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BNM High Level Conference 2009: Central Banking in the 21st Century: Implications of Economic and Financial Globalisation

In conjunction with the 50th Anniversary Celebrations of Bank Negara Malaysia, Bank Negara Malaysia organised a High Level Conference that was held on 10 and 11 February 2009 in Kuala Lumpur, Malaysia. The theme of the Conference was 'Central Banking in the 21st Century: Implications of Economic and Financial Globalisation'. The Conference covered economic and financial market developments and their implications for monetary and financial stability, the unique challenges posed to central banks, the prospects for central bank cooperation and the role of central banks in the global financial architecture. The Conference drew participation from senior central bankers, senior public sector officials, senior members of the financial and corporate community as well as leading academicians.

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10 February 2009 (Tuesday)

Opening remarks

Dr. Zeti Akhtar Aziz, Governor of Bank Negara Malaysia
Transcript [PDF 26K]

 

Keynote Address

Dr. Zhou Xiaochuan, Governor of the People's Bank of China
Slides [PDF 156K], Transcript [PDF 134K]

 

Session 1: Economic and Financial Globalisation: A New Economic and Financial Order

A more integrated world economy as seen by the increased cross-country investments and movements of human capital has brought with it the prospect of a more productive and competitive world economy. The increase in the ties between national financial systems, the greater sophistication of financial markets and financial market instruments have also allowed for risks to be shared more broadly. The ongoing financial crisis has, however, triggered reassessments of the impact of globalisation. What have been the significant trends in global economic and financial integration? What potential opportunities and challenges do they present to central banks?

Chairperson : Dr. William White, Former Head of Monetary and Economic Department, Bank for International Settlements
Presentation on:

Reflections on the Crisis and the Post-Crisis World
Dr. Mohamed El-Erian, Co-Chief Executive Officer and Co-Chief Investment Officer of PIMCO
Slides [PDF 182K]

Moral Hazard, Market Discipline and Self-Regulation - What Have We Learnt?
Professor Axel A.Weber, President of Deutsche Bundesbank
Transcript [PDF 30K]

 

Session 2: Monetary Policy in a Globalised World

Economic and financial integration have brought about both new insights and dilemmas in the conduct and understanding of monetary policy. The long period of low global interest rates and low inflation earlier this decade was reversed last year when commodity prices shocks set off the sharp rise in inflation in most economies. Both these phenomenon were to some degree, related to globalisation. Furthermore, in a financially integrated world, capital flows pose additional challenges to emerging economies in terms of the risks in the domestic foreign exchange and other asset markets. How has globalisation challenged the conduct of monetary policy? To what extent can monetary policy control inflation in a globalised world?

Chairperson : Heng Swee Keat, Managing Director of the Monetary Authority of Singapore
Presentation on:
Managing Financial Flows - Issues and Challenges in Conducting Monetary Policy
Dr. John Williamson, Senior Fellow, Peterson Institute for International Economics
Slides [PDF 24K], Paper [PDF 54K]

Rethinking Monetary Policy in a Globalized World: Coping with Current Challenges and Beyond
Dr. Tarisa Watanagase, Governor of the Bank of Thailand
Transcript [PDF 43K]

Monetary Policy Autonomy in Small Open Economies - Fact or Myth?
Dr. Martin Redrado, President of Central Bank of Argentina

 

Session 3: Preserving Financial Stability in a Globalised World

The recent turmoil in the financial markets has raised fundamental issues on regulatory oversight structures. The blurring of lines between different sectors within the global financial system has resulted in more complex products emerging in the market. They pose new risks and challenges to regulators that only have mandates over specific institutions in financial conglomerates. Evidently, multiple regulatory structures may not be the best approach given issues on coordination, consistency and possible gaps and overlaps. Yet, there are also counter arguments against the effectiveness of regulators with multiple mandates. There is also a need to review the present arrangements between the international standard setting bodies for banking, insurance and securities industries. What is the optimal regulatory oversight structure that adequately governs financial institutions that undertake a broad range of activities? Should there be financial re-regulation and tighter regulatory grasp on the financial industry going forward? What are the alternatives?

