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Can the government reasonably accumulate the large stock of assets that full funding would require? These are all difficult questions on which there is no political consensus.

In the past, a reasonable goal might have been to maintain a zero deficit in our on-budget accounts - those accounts that exclude the Social Security and Medicare surplus - and to begin a serious discussion of reforms to Social Security and Medicare to bring them closer into actuarial balance.

Looking back, it seems that other Policy Board members, each from their own perspective, have had a similar or acute view. It is these concerns that prompted the decision to introduce the comprehensive monetary easing policy. B.

An uneven recovery across sectors and countries increases the risks of fragmentation The pandemic crisis has put great pressure on economic activity, with euro area growth expected to fall by slightly less than 8% in 2020. While the gradual relaxation of social distancing measures created a strong yet incomplete rebound in economic activity in the third quarter, that recovery started losing momentum.

It is possible that we might occasionally use a primary auction of securities for monetary policy purposes in the future, but this will be the exception rather than the rule and if we do so we will announce this explicitly, to avoid any confusion. I hope that you have found these remarks useful.

As I noted earlier, transparency and communication play a vital role in modern monetary policy frameworks, so it is very important that the public and especially decision makers in the banking and business communities have a good understanding of what the Central Bank aims to achieve and how this will affect the economy.

Any benefits that might conceivably accrue to this action would likely be lost if implementation were significantly delayed, as private securitization activity would likely be inhibited in the interim.

BIS Review 104/2007 5 Implications for financial markets and monetary policy Most recently, as I am sure Committee members are well aware, subprime mortgage losses that triggered uncertainty about structured products more generally have reverberated in broader financial markets, raising concern about the consequences for economic activity.

There were some thoughts in some quarters that if the banks in India do not adopt IRBA / AMA, they run the risk of being viewed as inferior banks and consequently the system might be branded as a secondary citizen in the global financial markets.

As mentioned earlier, our approach to reforms has been to align with the international best practices but adopt them in a manner and pace as suitable to our economy and environment. Therefore, we have consciously decided to mandate the Standardized Approach and Basic Indicator Approach to all scheduled commercial banks in India as the first step in migration to Basel II.

However, even with the 100 bps adjustment in the headline rate, 3% is still over 250 basis points higher than the Fed funds target rate. That gives us significant wiggle room, in this environment where some jurisdictions have gone into negative interest rate territory. At our policy meeting last week, we again kept the policy rate steady at 3%.

While our assessment showed that inflation would be slightly below the NG target range for 2016, we expect that inflation would be within the target of 2–4% in 2017–2018, with an upside bias for 2017. In addition, our credit growth suggests favorable monetary conditions, and aggregate demand remains firm.

This package includes: a record low cash rate a target of 10 basis points for the April 2024 Australian Government bond a bond purchase program under which we have already purchased $ billion of government bonds, with more to come; and the low-cost term funding facility for Australia's banks, under which $ billion has been provided for 3 years.

https://www.rba.gov.au/speeches/2021/sp-gov-2021-09-14.html 9/14 9/14/21, 1:55 PM Delta, the Economy and Monetary Policy | Speeches | RBA This monetary policy package is working by: keeping funding costs and lending rates low across the economy; ensuring that the financial system is very liquid; supporting household and business balance sheets; and contributing to an exchange rate that is lower than it would be otherwise.

After more than two decades of deregulation in the majority of the industrialized countries, finance has entered a new era: various initiatives have been undertaken to reform and strengthen the global framework for financial stability and reduce the probability of such a devastating global crisis occurring again.

The larger presence of foreign banks can increase the vulnerability of the domestic economy to foreign shocks, as happened in Eastern European and Baltic countries.

9 Nominal wage growth per worker has been remarkably stable since the beginning of EMU but also relatively invariant to the cycle. So, the slowdown in labour productivity growth translated into greater increases in nominal unit labour costs in the contractionary phase between 2001 and 2003. See, for empirical evidence, A. Arpaia.

and K. Pichelmann (2007), “Nominal and real wage flexibility in EMU,” European Economy Economic Papers No 281 (June). 10 See F. Altissimo, M. Ehrmann and F. Smets (2006), “Inflation persistence and price-setting behaviour in the euro area – a summary of the IPN evidence”, ECB Occasional Paper No 46, June.

-6demand, they can even set off a self-fulfilling spiral of higher unemployment and stronger precautionary savings incentives, worsening the initial downturn.5 It’s easy to imagine how such mechanisms could have resulted in a much deeper downturn and slower recovery associated with COVID-19.

Luckily, policy-makers had learned from previous episodes, and their strong responses over the past two and a half years helped prevent the unusual savings and balance sheet dynamics that often hobble recoveries. Fiscal policy measures clearly prevented a worse outcome. These included a range of wage and income supports that helped preserve private sector balance sheets and supported consumption.

Today, our economies are - not completely, but to a considerable extent - shielded against the ups and downs of the U.S. dollar (just recall what that would have meant in the ERM I of the early 1990s!). Moreover, the Eurosystem’s monetary policy has established sustainable price stability in the euro area. Inflation expectations have been stabilized at slightly below 2%.

This signals the high credibility which the Eurosystem enjoys with professional analysts, financial markets and the general public. That success has only become possible against the background of the lasting consensus among European politicians that price stability is an important goal - both in its own right and as a precondition for sustainable growth. I mentioned before that we must never become complacent.

Macroeconomics of policy assessment Domestic macroeconomic prospects are currently seen to be broadly favourable, with the pace of growth being maintained and the inflation outlook softer. As already stated, however, the attendant risks from global developments relating to food, commodity, and energy prices remain and will have to be monitored carefully, and acted upon as necessary.

In an overall perspective, the main objective of policy as set out in April, is to manage the transition to higher growth with price and financial stability. The key issues for the conduct of monetary policy in the context of this objective are a continuing emphasis on price stability and well anchored inflation expectations.

