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that in the wake of such fundamental changes, like the one currently transforming the swedish retail payments market, new questions keep arising. with change, there will be winners and losers. in this case the winners are the swedes who have adapted to electronic payment means. losers are the ones who want, or for some reason need, to keep on using cash and who increasingly find themselves in a world where access to cash, and acceptance of cash, are on the decline. this creates a new challenge for society. this change needs to be managed. for a central banker, the transformation of the retail payments market also implies a more fundamental question. if cash basically disappears, then the general public will lose access to central bank money – they will only have access to commercial bank money. is that a good outcome? responding to this, the riksbank has decided to analyse a “ possible do ”. should we issue an electronic currency? an e - krona? we have given ourselves about two years to come up with an initial answer to this question. one possible outcome is that we as central bank in some sense will ourselves become an innovator. moreover, what we eventually decide to do is likely to affect the possibilities and business cases for different financial innovations in more general terms and have possible repercussions on many other aspects of central banking, such as monetary policy and financial stability. to conclude, i believe that a central bank has an important role to play. what we do, and what we do not do, will affect the pace and the substance of innovation in the financial system. i believe this to also apply to the regulatory community in general. we can talk about the promise of innovation, but we also need to walk the talk – that is to make decisions that balance innovation, stability and growth. that will by necessity involve deciding upon a suitable degree of public and regulatory intervention. there will be winners and losers from these decisions. making the decisions, and finding that balance, is a major challenge, but it is also an unavoidable challenge. 4 | that was made available to the uk during the period from 1964 to 1977. the scheme was undertaken under the auspice of broader international initiatives, and the two central banks, in particular, were in very close cooperation. for details, please refer to the handout of a historical summary of major events that involved the uk - japan relationship. in this regard, i would also like to refer to some of the bank of england ’ s collections that are displayed in the showcase. the collections are commemorative of relations between the bank of england and japan as a whole. they are made available here today kindly by mr. keyworth, the archivist of the bank of england. concluding remarks finally, let me move from the past to the future. the future is always uncertain, but some current trends and changes can be certain in the future as well. among them are globalization and the advancement of communications technology. it is true that these things will reduce notional distance between countries, but nobody would deny the importance of direct face - to - face interactions between people in the market. as far as we understand it, the very strength of the london market comes from such direct face - to - face interactions between market participants, who work here in financial, accounting, legal and other related businesses. the london market attracts the best and brightest professionals and management from all over the world. in fact, their close interactions generate the dynamism of market development. that is why the bank of japan highly values information and insights that our london office gains from direct contacts here. moreover, that is why the bank of japan sees our london office as one of the important channels of communication to market participants. in concluding, i thank again, all the guests, predecessors and your institutions for the 100 - year - long friendship and cooperation. and i am convinced that this established good relationship will continue for another century. there is no “ exit policy ” from london. i wish all the best for each of you. thank you. | 0 |
stronger then expected every year in this period. at the same time, inflation was moderate and unemployment declined. many observers attribute the prolonged period of strong growth to the new economy, which features three main aspects : • the labour market had become more flexible. while earlier experience implied an acceleration in the rate of increase in wages and prices at an unemployment rate of six per cent, unemployment fell to four per cent without triggering higher inflation. • productivity growth increased in both the it sector and in other industries. the forecasts for the annual growth potential of the us economy were revised up substantially to around 4 per cent. • equity prices for technology stocks advanced sharply, with more than a sixfold increase in the nasdaq index from the beginning of 1995 to the peak in march 2000. strong productivity growth and low wage growth led to a sharp increase in corporate profitability. expectations of a continued rise in profits spurred sharp growth in investment. at the same time, advancing equity prices boosted household wealth. households could reduce their current saving and still increase wealth, allowing them to use a growing share of income for consumption. but imbalances heightened. the fall in the household saving ratio was based on gains in the stock market, which after a time reflected unrealistic expectations of future earnings. corporate debt increased sharply and current account deficits grew larger. in spring last year, equity prices declined. the nasdaq index showed a particularly strong decline. the index continued to fall through autumn and winter, with the overall decline nearing 60 per cent. the more broad - based stock indices have also shown a decline, albeit a more moderate one. growth has been expected to slow this year for some time. in spite of this, the turnaround in the us economy was surprisingly strong and came faster than expected. consumer and business confidence indicators have shown a marked fall. the federal reserve has sought to counter the downturn. interest rates were lowered by 1 percentage point in january. the government has announced substantial tax cuts. this may moderate the downturn, but hardly bring it to a halt. consolidation in the household and business sector may imply lower consumption and investment for a period. in 2001, we expect the us economy to expand by less than half the rate recorded last year. growth in the japanese economy is also sluggish, but the downturn in japan has continued for ten years. at the beginning of the 1990s the financial bubble burst, following a sharp increase in stock and property values in the preceding years. the | . when there are prospects of moderate economic activity, low wage growth and low inflation, norges bank will reduce the interest rate. this will normally result in a depreciation of the krone. prices for imported goods and services will increase. a weaker krone strengthens the competitiveness of norwegian enterprises and indirectly leads to higher output, employment and inflation. themes in foreign exchange markets shift. in periods, investor focus on stock returns feeds through to exchange rate movements. during periods of political and economic unrest, investors may choose individual currencies as a safe haven - often the swiss franc. in autumn 2002, the norwegian krone was probably also perceived as a safe haven. in addition, oil prices rose as a result of the uncertainty associated with the war in iraq. in autumn 2003, the krone showed a tendency to appreciate against the euro. this partly reflected lowered market expectations concerning an interest rate increase abroad and expectations that interest rates might rise earlier in norway than in other countries. at the same time, the euro appreciated in relation to other currencies. changes in the krone resulted in an unintended tightening of monetary policy. this trend was reversed in december owing to low inflation figures and a reduction in interest rates. the interest rate reduction was probably of considerable importance as it eliminated the excess return on nok investments. the krone has appreciated again in the last couple of months. the appreciation of the krone, if it persists, may curb inflation one to two years ahead. past experience shows that the krone is at times heavily influenced by developments in the interest rate differential between norway and other countries. this is given weight in interest - rate setting. however, as mentioned, themes in foreign exchange markets shift, and norges bank does not have instruments to fine - tune the exchange rate. normally, norges bank will not intervene in the foreign exchange market in order to influence the exchange rate. exchange market intervention, irrespective of whether foreign exchange is bought or sold, is not an appropriate instrument for influencing the krone over a longer period. we do not wish to act in a way that may trigger a game situation in the foreign exchange market. foreign exchange intervention rather than a change in the interest rate may give ambiguous signals to foreign exchange operators and a game situation may arise. however, interventions may be appropriate if the krone deviates substantially from the level that the bank judges to be reasonable in relation to fundamentals, and if exchange rate developments | 0.5 |
and stable employment conditions have accorded policy flexibility to support the growth during this period. going forward, the process of rebalancing the economy to enhance the competitiveness of the economy can be expected to intensify and widen. • there will be a greater rebalancing between the role of the public and private sectors in the economy, with the public sector activity focussed on providing the enabling environment to strengthen the role of the private sector in the economy. • while large domestic corporations and multinational corporations will continue to be important in the economy, the role of the small and medium - scale enterprises will gain significance. • greater focus will be given to secure competitiveness on a more comprehensive basis in terms of other dimensions such as productivity and efficiency, labour quality, logistics, research and development, the delivery system and the supply chain. malaysia will also continue to leverage on our low country risks in terms of the political stability, industrial maturity and the supply of a skilled workforce. to promote endogenous sources of growth, greater focus has been directed at promoting greater private investment, including by the small and medium enterprises ( smes ). the financial infrastructure and incentive structure will continue to be enhanced to promote investment in new sub - sectors in particular, the services, agriculture and manufacturing sectors. on the external front, while there has been a synchronisation of growth among the major economies, there has also been some rebalancing of the relative strength of the growth among the economies. the increase in the expansion of world trade and the strengthening of labour market conditions in most of these economies suggest continued and self - sustaining growth. meanwhile, the asian region has shown strong growth performance amidst robust intra - regional trade. this will be mutually reinforcing for the region in expanding the cumulative domestic market of the region and thus contributing to the overall growth prospects of the region. while growth remains strong, there are risks on the horizon. the recent moves to raise interest rates have however aimed to adjust the economic expansion to converge to more sustainable levels. policies in a number of the major economies have now shifted from addressing a deflationary environment to a more neutral position that is aimed at removing the inflationary bias. this is in contrast to an anti - inflationary stance which would require aggressive tightening. on the domestic front, malaysia continues to be highly integrated with the world economy in which economic and financial developments in our major trading partners will have implications on our economy. the strengthening of our economic structure, our | muhammad bin ibrahim : the way forward for development financial institutions opening address by mr muhammad bin ibrahim, governor of the central bank of malaysia ( bank negara malaysia ), at the global symposium on development financial institutions “ the way forward for development financial institutions ”, kuala lumpur, 19 september 2017. * * * selamat datang ” and a very warm welcome. thank you for the opportunity to speak today at this important gathering to discuss the way forward for development financial institutions. in 2012, the music video “ gangnam style ” by korean pop artist psy took the world by storm. being the first video to record more than 1 billion youtube views, its infectious dance moves have become universally recognised, transcending borders and social status. the video marked the beginning of the rise of the korean cultural phenomenon known as korean wave or “ hallyu ”, a new growth area for its economy. today, the export of korean culture content, including films and music, is estimated at usd83. 2 billion. in under a decade, the sector grew to contribute 0. 7 % to south korea ’ s gdp in 2011, supported over 67, 000 jobs and generated usd3. 3 billion in tax revenues. this extraordinary rise of the korean wave can be attributed to the growth of investment in the creative industry. the industry was boosted by the government ’ s strategy to prioritise the sector as an engine of growth after the asian financial crisis. the korean government had earmarked 1 % of the national budget for development financial institutions to kickstart the sector. following in their footsteps, domestic conglomerates like samsung and daewoo started investing in film financing and video production. korea ’ s experience above illustrates an important lesson for economic development. properly structured development institutions can be a potent agent of change for private sector investment, drive growth, and forge inclusive societies. it can do a lot of good. but in reality, the real challenge is how to replicate the key factors that contribute to the success, and to achieve this more consistently across different political, economic and social contexts. with this in mind, let me outline the crucial factors that might help us understand this phenomena : a. first, a mindset shift to contribute more broadly to catalyse new growth areas ; b. second, the need to strengthen accountability frameworks ; c. third, the continuous cultivation of a strong culture of innovation ; and d. fourth, a robust corporate governance. stepping up to the plate by further developing | 0.5 |
account of the need to balance opportunities and risks. before announcing the winners, i wish to thank all of you who answered this call for proposals and who took up this shared challenge. special thanks go to the members of the panel who assessed the projects, for their commitment to carrying out a difficult task with great speed and professionalism, and to all our colleagues in the bank of italy who enabled us to reach our goals in just a few short months. i wish you every success in your future endeavours and hope that cooperation between the supervisory authorities, fintech companies, supervised intermediaries and research centres can continue to make progress and to be intensified over time. 1 / 1 bis central bankers'speeches | ignazio visco : milano hub - results of the 2021 call for proposals opening remarks by mr ignazio visco, governor of the bank of italy, at an event marking the conclusion of the first call for proposals by milano hub, milano, 28 february 2022. * * * good afternoon. i am delighted to welcome you to this event marking the conclusion of the first call for proposals by milano hub, the innovation centre through which the bank of italy intends to provide concrete support to digital developments in the financial market. this first call focused on the contribution of artificial intelligence to improving the provision of banking, financial and payment services. the importance of this field is apparent in the many fintech and non - fintech initiatives that rely on technological solutions based on artificial intelligence. we have seen this not only when performing our institutional functions but also through our dialogue with the market within the two other innovation incubators, the fintech channel and the regulatory sandbox. based on some market estimates, investment in artificial intelligence in europe currently amounts to more than $ 20 billion and is set to exceed $ 50 billion in 2025. the banking and manufacturing sectors are among the trendsetters and yet – according to analyses conducted by the european commission and the european investment bank – europe lags behind both the us and china in the development and use of artificial intelligence. artificial intelligence systems allow business processes to be modernized, strengthen risk management processes, and promote the supply of new products. at the same time, they can give rise to new risks that must be carefully monitored. we must, for example, ensure that the mechanical adoption of complex and at times opaque algorithms do not generate distortions and improper uses of data. acknowledging the need for a common legal framework to regulate the use of artificial intelligence, last year the european commission began discussions on its definition. specific provisions on the financial sector are contained in the framework proposal, which will help ensure an increasingly intensive yet balanced use of the applications developed by industry. it is from this fertile and promising new ground that we put out the call for proposals for our hub. the market response has been more than positive with over 40 projects presented by italian and foreign operators. the initiatives, which were submitted to a panel of experts for evaluation, were notable in most cases for their variety, novelty and the wealth of topics explored. this experience has proven that milano hub can be a key forum for interacting with the market and supporting the development of innovative solutions based on approaches that take due | 1 |
klaas knot : dutch financial stability in the asian era speech by mr klaas knot, president of the netherlands bank, at the symposium “ the future of the netherlands in the asian era ”, center for japanese studies, university of groningen, 31 august 2012. * * * with thanks to jeroen hessel. introduction ladies and gentlemen, it is always a pleasure to be back here in groningen. i find the two buildings on the conference invitation very well chosen. they symbolise the common fears about the rise of asia. the dutch euromast was modern and imposing when it was built in1960, but now looks small and outdated compared to the brand new sky tree in tokyo, the second - tallest building in the world at a height of 634 meters. 1 the euromast would also be dwarfed by the 492 meter shanghai world financial center or the 509 meter taipei 101. does this indeed show that advanced economies like the netherlands are not able to compete with the larger and more efficient asian countries? i tend to be optimistic. i will discuss the rise of asia with a focus on financial stability. indeed, the rise of asia implies profound changes for advanced countries. but as long as countries face the challenge and adjust their economies, this need not be problematic. on the contrary, asia also provides many opportunities. this applies especially to the netherlands, with our centuries of experience in international trade and finance. after all, our verenigde oostindische compagnie had the only western trading post with japan for over 200 years. until 1859, a number of dutch settlers lived on deshima, a tiny island just off the coast of nagasaki. and already in the 1920s, banks like the nederlandsch - indische handelsbank and the nederlandsche handelsmaatschappij had offices in singapore, shanghai and bombay. influence of asia on the real side the rise of asia is not new. in fact, asia accounted for over half of world gdp for centuries, and only started to lag behind in the 20th century. in a way, asia is now restoring the old balance of power. we saw the rise of japan in the 1960s and 70s, and the rise of korea, singapore, hong kong and taiwan in the 1980s and 90s. but the recent ascent of large countries like china and india dramatically increases the scale and speed of the shift. the share of emerging asia in the world economy increased from 8 % in 1980 | to 26 % in 2012. the rise of asia primarily affects advanced economies on the real side of the economy. trade and international competition have intensified. trade with low wage countries has quadrupled the effective global labour supply since 1980. 2 companies more easily offshore stages of their production to these countries. our iphones were designed in the us but are assembled in china. so comparative advantages have not disappeared, but they are changing more quickly than before. the dutch trade monopoly with japan lasted for two centuries. by contrast, the top position in the mobile phone market has already changed several times in the last decades. it switched from after the burj khalifa in dubai, which is almost 830 meters high. this measure of the effective global labour supply comes from the imf ( weo april 2007 ) and is measured as the size of national labour forces scaled by trade openness ( export - to - gdp ratio ’ s ). more trade openness means a larger effective labour supply as more people work in the tradable sector worldwide. bis central bankers ’ speeches nokia in finland via blackberry in canada to samsung in korea. it is vital that western countries become flexible enough to accommodate such more frequent changes, and to prevent structural problems like long term unemployment. this would also help them benefit from asia ’ s fast - growing domestic markets. germany ’ s strong exports to china show that chinese people enjoy driving an audi or bmw as much as we do. the rise of asia also affects inflation in advanced economies – an important theme for a central banker. inflation is lower because consumers directly profit from cheap imports like camera ’ s, computers and clothing. more indirectly, domestic producers also keep prices low because they are afraid of losing market share to asian competitors. the rise of asia has therefore contributed to the decline of inflation over the last decades, alongside other factors like better monetary policy. in recent years however, this was partly offset by the strong increase in food and commodity prices, which is driven by demand from emerging markets. china for instance accounted for 30 % of the growth in oil demand between 2002 and 2005. influence of asia on the financial side while the rise of asia has clear effects on the real side, the effects on the financial side are more controversial. some people claim that asia had a large influence on the exceptionally loose financial conditions that led to the financial crisis. in their view, the strong increase in global liquidity was largely driven by the savings glut in asia, particularly in china. asian | 1 |
andreas dombret : can regulation contribute towards greater stability of the financial system? speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the general conference to mark the 60th anniversary of the osterreichische bankwissenschaftliche gesellschaft, vienna, 1 october 2012. * * * ladies and gentlemen, “ can regulation contribute towards greater stability of the financial system? ” my answer to this question is, “ yes, but …. ” or to be more precise : “ yes, but only if we pay more attention to certain things in future. ” what do i mean by that? i would like to begin by emphasising the great achievements that we have reached so far. the international financial system is considerably more resistant today than it was just a few years ago. many important regulatory measures were tackled under the g20 financial sector reform agenda. many initiatives have been converted into legislation or have already entered into force ; others will follow in the months ahead. now i come to the “ but ” i just mentioned. in order to make the financial system truly safer, i believe we must pay more attention to the following two aspects in the future than we did up to now. first, we must have a closer look at the consistency of the many different regulatory projects. second, we need to intensify international cooperation. let me speak briefly about these two aspects 1 ) pay greater attention to the consistency of regulation we are currently working on a number of topics to make the international financial system more stable. of course, the progress made so far varies from one area to the next. at this point i would like to mention just three examples that keep us busy at the moment : • the transposition of capital requirements laid down in basel iii into european law ( crd iv / crr ), • the new solvency regime for the european insurance sector ( solvency ii ) and • the eu european market infrastructure regulation ( emir ). this small selection is enough to demonstrate the wide range of reforms that have been launched – from banks to insurers to individual financial instruments. this is both right and necessary. however there is a danger that we may lose overview of the financial system as a whole by pushing ahead with sector - specific regulations largely independently of one another. we need to be aware of this risk and focus our attention more on the systemic aspects of regulation. it is important to adopt such an approach in order, for example, to effectively | the system as a whole and by continuing to work closely together will we have lasting success. thank you! bis central bankers ’ speeches | 1 |
brought about by globalisation. to be sure, this is no easy ride, as international competition always necessitates painful adjustments, and switzerland is no exception in this respect. given our openness, we are immediately affected by a slowdown of the world economy. on the other hand, as in the current circumstances, we can take full advantage if worldwide business activity is healthy. when we take stock of the last few years, the bottom line looks favourable. however, we would certainly be in an even better position now if we had built up a stronger presence in emerging economies. contrary to what some people believe, i am fully convinced that globalisation is not the cause of weak growth and unemployment in switzerland ; indeed the opposite is true. foreign trade is the engine driving our economy. it has expanded in recent years in step with the global economy. by contrast, our domestic market has been much less dynamic and has registered only limited gains in productivity. in comparing switzerland to singapore the many similarities are evident. as small countries, both of us have simply no choice but to trade with the rest of the world, if we want to prosper. in many respects, we also face the same challenges : we have to adjust to a rapidly changing world, we have to remain competitive with our high technology products as well as our world - class services, and we have to focus on niche policies. in other words, we have no choice but to opt for excellence. | for the medium - term, ensuring frameworks are fit - for - purpose, learning the lessons of the past while preparing for the future and creating the narrative that helps all of us understand what is happening and why. as i complete my start - of the - year reflections, i know that a determination to be future - focused, to be open to change and to different ways of thinking and doing – however uncomfortable it can sometimes feel – will be important ingredients with which to build the resilience that will help us meet those challenges. 1 oecd economic outlook, volume 2021 issue 2. it should be noted that these predictions were estimated prior to the emergence of the omicron variant. 2 eurosystem staff projections for the euro area, december 2021 3 robert f kennedy, speech at the university of kansas, 18 march 1968, when describing the limitations of the measurement of gross national product. 4 see eurostat flash estimate - december 2021. 5 data from november 2021 6 these figures refer to the average price of australian and south african thermal coal. 7 see our strategy 5 / 5 bis central bankers'speeches | 0 |
out differences in living conditions. germany has this in the form of horizontal financial equalisation among the federal states [ landerfinanzausgleich ], as well as transfer payments to the states of former east germany, which are financed by the solidarity surcharge [ solidaritatszuschlag ]. it may well be that one day the political will considers fiscal transfers between the member states of the euro area necessary and desirable. however, that would then require a change conclusions of the presidency, european council in copenhagen, http : / / www. consilium. europa. eu / uedocs / cms _ data / docs / pressdata / en / ec / 72921. pdf. see the opinion of advocate general cruz villalon on case c - 62 / 14, peter gauweiler, et al. and fraktion die linke im deutschen bundestag v deutscher bundestag ( request for a preliminary ruling from the bundesverfassungsgericht ( germany ) ) delivered on 14 january 2015, paragraph 38 ff. bis central bankers ’ speeches 21 – 22 june 1993, to the european treaties. there is no provision for a transfer union in the current treaty. and whether you like it or not, that applies to the front door as well as the back door. this is something which those who call for more ( financial ) solidarity must realise. more solidarity within europe in this sense would also require more european control. but we don ’ t yet have a “ euro area parliament ” with the democratic legitimation for this, or a supranational budget worthy of this name. at the moment i see correspondingly little willingness from national parliaments to relinquish their budgetary powers in order to centralise them at the european level. the flipside of this coin, however, is that member states, with their own national budgets, have disproportionately more individual responsibility. even without financial transfers, there must be reasons why it is more attractive for member states to be part of the monetary union than to stay outside it. in addition, they must be better off in the euro area than out. in concrete terms, membership of the euro should bring more stability and prosperity. in this respect, the monetary union has already taken considerable steps towards integration. but a common internal market and a single monetary policy alone is not enough to achieve this in the long run. with strict | 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. | 0.5 |
##b ), “ the greek economy : prospects and main challenges ”, speech at the 2nd eu - arab world summit, athens, november. www. bankofgreece. gr / pages / en / bank / news / speeches / dispitem. aspx? item _ id = 482 & list _ id = b2e9402e - db05 – 4166 – 9f09 - e1b26a1c6f1b stournaras, y. ( 2017a ), “ greece and the global economy : prospects and main challenges 6 / 7 bis central bankers'speeches ahead ”, speech at an event organised by credit suisse, athens, 11 october. www. bankofgreece. gr / pages / en / bank / news / speeches / dispitem. aspx? item _ id = 476 & list _ id = b2e9402e - db05 – 4166 – 9f09 - e1b26a1c6f1b 1 it is about 30 million euro in january - november 2017. services receipts from spain account for approximately 1. 0 % of total greek exports of services ( and have declined by 11 % in nominal terms in 2012 – 2016 ), while payments to spain account for about 2. 2 % of total greek imports of services ( and have increased by about 9 % in nominal terms in 2012 – 2016 ). 2 ( 2 ) for an overview of the literature and an empirical analysis of the role of institutional factors in long - term growth in the eu, see masuch, k., moshammer, e. and pierluigi, b. ( 2016 ) : institutions and growth in europe ”, ceps working document no 421. 7 / 7 bis central bankers'speeches | markets. i very much welcome this initiative by the ebrd to communicate the modalities of the programme and how exporting and importing firms in greece can benefit from it. i am sure that we will have a fruitful, informative and interesting discussion. bis central bankers ’ speeches | 0.5 |
for fostering best practices, raising awareness and helping us to improve our processes especially in this area of financial stability in the region in general. finally, i hope that you will find this workshop stimulating and that you will enjoy your stay in zambia. with these remarks, i declare this workshop officially open. i thank you. bis central bankers ’ speeches | matters of common interest. i am pleased to note that over the past few years, the region has taken a proactive stance towards promoting harmonisation of regulatory and supervisory frameworks and the integration of financial systems. through mefmi, sadc, comesa, the east african community ( eac ) and the west african bloc, member central banks are working together to promote effective supervisory standards geared towards achieving long term goals of financial inclusion and financial stability. bis central bankers ’ speeches ladies and gentlemen, i note with gratitude that this workshop is designed to address supervisory standards in the non - bank and microfinance sector through three main themes, namely ; i ) regulatory structures, ii ) international trends and standards, and iii ) integration of non - banks into the formal sector. these are all very important and topical issues and allow me to talk a little bit more about one of these themes – the development of regulatory structures. first, while there is a definite role for international standards for regulation of this sector, it is very important that they are implemented in a way that takes into account the individual circumstances of each country. secondly, the standards we adopt should in the end not impede financial sector inclusion. we need to balance this in order to achieve our overall objective which is a sound and efficient financial system. ladies and gentlemen, it is important not to assume that supervisory arrangements should be, or can be, the same in every country. they must be tailored to the individual circumstances of each country. as an example, what is appropriate for namibia may be totally inappropriate for another country like uganda, and vice versa. however, there are likely to be common characteristics that cut across and can enable us all to learn from each other. i do not wish to prescribe what you should talk about throughout this workshop, but i am hopeful that what i have mentioned above can form some discussion points in the deliberations of this workshop. it is also my desire that as you travel back to your respective countries, you would have learnt something you can implement to improve our respective financial systems. in conclusion, as financial markets become increasingly globalised, supervisory co - operation and harmonisation become increasingly important. organisations such as mefmi play an important role in developing capacity in the identified areas of macroeconomic and financial sector management. ladies and gentlemen, allow me to commend mefmi which has been in the fore front of building sustainable capacity in financial supervision in the sub - region. it has shown the cause | 1 |
systems ultimately rest. over the past 70 years, financial markets have worked on the assumption that public debt in advanced economies was, indeed, risk - free. that basis has now been shaken, both by psi in europe and the debate on the debt ceiling in the us. we used to think of public debt in major countries as a riskless asset. not anymore, or at least not to the same extent. the immediate effects seem benign so far in the us, which remains the deepest and most liquid bond market in the world. in europe, by contrast, there have been more dramatic consequences. once credit risk has entered into sovereign bonds, a fundamental element of instability has been introduced. this is why, unfortunately, the strong statement made in the communique of the euro area heads of 21st july that greece was a unique and exceptional case did not impact the market and was followed by an increase in sovereign spreads for all peripheral countries. a second, more recent, decision may have contributed to intensifying the current turmoil. it was rightly decided by european regulators, under the auspices of the european banking authority, that banks should hold more capital to face increased uncertainty in the current environment. a deadline was set for them to achieve a 9 % core tier 1 ratio, based on a commonly agreed definition of capital. unfortunately, however, calibration for this exercise explicitly incorporated a mark to market assessment of each bank ’ s exposure to sovereign debt. although this element of the calibration was deemed to have been done once and for all, just for the purpose of calculating an additional capital cushion above the objective of 9 %, the market considered the risk that it might be repeated in other circumstances. this created a powerful disincentive to hold, let alone acquire, such debt, since banks felt they could be penalized in the future. banks are major actors on the sovereign bond markets and it is certainly no coincidence that liquidity dried up and spreads went up in most markets in the days following that decision. policy responses cumulative and destabilizing dynamics need to be addressed by a conjunction of complementary actions. first, it is essential to stabilize european bond markets. we have to recognize that the necessary degree of fiscal adjustment is heavily dependent on the level of market confidence. this has been well recognized by france with the recent eur 18 billion consolidation package for this year and 2012, consisting notably of tax benefit reductions, vat increases and an acceleration of the pension reform. but we also know | also be possible to do so. in belgium the debate on the reform of corporate tax, for example, has been going on for quite some time. there is still a heavy reform agenda. much still needs to be done and not everyone agrees on how to go about it. the risk is that the appetite for reform will wane as the economy improves. people have a tendency to lean back and take a break. is that what ’ s happening in belgium now? not only in belgium. there is a sort of honeymoon atmosphere. times have been hard and people would like to take a break from reforming and enjoy the improvements for a while. there ’ s a kind of reform fatigue. but not everyone is enjoying the recovery because unemployment is still too high and there are differences in contracts between insiders and outsiders, etc. but it has to happen, because monetary policy can ’ t fix everything. france is a good example. the financial situation there was not much different to that in germany. there was no banking crisis in france. but growth has been weaker in france than in germany, because german industry was able to adapt, to focus on new markets – first china, then the united states. they have more smes that are export oriented, whereas french industry is much more dependent on a number of national champions. this shows that there are limits to what monetary policy can do. critics are saying that the ecb ’ s low interest rate policy is reducing the incentive to reform. governments should have made more use of the low interest rates. but the fact that there has been too little reform isn ’ t because low interest rates are making it easier for them to muddle through. rather, it ’ s because they aren ’ t managing to sell the reforms. i talk to politicians regularly and they all know what needs to be done. but they are also afraid that they won ’ t get elected again afterwards. i hope that the general public, through seeing better and better results, will start to grasp the importance of reforms. will the [ rise of the far left ] ptb party in wallonia have a major impact? yes, i ’ ve seen it. but take macron : he ’ s been able to build a movement because there was a window of opportunity to go for reforms. but that has nothing to do with the interest rate. in france the public voted for macron because they want changes, but we have yet to see which ones will actually get through. in belgium the government | 0 |
##ntial standards for large banking organizations and nonbank financial firms designated by the fsoc. these standards will include enhanced risk - based capital and leverage requirements, liquidity requirements, and single - counterparty credit limits. the standards will also require the fsoc ’ s internal structure consists of a deputies committee – composed of personnel from all of the voting and nonvoting members – and six other standing committees, each with its own specific duties. the deputies committee, under the direction of the fsoc members, coordinates the work of the six committees and aims to ensure that the fsoc fulfills its mission in an effective and timely manner. bis central bankers ’ speeches systemically important financial firms to adopt so - called living wills that will spell out how they can be resolved in an orderly manner during times of financial distress. the act also directs the federal reserve to conduct annual stress tests of large banking firms and designated nonbank financial firms and to publish a summary of the results. to meet the january 2012 implementation deadline for these enhanced standards, we anticipate putting out a package of proposed rules for comment this summer. our goal is to produce a well - integrated set of rules that meaningfully reduces the probability of failure of our largest, most complex financial firms, and that minimizes the losses to the financial system and the economy if such a firm should fail. the federal reserve is working with other u. s. regulatory agencies to implement dodd - frank reforms in additional areas, including the development of risk retention requirements for securitization sponsors, margin requirements for noncleared over - thecounter derivatives, incentive compensation rules, and risk - management standards for central counterparties and other financial market utilities. the federal reserve has made significant organizational changes to better carry out its responsibilities. even before the enactment of the dodd - frank act, we were strengthening our supervision of the largest, most complex financial firms. we created a centralized multidisciplinary body called the large institution supervision coordinating committee to oversee the supervision of these firms. this committee uses horizontal, or cross - firm, evaluations to monitor interconnectedness and common practices among firms that could lead to greater systemic risk. it also uses additional and improved quantitative methods for evaluating the performance of firms and the risks they might pose. and it more efficiently employs the broad range of skills of the federal reserve staff to supplement supervision. we have established a similar body to help us effectively carry out our responsibilities regarding the oversight of systemically | - essentially the same pace as in march 2003, and the core pce price index change from twelve months earlier moved back above the 1 percent level in both february and march. although the increased pace of economic activity has put some upward pressure on prices at earlier stages of processing and higher energy prices are being passed through to the prices of some products, strong productivity growth and slack in resource utilization have kept core retail price increases in check. household financial conditions some commentators have expressed concern about the rapid growth in household debt in recent years, fearing that households have become overextended and will need to rein in their spending to keep their debt burdens under control. my view, however, is considerably more sanguine. although there are pockets of financial stress among households, the sector as a whole appears to be in good shape. as bankers, you are well aware that households have taken on quite a bit of debt over the past several years. according to the latest available data, total household debt grew at an annual rate of 10 percent between the end of 1999 and the fourth quarter of 2003 ; in comparison, after - tax household income increased at a rate of 5 percent. but looking below the aggregate data, we must understand that the rapid growth in household debt reflects largely a surge in mortgage borrowing, which has been fueled by historically low mortgage interest rates and strong growth in house prices. indeed, many homeowners have taken advantage of low interest rates to refinance their mortgages, some having done so several times over the past couple of years. survey data suggest that homeowners took out cash in more than one - half of these “ refis, ” often to pay down loans with higher interest rates. on net, the resulting drop in the average interest rate on household borrowings, combined with the lengthening maturity of their total debt, has tempered the monthly payment obligations from the growing stock of homeowners'outstanding debt. the federal reserve publishes two series that quantify the burden of household obligations. the first series, the debt service ratio, measures the required payments on mortgage and consumer debt as a share of after - tax personal income. the second series, the financial obligations ratio, is a broader version of the debt service ratio that includes required household payments on rent, auto leases, homeowners'insurance, and property taxes. both ratios rose during the 1990s, and both reached a peak in late 2001. since then, however, they have receded slightly on net from their | 0.5 |
the economy is bound to recover, but recovery is not necessarily just around the corner. the imf expects the us economy to grow at a rate of 2. 2 % in 2003. according to this es - timate, the euro area can expect gdp growth of 1. 1 %, while germany should brace for a third year in a row with significantly sub - par growth of 0. 5 %. in 2002, north america and non - japan asia were the main contributors to world output growth, with the euro area and japan lagging behind significantly. two implications are worth consideration : 1. first, the world economy is depending far too heavily on the us taking the driver ’ s seat. the euro area and japan must work on improving their ability to produce self - sustained economic growth. 2. second, the world economy is even more fragile than this tilted growth performance suggests at first sight, for the growth path of the us economy itself is somewhat unbalanced. its macroeconomic imbalances deserve careful addressing. the expectation that the world economy will return to a healthy and stable growth path once the dust of war in the middle east has settled is unrealistic to begin with. obviously, the workload for the world economy to return to healthy growth will be high on both sides of the atlantic. in the euro area structural weaknesses have been building up for more than a decade. they are well known, as is the adequate therapy. labour market inflexibility is the core european weakness. in a currency union, market flexibility is all the more crucial as exchange rates can no longer cushion asymmetric shocks. the euro - area countries now need to seize the opportunity to embark on serious reforms during times of crisis, where the reform zeal is more pronounced than at more quiet times. the key message the present situation of the world economy conveys for europe is that europe would be well - advised to improve its ability to grow on its own. a tripolar economic and financial world cannot afford to rely on one pole only. europe, especially now that european union enlargement is just a year away, has a responsibility to assume in at least three areas : the political, the financial and the economic field. we are prepared. we have strengths we can build on. the framework for economic and monetary union is sound and strong. you probably know that a european convention is working on drafting a european constitution. for over four years we have had a single currency, the euro. first, | inadequate rules is not confined to banks. artificial additional demand for sovereign debt may lead to distorted price signals and, as a consequence, to private investment being crowded out. and of course, it gives governments the wrong incentives. even central banks are affected, because they accept sovereign bonds as collateral when lending money to banks. thus, neglecting sovereign risk is not only inconsistent both from an economic and a regulatory view ; it also produces sizeable side - effects in other domains. the european debt crisis is the best evidence there is on the detrimental linkages between states and domestic banks. we can only contain these unhealthy relationships if we target the root causes, such as the lack of regulatory treatment of sovereign risk. what could be the therapy? it would consist of two components : non - zero risk weights as well as concentration limits for sovereign exposures. concentration limits directly relate to a fundamental principle of banking : never put too many eggs in one basket. in the status quo, euroarea sovereign bonds are exempt not only from non - zero risk weighting, but also from the existing concentration limits. 4. the road ahead of course, simply believing that the euro - area architecture contains structural flaws will not, in itself, invoke change. transitioning towards a more desirable order may get tough for those affected. banks do not only make some of their money with sovereign bonds ; they also use this paper as collateral in interbank markets and for their borrowing from central banks. also, increased holdings in sovereign bonds have helped banks comply with stricter capital requirements and newly enacted liquidity requirements. for example, german banks were able to improve their capital ratios partly by increasing their holdings of euro - area sovereign bonds relative to investments, which lowered their rwas. amending the regulation of sovereign risk gives rise to a number of tasks in the management of banks. a similar storyline can be told about states that are highly indebted. putting an end to subsidised lending will often be onerous. some may also be worried about cliff effects. 4 / 6 bis central bankers'speeches we need to take those temporary burdens into account. whatever path the european financial architecture is taking, we need to ensure that it is not only viable, but also feasible in the first place. but the fact that resistance to reforms happens for a reason does not mean that it is a superior reason. this is evident in the field of government financing. markets have not been able to discipline governments. but | 0.5 |
applause! indeed, given the global economic slowdown resulting from the continuing financial crisis, it is important that we remain united in our efforts to minimize its adverse impact on our country and our people. ensuring the availability of market liquidity is a critical element in a comprehensive approach to avoiding a severe slowdown. in this connection, the bangko sentral ng pilipinas has been implementing a series of moves in accordance with this overall thrust to provide better access to credit. among others, we have done the following : • first, we have reduced policy interest rate twice since december 2008 by a total of 100 basis points. in effect, we have lowered the cost of money for banks. this paves the way for banks to charge lower interest rates for their loans and in effect reduce the overall cost of borrowing and doing business ; • second, we have reduced the deposit reserve requirements for banks by 2 percentage points. this should infuse roughly p60 billion in additional liquidity. latest information reveal that demand for money remain strong : in december 2008 domestic liquidity grew by 15. 6 percent from the previous year. this double - digit growth in domestic liquidity indicates that there are funds available in the system which could be tapped for investment and other productive activities ; • third, we have opened a us dollar repurchase facility. this is a preemptive move on our part to provide liquidity to the market, not only in pesos but also in dollars. relevant to this, i wish to report that our country ’ s gross international reserves is at an all - time high of $ 39. 2 billion as of end - january 2009 ; • fourth, through the “ credit surety fund ( csf ) ” program which it conceptualized, the bangko sentral ng pilipinas has provided leadership in addressing the problem of our msmes or our micro, small, and medium entrepreneurs in getting loans for lack of collateral. the credit surety program brings together well - managed and wellcapitalized cooperatives with local government units and other donors to provide surety cover, in place of collateral, to guarantee msmes ’ bank loans. the credit surety fund operates at the provincial level and has been launched in cavite, aurora, and bohol. i am happy to report that more provinces have expressed interest in joining this csf program. • fifth, to provide banks better access to additional funds which they can relend to the public, we have increased the budget for | it adjusted its gdp growth projection upward for 2021 to 5. 0 - 5. 5 percent from 4. 0 - 5. 0 percent. moreover, it expects the economy to grow by 7. 0 - 9. 0 percent in 2022 and 6. 0 - 7. 0 percent in 2023 and 2024. another macroeconomic concern is inflation. for monetary authorities around the world, the foremost question is whether the elevated inflation is temporary or permanent in nature. views diverge. a number of central bankers chose to tighten monetary policy to keep their economies from overheating while others opted to take a wait - and - see approach. for the philippines, inflation settled at an average of 4. 5 percent in 2021 after falling to 3. 6 percent in december from 4. 2 percent in november. this is slightly above the official target range of 2 - 4 percent. the elevated inflation this year is driven largely by supply - side pressures and do not warrant monetary interventions at this time. but we expect it to revert to 3. 3 percent in 2022 and 3. 2 percent in 2023. based on survey of selected economists, inflation expectations remain anchored. an important policy question is : should we follow other central banks who have tightened policy at this time in the face of persistently elevated inflation? i disagree. to me, the harm of tightening monetary policy too soon exceeds the harm of moving too late given that the philippine economy is still at its nascent state of recovery. this crisis, while unprecedented in scale and scope, is unlike other crises in the past. previous philippine crises were characterized by rising interest rates cum depreciating peso, aggravated by foreign exchange outflows. by contrast, in this crisis, interest rates are at a historic low and the gross international reserves ( gir ) are more than sufficient. the gir reached usd107. 72 billion in november. this level is equivalent to 10. 2 months ’ worth of goods imports and payments of services and primary income. the received doctrine is that three - months ’ worth of goods imports is sufficient. the level also represents 8. 7 times the country ’ s short - term external debt based on original maturity and 5. 7 times based on residual maturity. thanks to receipts from business process outsourcing firms and remittances from overseas filipinos, we expect gir levels to remain steady or expand even more. i am cautiously optimistic on the economic prospects of the philippine economy. i agree with | 0.5 |
