Has the search for efficiency made the financial worldless safe?William R WhiteHead, Monetary and Economic DepartmentBank ...
subtitle              Overview    The search for efficiency    As good as it gets?    Could financial imbalances lead to “...
The search for efficiency                                         subtitle     In the real economy     In financial market...
Efficiency in the real economy                                              subtitle     Deregulation in industrial econom...
Efficiency in financial markets                                              subtitle     Deregulation and technology     ...
Efficiency in financial markets   subtitle6
Efficiency in the conduct of monetary policy                                               subtitle     More focus on near...
As good as it gets?                                         subtitle     Lower and less volatile inflation     Higher and ...
Could financial imbalances lead to “headwinds”?                                                                          s...
Could financial imbalances lead to “headwinds”?                                                  subtitle      Credit grow...
Credit growth                                                                 subtitle      Low real interest rates and th...
subtitle12
subtitle13
subtitle14
Asset prices: bond rates and corporate spreads   subtitle15
Asset prices: sovereign spreads   subtitle16
Asset prices: equity   subtitle17
Asset prices: real estate                                 subtitle18
Asset prices: implied volatility   subtitle19
Sectoral imbalances                                                            subtitle      Over extended consumer and ho...
subtitle21
subtitle22
Headwinds in history                                                     subtitle      Net private savings      Credit cyc...
subtitle24
subtitle25
Boom-bust cycles in historical perspective                                             subtitle      Why history still mat...
Current financial turbulence: subprime as “catalyst”                                                                      ...
Implications for participants; households                                                     subtitle      Easier and che...
Implications for participants; originators and banks                                                       subtitle      G...
Implications for participants; originators and banks   subtitle 30
Implications for the financial system as a whole                                                       subtitle      Risk ...
Implications for the financial system as a whole   subtitle32
Implications for the financial system as a whole   subtitle33
Implications for the broader economy                                                            subtitle      Will current...
Conclusion                                                             subtitle     Current financial turbulence has deep ...
Upcoming SlideShare
Loading in...5
×

2008 03 white presentation at dexia istanbul 13 march 2008[1] [mode de compatibilité]

290

Published on

Published in: Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
290
On Slideshare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
2
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

2008 03 white presentation at dexia istanbul 13 march 2008[1] [mode de compatibilité]

  1. 1. Has the search for efficiency made the financial worldless safe?William R WhiteHead, Monetary and Economic DepartmentBank for International Settlements, BaselIstanbul, 13 March 2008 Money does not perform. People do.
  2. 2. subtitle Overview The search for efficiency As good as it gets? Could financial imbalances lead to “headwinds”? Current financial turbulence Conclusion2
  3. 3. The search for efficiency subtitle In the real economy In financial markets In the conduct of monetary policy 3
  4. 4. Efficiency in the real economy subtitle Deregulation in industrial economies Productivity and IT Transition economies and globalisation A disinflationary bias? 4
  5. 5. Efficiency in financial markets subtitle Deregulation and technology Risk decomposition and risk management New products and new players Cheaper and better services 5
  6. 6. Efficiency in financial markets subtitle6
  7. 7. Efficiency in the conduct of monetary policy subtitle More focus on near-term price stability More reliance on market processes More attention to communication 7
  8. 8. As good as it gets? subtitle Lower and less volatile inflation Higher and less volatile growth More resilience to shocks 8
  9. 9. Could financial imbalances lead to “headwinds”? subtitle 1, 2, 3, …? Efficiencies on the real side keep inflation down More efficient central banks conclude all is well More efficient financial markets overreach and imbalances build up 9
  10. 10. Could financial imbalances lead to “headwinds”? subtitle Credit growth Asset prices Sectoral imbalances Headwinds in history 10
  11. 11. Credit growth subtitle Low real interest rates and the Wicksellian natural rate Rapid credit growth globally The particular case of China 11
  12. 12. subtitle12
  13. 13. subtitle13
  14. 14. subtitle14
  15. 15. Asset prices: bond rates and corporate spreads subtitle15
  16. 16. Asset prices: sovereign spreads subtitle16
  17. 17. Asset prices: equity subtitle17
  18. 18. Asset prices: real estate subtitle18
  19. 19. Asset prices: implied volatility subtitle19
  20. 20. Sectoral imbalances subtitle Over extended consumer and household balance sheets Large external imbalances 20
  21. 21. subtitle21
  22. 22. subtitle22
  23. 23. Headwinds in history subtitle Net private savings Credit cycles and financial stress “Boom-bust” cycles in historical perspective 23
  24. 24. subtitle24
  25. 25. subtitle25
  26. 26. Boom-bust cycles in historical perspective subtitle Why history still matters Historical examples And all without inflation 26
  27. 27. Current financial turbulence: subprime as “catalyst” subtitle Implications of the securitisation revolution for participants Implications for the financial system as a whole Implications for the broader economy 27
  28. 28. Implications for participants; households subtitle Easier and cheaper access to mortgage credit More options, especially variable rates Intertemporal smoothing BUT Choice requires more judgement More exposure to market swings 28
  29. 29. Implications for participants; originators and banks subtitle Greater risk diversification Normally more sources of liquidity BUT Less need for “due diligence” Difficulties in valuing complex products Failure to price liquidity adequately 29
  30. 30. Implications for participants; originators and banks subtitle 30
  31. 31. Implications for the financial system as a whole subtitle Risk transferred to those who can manage it OR To the most gullible and the most greedy? Everyone becomes suspect And the demand for liquidity soars 31
  32. 32. Implications for the financial system as a whole subtitle32
  33. 33. Implications for the financial system as a whole subtitle33
  34. 34. Implications for the broader economy subtitle Will current turmoil result in credit rationing? How vulnerable is the global economy? Is the global housing sector of particular concern? And what about the dollar? 34
  35. 35. Conclusion subtitle Current financial turbulence has deep roots The boy who cried wolf! How a “better” financial system can still be improved Implications for monetary and regulatory policy35
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×