In fact, the conduct of monetary policy and management in the context of large and volatile capital flows has proved to be difficult for many countries. A key issue facing India admidst these sweeping winds of change is to work out the policy mix of instruments for liquidity management consistent with the monetary policy framework and operating procedures.

More generally, such indicators are also vital for fiscal analysis and many private-sector decisions. 4 BIS central bankers’ speeches The highly-globalised nature of the Irish macro-financial system means that accurate implementation of UN/Eurostat statistical manuals does not provide sufficient guidance, as is evident from the debate following the most recent CSO official releases.

Many central banks, with or without the concurrence of the government, are adding to the reserves or are holding on to the reserves even though they incur a quasi fiscal cost. This clearly suggests that there must be some benefits of such a widely adopted practice and if so, what are these benefits? My submission is that these benefits unfortunately are not quantifiable.

To provide the tools necessary to respond to the longevity risk, providers need to be able to manage the accompanying risks in the economy as a whole.

Lending to creditworthy borrowers A key objective of the stress assessments and our efforts with smaller institutions has been to restore confidence in the stability of our banking system, confidence that was lacking in early 2009.

Both orthodox Keynesians and orthodox Monetarists see no economic reason for central bank independence and many of you may know the famous dictum by Milton Friedman (1962, p. 51) “Money is much too serious a matter to be left to the Central Bankers”.

The securities borrower posts collateral, usually cash in the United States, which a custodian bank then typically invests on behalf of the securities lender in supposedly safe and liquid investments, including money market funds, triparty repos, and other short-term instruments.

The gains from these reinvestment activities provide a significant amount – in some cases, all – of the compensation to the securities lender associated with participating in the lending program.4 The custodian banks all but universally provided a contractual indemnification to the securities lender that required them to absorb any losses to the securities lenders if the securities were not returned.

By limiting the room for an interdependent monetary policy, it also magnifies the risk of financial imbalances, such as bubbles in asset markets. Moreover, liberalisation of capital flows and financial globalisation implies that keeping one’s exchange rate undervalued nowadays has become more difficult than in the 1980s. There is a second issue to having a flexible Chinese exchange rate.

To restrict exchange rate flexibility, capital controls are used. At present, Chinese control the outflow of capital. The Chinese savings rate is extremely high (40 percent), but interest rates offered to Chinese investors are relatively low. Therefore, an opening up of the capital account could lead to high outflows of Chinese capital, causing difficulties for the banking sector.

Moreover, the new administration is planning to launch new economic stimulus measures, including additional public investment in the supplementary budget for fiscal 1998 and the reduction in personal income taxes and corporate taxes. The materialization of these policies along with their effects on corporate and household sentiment should be carefully monitored.

However, episodes of financial markets turmoil such as the recent ones appear to have a greater impact on countries with poor credit ratings and a weaker economy. These countries saw the yields on their government bonds rise considerably.

Achieving this objective does not require corrective measures with respect to the projections based on the “current legislation” framework (supplemented by the additional spending provided for by the decree law presented together with the Planning Document).

4 BIS Review 92/2007 Nevertheless, for purposes of greater transparency, the Planning Document observes that the deficit on a current legislation basis excludes some costs that do not derive from obligations under the law but that are very likely to arise.

The green transition is now moving ahead but not in a planned manner and not in the way we would have liked, being driven by the Ukraine war and the energy crisis. Energy prices were already beginning to rise last year as the global economy was recovering from the pandemic, and the situation was further exacerbated by the outbreak of the war.

The fragility is due, first, to the fact that because Pemex is state-owned, markets assume the government will back its debt under the pressure of contingencies.

7 IMF (2005) 7/7 BIS central bankers' speeches

Last month, Mr. Tsipras was emphatically re-elected as Greece’s Premier, the Syriza parliamentary group now consists of moderate MPs, the vast majority of opposition parties are also in support of European compromise, and also no other election (regional, local or European) is expected in the foreseeable future.

In this case, there was a high pressure system over Tasmania, and a low pressure system off the north-east coast of NSW. This combination fed very moist air over the south-east of the continent, resulting in cloud and rain. In fact, meteorologists know a lot about how weather works.

They have pretty long time series of observations and increasingly frequent real time observations of conditions. They have highly developed models. The combination of real time data, understanding of how the dynamics of weather occur and their experience, enabled the forecasters to get the big picture right, and give a very useful forecast for those planning on venturing into the skies that day.

7 See for example, Terrence Hendershott, Charles M. Jones, and Albert J. Menkveld, "Implementation Shortfall with Transitory Price Effects (PDF) ," in High Frequency Trading; New Realities for Trades, Markets and Regulators, David Easley, Marcos López de Prado, and Maureen O'Hara (editors), Risk Books (London: 2013).

Financial regulation is central to an effectively functioning market. It must be consistent both with good quality competition providing consumers with appropriate levels of availability and choice, and with the sustainability and resilience of well-run financial firms. It is because the Irish financial services sector is so international that we rely on European and global institutions particularly in standard-setting.

Next step in optimizing the legal framework As China’s financial reform is accelerating, the task of preventing financial risks has become more important and challenging. Given the innate risks associated with the financial sector, the legal framework for the sector cannot eliminate all financial risks once and for all.

However, a sound legal framework may help deter imprudent risk-taking activities of financial institutions and reduce systemic risks. Furthermore, a favorable legal environment is the precondition for the steady performance of the financial system. The PBC is stepping up its efforts in improving the legal framework for the financial sector.

In the fiscal and economic realms, common instruments can bolster convergence, thus providing a shield against bad equilibria and economic scarring in crises. And pursuing the right policies helps to create the policy space to address shocks in the first place. In the financial realm, backstops reduce risk across the system by containing market panics when a crisis hits.

And a strong resolution framework ensures that very little public risk-sharing is actually needed when a crisis hits, as the costs are primarily born by the private sector. Nevertheless, it is a fact of economic life that the risk of significant downside economic shocks can never be fully eliminated. This is why an effective crisis management framework remains indispensable.

