YouSaid · the spoken record

Paul Tucker

lines on the record: 98
first: 2023-03-27
most recent: 2023-03-27
sittings or episodes: 1
sources: podcast

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“They won't have to. This debate about trade offs and things, it's so silly. I mean, when there's a desperate financial crisis, actually a demand and spending and confidence collapses. And as soon as the central bank has pointed out, they've got instruments for catering both. When it comes to it, there's never really a pledge. I mean, I think myself, I thought at the time that when in the mid of the last decade, 2016-17, when fiscal policy was switched off effectively and the whole job of trying to revive the economy fell to monetary policy, which was itself problem, but not something central banks could control, I thought at that point that central banks and regulators should have been increasing minimum haircuts to reduce the increase in leverage in traded markets. And those are powers they have, including in the US. And there's a kind of awesome people in the USO and they haven't got the powers to do this and the other. And they haven't got quite as many powers as in Europe.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“America to jeopardize the West and our way of life. And we just got to get a grip, frankly, around the importance of stability in the financial system is as important as stability in prices. We want low and stable inflation and a resilient financial system. And this isn't some luxury. This is a precondition for sustaining our way of life.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Needs to be persistently attentive to it with everybody, really. And secondly, we can't afford to make mistakes. Our biggest mistakes as problem is concerned. Democracy and discontent and things. We also can't afford to make technical mistakes, and one of them is we cannot afford another financial crisis. And this isn't the hardest thing in the world to afford. And those people that press for deregulation, not deregulation of conduct type things, which is different political parties have different views. But wanting deregulation and stability policy is to jeopardize”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“What we saw last time was Beijing felt that it could be more assertive and more confident in the world. I am not somebody that believes we ought to be aggressively trying to contain China and things like that as at all realistic. But we shouldn't have any problem with the Chinese people or with their civilization, which is magnificent. We've got a problem with the party and they've got a problem with us. But the thing for us to do, we can't, they're so big and so successful and they've got so much human capital. What we can do is avoid, we can avoid being over-dependent, we're being over-dependent could hurt us in bad states of the world. We must keep friends and allies around the world. Washington hasn't always been very attentive to that. And it needs to be...”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“I think the bigger questions are you had a plan. Why didn't you carry it through? And Thomas Jordan saying, well, the resolution is for normal circumstances. Of course it's not. The failure of a SIFI isn't normal. So I think, and you know, what is the resolution plan for UBS? That question will need to be answered at some point, not in a great rush, it's important that things calm down and best support. I think the set of issues raised by Switzerland is different from the set of issues raised here. The set of issues raised here seems to me less excusable but more easily repaired. And I want to finish on this note, if I may, which is Does this feel like two conversations? In the geopolitics, and this is in my book towards the end, the West cannot afford another financial crisis.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Well, I'm not going to answer your question any length. And that's because I've read the emergency legislation in English, but I haven't read it in German. And English isn't an official language of Switzerland. And although I am aware of the prospectus terms of the Swiss Coco, I have not reread the prospectus. I think there is a question about if there were rights in the prospectus for the 81s to be written down under contract. Why was a provision needed in the emergency law to write them down as well? Normally, people are quite careful about doing that because if you put something in statute which implies you need to do so, which implies they weren't satisfied that the contract covered it. Because that may be a misunderstanding. And I think that I actually think that although that is understandably what the market is fussed about now,”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“I believe in prophylactic supervision. It's a job that I did as a young man. But I think the most important thing is to work backwards from failure. Would you do if it's a liquid? What would you do if it's insolvent? And perhaps there are other scenarios as well, I don't know. And I don't think they have done that. They either haven't as planned as much on that as they should have done, or they have planned and they haven't stuck to the plans. And I think it's too early to be sure on that. For me, it looks as though the United States didn't do the plans. And for the regional banks and for Switzerland, it looks to me as though they had a plan and didn't stick to it. And I think, you know, but I want to be wrong about this, by the way.