bankers'speeches | the currency of a payment obligation should be determined by the law of the country of that currency. this means for example that a payment obligation payable in french francs would become payable in euros after the introduction of the euro because that is the situation that applies under the law of france. however, despite this general principle, concerns have been expressed that parties to contracts might argue that the introduction of the euro represented a fundamental change of circumstances, bringing the contract to an end or requiring its terms to be adjusted. in addition, another feature of the introduction of the euro is that it will replace the ecu at a rate of one for one on 1 january 1999. the ecu is a currency basket but not a currency in its own right. the “ lex monetae ” principle does not apply in this case and therefore the euro will not automatically substitute for the ecu in contracts. it is to remove uncertainty on these points that we have decided to legislate. we believe that this is appropriate for an international financial centre such as hong kong. the financial and legal community in hong kong strongly supports this view. this is just one specific example of how hong kong is affected by the introduction of the euro. there will undoubtedly be more far - reaching effects on our economy and our financial system as the single currency takes root. this is why this seminar is timely and important. i hope that you will find it enjoyable and useful. | 0.5 |
euro area, the governing council welcomes the reaffirmed commitments of the governments of euro area countries with fiscal imbalances to adhere to the objective of achieving balanced budgets by 2003 - 2004. the confirmation of the political will to continue along the path of fiscal consolidation is most appropriate. the governing council supports the actions taken by the european commission in the context of the stability and growth pact and the subsequent outcome of the ecofin council meeting last month. it is now necessary to remain vigilant in order to ensure strict adherence to the medium - term plans and rigorous implementation of the procedures of the stability and growth pact. in order to further improve the fundamentals of the euro area and to put the expected recovery on a broad and sustainable basis, euro area countries must strengthen their efforts to implement comprehensive structural reforms. over the past few years progress has been made with regard to enhancing the flexibility of euro area product and capital markets. euro area countries have also made some headway in terms of improving the way their labour markets operate. these reforms, together with moderate wage developments, have contributed to the strong employment growth and the considerable reduction in unemployment witnessed in many euro area countries in the last cyclical upswing. however, it is worth noting that despite the continued high unemployment in the euro area, firms continue to report difficulties in terms of recruiting suitably qualified workers. this suggests that further improvements in the functioning of euro area labour markets and their ability to match labour supply and demand are needed. evidence gathered in a recent eurosystem analysis, which will be published shortly, supports this view. in this context i would also like to stress that structural reforms in different markets should not be seen in isolation. the more efficiently euro area product and capital markets function, the greater the success of labour market reforms will be in creating employment opportunities. we are now at your disposal for questions. | has been happening so far, is that the financial industry must always be closely linked with the real sector activities, the fundamental economic. the indonesian economy and financial industry during turmoil as in some emerging economies, indonesia essentially has quite a strong fundamental, and much better compare to what was during 1997 / 98 asian crisis. however, as i previously mentioned the crises that caused global economic growth slump and the international trade volume squeeze, as well as a high degree of uncertainty that surrounded the international financial market has also weakened the domestic economic activities. yet, the economy is still able to expand. the indonesia ’ s economy grew at 6. 1 % in 2008. the indonesian economic growth reached the bottom in quarter ii 2009 at 4 %, a 0. 4 % drop from previous quarter of 4. 4 %. we expect that the indonesian economy will grow at 4. 0 to 4. 5 % in 2009, higher than previously estimated. the domestic economic growth is mainly supported by domestic demand which contribute more than 60 % of gdp and natural resources export. in 2010, we expect the economy will grow at 5 % to 5. 5 %. along with declining domestic economic activities in 2009, inflation rate has also descended. as of september 2009, the year to date inflation rate is 2. 28 %. inflation is expected back to its normal pattern in 2010 at 5 + / - 1 % as economic activities start accelerating. in addition, the domestic banking industry is also in relatively sound condition and well capitalized. the average capital adequacy ratio ( car ) is around 17 % and the gross nonperforming loan ( npl ) ratio is below 5 %. those facts show that the indonesian economy is relatively sheltered from the biggest turbulence since the world ’ s war ii. however, foreign investors tend to undermine those facts, and perceived risks exaggeratedly on the indonesian economic fundamental. despite that, it was true that the crisis caused panic and lost of confidence, in particular post lehman brothers collapsed on 15 september 2008, which led to the phenomenon of holding cash alike and safe haven assets, it has put significant pressure on indonesian economy and increasing volatility in the domestic financial market. risk perception on the indonesian financial market has been so high as shown in the hike of cds spread, that reach a peak of around 1000 bps in october 2008, the highest spread amongst countries within the region. further, the exodus from emerging market financial assets, led the government bond ( sun ) price index ( idma index ) | 0 |
datasets could be used. in germany, dois are assigned by the registration agency for social science and economic data ( da | ra ). see https : / / www. da - ra. de / geta - doi see european commission ( 2022 ). the workshop concluded to support follow - up work on developing an international microdata standard, to investigate what is feasible, including how undertakings by member countries could be established and enforced. page 11 of 18 deutsche bundesbank, directorate general communications wilhelm - epstein - strasse 14, 60431 frankfurt am main, germany, tel. : + 49 ( 0 ) 69 9566 33511, fax : + 49 ( 0 ) 69 709097 9000 presse @ bundesbank. de, www. bundesbank. de reproduction permitted only if source is stated. new dgi. 34 in 2022, these institutions were asked to fine - tune the workplan. 35 hence, all the necessary ingredients are in place to start work on a global microdata standard. 36 step 3 : how to close data gaps? even under the most optimistic scenario in terms of enhancing the usability of existing data, gaps will remain. international investors are increasingly calling for improved reporting by companies not only on climate, but also on social and governance ( esg ) issues. in 2021, the ifrs foundation trustees thus announced the creation of a new standard - setting board – the international sustainability standards board ( issb ) – to help meet this demand. 37 closing data gaps sufficiently fast requires costs and benefits to be well - balanced and practical approaches to be taken. new reporting requirements require strong justifications and well - justified data needs. the eu proposal for a corporate sustainability reporting directive ( csrd ) is a good example in this regard. 38 under the new eu taxonomy and through the efforts of the issb, firms will disclose new and relevant data. overall, it is important to improve the cost - benefit balance of this reporting. the g7 under this year ’ s german presidency thus called for international organisations to take concrete steps to improve accessibility of sustainability data. at the same time, esg criteria and taxonomies are not without criticism. a recent issue of the economist argues that esg standards are flawed for many reasons – for being too imprecise, for not having clear objectives, and for addressing too many different aspects of firms ’ behaviour. 39 many of these points are quite | ##se 14, 60431 frankfurt am main, germany, tel. : + 49 ( 0 ) 69 9566 33511, fax : + 49 ( 0 ) 69 709097 9000 presse @ bundesbank. de, www. bundesbank. de reproduction permitted only if source is stated. 1. 3 measuring time the measurement of time is another example illustrating the interaction between the private and the public sector. with today ’ s digital tools, measuring time has become so instantaneous that we almost do not pay attention to it anymore. as we disembark from planes in remote parts of the world, our electronic devices automatically switch to the new time zone. in earlier eras of globalisation, measuring the exact time was an almost insurmountable challenge. on the high sea, the most important piece of information is knowing your exact position. this is defined by latitude and longitude. latitude is easily determined by the sun and the stars, with the help of a sextant. longitude is much harder to measure. the exact time at a location with a known longitude, such as greenwich, is needed to infer the longitude of your own position. without a standardised and exact time, navigators could not afford to take the shortest route, they had to sail along known coasts. this inefficiency was addressed through a combination of public - sector incentives and private - sector innovation. governments of sea - faring nations offered prizes for a workable solution. in 1717, the british parliament offered a reward of up to £20, 000 ( about £3, 350, 000 in today ’ s prices ) for a seagoing clock that was sufficiently accurate to measure longitude. john harrison, a british carpenter and clockmaker, solved the problem and revolutionised navigation and international trade. 12 in this example, improved measurement was driven by structural change and then itself became a major driver of economic development. it also generated rents : clockmaking was a highly lucrative business at the time when international travel took off. implications for climate statistics the above examples show that an active public sector is needed to support and develop measurement systems. measurement systems help to solve coordination problems, but they themselves require coordination. standardised systems of measurement such as the metric system have huge benefits. they save us from discussing how to express the length of screws or the voltage of power lines. nevertheless, there is no market mechanism that could lead see history of longitude - wikipedia. page 6 of 18 deutsche | 1 |
is mixed. what is clear is that credit conditions are unambiguously tighter than two months ago, underlining that source of downside risk to the outlook for demand and inflation. in retail lending markets, banks have raised the interest rates charged ( relative to bank rate ) on new lending, but they have all been doing much the same and many borrowers seem to have been willing to pay the extra. in consequence, banks generally may not have achieved their desired conservation of balance sheet capacity, and we are now seeing the withdrawal of some lending products. and in wholesale markets, the spread between the price that the banks themselves pay for funds, roughly libor, and the expected central bank policy rate has, again, widened significantly over the past couple of months across the major international markets. many financial contracts are linked closely to three - month libor so, other things being equal, the increase in money market spreads has the effect of reducing the level of bank rate consistent with unchanged monetary conditions. at the committee ’ s march meeting, i judged that an immediate further cut, following february ’ s, might very easily have been misunderstood as a change of strategy away from the one focused on the medium - term outlook for inflation that i have spelled out this evening. my own vote at the april meeting will depend on all the data, some of it still to reach us, since then. financial system deleveraging : legacy portfolios whatever path monetary policy takes in the uk in the months ahead, it is clear that the process of deleveraging in the financial system is not complete. some asset prices embody a hefty discount for the current illiquidity in markets, which feeds into the accounting measure of financial firms ’ capitalisation, and so into perceptions of counterparty credit risk and money market conditions. in consequence, there remains a risk that credit creation – the lubricant that the financial system provides to the real economy – will be further impaired. several features of our financial system lie behind this, and i want to touch on just a few of them. financial markets have swung from a prolonged period of underpricing risk to now plausibly overpricing risk on at least some products. and yet, one might think perversely, we have also swung from an over abundant supply of credit to a much more restrictive supply of new credit. the global insurance industry provides an interesting contrast with banking in this respect. for sure, it too is capable of systematically mis | this tradeoff between risk sensitivity and competitive concerns, on the one hand, with the additional reporting burden on the other, so that we can develop a proposal for capital that is workable for the large number of banks that will continue to use basel i as amended. in addition to the basel i anpr, the u. s. banking agencies issued within the past two weeks a statement about the plans for basel ii implementation in the united states. the agencies had previously indicated a delay in the basel ii notice of proposed rulemaking based on the results from a recent quantitative impact study ( qis4 ), which showed a wider dispersion and larger overall drop in regulatory capital requirements for the qis4 population of banks than the agencies had expected. i am very pleased that the agencies, based on additional analysis of qis4 data over the summer, were able to come to an agreement on a way forward, described in the recent interagency statement. in our statement, we made every effort to provide as much information as possible to institutions interested in basel ii, and also, i hope, showed how seriously we are taking basel ii implementation and paying attention to its possible consequences. in particular, the agencies underscored the prudence we are using in moving to basel ii by revising the proposed implementation timeline and suggesting extra safeguards beyond the ones already in the basel ii framework. as we move forward, we continue to heed the findings from qis4, especially those relating to the overall level of regulatory capital. capital serves as an important backstop against risk - taking and we need to ensure that an adequate level of capital is produced by the basel ii framework. as i have said before, the federal reserve would not be comfortable qualifying any bank based on the results of qis4, if basel ii were to be applied today. the qis4 results demonstrated that bank data and risk - 3 / 5 management systems required by basel ii are not yet fully developed and implemented as expected by the framework. to be sure, by the time that basel ii " goes live, " bankers would have significantly more information regarding our expectations on model specifications and more robust default and loss - severity data. banks would also have to adhere to the qualification standards set by supervisors. the road to basel ii will take several more additional steps, but we believe they are well worth the effort. we will carefully review the comments to the anpr on basel i amendments, and then move to a notice of proposed | 0 |
: for example, over the six months through april, the bis central bankers ’ speeches price index for personal consumption expenditures has risen at an annual rate of about 3 - 1 / 2 percent, compared with an average of less than 1 percent over the preceding two years. although the recent increase in inflation is a concern, the appropriate diagnosis and policy response depend on whether the rise in inflation is likely to persist. so far at least, there is not much evidence that inflation is becoming broad - based or ingrained in our economy ; indeed, increases in the price of a single product – gasoline – account for the bulk of the recent increase in consumer price inflation. 1 of course, gasoline prices are exceptionally important for both family finances and the broader economy ; but the fact that gasoline price increases alone account for so much of the overall increase in inflation suggests that developments in the global market for crude oil and related products, as well as in other commodities markets, are the principal factors behind the recent movements in inflation, rather than factors specific to the u. s. economy. an important implication is that if the prices of energy and other commodities stabilize in ranges near current levels, as futures markets and many forecasters predict, the upward impetus to overall price inflation will wane and the recent increase in inflation will prove transitory. indeed, the declines in many commodity prices seen over the past few weeks may be an indication that such moderation is occurring. i will discuss commodity prices further momentarily. besides the prospect of more - stable commodity prices, two other factors suggest that inflation is likely to return to more subdued levels in the medium term. first, the stillsubstantial slack in u. s. labor and product markets should continue to have a moderating effect on inflationary pressures. notably, because of the weak demand for labor, wage increases have not kept pace with productivity gains. thus the level of unit labor costs in the business sector is lower than it was before the recession. given the large share of labor costs in the production costs of most firms ( typically, a share far larger than that of raw materials costs ), subdued unit labor costs should remain a restraining influence on inflation. to be clear, i am not arguing that healthy increases in real wages are inconsistent with low inflation ; the two are perfectly consistent so long as productivity growth is reasonably strong. the second additional factor restraining inflation is the stability of longer - term inflation expectations. despite the recent pickup in overall inflation, measures of households ’ longerterm | worst financial crisis and the most severe housing bust since the great depression, and it faces additional headwinds ranging from the effects of the japanese disaster to global pressures in commodity markets. in this context, monetary policy cannot be a panacea. still, the federal reserve ’ s actions in recent years have doubtless helped stabilize the financial system, ease credit and financial conditions, guard against deflation, and promote economic recovery. all of this has been accomplished, i should note, at no net cost to the federal budget or to the u. s. taxpayer. although it is moving in the right direction, the economy is still producing at levels well below its potential ; consequently, accommodative monetary policies are still needed. until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established. at the same time, the longer - run health of the economy requires that the federal reserve be vigilant in preserving its hard - won credibility for maintaining price stability. as i have explained, most fomc participants currently see the recent increase in inflation as transitory and expect inflation to remain subdued in the medium term. should that forecast prove wrong, however, and particularly if signs were to emerge that inflation was becoming more broadly based or that longer - term inflation expectations were becoming less well anchored, the committee would respond as necessary. under all circumstances, our policy actions will be guided by the objectives of supporting the recovery in output and employment while helping ensure that inflation, over time, is at levels consistent with the federal reserve ’ s mandate. bis central bankers ’ speeches | 1 |
the escalated political tension was also something we had not anticipated. in particular, the damage it has inflicted on the tourism sector will significantly shave off one significant source of external revenue the economy has relied on. still, we see the economy ’ s growth momentum to remain in tact. here i am not alone in believing so. the latest set ’ s ceo survey released last week showed that the majority of listed companies ’ ceos remained confident in the growth prospect of the thai economy. obviously, this is a difficult time for the economy. but you have to remember that we are no strangers to difficult challenges, some much worse than what we are facing. most importantly, as i repeatedly said on different occasions, thailand possesses strong economic fundamentals and room for maneuvering the right policy mix that makes us resilient against economic shocks. allow me to elaborate on some of these. first, thailand ’ s external position remains strong. our external debt to gdp has hit an alltime low since 1980, recording 29. 4 percent last year. our foreign reserves doubled within three years reaching over 100 billion us dollar at present day. the amount of foreign reserve has by far exceeded the short - term external debt by more than four times. this provides us an ample room to safeguard against instability from volatile capital flows and exchange rate movements. second, the government ’ s fiscal position continues to improve as reflected by a falling trend of public debt to gdp. this gives the government the financial flexibility to tackle economic problems and stimulate the economy if necessary. it is no coincidence that credit rating companies often stated the strength of our fiscal and external position in their underlying reasons for affirming thailand ’ s sovereign ratings. in fact, to cite james mccormack, the head of asia sovereign of fitch ratings, at the firm ’ s last week annual thailand conference, unless political uncertainty significantly undermines thailand ’ s future growth prospect, it is unlikely that thailand will be downgraded, for the country ’ s sovereign credit fundamentals remain sound. third, the banking sector remains healthy and strong enough to weather the current global financial turmoil. the bis ratio remains high and the ratios of npls to total loans continued to decline. together with the implementation of ias39 accounting standard in 2006 - 2007 and the adoption of basel ii by the end of this year, the banking sector would be less prone to adverse shocks. finally, the soon - to - be - implemented second phase of the financial sector master plan will further improve efficiency of | only make the scenario far reaching. without the resuscitation of investment, thailand ’ s potential growth rate will likely fall to a lower path. the same study also points out the impact of demographic change on thailand ’ s future growth. by 2026 - 2035, the economy ’ s potential gdp growth rate under the balanced growth path assumption is projected to fall to 4. 8 - 5. 4 % due to ageing population. moreover, the study finds that measures such as attracting foreign workers and raising the retirement age from 60 to 65 have only small impact at boosting the economy ’ s long - term growth and that the key to maintaining high growth rate lies in enhancing productivity growth rather than trying to squeeze out more hours from the aging population. while improvement in educational and skill attainment of the labor force and de - bottlenecking of inefficient sectors such as improvement in the logistic system and water management for irrigation are most obvious policies, financial deepening must not be neglected. it is the efficiency of resource allocation which includes funds and capital that enhances economic productivity, hence, raising the economy ’ s long - term growth potential. this is the focus of the rest of my talk to which i now turn. ladies and gentlemen, as you know, the fundamental function of financial markets and intermediaries is to channel funds from those who have a surplus of savings to those who have a deficit. if financial markets are functioning efficiently, they contribute to an optimal allocation of resources, reduce the cost of capital, and allow for risk - sharing and risk - diversification. well - developed and efficient financial markets contribute to higher productivity growth because they are better at channeling capital from sectors in decline to those with growth opportunities, in a process of schumpeterian “ creative destruction ” that ultimately drives economic growth. having efficient resource allocation is particularly important now for the thai economy, given the ongoing structural shift in relative prices of commodities and asset prices which render some businesses obsolete while opening up many other new opportunities. indeed, the vast body of research over the past decade strongly suggests that improvements in financial developments precede and contribute to economic performance. in other words, the widespread desire to see an effectively functioning financial system is warranted by its clear causal link to growth, macroeconomic stability, and poverty reduction. as for the specific form of financial market development, it is also well accepted by policymakers that economies that have well - developed banking sectors and capital markets are advantageous to | 1 |
##b president mario draghi has pointed out the divided opinions on the current package of measures within the governing council. i consider it not just normal, but absolutely imperative, for far - reaching measures such as government bond purchases to spark intense debate. the austrian philosopher karl popper once stated that only critical discourse could give us the maturity to consider an idea from more and more angles and to evaluate it properly. 5 and to my mind, the conditions under which the eurosystem has been buying government bonds since 2015, for example, illustrate how this kind of debate can in fact improve our decisions. during our discussions back then, we drew boundaries in the purchase programme to mitigate the risk of monetary policy being harnessed to fiscal policy. with that in mind, i hope that the decisions that have now been made do not call into question these restrictions, for example with regard to upper limits relative to a government ’ s total debt or relative to the volume of a single issue, or the principle that purchases are distributed across member states ’ bonds according to the ecb ’ s capital key and not according to the amount of government debt. after all, nothing has changed when it comes to the validity and importance of 2 / 4 bis central bankers'speeches the limits on government bond purchases decided by the governing council of the ecb. particularly in a monetary union where member states enjoy fiscal autonomy, it is vital to ensure that the line between monetary and fiscal policy does not become blurred. the central banks ’ response to the crisis also posed temptations with regard to the eurosystem, which it should not pursue. to quote ewald nowotny : “ a lot is being asked of the ecb [ … ]. some of it we can ’ t deliver – because our framework is different to that of the us fed. ” 6 this is of course all the more true of demands such as those espoused by modern monetary theory : transferring the objective of price stability to fiscal policy and making monetary policy, in the role of an agent, subordinate to fiscal policy would be doing a disservice to society. even though economists in fact disagree about many issues, the notion that independent central banks focused on price stability are good for a society ’ s prosperity is backed up by theory and empirical evidence and enjoys broad consensus. this is also illustrated by the oenb ’ s long history. at its anniversary three years ago, ewald nowotny stated : “ yet, irrespective of the | us trading times. the new enterprise is based in frankfurt. the german - chinese exchange will operate using the established and globally available infrastructure of the deutsche borse group. the three joint venture partners intentionally chose frankfurt as the financial platform from which to offer their service in a european regulatory environment and in the european and american time zones. the money flows resulting from securities settlement are to be channelled through the clearing infrastructure provided in frankfurt. in my view, china ’ s real economic development and the launch of the china europe international exchange will give rise to additional volumes of rmb payments. the german banking industry will decide which channels shall be used to clear rmb payments. nevertheless, i would wish that the german banking community will support the german financial market to become an rmb hub. this could be done by processing rmb transactions via the rmb clearing bank in frankfurt. potential prospects the bundesbank operates the target2 system together with the french and italian central banks, while the eurosystem is currently looking at strategically enhancing its market infrastructures. for example the eurosystem discusses to offer multicurrency services in a future target2 system. for such a new service the renminbi and its processing would be a candidate. a connection on infrastructure level between the chinese payments traffic and an enhanced target2 system – we can call it target3 – would also an option. however this will only be possible, if both systems use a harmonised iso 20022 standard. this is not yet the case today. all in all the surrounding will remain interesting and exciting. many new ideas and visions can still be developed. bis central bankers ’ speeches | 0.5 |
peddled around by some commentators to the effect that the recent increase in non - performing loans of the banking industry from 4 percent in june 2015 to over 7 percent in june 2016 was mainly a result of high interest rates. the truth could not be far from this. while lending rates by commercial banks have increased since 2015, the current average lending rate of about 23 percent, defined by the global entrepreneurship monitor ( gem ) as the proportion of the adult population that reported having discontinued a business within a year page 3 of 7 on shilling denominated loans, is not out of line with their historical average over the last few years. in addition, a recent review by bank of uganda to ascertain the reasons for the non - performance of large credit facilities in commercial banks indicated that only a paltry 0. 3 percent of non - performing loans as at march 2016 could be attributed to high interest rates. diversion of funds away from the intended purpose of the loan was a major contributor to the non - performing loans, only surpassed by delayed payment by government ( domestic arrears ) and cost overruns / insufficient cash flows. the above three reasons inclusive of diversion of loaned funds and poor management accounted for about sixty five ( 65 ) percent of the large non - performing loans in our banking industry. the third relates to the feedback we have received from the public during the bank of uganda golden jubilee commemoration activities that involved townhall meetings, radio talk - shows and public exhibitions in mbale, gulu, arua and mbarara. a sentiment frequently expressed by the public related to a lack of transparency on charges and interest rates by financial institutions, complaints about customer care by these institutions, and lack of information about financial products and services. i believe all the above three issues can be dealt with by increasing financial education and stronger consumer protection coupled with developing the entrepreneurship and management competencies of individuals and the smes. with better financial literacy and enterprise management, it is not inconceivable page 4 of 7 to believe that uganda would have fewer financially distressed firms, a lower business failure rate, more employment creation and higher rate of savings and investment. uganda needs to pick a leaf from several of the asian countries that you may refer to as “ manufacturing and enterprise hubs ” by enhancing its entrepreneurial education and training in order to realize higher labor and enterprise competitiveness within the global economy. the latest estimates by the global entrepreneurship monitor, measuring the extent to which training in creating or managing smes is | continued monitoring. risk assessment risks to the economic growth outlook are on the downside, especially in the near term. the war against ukraine remains a significant downside risk to the economy. energy and food costs could also remain persistently higher than expected. there could be an additional drag on growth in the euro area if the world economy were to weaken more sharply than we expect. the risks to the inflation outlook are primarily on the upside. in the near term, existing pipeline pressures could lead to stronger than expected rises in retail prices for energy and food. over the medium term, risks stem primarily from domestic factors such as a persistent rise in inflation expectations above our target or higher than anticipated wage rises. by contrast, a decline in energy costs or a further weakening of demand would lower price pressures. financial and monetary conditions as we tighten monetary policy, borrowing is becoming more expensive for firms and households. bank lending to firms remains robust, as firms replace bonds with bank loans and use credit to finance the higher costs of production and investment. households are borrowing less, because of tighter credit standards, rising interest rates, worsening prospects for the housing market and lower consumer confidence. 3 / 4 bis - central bankers'speeches in line with our monetary policy strategy, twice a year the governing council assesses in depth the interrelation between monetary policy and financial stability. the financial stability environment has deteriorated since our last review in june 2022 owing to a weaker economy and rising credit risk. in addition, sovereign vulnerabilities have risen amid the weaker economic outlook and weaker fiscal positions. tighter financing conditions would mitigate the build - up of financial vulnerabilities and lower tail risks to inflation over the medium term, at the cost of a higher risk of systemic stress and greater downside risks to growth in the short term. in addition, the liquidity needs of nonbank financial institutions may amplify market volatility. at the same time, euro area banks have comfortable levels of capital, which helps to reduce the side effects of tighter monetary policy on financial stability. macroprudential policy remains the first line of defence in preserving financial stability and addressing medium - term vulnerabilities. conclusion summing up, we have today raised the three key ecb interest rates by 50 basis points and, based on the substantial upward revision to our inflation outlook, we expect to raise them further. in particular, we judge that interest rates will still have to rise significantly at a steady pace to reach levels that | 0 |
in may 2019 and even prior to that on a number of occasions, when the idea of introducing an automatic debt restructuring mechanism for the member states of the euro area had not yet been fully discarded. 12 the proposed changes in financial assistance to member states reassert principles of common sense that are already inscribed in the treaty. for the esm, as for any other lender, it would be nonsensical to grant credit to those whose debt is not deemed sustainable, given that this would constitute a non - refundable transfer. the safeguards in terms of ex ante conditionality and ex post monitoring that flank the financing mechanisms of the esm have always been, and still are, duly rigorous. they are safeguards that protect the resources that euro - area countries ‘ invested ’ at the time of the esm ’ s establishment and, as i recalled earlier, italy is the third largest contributor. the proposed reform is, of course, the result of a compromise – between the fears of those who have always rejected any further mutualization of risks and the opposing fears of an unjustified postponement of progress towards ‘ genuine economic and monetary union ’. the best way to convince everybody of the towards a genuine economic and monetary union ( 2012 ), report by herman van rompuy in close collaboration with mario draghi, jose manuel barroso and jean - claude juncker. i. visco, ‘ the economic and monetary union : time to break the deadlock ’, keynote address at the omfif - banca d ’ italia seminar ‘ future of the euro area ’, rome, 15 november 2019. see, for example, f. balassone and i. visco ( 2018 ), ‘ the economic and monetary union : time to break the deadlock ’, the european union review, vol. 23 – 1 - 2 - 3, march - november 2018, 9 - 22. usefulness of the reform is to see it as a starting point for the purposeful resumption of the path to european integration. a first step could be to announce the intention to incorporate the esm in european legislation in the medium term. what continues to be lacking is a comprehensive plan for the completion of monetary union, one that introduces a centralized fiscal capacity and a safe asset in the euro area, as well as the completion of banking union. the possibility of introducing a common fiscal capacity capable of flanking monetary policy in the task of stabilizing the euro area must | €704. 8 billion, of which €80. 5 has been paid in ; its lending capacity stands at €500 billion. in addition to having provided bilateral financial support and having participated in efsf programmes ( committing a total of almost €44 billion ), italy ’ s subscribed capital in the esm amounts to about €125 billion and its paid - in capital is more than €14 billion. each member ’ s share of the esm ’ s capital is based on the ecb ’ s capital keys, which reflect the country ’ s share in the total population and gross domestic product of the euro area. the portion of the esm ’ s capital that is subscribed but not paid in is ‘ callable ’ at any time if needed, meaning that esm members are asked to provide the corresponding funding with little advance notice. 2. esm governance and functions the esm was established by an intergovernmental agreement, outside the judicial framework of the european union. it is headed by the board of governors, which consists of the 19 ministers of finance in the euro area. unanimous approval is required for all important decisions ( including those relating to disbursements of financial assistance and the approval of memoranda of understanding with the countries that receive it ). the board of governors chooses whether it is chaired by the president of the eurogroup ( as is currently the case ) or by a president elected from within the board itself ; terms last two years and may be renewed. for the purposes of ensuring the efficacy of the esm ’ s decision - making system, the esm may operate with a qualified majority of 85 per cent of capital if, in the event of a threat to the economic and financial stability of the euro area, the european commission and the ecb ask it to make urgent decisions concerning financial assistance. the voting rights of board members correspond to the number of shares assigned to the respective countries. germany, france and italy have shares that exceed 15 per cent and, therefore, may also veto urgent decisions. the esm ’ s executive body is the board of directors, consisting of 19 members each of whom is appointed by a governor and has extensive experience in economics and finance. it is headed by the managing director who also serves as the esm ’ s legal representative. as i mentioned, the fundamental purpose of the esm is to provide financial assistance, subject to conditions, to member countries experiencing temporary difficulties in accessing the markets, | 1 |
lending, margin loans, and overthe - counter ( otc ) derivatives. for example, the existing basel i rule only imposes capital requirements on one side of a repurchase agreement, even though counterparty credit risk is present on both sides. for these reasons, a large and complex bank operating under basel i can easily and significantly increase its credit risk, without increasing its regulatory capital. this brings me to my second point : the advanced approaches of basel ii are designed to substantially reduce the perverse incentive effects and opportunities for regulatory capital arbitrage present in basel i. in short, basel ii significantly increases the risk sensitivity of the capital rule. under the advanced approaches, capital requirements for an exposure will vary on the basis of a bank's actual risk experience. if a bank increases the credit risk of its portfolio, its regulatory capital requirements will also increase, and vice versa. the enhanced risk sensitivity of basel ii will thus ensure that banks have positive incentives for lending to more creditworthy counterparties, for lending on a collateralized basis, for increasing loan seniorities, and for holding a larger capital cushion for higher - risk exposures. basel ii also includes sophisticated methods to address capital - markets transactions. third, the basel ii regulatory capital framework has three pillars – minimum capital requirements, supervisory review of capital adequacy, and market discipline through disclosure – that build on the economic capital and other risk - management approaches of sophisticated banks and competing institutions. as a result, basel ii will be better able than the current system to adapt over time to innovations in banking and financial markets. the new framework should also establish a more coherent relationship between regulatory measures of capital adequacy and the day - to - day risk management conducted by banks. finally, i would argue that one of the key benefits of the basel ii process is that it has prompted banks to make substantial progress in developing much more sophisticated riskmeasurement and - management processes. for example, most international banks have adopted detailed rating systems for credit risk that assess both borrower and facility characteristics. that is, the banks assign one rating that reflects a borrower's overall creditworthiness, and another for each individual exposure that takes into account collateral, seniority, and other factors that affect how much a bank is likely to lose on that specific exposure if the borrower defaults. in addition, large banks are increasingly using common credit - risk measurement concepts, such as probability of default ( pd ), loss given | to revive the price discovery mechanism. first, they will likely need to collect more detailed data. in particular, investors will need to gather data more systematically to help them understand the nature and risks of the underlying assets and the structures of the instruments. second, investors will likely require enhanced systems to warehouse and model data related to these instruments to better understand their risk profile, especially under stress conditions. third, investors will likely need to ensure that they have the appropriate human capital expertise – that is, people – to interpret, understand, and act appropriately on the results of their modeling and analysis. the investment in data, modeling, and assessment will take time so there may be an extended period before normal price discovery will return in markets for some existing products. in turn, given the likely increase in the costs of producing and evaluating certain complex instruments, these actions and efforts may affect investors ’ risk - reward calculus by increasing required returns – or the " hurdle rates " – on these investments. creators and sellers may respond by reducing complexity, improving quality of underlying assets or increasing transparency and disclosure. in light of recent events, market innovation may result in new instruments that satisfy the needs of both buyers and sellers – instruments that, of course, should not just be accepted on their face but should be subject to proper due diligence. in the end, investors will decide for themselves whether acquiring the data and expertise necessary to participate in certain markets is worth the cost. as a result, it is likely that these markets and instruments will look different than they did prior to the recent market turmoil. let me close by highlighting the role of the federal reserve over the past several months as a backstop source of liquidity in interbank funding markets. as price discovery broke down in a variety of markets, financial institutions, as intermediaries and liquidity providers themselves in the affected markets, became protective of their liquid reserves and balance sheet capacity. as a result, overnight and term interbank funding markets have come under pressure. the federal reserve accordingly took a number of steps to try to alleviate these pressures. the fed ’ s initial action in early august was to increase liquidity in short - term money markets through larger open - market operations – the standard means by which it seeks to ensure that the federal funds rate is maintained at or close to the target rate set by the federal open market committee. this extra provision of liquidity helped bring the funds rate down to its target early in the day ; it also eased banks ’ concerns about | 0.5 |
general crash, abroad, here in mauritius these last two years have definitely not been the worst of years. indeed, all things considered, they shine through as some of our best, showing our fortitude and good judgment in weathering the storm. for here in mauritius there is : • no crisis of credit, • no crisis in housing, • no collapse of banks, and • regulation which is sound, just, timely and respected. what is more, here in mauritius : • inflation is coming down, • public debt is declining, • the economy is buoyant, • revenue is increasing, • growth remains positive and • you ( at least ) are all pretty safe in your jobs. here, i am reminded of the difference between recession and depression, as defined by harry truman : “ it ’ s a recession when your neighbour loses his job ; it ’ s a depression when you lose yours. ” now, as some of you may guess, i am very preoccupied these days but i am certainly not depressed. for we are : • improving our forecasting methods, • establishing more transparency, • already rolling out added support to enterprises in distress and to smes, • seeing more efficiency and more customer - friendly services, stimulated by our smart fresh high street entrants showing the old timers a new trick or two, and • moving towards a regional role as a clearing house for comesa. total assets in banks here continue to grow well, both in deposits and advances, with scarcely a whiff of the toxic fumes that are besetting our distant neighbours. thus, as you will appreciate from these brief remarks, my stewardship of the bank has not been as negative as some recent press coverage might lead the uninformed observer to believe. let me give you a few other strong positives. first, our management of foreign exchange reserves. our net international reserves increased by nearly rs18 billion to stand at rs96 billion in october 2009. that ’ s an increase of nearly 23 % since december 2006. this constitutes more that 40 weeks ’ imports, as against 38 weeks of imports in december 2007, notwithstanding the rise in the value of imports during this period. still on this topic, tiny mauritius became the 2nd country to participate in the fund ’ s gold sales this year, coming hard on the heels of the south asian elephant, india. 163 / 2009 second, the exchange rate. the rupee exchange rate index meri1 and meri2 which we rolled | have nonetheless moved forward in putting in place a risk - based supervisory approach where minimum prudential standards are set, behavior and conduct are monitored but the day - to - day strategic & operational decisions are clearly vested on the banks in the context of their fiduciary responsibilities and their governance mandate as good corporate players. we have earlier shown the committee mr. chairman the capital adequacy position of our universal & commercial banks, setting the bar higher than the basel accord. over and above that, we now have a core of dedicated specialists who are individually assigned to oversee specific institutions and have the technical expertise & training required for this critical function. we are instituting a new reportorial system – the frp – that is fully compliant with international accounting standards. perhaps most critically, we have regular and open discussions with our stakeholders so that issues can be thoroughly ventilated and a common understanding reached. the broad overlying issues all of these developments on the ground eventually mesh with the broad overlying issues. we have strengthened ourselves internally because we recognize that funding markets are irrevocably global where ups and downs necessarily cascade to everyone. the market no longer distinguishes where perturbations emanate ; it only appreciates how the contagion may be transmitted. in this respect, the current problems in the united states are certainly not an isolated “ us issue ”. there is no other stronger proof of this than the fact that various central banks have been working in concert to provide the necessary liquidity to prevent systemic dislocations. moving forward though, information will always remain to be the key ingredient so that appropriate measures can be calibrated for differentiated difficulties. information though is a two - way street : we will continue to oversee covered - institutions based on our risk - based supervisory framework while stakeholders need to remain faithful to the tenets of transparency and disclosure. macro - economic landscape we would like to reiterate that the country ’ s macro fundamentals remain sound and the economy has proven to be resilient. despite a general slowdown worldwide and skyrocketing oil prices, we continue to generate growth. our inflation numbers have indeed moved upwards and we recognize the difficulties that this brings. however, based on present commodity market conditions, we may soon see some relief. our international reserves continue to rise, reaching $ 36. 7 billion as of end - august. this represents 6 months worth of imports and the payments of goods and services, doubling our previous norm | 0 |
rather it is a free informal alternative to going to court. over the next several months the ombudsman ’ s office will intensify its education and outreach programs through direct contact with the public and through its new website. i would like to invite the financial sector to join us in educating the public on financial matters. let me once again thank you for joining us at this ground breaking event. i have full confidence that all parties present here today will ensure the success of the operations of the office of the financial servicesombudsman which will redound to the benefit of our society as a whole. | m r pridiyathorn devakula : india and asia - trade linkages and alliances remarks by mr m r pridiyathorn devakula, governor of the bank of thailand, at the wharton global alumni forum, mumbai, 6 january 2006. * * * dean harker, mr. ambani, ladies and gentlemen, i am honored to be here today among friends and associates of the wharton global alumni. given that it is the first time that the school is organizing the forum in india, it seems only fitting that we should be talking about the rise to prominence of india as an engine of growth, both in the region and globally. more importantly, i would like to highlight the potential for india ’ s trade and investment linkages with east asia, and how the two regions of south and east asia can leverage on one another and become a global force to be reckoned with. china and india, asia ’ s two largest economies, are often hailed as potential growth areas and the new engines of growth for the world. china ’ s rising economic prominence has been particularly evident in the past decade and a half, with its gross domestic product ( gdp ) in purchasing power parity ( ppp ) terms, measured as a share of total world gdp, rising from 5. 7 % in 1990 to 13. 6 % in 2005. india, although coming later into the scene, has quickly caught the attention of the world as a potential global economic powerhouse. india ’ s economy is the 14th largest in the world measured in nominal us dollar terms, but in terms of purchasing power parity, india is the 4th largest economy in the world according to the imf. india ’ s gdp in purchasing power terms has also risen substantially, with its share rising from 4. 3 % to 6. 1 % of world gdp over the past 15 years. india ’ s unique characteristics that enhance this growth potential include its dynamic population and demographic structure, as well as its emergence as a global leader in service exports. this dynamism, growth, and positive sentiment has been clearly evident in india ’ s stock market, which has rallied 40 % in 2005, second only to korea as best performing major market in asia last year. sometimes overlooked however, is an informal group of asian economies ( excluding japan ) that account for the majority of trade and gdp in east asia, known as asia - 9. the asia - 9 economies comprise china, hong kong, indonesia, korea, malaysia, philippines | 0 |