This successful collaborative strategy has given the banking system sustained growth momentum. Indeed, we have made great strides in various aspects of our operations. Ours is a narrative of proactive management and reform to advance our vision for the country. Moving Forward With all that we have achieved so far, are we then set for the future? Well, no environment is ever static.

As the central monetary authority, our role is always evolving. This is the de facto norm in central banking amidst the transformation of the global environment, our country’s objectives and its needs. This task is not straightforward, as it has to contend with unexpected financial shocks, political upheavals, and natural calamities.

Or our own regulatory sandbox, which enables innovative firms to test their business models under our guidance and supervision. All this interaction is a two-way street. We do it not only to help new participants, but also to help ourselves identify regulatory shortcomings. —This know-how is especially crucial in one particular area – managing risks that are stemming from FinTech.

The duality of potential benefits and risks, recognized in the Bali FinTech Agenda, is also the underlying theme in our event today. In this regard, the Bank of Lithuania has brought the money laundering concerns to the forefront, substantially boosting human resources devoted to the issue.

But because technology expands the set of treatment possibilities, it also has the potential to add to overall spending - in some cases, a great deal. In implementing policy, we need to be cognizant that the uncertainties - especially our inability to identify the upper bound of future demands for medical care - counsel significant prudence in policymaking.

The critical reason to proceed cautiously is that new programs quickly develop constituencies willing to fiercely resist any curtailment of spending or tax benefits. As a consequence, our ability to rein in deficit-expanding initiatives, should they later prove to have been excessive or misguided, is quite limited. Thus, policymakers need to err on the side of prudence when considering new budget initiatives.

My task – both exciting and difficult – in this closing keynote is to discuss what future-proofing of your bank could mean, with the perspective of next 10 years. Futurology is often associated mostly with technology. Yes, digital technology is quite profoundly changing the operating environment of banks.

But it would still be a mistake to think the future is all digital, and nothing else. Future-proofing a bank is as much about a sound business model and the ability to adapt to a changing environment, as it is about utilising the best technologies available.

Our aim is to ensure that markets, elected representatives like yourselves, and the wider public better understand how we reach our decisions, the reasons behind these decisions, and how these decisions affect people’s daily lives. In other words, we need to be clear about what we call the “three A’s”. First, we must be clear about our aim.

Our new symmetric inflation target of two per cent over the medium term is simple, clear and easy to convey to the wider public. Second, we must be clear about our assessment.

The high oil prices is a big worry everywhere. It has necessitated us raising our forecast of year-end inflation to 3.5 percent from 3 percent. Continuing high oil prices will have ramifications on our cost structure and the balance of payments. It has come at a bad time for us and will complicate economic management.

But this is something that we have absolutely no control over and we can only hope that supply factors that are driving oil prices upwards disappear soon. From a strategic angle, we must avoid policies and practices that ratchet upwards throughout the economy the cost effects of higher oil prices.

Yet this conventional monetary policy virtually became a new instrument in June 2014. For the ECB cut the deposit rate for banks to below zero – the zero lower bound was breached. Since then, banks have had to pay interest on their deposits at the ECB. Do you find it strange to pay someone in order to lend money to them?

Our own Business Expectations Survey, where we survey 243 businesses on a semi-annual basis, is reflective of this. This year, the Investment-to-GDP ratio will be around 25 percent, of which the private sector’s share is forecast at 13 percent. Clearly this is a vote of confidence by the private sector in the Fijian economy.

It is now almost one year since I started my term in the ECB Executive Board, and it is interesting to reflect on how Europe has changed in that time. When I joined the ECB in January, the situation looked bleak. The first 3 year LTRO had temporarily calmed the markets, but many informed commentators were predicting a very difficult year ahead.

Putting probabilities on a euro break-up had become a cottage industry. Today, we have grounds to be cautiously optimistic. The fear of catastrophic tail risks has lessened. This is in part due to actions taken by the ECB to ensure monetary policy transmission, notably through our OMT programme.

Varian, H R (1999), “Markets for Information Goods”, Bank of Japan IMES Discussion Paper No 99-E-9. Zuckerman, M B (1998), “A Second American Century”, Foreign Affairs, May/June, 77(3), pp 18-31. BIS Review 55/2000 6

It strengthens both the preventive and the corrective arm of the Stability and Growth Pact and establishes minimum requirements for national budgetary frameworks. It was also important that the Heads of State or Government have further agreed on a new “fiscal compact” with a view to achieving a more effective disciplining of fiscal policies.

Further, non-adoption of advanced approaches may have reputational issues for larger banks. Therefore, it is time for larger banks to seriously consider upgrading their systems and migrating to advanced approaches. As regards technology, the implementation of Core Banking Solutions (CBS) provides a platform for augmenting technology to enable real time MIS and data analytics.

I am quite impressed by the way the theme “ideate, innovate and inspire” has been fleshed out, and by the depth and breadth of topics for discussion in the follow-on sessions.

However, at this stage, the market is pricing in a modest scenario of interest rate increases. Similarly, in China, with fixed investment and economic growth exceeding expectations, the authorities have signaled their intentions of cooling down the economy. However, there are market concerns that further policy tightening could adversely impact on Chinese and world economic growth.

It is for this reason, for the first time in its forty nine-year history, the Central Bank supported Ramleela this year. Ramleela is considered the oldest and largest open air theatre in the Caribbean. It provides an opportunity for people to learn the story of Ram’s life and his adherence to truth despite harsh challenges.

With the new tax system, the incoming administration will be in a better position to face the challenges of the post-pandemic economy. And the stable banking system—which benefitted from regulatory reforms over the years— remained able to provide credit to consumers and businesses. Loan growth is steadily picking up.

Despite these initiatives, however, the efficiency of cross-border transactions has actually worsened in recent years compared to domestic payments, where the improvements have been enormous, reflecting in particular the introduction of fast payments in several jurisdictions.

To this end, I hope that all of you will devote yourselves to selfimprovement, and to being top-class specialists in your areas of work. I will devote myself to creating an environment in which all employees can trust and communicate candidly with one another.

