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importantly, this argument is not about weighing secondary objectives, which may provide additional justifications for monetary policy taking into account climate change. it is about protecting the primary objective. of course, central banks would need to be mindful of their effects on market functioning. overweighing green assets in monetary policy portfolios could crowd out other investors, thereby doing more harm than good. and while demand can create its own supply, success would ultimately hinge on green issuance growing substantially as the economy transitions towards its new equilibrium. conclusion let me conclude. the current crisis teaches us that decisive and early action is crucial to tackle global disruptions. it enables us to better imagine the much more dramatic consequences that society could face if we were to fail on our efforts to fight climate change. and while the pandemic can eventually and hopefully be cured, global warming is much harder to reverse, raising the costs of taking no action today. covid - 19 provides a chance to build a greener economy. it is a chance to break the vicious circle of weakening entrepreneurship and the slow diffusion of new and green technologies that have held back productivity growth and prosperity in europe for too long. and it is a chance to build a deeper and greener financial market that reduces the costs of transitioning towards a low - carbon economy. the ecb will be no bystander on this journey. as climate change poses severe risks to price stability, central banks are required, within their traditional mandates, to strengthen their efforts to support a faster transition towards a more sustainable economy. thank you. [ 1 ] see le quere et al. ( 2020 ), “ temporary reduction in daily global co emissions during the covid - 19 forced confinement ”, nature climate change, 18 may 2020. [ 2 ] see un environment programme ( 2019 ), emissions gap report 2019. for the 2 % goal, the respective number would be 2. 7 %, which is still very large. [ 3 ] see carney, m. ( 2015 ), “ breaking the tragedy of the horizon – climate change and financial stability ”, speech at lloyd ’ s of london, london, 29 september. [ 4 ] see samset et al. ( 20200 ), “ delayed emergence of a global temperature response after emission mitigation ”, nature communications, 11. [ 5 ] see bayer, p. and m. aklin ( 2020 ), “ the european union emissions trading system reduced co emissions despite low prices ”, proceedings of | this order of magnitude, and both of those occurred when the unemployment rate was substantially lower than it has been of late. under current law, the amount of federal fiscal restraint will decline in 2014 and then decline further in 2015. at the same time, the sustained contraction in spending and employment by state and local governments appears to be over. the fact that the u. s. economy has continued to grow at around a 2 percent pace in 2013 despite this quite intense fiscal restraint provides evidence to the second key point, which is that the private sector of the economy has largely completed its healing process and is now poised to ramp up its level of activity. key measures of household leverage have declined and are now near the lowest levels they have been in well over a decade. household net worth, expressed as a percent of disposable income, has increased back to its average of the previous decade, reflecting rising equity and home prices and declining debt. recently, banks have eased credit standards somewhat after a prolonged period of tightness. as a result, we are now experiencing a fairly typical cyclical recovery of consumer spending on durable goods. for example, sales of light - weight motor vehicles have increased steadily over the past four years, reaching an annual rate of 15. 7 million in the third quarter of 2013, though sales in september and october have been somewhat below that average. similarly, after five years in which housing production was well below what is consistent with underlying demographic trends and the replacement demand for houses, it now appears that we have worked off the excess supply of housing built up during the boom years of the last decade. housing market activity has begun to recover, and a widely followed national home price index is up 12 percent over the 12 months ending in september. 1 anecdotal reports suggest that this higher - than - expected increase in home prices is due to a relatively low number of homes for sale. due to this shortness of supply, there is reason to expect increases in starts going forward. yet another bright spot on the horizon is the fact that growth prospects among our major trading partners have improved following a few years of lackluster performance which induced a sharp slowing of growth of u. s. exports. in particular, the euro area appears to have emerged from a protracted recession and is experiencing modest but positive growth. to summarize, while growth in 2013 has been disappointing, i believe a good case can be made that the pace of growth will pick up some in 2014 and then | 0 |
and arab women. in 2006 the employment rate among ultra - orthodox men was 25 percent ( compared to 62 percent among the male population overall ) and among arab women it was 17 percent ( compared to 53 percent among women in general ). if we do not manage to deal with this issue, more and more of the israeli population are likely to find themselves outside of the labor market and, as a result, poor. it is important that this sensitive and complex topic be addressed, and that appropriate solutions are found based, inter alia, on the right system of incentives. c. investments investment is the key to growth, and therefore it is important that the israeli economy is an attractive place for local and foreign investors. in this context, i will refer to the easing of processes required in order to do business in israel. there are a number of reports that refer to this topic, such as the world economic forum's global competitiveness report. i will concentrate on another important report, the doing business report, published by the world bank. this report ranks 178 countries measured by parameters that represent the ease ( or difficulty ) of doing business in each country. overall, israel is ranked 29th, which is not bad, and even relatively high. if we examine the parameters of the index more closely, we will find that israel ranks even higher on some of these : for example, on the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain, israel is ranked fifth ; or on the legal rights of borrowers and lenders, and the availability and legal framework of credit registries, israel comes seventh ; on the procedures necessary to import and export by sea a standardized cargo of goods, eighth ; and on the procedures and costs associated with setting up a business, 17th. however in other parameters israel ranks very low : for example, on legal procedures relating to the enforcement of contracts ( 102nd place ) ; on the procedures, time, and costs to build a warehouse ( 109th place ) ; and on registering property ( 152nd place ). these findings will not surprise any israeli. it is very important that all the relevant authorities cooperate, to remove these bureaucratic obstacles, and to bring about an improvement in all these fields, especially in those where israel currently ranks low. it is easy to think that details like these are not important. but we have to contend with competition from all the world, and it is clear that the achievement of sustainable growth depends on our dealing | capital. the examples will illustrate that without the implementation of such a strategic plan, not only will we not move forward toward closing the gaps vis - a - vis the other advanced economies, the gaps vis - a - vis the countries at the forefront will widen. it is important to state at this point that in recent years, there has been significant progress in the government ’ s strategic planning led by the national economic council. a deputy directors - general forum for planning and strategy has been established, and is preparing a plan for the government ’ s work ; seven areas in which the government has chosen to focus have been identified ; interministerial cooperation has been intensified ; and detailed targets have been set in a number of areas, and work has begun toward achieving them. however, the challenges are large, and the way toward formulating a work plan, and more importantly toward implementing such a plan, remains long. in the area of healthcare and long - term care, in view of the trend of aging population, we can estimate that the volume of needs for medical and long - term care services will increase sharply, and we must already prepare for this now. while the general population is expected to increase by 23 percent, the number of elderly citizens is expected to increase by more than double that – 52 percent. as a direct result, the demand for various healthcare services bis central bankers ’ speeches will also increase by about 60 – 70 percent, all while the overcrowding in the hospitals is already very high. in addition, about half of the physicians in the system are aged 55 or more – the highest figure in the western world – and the rate of those completing medical and nursing school is lower than in other countries, even after the increase in recent years. as such, the number of physicians per capita is expected to decline. the israeli healthcare system is considered very high - quality by international comparison. however, given the overcrowding in the hospitals, the long wait for various procedures, and the low rate of doctors and nurses per capita, the level budgeting for the healthcare system must be adjusted to the tasks imposed on it, a significant increase in the physical infrastructure and human capital in the system, and streamlining the long - term care system, with particular attention to improving systemic coordination. these can be advanced only through a multi - year plan based on a detailed analysis of future needs. only the formulation and implementation of such a program will be able to maintain and improve the high - quality israeli healthcare | 0.5 |
growth, albeit from the very depressed average pace that prevailed more - educated workers and older workers both have lower structural unemployment rates, at least historically ; see aaronson, hu, seifoddini, and sullivan ( 2015 ). the box “ the labor force participation rate for prime - age individuals ” in the board ’ s july 2018 monetary policy report contains a discussion of recent developments in labor force participation rates for prime - age individuals ; see board of governors ( 2018, pp. 8 – 10 ). for more on labor ’ s share of national income and price inflation, see clarida ( 2014, 2016 ). - 5throughout most of the expansion. indeed, as of the first quarter of this year, productivity in the nonfarm business sector rose 2. 4 percent over the previous four quarters, its fastest pace since 2010 when the u. s. economy was coming out of the great recession. by contrast, in both the 2001 – 07 and 1982 – 90 economic expansions, productivity growth was actually slowing relative to its average pace during those expansions. that said, while identifying inflection points in trend productivity growth in real time is notoriously difficult, a pickup in trend productivity growth relative to the pace that prevailed earlier in the expansion is a possibility that we should not, i believe, dismiss. 8 another structural change relevant for monetary policy is that price inflation appears less responsive to resource slack than it did in the past. that is, the short - run price phillips curve appears to have flattened, implying a change in the dynamic relationship between inflation and employment. 9 a flatter phillips curve is, in a sense, a proverbial double - edged sword. it permits the federal reserve to support employment more aggressively during downturns — as was the case during and after the great recession — because a sustained inflation breakout is less likely when the phillips curve is flatter. 10 however, a flatter phillips curve also increases the cost, in terms of economic output, of reversing unwelcome increases in longer - run inflation expectations. thus, a for more on productivity growth, see brynjolfsson, rock, and syverson ( forthcoming ). for evidence of a flattening of the slope of the phillips curve in the united states and abroad, see, among others, simon, matheson, and sandri ( 2013 ) ; blanchard, cerutti, and summers ( 2015 ) ; and bank for international settlements ( 2017 ) | anita angelovska - bezoska : statistical implications of the new financial landscape remarks by ms anita angelovska - bezoska, vice - governor of the national bank of the republic of macedonia, at a panel discussion at the 8th ifc conference “ statistical implications of the new financial landscape ”, bank for international settlements, basel, 8 – 9 september 2016. * * * contributors to the note : ana mitreska and maja andreevska. since the burst of the crisis, central banking community has been providing unprecedented monetary stimulus with a view of influencing financial conditions and thus reviving the growth. the measures have gone far beyond the pre - crisis mode of operation. if conducting a monetary policy in the pre - crisis period seemed like steering a ship with rudder being enough powerful to protect against the waves, the waves that emerged in 2007 – 2008 were too strong and reliance only on the traditional instrument posed a risk of sinking. thus, when the central banks approached / reached zero - lower bound, they were compelled to start experimenting with new policy tools such as balance sheet policies, forward guidance and in more recent period, even more extremely, with negative policy interest rate. has this monetary accommodation served the purpose of influencing the financial and economic conditions? while there is ample evidence that the measures have succeeded in influencing financing conditions, so far there is not strong empirical evidence on their impact on output and inflation. in fact, despite the ample liquid and ultra - low interest rates, the output growth remains weak and inflation stubbornly low pointing to a weak monetary transmission mechanism. this new puzzling reality has triggered more profound discussion on the monetary policy frameworks with the academia and policy making community. are the main traditional monetary policy principles - price stability as a main objective, some form of flexible it as a most adequate strategy, policy rate as a main instrument - still valid? as crisis clearly demonstrated that price stability is not a guarantee for financial stability and that financial instability can have long lasting effects on output and inflation, the discussions focus on the need to take into account financial stability in the monetary policy frameworks. thus, the question : is the so called “ flexible it ” enough flexible to deal with the current and future challenges or maybe as some observers have suggested, a thought should be given to the other alternative strategies such as targeting price level or nominal gdp. the discussions even touch upon the question of adding explicit financial stability objective. for example, as borio ( 2016 ) claims ” if mandates ( of | 0 |
speech maximising the user value of statistics : lessons from globalisation and the pandemic speech by philip r. lane, member of the executive board of the ecb, at the european statistical forum ( virtual ) 26 april 2021 economic and financial statistics play a central role in guiding monetary policy decisions : central banks constitute an important user group for the output of statistical agencies, while also helping to collect the data underpinning many macro - financial statistical series. events such as the european statistical forum provide a welcome opportunity to bring together the producers and users of statistics. in my remarks today, i will discuss two main topics : the first topic is the globalisation - related measurement challenges for macroeconomic statistics, with a focus on external and national accounts ; the second topic is the data needs exposed by the pandemic crisis. [ 1 ], [ 2 ] i will highlight some of the ongoing initiatives to address these measurement challenges, and outline some ideas to enhance further the quality of official statistics. measurement challenges related to globalisation the cross - border integration of production – through both the activities of multinational enterprises ( mnes ) and the complex production chains that connect firms specialising in different stages of production – has been an important engine of the globalisation of trade, finance and technology. [ 3 ] mnes typically have complex organisational structures made up of interlinked legal entities, including special purpose entities ( spes ). transactions by mnes, which are often made intra - group, are sufficiently large to pose challenges to the interpretation of balance of payments and national accounts statistics. while this is most visible for financial centres and very open small economies where global firms are large relative to the size of the domestic economy, these factors are also increasingly relevant for understanding the macroeconomic statistics of the euro area and other large economies. complex cross - border production and ownership arrangements, such as contract manufacturing and merchanting, affect the measurement of the balance of payments and the national accounts through the booking of exports of goods that are neither produced domestically nor cross the border of the domestic economy. moreover, transfer pricing – the pricing of the various transactions involved in intragroup crossborder production arrangements – substantially affects the amount and location of profits booked. over time, the location of corporate structures has become increasingly mobile. this has been partly driven by fiscal and regulatory arbitrage incentives that motivate the re - domiciliation of headquarters and the geographical optimisation of the legal registration of intangible assets such as patents | ##ing redemptions in a stress scenario. going beyond the esrb recommendation, i would argue in favour of complementing the powers that are currently envisaged for authorities with ex ante tools targeting liquidity risks at system level. existing liquidity management tools may mitigate liquidity risk ex post, but they might not suffice to prevent the build - up of vulnerabilities in exuberant times ex ante. the toolkit available to macroprudential authorities should therefore include additional ex ante requirements such as minimum liquidity buffers and redemption notice periods. 12 mandatory liquidity buffers require funds to hold sufficient high - quality liquid assets for the fund to be able to meet redemptions and margin calls under many foreseeable scenarios. the introduction of minimum notice periods would help align a fund ’ s liability structure with the liquidity - and riskprofile on the asset side. overall, such tools could be used to raise the sector ’ s resilience to potential investor runs or spikes in margin calls. setting these requirements would greatly limit the sector ’ s ability to build - up liquidity risk in exuberant times. finally, given the cross - border nature of the investment fund sector, we need to strengthen the european perspective in the supervision of investment funds while also ensuring a globally consistent approach to monitoring. arguably, the investment fund industry in the eu is highly concentrated in a few jurisdictions, but – due to the diverse asset holdings and investor locations – the impact of adverse developments in this sector may be felt across the eu. hence, i call for further investigation of the case for bringing investment fund supervision and the potential activation of macroprudential tools to the european level. 13 in a related debate, the fsb announced recently that it will no longer use the term “ shadow banking ” in its future communications to avoid the pejorative connotations. hedge funds and other asset managers will instead fall under a broader group of non - bank financial intermediaries. 5 / 7 bis central bankers'speeches we very much welcome the change in terminology, as it supports a closer focus on emerging vulnerabilities in the asset management sector, regardless of whether these are considered to be bank - like or not. concluding remarks we have come a long way since the financial crisis. we have implemented a range of regulatory reforms that have addressed many issues that the crisis brought to light both in the bank and non - bank financial sectors. nevertheless, the ever evolving | 0.5 |
amando m tetangco, jr : the central bank of the philippines – supporting academic excellence speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the bsp up centennial professorial chairs launching ceremony, quezon city, 7 october 2008. * * * senator angara, president roman, chancellor cao, our friends from the up community, fellow supporters of up, special guests, good afternoon. on behalf of the bangko sentral ng pilipinas, i am here to launch the seven bsp - up centennial professorial chairs. we believe that setting up professorial chairs is the best way to institutionalize our support to academic excellence that is the hallmark of the university of the philippines. as i said before, the concentration of up alumni in legal, political and government circles as well as in the scientific pool speaks volumes about the university ’ s central role in nationbuilding. by helping mold the minds of the nation ’ s best and brightest or what we call iskolars ng bayan, by stoking the engine of innovation, and by providing an intellectual compass and healthy critique to public policymaking, up has contributed and continues to contribute to the advancement of our country. the bsp - up centennial professorial chairs managed by the up foundation inc. are professorial chairs donated by the central bank of the philippines in 1982 - 1983 during up ’ s diamond jubilee celebrations. the original endowments for these chairs was p150, 000 each. we raised each endowment to p1, 500, 000 by donating an additional p1, 350, 000 per chair. meanwhile, the bsp up centennial professorial chair in business administration has an endowment of p1. 5 million from several donations made by the cbp and the bsp since 1981. we raised the endowment to p3 million through an additional donation of p1. 5 million. the terms also have been enhanced to maximize the benefits to the chairholder. since 1983 when the professorial chairs were first awarded, they have been held by distinguished scholars whose research and public service have contributed significantly to the shaping of policy decisions, the enactment of landmark legislation and the formation of institutions, both in the government and private sectors. the decision of the bangko sentral to establish additional professorial chairs namely, the bsp sterling professorial chair in monetary and banking economics at the up school of economics and the bsp sterling | our energies and ignite inspiration in our workforce. it likewise symbolizes our hope that the resolve we now possess to deliver on our commitments will be sustained by the ones we shall eventually bequeath it to. nothing appeases a parent more than the assurance of a formidable future he / she could leave behind. today is the time strengthening the structures around which we have built our vision and upon which we enable the fulfillment of our objectives is the order of the day. i am well aware that the road to accomplishing our operational plans has left not merely a handful of us battered and bruised, hardly getting time to breathe, more so, to regroup or reflect. but today provides the moment for us to recognize and celebrate our milestones, identify and accept the challenges that lie ahead and renew our vigor to move forward with our mandate. let us, at all times, be encouraged by the unwavering importance of our mission and the promise of better times before us. let us draw strength from the very resilience of the people we serve and the allies we have in each other. let us, most of all, remember that the route to excellence may never be simple and easy but the journey itself, a rewarding experience. good morning and good luck! * * * introduction we have come to the close of the three - part annual planning conference this year, the last during my term as bangko sentral ng pilipinas ( bsp ) governor. strategic planning in bsp though it may be said that we are in the early stage of strategic planning, we have already achieved several milestones in promoting strategic management thinking and in institutionalizing a synchronized planning and budgeting process in the bank. the creation of the corporate planning office in 2001 to oversee the strategic management process was a decisive step towards this goal. in 2002, for the first time in the planning efforts of the bank, participants to the planning conference underwent the complete strategic planning process - from crafting the vision and mission of bangko sentral, to the formulation of corporate level objectives and strategies, and down to the formulation of departmental / office level operational plans. in 2003, again for the first time in the history of the bangko sentral, we drafted a medium - term plan focusing on our twin mandates of maintaining price and financial sector stability. the plan defined the strategic intent, key objectives, strategies and key operational plans in performing our core functions of monetary policy formulation and bank supervision and examination. it also defined | 0.5 |
needs to boost the supply of equity finance. policies which stimulate individual ownership of traded shares, such as reducing the tax advantage of debt over equity or enhancing financial literacy, can have a material effect on public equity markets in europe. at the same time, because stock markets often penalise companies which undertake radical, but uncertain, innovative activities, the contribution of private equity – particularly in the form of early - stage venture capital finance – is indispensable, as a critical mass of angel investors who can provide financing for medium - size projects is also needed. only with a deep, liquid market is it possible to launch ipos of successful projects that can offset the losses with projects that fail. harmonising insolvency rules across jurisdictions would be a major step towards supporting capital markets. this is critical for mobilising finance through capital markets, as it would create incentives and favourable conditions for institutional investors to overcome the home bias in their investment strategies. this is especially true for pension investment, as large private pension funds tend to be a complement to deep capital markets. we need to establish a harmonised regulatory environment for new types of finance, such as crowd funding. the emergence of increasingly complex financial products needs to be accompanied by adequate consumer protection of financial investment, in order to safeguard financial stability and ensure the protection of individual investors. the second component of a comprehensive approach entails policies that will stimulate entrepreneurship. high - tech entrepreneurial firms that aspire to go public should be supported and facilitated by stock exchanges specialising in ipos for young innovative companies. a reduction in the wedge between corporate income taxes and personal income taxes has already been shown to have a strong positive effect on high - tech investment in a european context. 21 last but not least, the efficient application of r & d tax incentives and increased public funding of private research universities, whose labs often make key scientific and technological breakthroughs, are other important avenues for stimulating innovation and the commercialisation of science. conclusion let me conclude. so far, measures adopted in the context of the cmu initiative, albeit positive and helpful, are not yet commensurate with the ambition of the project. with cmu, we should aim to reach a situation where both issuers and investors enjoy the same basic legal rights concerning capital markets activity regardless of the eu country where they are located. the cmu project involves all eu member states but it is particularly important for the euro area member countries. it is a big waste to have taken the huge step to | into our framework. this includes the use of extended monetary policy tools when needed and the increased emphasis we have been placing on the health of the labour market. today, i want to briefly review our experience with flexible inflation targeting. i will then turn to the comprehensive review of our framework that we conducted over the past three years. and, importantly, i will focus on our renewed agreement and what it means as we pull out of this pandemic and prepare for the postpandemic economy. our experience with flexible inflation targeting monetary policy in canada has been anchored by an inflation target for 30 years. despite major external shocks — from the 2008 – 09 global financial crisis to the covid - 19 pandemic — inflation has remained much lower and more stable than it was prior to inflation targeting. in the 15 years before we began inflation targeting in 1991, inflation, as measured by the 12 - month rate of change in the consumer price index, averaged 7. 1 percent. since then, it has averaged 1. 9 percent. the unemployment rate has also been lower on average. 1 low, stable inflation has delivered clear benefits for canadians. it has made it easier for households and businesses to plan for the future and has improved the functioning of labour markets. keeping inflation low and stable has protected lowincome canadians and those on fixed incomes from the loss of purchasing power caused by higher inflation. the bank ’ s success in hitting the target on average over time has built credibility for both the target and the bank. and inflation expectations that are well - anchored on the target have been a stabilizing force when the economy has been hit by shocks. 2 three elements of the framework have been key to its success. first, the target is symmetric — we are equally concerned about inflation rising above or falling below the target. second, monetary policy is forward - looking. policy actions take time — usually six to eight quarters — to work their way through the economy. that ’ s why our policy decisions are based on where inflation is likely to be in the future, not where it is today. and third, our framework is straightforward to communicate and has come to be well understood. 1 since moving to the 2 percent inflation target in 1995, the unemployment rate has averaged 7. 4 percent, compared with 8. 9 percent in the 15 years before we had an inflation target. taking a long - term perspective underscores the amazing success of flexible inflation targeting. we first started collecting data on inflation in 1913 | 0 |
##fi ’ s will have to take initiatives to retool the product design towards garnering new customers and for acquiring more share of the market. mfi ’ s will have to re - engineer the customer responsive processes so as to create a favourable climate for doing business. they will have to revisit their mission and business strategy and reinvent the sector as a community relevant to public and policy support. in the long run, they have to arrive at a firm position on their existence by evolving, either as banks or bcs, or continuing as nbfcs in a niche market. in a nutshell, evidence suggests that poverty reduction strategies are successful in countries which adopt inclusive policies. building inclusive financial systems that are both financially and socially sustainable is a fundamental requirement of any poverty reduction strategy. two basic issues that need to be understood while helping people walk the first mile into financial inclusion are : • financial inclusion programmes should be implemented on commercial lines and not on a charity basis, in order to ensure its sustainability. it is important that banking with the poor is perceived and pursued as a viable business model. • while poor need not be subsidized, it is important to ensure that they are not exploited. the need is to ensure that poor people who deserve credit are provided access to timely and adequate credit in a non - exploitative manner. bis central bankers ’ speeches i am aware of the good work that sa - dhan has done over the past many years. i appreciate the vast and diverse membership of the association and look forward to their contribution in enhancing financial inclusion. i especially look forward to the work of expanding in the poorer districts of india and those that are affected by natural and other disasters, which restrict the presence of banks. given the paucity of financial literacy, i, particularly, am looking forward to high quality awareness building program which will enable the poor households to participate more actively in utilising financial services for their own benefit. i urge upon every stakeholder to contribute towards making our goal of financial inclusion a reality. some of the important areas that require more attention are timely access to affordable financial services including credit, savings, insurance, pension and money transfer, responsible behaviour of the service providers, electronic modes of money handling, livelihood and enterprise creation, and a sound regulatory mechanism that oversees all the above. this requires a complementary and supportive interplay of multiple institutions, channels, models and experiments. i hope that the conference would deliberate upon the above issues and come up with definitive | agriculture in the first half of the 1990s as indicated above began to change with a moderate revival in the second half of the 1990s, and then a steep rise in the first half of 2000s. by 2005 / 06, the ( three - year moving ) average growth in agricultural credit was in double - digits, hovering around 35 per cent per annum [ chart 3 ]. agricultural credit from commercial banks grew significantly faster than that from cooperatives during this period. figures do not add to 100 on account of the share of the rural electrification corporation ( rec ). bis central bankers ’ speeches source : handbook of statistics on indian economy, rbi ( 2010 – 11 ) notes : ( i ) the growth rates presented are three - year moving averages. ( ii ) the wide fluctuations in cooperative credit are on account of variations in indirect agricultural credit from cooperatives. ( iii ) since the data on agricultural credit from cooperatives were available only up to 2007 / 08, growth rates for the years between 2008 / 09 and 2010 / 11 have been estimated using the three - year moving average method. ( v ) commercial banks – growth in agricultural credit and total credit how does commercial bank credit to agriculture compare with aggregate commercial bank credit? notably, growth in commercial bank credit to agriculture, which was lower than the growth in aggregate bank credit during the 1990s, picked up sharply in the first half of the 2000s and largely coincided with the growth in aggregate bank credit. there was a downturn in the growth in commercial bank credit to agriculture after 2005 / 06, when growth in aggregate bank credit also slowed down [ chart 4 ]. source : returns on sectoral deployment of bank credit, database on indian economy, rbi. note : the growth rates presented are three - year moving averages. bis central bankers ’ speeches ( vi ) faster growth of indirect credit to agriculture5 since the second half of the 1990s, indirect credit to agriculture grew faster than direct credit taking the share of indirect credit in total agricultural credit supplied by commercial banks from about 11 per cent in 1995 to 29 per cent by 2011. during the second half of the 2000s, indirect credit even exceeded its prescribed sublimit under the priority sector guidelines by a narrow margin. 6 the rising importance of indirect credit can be interpreted as a reflection of the growing credit needs for strengthening the supply chain infrastructure and the consequent widening of the definition of indirect credit [ chart 5 ]. source : priority sector returns of scheduled commercial banks, rbi. note : in the chart, the sub - | 0.5 |
##fsn in an evolving global economy, ” eighth high - level conference on the international monetary system sponsored by the international monetary fund and swiss national bank, in zurich on may 8, 2018a. powell, jerome h., “ monetary policy in a changing economy, ” speech at the federal reserve bank of kansas city ’ s economic policy symposium on “ changing market structure and implications for monetary policy, ” in jackson hole on august 23 – 25, 2018b. rajan, raghuram g., “ competitive monetary easing : is it yesterday once more? ” macroeconomics and finance in emerging market economies, 8 ( 1 – 2 ), 2015, pp. 5 – 16. svensson, lars e. o., “ monetary policy after the financial crisis, ” presentation at the second international journal of central banking fall conference in tokyo on september 17, 2010. white, william r., “ is price stability enough? ” bis working paper no. 205, bank for international settlements, 2006. | of more than 5 percent of gdp, the unemployment rate has dropped by about 4 percentage points, the rate of poverty is declining ( based on the absolute measure ), and so are tax rates. this is a huge success, which must be protected. at present, when uncertainty about global growth has risen, it is even more important for israel to maintain fiscal discipline. what is the government ’ s fiscal strategy? it set a rigid framework of discipline based on budget targets for its expenditure and the budget deficit, and it makes sure that it adheres to them. this greatly enhanced its credibility in the eyes of investors and in the domestic and international financial markets. the high level of the government ’ s credibility, combined with the success of its policy, led to the reduction of israel ’ s sovereign risk premium, the improvement of its credit rating, the oecd decision to invite israel to start the process of joining the organization, and the agreement of the us government to extend the guarantees. the result of the above is that the government and the business sector can borrow at reasonable cost. thus, yields to maturity on indexed government bonds have fallen from about 5 percent in 2003 to about 3 percent today. households, too, pay lower interest on their loans. for example, indexed interests on mortgages have fallen from an average of about 6 percent in 2003 to an average of about 4 percent currently. now, just prior to the approval of the 2008 budget by the knesset, and just after the government set its budget targets for next year, proposals are being made to abandon those targets. it would be very dangerous to accept these proposals. abandoning the targets set by the government itself is likely to severely undermine its credibility, and will cancel much of the progress that has been made. just now, when uncertainty about continued global growth has increased, we must not go back on our undertakings. i support the efforts of the minister of finance, with the backing of the prime minister, to ensure that the framework of the budget for 2008, based on the expenditure and deficit targets set by the government, will soon receive knesset approval. these efforts were certainly an important consideration that led to israel ’ s recently improved credit rating, and we should help the minister and the government as much as we can to make sure that their undertaking is implemented. the responsible way to increase expenditure on certain items is to alter the order of priorities in the budget, within the framework of the targets that have been set, and to implement them in conjunction | 0 |
encouraged to prudently leverage on technology to reinforce their controls against fraud or financial crimes. criminals and money launderers never “ sleep. ” they are unfazed by the virus. the bangko sentral ng pilipinas therefore continues to be pro - active, alert, and determined to keep watch against financial crimes and money laundering activities. as bsp governor and chairman of the anti - money laundering council, i assure you that we will 1 / 2 bis central bankers'speeches continue to work for an internationally compliant and effective anti - money laundering regime, which will provide the filipino people with a sound, dynamic, and strong financial system in an environment that is conducive to the promotion of social justice, political stability, and sustainable economic growth. in closing, let me thank our speakers from the international monetary fund, bank de france, and the anti - money laundering council secretariat who have graciously shared their time and expertise to be with us in this webinar. they have been carefully chosen to help webinar participants learn how international institutions have developed a protective and responsive infrastructure against money laundering activities. thank you very much and stay safe always! 2 / 2 bis central bankers'speeches | benjamin e diokno : welcome remarks - “ combating money laundering during pandemic ” welcome remarks by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the webinar on “ combating money laundering during pandemic ”, 21 july 2020. * * * a pleasant day to everyone! i am happy to welcome all of you to the webinar series 2020 that the bangko sentral ng pilipinas institute is conducting in partnership with the international monetary fund – singapore training institute. this collaboration emphasizes the need for organizations and institutions like the bangko sentral ng pilipinas and the international monetary fund to continuously work together to discuss timely and relevant economic and financial issues with a view to developing a better appreciation of these issues and finding solutions that adhere to international good practices. the first topic of the webinar series, combating money laundering during pandemic, highlights the serious challenges that money laundering is creating among financial institutions and economies of the world during this difficult period. the discussion is timely as we often witness that money launderers and fraudsters thrive during crisis periods as they take advantage of the vulnerability of the world economy. while the global economic activities have slowed down sharply during the current pandemic, money laundering activities are continuously being reported, which give us reason to believe that opportunistic threats abound. in the case of the bangko sentral ng pilipinas, we issued memorandum 2020 – 036, dated april 29, 2020, directing all banks to pay close attention to new forms of money laundering and terrorism financing risks. aside from phishing or spear phishing campaigns and other cases of fraudulent activities highlighted in our advisories, bsp - supervised institutions have been warned to be on their guard against illegal schemes that exploit the changes in work arrangements, lifestyles or behavior of the public due to covid - 19. these new illegal schemes include donations or charity scams, impostor investment, product scams, money mules, online sex trafficking and exploitation, veiled donations for terrorism financing, which are usually coursed through financial transactions through fund or wire transfers and deposits. bsp - supervised financial institutions are also advised to consider these kinds of criminal activities and typologies in their anti - money laundering and counter terrorism financing controls and compliance processes and to report suspicious transactions to the anti - money laundering council. they are also | 1 |
##economic impact of higher trade tariffs treats it as a negative supply shock involving a trade - off between lower output and higher prices, at least in the short run. studies that use this rather mechanical approach tend to find significant but still relatively limited effects. the imf, for example, has examined the fairly severe scenario of a global rise in tariffs that causes a 10 % increase in import prices but conclude that this would only lead to a 15 % fall in global trade and a drop of around 2 % in world gdp after 3 years. page 4 sur 5 this type of analysis, in my view, seriously underestimates the possible effects because it ignores the shock to confidence through two channels. firstly, uncertainty can increase risk aversion in financial markets and reduce the supply of credit. second, a loss of business confidence can deter investment. both uncertainty channels would tend to depress demand. what ’ s more, they can be front - loaded and occur before any trade restrictions come into effect. indeed the damage can be done even if no additional trade restrictions are actually imposed. a good example of outcomes before the facts is brexit. for the time being, the uk has conducted a referendum and triggered article 50 but doesn ’ t leave the european union until march next year : there are no tariff or trade barriers. yet the pound fell immediately after the referendum result in anticipation of more difficult external trading conditions in the future ; this has substantially hurt the purchasing power of uk households. business investment slowed down – as apparently it has in canada due to nafta uncertainty. the bank of england estimates that uk real gdp is already 1¾ - 2 % lower than it otherwise would be as a result of brexit. fiscal policy uncertainty about fiscal policy in many advanced economies is a second source of policyinduced uncertainty. public debt has risen significantly since the great recession. average gross government debt in the euro area rose from around 65 % of gdp in 2007 to peak at over 90 % in 2014 and is currently still over 85 %, despite the fact that primary balances have improved on average across the euro area. the macroeconomic costs of fiscal uncertainty can be felt even without an actual sovereign debt crisis. risk premia increase and raise the cost of borrowing but without any riskadjusted increase in return for savers. the risks of fiscal uncertainty are highly non - linear and one could almost say binary due to the reaction function of financial markets, as we have seen since 2010 in the euro | a slowdown in underlying economic growth? the governing council judged that it was largely a moderation from the exceptionally strong growth of q4 compounded by some temporary and supply - side factors at both the domestic and the global level, as well as weaker impetus from external trade. page 2 sur 5 the euro - system staff projections of economic growth of 2. 1 % in 2018, 1. 9 % in 2019 and 1. 7 % in 2020 remains consistent with an ongoing solid and broad - based recovery ; the french economy, which is sometimes considered to be a good proxy for the euro - area average, is likely to follow a similar growth path with 1. 8 %, 1. 7 % and 1. 6 % in 2020 according to the banque de france. on the inflation outlook, as part of the sapi criteria, recent ecb and euro - system staff projections have become more and more stable giving us increasing confidence that the improving economic growth we have seen will translate into rising wage and price inflation. in other words, whilst we might be a bit less certain precisely where we are in the cycle, we are more confident that we are heading in the right direction on inflation. monetary policy decisions when would the governing council end the net asset purchases? when would it announce this decision? these were questions left hanging and the subject of market speculation before our meeting in riga. besides the famous and important three “ ps ” – perseverance, patience and prudence - the governing council ’ s decisions were also guided by three “ cs ” : credibility, consistency and clarity. each element is important. credibility : our actions are credible because they stick to our mandate and our economic forecasts, in particular with respect to the inflation outlook. and we were obviously wise not to change the inflation target of 2 % over recent years despite many different calls to do so. consistency : we acted consistently with what we have previously said as was the case in our previous packages of december 2016 and october 2017. this consistency helped to have, at least since march, an “ alignment of the planets ” between the governing council ’ s views and those of outside forecasters, including market expectations. it was important that we announce the end of the net asset purchases as soon as we felt the sapi criteria would be met. clarity : uncertainty is today the number one enemy of growth and financial stability. by providing clear guidance on the path of asset purchases and interest rates – once more several months in advance - we have done | 1 |
to a special purpose limited liability company, maiden lane ii, in which aig would hold a $ 1 billion first - loss position. maiden lane ii then purchased, at market prices, rmbs with a par value of $ 39. 3 billion from certain aig domestic insurance company subsidiaries. this facility allowed aig to terminate its domestic securities lending program and to repay fully all outstanding amounts under the securities borrowing facility, which was then terminated. the federal reserve also took steps to help address the drain of liquidity on aig arising from potential collateral calls associated with credit default swap contracts written by aig fp on multi - sector cdos. the new york fed made a secured, non - recourse loan in the amount of $ 24. 3 billion to another special purpose limited liability company, maiden lane iii. maiden lane iii then purchased, at market prices, multi - sector collateralized debt obligations with a par value of approximately $ 62 billion from credit default swap counterparties of aig fp in return for the agreement of the counterparties to terminate the credit default swaps. aig provided $ 5 billion in equity to maiden lane iii to absorb any potential future losses on the cdos held by maiden lane iii. the federal reserve loans to maiden lane ii and iii have a term of six years and are secured by the entire portfolio of each llc. iii. ongoing investment management of the maiden lane ii and maiden lane iii portfolios the panel has asked us to discuss the new york fed ’ s “ strategy for divesting its aig holdings. ” we must emphasize that the new york fed did not ever decide to invest in aig. we cannot make such an investment. our role has always been that of lender, although we are a lender that re - structured our original fed facility to accommodate aig ’ s changing circumstances. the new york fed is the managing member of maiden lane ii and maiden lane iii, and, as set forth above, has control rights over the rmbs and cdos that were acquired by these llcs. blackrock financial management inc., an investment manager, has been retained to serve as the new york fed ’ s agent in managing the rmbs and the cdos. the management objective for both is maximization of long - term cash flows to pay the new york fed ’ s senior loans to the llcs ( subject to certain fees, costs, and reserves that are senior to the senior loans ), and refraining from investment | connecticut as compared with the nation. connecticut home prices grew less than the nation during the housing boom and subsequently declined less during the housing downturn ( chart 7 ). as a this number is the reported number of newly initiated foreclosures ( 383, 000 ) adjusted to reflect the coverage of the survey ( 64 percent of the total market ). bis central bankers ’ speeches result, the cumulative change in connecticut house prices since january 2000 is now very similar to the nation as a whole. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches | 0.5 |
01. 07. 2022 closing ceremony of the academic year 2021 - 2022 centro de estudios monetarios y financieros ( cemfi ) pablo hernandez de cos governor good afternoon rector and colleagues. and good afternoon class of 2022. it is a pleasure for me to participate in this graduation ceremony together with carlos andradas, rector of the universidad internacional menendez pelayo, and rafael repullo, director of the cemfi. i would especially like to thank carlos andradas for being here today. as you know the main activity of the universidad internacional menendez pelayo takes place in the summer in the delightful, charming and vibrant city of santander ( you can take this description at face value, with no need to apply a haircut due to my own origins in the region ). so i greatly appreciate his coming to madrid to participate in this graduation ceremony. the partnership of the cemfi with the universidad internacional menendez pelayo, dating back to 2006, has been instrumental in improving our ability to attract first - rate students and the quality of our graduate programme, and i am very grateful for this. our society needs this constant drive for excellence, especially in the present circumstances. these are difficult times. following the covid - 19 pandemic and its economic consequences, the russian invasion of ukraine last february has provided a further negative shock, heightening uncertainty and worsening inflationary pressures and growth prospects. this is a particularly challenging environment for economic policy. to address current structural and cyclical challenges we need to rely on the analysis and advice of well - trained economists whether they are in the academia, in the public administration, central banks or the private sector. this is why it is so important to have academic institutions like cemfi, that produce groundbreaking research and invest heavily in boosting the single most important determinant of economic growth : human capital. students of the class of 2022, what you take from here – your knowledge and the tools needed to analyse and understand reality – is the accumulated capital stemming from what is probably the most important investment you will make in your whole life. you have invested your time and effort. and the yield on this investment will be a wide array of opportunities. but, above all, this human capital you now possess is something that nobody can take away from you. it will accompany you everywhere you go and you can apply it in every endeavour you may undertake. | 03. 10. 2016 second financial education day banco de espana / cnmv luis m. linde governor good morning i would like to begin by saying how pleased i am to be participating in this celebration of the financial education day. the purpose of this event is to raise society ’ s awareness of the importance of improving and broadening financial and, more generally, economic knowledge, helping people take decisions that affect many aspects of our lives. at times like the present, characterised by the constant evolution and development of saving and borrowing instruments, the ability to correctly assess the risk and profitability of different financial products is particularly important. indeed, different products may be more or less appropriate depending on an individual ’ s risk exposure profile, age and income. the role of experience when choosing products is limited, since we are frequently faced with new products or products with features that are not well known. i would like to stress that the main purpose of financial education is not to train experts in how to understand complex products, but to help ordinary people with their spending, saving and investment decisions. particular prominence is given in financial education to aspects such as preparing a household budget, prudence when taking decisions, the assumption that higher returns are generally associated with higher risks, and, no less importantly, the time profile of economic decisions, and, specifically, preparation for retirement, which is obviously very important given current demographic trends and the challenges of population ageing. background and current situation of the financial education plan the gestation and promotion of financial education started in 2008 with a project initiated by the national securities market commission and the banco de espana, joined subsequently by the ministry of economic affairs and competitiveness. after its renewal in june 2013, a plan of activities was drawn up for the period 2013 - 2017, demonstrating a clear intention of continuity. the plan addresses two closely related aspects : the assessment and measurement of the financial literacy of young people and of adults. activities in the education system financial literacy consists of knowledge and skills that enable individuals to take informed decisions. one indication of the level of competence relates to young people ( 15 - 16 years old ), and was obtained in 2012 within the framework of the pisa study of financial literacy. from this test, which reflects skills related to the use of means of payment and the understanding of risk, a number of conclusions were drawn, two of which i wish to highlight : 3 / 5 in every country for which information is available, the financial literacy of the youngest generation is not significantly better | 0.5 |
