Datasets:

samchain

/

BIS_Speeches_97_23

like 0

The main factor cited as impeding private sector credit in Kenya is high lending rates, that can be dealt with through concerted BIS central bankers’ speeches 1 efforts of all players in the sector. With AKCP bringing together several categories of credit providers, its voice on this issue and the technology to provide sustainable solutions should be loud enough.

Ladies and Gentlemen: As you may be aware, a high level Committee was established under the leadership of the Cabinet Secretary to the National Treasury in January 2014 to explore ways of increasing the supply private sector credit and mortgage finance in Kenya.

In the light of the subdued inflation outlook, the Governing Council reiterated the need for monetary policy to remain highly accommodative for a prolonged period of time to support underlying inflation pressures and headline inflation developments over the medium term. We will, therefore, closely monitor inflation developments and the impact of the unfolding monetary policy measures on the economy.

But at the same time, the compulsions of business must not take away from the basic tenets of good banking. Understanding and inculcating certain qualities will help ensure each one of you becomes a successful banker in the years ahead and this, incidentally, would be the theme of my address today.

Accordingly, it might presently be the case that high-tech equipment is not as short-lived as we think it usually is.

Adding further to firms' willingness to hold on to their existing equipment through the current period is the apparent absence of new “killer apps”, break-through technological advances in applications such as e-mail and web browsers that in the past have spurred investment in software and in complementary goods like computers and communications equipment.

Until a structured approach to this, and other issues is taken, there is likely to be no progress. Given these circumstances, the OECS has no option, and in fact, has an obligation to deal with this matter at both the CARICOM and bilateral levels in a very urgent and direct manner.

The optimal funding structure is not an “either/or” question. Instead, the European capital markets union aims to complement bank-based funding with capital market products. Ultimately, then, it’s all about diversifying the sources of corporate financing. If we give the capital markets a more prominent role in funding the real economy, that will give businesses broader and better access to funding.

On the other hand, there are also compelling arguments calling for extra caution going forward, as international financial markets adjust to monetary policy normalization in the United States: • Unconventional monetary policies affect financial markets in a way that differs from the more conventional interest rate policy, and the extent of such difference is largely unknown.

He ordered preparation of fresh sketches by the Government of India Mint and the Security Printing Press at Nasik. His dissatisfaction was with the image of the tiger on the seal, presumably because it did not quite look like a tiger. 7. Sir James could not find anyone to photograph a live tiger.

In particular, a stronger automatism is needed to punish breaches of the deficit and debt limits. Secondly, the no-bail-out principle needs to be reinforced: no member state should be permitted to assume liability for the debt of another member state. Financial market investors will only punish bad fiscal policy behaviour in a timely manner if they expect to lose their money.

In 2020, the decline in GDP was 3.7% in Germany and 2.8% worldwide (https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD). 13. See Deutsche Bundesbank (2021), p. 24. 14. See Deutsche Bundesbank (2020), p. 41. 15. See Buch (2023). 16. See Deutsche Bundesbank (2023) and Federal Statistical Office for the current value based on the change in the Harmonised Index of Consumer Prices (HICP). 17.

The second big economic challenge we need to focus our attention on in 2018 is the reform of the euro area. This is also emphasised by the weight that this topic has in the current negotiations to build a new government coalition in Germany. I will come back to this in a moment.

The euro area will remain vulnerable as long as one fundamental stumbling block remains in place: its asymmetric institutional design. Member states surrendered sovereignty in monetary policy matters to the ECB on the one hand, but retained ownership of their fiscal and economic policies on the other.

The aim of the asset purchases through the Program is not to raise the prices of these assets by adjusting the supply and demand balance in the market.

With a view to securing transparency of bank supervision, the revised 1998 edition of the Checklist has been made generally available as much of it should be useful to nondepository financial institutions not directly subject to the Checklist (securities companies, tanshi companies, etc.

On this basis, OFT arrived at the conclusion that any charge exceeding the monetary threshold of £ may not be fair and tenable. It is estimated that the consumers had paid £ million more than what was reasonable last year.

The industry estimates indicate that with credit card default fees ceiling at £ 15, gross profits of the banks in the UK would be reduced by £ 800 million. International research has shown that inter-change fee (fee for using ATM of a bank other than that of the account holder) is generally stable or declining in most of the countries.

In a word, the major role of accomplishing these targets and of making the peso become a store of value implies that every monetary policymaker decides what instruments will be used. On some occasions throughout our history, our exchange rate has been pegged as an anchor for our monetary policy. Other countries instead have pegged their interest rate.

I would like to be very clear on this point - the Central Bank of Argentina has established that an inflation targeting approach is the Bank’s best contribution to allowing our people to save in pesos and to appreciating our people’s real wages. This is our Bank’s major role.

For the financial markets increasingly seem to be divesting themselves of the “subservient role” they are supposed to play. Such fears apply, for one thing, to the relations of the global financial markets with national monetary, economic and fiscal policy. Anonymous market forces constrict policy makers’ national room for manoeuvre. This may lead to tensions because domestic policy-making normally claims to be sovereign.

Globally aligned disclosure standards have benefits … … for investors by ensuring consistency and comparability … for companies by reducing reporting burdens Broadly accepted reporting standards are enablers to the transition. 5 Transition plans – from commitment to action Let’s get down to the heart of the transition. I am looking at you – the representatives of companies and financial institutions. Your action matters.

Those who spend time thinking about financial sectors and how they evolve over time may find some interest in examining what went wrong, why it went wrong, and how it might be put right.

It is also of considerable importance to Australia -- not just for the effect on our economy (which is hard to quantify at this stage), but also for the opportunity it presents for Australia to deepen its engagement with the region. What went wrong?

This implies that the middle class expansion in the last decade will continue and correspondingly our domestic market will enlarge. The structure of demand for goods and services will also be getting more diverse with increasingly complex characteristics [GRAPH 13]. Graph 12 Income per capita 10 BIS central bankers’ speeches Graph 13 Expanding middle class 28.

In addition, we factor in, under blocks 2 and 3, the banks’ Internal Capital Adequacy Assessment Process (ICAAP) figures, including internal stress testing figures plus the results of our own risk proxies and stress testing tools.