We should never forget that a workplace culture where seniors, juniors and coworkers trust, respect and care about one another is a very valuable asset which our predecessors have cultivated for a long time. Dear fellow members of the Bank of Korea! I would like to briefly tell you my thoughts related to this organization and to its human resource management.

The criteria accession countries have to comply with are often thought to be constricted to the Maastricht criteria, which are nominal criteria, but we ought not to forget that there is another second set of Copenhagen criteria, by the number of three, which have been set up in 1993 already: 1. The first is a political criterion.

Against this background, the ECB takes the view that the establishment of public standards for risk management is essential. In fact, the Eurosystem has set such standards that securities settlement systems need to comply with in order to be eligible for the use in our credit operations. All interested parties should be actively involved in the development and implementation of such standards.

As documented by our surveys on SME access to credit, at this time “access to finance” was considered the dominant concern for small enterprises, right after “finding customers” for their business. Our measures are gradually changing that picture. Since the first round of our survey in April this year, “access to finance” has dropped to among the least important concerns for SMEs.

They in fact report an improvement in the availability of external sources of finance, and in the willingness of banks to provide credit. Terms and conditions have also sharply converged towards those enjoyed by large corporate borrowers. So why has transmission been so accelerated? There are two reasons.

In my view, no particular deference is owed – no promise of non-intervention due – in the conduct of regulatory policy, consumer protection, or other responsibilities granted to the Federal Reserve. This sharp distinction should be sustained as the Congress considers revisions to the Federal Reserve’s charter.

So, delineating that which constitutes the conduct of monetary policy – as distinct from these other activities – is critical. In normal times, there is less confusion. The Fed establishes shortterm, risk-free interest rates across the economy. And it does its level best to signal the appropriate path of policy to ensure low and stable prices and maximum employment over the horizon.

Barry Whiteside: Microfinance and financial literacy development in Fiji Opening speech by Mr Barry Whiteside, Governor of the Reserve Bank of Fiji, at the Korovou Microfinance Expo, Korovou, 19 May 2012.

* * * The Permanent Secretary Provincial Development & Multi-Ethnic Affairs, Lieutenant Colonel Inia Seruiratu The Commissioner Central, Major Bale Tuitubou The Roko Tui Tailevu, Mr. Semisi Saukawa Korovou Town Administrator, Mr. Jone Bera Microfinance clients and entrepreneurs Representatives of banks and financial institutions Government agencies and NGOs The Vanua of Tailevu Distinguished guests, friends, colleagues, ladies and gentlemen Bula vinaka and a very good morning to you all.

Radovan Jelašić: Development of the municipal bond market in Serbia Speech by Mr Radovan Jelašić, Governor of the National Bank of Serbia, at NALED – National Alliance for Local Economic Development, Belgrade, 13 May 2009. * * * It gives me great pleasure to welcome you all on behalf of the National Bank of Serbia.

We in the National Bank have long been advocating the development of bond markets by not only the government and local government bodies, but by other issuers as well.

She saw the world in terms of the symbolic, most things open to her interpretation. She understood and lived her life between its lines rather than according to an accepted script.

Edna, cousin to both Norman and Bustamante, crept between the starker realities to claim another role – a role, some say, as mother of Jamaica’s artistic soul.” In my opinion, Horses in Her Hair is a stark reminder that as we seek to forge a new Caribbean home, as we seek to cast away the island hubris of our leaders, we must balance our quantity of life, with our quality of life.

Secondly, it will strengthen competitive pressures in the national market, by exposing domestic firms to greater competition from firms from other EAC partner states. Competition provides the best incentive for firms to increase their productivity.

High rates of productivity growth in China have allowed for the production of a wide range of goods at low prices despite the increased costs of inputs. In a highly competitive globalised world market and credible monetary policies, product price increases have remained low or prices have even fallen in some instances.

2 The Bank’s view of recent economic and financial developments, determined by the Policy Board at the Monetary Policy Meeting held on June 11 and 12 as the basis for monetary policy decisions. BIS Review 37/2002 1 streamlining of distribution channels will continue to restrain prices.

Admittedly some Caribbean countries have relatively high debt ratios, but their debt burdens have been overtaken by countries like the US and UK, in many cases. So why doesn’t the Caribbean follow the lead of the industrialised world in countering the down cycle in economic activity with fiscal stimulus?

However, as restrictions are eased and people have more opportunities to spend, our judgement is that further monetary easing now provides additional support to other policies, including the fiscal initiatives and the RBA’s earlier monetary policy package. In reaching today’s decision, the Board also considered the effects on medium-term financial and macro stability as well as the impact on savers.

The motto of this event is: “Where is the global economy heading?” The answer to this question will be put together like the pieces of a jigsaw puzzle from the various reports of the speakers at your conference, who come from all over the world.

22 Since output gap measures were a key ingredient in the Fed’s monetary policy process, this 20 See Laubach (2009). 21 See Friedman (1947) and Brunner (1985). 22 See Orphanides, (2002, 2003 a, b). BIS Review 21/2010 7 automatically resulted in an excessively loose monetary policy, thus igniting and then perpetuating the Great Inflation.

The global outlook is summarized in Table 1. In Canada, we were looking for weaker economic growth in the fourth quarter of this year and the first half of 2008, but some strengthening thereafter. As you can see from Table 2, we were expecting continued strong final domestic demand throughout the projection period, but considerably weaker net exports.

As I look back, I am comforted that the financial and monetary effects of the horrible and tragic events on that day were less severe than one might have imagined. The aftershocks were less sizable than one might have feared they might be, largely because of the action taken by major market participants and the regulatory community, including the Federal Reserve System.

The incidents of September 11 taught us many lessons relating to central banking and financial stability. First and foremost, they reinforced the importance of the Federal Reserve’s role as lender of last resort.

You would no doubt have noted that with this blend, Prof. Fischer will make an ideal referee BIS central bankers’ speeches 1 for the perennial feud between the salt-water and fresh-water economists of the American School. Prof. Fischer served in several top level institutions in senior positions. He was Vice President, Development Economics and Chief Economist at the World Bank.