based on the new knowledge gained from this additional analysis, the u. s. agencies collectively decided to move ahead with our next proposal but adjust the plan for u. s. implementation of basel ii - - as announced in our joint news release on september 30. among a number of adjustments, we indicated our intention to extend the timeline for implementation and augment the transitional floors, which should provide bankers and regulators with more experience with basel ii before it is fully implemented in the united states. in terms of the specifics of the qis4 analysis, we learned that the drop in qis4 capital was largely due to the favorable point in the business cycle when the data were collected. while the previous qis3 exercise was conducted with data from 2002, a higher credit loss year, qis4 reflected the more benign credit conditions present in 2004. we learned that the dispersion among institutions was largely due to the varying risk parameters they used, permissible in the qis4 exercise, and also due to portfolio differences. that is, banks have different approaches to risk - management processes, and their models and databases reflect those differences. importantly, we also learned that some of the data submitted by individual institutions was not complete ; in some cases banks did not have estimates of loss in stress periods or used ad hoc estimates, which might have caused minimum regulatory capital to be underestimated. based on the results of qis4, the federal reserve recognizes that all institutions have additional work to do. in our view, the findings did not point to insurmountable problems, but instead identified areas for future supervisory focus. in that way, the qis4 analysis was critical in enabling us to move forward. we were also pleased to see that general progress is being made toward developing more risk - sensitive capital measures. as most of you know, the plans for u. s. implementation include a year of parallel run - - a period in which minimum regulatory capital measures for basel ii will be calculated parallel to the existing basel i measures - - as well as three years of transitional floors. the agencies expect to perform additional indepth analyses of the basel ii minimum capital calculations produced by institutions during the parallel - run and transitional - floor periods before we move to full implementation without floors. we want to ensure that the minimum regulatory capital levels for each institution and in the aggregate for the group of basel ii banks provide an adequate capital cushion consistent with safety and soundness. it is also helpful to remember that | mas ’ conduct of monetary policy. they are factored in the construction of the mas portfolio and closely monitored on an ongoing basis. mas employs a comprehensive range of stress tests to assess the risks to the portfolio on an ongoing basis and establish whether the portfolio remains resilient to potential tail risk events over the medium term. three types of stress tests are conducted : historical : shocks are applied to the portfolio using asset price movements seen in historical stressed episodes, such as the global financial crisis, 2000 dot - com bust, 1994 bond market selloff, etc. vulnerability - based : the portfolio is subject to hypothetical scenarios which stress in turn each of the portfolio ’ s risk factors such as equity, interest rate, credit, inflation, and foreign exchange. thematic : these are forward - looking stress tests and are designed by taking into account prevailing market conditions and potential risk events on the horizon. 4 / 7 bis central bankers'speeches depending on the stress test results, mas will consider appropriate responses and portfolio adjustments when needed. the risk management framework is reviewed on a regular basis to ensure it remains fit - forpurpose. balanced asset allocation subject to the liquidity and risk tolerance thresholds, mas seeks to achieve good long - term returns on the ofr through a balanced asset allocation. mas invests the ofr in a well - diversified portfolio, probably more diversified than is the case for most central banks. the portfolio is geographically diversified across advanced and emerging market economies, with investment - grade bonds in advanced economies making up the largest share. the portfolio is diversified across asset classes – in cash, bonds and equities. the portfolio has a diversified currency mix, with about three - quarters of the ofr denominated in us dollars, euros, japanese yen and pound sterling, with the us dollar forming the bulk. each asset class in the portfolio serves a function. cash and nominal government bonds facilitate regular operational needs and can be quickly deployed to fulfil urgent liquidity needs under stressed conditions. advanced economy inflation - linked bonds are less liquid than nominal bonds but provide inflation protection. equities provide exposure to long - term growth assets with higher return potential but also with higher risk. mas ’ investment horizon is longer than that of many central banks. this has given mas the flexibility to invest in more volatile ( and longer ‘ duration ’ ) asset classes beyond fixed income, including equities. both the risk management framework and strategic asset allocation are approved by the mas board of directors and reviewed regularly. | 0 |
and rate of change of the exchange rate. the exchange rate is of crucial importance for low income economies for at least three reasons. first, these economies generally exhibit a strong and rapid pass through of exchange rate movements to domestic prices. volatility in the nominal exchange rate imparts volatility to domestic inflation. in mid 2011, a very sharp fall in the nominal exchange rate against the dollar, by 18 percent in three months, made a large contribution to the acceleration of inflation in the third quarter of that year ; this is not an experience we wish to repeat. secondly, exchange rate volatility is very disruptive for firms which have to transact in foreign exchange markets. thirdly, an overvalued real exchange rate is damaging for the competitiveness of traded goods industries and discourages private investment in these industries, which in turn retards long term economic growth and development, as a large volume of research, including research by imf staff, has demonstrated. the approach that we have adopted at the bou is to dampen short term volatility in the nominal exchange rate through sterilized intervention in the interbank foreign exchange market ; i. e. sales or purchases of foreign exchange accompanied by secondary market operations to keep the stance of monetary policy ( the interest rate ) unchanged. our experience shows that sterilized interventions can be effective in influencing the exchange rate. for example, when the exchange rate was depreciating very rapidly in the last few days of february following announcements by donors that they would suspend aid, the bou intervened and was able to stem the depreciation. the effectiveness of sterilized intervention most probably arises from portfolio balance effects in the context of imperfect capital mobility. we also attempt to lean against prolonged overvaluation of the real exchange rate, also using sterilized intervention. however, there are constraints on the extent to which this is practically feasible. sterilization to stem appreciation involves the issuance of domestic securities to mop up the liquidity created by foreign exchange purchases, which requires that the central bank must have a sufficient quantum of securities at its disposal for this purpose. it is also expensive for the central bank because of the large interest rate differential between domestic currency securities and the assets in which the central bank holds its foreign currency reserves. in uganda this differential is currently about 11 percentage points. the speed of transition to itl i would like to make a brief comment about our experience with regard to the speed of transition | bostjan vasle : introducing the euro in times of high inflation - case of croatia opening speech by mr bostjan vasle, governor of bank of slovenia, at the lecture " introducing the euro in times of high inflation - case of croatia ", ljubljana, 20 april 2023. * * * the spoken word applies. dear ladies and gentlemen, dear guests, welcome to the second lecture of foreign central bank governors this year. after hosting the governor of the central bank of estonia in march, today we have with us the governor of the croatian national bank, boris vuji. just a few months after croatia became the 20th country to join the euro area, governor vuji will present croatia's path to and the first experiences with adoption of the euro. with croatia's entry into the euro area this year, the euro has become the official currency for 347 million people. euro area enlargement adds to the role of the euro and the european economy, which is particularly important at a time of increased geopolitical tensions. the euro remains the second most widely used currency for trade invoicing, crossborder lending and foreign exchange trading, and holds the second largest share of global foreign exchange reserves, after the us dollar. even at a time of high inflation, support for the single currency among the eu population remains high, at over 70 % according to this winter's eurobarometer. with support at 87 %, slovenians are among the biggest supporters of the euro. * * * while we can draw several parallels between the introduction of the euro in slovenia in 2007 and in croatia this year, there are also some interesting differences. ( i ) slovenia was the first of the so - called new eu member states to adopt the euro. the introduction of the euro was accompanied by broad support in politics and the professional community, which contributed to an exceptionally high 72 % acceptance of the euro among the population. 1 / 3 bis - central bankers'speeches the fact that slovenians, as savers and consumers, were well familiar with the euro also boded well. in addition, it is worth highlighting the importance of thorough tree - year preparations for the euro adoption, in terms of technical, managerial and communication aspects. in croatia, there were more divisions and doubts about euro adoption, which made the determination and public engagement of the central bank and the government even more significant. ( ii ) for slovenia, one of the major challenges in meeting the criteria for joining the euro | 0 |
yandraduth googoolye : small and medium - sized enterprises in mauritius address by mr yandraduth googoolye, first deputy governor of the bank of mauritius, on the occasion of the signing of an agreement for a line of credit to the mauritius leasing company limited by the european investment bank for sme financing, caudan, 19 december 2011. * * * ladies and gentlemen it is a great honour for me to be among you for this memorable event and i welcome this opportunity to address this forum on a subject that has been much talked about lately, both at the national and international level. smes have played a key role in providing the necessary impetus to the advancement of some of the world ’ s economies like the united states, china, japan, taiwan, korea, hong kong as well as many countries in europe. ninety - nine per cent of all european businesses are in fact smes. they provide 2 out of 3 of the private sector jobs and contribute to more than half of the total value added created by businesses in the european union. in some countries, such as the uk, governments have entered into an agreement with major banks to determine how much they will lend to smes. in south africa, smes are said to contribute 40 % of gdp and 40 % of employment opportunities. there are currently over 100 million smes in africa and this figure is deemed to grow even more. india and countries in south america have been concentrating their efforts in developing the sme sector. in developing countries, smes serve as a useful bridge between the informal economy of family enterprises and the formalised corporate sector. as such, most policymakers deem the health of the sme sector to be highly important for an economy mauritius is not an exception to this. i believe that smes are critical for our future economic prosperity given that it has been placed on the national agenda by the government. indeed, the government of mauritius has endeavoured to bolster the sme sector by providing various incentives, including industrial space and special grants amongst other measures. some of the former smes are now big players in the mauritian corporate landscape. a survey conducted by statistics mauritius in 2007 revealed that there were around 92, 000 smes which provided employment to some 209, 000 individuals. these numbers are estimated to have reached 94, 000 and 250, 000, respectively, in 2010. sme jobs represent around 46 % of total employment in the economy and are mainly concentrated in | are busy advancing this agenda. in monetary co - operation in comesa, we have the pta bank, the pta reinsurance company, the african trade insurance agency and the african commerce exchange which are all very much involved. among the new institutions, i am pleased to see that the comesa fund will soon be up and running with its two windows, the adjustment facility and the comesa infrastructure fund, based here in mauritius. the first window addresses the problems related to liberalization of the economies of member - states while the second window addresses infrastructural problems of the region. out of the eu allocation of €78 million, a sum of €5 million has already been disbursed. the pilot aid - for - trade programme for the north / south corridor has mobilized nearly us $ 3 billion, with a further programme planned for the rest of the comesa region. we have every reason to believe that the comesa fund will hit the ground running! so, with all this ferment of activity, it is difficult not to get excited about the continent. africa is moving on, so move over in front, you are blocking the way, we are now in the fast track. for our meeting this morning we have before us a wide - ranging and important agenda. let me just single out six key points that i believe will provide a focus for our discussions and give a real added boost in our exciting journey towards economic integration. we shall • first, review the choice of monetary policy regimes and we shall be guided by the distinguished governor of the central bank of kenya, prof ndung ’ u. • second, listen to a presentation by the international expert gavin bingham of the bank for international settlements on issues in the governance of central banks, to be enlightened on emerging best practices and improve on our current performance. • third, receive country reports on progress towards macro - economic convergence – which is the acid test of how well - prepared we are for closer union. • fourth, hear of progress in the establishment of financial stability units and the production of financial stability reports by central banks, to enhance our surveillance and increase our resilience. • fifth, consider the draft charter of the comesa monetary institute towards strengthening our regulatory and supervisory framework. • and finally, agree on the choice of a host central bank to house the comesa monetary institute. that is quite an agenda. i have underlined what i believe are some of the crucial issues for | 0.5 |
conducted at the european level and fiscal policies conducted at the national level. basically, there are two ways to realign this imbalance : either the european level gains certain control rights over national budgets – which would mean a deeper political bis central bankers ’ speeches integration. or we leave control of fiscal policy at the national level. but then the national level also has to assume liability for its policies – that would mean strengthening the maastricht framework. the first course would amount to what is known as a fiscal union. but that would depend on the countries of the euro area transferring national sovereignty to the european level – for example, by giving the european level the right to intervene in the case of unsound public finances. giving up sovereignty in this way would be a radical change and require wide - ranging legislative changes nationally and at the european level. more than anything, such changes would need the support not only of policymakers but also of the general public. and, on this point, we should be realistic. it is not possible to identify any willingness to do that at present – not in germany or in any other country of the euro area. this just leaves the second course of action : that is, an improved maastricht framework, a “ maastricht 2. 0 ”. among other things, that means strengthening the rules on borrowing – the stability and growth pact not only needs teeth, it also has to be able to bite. the rules have since been tightened – now they have to be applied and complied with. a “ maastricht 2. 0 ” would also mean taking the no bail - out principle more seriously again. but that calls for the possibility of sovereign default as the ultimate logical conclusion of individual responsibility. sovereign defaults have to be possible without destabilising the financial system of the euro area as a whole. 3. 3 the banking union as part of a better architecture and that is an important point, because the close link between government finances and the financial system was a major element of the crisis. basically, this is very much a vicious circle : if public finances run into difficulties, the banks are put under strain – if the banks hold government bonds on their balance sheets, for example. conversely, if banks run into difficulties, public finances are put under strain. take the example of ireland : in order to save its banking sector, ireland ran up a budget deficit amounting to 30 % of its economic output in 2010. there are various approaches | is necessary to cross - check against other inflation expectations ’ measures. this leads me to my third and final point. 3. other useful indicators of expected inflation inflation - indexed bonds are not the sole financial instrument to provide information on long - term expectations of inflation, as similar information can be extracted from inflation - linked swaps. the market for inflation - linked swaps has developed rapidly since 2002 in the euro area. companies with revenues linked to inflation may use this market to hedge against the perspective of low inflation while companies with liabilities linked to inflation may use it to hedge against the risks of high inflation. compared to inflation - indexed bonds, they provide a wider maturity spectrum for short and medium horizons. however, they are affected by the same biases, in particular the inflation risk and liquidity premia. this tool, however, usefully complements inflation - indexed bonds in the eurosystem ’ s information set7 and, so far, the information provided by this new financial instrument has been broadly see f. alonso, r. blanco and a. del rio : “ estimating inflation expectations using french government inflation - indexed bonds ”, banco de espana, documento de trabajo, n° 0111, 2001. see for instance the box entitled “ deriving euro area inflation expectations from inflation - linked swaps ”, ecb monthly bulletin, september 2003. in line with the information derived from indexed bonds, suggesting an average ten - year expected inflation rate of around 2 %. in addition to financial indicators, central banks, and the ecb in particular, also rely heavily on surveys to extract relevant information as regards long - term inflation expectations. i will limit myself to two examples : the first is the quarterly survey that has been carried out by the ecb since 1999, in which information is gathered from professional forecasters. in particular, it surveys inflation expectations over the medium term, at a 4 - year horizon, and delivers very useful information since each forecaster is asked about his own probability distribution of inflation over the forecast horizon. it might then be completed by other surveys looking at longer horizons, such as the consensus forecast for instance. according to these surveys, medium to long - term expectations have proven remarkably stable in the euro area, standing at a level around 1. 8 - 1. 9 %, in spite of short - term inflation dynamics being adversely affected by a series of sizeable supply shocks that have impacted the economy since 2000. another very useful kind of survey | 0 |
, of course, first the responsibility of monetary policy, which has been assigned to the eurosystem since january 1. incidentally, monetary policy is european commission, economic forecasts spring 1999. also making the most valuable contribution to growth and employment by ensuring price stability. to enable the european system of central banks ( escb ) to fulfil its task, its independence was enshrined in the maastricht treaty ( article 107 ). neither the ecb, nor a national central bank, nor any member of their decision - making bodies is allowed to take instructions from any government. similarly, the governments of the member states shall not seek to exert any influence on monetary policy. in the last months, this second part of the article of independence was neglected by some parties. the signatories of the maastricht treaty have, however, and rightly so, acknowledged that a “ depoliticised ” money can only be brought about, if all policy areas duly respect the independence of the central bank. at the beginning of this month, the governing council of the ecb - fully independently and with total responsibility for price stability - lowered the interest rate for the main refinancing operations from 3. 0 % to 2. 5 %. this decision was in line with the two pillars of its strategy and was taken with a view to the future. it was generally welcomed. however, the ecb governing council made it clear that those responsible for other policy areas are now even more obliged to take the necessary steps. iii the international role that the euro will play in the future will be determined particularly by the policies pursued in the euro countries. it will hinge crucially on the euro ’ s stability and the success of emu and on the markets ’ confidence in the new currency. i should like to stress at this juncture that it was never intended to establish the euro as a “ counterweight ” to the dollar - although some commentators saw it like that. the relationship of the european currencies to the us dollar had previously depended, in particular, on the size and openness of the respective economic area, the breadth and depth of the financial market, and the preferences of international investors. in the case of the d - mark it was certainly the profound confidence of market participants in the stability of the german currency that established is as the second most important reserve and investment currency after the us dollar. as far as the size and openness of the | bank recovery and resolution directive spells out clear rules on who has to bear the costs when a bank fails. in a nutshell : bail - out is out and bail - in is in. in future, shareholders and creditors will be first in line when it comes to bearing losses ; taxpayers will be last in line. this directive will be implemented in germany in early 2015 ; the latest possible date for implementation in other countries is 2016. also from 2016 onwards, european banking supervision will be supplemented with a european resolution mechanism for banks. from then on, the banking union will rest on two pillars and provide a stable framework for european financial markets. 4. what about the banks? what does all that mean for the banks? in essence, regulators and supervisors are working towards strengthening the principles of a market economy. naturally, this puts more weight on the shoulders of market participants, that is, the banks. in future, there will be no public lifeguard standing by to bail banks out when things go wrong. failure has become a real possibility and banks have to acknowledge that. they should have an interest in safeguarding their stability and strengthening their profitability. regarding the stability of banks, the comprehensive assessment provided a deep insight into the state of the european system. so let us take a closer look at the german banks that were subjected to that assessment. all in all, german banks did rather well. of the 25 german banks that were examined, there was only one “ technical ” failure, since the bank in question has already remedied its capital shortfall. over all, it could be concluded that german banks are stable enough from a capital point of view to cope with severe economic stress. but again, no bank should give in to complacency. and neither should supervisors. we should, for instance, be aware that the comprehensive assessment focused on risk - weighted capital ratios. markets and supervisors, however, also cast an eye on unweighted capital ratios. and with regard to these leverage ratios, german banks are below average compared to other euro - area countries. thus, there is ample room to catch - up and improve stability even further. nevertheless, while stability is necessary for a bank, it is not sufficient. banks have to be profitable as well. and in this regard, too, german banks need to catch up. their return on assets and their return on equity are also relatively low compared to other euro - area countries. a recent study even comes to the conclusion that only 6 % | 0.5 |
a glance at the treaty would help to prevent false political ambition. already today, the dialogue between the eurogroup and the ecb is intensive. it cannot and must not be transformed into coordination including monetary policy. the young currency euro needs political influence least of all. the much - vaunted “ political visibility ” of the eurogroup exists. and yet, as i may recall at this juncture : the only spokesman for the euro is the president of the ecb. he is “ mr euro ”. any political attempt to involve the ecb ex ante in political decisions or to create a second “ mr euro ” ( namely, the chairman of the eurogroup ) would only lead to a blurring of responsibilities and thus to confusion. conclusion 1. right from the start, the ecb has demonstrated responsibility, reliability and consistency in its monetary policy. the ecb is close to its objective of safeguarding price stability, and keeping inflation below 2 % in the medium run. the inflation rate in the euro area is likely to drop back below 2 % in the second half of 2001. the ecb is pursuing its own strategy, geared to european conditions. its decisions are based on its own analyses. it is not sailing in the wake of the fed. up to the present, it has pursued a policy of “ steady as she goes ”. hectic responses by central banks transmit themselves to the markets and increase volatility. 2. the ecb must go on working to enhance its credibility and to strengthen the confidence of the markets and residents. to accomplish that, it is important to withstand political pressures and to defend the independence constitutionally enshrined in the ec treaty against political “ attempted embraces ”. in this respect, the ecb should be less modest. it should be less reluctant to issue public clarifications whenever concealed attacks on its independence are concerned. that is to say, the ecb must be prepared, to a greater extent than in the past, to carry out conflicts with the european parliament and the eurogroup in public. the increasing political demands being made on the ecb must be met with greater self - assurance. failing that, the young institution will run the risk of being forced on to the defensive in the event of a serious test. 3. politicians are not doing themselves any favours by making demands on the ecb going beyond the maastricht treaty. instead, the politicians should concentrate on the major challenges arising in their own fields | an assessment of inflation prospects based on a broad range of indicators. it is only the combination of the strict orientation of monetary policy towards an unambiguous objective – price stability – and a pre - announced strategy – the two - pillar strategy of monetary growth and inflation prospects – that guarantees the transparency of the monetary policy decisions taken by the eurosystem, and their public control. in addition, the eurosystem informs the public regularly about its assessment of risks to stability ( through press releases, press conferences, etc. ), thereby contributing further to the transparency of its monetary policy decisions. the policies of the eurosystem are often compared to those of other systems. but the eurosystem need not shrink from comparison with other monetary policy strategies. incidentally, in this connection the question has already been raised as to which monetary policy strategy other central banks pursue, if not “ looking at everything ”. 2. the transparency of the ecb governing council ’ s decisions transparency is an ambivalent concept. an “ excess ” of information may also result in less transparency of monetary policy decisions. in the debate on the transparency of monetary policy, quantity and quality are often confused. more information does not automatically imply more transparency. on the contrary : more information may easily give rise to confusion, and thus to less transparency. hence “ natural limits to transparency ” exist : perfect transparency would imply that the central bank must make available all the information which contributed to its decisions. for purely practical reasons, this is impossible. in practice, therefore, transparency is invariably partial, and can never be complete and perfect in the sense of the theoretical models. criticism of the alleged non - transparency of the eurosystem ’ s monetary policy, and calls for the publication of minutes, are heard particularly often from the anglo - american press and academia. remarkably, the disagreements about assessing inflation forecasts between the members of the decision - making bodies of those central banks that publish their minutes have engendered confusion precisely among those commentators who insist on the publication of the minutes of the ecb governing council. in the specific situation of the eurosystem, the publication of minutes would pose particular risks. whereas the entire euro area is considered in the ecb governing council, national viewpoints are the rule among the general public, and also among policy - makers and the parties to pay settlements. that is illustrated by the frequently - asked question “ is a change in interest rates good for our country? ” hence the publication of minutes involves | 1 |
simple solutions to complex problems. think about the leverage ratio, for example, which has been promoted as a simple measure to restrict risks. designing a leverage ratio compatible with the different banking systems has been anything but simple ; at the bcbs it took us several years and i would not call the outcome a simple design either. often there was no easy answer available to those negotiating basel iii as we had to cater for the heterogeneity of our markets, market participants and banking systems. as for the future, i believe the basic architecture of basel iii is solid and that it will serve us well for years to come. but it ’ s no secret that the business of banking changes fast. so, it was clear from the start that some parts of any framework might have to be fine - tuned. the same is true with basel iii ’ s complexity. we have to see how the rules work in practice and what impact they 1 / 2 bis central bankers'speeches have. but still, we can reinforce the framework without introducing new rules or reworking its architecture. the next step is now to faithfully implement basel iii around the world. overall, i agree with the idea that we should not try to come up with a new framework every three years. we should rather focus on implementation. but i would not want to give the impression that i am in favour of less regulation. over the decades, we have seen a regulatory and supervisory cycle. the post - crisis phase of this cycle has been characterised by an understandable tendency to strengthen regulation and supervision. this is natural when the memory of the consequences of light - touch regulation is still fresh. however, as the memory of the crisis fades, the cycle usually enters a phase where regulation and strong supervision are perceived as a hindrance to growth and markets. in this phase, regulation leaves less room for supervisory discretion. the requirements for the supervisor to be allowed to act begin getting more stringent. in this phase of the cycle, it is usually harder for regulators and supervisors to react to new risks. my impression is that we are now between these two phases of the cycle. between a phase where strong regulation and supervision are encouraged, and one where there are strong calls for fewer restrictions. this could be risky, and i would strongly advise against weakening rules we have already agreed on. besides this general point, there are several issues which should and could be dealt with, or discussed at the bcbs. work can be done to improve joint understanding of | are. although the liquidity provided by the ecb has increased substantially, this has not led to an increase in monetary and credit aggregates. on the contrary, credit flows remain weak and loan demand has not yet picked up. this will, however, change at some point in the future, so that we are constantly monitoring the situation. again, you could gain an understanding of the dynamics of a pick - up in credit demand and supply via the ecb ’ s balance sheet. if banks increase their lending activities, their reserve requirements would rise. all other things being equal, that would reduce the amount of “ excess liquidity ”, thereby transforming the balance sheet expansion of the ecb into credit and economic growth, both of which entail inflationary risks. from this reasoning it becomes clear that the timing will be crucial for the withdrawal of the enhanced credit support, and that a strategy is needed to guide this process. let me now turn to this topic. 2. 4 phasing out the enhanced credit support there can be no doubt that the ecb ’ s monetary policy currently provides substantial support to the banking sector and the euro area economy as a whole. i would characterise our current monetary policy stance as accommodating, which is appropriate in view of the fact that neither the economic analysis nor the monetary analysis point to risks for price stability at this stage. it is clear, however, that our exceptional support cannot last for too long a period of time since there are negative side effects. • the money market yield curve is currently strongly influenced by the abundant liquidity in the market, i. e. short term money market rates are to some extent distorted. if this situation persists for too long, it may contribute to a misallocation of capital. • there is a clear risk of creating a dependency of banks on central bank refinancing, while the intention of the current policy is only to “ help banks to help themselves ”. it may also slow down necessary structural adjustments to the balance sheets of banks and, ultimately, to the business models of some financial institutions. • risks to price stability will ultimately emerge from having this exceptional support in place for too long a period of time. for all these reasons, the ecb has an exit strategy in place to guide the process of phasing out our enhanced credit support. this strategy can be activated at any time. let me elaborate. consistent with its mandate, the ecb needs to act if risks to price | 0 |
yandraduth googoolye : developing the custody market in mauritius address by mr yandraduth googoolye, first deputy governor of the bank of mauritius, at the official launching of hsbc global custody services, port louis, 12 april 2012. * * * good morning to you all. it gives me great pleasure to be present this morning at the launching of the hsbc global custody services. this is yet another initiative of hsbc towards broadening the range of services that it offers to its customers. i have been given to understand that with this proposition, the bank, with the intrinsic support of its parent group, aims at increasing the size of the custody market in the mauritian jurisdiction. “ hsbc security services ” hopes to create a hub for tapping of both developed and emerging markets in over a network of 90 countries worldwide, including 25 african states. it is a known fact that the custodian industry has been dominated by a handful of largest banks worldwide, and hsbc has, in this regard, secured a privileged position among these big players. no doubt, your bank can view its track record in the global custodian industry with immense pride today. having been ranked number one globally for its global custody product in the global custodian 2011, your bank has been top rated in 8 out of 10 categories as published recently in the magazine. this outstanding performance clearly demonstrates your commitment to deliver a market leading product and maintain the position of number one service provider by the industry. while looking at the history of hsbc group in mauritius as far back as in the year 1859, it is remembered with pride and nostalgia of the assistance provided by the bank in the financing of railway construction in 1864. and today, it is acknowledged that hsbc bank is moving on the fast track, bringing new life and strength to our banking sector. role of a custodian bank the traditional responsibility of a custodian bank has been the holding and safe keeping of the various assets of either institutional or individual investors. these assets included stocks and bonds. while having its origins from the physical safekeeping of share certificates, custody has now been transformed into a technology - intensive information processing business. with the globalization of capital markets, more specialization is coming along with the constant growth of cross - border investment and collective investment schemes. global custodians are therefore able to capture cross - border custody business without incurring substantial set - up costs and on - going fixed costs. there | is no doubt that the global custodian model is most appealing to institutional investors and asset managers, and rightly so, hsbc is well - placed to serve this industry by capitalizing on its network of branches across the globe and by leveraging effectively on its worldwide resources with local expertise. hsbc bank is creating a one - stop shop service by providing from its globally connected business, whether for fund accounting, valuation, global custody and transfer, foreign currency exchange, cash management, or securities lending. in addition, the proposition of hsbc bank incorporates the creation of a central flow of data on the current status of assets which would enable the owner of the assets to easily obtain documentation that provides information about the holdings that he has entrusted to the bank. bis central bankers ’ speeches supervisory issues relating to provision of custody services as is the case for any financial product, there are a number of risks associated in the delivery of custody services. these risks can be broadly, classified into operational, financial and legal risks. focus is therefore being laid on financial risk management, capital adequacy, and operational risk mitigation. while it is viewed that there might not be any systemic implications which emanate directly from custody services, vigilance is nonetheless required on the part of financial institutions and supervisory authorities alike, since cross - border investment flows might have an impact on domestic financial system stability. in the aftermath of the global crisis which has been of unprecedented magnitude, banks have been called to become leaner and fitter. alongside, the job of regulators has become even more complex given their mandate to maintain soundness and stability of the financial system. presently, the bank of mauritius is engaged in constantly upgrading its prudential and supervisory norms to keep pace with international best practices in the regulation and supervision of financial institutions falling under its purview. the recent financial crisis bears witness to the fact that a mere slackening of vigilance can give rise to devastative snowball effects. as supervisor, we do maintain that prudential and supervisory norms have to be constantly revamped to chase up and keep pace with financial innovation. and in the wake of the rapid integration of financial markets, there is a dire need for refinement in early warning system tools that can further enhance the supervisory framework. concurrently, the upholding of the basic principles of sound corporate governance remain crucial for withstanding speculative appetites and curbing excessive market volatility. and so much so, as banking | 1 |
other industries have been small. initially, there had been some concern that sars would disrupt the just - in - time inventory systems of u. s. manufacturers. many of those systems rely on components from asia, and any disruption in the flow of these goods has the potential to affect production in the united states. so far, however, u. s. manufacturing output has not been noticeably affected. in recent months, inflation has dropped to very low levels. as i noted earlier, energy prices already are reacting to the decline in crude oil prices, and core consumer price inflation has been minimal. inflation is now sufficiently low that it no longer appears to be much of a factor in the economic calculations of households and businesses. indeed, we have reached a point at which, in the judgment of the federal open market committee, the probability of an unwelcome substantial fall in inflation over the next few quarters, though minor, exceeds that of a pickup in inflation. mr. chairman, the economic information received in recent weeks has not, in my judgment, materially altered the outlook. nonetheless, the economy continues to be buffeted by strong cross currents. recent readings on production and employment have been on the weak side, but the economic fundamentals - including the improved conditions in financial markets and the continued growth in productivity - augur well for the future. | . in the model shown here, the appreciation has its largest effect on gross domestic product ( gdp ) growth in the second year after the shock. thus, it is plausible to think that the rise in the dollar over the past year would restrain growth of real gdp through 2016 and perhaps into 2017 as well. the rise in the dollar since last summer, of about 17 percent in nominal terms, with its associated declines in non - oil import prices, could plausibly be holding down core inflation quite noticeably this year. commodity prices other than oil are also of relevance for inflation in the united states. prices of metals and other industrial commodities, and agricultural products, are affected to a considerable extent by developments outside the united states, and the softness we ’ ve seen in these commodity prices, has in part reflected a slowing of demand from china and among the many papers finding a role for resource utilization in affecting inflation based on evidence from macroeconomic time - series data, see robert j. gordon ( 2013 ), “ the phillips curve is alive and well : inflation and the nairu during the slow recovery ( pdf ), ” nber working paper series 19390 ( cambridge, mass. : national bureau of economic research, august ) ; or douglas o. staiger, james h. stock and mark w. watson ( 1997 ), “ how precise are estimates of the natural rate of unemployment? ” in christina d. romer and david h. romer, eds., reducing inflation : motivation and strategy ( chicago : university of chicago press ), pp. 195 – 246. for similar results based on cross - sectional evidence, see michael t. kiley ( 2014 ), “ an evaluation of the inflationary pressure associated with short - and long - term unemployment ( pdf ), ” finance and economics discussion series 2014 – 28 ( washington : board of governors of the federal reserve system, march ) ; or, for wages instead of prices, christopher l. smith ( 2014 ), “ the effect of labor slack on wages : evidence from state - level relationships, ” feds notes ( washington : board of governors of the federal reserve system, june 2 ). there has also been debate regarding other potential channels through which global factors could affect domestic inflation – for example, whether measures of foreign resource utilization play an important independent role. for evidence supporting such global factors, see claudio borio and andrew filardo ( 2007 ), “ globalisation and inflation : new cross - country evidence on the global | 0.5 |
intervention, especially since these activities do not necessarily have zero economic value - added. contrary to the basel ii approach, the penalty imposed on risky activities would become infinite. thus, given the inherent trade - off between the efficiency costs of intervention and its benefits, a reformed basel ii framework might provide a more balanced solution. this is also the case with regard to the introduction of an additional tax for the banking sector. even though such a tax could be useful in recouping some of the costs of the crisis, it is an inferior instrument in terms of internalising the effects of risky activities on financial stability. hence, the reform of the basel ii framework is rightly given preference by regulators and should be implemented with priority by policymakers. regardless of its actual design, the general objective of regulation on the microprudential level is to have a first line of defence by reducing the likelihood of individual bank failures. however, given our globalised and interconnected world and the interdependence of financial institutions and markets, even the failure of a single institution might lead to systemic disruptions. thus, it is necessary to complement a strengthened microprudential regulation with a macroprudential stance which as a second line of defence takes into account the stability of the financial system as a whole. one major aspect of macroprudential regulation would be the treatment of systemically important financial institutions. although the revised basel ii framework is part of a solution to this problem, broader reforms are necessary. these might include capital surcharges for systemically important institutions, better resolution regimes as well as a stronger market infrastructure. regarding the reform process itself, we have to bear in mind that the decisions we are about to make will shape the global financial system for years to come. thus, accuracy is more important than speed, and we have to be careful not to implement oversimplistic solutions. regarding the required complexity of regulatory measures, potential interactions have to be taken into account, as otherwise the danger of unintended consequences will grow. at the same time, the cumulative effect of new measures has to be considered, which makes thorough impact assessments of the intended consequences necessary. we are, of course, aware of the fact that a slow pace of reform increases regulatory uncertainty for market participants. but up to now, policy development has proceeded according to agreed and very ambitious timelines, reducing the uncertainty as far as possible. 3. international cooperation and harmonisation another factor that increases the complexity of the | - placed to understand what the important questions are, to generate the data needed to answer them and to speak to diverse audiences about the results. this webinar and blog series are important parts of our strategy for communicating about our work and for advancing thought about the critical role that heterogeneity plays in our economy. thank you. 2 / 2 bis central bankers'speeches | 0 |
1997? in october that year, the world economic outlook published by the imf projected that world economic growth would continue at above 4 per cent per annum for the balance of the decade. this projection was made in the knowledge of the emerging problems in asia, but in the expectation that relatively robust growth would continue in the united states and europe. a few weeks later, the south korean economy was clearly in serious difficulty, but the mean of the november consensus forecasts projected that industrial production in korea would grow by almost 8 per cent in 1998. industrial production in japan was projected to grow at what seemed like a very modest 2 per cent this year. we were suspicious that perhaps the consensus forecasts were not picking up the seriousness of the deterioration in the world situation. for the first time, we deliberately departed from our traditional use of the mean of the consensus forecasts, and instead used a pessimistic sub - set of those forecasts. we had a hunch that the situation could turn out even worse than these numbers suggested but, with the overwhelming majority of international forecasters continuing to project strong growth in key markets such as australia, the united states, and europe, we stayed with that pessimistic sub - set. even though, with the wisdom of hindsight, it is clear that the growth we projected for the new zealand economy in 1998 was too optimistic, that is not the same as saying that monetary policy itself was flawed. every quarter, the bank produces a new quarterly projection, and adjusts its position in the light of new data. perhaps of even greater importance, the bank allows financial markets very considerable leeway to adjust monetary conditions in the light of new data between those quarterly projections. the real issue is not whether the bank ’ s projections were absolutely correct ; they will never be. rather the issue is whether the bank allowed monetary conditions to evolve appropriately in the light of new information, and i believe that we did. over the 10 months since december 1997, the easing of monetary conditions has accelerated so that today monetary conditions are the equivalent of almost 10 percentage points easier than they were in december 1997, and more than 9 percentage points easier than they were projected to be now, back in december 1997. of course, not all of that easing has been through reduced interest rates : the exchange rate has fallen substantially also. but 90 - day interest rates today are at levels last seen in early 1994, and indeed, apart from that brief period in early 1994, new zealand has | average trade - weighted exchange rate is a little higher than the present level. but just as the exchange rate almost certainly overshot during the period of almost four years in which it was appreciating, so it may overshoot ‘ on the other side ’. given new zealand ’ s large current account deficit, and still - heavy dependence on world commodity markets, some further weakness in the currency in the short - term would not be at all surprising. one thing we know with confidence, and that is that if financial markets feel disinclined to continue investing in new zealand in large amounts at current low interest rates, either interest rates will rise somewhat or the exchange rate will fall somewhat. the reserve bank ’ s responsibility is to ensure that, whatever the mix of monetary conditions, we continue to deliver price stability. conclusion on 26 june this year, i gave a speech entitled, monetary policy in a dangerous world. though delivered about two hours after the release of the weak march quarter gdp numbers, it was, of course, written several days before that release. in it, i warned that we could well be facing ‘ the most serious shock to hit the new zealand economy since the oil shocks of the 1970s ’. but i also said that the reforms of the last 15 years, including a monetary policy committed to delivering on - going price stability, put us in a good position to weather the storm. nothing that has happened since 26 june has changed my mind, either about the seriousness of the shock or about our ability to weather the storm. | 1 |
that the bank of japan had been taking all possible steps to maintain japan ’ s financial intermediation function and ensure smooth fund settlement. moreover, the international bankers association, which is a group of foreign financial institutions active in japan, issued a press release on march 15, soon after the earthquake, stating that major foreign financial institutions in japan were continuing to operate business as usual. subsequently, senior executives of such institutions visited japan one after another and expressed their commitment to continue to do business in japan. along with such communication, it is, as i mentioned earlier, of utmost importance that settlement systems and the financial markets physically continue to function as normal. once financial infrastructure continues to function normally, unfounded rumors will disappear in due course. if, on the contrary, financial infrastructure does not function normally, the situation will bis central bankers ’ speeches deteriorate further. for that reason, even in times of disaster, it is important to make the necessary preparations to enable the normal functioning of financial infrastructure. in this regard, it has driven home to me the importance of the “ logistics ” of providing human and physical resources, and within this the importance of the location of backup centers. the foremost challenge for japan today is responding to the acute emergency after the disaster. financial infrastructure is vital not only in this emergency phase immediately after the disaster, but also in the process of economic rebuilding that will gradually become more and more center - stage. the financial markets have the most important role as the infrastructure for providing the financing necessary for this rebuilding. after the great kanto earthquake of 1923, foreign currency - denominated government securities were issued to cover the rebuilding costs. at that time, the government was forced to issue securities at high interest rates. since the recent earthquake, there have been 12 auctions for 35. 0 trillion yen worth of newly - issued government securities including treasury discount bills. despite the unprecedented major earthquake and subsequent disasters and despite the fact that japan ’ s fiscal conditions remain severe, it was still possible to issue securities at low interest rates in a stable manner. this was possible partly because the markets have confidence that the aim of japan ’ s monetary policy is to achieve sustainable growth with price stability and not to facilitate government financing. it is not easy to get a sense of the importance of the infrastructure at the heart of society, such as electricity supply and the road network, when it is functioning as normal. the recent disaster has made us recognize that, once such infrastructure is damaged and impaired, repairing it | sayuri shirai : monetary easing and communication policy – a review based on several surveys speech by ms sayuri shirai, member of the policy board of the bank of japan, at a seminar held at columbia university, new york city, 27 february 2014. * i. * * introduction it is a great honor to be here today and have the opportunity to speak at columbia university. i would like to add how very nice it is to return to this university, where i received my ph. d. in economics, and i am looking forward to exchanging views with professors and students after my presentation. today, i would like to talk about communication on monetary policy – a topic of growing interest among central banks – in the context of the bank of japan. to begin with, let me pose a question : why do central banks pay special attention to their communications on monetary policy with the public ( meaning market participants and the general public )? i think there are at least three reasons : ( 1 ) to ensure central bank accountability ; ( 2 ) to enhance the effectiveness of monetary policy ; and ( 3 ) ( in a narrower sense ) to make active use of communication as a nontraditional monetary easing measure among central banks in the face of the zero lower bound on short - term interest rates. communication plays a crucial role in successful conduct of monetary policy by the bank. i would like to highlight three reasons why this is so. first, the bank adopted its 2 percent price stability target in terms of the year - on - year rate of change in the consumer price index ( cpi ) in january 2013. there is an inherent challenge in convincing households of the benefits of this target, since they tend to see a rise in inflation as unfavorable. this is especially true when a rise in wages does not take place immediately, or expectations of future wage growth are not fulfilled. thus, communication is important in this regard. second, as stipulated in the joint statement of the government and the bank of japan on overcoming deflation and achieving sustainable economic growth, released in january 2013, the bank recognized that the inflation rate consistent with price stability on a sustainable basis would rise as efforts by a wide range of entities to strengthen the competitiveness and growth potential of japan ’ s economy progressed ( chart 1 ). based on this recognition, the bank set the price stability target at 2 percent. in this spirit, quantitative and qualitative monetary easing ( qqe ) was introduced in april 2013. thus, promoting | 0.5 |
