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A responsible state, however, takes precautionary measures. It anticipates movements and acts as a buffer in the most extreme cases. This role is now being played by the National Bank. But what can the National Bank responsibly commit to achieve in these turbulent times? Let me point out the main areas: 1.

The sustainability of public finances would hardly change, since a prolongation would do nothing to improve the other factors that determine the sustainability of the current debt level: growth prospects and the primary surplus.

Bimal Jalan: A review of the Asian Clearing Union Welcome address by Dr Bimal Jalan, Governor of the Reserve Bank of India, at the 32nd ACU Board Meeting, Bangalore, 16 June 2003.

Recently, key developments within the intermediation process include the growing importance of FinTechs in delivering financial services as well as the introduction of electronic payment platforms to enhance interoperability.

3 / 11 BIS central bankers' speeches 4 / 11 BIS central bankers' speeches These are positive developments and they provide us with an extra degree of insurance against future shocks. Of course, this insurance does not come for free. Higher capital, more liquidity and more expensive, stable funding all have a price.

Port ugal ................................................ Spain .................................................... Swit zerland ........................................... UK ..................................................... UK ..................................................... USA ..................................................... 2037 2035 2037 2041 2057 2039 2055 2040 2040 2035 2038 2037 2037 2037 2040 2049 2055 2055 2038 Nominal Nominal Nominal Linker Nominal Nominal Nominal Nominal Nominal Linker Nominal Nominal Nominal Nominal Nominal Nominal Nominal Linker Nominal Turnover rate of German federal securities 2006 10 9 8 7 6 5 4 3 2 1 0 Bubills (6 months) Schatz (2 years) Bobls (5 years) Inflationlinked Bund (10 years) Bunds (10 years) Bunds (30 years) Security (M aturity at issuance) Source: German Finance Agency DANMARKS NATIONALBANK 12 Supply of ultra-long bonds is small compared to the size of pension fund and life insurance company portfolios.

21 In these speeches, we often emphasize that, given the integration of global capital 21 Bernanke (2014), Fischer (2014), and Tarullo (2014) also discuss concrete steps that U.S. authorities have taken in the past five years to implement financial reform of large financial institutions (including introducing a systematic framework for stress-testing, stronger capital and liquidity requirements, and progress on resolution mechanisms for failed institutions), of financial market infrastructures, and in short-term funding markets.

To make this argument more concrete, consider the onset of the pandemic in March 2020. The Federal Open Market Committee held two unscheduled meetings where, recognizing that the coronavirus would weigh on economic activity and pose risks to the economic outlook, it lowered the policy target range down to zero.

The decline in the neutral rate likely reflects a variety of forces globally, such as the aging of the population in many large economies, some slowing in the rate of productivity growth, and increases in the demand for safe assets.

• The fourth is reforms. We have been slow in implementing the necessary reforms in the public sectors and other sectors. • The last but not least is the Balance of Payments. Exports must now drive growth.

An influential view on the poor European performance builds on the observation I made at the beginning of my talk, that the productivity slowdown is mostly associated with a sharp increase in the growth rate of hours, for an unchanged growth rate of output.

The rise in hours worked since 1995, and its previous decline, have been relate to gradual increases in labour taxes until 1995, and to reductions over the more recent period. According to this view, lower taxes on labour and the introduction of labour market reforms since the mid-1990s have provided incentives for firms to hire a larger number of lower skilled workers.

Given the robust link between trends in monetary growth and trends in inflation, a prominent role for money in the strategy provides insurance that the ECB does not “take its eye off the ball” and get distracted from its most important task. It is useful to place our experience in a wider context.

6 BIS central bankers’ speeches

To date, permanent modifications in this credit cycle episode, as in the past, have typically involved a reduction in the interest rate or an extension of the loan terms, while reductions of principal balance have been quite rare.

Gill Marcus: South Africa’s challenges at a difficult time for the global and domestic economy Address by Ms Gill Marcus, Governor of the South African Reserve Bank, at the Noah Gala fund-raising dinner, Sandton, 21 August 2012. * * * Distinguished Guests, thank you for the invitation to address you this evening.

The group leaders operate the SHG accounts. SHGs facilitate collective decision – making and provide “door step” banking to the poor. The banks, as wholesalers of credit, provide the resources, while the NGOs are the agencies that organise the poor, build their capacities and facilitate the process of empowering them. Interest rates on loans granted by banks to SHGs are deregulated.

Loans to SHGs of individual farmers are treated as direct agricultural finance, provided the details of such loans are maintained by the bank/SHG. As at March 31, 2007, over 2.9 million SHGs have been linked to banks involving a total credit flow of over Rs.180 billion.

However, on balance, these developments have prompted banks to become protective of their liquidity and balance sheet capacity and thus to become 1 Jumbo mortgages are those mortgages for which the principal value does not conform to the limit set annually by Fannie Mae and Freddie Mac for loans they will purchase; the amount for 2008 is $ Jumbo loans are thus a type of “nonconforming” loan.

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 the “Wholesale and Retail Trade”.

1864. BIS central bankers’ speeches Chart 1 Use of additional liquidity and impact of the APP on bank lending Notes: The net percentages are defined as the difference between the sum of the percentages for “tightened considerably” and “tightened somewhat” and the sum of the percentages for “eased somewhat” and “eased considerably”.

For its part, the ECB will be conducting a communication campaign to ensure that the people of Latvia are well informed about the euro coins and banknotes, in particular the security features of the banknotes. Ensuring sustainable convergence The second lesson we have learned is that to prosper within Monetary Union, countries need to ensure sustainable convergence.

The ECB will detail the design and strategy of the assessment exercise, monitor its execution, perform quality assurance as well as collect and consolidate the results and finalise and disclose the overall assessment. National supervisors execute the exercise at the national level, benefitting from local knowledge, but following common data requirements and methodology.

The Comprehensive Assessment is a truly huge effort, involving around 130 banking groups, with a very large coverage in the euro area. For Finland, the Assessment will cover three main banking groups, OP-Pohjola Group, Nordea Bank Finland Oyj, as well as Danske Bank Oyj.

