philip n jefferson : on the assessment of current monetary policy speech by mr philip n jefferson, member of the board of governors of the federal reserve system, at the " how to get back on track - a policy conference ", hoover institution, stanford, california, 12 may 2023. * * * accompanying charts of the speech good afternoon, everyone. thank you to the organizers for inviting me to speak. it is a pleasure to be here. i welcome hearing diverse views on how to best conduct monetary policy, and this conference is certainly providing an invigorating debate on that topic. before i begin, i want to address quickly some news from this morning. i am deeply honored by the trust president biden and vice president harris have shown me with the nomination to be the next vice chair of the board. i am humbled by this extraordinary opportunity and thankful to my colleagues, friends, and family for their support. turning back to the conference, as i join this debate, let me remind you that the views i will express today are my own and are not necessarily those of my colleagues in the federal reserve system. introduction the title of the conference " how to get back on track : a policy conference " is potent. its intent and ambiguity are striking. first, the title presupposes that u. s. monetary policy is currently on the wrong track. second, the webpage for this conference advances a puzzling definition of the phrase " on track. " how so? according to the hoover webpage, " a key goal of the conference is to examine how to get back on track and, thereby, how to reduce the inflation rate without slowing down economic growth " ( emphasis added ). 1 as this audience knows, there are macroeconomic models that permit disinflation with no slowdown in economic growth, but the assumptions underlying these models are very strong. 2 it's not clear, at least to me, why such a strict metric would be used to assess real - world monetary policymaking. third, the definition of " on track " in the title contrasts with more commonplace definitions such as " achieving or doing what is necessary or expected, " as offered by a standard reference such as the merriam - webster dictionary. 3 my view is that this commonplace definition provides a more practical lens through which to assess real - world policymaking. against this semantic backdrop, i will begin my remarks with my perspective on the current inflation and economic situation. then, i will

practices for the effectiveness of any capital adequacy framework. let me take leave of you with a final thought : do never forget the story about the barber that dates 4 / 5 bis central bankers'speeches back to the years before the 1970s. his business had collapsed not because of the variety of risks stemming from the rapid pace of technological progress ( schumpeter ’ s creative destruction ) but because of the risk associated with misplaced trust. the world has since changed cinematically and dramatically. in the decades before the 1960s, the life of tools, equipment and machines for production of goods and services lasted for 25 to 30 years. the cycle of obsolescence was so long that the risks of enterprises going bust because of technological progress were lower than they are today. lending institutions faced lesser risks in those days. with digital technology, the cycle of obsolescence has accelerated. just imagine the average lifespan of a phone app is a mere 30 days. we do not have enough time to master anything in today ’ s world before it is displaced. the risks of enterprises and along with them lending institutions going bust are indeed unprecedentedly heightened. it ’ s very difficult for any lender to appropriately assess risks arising out of digital advancement – and more so for any regulator. lending institutions indisputably need much stronger capital buffers than in the past in order to meet the challenges of the unknowns. with this final thought, may i wish you all the very best in your pursuit to know more about how best to implement the basel standards of regulation of banks. the regulatory and supervisory community in africa faces enormous challenges. i fervently hope that by the end of this seminar you will have learned from each other quite some ways and means of improving your approach to regulation and supervision of financial institutions. thank you. 5 / 5 bis central bankers'speeches