Команды новобранцев осеннего призыва из Мурманской области прибывают на Северный флот

MIL OSI – Source: Russia Federation – Ministry of Defence –

Headline: Команды новобранцев осеннего призыва из Мурманской области прибывают на Северный флот

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Подробнее28.10.2016 (08:00)

Со сборного пункта военного комиссариата Мурманской области на Северный флот (СФ) направлена очередная команда новобранцев осеннего призыва. 20 молодых людей в возрасте от 18 до 24 лет будут проходить военную службу по призыву в объединениях, соединениях и воинских частях СФ.

В торжественной церемонии отправки призывников приняли участие представители штаба СФ, областной администрации, общественных организаций, Мурманской епархии, а также родители новобранцев.

В своем выступлении начальник организационно-мобилизационного управления штаба СФ капитан 1 ранга Владимир Кондратов отметил большие перспективы в трудоустройстве в силовых структурах для тех, кто отслужил год в Вооружённых Силах. Он также сообщил родителям призывников о готовности пункта приема и распределения военнослужащих центра обеспечения управления флота к приему новобранцев.

В свою очередь, начальник отдела подготовки и призыва граждан на военную службу военкомата Мурманской области полковник запаса Вадим Бугаев подчеркнул, что все молодые люди признаны годными по состоянию здоровья и профессионально-психологическим характеристикам для прохождения военной службы в объединениях, соединениях и воинских частях СФ.

Вадим Бугаев также сообщил, что в ходе нынешней призывной кампании, как и весной этого года, военнослужащим по призыву продолжают выдавать персональные электронные карты, содержащие подробную информацию о призывнике.

Всего в ходе осенней призывной кампании из Мурманской области планируется призвать и направить на военную службу около 800 юношей. Более половины из них будут  служить на территории региона.
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Foreign Minister of Ukraine Mr. Pavlo Klimkin met with the Special Representative of the President of the Islamic Republic of Iran on the Caspian Sea, Deputy Foreign Minister Mr. Ebrahim Rahimpour

MIL OSI – Source: Government of Ukraine – Press Release/Statement

Headline: Foreign Minister of Ukraine Mr. Pavlo Klimkin met with the Special Representative of the President of the Islamic Republic of Iran on the Caspian Sea, Deputy Foreign Minister Mr. Ebrahim Rahimpour

During the talks the sides discussed wide range of issues of
bilateral relations and practical cooperation in the political and consular
sphere, exchanged views on the situation in Ukraine, Iran and the Middle East.

The sides agreed on priority directions of developing
mutually beneficial co-operation.

Comment of the Ministry of Foreign Affairs of Ukraine on the Moscow City Court consideration of the petition of appeal from the defense of Roman Sushchenko

MIL OSI – Source: Government of Ukraine – Press Release/Statement

Headline: Comment of the Ministry of Foreign Affairs of Ukraine on the Moscow City Court consideration of the petition of appeal from the defense of Roman Sushchenko

The Ministry of Foreign Affairs of Ukraine expresses strong
protest regarding decision of the Moscow City Court to dismiss a petition of
appeal of a lawyer of illegally detained in Russia citizen of Ukraine Roman Sushchenko in relation to the decision of the Lefortovo District Court in the city of Moscow dated
October 1, 2016 on the arrest of the Ukrainian national.

Groundless detention of the journalist of the National News
Agency of Ukraine in the Russian Federation under politically motivated and
fabricated charges in espionage has become another notorious evidence of absence
in this country of the legal system and the right for a fair justice.

Denial of access to the court room of the Ukrainian consular
official causes a particular indignation. This is another evidence of Russias
biased and unfair court.

We demand from the Russian side to immediately release Roman
Sushchenko and other citizens of Ukraine who have
become hostages of Russias aggressive policy and to ensure their return to
Ukraine.

Situation Update, east of Ukraine as of October 28, 2016

MIL OSI – Source: Government of Ukraine – Press Release/Statement

Headline: Situation Update, east of Ukraine as of October 28, 2016

According to the press centre of the anti-terror
operation (ATO) HQ, the enemy has violated ceasefire for 54 times over the
past 24 hours.

Militants used heavy machineguns, grenade launchers, and
small arms in Hranitne and Talakivka,
82 mm and 120 mm mortars near Taramchuk, Pavlopol, Novotroitske and Slavne. Occupants shelled the ATO positions near Marjinka, Krasnohorivka, and Shyrokyne with APC armament, mortars, machineguns, and
grenade launchers, near Vodyane  152 mm
artillery and 120 mm mortars.

The enemy fired machineguns, grenade launchers, and mortars
on the ATO positions near Zaitseve, Opytne, and Mayorsk, 152 mm
artillery  near Avdiivka.

Occupants used small arms near Novooleksandrivka
and Stanytsya Luhanska.

Prime Minister Volodymyr Groysman met with Minister of Foreign Affairs and International Development of France Jean-Marc Ayrault

MIL OSI – Source: Government of Ukraine – Press Release/Statement

Headline: Prime Minister Volodymyr Groysman met with Minister of Foreign Affairs and International Development of France Jean-Marc Ayrault

Prime Minister of Ukraine Volodymyr Groysman met with Minister of Foreign Affairs and International Development of France Jean-Marc Ayrault. The parties discussed the state of
implementation of the Minsk agreements and the situation in the east of the
country.

At the beginning of the meeting, the Prime Minister thanked
France for assistance to Ukraine in countering Russian aggression.

“The Government is eager to develop mutually beneficial
relations with France in various spheres”, said Volodymyr Groysman.

The Head of Government briefed on the situation in Donbas.
He stressed that there is no alternative to the Minsk deals and Ukraine
strictly adheres to the assumed commitments.

