ). although calls for protectionist measures to counter the increasing competition from asian economies should be taken seriously, i stand on the side of free trade and believe that protectionist pressures need to be firmly resisted. eight and a half years after its introduction, the euro has now firmly established itself as the second world currency. the increasing globalization of the world economy, with new players emerging on the world stage, has contributed to the very impressive expansion of the world economy in the recent past. yet, this dynamic growth has also spurred economic challenges, such as strongly rising commodity prices and significant current account imbalances. the economic upswing recorded in the euro area can be attributed, at least partly, to improved economic structures and is based on the stability - orientated framework of economic and monetary union. the ecb and the eurosystem respectively, will continue to support economic growth in the euro area by vigorously pursuing price stability. following this approach also guarantees that the euro can contribute most effectively to international stability. | 0 |
roger w ferguson, jr : basel ii - a case study in risk management speech by mr roger w ferguson, jr, vice - chairman of the board of governors of the us federal reserve system, at the risk management workshop for regulators, the world bank, washington, d. c., 28 april 2003. * * * i am pleased to join you this morning as you begin your conference on risk management in banking. as many of you may know, i have been spending time on the initiative to increase the risk sensitivity of the basel capital accord - the subject of your first panel discussion. in the last analysis, our basel ii efforts are geared to improving risk management - measuring risk more accurately ; communicating those measurements to management, to supervisors, and to the public ; and, of course, relating risk both to capital requirements and to the supervisory focus. this morning i will not discuss the details of the basel proposals. tomorrow, the basel supervisor's committee will publish its third consultative document describing the proposal in its near - final form, and i urge you to review it and provide your comments and suggestions to the committee. it is not too late to shape the details. this morning, however, in keeping with the theme of the conference, i will spend my time talking about the objectives of the proposed basel ii, particularly as they relate to risk management. risk in banking any discussion of risk management in banking must start with the understanding that banks exist for the purpose of taking risk, and the objective of supervision is certainly not to eliminate, and perhaps not even to lower, risk - taking. rather, the objective of supervision is to assist in the management of risk. we cannot lose sight of the fact that banks'willingness and ability to take risk, in turn, has allowed them to contribute significantly to economic growth by funding households and businesses. nonetheless, this economic function, especially when conducted with a relatively small capital base and using mainly funds that have been borrowed short - term, has historically led to periodic rounds of bank failures and changes in credit availability that have exacerbated macroeconomic cyclical patterns and inflicted losses on households and businesses alike. such a history has often led to proposals to change dramatically the business of banking ; it clearly has been a major reason for central banks and for the regulation and supervision of banking. these developments, however, did not change the risktaking function of banking nor the need for risk management. banks, from the very beginning, have, to be sure, managed risk | guarantee that there will not be any problems. in fact, the turmoil generated by the international crisis has fed through to the spanish economy and impacted it at a time when it was beginning to adjust the imbalances which had built up during fifteen years of continuous high economic growth. all these factors led spain into an economic recession which is reflected most significantly in the sharp rise in unemployment. this, together with high corporate and household debt, in the framework of what had been excessively lax financing conditions, has now resulted in a weakening of households β and firms β spending capacity and of their financial position. and the consequence has been a rise in bad debts in the spanish banking system. although the recent trend in interest rates is a considerable relief for many debtors, the rise in bad debts, which will continue over the next few quarters, poses a risk which deposit institutions must manage with great caution. this results in the gradual weakening of the income statements of credit institutions, which requires them to react decisively. thus, it is of paramount importance that business models and income statements are in step with the new reality. in simple terms, in order for spanish deposit institutions to remain in a sound position, they will have to face the new challenges of the current situation by finding levers for change which allow them to counter the adverse developments currently putting pressure on their income statements, and incorporating such levers into their business models. let me give you some figures on the recent trend in income statements. the consolidated profit of spanish deposit institutions fell at a rate of approximately 20 % in december 2008 with respect to december 2007, while in june 2008 it had declined by slightly less than 3 % on june 2007. two general remarks can be made about these figures. first, comparison with the results posted by institutions in other banking systems in developed countries is favourable for spanish institutions ; practically all of them continued to post positive results, mainly due to the factors i mentioned earlier. the complex and rather opaque products that caused notable losses at institutions in other countries were avoided. at the same time, the banking model in spain is less reliant on developments in financial markets and on investment banking activities. second, the data mentioned previously show that spanish institutions β income statements have been affected by the gradual deterioration of the economic situation. although it is natural to some extent that, in more adverse conditions, results and profitability have not increased as notably as in recent years, there is a clear and pressing need for resolute action by managers aimed | 0 |