and business leaders are prepared to take canada into a prosperous future. tiff did such a great job as senior deputy governor that, to find his replacement, we have had to split the position and look for two people to fill his shoes. i am pleased to report that we will be in safe hands. and, i look forward to introducing you to carolyn wilkins, the incoming senior deputy governor, who will oversee the bank ’ s strategic planning and operations and will share responsibility for the conduct of monetary policy. i also look forward to working with our new chief operating officer, filipe dinis, who will be responsible for managing all of the bank ’ s administrative functions. and with that, tiff and i are happy to take your questions bis central bankers ’ speeches | economies are showing solid growth, although there are some growing concerns about financial vulnerabilities – specifically, increased market volatility in response to political uncertainty. bis central bankers ’ speeches the economic recovery in the united states, however, is proceeding as expected, despite recent softer results largely due to unusual weather. in fact, private demand could turn out to be stronger than we had thought. the issues canada ’ s economy faces are not unfamiliar to you. competitiveness challenges continue to weigh down our export sector ’ s ability to benefit from stronger growth abroad. given the importance of the export sector to an open economy such as ours, and given the growing wedge between canada ’ s exports and foreign demand, the bank has deepened its analysis of the export sector, specifically, non - energy exports. non - energy exports by breaking down the non - energy export sector into a large number of subsectors, interesting facts and trends emerge. to start, we are discovering that there are subsectors, such as machinery and equipment, building materials, commercial services, and aircraft and aircraft parts, that are in line with fundamentals, or even doing better than their respective u. s. benchmarks. this suggests that, as the u. s. recovery gathers momentum and becomes more broadly based, many of our exports will benefit. the lower canadian dollar will also contribute to the recovery of these subsectors. other subsectors, including auto and truck makers, food and beverage suppliers, and chemicals, will also be helped by a lower dollar, but to a lesser extent, since they are experiencing greater competitiveness challenges. their recovery will be slower. the big picture tells us to expect a gradual convergence between the growth rate of canada ’ s exports and that of the u. s. economy. but this more granular research indicates that the wedge between exports and foreign demand will endure. and make no mistake. this wedge is real and it is big. the good news is that we now know more precisely just where it is – with about half of our non - energy exports. the bad news is that these subsectors are doing worse individually than we thought before. this deeper understanding of our export sector is valuable, but it does not make us any less concerned about the challenges ahead. looking forward, we continue to believe that rising global demand for canadian goods and services, along with the assumed high level of oil prices, will stimulate business investment in canada and help shift the economy to a more sustainable | 1 |
statistical information independently for purposes such as macroprudential work, meaning the interplay between the real economy and the general health of the financial sector. it will further more be possible for the nationalbank to use the collected data for individual respondants in its general work and thus not only for general statistical purposes. this work will be strengthened considerably in the coming years in cooperation with the danish financial supervisory authority and international players such as the ecb and the new european systemic risk board. several of the new statistical measures were too late to be of any essential use in the analytical work during the crisis. hopefully they can contribute to a better understanding of the crisis and perhaps to preventing similar crises in the future. looking ahead, the point of interest is how to improve the identification of economic imbalances with negative consequences for growth and employment. this area is also in focus at the international level. the international monetary fund ( imf ), the bank for international settlements ( bis ) and others have constructed indicators of economic imbalances. but their usefulness remains to be seen. the observation, that it is not only necessary to have more data, but certainly also to achieve better analysis of the data available, as illustrated by the danish banks ’ accumulation of a large customer funding gap – or “ the deposit deficit ” as we call it. the customer funding gap means that the banks did not have enough deposits to cover the strong expansion of lending, forcing them to turn to the international money and capital markets. this is no problem as long as the markets are functioning smoothly. but the banks will be more exposed, if the markets are not functioning smoothly, as evidenced during the crisis. we knew the figures, but underestimated the risk. the most recent figures show that the customer funding gap is widening again. but this presents a bit of a dilemma. as we have seen, it increases the vulnerability of the financial system. on the other hand, we are also keen to prevent tighter lending policies from resulting in a credit crunch. the quarterly national accounts, play the leading role in danmarks nationalbank ’ s assessment of cyclical developments. what is required here are timely, accurate and reliable compilations. the lesson we are learning at the moment is, that countries with unreliable – or downright incorrect – statistics will be punished by the markets. not necessarily gradually, but often abruptly. the punishment is downgrading of the sovereign debt, resulting in substantial widening of interest - rate spreads. an economic cycle is defined | to confusion in the public debate. however, a positive feature is that gross unemployment statistics are now compiled, meaning statistics for unemployment including people in activation schemes. i think it is worthwhile to consider a new and more comprehensive publication of our unemployment statistics. with the aim of giving a more nuanced picture of the unemployment situation and a higher degree of comparability internationally. danmarks nationalbank prepares forecasts for the danish economy. the frequency will be increased from semi - annually to quarterly releases. forecasting the future is a great challenge, which multiplies many times if the point of departure is not even known, as illustrated by the revisions of the supply balance and employment. naturally, this is not an isolated danish phenomenon, although the danish quarterly national accounts tend to be more volatile than those of the major economies. this is also the case in other small, open economies. there is one aspect of forecasting that i haven ’ t mentioned yet – psychology. how can it be measured and modelled? well, that is next to impossible, i think. nevertheless, it still applies that psychology plays a very large role, and also did so during the most recent crisis. the total freeze of the financial markets after the collapse of lehman brothers was strongly driven by psychological factors. this can also be said about consumer behaviour in the wake of the financial crisis. consumers have kept, and are still keeping, their purse strings tight, despite solid growth in disposable incomes. consequently, psychological factors contributed to the crisis spreading from a purely financial crisis to a full - blown economic crisis. this mechanism can also be observed in the housing market. regular questionnaire surveys are conducted in denmark as regards household expectations of house prices in the years ahead. there is a high correlation between household expectations and the actual development. but it may be problematic that the exact present position is subject to uncertainty also in this area. one contributing factor is the considerable lag of house price statistics from statistics denmark. over the summer, prominent economists have debated fiscal policy in the financial times. one school advocates easing of fiscal policy on the grounds that the economies are still too fragile to stand on their own two feet. the other school advocates fiscal tightening on the grounds that increased indebtedness will only make the households hold back. again, this is a question of psychology and expectations : will the households realise that the debt that is increased today has to be repaid with interest later, and will they also realise that they have to | 1 |
, has been at the fore - front of pushing the financial inclusion agenda. the support we have received from the bill and melinda gates foundation and afi has been enormous on these initiatives. 7. the critical mandate of the central bank is to ensure that the financial sector is stable, efficient and accessible. in this regard, the central bank of kenya, jointly with other players, has undertaken several initiatives and reforms aimed at boosting bis central bankers ’ speeches financial inclusion through an appropriate financial infrastructure that includes : licensing of deposit taking microfinance institutions ( dtms ) and credit reference bureaus ( crbs ) ; mobile phone financial services and the agency banking model. 8. ladies and gentlemen ; these initiatives and reforms have led to notable improvements in the levels, reach and depth of access to financial services especially among the lower population segments. the results in terms of numbers are astounding with deposit accounts growing tremendously over the years. but such a vibrant sector requires to be safeguarded ; that is why financial integrity becomes important. financial integrity 9. ladies and gentlemen ; success in financial inclusion has to go hand in hand with financial integrity. the central bank of kenya continually seeks to enhance the regulation and supervision of the financial system in order to improve its integrity. as part of our efforts in ensuring appropriate and effective oversight, we first issued aml guidelines in 2000. these guidelines were revised in 2006 and are currently in the process of being reviewed to reflect the prevailing international best practice and to align them with the proceeds of crime and anti - money laundering act, 2009 ( pocamla ). 10. over the last 2 years, the central bank has issued regular aml / cft guidelines to financial institutions to further support and enhance the implementation of the proceeds of crime and anti - money laundering act, 2009 ( pocamla ). the guidelines have covered the operationalization of the aml act, suspicious transaction reporting, and measures to be adopted by financial institutions to combat the financing of terrorism. the central bank has also revised the forex bureau guidelines so as to align these guidelines to the aml act. we are also working on hawala system to formalize and issued guidelines. on the microfinance front, the microfinance regulations and the agency guidelines require deposit taking microfinance institutions and their agents to implement aml / cft measures. 11. these measures demonstrate that as we push the frontiers of financial inclusion, we are also taking the requisite steps to ensure that the measures put in | place take into account the need to safeguard the integrity of the financial system. 12. in november 2011, parliament enacted the national payments system act. this act provides cbk with oversight of the national payments system. it aims to bring all payment service providers including mobile phone service providers offering money transfer services, within one regulatory framework. going forward, the inclusion of these mobile phone service providers within the supervisory and regulatory scope of cbk will no doubt enhance the country ’ s aml / cft measures. 13. it is my hope therefore, that this conference and the initiative being launched by the financial services volunteer corps will contribute to a greater understanding of the subject and will generate frontier ideas of enforcing and enhancing aml / cft measures. 14. it is now my pleasure to invite the permanent secretary, ministry of finance, bw. joseph kinyua, to officially open this conference. thank you bis central bankers ’ speeches | 1 |
##sable and resolute action. after having set up the previous two lines of defence, a third step is now needed in order to improve very significantly medium and long - term confidence. in this context, the credibility of the reforms to improve resilience of the global financial system as well as the stability of the global economy is of the essence. we will see the benefits of the reforms not only in a longterm perspective, but already today, because confidence today, and therefore the success of the decisions already taken by central banks and governments, depends on the quality and credibility of the ambitious reform exercise that has started a few months ago and that is presently deepening with the recent and future meetings of the g20. in my remarks i have concentrated on the financial aspects of the turmoil, which are very much in the domain of the financial stability forum. the financial stability forum, whose task is to elaborate international supervisory and regulatory policies and standards, has drawn the first set of lessons from the turmoil along the lines i have described above. deepening its work and implementing it is now of the essence to establish an appropriate and effective reform of the global financial system. the imf participates in this work and provides relevant inputs as a member of the fsf. there is also a very important role for the imf itself in its assessment of macro - financial risks and systemic vulnerabilities, and in its surveillance of macroeconomic policies. credible stability in the long run requires macroeconomic policies that have a medium - term orientation and are stability - oriented. pro - cyclicality can stem not only from unsatisfactory regulatory policies in the financial sphere, but also from macroeconomic policies, where it is equally undesirable. in a global context, there is hence a need to significantly strengthen imf surveillance over economies that are systemically relevant. the imf ’ s multilateral consultation with key partners is a process that can be built upon in this context. in a longterm perspective, greater discipline in the global economy is needed to foster stability and help balance short - term and long - term prosperity more appropriately. thank you for your attention. | for singaporeans in financial services is $ 6, 400, compared to the national median of $ 4, 000. financial services will become even more important in the future economy. • the sector grew by an average of 8. 6 % p. a. during the last five years ( 2011 – 2015 ), two times faster than the overall economy at 4. 0 %. bis central bankers ’ speeches • if the sector continues to grow twice as fast as the economy over the next five years – not easy but we aim to – financial services will make up 14 % of the economy in 2020, compared to 11 % in 2010. now, the bad news. the financial sector is inherently vulnerable to risk and volatility. • as crisis after crisis has shown, problems in the financial sector quickly become problems for the entire economy. • the global financial crisis imposed a tremendous cost with the global economy estimated to have lost 5 percentage points of growth between 2007 and 2009, not to mention the human dimension in jobs lost and companies closed. • as an international financial centre – connected to the global network of financial flows and playing host to hundreds of foreign financial institutions – singapore is particularly vulnerable to contagion and shocks from abroad. the global financial industry is facing unprecedented headwinds. • we are looking at a prolonged period of low growth and low interest rates – a combination that spells reduced earnings and increased risks for most financial institutions. • the regulatory and compliance burden has increased significantly, following wideranging regulatory reforms in the wake of the global financial crisis. • the reforms were necessary to help make global finance safer ; but their cumulative effects do pose a challenge for the profitability of financial institutions, especially banks. • unprofitable banks are not necessarily safe banks. finally, the financial industry in many parts of the world is facing a crisis of trust. • financial institutions have come under increasing public scrutiny over their business conduct. • globally, we have seen repeated cases of mis - selling financial products, manipulating benchmark rates, and using the financial system for illicit transactions. singapore ’ s financial sector has to overcome these headwinds and manage these risks as it develops further. and it must do this while seizing on opportunities presented by a growing asia and technological change. let me touch on three attributes that our financial sector needs to maintain and strengthen in the years ahead : resilience, dynamism, and trust. a resilient financial centre i will start with resilience. • we | 0 |
“ dutch disease ” will be avoided. the time is too short to go into a full analysis of the “ dutch disease ” phenomena. we at the central bank will do our best to ensure that the exchange rate is not pricing the traditional exports of papua new guinea uncompetitive in the international commodity markets. it is of paramount importance to commence the planning of the shift in the priorities now, to ensure that the 2011 budget reflects them. i am convinced that by proper planning and thoughtful utilization of our implementation capacities, we will avoid the overstretching of the nation ’ s productive resources and capacities. this way we will avoid unwarranted domestic price increases and the import of competing machinery, equipment and labour that, will depart the day the construction of the lng project is completed. such a scenario will result in the loss of all the knowhow that could be accumulated for the future use and benefit of the nation ’ s development. the three to four years of the construction stage of the lng project will be hard to manage. i am however confident that with close cooperation and coordination with the government specifically the departments of treasury, finance and national planning and monitoring the bank of papua new guinea can achieve the objective of price stability as i defined it. we are also pursuing vigorously some other objectives such as a modern payments systems that will provide a safer, efficient and cost - effective payment and settlement system in the future. financial inclusion of the rural majority through financial literacy, micro banking, technological innovation through the use of mobile phone banking. all of it without compromising the objective of a stable prudently managed financial system that is customer and service oriented and will withstand future shocks as it did in 2008. if the government can continue its focus on developing and improving infrastructures and basic social service in the rural areas, people can take advantage of these new financial and payments innovations to improve their livelihood and living conditions. they can also realize the benefits from the lng project and the improved macroeconomic developments in the economy. if this is sustained into the future, the objectives of the government ’ s vision 2050 can be realized. to do justice to all the roles that are placed under the bank of papua new guinea ’ s mandate, we will continue to protect the contributor ’ s savings in the long term savings schemes in the superannuation and life insurance industries. i wish to thank the organizers for inviting me to address the forum and i look forward to the day ’ s presentations. thank you. | manuel sanchez : productivity, growth, and the law remarks by mr manuel sanchez, deputy governor of the bank of mexico, at the annual bank conference on development economics, organized jointly by the world bank and the bank of mexico, mexico city, 16 june 2015. * * * it is an honor to have the opportunity to deliver the closing remarks at this international conference, organized jointly by the world bank and the bank of mexico, on the relationship between productivity, growth, and the law. on behalf of the bank of mexico, i would like to extend my gratitude to all the participants for their valuable contributions. the discussions here have been highly enlightening, and the wide variety of papers presented has helped us deepen our understanding of the vital role of productivity in any economy. identification of the sources and effects of productivity is critical to explaining why income levels differ so much among nations, and more importantly, may give us a guide as to how to foster higher living standards. i would like to begin my remarks by reflecting on a few salient issues in the literature on productivity and the rule of law. then, i will briefly explore some struggles that policy makers face in the aim of promoting efficiency and economic expansion. finally, i would like to address challenges to higher long - term economic growth in mexico. as usual, my remarks are entirely my own and do not necessarily reflect those of the bank of mexico or its governing board. a few salient productivity issues two basic observations arise from international data on economic development. the first is the persistent divergence of income per capita across countries over a sufficiently long period of time. this well - known tendency is striking, as developing economies typically exhibit unexploited business opportunities that would otherwise allow them to grow faster than industrial nations, thereby catching up with the leaders. we know that, as a general trend, absolute convergence has not occurred. a second observation is that a large part of economic growth can be attributed to the efficiency with which production inputs are applied, in addition to the intensity of their use. economists refer to the first as total factor productivity ( tfp ), estimated on the basis of measures of output and inputs, as well as certain production function assumptions. the success of a few countries which have managed to multiply their income levels quite rapidly has largely resulted from booming tfp. furthermore, productivity differences at the firm level within an industry is a puzzle that prevails even in advanced countries. firm survival is frequently linked to higher levels of | 0 |
of public finances that ensures their sustainability and provides for fiscal policy headroom to boost investment and growth. last but by no means least, the demographic developments our country will foreseeably face in the coming decades, like other eu members, place greater and more pressing demands on the economic policy responses to the foregoing challenges. this is because a progressively older population makes it more difficult to entrench budgetary sustainability and to ensure long - term economic growth. conclusion as we all know, the economic and political context in which we must face these challenges is not exactly going to be an easy one. the plans for european unity, in their various configurations prior to those we have today, have over the almost 60 years since the project was launched overcome highly diverse difficulties. but i believe that today the risks are high because political repudiation – attributable in part to the crisis, but not only to the crisis – is on the agenda, and this was non - existent or insubstantial only a decade ago. for the first time since the signing of the european union treaty in 1992, political currents and popular movements have arisen in the eu openly contrary to the integration so far achieved and, of course, to potential further steps towards greater integration ; contrary to european institutions and their current remits ; and contrary to the continuity of the single currency. the announced departure by the united kingdom, whatever its final form, is going to encourage these movements. in this situation, national governments, european union authorities and legislators all have a responsibility to come up with the appropriate response and to pursue the reforms that may first contain misgivings and then restore support, relatively seamlessly, for the grand european union project. to conclude, allow me to return to monetary policy and central bank action. as we approach the twentieth anniversary of the launching of the euro, we can have no doubts about the crucial importance of preserving and strengthening the monetary union and the single currency in order to sustain and give continuity to the european union project. many thanks, once more, to fomento de trabajo nacional for this celebratory event and to all of you for your attention.. 7 / 7 | s effectiveness and productivity. the cyclical juncture at which the budget for 2011 has been drawn up is marked by the muted start of a phase of recovery which became discernible in the opening months of 2010 and which will foreseeably continue over the coming year. nonetheless, exceptional domestic and external factors of uncertainty are clouding the outlook. so far, the recovery is proving very subdued and dependent on temporary stimuli linked to the government plans supporting spending and to the possible bringing forward of consumption and residential investment decisions by households and firms in the face of the rise in indirect taxes on 1 july. moreover, funding conditions remain restrictive and both the public and private sectors have a pressing need to restore health to their financial position. in these circumstances it will be difficult for domestic demand to post the same figures it did in the first half of the year. the rate of increase of household consumption, one of the most dynamic items in that period, will foreseeably slacken, in line with the diminished growth rate of earnings and the lower contribution of other sources of income, in particular those stemming from general government measures. the response of consumption is expected to be consistent with a declining trajectory of the saving ratio, in step with the changes observed since the start of the year, after almost two years of successive increases in this ratio. it is very likely the other domestic demand components will continue to reflect the weakness of their main determinants. in the case of investment in equipment, this will be due to the excess capacity built up during the crisis and the still - prevailing uncertainty over financing conditions ; and in that of residential investment, to the need to complete the adjustment set in train back in 2006. in contrast, net external demand is expected to be more buoyant once the high growth rates of imports of the previous quarters ease, rates which were linked largely to the bringing forward of certain spending decisions, and exports continue on their rising course. for this to occur, perseverance will be needed in anchoring the cost - and price - competitiveness improvements obtained in recent quarters and entrenching them with genuine productivity gains. in sum, the outlook for the spanish economy is one of gradual recovery which will take some time to attain the dynamism proper to an expansionary phase with sufficient capacity to generate employment. the restoration of confidence, the positive effects of fiscal consolidation on agents ’ expectations and the lessening of uncertainty in the labour market, further to the reform under way, will need to be | 0.5 |
the diagnosis of the “ irrelevance of money ” relies on a number of simplifying assumptions. relaxing one or more of these assumptions can restore a more meaningful role to money even in this model framework. for instance, christiano, motto and rostagno ( 2007 ) extend the basic new keynesian model by including various measures of money and credit. they thereby achieve a rather detailed and more realistic description of financial markets and the transmission process. in addition, acknowledging model uncertainty and the quest for a robust policy framework, it can be shown that taking monetary factors into account may lead to more desirable outcomes compared with a purely new keynesian framework ( kilponen / leitemo ( 2007 ) ). and it is exactly the need for a more robust framework in the face of uncertainty that is the main motivation for the eurosystem ’ s two - pillar approach. by the way : even many of those central banks which would label themselves as pure inflation targeters, e. g. the bank of england, have put monetary indicators more to the heart of their monetary policy analysis framework in recent years. integrating monetary and financial factors into the current new keynesian paradigm is a fairly recent development in modelling which have only just begun to be incorporated into the present vintage of dsge models. progress on these lines would be highly welcome from a policymaker ’ s point of view. but, on the basis of the evidence just mentioned, it would be unwise to discard monetary analysis – especially now that we find ourselves in a period in which asset prices and liquidity are at a high level and ample on an unprecedented scale worldwide. concluding remarks conferences like this one, which bring together academics and policymakers, serve as a useful reminder that the challenges to our respective professions have not become less. on the contrary, the challenges are likely to have increased since monetary policymaking is confronted with many forms of uncertainty. research on the phillips curve is an excellent example of academic work being of interest far beyond academia itself. the findings of lucas, kydland, prescott, woodford and many others also shape our every - day decision - making process – and we central bankers continuously seek such advice. so, let us continue our cooperation in a mutually beneficial exchange of views for the public good that we aim to achieve : price stability, that is low and stable inflation. this is admittedly the best contribution monetary policy can make to fostering long - run sustainable growth and job creation. thank you for | h. and jimeno, j. f. and r. ramos ( 2017 ) the spanish public pension system : current situation, challenges and reform alternatives, banco de espana occasional paper no. 1701. 2 king, m. ( 1995 ), commentary : monetary policy implications of greater fiscal discipline, in budget deficits and dept : issues and options ( pp. 171 - 183 ), federal reserve bank of kansas city, jackson hole symposium. 3 / 3 bis - central bankers'speeches | 0.5 |
##bilities in the total amount of usd 43. 3 million are projected to be paid in the last quarter of the year. at the end of september 2000, the short - term debt of the private sector of the republic of macedonia amounted to usd 42. 9 million, and compared to the end of 1999 was by usd 10. 8 million lower. the share of the external debt in gdp accounts for 42. 0 %, which ranks the republic of macedonia in the countries with moderate to medium degree of indebtedness. sound and stable banking system in the republic of macedonia in 2000, the banking sector of the republic of macedonia continued to recover from the adverse effects caused by the external shock in 1999. the share of high - risk credits in the total credit exposure of the banks in the first nine months of 2000 reduced by 4. 1 percentage points, however, still remaining high at the level of 37. 3 %. nevertheless, the high average capital adequacy ratio of 33. 8 % at the end of september 2000, positively affects the banking system stability, by far exceeding the required minimum of 8 %. significant investments of foreign capital in the macedonian banks was registered in the first six months of 2000, increasing the share of the foreign capital in the total banking capital from 19 % to 33. 3 %. in 2000, the legal framework regulating the banks ’ operations was subject to fundamental improvement. in that context, the newly adopted banking law in july 2000 is of great importance, in which preparation the national bank of the republic of macedonia had a considerable contribution. this law represents a step towards the harmonization with the european legislative and the european union directives and achieves greater degree of compliance with the so - called core basle principles for effective banking supervision. in november 2000, certain changes were made in the regulation on banks ’ foreign exchange operations, as well. with the new amendments of the regulation, the requirement for holding portion of the foreign exchange deposits collected by the banks on their accounts abroad was reduced. this measure is expected to have positive effect on the banks'credit supply in the economy. monetary policy in 2001 monetary policy projection for 2001 has been defined in the macroeconomic policy package incorporated in the arrangement with the international monetary fund. primarily, the 2001 monetary policy will be directed towards preservation of stable macroeconomic environment, as a precondition for achieving long - term sustainable economic growth. the projected economic growth will be supported through the adequate money and credits supply, simultaneously designing the monetary | anita angelovska bezhoska : enabling environment for capacity building opening speech by mrs anita angelovska bezhoska, vice - governor of the national bank of the republic of macedonia, at the center of excellence in finance ( cef ) coordinators meeting, skopje, 1 december 2010. * * * dear ladies and gentlemen, dear cef coordinators, distinguished representatives of central banks and ministries of finance in the region, dear representatives of the international monetary fund, international labor organization and, last but not least, dear organizers of this event, representatives of the cef ( center of excellence in finance ), i wish you all a warm welcome. i am delighted that this year the traditional meeting of the cef - coordinators takes place in the republic of macedonia and it is focused on a very important topic : “ enabling environment for capacity building ”. no doubts that the knowledge does not have boundaries. all of us, during our lifetime do try to compile as much wisdom as possible, to broaden our knowledge horizon and augment what we already know. in our professional life, we face a constant intellectual and public debate, which tries to challenge the existing paradigms, to offer new insights and to establish new norms. all of this, of course, for the purpose of building stronger intellectual and analytical capacity for efficiently coping with forthcoming professional challenges. sometimes, unprecedented events are needed to reveal the deficiencies in the currently accepted system of knowledge. these types of events underscore the weaknesses and pinpoint the missing parts of the puzzle. at the end of the day, out of turmoil, we all come out with new ideas, new concepts and new lessons to be learned and followed. or, to be more illuminating let me quote christopher adam and david vines – oxford university : “ … the great depression led keynes to write his general theory, thereby creating macroeconomics as a basis for national macroeconomic policy - making. the second world war led – via the bretton woods conference – to the creation of international macroeconomics, and to the birth of the imf … the present global financial crisis will, we think, most likely lead to a major shift in our understanding of the role of finance in macroeconomics, in both theory and in policy - making ”. the recent global economic and financial crisis indeed created a room for upgrade of what we knew or what we thought we knew. it clearly illustrated how fragile our knowledge can be emphasizing the need for a continuous capacity | 0.5 |
##20, imf or the world bank. in our region, the ebrd is playing a key role in coordinating these efforts under the vienna plus initiative. so, what should be the key requirement on our dinarization strategy? the strategy needs to have realistic objectives, and be technically feasible. it also has to involve all key stakeholders and to minimize the risks of adverse side - effects on the economic recovery or other segments of the economy. next, what extent of dinarization is achievable? i believe increasing the share of dinar corporate loans in the banking sector from the current 28 to around 45 % in the period of 2 – 4 years is a simple and appropriately ambitious objective. 2 under plausible assumptions, such an objective implies a net addition of circa 800 bn of new dinar denominated loans in the next 4 years compared to the existing stock of almost 300 bn. 3 although ambitious, this objective still provides enough room for the expansion of the fx credits – they could continue growing at 20 % in nominal terms, which was the rate of growth of corporate credits in 2009. 4 now, are there enough dinar sources for such dinar credit expansion? yes, and the central bank is ready to supply as much as needed ( as long as collateralized by dinar t - bonds ), should there be a structural dinar liquidity shortage in the future. our analysis ( based on an average multiplier from the recent years ) shows that the current stock of repos and dinar part of fx required reserves should comfortably support the needed dinar credit growth in the next 2 years. however, i would like to send a strong signal that the nbs is ready to start liquidity providing repo operations, if need be, so that the banking sector is not worried about the sufficient sources of dinars in the future. also, we have already prepared all the necessary infrastructure for such potential move, although we do not expect the need for such a move to arise this year. the dinarization strategy must involve all the key stakeholders – the nbs, banking sector government, and the public. most activities will inevitably be done by the nbs and the banking sector. however, increasing the public awareness and receiving an active support of i am assuming the cross - border loans are granted only to entities with fx denominated revenues and will not be a focus of dinarization campaign. assuming that the real credit volume in the corporate sector will grow at an average annual rate of | in dinars has been abolished, whereas for loans indexed to foreign currency it is still 30 %. government has been on board too, and from may 2010, state - subsided cash and liquidity loans are extended in dinars only. the nbs is cooperating and intends to further intensify its interactions with the banking sector and aci in all of these pillars. we would very much wish this to be a two - way process with the banking sector taking a lead in many areas. for instance, we welcomed the decision of the domestic banks to discontinue entirely their small lending programs in swiss francs. we would be happy to see further voluntary restrictions to target consumer loans to unhedged retail customers. we are ready to discuss and encourage any well meant initiative to help with dinarizing the economy. for example, formal market making or primary dealership arrangements could be considered if there is consensus that such arrangements could help. all in all, strengthening the resilience of our financial system must be based on increasing the use of dinars. the aim of the dinarization agenda is to discourage the buildup of foreign currency risk in the nonbank sector, to hedge any remaining risks, and to develop the market for local currency financial instruments. it involves a number of very different activities – from pursuing an inflation targeting regime to educating borrowers about the fx risk. and it also requires a good coordination among the banking sector, government and the nbs. a lot has already been done in the past 18 months, but more rests ahead of us. in the period from march to june this year the share of dinar denominated bank assets increased from 24. 6 % to 27. 4 % and more than 40 % of the newly granted credits were in dinars. true, much of it drew on the government subsidy programs, but several banks have started offering fixed - term dinar credits with a maturity of several years. however, we are not seeing any movements in the currency composition of savings so far. this is despite the fact that saving in dinars has been a more profitable strategy than saving in euros in the past several years ( see charts ). 7 but as i said earlier – changes in savers ’ behavior require years of sustained macroeconomic and financial stability, and they will come gradually. the nbs is assuming the leading role in the dinarization agenda, but will cooperate closely with the other stakeholders – most notably the banking sector. we therefore welcome your initiatives and | 1 |
nbim ’ s equity and fixed income traders to decide on the details of purchases. they must decide when, where and how trades are to be made. such choices affect day - to - day asset management – also where indexes are tracked the closest. the organisation trades on over 250 exchanges and sees to settlement, valuation, custody and risk management. in 2019, we executed around 30 million equity trades, or an average of approximately 100 000 trades per day. this is more than all of oslo børs. trading runs full steam around the clock, despite large operational challenges owing to the covid - 19 pandemic and considerable market volatility. allocation divides the fund ’ s assets among asset classes and markets. as a part of this, a relatively substantial negative contribution to the fund ’ s return has come from our fixed income investments in emerging markets. our experience is that we have not been paid enough for the risk to which some of these markets are exposed. in 2019, the ministry of finance decided that fixed income securities in emerging markets would no longer be a part of the fund ’ s benchmark index. the covid - 19 year 2020 has been a peculiar one. when the pandemic spread in march, global exchanges fell sharply. since then they have recovered to a great extent, but there are considerable differences across sectors. the real estate sector has been particularly hard hit, along with some services. at the other end of the scale, we find the tech giants. the news of a vaccine breakthrough has generated renewed optimism in equity markets in recent weeks. in spite of the turbulence and large market movements, the overall value of the fund has held steady, also in usd terms. we have avoided large losses – in both absolute terms and relative to the benchmark index against which the fund is compared. but volatility has been high through the year, and it remains to be seen where we end up. one characteristic of developments over the past seven years has been the solid results from the more traditional part of our active management – security selection. as we see in the table, our external asset managers have performed particularly well. 2 / 5 bis central bankers'speeches in my view, these results are linked to the key words appearing in the title of today ’ s speech : responsible investment and active ownership. the fund ’ s size and long horizon are unique characteristics that have an impact on this part of asset management. i would therefore like to spend a little time going into | zero trust model, ” directing its supervised financial institutions to subject any access to their digital infrastructure to verification and security screening. the bsp has also embarked on cybersecurity campaigns, issuing advisories to warn the public on emerging cyberthreats and scams especially during this unprecedented health crisis the covid - 19 era has indeed changed the way we live, work, and play. it has challenged us to try things we have never done before or were afraid to do, to quickly adapt to changes, to take unprecedented moves, and to take a step toward a world of new possibilities. the digital transformation has indeed increased our resiliency. this brings to mind a japanese proverb about the bamboo tree : “ the bamboo that bends is stronger than the oak that resists. ” in times like these, raw strength is important, but equally important is the ability to bend and adapt. digitalization is part of the new normal, and the rate and speed of how we get used to it 4 / 5 bis central bankers'speeches will determine our chances of bouncing back and standing tall and strong again. maraming salamat at mabuhay tayong lahat! 5 / 5 bis central bankers'speeches | 0 |
in which they exist and do business. after all, these same communities cannot be distanced from any economic activity, just as one cannot live without the other. let me, in this regard, take this opportunity to urge all commercial banks, non - financial banking institutions and other corporate bodies that are involved in community work and corporate social responsibility to please continue assisting the needy. there are numerous projects that are in dire need of assistance. and to all those corporate bodies that are actively engaged in corporate social responsibility programmes, allow me to commend you and urge you not to relent in your efforts to bring the communities you serve closer to you. distinguished guests i hasten to add that the bank of zambia has not been alone in this project to restore the mukuyu tree. the bank has partnered with the kabwe municipal council leadership with whom we have signed a memorandum of understanding ( mou ). this mou outlines the accountabilities of the various parties. for kabwe municipal council, the main accountability and responsibility will be to maintain and preserve the tree and its surroundings to ensure that the area is well protected and cleaned. the bank has also worked closely with zambia electricity supply corporation ( zesco ) who have kindly facilitated the provision of power to enable us light the mukuyu tree on a continuous basis. we have also worked closely with the national heritage conservation commission whose input has been invaluable in providing insight into the history and status of the mukuyu tree as a national heritage site. on behalf of the bank of zambia board of directors, senior management and staff and indeed on my own behalf i wish to thank all our partners for the good cooperation and oneness of vision that has culminated in the commemoration and re - launch of the mukuyu tree today. distinguished guests before i conclude my speech, i wish to pose a challenge to the general members of the public and in particular to the people invited to grace this occasion today. the mukuyu tree has been identified and depicted as a national monument under the laws of zambia. by this assignment the tree belongs to all zambians, young and old alike. my challenge to you all is to cherish it and preserve it. for the younger generation, i encourage you to learn more about the tree so that you can in turn learn to cherish the freedom that you have today in memory of all our forefathers who were sold into slavery many years ago. for our senior citizens, i request that | norman t l chan : new round of countercyclical prudential measures for property mortgage lending address by mr norman t l chan, chief executive of the hong kong monetary authority, to the media, hong kong, 14 september 2012. * * * 1. i am going to announce a new round of countercyclical prudential measures for property mortgage lending. 2. since the introduction of the fourth round of tightening measures for property mortgage loans by the hong kong monetary authority ( hkma ) in june 2011, the local property market quieted down somewhat – but for just about seven months. the property market began to heat up again in february 2012, with significant increase both in transaction volume and prices. cumulative growth in property prices was as much as 13 % compared with the beginning of this year. 3. the evolution of the property market cycle in hong kong is affected by many factors, including the external environment. with the third round of quantitative easing announced by the us federal reserve last night, there can be more capital inflows through the us banking system into the emerging markets. moreover, europe has earned some respite from its debt crisis following the announcement by the european central bank of its bond - buying programme and related judgment by germany ’ s constitutional court. so the sentiment in financial markets is likely to stay calmer for a while. against this background, the risk brought by the continued heating up of the hong kong property market on the banking sector will rise again. to enhance risk management of banks, the hkma has just issued a set of guidelines to banks, requiring them to tighten the underwriting criteria for mortgages where borrowers already have one or more properties under mortgage. 4. under these new measures, when handling new applications for mortgage loans for residential, industrial or commercial properties from borrowers who already have one or more properties under mortgage, banks must adopt the following three requirements : first : for mortgage loans assessed based on the debt servicing ability of a mortgage applicant, the maximum debt servicing ratio ( dsr ) shall be lowered from the current 50 % by 10 percentage points to 40 %. accordingly, the maximum stressed dsr shall also be lowered correspondingly from the current 60 % by 10 percentage points to 50 %. however, an applicant with just one property with outstanding mortgage loan will not be affected by this new measure if the new mortgage loan is for self - occupied purpose, or for the replacement of an existing property. second : for mortgage loans assessed based on | 0 |
inflation expectations — near - and long - term, as well as survey - and market - based — that cover many different participants in the economy. since the onset of the pandemic, medians of many surveys of longer - run measures suggest that inflation expectations are still within their pre - pandemic ranges, despite having come up a little. this is consistent with overall pce price increases declining to a 2 percent pace. market - based measures of inflation compensation beyond - 6the near term, such as those derived from treasury inflation - protected securities, or tips, tell a similar story. i have also looked beyond the headlines of the survey data to assess how inflation expectations are moving and responding to the current high - inflation environment. for example, in the michigan surveys of consumers, we can compare households ’ perceptions of past inflation to their expectations of future inflation at the 1 - year and 5to - 10 - year horizons ( figure 8 ). the comparisons show that while households have raised their inflation expectations over the past few years, especially for the short - term measure, the increases were far less than one - for - one with how much they perceived inflation had already risen. i will monitor these comparisons to ensure that inflation expectations remain well anchored. any de - anchoring of expectations would be a major concern, as it could cause the high inflation that we have been experiencing to prove more persistent. looking ahead, the outlook for inflation will depend, in part, on how the factors restraining supply responses and boosting cost pressures in each of these three main pce price categories play out. i think it is quite possible that the organization of production and supply chains will look different in the coming years from the way they did before the pandemic, as firms evaluate some newly exposed tradeoffs between keeping costs low and supplies available. we should keep a close eye on the incoming indicators of production disruptions and bottlenecks. we should also advance our understanding of how an environment of more frequent disruptions to the production and distribution systems will affect potential output, feed into inflation, and become an important element in forecasting inflation, assessing risks, and adjusting monetary policy. - 7we must also continue to advance our understanding of inflation and its underlying structural causal relationships as well as our ability to forecast risks. progress in these areas would help us better assess developments in real time. some questions deserve further attention and study. as sectoral supply – demand imbalances have played a key role in understanding inflation in | financial goal and presents information on coverdell education savings accounts, u. s. savings bonds, and qualified tuition programs as types of savings vehicles for achieving that goal. programs on estate planning and retirement are offered, as well as seminars on financial planning and advanced investment. many of these programs are geared to those employees who have been in the workforce for many years. however, understanding that many of our young people don ’ t receive formal course work in financial matters, we designed a program that is more meaningful to new professionals. this program, which is designed for those young people just entering the workforce, discusses the importance of starting to save at a young age, homeownership, advanced education, and avoiding debt. workplace education benefits both the employer and employee. for the employee, more knowledge, one hopes, will result in better financial decisions and overall financial well - being. employees who are taking maximum advantage of the benefits available to them will more likely have greater job satisfaction, which may result in lower turnover. for the employer, research studies have shown that employees who are financially healthy are more productive. they are absent less often, spend less time at the workplace dealing with financial crises, and earn higher job performance ratings. we commend the commission for recognizing workplace education as an integral component in formulating a national financial education strategy. | 0 |
olli rehn : disinflation on track amid geopolitical uncertainty remarks by mr olli rehn, governor of the bank of finland, at the ubs european conference, london, 12 november 2024. * * * let me first thank ubs for kindly inviting me to address this distinguished audience. to kick off, i will briefly discussthe economic outlook in the euro area and the ecb's monetary policy approach. overall, it is fair to say that the ecb's monetary policy has been relatively successful in taming inflation. rate hikes have helped keep inflation expectations anchored to around 2 %. somewhat unusually for a tightening cycle, the euro area appears to have avoided recession, and unemployment has stayed at a record low. the ecb's inflation target was revised in 2021, and the revised symmetric target of 2 % over the medium term has worked well during the past poly - crisis years. the big picture now is that disinflation in the euro area remains well on track. in october, inflation stood exactly at 2 %, and it is expected to stabilise more sustainable next year. the progress with disinflation has prompted us to make three 25 bp. rate cuts since june. even though a soft landing seems plausible in the euro area, growth is projected to remain sluggish. the manufacturing sector, in particular, is underperforming, not least in germany but also elsewhere. what does this imply for monetary policy going forward? as you may be aware, we have been preaching and practising data - dependency. so, i am indeed looking forward to our december broad macroeconomic projections, especially on two issues. will the projections indicate that inflation is stabilizing at our 2 % target in early 2025 already? will they confirm the weakening of growth momentum? as for the ecb's monetary policy stance, we are approaching a neutral level of interest rates – although nobody knows exactly when this will be reached. the direction of rate changes is clear, but the speed and scope of rate cuts will depend on our overall assessment at each meeting of three factors : the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission. the question in the title of the panel – how far and how fast do we move in reversing the tightening cycle? – can also be tackled by scrutinising the natural rate of interest, r *. r * provides a meaningful analytical framework for thinking | olli rehn : new avenues for monetary policy opening remarks by mr olli rehn, governor of the bank of finland, at the bank of finland centre for economic policy research ( cepr ) joint conference “ new avenues for monetary policy ”, 10 september 2021. * * * ladies & gentlemen, dear friends, good afternoon and welcome to this conference on new avenues for monetary policy, which is jointly organized by the bank of finland and the centre for economic policy research. our collaboration with cepr in organizing annual conferences has a long and successful history, for which we are grateful. we are very happy and honoured to have several leading experts in the field to address us at this conference, including alan blinder, markus brunnermeier, mikhael golosov, ethan ilzetzki, loretta mester and michael woodford. the scientific committee have done an excellent job in putting together a high - quality programme for the next two days. this conference takes place against the backdrop of the covid - 19 pandemic, from which the global economy is now recovering rapidly, if unevenly. in the euro area yesterday ’ s fresh projection by the ecb foresees, the economy is rebounding significantly this year on the back of the expected re - opening of the economy, strengthened policy support and economic recovery in the rest of the world. real gdp is projected to grow by 5 % this year and 4. 6 % next year. the key underlying assumption for the current view is that containment measures can be relaxed rapidly in the second half of the year. with regard to inflation, the harmonized index of consumer prices is forecast to peak in the fourth quarter of this year, with annual inflation reaching an average of 2. 2 % this year, supported by temporary factors, such as strong base effects caused by energy inflation and the german vat rate reversal, and an increase in input costs related to supply bottlenecks. in 2022, inflation is expected to be 1. 7 % as the temporary factors fade, and stay at 1. 5 % in 2023. after the worst crisis phase was over, the ecb governing council continued its once - postponed review of monetary policy strategy. the review, the first since 2003, was concluded in july this year. high - quality analysis and extensive dialogue between research and policy - making were crucial for reaching pertinent conclusions. we reviewed the definition of price stability, monetary policy instruments and their effects – both the main | 0.5 |
