randall s kroszner : remarks on “ liquidity and monetary policy ” remarks by mr randall s kroszner, member of the board of governors of the us federal reserve system, to the u. s. monetary policy forum, washington, dc, 9 march 2007. * * * i ’ m pleased to be here today to participate in this discussion about liquidity and monetary policy. apparently many others are having a similar discussion – a quick search of lexisnexis turned up 2, 795 separate articles in the past six months alone that mentioned the word “ liquidity ” in the context of its abundance in financial markets. the use of the term liquidity in these articles spans a wide variety of meanings – perhaps 2, 795 of them! rather than grapple with the definition of the rather slippery concept of liquidity in my short remarks here, i will focus on aspects of global financial markets that many analysts associate with liquidity and that are particularly relevant for monetary policy – namely, the relatively low level of long - term interest rates in both real and nominal terms and the resulting relatively flat slope of yield curves around the world. 1 i want to emphasize that, given the openness of capital markets, explanations of these phenomena should have an international component. i will argue that the flatness of the term structure reflects both the global balance of saving and investment, through its effect on real interest rates, and currency competition, through its effect on expected inflation and inflation risk. i should note at the outset that the views i express here are my own and not necessarily those of my colleagues in the federal reserve system. of course, flat and even inverted yield curves in advanced economies are nothing new. we know that the short end of the yield curve is dominated by monetary policy and cyclical factors. to abstract from the potential effects of cyclical factors on the yield curve, consider the pattern of forward rates many years into the future, at which point the effects of current cyclical shocks would be expected to no longer be important. 2 such forward rates reflect not only market expectations of future short - term interest rates but also term premiums to compensate for the risk associated with commitments to extend credit so far in the future, including the risk of future inflation. the short - term forward rate ten years ahead estimated from the yield curve for u. s. treasury coupon securities has ranged between 4 - 3 / 4 percent and 5 - 3 / 4 percent over the past year, nearly

thomas jordan : monetary policy – achieving a balance between inflation and growth summary of a speech by mr thomas jordan, member of the governing board of the swiss national bank, at the annual meeting of the swiss venture club, berne, 2 september 2008. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * following several settled years, the international downturn in the economy, high commodity prices and the ongoing financial market crisis is challenging central banks on a number of fronts simultaneously. by comparison with other countries, switzerland is in a relatively good position thanks to the continued strength of consumption, full order books, full employment, low inflation by international standards and few excesses in the real estate market. however, the global economic decline is likely to reach switzerland, albeit with a certain lag. in particular, the economic slowdown now becoming apparent in europe could have a considerable impact on the swiss business cycle by reducing the demand for our exports. moreover, the pessimistic mood in the financial markets is not likely to be conducive to the creation of value in the financial sector. however, the relative stability of the swiss franc should continue to support our exports. the recent rise in the swiss rate of inflation to over 3 % is mainly attributable to first round effects, i. e. to the direct results of the increase in oil prices. if, as expected, second round effects remain contained, the rate of inflation should drop back below 2 % during the course of 2009, and long - term inflation expectations should remain low. based on these assumptions, current monetary policy is appropriate. however, if inflation does not fall back due to second round effects as expected, the snb would need to counter this development in order to anchor price stability.