A critical pillar to this was ensuring that the SARB as an institution was stable, by retaining institutional memory and the requisite skills, while at the same time preparing 1/3 BIS central bankers' speeches to transform the organisation. The SARB debuted its ‘Big Five’ banknote series, and introduced a R5 coin, commemorating the inauguration of our first democratically elected President, Nelson Mandela.

First, unlike many other developing countries we have had a record of moderate inflation, with double digit inflation being the exception, and which is largely socially unacceptable. 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.

These include such things as planning and budgeting, saving and investing for the medium and longer term, retirement planning and last, but by no means the least, managing our debts. This year the Financial Literacy Working Group has once again taken the opportunity to raise public awareness on the importance and need for financial literacy for all our people.

THE BANKING SYSTEM AND PRIVATE INSURANCE UNDERTAKINGS The main developments in the domestic banking sector in 2017 were a gradual recovery of operating profitability; the maintenance of capital adequacy at satisfactory levels; a diversification of banks’ funding sources; and a small decline in the stock of non-performing exposures (NPEs) in line with the targets set, although this stock remains high € billion in September 2017).

It is worth noting that, according to December 2017 provisional data, there was a substantial pickup in the pace of NPE reduction in the fourth quarter of 2017 (with the NPE stock amounting to roughly € billion).

A strong relationship exists between monetary and broader financial stability in that financial stability is a prerequisite for the effectiveness of monetary policy, and therefore the monetary stability in a country. The maintenance of financial system stability. The central bank performs a pivotal role in ensuring the smooth and efficient functioning of markets and infrastructure such as the payment system in a country.

There are two broad lessons that emerge from this episode and earlier experiences involving financial crises. First, to reduce the vulnerability of an economy to banking and financial crises, a high priority should be given to sound corporate governance, narrow and explicit government guarantees, and adequate prudential supervision of banks.

BIS Review 60/2008 1 Table 1: Structure of Australia’s Economy Share of GDP (per cent) 1977 2007 Manufacturing 16.4 10.1 Financial, property and business services 12.4 19.5 Wholesale and retail trade 11.1 10.3 Education, health and community services 9.2 10.0 Utilities and transport 6.6 6.8 Construction 6.3 6.8 Mining 5.9 6.8 Government administration and defence 4.9 3.9 Rural 3.7 2.1 Communication services 0.7 2.7 Other 22.9 21.2 Source: ABS Beyond these shifts, not all that much has changed at the broad structural level.

Australia even 30 years ago had quite a substantial services sector, and still does. But the opening up of Australia to international trade, as a result of the policies of tariff reform and product market liberalisation since the mid 1980s, has been a significant change (Graph 1). The change in our trade patterns has been substantial (Table 2).

28 Moreover, the uncertainty associated with long-run inflation under a zone could affect the perceived longterm real interest rates faced by households and firms through differential effects on the expectations of different agents, a pitfall that seems particularly plausible given the dispersion in professional forecasters' long-run expectations for U.S. inflation, as shown in figure 2.

In the past ten to fifteen years, the experience in the old industrial countries has resulted in a strengthening of risk management in banks and in the supervisory process, something which is now being worked on in Asia.

In particular, I will explain why now is a particularly appropriate time for fiscal stimulus. I will also offer some thoughts on how to improve the current fiscal framework.

In the short term, however, downward pressures on prices are inevitable if the economy must endure a low growth rate temporarily in the course of structural reforms and fiscal consolidation, because the negative output gap would widen as a result.

Alternatively, the reduction in churning could itself be a function of slower productivity growth, as slower productivity growth implies lower benefits to forming new matches. One recent trend that is particularly disturbing is stagnation in the formation of new firms.

A further area where Government intervention is needed is to strengthen land tenure rights for smallholders. Only if farmers have secure rights to use their land will they have incentives to invest in land improvement and to avoid 3 See the discussion in Clive Drew (2010), “Past Successes and Failures in Supporting Agricultural Commercialisation in Uganda”, mimeo, prepared for the World Bank.

I believe the annual awards in the various categories help to promote a competitive spirit, financial innovation, diversity of products and services, and efficiency in providing services to customers, and fostering confidence in the banking sector. Today’s event is organized around the theme “Enhancing Confidence in the Ghanaian Financial System in the Midst of Global Financial Crisis”.

While real after-tax personal income increased at more than a 7 percent annual rate in the third quarter, most of that gain reflected the influence of this year’s cut in taxes.

With these two observations, the Council also maps out the areas that it would address in its policy discussions and policy decisions at the following meetings: credit growth and credit standards, the search for yield resulting in excessive risk-taking by both borrowers and lenders and finally the housing market.

The interagency consultation process has included staff discussions during the initial policy development stage, sharing of draft studies and regulatory text in the interim phases, and dialogue among agency principals in the advanced stages of several rulemakings. Along with the other agencies testifying today, we have gone well beyond the formal consultation requirements of Dodd-Frank.

• Meanwhile, recent data have been consistent with the Bank’s expectation of a soft landing in the housing market and a stabilization of household indebtedness relative to income. • Real GDP growth is projected to pick up from 1.8 per cent in 2013 to 2.5 per cent in both 2014 and 2015.

On interest rates, can the ECB go even further? In our guidance on interest rates we have said that rates will remain at present or lower levels. So this means that interest rates are still in the tool box.

In a downturn, or during a painful recovery, they – again – should avoid short-sighted policies that promise to alleviate the side effects of the adjustment but in fact make that adjustment neverending.

Indeed the progress made so far towards the integration and development of the European financial system is a European achievement, and the creation of the euro has made a decisive contribution. Finally, I should also like to stress that, while financial integration is an important driver for increasing the efficiency of a financial system, financial efficiency also depends on other factors.

Central bank statistics are a public good. Therefore, the costs and benefits of different types of statistics need to be assessed from the perspective of society as a whole. The financial industry is a key stakeholder in this process.