As market participants explain, the credit line can be cut off at once, but the reestablishment of the credit line takes a much longer time. Issues related to monetary policy Mop-up operations Given the understanding on the risk-taking channel I have discussed so far, what consequences will follow from the asymmetric monetary policy responses before and after the burst of a bubble?

Suppose a central bank is considered to make a commitment to refrain from taking any monetary policy responses until the burst of a bubble, the private agents will surely take action based on such unfounded expectations. That will accelerate maturity mismatches and asset price increases, thus further accelerating the bubble and the adverse consequences of its burst.

The first set of reforms requires the utmost international convergence, otherwise regulatory arbitrage and market integration will preclude their effectiveness.

Let us now turn to the path that we will chart in terms of the following key areas: On growth, we expect the gross domestic product (GDP) to swing from a range of negative 7.0 to negative 9.0 percent this year, to a range of positive 6.5 to 7.5 percent next year and in 2022.

The Bank undertook interest rate policy, lowering its target for the uncollateralized overnight call rate – the policy rate – by 0.2 percentage point both in October and December 2008, to 0.1 percent, or virtually zero percent. Since then, the policy rate has remained at that level. The Bank has also been encouraging longer-term interest rates to decline.

In a severe crisis, we might even be expected to extend emergency lending to a failing CCP or to its participants although this would only be done at our own discretion: an automatic right to central bank liquidity could create serious moral hazard concerns.2 In short, the safety and soundness of CCPs matters for central banks, and it matters a lot.

The negotiations will certainly seek improved access and greater security for this type of trade. This issue is also relevant to the ongoing work on electronic commerce. Now, what can we do to ensure successful conclusion of these negotiations? There is much that can be done, especially in creating conditions favourable to further liberalization.

[8] Banks also have a key role to play in contributing to resilience by having good visibility of near-term liquidity risks and concrete plans to tackle them; strong cyber defences; and the ability to withstand fire sales and the associated mark-to-market hit on assets held on their balance sheets.

For example, liquidity was provided at much longer maturities than usual to help alleviate tensions exacerbating the maturity mismatch on the banking sector’s balance sheet. The list of eligible collateral was also expanded to ease the shortages that emerged during the crisis.

A direct implication of the activity of eased liquidity provision to the market was the increase in the size of the ECB balance sheet. The increase in financial institutions’ demand for ECB liquidity led to a progressive, and sizable, increase in bank reserves.

Further reforms are also indispensable to ensure the smooth functioning of our Economic and Monetary Union. Our monetary union is gradually becoming stronger. Last week the Euro Summit agreed to take further steps towards completing the banking union and to strengthen the European Stability Mechanism, including by providing the backstop to the Single Resolution Fund.

There is another set of players out there who think of the Payments System Board as the body that seeks to ensure the stability of key financial market infrastructure, or “FMIs”, such as securities settlement systems and, increasingly importantly, central counterparties – which stand between financial market participants in order to better manage risk.

Since spring last year when the Bank of Japan effected the zero interest rate policy and public funds were injected into major banks to strengthen their capital base, public confidence in the financial system has been gradually restored, and we are observing a favorable impact on the economy.

Furthermore, an important development which has not been observed for nearly half a century since the end of World War II, is that the financial industry is moving toward large-scale consolidation. Last year, private consumption supported the economy in the midst of a decline in household income, which means a decline in the savings rate.

Only a few days later the US Treasury had taken on the sizeable debt of Fannie Mae and Freddie Mac, a decision which was criticised in the press.

Straight after this step was taken, it appeared that the US Treasury did not want to be charged with using 1 “I never once considered that it was appropriate to put taxpayer money on the line in resolving Lehman Brothers”, Dow Jones, 15 October 2008.

Michael Spence, when examining this matter in his book “The Next Convergence”, says that “at a 7 percent rate of growth income doubles every decade, and that is very fast ... And even at such very high growth rates it takes well over half a century to make the full transition. What matters is sustained growth over a long period of time.

Little growth spurts followed by stagnation simply lowers the average growth and prolongs the process.” It is in this context that we need to frankly assess our long term growth average, and our current growth rates, as while we are creating new jobs, they are not sufficient to absorb new entrants into the labour market, and therefore unemployment continues to rise.

Stephen S Poloz: Returning to natural economic growth Remarks by Mr Stephen S Poloz, Governor of the Bank of Canada, to the Vancouver Board of Trade, Vancouver, British Columbia, 18 September 2013. * * * Introduction Thank you for that kind introduction and to all of you for coming this morning.

But even though I am extremely optimistic, we have to bear one thing in mind: European banking supervision is an immensely complex operation that has been put together in a very short space of time. We should not expect everything to run smoothly from day one.

Indeed one risks forgetting that over recent years the OTD model delivered numerous benefits to financial markets participants, including an increased ability to hold or transfer credit risk, improved funding possibilities and capital efficiency and more flexibility in reducing credit risk concentration.

These are pertinent motives to continue resorting to securitisation so that in my view the OTD concept will remain valid, though certainly not in the same form and to the same extent as in the recent past. It remains important that policy makers are aware of these benefits when considering possible public action.

• Second, shortcomings and uncertainties in the valuation of structured finance products, due to their complexity, imperfect information about the underlying asset characteristics and excessive reliance on the ratings of such products by credit rating agencies.

This is, of course, particularly, important for private investors because uncertainty is a major factor affecting investment decisions: the more uncertain are economic prospects, the more likely it is that private investors will put off decisions to commit resources to investment.

We have often been asked why we have not yet raised policy rates given that inflation is trending higher this year and also given the signaling of monetary policy normalization in the advanced economies particularly in the United States.

MNB, in addition to aiming at issuing forint banknotes and coins that are appropriately protected against counterfeiting, established the National Counterfeit Centre using the existing expert basis in January 2005. Here suspect counterfeit forint banknotes and coins as well as suspect counterfeit foreign currencies detected in Hungary are examined.

That brings me to the final area for action: completing our monetary union. The Five Presidents’ Report has laid out a long-term vision for Economic and Monetary Union (EMU) and a sequence of steps towards it. Now we need to realise the short-term steps that will lend credibility to that long-term vision – first and foremost, by finishing all three pillars of banking union.