In this context, the Prime Minister highlighted that
sanctions against Russia should be preserved until it completely complies with
its obligations under the Minsk agreements.

While on the subject of temporary occupation by Russia of
territories of Ukraine, Volodymyr Groysman noted that the annexation of Crimea
is accompanied by the accelerated militarization of the peninsula, thereby
completely worsening the security situation in the area. “Russia is actually
transforming Crimea into a huge military base,” he stressed.

In this regard, Ukraine highly appreciates the consistent
position of France concerning non-recognition of the illegal annexation of Crimea
and elections in the State Duma of the Russian
Federation, said the Prime Minister.

Apart from that, the Head of Ukraines Government thanked
for the initiative of creating a “road map” for the implementation of
the Minsk agreements and for providing proposals to it, what was agreed by the Normandy Four leaders in Berlin.

The parties also focused on the issue of the deployment of
armed OSCE missions and mine clearing of territories in Donbas.

Moreover,
the sides discussed visa liberalization. In this context, Volodymyr Groysman
stressed that Ukraine had fulfilled all the requirements necessary for
visa-free regime.

The Prime
Minister also noted the need to complete the ratification of the Association
Agreement.

He also
informed Minister of Foreign Affairs and International
Development of France Jean-Marc
Ayrault on the Governments reforms in
Ukraine and initial achievements on this path.

Gagnez une paire d'invitations pour le film d'ouverture du French Film Festival !

MIL OSI – Source: Republic of France – Foreign Affairs in French – Press Release/Statement

Headline: Gagnez une paire d'invitations pour le film d'ouverture du French Film Festival !

Pour participer au concours, il suffit de vous rendre sur notre page Facebook et de donner le nom de votre film français préféré dans les commentaires avant le 2 novembre. Le nom des gagnants sera annoncé le 3 novembre. Participez dès maintenant et gagner l’un des deux prix !

Le French Film Festival se tiendra du 10 au 20 novembre. Suivez French Cinema in Singapore sur Facebook ou visitez http://frenchfilmfestival.sg/ pour obtenir plus d’informations sur la programmation.

Schritt für Schritt zum Wunschberuf

MIL OSI – Source: Deutschland Bundesregierung – Press Release/Statement

Headline: Schritt für Schritt zum Wunschberuf

Aygün Gasimova ist vor zwei Jahren aus Aserbaidschan in das nordrhein-westfälische Dorf Hoetmar gekommen. Sie verbessert ihr Deutsch und hilft anderen Flüchtlingen bei der Integration. Ihr Ziel ist es, Erzieherin zu werden. Adelheid Vollmann vom örtlichen Arbeitskreis Integration ist zuversichtlich: “Aygün kann das schaffen.”

Im Arbeitskreis Integration aktiv: Adelheid Vollmann und Aygün Gasimova aus Aserbaidschan
Foto: Joanna Nottebrock

Hoetmar nahe Münster – auf 2300 Einwohner kommen hier aktuell 70 Flüchtlinge. Auch Aygün Gasimova ist aus politischen Gründen geflohen und lebt nun in dem kleinen Dorf.

Sie sei froh, mit ihrem Mann und den zwei Kindern in einer Privatwohnung zu leben, erzählt die 38-Jährige. Darum gekümmert hätten sich die Mitglieder des Arbeitskreises Integration – eine enorm engagierte Gruppe von 40- bis 75-Jährigen. Sie unterstützen die Flüchtlinge bei ihrem Start in der neuen Heimat.  
Vermittlerin und Helferin

“Kommen Sie herein!” Mit strahlenden Augen empfängt sie uns im Pfarrheim St. Lambertus. Aygün ist in Hoetmar angekommen. Sie helfe im Arbeitskreis, wann immer sie gebraucht werde. Das sei ein ganz wichtiger Baustein gewesen, sich einzuleben. “Ich bin Lehrerin für Aserbaidschanisch und Literatur”, erzählt sie. Da sie außer ihrer Muttersprache auch noch russisch und türkisch spreche, könne sie bei vielen Gesprächen mit den anderen Flüchtlingen übersetzen.

Adelheid Vollmann erzählt, dass gegenüber den Flüchtlingen im Dorf eine gewisse Scheu herrschte. Man sah sie einkaufen oder spazieren gehen. Doch wie soll man sie ansprechen, wie ein Gespräch anfangen, wenn man die Sprache nicht beherrscht. “Hier konnte Aygün helfen.” Übrigens: Das Wort “Flüchtlinge” mögen sie in Hoetmar gar nicht. Sie haben sich für die Bezeichnung “Neubürger” entschieden. Das drückt aus, was den Arbeitskreis bewegt: “Die Neubürger sollen sich bei uns wohlfühlen”, so Vollmann.

Bilderstrecke: Flüchtlingsarbeit in Hoetmar

Das “Neubürger-Frühstück”

Die Aserbaidschanerin hat das “Neubürger-Frühstück” mit organisiert. Bereits zweimal hat der Integrationskreis dieses Frühstück veranstaltet, zu dem alle Hoetmarer eingeladen waren. Und diese Chance wurde gerne genutzt: zwischen 120 und 150 Bürger und viele der Neubürger fanden sich zum gemeinsamen Essen und Gesprächen ein. “Das war eine tolle Sache.”, so Vollmann. Dieses Engagement werde auch erwidert, zum Beispiel durch Einladungen zum Kindergeburtstag.