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“And if the bank wasn't sound, it would go through a resolution procedure where not only the insured depositors, but the uninsured depositors would take losses after equity, after the bail-in bonds, after subordinated debt. And actually, I think I've written this out in one place. I think that the authorities ought to prescribe more the capital stack so that uninsured depositors get covered by my liquidity thing, if it's liquidity thing, well, it's just a liquidity problem, and when it's a solvency thing, they eventually get all their money back and possibly very quickly because there are so many layers of protection ahead of that. And I think bank supervisors just haven't, they've continued to focus mainly on prophylactic. Supervision And”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Well, I hope it will be, and I hope all listeners and viewers will say this is a great policy. Where can we find where has written about this, where King's written about this? We both have. We both sent it out at some length. And I think it should happen. And this debate about should we raise the deposit insurance ceiling, which has been going on here in the United States? Would go away in these circumstances. Because what the deposit insurance debate blurs is how are we handling a liquidity crisis and how we handle solvency crisis. Liquidity crisis, everybody with a short plane would be covered. By the system I just described because the central bank would lend. It could be fast to add some money, would lend against collateral, much of it prepositioned with the central bank. So long as the bank was sound.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“And I think part of the solution for the liquidity problems in banks when King has advocated a version of this and I've advocated a version of it, I would have banks cover the entirety of their short-term liabilities with assets that are discountable at the central bank or central banks around the world at the discounted value”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“I think for some types of collateral, the New York Feders occasionally or systematically had outside bodies, asset managers to help them with. We didn't do that. We trained up. We had a, in the last crisis, we had a fortnight or so where we had a firm behind a Chinese wall teach an absolutely quality squad of bagging of people how to do various things. I was firmly of the view and so was the then governor king that if we leant against collateral, we had to be capable of managing it ourselves. Because if the counterparty defaulted, we would be the owner of that collateral. I mean, when you take collateral, You always have to think about yourselves as a contingent outright owner of those instruments. I mean, collateral, in my view, other than setting interest rates, collateral policy is what central banks do.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“The principals should be articulated before. The other thing you said is good collateral. It's actually, this is an expression kind of that one can be slightly loose about. One can lend against risky collateral as long as one understands it, knows how to value it and knows what aircraft to set. So portfolios of loans, you can lend them against those as long as you are the condition that I hope the Magnund still has. It's one that I owe that I think, which is we should only ever take things as collateral that which we are capable of managing ourselves and we are capable of valuing, so I should put that the other way around.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“So, on the first bit, I mean, if the counterpart is to false and the Fed end up holding treasuries and they hold the treasuries to maturity and they're not going to lose money, that's why they'll be lending a par. On the interest rate, what matters actually is the lend, it's not so much at the high rate of interest, it's at a rate of interest that is higher than the market rate. And so it needs to be, it's like an exposed insurance premium. So, whether that's high enough, I'm not close enough to the detail to form a judgment. When you get to the real details of things, you really do need to be part of this situation to make that.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“So I want to hone in on two things lend against good collateral and then at high levels of interest. Good collateral, the government, U.S. government securities that can be pledged in the bank term funding program, they're certainly of extremely high credit quality, but they have fallen in value because of interest rate risk as interest rates have risen. a program lends $100 at par value instead of what the market value would say. And then also the high rate of interest, I think the overnight, it's the index swap plus 10 basis points. Is that a high rate of interest?”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“And then, of course, there was contagion, and then they led to everybody against good collateral. They more or less stabilized the market. And everyone always takes from that story. I'm kind of emphasizing this rather. Everyone always takes that away from that story. It's being prepared to lend against collateral. That's absolutely true. It's vital. But the first part of the story is important too. Don't lend to unsound firms. But what... My generation trying to add, but if you're not going to enter the unsand firm, then you need a plan, which we call a resolution plan, for the unsand firm not to collapse in a disorderly way. Liquidity policy, and you need resolution policy, and everything else in prudential policy should work backwards from that.