But Monnet and the other early architects of European integration clearly understood that political federalism was the end-point of long process, which had to be achieved incrementally and through focused actions in limited policy areas where the benefits of European cooperation could be clearly seen.

Under this hypothesis, the question is whether it is possible to reach at least a free trade agreement, which would benefit the common interest; the notification letter expresses a desire for it to be ‘bold and ambitious’. At this stage, the nature, timeframe and contents of any future agreement cannot be predicted.

Negotiations are yet to begin; the UK government’s stance will also depend on the outcome of the recently announced general election. We may imagine that the main topics of negotiation will be the trade of goods and, above all, financial services. There are free trade agreements with nearly one hundred advanced and emerging countries, including Switzerland, Canada and South Korea.

The sound and prudent management of our financial institutions is reflected by the high capital adequacy ratios, a liquid banking system, low level of non-performing loans, and funding of loans by the banking system from deposits rather than from borrowings from overseas. The Central Bank authorized financial institutions also remained highly profitable.

To this end, it is quite significant that some banks have already started to renew credit. However, the behavior is not yet widespread and amounts of new credit to date are insufficient to contribute properly to economic development. In the political arena we have witnessed important institutional progress.

The strong performance of the current account can largely be attributed to the growth in merchandise exports which neutralised increased imports. The favourable economic conditions in the world, a rise in international commodity prices and a competitive exchange rate level in South Africa led to a considerable increase in both the value and the volume of exports.

As a result of this fundamentally sound balance of payments situation, the gross gold and other foreign reserves of the country have increased substantially. At the end of 1998 the total foreign reserves of the country amounted to R42.1 billion, which was equivalent to the value of about 10 weeks’ imports of goods and services.

Compared with the situation in the other main industrial countries, both the amount of household debt and the burden of instalments and interest payments are still limited. The debt is largely concentrated with high-income households, which normally are better able to absorb additional costs due to rising interest rates, but its rapid expansion is involving everbroader strata of the population.

On that occasion, several areas of collaboration were pointed out: improving the availability, quality and cost-effectiveness of data production to inform policy making in low and middle income countries; engaging in research on subjects of common interest; promoting the harmonization of household surveys; and engaging other entities, such as research institutions and local academia, to give additional support to the abovementioned activities.

This ‘wealth effect’ directly benefits the owners of the assets, but it only indirectly impacts others in the economy through the subsequent increase in economic activity and jobs. The impact of low nominal interest rates and significant fiscal stimulus on asset prices is very evident over recent years.

* Excluding revolving loans, current account overdrafts and credit card debt.

We have refocused our supervision of financial institutions to take a more “macroprudential” approach that fosters systemic stability as well as the stability of individual institutions.

For the time being, we still assume that the high degree of uncertainty will decline in the course of this year. However, at this juncture it is very difficult, if not impossible, to form a conclusive judgement on the impact of geopolitical developments on the world economy in general, and the euro area in particular.

We noted earlier that these were “good” deficits, and in defence of Korea and Indonesia, it should also be noted that neither was running a particularly large deficit over recent years (for Korea 2 per cent of GDP in 1990-96, and 3 per cent for Indonesia). But Thailand certainly was - around 8 per cent of GDP.

What is very clear, ex post, is the vulnerability to extraordinary reversals of capital flows (which we have not, for example, seen in Australia). The inflow into these countries was around $ 40 billion in 1995, more than doubled to nearly $ 100 billion in 1996, and reversed to an outflow of around $ 12 billion in 1997.

8 BIS central bankers’ speeches In order to signal the transitory nature of these measures and avoid hardening of interest rates at the longer end, a form of operation twist was tried by conducting outright OMO purchase of government securities alongside sale of short-term government cash management bills. This inverted the yield curve, though accompanied by some increase in long-term rates.

Simultaneously, steps were taken to augment foreign exchange reserves. In this regard, banks were incentivized to mobilize fresh non-resident foreign currency [FCNR(B)] deposits and swap those directly with the Reserve Bank. The overseas borrowing limit of banks was also increased from 50 to 100 per cent of their unimpaired Tier I capital with the option of swap with the Reserve Bank.

In addition, customers that have chosen to establish relationships with banks will be forced to terminate these relationships or have duplicate accounts at the bank and a broker-dealer, resulting in increased costs 2 and burden. We do not believe that this was the result intended by the Congress.

The financial turmoil has once again highlighted how negative developments in one market segment can abruptly spill over to other, seemingly unrelated, segments of the financial sector and across borders. One cause of the severity of the turbulence is that financial institutions had not sufficiently foreseen that liquidity can dry up in certain markets very quickly.

PMs continue to be responsible for the settlement of such bids placed by their GAH as earlier. As the Core Banking Solution (E-Kuber system) of the Reserve Bank of India replaced Primary Auction module, Reserve Bank is in the process of providing similar features (as in web-based system) in CBS E-Kuber system.

Considering wide reach of exchanges, approach of allowing retail investors to access the G-sec market through stock exchanges can be one of the most feasible options. The Reserve Bank had also allowed buying and selling of government securities through stock exchanges since 2003 to facilitate easier access and wider participation. Trading volumes, however, continue to be very low in the exchanges.

I believe that Japanese firms, which have strength in environment-related technology, could and should make a valuable contribution on this front. From the policy framework perspective, it is also imperative that each influential economy maintain sufficient exchange rate flexibility.

* * Introduction It is a great pleasure to welcome the BIS FXWG (Foreign Exchange Working Group) and MPG (Market Participants Group) joint meeting on developing a single global code of conduct for the foreign exchange market.1 In March last year, the eight foreign exchange committees in the major financial centers gathered here in Tokyo and adopted the “Global Preamble,”2 sharing their commitment to developing and promoting clear, robust, and implementable best-practice guidance in the foreign exchange market.

Secondly, a fixed-exchange-rate policy is neither an approach by which lower interest rates can be achieved the easy way, nor a way to postpone structural domestic adjustments with the support of the anchor country. The primary responsibility for the establishment of a stability oriented macroeconomic framework remains with the individual country itself. BIS Review 22/2003 11

The aim of macro-prudential supervision is to provide better regulation – and if possible much better, not in quantity but in quality. Indeed, I foresee several benefits for the financial industry from well-functioning macroprudential oversight.