Neben den vielen Aktivitäten des Arbeitskreises hat Aygün noch ganz eigene Projekte, wie zum Beispiel die Hausaufgabenunterstützung in der Schule. “Das ist gut für alle”, stellt sie fest. “Den Kindern kann ich noch besseres Deutsch beibringen und ich lerne selber noch vieles.”
Deutsch lernen und dann Erzieherin werden

Aygün ist ehrgeizig: Gleich nach ihrer Ankunft in Hoetmar hat sie einen Grund-Deutschkurs vom Sozialamt mitgemacht. Anschließend übte die örtliche Grundschulleiterin mit ihr. Das war möglich, da jeder jeden im Dorfe kennt und so über kurze Absprachen Kontakte geknüpft und Termine gemacht werden können. Aber auch Online-Kurse nutzte Aygün.

Die Arbeiterwohlfahrt bot einen sechsmonatigen Berufssprachkurs an, fünf Monate Schule und einen Monat Praktikum in einem Übersetzerbüro. Auch das habe sie gemacht, erzählt Aygün. “Und nun will ich die B1 – Sprachprüfung ablegen”, stellt sie selbstbewusst fest. Das wird noch einmal hart: Sie wird einen Abendkurs belegen der 21 Stunden umfasst und zweimal die Woche stattfindet. Nicht ohne, mit zwei schulpflichtigen Kindern.

Bei allen Bemühungen um die deutsche Sprache hat Aygün ihren Wunschberuf vor Augen: “Ich möchte Erzieherin werden.” Super wäre es, wenn sie nach der Ausbildung im örtlichen Kindergarten arbeiten könnte. “In Hoetmar zu wohnen und zu arbeiten, das wäre sehr schön!” Alle Mitglieder des Arbeitskreises drücken ihr die Daumen. Denn ein bisschen bangen muss sie noch: In den nächsten Tagen wird geprüft, ob ihre bisherigen Praktikumsbescheinigungen für eine Ausbildung ausreichen. Aber eines ist sicher: Für alle Fälle hat sie engagierte und zuverlässige Freunde, die sie unterstützen werden.

Hoetmar wurde beim Bundeswettbewerb “Unser Dorf hat Zukunft” 2016 mit Gold ausgezeichnet. Die örtliche Integrationsarbeit trug erheblich zu dieser Ehrung bei. Einen Überblick über die Projekte des Arbeitskreises Integration finden Sie hier.
Freitag, 28. Oktober 2016

Аэрофлот переходит на зимнее расписание

MIL OSI – Source: Russia Aeroflot – Press Release/Statement

Headline: Аэрофлот переходит на зимнее расписание

28 октября 2016 года, Москва. — С 30 октября Аэрофлот переходит на зимнее расписание, которое будет действовать по 25 марта 2017 года.

В зимнем расписании авиакомпания сохраняет акцент на развитии своей маршрутной сети внутри России. Аэрофлот открывает новую линию Сочи – Симферополь, которая свяжет самые популярные российские курорты черноморского побережья и предоставит беспрецедентные возможности для путешествий в регионах, которые высоко востребованы не только в летний период. В предстоящем сезоне открывается еще одна новая линия – Москва – Сыктывкар, полеты на которой будут осуществляться два раза в день на воздушных судах Sukhoi Superjet 100.

Всего в расписании «Зима–2016/2017» запланированы полеты в 50 стран мира, в том числе семь стран СНГ (Азербайджан, Армения, Белоруссия, Киргизия, Казахстан, Молдавия, Узбекистан). Собственные рейсы будут выполняться в 131 пункт назначения, из них 46 пунктов в России, 14 – в СНГ.

На ряде внутренних направлений, пользующихся особым спросом, Аэрофлот увеличил частоту полетов: Санкт-Петербург (со 119 до 140 в неделю), Екатеринбург (с 42 до 49), Сочи (с 42 до 49), Волгоград (с 28 до 35), Новосибирск (с 21 до 28), Тюмень (с 21 до 28), Ставрополь (с 14 до 21), Уфа (с 28 до 35).

Среди зарубежных направлений значительно возрастает еженедельная частота рейсов в Бангкок (с 7 до 14), Лион (с 4 до 7), Гуанчжоу (с 5 до 7), Ханой (с 5 до 7), Майами (с 2 до 5). Новшество зимнего сезона на европейском рынке – открытие полетов во второй по значению аэропорт Лондона – Гатвик. Кроме того, открывается новый ежедневный рейс в главный аэропорт британской столицы – Хитроу. Таким образом, общая частота полетов в Лондон увеличивается с 18 до 32 рейсов в неделю.

Вклад в развитие маршрутной сети внесут другие компании Группы «Аэрофлот» – авиакомпания «Россия», единый дальневосточный перевозчик «Аврора» и активно растущий лоукостер «Победа». Программу собственных полетов Аэрофлота дополнят 85 маршрутов дочерних авиакомпаний, полеты по которым будут выполняться из Москвы, Санкт-Петербурга, Ростова-на-Дону, Краснодара, Сочи, Самары, Екатеринбурга, Махачкалы, Владивостока, Хабаровска и Южно-Сахалинска. С учетом этих маршрутов Группа «Аэрофлот» будет выполнять полеты по 216 неповторяющимся маршрутам в 51 страну мира.

Еще по 144 неповторяющимся маршрутам будут выполняться рейсы в рамках соглашений о совместном использовании кодов (код-шеринга) с авиакомпаниями-партнерами. Благодаря этому сотрудничеству в маршрутной сети Аэрофлота появятся еще 18 государств: Албания, Алжир, Босния и Герцеговина, Гана, Индонезия, Ирландия, Исландия, Кения, Люксембург, Камбоджа, Мальта, Македония, Марокко, Мьянма, Португалия, Саудовская Аравия, Словения, Тунис.

В общей сложности под кодом Аэрофлота SU намечено выполнение рейсов по 360 неповторяющимся маршрутам в 69 стран мира, включая Россию.