There were concerns, however, that the impact of this additional stimulus would disappear by the middle of this year, and that consumption expenditure would not yet be on a selfsustaining path.

This could potentially lead to a higher cost of borrowing if markets were to become concerned about its sustainability, and of a protracted period of very low policy interest rates and abundant liquidity, which may end up fuelling new asset price bubbles, thus building up the conditions for the next crisis.

Finally, the introduction of cutting edge technology by large firms raises their fixed costs while lowering variable costs, thus increasing the likelihood of firms continuing to compete fiercely right up to the point of bankruptcy. The bottom line is that forces specific to the banking industry tend to generate pressures towards excess capacity quite apart from other innovations. This complicates the required restructuring.

The point was made yesterday that the reality of integrated markets and the IT revolution is reducing the need to be in a specific place to conduct financial business. However, some IFC’s are thriving, suggesting that if you get a niche and if you provide value-added you could be in business.

To put any successful talent management programme into action, we need data and a robust MIS. It is intrinsically linked with strategy, with technology, with processes, with the quality initiatives and the traditional HR subsystems such as recruitment, placements, performance appraisal, and compensation.

Banks are now aggressive and recognize that having cleaned up their loan portfolios and balance sheets, they need to re-position themselves to take advantage of the boosting economy. Over the next few years, commercial banks will have to focus on product innovations and diversifying their reach to infrastructure, housing, SME and microfinance industry while exploring and reaching out to new and under-banked regions.

In the DTC market, the increase around 3 p.m. would be consistent with trading related to mutual fund daily and end-of-month portfolio rebalancing. In the electronic IDB market, the increase around 3 p.m. would be consistent with the increased role of proprietary trading firms in intraday intermediation and the possible closeout of positions toward the end of the main part of the trading day.

From a market resilience perspective, it would be valuable to analyze these systematic intraday spikes in trading volumes, particularly as they may influence price formation and liquidity provision in the Treasury market. The large spike in flows toward the end of the trading day points to a financial stability consideration that is worth flagging.

Gross domestic product (GDP) appears to have contracted appreciably in the final quarter of 2012, and the economy is likely 2 BIS central bankers’ speeches to be listless in the current quarter too. This is attributable not least to the crisis in the euro area and the uncertainty it is generating.

Overall, consistency in legal framework within the country and in line with international standards modified to suit our needs, and accompanying State level reforms would be useful in this regard. Overall, flexibilities are essential for supply and demand responses to price signals, which are critical for improving investment climate and more generally, for an open economy that best serves the national interest.

In my view, firms that are breaking new ground should avoid bank debt if possible, because any new activity needs to be generating a reliable on-going stream of income sufficient to meet operational costs, before it begins to take on bank debt, which comes with a monthly service cost.

The result is an evolving competitive banking sector that has witnessed continuing growth in banking sector assets, liabilities and incomes. While in the last few years we have observed rising cost to income ratios, profitability ratios remain high in comparison with Sub-Saharan averages.

The first round effects came through the finance channel by way of sudden stop and then reversal of capital flows consequent upon the global deleveraging process. This jolted our foreign exchange markets as well as our equity markets.

Almost simultaneously, our credit markets came under pressure as corporates, finding that their external sources of funding had dried up, turned to domestic bank and non-bank sources for credit. By far the most contagious route for crisis transmission was the confidence channel. For weeks after the Lehman collapse in mid-September 2008, everyday there was news of yet another storied institution crashing.

Need for financial literacy arising from demographic changes An aging population and declining birthrate represent the greatest social and economic issues in Japan. The average life expectancy is 80 years for men and 86 years for women, and the population’s longevity is one of the highest in the world.

11 The forecasts contained in the August Monetary Policy Statement have the economy’s output gap currently at zero and rising to around 1.2 percent of GDP in 2018. We assess core inflation to currently be within the lower half of the target band and headline inflation is forecast to reach the lower end of the target band in December 2016.

However, with regard to the second area, economic stabilization, it is imperative that the central bank remain independent from the fiscal authority. There are sizable costs if cooperation turns into fiscal control. To understand this point, consider a situation where the economy is hit with a negative shock that depresses aggregate demand.

The Macro 101 textbook policy response we teach students is for the monetary and fiscal authorities to enact stimulative policies to increase aggregate demand. This effort involves fiscal actions, such as increasing spending and cutting taxes, which increase the deficit. The finance ministry’s job is to finance the deficit that results from these fiscal policy actions.

Obviously, the sector would need multiple originators of credit as also an efficient “originate and distribute” model to leverage capacity and expertise of each player in the act. It may also be mentioned here that any reference to infrastructure generally gets limited to commissioning of large new projects. There are, however, other equally important aspects which need consideration eg.

11) Thank you once again and I look forward to more engagements, and encourage a more structural approach to advance financial inclusion and access to finance in the country. Thank you and God Bless you all. 2/2 BIS central bankers' speeches

Second, adoption of inflation targeting requires the existence of an efficient monetary transmission mechanism through the operation of efficient financial markets and absence of interest rate distortions. In India, although the money market, government debt and forex market have indeed developed in recent years, they still have some way to go, whereas the corporate debt market is still to develop.

Though interest rate deregulation has largely been accomplished, some administered interest rates still persist. Third, inflationary pressures still often emanate from significant supply shocks related to the effect of the monsoon on agriculture, where monetary policy action may have little role.

* * * One of the consequences of the financial crisis of recent years has been a re-examination of the role of central banks in financial stability policy, and the associated notion of “macroprudential supervision”. I’ve been asked to talk today about the interaction between micro and macroprudential supervision, and how we reflect that in the design of our regulatory institutions.

The first thing to say is that the distinction is in my view somewhat artificial. In concept, the micro/macro distinction corresponds roughly to the difference between idiosyncratic risk and market risk in finance theory. One refers to risk specific to a firm and the other to risks affecting all firms.

In this context some relevant questions appear: If the weighting of the asset price channel is raised, should its relevance in the monetary authority’s reaction function increase? ; If the capital markets become more important in intermediating savings, is the degree of supervision of agents on that market adequate for the financial stability purpose?

