Normalizing Central Banks’ Balance Sheets: What Is The New Normal?

Tuesday, July 11, 2017 | Federal Reserve Bank of New York

Keynote Address: Lael Brainard, Board of Governors of the Federal Reserve System

With nominal interest rates in many developed countries compressed near historically low levels in the years since the global financial crisis, a number of central banks around the globe were forced to expand the set of tools and operations used to achieve their monetary policy objectives. Central banks have adopted a variety of approaches, but one common feature of their unconventional policies is a large expansion of their balance sheets.

As the outlook for the global economy improves, central banks will begin the process of tightening policy. When should central bank balance sheets be unwound? What are the intended financial market effects of these changes and what are potential unintended consequences? How will the monetary policy transmission mechanism work as these policies are unwound? What would be a desired composition of the central bank balance sheet in the medium- or longer-term? What are the tactical considerations in the approach, including the implications for the speed and composition of reducing balance sheets? What should be communicated about how these policies will evolve? Looking more globally, what are the international spillovers? How might global funding markets be affected by the reversal of unconventional policies?

This workshop will bring together international experts in monetary policy design and implementation—academics, industry experts, as well as current and former central bankers—to raise and discuss strategic issues and practical considerations associated with an exit from unconventional balance sheet policies as well as to reflect on the impact these actions will have around the globe.

Agenda

Opening Remarks: Simon Potter, Federal Reserve Bank of New York

Strategic Issues

• Robin Greenwood, Harvard Business School
• Roberto Perli, Cornerstone Macro
• Athanasios Orphanides, MIT Sloan School of Management

Keynote Address

• Lael Brainard, Board of Governors of the Federal Reserve System

Practical Considerations

• Michael Feroli, JP Morgan
• Bill Nelson, The Clearing House
• Laurie Goodman, Urban Institute

Global Impact

• Andrea Maechler, Swiss National Bank
• Prakash Kannan, GIC
• Seiichi Shimizu, Bank of Japan

Wrap-up Observations

• Donald Kohn, Brookings Institution

Media

This event is open to the media. Chatham House Rule will be in effect for all but the keynote address; media may report on comments made during the event, but may not attribute remarks to individuals or organizations. To register, please contact Suzanne Elio at the New York Fed, [email protected]

Organizers and Sponsors

Patricia Mosser, Director, MPA Program in Economic Policy Management

Julie Remache, Federal Reserve Bank of New York

Antoine Martin, Federal Reserve Bank of New York

Columbia University | School of International and Public Affairs

Federal Reserve Bank of New York