ben s bernanke : hedge funds and systemic risk remarks by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the federal reserve bank of atlantaa€™s 2006 financial markets conference, sea island, georgia, 16 may 2006. * * * thank you for inviting me to speak today. in keeping with the theme of this conference, i will offer some thoughts on the systemic risk implications of the rapid growth of the hedge fund industry and on ways that policymakers might respond to those risks. the collapse of long - term capital management ( ltcm ) in 1998 precipitated the first in - depth assessment by policymakers of the potential systemic risks posed by the burgeoning hedge fund industry. the president's working group on financial markets, which includes the federal reserve, considered the policy issues raised by that event and, in 1999, issued its report, hedge funds, leverage, and the lessons of long - term capital management. the years since then have offered an opportunity to consider whether the working group's recommendations for addressing those issues have been effective and whether new concerns have arisen that warrant an alternative approach. ltcm and the working group's recommendations as the title of the report indicated, the working group focused on the potential for leverage to create systemic risk in financial markets. the concern arises because, all else being equal, highly leveraged investors are more vulnerable to market shocks. if leveraged investors default while holding positions that are large relative to the markets in which they have invested, the forced liquidation of those positions, possibly at fire - sale prices, could cause heavy losses to counterparties. these direct losses are of concern, of course, particularly if they lead to further defaults or threaten systemically important institutions ; but, in addition, market participants that were not creditors or counterparties of the defaulting firm might be affected indirectly through asset price adjustments, liquidity strains, and increased market uncertainty. the primary mechanism for regulating excessive leverage and other aspects of risk - taking in a market economy is the discipline provided by creditors, counterparties, and investors. in the ltcm episode, unfortunately, market discipline broke down. ltcm received generous terms from the banks and broker - dealers that provided credit and served as counterparties, even though ltcm took exceptional risks. investors, perhaps awed by the reputations of ltcm's principals, did not ask sufficiently tough questions about the risks that were being taken to | ##os. the conversion of mortgages into mortgage - backed securities ( mbs ) and collateralized debt obligations ( cdos ) may seem complicated but in reality these are fairly straightforward transactions. to provide the committee a rough schematic, we start with those who take out amortizing housing loans from banks. for the bank, this is a long - term asset which ties up resources and is prone to market and credit risks. to mitigate these risks, the bank may pool the amortizations expected from the mortgage and create a security which can be sold to investors. the coupon payment of the new security is funded by the amortizations of the housing loan. this security is referred to as the mbs and the transaction is oftentimes is handled through a special purpose vehicle. to the bank, the effect is an improvement in the asset quality of its balance sheet because the traditional mortgage risks are mitigated. investors welcome this because it affords them another instrument that they can consider for their portfolio. the spv earns from being a conduit while the mortgagor is unaffected because he / she has already received the proceeds from the original loan. taking this a step further, collateralized debt obligations may also be created and likewise offered to investors. there are technical differences between cdos and mbs but for purposes of situating the current market conditions, it is perhaps sufficient to suggest that the two instruments are similar in that they pool underlying assets and sell an instrument that represents these underlying assets. the effective fed funds rate subsequently reversed course. housing prices also began to fall significantly and mortgage defaults began to rise. since the home was typically the collateral of the mortgage, falling housing prices also eroded the value of the collateral supporting the loan. in the past, a loan default would have simply meant foreclosing on the home. however, since the mortgage was already “ converted ” into a security ( mbs and cdos ) held by investors worldwide, the combination of rising mortgage defaults and falling collateral values translated into losses for the mbss and the cdos ( either through outright defaults, missed coupon payments and loss in market value of the security ). these factors sparked the widespread dilemma that we now find ourselves in. if memory serves us right, it was in february 2007 that the term “ subprime mortgage ” was publicly alluded to in a disclosure by an international financial institution. the subprime difficulties began to take explicit shape as | 0 |
for an economy, with large losses in welfare. indeed, i think that the global financial crisis has once again demonstrated the sound economic logic which underlies the convergence process as laid down in the treaty. this convergence process builds first of all on sustainability as evidenced by sound macroeconomic fundamentals, in particular the absence of any major imbalances which may threaten sustainability. it is not surprising to see that the countries which have been hit hardest by the crisis in the central and eastern european region are those that built up large imbalances and vulnerabilities in the past. these imbalances and vulnerabilities were, in turn, often the result of unsustainable policies and lack of progress with respect to structural reforms. when talking about unsustainable policies, it is straightforward to point to significant fiscal imbalances which have been accumulated in some countries. however, several countries also suffered from an overheating of the economy, fuelled by too low real interest rates, strong credit growth fuelling private consumption and investment, and local asset price bubbles. as a consequence of excessive domestic demand, several countries recorded very high current account deficits and were dependent on strong inflows of foreign capital. at the same time, due to the overheating of the domestic economy and associated pressures on wages and prices, countries operating under fixed exchange rate regimes underwent strong losses in external competitiveness. countries with flexible exchange rates, such as poland, were in a better position to avoid such imbalances in the past and they also seemed to have absorbed the crisis shocks better than others. a further vulnerability that has been built up in many countries over recent years stems from the existence of high levels of foreign currency loans extended by the financial system to unhedged borrowers, thereby giving rise to significant currency and maturity mismatches. it should be clear to everyone that having achieved sustainable convergence before euro adoption is very much in the interest of the country concerned. without such convergence the monetary policy stance of the ecb is likely to be inappropriate for the country, and it may face a risk of excessive output volatility leading potentially to a series of boom - bust cycles as the country lacks important tools to stabilise economic conditions at home. therefore, it is crucial that euro adoption only takes place after the elimination of major imbalances in the country and when sufficient convergence has been achieved and a high likelihood exists that the economy of the country will be in a position to reap | wages, which have not always adjusted smoothly across countries, regions and sectors. essentially, this protracted adjustment reflects the fact that national macroeconomic policies and structural reforms have not been ambitious enough to avoid the build - up of imbalances or to provide the economy with sufficient flexibility to deal with the necessary adjustment. without having achieved a sufficient degree of sustainable convergence, the risk of such undesirable boom - bust cycles is particularly high. to conclude, we can indeed be proud of the achievements of the euro. however, there is still scope to draw greater benefits from it. the build - up of macroeconomic imbalances, inside but especially outside the euro area, shows that the surveillance framework in the eu should be strengthened. strengthened surveillance could provide early warnings to policy markers, thereby allowing them to adjust policies early enough. sound macroeconomic policies coupled with a targeted and ambitious structural reform agenda are key in this regard. such policies should be implemented very forcefully, both by countries that participate in the euro area as well as those that are preparing for it. | 1 |
ewart s williams : building individual and organisational capacity feature address by mr ewart s williams, governor of the central bank of trinidad and tobago, at the co - operative credit union league, launch of events calendar 2011, chaguanas, 26 january 2011. * * * i wish to thank the co - operative credit union league for the invitation and extend a happy new year to you and your organisations. it has been some time since i have met with the credit union movement, so i welcome this opportunity. you have suggested that i address the topic “ building individual and organisational capacity ”. i am not sure that i could tell you much about this, since your credit unions, in order to survive in this increasingly competitive environment, have had to expend considerable efforts in capacity building. i, however, welcome the opportunity to offer my variation on this theme since, in my view, the outlook both for the economy and for your sector will require you to intensify and, indeed, broaden your capacity building efforts, if you are to maximize your contribution to your membership and adhere to the new regulatory paradigm that is on the way. permit me to put my views against the background of the following recent developments : as you know, the decline in economic activity in 2009 was followed by another year of economic stagnation in 2010. the economic downturn was triggered by the sharp contraction of activity in non - energy sector ( most notably construction ) and was accompanied by a significant increase in unemployment. the official data show that unemployment rose from a low of 3. 9 per cent in the last quarter of 2008 to 6. 7 per cent in the first quarter of 2010. i guess, with your close day - to - day involvement in the community, you are in a better position to appreciate the real level of employment and underemployment in the country. the more challenging economic environment has led to a sharp rise in non - performing loans on the commercial banks ’ balance sheets – from 1 per cent to 5 per cent. the nonbanks, that cater to a somewhat different clientele have recorded an even more sizable increase in loan delinquency – from around 4 – 5 per cent to almost 12 per cent of total loans. fortunately, the banking system – both the banks and non - banks, have the resources to adequately provide for these bad loans. we, in the central bank, do not have up - to - date comprehensive data for the credit union sector. | otherwise it cannot lower interest rates when the next economic downturn occurs. of course, when the price stability target is achieved in a sustainable manner, interest rates are likely to increase reflecting inflation. however, interest rate hikes before the price stability target is achieved will instead bring about an economic downturn, which will be counterproductive. recently has discussed whether to update its framework. 11 key points of such discussions including these can be summarized as the following. 12 first, through the experience of japan's battle against deflation and the u. s. and european economies following the global financial crisis, policy tools such as qqe, a negative interest rate policy, and forward guidance have been added to the central banks'" arsenal. " they will be used going forward depending on the situation. second, the inflation target framework has been proved effective even in the time of the global financial crisis and its aftermath, but it has been pointed out that, even in the united states, where economic and price developments are relatively firm, interest rates have remained lower and room for monetary policy response has become smaller than before. under these circumstances, there are ongoing debates in the united states and other economies on what monetary policy framework should be adopted with a view to achieving the medium - to long - term price stability. various approaches have been proposed, such as setting a higher inflation target and introducing average inflation targeting, price - level targeting, the inflation target range, and nominal gdp targeting ( chart 11 ). every approach has its own advantages and challenges. of course, japan cannot be treated the same as other economies such as the united states, where the inflation rate is already at around 2 percent. the bank judges at present that it is appropriate to maintain the current policy framework in which it clearly commits to the price stability target of 2 percent and pursues the monetary easing to achieve the target. that being said, i think it is necessary for the bank to work sufficiently on studies toward better monetary policy. regarding the bank of canada's review of its monetary policy framework to date, see https : / / www. bankofcanada. ca / agreement - inflation - control - target /. as for the fed listens events that the federal reserve has proceeded with, see https : / / www. federalreserve. gov / monetarypolicy / review - of - monetary - policy - strategy - tools - and - communications - fed - listens - events. htm. with regard to | 0 |
assessing labor market slack is the elevated number of workers who are employed in part - time jobs but would prefer to have full - time work - in other words, those classified as “ part time for economic reasons. ” at around 4 - 1 / 2 percent of employment, the share of such workers is notably larger than has been historically typical in a growing economy. some portion of the greater share of workers who are part time for economic reasons may reflect structural rather than cyclical factors. 3 for example, the ongoing shift in employment away from manufacturing and toward services, a sector which historically relied more heavily on part - time workers, may be boosting the share of part - time jobs. despite these structural trends, which make it difficult to know where the share of those employed part time for economic reasons may settle in the longer run, i continue to think that it probably remains higher than it would be in a full - employment economy. other indicators also generally corroborate the view that while the labor market has improved, it still has not fully recovered. for example, the rate at which employees quit their jobs for other opportunities has tended to go up in a strong economy, since more workers voluntarily leave their jobs when they have greater confidence about their ability to find new ones and when firms are competing more actively for new hires. indeed, the quits rate has picked up as the labor market has improved over the past few years, but it still is not as high as it was through much of the early 2000s. another important indicator is the number of available positions, or job openings, that employers currently have posted. job openings have increased significantly over the past year and a half, and, in another encouraging sign, the pace of hiring has also stepped up in the past year or so, though it too continues to run somewhat below the levels that prevailed through the middle part of the last decade. finally, the pace of wage increases also may help shed some light on the degree of labor market slack, since wage movements historically have tended to respond to the degree of see stephanie aaronson, tomaz cajner, bruce fallick, felix galbis - reig, christopher smith, and william wascher ( 2014 ), “ labor force participation : recent developments and future prospects ( pdf ), ” brookings papers on economic activity, fall, pp. 197 – 275. see tomaz cajner, dennis mawhirter, christopher nekarda, and david ratner ( 2014 ) | mr. greenspan considers some of the effects of technological change remarks by the chairman of the board of governors of the us federal reserve system, mr. alan greenspan, at the annual convention of the american bankers association in boston, on 5 / 10 / 97. it is always with mixed feelings of pleasure and trepidation that i accept an invitation to speak at the american bankers association annual convention. i still have a disconcerted remembrance of my acceptance of your first invitation, which had been scheduled for october 20, 1987. that speech had to be scratched at the last minute as the result of a certain adversity in stock price adjustments the day before. experience suggests, however, that history does not repeat with a fixed periodicity and, besides, i have crossed my fingers. the theme of your convention this year is timely. it is exactly when rapid innovation and institutional and technological change are taking place that market participants should take time to contemplate the opportunities and the risks, what to retain and what to change. only then can the banking industry create the most value - added for customers, employees, and society, and as a consequence, for shareholders. as in recent years, the future role of banks and other providers of financial services will surely be significantly affected by the same basic forces that have shaped the real and financial economy world - wide : relentless technological change. this morning, i would like to describe some of the effects of technological change in both the financial and nonfinancial sectors and discuss a few of their more important implications. i will begin with the real economy. technological change and the real economy the most important single characteristic of the changes in u. s. technology in recent years is the ever expanding conceptualization of our gross domestic product. we are witnessing the substitution of ideas for physical matter in the creation of economic value - - a shift from hardware to software, as it were. the roots of increasing conceptualization of output lie deep in human history, but the pace of such substitution probably picked up in the early stages of the industrial revolution, when science and machines created new leverage for human energy and ideas. nonetheless, even as recently as the middle of this century, the symbols of american economic strength were our outputs of such physical products as steel, motor vehicles, and heavy machinery - - items for which sizable proportions of production costs reflected the exploitation of raw materials and the sheer manual labor required to manipulate them. however, today ’ s views of economic leadership focus increasingly on | 0 |
in the euro area, monetary policy decisions are centralised from now on, but their implementation remains to a large extent decentralised. the governing council of the european central bank is the supreme decision - making body. it meets every fortnight and consists of the six permanent members of the board of the ecb and of the governors of every national central bank. it is the governing council which more in particular determines the level of official interest rates. in practice, decisions are taken on a consensus basis, but according to the legal provisions they require a simple majority of votes. each member has one vote : the vote of the governor of the national bank of belgium carries the same weight as the one of the president of the bundesbank, the governor of the central bank of luxembourg or the governor of the national bank of belgium. the principle ‘ one person, one vote ’ thus reflects the fact that even though they are originally from different countries of the euro area, the members of the governing council act completely independently and not as representatives of their country. the treaty specifically stipulates that they can neither ask for or receive instructions from their government or from anybody else and that they must take their decisions solely on the basis of the interests of the euro area as a whole. * * * in granting the decision makers of the european central bank a high degree of independence, the treaty of maastricht - and i think these two things go together - has also assigned them a specific task : i. e. to guarantee price stability. indeed, the treaty clearly states that this is the primary objective of european monetary policy and that, without prejudice to this stability, monetary policy contributes to the other objectives of economic policy. in every country in the world the population is, i think, of the opinion that the first duty of the central bank consists in maintaining the purchasing power of the currency it issues. but this mandate is particularly stringent for the euro area, as was the case previously for the bundesbank in germany. the people in europe, and moreover not only in germany, seem to be particularly attached to price stability. moreover, no central banker, and in any case not the members of the governing council of the ecb, is insensitive to growth and employment. but we think that growth should not be stimulated to the detriment of price stability, as such an action is short - lived and costly in the long term and monetary policy cannot resolve structural problems, in particular structural unemployment, | term structure of interest rates, indicators for budgetary policy, various standards for measuring real economic activity, and the results of surveys among producers and consumers. * * * if i make a short comparison between the monetary policy in the united states, canada and the euro area, i observe a great similarity between the bank of canada and the ecb : price stability is clearly the primary objective of their policy, whereas the mandate of the federal reserve is both wider and less specific. in your country quantifying the objective ( “ inflation target ” ) is subject to an agreement between the minister of finance and the central bank, whereas in the euro area, the central bank determines this autonomously. it is true that in the euro area we have twelve finance ministers! however the discretionary power of the fed is greater still. but apart from these few differences, our three central banks share the characteristics of the major modern central banks : price stability is considered as a necessary condition for sustainable growth ; they enjoy a high degree of independence in the conduct of monetary policy and simultaneously have a strong concern for transparency and accountability. * * * during the first three years of the euro ’ s existence, the european central bank has already been confronted with important and different challenges. at the start of the single monetary policy, in the beginning of 1999, its principal leading interest rate stood at a low level of 3 p. c. during the spring of that same year the ecb then has had to address a deflationary threat and lowered its rate to 2. 5 p. c. later on, primarily due to the steep rise in oil prices, but also of meat prices in europe inflationary risks appeared which the ecb has sought to contain by gradually raising its interest rate from 2. 5 % to 4. 75 % between november 1999 and october 2000. no central bank can avoid that a shock beyond its control, such as an oil shock, momentarily increases inflation. but the central bank has to prevent the increase of certain prices from transforming into an upward spiral of all prices and costs. the european central bank has succeeded in doing so. euro area inflation reached a maximum of 3. 4 p. c. at the beginning of the summer of this year ; since then it has been declining and should according to all expectations drop below 2 p. c. in the coming months. the reduction of inflationary pressures has allowed the european central bank to reduce its interest rates since the spring by 150 basis points in four moves ( coming | 1 |
masaaki shirakawa : the turmoil in global financial markets and economic and financial developments in japan speech by mr masaaki shirakawa, governor of the bank of japan, at the kisaragi - kai meeting, tokyo, 5 november 2008. * * * introduction i am very privileged to have the opportunity to speak before such a large audience. as you all know, global financial markets are currently experiencing a type of turmoil not seen since the 1930s. strains in the markets have mounted significantly, especially since the bankruptcy filing of lehman brothers in september. it is difficult for a central bank to choose the right words to express this situation, but the blunt phrase " financial crisis " was used in the joint statement by major central banks released in october. the degree of strains in financial markets, although they have recently improved somewhat, has increased to a level that has obliged us to use such a strong phrase. the turmoil in financial markets that began in the summer of 2007 as well as its impact on economic activity were, at first, limited to the u. s. and european economies, but have since gradually spread to japan as well as to emerging economies. this global turmoil has now become the largest problem facing the world economy, although the degree of impact varies by country. in my speech today, i would like to first discuss developments in global financial markets and overseas economies, given that current developments in japan's economy are being overwhelmingly influenced by them. after that, i will discuss the outlook for japan's economic activity and prices, and then the bank of japan's conduct of monetary policy, including the reduction in the policy interest rate decided at the monetary policy meeting held on october 31. and lastly, i would like to touch on how a financial crisis should be dealt with and how, from a longer - term perspective, similar crises can be prevented in the future, based on our experience with the one that occurred in japan. i. developments in global financial markets and overseas economies i will begin by discussing developments in global financial markets and overseas economies. looking back, until recently the world economy enjoyed a sustained period of benign economic conditions. the statement released after the meeting of the group of seven ( g - 7 ) finance ministers and central bank governors in april 2007, for example, indicated, " although risks remain, the global economy is having its strongest sustained expansion in more than 30 years and is becoming more balanced. " all of you here are familiar with developments in the world economy since then | prices stabilize, while aggregate supply and demand conditions are expected to loosen, with real gdp growth falling short of the potential growth rate. on a fiscal year - on - year basis, the cpi ( excluding fresh food ) is projected to rise by around 1. 5 percent in fiscal 2008 and remain more or less flat in fiscal 2009. thereafter, it is projected to increase somewhat and register an increase in the range of 0. 0 - 0. 5 percent in fiscal 2010, as commodity prices are likely to rise gradually reflecting the recovery in overseas economies and the aggregate supply and demand balance in the economy is likely to improve moderately. what is important in the conduct of monetary policy when faced with a decline in the inflation rate is developments in medium - to long - term inflation expectations. in this regard, medium - term inflation expectations have barely changed during the recent period of price rises, and it is not anticipated in the current projections that they will change during the coming period of price decline. b. uncertainty regarding the outlook for japan's economic activity and prices in sum, the most likely outlook is that increased sluggishness in japan's economic activity will remain over the next several quarters, but in the longer run, the economy will return onto a sustainable growth path with price stability. however, this outlook is attended by a significant level of uncertainty. the first and the largest risk factor is the outcome of financial crises in the united states and europe. if the negative interaction operating between financial markets and economic activity in the united states and europe should worsen, this may lead to a further slowing in these economies and may further delay their recovery. if growth of the world economy slows as a whole due to a subsequent slowdown in emerging economies, not only will japan's exports decline but also the slowdown in the world economy may reduce business fixed investment by altering firms'expectations of an increase in global demand. the second risk factor concerns developments in energy and materials prices. it is assumed that, in the medium term, these prices will rise moderately, supported by growing demand especially in emerging economies. however, this assumption is, again, accompanied by uncertainty. if the current fall in these prices, which implies an improvement in japan's terms of trade, mainly reflects the slowing of the world economy, it should be borne in mind that this also implies a decrease in japan's exports. on the other hand, if commodity prices should surge again, inflationary pressures may increase globally, which could raise | 1 |
to interest rate risk, the spread between assets and liabilities repricsed up to three months, accounted for 5. 1 % of earning assets, which shows a low exposure to interest rate fluctuations at system level. moreover, during 2011, the banking system performed positively in terms of compliance with new standards and regulations on operational risk management approved over the year. issues related to transparency and money laundering prevention were an important part of supervision in 2011. to monitor them, a number of examinations on banks and non - bank financial institutions, including bureaux de change, have been conducted. they have revealed that the entities have generally taken preventive measures. transparency and publication of information were subject to reforms in 2011 and aimed at establishing a more appropriate business climate for banks and providing higher protection to the public. banks, on their side, have responded positively by adapting their internal regulatory framework in line with these changes. further improvement is needed to enhance the transparency with regard to credit agreements, which have been a source of customer complaint and on focus of examinations on transparency and corrective measures taken by the bank of albania. the practices for deposit and account estimation, as well as disclosure and addressing of customer complaints are generally regarded as less problematic. supervision of non - bank financial institutions is also a functional part of the bank of albania. their number amounted to 19, from 17 a year earlier ; their specific share remained unchanged, accounting for 3. 1 % of banking system assets. during 2011, their activity posted moderate growth with regard to total assets, loan portfolio and financial profit. overall, non - bank financial institutions have adhered to regulatory framework and supervision standards. however, on - site examinations have identified several problems, thereby making appropriate recommendations related to them. among them, we would highlight the need to : improve lending process ; revise internal regulatory framework ; enhance transparency to clients, etc. the expansion dynamics of the financial sector activity is reflected in the licensing process. during 2011, additional activities requested by banks and non - bank financial institutions were approved, consisting in introducing new market products and diversifying the existing products of financial institutions. moreover, a preliminary approval was granted to new bank branches and agencies ( 10 ), but at low paces, whereas the activity of some bank branches and agencies was closed ( 11 ). as at year - end, there were 528 bank branches and agencies operating in the country and 1 branch operating abroad. regarding supervision of the financial activity under the jurisdiction of the bank of albania, allow me to | have triggered european banks to revise the model and expansion of their activity. in more practical terms, it implies that the presence of foreign bank subsidiaries in the countries of our region is subject to a careful assessment, to determine their effectiveness and business continuation. this process is not necessarily restrictive for the economies of our region, as it may generate processes related to banking consolidation or lead to new investors entering the market. the bank of albania is closely monitoring economic and financial developments in the countries where parent bank groups operate. we have undertaken over time measures that ensure the strengthening of capital and liquidity indicators and improve the resilience of both individual banks and the whole sector. at a more operational level, periodic analyses and other processes are under way, with a view to realising : i. a professional assessment of the financial situation and operational risks for individual banks and the whole sector ii. a comprehensive framework for addressing and mitigating risks facing the financial system stability. 4. main objectives for 2015 this was an overview of bank of albania ’ s activity in 2014 and of the first months under my governance. in conclusion, i would like to focus briefly on our main objectives for 2015 that stem from both legal obligations and the medium - term development of the bank of albania. first, monetary policy decisions will aim at anchoring inflation expectations close to the 3. 0 % inflation target. our projections suggest that the monetary policy will remain accommodative side in the period ahead. in our judgement, the current monetary conditions are adequate for the return of the economy to equilibrium and of inflation to target. however, within the legal framework that regulates the work of our institution, we are ready to undertake all the necessary measures for compliance with our inflation target. second, supervisory policies aimed at strengthening the banking system stability. main challenges facing the albanian banking sector are as follows : i. ensuring the return of a steady growth of lending ; ii. improving indicators of bank asset quality, in the framework of measures taken for cleaning their balance sheets, which are expected to have a positive effect on the operational efficiency and intermediation capacity of banks ; bis central bankers ’ speeches iii. mitigating effects arising from structural regulations imposed to eu - based banking groups in the context of reducing their exposure to subsidiaries outside the eu ; to safeguard the financial stability, the aim will be to further strengthen the inter - institutional cooperation with other financial supervisory institutions and international financial institutions. third, strengthening the system of management and internal audit, and institutional capacities | 0.5 |
future state of economic activity and prices and the government's fiscal condition. ⇒ the signaling effects have not been fully exerted. the first side effect is a weakening of the hurdle rate function of interest rates, which acts to stimulate business metabolism. if the borrowing interest rate for a firm is high, the firm, in order to survive, is pressured to concentrate its business resources in areas that earn enough profits to cover that interest cost ; in other words, businesses with high added value. however, if the borrowing interest rate is low, the firm has the option of continuing with businesses with relatively low added value. in sum, in an environment where an interest rate functions effectively as a hurdle rate, funds will gravitate toward highly productive businesses, consequently stimulating business metabolism. this will make resource allocation more efficient from a macroeconomic perspective. conversely, in an environment of the government's support measures and continued low interest rates, it is likely that the channeling of funds into businesses with relatively low productivity has impeded advances in business metabolism. in fact, entry and exit rates of firms in japan have remained low compared to other major countries, and labor productivity growth also has remained lackluster ( chart 10 ). chart 10 : entry - exit rates and productivity in major economies entry and exit rates < entry rate > < exit rate > 16 % labor productivity 14 10 thous. usd, 2015 ppps japan united states united kingdom germany japan united states united kingdom germany cy 08 11 14 17 20 08 11 14 17 20 cy 90 notes : 1. in the left panel, figures for japan are on a fiscal - year basis. there is a discontinuity between the figures for germany up to 2020 and those of 2021 due to changes to the definition. 2. in the right panel, figures represent gdp per person employed at constant prices. sources : eurostat ; oecd ; small and medium enterprise agency ; u. k. office for national statistics ; u. s. census bureau. the second side effect relating to interest rate functions is a weakening of the signaling effects of interest rates freely determined by the market. the level of long - term yields on jgbs and how it changes provide a signal for how the market sees factors such as the future state of economic activity and prices and the government's fiscal condition. however, with the bank's large - scale jgb purchases, the signaling effects have not been fully exerted. of course, even if the hurdle rate function | . the underlying inflation trend needs to remain stable at around 2 percent in order to achieve the bank's price stability target of 2 percent in a sustainable and stable manner - - even after the impact of higher import prices disappears completely. to that end, it is necessary above all for nominal wages to continue rising at a level consistent with the 2 percent price stability target. 1 this is because, if there is a given uptrend in nominal wages, this will contribute to higher prices, mainly for services, and thus, there will also tend to be a given uptrend in general prices. this is why the bank made clear in its forward guidance in april 2023 that, by patiently continuing with monetary easing, it aims to achieve the price stability target of 2 percent in a sustainable and stable manner, accompanied by wage increases. b. significance of achieving both price stability and economic growth as i have just outlined, major central banks around the world, including the bank of japan, have been conducting monetary policy with the aim of achieving and maintaining a situation in which the year - on - year rate of increase in consumer prices is stable at around 2 percent, albeit with differences in their policy directions. this stance is based on the experience of various countries to date and the insights of experts. namely, a certain degree of mild inflation taking hold as a trend is considered desirable in order to achieve both price stability and economic growth. thus, high inflation, deflation, and excessively low inflation are all deemed undesirable. the reason why many major central banks have continued with monetary tightening at this point is that current inflation in a large number of countries and regions is considered to be the result of excess demand outstripping the economy's potential production capacity, which is mainly constrained by labor supply. implementing further economic stimulus measures under these circumstances will merely result in higher inflation and will not induce a higher level of production. moreover, excessively high inflation carries its own economic since the real wage growth rate is virtually identical to the labor productivity growth rate over the long term, if the labor productivity growth rate is 1 percent, adding 2 percent to that value yields a value of 3 percent, which will be the nominal wage growth rate consistent with the 2 percent price stability target. however, the labor productivity growth rate is fundamentally determined after incorporating the efforts of individual private - sector firms, such as research and development and improvements in business and production processes, and thus its value cannot be determined in advance. inef | 0.5 |
in the usa economic developments in the united states continued to deteriorate during the first half of the year. this was largely connected to problems in the financial markets. in the most recent monetary policy report published at the beginning of july we were expecting gdp growth in the united states to slow down to around 1. 5 per cent a year in 2008 and 2009. i agreed on the whole with the picture of international developments presented in the monetary policy report, but my assessment was that developments in the united states could be even weaker than we were assuming. there is a risk that we will have to lower the forecasts even more in coming reports, particularly the forecasts for 2009. gdp growth in the second quarter of 2008 was actually slightly stronger than we had expected. gdp increased by 0. 5 per cent compared with the first quarter. growth in the united states is now largely being upheld by exports alone, which are increasing at a good rate as a result of world growth and the dollar depreciation ( compared with the level 2 - 3 years ago ). domestic demand will on the whole not show any increase in 2008 and 2009. i do not believe that the recovery in domestic demand will get started before the financial system has stabilised and before the fall in us house prices has come to a halt. house prices have continued to fall during the summer. growth in europe will also slow down europe fared better than the united states at the beginning of the year. this is partly because the financial crisis originated in the united states and the financial market turbulence has not been as severe as there. another explanation is that the financial balance is better in europe ; public sector finances have improved in recent years and the current account is close to zero. we assumed in the monetary policy report that gdp growth in the euro area would slow down to 1. 7 per cent in 2008 and 1. 2 per cent in 2009, to reach almost 2 per cent in 2010. at the beginning of july we had seen little sign of the slower growth in the statistics on production and in the national accounts. on the contrary, there had been several positive surprises. however, there were tangible signs of a future slowdown in other types of data, such as corporate and household confidence indicators. the quick figures for the second quarter now indicate that gdp in the euro area declined by 0. 2 per cent compared with the first quarter, which was weaker than we had expected. global growth still strong gdp growth in the world as a whole has been | barry whiteside : celebrating the fijian entrepreneurial spirit opening address by mr barry whiteside, governor of the reserve bank of fiji, at the launch of the 2013 fuji development bank small business awards, suva, 14 august 2013. * * * ratu deve toganivalu executives and staff of fiji development bank fellow sponsors distinguished guests ladies and gentlemen introductory comments bula vinaka and a very good morning to you all. thank you, ratu deve, for your kind invitation to launch the 2013 fdb small business awards. it is another significant event on the business calendar where we recognise the achievements of the private sector, and in this particular case, small businesses in fiji. these awards were conceived around the idea of the need for us all to stop what we are doing and salute those small businesses doing great things for our country. let us not only celebrate the winners, but also all the others that have dared to back their entrepreneurial spirit and set up a business. we trust that this event will create the necessary awareness out there of these “ mum and dad ” type enterprises. we hope that this will further encourage them to grow from strength to strength to become much larger businesses in the future. there are of course many examples we can cite of large successful fijian companies that started from virtually nothing. the small business awards today is actually the 10th anniversary of the fdb ’ s small business awards and i am honored to be here to share this achievement with you. i applaud the fiji development bank for organising this competition over the years. the fact that it has been sustained shows fdb ’ s commitment and energy towards growing the fijian economy by assisting the small players, particularly, in providing them with access to credit. one of the major challenges of small businesses is who will give them the money to start and sustain their initial operations? the winners i have been informed that this year there are seven award categories : – agriculture, tourism, wholesale & retail, professional & business services, manufacturing, a best business practice award and a special award. that pretty much covers everything. ladies and gentlemen, in as far as gender balance goes when it comes to small businesses, women are clearly the driving force. unfortunately they beat us men “ hands down ”. last year ’ s awards saw women entrepreneurs win five of the seven awards. as a man, this is always a difficult and painful one to explain as it is not only fijian men that suffer our well known “ malua | 0 |
charles i plosser : communication and transparency in the conduct of monetary policy speech by mr charles i plosser, president and chief executive officer of the federal reserve bank of philadelphia, at the council on foreign relations, new york city, 8 may 2014. * * * the views expressed are my own and not necessarily those of the federal reserve system or the fomc. highlights 1. president plosser outlines his views that policy transparency and forward guidance could be enhanced if the central bank would be more explicit about its reaction function. 2. president plosser notes that one way to be more explicit would be to indicate the likely behavior of the policy rate based on a few different taylor - like rules that have been consistent with past conduct of monetary policy and are robust to our uncertainties regarding the true economic model. 3. president plosser believes that the federal reserve board staff ’ s model, called frb / us, seems to be a reasonable starting point for providing economic forecasts based on those rule - based policies. introduction thank you for the kind introduction. it ’ s a pleasure to return to the council on foreign relations. i know that the value of these sessions often arises during the discussion, so i will try to keep my opening remarks brief. before i go any further, though, i should begin with the usual disclaimer that my views are my own and do not necessarily reflect those of the federal reserve system or my colleagues on the federal open market committee. the topic i want to address today is communication and transparency in the conduct of monetary policy. some of you can recall when it was taken for granted that the central bank was supposed to be secretive and mysterious. the guiding principle was simple : the less said about monetary policy, the better. indeed, it was not until 1994 that the federal open market committee ( fomc ) began to announce policy changes made at its meetings. but times have changed. transparency has replaced secrecy, and open communication has replaced mystery. the extent of this transformation is, in many ways, remarkable. today, the issues of communication and transparency are front and center on the agenda of many meetings and conferences on central banking. a major reason for the focus on these issues is the recognition that the stance of monetary policy encompasses not just the current level of the short - term policy rate but its expected future path as well. more broadly, economists have come to understand that expectations, including expectations about monetary policy, play an important role in determining | the rules. a monetary policy report that might accompany such a forecast could include various views that may differ from the baseline summaries. performing this exercise would indicate the inherent uncertainty that policymakers face, yet it would also provide a better sense of the likely direction of policy and the variables most related systematically to that policy. further, this type of communication would push the fomc to conduct policy in a more systematic manner, which i believe will lead to better economic outcomes over the longer run. bis central bankers ’ speeches | 1 |
##bank. se / upload / dokument _ riksbank / kat _ publicerat / rapporter / 2010 / ar2009 _ en. pdf 6 https : / / www. riksgalden. se / en / aboutsndo / guarantees - and - lending / our - guarantees / 6 regular analysis of the stability of the financial sector and good crisis preparedness to be able to fulfil our liquidity supporting role in a crisis, we must have good knowledge of the financial system and its participants. we therefore analyse financial companies, infrastructures and markets, as well as the links between them, both under normal circumstances and in times of crisis. in the initial stage of a crisis – when the riksbank needs to make a decision on liquidity support of several billion in the course of a day or so, or in the worst case a few hours – it is not possible to start analysing the bank that is in distress and what links it may have to other participants in the financial system. being a slow starter does not work, as the course of a crisis can be very rapid. a regular analysis of banks and other financial companies even during normal circumstances is needed also to ensure that the institutions that are members of rix have good risk management, so that they are stable and do not subject the system to major risks. to be able to carry out this regular analysis in a good way, the riksbank cooperates with finansinspektionen, which in its capacity as financial supervisory authority has good access to information and in - depth knowledge of the individual financial companies. in addition to the regular analyses, we at the riksbank need to practice our crisis management capacity in various ways. we do this regularly, together with other public authorities in sweden and in other countries. in other words, crisis preparedness is high on our agenda, as it is for other central banks. it is quite clear that sweden, with a large bank and payment system, could be destabilised through the payment system. in addition, to our own exercises and preparedness, it is also important that we have the possibility to require that the participants in the payment system have a high level of crisis preparedness. i hope that the riksbank will be given greater power of authority in this field. 7 monetary policy is closely related to financial stability now i have talked at length about the concrete tasks the riksbank has to contribute to | payments the riksbank can already be said to issue digital money, but this can only be held by banks and some other financial institutions. this electronic central bank money plays an important role and, like cash, is risk - free. it is used to implement payments between financial institutions participating in the central bank's payment system. in sweden, this payment system is called rix and it is operated by the riksbank. responsibility for a central payment system is a second central bank task that is of great significance for ensuring that our payments are efficient and safe, and thereby for the financial system. most non - cash payments in sweden that are not internal within a bank pass through rix one way or another. on average, around 21, 000 payments are settled in rix every day to a total value of around sek 565 billion 4. in other words, every week an amount is settled that is roughly the size of sweden ’ s gdp. rix also acts as the hub in a large universe of systemically important financial infrastructures that consists of central counterparties, securities companies and clearing organisations. the riksbank's role is to supply the rix system and to guarantee that the parties that are members of rix can settle their payments efficiently. the requirements for operational reliability for the rix system are very high, as a breakdown would have major repercussions on society. if payments do not reach 4 http : / / www. riksbank. se / documents / riksbanken / rix / 2017 / rb _ rix _ tertial _ 3 _ 180119 _ eng. pdf 4 counterparties as planned, this could entail problems for the companies and households that are affected. rix thus plays a very central role in the swedish economy, as it is the economy's “ circulatory system ” through which the riksbank acts when supplying liquidity to promote financial stability and also when conducting monetary policy. as a result of the increasing internationalisation, the rapid technological developments and the emergence of new regulations, rix, like the central payment systems in many other countries, is currently facing strong pressure to change. one effect of these developments is that an increasing number of credit institutions and some other institutions want to be able to participate directly in the payment system, instead of through agents. with more participants in the rix system, the concentration risks will decline, as there will be more institutions that have the possibility to borrow directly | 1 |
##bling patterns : many workers do not participate, contribute only a small portion of their wages if they do participate, and make questionable investment and distribution choices. let me take a couple of minutes to cite some telling facts about individual savings in 401 ( k ) plans, suggesting that workers may not be giving adequate attention to their savings in the retirement plans sponsored by their employer. first, despite the tax advantages of 401 ( k ) contributions, one - quarter of workers eligible for 401 ( k ) plans do not participate at all, even if the employer would match a portion of their own contributions. 2 these workers are effectively giving up a pay raise. and among those that deloitte and touche, 2003 401 ( k ) annual benchmarking survey. contribute, many save just a little. in a survey last year, one - quarter of firms reported that their rankand - file 401 ( k ) participants saved an average of less than 4 percent of pay. 3 another concern relates to the way employees manage their 401 ( k ) plans. some participants simply invest contributions equally across the investment options or according to plan defaults, which in many cases is a low - risk, low - return money market fund. 4 and, as has been publicized widely in recent years, many 401 ( k ) participants invest heavily in employer stock. among companies that offer company stock as an investment option, more than one - quarter of 401 ( k ) balances are in company stock. 5 this high concentration cannot be attributed entirely to an employer match that is required to be held in company stock. instead, employees appear to voluntarily purchase abundant amounts of company stock, despite the obvious risk of linking their current income and retirement wealth to the financial health of their employer. these patterns are troubling because they raise doubts about the financial security of workers in later life. fortunately, new research in the discipline of behavioral finance provides some important insights into the behavior of 401 ( k ) participants and suggests some promising changes that can lead workers to make savings choices that will leave them better prepared for retirement. contrary to predictions of traditional finance theory, the way the retirement - plan options are framed affects the choices made by participants. as compelling evidence that framing matters, researchers have found that “ opt - out ” plans - those that automatically enroll workers unless they actively choose not to enroll - have substantially higher participation rates. 6 moreover, when defaults are designated, many workers tend to enroll using the default contribution rates and investment options and to leave | philip r lane : the brexit discontinuity speech by mr philip r lane, governor of the central bank of ireland, to the 2019 european financial forum, dublin, 13 february 2019. * * * introduction i am pleased to address the 2019 edition of the european financial forum. currently, both policy officials and private - sector participants in the global financial system are confronted with a combination of cyclical and structural concerns. at the cyclical level, the recent revision in global growth projections and the downside shift in the risk distribution require a careful assessment of the likely duration of adverse shocks and the potential offsetting impact of some mitigating stabilising factors : this exercise will be aided by the arrival of the incoming hard data on macroeconomic outcomes in the first months of 2019. at the structural level, longer - term prospects depend on the traditional determinants of global productivity ( such as investment and innovation rates ), the steady - state cross - country distribution of national income levels relative to the frontier and demographic trends. in addition, climate change ( together with the international policy response ) will exert an increasing influence on the path for global output. 1 however, both short - term and long - term prospects are currently also subject to an unusually high level of uncertainty about the paradigms governing policymaking. at the global level, the primary focus is on the future of the multilateral policy framework underpinning international trade. within europe, brexit constitutes another paradigmatic shift : the departure of the united kingdom from the european union represents a disruptive event across many dimensions, including the operation of the single market. a full analysis of such paradigmatic events requires a multi - field integrated approach that draws upon history, political science, international relations as well as economics and finance. i will not attempt such a comprehensive approach in this speech : rather, i will focus on some of the implications of brexit for the irish economy and the irish financial system. the central bank of ireland has been focused on brexit risks since the announcement of the 2016 uk referendum. our work has focused on ensuring that : ( i ) the risks to the irish economy and consumers are understood ; ( ii ) regulated firms prepare appropriately for all scenarios, in order to protect consumers ; ( iii ) where necessary, the required policy and legal adjustments are prepared to counteract the cliff - edge risks of a hard brexit to the delivery of vital financial services ; and ( iv ) we perform our gatekeeper | 0 |