• One big question mark would be the role that credit derivatives might play in the propagation of the crisis. At the moment there is much uncertainty about the way credit risks have been distributed in the financial system and the issue who is their ultimate holder. Possible problems in the credit derivatives market could spell further trouble for emerging market borrowers.

These issues are analyzed in great detail in the forthcoming issue of the ECB's Financial Stability Review that will be published any day now. • Declines in stock prices and increases in bond yields could weaken domestic balance sheets. These factors, and a generally weaker economy, could put a strain on domestic financial institutions.

A number of hypotheses have been put forth as potential causes of the generally disappointing performance of the labor market, and, indeed, it seems likely that several factors have contributed to the shortfall in hiring. But any meaningful explanation must account for the surprising strength in productivity growth in recent years.

In particular, labor productivity in the nonfarm business sector rose 4-1/4 percent in 2002 and nearly 5-1/2 percent in 2003, the largest back-to-back increases since the early 1960s. Let me review the major hypotheses advanced to explain labor market developments.

It is now time, as the CEBS completes more than three years of successful operation, to take a step back to evaluate the progress that has been made and to identify the key issues on the way forward. I will organise my remarks in three parts.

In the cases of the recent financial institution failures, the Bank judged it appropriate to extend special loans after thoroughly examining these four points. While the Bank had previously extended special loans to depository institutions, the loan extension to Yamaichi Securities should be regarded as an extraordinary measure.

Considering that the liquidity support was introduced as an extraordinary measure and the fact that the repo market has developed and is expected to become more liquid with the operationalisation of the CCIL, there is a case for reviewing the liquidity support to Gilt Funds from RBI.

Significance of secondary markets A diversified investor base with varied demand, maturity profile and risk preference is admittedly important for ensuring high liquidity and stable demand in the market. Apart from banks, PDs and mutual funds, retail investors and foreign investors can also play a role in widening the investor base.

The labor market continues to show a mixed trend: The unemployment rate declined and is at a historic low thanks to an increase in employment rates that took place together with stabilization of the participation rate at a very high level (slide 4).

Recognising the importance of having good infrastructures in Africa, it is our responsibility, as Africans, to develop common and/or harmonised projects in this field. Within the Southern African Development Community region, pre-conditions harmonisation process of some financial infrastructures have already been created.

The unbanked population, which lives primarily in developing countries, comprises nearly half of 2 BIS central bankers’ speeches the world’s working-age population. Their exclusion from the formal financial system restricts their participation in the global economy and severely curtails the opportunities available to them to pull themselves out of poverty.

Banks should have a vested interest in poverty alleviation as improvement in the economic status of the poor would enable the latter’s joining the formal financial system and becoming prospective bank customers. Social banking can contribute to poverty alleviation by developing low cost products customized to the needs of the poor and providing them access to affordable credit for entrepreneurial and emergency purposes.

We will be coming to your career fair in DkIT on 16th October, so make time to come and talk to us. I will now hand over to Mark Cassidy, the Central Bank’s Director of Economics and Statistics who will give a short presentation, after which I look forward to an engaging discussion with you. Thank you.

Higher risks to financial stability should be met primarily through domestic macroprudential policy. In a single currency area, macro-prudential policies are particularly important to deal with sectoral and regional risks. Macroprudential policy provides the most appropriate instruments for mitigating financial stability risks, and thereby supporting the price-stability-focused monetary policy.

All of that suggests a significant structural rise in demand for energy and resources has occurred, as a result of the cumulative growth of the emerging world. This seems more likely to be a feature of the international economy for some time than to go away.

If so, it has to be accommodated by the advanced industrial countries that, hitherto, have had access to those resources on favourable terms. Such an accommodation can be made, over time, via responses to higher prices in terms of efficiency gains, structural change in economies and so on. But it is as well to recognise that an adjustment has to be made.

Second, the efficiency and legitimacy of global governance is being addressed: the mandates and governance structures of existing international institutions are being strengthened, existing informal fora adjusted and new fora developed. Third, the system is moving decisively towards a much more inclusive system of global governance, encompassing key emerging economies as well as the industrialised countries.

The acknowledgment of the increasing role of emerging economies is a trend that predates the recent crisis. But the crisis has made it even more pressing. Although emerging countries have also been immediately affected, they have rapidly become a source of strength for the world economy. In 2009, the contribution of emerging countries to global growth was 57%.

Amid increasing corporate profits, close attention will be paid to whether firms carry out wage hikes to some extent, including an increase in scheduled wages. 4. Developments in prices and inflation expectations I will now turn to price-related issues.

Given the critical importance for us central bankers to keep abreast with international developments, these meetings provided a platform for exchanging views and establishing and maintaining contacts with our peers. (More on this issue) Forthcoming events As I look ahead, I note with satisfaction that our efforts to heighten the Bank’s visibility on the regional and international front are beginning to bear fruit.

It also shows heterogeneity of policy responses across countries: Countries hit harder by the pandemic tend to have larger programmes with greater uptake, while countries with more employees in vulnerable sectors rely more on direct grants. The uptake of moratoria is positively correlated with the debt levels of non-financial corporations and private households before the pandemic.

We are not only voracious data users, we are also big data producers. We collect terabytes of granular data in the fields of banking supervision, oversight of financial markets and payment systems. Central banks can and should harvest the benefits of new technologies.

The highly competitive free market paradigm, however, is viewed by many at the other end of the philosophical spectrum as obsessively materialistic and largely lacking in meaningful cultural values. This view gained adherents with the recent uncovering of much scandalous business behavior during the boom years of the 1990s.

But is there a simple tradeoff between civil conduct, as defined by those who find raw competitive behavior demeaning, and the quality of material life they, nonetheless, seek? It is not obvious that such a tradeoff exists in any meaningful sense when viewed from a longer-term perspective.

