speeches published date : 20 september 2022 " critical economic uncertainties " - keynote speech by mr ravi menon, managing director, monetary authority of singapore, at the superreturn asia conference on 20 september 2022 ladies and gentlemen, good morning. i am happy to join you at the superreturn asia conference — the first time the conference is being held fully in person since the start of covid - 19, and the first time here in singapore. uncertainty has become the dominant theme in investment today. let me touch on four key uncertainties around the global economy : first, how severe will the economic downturn be next year? second, where is inflation headed in the medium term? third, how will geopolitical tensions impact the global economy? fourth, how might climate risks affect investor portfolios? how severe will the economic downturn be next year? the global economy is facing a severe bout of inflation with two positive stimuli to demand coming up against two negative supply shocks. on the demand side, the lagged effects of the massive fiscal and monetary stimulus in response to the pandemic coupled with the unleashing of pent - up demand following the re - opening of economies have substantially added to general inflationary pressures. supply disruptions stemming from the lingering effects of the pandemic and the russia - ukraine war have sharply driven up global food, energy, and commodity prices. the surge in inflation has necessitated monetary policy tightening by central banks, at a pace not seen in the last four decades. it is inevitable that economic growth needs to slow down to bring aggregate demand and supply back into balance. the risk of the major advanced economies entering a recession in 2023 is high. the latest consensus forecasts has us and eurozone gdp growth for 2023 coming in at 0. 5 % or less. two recent polls by bloomberg place the probability of recession in the us and the eurozone in the next 12 months at 50 % and 80 % respectively. the asia - pacific economies are at lower risk of a recession but they will see a spill - over from the broader global slowdown. exports from the region are already declining. the key question is : how deep and prolonged will the downturn be? that will depend on how high and persistent inflation is. for if inflation turns out to be stubborn, central banks will have to tighten monetary policy more and for longer than currently anticipated by markets. the good scenario is a short and shallow downturn, maybe even a technical recession –

##ntial standards for large banking organizations and nonbank financial firms designated by the fsoc. these standards will include enhanced risk - based capital and leverage requirements, liquidity requirements, and single - counterparty credit limits. the standards will also require the fsoc ’ s internal structure consists of a deputies committee – composed of personnel from all of the voting and nonvoting members – and six other standing committees, each with its own specific duties. the deputies committee, under the direction of the fsoc members, coordinates the work of the six committees and aims to ensure that the fsoc fulfills its mission in an effective and timely manner. bis central bankers ’ speeches systemically important financial firms to adopt so - called living wills that will spell out how they can be resolved in an orderly manner during times of financial distress. the act also directs the federal reserve to conduct annual stress tests of large banking firms and designated nonbank financial firms and to publish a summary of the results. to meet the january 2012 implementation deadline for these enhanced standards, we anticipate putting out a package of proposed rules for comment this summer. our goal is to produce a well - integrated set of rules that meaningfully reduces the probability of failure of our largest, most complex financial firms, and that minimizes the losses to the financial system and the economy if such a firm should fail. the federal reserve is working with other u. s. regulatory agencies to implement dodd - frank reforms in additional areas, including the development of risk retention requirements for securitization sponsors, margin requirements for noncleared over - thecounter derivatives, incentive compensation rules, and risk - management standards for central counterparties and other financial market utilities. the federal reserve has made significant organizational changes to better carry out its responsibilities. even before the enactment of the dodd - frank act, we were strengthening our supervision of the largest, most complex financial firms. we created a centralized multidisciplinary body called the large institution supervision coordinating committee to oversee the supervision of these firms. this committee uses horizontal, or cross - firm, evaluations to monitor interconnectedness and common practices among firms that could lead to greater systemic risk. it also uses additional and improved quantitative methods for evaluating the performance of firms and the risks they might pose. and it more efficiently employs the broad range of skills of the federal reserve staff to supplement supervision. we have established a similar body to help us effectively carry out our responsibilities regarding the oversight of systemically