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“There's sound institutions That is rarely, rarely. So Badget was writing after this crisis in 1866. What happened in 1866 is that the Bank of England, my former shop, they let Over and Gurney go bust. And no one that's watching this will have heard of Over and Nigurne. And Over in Nigurne was gigantic in Britain, the most powerful country in the world in the 1860s. And then having let Overing Gurney go bust because it was fundamentally unsound, they had what we would call inspectors go in and have a look to check that. A former governor and two other people went in and have a look at the books and advised Dopend.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“And that should remain. I think that should remain the goal. Because if not, you know, somebody is going to say persuasively, we just got to break all of these things up.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“So policy has to be reoriented to what will we do when there is a failure and how does that need to convey what we will do in ways that shape incentives. The bondholders should have been charging in the structure I'm describing. The bondholders would have been charging at premium. And that would have provided a signal of some deterioration. Whereas in the equity market, the equity market's wonderful, but the equity market is populated by optimists. They're not. Bond markets are popular corporate bond markets are populated by people that have a better balance between pessimism and optimism because they've got some risk. That it gets repaid. And we need somehow. And we know by A when I was involved with this was, to put it in a kind of slightly silly way, was I really wanted banking to be part of capitalism, to be part of a market economy.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“And good crisis management is made during financial peacetime. It is not made in the midst of crisis. One can, banks aren't new things. And that, you know, Fulton at the end of the 18th century wrote instructively about this, my predecessors in the Bank of England in the canonical crisis in 1866 wrote instructively about this. And the time for debate and discussion and the best sets of the word education is during financial peacetime. And I hope that going forward, the leaders of the Fed and the ECB and elsewhere will talk about resolution policy during financial peacetime. Because why do we supervise regulating supervised banks at all? It's because of the costs of failure, the prudential regulation, not the conduct regulation. Well, we should work backwards from what are we going to do when they do fail. No one's ever going to supervise, although it's possible that banks weren't supervised well here. No one's ever going to supervise banks well enough to”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Too many speeches about monetary policy, many of which turned out to be not very enlightening as it happened. It was just bad luck, and not enough speeches about this kind of thing. And yet when it happens, it's the most important thing ever.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Well, it really, you know, the policymakers here, I mean, if I may say so, from really senior levels, just need to get America away from this language. And the best way to do that is to talk about these issues during financial peacetime.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Agree with you. If I'm sitting there, or the people who are inside the banking, if they lend against collateral, sensibly valued with haircuts, that's not a bailout. The back of the back has to repay, and if it doesn't repay, you realize the collateral. I mean,”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“A bailout, as I use the word bailout, bailout is when taxpayers provide solvency support in some way or guarantees. I don't think providing liquidity against good collateral is a bailout. I mean, banking is runnable.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“It seems that they had a policy and then didn't carry it out. And, you know, I hope I'm wrong about those things. And for those concerned, I apologize if I have got the facts and my interpretation of the facts wrong.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“And the Federal Reserve hasn't yet got inflation under control. And so there's a lot more to be navigated yet. But I am, and I'm sure everyone feels this really. I mean, this is so soon after the last crisis. I mean, I would never have guessed that people would have relaxed their vigilance so quickly after the last crisis. And look what's happened socially, culturally, constitutionally evil in both sides of the Atlantic. I mean, big financial crises, they dislocate our societies in really difficult ways. And we've got to have policies for dealing with them. And we've got to have policies that officials stick to. So in the United States with the regional banks, they didn't even bother to have a policy. And in Switzerland,”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“it would have also something else something rather marvelous would be being said now which is my god we seem to have overcome the problem of big bag failures not the very biggest bank but actually by showing that that could have worked for a medium sized bank it would have given people much greater faith that it would work for the very large institutions so i think i think that what's happened was avoidable And I think that is a, I think that raises pretty big questions about banking policy going forward. But it's not quite the moment to be addressing those questions because there's still a degree of nervousness out there, of course.