La poltica monetaria nunca volver a ser como antes

Publicado en December 5, 2013

Por Olivier Blanchard
(Versin en English)
El mes pasado, el FMI organiz una importante conferencia, en honor a Stanley
Fischer, sobre las enseanzas de la crisis. En este artculo, presentar mi visin
personal de la misma y me centrar en lo que, en mi opinin, son las enseanzas
para la formulacin de la poltica monetaria, pero antes permtanme mencionar
otras dos conclusiones importantes.
En primer lugar, es til tener la situacin macroeconmica en orden cuando se
produce una crisis (externa). En comparacin con otros episodios anteriores, la
aplicacin de una poltica fiscal prudente antes de esta crisis les dio a los pases
de mercados emergentes margen de maniobra para aplicar polticas fiscales
anticclicas durante la crisis, y esto hizo una gran diferencia.
En segundo lugar, despus de una crisis financiera, es esencial sanear y
recapitalizar rpidamente los bancos. Esto no ocurri en Japn durante los aos
noventa, y fue un proceso costoso. Pero s ocurri en Estados Unidos, lo que
ayud a la recuperacin.
Quisiera ahora referirme a la poltica monetaria y centrarme en tres cuestiones:
las implicaciones de la trampa de liquidez, el suministro de liquidez y la gestin
de los flujos de capitales.
Con respecto a la trampa de liquidez: hemos constatado, lamentablemente a un
costo muy alto, que el lmite inferior cero puede ser realmente vinculante, y que
puede serlo durante un perodo prolongado: de cinco aos hasta este momento.
Tambin hemos constatado que, aun en ese caso, existe cierto margen de
maniobra de poltica monetaria. La mayor parte de la evidencia emprica muestra
que la poltica no convencional puede afectar sistemticamente a las primas a
plazo y, por consiguiente, inclinar la curva de rendimientos a travs de los
efectos de cartera. Sin embargo, sigue siendo un hecho que, en comparacin
con la poltica convencional, los efectos de la poltica monetaria no
convencional son muy limitados e inciertos.
Por lo tanto, en el futuro es aconsejable por muchos motivos evitar, en primer
lugar, caer en la trampa, y esto plantea nuevamente la cuestin de la tasa de
inflacin. Existe un amplio consenso en que actualmente en la mayora de los
pases avanzados sera positivo que la inflacin fuera ms elevada. Cabe
suponer que si antes de la crisis hubiera sido ms elevada, hoy tambin lo sera.
Concretamente, si la inflacin hubiera sido 2 puntos porcentuales ms alta antes
de la crisis, podemos suponer que hoy sera 2 puntos ms elevada, que la tasa
real sera 2 puntos porcentuales ms baja y que hoy estaramos ms cerca en
Estados Unidos de una salida de esta situacin actual de tasas nominales de
nivel cero.

