samchain/econo-pairs-v1 huggingface dataset:
Caleb M Fundanga: Trends in central bank governance Opening remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the official opening of the seminar on “Trends in Central Bank Governance”, Livingstone, 28-29 February 2008. *  *  *  His Honour the Vice President Her Grace the Mayor of Livingstone The Chairperson Central Bank Governors and Deputy Governors Board Members of Central Banks Resource Persons Distinguished International Participants Ladies and Gentlemen On behalf of the Bank of Zambia and indeed on my own behalf, I would like to extend a very warm welcome to you all to this important seminar on “Trends in Central Bank Governance.” To our colleagues from outside Zambia, I wish to extend a special welcome to you to Zambia, in particular to Livingstone, our tourist capital especially at this time of the year. Like the rest of Zambia, Livingstone is a city of tranquility with an easy-going African charm. Apart from the famous Victoria Falls, there are many other tourist spots such as the Mukuni Cultural Village, curio markets, the Game Park, the National Museum, railway museum, e.t.c. I therefore urge you to find time or indeed stay an extra day or more to sample this special menu that Livingstone can offer. Like other participants, I am glad to be part of this rare gathering of imminent experts.

As monetary authorities in these countries, we have greater challenges before us in rebuilding our nations. I hope we could effectively face these challenges with active cooperation of all central banks in the region. We live in an era of rapid globalisation. Enriched by vast advances in information and communication technology, the process has facilitated the free flow of trade and investments across the borders. This has also posed burgeoning management challenges to central banks in the form of how to plan for the future in a scenario of multiples of objectives and targets entrusted to them. In order to overcome these challenges, the central banks world over, are called upon to review their objectives and restructure their activities. Such review processes encompass re-examining legal frameworks, accounting practices and policies, organisational structures including the change in the composition of Boards, supervisory and human resources standards, to mention but a few of the new tasks. Having realised this need, the Central Bank of Sri Lanka recast its objectives in December 2002 into two core objectives, namely, economic and price stability and financial system stability with a view to encouraging and promoting the development of the productive resources of Sri Lanka. The change has enabled the Central Bank to free itself from multiple objectives for pursuing its core objectives. The theme of this seminar is Central Bank Governance and how such governance is related to strategic planning in central banks. These issues are not a novelty in a private sector organisation.
Across all of these, we will also want to dig into systemic risks – most obviously those associated with cyber-attacks and the risks associated with a heavy concentration of activity across firms with a handful of outsourcers. But there is also a much wider set of more day-to-day operational issues and problems which arise for firms, and given the increasing importance of digital service delivery firms need to get much better at this. Sometimes these issues will engage the FCA’s objectives, which will be a judgement for Andrew and his team. But in general, they will only be a priority for the PRA if they meet the criteria I have just mentioned. With sufficient but limited resource we need to focus our efforts where they can have the biggest impact in terms of advancing our statutory objectives. Brexit Now Lord Mayor, I admit that I am very tempted to conclude this speech without a mention of the B-word, not least because this would surely guarantee a speech shorter than Andrew’s. But our philosophy on Brexit issues happens to illustrate the point I am making here about shared endeavours. Because getting from A to B on Brexit is very much a shared endeavour, although let’s be honest it doesn’t always feel like that! Of course there are some debates between us and firms as they restructure, in particular where we see structures that appear overly complex or lacking in proper accountability.

