ISSN 2330-717X

Georgieva: Opening Remarks At Michel Camdessus Lecture Series


Ladies and Gentlemen, dear colleagues and friends: welcome to the seventh Michel Camdessus Lecture—our signature lecture series on the role of central banks.

It is my privilege to welcome and introduce our speaker today—the Chairman of the Governing Board of the Swiss National Bank, Thomas Jordan.

1. Unprecedented Times

Before I turn to Governor Jordan, let me underscore that this year’s lecture takes place under very unusual circumstances. The world is facing a crisis like no other—one that is more severe and more complex than anything we have seen in living memory.

For all of us, this means supporting those who are most affected, especially those who have lost loved ones. And it means adapting and rethinking our lives and economies—which brings me to our first-ever virtual Camdessus Lecture.

When we were planning this event—back in January—and Governor Jordan agreed to be our speaker, our theme was the ‘lower-for-longer’ interest rate environment and the challenges this poses for monetary policy. It now looks like thatbecause of the crisis, it will be lower for even longer.

We discussed this challenge during yesterday’s conference on Advances in Monetary Economics—which was organized by the IMF’s Monetary and Capital Markets Department and in which many of you participated.

2. Monetary Policy in Uncharted Territory

As you know, the IMF recently cut its global growth forecast to -4.9 percent in 2020, and we project only a partial recovery in 2021. The good news is that governments and central banks around the world have taken extraordinary fiscal and monetary measures. These actions have placed a floor under the global economy, but we are not out of the woods.

In fact, the current environment raises key questions for monetary policy:

  • How can central banks best support the economy once they have exhausted conventional policy space—and how can they avoid unintended consequences, such as asset markets that may become detached from economic fundamentals?
  • What other instruments are in the toolbox if circumstances become even more challenging?
  • How will higher debt levels and weaker balance sheets affect demand for credit, the natural rate of interest, and the conduct of monetary policy going forward?
  • And what will be the impact of ‘lower for longer’ on financial stability—both domestically and externally via spillovers?

These are difficult questions. We are in uncharted territory. But we can benefit from those who have successfully pioneered unconventional approaches—and that includes Thomas Jordan and the Swiss National Bank.

3. Redesigning Monetary Policy

As a small open economy, Switzerland has been frequently affected by external economic shocks—and policymakers have responded with creativity and resolve. Think of the European sovereign debt crisis in 2011, when the SNB introduced an exchange rate floor to help safeguard its economy. [1] Switzerland and the franc are considered safe havens, and policy choices during shocks are often particularly challenging and unconventional.

A few years later, in 2015, a negative interest rate policy was introduced to deal with deflationary pressures—a policy that remains in place to this day. Again, this was an innovative approach that others have been monitoring very closely.

Thomas, who has served on the SNB Governing Board since 2007, has played a key role in shaping these policies—including as head of financial markets and by overseeing the regulatory work, before being appointed Chairman of the Governing Board in 2012.

In this position, he is joined by two other Board members—Fritz Zurbrügg and Andréa Maechler—both of whom previously served in senior positions at the IMF. This is just one of many connections between our organizations. I want to thank the Swiss authorities, the SNB, and Thomas personally for engaging deeply with the IMF, especially through generous financial support for our regular and concessional lending resources, debt relief, and capacity development efforts, especially in the Caucasus and Central Asia region.

International cooperation is part of Switzerland’s DNA, and it’s a key priority for Thomas. After the global financial crisis, he worked with other policymakers to draw up new capital standards for systemic banks—and these stronger buffers have benefited economies in the current crisis. The SNB is also working with other central banks to help address climate risks—this includes finding ways of better integrating climate risk into banking supervision. [2]

I expect many know well Thomas’ excellent work and leadership at the SNB, but let me add one more thing you may not know: Thomas is noted for having excelled at water polo, one of the world’s most demanding sports. It requires extraordinary agility and situational awareness, creative game plans, and rallying teammates to pursue a common goal. These are some of the key ingredients of his distinguished career.

So, who better to quiz on the workings of monetary policies in the current environment? And who better to help us redesign monetary policy in this crisis and beyond?

Thomas—I am deeply honored that you have accepted our invitation to deliver the Michel Camdessus Lecture. We look forward to hearing your thoughts on monetary policy in difficult times and the insights you have gained from the experience in Switzerland.

I also look forward to engaging with you in a conversation about the major challenges facing central banks, after your remarks.

The floor is yours.

[1] Speech by Thomas Jordan (2016): “ The euro and Swiss monetary policy.”

[2] SNB Financial Stability Report (2020): As a longstanding member of the Basel Committee on Banking Supervision, the SNB is contributing to work on the integration of climate risk into banking supervision. In April 2019, the SNB joined the Network for Greening the Financial System ( NGFS).

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