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Detail in terms of understanding the basic structure. I actually think it would have been quite easy. In this particular case, and the systemic risk council letter from Volker, Trichet, Gilbert Bert, myself, and many others in 2019 said, you should seriously consider requiring regional banks to issue this bail-inable debt as part of having a bail-in resolution plan for them. I don't understand why that wasn't done. And actually, have they done it? It's not just that it would have avoided the actions that you're describing.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“So there the question is Is the holding company now still solvent or is it bust? If it's solvent, move forward. If it's bust, well, then you have to have a resolution at the holding company level, and that would involve writing off the equity because it's bust. And the bondholders, they become, their bonds get converted into equity, or sufficient of their bonds, sufficient proportion of their bonds is converted into equity to recapitalize the group. And they become the ownership of the group moves from the equity holder of the previous equity holders to the old bondholders who are now the equity holders. Now, the United States, various complicated reasons, this would be done via a bridge company administered by the FDIC, but all of that is detail. It's kind of important detail to executing it. It's not important.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Oh, okay. So I think SBB does have two entities at Leeds. There's an operating bank and there's a holding company. There would be an internal debt between the operating bank and the holder company. And the holding company would have issued as well as equity to the market, it would have issued bonds to the market. And there'd be nothing else going on at the holder company level at all. No derivatives contracts or anything like that. The operating company, what I'm going to say doesn't depend on any details of SVB The operating company gets a difficulty, it loses its equity, its equity is written off, but the internal loan or bond between the holding company and the operating company, that gets converted into equity. So the operating company is now recapitalized.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Takeover of Silicon Valley Bank by the FDIC. They took it over, the treasury then insured deposits over the two hundred fifty thousand dollars limit, and the FDIC embarked upon an attempt to sell the assets of Silicon Valley Bank, both the actual securities, the loans, but also the business units to various parties to attract bids in the same way, you know, Sheila Bear from the FDIC did in 2008 with Washington Mutual, for example. According to reporting from Bloomberg, I saw that there were bids, but those bids were not taken for reasons that were unclear. What would your resolution plan would have done different than?”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“If one of the top 20 financial institutions in the world is failing, it is not a normal circumstance. The resolution I gave speeches over the years saying resolution is about being in a better circle of hell. And there's a risk that that image trivializes it. And I don't mean to. I mean, my generation did better than the generation of the 1930s. We did not have the Great Depression again, and that is something of to be grateful for and something which in a kind of small way I'm proud of having been part of. We said that the next generation can do quite a lot better than us. Because we're leaving them with this technology where you don't have to use taxpayers' money to bail these people out.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“But this is just the history of backing. This is stuff people have known forever. And on Credit Suisse, Which is what people call a global ciffy systemically important bank. There was a plan. What's called single point of entry resolution. And that will have been a plan that I assumed was maintained in close cooperation with the jurisdictions of the main credit suite subsidiaries, which I guess but don't know the United States, the United Kingdom, and somewhere in Asia and somewhere in continental Europe. And they didn't use that plan. Chairman of the Swiss National Bank was quoted in the Financial Times yesterday as saying words to the effect, well, resolution is only useful during normal times. I want to believe that he was misquoted. Because I don't see how anyone could think that sentence.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“partly in Europe the guidelines were implemented that these charts show that European banks apparently have much smaller interest rate exposures than many US banks. So this isn't this resolution stuff was a bit new. This bit isn't new. This isn't all lessons post the crisis. This is SML crisis stuff.