Artigos de Bancos Centrais e BIS REUNIÃO DE

REUNIÃO DE CONJUNTURA
20/06/2016
Artigos de Bancos Centrais e BIS
Vítor Constâncio: The challenge of low real interest rates for monetary policy ......................... 1
Discurso de Ilan Goldfajn na cerimônia de transmissão do cargo de Presidente do Banco
Central do Brasil.................................................................................................................................. 13
Ignazio Visco: "Doing Business in a Fragmented World" ............................................................. 17
Vítor Constâncio: The challenge of low real interest rates for monetary
policy
Lecture by Mr Vítor Constâncio, Vice-President of the European Central Bank, at the
Macroeconomics Symposium, Utrecht School of Economics, Utrecht,15 June 2016.
***
The charts can be found at the European Central Bank's website.
The Footnotes can be found at the end of the speech.
This is the full text of a speech delivered in abridged form at the Macroeconomics Symposium at
Utrecht School of Economics on 15 June 2016.
Ladies and gentlemen,
I warmly thank the organisers for inviting me to the Utrecht University Macroeconomics Symposium,
a prestigious event dedicated this year to the low interest rate environment. Low interest rates are
prevailing in advanced economies where a third of public debt is in negative territory and deposit
facility policy rates are negative in several of them. Over the past decades, across major advanced
economies both short- and long-term interest rates have experienced a significant decline and are
currently at historical lows (see chart below on Long-term interest rates).
In 1980, long-term interest rates stood at 11.4% in the U.S. and 8.5% in Germany. On average, over
2016 they have been about 1.9% and 0.3%, respectively and at about 0.3% for the euro area as a
whole. Short-term interest rates have witnessed an equally dramatic fall: in 1980 the interest rate on
three-month Treasury securities stood at 11.4% in the U.S. and 6.4% in Germany; this year it has
averaged about 0.3% in the U.S. and minus 0.5% in Germany. In the euro area, the overnight
interest rate has been minus 0.3%. A striking feature of the current environment is the extent to which
interest rates are in negative territory at different maturities across so many advanced countries (see
chart below on Sovereign debt yields). For example, yields in Japan up to ten years are negative,
and in the case of Switzerland this extends to 15 years.
Why are interest rates so low? Is monetary policy responsible?
Answering these questions is of crucial importance. Understandingly, low interest rates are
generating a degree of apprehension in some quarters about the potential negative implications for
savers and for the financial industry, due to the compression of interest income.
A superficial, impulsive answer is that rates are low because monetary policy keeps them low.
However, in reality, low rates are the result of real economy developments and global factors, some
of which are of a secular nature and others relate to the financial crisis.
The concept of a real equilibrium interest rate
To fully understand the present situation, it is useful to invoke the concept, controversial as it may be,
of an equilibrium (or neutral) real interest rate, determined by long-term real economic factors and
independent from monetary causes. It is based on the idea that there are real economic forces that
lead the economy to long-term equilibrium at full employment with stable inflation. The role of
monetary policy should therefore be to steer policy and market rates to that equilibrium rate. The
concept assumes therefore that money, as well as finance, are neutral in the long run, and only act
as devices that facilitate contemporaneous and intertemporal transactions. Many general equilibrium
models operate reflecting this vision, which may be difficult to square with economies at present, on
the back of the staggering permanent loss of output resulting by the recent financial crisis.
The importance of the concept of a real equilibrium interest rate is that it provides a sort of anchor to
a monetary economy. In reality, the concept defines an optimum to which the economy would move
spontaneously in the long run if wrong policies would not disturb it. The concept was introduced in
1898 by Knut Wicksell as he became aware that in a credit-dominated economy, where banks create
money, the traditional quantity theory of money could not explain inflation. He therefore introduced
the theory of a natural real rate of interest, linked to the marginal productivity of capital that, in
combination with market interest rates, would determine price dynamics. Prices would increase if
market rates were below the natural rate, and would decrease should the opposite be the case. As
1
market rates are influenced by monetary policy and somehow related to monetary aggregates, he
presented his theory as a reformulation of the quantity theory of money adapted to a credit/money
economy. As he wrote in his book "Interest and prices": "There is a certain rate of interest on loans
which is neutral in respect to commodity prices, and tends neither to raise or lower them. This is
necessarily the same as the rate of interest which would be determined by supply and demand if no
use were made of money and all lending were effected in the form of capital goods. It comes to much
the same thing to describe it as the current value of the natural rate of interest on capital."[1]
The connection with the productivity of capital in production in physical terms was kept in the
loanable funds theory of the interest rate when it refers the forces of "productivity and thrift". Keynes,
in his 1930 Treatise on Money, uses the concept of the natural rate but abandons it in the "General
Theory" as he introduces the concept of equilibrium at different levels of employment rejecting the
idea of real self-equilibrating forces and underlining the importance of monetary factors (the liquidity
preference theory) in determining the interest rates even in the long term. As a result, some
Keynesians and especially all post-Keynesians reject the notion of the natural real equilibrium
interest rate.[2] The link with the real productivity of capital also contributed to that rejection after the
famous controversy between the two Cambridge Universities (U.K. and U.S.) in the 1960s and 70s
about the possibility of aggregating different capital goods in a capital variable with prices that need
an interest rate to be calculated, when, at the same time, the interest rate was supposed to depend
on the real productivity of capital.[3] The idea of the real equilibrium or natural rate disappeared from
monetary theory and policy during the time of the controversy between monetarists and Keynesians
as also Milton Friedman did not believe in the concept. In his 1968 paper Friedman wrote: "What if
the monetary authority chose the "natural" rate - either of interest or unemployment - as its target?
