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Today’s interview is a very special one. Dr. Claudio Borio, renowned economist and Head of the Monetary and Economic Department at the Bank For International Settlements (BIS), joins Joseph Wang of Fedguy.com and Jack Farley for a wide-ranging discussion on the nature of financial instability and the interplay of monetary policy and fiscal policy. Borio shares insight from recent BIS research on inflationary regimes, financial cycles, and the boundaries of debt-fueled growth. Borio notes that the materialization of interest rate risk has so far been seen in the banking sector, but that we have yet to credit risk. Filmed on October 17, 2023.
Some of Borio’s and the BIS’ works mentioned in this interview:
“Monetary and fiscal policy: safeguarding stability and trust,” June 2023 Presentation in Basel, Switzerland, Claudio Borio
www.bis.org/speeches/sp230625...
“The two-regime view of inflation,” March 2023, Claudio Borio, Marco Lombardi, James Yetman and Egon Zakrajšek
www.bis.org/publ/bppdf/bispap...
“International banking and financial market developments” BIS Quarterly Review, September 2023
www.bis.org/publ/qtrpdf/r_qt2...
“Does money growth help explain the recent inflation surge?” 26 January 2023, Claudio Borio, Boris Hofmann and Egon Zakrajšek
www.bis.org/publ/bisbull67.pdf
“On money, debt, trust and central banking,” January 2019, Claudio Borio
www.bis.org/publ/work763.pdf
“Navigating by r*: safe or hazardous?” November 2021, Claudio Borio
www.bis.org/publ/work982.pdf
“The financial cycle and macroeconomics: What have we learnt?” December 2012, Claudio Borio
www.bis.org/publ/work395.pdf
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Timestamps
00:00 Interplay of Monetary Policy & Fiscal Policy
09:03 Risks Of Large Debt Loads
14:42 Maturity Of Debt Around The World
17:10 The Financial Cycle & Central Banks
23:30 "Twilight Zone" Between Low-Inflation and High-Inflation Regimes
36:05 Balance Sheet Policy (Quantitative Easing and Quantitative Tightening)
47:30 Risks In Banking & Non-Bank Financial Sector
50:40 Interest Rate Risk & Credit Risk
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