when inflationary pressures fall away, perhaps because of a sharp deterioration in the international environment, we can be relied upon to ease. it certainly does not mean, as some commentators have asserted, that we operate in some kind of strait - jacket which requires us to suppress economic activity at every opportunity. monetary policy aimed at delivering predictably low inflation enables the economy to maximise sustainable growth and employment opportunities. conclusion the sharp downturn in many of our major export markets may well turn out to be the most serious shock to hit the new zealand economy since the oil shocks of the ‘ seventies. if so, the benefits of recent economic reforms, in reducing public sector debt and improving the flexibility and adaptability of the economy as a whole, will be evident for all to see. a monetary policy aimed firmly at price stability is of enormous benefit in weathering the storm. * * * nb this bis review is available on the bis world wide web site ( http : / / www. bis. org ). _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ | our net investment income. this is not an immediate cause for alarm. as the world and particularly europe recovers, demand for our products and returns on our investments should increase. more competitiveness gains from the past depreciation may yet be realised, and in any event, unlike for much of montagu norman ’ s time, our exchange rate will remain flexible. nonetheless, sustained borrowing from abroad to consume at home is hardly a recipe for a balanced and sustainable expansion. borrowing to invest, improve productivity, competitiveness and incomes is. amidst much commentary about an unbalanced recovery, it should not be forgotten that business investment has accounted for more than a quarter of gdp growth over the past six months. the mpc ’ s forecasts rely on continued rapid growth of business investment over the next few years, leading to a revival in productivity and real wages, which in turn will allow consumption to grow without an unsustainable decline in household savings. creating the right conditions for investment is thus essential. in a world of corporate caution this will likely require interest rates consistent with our guidance. the bank is well aware that such a monetary stance could encourage other risks to develop. for instance, there is evidence of growing vulnerabilities in financial markets. across asset classes, implied volatilities are well below their long - term averages. spreads in high yield and peripheral bond markets have collapsed. and covenant - light loans are the new normal. while the banking system is much more robust to spikes in volatility, end investors may not have fully absorbed the extent to which financial reforms will distribute shocks across the financial system. this may be a case of still waters running deep – often the most dangerous time on the river. that is why an essential counterpart to our monetary stance is macroprudential vigilance and activism. nowhere is the need for that more acute than in the housing market. balance in housing across the country, house prices have risen by around 10 % over the past year, approaching their early 2007 levels. price inflation has broadened and accelerated across regions. expectations that prices will continue to rise are now most marked outside london. there have been some signs of a slowdown in activity, with mortgage approvals falling back to their mid - 2013 levels. the bank is watching closely to determine the extent to which this reflects an underlying slowing of housing demand. however, some of this likely stems from lenders adjusting to the financial conduct authority ’ s ( fca ) tough new mortgage | 0 |
guidance for supervisory stress testing, which includes guidance on how multiple authorities can conduct stress tests. 6 testing a ccp ’ s recovery plan by authorities may help to assess the market conditions under which recovery – and potentially resolution – may be necessary, as well as the potential funding required. internationally coordinated stress - testing is essential to foster a better understanding of the aggregate amount and quality of committed funding that is available across major ccps. co - ordinating ccp and banking stress testing will provide additional understanding on how resolution plans would work in case of extreme scenarios. second, recent analysis of central clearing interdependencies carried out by the standard - setting committees has revealed the limited number of banking groups that are members of ccps across the world, thereby closely linking ccps themselves. 7 even without stress testing, it is easy to understand that a ccp under stress would send a 2 / 4 bis central bankers'speeches liquidity shockwave across its participants and beyond as it requires additional margins and / or passes on losses. this is especially important for central banks. with stress testing, potential funding strains can be further explored, and useful information for ccp and bank supervisors as well as resolution authorities can be gleaned. third, european arrangements for ccp recovery and resolution must be coordinated. the significant interdependencies between ccps globally are also present in the single market. resolution planning should therefore be coordinated across all european union ccps. 8 this is crucial to preserve financial stability within the union in the event of a crisis. critics of eu - wide coordination claim that the fiscal risks of central clearing arise primarily in ccps ’ respective home countries. but given that cross - border membership of eu banks in eu ccps is widespread, this argument is flawed. the losses faced by a ccp during default management and recovery and resolution are mostly borne by its clearing members, rather than by the ccp itself. even though a ccp ’ s home country may choose to provide temporary public funding during resolution, such support would be recouped from clearing members, in line with their obligations to contribute to comprehensive loss absorption. therefore, fiscal risks would in fact appear to arise in countries in which major ccp participants are located. domestic authorities may need to provide these participants with financial support if they are faced with large payment obligations due to ccp losses. thus, eu - wide coordination in resolution planning is necessary to ensure that system - wide risks are fully identified and mitigated in | are determined to ensure that inflation returns to our two per cent medium - term target in a timely manner. based on our current assessment, we consider that the key ecb interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal. our future decisions will ensure that our policy rates will be set at sufficiently restrictive levels for as long as necessary. we will continue to follow a data - dependent approach to determining the appropriate level and duration of restriction. in any case, we stand ready to adjust all of our instruments within our mandate to ensure that inflation returns to our medium - term target and to preserve the smooth functioning of monetary policy transmission. we are now ready to take your questions. 3 / 3 bis - central bankers'speeches | 0.5 |
intend to discuss all 43 of its recommendations in this speech, but that i would only like to highlight a few which hold particular relevance for this audience. the first is the development of a general code of conduct for financial market participants that would be pre - empted by the formation of a financial markets standards group. this group, led by senior market professionals, would provide a forum to discuss compliance issues and to resolve conflicts in standards of market practise. another recommendation is that the necessary data to carry out cross - market 5 see http : / / www. resbank. co. za / lists / news % 20and % 20publications / attachments / 8743 / 2018 % 20fmr % 200 7. pdf page 7 of 9 monitoring and surveillance could be collated via trade repositories, aiding both market discipline and transparency. regulation covering conflicts of interest and market abuse will also be considered. and in addition to our review of benchmark interest rates, regulators may also investigate ways to expand the repurchase market and encourage technological innovation to aid the competitive landscape. a final version of the review is being deliberated and will be handed over to the financial markets implementation committee comprising representatives from the nt, fsca and sarb, to give effect to the recommendations. finally, of specific interest to the audience here tonight, may be the progress that the sarb has made in accommodating collateral substitution in its operations. changes to our systems will allow banks to replace or substitute assets used as collateral in the main repurchase auction, in line with international best practice. in particular, the sarb will be transitioning the current master repurchase agreements into the global master repurchase agreement ( gmra ) to allow for this substitution. system changes are in progress, and full functionality for market participants is anticipated around midmay. once the gmras have been signed, our counterparties will be able to substitute collateral posted at the sarb. collateral substitution is expected to ease some of the demand for high - quality liquid assets through a more efficient use of such assets. more information on these and other initiatives is contained in the fmd newsletter6, accessible on the sarb website, with some printed copies available here as well. concluding remarks let me conclude by once again extending, on behalf of fmd and the sarb, our appreciation to all market participants for your continued support and cooperation, which has aided the orderly functioning of our markets. a | sturzenegger, ‘ does it matter how central banks accumulate reserves? evidence from sovereign spreads ’, nber working paper no. 28973, june 2021. available at : https : / / www. nber. org / papers / w28973 agustin samano ‘ international reserves and central bank independence ’, policy research working paper no. 9832, 2021. available at : https : / / openknowledge. worldbank. org / handle / 10986 / 36483 olivier jeanne and damiano sandri, ‘ global financial cycle and liquidity management ’, bis working papers no. 1069, january 2023. available at : https : / / www. bis. org / publ / work1069. pdf in addition to these tools, we should consider our macro policy narratives. for a start, we need to rediscover the dangers of government borrowing. responsible policymakers never forget that fiscal debt is risky. but the nature of policy discussions is that while many claims are valid, some points get more emphasis than others. in the past decade, one such point was that fiscal consolidation hurts growth and is therefore self - defeating. another was that higher government debt levels were safer than previously thought. i have personally observed these claims justify sustained fiscal slippage in south africa. if we had felt the urgency of debt sustainability more keenly, we would have had a wiser conversation. we need a more responsible set of narratives around fiscal risks. 35 we also need to think more clearly about allocative efficiency. one of the strongest lessons i have learnt as a policymaker is that poor countries are poor not simply because they do not have money, but because they do not use money effectively. too often, there is a tendency to look at a problem, cost out a solution and focus on raising the cash. implementation is just a black box. but good policymaking starts with implementation and the financing need should reflect what can be used efficiently. indeed, one might cast the volatile and often damaging history of capital flows as a conflict between budget constraints and capacity constraints. capital flows provide spending power and can radically shift the budget envelope, but implementation capacity is stickier, and budgets can easily overshoot capacity. this point is relevant, once again, in the global dialogue about climate change justice and the financing that should be directed from rich countries to poor ones. there is a strong focus on costing the climate change impact for poor countries and | 0.5 |
directives. this case also highlights the link that must exist between deposit insurance and the lolr function. part of the rationale is to prevent and stop runs. but at the end of the day, that only works if bank liabilities are flowing to a central bank that has the mandate, willingness, and capacity to recycle them against collateral and expand its balance sheet as needed. this means that, in the absence of arrangements for currency swaps, it must take place mostly in the same currency in order to work. so the bottom line is that a sovereign default was avoided in spite of an almost unprecedented financial collapse and the worst economic recession since the interwar years. a key to that result was the attempt to ring - fence the sovereign from the collapse of these three cross - border private banks. however, the avoidance of default during such a severe crisis does require the willingness to use the means available to avoid that outcome and the ability to endure the temporary hardship that might come with it. even if the icelandic authorities tried to avoid the socialisation of private sector losses in the case of the collapse of the three - cross border banks, the direct fiscal costs of the financial crisis were enormous. in this case, it is difficult to distinguish between the cost of the banking crisis and the recession that would nevertheless have occurred in iceland in 2009, as a result of the unavoidable macroeconomic adjustment following the serious overheating of the economy in 2005 – 2007. be that as it may, the direct fiscal costs of capital injections into domestic banks, losses on government guarantees, the blanket guarantee of domestic deposits, and the refinancing of the central bank are estimated to have amounted to onethird of year - 2010 gdp. the net might turn out to be somewhat lower, however ; for instance, there will be some recovery on the collateral of cb lending to failed banks. gross government debt went from under a third of gdp before the crisis to a peak of one gdp, and net debt rose from around a tenth to two - thirds. as a result, there was no fiscal space to save banks 10 times gdp, and attempting to do so would have bankrupted the country. indeed, iceland had to embark on a medium - term fiscal consolidation programme even as output was still contracting, in order to stop government debt from reaching an unsustainable level and to rebuild the external confidence needed for the sovereign to regain market access. the overall fiscal effort ( measured by changes in | and credit recovery. the latest stress tests indicate that the banking system can withstand shocks. as the current credit expansion cycle gains momentum, bou remains focused on maintaining strong supervision to ensure that banking sector loans and advances do not drastically worsen if the economic growth momentum unexpectedly slows down. although bank supervision and regulatory structures broadly follow international best practices, bou has stepped up the strengthening of commercial banks ’ financial reporting, internal controls, and governance. weaknesses in page 3 of 5 these areas were at the core of the most recent commercial bank failures. despite strong economic performance since the early 1990s, uganda ’ s financial sector remains shallow. private sector credit could play a bigger role in supporting growth that is the case at this moment. private sector credit remains low at 12 per cent of gdp. although large corporates have access to credit on more favourable terms, smaller firms in need of financing have limited options. they often do not meet financial accounting standards that would facilitate access to long - term capital. a law to allow movable assets as collateral has been passed. however, legal uncertainty over property rights and lengthy proceedings to recover collateral continue to weigh down on banks ’ credit risks. the stock market remains largely untapped with only 9 listings of domestic companies and rather limited trading in the shares of those that are listed. on a more positive note, around 85 per cent of ugandans have access to financial services, including through mobile money. the bou together with other stakeholders is implementing a five - year financial inclusion strategy so as to improve financial literacy, develop the credit infrastructure and promote formal savings, investment, and insurance while ensuring consumer protection. in 2018, access to financial services benefited from the introduction of agency banking. uganda has recently issued regulations for islamic banking and preparations are underway for the introduction of the first islamic financial products. the bou in collaboration with page 4 of 5 other stakeholders is working towards adopting the national payments system act, which will provide a legal basis for bou to supervise the mobile money sector and support modernise of the financial system. in conclusion, uganda has made impressive development gains over the last 3 decades, while maintaining macroeconomic stability. the prudent approach to fiscal and monetary policy has served the country well. the challenge is to build on this momentum so as to achieve economic take - off in the next few years. page 5 of 5 | 0 |
##ly adopted by the bank of albania, allows the albanian economy to withstand these shocks at minimum cost. let us leave this mechanism operate smoothly, without excessive reactions from the market or its agents. any smooth moves towards the exchange rate equilibrium will be in the albanian economy ’ s own interest. any hasty short - term reactions, like the ones we have been attesting to over the course of the present year and in the early days of this week, bring about individual financial cost to those undertaking them, as well as financial cost to the economy. no economic agent is stronger than the foundations. the high volatility and uncertainty in the foreign exchange market do not have any real base. the euroisation of the economy is a visionary idea, not only for albania but for the entire region as well, since its final aspiration is the membership into the european union. it encourages the domestic and the regional market, and the european authorities, to speed up the convergence process. however, convergence in the euro area is a derivative of continuous structural reforms and strengthening of financial systems, wherein the stability of the currency is of prime importance. there can be no european integration without a longterm equilibrium of the national and european currency. in the long run, the exchange rate will inevitably reflect the sound foundations of the albanian economy, which are to remain so. the past years ’ equilibriums remain real indicators of the potentials of the albanian economy. in the long run, we remain deeply convinced of the benefits the free floating exchange rate regime brings about. it will be the passport to and the best support to the albanian economy in its path to european integration. i take this opportunity to invite all the economic agents to consider the benefits, that our national currency provides, impassively, as the best long - term instrument for protecting their savings and as the greatest buffer to wealth volatility. to albania, the lek has been, is and will remain a successful currency. the lek serves as an anchor for all our european initiatives. in the last 17 years, the lek has managed to withstand the inflationary pressures and the pressures deriving from the foreign markets. therefore, it should be left alone. it should move freely on its path, concurrent with the market demand and supply. the lek is the icon of the albanian economy that will guide us through the european gates. i take this opportunity to invite the media to comprehend this message and transmit it to the public at large. before giving the | in the future ; the importance of internal anchors and the study and research of external ones, and ; the need for establishing capacities ; are included in the research work ’ s agenda of the bank of albania. it is a great pleasure that we already have the possibility to cooperate with a remarkable partner as oxford university, a distinguished institution for the high - level research in political and economic sciences. for this collaboration, i hope and i believe that many issues i discussed above would have an answer, partial or a complete one. the one thing i strongly desire is the involvement of as many domestic and regional researchers. i would like to guarantee all the interested persons that we are open in this direction. on the other hand, i am confident that the collaboration we made official today, shall provide a sensitive contribution towards the education and establishment of professional capacities at national level. please allow me to close my speech returning once more to the argument of professional technicians. i still think that we need to educate our technicians ; furthermore, we should make them independent financially and politically ; and afterwards, we should educate them again. on the other hand, the building of capacities is not an “ individual ” issue ; it is an institutions ’ issue ; in fact it is a process independent from human resources. this because capacities should be based on “ processes ” and not on people, for long - living. the good anchors are not used only from institutions which relate policies with them. they are instruments in the hand of public, as strong arguments to encourage government ’ s agencies towards the compilation and implementation of long term sustainable polices. i believe that the european values may play decisive role in this direction, by strengthening and supporting the establishment of respected institutions, where the criticism occurs independently from the political processes and targets. that is the reason we have chosen the collaboration with the oxford university. | 0.5 |
ba es o f gh a na nk t. 1 9 5 7 goodwill message delivered by the first deputy governor, dr maxwell opoku - afari at the launch of the 20th anniversary celebration of it consortium ghana limited 23rd april 2021 with a high sense of pride and appreciation, i extend my warm congratulations and best wishes to it consortium ghana limited on the occasion of the twentieth anniversary of its foundation. twenty years in the life of a fintech in any part of the world is no mean achievement. it becomes even more significant when placed in the context of a developing country, and truly this achievement is monumental for both it consortium and ghana. a trip down memory lane to 2001, bank of ghana had commenced in earnest implementation of interbank payment infrastructures aimed at modernising the banking sector and guided by a strategy that is focused on banks. in an era when the word “ fintech ” was alien to the library of finance vocabulary and the thought of technology companies providing financial services would have been considered sacrilegious, it consortium was established. with unusual appreciation of bank of ghana ’ s direction of financial sector development, it consortium has competently supported the digital transformation agenda of the ghanaian financial services industry with digital solutions relevant to our developmental needs. a stellar example is the chango crowdfunding product, the first of its kind by a licensed institution in ghana, introduced to improve on the traditional “ susu ” model for raising funds among a group of persons. it consortium ’ s commitment to the norms of the financial services industry over the years has been commendable. at a time when the regulatory regime did not recognise fintechs, key management personnel of the company frequently interacted with officials of bank of ghana on regulatory issues. it is no wonder then, that it consortium is one of the first few fintechs to be licensed by the bank of ghana as an enhanced payment service provider. remarkably, as a wholly - owned ghanaian company and staffed by persons trained and worked in ghana, the company has demonstrated fidelity to the digital transformation agenda of the ghanaian economy. its contribution to the conceptualisation, designing and implementation of the flagship ghana. gov platform which is at the core of the digital economy project is laudable. indeed, the successes of the company in the ghanaian digital financial services ecosystem signifies the capacity of the ghanaian to deal with the challenges confronting us as a country. recently, i had the privilege of gracing the inauguration of the new office premises of it consortium. the beautiful ed | ##ifice is not only functional but also a symbol of hope and determination of the ghanaian. as a pacesetter in this emerging industry, i urge you to be a shining example and a beacon of hope to the many up and coming ghanaian youth desirous of making a career in the fintech industry. this would require that you operate responsibly by being customer - centric and complying with the regulatory regime at all times. while you relish the accomplishments of the past two decades, may i remind you that you have just entered a new era and a new phase of your existence. the ecosystem in which you operate is also in a state of flux. in the midst of the excitement, you should not forget to strategize for the future. happy twentieth anniversary! congratulations! | 1 |
me to tell you this. you face the challenges of inequitable growth every day through your work. and that ’ s why i ’ d like to talk about the role we can play to support you create a new york city that benefits every part of the community. when i think about our work at the new york fed, both today and going forward, it boils down to three things : we connect organizations with data and research to amplify the power of their work, we convene stakeholders to share experiences and best practices, and we are a catalyst for initiatives and approaches that help tackle some of the most complex challenges confronting our communities. connect some of our greatest assets are our data, analysis, and research. and i don ’ t say that only because i am an economist by training! data is at its best when it leads to meaningful action. i just came back from a trip to puerto rico and the u. s. virgin islands, which are part of the new york fed ’ s district. the overwhelming feedback i received from community leaders there was how useful they found our research reports for thinking about how to strengthen their local economy. an example closer to home is the work we do looking at the credit behavior of households at the zip code level. analysis from the new york fed is used by financial empowerment centers across new york city to support people on low and middle incomes get out of financial trouble and build a credit profile. it also acts as a barometer for the success of programs, which helps practitioners learn which interventions are most effective. 2 / 4 bis central bankers'speeches convene as well as connecting people with research and data, we play an important role creating spaces where different stakeholders convene, discuss the challenges and opportunities facing their communities, and share best practices. this is where our workforce development program comes in, and it ’ s an area where federal reserve banks from across the country have been collaborating to share knowledge among key stakeholders. the work we ’ re doing bringing together schools and local employers is also in this vein. we owe it to young people to ensure that their investments in education pay off and that there ’ s a job at the end of all their hard work and study. fostering connections between community colleges and employers is one way we can help to make sure the next generation is ready for the opportunities our economy has to offer. we ’ ve published loads of research on this subject, and we ’ re putting some of our findings into practice | increase in the services industry. at the same time, the floating exchange rate regime has contributed to a significant change in the pattern. historically, a devaluation of the krona has been necessary at the climax of a crisis and on several occasions during the 1970s and 1980s crises were caused by the fixed exchange rate in combination with cost developments leading to a cost crisis. the slowdown in 2001 was different to the extent that industry ’ s competitiveness was very strong. the weakening of the krona began, fortunately, a year before industrial activity slowed down. this contributed to a very strong development in net exports during 2001. this is probably an important factor behind the slowdown being a slowdown rather than a recession in sweden. although there are otherwise major differences, it can be noted that the decline in gdp and exports in finland was much greater than that in sweden. while industrial production in sweden decreased at most by 5 per cent, it fell by over 10 per cent in finland. whether this is due more to other factors than to the exchange rate is an open question, but it is reasonable to assume that the development of the krona subdued the decline in the swedish economy. certainly, it may have at the same time have aggravated the inflation problems. if the krona continues to develop along the path estimated by the riksbank and many other analysts, and continues to strengthen in 2002 and 2003, it will help ensure that the economic upturn does not grow into overheating. the economic situation and monetary policy it is clear from the minutes of the most recent monetary policy meeting that the riksbank is painting a fairly bright picture of the swedish economy in future. the international recovery, particularly in the usa, may become slightly stronger than we believed earlier, and this, combined with a continued weak krona, will benefit swedish exports. however, developments in ericsson and the telecommunications industry constitute cause for concern and uncertainty. at the same time, the significance of one single sector should not be exaggerated. industrial activity in sweden is continuing to strengthen. both order intake and industrial production indicate a recovery is on its way. this is also reflected in various confidence indicators. with regard to consumption, there are also signs that a turnaround is on its way ; households ’ confidence indicators and the demand for banknotes and coins all point in this direction. retail trade sales have stabilised and there has possibly been a slight upturn at the beginning of the year. this applies particularly to consumption of durable goods. | 0 |
move on to the european economy. the euro area economy has continued to see moderate recovery, as can be observed in positive growth in the real gdp for eight consecutive quarters ( chart 3 ). the european economy has recently been seeing a clear increase in private consumption given the improvement in labor market conditions, as well as reflecting the effects of the decline in crude oil prices and of a rise in stock prices. it also has been seeing a recovery trend in business sentiment and industrial production resulting from an improvement in exports and corporate profits due to the depreciation of the euro. as for prices, the year - on - year rate of change in the harmonized index of consumer prices ( hicp ) for all items, which had once been negative, has recently recovered to a slight positive, and concerns about deflation have been alleviating. going forward, the european economy is expected to continue to see moderate recovery as depreciation of the euro and the monetary easing measures by the european central bank ( ecb ) are taking effect. currently, the largest uncertainty over europe is the sovereign debt problem in greece. at the euro summit this month, leaders agreed in principle that they were ready to start negotiations on a european stability mechanism ( esm ) program on the condition that various requirements would be met by greek authorities. the scenario in which greece will exit from the eurozone was avoided, and global financial markets have reacted positively. that said, greece is still confronted with large problems ; namely, reorganizing its economy and financial system, as well as fiscal consolidation. in particular, i believe that it is essential for the reconstruction of the greek economy to restore its financial intermediary function through swift recapitalization and liquidity assistance to financial institutions. the bank strongly expects that there will be steady progress toward resolution of the sovereign debt problem in greece with support by the institutions and european countries. now, turning to emerging economies, the growth momentum of the chinese economy has been slowing against the backdrop of the deceleration in fixed asset investment – under excess production capacity – and of continued adjustments in the real estate market ( chart 4 ). in this situation, the chinese authorities have been taking both fiscal and monetary measures toward underpinning the economy in a more proactive manner since spring. going forward, due attention needs to be paid to the possibility that excess production capacity and adjustments in the real estate market will be prolonged, but the economy is likely to follow a generally stable growth path, although the | malcolm edey : the evolving risk environment speech by mr malcolm edey, assistant governor ( financial system ) of the reserve bank of australia, at the australian shareholders association ( asa ) investor forum, sydney, 18 february 2016. * * * this is an expanded and updated version of a speech presented in november 2015. malcom e ( 2015 ), “ the risk environment and the property sector ”, speech at the australian property institute ’ s queensland property conference, gold coast, 6 november. thanks for the opportunity to speak to you today. i have taken as my subject “ the evolving risk environment ”. as you know, the reserve bank has a longstanding mandate to promote financial stability. the way we interpret that mandate, its place in the wider central banking framework, and its interaction with the mandates of the other financial regulators, are large topics in themselves. 1 for today, i simply note that one of the ways we seek to promote financial stability is by providing regular analysis of system risks, particularly through our half - yearly financial stability review. we do that partly to inform the policy debate, but also because it is important that lenders and investors are well informed about the risk environment, so that they can make prudent decisions about the risks they choose to accept. as investors in the share market, you will be well aware that investment is a risky activity. in the early part of this year we have seen some significant falls in equity prices and higher volatility in equity markets around the world. there has been significant volatility in other markets too, notably including large falls in oil prices. there is no shortage of commentators offering interpretations of these events and predictions of what might follow. i am not going to be offering those sorts of predictions today. instead, i think the way i can best contribute to your thinking about these things is to place them in the wider context of the evolving financial risk environment over the past few years. the post crisis environment in many ways the current situation continues to be shaped by the aftermath of the global financial crisis ( gfc ). the epicentre of the crisis is usually dated to the collapse of lehman brothers in september 2008, and the general recovery that we have had since then began about six months later. on that basis, we have been in a period of global economic recovery now coming up to about seven years. in broad outline, this has been a period marked by : • a return to reasonably solid growth in world gdp, at rates either | 0 |
the new landscape for banking competition remarks by michelle w. bowman member board of governors of the federal reserve system at 2022 community banking research conference federal reserve bank of st. louis september 28, 2022 good morning and thank you, it ’ s great to be back here in st. louis for this year ’ s research conference. 1 while the federal reserve learned a lot about how to operate virtually during these past two - and - a - half years of the pandemic, there are certain interactions and discussions that are just better face to face. for me, this conference is one of them. it ’ s also significant that we ’ re able to be here in person to commemorate the 10th year of these proceedings. i ’ d like to share a few thoughts on how we got here. back in 2013, in the wake of the financial crisis and the passage of the doddfrank act, the federal reserve, the federal deposit insurance corporation ( fdic ) and the conference of state bank supervisors ( csbs ) created this conference, based on the understanding that research plays a vital role in shaping our nation ’ s supervisory and regulatory policy. simply put, good research leads to good policy, and the decision was made to create a conference that could attract high - caliber research on community banking from all over the world. the conference was also designed to be a forum for multiple stakeholders — researchers, policymakers, and community bankers — to come together annually to share insights and perspectives, all in the interest of better informing current and future research. in my view, this gathering has certainly delivered on, and expanded upon, these promises. sadly, two of the pioneers of this conference are no longer with us to celebrate this important 10 - year milestone : john ryan, president and ceo of the conference of state bank supervisors, and rich brown, chief economist at the fdic, both have passed i would like to acknowledge the assistance of jim fuchs of the federal reserve bank of st. louis in preparing these remarks. - 2away since the last time we were able to be here together in person. john created the vision for this conference and oversaw its success to this point, while rich served for many years on the conference research committee, and even served as an academic discussant. both have shaped this conference in important ways, and both will be deeply missed. in 2014, csbs, under john ryan ’ s leadership, identified a need for more forward - looking data and information on community banks and the | . as a result, changes to current accounting practice will also have a direct impact on the quality of accounting capital and on how supervisors assess that capital for regulatory purposes. 7. points of divergence from banking supervision accounting standards operate under a different time horizon than capital standards and have their greatest impact in the area of loan losses. under ifrs and us gaap, allowances for incurred losses must be based on the occurrence of a given loss event rather than historical trend information alone. for some banks at least, this means that allowances at any point in time are unlikely to be sufficient to meet full el requirements although, amazingly, we did see some excesses during our qis work. also, dynamic provisioning approaches that provide “ through the cycle ” accounting are unlikely to be acceptable. this means banks must take the credit risk premium charged to cover expected losses to income, even if the related losses cannot be recognised until a much later date. 8. points of divergence from banking supervision standard setters also don ’ t appear to give much consideration to the financial stability implications of their proposals. first, they seem indifferent to how much additional volatility could be created in banks ’ financial statements as a result of the wider use of fair values. second, they do not share the concerns of supervisors and many others that fair valuing changes in own credit risk is inappropriate, especially when this means recognising gains based on deterioration of one ’ s own credit. even if supervisors can make appropriate adjustments to these items for regulatory capital purposes, how users will react to what is published in the financial statements is a worry for both banks and banking supervisors. finally, supervisors are deeply concerned with the apparent disconnect between how banks manage portfolios of risk and the models produced by standard setters to capture these activities. the key issue is that international standards apply fair value to whole instruments rather than the underlying risks, and to single contracts rather than portfolios, and we believe that standard setters need help to better understand the business of banking. as chairman caruana noted, good accounting should support sound risk management practices. certainly the two pictures should not be in conflict. 9. additional challenges for banking supervision if these issues were not enough, supervisors must grapple with more subjective balance sheet measurements and what this means for the reliability of financial statement values. in this case, subjectivity takes two forms : the need to use models for instruments that do not have active local markets, and the potential for | 0 |
luxury of selling their loans. recent events have shown that during times of systemwide stress, liquidity shocks can become correlated so that the same factors that can lead to liquidity problems for the bank's assets or off - balance - sheet vehicles can simultaneously put pressure on a bank's own funding liquidity. again, we see the trouble that risk concentrations can cause if an institution has not tried to identify them in advance and has not taken steps to mitigate their effects. as i mentioned earlier, we also have noticed the potential for liquidity risk to have an impact on capital adequacy. in a few cases, unplanned increases in a bank's balance sheet led some banks to take measures to bolster their capital. because risk concentrations have the potential to manifest themselves during times of stress and at that time adversely affect capital positions, it is particularly important that firms assess how liquidity events could place pressure on capital levels. in a nutshell, liquidity problems always have the potential to affect bank balance sheets and, in doing so, bank capital adequacy. governance and risk control the third fundamental, governance and risk control, has been a key factor that differentiated performance across financial institutions during recent events. 4 clearly, senior management of financial institutions must take on a very active and involved role in risk management. in some cases, it appears that managers were not fully aware of the extent to which the risks of the different activities undertaken by the firm could, first, become correlated in times of stress see, for example : senior supervisors group ( 2008 ), " observations on risk management practices during the most recent market turbulence " ( new york : federal reserve bank of new york, march 6 ). and, second, result in high concentrations of risk exposures. for example, those in senior management may not have been cognizant of a firm's overall concentration to u. s. subprime mortgages, because they did not realize that in addition to the subprime mortgages on their books, they had exposure through off - balance - sheet vehicles holding such mortgages, through claims on counterparties exposed to subprime, and through certain complex securities. senior managers should encourage risk managers to dig deep to uncover not only risks within each business unit, but also risk concentrations that can arise from the set of activities undertaken by the firm as a whole as well as latent risks – such as hidden risk concentrations that can arise from correlation | mr heikensten discusses global capital : advantages, problems and remedies speech by mr lars heikensten, first deputy governor of the sveriges riksbank, the swedish central bank to the institute of international affairs in stockholm on 3 may 1999. first a word of thanks for the invitation to talk here about the global financial markets. many of the questions raised by financial developments in recent years are clearly connected with foreign policy. the crisis in the international financial system that began in asia in summer 1997 developed, to cite president clinton, from being just ‘ a few small glitches in the road ’ into ‘ the worst financial crisis in fifty years ’. the extensive financial turbulence has fuelled the debate about globalisation and the increasingly integrated world economy. in certain respects it can be said that, compared with the present situation, the degree of economic integration was greater at the beginning of this century. expanding trade was accompanied by innovations that simplified international dealing. a common currency was available in the form of gold. in the years before world war one the net financial flows between countries, represented by current - account deficits, were even larger than today. in certain periods, moreover, migration was higher than at present. all in all, however, integration is presumably more extensive today. many more countries are now participating in the global exchange, gross capital flows are larger and market reactions are much swifter. new technology has paved the way for continued integration and is likely to go on contributing to further developments in this direction. against this background my talk today focuses on global capital : its advantages and problems and the remedies for the latter that are being discussed internationally. let me begin by looking at what has shaped the global financial markets as we know them today. emergence of today ’ s global financial markets today ’ s global financial markets largely date from the 1970s, when the oil - exporting countries needed to invest surpluses and many western countries had incurred budget deficits that had to be financed. there was thus a need for a more efficient international market for capital. another factor behind the development of financial markets was that after the collapse of the bretton woods system in the early 1970s, the major world currencies started to float in relation to each other. this generated a demand for instruments that would render the exchange rate movements less deleterious for exporters and importers. the evolution of the financial markets has been promoted by rapid technical advances that, besides facilitating international communications and transactions, | 0 |
and tackling the shared challenges we face. 1 see mion, giordano and ponattu, dominic ( 2019 ), “ estimating economic benefits of the single market for european countries and regions ”, bertelsmannstiftung policy paper. 2 philippon, thomas ( 2019 ), the great reversal : how america gave up on free markets, belknap press. 3 faccio, mara and zingales, luigi ( 2017 ), “ political determinants of competition in the mobile telecommunication industry ”, nber working papers 23041, national bureau of economic research. 4 see european parliament factsheet ( 2019 ), “ the european union and its trade partners ”, www. europarl. europa. eu / factsheets / en / sheet / 160 / the - european - union - and - its - trade - partners 5 standard eurobarometer survey 92, autumn 2019. 2 / 3 bis central bankers'speeches 6 bergbauer, stephanie, hernborg, nils, jamet, jean - francois and persson, eric ( 2020 ), “ the reputation of the euro and the european central bank : interlinked or disconnected? ”, journal of european public policy, january. 3 / 3 bis central bankers'speeches | united states. a union where the central bank is called upon by certain politicians to decide on the membership of certain states cannot be right. the central bank should just do the work of a central bank, i. e. maintain price stability over the medium term, and should not be called upon to take such decisions. that is why we have to move towards greater political integration. certainly, we have been criticised for making allegedly political decisions. those on one side say that we should have cut ela to the greek banking sector much earlier – not only frozen, but cut it, and cut it to zero ‒ and those on the other side say that we should have extended ela further, unconditionally, even if that would be a violation of the treaty. all in all, given these extreme criticisms, i think we have acted in an independent and balanced way. do you think any mistakes were made in terms of how greece was handled during the last few years? well, i can only speak for the ecb and, obviously, i am a biased observer. the very nature of any crisis is that you are working under intense pressure to come up with a solution. what i can say with confidence is that the ecb has always acted within its mandate and outside of politics. and what ’ s your main message for the greek government right now? it is a very critical moment ‒ we have just had an election and the review lies ahead. my message is one of hope and determination. greece has been through a very rough period in which the economic and living conditions of the greek people have worsened considerably. the cost for the country, the economy and society alike, has been high. but recently, with bis central bankers ’ speeches enormous determination, the greek people and the greek government have re - established political and economic stability. my message is : build on this and do not let a sense of desperation take over again. fight to maintain the stability that you have rebuilt at great cost, and very soon you will see the benefits. that is the message i want to send and, frankly, the message that i would listen to, if i were in that situation. let me ask you now about non - greek issues. there is also discussion, as you know, about the debt crisis and at some point there was a real fear that it was going to hit spain, italy and france. does that still worry you, or do you think that it is completely off the table and, if so | 0.5 |
5 bis - central bankers'speeches | ##ence to exogenous shocks, of the type we are facing currently. i therefore welcome you all to the seminar and invite you to contribute to meaningful discussions which will further the development of our sme sector and redound to benefit our economy over the medium and long term. i thank you very much for your participation and i again thank the various sponsors, speakers and all those who have contributed to make this seminar possible. i wish you a most productive seminar. | 0 |
( reflecting global macro imbalances ), “ carry trade ” and currency misalignments. although, monetary conditions had begun to tighten, the sub - prime mortgage crisis caused liquidity squeeze that resulted in loss of confidence and panic among investors and lenders ( and now central banks ) as they could not offload the complex risky assets and structured financial products. since banks turned to rescue and bought off chunks of these papers, with low mark - to market valuations these resulted in losses to a number of financial institutions and write offs required capital injections. this fortunately was possible given the growth in sovereign funds which are waiting for acquisition and other deals. could it be possible that by accommodating the oil and food prices and ( attempting ) to revive the economy, us is setting the stage for another round of easy monetary policy and liquidity situation. in my opinion, the key issue for central banks is to differentiate between need for short - term liquidity to rescue troubled financial entities and need for adoption of a credible monetary policy stance which aims to calibrate liquidity management in a way that it does not aggravate inflationary risks which in turn would trigger further complication and protract the global economic recovery. while lowering interest rates, central banks have to weigh inflationary risks against the risk of recession and financial instability. in bailing financial entities, the central banks have to be concerned with “ moral hazard ” associated with such policy response as it often encourage more risky endeavors by salvaging institutions whose sole purpose of existence is risk taking and profit making. not only is pakistan facing different sets of complex challenges, but the emerging global economic scenario itself underscores that country does not mimic the policy response of advanced economies. advanced countries that are selectively lowering interest rates are those that have enjoyed low inflation for sometime but are now facing steeper risks of downturn. as such, there trade off for growth supportive policies relative to inflation is understandable as risks associated with us slowdown would threaten global economic outlook and financial vulnerabilities. pakistan on the other hand has relatively stable financial system, but mounting aggregate demand pressures are now visible in rising inflation and rising inflationary expectations. tightening of monetary stance and flexible exchange rate management are the two key central bank policy responses. these however will have more distinct impact if the government reverts to fiscal prudence and efforts to this count are visible through recent reduction in oil and other subsidies. turning to the domestic front structural reforms : | ecb ’ s new payments survey, cash remains the most common way of making small retail payments, with cash payments accounting for 73 % of all physical retail payments in 2019. but almost half of consumers said they prefer to pay digitally, and this has increased further during the pandemic. this trend is unlikely to be reversed once the pandemic is over. a survey conducted by a consulting firm in 17 european countries shows that a vast majority of consumers expect to continue to use digital services as often as they do now or even more often. in other words, the pandemic has served as a catalyst, accelerating the transition towards a digital new normal. the second major trend is the competition to dominate payments on a global scale. payments are subject to strong network effects : the more users a payment system has, the more attractive it becomes to new users. scale matters - this limits the field and inevitably leads to just a few service providers dominating the payments market. europe has fallen behind in this competition. the lack of payments integration in europe means that foreign providers have taken the lead. this is not necessarily a concern, as long as foreign firms are accountable and subject to appropriate regulation and oversight, in accordance with the principle of same business, same risk, same regulation. but the evolving global context and rapid technological progress are changing the nature of the risks that we are exposed to. we are seeing an increase in protectionist policies, as sanctions and even exclusion from payment systems in recent years have shown. this presents new risks of payment disruption – especially for jurisdictions that are overdependent on dominant system providers. europe had a taste of the potential risks in the summer of 2018 : outages at international card providers left millions of europeans temporarily unable to pay for goods and services. european payments are also being affected by technology firms driving the digital transformation of global payments. these firms ’ well - established user networks give them a unique advantage in the payments industry. more than a quarter of the world ’ s population are active users of facebook, which could give its libra project a global footprint from the outset. and it is not unlikely that other large technology firms enter the playing field, too. this has great potential to drive competition, improve payment solutions and support financial inclusion. but it could also magnify a host of issues, ranging from abuse of market power to ownership of critical data. it could also make it more difficult to combat illicit activities and ensure operational resilience. and more importantly – but | 0 |