10 Debbie Borie-Holtz, D., Carl Van Horn, and Cliff Zukin (2010), “No End in Sight: The Agony of Prolonged Unemployment”, New Brunswick, NJ: John J. Heldrich Center for Workforce Development, Rutgers University, May 2010. http://www.heldrich.rutgers.edu/sites/default/files/content/Work_Trends_May_2010_0.pdf 4 BIS central bankers’ speeches moderate-income families with lower savings.

In addition, recent research found that households that are “liquid-asset poor” are two to three times more likely than those with liquid assets to experience “material hardship” after a job loss, health emergency, death in the family, or other adverse event.11 Clearly, emergency savings are important for households at every income level.

A greater emphasis on balance sheet repair by households, banks, and governments in a number of advanced economies is expected to temper the pace of global growth relative to the Bank’s outlook in April.  The policy response to the European sovereign debt crisis has reduced the risk of an adverse outcome and increased the prospect of sustainable long term growth.

• Vanuatu is made up of some 80 mostly volcanic islands that extend approximately 1,176km in a north-south direction. The total land area is 12,281.25 Km² and the current crude population density is estimated at 17 persons per Km². The country’s population growth rate is 2.6 percent per annum and a real GDP per capita estimated at USD718 in 2004.

And then in the decades following the 1960s, as average incomes rose and tariff barriers came down, there was a very marked shift to employment in the services sector and away from manufacturing.

Looking at this long-run record, it is obvious that structural change is something that is occurring all the time and, at least in terms of the labour market, the current rate of change is not unusual. A similar conclusion is reached when we look at changes in the composition of real output.

For example, a highly successful G-20 seminar on economic growth, co-hosted by the Bank along with the People’s Bank of China and the Banco de México, was held in Pretoria in August 2005, and the findings were discussed at the meeting of deputy finance ministers and deputy central bank governors in China in September and ultimately at the meeting of finance ministers and governors in October at the Grand Epoch City, Xianghe, Hebei Province, China.

In August I mentioned in my address to shareholders of the Bank that closer economic co-operation in the SADC region and the African continent will increasingly become a key strategic focus area in the years ahead. The Bank has for example during the course of the year once again rendered technical assistance to various other central banks in the region.

To understand some indicators of the linkages, we can see that the ratio of India’s external trade to GDP has increased four-fold – from 8 per cent of GDP in 1972 to nearly 40 per cent now while the ratio of two- way flow of goods and finance in and out of India to its GDP which incorporates non trade related flows, has increased eight fold over last four decades, from 14 per cent in 1972 to well over 100 per cent now.

Apart from linkages with the global developments, there are several domestic factors which are also important in the context of increasing trend of volatility in domestic financial markets such as widening current account deficit, growth slowdown, growing fiscal deficit and sticky inflation, to name just a few.

What Australia did have was a conservative household sector with relatively low gearing. As such, the financial sector saw opportunities for financial innovation aimed at encouraging households to make greater use of their borrowing capacity. Most of this was focused on housing lending.

The result was that the boom in housing in Australia got underway well before that in the US the latter did not really get going until after the tech bubble collapsed. A second difference relates to the dynamics of the housing markets in the two countries.

Regrettably, we at the Federal Reserve do not have the luxury of awaiting a better set of insights into this process. Indeed, our goal, in responding to the complexity of current economic forces, is to extend the expansion by containing its imbalances and avoiding the very recession that would complete a business cycle.

The announcement of OMT had an extraordinary effect and proved to be a potent circuit-breaker by successfully truncating the most extreme tail of the distribution of possible macroeconomic outcomes and, as a result, financial stability was restored.

6 We made great advances in transparency and communications, with the initiation of quarterly press conferences and the Summary of Economic Projections (SEP), which comprises the individual economic forecasts of FOMC participants. During that time, then–Board Vice Chair Janet Yellen led an effort on behalf of the FOMC to codify the Committee’s approach to monetary policy.

In January 2012, the Committee issued its first Statement on Longer-Run Goals and Monetary Policy Strategy, which we often refer to as the consensus statement. A central part of this statement was the articulation of a longer-run inflation goal of 2 percent.

1 U.S. Census Bureau, America Counts: Stories Behind the Numbers, “What Is Rural America?” August 9, 2017. Return to text 2 Federal Communications Commission (FCC), 2018 Broadband Deployment Report (Washington: FCC, February 2, 2018). Return to text 3 Megan Lavalley, Out of the Loop (PDF) (Alexandria, VA: Center for Public Education, January 2018).

It also demonstrates our readiness to open discussion and to address understandable apprehension. In the same way it promotes a better understanding of price stability as an important contributor to both orderly exchange rate adjustment and the maintenance of economic competitiveness. Taken together these functions may help build confidence – probably the most essential task central banks have. 4 BIS Review 144/2007

Against this background, inflation in terms of the CPI excluding fresh food is likely to gradually accelerate and reach around the price stability target of 2 percent toward the latter half of the projection period through fiscal 2015.

4 Additionally, Texas is the second most important state in terms of labor migration from Mexico. For a long time, as we all know, our migrants have found opportunities to contribute to this vibrant economy with great dedication and efficiency. Remittances, in turn, have allowed families in Mexico to increase schooling and build better housing.

First, the end of the war in Iraq had brought greater stability to the oil market. Second, it was clear that the exchange rate of the rand was maintaining its recovered levels in spite of continued volatility. Third, there were clear signs that inflation pressures emanating from abroad would remain weak.

Although there are several important principles and approaches to risk-based supervision, it is essential to be mindful that there can be no fixed template. There is a need for supervisory bodies to design and understand structures and approaches that are best suited to their needs.

With regard to LTCM, the review found that the fund was atypical among hedge fund counterparties in both the size of its positions and the amount of leverage it employed. While several hedge funds had larger net asset values (capital) than LTCM and a few funds may have employed the same or comparable book leverage, LTCM’s combination of size and leverage was singular.

Under the CSPP, the Eurosystem has since June 2016 purchased bonds issued by a wide range of non-bank corporations established in the euro area, which include large, as well as some smaller, companies. So far, close to € billion of corporate bonds from around 200 issuers, in 20 countries, across all sectors, have been purchased.

