Beyond the lockdown: Monetary policy and financial stability in the transition

William White gave a webinar on 9 June 2020 for the Global Risk Institute. He began by explaining how the global economy developed a number of “dangerous preconditions” prior to the onset of the covid 19 pandemic. In particular, global debt ratios had swelled to unprecedented levels under the influence of extremely accomodative monetary conditions.  The fiscal and monetary response to the pandemic, in the advanced market economies, will further increase debt ratios with implications for both financial stability and inflation. Mr White noted that, unfortunately,  these macroeconomic challenges will be accompanied by other challenges as well. It is clear that current trends with respect to wealth  distribution and environmental damage are not sustainable. While solutions can be proposed for all of these challenges, they will be costly and there will be political resistance. People must be convinced that solutions that are “unpalatable” are preferable to outcomes that are “disastrous”. The need for debt restructuring needs particular attention.

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Coronavirus and the bursting of the everything bubble

On 22 April, William White participated in a panel organized by the American Enterprise Institute in Washington. Other participants were Tobias Adrian (IMF), Jeffrey Frankel (Harvard University) and Desmond Lachman (AEI).  In addition to responding to various questions posed by the moderator, Alex Pollock, Mr. White led a discussion on how debt accumulation increases the exposure of the economy to exogenous shocks – like the coronavirus. While the current response of  monetary and fiscal stimulus is appropriate, both policies serve to raise debt levels even further. Significantly more attention needs to be paid to judicial and administrative procedures for restructuring debt, both private and public, in order to avoid more disorderly and costly outcomes.



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Economic globalisation and the need for international cooperation

This presentation by William White was made in 2012, but has only recently been written up. The presentation began by noting the good and bad aspects of economic globalization, and the challenges it posed for policymakers. It then went on to discuss why international cooperation was required to meet those challenges, and to identify the various factors that were likely to impede that cooperation. Some eight years later, most of the reflections in the paper seem as pertinent as ever. Indeed, in light of the Covid-19 crisis, perhaps even more so.












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The effects of ultra low interest rates on banks and the economy

On 13 December, William White made a presentation on this topic in the final panel of a two day conference at Imperial College Business School in London UK.  Other panelists were Jose Manuel Campa, Nicholas Veron and Martin Wolf. Mr White spoke first about the effects of ultra low rates, both desired (generally ineffective) and undesired (generally unintended) and then about negative rates. The distinction reflects the possibility that there could be a “phase shift” at the Zero Lower Bound. He concluded by talking about alternatives to ultra low rates, and stressed the need for efficient processes to facilitate the orderly restructuring of debt loads that have grown very heavy.




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Tools for the Next Global Recession?

On December 10, 2019, William White participated in a luncheon panel addressing this question at the C D Howe Institute in Toronto. Other panel members were Dawn Desjardins, Deputy Chief economist of the Royal Bank of Canada, and Mark Zelmer, former Deputy Superintendent of Financial Institutions at OSFI. Mr. White began the discussion with an overview of global developments. He concluded that growing stresses in the global economy, not least rising debt levels, could trigger a recession but would certainly aggravate one arising from other causes. Since our macro instruments to respond were now much constrained, serious thought should be given by governments as to how orderly debt restructuring might be facilitated.



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Emerging Market Debt Risk: Are We Ready for the Next Crisis?

On November 18, 2019, William White made the introductory presentation for a three day conference sponsored by UNCTAD in Geneva, Switzerland. He focused on how ultra easy monetary in the advanced market economies had led to capital inflows into emerging markets (a “boom”) and increased their vulnerability to a subsequent outflow (a “bust”). Inadequate domestic policies and changes in the sources of funding (not least corporate issues of dollar denominated bonds) have increased both the likelihood of a forthcoming crisis and its possible severity. The policies needed to help prevent such a crisis, to manage such a crisis and to help resolve such a crisis (orderly restructuring and forgiveness) remain highly inadequate.

UNCTADGeneva2019 [Autosaved]

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Understanding the New Economy: Systems Not Silos

William White made a presentation on 18 September, at a conference organized by the NAEC group at the OECD in Paris, on “Averting Systemic Collapse”. He argued that we need to embrace the idea (to understand, to accept the narrative) that the global economy is a complex, adaptive system where stocks (not flows) really matter. Public policy will be much improved if we accept this reality and the need for a systems approach to public policy. In contrast, the current belief  that we can understand the system by understanding its individual components ( a silo approach), has led to a potentially catastrophic buildup of stocks of debt and greenhouse gases in the atmosphere. These stocks threatens not only economic stability but even human  survival. At the same time, the “good will” required to find political solutions to these problems, affecting everyone, has seriously declined. At the least, there is an urgent need to change the prevailing analytical framework in economics.



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Where will the money come from? How to finance a Green New Deal?

Mr White made a presentation in Paris on  16 September at a conference organized by a new German think tank, Forum for a New Economy. He began by noting some fundamental problems in providing estimates for the cost of either a Green New Deal (as recently proposed in the US) or for the costs of climate change mitigation. The focus of his remarks was on how fiscal policy, financial regulatory policy and monetary policy might be adapted to respond to climate change and to contribute to climate change mitigation. His greatest concern is that governments will shirk their own responsibility for action (not least, failing to impose much  higher carbon taxes) using the excuse that action by regulatory agencies and central banks will suffice.

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Global Financial Markets Risks: Prevention, Management and Resolution

On the 12 February, Bill White led off a panel discussion at the American Enterprise Institute in Washington. He contended that past policy measures directed to preventing economic crises have not been adequate. Indeed, there are grounds for belief that some of the policies followed in recent years have raised both the probability and the expected costs of a future crisis. When it comes, we will also find that our capacity both to manage and resolve crises has become increasingly inadequate.


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Changing Landscapes for Central Banks and Financial Regulators

Bill White made an introductory set of comments at a 21 January conference in Zurich organized by the Council on Economic Policies. Motivated by the recognition that dealing with climate change would prove very costly, the conference examined the issue of whether the governance structure (mandates, instruments  and accountability mechanisms) of central banking and financial regulation needed to be revisited.  White’s comments covered the historical origins of current practices, the underlying assumptions of current practices, the need for review of those basic assumptions and some possible implications of such a review.



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