me say in conclusion that i consider it essential to preserve, consolidate and reinforce the remarkable unity demonstrated by the international community in the crisis period. we were able to agree on the following major points. first, there was the consensus on the need to increase participation in the informal global governance framework to include all systemic emerging economies. this was illustrated by the g7 passing the baton to the g20 as the primary forum for global economic governance. second, there was consensus – spanning both emerging and advanced economies – in confirming, at the very moment the crisis was unfolding, that market economy rules are the most effective and efficient means to create prosperous economies and societies. third, there was consensus on working together to reinforce rules, regulations and standards in the financial sector with a view to decisively strengthening its resilience and improving the coordination of fiscal and structural policies within a framework for strong, stable and sustainable growth. this was no time for complacency. the unity of the international community made a difference. we avoided a depression, and the recovery began in the second half of 2009. this is still no time for complacency. what we need today is not “ wars ” of any kind, but a strong and renewed commitment to confident and resolute cooperation. together we must say “ no ” to protectionism and “ no ” to beggar - thy - neighbour policies. the international community can and must continue to make a difference by being united and showing a strong sense of medium and long - term direction. i thank you for your attention. | products and for asset - backed commercial paper to european money markets, how did the ecb react? the liquidity squeeze in the interbank money markets that was observed in early august 2007 was triggered by the larger - than - expected funding liquidity needs, or perceived needs, of some banks, while at the same time those financial institutions that had liquidity balances tended to hoard them because of uncertainty about their future liquidity position and increased counterparty risk. in the face of these information asymmetries and heightened uncertainty, the normal functioning of the euro money market was severely impaired. the ecb therefore stepped in and addressed these tensions, initially by launching a series of overnight fine - tuning operations, and subsequently by taking four specific measures to ensure that very short term money market rates remained close to the ecb ’ s policy rate and to contain upward pressures in the longer - term money market. first, the ecb shifted the time pattern of liquidity provision through its main refinancing operations in the interbank money market by providing more liquidity at the beginning of the reserve maintenance period and less towards the end of the period. this “ frontloading ” led to more balanced liquidity conditions and helped to keep very short - term rates close to the key policy rate, without changing the overall amount of liquidity provided. second, responding to banks ’ greater preference for assuring the fulfilment of their liquidity needs on a longer - term basis, the ecb increased the share of refinancing provided via three - month longer - term refinancing operations and reduced the share provided via the one - week main refinancing operations. again, the total amount of outstanding refinancing remained unchanged ; however, the average maturity was extended. third, the ecb undertook a number of specific measures designed to address expected money market tensions around the year - end. and fourth, to ensure the availability of funding denominated in us dollars, the ecb joined a concerted action with other central banks, notably the federal reserve system in december 2007, the aim of which was to improve global funding conditions. it may be useful to clarify that the eurosystem requires adequate collateral from its counterparties for its credit operations. adequate collateral in this context has two dimensions : first, the eurosystem should be protected from incurring losses in its credit operations. second, sufficient collateral should be available to counterparties, so that the eurosystem | 0 |
normal for inflation not only has no theoretical or empirical support, but entails the moral hazard of policy inaction in dealing with supply constraints. not a sufficient condition because there is no empirical evidence to establish that the benefits of higher growth outweigh the costs of welfare loss associated with higher inflation. 55. key to our collective national aspiration for sustained high economic growth is low and steady inflation. it is only under such an environment of price stability that investors and consumers can make informed choices and contribute to growth. the responsibility of the reserve bank in this regard is to anchor inflation expectations and ensure price stability. neither theory nor empirical evidence presents a credible case for acquiescing in a new normal for inflation in india. bis central bankers ’ speeches | associated with monetary policy and more effectively anchor longterm inflation expectations. in his view, however, the introduction of a long - term inflation target is fully consistent with current us monetary policy 1. there has been little interest in us political circles in changing the monetary policy framework 2. pursuant to the regulation of march 2001, the mandate for monetary policy stipulates that monetary policy shall be aimed at stability in the norwegian krone ’ s national and international value, and at the same time underpin fiscal policy by contributing to stable developments in output and employment. the operational objective of monetary policy is low and stable inflation, with annual consumer price inflation of approximately 2. 5 % over time. the mandate implies that inflation targeting shall be flexible, so that weight is given to both variability in inflation and variability in output and employment. the concrete target for inflation varies somewhat among central banks. the inflation target may be formulated as an interval, for example 1 - 3 per cent, as in new zealand or, as in norway, as inflation of close to 2. 5 per cent over time. partly owing to various disturbances to the economy, inflation cannot be expected to remain at target constantly. central banks have somewhat varying formulations as to how rapidly inflation should be brought back to the target. some central banks state that inflation should be brought back to target within a “ reasonable time horizon ” or “ over the medium term ”. others have quantified that the inflation target should normally be attained within two years, as in sweden, or as in norway, where the interest rate is set with a view to stabilising inflation at the target within a reasonable time horizon, normally 1 – 3 years. in practice, the monetary policy conducted by most central banks is nonetheless similar. they orient monetary policy towards maintaining low and stable inflation. all central banks will reduce their policy rate when there are prospects of low inflation in the medium to long run and raise it when there are prospects of high inflation. what distinguishes norges bank from other central banks? monetary policy in norway is in line with the monetary policy conducted by a number of central banks in the oecd area. one difference, however, is that norges bank is conducting monetary policy in an oil economy. as a result of the high level of earnings and fluctuations in these petroleum revenues, the most important contribution fiscal policy can make to stabilising the norwegian economy is to provide a sound, longterm strategy for the use of petroleum revenues. in other words | 0 |
ladies and gentlemen, i hope one thing has become obvious from my short remarks : the european banking union, while being an important step, will require a lot of work in its implementation and in the process will require a lot of further thinking, creative problem solving and persistent work. i am confident that today ’ s and tomorrow ’ s distinguished lineup of speakers will shed light on a number of challenges that have yet to be tackled on the road toward full banking union. i very much look forward to two days of lively discussions with all of you, given the multitude of perspectives represented here. i hope you will find our conference useful and insightful. bis central bankers ’ speeches | “ interests and alliances ” opening remarks by klaas knot at the suerf conference ‘ forging a new future between the uk and the eu ’ amsterdam, 8 january 2020 the suerf conference of january 2020 brought together thought leaders from policy making, academia and industry, to discuss the economic implications of some of the challenges uncovered by brexit and other recent events on both sides of the channel. because the conference was held at de nederlandsche bank in amsterdam, klaas knot was invited for an opening keynote speech. in it, mr knot offered an optimistic view on the future relationship between the uk and the eu, based on the shared interests and the current and possible future alliances. it is my pleasure to welcome you all here at the dutch central bank. and a special welcome to our distinguished speakers and panelists. a new year, a new decade, and a good moment to discuss the future relationship between the eu and the uk. indeed, political developments over the coming months will be vital in shaping this new relationship. henry kissinger – the former us secretary of state, famously said that “ america has no permanent friends or enemies, only interests. this echoes what lord palmerston – the 19th century uk prime minister – once said : “ the uk does not have eternal allies, nor perpetual enemies, but eternal and perpetual interests. ” let me now fast forward to today ’ s world of brexit. obviously, a politician or political party can persuade people to vote to leave the european union. a member state can decide to abandon a treaty, or to withdraw from an agreement. every nation has its own - sometimes narrow - political interests. these interests clearly matter over the course of history, and they probably will continue to do so for a long time to come. when kissinger and palmerston contemplated the alliances and interests of nations, they of course considered that the interests of nations can diverge. and alliances could therefore be temporary. but let us now take a different perspective. a perspective that also rings true. and which offers us a more optimistic view. first, nations do not just have divergent or competing interests, but also enduring common interests. indeed, the eu and the uk continue to face very similar challenges and opportunities. some of which will be discussed today and to which i will return shortly. second, alliances may indeed be temporary, such as the uk ’ s membership of the european union. but at the same time, other alliances between the eu and the uk | 0 |
highly complex, and the right calibration is very important. therefore, economic research plays a crucial role in ensuring the success of the initiated reforms. this is particularly true of the design of procyclical capital buffers and surcharges for systemically important financial institutions. but of course there are many other very interesting strands of research, some of which have been covered at this conference. quite a few papers aim, for example, to create a deeper understanding of systemic risk and contagion mechanisms, which are surely key issues when it comes to dealing with future crises. in their paper “ structural estimation of systemic risk : measuring contagion in the sub - prime crisis ”, rigobon and his co - authors have developed a measure of international contagion which allows us to assess the role of systemic risk for the global economy. 4. conclusion ladies and gentlemen addressing the broader context of global developments which have contributed to the financial crisis and in particular the role which global imbalances have played, you have dealt with an interesting but also very complex issue at this conference. this question is far from being resolved, and i am sure that it will occupy researchers for quite some time to come. that is not less the case for those strands of research that deal with how to strengthen the financial system. seen in this light, times have seldom been as exciting for economic research as they are right now. i would like to encourage you to continue with your work and wish you much success. thank you for your attention. | banking innovations. in february this year, the bsp issued circular 1033 to streamline the licensing requirements of our supervised institutions intending to offer electronic payment and financial services ( efps ). these initiatives, together with the passage of the national payment systems act ( npsa, ra 11127 ) that grants the bsp with regulatory oversight over payment systems, will significantly advance our digitization agenda. but in order for these developments and initiatives to be relevant, there needs to be a systematic collection and dissemination of relevant data, one that would inform policymaking and lead to a better, deeper understanding of the msme market. with this in mind, we have embarked on two initiatives designed to bridge the information gap – the national demand side survey on msme finance and the strategic partnership with the department of trade and industry ( dti ), microfinance council of the philippines, inc. ( mcpi ), and alliance of philippine partners for enterprise development, inc. ( append ) to expand the negosyo center financing ecosystem. the national demand side survey on msme finance, which is currently under development, will enable us to address the need for comprehensive data on the msme sector and formulate responsive policies and programs. meanwhile, an essential component of the negosyo center partnership is the creation of an information database on negosyo centers and microfinance institutions ( mfis ) nationwide. this database will enable negosyo centers to refer clients to various financing options and help microfinance institutions design products and services appropriate to clients ’ needs. finally, let me say this again. financial inclusion is a necessary condition for a sustainable 4 / 5 bis central bankers'speeches economy. to realize this vision means pursuing change and reform however difficult they may be. the bsp ’ s enduring financial inclusion journey attests to this. we craft our policies not only for the present, but also with the future in mind. i am optimistic that the various financial inclusion initiatives of the bsp that i discussed this morning will help improve access of msme exporters to financial services, and consequently enhance our country ’ s export competitiveness. with these thoughts, let me say that the best for all of us is yet to come. maraming salamat po. 5 / 5 bis central bankers'speeches | 0 |
has responded positively to these relief measures as we can see from banks ’ lending behavior and activities towards the sector. first, banks continued to extend loans to msmes even during the lockdown period. in fact, as of end - august 2020, credit allocated to msmes reached p527. 2 billion. second, banks granted new msme loans as well as re - financed existing loans. third, loans to msmes as compliance with the reserve requirements have likewise increased and banks ’ lending rates for msmes have generally declined. 1 / the pandemic has given us this opportunity to further accelerate the digital transformation of the financial services sector. the bsp encourages the use of electronic payments to enhance the speed, convenience and affordability of financial transactions. now, we have the pesonet and instapay, the current two automated clearing houses. the bsp is promoting the use of pesonet as a viable alternative to checks and recurring bulk payments while the instapay as a substitute for coins and cash. 2 / 4 bis central bankers'speeches the existence of the pesonet and instapay was crucial in facilitating two key milestone initiatives of the national retail payment system : the government e - payments ( “ egov pay ” ) facility via pesonet ; and the national quick response code standard ( “ qr ph ” ) via instapay. the pandemic has shown the critical role of digital platforms in financial transactions and in the economy in general. as a result of the pandemic and the consequent lockdowns, more consumers shifted from cash payments to digital payments. the evidence is crystal clear : the use of pesonet and instapay zoom exponentially. for the first eight months of 2020, the value of instapay rose by 388. 7 percent, while that of pesonet jumped 100. 7 percent. year - on - year. by volume of transactons, instapay and pesonet soared by 623. 8 percent and 129. 6 percent, respectively. personally this is music to my ears. one of my personal goals as governor of bsp is to have not less than 50 percent of transactions, by volume and value, should be done digitally rather than by cash payments by 2023. with the pandemic, i ’ m optimistic that this goal will be met sooner. of course, this is consistent to my other vision of having a cash | benjamin e diokno : supporting msmes and the economy in the new economy arrangement speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the u. p. alpha phi beta fraternity alphan thought leaders webinar series, 9 october 2020. * * * to all participants of this alphan thought leaders webinar series, good morning. i thank my fellow brothers of the u. p. alpha phi beta fraternity for organizing this webinar series in order to raise public awareness of the current challenges, opportunities, and innovations that we are facing as the result of the covid - 19 pandemic. let me start by providing a macroeconomic perspective on the estimated impact of the coronavirus pandemic. the covid - 19 pandemic raised uncertainty and affected economic activity of all nations though the its impact is uneven. based on the june 2020 imf world economic outlook, the global economy is projected to contract by 4. 9 percent in 2020 to be followed by a mild recovery of 5. 4 percent in 2021. in the philippines, economic output contracted by 16. 5 percent in the second quarter of 2020, after exhibiting 84 consecutive quarters of growth. this is the lowest recorded quarterly contraction since the 1981 series. the decline was primarily attributed to our lockdown measures to slow down the spread of the virus and help prepare our public health sector and local communities respond to the health crisis. by sector, only agriculture was able to post growth of 1. 6 percent. industry plunged by 22. 9 percent while services contracted by 15. 8 percent. in the industry sector, two major subsectors were worst hit : construction and manufacturing, which contracted by 33. 5 percent and 21. 3 percent, respectively. in the services sector, the top three sub - sectors that suffered the most were the following : 1 / 1. accommodation and food service activities 2. other services, that is, arts, entertainment and recreation ; and 3. transportation and storage. fortunately, we were prepared when the pandemic hit us. this slide shows the strength of our macroeconomic fundamentals in 2019. two decades of sustained economic and structural reforms served as well and enabled us to build buffers and widen policy space. our gdp growth averaged 6. 4 percent in the last 10 years. the robust growth of the domestic economy was achieved in an environment of generally stable inflation and was anchored | 1 |
to receive funds at an earlier time than the usual end of banking day. with this enhanced feature, we hope that consumers will be incentivized to use pesonet for greater convenience, faster settlement, and better liquidity management. this enhancement also stands to improve person - to - government payments made through egov pay, which is another facility that runs through the pesonet. with pesonet mbs, payments for taxes, permits, fees, and other obligations to the government using egov pay will be faster. as more filipinos embrace digital payments, we are optimistic that pesonet mbs would bring 1 / 2 bis central bankers'speeches us closer to our strategic objectives under the bsp ’ s digital transformation roadmap : namely, first, digitalizing 50 percent of retail payments volume, and second, onboarding 70 percent of adult filipinos to the formal financial system by 2023. they say, “ teamwork makes the dream work. ” hence, i would like to commend our partners in the payments industry for helping us turn this vision into reality. despite the challenges from the pandemic, we, at the bsp, remain committed to closely collaborate with the various stakeholders in the payments industry, as well as in the public and private sectors to deliver safe, convenient and responsive digital payment services that help our fellow countrymen thrive in the new economy. together, let us continue to work towards achieving our shared goal of building a vibrant and inclusive digital philippine economy where every filipino can have meaningful participation. once again, congratulations to all the men and women who worked tirelessly to make the pesonet mbs launch a success! 2 / 2 bis central bankers'speeches | risk triggering exchange rate adjustment among competitor economies – particularly in asia, and would spread deflationary forces across the globe. although its recovery has been slower than previous economic expansions, the us is the main bright spot in the global economy. but even here there are significant puzzles around the labour market and investment climate. why, for example, has recent us labour productivity growth been so slow, and what explains the substantial wage moderation and weakness in business investment at this stage of recovery? on the policy side, there is uncertainty as to when and how fast the process of raising interest rates might take place, and its possible impact on international growth and asset prices – especially at a time when the bank of japan and european central bank are considering expanding their quantitative easing programs. these are some of the considerations that shape the world of central bankers. it ’ s a world of complex linkages, of instantaneous information, massive daily cross - border portfolio flows, unprecedented monetary accommodation and, in some instances, sharp swings in market liquidity and asset prices. it ’ s also a world in which high expectations have been placed on central banks to use all of the scope within their mandate to stimulate growth in demand and counter the risk of inflation remaining below desired goals for extended periods. in seeking to do so, central bankers have often had to work without the support of fiscal policy, or the structural adjustment reforms needed to raise potential output growth. 3. monetary policy in a small open economy central bankers also operate in a world where there is widespread overestimation and misunderstanding of what monetary policy can deliver. i will elaborate on three areas that may contribute to this. these concern the scope of monetary policy ; the dynamics – notably in terms of transaction volumes, driving forces and time horizons – of financial markets and their interaction with monetary policy ; and the degree of precision of the links between policy actions and outcomes. i ) scope of influence flexible inflation targeting here and overseas has been successful over the last 25 years in reducing inflation to low and stable levels – the best contribution monetary policy can make to an economy ’ s long - run growth. over the shorter term, monetary policy stabilises inflation by countering fluctuations in demand growth and employment away from their longer - run trends. 5 with inflation expectations stabilised at low levels, and the associated gain in policy credibility, g wheeler, reflections on 25 years of inflation targeting, international journal of central banking, september 2015. bis central bankers ’ speeches the ability of monetary policy to | 0 |
( chart 4 ). looking at the list of projects may leave an impression that it is an all - around list of challenges facing japan's economy. i believe that what the economy needs now is to implement various initiatives simultaneously to overcome many such challenges. what i mean is that, while these initiatives may look like " a little bit of everything, " firmly promoting them in order to achieve economic revitalization in an omnidirectional manner, and thereby revitalizing japan's economy, is necessary. i think that this will lead to an increase in growth expectations, and ultimately to a rise in inflation expectations. for japan's economy, the third largest in the world, ending deflation and returning to a sustainable growth path will also have significant meaning for the global economy. the bank will maintain highly accommodative financial conditions, with a view to achieving the price stability target of 2 percent, and ensure the overcoming of deflation. i believe that highly accommodative financial conditions, combined with the initiatives of the public and private sectors just mentioned, will give a boost to firms'investment and efforts for improving productivity. let me conclude by emphasizing that ensuring the exit from deflation in japan will lead to a more dynamic and stronger economy. thank you for your attention. japan's economy and monetary policy march 8, 2017 takako masai bank of japan chart 1 1999 年 2 月 「 セロ 金 [UNK] 政 [UNK] 」 の [UNK] [UNK] changes in the bank's monetary policy management feb 1999 introduction of the zero interest rate policy （ - aug 2000 ） mar 2001 introduction of the quantitative easing policy （ - mar 2006 ） mar 2006 release of " the bank's thinking on price stability " dec 2009 release of " clarification of the'understanding of medium - to longterm price stability'" oct 2010 introduction of the comprehensive monetary easing policy feb 2012 introduction of the " price stability goal in the medium to long term " jan 2013 introduction of the " price stability target " of 2 percent [UNK] release of " joint statement of the government and the bank of japan on overcoming deflation and achieving sustainable economic growth " apr 2013 introduction of quantitative and qualitative monetary easing ( qqe ) oct 2014 expansion of qqe jan 2016 introduction of qqe with a negative interest rate sep 2016 introduction of qqe with yield curve control chart 2 mechanism of qqe quantitative and qualitative monetary easing ( qqe ) large - | scale purchases of jgbs decrease strong and clear commitment to achieve the price stability target of 2 percent increase ⇒ ⇒ ⇒ nominal interest rates － inflation expectations [UNK] real interest rates decrease improvement in the economy and increase in prices chart 3 consumer prices y / y % chg. cpi ( all items less fresh food and energy ) cpi ( all items less fresh food ) - 1 - 2 - 3 cy 07 notes : 1. figures for the cpi ( all items less fresh food and energy ) are calculated by the research and statistics department, bank of japan. 2. figures for the cpi are adjusted to exclude the estimated effects of changes in the consumption tax rate. source : ministry of internal affairs and communications. chart 4 the 10 strategic public - private joint projects toward gdp of 600 trillion yen 1. the fourth industrial revolution 2. toward a world leading healthcare country 3. overcoming environmental and energy constraints and expanding investments 4. changing sports to a growth industry 5. revitalizing markets for transaction of existing houses and reform 6. improving productivity in the service industry 7. bringing about revolution among small and medium - sized firms and micro firms 8. promoting proactive agriculture, forestry and fishery, as well as reinforcing exports 9. realizing japan as a tourism - oriented country 10. taking measures to stimulate domestic consumer sentiment source : " japan revitalization strategy 2016 " ( cabinet decision, june 2, 2016 ) | 1 |
element in the snb ’ s monetary policy, and just last week, at our monetary policy assessment, we decided that it should be maintained. although the recovery of the global economy continued in the fourth quarter of 2013, substantial risks remain. in addition, the conditional inflation forecast for switzerland has been adjusted downwards in comparison to december. internationally declining inflation rates and the slightly stronger swiss franc are delaying the rise of inflation into positive territory. the snb is now expecting inflation of 0 % in the current year and 0. 4 % in 2015. in 2016, inflation should increase to 1. 0 %. furthermore, the value of the swiss franc is still high. with the three - month libor close to zero, the minimum exchange rate continues to be the right tool to avoid an undesirable tightening of monetary conditions in the event of renewed upward pressure on the swiss franc. through the minimum exchange rate, therefore, we are in a position to fulfil our price stability mandate. however, the consistent enforcement of the minimum exchange rate has contributed to the substantial increase in our currency reserves. slide 1 shows that, since 2009, our currency reserves have increased by a factor of about six, and the foreign bis central bankers ’ speeches exchange reserves are almost ten times higher. our foreign exchange reserves, that is, currency reserves excluding gold, currently amount to almost chf 450 billion, which is over 70 % of switzerland ’ s annual economic output. the expansion of our foreign exchange reserves means that our balance sheet is more exposed to the volatility of the financial markets than it used to be. even slight price changes can have a strong influence on our investment performance. this has made our investment policy even more challenging. however, thanks to established processes and a high level of expertise, we are in a position to meet these demands. history of investment policy at the snb at the snb, the move towards a sustainable investment policy aimed at optimising risk and return began as early as the 1970s. at that time, the management of foreign exchange reserves focused exclusively on the highest possible level of security and liquidity. imagine a situation whereby, until 1978, a residual term of only three months was a legal requirement. as a result, foreign exchange reserves consisted primarily of short - term us dollar investments, particularly us treasury bills. this led to considerable concentration risk. at the same time, the potential return was extremely low. despite narrow statutory provisions and market - related limitations, the | ’ s gdp is likely to grow by around 1 % this year. in this environment, unemployment is likely to continue to rise gradually, and the utilisation of production capacity is likely to decline somewhat further. our forecast for switzerland, as for the global economy, is subject to significant uncertainty. the main risk is weaker economic activity abroad. monetary policy outlook ladies and gentlemen, allow me to return to our monetary policy. following the coronavirus pandemic, inflation rose strongly worldwide. in many countries, the increase in inflation proved to be more persistent than at first assumed. the snb began tightening its monetary policy at an early stage. we initially allowed the swiss franc to appreciate and then from june 2022 onwards raised the snb policy rate by a total of 2. 5 percentage points. in addition to this, we sold foreign exchange. page 3 / 6 zurich, 21 march 2024 thomas jordan, martin schlegel and antoine martin news conference tightening monetary conditions in this way had various advantages. first, the appreciation of the swiss franc significantly weakened the transmission of inflation from abroad. the increase in inflation in switzerland was therefore considerably smaller than in other countries. second, we had to raise our policy rate only moderately by international comparison. this also prevented a stronger rise in the mortgage reference interest rate. the tightening of our monetary policy led to inflation being above 2 % only for a short time, and rapidly decreased from its peak of 3. 5 % in august 2022 to the current level of 1. 2 %. inflation expectations remained well anchored throughout this period. overall, the secondround effects were limited. over the past three months, the underlying inflationary pressure has decreased further. this is reflected in our conditional inflation forecast, which we have revised down significantly compared with december. it is within the range of price stability over the entire forecast horizon. having already decided in december to no longer focus on sales of foreign exchange, we can now lower the snb policy rate by 0. 25 percentage points to 1. 5 %. our decision takes into account the significantly reduced inflationary pressure as well as the appreciation of the swiss franc in real terms over the past year. it also supports economic activity. with today ’ s easing, we are ensuring that monetary conditions remain appropriate. however, in the current environment uncertainty is still elevated. we will therefore monitor the ongoing development of inflation closely. if necessary we will adjust our monetary policy again. we also remain willing to be active | 0.5 |
e - cny in china, ” white paper ( beijing : people ’ s bank of china, july 2021 ), http : / / www. pbc. gov. cn / en / 3688110 / 3688172 / 4157443 / 4293696 / 2021071614584691871. pdf. - 9continue to play a lead role in the development of standards governing international digital financial transactions involving cbdcs consistent with norms such as privacy and security. given the dollar ’ s important role as a payment instrument across the world, it is essential that the united states be on the frontier of research and policy development regarding cbdc, as international developments related to cbdc can have implications for the global financial system. technology research and experimentation given the range of possible future states with significant digitization of the financial system, it is important that the federal reserve is actively engaging with the underlying technologies. our work to build 24x7x365 instant payments rails leverages lessons from some of today ’ s most resilient, high - performing, and large - scale technology platforms across the globe. it is providing important insights on the clearing and settlement models associated with real time payments as well as on fraud, cyber resilience, cloud computing, and related technologies. in parallel with the board ’ s public consultation on cbdc, the federal reserve bank of boston, in collaboration with the massachusetts institute of technology, has developed a theoretical high - performance transaction processor for cbdc. 16 they recently published the resulting software under an open - source license as a way of engaging with the broader technical community and promoting transparency and verifiability. 17 federal reserve bank of boston, “ project hamilton phase 1 a high performance payment processing system designed for central bank digital currencies, ” news release, february 3, 2022, https : / / www. bostonfed. org / news - and - events / press - releases / 2022 / frbb - and - mit - open - cbdc - phase - one. aspx. “ a transaction processor for a hypothetical, general - purpose, central bank digital currency, ” github, https : / / github. com / mit - dci / opencbdc - tx. - 10 moreover, the board is studying how innovations, such as distributed ledger technology, could improve the financial system. this work includes experimentation with stablecoin inter | ##operability and testing of retail payments across multiple distributed payment ledger systems. the federal reserve bank of new york recently established an innovation center, focused on validating, designing, building, and launching new financial technology products and services for the central bank community. 18 these technology research and development initiatives are vital to our responsibilities to promote a safe and efficient payment system and financial stability, whatever the future may bring. conclusion the financial system is not standing still, and neither can we. the digital financial ecosystem is evolving rapidly and becoming increasingly connected with the traditional financial system. it is prudent for the board to understand the evolving payment landscape, the technological advancements and consumer demands driving this evolution, and the consequent policy choices as it seeks to fulfill its congressionallymandated role to promote a safe, efficient, and inclusive system for u. s. dollar transactions. 19 to prepare for the financial system of the future, the federal reserve is engaging in research and experimentation with these new technologies and consulting closely with public and private sector partners. federal reserve bank of new york, “ new york fed launches the new york innovation center to support financial technology innovation in central banking, ” press release, november 29, 2021, https : / / www. newyorkfed. org / newsevents / news / aboutthefed / 2021 / 20211129. see board of governors of the federal reserve system, “ fostering payment and settlement system safety and efficiency ” in the fed explained, 11th ed. | 1 |
to finalise and stabilise basel iii, not to open a new basel iv. the insurance sector has not been left out. the entry into force of the european regulatory reform solvency 2, also on 1 january, marks a profound break. we all know that “ solva 2 ” may still be improved ; but it is a significant step forward. in this respect, it is important that all institutions continue their efforts to improve governance and enhance the quality of estimates and data submitted to supervisors, in order to ensure an adequate monitoring of risks, in bis central bankers ’ speeches particular those linked to the persistence of very low interest rates. at the international level, other challenges lie ahead, notably the definition of systemic groups – it must be similar on both sides of the atlantic, like you i am sensitive to this –, harmonised capital requirements and resolution strategies. however, the soundness of the financial system does not depend solely on prudential regulations. it also depends on the confidence that economic players and the public, households and businesses, have in their financial system. in this respect, the efforts of financial institutions to protect their clients are essential. in 2016, what is needed is a firm implementation of the eckert law on dormant bank accounts and unclaimed life insurance policies, and greater freedom of choice of loan insurance on real estate loans. and, of course, more than ever, we need to step up the fight against money laundering and terrorist financing. new measures have already been taken, some are being strengthened. i expect from financial institutions – both insurers and banks – an exemplary participation in this fight. i know that they fully agree to the principle, but they must now carry it through in their daily management ; it is in your interest as compliance risk has become as vital, as strategic, as credit risk. may your institutions be strong on both fronts ; may our country be as involved in the economic battle as in the fight against terrorism, with the contribution of all of us ; and may each one of you remain vigilant and active, yet as serene as possible in 2016. thank you for your attention. bis central bankers ’ speeches | francois villeroy de galhau : challenges for france ’ s economy and financial sector in 2016 new year address by mr francois villeroy de galhau, governor of the bank of france, paris, 18 january 2016. * * * ladies and gentlemen, thank you for coming here today to this magnificently restored golden gallery. this is the first time that i am giving this address as governor of the banque de france, but it is an auspicious tradition that brings us together. i would like to start by extending my warmest wishes to you, your colleagues and your institutions. 2016 has already been marked by volatility : weak financial markets and commodity prices, from china and the middle east ; political uncertainty in europe, in southern europe, in eastern europe, north - western europe with the british referendum, and even in central europe with the refugee crisis. it is our duty to be vigilant, but we must also, on the one hand, distinguish real information from background noise and real challenges – and there are no shortages of them – from the sensational and sometimes excessive statements at this start of this year ; on the other hand, in the face of current volatility, we must stick to our mediumterm objectives. this evening i will not discuss the eurosystem ’ s monetary policy as we are in the “ silent period ” leading up to the governing council meeting this thursday. such longterm strategies also apply to the reforms in europe and in france. i would like to broaden my personal wishes to three collective wishes : for our country and its economy first ; for its smooth financing second ; and for financial stability and the soundness of your institutions lastly. 1 ) today a confirmed recovery is underway, with growth of over 1 % in france in 2015, and 1. 5 % in the euro area. in 2016, despite the uncertainties, all indicators point to higher growth. france must now transform this modest but real recovery into strong, lasting, job - creating growth. to do this, two conditions must be met in 2016 : public reforms must be pursued, and corporate investment must be stepped up. as regards the reforms, france is currently being penalised by excessive debt levels in its public sector ( differential of 25 % of gdp vis - a - vis germany, whereas both countries displayed the same level in 2010 ) and the deterioration in its trade balance and competitiveness. the fight for growth and against unemployment can only be won over time, | 1 |
that financial conditions are not really an impediment to economic activity and for inflation to increase. third, unconventional monetary policy measures are effective if other policy areas contribute decisively to solving underlying structural problems in the economy and financial sector. this can, for instance, prevent that the monetary transmission mechanism loses its efficacy by a lack of capital or the persistence of legacy assets on banks ’ balance sheets. resolving those issues can, for example, reinforce the effects of the targeted long - term refinancing operations that the ecb is offering to banks to support the supply of credit at the present juncture. having said this, monetary policy may wish to display more inertia – by which i mean caution or carefulness - in deploying policy instruments on those fronts where our knowledge is less developed. this applies to less conventional policy tools, of which the effects are still not fully appreciated, both in phasing - in and the phasing - out. a more inert approach by the central bank is also warranted if the nature of shocks and frictions in the economy cannot be clearly identified. frictions may reflect structural underlying weaknesses in economies or the banking sector, of which the root cause cannot be addressed by monetary policy. a cautious monetary policy response is also appropriate, if there is a risk of complacency in other policy areas. for example when monetary policy measures lead to delayed efforts to shore up bank balance sheets or implement structural reforms at the national level. the emu perspective the dilemma on when to act forcefully and when to apply caution in a context of instrument uncertainty is of clear relevance for central bankers worldwide. policymakers should consider to apply more caution in deploying unconventional tools that are subject to uncertainty, for example because their effects depend on shocks and frictions that cannot be clearly identified in real time. given the intricacies of brunnermeier and koby ( 2018 ), the reversal rate, nber working paper no. 25406. monetary policy in a monetary union, i believe this may be of particular relevance in an upcoming review of the ecb ’ s strategy. at the same time, in the ecb ’ s case, we can draw comfort from the enhancements in the functioning of emu that have been implemented in the last decade. this includes the establishment of the european stability mechanism, the european banking union and first steps towards a capital markets union. these institutions contribute to align the incentives for action and the policy measures of other | players with those of monetary policymakers. this will reduce the dilemmas for the central bank to employ balance sheet instruments. their use can then be tailored more easily to circumstances where they are most effective. in that sense, it is clear that monetary policy in the euro area is helped by further steps to move to a more complete economic and monetary union. and speaking about european institutions : imagine what maps sir francis drake, vasco da gama and columbus could have drawn when we would have cooperated. in their times, sir francis drake explored for elizabeth i of england and for her alone. vasco da gama carefully drew maps of his trip round cape horn for the portuguese king only. and cristopher columbus, a native of genoa, was hired by and thus worked solely for the spanish king and queen. but we, you, brave explorers of the monetary policy waters, we work together. we can combine our lessons learned. we can together combine our sketches and work on one clear map. let ’ s be the cartographers of the ocean of the uncharted monetary policy. | 1 |
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 – 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 ’ 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 | leonard wilson kamit : the 2003 dividend to the government speech by mr leonard wilson kamit, cbe, governor and chairman of the board of the bank of papua new guinea, on the occasion of the payment of the 2003 dividend to the government, port moresby, 14 september 2004. * * * introduction the minister for finance and treasury, honourable bart philemon m. p, members of the board, executives of the bank of papua new guinea, ladies and gentlemen. the central banking act ( cba ) 2000 specifies the objectives and functions of the bank of papua new guinea. besides our core functions of managing monetary policy, supervising the financial system, ensuring an efficient payments system, promoting macroeconomic stability and economic growth in papua new guinea, the central bank also has a special relationship with its shareholder, the government. the bank is mandated to provide to the government advice on financial and banking matters, and liaise closely with the treasury department on macroeconomic matters. our relationship with the government involves acting as its banker and financial agent, as the official depository, perform general agency functions, liaise with international financial institutions and provide short - term advances to meet cash - flow mismatches. the bank of png has a board that ensures that the governor and management perform in fulfilling the duties so prescribed as well as strive to make profits and declare dividends to its shareholder. i am pleased to announce that the central bank has a very dynamic and vigilant board, which ensures that the bank ’ s policies and operations are prudent and sound. the membership of the board as prescribed under the central banking act has representation from the civil and business community with explicit governance responsibilities. the board members are : mr l wilson kamit cbe – governor & chairman mr benny popoitai mbe – deputy governor, management & operations rev samson lowa – president, png council of churches mr john mahuk – president, png trade union congress mr michael mayberry – president, png chamber of commerce mr patrick kolta – president, png institute of accountants mr kostas constantinou obe – managing director, lamana hotel ltd mr robert igara cmg – chief executive, png sustainable development program ltd the late koiari tarata iso, cbe – secretary, department of treasury ( now vacant ) to ensure that accountability, structural and governance matters were strengthened in the bank, the board established an audit committee. the approved a charter for the audit committee covers the responsibilities, | 0.5 |
ensure that banking excesses bis central bankers ’ speeches would not be repeated, various fora, including the g20, the basel committee for banking supervision and the financial stability board ( fsb ) engaged in revising regulations and standards. regulation has become more stringent with the impending introduction of what is known as the basel iii framework. there was, however, always a concern that the regulatory pendulum would swing too far in the other direction, and there is the danger that their implementation may further impede the slow global recovery. in the eurozone for example, the need to increase bank capital has contributed to the reluctance of banks to lend. higher capital adequacy ratios are ideally achieved through raising capital, but in the prevailing economic climate this is difficult and expensive. banks have consequently been adjusting to these tougher ratios either through selling off some of their assets or by reducing their lending or both. the continuing crisis in europe is in part a function of continued bank deleveraging, and has required at times extraordinary intervention from the ecb. mario draghi, for example, reported in davos earlier this year that a “ major, major credit crunch ” had been avoided in europe, following the €489bn emergency loans to eurozone banks in december 2011. our concern has been that changes to the basel committee rules to which south africa subscribes, are intended to solve problems in the banking systems of some of the advanced economies, but would apply equally to countries such as south africa, that did not experience these excesses. in other words, the changing regulation would solve problems that we did not have, and could in fact cause unnecessary difficulties for the banks and for the broader macroeconomy. to some extent the revised principles have proved to be challenging, but we are nevertheless expected to abide by them as members of the fsb and the g - 20. some aspects of these changes could have significantly negative implications for our banks and for the economy in general if applied in the forms that are currently being proposed. we are committed to meeting the basel iii requirements, and are actively working with the global policy makers to see how these proposals can be modified or allow for country discretion in their application. but this is an example of how global solutions if applied indiscriminately to all countries, even to those such as south africa that did not experience regulatory failures, could have adverse consequences for some. the basel iii accord provides for high capital ratios in order to ensure that banks | improvement in international financial conditions that gained momentum during and after the 1998 annual meetings of the international monetary fund and the world bank. the improvement in the south african financial market conditions was reflected in : • • • • • a decline in the net sales of south african bonds by non - residents. the net outflow in october declined to less than r1 billion and was the smallest for the past six months. an easing in the overall liquidity position of banking institutions. the total liquidity requirement at month - ends declined from r12. 2 billion in june to r7. 2 billion in september and r5. 9 billion in october. a decline in long and short - term interest rates. the yield on long - term government bonds declined from 20. 09 per cent on 28 august 1998 to below 16 per cent at this stage. the rate on repurchase transactions from the reserve bank declined from 21. 85 per cent on 13 october to 20. 45 per cent today. banking institutions reduced their prime overdraft and mortgage lending rates by 1 full percentage point during the past few weeks. an appreciation of the rand from the very low level reached in july. during the month of october the average effective exchange rate of the rand appreciated by 3. 9 per cent to reduce the cumulative depreciation since the beginning of the year to about 17½ per cent. a significant slowdown during september 1998 in the rates of growth of both the m3 money supply and bank credit extended to the private sector. conditions in the financial market will hopefully continue to improve further and to lead real economic activity into recovery in the course of the current business cycle. the recent improvements in the south african financial market conditions should therefore hopefully lead to an improvement in real economic activity, and particularly in gross domestic production, during the course of next year. 5. what monetary policy must take into account for 1999 the tight monetary conditions, high interest rates and restrictive monetary policy in 1998 were forced on south africa by adverse developments in the international financial markets. in the situation, monetary policy had to carry a heavy burden in restoring financial stability to the south african financial markets. unpopular measures, such as a reduction in bank liquidity and high interest rates, had to be embraced in order to avoid more serious problems, such as a foreign reserves crisis, or a breakdown in the banking system. provided the encouraging recent trends towards greater stability in the international financial markets continues, monetary conditions in south africa should also gradually become easier. from the point of view | 0.5 |
this requires sustained financial sector focus and dedication to the transformation and development agenda involving both the private and development finance institutions in financing infrastructure, green economy, digital and outward - looking industrialisation. this also requires clarity of roles of development finance 2 / 3 bis central bankers'speeches institutions, namely, bdc, ndb, ceda and bsb, with respect to alignment of their respective mandates to strategic sectors. furthermore, a sustained focus on the development of the domestic capital market, underpinned by the right governance architecture and macroeconomic stability, is critical to internally orientate and tap into resources accumulated by pension funds, annuity providers and other institutional funds, the bulk of which are currently invested offshore in search of yield. as at february 2021, pension funds assets amounted to p106. 1 billion, of which p68. 3 billion or 64. 4 percent of the total were invested offshore. as at that date, this was more than the official foreign exchange reserves at p55. 8 billion. in this regard, the “ reset agenda ” needs to continue to prioritise sufficient and diversified mobilisation of financial resources by government for funding infrastructure and cost - effective and, increasingly digital provision of services while ensuring budget sustainability and rebuilding of fiscal and external buffers which, hitherto, anchored the country ’ s economic resilience. in this regard, the bank is fully aligned to, and agrees with the multi - pronged financing strategy adopted by the ministry of finance and economic development for financing national development plan 11. given the prevailing low interest rates environment and relatively low public debt matrices, it is indeed propitious to access global credit markets for funding growth - friendly and capacity building infrastructure, health eco - systems and rebuilding of the external buffers in readiness for the next negative external shocks including droughts. fourth, with respect to the vision 2036 aspirations, notably to achieve high - income status and inclusive diversified growth, a sustained focus on structural and economic transformation remains necessary. this requires harnessing opportunities offered by ict as a singular sectoral growth area as well as an effective and influencer of economic activity. the country will need to continue to upscale investment on digital infrastructure to improve availability and affordability of it equipment, internet and development of a critical mass of digital skills. at this juncture, i would like to ask the chief financial officer, mr daniel loeto to kickstart the economic briefing with a presentation on financial performance and highlights of the bank ’ s | 2015 as the effect of the fall in crude oil prices dissipates, and is expected to reach around 2 percent in or around fiscal 2015. subsequently, for fiscal 2016 the year - on - year rate of increase in the cpi ( excluding fresh food ) is projected to reach 2. 2 percent as the economy continues to grow above the potential growth rate and the output gap improves in positive territory. since crude oil prices have recently been fluctuating substantially, the 2 percent inflation rate, depending on developments in crude oil prices, may be achieved somewhat sooner or later than envisaged. that said, however, let me reiterate that in our view, what matters is the underlying trend in inflation. going forward, the bank will continue with qqe, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. of course, the bank will make adjustments as necessary to achieve the price stability target at the earliest possible time, if there are changes in the underlying trend in inflation. regional economies after the 2 percent target has been achieved as explained, the bank believes that the price stability target of 2 percent can be achieved through continuing with qqe. on the other hand, some have argued that qqe may lead only to higher inflation, which would undermine people ’ s standard of living. therefore, let me talk about why it is necessary to aim at 2 percent. under deflation, the real value of cash and deposits increases simply by holding them. therefore, hoarding cash and deposits becomes a better investment than actual investment. in japan, as a result of protracted deflation, firms ’ investment in business facilities and in research and development remained restrained, which deprived the economy of potential growth and led to a loss of vitality. such subdued business fixed investment is one reason that japan ’ s potential growth rate has been on a declining trend ( chart 13 ). however, in an economy in which prices rise steadily at a rate of 2 percent, the situation changes drastically. that is, since the real value of cash and deposits will erode over time, firms need to make effective use of their funds in hand in the form of investing in business facilities and in research and development as well as recruiting and developing human resources. proactive behavior such as venturing into new business areas will also increase. such developments will enhance firms ’ competitiveness and productivity, and consequently result in restoring the vitality of japan | 0 |
