mojmir hampl : outlook for global interest rates speech by mr mojmir hampl, vice governor of the czech national bank, at the official monetary and financial institutions forum ( omfif ) roundtable for public sector asset managers, london, 30 january 2018. * * * my contribution to today ’ s discussion on global interest rates will focus on the equilibrium real rate of interest. the equilibrium rate, which determines the development of interest rates in the long run, has decreased around the world by about 4 percentage points since the 1980s, as documented, among others, by the influential studies of holston, laubach, and williams and rachel and smith ( 2017 ). very recently, it seems to me, the process has started to reverse, but any progress toward a higher rate is likely to be slow. equilibrium values do not change abruptly. seven principal reasons have been identified for the decrease in this parameter observed in the past : the first is a decrease in growth expectations caused primarily by the great recession and the ensuing process of de - leveraging. gloomy prospects depress demand for capital and, in consequence, also the equilibrium interest rate. currently, however, notions of secular stagnation are losing steam, and growth expectations have slowly been recovering to pre - crisis levels. it is perhaps useful to remind ourselves that secular stagnation has been declared many times in the past – by malthus, after the great depression, and during the 1970s and 1980s – only to be refuted by continued growth. second, we have seen a steady decrease in dependency ratios, which has stimulated excess savings and therefore lowered the equilibrium rate. this trend, too, will reverse soon, as the increase in the share of the elderly population will outpace all other population groups. dependency ratios around the world will rise, which will buoy the equilibrium rate. third, inequality has risen in past decades, again adding to the increase in the mean savings rate. but note that we are now observing a decrease in ( at least ) wage inequality in many countries, including the czech republic. inequality, broadly defined, has decreased in most countries around the world since the crisis ( world bank, 2016 ). i believe that the discussion on inequality tends to be overly pessimistic. fourth, more and more developing countries have been getting fully integrated into the world economy, releasing their supply of savings into global markets and giving rise to the notion of a “ savings glut ”. i see no reversal here

mojmir hampl : a digital currency useful for central banks? speech by mr mojmir hampl, vice governor of the czech national bank, at the 7th bbva seminar for public sector investors and issuers, bilbao, 27 february 2018. * * * ladies and gentlemen, let me begin by thanking bbva for their kind invitation to this event. it is a pleasure to speak in front of this knowledgeable and receptive audience, and it is a pleasure for me in particular to be in bilbao for the first time in my life. cryptocurrencies, digital currencies, and especially bitcoin have become almost household names over the last couple of months. what is especially interesting and curious for this place – as some of you might know – is that among the hundreds of cryptocurrencies introduced in the last couple of years is one called “ bilur ”, which means “ chain ” in euskara, the basque language. bilur is unique for being the first cryptocurrency explicitly linked to the price of oil. by the way, the second part of the label “ cryptocurrency ”, namely the currency part, is a misnomer in my eyes. no existing cryptocurrency for the time being conforms to the three basic functions of money : a store of value, a unit of account, and a medium of exchange. one cannot store value in an asset that can get 30 % – 50 % cheaper or more expensive in a matter of days. one cannot use cryptocurrencies to measure value in economic transactions, because prices are mostly not displayed in cryptocurrencies and transaction costs are high and hidden for most people who would like to pay this way. one cannot, at least so far, use cryptocurrencies as a medium of exchange, because not many counterparties accept them. therefore, cryptocurrencies are not currencies. to me, rather, they resemble commodities – pieces of code with some value for enthusiastic collectors. which is fine. its founders wanted to create something that – through the process of mining and the costs associated with it – would resemble a physical commodity or something physical. i would call it a commodity of the new digital era. but compared to vintage wine, art, or postage stamps, the amount of digital commodities is never really fixed, as proved, for instance, by last year ’ s split ( or “