John C Williams: Remarks at the 42nd Annual Central Banking Seminar Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the 42nd Annual Central Banking Seminar, Federal Reserve Bank of New York, New York City, 1 October 2018. * * * It is my pleasure to welcome you to the Federal Reserve Bank of New York to participate in the 42nd annual Central Banking Seminar. This is truly an impressive group—our largest ever—with so many countries, institutions, and central bank departments represented. The program and speakers are similarly wide-ranging: You can expect to hear not only about the global economy, monetary policy, financial stability and supervision, technology, operations, and payments, but also about issues outside the usual central banking orbit. We see this breadth of coverage and participation as a key distinction and strength of the Seminar. The long history of the Central Banking Seminar reflects the New York Fed’s deep commitment to strengthening central bank cooperation over the long term. Such cooperation is vital to better understanding the world around us and the execution of our responsibilities. Those relationships are also essential during times of financial stress, and were critical to managing events during the Global Financial Crisis. A broad perspective is absolutely necessary for central bankers today given the tremendous array of issues we face, the high level of economic and financial integration across the globe, and a range of uncertainties within and outside our traditional remit.

The international competition in the product and labour markets and the financial integration process will thus continue to increase during the foreseeable future. The deregulation implemented in Sweden in the 1990s in the communication and transport sector has probably already had its main impact on productivity. There is of course still scope for reforms to increase competition further and thereby also productivity. 14 But without such new initiatives the deregulation will probably not contribute as much to future growth. Investments in IT will probably fuel productivity for a long time. Earlier experiences show that major development phases, such as electricity and the combustion engine, affected productivity growth over several decades. 15 As yet we know very little about the delayed effects on productivity from earlier IT investments and reorganisations. Hopefully, the productivity project I mentioned earlier will increase this knowledge. All in all, the indications are that long-term productivity growth will be slightly lower than in the past 10-15 years. The Riksbank’s assessment is that the long-term rate of increase in productivity in the economy as a whole has fallen slightly to 2.25 per cent a year. This is lower than during the period 1995-2006, when productivity growth was on average 2.6 per cent a year, but slightly higher than the level of around 2 per cent a year that applies if the 1980s are included. The Riksbank’s assessment is well in line with what, for instance, the National Institute of Economic Research has assumed regarding long-term productivity growth in the economy.