The strategic and structural challenges and risks arising from the use of sustained ultra-low interest rates and quantitative easing (QE) have been debated since their widespread inception with the Global Financial Crisis (GFC) of 2007-09. With the move to near zero interest rates combined with the historic QE in 2020, it is timely to analyse the initial lessons from the pandemic as well as the sustained use of near-zero interest rates and QE by the Fed, European Central Bank, and other central banks during and since the GFC. The experience of Japan is especially instructive as the BoJ embarked upon QE in the late 1990s, and has expanded its use to the widest range of assets for the longest time of any major central bank.
William (Bill) White will explore a broad range of issues for monetary and financial stability, including whether advanced economies are now mired in a monetary policy trap whereby each period of severe financial system stress leads to yet more monetary stimulus. Other risks that he will assess include the role of monetary policy in supporting increasing public and private sector debt as well as much greater risk-taking in financial markets over the past 25 years. Bill’s remarks will also address whether there is excessive confidence in the role of monetary policy generally, especially the core beliefs that near-zero rates and QE specifically can stimulate demand beyond the near term and that the harmful side effects can be contained. In sum, have near-zero rates and QE “fixed” both the GFC’s and pandemic’s stress on the banking system, economy and financial markets at the expense of greater medium and long-term problems?
This session will be moderated by Jason Stewart, Executive in Residence at GRI, and Senior Fellow, C.D. Howe Institute.
William White, Senior Fellow, C.D. Howe Institute; Former Deputy Governor, Bank of Canada; Former Chairman, OECD Economic and Development Review Committee; Former Economic Adviser, Bank of International Settlements
William (Bill) White was the chairman of the Economic and Development Review Committee at the OECD in Paris until April 2018. He began his professional career at the Bank of England, and subsequently he spent 22 years with the Bank of Canada (BoC). He was appointed Adviser to the Governor in 1984 and Deputy Governor of the BoC in 1988.
Bill joined the Bank for International Settlements (BIS) in 1994, becoming Economic Adviser and Head of the Monetary and Economic Department (MED) in 1995. At the BIS, he oversaw the preparation of its prestigious Annual Report, and had overall responsibility for MED’s research. He was also a member of the BIS Executive Committee.
Bill is a former member of the Issing Committee, advising the German chancellor on G-20 issues. He has in recent years published many articles on topics related to monetary and financial stability. In 2016, Bill was awarded the “Adam Smith Prize”, the highest award of the National Association of Business Economists (US).
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