Ravi Menon: The Institute of Banking and Finance at forty Welcome remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore and Chairman of the Institute of Banking and Finance, at the Institute of Banking and Finance 40th Anniversary Dinner, Singapore, 10 June 2014. *  *  *  Deputy Prime Minister and Minister for Finance, Tharman Shanmugaratnam, Pioneers of IBF, distinguished guests, ladies and gentlemen, On behalf of the Council and staff of IBF, let me welcome you to IBF’s 40th anniversary dinner. IBF is where it is today because of what previous generations of Council members and staff, industry practitioners and training providers accomplished together. They are the Pioneers of IBF, whose contributions and achievements we are gathered here to celebrate. It is the inspiring vision and tireless efforts of these Pioneers to build competencies in finance that helped create the international financial centre that Singapore has become today. I am delighted that several of them are here with us this evening. IBF was set up in 1974 with the support of the Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS). Those were early days in Singapore’s development as a financial centre. The birth of IBF helped to fill a critical gap in the training of Singapore’s financial sector workforce. The subsequent growth of IBF has been a story of each generation building on the efforts of previous generations and helping to strengthen the capabilities of Singapore’s finance professionals.

Finally, advancements in cryptography and distributed-ledger technology have led to a proliferation of digital assets and tokens, some of which circulate in parallel infrastructure outside of regulatory control and oversight. It has also spurred a concerted effort by central banks to harness these new technologies, through CBDCs and other initiatives, in order to ensure that central bank money remains fit-forpurpose in a digitalized monetary system. Shifting conceptual frameworks A radically different economic and financial landscape has forced some deep fundamental rethink of conceptual frameworks guiding policy, tracing out a second fault line. Facts on the ground are increasingly testing long-standing analytical paradigms on which central banks can rely to inform their policies. Most prominently, the recent surge in inflation has upended the Phillips curve as a model of inflation. The supposedly low sensitivity of inflation to measures of slack, or in other words the flat Phillips curve, turned out to be anything but low; the lack of any internal persistence generating mechanism implies that the framework underplays the possibility of wage-price spirals, and the assumed independence of structural parameters to the level of inflation rules out self-reinforcing transitions from low to high inflation regimes – a very real danger that central banks are grappling with. The upshot has been a systematic underprediction of inflation. We definitely need a better model of the inflation process: one that can capture how relative price shocks translate into persistent price movements as well as non-linearities in expectations and cost passthrough.