world growth? do all the emerging economies have fiscal room to back a weak scenario, or it has been shrinking after the strong stimulus packages of 2008 – 2009? and there are the local tensions, too. certainly, the climate of political and social unrest is not the most appropriate to confront a further deterioration of the world economy. for the same reason, this scenario imposes more than ever the challenge of building an effective solution for these specific problems, but always safeguarding macroeconomic stability and strengthening our capacity to grow. this is not only about the specific policies we apply, but also about how we resolve our problems. as much as some have trouble admitting – it seems that the trendy thing is to complain about everything – our country is exemplary. in the past few decades, all of us chileans have enjoyed progress like never before in our history. and, granted, there are many tasks ahead, we are a role model for many countries. in this conjuncture we must also set an example resolving urgent and critical problems and continuing building an ever more prosperous country for all. thank you. bis central bankers ’ speeches figure 1 world activity ( * ) ( index, iv. 07 = 100, quarterly series ) iv. 07 iv. 08 iv. 09 emerging iv. 10 developed ( * ) regions weighted at ppp. developed economies include : australia, canada, denmark, the eurozone, japan, new zealand, sweden, switzerland, the u. k. and the u. s. emerging economies include argentina, brazil, bulgaria, chile, china, colombia, the czech republic, hong kong, india, indonesia, israel, latvia, malaysia, mexico, peru, the philippines, south korea, russia, singapore, south africa, taiwan, thailand, turkey and venezuela. source : central bank of chile based on bloomberg, the imf and statistics bureaus of respective countries. figure 2 cpi inflation around the world commodity prices ( annual change, percent ) - 2 - 2 - 4 - 4 u. s. eurozone latin america emerging asia ( monthly index, jan. 00 - sep. 11 = 100 ) emerging europe fao foodstuffs wti oil ( 1 ) regions weighted at ppp. data through august 2011. ( 2 ) cpi includes argentina, brazil, chile, colombia, mexico and peru. ( 3 ) cpi includes china, india, indonesia, malaysia, south korea, thailand and taiwan. ( 4 ) cpi includes the czech republic, hungary, poland, russia | for chile • since the beginning of the process, the cbc has publicly stated on several occasions the benefits of cls and its intention to incorporate the peso to the system. • cls mitigates the settlement risk, through a multicurrency payment versus payment ( pvp ) system with legal certainty, meaning the payments are final and irrevocable. page 1 of 4 central bank of chile july 2020 • moreover, cls improves the liquidity management of the financial institutions, particularly the banks that settle directly into the system, using an efficient multilateral net mechanism. • additionally, due to the high standards of currency eligibility and the efficiency of the operative process of settlement, when a currency is part of cls it gives a strong signal of financial development. at the same time, important international players that only traded if the payment is performed through cls can incorporate the peso into their portfolios, thus increasing market competition. • finally, the cls settlement of the peso will improve the transparency of the currency markets ’ transactions, incorporating over - the - counter transactions into an infrastructure, according to the international recommendations and principles. iv. private sector involvement in the cls system • an important part of the risk reduction and liquidity saving benefits is faced by the financial institutions participating in the system and, therefore, passing through to the rest of the financial markets, and ultimately to the users of the financial products, currency derivatives, and foreign exchange ( fx ) transactions. • moreover, as a financial market infrastructure, cls interacts with other financial institutions, particularly with banks. at cls, banks play different roles, such as settlement member, correspondent or nostro service provider, and liquidity provider. • the timely involvement of banks in the process is essential, considering the start of the implementation phase by the end of this year. in other words, at this stage of the peso incorporation process to cls, it is imperative to define the participation of local banking entities, as a settlement members or nostro services providers. • the current projection is that the peso will go live before the end of the second quarter of 2022. therefore, and given the necessary actions, investments, and transformations to connect to the system, the banks must join during this budget period to carry out the implementation process during next year. v. central bank actions to incorporate the peso • the cbc must also perform significant actions, investments, and modifications of its current operation to integrate the | 0.5 |
significant macroeconomic consequences and these should be factored in when designing and implementing them. while the crisis has clearly had global ramifications, its impact on financial systems was not uniform across the world. differences in financial structures do matter. banks remain central in our financial systems : this is especially true for continental europe where they are responsible for more than 80 % of financial intermediation. these differences suggest that we should be careful in crafting the regulatory answer to the crisis. 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 which would challenge such universal models. there needs to be scope for different countries to tailor solutions to their circumstances, while at the same time doing so within a globally agreed framework. many banks have improved significantly their capital position through raising high quality capital. yet, banks may not feel comfortable if their new capital position is barely above the new minimum. indeed, a critical issue going forward relates to the behavior of banks with respect to capital buffers 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 amount of equity than what can be expected just looking at the current package. on the one hand we know from empirical studies that weaker capitalized banks typically exhibit weak loan growth compared to other better - capitalized banks. on the other, 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. finally, any regulatory framework needs to manage avoidance and regulatory arbitrage, and keep up with innovation and other forms of structural change. for this, a necessary, but not sufficient condition is that standards are comprehensive in coverage and consistent across jurisdictions. i am not sure, for instance, that the leverage ratio, if it was to be implemented as a compulsory instrument, would meet this double test. at the current level of accounting divergences, consistency will be very difficult to achieve. furthermore, there is a risk that it would encourage migration of credit activities towards other – less regulated – parts of the financial system. it is therefore important that consistency apply across standards and countries. 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 | number of cfa charter holders and expects the numbers to grow as more and more sbp officers pursue cfa certification. ladies and gentlemen, let me now shed some light on why it is necessary for all of us to equip ourselves with advance knowledge and tools proactively. the global financial crises ( gfc ) has aptly demonstrated the havoc that can be caused when profit taking motive combines with lack of transparency and disclosure standards, inadequate awareness of sophisticated financial products, optimistic expectations about asset pricing and lax regulatory standards. the global financial crisis forced the regulatory attention towards containing systemic risk and ensuring financial stability through strong capital and liquidity standards ( such as basel iii ), more stringent regulations, and introduction of macro prudential policy toolkit. financial stability demands timely identification of systemic vulnerabilities along with mitigating measures to limit page 2 of 5 the spillovers and keep the public confidence intact. appreciably, cfa institute has updated its curriculum to address the key lessons learnt from the global crisis. ladies and gentlemen ; not surprisingly, ensuring financial stability has now become the number one priority of many of the central banks around the world. sbp is also playing a pivotal role in ensuring stability of the financial sector in pakistan. in line with its vision 2020 ’ s focus on strengthening the financial stability regime in pakistan, sbp has established a separate financial stability department ( fsd ). an executive level financial stability executive committee ( fsec ) has also been constituted within sbp which is entrusted with the responsibility of discussing and monitoring financial stability issues. further, sbp and secp have formed a council of regulators, which will act as a forum for deliberating issues related to systemic risk, particularly those having cross market stability implications. work is also underway to form a national level financial stability council ( nfsc ) involving other stake holders such as ministry of finance. it is no secret that developed financial institutions act as a catalyst for enhancing financial intermediation, reduce information asymmetries and allow central banks to implement and achieve policy objectives. monetary policy is, generally, implemented through money and foreign exchange markets where financial institutions, particularly the banks, play a pivotal role. if financial institutions are fairly mature, markets are efficient and there is low uncertainty, the effectiveness of monetary policy increases as the monetary signals are smoothly transmitted to the entire spectrum of the yield curve. sbp, through its various policies and initiatives, has been endeavoring to create an enabling environment for the | 0 |
rachel lomax : current monetary policy issues speech by ms rachel lomax, deputy governor of the bank of england, to the hull & humber chamber of commerce, hull, 22 november 2007. i am very grateful to gareth ramsay for his help in preparing this speech, and to several other colleagues at the bank of england for useful comments. * * * tonight i want to talk about the current issues confronting the monetary policy committee. it ’ s hard to tell the story of an economy as open as the uk without starting with global developments. that ’ s not a point i need to labour here in hull, the gateway to europe, and home to a brand new world trade centre. and it ’ s never been more true than today. the past 4 years have seen the fastest growth in the world economy since the early 1970s 1. but even more striking than its pace has been the change in the balance of global growth, with emerging economies contributing nearly three quarters of the increase in world output 2. this has become even more pronounced over the past year, as chinese growth has picked up even as the us economy has slowed. the world ’ s economic see - saw has tilted. that ’ s the new reality behind two dramas that have held the world ’ s attention since last august : the turmoil in financial markets ; and the renewed surge in energy prices. both these developments are highly unusual and very recent. no - one knows how they will play out. so you would be right to take all forecasts – including our own – with a large pinch of salt. but the mpc has to take a view, when it sets interest rates. my aim tonight will be to share some of that thinking with you. financial market developments let me start with the problems in global financial markets. over the course of the summer, growing arrears in the us sub prime mortgage market triggered a global loss of confidence in the valuation of securities backed by bundles of mortgages and other loans. how could a relatively limited problem – confined to the bottom end of the us housing market – spark a global financial crisis? it ’ s a good question. the short answer goes as follows. investors had come to rely too heavily on the ability of rating agencies to value what had become exceedingly complex financial instruments. the realisation that their faith had been misplaced cast doubt on the value of a wider class of asset backed securities. many of these were embedded in ever more complex, highly leveraged, investment vehicles. this | the flexibility of goods and labour markets ; and by raising the skills of the workforce through education and training. lord haskins has just been talking to you about the supply - side of the economy, and it is fundamentally important, because it is our supply - side performance essentially that determines the rate of growth that we can hope to sustain. it is hugely more complex than macro - economic management, being affected as it is by the whole range of public policy issues, often involving difficult political judgements on how to strike the right balance between social and economic considerations. i will have little more to say about the supply side. my involvement is on the macro - economic side. macro - economic management can do relatively little directly to contribute to improvement on the supply side, but - if we succeed in maintaining stability we can nevertheless contribute to more rational economic decision - making by the private sector, based upon real rather than purely nominal considerations ; and that can help improve our supply - side performance indirectly. as the emphasis of macro - economic management - overall fiscal policy and monetary policy taken together - shifted towards stability, a growing distinction emerged between the role of overall fiscal policy, which is set for the medium term, and a more specific role for monetary policy, which became the principal instrument for shorter - term stabilisation. this distinction crystalised first with the adoption of an explicit inflation target as the objective of monetary policy, following our exit from the erm in 1992, and subsequently, in 1997, when the bank, through the monetary policy committee, was given independent operational responsibility - legitimised through transparency and public accountability for the achievement of the government's inflation target. it is important to understand, however, that the stated aim of consistently low inflation is not simply an end in itself : low inflation is a measure - a barometer if you like - of our success in keeping overall demand in the economy in line with supplyside capacity, so that the underlying aim is economic stability in that much wider sense. now it has to be said that this emphasis on low inflation as the objective of monetary policy was not without its critics. some people argued that " any fool can control inflation simply by holding back growth and employment. it is a recipe " they said " for economic stagnation ". well that has not been our experience since inflation targeting was introduced. in fact we've experienced the longest period of continuous and relatively stable quarter by quarter growth since quarterly records began, with average annual growth at around 3 | 0.5 |
the risks surrounding the outlook and in judging the appropriate future course of monetary policy. references blinder, alan s. ( 2023 ). " landings, soft and hard : the federal reserve, 1965 – 2022, " journal of economic perspectives, vol. 37 ( winter ), pp. 101 – 20. duesenberry, james s. ( 1949 ). income, saving, and the theory of consumption behavior. cambridge, mass. : harvard university press. gali, jordi ( 1994 ). " keeping up with the joneses : consumption externalities, portfolio choice, and asset prices, " journal of money, credit and banking, vol. 26 ( february ), pp. 1 – 8. lindsey, david ( 2003 ). " a modern history of fomc communication : 1975 – 2002 ( pdf ), " memorandum, board of governors of the federal reserve system, division of monetary affairs, june 24. pollak, robert, a. ( 1970 ). " habit formation and dynamic demand functions, " journal of political economy, vol. 78 ( 4, part 1 ), pp. 745 – 63. stigum, marcia, and anthony crescenzi ( 2007 ). stigum's money market, 4th ed. mcgraw - hill. volcker, paul ( 1981 ). " dealing with inflation : obstacles and opportunities, " speech delivered at the alfred m. landon lecture series on public issues, kansas state university, manhattan, kansas, april 15. 5 / 6 bis - central bankers'speeches 1 the start date of 1989 is motivated by the fact that this was the earliest cycle in which the fomc was viewed as considering monetary policy actions in terms of discrete 25 basis point, 50 basis point, etc., rate moves in the federal funds rate target and, as such, is more comparable to today. see stigum and crescenzi ( 2007 ) for a discussion of the fomc's increased focus on federal funds rate targeting in the late 1980s as well as lindsey ( 2003 ), who describes the fomc's further shift toward targeting the federal funds rate in 1989 by discontinuing the practice of targeting borrowed reserves. 2 the pce inflation numbers in table 1 are revised data, which means the data that policymakers were reviewing at the time - the so - called real - time data - could have been different. in addition, for some of these cycles, policymakers focused | on cpi inflation more than pce inflation. also, note that while the table frequently references inflation relative to a 2 percent rate, it was only for the last peak - rate episode for which the fomc had established a 2 percent rate of inflation to be most consistent over the longer run with its price - stability goal, per its first " statement on longer - run goals and monetary policy strategy " adopted in january 2012. 3 the data shown in figure 4 are revised data. 4 blinder ( 2023 ) labels the july 1995 episode as the " perfect soft landing " and identifies other " softish " landings ( see his table 1, page 119 ). blinder ( 2023 ) defines a softish landing as an outcome in which real gdp declines by less than 1 percent or there is no nber recession for at least a year after an fomc tightening cycle. 6 / 6 bis - central bankers'speeches | 1 |
0. 5 percentage points, to 14. 5 %. 2 / 3 bis - central bankers'speeches the easing of interest rate policy will support economic recovery, without threatening macrofinancial stability. the new level of interest rates on the nbu's operations is sufficient to maintain the attractiveness of hryvnia assets, safeguard exchange rate sustainability and retain moderate inflation. in particular, for these purposes, the nbu plans to continue operations with threemonth certificates of deposit as an effective element of the operational design of interest rate policy, which has proven to be effective over the past year. at the same time, in the context of the interest rate policy easing cycle and a steady slowdown in inflation, the need for a significant difference between the interest rate on this operation and the key policy rate is diminishing. in view of the above, the nbu is cutting the interest rate on three - month certificates of deposit by 1. 5 percentage points, to 17. 5 %. what is more, the nbu is decreasing the interest rate on refinancing loans by 1. 5 percentage points, to 19. 5 %. the interest rate on overnight certificates of deposit will continue to equal the key policy rate. if required, the nbu will continue to modify the parameters of operations with threemonth certificates of deposit. in particular, starting from 19 april, to determine the limit on banks'investments in three - month certificates of deposit, the growth of hryvnia household deposits with a maturity of more than 93 days will be calculated for the last 12 months ( rather than from 4 april 2023, as is currently the case ). this will encourage banks to increase their portfolios of hryvnia household term deposits, which is important for maintaining exchange rate sustainability and protecting international reserves. the nbu will continue the cycle of interest rate policy easing, provided that risks to inflation and exchange rate sustainability are sustainably reduced the nbu continues to be prepared to adapt its interest rate policy dynamically in response to changes in the balance of risks to inflation and exchange rate sustainability. maintaining a controlled situation in the fx market and moderate inflation, as well as increased foreign aid inflows, will create preconditions for further steps to cut the key policy rate and ease fx restrictions. they will promote lending and support economic recovery. 3 / 3 bis - central bankers'speeches | milestone in the process of building the capital market union. finally, i wish to thank the staff of the 4cbs and the ecb for their effort and their commitment to the project ’ s success : they have all been involved in the development of t2s and are now actively engaged in the operational phase. and thanks to all those involved central banks, csds, financial markets - for their unflagging support and decisive contributions. once again, let me extend our welcome to everyone present. i wish you all a pleasant evening. bis central bankers ’ speeches | 0 |
being of a short term maturity of up to six months. bonds are offered over longer tenors of up to 15 years. these instruments can be discounted at the central bank and bonds are tradeable on the nairobi stock exchange. it is also useful to highlight other critical investment products that fall under the purview of the capital markets authority ( cma ). of particular interest are equity securities and unit trusts. the nairobi stock exchange ( nse ) offers equity ( shares ) and fixed income ( debt ) securities. there are over 50 companies in diverse sectors that are currently listed on the nse. the shares of these companies provide an investment opportunity based on one ’ s risk preferences and investment horizon. recent initial public offers ( ipo ) such as the kengen one have elicited substantial interest among kenyan investors. this trend is expected to continue with forthcoming ipo ’ s in line with the government ’ s ongoing privatization programme. on the fixed income segment, the nse offers bonds, commercial paper and notes that tend to target institutional investors. i regard unit trusts as a form of “ collective investment scheme ” that provide an opportunity for small investors to access the capital markets. they involve the pooling of funds from various investors by market players licensed by the cma. the pooled funds are invested in diverse investment vehicles primarily shares based on among other factors, the investors risk appetite and liquidity preference. the returns are then proportionately shared among the investors. unit trusts particularly offer small investors the benefits of professional investment management, economies of scale and portfolio risk diversification. turning to recent significant developments in the financial sector, i will focus on microfinance and credit reference bureaus. microfinance involves the provision of diversified financial services and products to the un - banked and underserved segments of the population by different financial service providers, mainly to the low - income households and micro enterprises. microfinance plays a vital role in poverty alleviation in empowering the underserved and un - banked economically active and underprivileged social constituencies in contributing more effectively to wealth creation and economic development. the recently enacted microfinance act, 2006 provides a legal, regulatory and supervisory framework for deposit - taking microfinance business aimed at creating an enabling environment that will promote performance and sustainability of deposit - taking microfinance institutions, while at the same time protecting depositors ’ interests. one of the key hindrances to access to financial services and products by the | michelle w bowman : brief remarks - fed listens event on transitioning to the post - pandemic economy brief remarks by ms michelle w bowman, member of the board of governors of the federal reserve system, at the fed listens event on transitioning to the postpandemic economy, boston, massachusetts, 31 may 2023. * * * it is very good to be here, and to be part of this fed listens event and discussion about the effects of the pandemic experience on the u. s. economy, highlighting challenges in the labor and housing markets. while there are many ways to think about the impact of these effects, i find it helpful to consider both the cyclical or temporary factors and those that are structural and longer term. as monetary policymakers, we are primarily focused on the cyclical mattersmeaning how the pandemic and the measures taken to address it complicated accomplishing our dual - mandate objectives of maximum employment and stable prices. making the best monetary policy decisions over the business cycle requires distinguishing between temporary effects and lasting, structural changes. today's agenda includes the employment recovery following the high unemployment during the spring of 2020 leading to the current tight labor market. today's labor market strength reflects policy decisions taken in light of the pandemic experience, including the widespread lockdowns, reliance upon remote work, and other factors that may have structurally altered the labor market. i am very much looking forward to the discussion. i also look forward to learning from the perspectives of today's participants from around new england about the issues that will be discussed today. i find it especially helpful to participate in regional discussions to broaden my understanding of economic conditions throughout the country. this local perspective is one of the great advantages of the federal reserve system's regional structure, and of the fed listens initiative, which complements the board's efforts to understand national economic conditions. in 2019, the board launched fed listens with a year of listening sessions with the public focused on monetary policy and, specifically, on how the federal open market committee uses interest rates and other tools to promote a healthy economy. while data can tell us a lot, learning about the experiences behind those data helps bring economic data to life for me and for my colleagues. through fed listens and other engagements with the public, we hear about how americans are faring in the economy and about how our policy decisions affect individuals, businesses, and communities. so our efforts to enhance | 0 |
. 17 billion for the first three quarters, which was again a positive year - on - year growth. at the moment, the banks operating in macao have good quality assets, ample liquidity, adequate capital and fine profit - making capability. in our insurance business, the total premium receipts for the first three quarters amounted to mop3. 2 billion, which was a 13. 5 % increase year - on - year. the overall operation of the insurance industry has been steady, the aggregate asset value, including value of assets guaranteeing technical reserves has registered marked increase. it reflects the stable financial status of the industry, which carries much weight in sustainable development. in tandem with the perfection and enhancement of the financial industry, it carries more weight in the overall gdp, reaching 8. 5 %. the continued growth of our financial industry will further promote appropriate diversification of the economy. bis central bankers ’ speeches in mid - october, amcm organized a delegation of the financial sector to visit beijing and shanghai. making use of this opportunity, i am pleased to advise our financial practitioners that initial result has been achieved. at the moment, this authority is following up the matter closely and discusses with the relevant departments with a view to realizing the widening of the scope of rmb business and seeking more investment channels for the msar fiscal reserves. simultaneously, in promoting macao to be the rmb settlement platform for trade between the mainland and portuguese speaking countries, preparatory work has been rolled out with the policy support of the central government. under the auspices of the central government and relevant departments and the direction and support of the liaison office and the msar government, we believe all policies and arrangements beneficial to the overall economic development of the msar will be realized. the financial sector will continue to serve its pivotal function in servicing the economy and promote overall economic growth. as the regulator, we shall not only continue to maintain the order and normal functioning of the market, and will also support, as usual, our practitioners in their development and uphold the lawful rights of our financial consumers. in commemorating the anniversary of our motherland and the msar, we gather together delightfully. before i end the speech, let me express, on behalf of the board of directors of the monetary authority of macao, our heartfelt wishes for the prosperity and strength of our motherland and happiness of all her people, the prosperity and stability of the msar, the continued growth of our financial industry in a steady manner, your health | a financial institution should adopt a check and balance approach in management. in the heyday, deal makers in a financial institution are the golden boys. they tended to disregard those who are supposed to control risks. normally, when there was an argument over whether a certain deal should be done, the senior management, whose year - end bonus may depend on the current year revenue, or who are more concerned with the profit and loss account of the institution, would invariably stand on the side of the deal maker. this is usually the root of huge losses to be incurred later. to harness risks, the risk management function should be vested with more authority. the internal control function should go to board level. there should be a minimum level of knowledge of internal control to be required for all audit committee members. knowledgeable internal controllers and anti - fraud experts may be hired by financial institutions to implement risk - assessment and fraud prevention measures. measures and procedures are to be implemented to prevent management overriding internal control systems. the greatest safety to ensure the stability however comes from self disciplined practitioners of the financial sector. legislations and regulators are serving merely as directions and referees. it is the professional skills and ethics of practitioners which will give the greatest comfort and protection to a financial institution and hence the financial system as a whole. it is therefore the endeavour of human resources function to provide adequate training in these respects, especially ethics, in order to have a long term solution which warrants the stability of the financial system. macao returned to china in 1999. this year is the 10th anniversary of the founding of the macao special administrative region. under the principle of “ one country, two systems ”, “ macao people ruling macao ” and “ high degree of autonomy ”, macao ’ s economy has grown by leaps and bounds. the financial sector has burgeoned in tandem with the spectacular performance of the overall economy. we have witnessed a surge in deposits, assets and profits in our financial sector. capital adequacy ratio for the banking sector is well above what is required by the basel committee while non - performing loans ratio lingers at a low level. our financial system is not immune to the financial tsunami but it has emerged unscathed. there is however no ground for complacency. the financial sector and the regulators are adopting a prudent and cooperative approach and have been working in harmony in the best interest of the community. we are doing our best to attract qualified people to join the financial | 0.5 |
for instructions. it was for monetary policy reasons that the governing council, in full independence, adopted all the non - standard measures. the crisis is being caused by excessive debt in euro area countries. do we need a political union, or is a return to the stability and growth pact of maastricht sufficient in order to prevent such events from recurring in the future? what is important at the moment is to monitor compliance with the now considerably stricter stability requirements. we had initially called for these to go further – calling, for example, for more automatic sanctions against “ deficit sinners ”. significant progress has been made, and that now needs to be rigorously implemented. that includes strengthening the presidency of the eurogroup and the body of staff which is to monitor economic developments. in the medium and long term we need to strengthen europe ’ s political structures, which will not be possible without amendments to the treaty. i would say – as a citizen of europe, not as president of the ecb – that we could proceed in the direction of significantly stronger european governance with well - defined responsibilities. with that new governance, it would be possible, in countries that consistently fail to comply with stability requirements and thereby threaten the financial stability of the euro area, to directly implement appropriate measures. in the long term, therefore, we will need to go further in the direction of political union. but the decision on that will lie with the people of europe. what was your most important decision, your greatest success? as a central banker, you are constantly taking important decisions – for example on interest rates. all of these decisions are taken with the aim of ensuring price stability, which is a prerequisite for sustainable growth and job creation. as a result, it is difficult to say that a particular decision was the most important. but the greatest challenge for the ecb ’ s executive board was to recognise in 2007, in real time, that something very significant – something very dangerous – was happening. we were the first central bank in the world to recognise the reality of the situation and quickly implement comprehensive measures in response. horst kohler, with whom you negotiated the maastricht treaty, describes the markets as “ monsters ”. is he right? i would not necessarily go as far as horst, for whom i have great respect, but i can see what he could have meant by that. supervisory authorities need stronger means of monitoring the rapid development of new technology and need to ensure that all innovation in the financial | what kind of future would europe have without the euro? we have to be very careful to distinguish between the euro as a currency and the problem of financial stability in the euro area. the first 13 years of the euro have seen the currency retain its value, both domestically and externally. annual inflation currently averages 2. 0 % – and just 1. 56 % in germany. that is lower than in the previous 50 years. inflation will, in all probability, remain very low for the next ten years – at around 1. 8 % according to current expectations. so, we have price stability in the euro area. we are rightly proud of that fact, as we have achieved what was expected of us : we have secured price stability and ensured that the euro is a credible and trusted currency. the financial stability of the euro area is a different story. this has been undermined by mismanagement on the part of certain governments. however, following the decisions taken this week, i am confident that governments can succeed in restoring financial stability. a critical issue in this respect will be the will of the people. i was very impressed by the decisiveness displayed by the german parliament this week. bis central bankers ’ speeches the euro ’ s rescue fund is being significantly strengthened, with its total firepower set to reach €1, 000 billion. does this mean that the ecb will, in future, be able to do without its controversial purchases of stressed countries ’ government bonds? we have adopted special measures during the crisis because they were necessary in order to correctly transmit our interest rate decisions to the economy. in august 2007 we supplied banks with liquidity at fixed rates of interest in order to stabilise the markets. second, we took the decision to buy covered bonds. and third, we intervened in some government bond markets to help improve the transmission of our monetary policy. such actions are only justified in the exceptional circumstances of a major global crisis. once national governments ’ new tools to restore financial stability are up and running, we will have no reason to continue with these special measures. does the ecb really have complete freedom as regards government bonds, or is it under political pressure? the ecb takes its decisions in full independence. we have consistently demonstrated this, taking controversial decisions on interest rates and other matters. under the treaties, members of the ecb ’ s governing council are not permitted to take instructions from anybody – neither from governments nor from interest groups. indeed, they are not even allowed to ask | 1 |
thus under - price the respective financial assets. exaggerated pro - cyclicality of this type has hit the sovereign bond market during the crisis. furthermore, in particular through the use of sovereign bonds as collateral, it has exerted adverse effects on other segments of financial markets, such as the funding markets for financial institutions. to remedy exaggerated pro - cyclicality does not mean that we should dispense with the disciplining role of financial markets. the history of the monetary union teaches us an interesting lesson : when the disciplining role of intra - euro area exchange rates was lost, volatility and tensions have in fact migrated to sovereign debt markets, where they were building up under the surface. even though markets sometimes misprice assets, they nevertheless provide a useful service in terms of signalling, price discovery and incentives. for example, if markets had not pushed up the yields of countries in weak fiscal positions, imbalances would have remained unnoticed and grown much larger, and the cost of fixing them would have been even higher. while attenuating exaggerated pro - cyclicality is important to avoid self - fulfilling expectations leading to bad equilibriums, at the same time we should recognise that markets have issued valuable signals. there are a number of ways to mitigate exaggerated pro - cyclicality of government bond markets. one way is to reduce the reliance of the financial, regulatory and supervisory framework on credit ratings. the european commission has put forward a number of proposals to this end. similarly, it is worth considering ways to delink the risk assessment of credit institutions from the credit rating of the sovereign. in addition, risk management by bis central bankers ’ speeches central clearing counterparties or ccps is of particular importance, as an increasing number of financial transactions is expected to migrate to them. the cpss - iosco principles for financial market infrastructures expect ccps to adopt forward - looking and conservative margin and haircut policies to limit the risk of destabilizing responses to changes in credit ratings. but to address the root causes of the current instability, fundamental policies will have to be adopted. the adverse feedback loop between banks and sovereigns, that i mentioned before, can be broken by establishing a true financial union : in my view this includes the creation of a pan - euro area deposit insurance fund and a pan - euro area bank resolution framework, supported by a single supervisory system with centralised decision - making. if the european stability mechanism – an institution that can provide financial assistance to euro area member states | money lenders. i am happy to report that seven out of the nine proposals made have been progressed with the other two still under discussions. the government and world bank are already in negotiations for a financing arrangement that may incorporate a form of guarantee scheme and financial education elements while dbz has been recapitalized and has disbursed some funding through other financial institutions. a legal framework for consumer protection as well as possible incentives have already been taken account of through adequate provisions in the revised banking and financial services act which is under government consideration for possible legislation in 2014. guest of honour we all agree that one of the major barriers to growth of the sme sector in zambia is the shortage of financing despite its high potential to catalyze growth and employment creation. it therefore makes business sense that the financial sector should start to look at the financing problems for smes in a holistic manner which takes into consideration other developmental constraints which may impede sustainable growth and render the financing ineffective. in line with government ’ s desire to enhance local content through smes and use of locallymanufactured inputs in the zambian mining industry, a study in the mining sector is being under taken by the zambia local content initiative ( zmlci ) facilitated by the world bank and co - financed by dfid. the goal is to build sustainable collaboration between smes and the mining industry. it is our hope that the above initiative will be extended to non - mining related smes such as those in agribusiness, tourism and retail. honourable minister you may wish to note the following topics that will be discussed during this forum : i. sme financing and business linkages, ifc experiences in africa ; ii. sme financing and experiences and lessons learned – afdb ; iii. promoting business linkages in zambia – dfid zambia ; and iv. sme financing and business linkages in zambia – focus financial services. further, the programme will include panel discussions on policy recommendations and an interactive session. the discussion panel will, among others, cover policy issues and outline some possible recommendations for action. chairperson as i conclude, allow me to thank the presenters and panelists for accepting to facilitate our deliberations at this forum. i urge all delegates to engage fully in these discussions so that we can collectively develop pragmatic solutions to the financing challenges facing zambian businesses. thank you for listening. bis central bankers ’ speeches | 0 |
use up its excess capacity. this would mean significant downside risk to our underlying inflation profile, which is already below target because of the expected dissipation of one - time inflation effects from meat, communications and dollar depreciation. obviously, these risks would be even more material if oil were to average $ 50 a barrel. adding at least another year onto the period during which the economy would be operating below capacity and accepting more downside risk on inflation was considered unreasonable. accordingly, we decided that it was appropriate to take out some insurance against that downside risk in the form of a lower interest rate profile. policy insurance is a logical part of our risk management framework. today ’ s action is intended to reduce the risk that our inflation path might move materially to the downside, as well as cushion the impact of lower oil prices and facilitate the economy ’ s sectoral adjustment to its new circumstances. the bank has room to maneuver should its forecast prove to be either too pessimistic or too optimistic. bis central bankers ’ speeches we also considered carefully the matter of financial stability risks. for the past couple of years, we have seen periods of downside risk to the inflation profile, but the horizon over which we believed inflation would return sustainably to target remained reasonable, around two years. financial stability risks have been elevated throughout, sometimes evolving constructively, sometimes edging higher. but they did not pose sufficient concern to make it necessary to alter policy and delay further the economy ’ s progress toward sustainable 2 per cent inflation. the drop in oil prices, however, has two separate effects relevant to policy. as already discussed, it materially increases the downside risk to underlying inflation, but it also increases the household debt - to - income ratio significantly. while it is true that a lower profile for interest rates may exacerbate household imbalances at the margin by encouraging more borrowing, the far more important effect will be to mitigate those imbalances by cushioning the decline in income and employment caused by lower oil prices. ultimately, we believe the most reliable way to reduce financial stability risks is to do what we can to get the economy back to full capacity and sustainable inflation. finally, we discussed the risk that by moving today we would surprise financial markets. we generally prefer that markets not be surprised by what we do, and believe that transparency around our analysis of the economy will minimize the scope for surprises. in that respect, we took comfort from the observation that | the consequences of the drop in oil prices appear to be well understood, and that the possibility of a rate cut had begun to enter markets in the last couple of weeks. moreover, given the magnitude of the shock, we concluded that the benefits of acting now rather than waiting would outweigh the costs of any short - term market volatility that might arise. with that, carolyn and i would be happy to take your questions bis central bankers ’ speeches | 1 |
, they prefer something like the old fashioned pension through which the employees would receive guaranteed monthly payments for life. as we know, people now live longer due to improvement in healthcare, diet and exercise etc. at the same time, most if not all employers have withdrawn from offering life - long pension benefits because of the huge costs involved. moreover, the current low yield environment coupled with high volatility of the financial markets have also made it hard for any defined contribution pension plans to guarantee anything other than a rather low rate of return. 7. what the hkmc is doing is to offer a life annuity product to those aged 65 and above. the hkmc will guarantee an immediate fixed amount of monthly payout for each annuity policyholder. for a person at 65, with a hk $ 1 million premium, the monthly payment guaranteed for life is hk $ 5, 800 for male and hk $ 5, 300 for female, equivalent to an annuity rate of about 7 % for men and 6. 4 % for women. the reason that the hkmc can offer rather high annuity rates is because it will place the entire annuity premium received from policyholders with the hkma. the hkma will then invest the money alongside with the exchange fund portfolios, half in the public markets ( bonds and listed equities ) and half in private markets ( private equity and real estate ). as the hkma already has the investment capability and infrastructure for managing a portfolio as large as around hk $ 4 trillion, it would be easy to take on the additional investment generated by the hkmc ’ s annuity premium. the hkmc has now received around 10, 000 applications amounting to $ 5 billion in subscription. we are processing the applications and the exercise is expected to be completed soon. by end - october or early november this year, the first annuitants will be receiving their first monthly annuity payments. 8. let me do some quick maths here by using a married couple at the age of 65 who has joined both the reverse mortgage programme and the life annuity scheme. if the property they own is worth hk $ 5 million, ( which is the average value of the properties under the programme ), then they would get a monthly payment of $ 11, 000 plus the right of lifelong occupancy under the reverse mortgage programme. if they each subscribe for hk $ 1 million life annuity, then they will get another hk $ 11, 100 ( $ 5 | weight to our general objective – which is to contribute to securing an appropriate degree of policyholder protection. now that sounds like rather a mouthful, but fortunately the bank ’ s independent evaluation office ( ieo ) has today published a thorough evaluation of the pra ’ s approach to its insurance objective. the bank set up the ieo in 2014 to help court evaluate the bank ’ s performance. early last year, court asked the ieo to consider whether we are doing enough of the right sorts of things to deliver the insurance objective. the ieo ’ s report includes a number of interesting findings, which i welcome and find consistent with my own observations from my time as executive director of insurance supervision. in particular, the ieo found that there is a lot of activity going on in pursuit of policyholder protection. this comes as no surprise to me. the pra ’ s insurance supervisors, actuaries and other professionals have in my http : / / www. bankofengland. co. uk / publications / documents / speeches / 2016 / speech877. pdf source : abi factsheet https : / / www. abi. org. uk / ~ / media / files / documents / publications / public / 2016 / keyfacts / abiukinsuranceandlongtermsavings - keyfacts. pdf as at 2016q2, based on insurers ’ reporting to the pra all speeches are available online at www. bankofengland. co. uk / speeches experience a strong public - service ethos. they are strongly motivated to protect insurance policyholders, which is for some a more human motivation than safety and soundness. however, the ieo found that we could do more to explain what we mean by “ policyholder protection ”. some of this is straightforward, such as ensuring staff have clear legal analysis and understand where and when the pra should and should not act, and we confirm in our response to the ieo ’ s report that we will improve that analysis and training where required. but the ieo also raises some deeper questions about how much protection the pra should seek to deliver, for which sorts of policyholders, and with what confidence. and it is those deeper questions that i intend to consider briefly in the remainder of my comments today. insurers are subject to what is known as “ twin peaks ” regulation in the uk. in addition to supervision from us in the pra, the financial conduct authority | 0 |
what is more, tightening in the credit supply conditions for corporate lending receded in this period ( chart 11 ). chart 10. chart 11. tl loan rates commercial loan standards * ( 4 - week average, percent ) ( net change ) source : brsa, cbrt. * banks are requested to state the change in the demand for credit. net percentage change of indexed responses indicates the direction of the change in credit demand. the index is calculated as [ the sum of percentages for ( increased somewhat + increased considerably ) ] – [ the sum of the percentages for ( decreased somewhat + decreased considerably ) ] + 100. index values greater than 100 signify increase in credit demand. source : cbrt. as a result of these developments, credit growth gained pace in the last quarter of the year ( chart 12 ). accordingly, annual rate of growth in total credit stock materialized around 16 percent at the end of the year, slightly higher than the 15 percent benchmark level for the medium term ( chart 13 ). total credit growth proved robust in early 2013, and the uptrend of 13 weeks in credit volume stood close to the past years ’ average. chart 12. chart 13. loan growth rates annual growth rate of loans ( adjusted for exchange rate, 13 - week average, annualized, percent ) ( percent ) source : cbrt. source : cbrt. bis central bankers ’ speeches there is a risk of further acceleration in credit in the forthcoming period. financial conditions index continued to ease with rapid capital inflows, improving credit supply conditions, and accommodative liquidity policy ( chart 14 ). this outlook necessitates a cautious stance against macro financial risks. given these evaluations, i would like to remind that in its first monthly meeting of 2013, the committee highlighted the faster - than - expected credit growth and signaled that macroprudential measures might be continued should this trend persist. chart 14. financial conditions index * for further details on financial conditions index, see cbrt economic notes no. 12 / 31 and report 2012 - iv, box 5. 2. source : cbrt. 2. macroeconomic developments and assumptions now, i will talk about the macroeconomic outlook and our assumptions which constitute the basis for our forecasts. first, i will summarize the recent inflation developments, and then compare the short term forecasts in the october inflation report with the actual year - end inflation data in 2012. then, i will continue | erkki liikanen : independent institutions and rule of law are essential for successful convergence speech by mr erkki liikanen, governor of the bank of finland, at the 7th ecb conference on central, eastern and south - eastern europen ( cesee ) countries " institutional quality and sustainable economic convergence ", frankfurt am main, 5 october 2017. * * * first a comment from the history of enlargements. the first post - cold war – enlargement negotiations started in march 1993. these were concluded in spring of 1994. austria, finland and sweden joined in january 1995. i was one of the negotiators then. in the middle of these negotiations, in june 1993, the danish presidency hosted copenhagen european council. the council wanted to show the path to 10 central and eastern european countries who desired to become a member of the eu. the summit defined three key pillars, preconditions for the membership : the membership requires : 1. the candidate country has achieved stability of institutions guaranteeing the rule of law, human rights and respect for and protection of minorities 2. the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the union 3. the ability to take on the obligations of membership, including adherence to the aims of political, economic and monetary union. in the summit in essen in 1994 the pre - accession strategy was confirmed and it turned out to be very successful. four years later, in july 1997 the european commission assessed the candidate countries in her opinion. this opinion was a pre - condition for membership negotiations. i was a member of that european commission. the first chapter of the commission opinion analysed the political criteria with the title democracy and the rule of law. the judiciary, its structure and its functioning got a particular attention. it is no surprise to anyone that these issues remain a corner stone in the european union. when joining the eu, the countries took the commitment to respect these principle. it is also very important that european commission monitors the developments closely and takes also actions, when needed. the enlargement negotiations were launched in march 1998 in brussels. w e can all agree that economic convergence in the cesee countries has been a success. with the help of foreign investment and especially market access to the european union, countries in the region have been able to lift their incomes significantly. for example, during the past 25 years real per capita gross domestic product in hungary and the czech republic increased by | 0 |