No deberamos descartar la posibilidad, planteada por Larry Summers, de que

probablemente tengamos que mantener tasas reales negativas durante un
perodo prolongado. Los pases podran, en principio, alcanzar tasas reales
negativas a travs de unas tasas nominales bajas y una inflacin moderada. En
cambio, seguimos enfrentndonos al peligro de que se produzca un crculo
vicioso, en el cual una demanda dbil d lugar a una inflacin ms baja, una
inflacin ms baja d lugar a tasas reales ms altas, y estas tasas ms elevadas
den lugar a su vez a una demanda an ms dbil.
Con respecto al suministro de liquidez: en los pases avanzados (pero, tambin
en este caso, la enseanza es ms general), hemos aprendido que las corridas
no solo son importantes para los bancos, sino tambin para otras instituciones
financieras, y para los gobiernos. En un entorno de elevados niveles de deuda
pblica, no se pueden excluir los riesgos de refinanciamiento. Esto significa, y
es uno de los temas subrayados por Paul Krugman, que es esencial tener un
prestamista de ltima instancia, que est dispuesto a prestar fondos no solo a
las instituciones financieras sino tambin a los gobiernos. La evidencia sobre
los bonos soberanos de los pases de la periferia de la zona del euro, antes y
despus de que el Banco Central Europeo anunciara el establecimiento de las
transacciones monetarias de compraventa, es bastante convincente a este
respecto.
Por ltimo, en lo que se refiere a los flujos de capitales, en los mercados
emergentes (y, a nivel ms general, en las pequeas economas avanzadas,
aunque estas no estaban incluidas de manera explcita en la conferencia), la
evidencia parece indicar que la mejor forma de hacer frente a los flujos de
capitales voltiles es dejar que el tipo de cambio absorba la mayor parte del
ajuste, aunque no necesariamente todo.
El argumento tpico a favor de dejar que el tipo de cambio absorba el ajuste fue
planteado por Paul Krugman durante la conferencia. Si los inversionistas
quieren retirar sus fondos, que lo hagan: el tipo de cambio se depreciar, y esto
dar lugar, en cualquier caso, a un aumento de las exportaciones y del producto.
No obstante, tradicionalmente se han planteado tres argumentos en contra de
basarse en el ajuste del tipo de cambio. En primer lugar, en la medida en que los
prestatarios internos se han endeudado en moneda extranjera, la depreciacin
tendr un impacto negativo en los balances, y dar lugar a una disminucin de la
demanda interna que probablemente contrarrestar con creces el aumento de
las exportaciones. En segundo lugar, gran parte de la depreciacin nominal
posiblemente se traduzca en una mayor inflacin. El tercer argumento es que
una fuerte variacin del tipo de cambio puede generar perturbaciones, tanto en
la economa real como en los mercados financieros.
Sin embargo, la evidencia muestra que los dos primeros argumentos son mucho
menos importantes hoy que en las crisis anteriores. Gracias a la aplicacin de
medidas macroprudenciales, al desarrollo de los mercados de bonos en moneda
local y a la flexibilidad del tipo de cambio y, por lo tanto, a que los prestatarios
tienen una mejor percepcin del riesgo cambiario, la exposicin a este riesgo en

los pases de mercados emergentes actualmente es mucho ms limitada que en

crisis anteriores. Y gracias a la mayor credibilidad de la poltica monetaria y las
metas de inflacin, las expectativas de inflacin parecen estar ms firmemente
ancladas, por lo que los efectos de los movimientos del tipo de cambio en la
inflacin son limitados.
Sin embargo, el tercer argumento sigue siendo relevante. Y, por ello, los bancos
centrales de los pases de mercados emergentes an no han adoptado
regmenes de plena flotacin, sino de flotacin dirigida, es decir, utilizan
conjuntamente la tasa de poltica monetaria, la intervencin cambiaria, medidas
macroprudenciales y controles de capital. Esto les ha permitido reducir el
antiguo dilema que se plantea cuando el nico instrumento utilizado es la tasa
de poltica monetaria: un aumento de la tasa de poltica monetaria posiblemente
evite el sobrecalentamiento asociado a la afluencia de capitales, pero al mismo
tiempo, posiblemente haga que esta sea ms atractiva para los inversionistas
externos. La intervencin cambiaria, los controles de capital y los instrumentos
macroprudenciales pueden, al menos en principio, limitar los movimientos de
los tipos de cambio, y las perturbaciones del sistema financiero sin recurrir a la
tasa de poltica monetaria. Los pases han utilizado todos estos instrumentos
durante esta crisis. Algunos se han basado en mayor medida en los controles de
capital, otros en la intervencin cambiaria. Y la evidencia, no solo derivada de la
conferencia, sino tambin de los trabajos realizados en el FMI, parece indicar
que estos instrumentos han funcionado, aunque no haya sido de manera
perfecta. De cara al futuro, debemos hacer frente a un desafo importante (y
enorme): comprender cul es la mejor forma de combinarlos.
En resumen, la poltica monetaria nunca volver a ser como antes de la crisis. La
conferencia nos ha ayudado a comprender cmo ha evolucionado y en qu
aspectos debemos centrar nuestros estudios y esfuerzos de poltica en el futuro.
Smart Governance: Solutions for Todays Global Economy
By Nemat Shafik
Deputy Managing Director, International Monetary Fund
Oxford, United Kingdom, December 5, 2013
As prepared for delivery
Good afternoon! I am so pleased to be here with you today, where I spent very happy
years earning my DPhil in economics. This is a magical place, full of beauty and clever
people. My only regret is that I left too soon.
Fortunately, my good friends Ngaire Woods and Max Watson have invited me to return
to give the Annual Global Economic Governance Lecture. Let me outline the main
points I plan to make today.
Making the case for smart governance
Global economic crises tend to reignite discussions of global governance and
international cooperation. The recent crisis has been no different. This is because
crises lay bare the shortcomings of existing international rules and institutions.