АЭРОФЛОТ — лидер воздушного транспорта России, член глобального авиационного альянса SkyTeam. Совокупная маршрутная сеть альянса насчитывает 1057 пунктов в 179 странах. В 2015 году Аэрофлот перевез 26,1 млн человек, а с учетом авиакомпаний Группы «Аэрофлот» — 39,4 млн.

Аэрофлот в 2016 году первым из российских компаний стал обладателем высокого рейтинга «четыре звезды» Skytrax по качеству сервиса и в пятый раз стал обладателем престижной международной премии SkyTrax World Airline Awards в категории «Лучшая авиакомпания Восточной Европы».

Аэрофлот в 2015 году впервые вошел в ТОП-10 авиакомпаний с лучшей кухней на борту по версии ведущего американского издания о путешествиях Global Traveler.

Аэрофлот располагает одним из самых молодых самолетных парков в мире, который насчитывает 188 воздушных судов. Аэрофлот базируется в Москве, в международном аэропорту Шереметьево.

Аэрофлот входит в число мировых лидеров по обеспечению безопасности полетов. Коэффициент программы Европейской комиссии SAFA у Аэрофлота соответствует уровню ведущих мировых авиакомпаний.

Аэрофлот первым из российских перевозчиков вошел в реестр операторов IOSA и постоянно подтверждает этот сертификат. Авиакомпания успешно прошла аудит безопасности наземного обслуживания ISAGO. Интегрированная система менеджмента ПАО «Аэрофлот — российские авиалинии» сертифицирована по стандартам ISO 9001:2008 и ISO 14001:2004.

Speech Benoît Cœuré: Monetary policy in a low-growth environment

MIL OSI – Source: European Central Bank – Press Release/Statement

Headline: Speech Benoît Cœuré: Monetary policy in a low-growth environment

Speech by Benoît Cœuré, Member of the Executive Board of the ECB, 4th Frankfurt Conference on Financial Market Policy organised by the Sustainable Architecture for Finance in Europe Policy Centre, Goethe University, Frankfurt, 28 October 2016
Since the onset of the crisis, the ECB has introduced a wide range of unconventional measures in order to meet its inflation objective, including negative deposit facility rates, targeted long term refinancing operations, and asset purchases. These measures were – and remain – necessary, and have been effective. But in the public debate, there is an increasing focus on the potential negative side effects of these measures and the rationale behind their deployment. This triggers two questions: why did we launch unconventional monetary policy in the first place? And how can we mitigate the potential risk of negative spillovers from monetary policy over the medium term?
The answer to the first question is clear – these measures have been taken to react to the large negative shock caused by the global financial crisis, which has exacerbated a number of structural factors that have been driving down real interest rates even before the crisis. The unconventional measures are a reaction to the challenge of low global interest rates, not their cause.
In my remarks today I will set out the challenges for monetary policy caused by structural factors such as low interest rates and low productivity growth. Understanding the structural nature of these challenges is key to answering my second question on mitigating potential spillover risks from monetary policy in the future.

The impact of low productivity growth on monetary policy
To understand the structural challenges for monetary policy, it is useful to consider two interlinked concepts for the setting of monetary policy – potential output and equilibrium interest rates. Understanding the interplay between these two concepts is at the heart of the current policy settings of the European Central Bank. How they evolve will determine the future path for inflation and at what stage monetary policy can eventually be normalised.
Potential output represents the level of activity where capital and labour are sustainably used. Equilibrium nominal rates are the level of nominal interest rates where there is neither upward nor downward pressure on activity, and are composed of two parts: the real equilibrium rate and inflation expectations. Actual levels of activity above potential put upward pressure on inflation and levels below potential put downward pressure. In similar fashion, setting actual interest rates below equilibrium rates stimulates economic activity, whereas setting interest rates above equilibrium restrains activity.
Over recent years, economic activity in the euro area has been below potential – in other words there has been a negative output gap – which has put downward pressure on inflation. The classic textbook prescription is simple: loosen monetary policy to drive interest rates below equilibrium, stimulating output to bring it back to potential and generate inflationary pressures to achieve the inflation objective. In general terms, the ECB’s monetary policy since the crisis fits that textbook prescription.
But the finer details also matter. Simple models in textbooks assume that the growth of potential output and the rate of equilibrium interest rates are fixed and immutable. In reality, productivity growth has slowed in the euro area and other advanced economies. Combined with unfavourable demographics, the slowdown in productivity has depressed potential output growth and lowered equilibrium interest rates. The productivity slowdown has been particularly pronounced in the euro area, where both total factor productivity and capital per employed person have markedly slowed down.
These changes matter for the conduct of monetary policy, and they create a dilemma. The slowdown in growth below potential has increased the need for macroeconomic stabilisation. At the same time, the overhang of public and private debt and their interaction through the bank-sovereign nexus impairs the use of fiscal policy and places a greater burden on monetary policy to carry out that stabilisation. Yet the fall in equilibrium rates reduces the margin of operation for traditional monetary policy instruments to stimulate the economy. Let me address these three elements in turn.

