John C Williams: Global issues, global implications
Remarks (via videoconference) by Mr John C Williams, President and Chief Executive Officer of
the Federal Reserve Bank of New York, at the Central Reserve Bank of Peru (BCRP) Centenary
Conference, 25 March 2022.
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As prepared for delivery
It's a great honor for me to participate in this event commemorating the centenary of the Central
Reserve Bank of Peru. I want to start by congratulating Julio and everyone at the Bank on this
special and significant anniversary. I am looking forward to a time, hopefully soon, when we can
come together, enjoy some ceviche, and celebrate in person.
And while it's not nearly as enticing as a gathering over fine Peruvian food, I need to give the
standard Fed disclaimer that the views I express here are my own and do not necessarily reflect
those of the Federal Open Market Committee (FOMC) or anyone else in the Federal Reserve
System.
Given this special occasion, let me begin with some reflections on the importance of
communication and engagement in central banking.
Shared Concerns
As central bankers, we have long understood the value of engaging with colleagues around the
world on the challenges we face in our own countries. We all operate in a highly interconnected
global economy and financial system. And we have many of the same goals, including price
stability, vibrant economies, and financial stability. Many of the issues we face are not unique to
any one of us, but rather are shared across the region and the globe.
Recent events, from the COVID-19 pandemic to the war in Ukraine, have only underscored the
importance of active dialogue and transparency among central banks. Beyond the global
economic impact of these events, it's important to emphasize that the pandemic is first and
foremost a public health crisis, and that the Russian invasion is inflicting tremendous hardship
and suffering on the Ukrainian people.
In terms of economic impacts, all of us in the Americas were affected by lockdowns and
shutdowns at the start of the pandemic. All of us have faced supply-chain bottlenecks and
imbalances, as people around the world shifted their spending habits-buying more goods and
spending less on services. And many of us are now confronting a sharp rise in inflation,
especially for food and energy, which is hardest on our most vulnerable populations.
Of course, each country is facing its own set of circumstances, and each has its own domestic
mandates. But it's important to remember that the policies we implement can affect our
neighbors, just as developments that take place outside our borders can impact our ability to
achieve our domestic goals. The actions we take can also affect the flow of capital across
countries.
As central bankers, it is vitally important that we clearly communicate our policy strategies and
reasoning for our actions as we carry out our mandates. Clear communication reduces the risk
of confusion, volatility, and spillovers, and helps others prepare for challenges that may lie ahead.
Experience has demonstrated that transparency in monetary policy can both increase its
effectiveness and reduce unintended consequences.
Shared Insights and Analyses
That is why the perspectives we gain through ongoing dialogue with our counterparts are so
valuable. Across the globe, many central banks-including the Federal Reserve-are moving to
unwind the highly accommodative policies they put in place at the start of the pandemic. And we
are doing this at a time when the economic implications of COVID-19 and the war in Ukraine
remain highly uncertain.
As we all take these steps, the Bank for International Settlements (BIS) has provided an
indispensable venue for sharing insights, analyses, and concerns. By engaging with each other,
we are able to stay ahead of the trends and issues that affect other economies and their financial
markets. And that is true not only when it comes to policy development and execution, but also in
understanding economic and financial developments across the globe.
A particularly apt example of the value of dialogue is the BIS's Consultative Council for the
Americas, which I've had the pleasure of chairing since 2020. Agustín, Julio, Roberto, and our
colleagues from Argentina, Canada, Chile, Colombia, and Mexico are participants in meetings of
the Council. Suffice to say, we've had a great deal to discuss over the past two years. And to do
so, we have significantly increased the frequency of our meetings.
These meetings provide us with opportunities to communicate the reasoning and implications of
our policy strategies, goals, and actions, and to hear how these affect other economies in the
region. We exchange perspectives on shifting policy imperatives, and we share experiences and
insights related to managing risks.
Through the BIS, we also jointly meet with members of the private sector, including bank CEOs
and chief economists from the region, to hear their views about the economy. This is another
valuable aspect of our work as central bank governors, and it's insightful for all of us to hear from
leaders beyond our own organizations and the borders of our countries.
Global Issues
I touched on many topics-the pandemic, the war, and inflation. These are global issues with
domestic implications, and when we address them to fulfill our own mandates, we affect the
economies of other countries in the region as well. In this regard, the work of the BIS in bringing
central banks together has never been more important. I look forward to continuing our dialogue
and engagement in the future.
Again, congratulations to the Central Reserve Bank of Peru, and best wishes for your second
century.