Archive for the ‘Speech / Interviews’ Category

History of Netherlands Central Bank and future outlook for central banks (which is highly confused)…

May 8, 2014

A really nice speech by Klaas Knot head of De Nederlandsche Bank, the central bank for Dutchland.

The speech is given celebrating 200 years of the bank, so there is some history to it. Knot then also looks at the future outlook for central banks in future. How DNB evolved from being a sleeping old lady to guardian of the gilder is an interesting story which I guess is common across most central banks.

He says neglect of financial stability as a goal is coming to haunt central bankers. After all the original purpose for most central banks was fin stability which then moved to price stability. With FS, there are two issues:


Currency management in India – issues and challenges…

April 29, 2014

One wishes central banks talked more about other issues they tackle other than mon policy.

This is a really interesting speech from RBI Dep Guv. Dr KC Chakrabarty (slightly dated) on this really interesting issue of currency management. People can choose to ignore what central banks do in mon pol but currency policy  is something  which no one can choose to ignore. Any policy change with respect to currency issues is followed and understood by all.

The speaker touches on several issues in currency management in India:

  • Demand and supply of currency notes – both process and trends are discussed
  • Demand and supply of factors that lead to currency production
  • Security and counterfeit issues

Useful stuff. May be with digital currency etc. one looks at other kinds of currency management challenges in future. 

A year without dividends and profit distribution – what are the reasons?

April 25, 2014

The title of the post will most likely suggest that it is about some company. Well it is, except that the company is Swiss National Bank, the central bank of the nation.


QE in Euroarea has to deal with three kinds of interest rate differentiation..

April 17, 2014

A thoughtful speech from Benoît Cœuré, member of ECB.

He says when we say about QE in EZ, we have to look at interest rates across three spectrums:

Focusing specifically – and at the risk of over-simplifying the issue – on the interest rate channel of monetary transmission, monetary policy operates by raising or lowering the interest rate in the economy. A lower (real) interest rate lowers the cost of capital for firms, encourages investment spending and stimulates consumption. A higher real interest rate has the opposite effect.

But the point of course is that there is no such thing as one interest rate to which all economic agents respond. There are at least three ways in which interest rates are differentiated in the euro area. There is vertical differentiation – different economic agents are sensitive to interest rates with different maturities. There is spatial differentiation – different interest rate curves provide the reference rates in different jurisdictions. And there is horizontal differentiation – within jurisdictions, different markets determine firms’ and households’ cost of borrowing.

What this implies is that the levels of medium- and long-term real interest rates across jurisdictions and markets will always be relevant to the formulation of monetary policy. The difference between normal and abnormal times is therefore not what we are trying to achieve – it is how we strive to achieve it.

He further explains these three kinds of differentiation:

First, vertical differentiation – the relevant maturities at which asset purchases should take place. In practice, purchases would naturally be linked to the interest rate maturities that are most important for firms’ and households’ investment and consumption decisions. In the euro area, this tends to be the intermediate to longer part of the yield curve.

Second, spatial differentiation – the jurisdictions across which asset purchases should be spread. Here we would have to take into account the interest rates in different jurisdictions that provide the benchmarks for loan pricing. In the euro area, remember, there is no single yield curve that refers to a “commoditised” reference asset and that is equally relevant for loans to firms and households. Creating such an asset would ease the implementation of our monetary policy, but this cannot be a short term project.

Third, horizontal differentiation – the markets within jurisdictions that asset purchases should target. When financial markets are highly integrated with a high degree of substitutability between assets, purchases in one asset class, such as government bonds, are more likely to affect term premia across all asset classes. This is because the process of portfolio reallocation facilitates a relatively homogenous transmission. But given the segmentation of euro area financial markets, this effect cannot just be assumed. To achieve a homogenous reduction of term premia across relevant interest rates, segmentation would have to be taken into consideration in our strategy.

Pretty complicated as most things in EZ are. One has to decide on maturities, countries and then within countries..

He says unconv policies are not as unconv and there is a wonderful quote at the end:

Unconventional monetary policy tools are less unconventional than the word implies. They are unusual, because they respond to highly unusual circumstances. They imply risks that have to be carefully weighed and mitigated. But fundamentally, unconventional tools are only a means for central banks to continue doing what they have always done: managing aggregate demand, by influencing the level of real interest rates and other monetary transmission channels, to maintain price stability. To borrow from Giuseppe Tomasi di Lampedusa, in these unusual times “everything must change, so that everything stays the same”. It is this that will determine both the appropriateness of using targeted asset purchases in our monetary policy operations, and the design of any such purchases.



From a one handed economist to an economist with many hands like a Hindu god …

April 14, 2014

Came across this interesting and dated speech of Nemat Shafik, ex IMF DMD and now BoE’s Deputy Governor. The speech was given at a conference in Delhi organised by CAFRAL.

She says:


What happens when the heart available for transplant is that of 75 year old central banker?

April 11, 2014

Usually brilliant and funny Richard Fisher if Dallas Fed has this interesting speech. He discusses QE, forward guidance, hype around central banks and so on..

He narrates a story told by Mario Draghi at a conference:


What is fair trade and fair value? Myths and Reality..

April 1, 2014

DeLisle Worrell, Governor of the Central Bank of Barbados has this interesting speech. As his previous speeches this one also looks at myths around economics (one and two).

This time he targets fair trade and fair value concepts:


Three dimensions of a successful finance professional…

March 13, 2014

Rave Menon of Monetary Authority of Singapore speaks on finance sector and jobs in Singapore… He says fin professionals in Asia need three competencies:


Irish exceptionalism in the world economy..