The greater need for macroeconomic stabilisation
Shocks constantly hit economies, driving activity away from potential and inflation away from the central bank’s objective. Recent examples include the global financial crisis and large fluctuations in oil prices. In principle, these deviations from potential output can be managed by appropriate macroeconomic stabilisation. But cyclical deviations can have more lasting effects on potential output through a process termed hysteresis.
For example, following a prolonged period of output below potential, the public may become pessimistic about future growth and income prospects and consequently reduce consumption and investment. In the short term, lower consumption and investment worsen the negative output gap and are deflationary. The lower investment also reduces longer-term capacity and hence future potential output. In a similar fashion, there is a risk of hysteresis. This means that people made unemployed due to the cyclical downturn may remain out of employment for too long, losing valuable human capital and finally becoming structurally unemployed, a tragedy for them and their families, and a loss for society.
There is some evidence that the prolonged period of negative output gap in the euro area since the crisis has weighted on potential. Potential growth is estimated to have fallen from 1.6% a year over the period 2000-07 to 0.7% over the first five years of the crisis.[1] Skill mismatch has increased in a number of countries, in part arising from the shift in sectoral composition as the construction sector shrunk rapidly.[2] The high rates of youth unemployment are also likely to result in labour market “scarring”.
The financial crisis and the bank-based nature of finance in the euro area amplified the slowdown in potential growth. The transmission of monetary policy in the euro area has been impaired by fragilities in the banking system, compounded by the overhang of public debt, on which I will shortly say more. Loss of access to finance can have a marked impact on business performance and in aggregate lower potential output.
To put some perspective on the problem, let me highlight recent research carried out for the ECB looking into the impact of loss of finance on firm performance in the euro area.[3] The research looks at thousands of loan applications made by small and medium-sized enterprises to a major German bank between 2009 and 2012. In particular, it focuses on firms that are around the cut-off line for loan acceptance. These firms are in general very similar in terms of balance sheet and profitability metrics, but some lie slightly above the line and some lie slightly below.
The study maps the outcomes for those firms in the year following the loan rejection. On average, a rejection leads to a 9% fall in assets, and lower investment and employment. The effects are amplified in firms with low liquidity, with such firms seeing a 5.6% fall in investment and a 7.2% fall in employment. Yet these are not unprofitable or inefficient firms – the average return on assets for firms just below the cut-off line is a little over 14%.
The long-term risk from the prolonged period of sluggish growth also extends beyond real activity into prices. A key part of our monetary policy is to anchor inflation expectations around our – price stability aim of a rate of below, but close to two percent over the medium term. Although our objective is forward looking, there is a risk that continued undershooting of our inflation aim will cause households and firms to revise down their inflation expectations. And lower inflation expectations directly lower the equilibrium nominal interest rate, requiring a lower interest rate to create monetary stimulus. Thanks to our measures, inflation expectations have remained anchored. According to the ECB’s latest survey of professional forecasters, expected inflation at a five-year horizon is 1.8%. But market-based expectations have been lower and more sensitive to current levels of inflation, and without our measures, the risk of a de-anchoring would have been very serious.

The increased burden on monetary policy
Taken together, a long period of growth below potential requires robust policy action to prevent the low growth from becoming entrenched into the long run. But at the same time, falling potential growth also increases the burden on monetary policy to carry out that macroeconomic stabilisation.
The policy mix in the euro area is already heavily tilted towards monetary policy given the decentralised nature of fiscal policy by 19 national governments and the limited success of European fiscal rules in creating incentives to build up national fiscal space. The available fiscal space in most euro area countries is in addition constrained by the overhang of public debt inherited from the crisis. Lower potential growth and weaker inflation inhibit the reduction of public debt ratios by acting on both sides of the fraction. Higher expenditure arising from higher structural unemployment and lower tax revenues from weaker inflation restrict the ability of governments to save, i.e. reduce the numerator. And low inflation increases the real savings required to serve a given level of nominal debt. Similarly, weaker potential growth lessens the ability to increase the denominator and grow out of the overhang.
Since the crisis, the overhang of public debt has not just reduced the ability of fiscal policy to share the burden of macroeconomic stabilisation with monetary policy, but it has also impaired the transmission of monetary policy through the sovereign-bank nexus.
Recent research by the ECB shows that during the sovereign crisis, banks in stressed countries increased their holdings of domestic sovereigns.[4] This was particularly marked for publicly owned banks and recently bailed-out banks. As the price of stressed sovereign bonds fell, these banks were forced to deleverage, reducing their lending. This drop in lending was not just confined to the domestic market – foreign subsidiaries of banks with head offices in stressed countries also reduced lending. The notion that sovereign bond purchases by domestic banks acts as a useful stabilising mechanism in the face of financial stress therefore needs qualification.

The reduced margin of operation for monetary policy
As I have just mentioned, falling growth rates had increased the need for macroeconomic stabilisation, and put greater burden on monetary policy to carry out that stabilisation. But it has also affected the capacity of monetary policy to stimulate the economy. That is because the long-run growth in output is an important determining factor of equilibrium interest rates, which have been falling in major advanced economies for the best part of the past three decades.
As I noted above, in order to generate inflationary pressure in the economy, central banks have to set interest rates below equilibrium. As equilibrium interest rates have declined, so has the interest rate that is stimulatory. Estimating equilibrium rates is tricky, and estimates are subject to bands of uncertainty. But a range of estimates puts the euro area real equilibrium rate, which is to say the equilibrium rate minus inflation expectations, at close to zero, with some measures even negative.[5]
To provide the required monetary accommodation to bring inflation back to our objective, the ECB has needed to bring the main refinancing rate to zero, and our deposit facility rate has been negative since 2014. These low and negative rates are a direct consequence of the decline in the equilibrium rate. If that rate were higher, so would our interest rate settings. Failing to follow the move lower in the equilibrium rate would have created the risk of remaining trapped in a low growth, low inflation equilibrium or even of falling in a deflationary spiral.
But there are limits to how low interest rates can go. First of all there is the physical lower bound, where households and businesses disintermediate the banking sector and hold their money in cash. Experience of other central banks shows that the physical lower bound is below where we currently have our deposit facility rate. But there may well exist an economic lower bound at which the negative impact on monetary policy transmission through banks outweighs the positive benefits of low rates for economic activity.[6] Low interest rates have implications for bank profitability in both the short and long term and can weigh on credit provision and financial stability.
Such negative effects have not materialised so far, partly because lower rates have initially generated capital gains on banks’ fixed-income portfolios and lowered banks’ funding costs, and partly thanks to the overall positive impact of low rates on the volume and riskiness of bank loans. But over time, falling rates will squeeze bank interest margins.
In the longer run, there are also risks to financial stability if low interest rates result in asset price bubbles, which are vulnerable to sharp reverses once interest rates rise. Similarly, if banks “search for yield” by increasing lending to lower quality borrowers or if they roll over non profitable, “zombie” loans to ailing companies, there may well be a higher aggregate default risk.
ECB staff estimates suggest that recent monetary policy actions in the euro area have so far been net positive for bank profitability, relative to a scenario of no policy action,[7] and we don’t see today asset price bubbles which would threaten the euro area’s financial stability. But if rates are low for too long, the negative effects may well dominate and impair the effectiveness of our measures.
Of course, low interest rates are not the only factor affecting bank profitability in the euro area. Europe as a whole is overbanked, and a number of jurisdictions have suffered from low profitability and high cost-to-income ratios for several years. With interest rates likely to remain low for the foreseeable future, even once monetary policy normalises, banks will have to revisit their business models to ensure continued profitability over the medium term.