This has the dual advantage of consolidating operations, thereby reducing costs through economies of scale, and also crucially of optimising capital, as capital is no longer fragmented in each individual subsidiary. There are some prominent examples of the Hub and Spokes structure in Europe involving Ireland as the choice of Hub.

In February 1999 the Minister also increased the amount that South African corporates investing abroad could remit from South Africa from up to R30 million per 3 BIS Review 95/2000 new investment project in foreign countries and R50 million in SADC to R50 million and R250 million respectively.

The large capital inflows over the past few years have enabled the Reserve Bank to increase the country’s official foreign reserves from the equivalent of 6½ weeks’ worth of imports of goods and services at the end of 1994 to 14½ weeks’ worth at the end of June 2000.

Response to the Disclosure Framework for Securities Settlement Systems: The-BOJ-NET JGB Services Introduction This document provides answers to the “Disclosure Framework for Securities Settlement Systems”, a survey questionnaire drawn up by a joint working group of the Committee on Payment and Settlement Systems (CPSS) of the Bank for International Settlements, and the International Organisation of Securities Commissions (IOSCO).

The second reason for concern about the debt/GDP ratio is the economy's sensitivity to external shocks. With debt/GDP ratios as high as Israel's, the government budget and the economy are very sensitive to shocks such as changes in interest rates abroad, particularly for the medium and long terms.

In this third meeting, besides taking an in-depth look into financial education in schools, a strategic pillar of education for population in general and for young people in particular, new topics will be discussed, such as the assessment of financial education initiatives and education to ensure the proper use of financial products and services through digital channels.

I would like to underline that one of the greatest assets of sharing our experiences at these meetings is the diversity of approaches. Though we pursue a common goal, to increase people’s financial literacy and inclusion levels and ultimately their well-being, the path to reach that goal may – and certainly will – differ.

* * * When Charles Wilson, the CEO of General Motors, was being reviewed by the US Senate in 1953 for the position of Secretary of Defence in President Eisenhower’s Administration he commented: “For years I thought what was good for our country was good for General Motors and viceversa”.

The Portuguese plan has six priorities, one of them is social cohesion, which I think is quite important. But there are some of the reforms that are to be reversed and we need to ask a number of questions. What are the budget implications, for example, if you go back to 35 hours a week?

However, before I proceed, let me remind you of the events during last forty years in Yugoslavia, and subsequently in Serbia, when our currency was losing value almost on a daily basis resulting in an automatic growth in inflation, while exports were gradually, but inevitably, declining.

And the resulting increase in aggregate demand helps generate a stronger pace of job creation.5 At last week’s FOMC meeting, the Committee announced that we intend to extend the average maturity of our securities holdings over the coming months by selling $ billion of short-term Treasury securities and purchasing an equivalent amount of long-term Treasury securities.

Even though banks do not require credit rating by external rating agencies for calculating their capital requirement for all loans (only loans above ₹ 10 crore require credit rating), some are seemed to be asking companies to get a rating.This evidently is being done to enhance their credit assessments.

Quite clearly, there is recognition of the value brought to the table by CRAs for banks which is being used for purposes beyond capital adequacy. However, banks should take into account the cost to the companies and balance it against the benefits. We talk of sharing of credit information, which is vital given the frequent occurrence of business cycles and their consequences.

Comment neutraliser de telles perturbations pour l’économie suisse? Il n’y a pas de réponse simple et évidente à cette question. Certains pensent qu’il conviendrait, à l’image de ce qu’avait fait l’Autriche, que la Suisse décide de se lier unilatéralement à l’euro afin d’éliminer le risque de change.

Il lui suffirait pour cela de mener une politique de taux d’intérêt appropriée, voire de la renforcer par des interventions sur le marché des changes. Ce n’est malheureusement pas si facile!

To-date, we have issued exposure drafts for the treatment of counterparty credit risk, domesticallyoperating systemically important banks, the data aspect of OTC derivatives and of leverage. And while the exposure draft for liquidity risk has yet to be issued, this too has been simulated, much like our prior efforts on capital, D-SIBs and leverage.

As of end-December 2020, the risk-based capital adequacy ratio of the universal and commercial banking industry on solo and consolidated bases stood at 16.6 percent and 17.1 percent, respectively—well above the minimum thresholds set by the BSP and the Bank for International Settlements.

The third component is the Bank's public commitment regarding the future conduct of monetary policy.

In July 2018, the Bank introduced forward guidance for short- and longterm interest rates, stating that "[t]he Bank intends to maintain the current extremely low levels of short- and long-term interest rates for an extended period of time, taking into account uncertainties regarding economic activity and prices including the effects of the consumption tax hike scheduled to take place in October 2019."

At the end of the discussion, the Governor, as Chairman of the Board, will sum up and introduce the policy question. Each member has an opportunity to give their view and their reasoning on the decision at hand. Typically, a consensus emerges, and the decision is then taken. It then remains to issue a statement.

This shortage is even more severe in South Africa, and without appropriate skills in the country, and without a strong and sustained global recovery from the crisis, the domestic economy will struggle to grow sufficiently to make appreciable inroads into our persistent unemployment problem.

Growth this year has been held down by weak net exports, which have subtracted more than 1/2 percentage point, on average, from the annual rate of real GDP growth over the past three quarters.

In light of such experiences, evidence of improper procedures in foreclosure cases causes consumers, at a minimum, to further mistrust the loan servicing process. At worst, it can result in improper loss of a home or premature eviction from that BIS Review 154/2010 1 home. For individual borrowers, uncertainty about the prospect or timing of foreclosure makes everyday decisions difficult.

The Reserve Bank has appointed an External Committee on Procedures and Performance Audit on Public Services headed by Dr. S.S. Tarapore and this committee has in one of its reports focused on depositor’s accounts and other banking facilities relating to individuals - the common man. Subsequently, Governor, Dr. Y.V.

Reddy has addressed all the Chairmen of banks reminding them of the trust reposed by the common person in the nature and quality of customer 4 BIS Review 49/2004 service rendered by banks. Banks must recognise that if there is disenfranchisement of the depositor they may wake up to find slippages on the liability side of their balance sheet.

