Introductory remarks at the 2015 Finance & Society conference in Washington D.C.
Welcome Address & Introductory Remarks
Opening Remarks by Signe Krogstrup
Finance and Society Conference, May 6, 2015
I would also like to welcome all of you to this very special conference today. I first would like to say a few words on the program.
As I am sure that you already noticed, the program is filled with interesting and prominent speakers, from many different parts of finance. We will hear from policy makers, from central bankers, non-profit sector, and academics.
You may also have noticed the large number of women speakers on the program. This stands out – finance conferences usually do not feature a lot of women. But that is not for a lack of women who have important things to say on finance.
So for this conference, we decided to invite women whom we thought would give great contributions to the issues that we raise. As it turned out, these women were very interested in participating. We never ran out of great women speakers to invite. So we ended up filling the program with women.
But just as finance conferences with predominantly men as speakers are not “men’s” conferences, this is no “women’s” conference. It is not about gender and diversity or about the role of women in finance. Gender issues are not on the program. We are here to discuss the role of Finance in Society.
Why is this an important discussion? Ceyla just made that very clear. The rules governing the financial system are central to how society functions. The financial system intermediates between savings and investments. It has a strong influence on how resources are allocated between different groups within society, and also over time. And so we really want these rules of finance to be set in a way that they benefit society as a whole.
From a much narrower central banking perspective – and this where I am coming from – the health of the financial system is also key. Central banks are usually concerned with price stability, and perhaps also worry about employment, or growth. But the health of the financial system is intimately linked with a central banks’ ability to provide price stability, and to influence employment and growth prospects.
The global financial crisis and the European debt crisis have made this point all too clear. Financial sector leverage, risk taking, credit booms and subsequent busts have strongly influenced our economies. The costs, in terms of macroeconomic instability, lost jobs, deflationary concerns, have differed across countries. But they have been and remain huge.
In spite of the forceful monetary policy responses that central banks have taken, the recovery has been very slow in many countries. There are of course many complex reasons for this. But among them is that monetary policy simply cannot be as effective when the financial system is in crisis and cannot fulfil its intermediating role.
In my recent experience at a central bank of a small and very open economy, it is not enough to focus on the role of the domestic financial system in society. In Switzerland, we have seen our economy strongly influenced by foreign financial developments. Examples are sudden capital flow movements, and how the Swiss franc has tended to sharply appreciate when concerns have erupted in global financial markets. Such sudden and strong appreciations have been highly disruptive.
Similar global financial factors influence the economies of many other countries. Finance is global. So we also need to discuss how to promote good global finance for our global society. In this respect I agree with Ceyla that it is particularly fitting that we are having this discussion today at a multilateral institution, the IMF. We are grateful that the IMF has accepted to host this event.
Why is the financial system unstable and what does it mean for society? I expect the discussions today to provide important insights and, I hope, a path forward.
And now, it is a great honor for me to introduce you to our first session, a special keynote conversation with Federal Reserve Chair Janet Yellen and IMF Managing Director Christine Lagarde.
The format of the session is the following. The speakers will first offer introductory remarks of about 15 minutes each. They will then have a conversation amongst themselves on the issues raised, and will afterwards take questions.
Our speakers need no further introduction. Chair Yellen and Managing Director Lagarde, welcome. The floor is yours.