One problem is that it cannot know what the "natural" rate is. Unfortunately, we have as yet devised
no method to estimate accurately and readily the natural rate of either interest or unemployment. And
the "natural" rate will itself change from time to time. But the basic problem is that even if the
monetary authority knew the "natural" rate, and attempted to peg the market rate at that level, it
would not be led to a determinate policy. The "market" rate will vary from the natural rate for all sorts
of reasons other than monetary policy."[4] As the empirical instability of money demand functions
contributed to the demise of Friedman's monetarism based on monetary aggregates, the concept of
the real equilibrium rate in a Wicksellian sense re-emerged by the hand of Michael Woodford and
Lars Svensson, when both created the theory of inflation targeting monetary regimes. Woodford even
titled his 2003 book as "Interest and Prices" to underline the relation to Wicksell. [5] Monetary
aggregates were substituted by interest rates as the monetary instrument of choice, with monetary
policy subject to a quantitative inflation target. As the real equilibrium rate is unobservable, as in the
case of Wicksell, evidence that the policy and market rates were deviating from the natural rate
would be given by the change in inflation. The policy response was then to increase or decrease
policy rates accordingly, to address the problem. This Wicksellian approach, at the centre of the
inflation targeting theory, can also be found in optimal rules extracted from new-Keynesian macro
models as well as in the Taylor-type monetary policy rule in which the intercept is set at the real
equilibrium interest rate level.
The importance of this background is that monetary policy needs to shadow the equilibrium rate in
order to meet its stability mandate. If the real equilibrium rate is decreasing then failure to accompany
it would leave the economy with too high borrowing costs with respect to the return on investment.
This would discourage investment and consumption and generate recessionary and deflationary
pressures.
Monetary policy is therefore part of the solution and not part of the problem. By ensuring low interest
rates, monetary policy is supporting and accelerating the recovery and with this, the return to a
normalisation of inflation and subsequent normalisation of interest rates. This starts to be visible in
the U.S. where interest rates have started to increase.
To demonstrate that monetary policy did not create per se the environment of low interest rates but is
rather responding to a declining real rate of equilibrium, we need to have some empirical idea about
a concept that is unobservable. There exist, however, many different methods to try to estimate this
unobservable rate. One approach can be based on the existing medium- to long-term market interest
rates, assuming that the markets are influenced by the concept of a long-term equilibrium real rate.
2
Methodologies can then try to extract that wisdom of markets by using filters or models to
decompose the actual interest rates. Other methods are more theoretical and model-based, building
on the possible determinants of a real equilibrium interest rate. I will present some estimates using
both types of approaches.
Determinants behind the decline of market interest rates
A useful starting point to understand the decline in nominal risk-free long-term interest rates over the
last thirty years is to decompose their evolution into four components: expected inflation over the
lifespan of the asset, inflation and real term premia, which are the compensation investors require for
holding onto a long-term asset and finally, the expected path of the short-term real interest
rate.[6] Although data limitations make it hard to derive empirical estimates of each element of this
decomposition going far back in the past, available estimates suggest that all components have
contributed to the decline in nominal interest rates.[7]
Taking a historical perspective, the first component, long-term inflation expectations have declined
steadily since the beginning of the 1980s to stabilise at levels around 2% in the late 1990s (see chart
above on Long-term inflation expectations). The trend decline and subsequent stabilisation are a
manifestation of the success of central banks' monetary policy in regaining control of inflation and in
establishing strong credibility. In the last two years, these benign developments have been
overshadowed by the small decline in long-term inflation expectations, with the decline in short- and
medium-term inflation expectations reflecting oil price developments and the degree of slack in the
economy. From a central bank's perspective, this was very concerning and motivated the ECB's
substantial and comprehensive policy response. I will return later to the issue to elaborate on the
ECB's policy measures.