The quality of the data reported hinges on the reporting mechanisms employed by the industry, and data that are not regularly kept up to date by financial institutions may be of limited value for central banks, too. To a large extent, this aligns the interests of central banks and the reporting parties.

“Leaning against the wind” means the following in this case: the central bank should try to compensate for the excess ease with which speculators can secure credit to finance their speculative positions in asset markets with a stance of monetary policy that is more restrictive than the one they would implement in less perturbed financial conditions.

Naturally, financial education is not only important for those excluded from the financial system, but also for people in general, as it promotes a responsible and efficient use of financial products and services, raising awareness of advantages and risks associated with the products and services provided by credit institutions and of financial consumers’ rights and obligations.

It is worth stressing that the “proportionate” principle is not designed to lower the bar – it is designed to reflect the differences in the type and volume of market activities of certain market participants and the variation in FX markets worldwide. The concrete details of the adherence mechanisms remain a work in process.

The low inflation in the United States tells us that resources are being wasted. What exactly are these wasted resources? There are multiple answers to this question – when demand is too low, lots of resources are left unused. But the biggest and most disturbing answer is our fellow Americans.

The current framework based on Basel II involves greater risk sensitivity, because it links required capital to the perceived riskiness of assets which is likely to change in the course of the economic cycle.

At the 24th Meeting of the Convergence Council of Ministers and Governors of Central Banks of the West African Monetary Zone (WAMZ), it was yet again agreed that the dateline for the single currency and monetary union in the WAMZ should be postponed to January 1st 2015.

Had the FOMC not eased policy, it would have faced a risk that the tightening of credit conditions and an intensifying housing correction would lead to significant broader weakness in output and employment.

In addition, it would have faced the possibility that the impaired functioning of financial markets would persist for some time or worsen, which would create an adverse feedback loop not dissimilar to what I earlier called macroeconomic risk.

Banks/FIs (42.3 per cent of total issuances) followed by finance companies (26.4 per cent) were the major issuers in 2011–12. India lacks a long-term debt market for pure project finance. Corporate bonds issued in India usually carry a rating of AAA indicating lack of interest in bonds of lower rated borrowers in the debt market.

Institutional participants, such as, banks, primary dealers, mutual funds, insurance companies, pension funds, corporates, etc. are the major players in this market. Retail investors are also gradually entering this market. Their participation is, however, minuscule. As regards regulation of corporate debt market, the regulatory involvement is clearly delineated between the Reserve Bank of India and the SEBI.

Before moving on to the next set of issues, let me set out a few more questions. If IT is to rule our lives, how do we measure whether IT has delivered? IT has certainly enabled banks to increase its business multiple times with less of man power. But is this sufficient? What has been the customer experience?

New technologies, and new entrants, offer opportunities and risks The possibilities of new technologies are a central theme in the discussion around innovation. There is no doubt that new applications of technology – like big data, AI/machine learning and distributed ledger technology - offer opportunities to drive innovation and enhance efficiency along with countervailing risks to be recognised and managed.

If long-run price stability is the most important contribution that monetary policy can make to our broader economic welfare, is inflation targeting the best monetary policy framework available to us? You won’t be surprised to hear me answer with a clear ’yes’.

As I have described, we found our way into inflation targeting, partly as a process of elimination, partly by accident, and partly by way of some original thinking about old problems.

By some estimates, about half of the manufacturing firms in the state are small- and mediumsized enterprises, which provide some parallels with Germany’s renowned export powerhouses, known as the Mittelstand. Real solutions versus economic shortcuts Rebalancing our economy and improving our trade position is a necessary development, but unfortunately, it will take time.

And as our immediate desire is to rush to improve our economy, I warn against the all-too-common impulse to take shortcuts and suffer their unintended consequences. Here in Iowa, for example, one area where I suspect this tradeoff might be playing out is in the recent rapid run-up in agricultural land prices.

* * * Mr Chairman, ladies and gentlemen, I was greatly flattered to be nominated for this NZIER/Qantas economics award, and feel deeply honoured to have been selected to receive it.

I regard the earlier recipients of the award as among the giants of the economics profession, and I have been privileged to work with all of them in one way or another.

In many respects the decision to begin a new financial data collection has the hallmarks of an investment decision to purchase a long-lived asset. We engage extensively with users in trying to identify clearly the benefits of the new data for financial analysis and policymaking in the future.

Some of the benefits associated with new statistics accrue several years down the track once a good time series is developed. Choices made now about what (or) not to collect and how to collect it can have implications for the quality of financial analysis (or policymaking) for years into the future.

“Any use of a precautionary line would assume that you can cover as a country all your financing needs from the capital markets. Otherwise, the program is more than precautionary. And one has to assess very carefully when a country can access capital markets. In my personal view, there are at least two preconditions.

One is that the country has reached a primary surplus and second that it has returned to positive real growth. Tapping capital markets is a challenge and it will remain a challenge”. You have been following the Greek crisis since 2010. Three years later, what would you say about the progress Athens has made in putting it fiscal affairs in order?

With this in mind, our policy actions have been aimed at helping you manage your own risk appetites. Given all these fundamental reasons for the series of BSP actions so far, what can the market expect from the BSP going forward? As I have always said, the BSP will remain watchful.

It is another significant event on the business calendar where we recognise the achievements of the private sector, and in this particular case, small businesses in Fiji. These Awards were conceived around the idea of the need for us all to stop what we are doing and salute those small businesses doing great things for our country.

Improving the governance of the Bank’s lending projections, budget, and net income is crucial. Financial sustainability We are pleased that the IBRD’s capital is no longer deployed to cover administrative expenses in excess of revenues. Its business model is now financially sustainable, as it ensures solid income generation to bear future needs.

Coverage of direct and indirect costs of lending, including expected loan losses, is achieved while maintaining loan terms well below market rates. Higher rates on loans that tie up the Bank’s capital for longer periods of time will help prevent scarce longterm funds from being diverted to operations that are better served by shorter term loans.