it means using our skills and talents to make a positive difference in the world. to stay true to this value, it's essential to practice empathy and understanding. try to put yourself in other people's shoes and consider their perspectives. volunteer your time and resources to help those in need, and be a positive influence on those around you. remember that small acts of kindness can have a big impact on someone's life. how can we practise compassion in our daily lives? one way is to cultivate a growth mindset. instead of judging others or labelling them, try to see them as individuals with unique experiences and challenges. by approaching others with an open mind and heart, we can build empathy and understanding and make a positive impact on the world around us. 2 / 3 bis - central bankers'speeches building community lastly, this school has taught us the value of community. former south african president nelson mandela said, " no one is born hating another person because of the colour of his skin, or his background, or his religion. people must learn to hate, and if they can learn to hate, they can be taught to love, for love comes more naturally to the human heart than its opposite. " building community means reaching out to those around us, regardless of their background or beliefs. it means finding common ground and working towards a common goal. to stay true to this value, it's essential to stay connected with others and build strong relationships. find ways to support and encourage your peers, whether it's offering help, attending events, or simply being present. join clubs or organisations that align with your interests and passions, and get involved in community service projects that make a difference in the lives of others. building community also means being open to diverse perspectives and ideas. don't be afraid to engage in civil discourse with those who hold different views than your own. seek to understand their perspectives and find common ground where you can. by building bridges and connections with those around us, we can create a more inclusive and harmonious society. so, how can we stay connected to our community and build strong relationships? one way is to be present and engaged. attend events and activities, and participate in group discussions or projects. listen actively and ask questions, and be willing to share your own experiences and perspectives. another way to build community is to be vulnerable and authentic. don't be afraid to share your struggles and challenges with others, as it can help | economy, low energy prices and a global decline in conflicts. energy costs in the case of energy, the current level of oil prices must be of concern as the cost of utilities, operating costs and investment have constantly been an issue with respect to their cost impact on the tourism product in barbados. therefore, continued buoyancy in the price of oil will impact on economic prospects. government earlier this year passed on some of these price increases to the consumer. this had an impact on all sector of the economy, including tourism. this was however prior to the since galloping increase in oil prices. even the airlines have imposed a fuel tax but it is unclear whether this will have far - reaching implications. in a simulation run by the economists at the central bank it was found that a 25 % rise in domestic fuel prices reduces nominal gdp by approximately one percentage point, implying that higher oil prices do impact on overall output. an analysis by sector has not however been conducted so we are unable to say what proportion of this impact would borne by the tourism sector. exchange rate changes meanwhile exchange markets have been dominated by declines in the us dollar. not withstanding some rebound since last february, world economic outlook, an imf report, notes that the us dollar depreciated by 3 1 / 4 percent in trade weighted terms since september 2003 and by 16 ½ percent since its peak in february 2002. the dollar depreciated significantly against the euro and against the yen. this would have made travel from these source markets more attractive, and because the barbados dollar is tied to the us, would not have affected travel from the us market. the report also indicates that in developed economies ( our main source markets ) business confidence is rising, unemployment is improving, consumer confidence is up and global investment is promising. this augurs well for travel in late 2004 and 2005. the latin american market while latin america is not a major source market for the caribbean, eclac reports that rising commodity prices in latin america have resulted in the highest surplus in goods and services in 13 years and the best current account surplus in half a century. this would have positively affected discretionary income available for travel. however, it is not clear that the improvements are sufficiently significant as to lead to greater travel to the caribbean from those markets, but the information should be noted and monitored when future strategies involving that market are being developed. many caribbean markets also provide a continuing growth opportunity, particularly since some of our neighbours to the south are experiencing prosperous times | 0.5 |
that private investors are now provided with incentives to invest in the area of education. this policy is expected to provide the much needed investments in institutions such as the zambia institute of banking and financial services. looking around in this gathering, i see people who are very well connected to private investors. therefore wooing investment into this institution should not be difficult task. such investment will go a long way in enhancing the quality of graduates this institution will produce. mr president, it is during times of crisis such as the one we are undergoing that graduates should assist the industry in coming up with well researched constructive proposals and solutions on how challenges may be addressed within the context of our local environment. the prevailing global financial meltdown is in fact an opportunity for the institute to critically review its core operations and determine if its flagship education and training programmes as well as other learning environment initiatives such as research, consultancy, counselling and continuous professional development activities are robust enough to adequately serve our financial services sector, both in times of buoyancy and during periods of turbulence. ladies and gentlemen, i am reliably informed that the institute is negotiating strategic alliances that will ensure high quality international standard flagship education and training programmes for professionals in zambia ’ s financial services industry. i am equally pleased to note that that the institute has direct representatio n on two working groups of the financial sector development plan ( fsdp ) – the banking working group and the human resource working group. i have no doubt the fsdp stands to benefit from more representation from the institute. i urge you mr president and council members, to engage all the stakeholders in the financial sector including, non - bank financial institutions, insurance companies, stock brokers and pension funds. i have no doubt that with increased support from other financial service providers and regulators, the institute will increase in stature in human resource capacity - building aimed at developing a critical mass of professionally qualified and competent bankers. to the graduates, the qualifications in banking and finance you are obtaining today will certainly not make you an instant expert to tackle challenges in the financial services sector. it will take hard work, determination, and a variety of continuing professional development programmes for you to be able to begin to understand in a comprehensive manner, the banking industry in its entirety. however as graduates from this special institution, each of you will be given a unique opportunity to prove yourself. i therefore, urge you to work hard and learn from others around you including those with different views from yours. let me also mention that | tukiya kankasa - mabula : modernising zambia ’ s payment system remarks by dr tukiya kankasa - mabula, deputy governor administration of the bank of zambia, at the ecobank launch of financial products, lusaka, 16 december 2009. * * * • members of the ecobank zambia limited board of directors present ; • the managing director of ecobank zambia limited, mrs charity lumpa ; • members of the diplomatic corps ; • ecobank zambia limited customers ; • management and staff of ecobank zambia limited ; • members of the press ; • distinguished invited guests ; • ladies and gentlemen. it is with great joy and gratitude that i stand to address you at this important launch of the “ ecobank rapid transfer ” and the “ non - resident african account ”. i am informed that the two products are designed to transfer money faster and in real time while meeting the needs of customers resident in countries other than those where their accounts are domiciled. i am also pleased that these two products are aimed at promoting the efficient transmission of remittances at an affordable cost. distinguished ladies and gentlemen, allow me to briefly highlight the importance of remittances to our economy. remittances are increasingly growing to be one of the most important sources of finance in zambia. such funds are not simply an expression of fondness by people in the diaspora to assist their families in adverse situations. they also represent an important source of finance that augments capital inflows and investments in the economy. formal remittance inflows into the country for the three quarters to september 2009 were estimated at k221 billion. this emphasizes the growing significance of globalisation and thus the need to intensify efforts to improve and establish, an environment that could enhance the impact of remittances and their effectiveness on the economy. furthermore, remittances when compared to other forms of capital inflows, can have a positive impact not only on the volume but also on the quality of investments. people in the diaspora or their relatives are more familiar with the local economic and social environment and therefore can make a better use of the capital brought into the country. infact, the recent few years has seen a growing number of zambians who were in diaspora, returning and trying to set up their own small or medium size businesses, bringing in, not just funds, but also a lot of know - how. the downside to remittances | 0.5 |
vitor constancio : in defence of monetary policy opinion piece by mr vitor constancio, vice - president of the european central bank, 11 march 2016. * * * this week the ecb adopted new measures to reinforce its monetary policy in the face of recent headwinds. that decision was taken against a backdrop of vocal scepticism in the media and markets. the sceptics ’ reasoning is two - pronged. first, that monetary policy is not sufficient to address the present low growth trend ; and second, that monetary policy is increasingly ineffective in any case. the notion that monetary policy alone cannot raise trend growth is mostly true but trivial, especially if the challenges of secular stagnation highlighted by robert gordon in his brilliant new book are considered. the g20 has appealed for the use of other policies, notably fiscal and structural reforms. while other policies would certainly be welcome, one can have justified doubts about their implementation. for a start, active stabilising fiscal policy is restricted by law in the eu and by politics in the us. more generally, countries that could use fiscal space, won ’ t ; and many that would use it, shouldn ’ t. that leaves us with structural reforms. some, like upgrading education and judicial efficiency, are important but take a long time to implement and to produce results. the structural reforms economists often have in mind ( i. e. liberalization and deregulation of markets ) lead to lower wages and prices in the short - term, which does not help inflation normalisation. and concerning unemployment, higher productivity often initially implies labour saving. structural reforms are essential for long - term potential growth, but it is difficult to see how they could spur growth significantly in the next two years, especially when the current problem is lack of global demand. and as regards their delivery by governments, we should recall the embarrassing results of the g20 plan agreed in brisbane to generate an additional 2 % in world growth via a long concrete list of reforms put forward by the imf and the oecd. in fact, the world economy now risks not even attaining what was then considered the baseline scenario. so if these other policies either can ’ t or won ’ t contribute to a significant degree, then not only is it wrong to start talking down monetary policy – it ’ s actually dangerous. the second criticism of monetary policy is mostly based on a crude comparison between where inflation ( or growth ) is now and where it was at the beginning | of the policy. the conclusion : inflation didn ’ t change much, so the policy isn ’ t working. however, what is rational and essential is to examine what would have happened had the policy not been adopted in the first place. using several models, ecb staff estimated that, without our policies, inflation would have been a third of a percent negative in 2015 and would have stayed significantly negative throughout 2016, which would mean that we would have been in permanent deflation since last year. this is a significant result. recall that the final outcome was affected by the unexpected decline in the price of oil by 30 % from september to december. we estimate that two thirds of one percent of the registered growth in the past two years was due to our monetary policy. however, what we achieved in fostering internal demand was undone by the subsequent decrease of net exports in a decelerating world economy. these developments did not make our policy less effective, only ex - post insufficient for the desired outcome. bis central bankers ’ speeches naturally, all policies have limits. in the case of the instruments we are now using, this is particularly true of negative interest rates on our deposit facility. the reasons are more fundamental than just the effect on banks 1. despite negative rates throughout last year, the net interest income ( nii ) of euro area banks increased in percentage of assets, and their return on equity went up from 3. 5 % in 2014 to 5. 7 % in 2015 – which corresponds to a real return as inflation was zero. our policies also produced capital gains for banks, as securities ’ prices went up ( and yields down ), and impairment costs came down as the recovery reduced the amount of npls. more broadly, negative deposit facility rates have contributed to negative rates in the money market, reducing funding costs for banks. the whole yield curve has been lowered, which is the sole objective of using this particular monetary policy instrument. to normalise inflation in the euro area we urgently need higher growth that can reduce negative output and unemployment gaps, using all really available policies. if not monetary policy, then what? see cecchetti & schoenholtz ( 2016 ) how low can they go? bis central bankers ’ speeches | 1 |
. i am sure, when ready, the plan would provide rbia with guidelines to combat the emergency efficiently and effectively. before i end, i would like to emphasise the urgent need for adopting proactive approach in streamlining records management in the bank. with the enactment of right to information act the records management system needs closer look so that systems are evolved for instantaneous storage and retrieval of information for dissemination purposes. i once again congratulate rbia and its staff on silver jubilee and hope that they would be able to tackle future challenges efficiently and effectively. thank you. | shyamala gopinath : special features of financial sector reforms in india inaugural address by ms shyamala gopinath, deputy governor of the reserve bank of india, at the 18th annual national conference of forex association of india, bangkok, 6 april 2007. * * * ms. nitaya pibulratanagit, asst. governor bank of thailand, mr. appiah chairman forex association of india, mr. lamba secretary forex association of india, delegates from india and asia / middle east, ladies and gentlemen. it is a pleasure to inaugurate the 18th annual conference of the forex association of india which is affiliated to aci in this historical city of bangkok. i understand fimmda had held a similar conference in bangkok in 2003 which was inaugurated by my senior colleague dr. rakesh mohan. india and thailand share a close association dating back to many centuries, which continues even in the present times, both culturally as well as economically. the past few years have witnessed increasing economic and commercial links and the signing of a number of agreements leading to a further intensification of relations. the economies of the asian region are emerging as the new engines of growth in the global economy and i am sure in this year ’ s conference many speakers will focus on the theme of the conference. for my address today, i intend to reflect upon the special features of financial sector reforms in india since the initiation of the reform process in early nineties covering banking sector and financial markets and certain actions taken and contemplated. there have been innumerable evaluations of the financial sector reforms undertaken by india, some of which critical of the pace but the results achieved are acknowledged by all. it is important to understand and appreciate the circumstances under which the entire process was guided through balancing the given systemic imperatives with the need for bringing about changes in a non - disruptive manner. financial sector reforms in india introduced as a part of the structural adjustment and economic reforms programme in the early 1990s have had a profound impact on the functioning of the financial institutions, especially banks. the principal objective of financial sector reforms was to improve the allocative efficiency of resources, ensure financial stability and maintain confidence in the financial system by enhancing its soundness and efficiency. at the same time, reforms were also undertaken in various segments of financial markets, to enable the banking sector to perform its intermediation role in an efficient manner. with a view to making the reform measures mutually reinforcing | 0.5 |
s s mundra : customer service in banks - time to raise the bar! keynote address by mr s s mundra, deputy governor of the reserve bank of india, at the annual conference of principal code compliance officers, organized by the banking codes and standards board of india, mumbai, 30 may 2017. * * * shri a. c. mahajan, chairman, banking codes and standards board of india ( bcsbi ) ; shri anand aras, ceo, bcsbi ; colleagues from the banking industry ; representatives from the media ; ladies and gentlemen! at the outset, i would like to thank bcsbi for inviting me for this annual conference of the principal code compliance officers ( pccos ) in the banks. 2. during the past 12 years of its existence, bcsbi has played a pivotal role in enhancing awareness about customer service in banks. the code of bank ’ s commitment to customers and the code of bank ’ s commitment to micro and small enterprises developed by bcsbi set out common minimum standards for customer service in banks. 3. monitoring of compliance to the codes by member banks is one of the mandates of bcsbi which is fulfilled through visits to a representative sample of branches by authorized representatives of bcsbi. bcsbi, thus, helps the banks by providing an independent review and feedback on their adherence in practice, to the self - prescribed standards. from 2013, bcsbi has been rating banks on code compliance based on the inputs from branch visits and customers feedback. this rating indicates level of implementation of important provisions of these codes at the first customer touch point in the bank. a release now of these ratings in public domain is intended to increase transparency, generate public awareness and also instill a sense of competition among the member banks for achieving a higher level of customer service. a perusal of the ratings, however, does not exhibit any significant improvement in consumer service rating of banks. only 12 of the 46 banks rated by bcsbi received ‘ high ’ rating in terms of performance while 24 were above average and 10 remained as ‘ average ’ performers. in fact, the position has marginally worsened since 2015 survey. 4. despite outlining of minimum standards for customer service through codification of banks ’ commitments to customers, we observe that the number of complaints received by the offices of banking ombudsmen continues to rise. for the first time since its inception in 1995, the number of complaints to bos exceeded one lakh last year. | amando m tetangco, jr : working on asean governance standards speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the financial sector forum on asean corporate governance scorecard, manila, 24 september 2014. * * * good morning everyone and welcome to the bangko sentral ng pilipinas. on behalf of the other members of the fsf – the heads of sec, ic and pdic – i also welcome everyone to this forum on the asean corporate governance scorecard or what we call acgs. the bangko sentral ng pilipinas, the securities and exchange commission, the insurance commission and the philippine deposit insurance corporation are pleased that representatives from various sectors have joined us this morning to know more about the acgs. this tells us that you and the institutions you represent similarly value corporate governance. as you and i know, good corporate governance is key to ensuring sustainable long - term growth. in this context, acgs is important – it deserves our time and full attention. a joint initiative of the asean capital markets forum and the asian development bank, the acgs evaluates the top publicly listed companies in five categories, based on the following weights : 10 % for rights of the shareholders ; 10 % for role of stakeholders ; 15 % for equitable treatment of shareholders ; 25 % for disclosure and transparency ; and 40 % for responsibilities of the board. benchmarked against international best practice, the acgs provides a standard rigorous methodology that can generate comparable information crucial to investors, fund managers, the private sector, the regulators and governments. at present, the acgs counts six participating asean countries : indonesia, malaysia, singapore, thailand, vietnam and the philippines. this program is being done in parallel with other efforts to promote asean as a competitive growth region. while the acgs country reports and assessments for 2013 – 2014 said the performance of asean publicly listed companies in applying recommended corporate governance principles is commendable, continuing improvements are called for. we agree. and all of us should strive to do so in our respective institutions, industries and sectors. good governance has to be a culture not only within institutions but across our country. at this point, i will share a number of our initiatives at the bangko sentral. over the years, we at the bangko sentral have been working on strengthening governance standards in banks. among others, proposed directors of banks are subject to | 0 |
shock and therefore with transitory effects on inflation, tightening the policy was less than optimal. most recently, the exchange rate broke the upward trend it followed for several quarters. actually, it has dropped compared with its levels early in the year. symmetric to our previous actions, if for this reason inflation were to fall temporarily below our target, we would not apply a more expansionary monetary policy, unless after some time we saw second - round effects jeopardizing the return of inflation to 3 % over a two - year horizon. importantly, any changes in the policy stance in either direction can be warranted only if our medium - term inflation forecast suggests that it will deviate away from the 3 % target. of course this would be determined by changes in its fundamentals. what are the risks we identified in our baseline scenario? on the external front, one of the main risks is a reversal of the improved international financial conditions. as i said, the path that the fed will ultimately take to adjust the policy rate is critical. an increase in the fed funds rate is very likely within this year, and the markets ’ expectations point at very gradual subsequent adjustments. a more aggressive action by the fed could increase global volatility significantly, affecting asset prices, capital flows and currencies. the brexit vote materialized one of the risks outlined in june but, to this date, its effects seem 4 / 14 bis central bankers'speeches bounded. however, its true consequences are still in the making, so further repercussions on medium - term growth in the uk and europe cannot be ruled out. add to this the concerns about the soundness of part of european banks, particularly in italy and portugal. and let ’ s not forget several open electoral processes around the world, whose results could cause a shift towards more protectionist policies. in the emerging world, the overall risk outlook has tended to moderate in the past few months. accordingly, concerns about china have eased, while the chinese impulse policies have stabilized the pace of growth. significant risks remain, however, namely the doubts surrounding the sustainability of these measures over time, as well as about the chinese financial system and real estate sector, among other factors. moreover, a scenario in which the fed ’ s monetary policy becomes more aggressive may have important negative implications on china. in latin america, beyond very recent improvements, adjustments to both public and private spending are still needed. domestically, short - term inflationary risks remain tied to the evolution of | jose de gregorio : what does society expect from the financial sector? panel discussion remarks by mr jose de gregorio, universidad de chile and former governor of the central bank of chile following the per jacobsson lecture by dr yv reddy, 24 june 2012, basel, switzerland. * * * i would like to thank the bis for the invitation to participate in this panel, which makes us look at financial markets from a new perspective. as policymakers, we are used to talking about how the financial system must operate in order to fulfill its goals without threatening financial stability or imposing costs at the aggregate level. in recent years, the discussion has focused on how to avoid excessive procyclicality, contagion, moral hazard, and other important policy concerns. as economists, we have been trying to explain the misbehavior of financial systems, and we are still searching for answers. although we may have some ideas, the policy implications are not straightforward, but the answers cannot wait. policy design needs answers as soon as possible, and delays may cause well intentioned policies to be poorly implemented. but what society really demands from financial systems is quite difficult to define. society is a collection of actors, with different interests and different needs. people want access to the financial system at fair conditions. therefore it is useful to think of society as everyone who is not related directly to the financial industry or policymaking. starting from here, we can say that society is demanding safer and fairer financial systems. the view that financial markets were big casinos, where the betting was done with other people ’ s money and gamblers walked away unpunished, is quite common around the world. public opinion has been dominated by that sentiment, which has also affected policymaking. on financial development let me start by stressing that financial intermediation is good, and with the backlash from the crisis it should be repeated that a well functioning financial system is key to prosperity. it promotes economic growth by channeling investment funds from savers to borrowers ( levine, 2006 ). it is central to promoting entrepreneurship and to facilitating investment, including human capital accumulation. it provides financing to households in order to smooth consumption, and provides insurance. it provides safe and cheap means of payment. the difficulties faced by households and firms in many emerging market economies due to underdeveloped financial institutions and markets should be a clear reminder of this positive role. but financial depth may also be a source of great problems. as in | 0.5 |
to address this risk? some policy makers have argued that public disclosure of information could help reduce the risk of future systemic financial crisis, by preventing the buildup of " excessive " leverage or concentrations of risk. the principal focus of attention, as in the immediate wake of the failure of long term capital management, has been on two quite different types of public disclosure. the first is information that would make it easier to evaluate the overall leverage or risk profile of major hedge funds and their counterparties, and thereby judge their vulnerability to a sharp movement in asset prices. the second is information about the actual positions of individual funds or institutions : information that would make it easier to identify concentrated exposures to specific risk factors, and thereby assess more accurately the potential impact of the failure of a major fund or institutions on the market as a whole. these pose very different challenges and offer different benefits. there are a number of crude measures of overall risk profile that, if disclosed to the market, would give counterparties information they do not now typically get about the risk of failure of the fund. one example is data on the size of daily variations in net asset value, var, or profit and loss over the previous quarter. this type of information would not reveal proprietary information about trading strategies or otherwise create substantial disincentives to risk taking. although these would provide some information on the overall risk profile of the fund, they would be lagging indicators, and they would carry the usual risk of providing false comfort in some circumstances and excessive concern in others. adopting such measures would give the institutions that provide financing and leverage to hedge funds a somewhat greater capacity to judge their direct risk to those funds. but that is not their principal challenge. the institutions already know the positions they are financing, and they can use the usual range of tools to measure the potential exposure, net of collateral, in those positions. and where they do not feel they have adequate information to evaluate the overall risk profile of the fund, they can manage that risk by taking less exposure, by requiring more margin, or by building a greater cushion of protection against overall risk. so the potential gains from a disclosure regime of this type would be limited, at least as compared with the cost of trying to put such a regime in place on the global scale that would be necessary to make it effective. by far the greater challenge is to assess the potential impact of the failure of a major hedge fund on the firm's other exposures and other counterparties. this is | sarah dahlgren : the importance of addressing cybersecurity risks in the financial sector remarks by ms sarah dahlgren, executive vice president of the financial institution supervision group of the federal reserve bank of new york, at the oprisk north america annual conference, new york city, 24 march 2015. * * * introduction i would like to thank operational risk & regulation for inviting me to speak here today. i appreciate the opportunity to address this group and kick off what looks like a very interesting and comprehensive few days of dialogue around current and future risks facing the industry. as always, my remarks today reflect my own views and not necessarily those of the federal reserve bank of new york or the federal reserve system. i will begin my remarks with a high - level overview of the progress made in recent years in addressing some of the most significant risks facing the industry following the financial crisis. i will then go on to discuss one of the areas where i see some of the biggest challenges in the road ahead. as the industry continues to adapt to and implement necessary regulatory changes, it is also adapting to and leveraging technology changes : technology changes that offer both exciting opportunities and more complex risks than – i think – we are prepared for. progress coming out of the financial crisis, we all knew that we needed to be better prepared for future crisis events, whatever their character, source or timing. we needed financial firms, and a financial system, that was better prepared to weather all storms. in 2011, we developed the framework for supervision – a framework designed to ensure we had firms and a system that were less complex, more resilient and better managed. collectively, we have made a lot of progress since 2011 – and the industry is in much better condition relative to the pre - crisis period. but, as you all know, business does not stand still and this constant evolution results in new risks and new challenges. before turning to one of the biggest risks or challenges i see, i want to pause and recognize two things : • first, it ’ s clear that progress has been made across the industry in a number of areas – particularly in making firms and the system more resilient through improvements in capital and liquidity, as well as enhancements in risk management, including capital planning and stress testing across the range of risks firms face. but, in the remaining two areas of the framework – less complex and better managed – i think it ’ s safe to say that despite the fact that firms are addressing a number | 0.5 |
amando m tetangco, jr : opportunities in financial inclusion and financial integration speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the baiphil induction of directors and officers and first general membership meeting, makati, 21 july 2015. * * * this is an auspicious time to be involved in baiphil. your term covering fiscal year july 2015 - june 2016 coincides with baiphil ’ s 75th anniversary! by any measure, this is a significant milestone. congratulations baiphil! and congratulations to your officers and members, past and present! by tradition, diamonds symbolize 75th anniversaries. this is because diamonds represent a highly prized quality – which is, enduring fidelity. faithfulness. commitment. i am pleased to know therefore, that the theme you selected for this year ’ s induction of officers is – “ building capacity for financial inclusion and integration. ” the industry is in the midst of so many facets of change that the concept of “ capacity building ” takes on new dimensions. it is no longer enough that you position yourself as a trainor for your peers. baiphil itself must navigate through a fast - evolving market landscape, appreciate and relate all the strands of change, if you are to become an effective venue for continuing education. training and education cannot be just about holding lectures and workshops. it is more akin to telling a good story with different chapters. in financial inclusion, we see the dimension of access and calibration so that the financial system itself is responsive to the diverse needs of differentiated stakeholders. how much more appropriate can this be than in an archipelago such as the philippines. this literally forces us to think out of the box, that comfort zone that we refer to as “ traditional banking ”. in financial integration, we bring together the collective aspirations of a regional community. this materially changes the landscape but more importantly, it does so at the same time that global best practices are themselves being re - set to a higher and more prescriptive bar. this forces us to think within the box, examining what we have, how we wish to position ourselves in this sea of change and what we need to do to remain competitively in the service of our respective constituents. in each of these two facets, we have a lot that needs to be covered. taken together, the strategic and tactical implications are | the target. this was especially important when the economy was hit by a supply shock, and we needed to trade off reaching the inflation target and closing the output gap. inflation was below target until last year. now, hit by a demand shock and looking ahead, we know that a trade - off is absent – the economy needs stimulus. but in the face of an unusually high degree of uncertainty, and given an unusually large shock, i believe that it is sensible to continue to be patient. we still try to have a long - term perspective, and we will carefully consider the effects of measures already taken as we move along. even with monetary policy able to counteract cyclical fluctuations to some extent, there is a limit to how much the one tool at the central bank ’ s disposal – the key policy rate – can accomplish. regulations need to underpin the robustness of the financial system with respect to cyclical fluctuations. supply side policy needs to support the capacity of the economy to absorb asset price fluctuations. as for regulatory reform of the financial sector, i believe we both need to reconsider the structural elements and we need some new discretionary features. in order to limit excessive credit growth, the leverage ratio of banks should be contained, with higher capital requirements. the procyclical effects of such capital requirements need to be addressed. since profits fall during a recession, capital requirements then tend to be more binding, reducing credit availability when it is most needed. the work aimed at changing the procyclical effects of capital requirements is still in its infancy. banks ’ incentives to increase loan provisions during upturns could be strengthened. this would smooth profits and hence make capital requirements less procyclical. ideally, loan provisions should internalise some of the cyclical risk by being based on longer term risk assessments. in addition, one could reduce the procyclical effects of capital requirements more directly by making the capital requirements themselves more flexible over the cycle. imposing capital requirements always involves a trade - off between financial stability concerns and efficient capital allocation. in a downturn, when concern about the availability of credit may be greater than in an upturn, a temporarily reduced capital requirement may be justified. the condition must be that the buffer is built up again during the upturn. such time variant capital requirements would also be demanding to implement, however. it would leave the relevant authority with the discretion to assess the cyclical situation and impose appropriate capital requirements. the time horizon over which the | 0 |
amando m tetangco, jr : efforts to provide an integrated national payments and settlements system remarks by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the signing of the moa on the interconnection of pds settlement highway ( psh ) and bsp philpass, bangko sentral ng pilipinas, manila, 29 august 2007. * * * monetary board members ; mr. vicente castillo, ceo, philippine dealing system holdings corp ; mr. ramon sy, president, bankers association of the philippines ; guests from our partners in the banking sector ; bsp officials ; our friends from the media ; ladies and gentlemen, good afternoon! today ’ s moa signing is another landmark in our joint efforts to provide an integrated national payments and settlements system. as partners in the financial reform agenda, we have all vigorously worked together to have the various pieces of the payments puzzle be put together. in the process, we continue to work towards the establishment of the infrastructure that would allow the secure and timely completion of transactions to reduce systemic risk in the financial markets and thereby enhance the integrity of financial transactions. in the course of the last five years, the bsp ’ s philpass has been interconnected with the check and peso clearing results of the pchc, the delivery vs. payment of government securities transactions of the bureau of the treasury, the atm transactions of the megalink member banks, and the payment vs. payment ( foreign exchange ) transactions of the philippine dealing exchange. to date, all the commercial banks and 50 % of the thrift and savings banks and some non - banks performing quasi - banking operations settle these various transactions in the philpass. with the signing of the memorandum of agreement for the interconnection of the philippine dealing system holdings corporation ’ s settlement highway with philpass, all the payment instructions for transactions that would be done through the pds group could now be transmitted directly to the bsp - philpass and effected in the ddas of the counterparties who are philpass member banks or through the ddas of the philpass member bank in their capacity as settlement banks for non - philpass members. these transactions include foreign currency transactions, interbank and interdealer repo transactions, and interbank fund transfers. it is also worthy to note that this interconnectivity comes at very minimal cost. this is because the infrastructure | is already in place ; all that needed to be done was minimal reconfiguration of the existing systems to capture these additional types of financial transactions. the bangko sentral ng pilipinas, in fulfilling the third pillar of its mandate, will continue to work to improve the operations of the philpass to better address all the concerns of our stakeholders. we are well aware, however, that we cannot do this alone. we look forward to your continued support and partnership. thank you! | 1 |
in facilitating innovation. 12. having set that context, i now want to address three specific sub - topics in the area of payment and settlement systems : i. rbi ’ s role in modernizing payment systems ii. rbi ’ s approach to responsible regulation iii. rbi ’ s role as facilitator of innovation rbis role in modernising payment systems 13. so, let me turn to the first sub - topic – the role played by the reserve bank in the modernization of the payment and settlement infrastructure of the country. paper based clearing 14. the reserve bank kickstarted the modernisation of the paper based system in the mid - 80s with the introduction of micr technology in the four metros. today micr technology is used at 66 centres across the country. besides, more than 1100 smaller centres have been brought under a uniform computerised clearing package – the “ express cheque clearing system ” – to enable the required level of interoperability across all the clearing houses. leveraging on the core - banking infrastructure of banks, we introduced “ speed clearing ” in 2008 to facilitate collection of outstation cheques on a local basis. 15. another major initiative has been the cheque truncation system ( cts ) which was operationalised in the national capital region of delhi in 2008. cts, as many of you know, is an image based cheque clearing system obviating the need for physical movement of cheques. a further technological improvement of the regular cts environment is the grid bis central bankers ’ speeches based cts. the grid based cts encompasses multiple clearing locations spread across several states facilitating the processing and clearing of cheques of all the banks under that particular grid. the national payments corporation of india ( npci ), the umbrella retail payments organization set up by banks, has since operationalized a grid based cts in chennai in 2011. electronic payment systems 16. even as it was modernizing paper based transactions, the reserve bank was also simultaneously working on retail electronic payment systems such as electronic clearing service ( ecs ) for bulk payment transactions ( credit as well as debit ) and an electronic funds transfer ( eft ) system. the localised ecs has today metamorphosed into an ecs suite of products : ( i ) a localised ecs catering to the bank branches of a local clearing house ; ( ii ) a regional ecs covering all the bank branches of a state or several states as in the north - east ; and | duvvuri subbarao : indian payment and settlement systems responsible innovation and regulation keynote address by dr duvvuri subbarao, governor of the reserve bank of india, at the idrbt ( institute for development and research in banking technology ) banking technology awards function, hyderabad, 3 august 2012. * * * 1. first of all, my thanks to the management of idrbt for inviting me to this eighth edition of the idrbt banking technology awards function. financial innovation in the context of the crisis 2. we are gathered here today to recognise and celebrate financial innovation. if we take a long sweep of history, there is no doubt that innovation has contributed to enhancing the quantum, quality and reach of financial intermediation. in recent years though, financial innovation has become a contentious issue. unbridled financial innovation and the failure of regulators to check that are also being cited as among the culprits for the global financial crisis. 3. quite understandably, the crisis has triggered a number of questions about financial innovation. is all financial innovation for the good? are there good and bad innovations? what determines if an innovation is good or bad – the innovation itself or the way it is used? who is to determine if an innovation is good or bad? do regulators have the wisdom and competence to regulate without stifling value adding innovation? 4. these questions are subject matter of a vigorous debate among financial markets and financial sector regulators. even as this is largely work in progress, the objective of all this effort is clear – to make both innovators and regulators more responsible. 5. is this talk about responsibility just a homily? i believe it is more than that. let me explain. innovations, we know, are not driven by altruism ; they are motivated by private profit. if there is no private profit, there will be no innovation. in theory, as adam smith had propounded over two centuries ago, this is no bad thing. individual pursuit of profit, driven by selfishness, can indeed lead to collectively optimal outcomes. the important condition for this to happen though is that markets must be competitive and efficient. but markets fail, and financial markets fail more notoriously than other markets for a variety of reasons – information asymmetry, moral hazard, adverse selection, externalities etc. 6. possibly the only way to mitigate the risks of market failure in respect of financial innovation is regulation. and herein comes responsibility. | 1 |
stability. | yannis stournaras : the acropolis of athens and contemporary europe speech by mr yannis stournaras, governor of the bank of greece, at the official dinner on the occasion of the ecb governing council meeting, athens, 25 october 2023. * * * dear prime minister mitsotakis, dear president lagarde, dear finance minister hatzidakis, dear colleagues and partners, it is a great pleasure to welcome you, the governing council of the ecb, to the bank of greece. it's been a long time, 15 years, since we last met here. what has happened since then is well known to all of us. it is now part of our shared history. what is important is that we are all now wiser, stronger, closer to each other, better prepared to tackle difficulties, more european. ladies and gentlemen, this room was designed to host esteemed guests like you, and is decorated with paintings made by some of the most important modern greek artists. but the most beautiful sight of this room you can see outside : it's the acropolis of athens, with the parthenon, its central temple. there's hardly an end to the list of things that one can say about the acropolis. the history, architecture and art of the monuments on this rocky hill have inspired many historians, artists and researchers. the parthenon was built between 447 and 438 bc, during the so - called " golden ge of pericles ", the athenian politician inextricably linked with the heyday of democracy demokratia ; literally, the power of the people - as a form of government that was destined to have a profound impact on the development of the western world. the acropolis is the most accurate reflection of the splendour, power and wealth of 5thcentury athens, a city - state at the peak of its glory. and it has the parthenon located at the most conspicuous point. the parthenon was dedicated to the goddess athena, who was much more than a patron goddess of athens. she was the apotheosis or deification of the athenian city. the parthenon was built by ictinus and callicrates, two famous architects of the time. its pedimental sculptures, frieze and metopes were the work of a team coordinated by master sculptor phidias. phidias also created the gold and ivory statue of athena | 0 |
karnit flug : the israeli economy – a macroeconomic perspective main points of a lecture by dr karnit flug, governor of the bank of israel, at the supreme court, jerusalem, 6 august 2015. * * * the israeli economy is an open economy that is greatly affected by developments abroad. this is reflected in the growth rates in the economy, which are very much in line with those abroad. the effect of activity abroad is mainly reflected through international trade, which affects demand for israeli exports, both goods and services. goods exports are in a virtual standstill, against the background of the virtual standstill in global trade, which declined slightly in 2013 and recovered slightly during 2014. in contrast, services exports have performed better than global trade. the labor market is in good condition. the unemployment rate is very low and this, alongside the continuing trend in the labor force participation rate, with new participants finding employment, reflects an increasing trend in the employment rate. the development of real wages per employee post indicates a moderate increase in recent years, and acceleration in the past year. monetary policy the bank of israel ’ s policy acts to achieve the bank of israel ’ s targets as set out in the law. the main target is achieving price stability, meaning meeting the inflation target, and subject to that, support for the other economic targets, chiefly growth and employment, and support for financial stability. in recent months, the inflation rate has been below the target, and in the past 12 months, prices have declined by 0. 4 percent, mainly due to a decline in fuel and commodities prices. in contrast, one - year forward inflation expectations are at the lower bound of the target range – 1. 0 percent. since the beginning of the year, the shekel has appreciated, which has contributed to lower prices, following a number of months of depreciation in the last few months of 2014. the appreciation also makes it difficult for israeli exporters to compete in the global market, and our estimation is that the shekel is appreciated relative to equilibrium levels. against the background of these developments – which are also affected by developments in the global economy – the bank of israel lowered the interest rate to the historically low level of 0. 1 percent, and purchased foreign exchange. the budget and the fiscal aggregates the government has recently been dealing with the finishing touches of the budget. the proposed budget for 2015 and 2016, which was approved by the government, includes deficit targets of 2. 9 percent | nadine baudot - trajtenberg : israel ’ s market developments and monetary policy objectives remarks by dr nadine baudot - trajtenberg, deputy governor of the bank of israel, at the globes capital market conference, tel aviv, 2 june 2014. * * * this is my first public speech as deputy governor, and i am pleased to be back to speak to those active in the capital market. in my remarks, i would like to look back on the monetary committee meeting that took place a week ago, in which we decided to leave the interest rate at its current level, and i would like to speak about what we saw, and what we did not see, in the market ’ s developments. i would like to re - state that the bank of israel has three objectives that inform our policy decisions. the first, and classic, objective, which is so relevant to the state of israel from an historical standpoint, is obviously price stability. the second objective deals, among other things, with real developments, and the third is not a new issue, but it is one with new importance – financial stability. this means that when we look at the data, we look, obviously, at inflation, and perhaps even more importantly, at inflation expectations. second, we assess the real developments in the economy and interpret the new data that has become available in the past month, and third, we track developments in the assets markets, and the level of leverage in the economy, which is obviously one of the most important indicators of financial stability. let ’ s start with inflation. inflation over the past 12 months is at the lower bound of the target range of 1 to 3 percent. in contrast, expectations are closer to the midpoint of the range, although they have recently declined slightly. we also look at inflation expectations over the long term, which are also within the target range. right now, if we analyze the relatively low level of inflation that we have, we can try to understand how much of it comes from low inflation in israel and how much is imported from abroad. we can see that inflation abroad is also low, and the case of switzerland is prominent, as they have been coping for some time with low, and even negative, inflation, which is obviously not the situation in israel. if we break down the consumer price index and look separately at inflation in the tradable components and inflation in the nontradable components, we can see a significant gap : inflation | 0.5 |