In particular, as I emphasized in a speech last spring, the Federal Reserve can determine and achieve the long-run average rate of inflation in keeping with its dual mandate, but the Federal Reserve most emphatically cannot choose the level of maximum sustainable economic activity--no central bank can control the level of real economic activity or employment over the longer run (Mishkin, 2007a).

Apart from the standard balance sheet related data for banks, we have a unique database, the Basic Statistical Return (BSR), that provides detailed granular unit level data on important parameters of financial intermediation by the banking sector. The Balance of Payments (BoP) statistics are generally based on near-complete enumeration of transactions through banking channel, unlike many other countries.

This was often the result of economic shocks, distributional or intergenerational problems as well as regional divergences. An unduly high stock of debt typically steers debt-service payments for both current and future budgets until debt levels are substantially reduced.

Exchange rate stability is also a measure of overall convergence, given that exchange rate movements typically reflect, in addition to market expectations, relative movements of economic variables. In this regard, participation in ERM II fosters convergence for prospective euro area members. The introduction of the euro in other countries will require more than only compliance with the convergence criteria.

In 2005, The Bank of Papua New Guinea undertook a review and modification of the design and upgrade the security features while retaining the traditional flavour of the original banknote designs.

We need to think thoroughly how the foreign exchange, particularly from export, can comprehensively cover import and financing needs, in addition to its contribution to financial deepening. 76. Second, I believe the strengthening of banking supervision system and the deepening of the banking industry through consolidation remains vital to determine the success for overcoming a crisis amid the global competition.

The whole of the legal and organizational framework of AML/CFT revolves around FATF's 40 recommendations. In that regard, NRB has been extensively working to strengthen its legal and organizational framework.

In this regime BFIs can play a very important role, not just because launderers have been abusing the financial system but also because as victim of such crimes, they are always at various risks such as legal, regulatory, concentration and reputational. 8.

So far, we have seen the introduction of the biometric national identification system and the digital addressing system which are all supportive of our quest to drive digitised financial transactions. As the central bank, we will continue to work with all stakeholders to ensure the successful implementation of these initiatives.

Of course, 8 there will be challenges, but with firm commitment, we will eventually reduce the dominance of cash in transactions and improve the efficiency and security of payments for a more inclusive society. 15. To conclude, let me note that the future of banking services is digitisation and it brings opportunities as well as challenges.

That long-term focus does not mean that we are too cautious, that we never take a risk; it simply means that we weigh the risks and rewards of policy actions over longer time horizons than many of the commentators on the economic scene which fill our newspapers and airwaves each day. We want an expanding economy, and low inflation.

Industry Assessment Well, taking a step back from looking at our initiatives, it’s fair to ask, “How well is the industry doing?” Most banks have completed the assessment phase; however, those that BIS Review 11/1998 -3- missed the September 30, 1997, time frame are going to be the subject of intensive supervisory attention.

Given the need to maintain price stability throughout the year 2000 and beyond, the present tight monetary conditions will have to be maintained as long as is feasible to ensure against unforeseen inflationary pressures.

Should there be renewed inflationary pressures, there are evident limits to what 1 BIS Review 98/1999 monetary policy could do to maintain price stability in the run-up to EMU. I do not have the time to discuss these constraints in detail.

Insurance industry in Fiji As the regulator of the insurance industry in Fiji, the Reserve Bank is satisfied with the overall performance of the industry. Insurance companies are well capitalised and adequately meet their solvency requirements. As you would expect of the long term nature of business, the bulk of their assets is invested in Government securities and term deposits with commercial banks.

ASIC’s review of interest-only lending practices made similar findings, and also noted instances where the lender did not make reasonable inquiries as to whether the loan product was suitable to the borrowers’ circumstances.

In addition, recently, joint efforts by the public and private sectors to further increase the value-added of local products have been moving ahead, such as the promotion of exports of high-quality "Saga Beef" and local 22 As for discussions being held overseas, see Wakatabe, "Japan's Economy and Monetary Policy," speech in Aomori on June 27, 2019.

23 As for the relation between declining and aging population and economic growth, see Wakatabe, M., "Japan's Economy and Monetary Policy," speech at a meeting with business leaders in Ehime, February 5, 2020, https://www.boj.or.jp/en/announcements/press/koen_2020/ko200205a.htm/. 15 sake, and turning the Ichigosan strawberry developed in 2018 into a nationwide brand.

This policy dependence masks the true underlying state of the economy – particularly in terms of labour market scarring and corporate vulnerabilities – and therefore its resilience to less expansionary policies. The recovery will need to be well advanced before we can get a clear picture of the underlying damage.

Now I’m going to cover how we ‘walk the talk’ in formulating our monetary policy decisions.14 Sound and effective monetary policy strategy requires more than just deciding whether the OCR should go up or down on any given day; instead central banks need to be transparent about their views of the economy over the medium-term and how monetary policy might respond to a changing economic landscape.

6 A. Haldane, “On Being the Right Size,” a speech to the Institute of Economic Affairs’ 22nd Annual Series, the 2012 Beesley Lectures at the Institute of Directors, 25 October 2012. 4 BIS central bankers’ speeches identifying bail-inable securities, requiring a minimum amount of them, and publishing a presumptive path for resolution.

This week, in Mexico City, we agreed to redouble our efforts on these fronts. The FSB will assess whether we have ended too-big-to-fail at the St. Petersburg Summit next September and I am confident the G-20 will agree on any further steps to do so if required. The G-20 is resolute in its intention to end too-big-to-fail.

Adrian Orr: Bank capital, risk management and the economy Speech by Mr Adrian Orr, Deputy Governor of the Reserve Bank of New Zealand, to the Retail Financial Services Forum, Auckland, 10 April 2006. * * * Thank you for the opportunity to speak to you today.

Fourth, the revised corridor was defined with a fixed width of 200 basis points. The repo rate was placed in the middle of the corridor, with the reverse repo rate 100 basis points below it and the MSF rate 100 basis points above it. The current operating framework is illustrated in Chart 1.

Core CPI inflation over the last three months of 2022 was revised up from 3.1 percent (at an annual rate) to now be 4.3 percent. Similarly, the 2022 fourth quarter PCE inflation data was revised from 2.9 percent to 3.6 percent. And the three-month rates increased in January; even measures that trim out the largest and smallest price changes saw increases.