* Primary income Goods Ladies and gentlemen, dear colleagues, Uncertainty surrounding the inflation and GDP projection we have just presented is still largely associated with factors from the international environment, primarily the impact of the Ukraine conflict on the availability and world prices of energy products, as well as the global growth outlook, which will largely influence international prices of primary commodities.

For instance, the large presence of major US investment banks in Europe can be traced back to the implementation of this Act, which separated investment banks from commercial banks.

Meanwhile, according to business surveys, financial positions of firms in general are improving slightly, although those of small firms remain severe. The year-on-year growth rate of the monetary base continues to be around 20 percent. The year-onyear growth rate of the money stock rose slightly and is at around 2 percent.

But we should take care that such work does not draw too many resources away from efforts in some of the less exciting areas which will have a concrete and timely pay-off.

In this connection the zero lower bound is certainly a critical aspect, although its relevance might be larger for the United States: Eurosystem experience shows that the lower bound rendering monetary policy ineffective might be less of an issue than commonly believed in the pre-crisis mainstream view.

LCEP can provide support in terms of policy, capacity building, technical assistance and market development. 4/6 BIS central bankers' speeches In enabling regulations, the BSP has come up with a proposed policy framework for sustainable finance, and we are currently in the process of consolidating and evaluating comments from industry players.

As the lack of financial literacy, operational skills, including accounting and finance, business planning, etc. represents formidable challenge for MSE borrowers, we have, on August 1, 2012, advised banks to play a more proactive role in the affairs of their MSE clients by providing them with financial literacy and consultancy support.

For this, banks could either separately set up special cells at their branches, or vertically integrate this function in the Financial Literacy Centres (FLCs) set up by them, as per their comparative advantage. We have also stated that the bank staff should be trained through customised training programs to meet the specific needs of the sector.

Indeed, further work is needed to elaborate in detail the institutional framework of the ESRB, as well as of the new European authorities for microprudential supervision. Conclusions The recent crisis has shown the importance of macro-prudential supervision in promoting financial stability.

A lot of work needs to be done to equip the competent institutions with the analytical instruments to assess and monitor systemic risk and with the toolkit necessary to contain such risks.

For instance, from the point of view of large economies like the euro area or the United States, an oil price increase fuelled by Chinese demand is not the same as one fuelled by a supply disruption.

Due to the high import component of public investment plans, it is expected that both the current and capital account balances of the balance of payments will decline, resulting in a small drawdown in official reserves in 2009/10.

For its part, the Federal Reserve will continue to use its policy tools to support the economic recovery and carry out its dual mandate to foster maximum employment in the context of price stability. In its supervisory capacity, the Federal Reserve will continue to encourage lenders to find ways to maintain prudent lending standards while serving creditworthy borrowers.

The passing of the two (2) draft bills will greatly enhance the BoU supervisory oversight on the National Payment Systems. While most of the payment systems in Uganda are provided by the Central Bank, the market has recently experienced an upsurge of systems operated by the private sector with powers to control access and set prices.

As multilateral clearing organizations have strengthened and spread across many of the major asset classes traded in the markets, they have enabled coordinated action on governance, rules, technology, and risk management. It is possible that new technologies could substantially change the way these functions are pursued, but it would be surprising if they would obviate the need for multilateral clearing in the major markets.

Governance, in particular, is a core function that is inescapably necessary if multilateral activity, even activity dealing with distributed ledgers, is to operate effectively. Indeed, if new technologies could lower the costs of multilateral clearing relative to bilateral clearing in new market segments, multilateral clearing could even grow.

Against this background, the Federal Reserve, or the central bank of the United States, decided on a reduction of its target interest rate by 0.5 percentage points at an unscheduled meeting of the FOMC at the beginning of the year, followed by an additional reduction of 0.5 percentage points at the end of January 2001.

But we should realise that – as the case of Bernard Madoff and others in the US and elsewhere clearly show – this is no panacea. (Madoff’s customers were surely much better educated than the average.) Therefore, for purposes of consumer protection in the financial services industry, financial regulation and good supervision are the necessary complements to financial education and inclusion.

Concluding remarks All industrialised economies will be required to deal with the ageing of their populations during the first half of the twenty-first century. The consequences of this process for central banks are likely to be of a “slow-burn” nature.

First, the real rate of interest that is expected to clear the capital market could mildly decline over the next decades, owing to a fall in 64% of all annuity contracts in the United States in 2040, up from 33% and 50% respectively in 2001. See also Poterba, Venti and Wise (2007). 32 G10 (2005).

Dr. Jha was Governor of the Reserve Bank from July 1967 to May 1970, at a time when our economy was going through one of its most challenging phases. The country was shaken by food security concerns, and initiatives to redress them resulted in the much celebrated “Green Revolution”.

Through his leadership, Governor Jha made the Reserve Bank an influential force in shaping these initiatives. The distress suffered by the poor because of the overall scarcity situation resulted in poverty reduction becoming the overarching consideration of all policy. The Reserve Bank, under Dr. Jha’s stewardship, contributed to designing and implementing many of these anti-poverty policies.

It is important to note that as investments in the oil patch are pared back, Canada’s growth slows. But when those investment levels stop falling, Canada’s growth will pick up again, even if oil sector investment does not, because other areas of growth will come to dominate the data. We saw this same dynamic following the oil price shock of 2014–15.

1/2 BIS central bankers' speeches In addition to concerns about global trade and oil prices, we have continued to watch how the Canadian housing market is adjusting to the combination of provincial and municipal housing policy measures, the revised guidelines for mortgage lending, and past increases in interest rates.

It is another significant event on the business calendar where we recognise the achievements of the private sector, and in this particular case, small businesses in Fiji. These Awards were conceived around the idea of the need for us all to stop what we are doing and salute those small businesses doing great things for our country.

Let us not only celebrate the winners, but also all the others that have dared to back their entrepreneurial spirit and set up a business. We trust that this event will create the necessary awareness out there of these “mum and dad” type enterprises.

This places a greater premium on effective international mechanisms of crisis prevention and response. Recognition of this fact lies behind the ongoing debate on strengthening the international financial architecture. Today’s financial architecture is based on the operation of liberalised markets.