and action plans were introduced, while existing financing mechanisms were strengthened to support the uptake of green initiatives. as 2020 approaches, malaysia is committed to continue implementing its strategic long - term plans and green friendly policies. budget 2020 is reflective of this commitment, with the allocation of a matching fund of rm10 million towards a joint united nations sdg - government fund to co - finance sdg initiatives 2 / 5 bis central bankers'speeches in malaysia. while government funding is important to realise the sdgs, most of the investments would need to be sourced from the private sector. an annual target of rm350 billion from private investments by 2020 was identified in the national roadmap for the sdgs, in line with achieving the targets of the 11th malaysia plan. thus, financial institutions are expected to embark on new financing and investment opportunities towards sustainable projects and practices. there is a large financing gap needed to be filled to realise the sdgs in developing countries, which is estimated to be between usd 2. 5 – 3 trillion annually. one major sector to drive a green economy is renewable energy. projections provided by the sustainable energy development authority ( seda ) estimates that rm 33. 5 billion is needed by private sector financing to achieve the national target of 20 % installed capacity of renewable energy by 2025 in malaysia. beyond that, financing is needed for other important sectors such as education, healthcare, social entrepreneurship and food production to galvanize sustainable development. there is also a more prominent role for financial institutions to advocate for or provide advisory services to businesses in sustainability areas. for islamic finance, green sukuk issuances have served as a bridge between islamic finance and sustainable investment. however, more is required for islamic finance to have greater impact and this pursuit can be further enhanced with the vbi initiative. with this islamic financial institutions will be able to play an important role in supporting the 2030 government ’ s shared prosperity agenda. nevertheless this will not be without its challenges. balancing different priorities on the social, economic and environmental fronts is a delicate act, as these may seemingly pull in different directions. it is inevitable there will be issues and challenges that need to be addressed on the path to attaining sustainability goals. i would like to touch on three key challenges and share the bank ’ s views and strategies in responding to these and to further accelerate our journey. first, is the low level of awareness, understanding and appreciation of sustainability practices and what it entails among stakeholders. this has led to limited integration | in fund raising, lending and investment activities. ultimately, this can potentially increase financing to green projects. the first draft of the taxonomy is targetted before the end of this month and we would welcome feedback from the industry on this. the joint committee on climate change is also there to build industry capacity, by sharing knowledge, expertise and best practices in assessing and managing climate - related risk. the four sub - committees formed under the joint committee are in the midst of developing their action plans, including strategies and initiatives to upskill financial institutions in managing climate - related risks and transition to a low carbon economy. ladies and gentlemen, the second challenge is in forging strong collaboration and cooperation among key stakeholders and overcoming the collective action problem. when it comes to costly and difficult action, we always prefer others to do it. ministries, government agencies, policymakers and regulators must therefore set aside their differences and work for the greater good, consolidate their strength based on their shared values and work collaboratively to develop and bring creative ideas for sustainable development into fruition. initiatives need to be driven beyond personal motivation and belief. strategies need clear milestones with clear accountability by stakeholders. sector - specific approaches need to converge to limit risks of a disorderly transition. the journey of sustainability is therefore one that is best navigated collectively. we have to come together to support joint and coordinated responses to mitigate unsustainable practices. for the malaysian financial sector, the formation of the joint committee on climate change was an important milestone in pursuing collaborative actions for building climate resilience. a key mandate of the joint committee is to facilitate collaboration between key stakeholders in advancing coordinated solutions to address arising challenges and issues. this is in addition to building industry capacity, and identifying issues, challenges and priorities facing the financial sector in managing the transition towards a low carbon economy. the third challenge that we face as a developing nation is in balancing sustainability and competing socio - economic priorities, given our limited resources for transition to low - carbon economy. for example, reduction in fossil fuel use may lead to significant trade - offs with growth and poverty reduction objectives, particularly in the short to medium - term. targetting sustainable growth and development amidst capacity and funding constraints can thus present significant challenges for political leadership, economic priorities and social outcomes. in this context, given the higher cost of transition, the country may need a longer time to transition towards more sustainable growth policies. this may however result in delayed actions which would heighten physical risks. for the bank, | 1 |
drift even further below target against the risks of exacerbating financial system imbalances. as central bankers, here in canada and globally, we are in new territory. it brings to mind the sailors of another era who were driven far off course by a nasty storm. when things calmed, they found themselves in the southern hemisphere. suddenly the navigational chart that they relied on – the night sky – was completely different. we have every reason to believe that, after the experience of the crisis is behind us, central banking will be defined very differently than it was just five years ago. we know now that economic and financial stability are intrinsically linked, and we are figuring out as we go how to better integrate the two in our analysis and research, and in our policy. on a technical level, we are actively building new models and adding new detail to our existing ones. we are spending more time talking to real people making real economic decisions, to understand better the forces we are facing. and, we are communicating differently, not just more, but with more transparency, with due regard to the uncertainty around us. i am confident that we ’ ve got it roughly right, given what we know and especially what we don ’ t. just like those sailors on the open seas, we will adapt and thrive – and find our way home. bis central bankers ’ speeches | . eastern canadian consumers are importing oil and paying the global price, at an average $ 35 premium to the price received by western heavy oil producers over the past year. new energy infrastructure - pipelines and refineries could bring more of the benefits of the commodity boom to more of the country. other new markets can be found at home. for example, as of november 2011, 255 ontario firms were suppliers to the canadian oil sands. 7 as well, ontario ’ s exports of mining - related services to alberta grew 44 per cent in the last year measured. capturing more of the value added in commodity production, from energy to agriculture, remains a tremendous opportunity for all of canada. we should also recognise that, in an era of high resource prices, better operating efficiency, improved resource management and products with a more sustainable environmental footprint make commercial and social sense. advances in building energy efficiency, enhanced farm yields and power plant performance would pay immediate domestic dividends. however, the real prize may be in emerging markets, which contain an estimated 85 per cent of the resource productivity opportunities in the world. 8 improve interprovincial mobility crucial to capturing value added in canada is ensuring that workers across the country can fully utilise their skills. a common complaint, especially in this province, is the lack of skilled labour. research by the bank of canada and others shows there are implicit and explicit barriers created by provincial borders ; for example, differences in occupational licensing, which deter interprovincial migration. 9 the new west partnership trade agreement could be an important step to bringing down such barriers. for canada as a whole, amendments agreed to in 2009 to the agreement on internal trade ( ait ) to encourage interprovincial mobility of regulated professionals and skilled trades have similar potential, if implemented. increase skills to compete with technology and trade transforming the workplace, the need to improve skills across the spectrum of work has never been greater. first, we need to continue to improve the skills of our managers. only one third of managers in canada have a university degree, compared with almost half of american managers. 10 second, we need to grow further and target better our already high level of post - secondary attainment. even though canada has the highest level of tertiary education in the oecd, only 60 per cent of our graduates work full - time, compared with the oecd average of 75 per cent. further, 20 per cent of university - educated adults earn less than half the median wage. | 0.5 |
jorg asmussen : economic convergence across central, eastern and south eastern europe – achievements and challenges speech by mr jorg asmussen, member of the executive board of the european central bank, at the conference on european economic integration ( ceei ) 2013 “ financial cycles and the real economy – lessons for cesee ”, vienna, 18 november 2013. * * * dear ewald, good evening ladies and gentlemen, it is a pleasure to be here with you tonight. i would like to thank the oenb for the invitation to share some thoughts on the region, on which the oenb has developed analytical excellence that is beneficial to the entire eurosystem. i will focus my remarks on selected experiences of countries in central, eastern, and southeastern europe on their path of economic and institutional convergence towards the rest of europe. i will argue that both the successes and the challenges associated with the convergence process point to two basic lessons. first, that we should never relax in the pursuit of domestic policies oriented towards financial stability and sustainable growth. and second, that we need not just more, but also better european integration. in what follows, i will use the term western balkans to refer to the six eu candidate and potential candidate countries in the region : albania, bosnia and herzegovina, kosovo, the former yugoslav republic of macedonia, montenegro, and serbia ]. i will use the term central and eastern european countries to refer to seven eu member states outside the euro area, namely bulgaria, croatia, the czech republic, hungary, lithuania, poland, and romania. and i will refer to the two groups of countries taken together as central, eastern and south - eastern europe. i. the good experiences with convergence if you had to pick three “ good experiences ” which countries in the region have made over the years in terms of convergence, what would your choice be? 1. increasing living standards for me, the first good experience i would bring home is the improvement in the region ’ s living standards : between 2000 and 2012, real per - capita gdp, adjusted for differences in purchasing power, increased on average by close to 50 per cent both in central and eastern europe and in the western balkans. in lithuania, per capita income, measured in this way, increased from 35 per cent of the euro area average in 2000 to 65 per cent in 2012. on the other side of the spectrum, the living standard in the former yugoslav republic of macedonia increased only from 24 per cent of the euro area average in 2000 to | . it is within this context that i appreciate the commitment of euro area member states, made on the occasion of the last european council meeting, to take determined and coordinated action, if needed, to safeguard financial stability in the euro area. let me also take advantage of my presence in front of the european parliament to lay out what i already mentioned in the hearing before the economic and monetary committee on monday. it is the intention of the ecb ’ s governing council to keep the minimum credit threshold in the collateral framework at investment grade level ( bbb – ) beyond the end of 2010. in parallel, we would introduce, as of january 2011, a graded haircut schedule, which will continue to adequately protect the eurosystem. i will provide the technical details when reporting on the governing council decisions of our next meeting on 8 april. conclusion the introduction of the single currency just over a decade ago represents the greatest achievement in the history of european integration to date – a process that has ensured six decades of peace and prosperity in europe. the global financial crisis has brought fresh challenges to which we in europe have all risen. our monetary union and our very close ties, inside the single market, with all eu member states ’ economies have prevented the crisis from being compounded by currency crises, as in the traumatic experiences of the early 1990s. today, europe faces further pivotal decisions. our common task is to ensure continued peace and prosperity, to make our union an even more attractive place to live and work in. for this purpose, we need strengthened surveillance and strengthened cooperation. we also need to revive the sense of common purpose, the shared ideals that motivated our founding fathers. their endeavour was visionary and all what we see in today ’ s world confirms their lucidity. thank you for your attention. | 0.5 |
joachim nagel : el economista speech by dr joachim nagel, president of the deutsche bundesbank, in honour of mr pablo hernandez de cos, governor of the bank of spain and recipient of the echegaray prize, madrid, 2 november 2022. * * * 1 introduction ladies and gentlemen, today we are celebrating the award of the echegaray prize to an outstanding economist and central banker. pablo, it is a great pleasure for me to speak at this wonderful event in your honour here in madrid. i could certainly talk for a long time about all your achievements and merits, but my time is limited, so i will have to remain brief. 2 life path and achievements allow me first to say a few words about you, your life path and your major achievements. pablo hernandez de cos was born on january 20, 1971. his family originates from santander, a beautiful region in the north of spain. this region is, i guess, more green but less sunny than average for the country. he graduated in economics and business administration at the university college of financial studies in madrid in 1993 and in law at the national university of distance education the following year. his career as a central banker started in 1997, when he joined the research division of the department of monetary and financial studies at the banco de espana as a senior economist. a year later, he moved to the economic policy analysis division at the department of economic analysis and forecasting, where he stayed until 2004. as you can see, pablo is familiar with the groundwork carried out by economists at central banks. he was one of the economic experts that central banks are famous for. perhaps i am stressing this point because i believe that getting to know a central bank from its heart is a highly valuable experience. in this period, pablo not only worked as a senior economist at a central bank, he also got his phd at the same time. a great achievement! meanwhile, he also opened a chapter in his life that someone from frankfurt like me is especially pleased to talk about : in 2000 he came to this city for the first time as a country expert at the ecb, staying for a few months. after receiving his doctoral degree, he deepened his frankfurt connection further and became an advisor to the executive board of the ecb in 2004. his second frankfurt experience lasted much longer, spanning three years until 2007. his first child was even born in frankfurt. this gives me reason to hope that he can | heighten this confidence. however, as with any insurance policy, one would have to make sure in this case, too, that the insurance does not cover losses which have already occurred, like bad loans already on banks ’ books, and that the insurance does not encourage careless behaviour in the future. unlike banks in the united states, banks in the euro area have a sizable share of sovereign bonds on their books. to insure euro - area bank risks in such a situation would be tantamount to insuring fiscal risks. given that the member states themselves still decide freely and independently on the level of government expenditure and taxes, this ultimately sets the wrong incentives : finance ministers would see less of a need to pay adequate attention to the sustainability of public finances. one precondition for a european deposit insurance scheme, then, is that the size of government bond portfolios that banks hold on their books is limited. doing away with concentration risks of sovereign bonds in banks would be a boon to monetary policy as well. during the crisis, monetary policy transmission was hampered by these large and undiversified sovereign bond portfolios. potential losses on these portfolios were draining banks ’ equity buffers. the banks in question were therefore unwilling to lend and to pass on the low policy rates to companies and households. 56 in order to shield an economy from a sovereign in trouble, banks must be restrained in taking on government debt. 5 conclusion ladies and gentlemen alfred nobel never envisioned a nobel prize for economics. on the contrary, he once wrote in a letter that he did not have an economic education, and that he hated it with all his heart. no wonder economics is dubbed the “ dismal science ”. obviously, i do not share nobel ’ s sentiment. on the contrary, i am firmly convinced that a social science that is based on transparent assumptions and is thoroughly steeped in data is of immense benefit to all of us. but i am equally convinced that a conference like today ’ s, that sets out to discern similarities and differences, would have met with approval, even in the eyes of alfred nobel. thank you for your attention. 1 auer r, c borio and a filardo ( 2017 ), “ the globalisation of inflation : the growing importance of global value chains ”, bis working papers 602, bank for international settlements. 2 allard, c, p k brooks, j c bluedorn, f bornhorst, k christopherson, f ohnsor | 0.5 |
bankers of the 1980s - an era that has oft been alluded to as the ‘ decade of greed ’. this set in motion a period when dramatic financial success received acclaim, flamboyant star operators were viewed as folk heroes and cautionary words from regulators were viewed with distaste. at another level, they are attributable to the changed business environment of relentless competition in which firms operate. this competition has brought with it pressures on corporate managements to consistently sustain and enhance their financial performance and demonstrably enhance shareholder value. the pressures on management, have in the recent past, also spilled over to auditors and how they conduct their business. these pressures have also brought into focus concepts of earnings management - the quality of earnings and how methods of earnings management may lead to or even constitute fraud. the accounting, regulatory and ethical failures subsuming the system, the cultural ethos and individual deviance have squarely resituated professional values and ethics and the broader governance issues onto the centre stage of boardroom concerns. the general dismay was, in fact, not with insolvencies per se but with unexpected collapses where the financial statements, regulatory warnings did not presage what was to come. the un - serviceability of accounts to give a true and fair picture of what lay in store, the inaction of regulators to gauge the pulse of the forthcoming events and the ethical failures of the organisational culture or of individuals that perpetuated acts of commission or omission painted a picture of a systems failure that often got blurred with the media focus on personalities and on deviant behaviour. this in turn has brought back into focus the quest for codes and standards as well as the issue of values and ethics in business. while the quest for codes and standards, in generic terms is, in some ways, never ending, the endeavour in accounting and finance, nonetheless, is geared to improve the reliability of financial statements. this makes them more credible and increase shareholders ’ confidence. confidence in financial statements reduces the cost of capital and makes the markets more efficient. thus, in a market economy, quality accounts, audits and the integrity of professionals create an enabling environment for economic efficiency and corporate growth. historically, the importance of published accounts was brought into focus by the uk ’ s companies act of 1844. this, over time, gave rise to the quest for standards, codes and quality in accounting in market based economies has been to shore up investor confidence by setting strong and binding | more questions than answers. today i sign off with a call for more innocent times and leave you with a chiasmus ( where meaning is reversed as in a mirror image ) : i trust that value based professionals value the profession they profess and value the values they profess to value. i leave it to you to pause and ponder. | 1 |
approaches in basel ii in talking about the benefits of basel ii, i would like to turn to the second half of my remarks to share my thoughts on how transparency contributes to stability. supervisors seek to achieve much more than simply a revision of the existing rules to calculate regulatory capital. by aligning capital requirements more closely to economic risk, we expect that, on a microeconomic scale, basel ii will encourage individual banks to improve the quality of their risk management. but the rewards of basel ii are more notable on a macro scale. when banks have the right incentives to improve their management of risk and they are well capitalize, we believe that the banking sector becomes more resilient, less sensitive to the business cycle, and better able to serve as a source for credit and sustainable growth of the economy. this workshop explores the role of transparency in promoting the resilience and stability that basel ii has as its overarching goal. the basel committee certainly agrees that markets can serve as powerful allies of official supervision. we recognise that, in some cases, market discipline can exercise a more binding constraint on banks ’ activities than regulations do. but i would emphasise that transparency does only part of the job. for transparency to promote stability, it must be combined with other policy approaches to achieve a goal that is as far - reaching and as significant as greater financial stability. certainly, the committee would agree that, when banks disclose sufficient information about their activities and controls, marketplace participants can create strong incentives for prudent behaviour. markets can reward banks that manage their risks properly and penalise those that hold unrealistically low amounts of capital for their risk. so there is a great deal of merit in a markets - based approach. but we must remember that markets can behave inefficiently. they may overreact to minor events yet ignore significant indicators of risk, or they may be too short - sighted. likewise, markets may not capture external concerns : they may focus on the immediate needs of direct participants rather than those of depositors, customers, or the public. that is why transparency is one “ pillar ” of basel ii ’ s three - pillar approach. the pillars we selected are meant to complement and to supplement each other. the first pillar - which specifies the minimum capital requirements - constitutes a very direct approach to supervision. by applying a uniform set of rules to banks, the first pillar adds transparency to the regulatory process and makes it easier to compare banks to gain a sense of their relative | the multiplier is easy to obtain, transparent ( as depends on a reliable macro variable ), it has a low implementation cost and, finally, it would be of a uniform and wide applicability. among its drawbacks we found that, first, it implies undertaking an external modification on the capital requirement figure and, second, that the multiplier is built using a domestic variable, which may make international comparison very difficult. no matter what the result of the previous debate is, either the use of counter - cyclical risk estimations or the use of a capital multiplier, we should explore the use of complementary measures to attain our final goal of financial stability and to minimise the social costs of procyclicality ; for example, dynamic provisions. as most of you already know, this type of provision uses historical information on credit losses to estimate a general provision for homogenous loan portfolios. it reflects a collective assessment of credit losses at the balance sheet date ( i. e. it covers incurred losses not yet identified in specific individual loans ). this provision builds up a buffer during the benign part of the cycle, which starts to be released when recession comes knocking on banks ’ doors. counter - cyclicality is intrinsic to dynamic provisions and part of its usefulness can be seen in the resilience shown so far by spanish banks in the current crisis. furthermore, its direct impact on the profit and loss account ( reflecting losses at a time when these losses are really being built up in balance sheets ) constitutes a way to make banks more aware of how credit must be priced, reducing the underestimation of loans risk premia and, to some extent, compensating the relaxation of credit granting standards in good times. it also delivers the right information to investors about the financial position of the bank. in all, dynamic provisioning allows a proper recognition of credit risk. i must also admit that there are voices raised by some institutions that do not agree with this view, and particularly, accounting standard setters. in this respect, we should call for further dialogue between accounting rule setters and supervisors as well as a clarification regarding roles and objectives of each of them. i really think that our objectives are compatible and that delivering the relevant information to investors should not be an impediment for supervisors to ensure the stability of the banking sector by promoting the most adequate measures that experience and results have proved to be useful. very much in line with dynamic | 0.5 |
marius jurgilas : who are non - banks and why are they important for us? opening remarks by mr marius jurgilas, member of the board of the bank of lithuania, at the conference “ non - banks in payment market : challenges and opportunities ”, organised by the bank of lithuania and the sveriges riksbank, vilnius, 8 october 2015. * * * it is a great pleasure for me to open the conference on non - banks in payment market. in 2007 federal reserve bank of kansas city hosted a similarly titled conference. it was the time when europe was still debating the modalities of the upcoming psd and steve jobs just introduced the first iphone to the world. now we have iphone 6 and psd2 and because of the another innovation by apple over that time – applepay the link between the two is relevant more than ever. let me briefly elaborate on two points : who non - banks are and why they are important for us. in general non - banks in the payment market mainly refer to the financial institutions that facilitate payment transactions for end - users. sometimes the definition goes even further and includes those entities that provide technology for the banks to facilitate for those payments. both groups are relevant as they deal with different problems. overall these institutions do not engage in financial intermediation or credit risk taking, like shadow banks, which do. we could start the list of non - banks in payments with traditional post offices that have been more or less active in payment market for ages. many have turned into banks or quasi banks by now. then we have electronic money institutions and payment institutions that joined the club not long ago. some of them tried to mimic banks ’ payments model and failed. a new wave of non - banks emerged in the age of smart phone. equipped with the latest technology and outof - box thinking they made a bald step – implemented new business models, in sectors where banks were slow to act. nevertheless, many early initiatives are struggling for a number of reasons. regulators as well as the industry need to understand what is still missing. payment initiation services as defined in the psd2 are a good bet. but the outlook is not all dark shades. last year the economist featured an article on the future of payments titled “ payments : the end of monopoly ”. the title speaks for itself – banks are losing the grip on payments market. but according to mckinsey 34 % of global profits banking industry is making from payments. therefore | assets, with the qfii quota fully utilized. portfolio consists of chinese government bonds only. however, i have some very recent news to share. just last week the board of the bank of lithuania made a decision to double our china on - shore exposure – up to an equivalent of eur 200 million. given the diversification benefits of the renminbi denominated assets, we consider this to be a logical next step in terms of our engagement in china. especially seeing that the market is maturing, and that the volatility in market interest rates has been decreasing over the recent years. going forward, we do see a potential of increasing our stake in this geographical region further. but, at the same time, we would like for some of the existing bottlenecks to be removed – encouraging further involvement of international investors. these are obstacles that we ourselves can identify based on our own practical experience. first, more clarity is needed on some of the financial market regulations. for instance, china ’ s foreign exchange regulator has decided to abolish quota restrictions on the qfii. however, an official ruling is yet to come out. some uncertainty remains regarding taxation as well. there is a lack of clarity on whether and how capital gains or coupons on some bonds would be taxed after november 2021 – and this can already influence current investment decisions. another barrier is the lack of interest rate hedging tools – for instance, foreign investors have not been allowed to trade bond futures yet. 2 / 3 bis central bankers'speeches finally, chinese policy bank bonds still remain outside of the eligible investment universe – due to the lack of explicit chinese government guarantees for these issuers. if such guarantees were provided, the highly liquid policy bank bonds could become a very attractive investment option. overall, there is surely room for china to attract more foreign institutional investors to china ’ s government bond market. the foreign institutional investor share has increased over the recent years – but there is a lot of potential for further growth. especially compared to other bond markets. on average, foreigners – both retail and institutional investors – hold a larger share of emerging market government bonds than china government bonds. and foreign ownership share is almost five times larger in case of the us or the oecd, and about eight times larger in case of germany. ladies and gentlemen, let me conclude with a few broader strokes on the future for renminbi internationalization. a more prominent international role for the currency would require a more | 0.5 |
the ongoing work on the key role biodiversity plays in our economy is important in this regard. but we also need to realise that the status quo is not sustainable – and so big changes are required to our economy and our lives. st. brigid as a symbol for renewal of the land can again be an inspiration for us here. conclusion to conclude, it is more than 1, 500 years since brigid founded and headed a double monastery for men and women ; but it is little over a 100 years since women in ireland have had the equal right to vote. in the intervening years, progress on equality was not linear, and it was not smooth. but then when i think about this progress, the words of eavan boland spring to mind, in her poem " our future will become the past of other women ". 4 / 6 bis - central bankers'speeches boland writes of the suffragettes, and how " in the shadow of their past, they vote [ d ] in the light of what will be ", aptly capturing in this instance the torch of progress, being passed – being shone. and thinking of brigid's legacy, i wonder if she ever thought that that future she forged would become the past of other women, just like the suffragettes, just like the women who are breaking through the ceilings of today. as we think of the torch of progress, it is apt that brigid is represented on our coin today holding a torch – a flame. st. brigid's flame burns in this very building – as a beacon of hope, justice and peace for the world. given all of the challenges which we face, it is a symbol which is still very much needed today. finally, before i finish, i want to thank some of the people who've helped to organise this afternoon's event. i want to recognise the central bank's currency centre team for the fantastic work they do each year on the collector coin series ; our team that produced the coin and mary gregoriy for her beautiful design. i would like to acknowledge the ongoing work of the numismatic advisory panel who support the bank's collector coin programme. and finally, on behalf of the central bank, i'd like to again thank everybody here at the solas bhride centre for your hospitality and for hosting us today. it is a great honour to be with you all to celebrate this special occasion in kildare. go raibh mile maith agaibh | patrick honohan : publication of the central bank of ireland annual report 2010 opening statement by mr patrick honohan, governor of the central bank of ireland, at the publication of the central bank of ireland annual report 2010, dublin, 30 may 2011. * * * we are today publishing the central bank ’ s 2010 annual report ; and for the first time an annual performance statement on our financial regulatory work. the latter is a new requirement under the central bank reform act of 2010. i am joined today by my colleagues, tony grimes, deputy governor for central banking ; matthew elderfield, deputy governor for financial regulation ; and gerry quinn, chief operations officer. major challenges on several fronts engaged the central bank during 2010, and continue to do so. the main driving force remains the pressing need to restore stability to the irish banking system. the central bank continues to work with the ecb to ensure that the necessary liquidity is available to allow the irish banking sector continue to function. the central bank has set new, tougher capital requirements to ensure the banks are strong enough to withstand future losses. we have brought in new consumer protection measures, not least in relation to the treatment of mortgage arrears. we have introduced new standards of corporate governance to the financial services industry and we have embarked on a major programme of enhancing supervision and enforcement. over the past year, the central bank has continued to provide policy advice to government on national economic issues, and to make public our views on current economic conditions and broad policy options. with the government ’ s access to market funding severely curtailed, the central bank did not hesitate to recommend a prompt application for assistance to the eu and imf financial support facilities. it provides a window of time during which the government can demonstrate its adherence to a convergent fiscal strategy, thereby helping to rebuild market confidence. to date, the programme is firmly on track. turning to our own financial accounts, the central bank ’ s profit for the year to 31 december 2010 amounted to €840. 9 million. after retained earnings, surplus income of €671 million will be paid to the exchequer. as i said, are also publishing today an annual performance statement ( financial regulation ) for 2010 and 2011. this comprises two main sections – a review of performance in 2010 and a regulatory performance plan for 2011. our key priority remains the resolution of the banking crisis and helping to put the banking system on a sound footing. we are now at your disposal for questions. bis central | 0.5 |
, patrick d. walker, sukanya chaudhari, robin varghese – perc press ( june 2012 ) 5. general principles of credit reporting, consultation paper, world bank 2011 6. worldbank datasets 7. doing business 2012, doing business in a more transparent world, the world bank bis central bankers ’ speeches | case of sme bis central bankers ’ speeches borrowers are far lesser than that in case of other larger borrowers. hence, there is a strong case for providing greater credit to this business segment. here, i see a significant role for the cics in building an information base on smes and assisting banks in their credit decision making. i would urge the cics to take urgent steps to bridge this information void and help facilitate flow of credit to smes, which would provide an impetus to the overall economic growth environment. identity fraud – an emerging threat and role of the cics in combating it according to the norton cybercrime report 2011 more than two thirds of online adults ( 69 percent ) have been a victim of cybercrime in their lifetime, and every second 14 adults become a victim of cybercrime, resulting in more than one million cybercrime victims every day. the situation is equally alarming in india. fraud, especially in the banking domain, assumes great significance due to the associated reputational and monetary losses. incidence of frauds can severely dent the confidence in the financial system, particularly at a time when we are trying to use technology as the medium to bring more and more of the excluded masses into the formal financial system. fraudsters employ innovative ways of impersonating others using altered kyc documents. they also apply for credit at multiple banks at the same time by exploiting vulnerabilities in banks ’ systems and processes. alternately, fraudsters can also apply for credit from the same bank at multiple locations assuming different identities. while guidelines around kyc norms have been strengthened and the banks are being encouraged to provide unique customer ids at the institutional level, the credit bureaus have capabilities to play an important role in preventing such frauds by providing a holistic view of the individual and highlighting the different variations of id information, as provided to different credit providers. also, data sharing mechanism amongst banks can help in identifying serial fraudsters by picking up inter - temporal and inter - bank inconsistencies of application data to provide an early warning mechanism to identify potential risk cases. further, in a robust kyc system, banks could consider using multi - database checks on an individual ’ s identity at the time of underwriting that encompasses different identifier databases like uid, pan, voter id, passport, etc. this will help in rooting out many cases of identity frauds through fraudulent documentation. from a consumer ’ s perspective, cics hold | 1 |
u. s. virgin islands — and is the area the new york fed is responsible for. i spent yesterday and today meeting with district business leaders, community organizers, and elected officials, hearing about their work, their successes, and their challenges. people ’ s experiences are influenced by the macro level, but their local economy plays an equal, and often more important role in shaping their economic opportunity. one aspect of the fed that we don ’ t talk about enough is the work our regional economists and our outreach teams do, trying to understand what ’ s going on at the local level. while the u. s. economy has been growing for the last 10 years, analysis by new york fed economists shows that not everyone is feeling the benefits equally. growth is concentrated in the largest cities like new york and san francisco, and those who benefit the most are those who already have high incomes. 2 a large part of this is because current economic conditions favor highly skilled workers who tend to flock to cities. these big metropolitan areas are successful, but they also suffer from some of the starkest wage inequality in the country. by contrast, upstate new york is less unequal, but the disappearance of manufacturing jobs has held back growth. more equal wage growth is only good news if people have jobs. but many have found themselves in the position of leaving the area in which they grew up to look for work. the albany area has bucked this trend. the mix of colleges and universities specializing in innovative subjects like nanotechnology, and high - tech businesses, alongside its position as a state capital, has created a real economic success story. i know there are a lot of students in the room, and choosing suny was a wise move. investing in an education that equips you for the future will pay off over the long term. the tale of many economies so what can the fed do about this complex picture — the tale of many economies i ’ ve talked about today? 2 / 3 bis central bankers'speeches monetary policy is an important tool, but it alone cannot address all the economic issues that we face. the policies we enact at the fomc are vitally important for sustaining growth at the national level, but they can ’ t determine everything that happens at the local level. this is where our community development work comes in. through our research and outreach, we put data and analysis into the hands of community leaders to give them tools to strengthen their local economies. we have programs that use | we tend to focus a lot on data such as the inflation rate, employment, unemployment, and gdp growth. but, that ’ s not all — we also collect and analyze enormous amounts of other information to help us assess the state of the economy and the economic outlook. 1 so, what does all that information tell us about the current economic outlook? after surging ahead last year, the u. s. economy appears now to be growing at a more moderate pace. i expect gdp growth to be around 2 - 1 / 4 percent this year, moderately above my estimate of the long - run sustainable growth rate for the economy. in my past speeches, i often mentioned the fact that we ’ re nearing the longest expansion on record. well, as of this month, i can finally say that we ’ ve reached that milestone. the economy has been growing for 121 months — a little over 10 years. 1 / 3 bis central bankers'speeches while this is undoubtedly good news, the headline data mask a more nuanced economic picture. consumer spending has been an important driver of growth, and the most recent readings have been very positive. however, other signs point to slowing growth. in particular, the latest indicators suggest that business fixed investment has softened and that manufacturing production is in decline. and the outlook for growth outside the united states has dimmed, which will weigh on demand for u. s. products. this mixed picture is mirrored in the employment data. on one hand, the unemployment rate, which stands at 3. 7 percent, is near the lowest we ’ ve seen in 50 years. on the other, job growth has slowed this year relative to last year ’ s pace. finally, turning to prices, the latest data show that underlying inflation is 1. 6 percent, below our 2 percent goal. the major challenge with inflation that ’ s persistently lower than 2 percent is that low inflation feeds into inflation expectations. if inflation stays too low, people will start to expect it to stay that way, creating a vicious cycle, pushing inflation further down over the longer term, and making it harder to achieve our goals through monetary policy. the second district all of these numbers tell the story of the u. s. economy at the macro level, but they ’ re not always reflected in the real experiences of americans across the country. i referred at the beginning of this speech to the second district — which includes new york state, parts of new jersey and connecticut, puerto rico, and the | 1 |
mugur isarescu : romania, the eu and the euro area opening speech by mr mugur isarescu, governor of the national bank of romania, at the " the future of the euro area and its enlargement " conference, bucharest, 17 october 2017. * * * professor sapir, ladies and gentlemen, the national bank of romania ’ s board and i are honored to extend a warm welcome to all of our distinguished guests attending the conference this morning. allow me to wholeheartedly welcome our speaker, professor andre sapir. it has become quite a tradition here, at the national bank of romania to invite well - renowned lecturers to address the audience on important topics of the day. this morning, we are privileged to listen to prof. sapir ’ s lecture on the future of the euro area and its enlargement. please, allow me to briefly introduce to you prof. andre sapir. he is a well - known name among european economists. he is an active member and senior fellow of bruegel institute in brussels. prof. sapir has a rich academic career and important contributions in the field and study of economics. i wish to express my appreciation for his diligent work dedicated to the strengthening of the conceptual underpinnings of the european union and the euro area ’ s economic and financial systems. for those of you who are not familiar with bruegel institute in brussels let me pinpoint a few facts. bruegel was set up in 2005 and has emerged as an important independent and non - doctrinal european think tank focused on economics. according to their mission statement, it aims to improve the quality of economic policy with open and fact - based research, analysis and debate, targeted at improving the quality of economic policy. at the same time, we are proud that the national bank of romania has been a member of bruegel think tank since 2016. returning to our guest speaker : andre sapir is a professor at the universite libre de bruxelles ( ulb ), he also teaches “ international economics and european integration ” at the solvay brussels school of economics and management. prof. sapir has a phd from johns hopkins university in baltimore, where he studied with the famous trade economist bela balassa. he was elected member of the academia europaea and of the royal academy of belgium for science and the arts. he was a visiting fellow at the international monetary fund, the world bank and the world trade organization. | had to face amid a flood of capital. third, the exit from these measures has not been easy. while the post - crisis environment provided an opportunity to gradually normalize the reserve requirements levels ( thus supplying an additional counter - cyclical tool ), they remain high by european standards. however, despite all these obstacles, i think the resort to unconventional policy instruments had 3 major advantages. bis central bankers ’ speeches i would name first the fact that they certainly managed to limit the size of the disequilibria. i have no doubt that the outcome would have been a lot worse had we been complacent and relied entirely on the self - corrective behaviour of markets. i will give here just one example : forex interventions limited significantly exchange rate fluctuations, with the appreciation during the massive capital inflows and the depreciation after the crisis outbreak not exceeding 25 percent. in the absence of such interventions, the magnitude of fluctuations could have been as high as 40 to 60 percent. the foreign exchange purchases made before the crisis not only limited the unsustainable leu appreciation and the associated loss of export competitiveness, but supplied the ammunition for subsequent interventions to cushion the currency depreciation once the outbreak of the crisis changed the direction of the flows. and i believe this is the second benefit of the approach. last, but not least, thinking outside the box allowed us to avoid incurring losses after 2006. while profitability should not be a concern for a central bank, this development proved very fortunate from the perspective of the political economy. on the one hand, it allowed the nbr to preserve its independence in relation to the government by not generating quasi - fiscal deficits in a period with an increasing fiscal imbalance. on the other hand, it helped preserve institutional credibility in relation to the banks subject to nbr supervision, which were closely monitored in terms of capital adequacy. moreover, through our actions we wanted to avoid rewarding the speculative behaviour several commercial banks were engaged in ( i. e. carry trade ) and instead incentivize them to focus on their core activities. bis central bankers ’ speeches | 0.5 |
during discussion of the basel ii agreement, it was suggested that provisions should be its fourth pillar but this idea was, in the end, rejected by the developed countries because of potential conflicts with accounting norms. after the crisis, there is, however, renewed interest in provisions as a prudential instrument. the idea of applying some countercyclical rule has gained ground. several latin american countries have advanced in this direction and their experience should be followed with attention. mortgage operations, which are very closely related to the origins of the crisis, will need to be reviewed. the volumes and amounts committed to this activity are growing and have, without doubt, acquired systemic importance. this has implications both for the banking system, where these operations tend to originate, and for the securities market which provides the financing. the recommendations that warrant attention include the application of a prudent loan - to - value ratio taking into account cyclical fluctuations in the price of the dwelling, stricter requirements for institutions in the business of originating to sell, and the use of covered bonds to finance these loans so as to leave credit risk in the hands of the issuer while transferring market risk to the investors. this latter recommendation is backed by several successful experiences including that of chile with covered bonds. because the origins of the recent crisis appear to have been closely related to lax credit policies in the personal banking segment, commercial practices that lacked transparency and excessive household borrowing, it has brought the issue of consumer protection to the fore. although also a broader issue, consumer protection is related to the proper functioning and stability of the financial system, particularly if it is understood to include such important matters as financial education, transparency with clients and market behavior, it can, therefore, not be ignored when deciding within which institutional framework and with what policies to address this issue. 4. final remarks concern for financial stability is at the origin of central banks. it can, in fact, be said to be in their dna. although this concern had faded over time, the experience of recent years has again brought it very much to the fore. as a result, there is now broad agreement that central banks have an unshirkable role in this field and debate centers rather on the instruments they need to have. the crisis has left important lessons, especially for the developed economies where it had its origins. they have already begun to implement financial reforms in a bid to remedy the weaknesses that were observed. the emerging economies, although they did not experience the same problems, must | - 4 - 4 - 4 dec. 2011 report sep. 2011 report ( * ) gray area, as from fourth quarter of 2011, shows forecast. sources : central bank of chile and national statistics institute ( ine ). figure 8 nominal exchange rate ( index, 1 jan 2000 - 19 dec 2011 = 100 ) australia japan switzerland czech rep. n. zealand china brazil thailand canada peru colombia norway sweden malaysia philippines eurozone chile israel poland s. korea hungary u. k. south africa u. s. russia india mexico range average july spot ( 1 ) the range shows maximum and minimum values of the currency during indicated period. considers broad index. ( 3 ) at 27 junly. sources : central bank of chile and bloomberg. bis central bankers ’ speeches figure 9 actual and expected mpr ( percent ) mpr fos, first half december 2011 forward, forward december report 2011 ipom diciembre eee, december 2011 source : central bank of chile. figure 10 total corporate debt ( % of gdp ) 11. i 11. ii banks'external debt external bonds debt external non - financial debt bank debt factoring & leasing bonds 11. iii ( 1 ) total debt chilean non - financial firms. ( 2 ) fdi - related loans and commercial credits. ( 3 ) commercial & comex. ( 4 ) corporate bonds ( except codelco ), securitized bonds with non - banking underlying origin and marketable securities. source : central bank of chile based on data from achef, sbif, and svs. bis central bankers ’ speeches figure 11 households'banking risk indicators total borrowing ( percent ) past - due - portfolio indices ( percentage of loans ) 1, 6 1, 6 1, 4 1, 4 1, 2 1, 2 1, 0 1, 0 0, 8 0, 8 0, 6 0, 6 0, 4 0, 4 06 07 08 09 10 11 over wage mass over disposable income ( rdi ) mortgage consumer ( 1 ) preliminary data for third - quarter 2011 disposable income. ( 2 ) dotted lines show effective index average. source : central bank of chile based on sbif data. figure 12 cost of short - term external financing of resident banks ( basis points ; months ) jan. 08 oct. 08 spread spread jul. 09 apr. 10 jan. 11 oct. 11 maturity ( 1 ) non - related bank loans, at variable rate. gray area shows interval between percentiles 5 and 95 | 0.5 |
. this brings me to another risk that needs to be addressed : greenwashing. this requires a detailed and shared definition of global and european standards, which we are focusing on and working towards. public debt as i mentioned earlier, italian households entrust a not insignificant share of their wealth to the state by buying public debt securities. like any good debtor, a sovereign issuer also has a duty to make good use of this money and to return it as and when agreed. however, unlike private borrowers, a government must not only repay its loans. the protection and efficient use of consumer savings require economic policies that ensure balanced financial conditions, smooth out cyclical fluctuations in the economy and improve its growth potential. for highly indebted countries, reducing the debt - to - gdp ratio is a priority : excessive debt relative to growth potential reduces the scope for countercyclical policies, exposes the economy to market stress and raises costs for the government, and ultimately for households and firms. in 2022, the debt - to - gdp ratio in italy was 141. 7 per cent, the highest in the european union after greece, although we cannot overlook the significant reduction following a sharp increase during the pandemic : almost 15 of the more than 20 points of increase recorded in 2020 – over half of which due to the mechanical effect of the denominator – will have been absorbed by the end of 2023. however, the government only expects a marginal decline over the next three years, with debt projected to amount to just under 140 per cent of gdp in 2026. subsequently, if no action is taken, the ratio risks increasing. looking ahead, the average cost of debt is set to return to higher levels than the economy ’ s nominal growth rate and the impact of population ageing on social spending will become more significant. in the 20 years preceding the pandemic, the gap between the average cost of debt and the growth rate was constantly unfavourable, averaging almost two percentage points. the deep recession that hit italy in 2020 led to it reaching a value close to ten points. on the other hand, the subsequent two years saw exceptionally favourable values for this indicator, as a result of the post - pandemic recovery and, in part, of the strong growth in the gdp deflator : nominal gdp growth was on average more than five percentage points higher than the average cost of debt per year. according to the update to the economic and financial document published at the | 2023 - 2024. cities for financial empowerment fund : bank on https : / / joinbankon. org / wp - content / uploads / 2020 / 10 / bank - on - national - accountstandards - 2021 - 2022. pdf. bank on accounts. bank on https : / / joinbankon. org / accounts / and the bank on national data hub : findings from 2021 ( 2022 ). federal reserve bank of st. louis. https : / / www. stlouisfed. org / community - development / bank - on - national - data - hub / bank - on - report2021. - 14 - in addition to considering customer preference, product design should help to counter, not lean into, biases that can lead to poor financial decision - making. 34 being aware of these can help banks help customers better understand risks and structure products that are designed to overcome, and not exacerbate, these problems. for instance, banks should ensure that their overdraft policies frame financial decisions in a transparent and fair way and avoid unexpected and hefty fees. 35 customers should be empowered with timely information on balances so that they can avoid inadvertent overdrafts, and best practice builds in a grace period for customers to cure their overdrafts. some banks have eliminated overdraft fees entirely. regulators need to understand both human decision - making and market context in designing the right rules of the road. regulators also need to engage with techniques, such as cash flow underwriting and alternative data, new credit models, and other technologies that hold out the promise to increase access and reduce bias in credit intermediation. 36 diversity in the workforce of financial institutions also matters for financial inclusion. for instance, working with minority loan officers improves credit access for minority borrowers, which suggests that underrepresentation of minorities among loan officers adversely impacts minority access to credit. 37 and we regulators need to focus on our own diversity as well. see barr, mullainathan & shafir ( 2012 ). see, e. g., consumer compliance supervision bulletin, july 2018. board of governors of the federal reserve system https : / / www. federalreserve. gov / publications / files / 201807 - consumercompliance - supervision - bulletin. pdf. see, e. g., evans & pence ( 2021 ). see frame, huang, mayer & sun | 0 |