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“And it's, I don't, I mean, I will say angry things if I carry on. So I think I'll leave it there. But I think there's some accounting to be done. SVB is a pretty simple bank. I mean, plainly an incompetent bank that didn't even manage to protect itself against interest rate risk by swapping its fixed rate assets into float more aid. And the supervisors have some questions about that as well. People are saying, I don't know whether it's true, that the United States also chose not to implement the 2016 guidelines on interest rate risk in the banking book. I don't know whether that's true, but lots of people are saying it, and people are circulating charts that show that European banks”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“because it wasn't obvious that they are the wise had credible resolution plans. And I used to share a body called the Systemic Risk Council with an extraordinary membership who is with us. God rest his soul. Jean Portrichet, the president of the European Central Bank in the past, now Venning, who had chaired the Basel Committee, built Olson, who chaired the SEC. And I could go on. I mean, basically, Sheila Baer created the Sustainable Risk Council who had chaired the FDIC. And we wrote a letter in 2019 to the Fed and the FDIC say, you should not go ahead with these proposals that you have out for consultation because it would involve stopping planning when you don't have a plan. And I am very sad, I am really very sad that it turned out they didn't have a plan.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Secondly, it has an international dimension to it that no corporate chapter 11 has to anything like the same degree. And it was agreed over the last crisis that there would be such a resolution plans for everybody of any significance. There's something called the key attributes, which is produced by a body that I happen to chair, but it's of no significance that I chaired it. United States designed it in 2090 Federal Reserve and the FDIC not to do such resolution planning on a regular basis with the large regional banks. And this was reckless.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Getting it to shore or to safety without a taxpayer bailout. Might be an orderly rundown, or it might be a recapitalization via what's called bailing in the bonds. Very simply, if you have at some one legal entity a bank, it's got some deposit liabilities and some insured, some uninsured, it's got some equity, but also it's issued some bonds. If it gets into difficulty and solvency difficulty, well, the equity is obviously lost, but the bonds could be converted into equity. And the bank is recapitalized. So this should be familiar to American corporate financial, because all I've just described is an administered chapter 11. Rather than a negotiated chapter 11. And the reason for it not being negotiated by a bankruptcy judge is you don't have time.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“No, I think this is really, I think the point you just made, I'm going to explain it at the moment. I think this is absolutely vital. I think the fact that you don't know, and perhaps lots of your listeners and watchers don't know, viewers don't know, is why this has come about. So, this is something that everybody ought to know about, and actually central bank governors are already repeating things I said on the record that I was in office and sits. Central bank governors should talk about resolution policy a lot because everybody needs to know about it in advance. A resolution policy is a policy for taking a distress bank. I mean, not just a liquid, but worse than illiquid. Not something that can be sorted out just by lending, that it's either solvent, insolvent, or not viable in a fundamental way.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Communicating and therefore thinking about monetary policy, we wouldn't be quite where we are because they would have been somewhat more preemptive. The banking failures of the last Full night or so are concerning and remarkable in some ways. I want to be backward looking at this. I don't want to say anything that could add to the noise about what is going on at the moment because I don't have all the information of those sitting in office. But I do have things to say about how we got to this place. And I'm afraid they're somewhat critical. So, in the United States, we've seen a large regional bank. Partly because there was no resolution plan for it. What may not be widely known is that in 2019 the Federal Reserve and the FDIC effectively decided formally to cease resolution planning to large bamboo regional banks.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“So called forward guidance wasn't a commitment, it was a prediction, but it was a prediction when they didn't know what was going to happen in the world. When people used to now got this stupid expression, data dependence. I mean, what I meant to do as a central bank, we sit around your office reading data because you don't know what's going to happen. But what you do form a view on is you have an expectation and you have some uncertainty around that central expectation and you have to fall on the balance of risks, are they to the upside or are they to the downside? You can have different risks for growth and inflation. And I think if they stuck to those old techniques,”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Monetary policy, and that they're now playing catch up. And I think the markets and others have found that difficult because after many years of forward guidance, people often criticize QE. And I would be critical of QE for going on so long. But I think people don't criticize forward guidance enough. Forward guidance is a form of addiction for the market. Oh, they'll tell us what they're going to do. Tell us well, they're not going to do well as soon as policy moved