union collapsed, eastern europe broke free, europe was united and china was integrated into the world economy. the world became a safer and more prosperous place to live – for a while. 1 / 3 bis - central bankers'speeches now, sadly, we are moving in the opposite direction, towards a new cold war and a breakdown in international cooperation. autocracies like russia and china are forcibly challenging the rules - based international order. the security policy environment of europe is being transformed as fundamentally as it was 30 years ago, only this time in reverse. the current geopolitical headwinds are detrimental also to the world economy. in the last few years, some have even predicted the end of globalisation. fortunately, the rumours on the death of globalisation have thus far proven to be exaggerated. in fact, the volume of world trade has already surpassed its pre - pandemic levels and is now close to its record level. at the same time, however, protectionism and friend - shoring are increasing and supply chains are being shortened. in the world of high geopolitical tensions, strengthening and maintaining the resilience of the financial system has become ever more important. to make the financial system safe and resilient, we need rigorous financial regulation and supervision. we also need high - quality macroprudential analysis and policy – another of the key topics of this conference. several sessions and presentations of this event are devoted to the analysis of the impacts of different macroprudential measures – both borrower - based and capitalbased measures – on households and banks, housing and labour markets, and even on tackling climate change. let me try and complement the forthcoming presentations with some thoughts on how macroprudential policymaking in europe could potentially be improved. first, it would be useful if the application of the capital - based macroprudential tools, especially the so - called o - sii buffer requirements, was based on more uniform criteria across the eu. in highly integrated banking markets, banks with equal or close to equal systemic importance should not have very different capital buffer requirements. similar application of tools would foster a level playing field and reduce any pockets of vulnerabilities. second, in the longer term, the borrower - based tools targeting housing loans and household indebtedness should be based on some minimum and common eu level requirements. at the moment, those tools are solely based on national legislation and are rather diverse across countries. in addition to credit | whether macroprudential policy should be formally part of the central banks ’ mandate as mostly exegetic, even theological – macroprudential policy is de facto the second pillar now, and de jure this fact has in europe been anchored in the eu ’ s secondary legislation, both as to the role of the financial supervisory authorities in the member states, and of the european systemic risk board. need for a better policy mix moreover, many of the challenges we face are beyond the mandates of central banks. better policy coordination – or policy mix – is key for better economic outcomes, especially since the monetary policy space is limited. the challenges in the domain of governments and fiscal authorities are both long - and short - term in nature. good examples of long - term structural issues are competitiveness and climate change. to deal with them, structural reforms need to be harnessed to boost productivity and the euro area ’ s growth potential and to reduce structural unemployment. fiscal policy can affect economic activity in the short term. that ’ s why automatic stabilisers should be able to play their full role. moreover, while euro area economies have different fiscal constraints, fiscal measures should be actively pursued in countries where fiscal space is available. such measures should be aimed at growth - enhancing public investment. in this endeavour, further development of the euro area financial architecture plays an important role. we need to finalise the banking union and make true progress with the capital markets union. moreover, sustainable finance will play a major role in the development of european capital markets. the european green bond market is the single largest green bond market in the world and the european investment bank is one of the largest multilateral providers of climate finance worldwide. ladies and gentlemen, to sum up : due to the prolonged pervasive uncertainty, we expect a period of slower growth – but no recession. inflation is projected to remain subdued. that ’ s why monetary policy will remain accommodative for an extended period of time. moreover, a strategy review is an opportunity to enhance common understanding and consistent communication on monetary policy. concerning flanking policies, macroprudential policy needs to be active and widen its toolbox, and we need a better policy mix where fiscal policy and structural reforms carry more responsibility for productivity and growth, so that monetary policy will not be the only active player in the field. and finally, we need to intensify the reform of the euro area architecture to make it more resilient before the next recession. many | 0.5 |
a first question is how the burden of high public debt levels in western societies will be shared between generations. this question is particularly pertinent in the euro area because all countries are bound by law to start reducing their debts to below 60 % of gdp – and average public debt levels in the euro area are currently in excess of 95 % of gdp. if fiscal consolidation starts today, then the generation which has benefited most from this debt will play the largest role in reducing it. but if consolidation is delayed, then future generations will have to bear the burden of debt reduction – this would constitute a direct transfer from our children and grandchildren to ourselves. bis central bankers ’ speeches and it is only us who are taking the decision. our children and grandchildren have no power to raise their objections. a second question with intergenerational consequences is how to spread the costs of demographic change. in the eu, it is projected that by 2060 there will be just two workingage people for every person over 65, compared with a ratio of 4 : 1 today. this means the weight of supporting an ageing population will rest on ever fewer shoulders. if current generations are proactive in reforming pension systems, they can reduce the load that the shrinking working age population will have to carry. but if they choose instead to preserve their entitlements, then they make the lives of future generations commensurately harder. they would be effectively sacrificing their descendants ’ quality of life for their own. in other words, all western societies are facing choices about the distribution of responsibility. do we, the current generation, take responsibility for the long - term fiscal challenges that we have played a large part in creating? or do we delay and pass the consequences of our choices onto our children and grandchildren? i think it is fairly clear what a perspective of intergenerational justice would imply. this perspective is of course not new. the so - called “ demographic time bomb ” has been predictable for many years. indeed, i pointed to this issue when i spoke here in greece in early 2008. but what has changed today is the urgency for action. the crisis has meant that these difficult choices can no longer be delayed. one might say it has pressed the fastforward button and brought the challenges of the future into the present. this is the broader context for the ongoing consolidation process in greece. certainly, it is about increasing spending control and tax collection. but it is also about putting greece on a sustainable path | mark w olson : a look at fair lending through the lens of the new hmda data remarks by mr mark w olson, member of the board of governors of the us federal reserve system, at the consumer bankers association 2005 fair lending conference, arlington, 7 november 2005. * * * i want to thank joe belew and the consumers bankers association for inviting me to be with you here this morning. i am especially pleased to speak at this particular annual fair lending conference because it gives me an opportunity to discuss fair lending in the context of the new pricing data that were collected under the home mortgage disclosure act ( hmda ) for the first time this year. later, federal reserve board staff members will discuss in detail the board's analysis of the 2004 hmda data and fair lending procedures. but now, i want to review the history and purpose of the hmda data collection and offer my perspective on the new pricing data, its impact on fair lending evaluations, and how the data can be used to monitor your institution's lending programs and explore new lending opportunities. as you are all aware, amendments to the regulation implementing hmda required the reporting of loan - pricing data for higher - priced loans, beginning in 2004. these additional requirements reflect significant changes in the mortgage credit market in recent years. technological advancements and the practice of credit scoring have resulted in new strategies for analyzing, underwriting, and pricing mortgage loans. because technology allows lenders to price for risk more efficiently, access to mortgage credit has expanded. this expansion, which is largely in the subprime market, has grown dramatically in the last decade, with generally positive, but sometimes negative effects. the change in reporting requirements was also the result of a fundamental reassessment of the nature of mortgage lending abuses. previously, it was presumed that a potential result of inconsistent mortgage loan administration was denial of credit on the basis of race, sex or other impermissible factors. more recently, the pricing of loans - - not just the availability of loans - - has been a potential source of discriminatory lending practices. home ownership is at record highs among low - income and minority borrowers, many of whom may not have qualified for mortgages prior to the development of risk - based pricing technologies. this is generally viewed as a very positive development, since home ownership is often the single most important step toward asset accumulation and wealth building in this economy. however, the increase in mortgage lending among lower - income and minority borrowers | 0 |
of the analysis of policy issues relating to financial regulation and supervision, financial stability arrangements ( e. g. financial crisis management and resolution ) and other financial services areas ( e. g. accounting ). this work encompasses the regular monitoring and assessment of developments in these areas as well as contributing to european and international discussions on regulatory and supervisory issues. this three - pronged approach allows us to focus on the distinct but complementary activities related to financial stability surveillance, systemic risk assessment and policy responses, respectively, while still ensuring that interlinkages between these elements are considered in bis central bankers ’ speeches an integrated manner when providing financial stability advice to the decision - making bodies of the eurosystem, the european systemic risk board and to the wider public. the ecb financial stability review is only one example of product where the three elements are developed. we are living difficult times and need state of the art tools and indicators for analysis. as mentioned before, we are currently living in an extremely complex and difficult macroeconomic situation. the financial crisis, if anything, revealed that we need to understand much better the interactions between the financial and real economic sectors. particularly, the concepts and analytical tools underlying financial stability and macro - prudential analysis were found somewhat deficient to properly guide policymakers trying to steer through the crisis. this has underlined the need for “ state - of - the - art ” tools and indicators for conducting financial stability analysis. indeed, especially during the past five years the academic research has very much enhanced the analytical toolbox that we have available to properly analyse and assess the pertinent financial stability issues of the day. further enhancements are, of course, needed and i can only encourage the academic community to continue in this direction as it will greatly help policy makers when trying to understand and ultimately address financial stability issues of a systemic nature. also in this light, it is my expectation that today and tomorrow ’ s conference will provide us with cutting - edge research in the financial stability area ; thus providing a highly useful stock taking of the progress made in recent years, while ideally also pointing towards areas where further improvements are still needed. need to rethink also policies and policy frameworks the conference will conclude with a panel discussion on macro - prudential policies. key questions in this area include the translation of systemic risk analysis into concrete policy actions and the related challenge of developing a well - functioning macro - prudential policy toolkit. in this regard, we have to ensure that once | yves mersch : monetary policy and financial stability under one roof keynote speech by mr yves mersch, member of the executive board of the european central bank, at the 6th policy roundtable of the european central bank : “ the future of global policy coordination ”, frankfurt am main, 6 september 2013. * * * ladies and gentlemen, it is my pleasure to join you at the 6th policy roundtable of the ecb, which this year focuses on “ the future of global policy coordination ”. i will be speaking about the interaction of a particular set of policies, namely monetary, micro - prudential and macro - prudential policy. but rather than discussing the global dimension or replicating the discussion at jackson hole, i will restrict myself to the changes taking place under the roof of the ecb : the ecb taking over responsibility for elements of micro and macro - prudential supervision in the euro area. having the financial stability function under the roof of the central bank is of course nothing new. it is almost exactly hundred years since that the federal reserve act was signed into law. according to the regulation, federal reserve banks were created “ to furnish an elastic currency, to afford means of rediscounting commercial paper ” – and notably – “ to establish a more effective supervision of banking ”. this combining of monetary and supervisory functions reflects the fact that, for monetary policy authorities, financial stability is obviously key. a stable financial system with sound and solvent banks supports the smooth transmission of monetary policy and ultimately contributes to macroeconomic stability. this is particularly relevant for the euro area, where banks play and crucial role in providing financing to the real economy, most notably to smes. conversely, financial imbalances can be a genuine threat to price stability, in addition to being extremely costly from a macroeconomic perspective. but in my remarks today i would like to focus on a specific aspect of these interactions – that is, between monetary and macro - prudential policy. the key point i would like to make is that this interaction should be stronger than in the micro - prudential area, where the impending regulation imposes a separation between monetary policy and supervision. the reason for this is simple. while micro - prudential policy focuses on the stability of individual institutions, both monetary and macro - prudential policy take a more systemic perspective and aim ultimately at system - wide stability. let me explain the interaction between these two policies in more detail. in many ways – objectives | 0.5 |
benjamin e diokno : micro, small and medium - sized enterprises ( msme ) message by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), for the msme ( micro, small and medium - sized enterprises ) day “ negosyo bounce back ”, 18 july 2021. * * * a pleasant morning to all the speakers and participants of today ’ s webinar entitled “ msme day : negosyo bounce back ”. thank you investree philippines for this initiative, which aims to inspire and equip our entrepreneurs towards business recovery and growth through innovative financing solutions. the bangko sentral ng pilipinas ( bsp ) has always supported programs that will steer the country ’ s economy towards a strong and sustainable path to recovery. as more vaccines arrive, and as a greater share of the population gets vaccinated, we move closer towards a new economy that is ‘ better, safer, and more technologically ready '. msmes in the new economy msmes are agile to adapt their business ventures to this new economy. they have taken advantage of the opportunities brought about by digitalization, such as e - commerce and digital payments. in fact, data from 1st quarter of 2021 show the combined volume of electronic fund transfers through pesonet and instapay hit 107 million transactions with total value of p1. 5 trillion. volume grew by 365 % and value by 171 % compared to the same period in 2020. this trend may be primarily driven by the desire to serve and retain their client - base, but it has also enabled msmes to expand their market. digital payment streams can also broaden msmes ’ access to finance. digital records of sales and payment transactions can be used in assessing the creditworthiness of a business which will unlock access to other welfare - enhancing financial services such as digital credit, insurance, and investment, among others. bsp ’ s priority initiatives for msmes the bsp has introduced a package of regulatory relief and incentive measures to ensure that banks would continue to lend to the msme sector amid the pandemic. the bsp is also aggressively undertaking various initiatives that will provide lasting benefits for msmes even after the pandemic. our credit risk database ( crd ) project in partnership with the government of japan aims to improve access to finance for smes by lessening banks ’ dependence on collateral during credit evaluation. instead | to the capital buffers that they retain on top of the existing minimum. if banks target buffers above the regulatory minimum, which is an endogenous market outcome, they may need to raise even larger amounts of equity than what can be expected by just looking at the current package. we know from empirical studies that weaker capitalized banks typically exhibit weak loan growth compared to other better - capitalized banks. we also know that banks may find it less costly to adjust loan volumes and loan pricing than capital, as frictions in the market for bank capital make the latter option more expensive. while the crisis has clearly had global ramifications, its impact on financial systems has not been uniform across the world. financial structures differ greatly between countries and there needs to be scope for different countries to tailor solutions to their circumstances and structures, while, at the same time, doing so within a globally agreed framework. for instance, our experience in france is that our banks ’ universal model has weathered the storm relatively well. it would be a major paradox to put in place rules that would challenge such models. finally, any regulatory framework needs to manage regulatory arbitrage and keep up with innovation and other forms of structural changes. for this, a necessary but not sufficient condition is that standards be comprehensive in coverage and consistent across jurisdictions. i am not sure, for instance, that the leverage ratio, if it were to be implemented as a compulsory instrument, would meet this double test. given existing accounting divergences, consistency will be very difficult to achieve. furthermore, it is likely to encourage migration of credit activities towards other – less regulated – parts of the financial system. convergence between accounting standards is a precondition for a consistent implementation of some of the prudential reforms discussed by the basel committee. it is also essential that new prudential standards for banks become truly universal. we should not underestimate the difficulties on the road to accounting and regulatory convergence. how can we reduce the procyclicality of financial systems? our accounting and prudential regimes have increased procyclicality in recent years. this is detrimental to a stable flow of credit to the economy. in a mark - to - market environment, asset price increases quickly translate into a larger capital base of financial institutions, which, in turn, trigger additional demand for assets and a further increase in their prices. a spiral is launched. actually this is a kind of “ inverted demand curve ” where demand increases with prices and vice | 0 |
or impossible for the recipient of an electronic payment, or even for an issuer, to detect an electronic counterfeit. telephone card fraud alone for example cost telkom more than r13 million in the three financial years ending august 1999. by contrast, counterfeit currency can usually be detected by a recipient and the reserve bank as issuer scrutinises banknotes and coins carefully to prevent counterfeiting. sophisticated security features will reduce the risk of successful electronic counterfeiting, but with the lucrative possible returns it will be difficult to rule them out. issuers will therefore have to take great care to ensure that the dangers of counterfeiting is minimised, and they should be vigilant in monitoring their systems and operations so that counterfeiting is quickly detected. even more important is that when south african residents get involved in payment arrangements which are effectively domiciled outside south africa, they need to understand who it is that they are dealing with, where the counterparties are legally located, whether they have an appropriate standing, and what potential risks they may face – either by holding balances within a system, or by using those balances in a transaction. this information may not always be readily available or may be difficult to evaluate. both the holders of new forms of electronic money, and the issuers, face potential risks in certain circumstances. some of these are reasonably easy to understand and evaluate, and may not be any more serious than the risks which exist at present, such as losing your wallet. however, the risk characteristics of schemes involving elements such as multiple issuers, many members, many business organisations, multiple jurisdictions, delay or complexity in any settlement arrangements, or lack of any audit trails are most certainly not all straightforward. 6. conclusion the introduction of e - money and for that matter all forms of e - commerce will accordingly create new problems for the business community, but will also create new opportunities for a more efficient payment system. the reserve bank is not too concerned about these new developments at this stage. customer needs are likely to be best met through effective competition, and this will require that genuine choices amongst alternative products are available. fast and efficient means of pricing trades, handling client relationships and redesigning distribution structures are being enabled by the internet. more widespread uses of these new methods will create opportunities for financial innovations. however, the bank will be watching these new developments carefully, in order to ensure that the integrity of south africa ’ s financial system is always maintained. | work underway in trying to understand exactly what all this means. so while central banks may have perfected the art of monetary policy in the last decade, they have also undergone a tectonic shift in the last few years, which still has some way to go. 3. emerging markets and capital flows one of the consequences of the easy monetary policy employed over the past few years has been the surge in capital flows to emerging market economies. the institute of international finance ( iif ) records that net private capital inflows to emerging markets increased from just below us $ 200 billion in 2002 ( 1, 5 per cent of gdp ) to us $ 908 billion in 2010 ( 7 per cent of gdp ). the iif estimates that inflows will rise to us $ 960 billion in 2011 and to over us $ 1 trillion in 2012. these inflows reflect a combination of greater macroeconomic fundamentals in emerging markets, significant fiscal deterioration and loose monetary policy in advanced economies, and the increased integration of emerging economies into international capital markets. many emerging market economies have taken various actions towards curbing capital inflows in an attempt to limit currency appreciation. measures considered and implemented range from taxes on inflows, limits being placed on government bond investment by foreigners, to pre - announced currency market intervention programmes, just to name a few. south africa too has experienced large capital inflows, with the resultant upward pressure on the exchange rate of the rand. a favourable fiscal position, deep and liquid capital markets and sound macroeconomic policy have made the country an attractive destination for portfolio inflows. south africa has studied the measures imposed by other emerging market economies, but questions the efficacy of most of these measures. furthermore, it is doubtful that such measures would be appropriate for south africa given our savings / investment the role of central banks after the crisis, mr jaime caruana, general manager of the bis, january 2011. bis central bankers ’ speeches imbalance and dependence on portfolio flows to finance our current - account deficit. like the philippines, where measures to encourage greater capital outflows were implemented, so too has south africa lifted some of the limits on outward investments for local pension funds, insurers and individuals. south africa has also taken advantage of strong capital inflows to increase the level of foreign - exchange reserves. gross reserves have increased by approximately us $ 9, 6 billion since january 2010 to us $ 49, 3 billion in march 2011. of this amount, an | 0.5 |
by almost three per cent. a notable development in the exchange rate of the rand during the last few months has been that it has become less volatile : the rand ’ s historical volatility – a measure based on an average daily standard deviation calculation – declined from almost 21 per cent in june 2005 to below 10 per cent in october 2005, and has remained there in the subsequent two months. 9. 1 it bears repeating the fact that the south african reserve bank ( the bank ) has been given a target for inflation : it has not been given a target for the exchange rate. of course, the bank cannot disregard the exchange rate because the exchange rate can exercise considerable influence on developments in inflation. but the bank understands that neither it nor anyone else can claim with any confidence to know the equilibrium level or time path of the exchange rate. the bank also understands that to switch focus to the exchange rate could mean losing control of inflation. 10. broadening access to financial services, targeted investment and increased economic cooperation remain high priorities on the agenda for south africa and the bank continues to monitor and support new initiatives in this regard. the bank makes a significant contribution to economic co - operation in africa by liaising closely with the association of african central banks regarding the implementation of the african monetary cooperation programme. 10. 1 in february 2005 the bank hosted a seminar with the european central bank ( ecb ), attended by southern african development community ( sadc ) central banks in which views on the road towards a single central bank for sadc were discussed against the background of the ecb experience. the mou on the harmonisation of legal and operational frameworks of sadc central banks was finally approved by ministers for finance at their meeting held on 5 august 2005 after extensive consultations. at their september 2005 meeting, the committee of central bank governors ( ccbg ) in sadc signed memoranda of understanding ( mous ) on exchange control, information and communications technology and payment, clearing and settlement systems. 10. 2 looking forward to the future, it is the case that there are promising signs that the targeted inflation rate will remain within the stipulated range. this, as my former colleague ian plenderleith noted, is not just something to look back on with satisfaction. rather, it is important to recognise that the stable framework for a normal, wellrun economy that has been achieved to date provides the foundation for sustained, if not improved economic performance in the years ahead. 10. 3 going forward | extending our network of bundesbank representative offices was particularly close to my heart, and i am pleased to say that we stabilised this network during my tenure and added two new locations – istanbul and pretoria. now we have representatives everywhere we want to be represented. you will no doubt have gathered by now that the international dimension was always particularly important to me. indeed, i recall my first franco - german financial summit in 2010, where i had the privilege of standing in for bundesbank president axel weber. on the french side, banque de france governor christian noyer was represented by his deputy, and my colleague and friend, jean - pierre landau. christine lagarde, still the french finance minister at that time, looked at the two of us before turning to german finance minister wolfgang schauble to say : “ well, wolfgang, if the representative of germany's central bank has the surname dombret and the one from france is called landau, there isn ’ t really much point in holding these francogerman summits any more, is there? … ”. but representing the bundesbank externally was just one part of my duties. being a manager, i aspired to mould my surroundings a little from the inside as well. but ultimately, the bank is one of those places where the institution moulds its executive board, which is why i am now proud to say that i am a bundesbanker. at the same time, i am pleased to have implemented one project or the other within the bank. i never regarded the bundesbank as an ivory tower out here in the ginnheim wilderness. interaction with the markets and dialogue with the banks was a cause i genuinely believed in – one which i both pushed and encouraged. with all due distance, i always felt that permeability between the worlds – between the central bank and politics, between supervisors and banks – was particularly important. parallel worlds – or " echo chambers ”, to use today ’ s parlance – are of no use to anyone ; hence my enduring commitment to forging a constructive and open relationship between central bankers and bankers. i dare say my mission to bring banks and supervision closer together over the past eight years has been successful – and i ’ m talking here not about nepotism or fraternisation but about nurturing a greater sense of mutual understanding. in this vein, i would also like to take a stand against the wholesale criticism levelled against bankers who “ switch | 0 |
with a hard - bis central bankers ’ speeches hitting message as to what could happen with poor governance, poor controls, and not the least, ineffective regulatory oversight. i am sure that you would have deliberated on these subjects in your various technical sessions and fully understand the repercussions for not setting the appropriate platforms. ladies and gentlemen, we live in a time where transactions and products are becoming more complex, leaving institutions, both big and small, vulnerable to failure. therefore, establishing proper safety nets is critical. i urge participants, as you return to your respective countries, to continuously review and benchmark your operations against international principles and best practices. the world council of credit unions and international credit union principles on governance, operations and safety and soundness have much guidance to offer in these areas, as do your facilitators. the importance of innovation let me touch a little on innovation, something which is very important if credit unions are to remain relevant and competitive in today ’ s dynamic environment. i encourage participants to put on your innovative thinking caps. observe the products and services offered by credit unions in other economies and identify those that could be tailored in yours to increase your coverage. for instance, technology now drives the efficient and economical delivery of financial services and interaction with customers. credit unions may wish to explore the use of digital finance to facilitate transactions with members, particularly those in remote areas. also, inward remittances from our families overseas are a significant foreign exchange earner ; in fiji remittances are the number two foreign exchange earner after tourism and we received in excess of $ 339 million last year and are expecting more than $ 370 million this year – which will be a new record. you may wish to explore the feasibility of creating remittance - linked products for your members – as currently practiced in kenya and latin america, in partnership with the world council of credit unions. the reserve bank of fiji ’ s experience – support for credit unions ladies and gentlemen, i firmly believe that in order for credit unions to compete and grow in a progressive and modern financial system, the support and guidance of the central bank is critical. therefore, before i conclude, i wish to share a few of our partnership initiatives in a bid to develop this important industry. in march this year we undertook a survey covering 21 credit unions with assets totalling $ 125. 1 million. this allowed us to understand the structure and coverage of credit unions and will help us in developing an appropriate regulatory framework. | yesterday, reserves held with the reserve bank were above $ 1. 84 billion, a historical high and sufficient to cover 5. 2 months of retained imports of goods and non - factor services. ladies and gentleman, the numbers are coming together for us and i have not seen them this good for a long time. the government has played its part in recent years and continues to do so, but we are also now seeing the private sector, the often quoted “ engine ” of growth, stepping up to the plate in a serious way. on our recent road trips in the central and western divisions and in discussions with captains of fijian industry we have noted a general buzz of confidence. a confidence and optimism that has this sector spending money to grow their businesses, and in their doing so, they grow fiji. on that note let me thank you all for your kind attention. i wish you all the best in today ’ s presentations and deliberations and hope that we can together come up with innovative ideas in further addressing our economy ’ s challenges. before i finish, please allow me to relate a brief story to you. many years ago i used to play in the suva cricket competition for a team made up of players of different ages varying from school boys to near senior citizens, both locals and foreigners and of many different ethnic backgrounds. we were truly a mixed bag of people who loved the game. we did not come from the well known traditional cricketing strongholds of lau or qvs, and were not part of the expatriate players who grew up representing their schools in australia or new zealand and who opted to join the top teams here. we were just your bunch of keen cricketers bent on succeeding as a unit. we committed ourselves and played smart and moved from the “ c ” grade to the “ a ” grade competition in 3 seasons, playing at the top level and holding our own for a number of years after that ( there were of course many more teams back in the 1980s and cricket actually had exclusive use of albert park from october to april each year! ). we had achieved much of what we set out to do through great teamwork and much enthusiasm for what we were doing. i can still remember those days quite vividly and it was a great experience in togetherness. we actually called ourselves tovata heads, which for us literally meant “ heads together ”. vinaka vakalevu and thank you all for listening. end bis central bankers ’ speeches | 0.5 |
move forward very quickly with their investment plans. economists call this “ animal spirits ” because it is very hard to predict. encouraging signs but some new data suggest we may be turning the corner. recently published private surveys of business sentiment show some improvement. further, financial market uncertainty has declined, according to canadian and global indicators. such measures of financial volatility may well be serving as proxies for actual world events or developments. we will be watching these closely to see if this improving trend continues. the bank ’ s interviews with canadian business leaders for our autumn business outlook survey are being conducted right now. i am looking forward to learning about their views and perspectives – and if, and how, they may be changing. but perhaps the most exciting sign is that the population of canadian companies is growing again. today, there are some 40, 000 more firms with at least one employee than there were last year at this time. this pace is considerably stronger than we would expect in normal, non - recessionary times and suggests that we may be replacing some of the firms that were lost in the recession with new ones. this is excellent news. we also know that most of the jobs created since the recession are in occupations requiring relatively high skill levels and are mostly in industries with above - average wages. what this will do is help contribute to the virtuous circle of higher incomes, more spending, and more jobs that is associated with natural growth. bis central bankers ’ speeches all of these signs are hopeful. they are signalling that we are on our way home. where we are going : natural economic growth let ’ s talk about that right now. what does home look like? this is a discussion about the future, so there are many unpredictable variables. however, i anticipate that the canadian economy will normalize and growth will become natural, in contrast to the economic activity of the past six years, which has been fuelled by policy, including record - low interest rates. natural growth will be self - generating and selfsustaining, and the economy will be growing at its potential, as its productive capacity expands. inflation will be back to our target of 2 per cent. as i have said before, policy rates in canada will be higher than they are today. we can expect that short - term interest rates, as is normal, will be above inflation. long - term rates will settle into place along a natural, upward - sloping yield curve. we can anticipate a better balance | , banks should treat their customers fairly when providing various services and financial products to them, and should stand in customers ’ shoes in pursuing profit. but how can we achieve this? in the past few months of discussion with the industry, we found that the basic principles of fair treatment to customers are indeed not so complicated. mr benjamin hung, chairman of the hkab, will brief us on the five principles in the charter. 5. some people wonder why don ’ t we simply make the charter part of the hkma ’ s regulatory requirements for banks given the importance of fair customer treatment? my reply to this is that : banks have to deal with tens of thousands of customers every day to provide a great variety of services and conduct countless transactions. while imposition of regulatory rules would bring about some effects, no external rules could possibly be all - pervasive, more difficult still about transforming the corporate culture or long - standing values in workplace. fair treatment of customers ought to be firmly embedded in the corporate culture of banks that all personnel – from board of directors, chief executives, senior management, to frontline employees – will accept, defend and uphold treating their customers fairly as a guiding principle. banks ’ incentive mechanism must also promote and support this culture in every aspect of the banks ’ operations. bis central bankers ’ speeches 6. bank customers, as consumers of various types of bank products and services, should receive appropriate protection. while banks should treat their customers fairly, the latter should also be responsible and smart. the most basic requirement is that customers should try their best to understand the products and services provided by banks, including credit cards, personal loans, home mortgages and wealth management products, their relevant risks, costs and expenses, and whether the products and services are suitable for them. bank customers cannot and should not blindly blame banks every time an investment loss is incurred or when they get into financial troubles due to excessive borrowing. banking customers ought to be responsible and smart. only then could there be a sustained win - win situation for all concerned. in this regard, the hkma will shortly launch a consumer education programme to help the public learn more about how to become a “ smart and responsible ” financial consumer. 7. this is why the hkma has been working with the industry in the past months in developing the charter. i am pleased to see that the charter has received the full support of 22 retail banks in hong kong. these banks are here today to sign and launch this charter, pledging to | 0 |
mr meyer reports on lessons from recent global financial crises remarks by mr laurence h meyer, member of the board of governors of the us federal reserve system, before the international finance conference, federal reserve bank of chicago, held on 1 october 1999. * * * on the principle that mistakes teach us as much as, if not more than, successes, i will take this opportunity to consider what can be learned to improve bank supervision and regulation from the financial crises that afflicted so many economies over the past 2½ years. i will consider two episodes – the asian financial crisis and the financial market turmoil surrounding the near - bankruptcy of the hedge fund long - term capital management ( ltcm ). because these episodes are too recent and too complicated to draw many firm conclusions that lead to concrete policy recommendations, part of my objective today is to identify some areas where i believe that further study would be particularly productive. the two crises the details of these two episodes are familiar to everyone here. the floating of the thai baht in july 1997 marked the onset of a period of market turbulence associated with the halting of new funds to and, in most cases, the flight of existing money from, many economies in southeast asia. because many entities in those nations relied on short - term funding in foreign currency for their ongoing operations, the drying up of funding from global financial markets quickly placed serious strains on them. and because the lines between the private and official sectors were often drawn imprecisely, these funding problems for firms soon became the burdens of national governments. such pressures, unfortunately, exposed numerous and substantial flaws in some of these financial systems, including lax lending policies, substantial mismatches in the maturities and foreign exchange denominations of assets and liabilities, seriously deficient standards for disclosure of basic private financial information, hedges based on erroneous presumptions about the correlations among returns, the failure to monitor ongoing loan performance, and the inadequacy of reserves against potential losses. in autumn 1998, we in the major industrial countries were reminded that emerging market economies did not have a monopoly on financial institutions that were inadequate in the task of assessing risks. the effective default of the government of russia on some of its obligations and the travails of ltcm in rebuilding its capital in the face of enormous trading losses – occurring as they did so soon after the crisis in asia – triggered a generalized reassessment of risk - taking by investors and market makers. interest rate risk spreads widened | to which debt rather than equity is financing the level of capital. the proper degree of leverage in a firm, or in an economy as a whole, is an inherently elusive figure that almost certainly changes from time to time. clearly, firms find some leverage advantageous in enhancing returns on equity, and thus moderate leverage undoubtedly boosts the capital stock and the level of output. a sophisticated financial system, with its substantial array of instruments to unbundle risks, will tend toward a higher degree of leverage at any given level of perceived underlying economic risk. but the greater the degree of leverage in an economy, the greater its vulnerability to unexpected shortfalls in demand and to other miscalculations. although the fears regarding business leverage have been confined mostly to specific sectors in recent years, concerns over potential systemic problems resulting from the vast expansion of derivatives have reemerged with the difficulties of enron. to be sure, firms like enron, and long - term capital management before it, were major players in the derivatives markets. but their problems were readily traceable to an old - fashioned excess of debt, however acquired, as well as to opaque accounting of that leverage and lax counterparty scrutiny. swaps and other derivatives have been remarkably free of default throughout their short history, including over the past eighteen months. of course, latent problems may exist in any market that expands as rapidly as these markets have. regulators and supervisors are particularly sensitive to this possibility. derivatives have provided greater flexibility to our financial system. but their very complexity could leave counterparties vulnerable to significant risk that they do not currently recognize, and hence these instruments potentially expose the overall system if mistakes are large. in that regard, concerns have been raised about potential counterparty risks in the large interest rate hedging efforts of government - sponsored enterprises ( gses ) in support of their secondary mortgage market operations. presumably, counterparties can manage this risk effectively through the use of credit limits, netting, and collateral agreements. the broader risks for financial markets and the economy result from the perception of government support for these corporations and the resulting implicit subsidization of gses. subsidies, by intent, distort the normal balance of markets. in this case, the perception of government support may induce the counterparties of gses to apply less vigorously some of the risk controls that they apply to manage their over - the - counter derivatives exposures. more generally, we need to be careful not to allow subsidies to unduly disturb | 0.5 |
1. 8 percent for fiscal 2017, from the april forecasts. the year - on - year rate of increase in the cpi ( all items less fresh food ) is likely to be about 0 percent for the time being, but the rate will likely accelerate gradually, on the assumption that dubai crude oil prices will rise moderately from 60 u. s. dollars per barrel. bis central bankers ’ speeches ii. keys to assessing the outlook for economic activity and prices i believe that japan ’ s economic and price conditions have already regained stability consistent with the economy ’ s growth potential, mainly due to the effects of almost two and a half years of quantitative and qualitative monetary easing ( qqe ). i expect that such stable conditions will continue through fiscal 2017 – the projection period covered in the bank ’ s april 2015 outlook report and its interim assessment in july. however, i hold a more cautious view on the outlook for japan ’ s economic activity and prices compared with the aforementioned forecasts in the policy board members ’ baseline scenario regarding that activity and prices in the july interim assessment. let me share some of my considerations regarding the outlook with you. a. output gap, potential economic growth rate, and outlook for the growth rate according to the estimates the bank presented in the april 2015 outlook report, the potential growth rate of japan ’ s economy, which represents – from the supply side – the pace of growth that is consistent with the economy ’ s growth potential, has been around 0. 5 percent or lower, and thus remains at a low level. the bank also estimates japan ’ s output gap, which represents the degree of utilization of labor and production capacity, at 0. 1 percent for the january - march quarter of 2015. the output gap has maintained a neutral level of around 0 percent since the end of 2013. i would like to note that the output gap in japan is also at a favorable level compared with those in other major countries, according to the estimates made by the organisation for economic co - operation and development ( oecd ). while these estimates are subject to a considerable margin of error, they generally have been in line with developments in the weighted average of the diffusion indices for production capacity and employment conditions in the bank ’ s tankan ( short - term economic survey of enterprises in japan ). the active job openings - to - applicants ratio and other indicators also suggest that supply and demand conditions in the labor market are tightening further, rather than being neutral. however, in a situation | where the economy enters a phase in which the negative output gap almost closes, it is considered that it becomes more difficult for the economy to grow at a pace well above its potential compared with the early stage of economic recovery when the output gap is wide. i also consider the possibility that supplyside constraints such as labor shortages will have the effect of constraining economic activity. based on these developments, as i will describe in more detail later, my assessment is that the economy will continue to grow at a moderate pace as a trend through fiscal 2017, which is roughly equivalent to its growth potential, and that – although lower than the policy board members ’ baseline scenario in the july interim assessment – stable economic activity and prices will be maintained. this is because the cumulative effects of qqe will continue to exert a positive impact on the economy, while on the demand side of the economy, there is downward pressure on exports, business fixed investment, and private consumption. b. overseas economies and japan ’ s exports the latest forecasts for global economic growth for 2015 released by international organizations such as the international monetary fund ( imf ) were revised downward from those made at the end of last year. this was mainly due to weaker - than - expected growth in the united states and china, which are japan ’ s major trading partners. the u. s. economy has been picking up on the whole, after being sluggish in the januarymarch quarter of 2015, reflecting effects such as of the severe winter weather and the labor disputes at west coast ports. however, the sluggishness remains, particularly in private consumption. the average growth rate in the first half of 2015 fell below the past trend, and it is still uncertain whether the pace will recover in the second half. if the growth in labor productivity continues to follow a downtrend, this would increase anticipation of a downward deviation in the growth trend, and an optimistic view on the economic outlook consequently would seem unlikely to spread on the basis of support from a favorable employment situation bis central bankers ’ speeches alone. meanwhile, the growth in the chinese economy has also continued to trend downward, and considering the deterioration in the employment situation and the decline in the inflation rate, it cannot necessarily be said that the economy is currently in a stable condition that is neutral to the output gap. the rate of economic growth appears to be slowing faster than the rate of decline in potential growth. as for asian economies with vulnerabilities arising from the high - 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do not mesh. but it is not easy to see how they will coalesce into a single image. the operation of monetary policy is often said to be more of an art than a precise science. but none of us can claim to be a michelangelo. so let me take you briefly through three particular areas of uncertainty we face, in the hope that, when we get to the discussion session, you will be able to add definition and colour to my half - formed sketches. first, the slowdown in the us is an important area of uncertainty because, if the downside risk of a deeper or more prolonged slowdown materialises, we would face slower growth and lower inflation in the uk than we are projecting on our central projection. that would, of course, be grounds for us to contemplate further easing in our monetary stance. that follows because our inflation target is, importantly, a symmetrical one : we need to be just as ready to contemplate easing if we see evidence on the downside of the economy underperforming, and hence the likelihood of inflation running over time materially below our 2 1 / 2 % target, as we would be to exercise restraint on the upside. we take this symmetrical nature of our responsibility very seriously and there is undoubtedly a significant risk that the us slowdown could have a material dampening effect on uk activity. analysts have used a large part of the alphabet to try to describe various views of how the us economy may develop. i am not sure that i find any of these pictograms particularly helpful, not least because people are sometimes pretty vague about vital details like the dimensions of the letter they favour or the angle of its arms : a big v, after all, can feel awfully like a u when you are down the bottom and trying to find your way up again. the short answer is that none of us can pretend to know precisely how the story will develop. it will be important to keep an open mind and be prepared to adapt our assessment in the light of actual events. but in doing so, there are four considerations that i would suggest are particularly germane to this first area of uncertainty. first, we need to recognise that we are talking of slowdown in the us from what have been extremely buoyant rates of growth, maintained for several years past, as the us economy has reaped the benefits of the application of information technology and the rise in productivity growth that had engendered - the new | target for most of the past two years. this is not in itself a particularly powerful argument, because the undershoot has been marginal and probably owes a great deal to the unexpected strength of sterling. indeed, before we began to track a little below the target, we had for around two years been tracking above it. nonetheless, the strength of demand in the economy does seem to have exercised less upwards pressure on prices over the past two years or so than we would have expected from earlier experience ; and this applies both to prices of goods sold in the product market and to pay and earnings in the labour market. why is this? in the product market, one factor may be greater competition, which has caused producers and retailers to accept lower margins. another factor may be new forms of marketing and retailing, for example the spread of e - commerce. this may have cut the cost of distribution, and it may also have intensified consumers'awareness of prices and their resistance to price increases, by enabling them to compare prices more easily. another possibility is that we may be seeing an increase in productivity growth, perhaps stimulated by the pressures many businesses faced from the strength of sterling, and perhaps also arising from the application of it possibly the beginnings of the arrival of the new economy from across the atlantic. in the labour markets, reforms which have made possible greater labour flexibility, and competitive pressures which have stimulated firms to adapt more quickly to changes in their business environment, may underlie the more benign performance of real earnings growth. more widely, the greater stability the economy has enjoyed in recent years from the medium - term framework that governs both fiscal and monetary decisions may, by stabilising inflationary expectations at a low level, have made it less attractive, and more risky, to try to raise prices even when demand is strong, and may also have enabled industry and commerce to plan their business activities on a sounder and more forward - looking basis. there is plenty of evidence that all these factors are, in varying degrees, at work in the uk ; and they offer the prospect of genuine improvements in the functioning of the economy. but the question is - on what scale, and are the improvements temporary or here to stay? we take considerable care to try to factor these developments into our decisions on interest rates, but the difficult judgment is to assess how much faster the economy can grow as a result without jeopardising our inflation target. my own view is that supply - side improvements are delivering benefits, but | 1 |