borrowing limit for banks was also raised from 50 to 100 per cent of unimpaired tier i capital with option to swap with rbi. these schemes mobilised us $ 34. 3 billion. [ swap schemes were closed by end - november 2013. ] bis central bankers ’ speeches | monetary conditions, and were intended to signal a policy shift towards maintaining interest rates at lower levels for a longer period. spillovers to emes it is widely perceived that in absence of unconventional monetary policy measures, financial sector meltdown and recession, particularly in advanced economies, would have been more severe, which in turn could have significantly impacted the global economy. 1 however, opinion remains divided on the efficacy of prolonged recourse to unconventional monetary policy. it is argued that greater risk taking behaviour as an outcome of unconventional measures could undermine financial stability. furthermore, there is the risk of postponement imf ( 2013 ), global impact and challenges of unconventional monetary policies, imf policy paper, october. bis central bankers ’ speeches of necessary fiscal reforms that were otherwise required. more importantly, there are concerns of cross - border spillovers in terms of capital flows, exchange rates and other asset prices, particularly in emerging market economies ( emes ). this was fully in evidence as the fed communicated its intention of undertaking tapering earlier than anticipated which increased financial vulnerabilities across emes, though subsequent communication somewhat eased the pressure. these policy developments, however, have significantly altered the external financial environment in many emes, including india. even before the tapering talk, the impact of policy changes in systemically important advanced economies on the rest of the world through various channels was in evidence. unconventional monetary policy measures not only supported domestic economies, but also boosted a broad range of asset prices globally, especially equity and bond markets in emes. in fact, recent literature suggests that besides domestic pull factors in emes, push factors – monetary policy in advanced economies and global risk appetite – were important determinants of capital flows to emes. 2 while the presence of cross - border spillovers from policy changes / announcements in advanced economies is well recorded in the literature, the more recent debate has been on the degree and kind of spillovers across emes and how these could be minimised. governor rajan argued that capital flows pushed into emes due to ultra - accommodative monetary policy in source countries tend to increase local leverage not only through cross - border banking flows but also through appreciating domestic currencies and escalation in asset prices. the exit from a prolonged use of unconventional monetary policy also poses the risk of asset prices overshooting on the downside which can cause significant collateral damage. 3 according to the imf, emes received much larger net | 1 |
bank of chile. figure 10 economic perception ( diffusion indices, percent ) business confidence consumer confidence brazil chile u. s. japan jul. china mexico eurozone jul. s. korea jul. brazil china u. s. mexico jul. s. korea chile japan eurozone ( 1 ) s. korea is anchored in 100. ( 2 ) series for japan, the eurozone and s. korea anchored in 50. other series, indices with base january 2007 = 100. for chile, adimark's ipec and icare / universidad adolfo ibanez indices. sources : adimark, bloomberg and icare / universidad adolfo ibanez. | rodrigo vergara : chile – economic outlook speech by mr rodrigo vergara, governor of the central bank of chile, at seminars held during the annual meeting of the inter american development bank, montevideo, uruguay, 12 march 2012. * * * i thank luis oscar herrera, enrique orellana and tatiana vargas for helpful comments. i would like to thank you for inviting me to present our views on chile ’ s economic situation at this conference. these last years have been particularly challenging for policymakers worldwide. periodically we must make decisions in an uncertain environment, weighing the costs and risks of alternative scenarios. for this reason, we welcome opportunities for meetings and discussions such as this, as they allow us to communicate our views in greater detail, as well as to hear other opinions. a better understanding of our decisions strengthens the effectiveness of our policies. more than four years have elapsed since the onset of the financial crisis that triggered the great recession. nonetheless, we are still handling its legacy, experiencing periodic episodes of financial stress that will likely continue for some time. the situation in the eurozone is complex, due to the interaction among fiscal, financial and macroeconomic vulnerabilities. from a historical viewpoint, growth perspectives for developed countries are weak. the outlook for emerging economies is noticeably better, although we are witnessing a slowdown whose pace is difficult to assess, particularly for china. additionally, we are confronting new risks, in the face of international tensions related to iran ’ s nuclear situation and its impact on the oil market. these sources of uncertainty are beyond our control. therefore, our role as policymakers in emerging countries is to preserve flexibility and space for policies that will enable us to respond to and buffer the financial and real effects that those risks pose on our economies. over the last years we have gained credibility, flexibility and space to implement a macroeconomic and financial policy framework that will help us smooth out the economic cycle. this framework rests on four pillars. first, monetary policy management is based on a flexible inflation - targeting regime, conducted by an autonomous central bank and supported by a floating exchange rate system. second, a fiscal policy that is accountable and predictable thanks to a structural balance rule. the significant amount of savings accumulated during the run - up of copper prices was a crucial factor in bolstering the resilience of the chilean economy and in providing a countercyclical fiscal boost. third, a high degree of commercial and financial integration with the rest of the world. | 0.5 |
households and firms. otherwise, increasing fiscal interventions could put upward pressure on market interest rates and crowd out private investors, with a detrimental effect on private demand. second, monetary policy has to continue supporting the banking sector to secure policy transmission and prevent adverse feedback loops from emerging. firms are still dependent on new flows of credit. and those that have borrowed heavily so far need certainty that refinancing will remain available on attractive terms in order to avoid excessive deleveraging. in other words, when thinking about favourable financing conditions, what matters is not only the level of financing conditions but the duration of policy support, too. all sectors of the economy need to have confidence that financing conditions will remain exceptionally favourable for as long as needed – especially as the economic impact of the pandemic will now extend well into next year. currently, all conditions are in place for both the public and private sectors to take the necessary measures. the gdp - weighted sovereign yield curve is in negative territory up to the ten - year maturity. nearly all euro area countries have negative yields up to the five - year maturity. bank lending rates are close to their historic lows : around 1. 5 % for corporates and 1. 4 % for mortgages. and our forward guidance on our asset purchase programmes and interest rates provides clarity on the future path of interest rates. but it is important to ensure that financing conditions remain favourable. this is why the governing council announced last month that we will recalibrate our instruments, as appropriate, to respond to the unfolding situation. the council is unanimous in its commitment to ensure that financing conditions remain favourable to support economic activity and counteract the negative impact of the pandemic on the projected inflation path. in the weeks to come we will have more information on which to base our decision about this recalibration, including more evidence on the success of the new lockdown measures in containing the virus, a new set of macroeconomic projections and more clarity on fiscal plans and the prospects for vaccine roll - outs. while all options are on the table, the pepp and tltros have proven their effectiveness in the current environment and can be dynamically adjusted to react to how the pandemic evolves. they are therefore likely to remain the main tools for adjusting our monetary policy. looking beyond our next policy meeting, our ongoing strategy review gives us an opportunity to reflect on the best combination of tools to deliver financing conditions at the appropriate level, how those tools should be implemented | overcoming the crisis. more than ever before, macroeconomic, supervisory and regulatory authorities have dovetailed and made each other ’ s efforts more powerful. policy responses to the pandemic what has this meant for monetary policy? there are two main ways in which we have adapted the ecb ’ s policy to the pandemic : via the design of our tools and via the transmission of our monetary policy. first of all, we have responded to the unique features of the recession by designing a set of tools specifically tailored to the nature of the shock, including recalibrating our targeted longer - term refinancing operations ( tltros ), expanding eligible collateral, and launching a new €1. 35 trillion pandemic emergency purchase programme ( pepp ). the pepp in particular has the dual function of stabilising financial markets and contributing to easing the overall monetary policy stance, thereby helping to offset the downward impact of the pandemic on the projected path of inflation. the stabilisation function of the pepp is ensured by its flexibility, which is crucial given the unpredictable course of the pandemic and its uneven impact across economies. in this context, the pepp ’ s flexibility allows us to react in a targeted way and counter fragmentation risks. this was key in reversing the tightening of financing conditions that we saw in the early days of the crisis. in parallel, the stance function of the pepp gives us the scope to counter the pandemic - driven shock to the path of inflation – a path that has also been greatly influenced by the specific characteristics of this recession. not only has inflation fallen into negative territory, but we have already seen services inflation, which is normally the more stable part of the price index, drop to historic lows. but the pepp, together with the other measures we have taken this year, has provided crucial support to the inflation path and prevented a much larger disinflationary shock. 4 and its impact has been amplified by interactions with other policies. for instance, the combined effect of the ecb ’ s monetary and supervisory measures is estimated to have saved more than one million jobs. 5 2 / 6 bis central bankers'speeches at the same time, the nature of the pandemic also affects the transmission of monetary policy. normally, an easing of financing conditions boosts demand by encouraging firms to borrow and invest, and households to bring forward future income and consume more. in turbulent times, monetary policy | 1 |
costs of government securities. increases in long - term interest rates would impact on the real economy, with possible repercussions on banks ’ balance sheets, casting doubt on the strengthening of the financial system. rules and controls on finance the purpose of the package of regulatory proposals recently announced by the basel committee on banking supervision is to strengthen banks ’ stability and contain liquidity risk. banks ’ capital bases will have to consist of high - quality instruments, genuinely capable of absorbing losses ; leverage will be curtailed ; the procyclical aspects of regulation will be attenuated through the build - up of capital buffers and provisioning in periods of strong growth for use when losses materialize. in the early part of this year, the committee will conduct a detailed impact assessment, in order to appraise alternative proposals, calibrate the new rules and set the new, higher capital requirements for banks. it will be important to verify the overall consistency of the framework, imposing stricter prudential requirements on those banks that operated with the particularly risky business models that were at the root of the crisis. the g20 leaders decided that the new rules do not have to take effect immediately, but only at the end of 2012, and in any event under the proviso that they not impair the stability of the markets and the resumption of an adequate flow of funds to the economy. they called on the financial stability board to examine the macroeconomic implications of the reform, and to ensure the requisite gradualness of its implementation, with appropriate transitional and grandfathering clauses governing the instruments already issued. the crisis demonstrated the devastating repercussions of the failures of major financial institutions. governments and central banks intervened to mitigate its impact ; in so doing, at times they supported and protected the very institutions that had triggered the crisis in the first place. moral hazard was compounded by the crisis : financial institutions have felt sheltered from the risk of failure and the fear this inspires, they have been taking new risks and, thanks to the extraordinary market conditions that have been created, are reaping enormous profits. reducing moral hazard is a shared objective. this is to be done by lessening the likelihood of failures and circumscribing the attendant damage ; creating mechanisms for their orderly management ; and centralizing the channels that transmit their effects, such as derivative instruments, which nowadays are traded outside regulated markets and bilaterally. criteria must be devised to determine the systemic importance of an | to the decisions of central banks, which react to macroeconomic conditions, but rather reflects the enduring underlying weakness of the economy and a possible market response to a resurgence of fisherian debt deflation. we are still quite far from the “ normal ” economic conditions to which we ought to return ( also in view of the structural factors that could explain lower growth rates worldwide than in recent decades ). the introduction of a two - tier system for bank reserve remuneration – which was also adopted in other jurisdictions – is intended to prevent the reduction in official rates to negative values from having, beyond a certain level, the undesirable side effect of impairing banks ’ ability to grant credit and, therefore, from being transformed into a restrictive factor. nevertheless, encouraging greater trading between banks seeking higher returns on their liquidity may spark tensions on money market rates, a risk that is countered by the calibration chosen but one which must still be carefully monitored. in its forward guidance, the governing council confirmed its determination to respond symmetrically to inflation developments, in other words to intervene when inflation falls below the target with the same determination as when it rises above it. the aim is to avoid a further downward revision of inflation expectations, or the resurfacing of the deflation risks we successfully countered three years ago, whilst simultaneously guaranteeing financial conditions capable of supporting the economic cycle. monetary policy resolutely pursues the objective of price stability. to achieve the maximum benefits from our action, the governing council unanimously agrees that, given the slowdown in production and the significant downside risks that weigh on the outlook, fiscal policy must make a more incisive contribution to strengthening aggregate demand. during this phase, the countries that have room to intervene can play an important stabilizing role ; those with a high public debt must prioritize a rebalancing of expenditure towards measures that are better able to support growth, such as public investment, and to reduce the tax burden on businesses and employment. * * * in conclusion, i think that the package of measures we adopted was necessary and appropriate to counter the cyclical risks and the weak inflation outlook, and fully in line with our previous decisions. in the past, i have always avoided giving my opinion of monetary policy decisions immediately after governing council meetings. i have decided to do so today, a few weeks after the last decisions were taken, mainly because of the recent media attention given to the discussion that followed that meeting. intense and | 0.5 |
studies, or cemla. i would be remiss if, before ending, i did not note the strong leadership that governor agustin carstens continues to provide at the bank of mexico. his leadership in economic policy, in several key roles, has been instrumental in solidifying the progress that mexico has made over the past two decades. agustin has also built an impressive record in the international policy community more broadly. he is currently the chair of the bis consultative council for the americas, has recently been appointed chair of the bis economic bis central bankers ’ speeches consultative committee and the global economy meeting, and played a key role in mexico ’ s successful presidency of the g - 20 last year. to conclude, i would like to congratulate the bank of mexico on the 20th anniversary of its independence. i wish you a productive conference marking this auspicious occasion. and i wish the bank of mexico continued success in its work to stabilize and strengthen the mexican economy. bis central bankers ’ speeches | summary of the outlook, let me now take a closer look at the financial positions of u. s. households and businesses. as i will discuss, the favorable financial conditions in both sectors should support a solid increase in household and business expenditures. household financial conditions some commentators have expressed concern about the rapid growth in household debt in recent years. they fear that households have become overextended and will need to rein in their spending to keep their debt burdens under control. my view, however, is considerably more sanguine. although there are pockets of financial stress among households, the sector as a whole appears to be in good shape. certainly, households have taken on quite a bit of debt over the past several years. according to the latest available data, total household debt grew at an annual rate of 10 percent between the end of 1999 and the third quarter of 2003 ; in comparison, after - tax household income increased at a rate of the opinions that i will be expressing are my own and do not necessarily reflect those of my colleagues on the board of governors or federal open market committee. 6 percent. the rapid growth in household debt largely reflects a surge in mortgage borrowing, which has been fueled by historically low mortgage interest rates and strong growth in house prices. despite the heavy borrowing, households have kept the repayment burden of their debt in check. notably, many homeowners have taken advantage of low interest rates to refinance their mortgages, some having done so several times over the past couple of years. survey data suggest that homeowners took out cash in more than one - third of these “ refis, ” often to pay down loans with higher interest rates. the resulting drop in the average interest rate on household debt, combined with the lengthening maturity of this debt, has tempered the repayment obligation from the growing stock of debt. the federal reserve publishes two series that quantify this repayment obligation. the first series, the debt service ratio, measures the required payments on mortgage and consumer debt as a share of after - tax personal income. the second series, the financial obligations ratio, is a broader version of the debt service ratio that includes required household payments on rent, auto leases, homeowners ’ insurance, and property taxes. both ratios rose during the 1990s, and both reached a peak in late 2001. since then, however, they have receded slightly on net from their respective peaks, an indication that households, in the aggregate, have been keeping an eye | 0.5 |
all the above suggest about the future path of yields? the sharp rises in expected short - term interest rates and hence in long - term yields ( the term structure of interest rates in theoretical terms ) are only likely to follow a strong recovery and subsequently a sharp rise in inflation expectations ( in empirical terms, historically, sovereign bond yields and, to a lesser extent, exchange rates track nominal gdp growth rates ). we are not there yet : only with a robust recovery in europe and a monetary policy normalisation in the us can markets start pricing risk in a traditional manner. the recent bond sell - off it is true, though, that the last days of april saw the beginning of a sharp sell - off in sovereign bonds across the euro area bond markets, leading to soaring volatility in european bond markets, a sharp steepening in the yield curve and an appreciation of the euro. the figures are quite spectacular as is often the case with the markets : in just 17 working days, the global sovereign bond index lost more than €0. 5 trillion of its value! this is an upward correction in bond yields from an early overshooting of bond prices ( early undershooting of the exchange rate ), which marked the first significant adjustment in european sovereign bond markets since mid - 2013 ( triggered in turn by the federal reserve ’ s tapering of its asset purchases ). the 10 - year bund yield increased from a historical low of 7. 5 bps on 20 april to over 80 bps by early june. as for the other euro area countries, yields in france and other core countries increased in a similar way, while the spreads of peripheral bonds over the bund have narrowed. turning to the us government bond market, and given the strong comovement of 10 - year german and us government bond yields ( with a high correlation coefficient of. 80 ), the 10 - year us treasury yields rose substantially to reach their highest closing levels this year in the region of 2. 30 %, as the contagion from the european bond selloff was the main driver of their recent rise. given the fact that recent us macro data were mixed and the uncertainty surrounding the fed ’ s rate hike timing, there was additional volatility in us yields spilling over to bunds and other euro area countries, with the interest rate differential set to remain in the region of 1. 50 %. in addition, the widening gap between us and euro area interest rates is also driving us companies to issue more | him on the head. themistocles looked at him calmly and said : “ strike me, if you will, but listen to me. ” according to plutarch, the spartan commander was so taken aback by themistocles ’ s reaction that he backed down and let him persuade the council of his winning strategy. i can ’ t promise you the outcome of all discussions will be the same. but i think it is increasingly important that central bankers speak up on these matters, even if what we have to say is unpleasant to and opposed by at least some domestic national audiences. many of us are no strangers to raised staffs – at least metaphorical ones. but tonight we are in friendlier company, and with no persian fleet in sight, let ’ s raise our glasses instead, and toast to peace, social prosperity and to the health of our common currency which connects us all, the euro. | 0.5 |
where we will continue to work together to make our emu an even stronger engine of prosperity for all its member states. the european parliament will have a fundamental role in guiding and designing our european future. in the past, together with the eu leaders, the european parliament took the fundamental decisions to create the single market, and in its wake the euro. today, we are all reaping the benefits of their commitment and we want the future generations of europeans to similarly benefit from our commitment as well. today, our duty is to complete what was started two decades ago. 1 / 1 bis central bankers'speeches | mario draghi : 20th anniversary of the euro speech by mr mario draghi, president of the european central bank, at the session of the plenary of the european parliament to mark the anniversary of the euro, strasbourg, 15 january 2019. * * * it is with great pleasure that i am here today to celebrate with you the first 20 years of the euro. the euro is the most tangible representation of european integration that our citizens encounter, on a daily basis. it is fitting, then, to celebrate this anniversary here with the directly elected representatives of all our citizens. over the years, elected representatives and leaders here and in other parliaments have rightly recognised that ensuring economic prosperity and stability over the long term is a shared challenge that is best faced collectively. we are stronger together. with the single market, we have a powerful engine of sustainable growth to underpin our living standards. the euro has safeguarded the integrity of the single market. today, our economies are integrated to a point that was not imaginable when the euro was designed. intra - eu exports rose from 13 % of eu gdp in 1992 to 20 % today and value chains are everywhere in the euro area. the euro has produced two decades of price stability also in countries where this was a long lost memory. stable prices have fostered people ’ s confidence in the value of their savings, which is one of the conditions for prosperity. based on such confidence, firms invest and create new jobs. today most challenges are global and can be addressed only together. it is this “ togetherness ” that magnifies the ability of individual countries to retain the sovereignty over the relevant matters, sovereignty that would otherwise be lost in this global world. it is precisely in this sense that the single currency has given to all members of the euro area their monetary policy sovereignty, compared with the pre - existing monetary arrangements. it is together that we have a voice in the regulation of international financial markets ; a voice, which has been fundamental in reshaping the world financial regulation after the global financial crisis. but in some countries, not all of the euro ’ s benefits have been realised in full. partly, this is because reforms at national level are necessary, and they would be so under any monetary system, to produce sustainable growth ; partly, because the economic and monetary union ( emu ) remains incomplete. great progress has been achieved since the crisis struck, but more work still needs to be done ; and there is no alternative to a future | 1 |
resilience not only of banks but also of the non - financial sector in the euro area. private sector debt ratios have declined in recent years. there are so far no indications of excessive credit growth or broad - based asset price misalignments in the euro area. however, developments in asset prices require close monitoring as risk - taking continues to gain momentum in financial markets and valuations are becoming stretched in some market segments. the ecb expects the national macroprudential authorities in the euro area to remain vigilant and continue to use the macroprudential policy instruments at their disposal to counteract any emerging risks when necessary. on its part, the ecb will contribute within its macroprudential mandate. the positive developments in the euro area are not independent of the global growth momentum. open trade, investment and sustainable financial flows play a key role in the cross - border diffusion of new technologies that drive forward efficiency improvements. they need to be underpinned by effective multilateral cooperation, both in the field of trade and in financial regulation and supervision, to help avoid major disruptions in global financial stability. preserving openness is crucial if the global economy is to thrive and to secure its growth potential. in the euro area, decisive contributions from areas beyond monetary policy remain necessary to raise the longer - term growth potential and reduce vulnerabilities. the current favourable economic conditions, in a politically stable environment, should help euro area countries to step up the implementation of reforms and thereby spur innovation and investment, further creating new jobs and reducing unemployment. a full and consistent application of the eu ’ s economic governance framework, including the european semester and the macroeconomic imbalance procedure, remains crucial to effectively incentivise national ownership of structural reforms. the current solid economic expansion also calls for fiscal buffers to be rebuilt in line with the requirements of the stability and growth pact. the full and consistent implementation of the pact is essential to ensure credibility and confidence in the eu fiscal framework, to rebuild fiscal buffers in national budgets for potential challenges ahead and to safeguard public debt sustainability. this is particularly important in countries where government debt remains high. in addition, all euro area countries would benefit from intensifying efforts towards achieving a more growth - friendly composition of public finances. the economic and monetary union ( emu ) should be strengthened, first by implementing what has already been agreed and finishing the common projects we have started : completing the banking union, strengthening the governance and the operational capacity of | in the fourth quarter of 2017, following similar growth in the previous quarter. this resulted in an average annual growth rate of 2. 4 % in 2017 – the highest since 2007. the latest economic indicators suggest some moderation in the pace of growth since the start of the year. this moderation may in part reflect a pull - back from the high pace of growth observed at the end of last year, while temporary factors may also be at work. overall, however, growth is expected to remain solid and broad - based. our monetary policy measures, which have facilitated the deleveraging process, should continue to underpin domestic demand. private consumption is supported by ongoing employment gains, which, in turn, partly reflect past labour market reforms, and by growing household wealth. business investment continues to strengthen on the back of very favourable financing conditions, rising corporate profitability and solid demand. housing investment continues to improve. in addition, the broad - based global expansion is providing impetus to euro area exports. the risks surrounding the euro area growth outlook remain broadly balanced. however, risks related to global factors, including the threat of increased protectionism, have become more prominent. 1 / 2 bis central bankers'speeches euro area annual hicp inflation increased to 1. 3 % in march 2018, from 1. 1 % in february. this reflected mainly higher food price inflation. on the basis of current futures prices for oil, annual rates of headline inflation are likely to hover around 1. 5 % for the remainder of the year. measures of underlying inflation remain subdued overall. looking ahead, they are expected to rise gradually over the medium term, supported by our monetary policy measures, the continuing economic expansion, the corresponding absorption of economic slack and rising wage growth. turning to the monetary analysis, broad money ( m3 ) continues to expand at a robust pace, with an annual growth rate of 4. 2 % in february 2018, slightly below the narrow range observed since mid - 2015. m3 growth continues to reflect the impact of the ecb ’ s monetary policy measures and the low opportunity cost of holding the most liquid deposits. accordingly, the narrow monetary aggregate m1 remained the main contributor to broad money growth, continuing to expand at a solid annual rate. the recovery in the growth of loans to the private sector observed since the beginning of 2014 is proceeding. the annual growth rate of loans to non - financial corporations stood at 3. 1 % in february 2018, after 3. 4 % in january and 3. 1 % in | 0.5 |
##uating the capital inflows. however, it doesn ’ t always work this way. many countries do not allow their currencies to adjust fully. indeed, credit booms typically occur in countries with fixed and managed exchange rate regimes. 8 it is also possible that, even with a floating exchange rate, appreciations can perversely encourage further capital inflows, exacerbating the problem. this occurs through the “ risk - taking channel. ” 9 if domestic borrowers have local currency assets and foreign currency liabilities, an appreciation increases the value of their domestic assets and makes their balance sheets look stronger. this increase in perceived creditworthiness could lead to the provision of more foreign currency loans as capital inflows through the banking sector increase. in a similar vein, it has been argued that, even with a floating exchange rate, a country ’ s financial conditions depend primarily on a global financial cycle, limiting a central bank ’ s ability to use monetary policy independently to influence its economy. one scholar thus argues that mundell ’ s trilemma boils down to a dilemma : “ independent monetary policies are possible if — and only if — the capital account is managed, directly or indirectly, via macroprudential policies. ” 10 the most familiar examples of international capital flows enabling the buildup of domestic economic and financial imbalances come from emes. but this is not just a developing - country issue : think of the united states before 2008. the distorted incentives and regulatory weaknesses in the us financial system during that period are well known. in that context, the ability to borrow cheaply, at global interest rates reflecting high savings rates in china and other emes, contributed to a growing financial bubble. this pattern, and the ensuing financial crash in the world ’ s most sophisticated financial system, had many elements that are familiar from emes in the past. to sum up, while there are known benefits to financial openness, a country can reap those benefits only if it avoids some important pitfalls. if a country has major distortions in its financial system, perhaps reflecting weaknesses in regulations, opening the economy to capital flows may just feed those distortions. to turn this r. a. mundell, “ capital mobility and stabilization policy under fixed and flexible exchange rates, ” the canadian journal of economics and political science 29, no. 4 ( 1963 ) : 475 – 485. e. g. mendoza and m. e. terrones | david dodge : summary of the latest monetary policy report opening statement by mr david dodge, governor of the bank of canada, at a press conference following the release of the monetary policy report, ottawa, 14 april 2005. * * * this morning, we released our april monetary policy report. in the report, we said that the global economy has been unfolding largely as expected, and the outlook for the canadian economy is essentially unchanged from that in january's monetary policy report update. there is increasing evidence that the canadian economy is adjusting to major global developments, including the realignment of currencies and higher commodity prices. the bank expects canada's economy to grow by about 2 1 / 2 per cent in 2005 and 3 1 / 4 per cent in 2006, with growth this year and next coming primarily from strength in domestic demand. to continue to support aggregate demand, we decided to leave the target for the overnight rate unchanged at 2. 5 per cent on 12 april. the bank continues to judge that the economy is operating slightly below its production capacity, and we expect that it will move back to full capacity in the second half of 2006. core inflation is expected to return to 2 per cent around the end of 2006. based on the scenario implied by oil - price futures, total cpi inflation is projected to remain slightly above 2 per cent this year, and to move slightly below 2 per cent in the second half of 2006. in line with this outlook for growth and inflation, a reduction of monetary stimulus will be required over time. this outlook is subject to both upside and downside risks and to uncertainties. the risks include the pace of expansion in asia and the prices of oil and non - energy commodities. a further risk relates to the resolution of global current account imbalances. should these imbalances persist, the risk of a disorderly correction would grow over time. most of the uncertainties with respect to the canadian outlook relate to how the economy is adjusting to the relative price changes associated with major global developments. monetary policy continues to facilitate the adjustment process by aiming to keep inflation at the 2 per cent target and the economy operating near its production capacity. | 0.5 |
benjamin e diokno : managing risks, sustaining momentum, improving lives speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the launch of financial stability report for the 2nd semester of 2021, manila, 1 february 2022. * * * ladies and gentlemen, friends from the media, good morning. thank you for joining the financial stability coordination council for the financial stability report for the 2nd semester of 2021. a few days ago, q4 2021 year - on - year growth was reported to be at 7. 7 percent, putting the full year expansion at 5. 6 percent. this is a remarkable turnaround from what we experienced in the first year of covid - 19. for financial authorities, we welcome these gains, humbly recognizing that there will always be improvements we can pursue, while maintaining a watchful eye over changing market conditions. in thinking of where our market stands, i am reminded of niccolo machiavelli, the italian philosopher and statesman to whom this quote was first attributed. he once said, and i quote “ never let a crisis go to waste ”, unquote. his idea cannot be more apt than today. while this pandemic has been a heavy burden, it has provided us the opportunity to come together and take collective action. now that we have our growth momentum back, we can pause, to take the opportunity to learn from this crisis. in previous fsrs, we described how quickly we all came together. faced with an unprecedented crisis, we took unconventional measures to respond to an out - of - the - box challenge. in this fsr, we talk about what we have learned from covid. for financial authorities, it is and will always be about the financial system as a whole and that whole has to be appreciated as being more than the sum of its parts. we also talk about how we can be better, addressing some of more immediate challenges that have come up because of covid. it is about the welfare of the filipino, seen through the lens of public health, through access to goods, through socio - economic equity, and through a greener future environment. all of these are in this latest fsr. we invite all of you to access and download your copy which will be available in the websites of the fscc member agencies. as always, we look forward to hearing your thoughts and comments. again, thank | - regulatory - relationships ref # 8609867 v1. 2 page 6 of 7 appointed actuaries play an important and valuable role to both the industry and the reserve bank. we consider the appointed actuary to be a key voice at the table when an insurer is seeking to understand its financial health and future prospects. our review team expects to make best practice recommendations to insurers and appointed actuaries, as well as provide recommendations to our own policy and supervision teams that will feed into our review of the insurance act. the public report of this review is expected to be published in the first quarter of 2020. putting on our ‘ sunday best ’ – closing the conduct gap as already mentioned, earlier this year the fma and reserve bank released a joint report6 called life insurer conduct and culture. we believe that conduct within financial institutions is a contributing factor to customer outcomes, and can result in a gain or loss of trust and confidence in the industry. based on our joint analysis, we found : extensive weaknesses in systems and controls for managing conduct risk, coupled with a lack of governance and management oversight ; a lack of focus on customer outcomes and limited evidence of customers being adequately considered in product design and sales ; that sales incentives were prioritised over good customer outcomes ; a serious lack of oversight and monitoring of intermediaries ; and a poor and inconsistent approach to dealing with complaints and remediating issues. since the report was made public, we have worked with life insurers while they develop their action plans for remediating the issues and mitigating the risks we identified. we strongly believe that all insurers - including health and general insurance – should learn from the review and its findings. this is why we have subsequently written to the boards of general insurers setting out our expectations that they will review the culture and governance within their own firms. a “ nothing to see here ” mentality is not, and never will be, a sensible response to such an array of serious findings in a sister industry. we will be following up with non - life insurers to understand how they are reviewing these issues within their own firms. how a firm monitors and addresses conduct and culture issues will be a part of our ongoing ‘ business as usual ’ supervision with all insurers. we will also monitor insurers to make sure their planned actions are implemented effectively. conclusion the public is demanding that both insurers and regulators play a part in providing greater confidence in | 0 |
action is now. we can halve emissions by 2030. ”, press release, 4 april. 4. deaton, a. ( 2021 ), “ covid - 19 and global income inequality ”, nber working paper series, no 28392, national bureau of economic research, january. 5. dizikes, p. ( 2018 ), “ study : on twitter, false news travels faster than true stories ”, mit news, 8 march. 6. rhoten, d. and pfirman, s. ( 2007 ), “ women in interdisciplinary science : exploring preferences and consequences ”, research policy, vol. 36, pp. 56 - 75. 7. altunbas, y. et al. ( 2022 ), “ does gender diversity in the workplace mitigate climate change? ”, working paper series, no 2650, ecb, frankfurt am main, february. 8. potential project, “ the human leader – a new world, a new kind of leadership ”. 9. hougaard, r., carter, j. and afton, m. ( 2022 ), “ when women leaders leave, the losses multiply ”, harvard business review, 8 march. 10. garikipati, s. and kambhampati, u. ( 2020 ), “ leading the fight against the pandemic : does gender ‘ really ’ matter? ”, discussion paper series, no 2020 - 13, department of economics, university of reading. 11. burni, a. and domgorgen, f. ( 2021 ), “ the verbal fight against covid - 19 : why female leaders stand out on their political communication during the pandemic ”, the current column, german development institute, 10 march. 12. krause, j., krause, w. and branfors, p. ( 2018 ), “ women ’ s participation in peace negotiations and the durability of peace ”, empirical and theoretical research in international relations, vol. 44, no 6, pp. 985 - 1016. 13. sahay, r. et al. ( 2017 ), “ banking on women leaders : a case for more? ”, imf working papers, no 17 / 199, international monetary fund, 7 september. 14. european banking authority ( 2020 ), benchmarking of diversity practices at eu level. 15. european institute for gender equality ( 2022 ) | doubt that if all the extraordinary leaders in this room, across all the fields we represent, can continue to lead with cooperation and compassion, we can be a force for good amid the turbulence of our current times. and this is very much the spirit i am aiming to bring to my leadership of the ecb. research shows that trust in the ecb hinges not just on our competence in delivering on our mandate, but also on whether we are perceived to care about citizens and to be acting responsibly. [ 17 ] that is why i have strived since i took office to better explain to the public what we are doing and why, and to show that we take people ’ s concerns seriously. today, that means following through on our unwavering commitment to deliver on our inflation target of 2 % over the medium term. conclusion let me conclude. the russia - ukraine war has reminded us just how quickly the world can change. but russia ’ s actions have unleashed what is only the latest in a string of crises that have marked the past decade. the challenges we face are becoming more complex and global at a time when the forces sustaining cooperation and multilateralism are weakening. in this setting, the need for female leadership has, in many ways, never been greater. it is often in the darkest hour that women are called to leadership. and now is the time for us to heed that call. let me recall those powerful words of eleanor roosevelt : “ nothing has ever been achieved by the person who says, ‘ it can ’ t be done. ’ ” because let me tell you : it can be done. the leadership qualities we need to master this uncertain world are ones that i see in abundance before me in this room tonight. and as we celebrate the top 100 female leaders in business, now is the moment for us to really show what female leaders can bring to the table. thank you. 1. zuleeg f., emmanouilidis j. a. and borges de castro, r. ( 2021 ), “ europe in the age of permacrisis ”, european policy centre, 11 march. 2. chlorofluorocarbons. 3. intergovernmental panel on climate change ( 2021 ), “ climate change widespread, rapid, and intensifying – ipcc ”, press release, 9 august ; and intergovernmental panel on climate change ( 2022 ), “ the evidence is clear : the time for | 1 |
olli rehn : monetary policy in low and high inflation environments speech by mr olli rehn, governor of the bank of finland, at the bank of finland's 3rd international monetary policy conference " monetary policy in low and high inflation environments ", helsinki, 26 june 2024. * * * presentation accompanying the speech ladies and gentlemen, dear friends, it is my great pleasure to welcome all of you to the bank of finland's conference on monetary policy in low and high inflation environments, and especially those of you who have travelled from further afield to be here in helsinki. i am more than delighted to welcome our distinguished speakers and participants from different continents, and very much looking forward to an inspiring exchange of views today. in my opening remarks, i will first talk about the exceptional price dynamics over the past crisis years, and then provide some personal reflections on the ecb's upcoming monetary policy strategy review. to set the stage, let me illustrate the brief history of inflation in the euro area by dividing the last quarter century of the euro into three periods. slide 2. three periods of inflation in the euro era, 1999 – 2024 these are, on average : 1 ) at around 2 % during the waning great moderation in 19992009 ; 2 ) slightly above 1 % during the post - financial crisis below - target inflation in 2009 – 21 ; and 3 ) above 6 % during the years of accelerating inflation since 2021. each of these periods had a specific set of inflation ( or deflation! ) drivers and price stability anchors, and thus specific price dynamics and specific policy issues. the common feature in the advanced economies is that inflation has been mostly due to supply disruptions and sharp increases in the prices of food and energy, as concluded by ben bernanke and olivier blanchard in their recent paperi. on the other hand, over time inflation became more broad - based and stickier, leading to higher wage inflation on a tight labour market. fiscal policy also played a role in fuelling demandside inflation, especially in the united states. while we have seen some less convincing data on inflation recently, in a moving context, we must see the forest for the trees. considerable progress has been made in bringing inflation down towards the ecb's symmetric 2 % target, especially since september 2023. monetary policy and financing conditions have been held tight to curb demand, which has helped keeping inflation expectations firmly anchored. slide 3. monetary policy anchored inflation expectations at 2 % | to the ecb's upcoming strategy review. given our primary mandate, the focus of the review should, in my view, be on achieving a better understanding of the inflation dynamics of the past few years, and of the secular trends that keep changing the operating environment of monetary policy going forward. to begin with, it is essential to analyze the large and persistent supply shocks that the euro area has encountered in recent years. but we must also have an open debate on the role of demand shocks, including monetary and fiscal policies. the jury is still out concerning the relative importance of their contribution to the period of high inflation. by the way, the same goes for the period of low inflation : did we come out of the liquidity trap as a result of our own policy actions, or was it due to the pandemic - related supply shocks and strong fiscal stimulus? a further key question is whether we should react to supply shocks in a different way than in the past few years. to what extent can we, as a central bank, even influence supply - side issues? i think a good approach is to follow the established wisdom of monitoring the extent to which supply shocks cause second round effects. 3 / 5 bis - central bankers'speeches turning to secular trends, one thing that has fundamentally changed since our last strategy review is the geopolitical landscape. geopolitics will continue to shape the operating environment of monetary policy in the years ahead. the changes that are taking place in the world economy, from trade wars to supply chain diversions, are likely to increase the probability of supply shocks and inflation volatility. but geopolitics, and especially the ongoing geo - economic fragmentation, may also have a strong impact on the new equilibrium that emerges once the current interest rate cycle is completed. and this brings us to the question of the level of the long - term real natural rate of interest, r * or the equilibrium interest rate. this has been much discussed among central bankers, including at the bis and imf. slide 5. natural interest rate is a necessary analytical framework the chart shows various estimates of the natural rate for the euro area. according to recent studies, it is typically estimated to be somewhere between 0 % and 1 % in real terms in the euro area. ii i, for one, don't think of the natural interest rate as a certain exact number, nor as a viable concrete tool for devising monetary policy, but instead as an illustrative and even | 1 |
of transactions are done in cash, to a cash - lite economy, with transactions becoming electronic. this move towards modernization supportive of e - commerce might be of particular interest to business people such as yourselves. on our part, we see the role innovations play in on - boarding currently excluded markets into the formal financial system. 3 / 4 bis central bankers'speeches but there is still much to be done. we count on you, rcm to help us in our financial inclusion efforts to collaborate with us towards maintaining a more stable, conducive and stronger business environment. i am confident that the returns on this, far from just being financial or proprietary, will be more satisfying and enduring. i end with a simple but powerful quote from deepak chopra “ if you want something, give it. ”. what one gives out, we know, returns somehow. as we work towards society ’ s positive transformation, we do not shirk at the possibilities of being at the receiving end. thank you for your kind attention. 4 / 4 bis central bankers'speeches | caleb m fundanga : the bank of zambia – placing a high premium on education speech by dr caleb m fundanga, governor of the bank of zambia, at the signing ceremony of the memorandum of understanding between the bank of zambia and the university of zambia, lusaka, 23 november 2007. * * * the vice chancellor the deputy vice chancellor the registrar the deans of various schools heads of departments present faculty members invited guests ladies and gentlemen i feel greatly honoured to once again participate in the signing of the memorandum of understanding ( mou ) between the bank of zambia ( boz ) and the university of zambia ( unza ). the bank of zambia and unza have a long standing relationship which is intertwined in more ways than one. i am sure that the majority of employees in the bank that possess a first degree have this university to thank for that achievement. it therefore gives me pleasure to stand here and undertake this function of signing the mou between our two institutions. vice chancellor, the bank places a very high premium on education. it is for this very reason that it has this day decided to renew its financial support to the university of zambia ’ s department of economics. under the new agreement, the bank has increased the level of support to unza to include setting aside a special fund specifically for research purposes and procurement of personal computers ( pcs ) and software for the same purpose. we in the bank consider research as very important because it forms the basis upon which we formulate our policies and execute our operations. to underscore this point, the bank of zambia launched the boz reader series a few years ago as a means of having articles of economic interest being published for the benefit of the zambian public. the three publications of the boz reader that have been published so far have largely contained articles prepared by boz members of staff. however, our intention has always been to have a wider network of contributors. with the signing of this agreement, we hope to see more economics related research being undertaken by faculty members in the department of economics on behalf of the bank. we further urge the university of zambia to be a key and keen contributor to the publications. the university of zambia economics department should coordinate with our economics department on this matter. in addition to the research fund, the monthly salary supplementation for faculty members in the economics department has been adjusted up by 64 %. meanwhile, the bank has continued to recognize academic excellence among economics students at unza. for this reason, the | 0 |