Together, the two-pillars ensure that information and analysis produced on the basis of one methodological perspective are always cross-checked against information and analysis produced on the basis of the other and that robust policy decisions are taken.

The industry is also seeking cost efficiencies from all functions. This reminds me of developments in the Finnish banking sector in 1990s. Finnish banks had invested heavily in information technology during 1970s and 80s, when the regulations of the time directed competition to service and quality enhancements.

The Bank of Japan has pursued such strong monetary easing measures while concurrently examining their effects, in other words, on a ‘learning by doing’ basis. Through this process, we have learned a lot about the new measures but, at the same time, more questions have arisen. It is said that it took a long time for Man to learn the concept of ‘zero’.

8 Research indicates that home bias in investment toward a foreign country is likely to be diminished to the extent that the country’s financial system offers transparency, accessibility, and investor safeguards. See Alan Ahearne, William Griever, and Frank Warnock, “Information Costs and Home Bias” Board of Governors of the Federal Reserve System, International Finance Discussion Paper No. 691, December 2000.

7 These effects are further amplified due to asymmetric information. In the aggregate, they lead to the nonlinear adjustments that are so characteristic of financial instability. The fact that such adjustments are nonlinear is particularly important for research and makes 4 Minsky, H. (1977), “A theory of systemic fragility”, in Altman, E. and A. Sametz (eds.

), Financial Crises: Institutions and Markets in a Fragile Environment, Wiley; Kindleberger, C. (1978), Manias, Crashes and Panics: A History of Financial Crises, Macmillan. 5 See, for example, Gorton, G. (1988), “Banking panics and business cycles”, Oxford Economic Papers. 6 Cifuentes, R., H. Shin and V. Ferrucci (2005), “Liquidity risk and contagion”, Journal of the European Economic Association.

Throughout the conference, I hope you will contribute your own best ideas and look for ways to use the ideas of others to improve your own communities and enhance your innovation network. To this end, I would like to talk about efforts underway across the Federal Reserve System and to share some of our ideas and resources.

Situated at the intersection of the federal government and private financial institutions, the Federal Reserve System is well-positioned to facilitate collaborative activities among experts in the community development finance industry. Through our network of 12 Reserve Banks across the country, we build relationships with local governments, nonprofits, foundations, academic institutions, and financing entities.

The banking system, which possesses databases and extensive and detailed information on the structure and profitability of firms, can promote mergers and acquisitions, provide the financial assistance and services needed to make the productive system more solid. The Italian economy contains instances of excellence in innovative and creative ability, not just in the traditional branches of activity but also in high technology.

These more dynamic units can act as poles of aggregation for less productive firms. It’s a challenge in which we cannot fail, in order to improve an important part of our economy. 6. The outlook The overall expansion of the world economy is set to continue this year. In the United States, GDP is expected to grow by about 3.5 per cent.

BIS central bankers’ speeches 3 Each inflation dip had different origins: the first was mainly due to external factors (falling energy and food prices), while the second was driven more by domestic sources in an environment of weak demand.

The challenge comes from the need for consensus among all the participants of the currency union – that is the case now with the Eastern Caribbean Currency Union. A more important problem, inherent in a monetary union is the difficulty with dealing with what the theorists call “asymmetric shocks”.

BIS Review 131/2010 5 6 BIS Review 131/2010 BIS Review 131/2010 7 8 BIS Review 131/2010 BIS Review 131/2010 9 10 BIS Review 131/2010 BIS Review 131/2010 11

I believe that the Committee of Governors of 3 BIS Review 76/1999 the Central Banks of SADC provides a unique body that should be able to proceed with a programme of financial cooperation in the region, without being unduly constrained by the more complex political decision-making processes.

The identity also makes clear that the budget deficit and the trade deficit can move together on a dollar-per-dollar basis, but only if the difference between private domestic investment and private saving is constant. Typically that difference will not be constant.

Reduced investor appetite for risk has also had an impact on those banks that follow an “originate to distribute” model, especially those that have funded real estate developments through distributing shares to investors in Special Purpose Vehicles. More challenging economic conditions affect the Islamic financial industry just as much as the conventional one.

The consensus seems to be that the euro’s depreciation has resulted largely from a slowing in growth relative to expectations in the euro zone, while, at the same time, growth in the U.S. has been stronger than expected.

If this is the case, and I believe it is, then the movement of the euro has simply mirrored what would have occurred in the currencies of the euro area in the absence of monetary union.

(iii) Proper implementation of evolving guidance of regulatory standards for special features of Islamic without comprising international standards to which both Islamic and conventional banks are to be subject too. (iv) Development of more interfaces between regulators – so far there seems to have been more systematic alliance between central banks to coordinate standard setting and its compliance.

There is however need for better coordination between bank and non bank regulators and also for later to launch more initiatives to nurture nonbank Islamic sector. 3 The McKinsey Qaurterly: Rethinking Regulation for Islamic Banking. Nasr-Eddine Benaissa, Xavier Jopart, and Ozgur Tanrikulu. 2007. 4 BIS Review 146/2007

(b) Drastically reducing NPLs Priority must continue to be given to reducing the high stock of non-performing loans (NPLs), which impairs banks’ profitability and lending capacity and delays the recovery of investment and economic activity. As I mentioned earlier, the ratio of NPLs to total loans remains very high (43.6% in June 2019).

According to the operational targets for NPL reduction, the aim is to bring the NPL ratio down to 35% by end-2019 and to below 20% by end-2021. Overall, despite the progress in this regard, the pace of NPL reduction has not been fast enough to bring the Greek NPL ratio close to the European average of 3.1% as of March 2019.

Of course they can do this only if their balance sheets are in reasonable shape. Again, overseas experience is relevant here. In the United States when the recession hit in 2008 some households found that they had simply borrowed too much. What followed was a period of defaults by some, less new borrowing and faster repayment of some debt.

The funds of the NGEU Recovery Fund can be used for loans and grants to governments for development actions, the most important of which are the transition to green energy, energy saving, Recognizing the need to address the consequences of climate change, the European Union, in addition to the funds provided for in the NGEU program, has set a goal of achieving climate neutrality by 2050.

