William White, together with a number of other economists, answered this question in a submission to the Winter 2020 edition of “The International Economy”. White notes that the current dollar based regime is decidedly sub optimal, not least because it has no nominal anchor and no reliable lender of last resort, and it needs to be replaced. While there is currently no political appetite to engage in such discussions, the next serious crisis in the global financial system might change this. White suggests that a crucial exposure today is the massive reliance on short term dollar funding faced by many non US financial institutions. Should this trigger other problems, it might lead to a broader discussion of the shortcomings of the current International Monetary (Non) System.
InternationalEconomyDollarSurvivalWinter2020Publications
Why central bankers should be humble
This article appeared in the Winter 2020 edition of “The International Economy”. White argues that there is a fundamental intertemporal inconsistency in the repeated use of monetary easing by advanced countries to stimulate aggregate demand. This arises from the fact that monetary stimulus encourages the buildup of debt which eventually strangles further spending. Moreover, such stimulus in the advanced economies has undesirable side effects. It threatens financial instability, has negative effects on productivity growth and can seriously injure emerging market economies as well. Looking forward, there should be greater reliance on fiscal expansion in response to economic downturns, complemented by stronger fiscal contractions in upturns. Improvements are urgently needed in administrative and judicial procedures for debt restructuring, both private and public.
InternationalEconomyUEMPWinter2020pdfFault Lines in the Pursuit of Financial Stabilty
This paper will in time be published as a chapter in a book. In the interim it will be forthcoming as an INET Working Paper. It argues that, while significant efforts have been made in the post-crisis period to to make the global financial system more stable, worrying shortcomings remain. Comments would be appreciated before a final version is decided upon.
RevisedUliDocumentAug31PDF
Is a Global Currency War Still Possible?
William White, along with other economists, gave his answer to this question in the Summer 2019 edition of The International Economy. He concludes that “The world has been in a currency war for about a decade” as important central banks have eased domestic monetary policy either to encourage currency depreciation or to prevent appreciation. Whatever the rhetoric about the objective of policy being solely domestic, the end result has been global monetary stimulus of unprecedented magnitude.
InternationalEconomySummer2019
The 2008 Financial Crisis in Retrospect: Panel Discussion
William White made comments in the concluding panel of a two day meeting (August, 2018) in Reykjavik, Iceland. The papers and proceedings of this conference have just been published by Palgrave Macmillan as
“The 2008 Global Financial Crisis in Retrospect” Edited by R Z Aliber and G Zoega (2019).
Mr White’s comments focus on whether post-crisis reforms to financial regulation have been sufficiently robust. He welcomes the progress made to date but concludes that threats to financial stability remain uncomfortably high.
Reyjiavikpdf
The Limits of Macroprudential Policy
This article was published in the Winter edition of The International Economy, 2019. It suggests that monetary and macroprudential policies should be tightened jointly to resist credit bubbles and the build up of debt to dangerous levels. While central banks have shown no appetite for this, they are increasingly inclined to use macroprudential policies to allow “lower for longer” monetary policies. This implies that monetary and macroprudential policies are now working at cross purposes, which risks raising the costs of future financial instability.
InternationlEconomyMacroPruThe Decade of Catching Up: Within the EU
Bill White made a presentation at the annual Lamfalussy Conference held at the Central Bank of Hungary, this year on February 4 in Budapest. His topic was the process of economic convergence between the Central, Eastern and South Eastern Economies (CESEE) in Europe and those richer economies further to the West. After looking at the recent history, Mr White suggested that future prospects for convergence depended in large part on the CESEE economies being resilient in resisting downturns. Historical studies indicated clearly that political division and the erosion of the rule of law reduced the trust and cooperation required for a resilient economy.
BudapestLamfalussyPaperReview of a Book of Essays by Alexander Lamfalussy
Alexander Lamfalussy was the General Manager of the BIS and later the head of the European Monetary Institute, the precursor of the European Central Bank. Lamfalussy’s analysis of problems like financial instability and debt overhang, still with us today, provide important insights into possible solutions. A book that can be read cover to cover, or dipped into as the need arises.
http://www.jeeh.it/articolo?urn=urn:abi:abi:RIV.JOU:2018;1.172
Thinking Like an Economist
This essay was used as a foreward to a research study, published on May 8 2018, which looked closely into the course content of eight undergraduate macroeconomic courses taught at Dutch universites. It concludes that the overwhelming emphasis on Neoclassical models and mathematical methods means these courses provide no practical insights into solving the real problems faced by economists in the real world.
ForwardThinkingLikeanEconomist (1)Recognizing the Economy as a Complex, Adaptive System: Implications for Central Banks
This essay has just been published as Chapter 21 in “The Changing Fortunes of Central Banking”, edited by Philipp Hartmann, Haizhou Huang and Dirk Schoenmaker. Cambridge University Press.
CAEGChapterpdf