We have seen how weaknesses and failures in banks and capital markets can spread
through the international financial system. The same is true for other challenges faced
by the world today, whether we are talking about climate change, nuclear weapons
proliferation, or health pandemics. What happens anywhere affects everybodyand
increasingly so.
So it is pretty clear that the world needs more, not less, international coordination and
cooperation. But how to achieve this goal? In a recent article, the FTs Martin Wolf
discussed the importance of global public goods and how to provide them. The states
on which humanity depends to provide these goods, from security to management of
climate, are unpopular, overstretched and at odds. We need to think about how to
manage such a world. It is going to take extraordinary creativity.
Martin is right. We need to be creative if we want to make progress. We need smart
governance if we want solutions that work for todays global economy.
I would like to focus today on three related topics. First, I will briefly touch upon the
historical relationship between crises on the one hand, and governance reforms and
policy coordination on the other hand. Second, I will discuss the response in terms of
governance reforms and policy coordination that we have seen in the aftermath of the
financial crisis of 2008. Finally, I will close my talk by sharing with you some reflections
on how global economic governance might evolve going forwardhow smart
governance may provide the right balance between flexibility and effectiveness that
the world needs to manage globalization.
A world in transition
The global economy is in transition. Global economic power is shifting from west, to
east and south. Emerging and developing economies already make up more than
50 percent of global GDP (on a PPP basis)ten years from now this number is
expected to increase to 64 percent.

At the same time, trade and financial linkages have risen spectacularly. Cross-border
bank claims grew from $6 to over $30 trillion between 1990 and 2008, and global
merchandise exports of goods and services increased from $4 trillion to $20 trillion.
While these numbers contracted somewhat in subsequent years due to the global
crisis, the growth rates for the past 20 or 30 years are still impressive.

On the production side, global supply chains have become the norm rather than the
exception. A typical manufacturing company today relies on inputs from more than 35
different contractors from around the worldfor some companies, such as car and
airplane manufacturers, this number can range in the tens of thousands.
With the sharp increase in interconnectedness and the growing diffusion of economic
power, it would have been reasonable to expect a simultaneous transformation and
expansion of global governance. In theory, demand for global governance should have
increased with rising levels of global integration in order to manage the rules of the
game and reduce negative spillover effects.
But as we all know, global governance issues were on the backburner in the run-up to
the financial crisis. Indeed, against the background of high growth and low output
volatilitywhat has been called the Great Moderationobservers even wondered
whether global governance was a concept of the past, and institutions such as the IMF,
World Bank and WTO superfluous.
Only in 2008, when a disruption in a relatively small segment of the U.S. financial
system spilled into distant markets and countries, and morphed into a full-fledged
global financial crisis, it became clear that there had been an undersupply of global
governance in the years leading up to the crisis.
Crises as opportunity
Five years after the onslaught of the global financial crisis, economic governance
remains at the center of the policy debate. I would argue that this is no surprise, given
that, historically, there has been a symbiotic relationship between crises and the
evolution of governance.
Granted, governance is often seen as evolving slowly and in an incremental manner
and at a stately pace, while crises are intrinsically disruptive and revolutionary.
However, as history has repeatedly shown, crisis often bring out the shortcomings of
existing governance arrangements, while the fear of recurrence can galvanize support
for reform.
For instance, in the wake of World War I, the League of Nations was created to
promote international cooperation and achieve international peace and security, while
experiences of hyperinflation in the 1920s motivated efforts to restore the gold

standard. Similarly, the Great Depression and World War II triggered much of our
current architecture of global governance, with the creation of the United Nations, IMF,
World Bank, and the General Agreement on Tariffs and Trade, now the World Trade
Organization. The traumatic experience of World War II also provided impetus for
political and economic integration in Europe.