The monetary policy reaction
Faced with activity below potential and inflation below its objective, the ECB has sustained accommodative monetary policy since the onset of the crisis. We have responded to the fall in equilibrium rates and the negative output gap by cutting our main refinancing rate to zero and our deposit rate into negative territory. Our targeted long-term refinancing operations have encouraged lending by banks and helped to mend the transmission mechanism.
More recently, our asset purchase programme (APP) has sought to influence a broader range of interest rates. This recognises that there is in fact not just one equilibrium rate, but a constellation of rates across a range of maturities and credit conditions that are important for the borrowing decisions of firms and households.
It is clear that the accommodative monetary stance is having the desired effect in the euro area. GDP growth continues, albeit still at a sluggish pace. According to the European Commission’s most recent estimates, the negative output gap has more than halved since 2014, from -2.5% to a projected -1.1% this year. The euro area unemployment rate fell from 11.2% at the start of 2015 to 10.1% now. Headline HICP inflation has risen by a percentage point over the same period, although mostly through the removal of energy price base effects. Credit standards have been loosening for firms and households, loan demand is increasing and banks are using the additional liquidity from the APP to grant more loans.[8]
There is, so far, little evidence of negative effects from our unconventional measures. Bank deposits continue to grow, and there is little sign of a disproportionate increase in holdings of cash, so the low interest rates are not causing disintermediation. Similarly, there is little sign of excessive increases in real estate prices across the euro area as a whole, although some local markets have begun to see some stronger increases.
Taken together, the ECB’s current policy settings are appropriate and are clearly providing the support required to sustain the recovery. In providing that support, we are minimising the risk that the sluggish growth becomes entrenched as enduring stagnation and that inflation becomes de-anchored. Monetary support for the recovery will continue until inflation is sustainably adjusting to our objective.

Ensuring sustainable policies for the future
But there is a risk that prolonged use of unconventional measures brings about greater risks. Absent structural changes to potential growth and equilibrium interest rates, so-called unconventional measures will become conventional measures in the euro area.
Because monetary policy has shouldered the lion’s share of the burden of post-crisis stabilisation, the debate has naturally centred around what the ECB should do. However, structural problems require structural solutions and other actors need to shoulder some of the burden. The public debate needs a renewed, wider focus.
In particular, fiscal policy has to shoulder a greater share of the burden of macroeconomic stabilisation by providing better support to investment and by achieving a growth friendlier composition. Equilibrium interest rates have to rise from their current low levels through structural reforms improving the efficiency of our economies.
Other actions are needed to ensure euro area resilience over the medium term, and may take some time to have their effects. This includes steps to complete banking union, complement it with a capital market union and address in a credible way the bank-sovereign nexus. This may also include steps to create a common fiscal capacity, backed by credible rules for national budgets and under appropriate democratic scrutiny.
As our political fabric is under severe strains, these are not low hanging fruits. But postponing the necessary reforms is not a valid option anymore. Procrastination and forbearance have not served the euro area well. Our financial system is a case in point. If our banks had been cleaned up and strengthened early after the crisis, our growth path would today be higher.
Building a more resilient euro area economy through better rules and structural and financial sector reforms will protect the potency of monetary policy to perform its stabilising role in the presence of structurally low equilibrium interest rates. But the benefits extend beyond short-term macroeconomic stabilisation. Higher potential output recreates fiscal space for governments and shifts equilibrium interest rates upwards. If the reform path is credible, part of these benefits can materialise today. Higher equilibrium rates, and a smaller share of the stabilisation burden, will reduce the need for monetary policy in the future to use the full range of its unconventional measures. But by far the best dividend from these reforms will be to improve the welfare of euro area citizens and their trust that Europe can make their lives better. This in itself is a matter of urgency.

Speech Yves Mersch: Low interest rate environment – an economic, legal and social analysis

MIL OSI – Source: European Central Bank – Press Release/Statement

Headline: Speech Yves Mersch: Low interest rate environment – an economic, legal and social analysis

Speech by Yves Mersch, Member of the Executive Board of the ECB, University of the Deutsche Bundesbank, Hachenburg, 27 October 2016
Many true and original comments are being made everywhere in the public debate on the low interest rate environment. Unfortunately, what is original is not always true, and what is true is not always original.
To bring some clarity of thought to a complex debate, I will approach the subject from three directions: economic, legal and social.
We are in a phase of weak growth and low interest rates – not only in Europe but in many mature economies. Without there being a final consensus, experts are providing a colourful bunch of possible explanations for the decline in growth potential over the past few years. Regardless of whether the causes are on the demand or supply side, there is broad agreement that the strong relative surplus of savings – some call it a savings glut[1] – has resulted in a worldwide fall in long-term interest rates.