The recent outlook of export orders for domestic and foreign markets exhibiting a more balanced pattern suggests that policy measures have started to become effective. Distinguished Guests, 48. I would like to remind you that we continued to implement floating exchange rate regime along with inflation targeting regime in 2010. In line with its general strategy to maintain a strong foreign exchange position, the CBRT designs foreign exchange buying auctions at times when supply is higher than the demand for foreign currency, and also assuring to affect the free market conditions at the minimum level. Accordingly, the daily amount to be purchased in foreign exchange auctions was increased in August on the back of a stable increase in capital inflows to Turkey as well as to other emerging economies. With a view to strengthen foreign exchange reserves, the CBRT modified its method of foreign exchange buying auctions effective as of October 4, 2010 in order to benefit more effectively  BIS central bankers’ speeches  15  from capital inflows and to enhance resilience against volatility in these capital flows. In this regard, the CBRT may raise the amount to be bought at regular foreign exchange auctions in order to accelerate foreign exchange purchases if liquidity conditions ease on global financial market developments and capital inflows remain strong. In case the CBRT decides to accelerate foreign exchange purchases, the additional amount that may be purchased will be announced on the first working day of the week. 49.
The performance of total and core CPI inflation in the run-up to the referendum was consistent  13  The MPC judged that these factors could explain around three-quarters to four-fifths of the deviation of inflation from target, with the remainder reflecting the impact of past spare capacity weighing on domestic cost growth. 11  All speeches are available online at www.bankofengland.co.uk/news/speeches  11  with this judgment – one that helped ensure that the UK economy continued to expand jobs and growth at some of the strongest paces in the advanced world. In my view, this period demonstrated the strength of the Bank’s expanded powers. Aware that the combination of strong growth and historically low interest rates could lead to excessive risk taking, this was a period of macroprudential activism by the Bank. In the five years to 2016, the major UK banks’ CET1 capital ratios in aggregate nearly doubled, rising from 7.2% to 13.4%. The FPC introduced a new leverage ratio and counter-cyclical capital buffer. With the PRC, it regularly stressed tested the major banks against a wide range of extreme economic and financial shocks. In a major innovation, the FPC brought in two measures to help ensure that mortgage underwriting standards did not deteriorate as they had in previous cycles and to limit the rise of heavily indebted households. The active management by the PRC and FPC of potential risks to financial stability ensured that monetary policy could concentrate on its core responsibilities.

In summary, in my view, all these issues underscore the value of a careful deliberate review of the current monetary framework, and the value of today’s research workshop. Conclusion To conclude, the flexibility in the UK monetary policy framework means that the MPC has been able to support the UK economy through the changing of the seasons. Despite the economy being buffeted by diverse and sizable shocks since the recovery began, inflation has averaged 1.7%; GDP growth has generally been robust, averaging around 2%, and above the subdued rate of potential supply growth. The wide margin of spare capacity present after the crisis was absorbed, unemployment is at multi-decade lows and employment at an all-time high. Real wages have finally returned to relatively strong rates of growth. Inflation expectations have remained anchored to the target, even when CPI inflation has temporarily moved away from it. This performance underscores that the bar for changing the regime is high. But it is nonetheless healthy to review it periodically, and that review is supported by the Bank’s active research agenda. Today’s workshop is organised with that in mind, and we appreciate all your contributions to help focus our research efforts. There is an old saying that there is no such thing as bad weather, just inappropriate clothing. With the economic climate changing, let’s ensure that the Bank remains well suited to deliver its mission to maintain price and financial stability in support of the Good of the people of the United Kingdom.
In this respect, the BWI can play a key role by focusing on their core competencies, – namely surveillance, technical assistance and lending –, and by developing new tools for the analysis of macro-critical issues such as climate change, digitalisation, and inequalities. We should aim at a better coordination between the BWI and other international organisations including UN bodies (UN Development Programme, UN Climate Change Conference, UN Conference on Trade and Development…). Given the insufficient achievement of economic development in Africa and part of South Asia, there is a need to review the functioning of development aid. We could say the same concerning climate change, stronger coordination between UN bodies and the BWI could be achieved, with the latter providing the macro-financial framework needed to assess risks and policies, following the example of the NGFS. ** Let me conclude with the prophetic words of President Roosevelt, during his inaugural address of the Bretton Woods Conference back in 1944: “Economic diseases are highly communicable [and] the economic health of every country is a proper matter of concern to all its neighbors, near and distant; [for that reason] the things that we need to do, must be done – can only be done – in concert”. Most of us could not agree more: the world today needs a new harmony instead of the dissonance of this unruly cacophony. This should be a guiding principle for the next 75 years. With that in mind, I very much look forward to the outcome of your discussions today.

