what did the monetarists ever do for us? − speech by huw pill given at walter eucken institut / stifung geld und wahrung conference – inflation and debt : challenges for monetary policy after covid - 19 published on 24 june 2022 huw pill talks about the challenges for monetary policy after covid. speech good afternoon everyone. it is a great pleasure to be here in freiburg to attend this excellent and topical conference. my thanks are due to the organisers, especially professors feld, krause and moellers, and to the sponsoring institutions, the stiftung geld and waehrung and the walter eucken institut, for their invitation and hospitality. i am tempted to start my remarks with the phrase : ‘ and now for something completely different … ’. in part, this is intended to signal a change of pace. after a series of outstanding presentations of very high quality research papers, i am afraid that i will lower the tone somewhat by bringing more of a policy orientation to the discussion. but it is also a nod to the pythonesque title assigned to my remarks. i understand that monty python was ( and is ) very popular in germany. but to avoid any misunderstanding, i thought i should clarify from the outset that the title is an allusion to a famous sketch from one of the money python films. to incite rebellion against their roman rulers during the time of empire, the rebel leader – played by john cleese – asks the question : ‘ what have the romans ever done for us? ’, only to be met by a long and impressive list of achievements and contributions made by the romans to the quality of life. in asking a similar question about monetarism – or perhaps, more precisely, a question about the role of monetary quantities in the design, conduct, transmission and presentation of monetary policy – i seek to explore whether a similar conclusion can be drawn. while monetarism remains unfashionable in academic and central banking circles, perhaps it has contributed more to the past, present and potential future of monetary policy than we conventionally admit. no money, no inflation twenty years ago, the former governor of the bank of england ( and now lord ) king published an article in the bank ’ s quarterly bulletin entitled ‘ no money, no inflation – the role of money in the economy ’. this article addressed an apparent paradox. on the one hand, milton friedman ’ s famous mon

##rt benson n / a n / a n / a leeds building society 7, 567 n / a n / a n / a lloyds banking group 443, 255 n / a n / a n / a n / a n / a n / a nationwide building society 152, 155 n / a n / a n / a principality building society 5, 408 n / a n / a n / a rbs group 214, 816 n / a n / a n / a santander 189, 339 n / a n / a n / a virgin money 15, 093 n / a n / a n / a total monmouthshire building society the fls measure of lending covers drawn sterling loans to households and private non - financial corporations ( pnfcs ) by the fls group, which includes all uk resident monetary financial institutions and related specialist mortgage lenders within a group. bis central bankers ’ speeches the fls has been implemented in large part because of the developments in financial markets i have described : an example of the important and powerful linkages between the real economy and the financial sector. the continued uncertainties about the future of the eurozone and about the european banking system meant that during the past two years bank funding markets have had periodic bouts of closure. and when open, spreads of bank debt over risk - free rates have remained elevated. a number of large uk banks still rely on wholesale markets for funding at the margin and higher wholesale funding costs have spilled over into other funding markets – driving up retail deposit rates for example. prior to the announcement of the fls, banks were passing on their elevated funding costs to their lending rates. over the 12 months to mid - 2012, we saw lending rates to businesses and for mortgages rising ( chart 5 ). furthermore, the bank of england ’ s 2012 q2 credit conditions survey of uk banks suggested that household secured and corporate lending rates were expected to rise further. chart 5 chart 6 change in bank funding and mortgage rates between 31 july 2011 and 31 may 2012 annual lending growth to households and companies ( a ) per cent - 2 ( a ) based on scheme definition. sterling loans to banks and building societies ( including related specialist mortgage lenders ) to uk resident households and private non - financial corporations. although only a small rise in absolute terms, according to our business contacts this increase in interest rates was accompanied by generally tighter lending standards, reflected in broader changes in terms and conditions, and came after two years of