economic policy: the challenge of future crises€¦ · structural rate of unemployment (%) source:...
TRANSCRIPT
ECONOMIC POLICY: THE CHALLENGE OF FUTURE CRISES
Pablo Hernández de Cos
Governor
TEN YEARS SINCE THE LEHMAN BROTHERS COLLAPSE
Círculo de Economía de Barcelona 14 December 2018
HEADWAY IN SUPRANATIONAL ECONOMIC POLICIES AND THE CHALLENGES INVOLVED
2
Reform of the international
financial system
Globalisation andglobal trade
New institutional
architecture of the euro
Monetary policy
Fiscal policy
Structural reformsoutstanding
Challenges to Spanish banks
REFORM OF THE INTERNATIONAL FINANCIAL SYSTEM
3
Reforms adopted
Microprudential area
o Increase in the quantity and quality of minimum capital
o Limits on major exposures
o Leverage ratio and liquidity standards
o Calculation of RWAs
Macroprudential area
o ESRB and national macroprudential authorities
o Macroprudential instruments
International Accounting Standards
o Expected loss model
Resolution
o Orderly resolution, including bail-in tool
Results
Financial institutions that are better and more capitalised, less leveraged and with higher liquidity ratios
Reduction in risks associated with systemic institutions
Simplified and more transparent OTC markets
Monitoring of non-bank financial intermediation risks.
Total Spanish banking system
SOURCE: Banco de España.
REFORM OF THE INTERNATIONAL FINANCIAL SYSTEM
4
Challenges outstanding
Very high global debt.
Increase in financial disintermediation.
Implementation challenges in respect of certain reforms approved (in particular Basel III).
Evaluation of reforms approved. The FSB shall assess whether the too-big-to-fail problem has beenadequately mitigated by the reforms.
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PUBLIC AND PRIVATE GLOBAL DEBT
% GDP % GDP
Source: IMF-Global Debt Database, World Bank-WEO, USITC, Historical Statistics of the US. Latest figures: 2016
GLOBALISATION AND GLOBAL TRADE
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Post-crisis global trade policies
Proliferation of protectionist measures
o Short and medium-term adverse effects for activity inthe economies on which the measures are imposedand for those that adopt them.
o Increase in the vulnerability of economies in the faceof negative domestic shocks.
o Long-term adverse effects on competition,productivity, technological innovation and potentialgrowth.
Possible revision of world trade rules andreform of the World Trade Organization (WTO).
Protectionism as a risk factor for the global economy
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1790 1820 1850 1880 1910 1940 1970 2000
UNITED STATES: IMPORT TARIFFS
% of total value of imports
Source: IMF-Global Debt Database, World Bank-WEO, USITC, Historical Statistics of the US. Latest figures: 2016.
NEW INSTITUTIONAL ARCHITECTURE OF THE EURO
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PROGRESS
Strengthened surveillance of macroeconomic
and fiscal imbalances
Creation of the ESM
Creation of the SSM
Creation of the SRF
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99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
%
STRENGTH OF RISK-POOLING CHANNELS IN THE EURO AREA
NEW INSTITUTIONAL ARCHITECTURE OF THE EURO
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TASKS OUTSTANDING
Deepening of the banking union
o Common financial backstop to the SRF
o European Deposit Insurance Scheme
Capital Market Union
Fiscal Governance Framework and Fiscal
Union
MONETARY POLICY
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Monetary policy in the face of the crisis.
MONETARY POLICY
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Long-term challenges of monetary policy
Note: Estimates of the natural interest rate and its determinants. Source: Fiorentini, Galesi, Pérez-Quirós & Sentana (2018).
THE POST-CRISIS SPANISH ECONOMY: ACHIEVEMENTS
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Source: Banco de España. Latest figures: 2018 Q2.
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-6
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02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Private-sector deleveraging
Improved competitiveness
Current account surplus
Adjustment of the real estate sector
Restructuring and clean-up of the financial
sector
PRIVATE DEBT AND CURRENT ACCOUNT BALANCE IN SPAIN
% of GDP % of GDP
MAIN CHALLENGES FOR THE SPANISH ECONOMY: PUBLIC DEBT
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Sources: AIReF, Eurostat, INE and UN.
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DEPENDENCY RATIO (OVER 65s RELATIVE TO POPULATION AGED 15-64)
% %
MAIN CHALLENGES FOR THE SPANISH ECONOMY: PRODUCTIVITY AND EMPLOYMENT
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1980 1984 1988 1992 1996 2000 2004 2008 2012 2016
NAIRU
STRUCTURAL RATE OF UNEMPLOYMENT (%)
Source: Banco de España. Latest observation: 2018.
ACHIEVEMENTS AND CHALLENGES OF THE SPANISH BANKING SECTOR
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Achievements
Reduction in unproductive assets
Increased solvency
Recovery in profitability
Challenges
Speeding up the reduction in unproductive
assets
Increasing profitability without undue easing of
lending standards
Strengthening the reputation of the sector
Shoring up capital and liabilities subject to bail-
in
Adapting to the new competition and banking
disintermediation framework