Eli M Remolona: Emerging trends in central bank policies and
operations
Speech by Mr Eli M Remolona, Jr, Governor of Bangko Sentral ng Pilipinas (BSP, the
central bank of the Philippines), at the 4th International Research Fair, Manila, 30 July
2024.
* * *
Introduction
That was a very thought-provoking presentation, Refet [Gürkaynak]. Refet is an old
friend from the Fed (Federal Reserve). But my role now is to welcome you all, to do a
proper welcome for you all. So, Professor Refet Gürkaynak, presenters, discussants,
and participants-from both the Philippines and abroad-and BSP (Bangko Sentral ng
Pilipinas) colleagues, including my colleagues in the Monetary Board, good afternoon
and thank you for joining us over the next two days.
This is the fourth annual Bangko Sentral ng Pilipinas International Research Fair. The
fair started in 2021 and it has become one of my favorite events. So, thank you former
Governor Ben Diokno, who gave the opening remarks today. Thank you, former
Governor Felipe Medalla, and thank you to the BSP Research Academy (BRAC) for all
that you have done to set up this fair and to sustain it.
As we all know, central banking is a nerdy business. That means research is central to
what we do. This reminds me of an episode in Douglas Adams' wonderful novel, A
Hitchhiker's Guide to the Galaxy. In the novel, a supercomputer called Deep Thought
was asked the question, "What is the answer to life?" After extensive computation,
Deep Thought replied that the answer to life is the number 42. When doubts were
raised about the strange answer, Deep Thought replied, "That is definitely the answer. I
think the problem is that you have never actually known what the right question is."
Right questions
Indeed, research is largely about asking the right questions. Often the answer to the
right questions would need good data.
About data, the mathematician and physicist Henri Poincaré has said, "Science is built
up with facts, as a house is with stones; but a collection of facts is no more a science
than a heap of stones is a house." As the world changes, our questions change, our
data change, and our analyses change.
When I look at the program for today and tomorrow, I am intimidated by the new
questions that are being asked and how they are being answered. That is the sign of a
good conference. The theme of this year's Research Fair, Emerging Trends Shaping
Central Bank Policy and Operations, is fitting. There are enticing and complementary
papers on the CBDC (central bank digital currency) and monetary policy, the
macroeconomics of temperature shocks, the pecking order of monetary policy, the
macroeconomics of policy uncertainty, policy uncertainty and cross-border flows, policy
uncertainty and the real exchange rate, cross-border evidence on a decomposition of
inflation, supply shocks with a flat Phillips curve, and asymmetric expectations of
monetary policy.
What a feast of papers. These are exciting times for researchers. As someone who
enjoyed doing my share of research, I am jealous of the work you are doing and will be
doing. But I am also grateful to be able to count on it.
Future trends
Before I end, let me mention three of the trends we could work on for future
conferences: economic fragmentation, sustainability, and digitalization. These trends
are of real concern to us. More specifically, we could look at such questions as:
geopolitical conflict and economic fragmentation including supply chain and
protectionist trade disruptions; how an emerging market, like the Philippines-whatever
Refet means by emerging market-how an emerging market should deal with climate
change in a way that it can afford. Following Refet, maybe a Gompertz function will help
us see the macroeconomics of artificial intelligence for an emerging market, including
the risks it could bring. Even including the risk that it could kill us all.
I had to mention artificial intelligence because of a personal experience I had a few
weeks ago. On social media, there was a video featuring a deepfake image of me. I
was portrayed ostensibly recommending investments in what could only be a financial
scam. One complaint I do have is that as long as they were doing a deepfake of me, I
wish it had made me better looking.
So, to close, I would like to welcome and thank everyone who came here today,
especially those who traveled far to join us. Thanks again to BRAC and other BSP
colleagues who helped organize this important discussion.
These emerging trends-economic fragmentation, digitalization, and climate
changepose profound policy questions for central banks. As with all new or fast-changing
developments, we need to understand them as best and as quickly as we can so we
can address them as well, if not better, than those we have faced in the past.
Thank you very much. Maraming salamat.