away from the zero and low bound, actually we were back to a world where”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“It wasn't just that they were sitting still, they carried on stimulating policy during this period. And then they said inflation was transitory. And I think there was quite an important symbolic mistake during that period in that they didn't sound very concerned about inflation. And I think that's a great hazard for a central bank because you must always be concerned about inflation getting out of control upwards or downwards into deflation and symmetric. People talk about the anchor. The anchor is the committee. The anchor is the men and women on these committees. And people need to feel completely assured that they care about maintaining the anchor above everything else. Everything else. And so I think that there have been unfalced errors in”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Of that is sad and part of it not so sad. That reduces the labor force, and therefore aggregate suppliers on a lower path, and therefore you need to push aggregate demand onto a lower path. So you need to have tighter policy. But instead, they said, no, they carried on stimulating.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“You raised three things. One is inflation. So my own view is that the central banks didn't need to continue QE on quite the scale they did during the whole of 2020. My view is that this is without hindsight. My view is that when the Biden administration... Launched the very large fiscal stimulus in 2021. The Federal Reserve should have raised interest rates a bit. So I've called them stopping QE in the middle of 2020. I've now got them raising interest rates in 2021. In parts of Europe, the labor force shrank very sadly because lots of people have got long COVID. and other people have chosen to retire early, which all of which is kind of”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Let me say, first of all, as a way of bridging to that, that I think the discussions in the Basel Tower these days and in the IMF and elsewhere can't be as straightforward as they were when I was sitting there and later on chairing some of the committees there precisely because of these geopolitical tensions. That's something I didn't mention very late is South China Seas, China Sea, China's fantastically assertive. Everybody that's watching this should at least once a week top up their news on what's going on in the South China Sea and the North. China C. So I think it would just be imagine having a discussion involved about cyber risk. or of the G20 that's quite tricky actually”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Curve those rapid interest rates in interest rates is causing financial instability. We've had two U.S. banks, regional banks being taken over by the FDIC. The Federal Reserve has to extend another program to lend to regional banks. Hopefully that works. We're in the process of that now. We'll see. And then Credit Suisse, that European giant Swiss bank had to be taken over by UBS. What are your thoughts as a former central banker on what's going on right now?”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“How the relations with the US and China proceed, you envision four possible outcomes that if people want to know more about, they've got to read the book. I recommend it. It is global discord, values and power in a fractured world order. So that's the first 18 chapters. Paul, I want to ask you about chapter 19, which is about your old life, your previous life as a central banker, and it is about the Bank of International Settlements, what central banker conferences are actually like. gubernatorial collegiality, people getting along doing all sorts of deals. And so I want to ask how those principles and issues that you discussed in chapter 19 apply to central banking today, where inflation accelerated beyond, anyone's really wildest dreams in 2022. Central banks perhaps were a little bit behind the curve. And now those in order to get ahead of the”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“So, for those people in the 1990s that thought, oh, it's not only might they become like us, but they're pursuing economic liberalization and therefore they're destined to become like us. And we should put all of our chips on that. Document nine is a pretty comprehensive refutation of that policy. I just don't personally, I don't think we should be surprised. But as I said before, my criticism is putting all our eggs in the other basket.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, let's say the two final two no's six and seven are basically known to criticizing the party state. And everyone should read this document. Those who can should read it. Those who can should read it in It's a very important document. And it goes along with speeches during the period from very important people in the party that said, well, actually, the party stands above the state, the party stands above constitution, the rule of law in China means the rule of the party. We've just shriven the...”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT
“You mean liberal in the tradition of Adam Smith? That makes sense, but not so they're against all of these liberal values, but they're not against private markets and they're not against individuals becoming wealthy via ownership of financial assets so long as they toe the line.”
2023-03-27 · Forward Guidance · Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker · IDENTIFIED FROM THE TRANSCRIPT