It is market forces that determine such key features of the international financial system as exchange rates, the availability of liquidity, capital flows and the balance of payments adjustment process. When instability occurs, it can usually be traced to market imperfections and failures.

Indeed, that is the case now for a couple of our largest institutions, particularly with respect to the internal audit process. Effective supervision of an LCBO requires a supervisory plan that is tailored to the institution’s current risk profile and organizational and operational structure and that considers the activities of other supervisors — highlighting, once again, the need for communication and coordination.

“ Monetary Policy in a Low Interest Rate World (PDF)," Brookings Papers on Economic Activity, Spring, pp. 317–396. Nakata, Taisuke, and Sebastian Schmidt (2016). “ The Risk-Adjusted Monetary Policy Rule,” Finance and Economics Discussion Series 2016–061. Washington: Board of Governors of the Federal Reserve System, August. Simon, John, Troy Matheson, and Damiano Sandri (2013).

While the overall analysis, including the assessments of likely impact, made in Mid-Term Review remains valid, I would like to add a few words on what factors we are monitoring now and why we feel that extraordinary vigilance of the factors mentioned are warranted by RBI.

House prices declined sharply through most of 2011, wiping out about half of home equity and restraining consumer spending. But the housing market finally began to recover in early 2012, and that recovery seems to be proceeding strongly. Single-family housing starts have risen by more than 40 percent over the past two years, albeit from a low base.

Having belatedly BIS central bankers’ speeches 5 realised that we had become over-optimistic, we cannot just go back to 2001. For better or worse, people have to live with, and work through, the consequences of past choices. That means many people have to reassess their plans, which typically means less spending and less investment.

Digitalisation has introduced fintech companies as new competitors, and the banking landscape in general is still characterised by overcapacities. This increases competition and depresses margins. European banking supervision – a comprehensive treatment plan Banks have become more resilient, but they do operate in an environment that is characterised by constant change and constant competition.

Among the prerequisites to implement this regime, we have already complied with the following: (1) institutional commitment with long-term price stability, regardless of the natural and necessary relative price adjustments related to the transition phase; (2) fiscal, financial and external stability, evidenced by the consolidation of a positive public sector balance, a recovered banking sector, and a stable external surplus; (3) a comprehensive and transparent communication strategy, including a clear explanation by the monetary authority of its plans, intermediate objectives, and decisions; (4) autonomy for the monetary authority to manage its instruments and meet the targets set; (5) the monetary authority’s accountability for compliance with disclosed plans.

As I have already mentioned in several opportunities, the main obstacle to implementing inflation targeting is the small size of the financial system: this does not ensure the adequate functioning of monetary policy transmission mechanisms and results from the deep shrinkage experienced by our banking system after the crisis.

Tax and Other Payments are Dragging on Disposable Income When we think about household income available for consumption and saving, economists usually disposable talk about household income. This is income net of taxes, net interest payments and a few other deductions like insurance premiums.

7 The following 13 central banks have been actively participating in the study: Danmarks Nationalbank, Eesti Pank, Central Bank of Ireland, Bank of Greece, Banco de España, Banca d’Italia, Latvijas Banka, Magyar Nemzeti Bank, De Nederlandsche Bank, Banco de Portugal, Banca Naţională a României, Suomen Pankki and Sveriges Riksbank.

To continue along this road, now that strong sovereign debt tensions making themselves felt, banks must increase their capital endowments and strengthen their management of credit and liquidity risk, proceeding along the path already taken. The activity of Italian banks Since the middle of last year, with the cyclical downturn, the quality of business loans has worsened.

The flow of new bad debts on loans to non-financial firms, which between 2005 and 2007 had been steadily below 1.3 per cent of total outstanding lending, rose to 2.9 per cent in the first quarter of this year, 0.2 percentage points higher than at the end of 2011.

All of these statistical enhancements require an even closer collaboration within the ESCB and, in particular, the Eurosystem. The ESCB Statistics Committee is charged with this pioneering task. Given the wide range of securities included in the CSDB, this project has attracted attention at the international level, including that of the G8.

However, first and foremost, it is important to demonstrate that the CSDB is fit for use in the production of euro area statistics, where balance of payments statistics, including the international investment positions, and investment funds statistics have been identified as the highest priorities.

While the official sector provides a stable currency, operates some important payment rails, and undertakes regulation and oversight of financial intermediaries and critical financial market infrastructures, the private sector brings competitive forces encouraging efficiency and new product offerings and driving innovation.

Responsible innovation has the potential to increase financial inclusion and efficiency and to lower costs within guardrails that protect consumers and investors and safeguard financial stability.

Second, in view of the improving economic conditions, the potential spillover of large and protracted increases in import and producer prices into consumer prices will need to be assessed carefully. In this context, developments in the exchange rate and in oil prices will play a major role.

It reflects on both the circulation coins and the collectable coins, which I am sure will be highly appealing both to the general public and to coin collectors. The SARB takes great pride in the issuing of such commemorative coins. It is an important element of our public service role, and a unique way to pay tribute to individuals and events of national importance.

The fiscal deficit has remained at a reasonably low level and public debt relative to GDP has been on the decline for the fourth consecutive year. Unemployment has dropped to a historic low of 5.2 percent while poverty has been falling for the last several years and is currently around 15.0 percent.

Against the back drop of a deteriorating global outlook, growth is expected to drop sharply but would remain around 4.0 percent in 2009, bolstered by prudent macroeconomic policies and expansion of the domestic economy particularly in the eastern and northern provinces of the country.

The currently high energy intensity of the upturn reflects the cyclically-related increase in demand, particularly in the United States and China, where growth is centred. This is compounded by uncertainty with respect to the actual capacities available in production, transport and refining. If oil prices remain high, this could dampen both foreign and domestic demand.

I urge the Executives of this Association to continue to lead the process of reengineering this sector, and in so doing, to help to refocus the business models of its members towards realigning themselves with the policy objective of financial inclusion for which savings and loans licences were issued.