Impact of low interest rates on the economy
The low interest rate environment is having an impact on our lives in many different ways. Let us start with what you as central bankers of the future will certainly be most interested in: the economic challenges for the European Central Bank (ECB).
Low investment and an increased tendency to save have resulted in a fall in the equilibrium interest rate – the price at which savings and investment are in equilibrium. This is important because this interest rate plays an important role in the orientation of our monetary policy. But more about that later.
Perhaps the greatest risk in such an environment is that individual developments can reinforce one other: the expectation of lower growth in the future can lead to lower investment and excessive saving today.
As I have said before, it is important to avoid a Ricardian angst effect, meaning that persistently low interest rates result in savers developing a higher tendency to save in order to accumulate the same wealth as they would have at higher interest rates.[2] The fact that the gross savings ratio has been rising again recently in many euro are countries – standing currently at 17.5% in Germany, 14.4% in France – demands our attention.
The International Monetary Fund has put forward similar arguments, warning recently of a “low growth trap”.[3] Such a development would lead to even lower interest rates, as ever more savings would compete for ever fewer investment opportunities. Greater risks of deflation could ensue.
A central bank cannot disregard such risks. Our mandate is based on maintaining price stability, which is defined as an inflation rate of below, but close to, 2% over the medium term. If we see this objective at risk, we must act.

Let us remind ourselves how monetary policy traditionally works.
In his main work “Geldzins und Güterpreise” (1898), Knut Wicksell investigated the influence of monetary policy on investment and savings behaviour, as well as on the economy. He stated that if the key interest rate is reduced to below the natural interest rate, savings are lower and consumption is higher. The natural rate is “the loan interest rate at which this reacts in an entirely neutral way to goods prices.”[4]
As a result, aggregate demand increases. This will raise the incentives for businesses to invest and they will demand more loans. If the demand for loans is so large that it is not met by the existing savings, the gap will be filled by newly created money.
Interest rate cuts thus lead to loan creation, investment and greater consumption. Investment will lead to higher salaries. As a result, the prices of goods will rise more rapidly. Conversely, higher interest rates dampen demand and price increases.
In short: if the market rate is lower than the natural rate, inflation will tend to occur, and when the opposite is true, then disinflation or even deflation are likely to result.
The problem of a lower equilibrium rate is that it limits a central bank’s leeway for supporting measures. If then in such an environment further economic shocks occur on the demand side, the central bank has to resort rather to unconventional measures, as it can only lower the policy rate to a limited extent.
The package of measures taken by the ECB reflects this situation. It consists of a mixture of conventional and unconventional measures: first of all, we have reduced the key rate to zero, and the rate on the deposit facility is even at -0.4%. In addition, we have launched an asset purchase programme and offered long-term loans to banks at favourable conditions which reward additional loan provision. The aim of all our measures is to keep market rates below their long-term level and thus create an incentive for investment and consumption.[5] Finally, we want to ensure that the inflation rate over the medium term returns to close to the 2% level. But as long-term interest rates are already at a very low level, market interest rates also have to be low and even negative in order to achieve an appropriate level of support.
In order to assess the effectiveness of our actions, it is important to observe our monetary policy measures not in isolation but as a whole: demand for loans is increasing[6] and our staff estimate that inflation in the euro area will rise to 1.6% in 2018. In 2019 we should largely achieve our aim of below, but close to, 2%. In other words, our monetary policy is working.
However, we are also aware that our measures are having side effects and are keeping this in mind. In particular, we are aware of the fact that these side effects are heightened the longer we maintain our measures. We are therefore keeping a very close eye on the effects that the low or negative interest rate environment has on banks, insurers and savers.
Indeed, banks are complaining that the profitability of their sector is being affected by the low interest rate environment. This is particularly the case for banks whose business model depends heavily on net interest income. First of all, the margins derived from maturity transformation are declining because of the very flat yield curve. And secondly, deposit-based refinancing becomes less profitable, mainly because it is difficult to pass on negative interest rates to private customers.
Some banks have started to charge for deposits over €100,000. Ultimately, however, it will mean that some banks will have to adapt their business models to operate profitably in the long term.
Particularly in Germany there is a need for action. And this is not primarily due to the low interest rate environment. The German banking sector is one of the largest in the euro area, but at the same time the most inefficient. The cost-income ratio of German banks stands at 73%, significantly higher than the rest of the euro area.
And while other countries reduced the number of their banks by almost a quarter following the financial and economic crisis to reduce overcapacity, in Germany it was only 10%. Life insurance companies and pension funds which have promised their customers a nominal rate of return are also coming under pressure: they are finding it difficult to generate these returns in the current market environment. However, we are already seeing that the industry is adapting and focusing somewhat more on unit-linked products, and thus on the more dynamic capital market. However, it is not just banks, insurance companies and pension funds that are suffering from the low interest rates – savers in general are also affected. Private savers are asking whether, in the current environment, it is still worthwhile saving at all. In most cases they take the nominal interest rate of their deposits as a benchmark. In so doing, what they don’t take account of is the real purchasing power of their savings, namely what is left over after deducting the inflation rate. If we consider for instance the real rate of return on bank deposits of private households in Germany since 1991, these generally remained at less than 1%, and sometimes they were even negative. The real overall portfolio return shows large fluctuations over the same period as a result of different factors, and stood just above 1.5% on average between 2008 and early 2015.[7]
In recent years, higher valuation gains above all have supported the overall rate of return, to which our asset purchase programme has also contributed. Because the scope for further valuation gains in the future is estimated to be fairly limited, analysts in Germany are assuming that overall returns in the coming year could decline or even be negative, also because of higher inflation.[8]
These developments suggest that the low-interest phase may lead to a structural change in the financial system, which in turn could give rise to new risks.
Especially in the euro area countries which have been greatly affected by the financial and economic crisis, lending by some banks is still severely constrained by legacy assets resulting from crisis times. On the search for yield and reinforced by technological progress new participants are coming to the fore in these fields. In particular, non-banks, which also go by the unfortunate name of shadow banks, are increasingly active in the traditional banking business. At the same time, sound and liquid companies from the real economy are entering the intermediation market and providing their customers with services that used to be the preserve of banks.
While developments of this kind need not be a bad thing in principle, we should be vigilant and closely monitor the resulting risks. For example, lower lending standards or higher debt levels could result. We also have to bear in mind the liquidity risks and interconnectedness of the various sectors.
Despite all these side effects, I would like to emphasise that the benefits of our monetary policy so far are prevailing. But this situation could change the longer these special circumstances continue. Above all, we need to remember that reactions to interest rate cuts into negative territory do not necessarily follow a linear path.[9] Moreover, the longer the measures are in place, the less effective they may become. The fact that additional lending in the euro area is losing momentum and that German banks are saying that the negative deposit facility rate is constraining lending volumes warrants attention.[10] We must be vigilant that this development does not spread to other euro area countries.
So when it comes to deciding what our future monetary policy stance should be, we have to take this into account in our cost/benefit analysis. This applies to instruments, volumes and horizons.

