robert holzmann : stress in public finances - the need for international policy coordination welcome remarks by dr robert holzmann, governor of the oesterreichische nationalbank, the austrian central bank, at the 2024 annual meeting of the standing field committee " international economics " of the verein fur socialpolitik, vienna, 3 may 2024. * * * ladies and gentlemen, esteemed colleagues, it is my pleasure to welcome you in the newly renovated kassensaal of the oesterreichische nationalbank to the discussion event on the occasion of the 2024 annual meeting of the standing field committee " international economics " of the verein fur socialpolitik. today's economic policy forum will discuss the topic of " stress in public finances : the need for international policy coordination. " since stress in public finances has a tendency to exert stress on financial stability and on interest rates, you can imagine that the topic of the panel discussion is of great interest to me as a central banker. i am very much looking forward to listening to our excellent panel of highly experienced experts. following many decades of rising globalization, including a " hyper - globalization period " between the 1990s and 2008, the 2008 global financial crisis led to a slowdown of this trend, sometimes called " slowbalization. " in recent years and fueled by the covid - 19 pandemic, the war in ukraine and growing ideological differences with respect to tackling the green transition, a trend toward de - globalization has emerged. so, based on forward - looking ideas and my personal experience – let me share a few remarks on how international policy coordination and cooperation can still work in a deglobalizing world : first, a lot of ink ( or time ) has been spent over many years on identifying the cooperation space for critical areas of economic policy - setting that promise welfare improvements of some size. a critical starting point for measuring welfare improvements is the nash equilibrium – as non - cooperative game theoretical outcome. this equilibrium assumes full information about the states of the world ( and mutual interests and differences ) and is quite likely quite some distance from the origin and state of ignorance. it thus reflects a relatively advanced welfare state to which cooperation can contribute a variable extend. hence, analytical policy events organized by international organizations primarily aimed at identifying country - specific positions may achieve such a valuable non - cooperative equilibrium. for me, a historic and still relevant example – the oecd working party no 1

. 70 ). • by prioritising an international playing - field that is as level as possible and as sound as possible, speed is sacrificed. • second issue – some key policy discussions end up being away from home, away from the westminster parliament. mainly global in fact. • that global process is pretty transparent – consultative papers, speeches and so on. but perhaps not covered in any national media, including here in the uk, as much as one might expect. bis central bankers ’ speeches • but there is a deeper question here about the compatibility of domestic and global objectives. in the monetary sphere, it is well known that one cannot combine capital mobility, monetary policy focused on domestic price stability, and fixed exchange rates. solution in post - bretton woods world has been floating exchange rates. this does not mean there are no spillovers. hence information sharing in basel meetings etc. • there is a financial trilemma too. cannot combine cross - border banking, and an integrated international financial system more generally ; financial stability ; and national policies focused solely on domestic stability. • came home to roost in the crisis : global banks were, as mervyn king put it, “ international in life but national in death ”. financial autarky is not the answer. • solution : co - ordination and co - operation on the resolution of global banks. g20 financial stability board has led the way here. real progress. • means foreign countries have a stake in our banks, and vice versa. means the key policies are unavoidably international, global. as a trading nation we should welcome that. i hope these brief remarks provide the basis for a good discussion. in short, the traditional roles of central banks – for the first time ever reflected in uk legislation – touch every household and business in this country and, in truth, more widely. we need to be clear about what we can do and what we cannot do ; we need to operate consistently within our remit ; and above all we must be sufficiently transparent to make proper accountability realistic. that is what trust requires, and we are in the business of trust – trust in the value of money. bis central bankers ’ speeches