For the last five years, the Bank has been blessed with a formidable Board of Directors who has carried out its mandate of providing oversight of, and guidance to, the management of the Bank with integrity, intelligence, wisdom and an unwavering commitment to the public interest.

The vision and stewardship provided by the Board has enabled the Bank to strengthen the implementation of its core mandate of macroeconomic management and financial sector regulation and to implement many projects which have enhanced the capacity of the Bank to serve the people of Uganda. I would like to take a few minutes to highlight some of the Board’s achievements.

Important sources of instability in inflation expectations could still arise if the central bank – even one endowed with a clear mandate to preserve price stability – is not sufficiently clear as regards its own monetary policy concept and strategy.

The decision taken by the Governing Council of the ECB in October 1998 to spell out the contours of its monetary policy strategy attests to the extent to which the notion of a monetary policy strategy has become operationally meaningful.

Another lesson is that central banks and other governmental agencies have an important responsibility to maintain financial stability. The banking crises of the 1930s, both in the United States and abroad, were a significant source of output declines, both through their effects on money supplies and on credit supplies.

Collaboration Finally, financial inclusion cannot be achieved without the active involvement of all stakeholders like RBI, other financial regulators, banks, governments, NGOs, civil societies, etc. The current policy objective of inclusive growth with financial stability cannot be achieved without ensuring universal financial inclusion.

Return to text 6 Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, “Community Reinvestment Act (CRA) Consideration for Activities in Response to the Coronavirus Frequently Asked Questions (FAQs) (PDF),” May 27, 2020.

2 BIS central bankers’ speeches I would also like to convey special thanks to the Editorial Committee and the staff of the NFLP, Legal and Corporate Communications Departments for their various contributions to the production of this booklet. In the not too distant future, perhaps we can all realize our dreams of opening the doors to our own homes.

The Bundesbank offers training tools to facilitate that learning process. 4 Conclusion Ladies and gentlemen, So, does that mean that cash is alive and well? As in other places, Germany is seeing a gradual decline in cash usage. Nevertheless, it remains popular.

The lion’s share of the cash held by households in Germany is used not to make purchases but rather as a store of value. The opportunity costs of holding this highly liquid asset are currently low. As long as Germany’s cash infrastructure remains intact, the country’s cash system will remain 3/4 BIS central bankers' speeches stable.

The measures contained in the current public consultation and which have just been approved by the Governing Council are designed to eliminate this problem. Concluding remarks I would like to conclude by saying that the Eurosystem has now become such an established component of the international financial system that one is inclined to forget that it is only four years in existence.

2 Thank you for listening. BIS central bankers’ speeches

The Guidance Note clarifies that cryptocurrencies are not legal tender in Mauritius but have “value” since they are exchangeable for other things having value, thereby showing characteristics akin to physical commodities such as precious metals. I expect that this Guidance Note will clarify a number of queries regarding cryptocurrencies.

This robust ability of the banking system to provide credit support to the economy is the result of a long and systematic reform process, boldly implemented since the Asian Financial Crisis. These reforms include asset cleanup, industry consolidation, continuing enhancements of corporate governance and risk management standards, and strengthening of compliance and enforcement frameworks.

On balance, this confirms our assessment that economic growth has both regained momentum and become more broadly based and sustained in the first half of 2006. Looking further ahead, the conditions remain in place for continued economic growth at rates around potential, despite possible volatility in the quarterly figures. Global economic activity remains strong, providing support for euro area exports.

Investment is expected to pick up, benefiting from an extended period of very favourable financing conditions, balance sheet restructuring and accumulated and ongoing gains in earnings and business efficiency. Consumption growth in the euro area should also strengthen gradually over time, in line with developments in real disposable income, as employment conditions improve further.

BIS Review 78/2010 1  Convenience: Access to financial services on the mobile phone will certainly lower the cost of transfer of remittances, improving the safety and security of cash and make payments more convenient.

A Belgian banker once told me, when I was working with the Generale Bank: ‘I had a great deal to tell, but nothing to say. Now I have a lot to say, but may tell little. Once I retire, I guess I’ll have nothing left to say and nothing left to tell’.” Text box Bond-buying has increased the central banks’ balance sheets dramatically.

The first one pertains to doing away with foreclosure charges on home loans that are carrying floating interest rates. The second one is concerning zero liability against loss in ATM and on-line transactions. Lastly, banks should offer transparent and non-discriminatory pricing to customers. These changes could alter the reach of banking and the customer welfare it provides.

III.4 KYC and integration of business in banking Sound KYC policies are being advocated for a long time by the Reserve Bank. These policies protect the integrity of the banking system by reducing the likelihood of banks becoming vehicles for money laundering, terrorist financing and other unlawful activities. So KYC in a sense has become public good.

While much of the attention of the FSB in its early years was on post-crisis reforms, members also spent time thinking about new vulnerabilities to the system. As we reach our 10th anniversary, it is a good time to review the ways we monitor the everchanging financial system.

The aim of this review is to ensure that we have a framework that is comprehensive, consistent over time, and effective at identifying relevant vulnerabilities. If we are not at the cutting edge in our ability to assess the state of the financial system, we do a disservice to the public we serve, which relies on a smoothly functioning financial system.

With regard to the outlook, the year-on-year rate of change in the CPI for all items less fresh food is likely to continue on an uptrend mainly on the back of the improvement in the output gap and the rise in medium- to long-term inflation expectations. The rate will likely reach around 2 percent in around fiscal 2019.

Compared with financial stability tools that address liquidity or other strains in targeted individual institutions or segments of the financial system, monetary policy affects everyone and every part of the economy and would be a blunt and less effective tool to address financial stability problems.

Now we also have the rise of ‘superstar companies’ that are in the ‘winner take all (or most)’ of an entire industry. These superstar firms generally have lower ‘wages-to-profit’ ratios than their competitors, accentuating the income divergence. How do they manage this? Through superior economies of scale driven by technology and brand advantages that are not easily replicable.

Witness Facebook, Amazon, Google, Alibaba and so on. This is also true within the financial sector, where big banks gain significant economies of scale, leaving smaller banks struggling to compete. This would be fine if it didn’t lead to other problems such as ‘too big to fail’ and excessive risk taking incentives.