financial integration made impressive progress in some markets, such as the bond markets, stock markets and money markets, but advanced very modestly in other areas, particularly in the case of the banking system. in retrospect, this may seem surprising, since four - fifths of private sector financing comes from the banks. the diversity of supervisory regulations and practices have made regulatory arbitrage possible and, in some cases, it has even led to the emergence of protectionist barriers across different domestic financial markets. a positive initial response to the financial crisis has been the active role played by the commission in seeking to ensure that public support to financial institutions becomes subject to conditions that limit the distortions to fair competition within the single market. another important milestone leading to a pan - european approach to supervision has been the creation of the european systemic risk board ( esrb ) to strengthen macroprudential supervision within the eu as a whole, which has filled one of the most acutely felt institutional gaps during the crisis. until recently, however, under the umbrella of the same legislation, we have witnessed regulatory competition to attract business, the oversight of cross - border groups has suffered from a lack of coordination and the compliance process has been fragmented along national borders. for this reason, it is difficult to overstate the importance of the commitment of eu institutions to a “ single rulebook ”. according to the logic of this approach, which pursues a growing harmonisation of supervisory standards, once the european banking authority ( eba ) or the other european supervisory authorities ( esma and eiopa ) have developed bis central bankers ’ speeches technical standards, once adopted by the commission, these standards will become legislation directly applicable to entities, with no need for national transposition. the potential of the “ single rulebook ” is enormous, although resistance to the concept of maximum harmonisation remains significant. in the area of crisis prevention, the difficult discussions surrounding the definition of capital, or the application of new liquidity requirements, among other basel iii proposals, will have to be followed closely. but perhaps the most demanding challenges are in the field of crisis management and the resolution of financial institutions that are both systemically important and which have significant cross - border operations. a legislative proposal from the commission is expected in the coming months, detailing common tools for monitoring and resolution as well as principles of cooperation and mediation applying to cross - border institutions, and the role of the eba in these processes. if we add to these important developments the possibility | and neither has the framework for coordinating fiscal policies worked well, not to mention the complete lack of coordination of macroeconomic policies, influencing competitiveness. the greek crisis and its contagion to other vulnerable countries have been the irrefutable proof : no matter how small the country, its competitiveness problems and imbalances can have a systemic impact. in this context, the absence of federal - type shock absorbers has resulted in a loss of market confidence in sovereign paper as a risk - free asset, and even in the fungibility of bank money, which has experienced episodes of flight to banking systems located in countries perceived to be stable. gross political mistakes, such as the “ deauville doctrine ” on private sector involvement in debt restructuring or the public debate about a country possibly abandoning the euro, have worsened the situation. all too frequently, the common monetary policy has been left to play its role in resounding solitude. it is clear today that the road we must travel to support the stability and to reaffirm the irreversibility of the euro cannot get round building the institutions of a political federation overnight. the euro area needs to follow a different path to ensure a stable functioning of monetary union to compensate for the absence of these institutions, without excluding the possibility that the process of european integration may also lead to federalisation in the medium to long term. this approach to the completion of the euro project should focus on four key pillars of stability : economic governance, crisis management, financial regulation and supervision, and monetary policy. 4. 1 economic governance the first pillar should be to fundamentally strengthen governance procedures to prevent and avoid the emergence of imbalances. with fewer institutions capable of providing stability and mitigating crises when they arise, we must be more effective in preventing the emergence of serious imbalances. this process has led us to strengthen fiscal policy rules and to create mechanisms for monitoring and correcting macroeconomic imbalances and competitiveness ( “ six pack ” legislation, the treaty on stability, coordination and governance and “ the fiscal compact ”. ) on the fiscal side, the reform of the stability and growth pact ( sgp ) and the new “ fiscal compact ” are specifically designed to detect and correct the fiscal imbalances at an early stage. one key aspect of the reform of the pact has been the strengthening of its “ preventive arm ”. for example, sanctions will now be possible not only in cases of non - compliance with the 3 % limit, but | 1 |
andreas dombret : introductory statement - iif international capital markets and emerging markets roundtable introductory statement by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the iif international capital markets and emerging markets roundtable, washington dc, 20 april 2018. * * * ladies and gentlemen ever since the ground - breaking work of solow in the fifties most policy makers and members of academia – especially in the advanced economies – have inclined to favour free capital flows. many crises later, the view has somewhat shifted, in particular, regarding emerging markets and developing countries, which is the group of countries that i will focus my remarks on. not only can capital flow reversals and in the extreme form sudden stops create significant costs in terms of output losses, financial instability and even political instability. but from all we know today it is surprisingly difficult to find empirical evidence of capital account liberalization being beneficial in terms of output gains, investment, productivity gains, or risk sharing for countries that have not progressed sufficiently far in their institutional development. much of the work on this has been carried out by the imf and indeed by maurice obstfeld himself, so maurice should correct me if i am wrong, but essentially liberalized capital flows should go hand in hand with functioning judicial systems including well enforced property rights, developed and well regulated financial systems as well as stability - oriented macroeconomic policies. there are even longer lists, but these seem to be the minimum requirements. so, given that these conditions are not always met fully, should countries resort to capital flow measures if faced with volatile flows? by the way, i am using the imf terminology of capital flow measures. these are basically capital controls plus those macroprudential measures that aim to limit financial stability risks arising from cross - border capital flows. i think we all agree that sound domestic policies should always be the first line of defence and that capital flow measures should not substitute for warranted macroeconomic or exchange rate adjustments. but it is also useful to state an obvious but often overlooked fact : unlike restrictions on the current account, the imposition of capital flow measures is not under the jurisdiction of the imf, thus, any country can basically adopt such controls as it deems necessary to regulate capital movements. however, capital flow policies are part of the funds surveillance and as such open to an assessment of their impact on the international monetary system. objectives of capital flow measures usually are to maintain monetary independence, to mitigate exchange | ##sustainable fiscal deficits in debt - ridden countries and too little toward growth and job creation. i believe that redirecting of financial resources more toward growth – more specifically, toward countries with high productivity – could yield substantial stability benefits to all in the long run. this is why i see a greater role for asia going forward. asia weathered the global crisis well, and has thus far remained resilient to negative spillovers from the on - going fiscal crisis in europe. moreover, many expect asia to develop even more into the engine of global economic growth. but asia also faces many challenges. its source of growth is skewed to external demand, and there is limited scope for domestic demand to play a major role. intra - regional trade has been on the rise, true, but it remains only secondary to trade with other advanced regions. our regional financial markets are meanwhile underdeveloped, less satisfactorily integrated, and vulnerable to shocks of external origin. while asia accounts for over one - third of world gdp, its share in world finance is less than one quarter. bis central bankers ’ speeches that said, i find the theme of this conference to be highly topical. asian market integration and financial innovation should, i believe, be our path to prosperity and stability. in what follows, i would like to set out my views on this theme, with a particular emphasis on the role of the central bank. asian market integration : a way forward to financial deepening and stability let me begin by addressing the benefits and the risks of financial integration in asia. asian economies grew rapidly over the past several decades, by integrating themselves to the world economy through trade. during the catch - up process, asia was able to upgrade and boost the scale of its productive capacity and, through learning - by - doing, significantly reduce its productivity gap vis - a - vis its advanced trading partners. i believe that financial integration can and should bring the same benefits for asia as trade integration. in principle, financial integration facilitates domestic financial development, improves resource allocation within and across countries, and ultimately promotes growth. the diverse stages of development and demographics of asian countries offer fertile ground for such efficiency gains from financial integration. these benefits are relatively well understood. another important but less known benefit is a stronger market base for financial stability. financial integration tends to bring about greater market liquidity, improved risk allocation and enhanced competition, all of which contribute to financial stability by allowing market participants to better absorb and trade risks among | 0 |
vitor constancio : establishment of the single supervisory mechanism – the first pillar of the banking union opening keynote presentation by mr vitor constancio, vice - president of the european central bank, at the 11th annual european financial services conference “ reshaping europe ’ s financial markets ”, organised by forum europe ltd., brussels, 31 january 2013. * * * ladies and gentlemen, it is a great pleasure to be here today. the crisis has made it clear that a highly interconnected and integrated area such as the euro area, and a genuine economic and monetary union needed a stronger institutional framework. an important element to strengthen the financial institutional framework is the creation of the banking union with the single supervisory mechanism ( ssm ) representing its first pillar. during my intervention today i will touch upon the different elements of the banking union and the underlying rationale for its establishment. subsequently, i will review the main features of the ssm and mention the immediate challenges for the ecb to prepare itself to assume its supervisory task. 1. the key building blocks of a banking union the banking union aims at building an integrated financial framework to safeguard financial stability and minimise the cost of bank failures. it consists of four complementary building blocks, of which the ssm forms an integral part. the establishment of a european framework for supervision forms the first pillar of the banking union. as implied by its name, the ssm will be a mechanism, composed of national competent authorities and the ecb, with possibility of non - euro area member states to participate. the process to establish the ssm is underway, with the council proposal forming the basis for the current trialogue with the european parliament. i am quite pleased with the council ’ s proposal as it lays down a robust legal framework for the ssm to operate in. in order to ensure a timely implementation it is now of the essence that the proposal is enacted as soon as possible. an important element that will be supportive to the effectiveness of the ssm, is the completion of the single rulebook whose implementation is overseen by the eba. the completion of the single rulebook will significantly contribute to the single market and towards creating a level playing field by harmonising regulation at the european union level. likewise, the ssm will also contribute to these same goals. a second element of the banking union is the establishment of a single resolution mechanism. the framework for the single resolution mechanism is still to be defined and i look forward to the commission ’ s | me generally a good thing that ( 1 ) more of the credit risk is borne by entities or forms of financing generally less characterised by leverage ; and ( 2 ) those entities that do have leverage ( i. e. banks in the main ) have less leverage than they used to. such developments lessen the system's tendency towards crisis ; resilience is greater. that said, all of this is still a work in progress and more progress is required. on the domestic front, the information we have received recently suggests that the australian economy was growing at a respectable pace in the second half of last year. the national accounts data released this month showed that the economy expanded by 3 per cent over 2015, a bit better than we estimated at the time of our most recent statement on monetary policy in february. this outcome seems to fit together with other pieces of information such bis central bankers ’ speeches as business surveys and labour market data, which improved noticeably over the course of 2015. so at the turn of the year the australian economy seemed to have been picking up. that's a good starting point. in the case of business surveys, better conditions seem generally to have continued in the early part of 2016, though labour market data have been more ambiguous. the fact that australia has a sound and credible macroeconomic policy framework, which could, if needed, respond as appropriate to significant negative events is also a good starting point. even with interest rates at already low levels, and public debt higher than it was, there would, in the event of a serious economic downturn, be more room to ease both monetary and fiscal policy than in many, indeed most, other countries. leaving aside the potential for macroeconomic policy responses, the economy's inherent ability to adjust has been on display through both phases of the mining boom. of course we should always be looking for ways to improve that flexibility, but i think it should be said that businesses and their workforces have been much more flexible than once used to be the case. turning to financial resilience, australian banks'asset quality has generally been improving over the past couple of years. like their counterparts abroad, in the post - crisis period the banks have lifted capital resources, strengthened liquidity and reduced use of short - term wholesale funding. so their ability to handle either a funding market shock or an economic downturn has improved compared with the situation in 2008. at this stage we do not see a material problem in australian financial or non - financial entities | 0 |
two days ago, the committee decided that it would release its economic projections four times per year rather than semiannually and that it would extend those projections from two years to three. the new information will include a description of the economic considerations underlying the forecasts, a discussion of the sources of risk to the overall outlook, and a sense of the dispersion of views among policymakers. the changes adopted by the fomc are an important advance : they will provide additional insight into the committee's outlook, they will help households and businesses better understand and anticipate our policy decisions, and they will enhance our accountability for the decisions we make. the committee's decision to provide this expanded information represents the latest step in an ongoing process, extending back at least thirty years, to foster that accountability and improve the public's understanding of u. s. monetary policy making. i hope that my remarks this morning also prove helpful in fostering a better understanding of how the risk - management tradeoffs affect the policy deliberations of the fomc as it pursues its dual mandate of promoting maximum employment and price stability over the longer term. | 25 basis points, to 4 - 1 / 2 percent. the further reduction in the target rate was intended to lessen the extent of macroeconomic risk in the economy and to increase the likelihood of achieving moderate growth over time. in terms of the potential inflation costs associated with that action, the incoming data on consumer prices continued to be encouraging and inflation expectations appeared to remain reasonably well anchored. but, the recent run - up in energy prices and the fall in the foreign exchange value of the dollar suggested to me that, since the september fomc meeting, somewhat greater inflation risks had raised the costs of easing policy to manage the macroeconomic risks. nonetheless, on balance, i viewed the benefits of that action as being greater than the costs. looking forward, one feature of monetary policy to keep in mind is that, all else equal, each successive action in the same direction tends to lower the incremental benefits and to raise the incremental costs of additional actions. for example, unless underlying economic conditions or risks change substantially, reductions in the target federal funds rate tend to be associated with decreasing incremental benefits in terms of further mitigating tail risks and with increasing incremental costs in terms of the potential for inflation to increase. in the current context, i would be especially concerned if inflation expectations were to become unmoored and will watch both market - based and survey - based measures of inflation expectations closely. in sum, in september and again in october, i believed that achieving the fomc's statutory mandate to promote price stability and maximum employment would best be accomplished by lowering the target federal funds rate. with those actions, however, the downside risks to economic growth now appear to be roughly balanced by the upside risks to inflation. i would add that the limited data and information received since the october fomc meeting have not changed my thinking in this regard. economic outlook with the september and october policy actions as a backdrop, i would now like to provide a more detailed description of where i think the u. s. economy is most likely to be headed in the near - term and further ahead. in the near term, the economy will probably go through a rough patch during which a number of economic data releases may be downbeat. home sales seem likely to weaken further given the difficulties faced by some potential buyers in obtaining a mortgage and, perhaps, some concerns on their part about buying into a falling market. moreover, with the inventory of unsold homes already quite | 1 |
familiar with it. rather, i intend to focus on what has made this latest episode of global financial turbulence more troublesome than others in recent history. this should help us see recent developments in the canadian economy and in monetary policy in a clearer light. it should also provide some insight on what needs fixing in the international financial system and what mistakes to avoid in the future. so, why has the 1997 – 98 financial turmoil been more widespread and long - lasting? the way i see it, there were two main reasons. first, with the benefit of hindsight, it is clear that too many incautious international portfolio investments were made in the wake of the growing globalization of capital markets. second, it has taken japan much longer than expected to deal with its serious economic and financial problems, problems that long predated the asian crisis. – 2 – let me explain why i think these factors have had such an impact this time around. first, the matter of incautious international investment practices – what was the problem here? with the opening up of financial markets and with the decline in interest rates in industrial countries, a growing number of investors were attracted to higher returns abroad. “ abroad ” often meant the so - called emerging market countries, particularly those in asia. with their rapid rates of economic growth year after year, these countries seemed to have great investment potential. but foreign investments, especially in emerging markets, are far more complex than domestic ones. and assessing these investments can be very tricky. for one thing, investors are dealing with companies operating far away, in a very different economic and political environment. for another, financial regulatory and supervisory practices in some of these countries are less welldeveloped and transparent. in addition, investors may have felt rather well “ protected ” from risks – for a couple of reasons. first, past assistance packages by the international monetary fund ( imf ) and other international agencies may have led them to believe that the international community would always come to the rescue if worst came to worst. second, many investment advisers evidently were not terribly fussed about the exchange rate risk because most asian currencies were fixed to the u. s. dollar. it is all too easy to forget that having a fixed exchange rate is not in and of itself a guarantee that a currency will not decline in value – which in fact is what many of these currencies have done. in the end, huge amounts were placed in emerging markets in the 1990s by mutual funds, pension | price inflation is now well below the core rate of inflation. and in such circumstances, it is equally inappropriate to base our policy actions on swings in total cpi inflation. the slowing economy in the past year let me now look back at a rather difficult year for the economy. during 2001, we lowered interest rates at every fixed announcement date, in order to adjust to the changing economic circumstances. at the beginning of the year, our main concern was the impact that a slowing u. s. economy would have on canada. although domestic demand in canada was holding up, against a backdrop of weaker foreign demand, we lowered our target for the overnight rate through the first half of the year. both the old and new measures of core inflation also remove the effect of changes in indirect taxes. but by mid - summer, evidence began to accumulate that the u. s. slowdown would be more protracted than anticipated, and that economic activity outside north america would be much weaker. at the same time, there were indications that domestic demand in canada, which had held up well through the first part of the year, was softening. so at our 28 august fixed announcement date, we said that we had revised down our expectations for growth. then came the terrorist attacks of 11 september. their immediate impact and subsequent fallout compounded the problems of the economic slowdown. and the attacks presented a pressing challenge to the bank of canada and other central banks : to keep the world's financial systems operating smoothly. one of the bank's key functions is to promote financial stability in canada. that means keeping markets functioning well, even in times of extreme stress, such as the days immediately following 11 september. the bank of canada, as did other central banks around the world, stepped in to provide financial markets with ample access to domestic liquidity. and we reached an agreement with the u. s. federal reserve that would have permitted us to provide extra u. s. - dollar liquidity to canadian banks had it been necessary. in short, we made sure that the disruption did not turn into gridlock. if there was one positive thing to emerge from this terrible event, it was that the global financial system kept running as well as it did. but in the aftermath of these events, we were left with another challenge. that was to try to minimize the economic impact of the attacks. it was obvious that consumer and business confidence would suffer. we needed to do our part to help keep the loss of confidence as small | 0.5 |
slightly weaker rate of 1. 6 %. due to improved economic activity abroad and the favourable exchange rate, exports exceeded their year - earlier level by 7. 4 %. equipment investment, which had expanded by as much as 7. 5 % in the final quarter of 2003, declined slightly due to special effects. the upswing has also made itself felt in certain domestic sectors. this is evident in private consumption, which increased by 2. 3 %. the uptrend, which had begun towards the end of last year, thus continued. surveys confirm that consumer sentiment has improved. construction investment also topped the year - earlier level by a hefty 2. 8 %. the expansion in mortgage loans by 5. 5 % confirms the revival in the construction and real estate sectors. the upswing is also evident from a stabilisation on the labour market. for the first time in five quarters employment slightly exceeded the corresponding year - back level. the job vacancies indices reveal that demand for labour is gradually rising again. the favourable overall picture is confirmed by the economic barometer of the institute for business cycle research at the swiss federal institute of technology. how do we assess economic development in the near future? for this year, we are forecasting economic growth of close to 2. 0 %. growth is therefore likely to be underpinned by both higher exports and stronger domestic demand and to lead to a gradual decline in unemployment as from the second half of 2004. towards the end of 2005, the economy should again be working close to capacity, and this will influence price formation. our inflation forecast of march already showed that, given an unchanged interest rate of 0. 25 %, inflation would exhibit a rising trend as from the second half of 2005. the reason was to be found in improved capacity utilisation and unemployment declining in step with the more favourable economic conditions. this assessment has not changed in any way. the new forecast, adjusted for the 25 basis points rise in the three - month libor, now suggests that, as from the second quarter of 2005, inflation will fall short of the figure predicted by the last forecast. it makes it clear that the normalisation of the monetary policy course now initiated improves inflation prospects. the monetary development our inflation forecast is much less certain over a longer horizon. for this period of time, it is particularly helpful to consider monetary factors. for the monetary analysis, i shall deal with the development of the money stock m3. when interest rates were last cut | philipp m hildebrand : where is productivity growth in europe? summary of a speech by dr philipp m hildebrand, member of the governing board of the swiss national bank, to the vereinigung basler okonomen, basel, 28 october 2004. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * since 1996 the e. u. is lagging behind the u. s. in terms of productivity growth. this phenomenon has become more pronounced since 2001. the growth of gdp per work hour in the e. u. between the periods 1990 - 1995 and 1995 - 2002 is lower by two percentage points per year. this difference amounts to 2, 8 percentage points per year if one compares the periods 1990 - 1995 and 2000 - 2005. differences in gdp measurement account for roughly 0, 5 up to a maximum of 1 percentage point of the productivity growth differential. the remaining difference is caused by two factors. on the one hand, total factor productivity growth has accelerated in the u. s. this was made possible by a wideranging restructuring of the u. s. economy which provided an optimal backdrop for the new information and communication technologies. on the other hand, capital deepening in europe was lessened by employment growth. the productivity of this additional labour input has to be increased through strong educational efforts, open markets and additional investment. labour market reforms remain indispensable in order to enhance the productivity of all workers. product market reforms will be crucial in order to unleash the full productivity potential of the new technologies. increasing productivity is the key to securing our welfare and the stability of our social security systems. | 0.5 |
the efficient and smooth functioning of economic adjustments within the euro area requires the completion of the single market and thus greater domestic and cross - border competition. * * * * let me conclude by briefly addressing the committee ’ s concern over whether we are experiencing a new and lasting upward shift in inflation. the central bank is precisely there to prevent such a lasting shift and to deliver price stability over the medium term. on the basis of the assessment of the governing council the current monetary policy stance will contribute to achieving this objective. the governing council remains resolute in its determination to keep inflation expectations solidly anchored in line with price stability. at the same time, upside risks to price stability over the medium term, in particular those stemming from second - round effects in price and wage setting, prevail. in this context, in order to avoid that the current high inflation rates become entrenched in expectations, it is of the essence that all relevant parties – price setters and social partners – meet their responsibilities. as emphasised, it is also important that indexation schemes are abolished. this would strengthen the resilience of growth and employment creation of the euro area economy with regard to the current adverse developments we have to confront. | jean claude - trichet : hearing before the economic and monetary affairs committee of the european parliament speech by mr jean - claude trichet, president of the european central bank, before the economic and monetary affairs committee of the european parliament, brussels, 10 september 2008. * * * madame la presidente, mesdames et messieurs les membres de la commission economique et monetaire, je me rejouis de ce troisieme echange de vues avec votre commission au cours de cette annee. je commencerai mon intervention par une evaluation de la situation economique et monetaire, en expliquant les raisons sous - jacentes a nos recentes decisions de taux. je me pencherai ensuite sur les developpements sur les marches financiers en vous donnant de plus amples informations sur les operations de politique monetaire que la bce a menees face aux tensions demeurant sur le marche monetaire. des weiteren freue ich mich das von ihnen aufgeworfene thema der interdependenz zwischen den vereinigten staaten von amerika und der eurozone zu erortern. zudem mochte ich naher auf die entwicklung der wettbewerbsfahigkeit innerhalb der eurozone eingehen. abschließend erfolgt ein inflationsausblick auch im hinblick auf ihre frage, ob eine phase hoherer preissteigerungsraten vor uns liegen konnte. economic and monetary developments since my previous appearance before the european parliament on 9 july when i presented the ecb ’ s annual report for 2007, annual inflation rates have remained at high levels well above those consistent with price stability. this is mainly the result of both the direct and indirect effects of past surges in international energy and food prices. in addition, upside risks to price stability over the medium term have continued to prevail in a context where the underlying pace of monetary expansion continues to be strong. looking ahead, inflation in the euro area is likely to remain high for quite some time, moderating only gradually during the course of 2009. according to the latest ecb staff projections the average annual inflation rate is foresee | 1 |
well. we are fortunate, for financial markets have had no realistic alternative other than to depend on the chief executive officer to ensure an objective evaluation of the prospects of the corporation. apart from a relatively few large institutional investors, not many existing or potential shareholders have the research capability to analyze corporate reports and thus to judge the investment value of a corporation. this vitally important service has become dominated by firms in the business of underwriting or selling securities. but, as we can see from recent history, long - term earnings forecasts of brokerage - based securities analysts, on average, have been persistently overly optimistic. three - to five - year earnings forecasts for each of the s & p 500 corporations, compiled from projections of securities analysts by i / b / e / s, averaged almost 12 percent per year between 1985 and 2001. actual earnings growth over that period averaged about 7 percent. perhaps the last sixteen years, for which systematic data have been available, are an historical aberration. but the persistence of the bias year after year suggests that it more likely results, at least in part, from the proclivity of firms that sell securities to retain and promote analysts with an optimistic inclination. moreover, the bias apparently has been especially large when the brokerage firm issuing the forecast also serves as an underwriter for the company ’ s securities. on topics such as nonfinancial corporate governance, which is not in the federal reserve board ’ s jurisdiction, i am obviously speaking for myself. in addition, my comments do not represent the official views on this subject of the president ’ s working group on financial markets, of which i am a member. the performance of securities analysts may improve as a result of the recent joint initiative by the national association of securities dealers and the new york stock exchange to require brokerage firms to include in research reports the distribution of the firms ’ ratings, among “ buy, ” “ sell, ” and “ hold, ” for example. brokerage firms must also include in research reports a record that indicates when an analyst assigned or changed a rating for a company. i suspect that with the underlying database publicly available, it is just a matter of time before the ex post results of analysts ’ recommendations are compiled and published on a regular basis. i venture to say that with such transparency, the current upward bias of analysts ’ earnings projections would diminish rather rapidly, because investment firms are well aware that security analysis without credibility has no market value. * * * | alan greenspan : corporate governance remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, at the stern school of business, new york university, new york, 26 march 2002. * * * corporate governance has evolved over the past century to more effectively promote the allocation of the nation ’ s savings to its most productive uses. and, generally speaking, the resulting structure of business incentives, reporting, and accountability has served us well. we could not have achieved our current level of national productivity if corporate governance had been deeply flawed. and yet, our most recent experiences with the bankruptcy of enron and, preceding that, several lesser such incidents suggest that the governance of our corporations has strayed from our perceptions of how it is supposed to work. by law, shareholders own our corporations and, ideally, corporate managers should be working on behalf of shareholders to allocate business resources to their optimum use. but as our economy has grown, and our business units have become ever larger, de facto shareholder control has diminished : ownership has become more dispersed and few shareholders have sufficient stakes to individually influence the choice of boards of directors or chief executive officers. the vast majority of corporate share ownership is for investment, not to achieve operating control of a company. thus, it has increasingly fallen to corporate officers, especially the chief executive officer, to guide the business, hopefully in what he or she perceives to be in the best interests of shareholders. indeed, the boards of directors appointed by shareholders are in the overwhelming majority of cases chosen from the slate proposed by the ceo. the ceo sets the business strategy of the organization and strongly influences the choice of the accounting practices that measure the ongoing degree of success or failure of that strategy. outside auditors are generally chosen by the ceo or by an audit committee of ceo - chosen directors. shareholders usually perfunctorily affirm such choices. to be sure, a ceo can maintain control over corporate governance only so long as companies are not demonstrably in difficulty. when companies do run into trouble, the carte blanche granted ceos by shareholders is withdrawn. existing shareholders, or successful hostile bidders for the corporation, usually then displace the board of directors and the ceo. such changes in corporate leadership have been relatively rare but, more often than not, have contributed to a more - effective allocation of corporate capital. for the most part, despite providing limited incentives for board members to safeguard shareholder interests, this paradigm has worked | 1 |
is monetary policy still regulatory policy today? speech at the university of lucerne, reichmuth & co lecture no 19 23. 09. 2022 | lucerne | joachim nagel 1 introduction 2 understanding regulatory policy 3 price stability is what matters 4 the maastricht regulatory framework 5 non - standard monetary policy measures 6 current environment in the fight against inflation 1 introduction dear thomas jordan, dear professor schaltegger, ladies and gentlemen, thank you very much for inviting me to this distinguished series of events. you are in an enviable position here in switzerland! not just because of the glorious scenery here at lake lucerne, but also because of the country ’ s inflation rate, which is admittedly also too high, at 3. 5 % in august. i would be happy, though, if we had that rate in the euro area right now, instead of 9. 1 %. yet my counterpart thomas jordan and i won ’ t be focusing, like we often do, on economic activity and price developments today. i am pleased to be speaking on a subject that is of a fundamental nature but is nonetheless topical and of practical relevance at the same time. 2 understanding regulatory policy is monetary policy still regulatory policy today? that is a question that is almost impossible to answer without delving first into what regulatory policy means and how it originated. but i will keep the backstory brief, i promise. in some quarters these days, regulatory policy has a bad reputation, is couched in negative terms, and is sometimes seen as “ typically german ”. [ 1 ] properly interpreted, though, it is neither a matter of harping on about principles nor dogmatic. i would like to show you that it offers important insights and serves as the backbone, so to speak, of a welfare - oriented economic policy – and that it also sets suitable guidelines for monetary policy. the theoretical roots of regulatory policy can be traced back to walter eucken and other co - founders of the freiburg school, who shaped german ordoliberalism. one hugely important aspect for ordoliberals is competition. but for them, it is not about a laissez - faire, unregulated interplay between market forces. rather, the rationale is to design a framework competitive order in such a way that decentralised decisions yield the best possible outcomes for the economy as a whole. for this to be possible, economic power, for example, also needs to be kept in check | because it means that, because hong kong's currency is linked to the us dollar, hong kong also becomes more competitive. this larger point may have been overlooked in all of the fuss about the somewhat less significant strengthening of the hong kong dollar against the us dollar. with regard to the mainland's currency, the political pressures from outside for an appreciation of the renminbi exchange rate have been prompted by the considerable attention that is being given in the us to the bilateral trade imbalance between the mainland and the united states. the arguments for appreciation are that, from the us perspective, chinese exports are undervalued and therefore unfairly competitive, and, from the chinese perspective, the substantial capital inflow into the mainland might carry long - term risks. leaving aside the arguments about trade, let us look a little more closely at the question of capital inflow and how to manage it. first, to put things in perspective, it should be noted that the mainland's current account surplus is really very small by international standards perhaps something around one per cent of gdp in the first half of 2003. this is much lower than the corresponding figures for many other economies. nevertheless, it is true that there has been substantial capital inflow into the mainland, leading to a very rapid accumulation of foreign reserves. the mainland authorities are well aware of the risks of this, in terms, for example, of an asset price bubble that could be quite destabilising to the financial system when it burst. they have, in fact, made quite intense efforts to deal with the inflow through a number of strategies. under the mainland's present exchange rate system, the accumulation of foreign reserves is matched by an increase in the renminbi monetary base, which needs to be sterilised if the undesirable consequences of credit expansion are to be contained. the people's bank of china has been carrying out sterilisation quite actively both through the recently introduced programme of issuing central bank bills and through reducing lending to government and financial institutions. there is scope for securitisation of these loans to produce more financial instruments for money market operations. another tool available to the authorities is to change the reserve requirement for banks, and indeed this requirement was raised in august from six per cent to seven per cent. further options include making changes to interest rates to discourage further capital inflow ( though obviously this may have undesirable effects on the asset markets ) and opening up relief valves in the capital | 0 |
deterioration in global demand for goods and services that occurred late in 2008 and early this year. there are some important features of this event that help us to understand both our own experiences in australia and those of other countries. historians will study this episode for years to come. they may find additional nuances, but one very clear trigger for the sharp collapse in demand was the heightening of stress in financial markets. a sequence of extraordinary events occurred in september and october last year. these included : • the us government taking over the two largest housing finance entities ; • the bankruptcy of one of the four remaining large us investment banks, which people had presumed was “ too big to fail ” ; • the us government taking over one of the world ’ s largest insurance companies ; and • in short order, pressure on systemically important institutions across the united states and europe. combined, this previously almost - unthinkable sequence resulted in a sharp increase in perceived systemic risk in financial markets and systems everywhere. stock prices fell sharply around the world. risk spreads on all sorts of debt instruments blew out, and capital markets for issuing ( or rolling over ) debt and equity essentially closed. it was the most turbulent period in international finance any current banker, economist, market trader or policy - maker has lived through or, we hope, ever will. unlike most previous financial crises, moreover, the news about this set of events reached people all over the world very quickly. they did not learn about it the way they once might have : sequentially, with varying lags, via delayed print media, word of mouth, high - brow publications and so on. instead, they learned about it simultaneously, via the 24 - hour news cycle, in every country, more or less in real time. not surprisingly, people everywhere suddenly became much more fearful of the future. in the face of this acute uncertainty, firms and households across the world did what you would expect. they acted in a precautionary way. they postponed discretionary purchases, shelved expansion plans and did what they could to consolidate their balance sheets. the result was a highly synchronised slump in demand especially for consumer durables and investment goods. production and consumption of more “ everyday ” non - durable goods and services did fall, but by much less than for those products that could easily be purchased tomorrow rather than today ( graph 1 ). graph 1 the nature of this slump helps us to understand both the relative performance of various national economies and the | central bank to manage liquidity and provide last - resort funding in a crisis. banking systems tied to a commodity standard were simply not flexible enough to cope with periodic bank runs and liquidity crises. no doubt, the true believers in free banking would argue that the theory was never properly tried, and that, if it were, the market would find a solution to the apparent problems. but that is to make the theory unassailable by pure assumption. the other school of thought on free banking is an even more radical one. it proposes a system of competing private currencies that would not have to be linked to any standard of value. the banks operating in such a system would compete with one another to offer sound currencies on terms that who would like to introduce money base targeting, see macfarlane ( 1984 and 1989 ) and goodhart ( 1995 ) for the contrary view. another interpretation of what " leaving it to the market " could mean is that the reserve bank should move the cash rate to where the market expects it to be. this could mean, for example, moving the cash rate to where the 90 - day rate currently is. the problem with this approach is that the current level of the 90 - day rate is mainly a reflection of where the market expects the reserve bank to set the cash rate 90 days hence. the process then becomes completely circular. see pope ( 1989 ) for a discussion of " free banking " in australia prior to 1910. the more commonly cited case of free banking is in the 18th century scottish banking system ( see white, 1984 ). note, however, that other writers such as goodhart express scepticism that this was a true case of " free banking ". the best known proponent of this view is hayek ( 1976 ). were attractive to the public. in effect, a country operating such a system would depend upon competition between commercial banks to ensure stability in the financial system and low inflation. to my mind, these free - banking proposals really belong in the world of technical curiosities. they can be argued to work in theory, but the fact is that there is no working example of such a system anywhere in the modern world. so i have to conclude that those who say interest rates should be left to the market are proposing something that is either not workable ( if they mean simply shutting down central bank operations ) or something that is much more radical than most people would be prepared to accept. this brings me to my third | 0.5 |
by lek 69. 3 billion, compared to the growth by lek 52 billion over the previous year. in 2006 the annual credit growth was 56. 7 percent, providing good support for economic needs. the relatively high pace of banking system lending to the economy has also continued over the first quarter of the current year, drawing our attention, as the regulatory authority of the banking activity, to the need to monitor any risks this expansion may comprise. more concretely, this growth has led to decrease of capital adequacy rate and liquidity ; however, banks have continued to be well - capitalised, liquid and profitable. quarterly stress - tests carried out by us have indicated that the country ’ s banking system is flexible against any probable shocks relating to exchange rate, interest rates or credit quality. the bank of albania has continued to prudentially monitor the rapid credit growth, enhancing its banking supervision. in this framework, the establishment of the credit registry, expected to be carried out within december 2007 is of special importance. currently, we are working for completing the legal framework that will enable the registry establishment and functioning. at the same time, the decision is already made on selecting the company that will provide technical solutions to the registry. we are confident that all these measures will contribute to the maintaining of credit quality and the financial stability of our country. wishing you a fruitful workshop, i give the floor to mr. watson. thank you! | public finances on a sound footing while times were good, and is also currently proving that it can be a flexible tool during crises, providing [UNK] fiscal leeway. in recent years, some economists have changed their perspective on the debt brake. given the low level of interest rates and the foreseeable need for high investments, greater scope for borrowing will be required. i do not share the harsh criticism directed at the debt brake by some. it is not an impediment to forward - looking investment and a modern state. when it comes to structural government expenditure, which corresponds to roughly half of economic output and which reaches record levels in the budget plans calculated excluding interest expenditure, this appears, to me, to be rather a question of setting priorities. this does not mean that any adjustment to the fiscal rules should be rejected fundamentally. yet measures should remain in place to reliably guard against high levels of government debt. i would advise against either relying on interest rates remaining low indefinitely or overestimating the growth effects of government actions. experience has shown that we often end up being disappointed when we have such expectations. of course, it is important not to scale back government support measures too quickly now. in view of the persistent uncertainty regarding the evolution of the pandemic and its economic impact, it is appropriate to take a cautious approach. the coronavirus crisis should not serve as a pretext to jettison, once and for all, fiscal rules that some dislike. although accommodative budgetary policy with high deficits may be popular in the short term, a return to stable public finances should not be continuously put off. this is also important from a monetary policy perspective : monetary and fiscal policy are currently working in concert. though i believe this will not remain the case. tensions are likely to resurface when the pandemic - driven crisis has been overcome. monetary policy is committed to the objective of price stability in the euro area and its reins will have to be tightened again if required by the inflation outlook. it must be clear to all that we are not putting monetary policy into the service of fiscal policy. it is essential to keep fiscal assistance measures targeted and temporary to reduce the likelihood of conflicts arising between monetary and fiscal policy. matters would become particularly critical if the foreseeable demographic burdens on public finan | 0 |
of them. the law proposes substantially improving general government transparency at the different stages of the budgetary process. in particular, timely detection of budgetary deviations is considered essential so as to adopt measures. consequently, it would be advisable to begin publication of the regional government monthly revenue and expenditure outturns as soon as possible, as envisaged in the organic law ( article 27. 3 ). the law further includes coercive instruments to ensure compliance with budgetary targets by all levels of government. such instruments can be effective in ensuring discipline if rigorously applied and if the appropriate procedures for overseeing the budget outturn throughout the year are set in place. but the pressure of everyday events should not make us lose sight of the medium and long term. allow me to refer here to the major reform of the pensions system approved in july last year. this checked a pension spending dynamic that was endangering the sustainability of public finances over the medium and long - term horizon. but it should be recalled that this reform did not cancel out all the risks arising from population ageing. it would thus be desirable to properly define the so - called sustainability factor, so that the parameters of the system may adapt automatically to future demographic developments. admittedly, the economic difficulties such as high unemployment and low growth that we face are most serious. but the main problem currently confronting the spanish economy is the fall in all confidence indicators in recent months, exacerbated in recent weeks by the management of the latest banking crisis. restoring confidence is the imperative at present, since without it, none of our problems will be resolved. all government measures and all actions taken by economic policymakers and agents should be aimed at restoring the confidence we have lost. and one of the pre - requisites for doing so and for dispelling all uncertainty is that spain should bring its public finances back on to a path of stability in line with its european commitments. i believe there is a sizeable consensus that spain needs to redress its fiscal imbalance and move towards a path of stability, in line with its european undertakings, and that this is a pre - requisite for restoring confidence and dispelling uncertainty. consolidation measures have been tabled that are capable of bringing about this change of direction in budgetary dynamics. and, above all, the national budgetary framework has been substantially reinforced in order to allow the coordination, monitoring, surveillance and, where appropriate, correction of deviations by the different tiers | ) of the main economies in terms of compliance. in this respect, peer review exercises have begun and a major effort is being made to identify those areas in which the regulatory framework does not sufficiently recognise risks, placing particular emphasis on those institutions, instruments and markets which are not currently regulated or supervised. in addition to all these efforts in the field of regulation, work is ongoing to set in place more effective and uniform microprudential supervision of financial institutions. the financial crisis has revealed major supervisory failings in certain jurisdictions. in these cases supervision did not adapt sufficiently to the increasingly global nature of financial activities and it was not as intensive as would have been necessary. as a result, certain banks ultimately built up excessive risks, prompting public interventions with a high cost for taxpayers. this was due in part to excessively lax supervisory standards, which led to insufficient monitoring of institutions under inspection and to the underutilisation of the information available to supervisors, and which allowed the excessive growth of the “ shadow banking system ”. work is now in progress to define and standardise ways in which material information on transnational institutions can be exchanged through so - called colleges of supervisors, which group together the supervisors of the countries where these institutions have a significant volume of activity. substantial headway has been made in a short time and improved supervisory cooperation at international level and at european level ( with the creation of new european supervisory authorities ) will unquestionably enable more effective action. i would like to emphasise here another dimension which the banco de espana considers crucial, namely the improvement of national supervision. the first step in achieving effective international supervision is to ensure high quality national supervision, not only of large institutions, but of the whole system, since systemic risk may flare up due to a mere contagion effect. the second step is to foster the convergence of a majority of countries towards uniform and higher - quality supervisory standards. in this respect, work is commencing on a review of the various national supervisory models with a view to developing principles based on sound supervisory practices. lastly, i would like to emphasise that a key issue in discussions on changes in regulation and supervision is the search for ways to mitigate the problem of moral hazard associated with so - called systemic institutions. some of the more perverse consequences of the crisis have manifested themselves in these institutions, i. e. those which, owing to their size, their inter - connectedness or the difficulty of replacement of their business areas, are too “ big ” to | 0.5 |