The fall in house prices towards the end of 2006 and in 2007 resulted in rising defaults on mortgages, especially in the subprime segment. In 2007 and 2008, interest rates will  2  BIS Review 100/2007  increase for a substantial portion of the most recently granted subprime mortgages. This will probably result in a further rise in defaults on these mortgages. Housing starts have also declined considerably. The sharp fall in housing investment has reduced the annual rate of US economic growth by about ¾ percentage point on average over the past year and a half. Housing market developments in the US may result in a more sluggish trend in private consumption and may further amplify the tendency to slower growth in the US, which may spread to the global economy. At the moment, the spillover effects seem to have been moderate and downward revisions of growth estimates have been modest. In the US, more than half of total mortgage debt is securitised and sold to investment managers all over the world. This is one of the largest fixed income markets in the world and accounts in volume terms for almost 10 per cent of global securities debt. Subprime securitised issuance showed a sharp rise in 2004 and increased further in 2005. Estimates of subprime mortgages as a share of the total volume of securitised mortgages in the US are uncertain and vary from 12 to 18 per cent. In the chart, the share is 12 per cent, or USD 665 billion.
Initial conditions for economic reforms The task which confronted the countries after the fall of the communist regime was enormous. It involved radical change of the whole political, institutional, and economic system. Along with the rejection of the communist one-party rule, the principles of the past economic system, i.e. state ownership of the means of production and the central planning and management of the entire field of economic activity, being entirely discredited, were rejected too. The issue was thus substitution of the previous system and not its reform. The goal was a transition toward a democratic society - and toward a functioning market economy, based on the dominance of private ownership. The respective move from the Communist centrally planned economy back towards a capitalist market economy implies a qualitative change in the entire economic and social regime. As such it is a unique process in modern economic development. The challenge is not only to stabilise, deregulate and liberalise the economy, as was the case in countries with extensive interventions such as Spain or Chile several years ago. The transition in Central and Eastern Europe required basic institutional, systemic as well as socio-political changes at the same time; it is inevitably a multidimensional process. It follows that, while stabilisation programmes and reforms in the other parts of the world economy may provide useful lessons from their experience, there are substantial differences implied both in the initial conditions and in the substance of the process.

Mr. Tosovsky gives the Czech Republic’s perspective of transition in Central and Eastern Europe Text of eighth Gerhard de Kock Memorial Lecture given by the Governor of the Czech National Bank, Mr. Josef Tosovsky, to an audience at the South African Reserve Bank in Pretoria on 17/2/97. It is a great honour and pleasure for me to be invited to give the eighth Gerhard de Kock Memorial Lecture, especially as this is probably (if I am not mistaken) the first time that a governor from the reforming countries of Central and Eastern Europe has been afforded this privilege. The region of Central and Eastern Europe has undergone a profound re-shaping. More than 100 million people of Central and Eastern Europe got involved in a far-reaching process of political, economic and social change. Because of its unprecedented character and size the impact of this multidimensional transformation has been in continent-wide Europe. Indeed, the political and economic map of the whole of Europe is nowadays rather different from what it used to be throughout the postwar period till the 1990s. Ladies and gentlemen, allow me to share with you some experience we have acquired. At the beginning of my lecture I cannot avoid briefly mentioning options for economic and political reforms as opened up for the countries of Central and Eastern Europe in the 1990s as well as the starting position of the former Czechoslovakia on the eve of the “velvet revolution” which in November 1989 enabled us to start a process of radical economic reforms.
In doing so, we have removed a substantial part of our accommodative monetary policy, and are clearly approaching the "normalisation range", which can be estimated to be around 2% in the euro area. We should reach this level in December. 1/4  BIS - Central bankers' speeches  Beyond this, I believe that we will probably continue to raise rates, but we may do so in a more flexible and possibly less rapid manner - "jumbo" rate hikes will not become a new habit. A favourable condition to interrupt rate hikes would be clear signs of a turnaround in the core inflation trend. Faced with persistent inflation, we have therefore demonstrated our resolve to bring it down towards our target level. I will reiterate here our forecast, our commitment and our capacity: together with the Governing Council, alongside Christine Lagarde, we are going to bring inflation down towards 2% within two or three years. II. What we differ on today: fiscal measures and energy prices This is the most difficult issue today, for fundamental reasons, not just questions of timing or of personalities. The first steps towards the necessary European coordination have already been taken: taxation of 'inframarginal' electricity producers; principle of collective gas purchases. The Banque de France is not an energy specialist; I would just like to mention two shared lessons. The first is from France: fiscal measures, taken at the domestic level to help households cope with rising energy prices, may be politically necessary as well as effective in smoothing the inflation shock.