When the inflation process is as forward-looking as it is in the euro area, policy shifts that lack persistence have little impact on longer-term interest rates, on expectations and – ultimately – on macroeconomic and pricing decisions. Counterfactual policy evaluation is difficult to conduct and necessarily conditional on a long list of technical assumptions.

We, at the Bank of Mauritius, have been constantly tooling and re-tooling, equipping and reequipping and beefing up our regulatory and supervisory capacity in the past fifteen years. It’s a never-ending exercise and will never be. I understand many of you here are from regulatory authorities in the region.

This is facilitated in part by allowing very small banks to retain the current evaluation procedures and in part by creating a separate community development test that would apply only to large banks. Tailoring is also an important consideration in data collection and reporting requirements.

The proposed retail lending approach is designed so that it can be implemented in significant part with data that are readily available. In designing the community development approach, we have been mindful of burden as we consider any additional data that might be required to implement certain metrics. Finally, as previously noted, the metrics are tailored for local conditions and cyclical considerations.

This turnaround was achieved because the initial dramatic increases in the real exchange rates have largely been corrected (see Figure 8, RHS). In most former programme countries relative unit labour costs are now below their respective level in 1999. All these positive adjustments have certainly contributed to underpin the evolution of sovereign bonds.

Mario Draghi: Hearing at the Committee on Economic and Monetary Affairs of the European Parliament Introductory statement by Mr Mario Draghi, President of the European Central Bank, for the Hearing at the Committee on Economic and Monetary Affairs of the European Parliament, Brussels, 16 December 2013.

The easing of the primary surplus targets, together with the implementation of the agreed structural reforms, would put the necessary conditions in place for a gradual lowering of tax rates, with positive multiplier effects on economic growth. Finally, there is the issue of what debt relief measures.

Looking ahead, we expect that the negative impact on growth and inflation from these adverse factors will diminish and that this will pave the way for a more satisfactory macroeconomic performance this year and next.

It is necessary to recognise that these banks have played a critical role in the development of the Indian economy in the period 1969-90, particularly in the spread of banking and monetisation of the economy, the mobilisation of savings and their allocation by plan priorities.

For all economies in the early and intermediate stages of development, credit markets face a persistent excess demand, reflecting the existing resource constraints. Moreover, market processes can well exclude the genuine credit needs of the weaker sections of society which do not have the competitive strength to bid for funds in the market for bank credit.

The pandemic has reminded us of the crucial role life and health insurers are expected to play in supporting household welfare and confidence. However, significant adjustment issues lie ahead for the insured and insurers as the industry adjusts pricing for seismic and climate risk in various locations.

While all these may be related to the core message of raising our ethical standards, I believe there is a need to think deeper, dig deeper, and be more earnest on this matter.

Should it reduce the debt burden on low-income countries? That is a decision for the IMF, but both initiatives seem to me to be a completely valid way of dealing with the situation of developing countries. Our compatriots are concerned about the solidity of European banks in general and that of French banks in particular. Many readers are wondering if their savings are safe?

Are they safe? European banks are much stronger than they were in 2008. Their capital ratios have practically doubled. Their regulatory framework has been strengthened and their supervisors are far more vigilant and scrupulous than they were back then. The banking sector is as strong as one could wish for. Savers can rest assured. 3/3 BIS central bankers' speeches

Challenges are stronger over the longer term, as a full CMU requires harder tasks such as harmonization of the various countries’ company and bankruptcy legislation as well as reduction in the differences between the tax treatment of capital gains.

Legislative harmonization will inevitably be a gradual process; a modular approach seems the most reasonable course of action to follow, starting with the easiest reforms and then gauging where there is room to tackle more ambitious challenges. I have recently highlighted the distinctive importance of the CMU project for Italy.

BIS central bankers’ speeches 3 sterling interbank market rates are in line with the Bank Rate by operating at the margin as supplier or taker of funds. The policy rate, i.e., the Bank Rate is set by the Monetary Policy Committee (MPC) based on macroeconomic conditions.

We will now need to reassess this. Our earlier estimate for a 1.7 percent growth this year and 1.5 percent next year is under serious threat. We are however relieved by the fall in oil prices. Like many of you, we have introduced several fiscal measures to cushion the impact of the increase in oil and food prices.

Almost simultaneously, I was appointed by the FSB RCG for Sub-Saharan Africa as its non-FSB member co-chair for a two-year term starting 1 July 2013.

Below average performance of the region – and particularly weaker growth rates in the states of Michigan and Ohio – are related to strong reliance on manufacturing.

Slippage ratio of public sector banks has improved, coming down from 3.1 per cent at end-March 2013 to 2.1 per cent at end-September 2013. There is some hope that the NPA cycle might bottom out ahead, especially if economic recovery sets in and investment activity picks up. 11.

However, the question we need to ask ourselves is whether the fall in slippages comes out of good luck or good policies by the bank boards. Have banks learned some lessons from this cycle of asset quality deterioration? The cycle has certain distinctive features in that apart from cyclical slowdown, structural and sector-specific issues have worsened the asset quality of the banks.

It made the international competitive climate considerably more fair, and it greatly improved bank safety and soundness worldwide. Let me elaborate briefly on the advances embodied in Basel I before I discuss the limitations that have become more evident in the years since it was implemented.

That point leads me to repeat what I said when I began: Like the Commonwealth Club, the Federal Reserve was created more than a century ago during an era of government reform to serve the public interest.

However, while history provides a useful guide, it should be used with care.8 This is because the natural rate of interest is also affected by the following: the impact of advancement in medical care and improvement in public health on the quality and quantity of the labor force; demographic changes; lifestyle changes; and deepening international interdependence.

Moreover, one research study shows that large-scale fiscal policies will put upward pressure on the natural rate of interest.9 That said, in the short run, the negative shocks to aggregate demand caused by COVID-19 may outweigh those to aggregate supply, and households and firms may become cautious with their consumption and investment activities because of high uncertainties over 6 As for explanation of the natural rate of interest, see Wakatabe, M., "Japan's Economy and Monetary Policy," speech at a meeting with business leaders in Aomori, June 27, 2019, https://www.boj.or.jp/en/announcements/press/koen_2019/ko190627a.htm/.