In the United States, the financial crisis of 1907 paved the way for the creation of the
Federal Reserve, while the bitter experience of the Great Depression led to a major
overhaul of financial regulation, with the passage of the Glass-Steagall Act in 1933,
which separated commercial and investment banking, and remained in place for more
than sixty years. More recently, the regional currency swap arrangements among
ASEAN members known as Chiang Mai Initiative were created in the aftermath of the
Asian crisis.
As with similar situations in the past, the global financial crisis of 2008 imposed large
costs and hardship on affected countries. However, from a perspective of economic
governance, it has also provided a window of opportunity to advance reforms and
strengthen policy coordination. Did we manage to not let a good crisis go to waste? (a
quote associated with Rahm Emanuel, President Obamas former Chief of Staff, but
like all great quotes was said by Churchill first). Let me provide a brief overview of what
we have achieved in the past five years before looking at the gaps that remain.
A mixed score card
The efforts in governance reform since the crisis can be broadly split into three
categoriescoordinating macroeconomic policies, fixing global financial regulation,
and strengthening regional and global safety nets.
First, macroeconomic policy coordination. Although not perfect, such coordination was
particularly strong at the initial stage of the crisis. For instance, six major central banks
announced, in an unprecedented move, a coordinated cut in policy rates in October
2008 to ease global economic conditions. The U.S Federal Reserve and 14 different
monetary authorities established temporary U.S. currency swap arrangements to
mitigate dollar shortages in short-term funding markets. And the first ever G20 Leaders
Summit was convened in November 2008 and led to a commitment to coordinated
fiscal stimulus and a pledge to refrain from protectionism.

These massive efforts meant that, instead of another Great Depression, we got the
Great Recession, which actually is a significant achievement, given the possible
counterfactuals. However, more recently, the momentum for policy coordination has
slowed, as the focus has shifted from preventing a calamity to avoiding future crises
and supporting the nascent recovery. Some have argued that while the G20 was good
in war, it might not be able to deliver as much in peace time.
And the task is far from over.
One challenge faced by the international community going forward will be to continue
the dialogue on unwinding unconventional monetary policies and managing potential
spillover effects as well as managing our way out of the debt burdens accumulated
during the crisis.
Second, global financial regulation. To address the origins of the crisis, G20 members
committed to a fundamental overhaul of global financial regulation, with the intention of
promoting a more transparent, safe, and resilient global financial system.
Most notably, the Financial Stability Board (FSB) was created in 2009 with a mandate
to develop and promote effective financial regulation. Significant progress has been
made in terms of strengthening system-wide oversight, increasing capital and liquidity
buffers, promoting the exchange of financial information, and implementing
macroprudential policy frameworks. Efforts are also underway to facilitate cross-border
resolution.