changes in the prices of those products. the second type does not reflect a direct change in the demand for canadian products. instead, it may reflect a portfolio adjustment - in favour of, or away from, canadian financial assets. or it may be part of a broader realignment of major currencies that is required to resolve the global imbalances ( by which i mean the persistent large u. s. current account deficit mirrored by large surpluses elsewhere, notably in asia and in many oilexporting countries ). let me now relate all this more closely to our recent experience in canada, and explain how monetary policy can be expected to respond to these different types of currency movements. consider the sharp appreciation of the canadian dollar since 2003. this movement has largely reflected strong world demand and prices for our energy and non - energy commodities. in this case, the higher canadian dollar has been working to dampen the initial increase in demand for our products and to encourage a rotation of economic activity towards commodities. to the extent that the dampening effect of the appreciation on aggregate demand exactly offsets the initial increase in demand, thereby keeping overall supply and demand in balance, there would be no need for monetary policy to respond. now, consider an upward movement in the canadian dollar that reflects financial market developments that have little to do with an increase in the demand for canadian products. movements reflecting a general weakness of the u. s. dollar against major floating currencies, related to the large global imbalances, are of this type. an appreciation of the canadian dollar reflecting these factors would have a dampening effect on aggregate demand in canada. so, if such a movement persisted, other things equal, there would be a need for offsetting monetary policy action. of course, in practice, it is difficult to gauge precisely the relative importance of these two types of movements. often, they may be concurrent, making it particularly challenging to sort out the implications for the economy and for monetary policy. reduce differences in sectoral and regional economic performance i will now turn to another, not unrelated, issue that some canadians expect us to address. and that is, the notable differences in performance we now see in certain sectors and regions of our economy. to put these trends in perspective, it is important to understand what drives them. the key factors at play here are the strong world demand and prices for energy and non - energy commodities, and the decline in the prices of many manufactured goods, but especially consumer goods, | paul jenkins : what monetary policy can and cannot do remarks by mr paul jenkins, senior deputy governor of the bank of canada, to the canadian institute of actuaries, ottawa, ontario, 29 june 2006. * * * i am very pleased to be here today. as canada's central bank, we are committed to conduct monetary policy in a way that fosters confidence in the value of money. this is our primary responsibility. but the bank has a number of other functions that are very important to economic life in canada. we promote the safety and soundness of the financial system. we supply quality bank notes that are readily accepted without concerns about counterfeiting. we provide efficient and effective central banking and debtmanagement services. and, of course, we communicate our objectives openly and effectively as part of our commitment to be accountable for our actions. today, i will focus on our main function - the conduct of monetary policy. specifically, i want to talk about what monetary policy can do and, by implication, what it cannot do. the bank's monetary policy mandate the bank of canada act of 1934 requires us to " regulate credit and currency in the best interest of the economic life of the nation, to control and protect the external value of the national monetary unit and to mitigate... fluctuations in the general level of production, trade, prices and employment, so far as it may be possible within the scope of monetary action, and generally to promote the economic and financial welfare of canada. " this is a fairly broad mandate, with multiple policy objectives. so one can understand why people might think that monetary policy can do more than it really can. but why does the preamble say " so far as may be possible within the scope of monetary action? " i believe that this is how the legislators meant to recognize the complexity of the economy and the fact that not all of the policy objectives in the preamble would be achievable through monetary policy action alone. as economists, we deal with this complexity by looking separately at different areas and aspects of the economy - industries, sectors, regions, various demand components such as consumption, investment, government spending, etc. then we add up all this information to get a better overall picture before taking policy action that is appropriate for the economy as a whole. we can use a similar approach with the preamble - pulling apart its various pieces and focusing on them separately. long - run economic performance so let me start with the | 1 |
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