That is, higher delinquencies are no BIS Review 28/2003 1 longer isolated in a small portion of the portfolio managed by one loan officer. Instead, significant losses can occur simultaneously across the bank's loan portfolio. Avoiding the problems of "model risk" requires more-rigorous oversight of internal controls.

The policy response The operating framework of monetary management is rendered complex, particularly in a developing economy such as ours which is undergoing significant financial deepening and structural change. The relationship between real economy variables such as GDP growth and monetary aggregates is subject to constant change.

The clearest evidence of hard capacity constraints is probably on the export side. In some parts of the resource sector there was a significant volume of investment in the second half of the 1990s, but a subsequent period of weak commodity prices saw investment decline to very low levels.

Graph 2 Table 2: Mortgage Rates on New Housing Loans* Predominant Mortgage Type Current Rate 10-year Average Rate Deviation from Average Australia Standard variable 5.16 6.85 -1.70 United States 30-year fixed 4.63 6.42 -1.79 Canada 5-year fixed 3.89 5.65 -1.76 United Kingdom Standard variable 3.83 6.5 -2.67 United Kingdom 3-year fixed 4.33 5.58 -1.25 New Zealand 2-year fixed 6.19 7.79 -1.60 Germany Fixed (>10 years) 4.49 5.33 -0.84 Sweden Variable 2.16 4.18 -2.02 ** ** Sources: Bloomberg; Thomson Reuters; national data * Data: to April for Australia, US and Canada; to March for UK and NZ; and to February for Germany.

The proposal of auditing the tax system should be supported, making clear once and for all, that once the taxation system is put in order, we are not going to manipulate it for at least one general election cycle.

Thus a practice of a stable and transparent tax system would be established – a system that, instead of being changed every year, is maintained stable for at least four years.

I would like, now, to turn to some of the recent accounting issues surrounding complex instruments and the role of financial disclosure in promoting risk management. For starters, I am pleased to see movement in recognizing employee stock options grants as a business expense.

BIS Review 5/2010 3 This important lesson from the recent financial crisis has been clearly brought out in the Fifth Report (2007–08) of the Treasury Committee of the House of Commons, entitled “Run on the Rock”.

The credit risk margin is not under the control of the central bank, it has to be brought down by focusing on improving the lending institutional infrastructure, as I have argued earlier. However, even though a system that allows for strong enforcement of repayment reduces the credit risk margin lenders charge, it also imposes larger costs on unfortunate borrowers.

So, for example, should a student who chose the wrong college for studies and ended up having to pay back huge loans with only a mediocre job be penalised for life? We need a system that has some flexibility in repayment, so that those who make bad choices or have bad luck can get some relief.

Another financial infrastructure, which could have a multiplier effect on lending to small businesses, is a Movable Asset Registry. Today CERSAI provides a facility for registering charge on immovable property.

However, most of the small business entrepreneurs do not possess immovable property to offer as collateral and instead they own machinery, stocks, receivables or livestock, which can be leveraged to obtain finance from banking channels if a “Movable Asset” Registry is available. We are working towards this as well. Tiding over the life cycle issues – MSME way 12.

The events of the past two years have already generated farreaching reflections on this issue. 11 Let me mention three avenues. First, the crisis has clearly demonstrated that the economic costs of the unravelling of imbalances can be overwhelming, notwithstanding extraordinary policy action – involving both monetary and fiscal policies.

Recent empirical research has explored more systematically the role of monetary policy in shaping the duration and depth of recessions. 12 When no distinction is made with regard to the nature of the downturn, expansionary monetary policy is found to be consistently associated with shorter recessions.

Sabine Mauderer: Getting the full picture - the road ahead for climate stress testing Speech (virtual event) by Dr Sabine Mauderer, Member of the Executive Board of the Deutsche Bundesbank, at the 2023 European Banking Authority workshop on climate risk stress testing, 8 February 2023. *** 1. Introduction Ladies and gentlemen, How does climate change affect the economy?

I am sure that the committee reviewing the Code of Banks’ Commitments to their Customers would be guided by the spirit of the principles listed out in the “Charter of Customer Rights”. On its part, Reserve Bank will be monitoring aberrations/ non-adherence to the Charter during supervisory process.

In the case of cheque GIRO, the model is essentially to facilitate customer of one bank to deposit cheques drawn on another bank at the counters of the branch of a third bank for collection/realisation of proceeds through the existing clearing infrastructure.

This contributes to the development of the culture that will help the entire society to recognize the Central Bank’s independence as a public interest. We also highly appreciate the support of the International Monetary Fund, which had a key role in the establishing of the Central Bank twenty years ago.

A first lesson is that even economies with relatively strong fundamentals, and fairly sound macro-economic policies, can fall victim to sudden loss of confidence. Why should this be? One reason is that even good macro-economic policies require adjustment in the light of evolving circumstances.

This flexibility was not always there in the case of the countries most affected by the BIS Review 30/1998 ˝ -3- crisis. Let me expand a little on what I mean. When strong capital inflows are pushing up the exchange rate and undermining external competitiveness, monetary policy often finds itself in an acute dilemma.

Now, what is my conclusion in this particular case of burden sharing versus efficiency? Well, the Bundesbank’s position has always been clear and consistent. Sound incentives are indispensable for countering the biases inherent in the euro area’s architecture. 4 BIS central bankers’ speeches Some burden sharing is necessary, and it is being implemented through the rescue mechanisms that grant financial assistance.

But if burdens are shared in a manner that distorts incentives even further, no lasting resolution of the crisis will be possible. Introducing Eurobonds would shift the balance closer to burden sharing and further from efficiency. In the long run, this would destabilise the whole monetary union and harm all of us. 5.

Last year, the Commission presented its first reform proposal, which saw contentious debate among Member States. Last week, the Economic and Financial Affairs Council – ECOFIN – agreed on basic reform principles. I very much welcome its commitment to sustainable public finances and reduction of high debt levels. However, the current agreement appears to be largely based on the Commission's proposals of last November.