Yet major challenges remain, such as ending the too-big-to-fail problem, reforming
shadow banking, and making derivatives markets safer. In the euro area, recent policy
actions have helped ease market stress, but more still needs to be done to reverse
financial fragmentation and move towards a full banking union.
Third, strengthening regional and global safety nets. To mitigate the impact of the
crisis, countries came together to strengthen the global financial safety net, including
by trebling the size of the IMFs resources and increasing the allocation of SDRs. In
Europe, the financial architecture of the euro area was enhanced through the creation
of the European Stability Mechanism (ESM) and the ECBs Outright Monetary
Transactions (OMT) framework. In other parts of the world, commitments to regional
financing arrangements, such as the Chang Mai Initiative and the Eurasian Economic
Community Anti-crisis Fund, were reinforced.
However, progress has been uneven in other areas. For example, in the case of the
IMF, the agreement reached in 2010 on important quota and governance reforms that
would further increase the voice and representation of emerging market and
developing economies has not yet been implemented. While two of three required
conditions have been fulfilled, further support is needed to meet the final condition that
will allow the reform to take effect.
If we put all this together, the report card on global governance reform since the crisis
is somewhat mixed. Policymakers across the globe need to keep the momentum alive
and seize the opportunity to advance governance reform while memories of the crisis
and the sense of urgency remain fresh. Indeed, there is a real danger that the window
of opportunity for addressing some of the most challenging global issues might soon be
closing. How can this trend be reversed and important reforms finalized? To answer
this question, it is helpful to look at the different types of solutions that have evolved as
means to deliver global public goods.
Soft versus hard policy coordination
In what direction is the global system of economic governance and policy coordination
evolving? To answer this question, I find it instructive to differentiate between hard
and soft governance and policy coordination.

Hard policy coordination is typified by quid pro quos in policies with a focus on
specific and tangible outcomes. Examples include the two initial G20 Leaders Summits

that took place in the immediate aftermath of the crisis, and resulted in the coordinated
fiscal policy response I mentioned earlier and the creation of the FSB.
In contrast, softer forms of coordination are more process-based without a priori
expectation of substantial outcomes or agreements. They are designed to facilitate the
exchange of views and information sharing on an ongoing basis, such as the regular
discussions among central bankers at the Bank for International Settlements (BIS).
Soft and hard policy coordination can complement each other. For instance, soft
arrangements can keep the policy dialogue alive during quiet times, and provide a
framework for harder cooperation, and even full-fledged policy coordination, during
crises.
Soft versus hard governance
A parallel argument can be made for governance. Hard governance arrangements
require the establishment of legal obligations and independent institutions through
treaties. The UN, IMF, World Bank and the WTO typify such arrangements.
On the positive side, this kind of hard, treaty-based architecture strengthens the
credibility of member countries commitments and grants legal enforcement powers to
institutions. However, their establishment and adaptation to changing circumstances
tends to be a relatively slow-moving process, which can be a problem when the global
environment or the needs of members change.
Soft governance arrangements, such as the G20 and BRIC country groupings, the
FSB, or the Financial Action Task Force (FATF) have no international legal personality
or obligations. As a result, they tend to be more flexible and can often be put in place
more quickly. They do not, however, have treaty-based mandates or legal enforcement
powers. As a result, they have a more limited ability to enforce commitments, which
can pose challenges for their relevance and effectiveness over time.
Finally, there are, of course, also private sector solutions to governance challenges.
One example are Collective Action Clauses (CACs) which allow a supermajority of
bondholders to agree to changes in bond payments terms, with the intention of
facilitating smoother debt restructuring. Another example is IFRS, an independent
nonprofit foundation that promotes the harmonization of global accounting standards.
A mosaic of solutions
In sum, the global economic governance structure of the future may well be a mosaic
or ecosystemof hard and soft elements that operate in a complementary fashion.
In such a system, governance arrangements would essentially be issues- and contextdriven, with choices between hard and soft governance arrangements depending on
what is the most efficient and practical solution to regulate and oversee a specific
matter at hand. Making such a system smart depends crucially on using hard or soft
governance at the right time and for the right issues.
Lets consider three examples of how hard and soft governance have been combined:

First, take trade. We all prefer multilateral trade agreements over regional ones.
Since the gains from trade are well recognized, the WTO dispute resolution
process has real teeth with an ability to impose sanctions on those who violate
global trade rules. Increasingly mega-regional agreements (like US-EU or TPP)
are less about tariffs but about standards and non-tariff barriers. To the extent
that they help set global norms that facilitate trade, they bring us closer to more
global solutions and potentially reinforce (and in the future possibly become
integrated with) the WTO framework.

Second, consider the balance between hard and soft governance in the
euro area crisis. Arguably the hard governance came from the IMF and the
ECB and soft governance from the Eurogroup. Europes complex governance
arrangements worked well in peace time, but decision making processes were
not well suited to managing crisis.

