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Diverging Monetary Policies, Global Capital Flows and Financial Stability

October 15–16, 2015 Hong Kong

Sponsored by Hong Kong Institute for Monetary Research, Board of Governors of the Federal Reserve System, European Central Bank and Federal Reserve Bank of Dallas

About the Conference

The Hong Kong Institute for Monetary Research, the Board of Governors of the Federal Reserve System, the European Central Bank and the Federal Reserve Bank of Dallas are organizing a one-and-a-half day conference on “Diverging Monetary Policies, Global Capital Flows and Financial Stability” in Hong Kong on Thursday and Friday, October 15–16, 2015.

In response to the Global Financial Crisis of 2007–2008 and the subsequent Euro Area Debt Crisis, almost all of the largest central banks quickly pushed their policy rates to the effective lower bound, where they are today. In an effort to provide further policy accommodation and support economic growth, several of these central banks have engaged in unconventional monetary policies. These include large-scale asset purchase programs and forward guidance about the likely future path of monetary policy. Aggressive policy actions by some central banks put downward pressure on the foreign exchange value of their currencies, prompting concerns about “currency wars.”

Diminishing slack in some of the larger advanced economies has hastened the prospects of monetary policy normalization. Early hints that the Fed would gradually end its last large-scale asset purchase program precipitated a major response in global financial markets. That program has now ended, and there is a broad expectation that policy rates will start rising in the not-too-distant future.

However, not all the major economies are on the steady path of recovery. Some larger central banks are still engaged in further loosing monetary policy, so there will likely be a period of diverging monetary policies among the major central banks. This could have a profound impact on global capital flows, exchange rates and financial stability.

Organizers

Stephen Cecchetti (Brandeis University), Hongyi Chen (Hong Kong Institute for Monetary Research), Luca Dedola (European Central Bank), John Rogers (Board of Governors) and Mark Wynne (Federal Reserve Bank of Dallas).