I have not been convinced by the initial Commission proposals. I have expressed doubts that such an approach will lead to an improvement in fiscal rules, but instead, I believe it will do the opposite. The Commission proposes multiannual fiscal adjustment paths. Those paths would have to be agreed by the Commission and every Member State.

This is why at the ECB we are also making parallel progress on this front 4/6 BIS central bankers' speeches within the DSGE paradigm, through the 3D model. The 3D model has been developed under the macroprudential research (MaRS) network, and can be used to assess the macroeconomic benefits and costs of macroprudential policies.

The matter I would ask you to reconsider is the increasingly fragile assertion that the Basel Committee is only making rules for large, internationally active banks. That may be the Basel position, but it is not the IMF position when it comes to FSAPs. This applies to the Basel Core Principles and the capital and liquidity frameworks.

Apart from the impact of lower commodity prices, the continued slow growth in the euro area and further risks from a slowdown in Africa constrain the growth in our manufactured exports. In addition, the persistent current-account deficit needs to be financed at a time when capital flows to emerging markets are declining. South Africa’s growth outlook is extremely fragile.

Following the disappointing quarter-onquarter GDP growth outcome of 1,3 per cent in the first quarter of this year, growth surprised on the downside when a contraction of 1,3 per cent was recorded. Of concern was the fact that it was broad-based across sectors, with only the finance, real estate and business services sector showing reasonable performance, recording growth of 2,7 per cent.

To make coherent policy choices, we have to take these feedback effects into account. The most important contribution that U.S. policymakers can make to the health of the world economy is to keep our own house in order – and the same goes for all countries.

Labor productivity in services also declined, at 1.1 percent, explained, to some extent, by absorption of low-skilled labor from rural areas and widespread levels of informality in some branches of economic activity. Finally, during the last two years, Mexico has undertaken a program of structural reforms of various areas of the economy.

(c) Given the prolonged fiscal consolidation and private disinvestment that took place (2007: investment was 27% of GDP, today it is 11% of GDP, the lowest level since 1960), the country needs an investment shock. Reviving domestic and foreign investment is crucial to supporting 4/5 BIS central bankers' speeches the economic recovery.

That is why it is important for the government to speed up the privatisation agenda, not so much as a revenue exercise, but as a great opportunity to attract FDI in key sectors of the economy, such as transport, energy, logistics and tourism.

As India attempts to transition to IFRS, the biggest challenge to the banking sector which is of equal concern to us as regulators, is the lack of clarity and uncertainty regarding BIS central bankers’ speeches 5 the finalisation of IFRS 9: Financial Instruments (scheduled to replace IAS 39) and its convergence with US GAAP.

In those cases where unsustainable fiscal policies were at the very origin of imbalances, the priority is to restore and ensure the medium-term sustainability of public finances. Another priority is to strengthen financial sector stability and avert the build-up of risks and vulnerabilities, including unsustainable lending booms, through adequate regulatory, supervisory and macro-prudential tools.

Loan classification is merely good accounting – it reflects what the true value of the loan might be. It is accompanied by provisioning, which ensures the bank sets aside a buffer to absorb likely losses. If the losses do not materialize, the bank can write back provisioning to profits.

If the losses do materialize, the bank does not have to suddenly declare a big loss, it can set the losses against the prudential provisions it has made. Thus the bank balance sheet then represents a true and fair picture of the bank’s health, as a bank balance sheet is meant to.

These principles can be summarized in four words: focus, impact, neutrality, and prudence. 1. Focus Any unconventional action initiated by the Bank must have as its primary objective the achievement and maintenance of the Bank's 2 per cent inflation target.

Restoring the normal functioning of financial markets and the flow of credit would be important considerations, but only to the extent that they help to achieve the ultimate objective. 2. Impact Decisions regarding which unconventional instruments to use, and when, would depend on current and prospective economic conditions, as opposed to a mechanical game plan.

BSP taking climate action: promoting sustainable finance Now, into the future, we have to be focused on [other matters] and this is a very important question: the idea that the central bank should be doing other things than its three pillars. The most important concern is climate change.

Now, our view about climate change is the Philippines is one of the most negatively affected economies by climate change. We should do something about it. The other one is a very pragmatic one: we expect the rich world that caused all the climate change [greenhouse gas emissions] will punish countries that will not do anything about it.

For financial markets, the past few weeks have been anything but a quiet start to spring: failures of banks, interventions by governments and central banks, and concerns of a looming financial crisis – these are all more reminiscent of a gathering autumn storm. But how justified are these concerns?

Market-based financial systems contain new risks and uncertainties when compared to tightly controlled systems. The behavior of financial institutions in a liberalization process involves major challenges as the market participants learn to understand their new operational environment.

In another sign of improved sentiment, money has flowed into risky securities - for example, equity mutual funds have registered strong net inflows since March after net outflows in 2002 and early 2003, and extremely large inflows have boosted assets of high-yield bond funds nearly 15 percent over the same period.

Under such circumstances, the European economy has continued to recover steadily, and the divergence in growth rates among the euro area economies clearly has become smaller recently. Emerging and commodity-exporting economies have followed their recovery trends.

To illustrate, Securities Act, Law on Compulsory Motor Vehicle Insurance, Law on the Market of Securities and Other Financial Instruments, Law on Personal Income Tax and Law on Corporate Profit Tax are all either in the final phases of completion or were completed and sent off to the Assembly of the Republic of Serbia for adoption only to be placed on the long waiting list of issues to be discussed!

There is no denying that voluntary pension funds and insurance companies are still hoping for a chance to invest in high-quality listed securities. They, however, remain in very short supply. Let us remember that there are only four listed securities in Serbia at the moment: besides bonds issued against frozen foreign currency savings deposits, we only have Tigar, Energoprojekt and Soya Protein securities.

The level of GDP in Australia is 27 per cent higher than it was in 2007. In comparison, in the US, it is 13 per cent; in the UK, 10 per cent; while in the euro area, the pre-crisis level of GDP was only regained in 2015.

We have also endeavored to create a monetary environment of stable inflation and a marketdetermined exchange rate to help you plan better for the medium-term. At the moment, our view is that inflaton will be manageable over the policy horizon.