The majority of global consumer transactions still take place through cash. As previous Currency Conferences have affirmed, we expect physical cash to remain necessary and relevant. Digital media has significantly transformed the way we experience the world. However, it has not brought us to the closing pages for physical media – including notes and coins. This may appear strange, if one considers the fact that much of our communication, planning and transportation revolve around the internet. As a recent McKinsey report puts it, mobile devices have become the “digital container” of our daily lives. This marks a profound cultural shift. The smartphone is fast becoming an extension of ourselves. Indeed, this digitalisation is altering the way payments are being made. We are not only spending more time online, we are spending more money through online channels. Our familiarity with and dependence on mobile devices is unprecedented. I believe that this attachment has made us increasingly comfortable with digital payments. They now appear more intuitive, more reliable and more convenient than ever before. This trend is evident in the findings of a recent international survey by ING. Most of the respondents are using less cash now compared to a year ago. A third of Europeans surveyed were even willing to go completely cashless if it were possible. We have seen a similar shift here in Malaysia. When internet banking was first introduced in Malaysia back in 2000, most people were sceptical about its safety and reluctant to learn how to use it.
Finally, both big banks are in the process of finalising their Swiss emergency plans, in which they have to demonstrate that they would be able to maintain their systemically important functions without interruption in a crisis. Credit Suisse and UBS have taken important measures in this context over recent years. For instance, they have both established Swiss subsidiaries to house their systemically important functions. According to FINMA, further efforts by the big banks are required to ensure their plans are finalised by the statutory deadline of end-2019. 1 Domestically focused banks  I would now like to turn to the domestically focused banks. The mortgage and real estate markets remain the biggest source of risk for these banks. Imbalances persisted on these markets in 2018. Both mortgage lending volume and prices for single-family houses and privately owned apartments continued to rise at a moderate rate in 2018. In the residential investment property segment, transaction prices fell slightly in 2018. Nevertheless, the risk of a price correction in this segment remains particularly high. On the one hand, this is due to strong price increases in previous years. On the other, the further rise in the number of vacant dwellings suggests that the brisk construction activity in rental apartments may have led to an oversupply. The risk appetite of domestically focused banks in this environment remained high. Mortgage growth at these banks continued to be robust at around 4.2% last year. Banks’ current lending policy in the residential investment property segment should be viewed as particularly risky.

This has been the case not just because a number of currencies replaced by the euro played an important international role in the past but also because the euro has become the currency of an economic area which roughly equals the United States in terms of economic size and external trade, and which has the world’s second largest capital markets. Let me emphasise at this juncture that the Eurosystem has no exchange rate target vis-à-vis other major currencies. We are also not participating in a formal exchange rate arrangement with third countries outside the EU, for instance with the United States, and we believe that this situation will continue in the future. It is important to mention that according to the Treaty the single exchange rate policy has to respect the primary objective of price stability. As the representative of a large economic area, the Eurosystem can best meet its overriding objective to maintain price stability in the euro area if it is not constrained by an exchange rate target. However, for smaller, very open economies, setting an exchange rate target may be a very reasonable decision. Against this background the ERM II exchange rate mechanism was created for those member states which have not yet joined monetary union but are willing to do so in the near future. Experience with the European Monetary System (EMS), the predecessor of ERM II, has shown that participation in a system of this kind may facilitate the fulfilment of other convergence criteria.
At the same time, there are imbalances in the sense that relative wages do not attract applicants for employment to the areas in the labour market where there are shortages. The challenge is to find a solution within the framework of the scope for pay increases created by the growth in productivity and inflationary expectations on a level with the target. Make use of available opportunities Sweden’s opportunities for regaining some lost ground in the prosperity league are good. Our country has a population which has taken to new technology in the field of IT more quickly than in many other countries; computer use is widespread at workplaces and also homes. According to a SIFO survey, 3.5 million Swedes surf the Internet - almost half of the population aged between 12 and 79. No fewer than 2 million Swedes surf every day. Even more remarkable is the fact that almost 20% of the age groups between 50 and 80 are active on the Internet. Together with some other countries, Sweden takes the absolutely leading position with regard to the use of IT, computers and mobile telephones. Young new entrepreneurs are starting successful businesses within the new areas alongside giants such as Ericsson. Pharmaceutical research and biotechnology are other areas where Sweden is well to the fore. Sweden is investing more in research in proportion to GDP than any other country in the world.

Earlier in my speech, I pointed to the imbalances in wage formation that could lead to inflation accelerating if they are handled incorrectly. This would make monetary policy tightening necessary that would risk interrupting growth and structural transformation, because the inflation target is mandatory and will not be given up. The Riksbank has both the instrument and the political mandate to achieve the target of 2%’s inflation. The issue then is not whether the inflation target will be met but the consequences that achieving the inflation target will have for the rate of growth and employment in the medium term. The Riksbank is responsible for achieving the inflation target, but responsibility for the positive development that we can now see in front of us being sustained over a longer period, is shared by everyone in Sweden. 5  BIS Review 126/1999