million. us $ 42. 7 trillion as at end 2010 as compared to us $ 26. 2 trillion as at end 2001 – ml - capgemini world wealth reports. bis central bankers ’ speeches this growing pool of wealth and put it to productive use. and singapore has a compelling value proposition in helping to make this happen. what makes singapore attractive as an international financial and wealth management centre? wealth desires stability. singapore ’ s political and economic stability, transparency in governance, and sound and predictable regulation, are often cited by private bankers and clients alike as the fundamentals underpinning its attraction. efficiency, connectivity, and sound infrastructure are added advantages. singapore has been ranked by the world bank, for the sixth year running, as the easiest place to do business in the world. perhaps the decisive advantage is the larger financial eco - system that exists in singapore. strong capabilities in asset management, foreign exchange and derivatives trading, coupled with deep and liquid capital markets – these are the ingredients that make singapore the ideal base for the intermediation of wealth in asia. but to use a common phrase in the industry, past trends are no guarantee of future performance. whether singapore continues to do well in wealth management will depend critically on three imperatives. first, we must raise competencies in the industry. second, we must enhance market conduct. third, we must keep the financial sector clean. strong competencies let me begin with raising competencies. the wealth management industry in asia is facing a shortage of talent. private banks are rapidly expanding to meet the needs of a growing affluent class. if singapore is to sustain its growth as a wealth management centre, there is an urgent need to raise competency levels in the industry and to build a strong pipeline of talent. we need qualified professionals to fill not just front office jobs like relationship management and investment advice but also mid to back office functions in risk management and compliance. there are two reasons why we cannot be complacent. one, the markets have changed. average investment returns are likely to be lower over the next decade than they were in the last, as the developed economies deleverage and global demand rebalances. the wealth manager can no longer sit back and let a buoyant market do the job. he needs to chart clear strategies and manage his clients ’ portfolios amidst a more uncertain and volatile environment. two, the clientele has changed. post - lehman, the client is more cautious and less trusting. he wants better service | attach importance to supporting technological innovations, including via the potential development of more efficient regulation or “ regtechs ”, as long as they go hand in hand with low operational risks and high transaction safety. third, economic services : payments are the nexus where a new ecosystem based on technological innovation and entrepreneurship is blooming. these developments are for the benefit of the real economy – and more particularly the corporate sector – in france and in europe : a myriad of so called “ fintechs ” are now emerging. they are competing with incumbents, notably in the united states, and are proposing not only new ways of paying but also new services related to payments ( such as account aggregation ). so there are high industrial stakes involved, and we must foster active competition, which is far preferable to monopolies, even technological ones. given the importance of payments in many aspects of our economy, we need a comprehensive 1 / 3 bis central bankers'speeches strategy. most importantly, innovation should be spurred, whether it comes from start - ups or incumbents. this is exactly the purpose of the french national strategy for retail payments – consistent with the european framework. this french strategy was developed last year through a cooperative process : it aims at modernizing payments, by relying on the dematerialization of processes in different fields, such as e - invoicing, e - mandates for sepa direct debits, virtual wallets, etc. the implementation of this strategy has been entrusted to the national committee for payments ( cnps ), your co - host for this conference, which gathers representatives from both the supply and the demand side and is chaired by the banque de france. going beyond the sole payments sphere, innovation in the financial sector can generate significant benefits that have to be reaped. it has the potential to foster financial inclusion all over the world, as long as people are provided with internet access. it also prompts incumbents to adapt, pushing them to develop new business models and new activities that ultimately benefit the customers. in this regard, let me highlight the initiatives to develop instant payments in the sepa area, to facilitate market - based funding and equity financing in the european union. i would like also to mention that the banque de france is conducting its own experiments, with the recent creation of a lab and the appointment a chief digital officer, thierry bedoin, who will moderate the first panel of this afternoon ’ s session. 2. technological innovation is to be welcomed | 0 |
axel a weber : the reform of financial supervision and regulation in europe speech by professor axel a weber, president of the deutsche bundesbank, at the institute of international and european affairs, dublin, 10 march 2010. * 1. * * introduction ladies and gentlemen first of all, i would like to thank you for giving me the opportunity to speak to you here at the institute for international and european affairs. it will come as no surprise to you that the financial crisis will be the main topic of my speech. however, the onset of the crisis lies nearly two and a half years in the past, and we are now seeing more and more signs of stabilisation and recovery. therefore, i shall leave aside the current state of financial markets and shall instead try to look ahead, focusing on structural issues. in this regard, the main challenge for the years to come will be to create a more stable and more resilient financial system to prevent future crises. it is obvious, however, that such an ambitious endeavour will not happen on its own. instead, it requires strong commitment, resolute efforts and broad reforms. where to begin? 2. lessons from the financial crisis the first step in any serious reform should be to gain a clear understanding of the events that occurred and their underlying causes. even though it is a tempting thing to do, a crisis of the magnitude we have been witnessing over the past two and a half years cannot be traced back to a single cause. in fact, there could be a hundred narratives, and each would appear to explain the events in a satisfying manner. the most popular of these narratives would revolve around the following explanations for the crisis : gaps in the regulatory framework, distorted incentives inside the financial system, such as short - termist remuneration schemes, an insufficient resilience of the financial system, an institutional design of financial supervision that did not properly reflect the crossborder dimension of crises, and a lack of awareness of systemic risks. all these narratives point to a number of lessons to be learned. and it is these lessons which show us the direction for the reform of the financial system. with regard to financial regulation and supervision, the lessons of the crisis cover, broadly speaking, the following four areas : first, we have to improve regulation and supervision at the microeconomic level. second, we have to pay greater attention to systemic risk control at the macroeconomic level. third, we have to ensure an effective interplay between these two levels | , gabriele and richhild moessner ( 2011 ), “ macroprudential policy – a literature review ”, bis working papers, no. 337, bank for international settlements. see kelber, anna and eric monnet ( 2014 ), “ macroprudential policy and quantitative instruments : a european historical perspective ”, banque de france financial stability review, no. 18, april and elliott, douglas j., greg feldberg and andreas lehnert ( 2013 ), “ the history of cyclical macroprudential policy in the united states ”, federal reserve board, finance and economics discussion series, 2013 - 29. a full overview of the different measures can be found in “ a chronology of main developments in the central bank of ireland 1943 – 2013 ”, central bank of ireland booklet ( 2013 ), also see kelly, john and mary everett bis central bankers ’ speeches in the 2000s many suggested the best contribution monetary policy could make to financial stability was to keep inflation low and stable, and if imbalances did emerge, the central bank could always “ clean up ” afterwards. 4 the effective microprudential supervision of individual banks would, it was thought, also safeguard financial stability. the recent crisis provided a clear demonstration that such an approach is not sufficient. recent evidence shows that in the post - war period, real estate credit has become an increasingly important predictor of fragility in the financial sector. 5 financial imbalances resulting from the unsustainable expansion in asset and credit prices, or contagion across the financial sector due to interconnectedness and strategic complementarities such as “ herding ” behaviour among market participants, can lead to the build - up of systemic risk. since such imbalances have very serious consequences for the real economy and price stability, one response is for the central bank to use interest rates to “ lean against the wind ”, and that may be appropriate in episodes of severe financial exuberance. 6 however, it is very challenging for central banks to manage their price stability objective and address concerns about systemic risks with just one tool ; namely interest rates. any central bank aiming to cool off systemic risk by hiking rates might risk disrupting the business cycle to the detriment of its price stability objective, or vice versa. that is why independent policy instruments are needed to address each policy objective. 7 macroprudential policies are now commonplace. they are generally regulatory policies or instruments with the specific | 0 |
. com / article / amazon - ai - the - smart - persons - guide / ; and fei - fei li and jia li, “ cloud automl : making ai accessible to every business, ” the keyword ( google blog ), january 17, 2018, https : / / www. blog. google / topics / google - cloud / cloud - automl - making - ai - accessible - every - business /. sintef, “ big data, for better or worse : 90 % of world ’ s data generated over last two years, ” sciencedaily. com, may 22, 2013, https : / / www. sciencedaily. com / releases / 2013 / 05 / 130522085217. htm ; and ibm, “ 10 key marketing trends for 2017 ” ( 2017 ) ( on file with author ). executive office of the president, preparing for the future of artificial intelligence. - 3so it is no surprise that many financial services firms are devoting so much money, attention, and time to developing and using ai approaches. broadly, there is particular interest in at least five capabilities. 8 first, firms view ai approaches as potentially having superior ability for pattern recognition, such as identifying relationships among variables that are not intuitive or not revealed by more traditional modeling. second, firms see potential cost efficiencies where ai approaches may be able to arrive at outcomes more cheaply with no reduction in performance. third, ai approaches might have greater accuracy in processing because of their greater automation compared to approaches that have more human input and higher “ operator error. ” fourth, firms may see better predictive power with ai compared to more traditional approaches - - for instance, in improving investment performance or expanding credit access. finally, ai approaches are better than conventional approaches at accommodating very large and less - structured data sets and processing those data more efficiently and effectively. some machine learning approaches can be “ let loose ” on data sets to identify patterns or develop predictions without the need to specify a functional form ex ante. what do those capabilities mean in terms of how we bank? the financial stability board highlighted four areas where ai could impact banking. 9 first, customer - facing uses could combine expanded consumer data sets with new algorithms to assess credit quality or price insurance policies. and chatbots could provide help and even financial advice to consumers, ai tools are also likely to be useful for central banks and regulators in their responsibilities for supervision, financial stability, and monetary | largest banks submit living wills that describe how they could be resolved under bankruptcy. 12 and the federal reserve has mandated that systemically important banks meet total loss - absorbing capacity requirements, which require these firms to maintain long - term debt adequate to absorb losses and recapitalize the firm in resolution. these enhancements in resolvability protect financial stability and help ensure that the shareholders and creditors of failing firms bear losses. moreover, these steps promote market discipline, as creditors — knowing full well that they will bear losses in the event of distress — demand prudent risk - taking, thereby limiting the problem of too - big - to - fail. financial stability risks can also grow large outside the regulated banking sector, as amply demonstrated by the events of 2007 and 2008. in response, a number of regulatory changes affecting what is commonly referred to as the shadow banking sector have been instituted. a specific example of such risks, illustrative of broader developments, was the buildup of large counterparty exposures through derivatives between market participants and aig that were both inappropriately risk - managed and opaque. to mitigate the potential for such risks to arise again, new standards require central clearing of standardized over - the - counter derivatives, enhanced reporting requirements for all derivatives, and higher capital as well as margin requirements for noncentrally cleared derivatives transactions. 13 another important step was the congress ’ s creation of the financial stability oversight council ( fsoc ). the council is responsible for identifying risks to financial stability and for designating those financial institutions that are systemically important and thus subject to prudential regulation by the federal reserve. both of these responsibilities are important to help guard against the risk that vulnerabilities outside the existing regulatory perimeter grow to levels that jeopardize financial stability. 14 the financial system is safer the evidence shows that reforms since the crisis have made the financial system substantially safer. loss - absorbing capacity among the largest banks is significantly higher, with tier 1 common equity capital more than doubling from early 2009 to now. 15 the annual stress - testing exercises in recent years have led to improvements in the capital positions and riskmanagement processes among participating banks. large banks have cut their reliance on short - term wholesale funding essentially in half and hold significantly more high - quality, liquid assets. assets under management at prime institutional money market funds that proved susceptible to runs in the crisis have decreased substantially. and the ability of regulators to resolve a large institution has improved, reflecting both new | 0.5 |
- functioning danish labour market and contrasts with the situation in the debt - ridden southern european countries, where unemployment reached a very high level before wage inflation could be reduced. in other words, the danish economy is adjusting to the situation and no political interference is required. denmark is positioned for growth and demand is likely to normalise as the output gap gradually closes in the coming years. * * * bis central bankers ’ speeches the negative sentiment in the housing market has curbed economic growth in denmark for some time. but now we are seeing the first budding signs of improvement. prices have stabilised over the last year and have begun to rise in some market segments – particularly owner - occupied flats in the cities, notably in greater copenhagen. although the milder winds may also blow across other parts of the market, there are bound to be areas that will not feel them and where prices will continue their downward trend. the housing market is becoming polarised. this is to a large extent due to migration within denmark, with parts of the country experiencing negative population growth and economic decline, while e. g. the copenhagen area is prospering. in danmarks nationalbank ’ s assessment, house prices are below the level to be expected – based on historical evidence – given the current levels of income, taxation and interest rates. on the basis of these underlying conditions it is estimated that house prices will rise slightly for denmark overall in the coming years. this estimate is subject to considerable uncertainty. the difficult, not to say impossible, part is to predict exactly when the mood changes, irrespective of the underlying conditions. * * * the danish mortgage credit system is unique. no doubt about it. the system has proved its worth during the financial crisis and the subsequent sovereign debt crisis, and these have been genuine stress tests. in spite of the odds, it has been possible to expand lending to households and corporates and sell bonds in the market – increasingly to investors abroad. all along, investors have had confidence in the credit ratings of the bonds and the high liquidity in the mortgage credit market. pension funds are large investors in mortgage bonds, and banks to a large degree use short - term mortgage bonds for liquidity management. hence it is hardly surprising that the committee on systemically important financial institutions has identified the market for danish mortgage bonds as systemically important. actually, the danish mortgage credit act already provides for sifi legislation in relation to mortgage credit. the act lays down stringent rules for the relationship | of licensing and enforcement before moving to the bank of zambia. to say something about my academic qualifications, i graduated with a bachelor of laws degree from university of zambia, thereafter a master of laws degree from harvard where i was a fulbright scholar and a phd from university of london, centre for commercial law studies, queen mary and westfield college. allow me to mention that all my studies were done on scholarship. bis central bankers ’ speeches apart from my work, i am also involved in service to the public and to the church through sitting on various bodies. i was not appointed to this position my chance ; it took effort and hard work to be noticed. i believed in myself and knew i had to put in the best to achieve anything i wanted to achieve. so what message do i carry for you this afternoon? my theme is that you can do it! to you the students, i want to encourage you to see yourselves as leaders. you are the future of this nation. you are part of the cream that need to push this country forward. i would like you to realise that academic and professional qualifications are an integral part of settings yourselves up for one ’ s life. by being here, you are establishing a path for your successful career whether as an employee or an entrepreneur. the knowledge that you are gaining is assisting in developing and enhancing your ability to think and perceive as well as manage the various situations that life offers. the outcome of your academic development will obviously have a positive impact on your family, society, culture and country at large. make sure you take full advantage of this opportunity. it sets the stage for the rest of your future. if you graduate from here with poor grades will mean you have limited your access to top notch institutions, should you, for example, wish to get an advanced qualification. you are limited even to apply for scholarships. and in situations of competition, the best will be selected. zcas is one of the renowned institutions in zambia. one thing you must realise is that not everyone has the opportunity to be enrolled in an institution of higher learning to obtain an academic or professional qualification. therefore, you must make the best of this opportunity to be here at zcas and indeed, be thankful to god. many of your friends are not able to have this opportunity. i am also aware that for quite a good number, it is a great sacrifice by your parents to send you here. you should ensure that this investment pays off by putting in your best. discipline for many of | 0 |
recovery and resolution of systemically important institutions has been developed by the financial stability board. having this new standard is a big step forward. at the european level, a central pillar of the envisaged banking union is the single resolution mechanism. this instrument will allow authorities to restructure or resolve banks without putting taxpayers ’ money at stake. in the future, whenever a bank fails, resolution costs must be borne first by shareholders and creditors. after that, a bank - financed resolution fund is to come into play, and only as a last resort are public funds to be used and the taxpayers made to pay. bringing light to the shadows – the shadow banking system we have made good progress at the global and the european level in addressing the toobig - to - fail problem. however, discussions have mainly centred around the banking system. yet there are other parts of the financial system that might become a source of systemic risk. one of them is the shadow banking system. according to the financial stability board, the shadow banking system comprises “ credit intermediation involving entities and activities outside the regular banking system ”. what i think is relevant from a financial stability perspective is that such entities create bank - like risk without being subject to bank regulation. the overall effects of the shadow banking system on financial stability are ambiguous. theoretically, non - banking financial institutions that perform bank - like activities are associated with diversification and specialisation benefits. therefore, it could be assumed that they contribute to making the financial system more efficient and more resilient. however, developments in the run - up to the financial crisis revealed something else : activities and entities in the shadow banking system can pose a threat to financial stability. these potential threats are mostly the result of maturity and liquidity transformation, the build - up of leverage and credit risk transfer conducted outside the perimeters of bank regulation. all these activities are not evil per se, but the ensuing systemic risk needs to be contained. all activities must be made transparent, in particular vis - a - vis supervisory authorities, and they need to be adequately regulated. in that regard, i welcome the global regulatory initiative on shadow banking – again under the leadership of the financial stability board. bis central bankers ’ speeches and here too, international cooperation is essential for establishing effective regulation. a central feature of the shadow banking system is regulatory arbitrage : activities are shifted from the banking system to the shadow banking system in order to evade regulation. a geographically fragmented approach to regulation would not curb regulatory | lael brainard : introductory remarks for the fed listens panel on the covid - 19 pandemic introductory remarks ( via webcast ) by ms lael brainard, member of the board of governors of the federal reserve system, at " a fed listens event : how is covid - 19 affecting your community? ", sponsored by the board of governors of the federal reserve system, washington dc, 21 may 2020. * * * this will be the 15th fed listens event the federal reserve has conducted over 16 months. we have listened to diverse voices from every type of community in every sector and every district of our country. this rich set of perspectives is helping bring alive for us the importance of the review of our monetary policy strategy, tools, and communication practices led by vice chair richard clarida. we have heard that maximum employment is not captured in a single national average, it brings vital benefits, and it takes a very long time to arrive in many neighborhoods. we have heard that inflation matters : households at different life stages and in different places are balancing the cost of living against their earnings, while businesses are balancing wages and other costs against their pricing power. we have heard that access to credit matters, and that it is important to use the full range of tools to support the economy. when we embarked on this listening journey, little did we know that our nation would experience the heartache and hardship associated with the covid - 19 pandemic — an emergency unprecedented in modern times. last year, we heard from small businesses that were expanding their workforces and investing in their communities. today, many of those same businesses are running low on cash reserves and struggling to make rent and payroll — especially those in consumer services, such as restaurants and retail. last year, national unemployment had fallen to its lowest point in over five decades. today, unemployment has surged to levels not seen since the great depression. last year, historically challenged groups were gaining a foothold in the workforce, and employers were investing in training and loosening job eligibility requirements. today, the fallout from the covid pandemic has cruelly hit groups with thinner financial cushions the hardest — workers in the lowest quarter of earnings, people of color, low and moderate income communities, and women disproportionately employed in services jobs. as we think about how the federal reserve ’ s tools and presence in communities around the country could best provide stability at this trying time and strong support for the recovery | 0 |
. 27 per cent in the weighted average selling rate for the review period as investors, in the main, continued to exhibit a preference for jamaica dollar assets. the demand pressures in september resulted in a 0. 78 per cent depreciation for the month and occurred in the context of reduced net private inflows as well as lower foreign exchange supplies from tourism. the bank sold approximately us $ 20. 0 million net to the market during the quarter. despite this, the nir increased by us $ 177. 9 million resulting mainly from the proceeds of an inter - american development bank loan of us $ 200. 0 million to the government. at end - september the nir stock was us $ 1. 91 billion, substantially exceeding the end - september target under the imf stand - by arrangement. at that date, gross reserves amounted to us $ 2. 79 billion, representing 20. 5 weeks of projected goods and services imports, comparing favourably with the international benchmark of 12 weeks. in the context of relatively buoyant jamaica dollar liquidity conditions, stability in the foreign exchange market and improved investor sentiment, market - determined interest rates continued to decline in the september quarter. at the end of september the average yield on the benchmark 6 - month treasury bill was 7. 99 per cent a decline of 1. 27 percentage points relative to the yield at the end of june. similarly, the average yields on the 1 - month and 3 - month instruments fell by 0. 72 percentage points and 0. 77 percentage points to 8. 26 per cent and 7. 75 per cent, respectively. inflation headline inflation for the september quarter was 1. 3 per cent, below the range of 1. 5 per cent – 2. 5 per cent that we were projecting when we met in august. the out - turn for the quarter is also significantly below the rate of 2. 6 per cent recorded for the june 2010 quarter as well as the 3. 8 per cent average inflation for the previous five september quarters. similar to headline inflation, the bank ’ s measures of core inflation were all below the rates in the previous quarter as well as the rates in the corresponding quarter of 2009. the lower than expected inflation for the review quarter was against the background of a decline in energy prices, relative stability in the exchange rate and continued weak consumer demand. lower energy prices in the quarter were typified by a 2. 6 per cent decline in the average west texas intermediate crude oil price. partly offsetting | markets to increase their size and scope, and doing away with the barriers to the cross - border functioning of markets implied by differences in national policy concerning insolvency, taxation and other areas. promoting a single rulebook in a wide range of areas, including consumer protection, anti - money laundering and accounting rules, is also key to the success of cmu. regulatory consistency in a broad sense and a level playing field, as opposed to leniency, are crucial to render eu markets attractive. at the european level, brexit is an additional challenge which may lead to fragmentation as services could be provided in a more decentralised way. at the same time, eu27 capital markets are still subject to national rules and supervision, making for a patchwork of regimes which prevent the integration of markets and may open the door to regulatory arbitrage. as a response to brexit, we need to develop truly european capital markets, and this makes progress on the cmu front even more urgent. as the united kingdom leaves the eu ’ s regulatory and supervisory framework and develops a new one of its own, a different relationship between the two jurisdictions will need to be defined. it will need to balance the benefits of continued integration with the uk financial markets with the potential risks to financial stability, consumer and investor protection, and the integrity of the single market. this path will not be easy for either side as the lure of the flexible and light - touch regulation of the past can be strong, bringing with it the risk of divergence between eu and uk rules or a potential race to the bottom. and these considerations will also play out as we review the role of equivalence regimes in eu financial legislation. 2 / 4 bis central bankers'speeches european responses are the way forward turning to policy responses, the way forward is clear : we need to move away from national responses and promote european ones within the cmu and banking union agendas. let me briefly emphasise five priority areas. first, we need to complete the banking union ’ s institutional architecture. in particular, we should ensure that the backstop to the single resolution fund is fully operational, agree on a banking union solution to liquidity needs in resolution and define a clear path towards a european deposit insurance scheme ( edis ). a fully fledged edis would facilitate cross - border banking since depositor protection would be independent of a bank ’ s location, and ensure that an increase in cross - border activity does not reduce the overall resili | 0 |
##s, with no commitment to restructuring, seen elsewhere. the frob envisaged action on two fronts. on the one hand, it gave the banco de espana broad powers to take control of any institution that were to fail. and on the other, on what we could call the preventive side, it allowed financial support to be provided for the restructuring of viable institutions and their management teams, and helped them digest the process ; that said, the institutions themselves, and especially those that had experienced management failures, would have to bear the attendant cost. this meant that private sector solutions were prioritised, as has been seen in the processes that have unfolded in the past few months. today, it is fair to say that the restructuring and recapitalisation of spain ’ s financial institutions is well under way. it is now just a case of formalising and implementing the agreements reached. as a result, spain ’ s deposit institutions that did not already have sufficient capital have now secured it, either from the markets or from the frob. the banco de espana has conducted stress tests to verify that all institutions – banks, savings banks and credit co - operatives – will actually have sufficient capital available, not only for what would currently seem to be the most reasonable scenarios, but also for complex growth scenarios in the near future. accordingly, before end - june, the banco de espana will take the steps necessary to formalise the processes already agreed and to ensure they are correctly implemented. if, by month - end, any of these processes has failed, or any institution has been left behind, the bank will act, using the mechanisms envisaged for this purpose in the frob legislation. moreover, the bank intends to publish the results of these stress tests, to reveal the deterioration estimated, the consequent capital requirements and the capital funding committed, to provide the markets with a perfectly clear idea of the situation of the spanish banking system. thus, before the summer, the restructuring of the banking system should be complete, save for a legal reform allowing savings banks to obtain high - quality capital on the market, to meet the new basel standards. the government has the agreement of spain ’ s main opposition party for the successful passage of this legal reform through parliament. the restructuring and reform of the financial system, along with the budgetary adjustment, the public pension reform and the labour market reform, are the most urgent measures needed to restore confidence in the spanish economy, and, as such, should be passed | 13. 11. 2020 the european response to the covid ‑ - 19 crisis opening address - fundacion internacional olof palme conference pablo hernandez de cos governor * english translation of the original speech in spanish why joint european action was / is necessary as in the rest of the world, the covid - 19 outbreak has triggered in the euro area a health and economic crisis that is unprecedented in recent history. against this backdrop, the economic policy response has had to be very forceful to mitigate the short - term economic effects and to prevent those effects from becoming persistent and affecting growth in the medium and long - term. the fact that this crisis is global also means that a coordinated response among the different countries is more effective both in combating the pandemic and as regards the capacity to facilitate economic recovery for all. the need for a coordinated response is particularly evident for european union ( eu ) member states, given the very high level of economic and financial interconnectedness. this is especially true in the euro area, because it shares a common currency, which increases both the economic benefits of joint action and the negative consequences of possible inaction. although the shock triggered by the pandemic is global, this crisis is affecting the eu unevenly, reinforcing the reasons for acting jointly at the supranational level. several dimensions of heterogeneity are particularly significant in this setting. first, the crisis associated with the pandemic is having a highly significant heterogenous impact at sectoral level. thus, the euro area countries that are being the hardest hit are those where the most affected sectors have a greater weight ( in particular those relating to services requiring greater social interaction ). second, the recent increase in national public debt levels is unprecedented. despite being widespread, this is having a more intense impact on the countries that were hardest hit by the crisis, some of which also had a less fiscal room for manoeuvre prior to the spread of the virus, which could limit the responsiveness of national fiscal policy. similarly, this uneven impact has interrupted the correction of the external imbalances recorded since the end of the financial crisis. specifically, the five euro area countries with a greater external imbalance measured by the net international investment position, i. e. the five countries with the highest level of net foreign liabilities, posted a tourism surplus of nearly 6 % of gdp in 2019. the impact of the pandemic on these flows, which largely came | 0.5 |
disposal. only then, and as a last resort, should it have access to a temporary and fiscally neutral public backstop, the contributions to which should be paid by the private sector either via ex post levies or, more normally, as a result of the reprivatisation of the intermediary institutions ( e. g. bridge banks ) or other good assets resulting from the resolution process. progress in these elements of a future banking union is very important in the present economic environment of low growth. part of the european problem has to do with the situation of the banking sector : pressed for capital, intending to deleverage and risk averse in bis central bankers ’ speeches managing credit risk. consequently, credit is being contained although it is virtually impossible to disentangle the contribution of supply restrictions versus weak demand in explaining the average decline of credit to the economy. in the markets there is the suspicion that banks ’ balance - sheets need more repair with full recognition of potential losses and that is also affecting the lending behaviour of banks. no one has provided clear evidence that this is true and that is why the balance - sheet assessment that the ssm has to conduct before actually starting supervision is so important to re - establish market confidence in our banks to reduce their funding costs. therefore, the establishment of the ssm, the possible use of direct european recapitalisation and the creation of a single resolution mechanism will decisively contribute to the desirable separation of banks and sovereigns. to regain market confidence, restoring full banking sector health must be a priority in order to create improved growth prospects. this is why the banking union project is crucial at this particular moment. economic growth in europe is now essential to complete the adjustment and the rebalancing that have been going on. therefore, it is of paramount importance that the momentum is maintained towards implementing structural reforms at national level and towards building a stronger economic and monetary union through european institutional reforms. i trust that the european parliament will continue to play an active and positive role in this process. i thank you for your attention and stand at your disposal for questions. bis central bankers ’ speeches | high quality modules from the world and just assemble them. the combination - type products are spreading. just for assembling, emerging economies, in which wages and land rents are low, have an advantage. to that extent, the advantage of coordination - type products, in which japanese firms can exert their strength, has declined. japanese firms still maintain high technological competitiveness in the production of core modules and processing equipment. however, technology transfer from japan to emerging economies has been further progressing, and the gap between the two economies has been narrowing. i have often heard that japan should be all right since it has “ manufacturing dna ” that no other country has. the reality is that such dna has gradually been transferring to emerging economies through the shift of japanese firms ’ production bases overseas and associated transfer of product development sections. having said that, in general terms, it may not be an appropriate policy for japanese firms to convert to a combination - type structure. that is because, that case might lead to abandoning the strength japanese firms have accumulated, in addition, to be forced to compete in terms of costs with firms in emerging economies. what is necessary now for japanese firms is not to be complacent about technological advantages, but to develop coordination - type products that respond speedily to and are finely - tuned to consumers ’ needs, and generate a new market itself. such high value - added markets might not necessarily be large. however, if firms cover broadly even such niche markets, those markets as a whole will provide a significant profit opportunity for firms. in that regard, population aging that has been progressing in japan could be a catalyst. consumer needs of the elder generation are highly versatile than younger generations, to the extent that elderly people have wide dispersion in income and asset formation. if firms can make finely - tuned responses to those needs, it will lead to stimulating potential demand, namely, exploiting niche markets. in the near future, population aging will progress in china and many overseas economies. if japanese firms can move ahead in product development and accumulation of business know - how in the aging population, it will lead to an increased chance for those firms to benefit from the first mover ’ s advantage overseas in the future. however, challenging various niche areas ahead of other firms entails risk. on this point, there are critics who argue that, by referring to the fact that the establishment rate of firms in japan remains at about half that in united states and europe, japanese dna is stabilityori | 0 |
about the economy have been as much if not more about understanding post crisis changes in the level of supply as about the level of demand. we spend more time now discussing the supply side in the mpc – mentions of ‘ supply ’ and ‘ productivity ’ in the minutes of mpc meetings have doubled, relative to mentions of other terms, between 2006 and 2014. productivity is also a key determinant of the growth in real incomes and so affects the demand side of the economy as well. drivers of the economic recovery over the past two years, uk economic growth has averaged 2. 5 % ; stronger than most of our g7 partners and we are forecasting that to continue. but our productivity growth has been dismal how is it possible for us to have grown relatively strongly with poor productivity performance but without generating inflation pressure? the answer is simple. we have grown by using the spare labour supply in the economy after the great recession. this spare labour supply was not just the post - recession stock of unemployed workers. it was also people who were in work but wanted to work longer hours. it was people who were not previously participating in the workforce who now wished to work. it was people who we would have expected to retire but who decided to stay in work. and it was workers from abroad. it is true to say that this reservoir of labour supply available to the economy has been larger and deeper than we or others would have predicted on pre - crisis trends. we have had what economists would call a “ positive labour supply shock ”. the crisis, recession and hit to living standards have clearly changed attitudes to work ; more people want to work and work more hours than before. and the impact of those two domestic trends – higher participation in the workforce and people wanting to work more hours – are the most important elements of this positive “ shock ” relative to what we expected, outweighing factors like higher net inward migration. the numbers are striking. in the 10 years prior to the crisis, growth in the hours worked in the uk economy, accounted for 23 % of the uk ’ s overall economic growth. the mainstay of our economic growth, the other 77 %, came from growth in productivity. since 2013 only 9 % of our annual economic growth has come from productivity improvement. the remaining 91 % has come from the increase in the total hours worked as a result, employment in the uk is now around its highest rate since comparable records began in 1971. over 73 % of people aged | ( dtl ) in eligible government securities. in view of the statutory pre - emption and the long duration of the government securities, banks were permitted to exceed the limit of 25 per cent of total investments under held to maturity ( htm ) category provided the excess comprised only of the slr securities, and the total slr securities held in the htm category was not more than 25 per cent of their dtl. such shifting was allowed at acquisition cost or book value or market value on the date of transfer, whichever is the least, and the depreciation, if any, on such transfer was required to be fully provided for. the above transition is consistent with international standards that do not place any cap on htm category, and was considered advisable taking into account the statutory nature of the slr while ensuring prudence and transparency in valuation on transfer to htm category. while the earlier prescription for this category was relatively more conservative, the changes in september 2004 recognised the dynamic interface with the interest rate cycles and were counter - cyclical. capital adequacy – risk weights in view of the increase in growth of advances to the real estate sector, banks were advised to put in place a proper risk management system to contain the risks involved. banks were also advised to put in place a system for ensuring proper checking and documentation of related papers before sanctioning / disbursing of such loans. in june 2005, the rbi advised banks to have a board mandated policy in respect of their real estate exposure covering exposure limits, collaterals to be considered, margins to be kept, sanctioning authority / level and sector to be financed. in view of the rapid increase in loans to the real estate sector raising concerns about asset quality and the potential systemic risks posed by such exposure, the risk weight on banks'exposure to commercial real estate was increased from 100 per cent to 125 per cent in july 2005 and further to 150 per cent in april 2006. the risk weights on housing loans extended by banks to individuals against mortgage of housing properties and investments in mortgage backed securities ( mbs ) of housing finance companies ( hfcs ), recognised and supervised by national housing bank ( nhb ) were increased from 50 per cent to 75 per cent in december 2004. however, on a review, banks were advised to reduce the risk weight in respect of exposures arising out of housing loans up to rs. 30 lakh ( usd 75, 000 approx ) to individuals against the mortgage of | 0 |
. coordinated policy actions are more powerful than stand - alone ones. that coordination may be domestic, or international. finally, a few lessons i take on the leadership or management front : diversity of past experience pays when blazing a new trail. crises are exhausting — a deep personnel bench is a key part of resilience. over - invest in technology and business continuity preparedness. stay in touch with staff — even the ordinary things must still happen. 4 / 5 bis central bankers'speeches thank you for your attention. now, i would welcome a discussion with you. 5 / 5 bis central bankers'speeches | , and so on. accordingly, we need to keep updating our understanding of the economy in real time. that is why we say that the outlook for inflation, and therefore monetary policy, is particularly data dependent right now. the meaning of data dependence what does it mean, in practical terms, to say that monetary policy is “ data dependent ”? after all, central banks always depend on data to measure their economy ’ s progress relative to expectations. what i mean in this context is that in a period of heightened uncertainty about how the economy is evolving and the implications for inflation, we need to pay very close attention to all the information we receive, including data, sentiment indicators and intelligence, and make continuous inferences about not just how the economy is evolving, but how its behaviour may be changing. let me give you four examples of the issues we will be monitoring. the first, and most important, is the evolution of economic capacity. i said that our version of “ home ” is at the intersection of full capacity and 2 per cent inflation. but full capacity can be a moving target. this is because when companies increase investment, they augment their capacity to produce through some combination of raising their productivity and increasing their workforce. this is a welcome development because, as the economy approaches full capacity, investment spending can have the effect of pushing out those capacity limits, giving the economy more room to grow in a non - inflationary way. in short, this is something worth encouraging. to some extent, this happens at this point in every economic cycle, but the protracted cycle we have been through makes this issue particularly relevant this time around. a second issue is the question of inflation and technology. some economists have cited technology as contributing to the weakness in global inflation. the digital economy may be allowing goods and services to be produced and delivered more efficiently, helping to keep prices down. we may also be seeing stronger competition through e - commerce, which affects how retailers set prices. it is worth emphasizing that this type of disinflation increases everybody ’ s purchasing power and therefore is also a positive development. the bank would want to estimate the impact of technological developments on trend inflation and, assuming the impact was temporary, see through it, provided that inflation expectations remained well anchored. there is a lot more work to be done to understand both the size and persistence of these effects. a third issue is wage growth, which has been slower than would be expected in an economy that is approaching full output. | 0.5 |
framework for enhancing flows of information between borrowers and lenders. they also provide guidance for productive engagements between them. these improvements should enable lenders to assess and price risks more precisely, enhance the stability of flows to developing and emerging market countries, and facilitate resolution of problems when they occur. these developments, especially the principles, would strengthen market discipline. borrowing countries would be encouraged to improve their institutions and adopt sound economic policies. as a result, we should see fewer international financial crises. in the unfortunate and hopefully rare event that problems do arise, a borrowing country and private lenders can negotiate orderly settlements, under the framework of cacs. the public sector, including the fund, would only be called on in the rarest cases, where the speed and magnitude of the problems might overwhelm efforts to formulate private solutions. what does this mean for the fund? in terms of giving out policy advice, the fund's role would be more relative. if private lenders become more important, borrowing countries would be inclined to listen to what the market wants. the fund is facing formidable competition, but i think it can build on its excellent reputation. i am especially looking forward to the efforts currently underway to enhance the fund's work related to financial issues. meanwhile, as i noted a moment ago, fund lending will be necessary only when there is a rapidly unfolding crisis of considerable magnitude. we should, therefore, consider if the current rules for releasing fund resources could appropriately cope with such a situation. in the jargon of the fund, this is a question of improving the rules for exceptional access. to say that the board is responsible for approving such lending is sidestepping the question. can the board form a consensus quickly enough? is the board representative enough so that members can subscribe comfortably to its decisions? who is going to be held accountable if something goes wrong? answering these questions will tax our imaginations to the fullest extent, but we must not dodge them. disasters do happen. recent developments in the japanese economy before closing my remarks, let me briefly speak on the japanese economy and the monetary policy of the bank of japan. 4 / 6 if we put aside quarter - to - quarter fluctuations in the rates of growth, the japanese economy has been on a recovery track for three and a half years, since the beginning of 2002. nevertheless, from the summer of 2004, we had a period of sluggish growth in exports and industrial production. this pause in growth | cram a few dozen bankers into one room and cut a deal, but we cannot do the same for bondholders. no wonder that emerging market and developing countries tapping the international financial market sometimes feel so insecure and helpless. the welcome rug could be pulled quickly from under their feet, as many of them found out in the late 1990s. they can turn to the fund for help, but private flows could even overwhelm the fund. fund quotas, essentially equivalent to paid - in capital, total about us $ 330 billion. this is only a fraction of global financial flows. in our recent efforts to reform the international monetary system, we have tried to deal with these changes. as i said a few minutes ago, the strategic review is an important milestone. nevertheless, the recommendations will soon be overtaken by developments in the international financial landscape. the three trends i mentioned in the first part of my talk - globalization, ict, and aging - - will continue. this means that capital movements between 3 / 6 economies will accelerate, broaden and expand. the fund must continue to evolve, if it is to remain relevant in tomorrow's international monetary system. though we cannot predict the exact consequences of the structural changes, a general idea of what we can expect seems to be clear enough. if private flows become increasingly important, we should emphasize private solutions as well as public interventions. there are two significant developments in this context. one is the collective action clauses ( cacs ) in bond covenants, advocated by the g - 10 countries in september 2002. now almost all new international bond issues are governed by cacs. in the near future, when bonds without cacs are all retired, cacs would govern the resolution of sovereign debt crises. a typical cac allows the terms of a bond issue to be changed with the consent of 75 % of bondholders. this means that if a country cannot pay its debts in full, it needs to come up with a restructuring plan that satisfies 75 % of the lenders. the clear and transparent rules also reduce the chances for holdouts or rogue investors to disrupt an orderly workout process. in turn, the market can more appropriately price the risks and costs of defaults. another notable development is the " principles for stable capital flows and fair debt restructuring in emerging markets, " released about a year ago. i know that managing director, charles dallara and his colleagues at the iif worked hard to see its publication. the principles offer a | 1 |
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