These data underscore the view, as laid out in the FOMC's December Summary of Economic Projections, that the fight to bring inflation down to our 2 percent target will be slower and longer than many had expected just a month or two ago.

However, signs of valuation pressures are emerging in commercial real estate markets, where prices have been rising at a solid clip and lending standards have deteriorated, although debt growth has not yet accelerated notably. In the corporate debt markets, valuation pressures had been high for a while, before risk spreads widened and issuance slowed over the past year.

During that transitional period, there will be national compartments which will be progressively merged. The fund makes banks not only less likely to fail but also safe to fail – meaning that they can be resolved without cost to the taxpayers and without significant disruption to the financial markets or the economy at large.

As a management tool, the practice of risk management so far, has failed to change human being behavior that tends to be easily trapped in complacency. That is, a tendency of not assessing risk properly in good time, partly covered by expected high return, but then reacting so extremely in reverse when thing goes in the opposite direction.

The association will have a booth at the festival, with information on membership, the association’s actual and future activities, information on resources for Mandarin language training, information on training and travel opportunities. If you already have an interest in interacting with China and the Chinese we need to hear from you.

I shall elaborate on some of these issues, mainly from the perspective of the financial investor, without the pretense of being exhaustive.4 2. Sustainable finance: key challenges There is a general consensus that we need to improve the quality, comparability and availability of non-financial data.

The most widespread metrics are the so-called ESG scores, intended to assess how well a firm is faring in addressing environmental, social and governance challenges. They are attributed by rating agencies and data providers to a broad range of issuers and financial instruments, and are intuitive to interpret. However, they suffer from several problems.

This secondary objective – just like our primary objective laid down in the EU Treaties – tells us that we shall support the general economic policies of the EU; without prejudice to price stability.

To put this in less legalistic and more pragmatic terms: whenever we have a choice between two instruments – or calibrations of instruments – that are equally conducive to price stability, we choose the one that is most supportive of the EU’s general economic policies, including the climate neutrality objective.

In this vein, we ought to carefully consider what we have learned from the deep and prolonged Greek banking crisis. The first lesson is that a well-designed and decisive policy response can mitigate the impact of 4/7 BIS central bankers' speeches shocks.

The Bank of Greece along with other Greek authorities and the European Institutions was involved in the establishment of the Hellenic Financial Stability Fund (HFSF) and in securing the appropriate financial envelope (initially € billion and subsequently € billion in total) for the recapitalisation and restructuring of the Greek banking sector.

The associated appreciation of the Canadian dollar has dampened the increase in demand and helped to facilitate the adjustment of the Canadian economy by encouraging a shift in activity towards Canada's commodity-exporting sector. To the extent that the dampening effect on demand exactly offsets the direct increase in demand, there would be no need for a policy response.

Tax reforms were undertaken to widen tax base, remove direct contact between tax payers and tax collectors, introduce value-added tax as the major source of revenue, simplify tax administration and strengthen the capacity of the Central Board of Revenue.

This included a guarantee of liabilities in the banking sector; a series of pro-cyclical, contractionary budgets; and capital injections into the domestic banks. By late 2010, Ireland’s fiscal position was unsustainable.

Currently, while data storage and retrieval are on computerized systems, the administrative processes are largely manual, warranting huge resource deployment. This adds to costs, impacts efficiency and reduces effectiveness of internal controls. Further, in the existing models followed in many work areas in banks, data flows and reporting for MIS as well as external filings require manual interventions and multiple database access/ sourcing.

On the downside, concerns remain relating to a stronger or more protracted than expected negative feedback loop between the real economy and the financial sector, renewed increases in oil and other commodity prices, the intensification of protectionist pressures and the possibility of disruptive market movements related to the correction of global imbalances.

With regard to price developments, as expected, euro area annual HICP inflation increased further in December 2009 to stand at 0.9%, after 0.5% in November. The rise mainly reflects upward base effects stemming mostly from the drop in global energy prices a year ago. BIS Review 2/2010 1 Inflation is expected to remain around 1% in the near term.

This is well-trodden territory and I do not have any comparative advantage to add value to the debate. I do want to address just three questions though. I have chosen these three, in part because they are less familiar themes, and in part because the debates around these issues have been reshaped by some new developments.

The three questions that I will address are: i. Is globalization inevitable? ii. Is geography destiny? iii. Can/should financial liberalization be shunned? Is globalization inevitable? There is a widely held view that globalization is inevitable in today’s world of rapid technological progress and growing embrace of economic liberalization by countries.

Mr Issing’s speech entitled “Hayek – currency competition and European monetary union”* Text of the Annual Hayek memorial lecture delivered by Mr Otmar Issing, a member of the Executive Board of the European Central Bank, hosted by the Institute of Economic Affairs in London on 27 May 1999. 1. Introduction As a young student I read “The Road to Serfdom”.

Turning to the fifth idea, on the question of whether we can contribute further to growth and job creation while fulfilling the requirements of our mandate, some say: “You should be less demanding in your definition of price stability. 2% is too low. Make it 3%.

In the wake of the global financial crisis, it is clear that growth and employment became foremost concerns of most central banks, particularly in those economies where the recovery was slow and protracted, and where inflation was not perceived to be a threat.

The persistence of the extraordinarily low interest rate environment in the advanced economies BIS central bankers’ speeches 1 attests to that. So is this focus on growth a new mandate for central banks and an undermining of the primary inflation objective? In this respect, inflation targeting has often been misunderstood, or oversimplified.

And, third, in terms of the most important consideration – the outlooks for inflation and jobs – we remain well short of our goals, as I have already discussed.

As a result, though the average world price of the commodities that New Zealand exporters sell declined by 10.8 per cent over the last year, the New Zealand price of those exports actually rose by 9.3 per cent over the same period.

These reforms have taken the form of gradual liberalisation of interest rates, development of money, capital and debt markets and giving operational flexibility to banks in the management of their assets and liabilities subject, of course, to prudential guidelines. In simple terms, these changes imply a greater degree of exposure of individual financial institutions to the domestic and international economic environment.