Chairperson : Andrew L.T. Sheng, Chief Advisor, China Banking Regulatory Commission
Presentation on:

Some Structural Challenges for Central Banks in the Delivery of Financial Stability
Sir Andrew Large, Former Deputy Governor of Bank of England
Slides [PDF 14K], Transcript [PDF 45K]

Pitfalls in a Post-Bubble World
Dr. Stephen S. Roach, Chairman of Morgan Stanley Asia
Slides [PDF 119K]

 

Session 4: The Nexus between Monetary and Financial Stability

The current global financial crisis demonstrates that financial markets and institutions are important sources and propagators of shocks. Financial globalisation has increased the number of market players and the complexity of financial products. These have important implications on our understanding of how changes in financial conditions would impact monetary stability, and ultimately the real economy. What role can the central bank play in mitigating the transmission of shocks to the macroeconomy? What lessons can central banks learn about the role of asset prices in the formulation of monetary policy? Is there still a conflict between the central bank’s mandate in maintaining price stability and the pursuit for financial system stability?

Chairperson : William Pesek Jr., Columnist, Bloomberg News
Presentation on:

Financial System Complexity and Implications for the Conduct of Monetary Policy
Glenn Stevens, Governor of the Reserve Bank of Australia
Transcript [PDF 1.5M]

Should Monetary Policy "Lean or Clean": That is the Question?
Dr. William White, Former Head of Monetary and Economic Department, Bank for International Settlements
Paper [PDF 275K]

 

Conference Dinner Address

Professor Joseph Stiglitz, University of Columbia

 
 

11 February 2009 (Wednesday)

Session 5: Central Banks and The New International Financial Architecture

Globalisation has led to stresses on central banks as well as on the international financial architecture. The ongoing global financial crisis has highlighted vulnerabilities in the international financial architecture. This has led to renewed thinking about reform of the global financial system. Longer term reforms need to enhance the stability and equity of the system. What are the areas of the current system that have contributed to global instability and inequity? Central bank governance is also important in ensuring that central banks continue to fulfil their mandates. Managing central banks in the 21st century will also need to take into account the changed environment to remain effective in contributing to monetary and financial stability.

Chairperson : Sir Andrew Crockett, President, JPMorgan Chase International

Panelists:

Dr. Guillermo Ortiz
Governor of Banco de Mexico
Slides [PDF 113K]

Dr. Yaga V. Reddy
Former Governor of Reserve Bank of India

Dr. Jean-Pierre Roth
Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements
Transcript [PDF 71K]

 

Session 6: Central Bank Cooperation - Where Are We Heading?

Most, if not all, recent financial turbulences have had some negative impact on the global economy. Therefore, in addition to appropriate policy responses at the national level, policy cooperation is required at the international level. Complexity, globalisation and institutional interdependence forcefully argue for close cooperation between central banks, regulatory authorities and other standard setters. Amongst central banks, the nature and scope of cooperation have commonly included areas such as monetary policy and price stability, exchange rates, crisis management and regulatory management. What are some of the challenges that have arisen in the current progress in central bank cooperation? What would future international cooperation look like?

Chairperson : Joseph Yam, Chief Executive of the Hong Kong Monetary Authority
Presentation on:
African Perspective
Tito Mboweni, Governor of the Reserve Bank of South Africa
Slides [PDF 149K]

European Perspective
Christian Noyer, Governor of Banque de France

Latin American Perspective
Dr. Alexandre Antonio Tombini, Deputy Governor of Banco Central do Brasil

Asian Perspective
Dr. Zeti Akhtar Aziz, Governor of Bank Negara Malaysia

 

Closing Remarks

Dr. Zeti Akhtar Aziz, Governor of Bank Negara Malaysia

 

Disclaimer: The views expressed are those of the authors and do not necessarily reflect the views of Bank Negara Malaysia or the institutions represented at the conference. Individual papers (or excerpts thereof) may be reproduced or translated with the authorisation of the authors concerned.

© Bank Negara Malaysia, 2009. All rights reserved.