Finally consider the areas of financial regulation. As part of its mandatory

Financial Sector Assessment Program (FSAP), the IMF conducts financial
stability assessments every 5 years of jurisdictions that have systemically
important financial sectors. Mandatory FSAPs are a good example of hard
surveillance where countries are assessed against compliance with clear global
standards and stress tested against national and international spillovers. Every
two years after an FSAP, the FSB does a peer review (a sort of soft
governance) of follow up on FSAP recommendations as a complementary way
to advance key reforms for financial stability.

However, a flexible and efficient global governance structure may not emerge
automatically. For example, when hard global institutions, such as the IMF, the World
Bank, and the WTO adapt too slowly to changes in their environment, governance
gaps will open up. Softer institutions may step in to fill these gaps, but as substitutes
rather than playing a complementary role. This would not be efficient and could leave
us with a weaker global governance system.
The case for IMF governance reform
This brings me to a final point. In the evolving ecosystem of global governance and
policy coordination that I described, it is essential for the elements of hard
governance to stay relevant by adapting to changes in the world economy.
Over the years, the IMF has demonstrated a remarkable ability to adjust its work and
operations in response to major changes in the global economy, including the fall of the
fixed exchange rate system in the early 1970s, the debt crisis of the 1980s, and the
collapse of the Soviet Union in 1991.
The key reason why the IMF has remained relevant has been a political governance
structure that, albeit slowly, does adapt to changes in the world economy. It also has
an independent staff, and a constitution (in the form of our Articles of Agreement) that
allows the Fund to adopt a longer-term perspective. Moreover, the IMF has, in some
aspects, also managed to internally integrate hard elements of governance such as
mandatory surveillance, with softer elements, such as voluntary Reports on the
Observance of Standards and Codes or facilitation of standards for sovereign wealth

funds. On the softer side, the Funds consensus-based decision-making has been
effective at ensuring that member countries points of view are being heard.
Going forward, it will be crucial for the IMFs effectiveness and legitimacy to ensure that
its governance structure reflects the relative position of its member countries in the
global economy. Approval of the 2010 reforms would be an important step in this
direction, although further shifts in quota and voting shares to dynamic economies will
also be needed.
To achieve this, some countries will have to accept relative declines in their quota and
voting shares. Understandably, for them this will not be an easy decision, but in return
they will help ensure that the Fund can continue to remain strong and legitimate for the
benefit of the entire membershipand the global economy.
Conclusion
While significant efforts to improve global economic governance were made in the
initial phase of the crisis, the momentum of reform and policy coordination has slowed
recently.
Indeed, while the current system is able to deliver governance and policy coordination
when there is a lot to losesuch as in a crisis, it is much less effective in galvanizing
action when there is potential for mutual gainsuch as global economic rebalancing.
One possible explanation is that the global community tends to rally in a time of crisis
when the time horizon is short and immediate costs are high. However, in normal
times, gathering momentum for action today may be hard because the cost of inaction
lies far in the future.
Some observers point toward plurilateralism and the rise of soft global governance as a
threat to the traditional pillars of hard global governance, including the IMF. I am much
less pessimistic. I see these two forms of governance as potential complements rather
than imperfect substitutes. Soft governance works when innovation is needed but there
is time to act, when getting a subset of countries to act is sufficient and ad hoc
implementation can work. Hard governance is needed in a crisis or when global
approaches are needed and when consistent enforcement is key.
So, coming back full circle to Martin Wolfs call for extraordinary creativity in seeking
solutions to the multitude of challenges faced by the world today, I believe we can
tackle the issues by being smart about the governance we need, and by making the
most of political opportunity when it presents itself. By integrating soft and hard
governance more intelligently, better outcomes can be achieved for everyone, small
and large countries alike.i

I am grateful to Andreas Bauer, Sanjaya Panth, Niklas Westelius, Camilla Andersen

and Dustin Smith for their help in preparing this speech and to Olivier Blanchard, Sean
Hagan, and Jose Vials for their thoughtful comments.