limited. in the aftermath of the terrorist attack on 11 september last year, the aviation and travel industries reported job cuts. cutbacks have also been announced in the process industry. the guidelines for fiscal policy will stimulate activity because petroleum revenues will now be phased into the economy. according to the government ’ s estimate, the guidelines imply an average increase in the use of petroleum revenues in the central government budget of about 0. 4 per cent of mainland gdp each year from 2002 to 2010. the government budget that was approved for 2002 implies that the use of petroleum revenues will increase by 0. 6 per cent of mainland gdp from 2001 to 2002. the guidelines for fiscal policy imply a substantial stimulus each year. the expansionary impetus varies considerably, and is greatest in the first few years. however, an unpredictable and more expansionary fiscal policy than that implied by the guidelines would have resulted in greater uncertainty. the guidelines provide a stable framework that contributes to reducing some of the uncertainty. over time, the size of the internationally exposed sector will be affected by the portion of petroleum revenues that is absorbed by the norwegian economy but will be unaffected by monetary policy. any appreciation of the krone may, nevertheless, affect the speed at which changes occur in the business sector. to maintain a balance in the norwegian economy, the phasing in of petroleum revenues must be countered by a monetary policy stance that is tighter than it would otherwise have been. this may be accomplished through a higher interest rate, an appreciation of the krone, or both. on balance, we expect moderate growth in the mainland economy in the next two years. the projections for gdp growth that were presented in the october 2001 inflation report were approximately on a par with the growth potential of the economy. household consumption and public spending are the main forces underpinning growth. fixed investment and exports are restraining growth. brisk growth in consumption is resulting in high demand for labour in public and private services. low international growth and lower petroleum investment are curbing employment growth. a tight labour market is generating continued high growth in labour costs. an expansionary fiscal policy, growth in private consumption and a continued high rise in labour costs contribute to a high rise in prices for domestically produced goods and services. at the same time, we expect a temporary decline in prices for imported consumer goods. this reflects lower international commodity and producer prices, a slower increase in global consumer prices and a stronger krone exchange rate. as these effects wane, and if global economic growth picks up in | rate will be increased. if it appears that inflation will be lower than 2½ per cent with unchanged interest rates, the interest rate will be reduced. inflation in norway is determined by both domestic and international inflationary impulses. domestic inflationary impulses are influenced by the state of the norwegian economy. international inflationary impulses are generated via prices for imported consumer and intermediate goods. these inflationary impulses will be influenced by developments in international commodity and consumer prices and by the exchange rate. the inflation target provides the framework for monetary policy. norges bank ’ s executive board makes decisions about changes in the interest rate. the members of the executive board are collectively responsible for the bank ’ s decisions. the executive board meets every three weeks. at every second meeting, the executive board discusses monetary policy in depth. decisions regarding changes in the interest rate will normally be made at these monetary policy meetings. three times a year, norges bank prepares inflation reports in which it presents its projections for inflation and economic developments in the years ahead. the executive board discusses the economic outlook at a separate meeting three weeks before the inflation report is presented. on the basis of preliminary projections for the report, the executive board assesses the outlook for inflation two years ahead and the uncertainty surrounding these projections. the following day, the executive board summarises its discussions and assesses the consequences for monetary policy for the next four months. this assessment constitutes an important internal reference when the executive board later makes a decision regarding the interest rate. it will also provide the basis for our external communication through speeches and the media. the risk of a deep recession in the world economy appears to have diminished. there is still, however, considerable uncertainty surrounding both the timing and the strength of the recovery. last year industrial output declined markedly in all major regions of the world economy. in the us it appears that the decline may be coming to a halt. developments in japan are still highly uncertain. in the us, confidence indicators have recently shown some signs of improvement. the decline recorded following the terrorist acttacks on 11 september last year has been partly reversed. nor does it appear that households in the euro area have become more pessimistic in the last few months. however, the indicators suggest that they still consider the economic situation to be fairly negative. various institutions ’ growth forecasts for 2002 were lowered substantially through 2001. due to sluggish economic developments, many central banks reduced their key rates last year, in some cases quite appre | 1 |
zamani abdul ghani : growth and development of smea€™s in malaysia opening address by mr zamani abdul ghani, deputy governor of the central bank of malaysia, at the top smi supporter award presentation, held at the credit guarantee corporation malaysia berhad ( cgc ), petaling jaya, selangor, 9 june 2008. * * * bismillahirrahmanirrahim distinguished fellow members of the board of directors of cgc, yang berbahagia datuk wan azhar wan ahmad, managing director of cgc distinguished guests and representatives of financial institutions members of the media ladies and gentlemen assalamualaikum w. b. t. and a very good afternoon on behalf of the board of directors and management of the credit guarantee corporation, ( cgc ), i am pleased to welcome you to this top smi supporter awards presentation ceremony. this occasion is held in conjunction with the cgc's 35th annual general meeting that was successfully concluded just a while ago. i am pleased to note the encouraging representation made here today by fellow members of financial institutions. this signifies the importance that financial institutions attest to this cgc's annual award presentation ceremony. that said, allow me to record our appreciation to all of you for making this ceremony an important event in your calendar. this top smi supporter awards presentation ceremony, as you are all well aware, is an annual occasion. it recognises the active participation by financial institutions in cgc's credit guarantee schemes in particular, and contributions by financial institutions to sme development in general. we firmly believe such efforts should not go unnoticed. collectively, the award recipients and all other financial institutions have helped in making cgc a stronger sme - support institution. this is so as their active participation opened a new window of opportunities not only for the smes but also for the cgc in reaching out to a wider cross section of the sme community throughout the country. in 2007, cgc provided credit guarantees totalling rm4. 6 billion to more than 13, 000 smes through our main schemes, the programmed lending schemes as well as the securitisation of sme loans. there was actually remarkable growth with the number of loans and amount guaranteed growing by 73 % and 53 % respectively. this could be attributable to the strong support given by participating financial institutions that have been robust in serving the sme market in the recent years. i particularly note with interest that the seven | to growth and development. this brings me to the second implication of the changing financial regulatory landscape in respect of preserving financial stability and the broader agenda of effective and efficient financial intermediation, taking into consideration the unique considerations in islamic finance. ladies and gentlemen, a sustained process of excessive financial deregulation and over reliance on market discipline particularly in advanced economies which led to a prolonged cycle of optimism and risk taking has been widely cited as part of the root cause of the recent global financial crisis. indeed, the pre - crisis era was a period of exuberance in financial innovation and rapid development in the conventional financial landscape. although it was argued that financial deregulation encourages innovation which in turn result in the more efficient allocation of resources, the recent crisis has shown that there is a need to balance between market discipline and regulatory oversight. whilst there is general support for the reform measures, there is also concern on the dangers of over - reaction by policymakers that could undermine the role of financial intermediation, and adversely affect the ultimate objective of economic growth and development. the concern is specifically on the unintended consequences of the regulatory reform. financial stability is not an end in itself ; it is a means towards achieving the ultimate goal of sustainable growth and shared prosperity. this presents the challenge for policymakers in finding the appropriate balance between preserving the resilience of the financial system versus maintaining the ability of the system to perform their intended function of delivering effective, efficient and innovative financing solutions to customers in the wider economy. hence, the concern is that that the regulatory reforms would increase the cost of financial intermediation. a careful assessment needs to be made of the potential medium and longterm effects of the proposed reforms on market structures and behaviour. these considerations are equally relevant in the context of islamic finance. the assessment on the aims and relevance of each of the proposed reform measures needs to take into account the two important considerations in islamic finance ; the need to support sustainable and responsible innovation, and secondly, to leverage on its inbuilt strengths that set islamic finance apart in performing its role in supporting the efficient mobilisation and allocation of resources to generate real economic activities. given the damaging effects of complexity and opacity associated with the recent unfettered innovative activities in the conventional financial markets, it has resulted in a reassessment of the role and benefits of financial innovation. in islamic finance, innovation is key in pushing the frontier of market development to generate the range of products and | 0.5 |
there are no plans to reuse these prototypes in the subsequent phases of the digital euro project. we have run a public call for expressions of interest for joining the prototyping exercise. all interested parties had to fulfil several " essential capabilities " that were outlined in the call, e. g. data protection / privacy compliance. we assessed which providers best matched the " specific capabilities " required for specific use cases. see ecb ( 2022 ), " ecb selects external companies for joint prototyping of user interfaces for a digital euro ", mip news, 16 september. 13 users will have the option to choose whether the conversion of commercial bank money or cash into digital euro, and vice versa, should take place manually or automatically. for the automatic option, we are investigating a waterfall functionality that would allow users to make or receive payments in digital euro above the holding limit by linking a digital euro account to a commercial bank account. when receiving a payment, this would allow automated conversion of retail cbdc in excess of a holding threshold into a bank deposit held in a linked commercial bank account chosen by the end user. similarly, a reverse waterfall would ensure that end users can make a payment even if the amount exceeds their current digital euro funds. additional liquidity would be pulled from the linked commercial bank account and the transaction would be completed in digital euro at its full value. 14 the eurosystem's sepa migration impact assessment noted that, in the context of the growing technical complexity of payment services in europe, one of the lessons that can be learnt from the sepa project and the implementation of the revised payment services directive ( psd2 ) is that technical standardisation and development of the scheme would ideally be completed before legislation to mandate its use is introduced. 15 for instance, the eurosystem might only be responsible for issuing the digital money, without providing the settlement infrastructure or intervening in distribution – the " issuance model ". alternatively, in an open access model, the eurosystem would only provide the settlement infrastructure and set access rules ; every entity that fulfils these 6 / 7 bis - central bankers'speeches rules could then use the infrastructure in their own way. while they give the market room to innovate, these two models may not achieve widespread distribution to end users or sufficient interoperability, which would hamper the end - user experience and financial inclusion. one could also imagine an alternative distribution model in which the eurosystem would provide the | as the scheme is being developed. conclusion let me conclude. a well - designed digital euro would bring benefits for everyone. it would provide a payments solution for anyone needing to make or receive a payment. it would ensure that a standardised infrastructure is available to everyone. and it would serve as a strong foundation for intermediaries to offer payment services throughout the euro area, thereby fostering competition and innovation. cooperation between the public and private sectors is crucial to make the digital euro a reality. the eurosystem and the intermediaries involved will have a key role to play, drawing on their respective expertise. successful cooperation will require a pricing strategy that provides adequate economic incentives to foster the adoption of the digital euro. we are currently analysing a possible compensation model for the digital euro, a topic that is also relevant for the european commission. i stand ready to discuss this with you in the coming months, as well as other important aspects of the digital euro that we are currently investigating. 4 / 7 bis - central bankers'speeches i now look forward to your questions. 1 panetta, f. ( 2022 ), " a digital euro that serves the needs of the public : striking the right balance ", introductory statement at the committee on economic and monetary affairs of the european parliament, brussels, 30 march. 2 panetta, f. ( 2022 ), " the digital euro and the evolution of the financial system ", introductory statement at the committee on economic and monetary affairs of the european parliament, brussels, 15 june. 3 ecb ( 2022 ), " progress on the investigation phase of a digital euro ", september. the eurosystem first establishes staff positions on the major design issues and policyrelevant aspects of a digital euro. these are then discussed with external stakeholders before the eurosystem high - level taskforce makes a final assessment. the ecb's governing council then approves the design options. further information on the project governance and the key milestones and project timeline is also available on the ecb's website. 4 for other transactions, the baseline will be to provide people with a level of privacy equal to that of current private digital solutions. 5 quantitative limits on the holdings of individual users would limit the individual take - up or the speed of deposit conversion. remuneration - based tools could be calibrated to make large digital euro holdings above a certain threshold unattractive compared with other highly liquid and low - risk assets. 6 | 1 |
ecb suggest that euro - area gdp will grow by just over 1 % in 2014 and by 1½ % in 2015. and this recovery is not only driven by the “ core euro - area ” countries such as germany. some of the crisis - hit countries have also finally embarked on the path to recovery. and those which have not can at least see the light at the end of the tunnel. it seems that the efforts to implement structural reforms are gradually bearing fruit. competitiveness has improved in most peripheral countries over the past few years. almost everywhere, unit labour costs have fallen substantially. improving competitiveness in turn drives exports higher. all peripheral countries – except cyprus – are projected to see some export growth this year. these achievements are reflected in current accounts increasingly reverting to positive balances. bis central bankers ’ speeches and germany is part of this rebalancing equation. since 2007, germany ’ s current account surplus vis - a - vis the euro area has shrunk continuously from 4½ % of gdp to 2 % of gdp. as business investment in germany is projected to pick up in 2014 and 2015, this rebalancing should continue. the progress that these abstract figures reflect is also visible in more concrete events. for example, ireland and spain have exited their financial support programmes without any friction. and portugal is planning to leave its adjustment programme in the first half of this year. all three countries recently returned to the sovereign bond markets at relatively low yields. it seems that international investors are increasingly acknowledging the countries ’ efforts and achievements. in the case of ireland and portugal, international investors have bought more than 80 % of the newly issued bonds. at the same time, stock markets in these economies have been rising for some time now. these developments underscore the progress that some peripheral euro - area countries have made in adjusting their economies. however, due to different starting points some countries are naturally more advanced in their adjustment process than others. especially in greece further efforts are necessary to manage the turnaround. 3. the role of monetary policy now, what is the role of monetary policy in this process? monetary policy certainly helped to prevent the crisis from escalating. still, there is one thing we should be clear about : monetary policy cannot solve the underlying causes of the crisis. nevertheless, some observers propose an even more expansionary monetary policy. they are worried about the risk of deflation in the euro area. it is certainly true that current inflation rates are rather low | currency. notwithstanding the encouraging developments over the past years, the capacity of the regional bond markets is still limited compared with the huge infrastructure and other financing needs of the region, resulting in heavy reliance on bank financing. much work still needs to be done, including but not limited to expanding the issuer and investor types, gradual liberalisation of barriers to entry of non - resident investors, promoting financial infrastructure linkages, improving corporate disclosure and transparency, more standardisation in legal and governance terms, to name a few. policymakers will have a key role to play in facilitating market developments and removing market impediments in the process. and we hope to see adb, the region ’ s long - standing partner in promoting bond market development, to further its efforts and cooperation with governments in the region on this front. thank you. bis central bankers ’ speeches | 0 |
interest rates constrain the ability of monetary policy to offset negative shocks to the economy. this effect has been seen most clearly in the behavior of inflation. over the past decade, inflation in the united states has been below our 2 percent longer - run target most of the time, and measures of inflation expectations have drifted down. these declines in trend inflation and inflation expectations can create a pernicious feedback loop of reduced policy space and even lower inflation expectations. again, this experience is not unique to the united states, indicating that it stems from factors common across countries, rather than issues unique to our economy. indeed, most inflation - targeting advanced economies have struggled to achieve their inflation goals on a sustained basis over the past decade. this brings us to last week ’ s announcement and the issuance of a new consensus statement of our policy framework. it is a culmination of extensive outreach and conversations with communities and stakeholders across the country, careful and thorough analysis, and active 1 / 2 bis central bankers'speeches discussion and debate among committee participants. 4, 5 we took important lessons from the experience of the past decade, reassessed the evidence, and looked at the challenges ahead of us. all this effort was worth it : this new statement means we are better positioned to achieve our goals. in fact, the process worked so well, we ’ ve committed to repeating it roughly every five years! the new framework statement directly and effectively addresses the problems caused by a low neutral rate and persistently low inflation. first, it stipulates that, following periods when inflation has been running persistently below 2 percent, a temporary overshooting of the longer - run inflation target will likely be desirable to keep inflation and inflation expectations centered on 2 percent. second, it makes clear that we seek inflation that averages 2 percent over time, consistent with our longer - run target. finally, the statement makes unequivocally clear that we seek maximum employment and will aim to eliminate shortfalls from this broad and inclusive goal. these changes are mutually reinforcing and will meaningfully improve our ability to achieve both of our dual mandate goals in an environment of a very low neutral rate. i ’ ll conclude with this : the new framework represents both an important evolution in our thinking about how to achieve our goals and another step toward greater transparency. it reaffirms key aspects of the original statement that have stood the test of time and refines others in line with experience and evolving practices. it also makes | simon m potter : challenges posed by the evolution of the treasury market remarks by mr simon m potter, executive vice president of the markets group of the federal reserve bank of new york, at the 2015 primary dealer meeting, new york city, 13 april 2015. * * * i would like to thank michael mcmorrow for his excellent assistance in the preparation of these remarks and colleagues in the federal reserve system for numerous insightful comments and suggestions. welcome to this year ’ s primary dealer meeting, and thank you for joining us today. as primary dealers, you play an integral role as the federal reserve ’ s counterparties in operations to implement monetary policy, as participants in u. s. treasury auctions, and as important providers of information on market developments to support the desk ’ s monitoring of financial markets. 1 today ’ s meeting provides us with a valuable opportunity to communicate our expectations for you as our counterparties and to strengthen our important relationship. today, i ’ ll discuss the market for u. s. treasury securities, with a focus on how the market ’ s structure has changed in recent years. as you all know, the u. s. treasury market is one of the most important financial markets globally and is valued as a source of safety and liquidity. indeed, both domestic and global investors, including private sector institutions, retail investors, and foreign central banks, hold treasury securities at least in part for these reasons. a deep and liquid treasury market also helps to underpin the u. s. dollar ’ s status as the global reserve currency. i ’ ll begin with an overview of the market ’ s basic structure, including some historical perspective on how that structure has evolved over time. i ’ ll then turn more specifically to the subject of electronic and automated trading – a topic that has become increasingly important across many markets, including the market for u. s. treasuries. i will then review the intraday volatility witnessed on october 15 of last year. as you all know, october 15 was a highly unusual day in the treasury market, particularly given the very sharp round - trip in yields that took place mid - morning with no obvious immediate trigger. i will conclude with a few words on the updated best practice recommendations from the treasury market practices group ( tmpg ) in light of the changing market structure, and some observations on how you, as primary dealers, are expected to help promote the market ’ s efficiency and integrity. as always, the views i express | 0.5 |
central bankers'speeches policies in euro area countries needs to be substantially stepped up to boost euro area productivity and growth potential, reduce structural unemployment and increase resilience. the 2019 country - specific recommendations should serve as the relevant signpost. regarding fiscal policies, the euro area fiscal stance is expected to remain mildly expansionary in 2020, thus providing support to economic activity. in view of the weakened economic outlook, the governing council welcomes the eurogroup ’ s call for differentiated fiscal responses and its readiness to coordinate. governments with fiscal space should be ready to act in an effective and timely manner. in countries where public debt is high, governments need to pursue prudent policies and meet structural balance targets, which will create the conditions for automatic stabilisers to operate freely. all countries should intensify their efforts to achieve a more growthfriendly composition of public finances. likewise, the transparent and consistent implementation of the european union ’ s fiscal and economic governance framework over time and across countries remains essential to bolster the resilience of the euro area economy. improving the functioning of economic and monetary union remains a priority. the governing council welcomes the ongoing work and urges further specific and decisive steps to complete the banking union and the capital markets union. we are now at your disposal for questions. 3 / 3 bis central bankers'speeches | an eminent civic one, namely by providing the glue that holds the whole society together. first, a good allround education enables voters to form their own opinions about complex substantive issues. this is essential in order for the advantages of direct democracy to be fully realised. second, an education system structured in a way to maximise labour market access for as many people as possible is a significant factor for integration. and third, owing to its high quality and flexibility, it prevents class mentality and elitism. bis central bankers ’ speeches | 0 |
makers and greek citizens. before giving the floor to the distinguished speakers, please allow me to thank the researchers who have worked for this study, eliamep and its president, professor loukas tsoukalis, and last but certainly not least, professor jean pisany ferry, who is the keynote speaker today. 1 see, among other, blanchard and giavazzi 2003, boeri 2005, fiori et al. 2007. 2 / 2 bis central bankers'speeches | 2 / 5 bis central bankers'speeches financial risks stemming from the transition to a low - carbon economy are important factors in promoting sustainable development and safeguarding the smooth functioning of the financial system9. in this context, the banking sector can also play an important role in addressing the threats and challenges of climate change. the united nations, through the environment programme finance initiative ( unep fi ), sets out sustainability principles in the framework of contemporary banking practice. currently under consultation, the principles for responsible banking10 aim to define the role and the responsibilities of the banking sector in a sustainable future, where banks align their business practices with the global community goals and create value for society. the principles set out the criteria for responsible and sustainable banking, through a holistic evaluation of risks and opportunities stemming from banks ’ activities. furthermore, they encourage banks to identify and assess the effect of their asset allocation decisions and be transparent on the resulting positive and negative impacts on society and the environment. as part of a roadmap towards sustainability, the principles support and accelerate the fundamental changes needed to achieve shared prosperity for current and future generations. if we are to meet the sustainable development goals of the united nations and the objectives of the paris climate agreement, the banking sector needs to maximise its contribution and align itself with these goals. last month, the bank of greece officially endorsed the principles for responsible banking and, in its capacity as the national central bank, strongly urges all banks within its remit to do the same and set ambitious targets. towards a sustainable future, scientific research and current developments confirm the need for a dynamic strategy and an action plan to adapt to the changing climate. climate change adaptation, as a process of adjusting to climate effects in order to moderate the negative and enhance the potential positive impacts of climate change, is a crucial issue spanning across multiple economic, social and environmental policy areas. therefore, under a memorandum of understanding signed with the ministry of environment and energy and the academy of athens, the climate change impact study committee drafted in 2015 the national climate change adaptation strategy, setting out the general objectives, guiding principles and implementation tools for an effective and growth - oriented adaptation strategy, in line with european directives and international experience. furthermore, fostering the adaptation process, the committee is currently working, alongside the ministry of environment and energy and other key national actors, on the life ip programme “ adaptingr − boosting the implementation of adaptation policy across greece ”. the programme aims at advancing the implementation process of the national climate | 0.5 |
. something that i think is relevant, but is sometimes a bit overlooked, is that monetary policy is not almighty. if there is a problem with price stability, that ’ s within our mandate. but this is something everyone has to keep in mind to avoid creating expectations that will not be met : we do not have the philosopher ’ s stone. are you implying that having something of a policy mix would be good, in total respect of the ecb ’ s independence? sure. but my point is that wherever there is a problem, for instance a problem with trade disputes, that is a real economic problem that is going to have real consequences. you can certainly smooth the impact with monetary policy, but you will not be able to address and fix this kind of problems with monetary policy. the real role of monetary policy is price stability. and in order to guarantee price stability, we have to monitor the evolution of the real economy – domestic demand, external demand, the exchange rate, and the rest. but you cannot fix all the 1 / 4 bis central bankers'speeches economic problems of the world with monetary policy. president draghi hinted recently that if there is a slowdown and those downside risks materialise, fiscal policy might also play a role. yes, sure. it ’ s the policy mix. of course there is monetary policy, and we have been the main game in town since 2012. monetary policy has been key to understanding the recovery of activity and employment creation, among other things. but it ’ s not the only policy in place. fiscal policy has to play a role, as do structural reforms. and in the case of fiscal policy, it ’ s not only the nominal deficit level, it ’ s the composition as well : the quality of public finances. are you saying that the public investment - to - gdp share, which has remained flat, at 2. 6 %, during the qe years, could now increase? it ’ s not even only public investment. one of the problems in europe now is low productivity, which is caused by the fact that we are not investing enough in education, r & d and public infrastructure. but public infrastructure is not a stabilisation instrument. when you start building a road, for instance, the project is delivered much later, when the business cycle may have already turned. but education and r & d are levers that have to be used. and at the same time i think it ’ s important that we look at the | luis de guindos : interview in corriere della sera interview with mr luis de guindos, vice - president of the european central bank, in corriere della sera, conducted by mr federico fubini on 13 june 2019. * * * the 5y5y forward inflation rate is at an all - time low and clearly below where it was when mario draghi first hinted at quantitative easing ( qe ) in 2014. the ecb has already done some more easing and president draghi himself mentioned that there was an interesting discussion at the latest governing council meeting on different tools to do some more easing – the asset purchase programme ( app ) and others. what do you need to see in order to decide to do more? what we need to see is a de - anchoring of inflation expectations. this has not yet happened, despite the fact that there has been a drop in market - based inflation expectations. if you look at the survey of professional forecasters, the situation is a little bit different – expectations have remained stable. then we need to see if there is a significant additional drop in economic activity – a crystallisation of the downside risks that we have indicated. we can always try to look forwards to get an idea of what might happen, but ultimately the reality is the reality. and, well, let ’ s see what happens. but i think the important part of our stance is that we are totally ready to react. we will have time enough to know the future when it arrives. does that imply that the current stance is appropriate, if your staff forecasts are confirmed? yes. and if there is a further deterioration, then we will react. but for now, our monetary policy stance is fully compatible with both inflation and real activity. the important element is that we are totally ready to react. and i would add another element, if i may : risks are tilted to the downside. do you mean, in terms of real activity? both in terms of real activity and in terms of inflation. so if those risks materialise, then we will react. can you think about different monetary policy tools to address different problems? if the issue is with the exchange rate, official rates are probably the answer ; if it ’ s real activity, then qe ; if it ’ s monetary transmission, then it ’ s targeted longer - term refinancing operations ( tltro ) … we do not allocate our instruments to different objectives | 1 |
requirements for banks must be weighed against any costs the countercyclical capital buffer imposes on the economy. several analyses, such as those conducted by the basel committee on banking supervision, suggest that higher capital requirements will not give rise to considerable, permanent economic costs in the longer term. 3 in the short term, higher capital requirements may result in somewhat lower growth in credit and overall gdp. analyses conducted by norges bank using norwegian data find similar patterns. 4 when credit growth is strong, a higher buffer requirement may restrain the build - up of financial imbalances. but if capital requirements are raised too quickly, the result may be excessive credit tightening. the level of the buffer must therefore be considered in the light of other capital requirements. norway could be among the first countries to apply the countercyclical buffer. growth in credit and in house prices in norway has been high for a long period, and credit has reached a historical level relative to gdp. in view of this situation, banks must make extra allowance for the risk of an economic setback. banks have taken due note of the requirements and are in the process of adjusting to them. discussions with market participants suggest that an expected countercyclical buffer has been included in banks ’ long - term adjustments. basel committee on banking supervision, “ an assessment of the long - term economic impact of stronger capital and liquidity requirements ”, august 2010. http : / / www. bis. org / publ / bcbs173. pdf. for an updated collection of references to studies of the costs and benefits of macroprudential regulation, see annex 1 in imf working paper wp / 13 / 167, by arregui et al. “ evaluating the net benefits of macroprudential policy : a cookbook ”, july 2013. http : / / www. imf. org / external / pubs / cat / longres. aspx? sk = 40790. 0. for further detail and references, see norges bank papers 1 / 2013. bis central bankers ’ speeches capital requirements and monetary policy the countercyclical capital buffer and the key policy rate are two instruments serving different objectives. the objective of the countercyclical capital buffer is to increase banks ’ resilience to losses in a downturn. the primary objective of monetary policy is low and stable inflation. the key policy rate is set with a view to keeping inflation close to 2. 5 percent over time without triggering excessive fluctuations | financial stability and depositors'interests amid heightened uncertainties in the international market. easier, faster, more accessible and secure financial services i am moving on to the third topic – easier, faster, more accessible and secure financial services. banks in the republic of serbia are an important link in the digitisation process as well, especially in the part of services they offer to users. there are certainly two important reasons for that : 1. the necessity of adapting to the needs of users, as well as 2. a stimulating and modern legal framework for the provision of financial services in the republic of serbia. what do the data tell us, are improved financial services being used? the fact that in 2022, compared to 2021, the number of transactions via m - banking increased by 26 %, and 3 / 5 bis - central bankers'speeches the number of card and e - money transactions for the purpose of online purchase of goods and services increased by over 34 % says that bank clients are quickly embracing innovations in the field of financial services. innovations are particularly present in payment services, where serbia is forging its own path, as in many other areas. i will remind you that the national bank of serbia was one of the first in europe, four and a half years ago, to establish a system for instant payments, which executes around 150, 000 transactions daily on average. with the system for instant payments, the national bank has provided banks with infrastructure through which they can upgrade their mobile applications with new services. an example of this is the transfer service – where just by selecting a name from the contact list in your phone or by entering a mobile phone number, you can easily and simply transfer funds to whomever you want. there are many other features of the national bank's instant payment system, such as the possibility of paying monthly bills by simply scanning the nbs ips qr code or paying bills at brick - andmortar and online points of sale. these new features that we have provided save time, which is an extremely important resource. our system for instant payments is not only a modern but also a cost - effective infrastructure for cashless payments, which has numerous advantages over card payments at points of sale, such as : simple implementation on the acceptance side, possibilities of using different acceptance solutions, not only pos terminals, or lower fees for merchants compared to card payments with foreign card brands. recently, the first newsstands in the country made it possible to accept instant payments, | 0 |
zeti akhtar aziz : growth and development in the asian region dinner address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the iclif alumni association dinner, kuala lumpur, 17 february 2006. * * * it is my pleasure to be here this evening at this inaugural annual dinner of the iclif alumni association. this occasion provides an excellent opportunity to promote greater engagement and networking among the industry leadership. this is particularly important for our region where the financial sector has experienced a pronounced transformation in the financial landscape. there will be new dimensions and new requirements for leaders and leadership capability in this new and highly challenging environment. it calls for being able to meet the new demands of the new economy, being able to perform in a more competitive environment, being able to reap the benefits of the new technologies and finally being able to operate in an environment of heightened uncertainty. despite these increased challenges, the world economy has entered 2006 on a stronger note. the latest indicators suggest that the global economic outlook remains favourable, with sustained growth across the major economies. while the us and china are expected to continue to experience strong growth, it is expected that the recoveries in japan and europe would provide additional support to global demand. this provides a positive external environment for asia. in the asian region, domestic demand has proved resilient with most countries experiencing a strengthening of domestic demand. cumulatively, this rapidly expanding domestic demand has represented an important market for the region. it has also increased the pace of regional integration. while energy prices have remained high, this is not expected to undermine the global growth momentum. oil price increases thus far have mainly been demand - driven, and therefore, well absorbed compared to historical episodes of oil shocks. however, the tight global supply conditions that prevail have not removed the risks of higher oil prices. the inflationary trends that have emerged, has prompted the monetary authorities in a number of countries to raise interest rates. while the degree has varied across countries, these moves have primarily reflected the need to anchor expectations and limit the second - round effects of rising oil prices. this has therefore continued to allow monetary conditions to remain supportive of growth. in view of the broadly favourable outlook for the global and regional economies, renewed attention has been focused on the prevailing imbalances in the global economy. this is a pertinent issue especially as these imbalances are expected to widen in 2006. it is recognised that reducing the global imbalances | liquidity to intermediate the portfolio adjustment by non - residents. the underlying motivation of the fmc is to create a deeper and more liquid onshore market that will enhance its capacity to intermediate these flows and strengthen our resilience against excessive volatility. despite the havoc caused by episodes of volatility from the opaque, unregulated and value destroying activities of the ndf market, the fmc in identifying the possible remedial measures have concluded that market based mechanism and solutions is still the best way forward. through close consultation with various stakeholders, including corporate entities and small and medium size enterprises, the fmc developed a series of targeted initiatives to develop the onshore financial market. the first series of initiatives announced on 2 december 2016, seeks to provide greater room for the onshore ringgit hedging for both resident and non - residents. the focus was on ensuring better access to the onshore financial market. in particular, residents can now hedge without providing underlying documents up to certain limits, while registered non - resident investors have the flexibility to carry out dynamic hedging. at the same time, the scope of the appointed overseas office framework was widened to provide greater avenues for non - residents to access the onshore financial market. 3 / 6 bis central bankers'speeches the second series of initiatives announced on 13 april 2017, introduced greater flexibility for investors to manage currency and interest rate risks. registered investors can now conduct full dynamic hedging and resident investors can now conduct short - selling for malaysian government securities. all these flexibilities are expected to increase the ease of hedging business risks. the aim is to promote a two - way liquidity in the onshore financial market. at the end of the day, we envision that the implementation of these initiatives will make the domestic financial market a market of choice, where prices are determined by the real economy devoid of speculative and damaging activities. in this respect, we have introduced initiative that enables non - resident investors to access and hedge ringgit assets in the domestic markets. we are mindful that for the ndf market to truly reduce in significance and adverse influences, the onshore market must become highly competitive, not just the foreign exchange market but also all aspects of the financial market. we are determined to realise the idea of having a market that possesses the breadth and depth to cater to the increasingly complex and diverse needs of the economy, and a market that is able to sustain and weather volatilities that contribute | 0.5 |
reserve board or the federal open market committee. 2 some have argued that the large change in payroll employment should be discounted because of unusually warm weather ; however, estimates of weather - adjusted employment are also quite large. see federal reserve bank of san francisco ( 2023 ), " weather - adjusted employment change, " webpage. 3 of course, more people finding jobs is good. but in the context of ongoing labor market tightness, this above trend number can complicate efforts to move the economy toward price stability, on which my remarks go into more detail. 4 each year, with the release of the january cpi, the bureau of labor statistics recalculates seasonal adjustment factors. this adjustment resulted in noticeable revisions to 2022 seasonally adjusted cpi prices. 5 this estimate of the terminal rate would align with the central tendency of fomc participants'projections of the federal funds rate at the end of 2023. 3 / 3 bis - central bankers'speeches | ardian fullani : basel ii, its implications, opportunities and challenges ahead for albania and southeastern europe speech by mr ardian fullani, governor of the bank of albania, at the southeastern european financial forum, the second edition, bucharest, romania, 11 november 2005. * * * ladies and gentleman, the topic to be discussed at this forum is certainly timely. you need not look any further than news headlines to understand why risk management matters so much. several events remind us that when banks lack the commitment to manage their risk prudently, they will fail to uphold their responsibilities to their shareholders and public at large. consequently, the cost to society can be high and the impact on the economy devastating. sound corporate governance comes about only when there is a genuine commitment to do the right thing and to manage risks in whatever form they may arise. risk managers must provide timely, objective and accurate information to their management. in turn, senior management and board of directors need to make sure that there is an atmosphere of transparency within the firm, one that promotes healthy and disciplined risk taking. in order to improve understanding and management of risk, the basel committee has been formulating regulatory approaches to foster a safe and sound banking system and greater stability within financial sector. it has become clear, though, that the 1988 accord and many of its amendments have become outdated and overtaken by advances in the banking and the financial sector, and other economic developments. as a consequence, the basel committee has come up with a new proposal known as basel ii. this proposal is intended to be more risk sensitive than the 1988 accord, in order to provide a better alignment and calibration of regulatory capital and capital adequacy with the underlying economic risks that banks face. categorizing debtors into a fewer risk ‘ buckets ’ was certainly a progress in 1988, but it open the gap between the regulatory risk measurement of any given transaction and its actual economic risk. this favours high risk loans over the low risk ones, given the 100 % risk weight charged, irrespective of the risk profile of firms receiving the loan. consequently, it adversely affects the accuracy of assessing capital requirements and allocation. the most concerning side - effect has been the distortion of financial decision - making which is, loans and investments made on basis of regulatory constraints rather than genuine economic opportunities. the new basle ii accord tries to improve on these issues by encouraging banks to become more sophisticated in their risk assessment and aligning more rigorous | 0 |
least one regtech solution in their bank. having said that, we do believe that regtech adoption can be and should be much wider than it currently is. and to make that happen, some barriers must be addressed. 24. at this point, i would venture a guess that at least some of you are thinking that, when it comes to barriers to regtech adoption, the hkma must be one of the biggest barriers. it is true that in our study, regtech firms ranked regulators as the fifth highest barrier to regtech adoption. but interestingly, banks thought the opposite. they actually ranked regulators as the third lowest barrier. well, of course, this may just be an indication that banks are exceptionally tactful in responding to our survey! 25. but joking aside, i am sure you want to know what are the most common regtech adoption barriers identified in our study? those include : first, concerns over budget issues there are also concerns about solutions lacking maturity and then respondents talked about a shortage of appropriate talent there are also concerns about the risks involved in applying regtech solutions ; and finally, there is a lack of awareness of the potential value of regtech 26. quite understandably so, budget constraints were consistently named as the top barrier by both financial institutions and regtech providers. especially in the current environment, cost management is a key focus for most banks. but it is sometimes forgotten that, as well as improving the quality of risk management and regulatory compliance, regtech offers longterm cost savings. this is a benefit that needs to be articulated much more loudly and clearly going forward. 27. and then about the lack of mature solutions – a lot of available regtech solutions were developed for other markets, and respondents to our study shared that those solutions may not adequately address specific hong kong circumstances. nor are those solutions always able to meet all the specific business requirements of our financial institutions. 28. another barrier is the lack of skilled talent. our findings show that local banks have particular difficulty in recruiting and retaining talent with skills across multiple disciplines. it appears that we do need to focus more of our efforts in developing a workforce that possesses skills across different business domains, as well as technical programming, data analytics and an understanding of regulations. it does sound like an impossible mission, but nonetheless we believe it is a critical one. 29. it was also noted that most banks are taking a “ low - risk ” and conservative approach to adopting regtech solutions. some still consider reg | bank institutions are subject to the same supervisory parameters. closing 2 / 3 bis central bankers'speeches 12. i have shared our experience gained from the actual operation of our macroprudential measures since the 1990s. some are more practical, operational issues but some involve complex considerations deserving further analysis. i hope my sharing has provided some food for thought for the audience. let me pause here. i look forward to comments from robert and catherine and the audience. thank you once again for having me here today. 3 / 3 bis central bankers'speeches | 0.5 |
we hold all our financial institutions to in terms of compliance with aml / cft / cpf requirements as set out under our laws, which are in line with international standards. ladies and gentlemen, combating ml / tf / pf risks is a continuous endeavour where challenges are constantly growing and evolving. even as we continue to make strides in improving our approaches and systems in addressing these risks, there is always the need to ensure that we keep an eye on the horizon, particularly in terms of ensuring that all agencies continue to have the necessary resources, skills and tools to effectively adapt to the emerging risks that lie ahead and the capabilities they would demand of us. in conclusion, i would like to stress that our ultimate and consistent goal is to ensure a strong, robust and effective aml / cft / cpf regime that will address financial crimes and preserve the integrity of our financial system. in this sense, the me is not a final destination. rather, it is an opportunity for us to take stock and demonstrate key progress that has been made in addressing these risks. i trust that the diligent and thorough preparations by all parties, including in executing our key recommended actions effectively, will be reflected in the me's outcomes. on that note, i wish all of you an insightful and productive exchange in the rest of today's sessions. thank you. 4 / 4 bis - central bankers'speeches | abdul rasheed ghaffour : revitalising the economy via islamic finance speech by mr abdul rasheed ghaffour, governor of the central bank of malaysia ( bank negara malaysia ), at the 19th kuala lumpur islamic finance forum 2024, kuala lumpur, 5 november 2024. * * * it is an honour for me to be here at the 19th kuala lumpur islamic finance forum. for over nearly two decades, kliff has been a mainstay in the annual calendar of events surfacing global islamic finance perspectives, which resonate with contemporary developments. this year's forum, with the theme'revitalising the economy via islamic finance ', again - fosters dialogue and collaboration among stakeholders - to cultivate ideas and address the challenges of our time. islamic finance to elevate its role and impact in revitalising the economy allow me to begin by drawing some reflections and lessons from our rich islamic history. right from the start, the principles of ethical trade and equitable wealth distribution - have always been foundational in islamic society. back then, when slavery was prevalent, islam called for the move away from involuntary and slave labour - to be in favour of productive labour. as reported by abdullah ibn umar, prophet muhammad exhorted his people to - " pay the worker's wages, before his sweat gets dried " 1. such a progressive move was not only virtuous, but also a significant labour market reform. in fact, we see in the history of islam, many important developments - which led not only to the boosting of productivity, but also the emergence of innovative business techniques - laying the foundations for the modern economic system we have today. these include limited partnerships or mudarabah, the earliest forms of credit ( qard ), as well as the practice of mutual aid and cooperation - through zakat and waqf that enable resources to be redistributed and utilised, for the common good. these advancements strengthened social welfare - and in turn - encouraged cooperative enterprises and community - driven initiatives fast forward to today, i believe that the islamic financial sector, must carry on this tradition of courage and ingenuity - by continuing to challenge the status quo and to unlock next - level frontiers in financial practices and offerings - while remaining anchored on our fundamental values. to follow in the footsteps of our forefathers - in pushing the envelope in bringing about change, as we work to build and develop a more inclusive and | 0.5 |
of governors of the federal reserve system, plans for reducing the size of the federal reserve's balance sheet, may 4, 2022. 4 / 4 bis - central bankers'speeches | john c williams : research, policy, and the zero lower bound remarks by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at the shadow open market committee spring meeting, new york city, 6 march 2020. * * * as prepared for delivery good afternoon. i would like to start by thanking athanasios for inviting me to participate in this event. it is a real honor to highlight the influence of our esteemed colleague marvin goodfriend, an outstanding and original researcher, policy advisor, and friend. marvin epitomized the role of policy advisor. his research dug deep into the issues, introduced new ideas into the discussion, and developed options for policymakers to consider for the most challenging issues. the fact that we have so many researchers and policymakers here is testament to the importance of his research in shaping the conversations that we are having to this day. before i reflect more on marvin ’ s contributions to monetary policy, i should give the standard fed disclaimer that the views i express today are mine alone and do not necessarily reflect those of the federal open market committee or others in the federal reserve system. in preparation for what i know will be a stimulating discussion, i ’ d like to highlight a few of the ways that marvin changed the conversation in the u. s. about what was then commonly referred to as the zero lower bound on interest rates, or zlb for short. these show how marvin ’ s insights shaped some of the most prominent discussions in monetary policy. before i do so, it ’ s helpful to look back about 20 years. as the clock ticked down on the 20th century, many people ’ s attention was not on the zlb. most were more concerned about the millennium bug that had the world on high alert. truth be told, the zlb wasn ’ t perceived to be a looming problem in the united states back in 1999. the economy was doing very well and the target federal funds rate was 5 - 1 / 2 percent at the end of the year. up until then, the only historical reference points for the zlb were from the great depression of the 1930s and, more recently, japan in the 1990s. it was simply not part of the experience of postwar europe or the americas. however, a small group of economists, with marvin at the forefront, was asking whether the zlb could pose a challenge here in the u. s. and, if so, what would be the | 0.5 |
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