Legal implications
Let me now turn to the legal dimension. I will make a distinction here between private law challenges and the legal framework to which the ECB is subject.
In the financial sector, there are many products whose remuneration is based on a variable interest agreement. This means that the interest rates are regularly adapted to the prevailing market interest rates. The legal position here is very unclear, since in Europe such agreements are subject not only to private law but also to regulatory requirements, based on the implicit assumption that interest rates are always positive in a market economy
This new phenomenon of negative interest rates creates uncertainty and leaves much room for interpretation. This could lead to high legal costs if the need for clarification becomes a matter for the courts.
The legal limits to our monetary policy are, on the other hand, very clearly regulated. The EU Treaties define the objective of our monetary policy measures: maintaining price stability. The ECB has a large measure of freedom in its choice of instruments to achieve this objective. However, it must ensure that the instruments chosen are necessary, appropriate and proportionate. In addition, it must be ensured that the European System of Central Banks (ESCB) “[acts] in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources”.
And finally, we are prohibited from conducting monetary financing. This prohibition protects monetary policy against becoming a plaything of fiscal policy. So what may at first sight seem to be a restriction is, in reality, a strengthening of our mandate and our credibility.
All the measures that we have taken over the past few years fall within this legal framework. The European Court of Justice and the German Constitutional Court have confirmed that this is the case, provided that the self-imposed boundaries are observed. We would do well not to shift these boundaries at whim, as this would call the current legal certainty into question.
In the current environment, this means that we are doing and will continue to do everything within our mandate to ensure price stability in the euro area. But it also means that others have to play their part in putting the euro area back on a sustainable growth path over the long term. And I address these remarks principally to the governments of the Member States which need to make progress on the necessary structural reforms in order to make product and labour markets more flexible, to reduce red tape and where possible to invest in education, infrastructure and productivity improvements.

Breeding ground for populist movements
This brings me to my last point: societal change. Like the low interest rate environment in which we as a central bank are operating, the current social dislocation is being caused by, among other things, low growth and the resulting high levels of unemployment in many economic areas. The fact that the recent annual meeting of the International Monetary Fund and the World Bank addressed this issue earlier this month shows how important this issue has become.[11] The solution to these problems does not however lie in the hands of the central banks. As I said, we are only responsible for maintaining price stability. Fiscal redistribution, for example, for the purpose of a politically motivated correction of income differences has to be decided and implemented by democratically elected parliaments. The division of tasks is clear.
Nevertheless, the societal changes over recent years have had an impact on us, and we observe these developments with great concern.
The fact is that many people in our society are finding globalisation difficult. They believe that it only benefits large companies, some of which pursue excessive tax optimisation and question protection rights for individuals – protection rights for those who are doing their bit for society. This sentiment, reinforced by the emotional reactions to the refugee crisis, has discredited the notion of open borders.
In addition, growing uncertainty about secure pension provisions, retaining the value of savings and the deteriorating economic outlook are a breeding ground for populist parties and movements. A growing number of people are ready to sacrifice economic and social freedom for what they believe to be greater security.
In such an environment, it will be more difficult for us, as a central bank, to explain our monetary policy decisions, particularly if some groups feel discriminated against by our decisions, such as savers in Germany. We must take these feelings seriously, although the interest rate on savings reflects the state of the economy and is not primarily the result of monetary policy measures
Our monetary policy measures have prevented the euro area from sliding into a new recession. In the long term our decisions help to stabilise the value of the currency and thus ensure more fairness in society. A Bundesbank study, for example, which considers whether and in what way monetary policy influences the distribution of income and wealth, concludes that it is highly questionable that the expansionary monetary policy measures taken in recent years have increased inequality overall.[12]
Let me conclude.
The current environment of low growth and the resulting low interest rates are already having significant economic, legal and social repercussions. Through our monetary policy decisions in recent years we have prevented this situation from becoming deflationary.
Ultimately, however, what matters in the long term is to increase potential economic growth, something which is critical for the prosperity of future generations. But monetary policy cannot do this. This requires others to act: those who have the power to decide on labour market reforms, investment incentives and taxation policy. In order to push forward a lasting recovery and raise potential economic growth, structural reforms are indispensable.
The longer we remain in this low interest rate environment, the stronger the side effects of our measures will be. So it has to be our shared goal to leave behind this special situation as soon as possible in order to minimise potential damage.