March 13, 2014

Patrick Honohan gives this nice historical perspective to Irish economy.

He says Irish economy keeps swinging from one side to other..thus the exceptionalism..


Of dentists and economists – the importance of a consistent economic policy framework..

February 19, 2014

A nice speech by Jens Weidmann, President of the Deutsche Bundesbank.

It is obviously based on the famous Keynes quotes on how econs would be seen doing a good job if they are as respected as dentists:


The Greek financial crisis – from Grexit to Grecovery

February 14, 2014

A nice speech by Greece central bank head George A Provopoulos. He presents a complete and thorough picture on The Greece crisis.

He joined GCB just on the verge of the crisis:


As RBI tries to become a BoE clone, BoE tries to become like RBI…

February 13, 2014

As RBI evades Government/Parliament to adopt the fancied inflation targeting regime, things are changing in the inflation targeting world.  They still say they are inflation targeters but are looking at all kinds of things. Call it flexible inflation targeting which is nothing but RBI’s now discarded multiple indicator approach.

One such case is Bank of England which is even more interesting as RBI is going to try and become like BoE over the years. The RBI committee report borrows heavily from Bank of England framework.

There has been lot of discussion on forward guidance of these central banks and more in case of BoE. The inflation targeting central banks have all kinds of targets (in the name of flexibility) like BoE has for unemployment. So it had this target that it will keep stimulating till unemployment touched 7%. As it touched 7.1% there were debates over whether BoE will stop its easy policy.

There were two solutions. One to lower the unemp threshold to say 6.5% like Fed did (though US unemp has touched tantalising close to 6.6%) or to revamp its fwd guidance statement. BoE chose the second option.

In its recent inflation report (which is also going to be taken out by RBI), BoE explained its changed stance. And interestingly, BoE will look at many indicators for its future policy just like RBI policy.

BoE head Carney explained:


Cutting the Gordian Knot or splitting hairs – the debate about breaking up the banks

January 22, 2014

Superb speech by Dr Andreas Dombret, Member of the Executive Board of the Deutsche Bundesbank.

He starts with this tale of Guardian knot:


How JD Power III (ratings) changed the automobile industry?

January 21, 2014

A nice interview of JD Power III, the guy who changed the auto industry by publishing the ratings and rankings of each auto product:

 In 1968, J.D. Power III took the radical step of soliciting customer feedback about cars through consumer surveys. This move ultimately led automakers to shift their operations from a product focus to a greater focus on the customer. Today, J.D. Power and Associates is focused on gauging customer satisfaction across a broad array of industries.

Power is now the subject of a new book that documents that history: Power: How J.D. Power III Became the Auto Industry’s Adviser, Confessor, and Eyewitness to History, by Sarah Morgans and Bill Thorness.  Recently, Power was a guest at theMack Institute for Innovation Management conference on the theme of disruptive technologies. Wharton professor of management John Paul MacDuffie sat down with Power to learn more about the experiences that led him to launch J.D. Power and Associates.

Nice bit..he has had quite a career working in different industries (started with auto industry thiugh) before starting on his own..

Indian economy and policy during financial crisis (2008)

January 20, 2014

Much is written and known. Still it is useful to keep revising what went on.

Deepak Mohanty of RBI summarizes how Indian policy reacted to global financial crisis. He begins showing how Adv econ central banks intervened during the crisis. Then the impact on EMEs and finally on India.

Like EMEs, India suffered two rounds of crisis – one in Sep-2008 as crisis started and two in May-2013 when the word taper buzzed. In both, the policy responses were different. In the first, India had huge cushion given the robust economic conditions. In the second, the conditions were not as great:


Why financial markets need referees and can anyone regulate a $400 trillion market?

January 16, 2014

A nice interview of Gary Genseler, just retired head of CFTC (Commodity Futures Trading Commission).

He points to how CFTC has tried to bring regulation to the futures market in US. He says transparency is the key:


For goodness’ sake, this Italian is ruining Germany..

December 31, 2013

Says ECB chief Mario Draghi in this year end interview with Der Spiegel.

He respond to this often criticism of Germans on ECB policies:


Indian economy and Policy responses in 2008 crisis

December 27, 2013

Deepak Mohanty, ED of RBI usually gives nice speeches summarising the key ideas whatever the given theme of his speech.

In this recent speech, he summarises the Indian response to the 2008 crisis and developments in Indian economy:


What If: “Lehman Sisters’ or the Sisterhood Ran G20 and Big Business?”

November 28, 2013

Women in Parliaments Global Forum (WIP) has this annual summit discussing several issues related to gender, diversity etc.

One such session was stirringly titled as –” Reverse reality – what if: ‘Lehman Sisters’ or the sisterhood ran G20 and big business”.

Thanks to this speech by Jorg Asmussen of ECB at the panel that I came to know of it. He points how ECB is promoting gender diversity in ECB. 

Nice thought though..Lehman sisters…

Can central bankers save the world (or is the world worth saving)?

November 28, 2013

Mr. Norman Chan, Chief Executive, Hong Kong Monetary Authority has this nice speech with a provocative title. Obviously central bankers cannot save the world but they try and try hard. But most of the time they put the world into a bigger hole. Infact the fab book Lords of Finance does suggest central bankers in the four economies could have saved us from the great depression. But it was not just them but the politicians who were reluctant to let gold standard go. At the end of the day it is the political system and the historical path  which matters. Central bankers are a part of this system and play their own bit.

He begins asking is the world worth saving?



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