In this connection, a distinction needs to be made between two types of market developments, which have implications for the financial system. One is developments in respect of macroeconomic fundamentals of the economy which impact on the interest rate, exchange rate and other asset prices. This is a normal phenomenon in any economy and has implications for the balance sheets of the financial intermediaries.

So why am I talking about instruments of internal communication in the context of “targetbased management”? Because, in my experience, they are decisive in ensuring that our BIS central bankers’ speeches 5 strategy is worth more than the paper it’s written on.

As this figure shows, productivity growth moves around significantly over time and has averaged about 2 percent since 1970. One factor behind the decline since the financial crisis is the relatively slow increase in the capital stock per worker, as weak demand and uncertainty about the future have held back business investment.

Profits declined, but were still positive in the first nine months of the year. Overall, capital has remained above minimum requirements. The capital ratios of Italian banking groups are calculated on the basis of stricter prudential criteria than are applied in other systems.

Some even regularly travel to Honiara and join the queues at the Treasury or at the commercial bank tellers to collect their house rentals and other dues.

The year-on-year rate of change in the CPI (all items less fresh food) has remained at around 0.5 percent. The relatively weak price developments compared to the economic expansion and tight labor market conditions are attributed to the mindset and behavior based on the assumption that wages and prices will not increase easily.

First, we must establish our credibility, secure some fiscal space to undertake employment generating development expenditure, avoid contracting short-term expensive debt, and augment our foreign exchange earning. The rulers were also of the opinion that the benefits of economic revival should be shared by a wide majority of the population and not by a chosen few.

If the data are adjusted to take account of some asymmetries of a purely accounting nature, the estimated increase in revenue would be greater, and basically consistent with the growth forecasts of general government tax revenue indicated in the Update. In the policy scenario, the structural deficit (that is, cyclically-adjusted and net of temporary measures) is expected to reach 0.9 per cent of GDP.

That important real-world consideration is often neglected in the academic literature, in which central bank “commitment devices” are simply assumed to exist and be instantly credible on decree. Thus, one of the most challenging questions is whether central banks could, in practice, attain the benefits of makeup strategies that are possible in models.

Yet when the chips are down and crises loom, it rises up from the depths that it inhabits and flings itself at the gathering storm. When the job is done, the recovery secured and macroeconomic and financial stability ensured, it falls back, usually unsung, but always on guard. The pandemic continues to shape the future, but the RBI remains armed and battle ready.

Continuously evaluating highly volatile and uncertain conditions and remaining prepared to protect the economy from shocks, the RBI has committed all its instruments to this objective, using conventional measures and fashioning new ones, as the pandemic experience showed.

With the fall of the Berlin wall and the introduction of the euro, integration in Europe has gained a new quality both from an economic and a political perspective. German unification has raised expectations of a wider unification in Europe in the sense of further integration.

It is against this dire backdrop in Africa and the world that the 26th UN Climate Change Conference of the Parties (COP26) is convening in Glasgow, Scotland. It brings together governments, businesses, civil society and citizens with the expectation of commitments to ambitious actions that are needed to counter climate change.

History has shown that economic crises around the world are always linked to financial crises; therefore, the central bank naturally has to consider interactions between the financial sector and monetary policy. Third, the central bank has the function of lender of last resort. Therefore, the central bank must utilise its resources to supply short-term emergency funds during a crisis.

The most obvious channel is through wealth effects to consumers, but business spending is also vulnerable to the rising cost of equity capital, and to the cost of debt as credit spreads widen. There may also be an increase in general uncertainty and preparedness to invest as a result of community disillusionment with some recent business practices.

We have seen that in times of uncertainty financial markets often shoot first and ask questions later, so the task of protecting against contagion should not be underestimated. 3 There are examples from the recent crisis, and previous ones, where large banks have been resolved by imposing losses on their shareholders, junior bondholders and, in some cases, their senior bondholders.

I am not aware, however, of any case where a bank returned from resolution as a privately owned entity, trading under its original name, having been recapitalised by private creditors alone.

3,4 Finally, to get a sense of global macroeconomic liquidity, one can aggregate macroeconomic liquidity across countries to obtain average world real interest rates and the average growth of monetary and credit aggregates. These measures will tend to be reflected over time in the behaviour of global spending and average global inflation rates.

In other words, if the governments of those countries wanted to sell bonds to finance their debt they would have to pay much more. The media started speculating about a break-up of the euro area, as did some politicians. Two weeks later though, something had obviously changed.

Looking beyond this special period, against the background of an output gap that is expected to remain negative throughout 6 next year, interest rates in Mexico are likely to be significantly affected by the evolution of interest rates in the United States. Markets continue to anticipate a further tightening of the monetary policy stance in that country, although at a very gradual pace.

To the extent that it responds to the need to contain inflation and maximize employment, this should be good news for the world and Mexico’s economies. Furthermore, as the experience with the increase of the federal funds rate in late 2015 shows, if well communicated, it need not be a source of disruption in international financial markets.

Does the answer lie in more integration? Of course, the key question is: how do we further strengthen the EMU? It is often assumed that deeper European integration is the answer, for example by way of more binding policy coordination. Many also favor more public risk-sharing, such as the introduction of a European budgetary stabilization fund.

In this case, the central bank would provide collateralized funding at a subsidized rate as long as banks met specified lending objectives. The Bank of England and the U.K. Treasury set up such a program in 2012.

Thus, although hedging may delay, and perhaps even smooth out, the adjustment, it cannot eliminate, without prohibitive cost, the consequences of exchange rate change. Accordingly, the currency depreciation that we have experienced of late should eventually help to contain our current account deficit as foreign producers export less to the United States.

[1] This is typical of many economies, though not for the United States. See Ellis L (2016), ‘Financial Stability and the Banking Sector’, Address to the Sydney Banking and Financial Stability Conference, 12 July. [2] Bergmann M and A Nitscke (2016), ‘The Kangaroo Bond Market’, RBA https://www.rba.gov.au/speeches/2017/sp-ag-2017-08-09.html Bulletin, September, pp 47–52.