The second element of the decomposition is the nominal term premium that corresponds to the
additional return that investors demand to hold a long-term bond as opposed to rolling over a shortterm bond. It can be decomposed in the inflation premium and the real term premium. But it is
imperative to first look at the nominal term premium as a whole, as it is available over a longer
sample. Some caution is needed when interpreting the results, as premia cannot be directly
observed, and deriving estimates requires a model-based analysis.
The term premium is found to display a trend decline over the last decades (see chart below on
the Nominal term premium). This feature is robust across measures derived from alternative models,
whereas there are noticeable differences about the precise level of the premium in specific episodes.
Breaking down the nominal term premium into its components, the real term premium and the
inflation risk premium, is subject to data limitations as estimates are based on inflation-linked bonds
or swaps which have only recently become more widespread. As a result, this prevents a detailed
assessment of the relative importance of the drivers behind the decline in the nominal term premium
from a long-term perspective. But it has to be expected that the inflation premium has significantly
declined in the 1980s and 1990s alongside the decline in inflation expectations, with investors
accepting lower compensation for bearing inflation risk.[8]
Focusing on more recent years, available estimates suggest that the inflation premium has remained
rather stable at low levels in the 2000s, and has declined in the last couple of years probably
reflecting investors' reduced concern about inflation. This may be worrisome and we monitor these
developments closely.
However, the main driving force behind the large decline in the nominal term premium observed in
2003-2004, as well as during the global financial crisis, has been the real term premium, as shown by
Abrahams and co-authors (2015) for the U.S. and ECB staff estimates for the euro area - available
since 2005 when inflation swaps have been introduced in the euro area (see chart below on
the Decomposition of the euro area nominal term premium).[9]
One important factor exerting downward pressure on the real term premium has been the imbalance
between the reduction in the supply of and the increased demand for safe assets at the global level,
which has been exacerbated by the global financial crisis. Investors' preference for the moneyness of
safe assets - that is a preferred habitat demand for safe assets - has in effect bid up the price of
those assets and correspondingly compressed the yield. Prior to the crisis, this was explained by the
large appetite among certain emerging economies to hold their rising savings, the so called "savings
3
glut" (Bernanke, 2005) - reflecting factors such as demographics and the desire to build international
reserves for precautionary reasons after the Asian crisis of the late 1990s - in U.S. safe assets. This
desire for safe assets led also to inflows into U.S. securitised assets - as well as increasing the
incentives for the financial sector to boost supply - which were perceived to be safe in the years
preceding the global financial crisis. However, by the start of the crisis these asset-backed securities
quickly lost their safe status. The subsequent emergence of the euro area sovereign debt crisis also
led to government bonds in certain jurisdictions being no longer characterised as safe. According to
Caballero and Farhi (2014), the global supply of safe assets has fallen from about $20trn in 2007 to
just over $12trn USD in 2011. Additional factors that have boosted the demand for safe assets are
the new liquidity regulation for banks and the increased need of safe and liquid assets to be posted in
collateralised transactions. Central banks have, of course, contributed to the compression of premia
via their quantitative easing programmes, and I will come back to this.
The final component affecting the long-term nominal interest rate is the expected path of the shortterm real rate over the life of the asset. Although the real rate has declined at all horizons, it is helpful
to partition this path in terms of the front and intermediate segment, and the long-term in order to
better understand the drivers of these developments.
First, over the short and medium run, the balance between savings and investment, and therefore the
real interest rate, is also affected by many factors of more cyclical nature. Since the global financial
crisis in 2008, these factors have predominantly exerted downward pressure on the real interest rate.
In the case of the euro area, it has still not emerged from its "balance sheet recession", where a
severe debt overhang and tightening of credit standards have required a substantial amount of
deleveraging of both private and public sector balance sheets, thus reducing investment and
prolonging the downturn. Furthermore, it takes time to reabsorb the over accumulation of capital and
capacity that occurred prior to the crisis. Overall, that growth remains weak in the years after a
banking crisis is certainly not atypical and has been well documented (Reinhart and Rogoff, 2009).
Second, in the long-term, market expectations about future monetary policy rates are being very
much influenced by the difficulty in normalising inflation and by the pessimistic views about the long
run growth prospects of the advanced economies which I will address later.[10]
Another way to operationalise the longer-term notion of the real interest rate is to take real forward
rates and remove the real forward premium. An advantage of using market-based measures to
derive an estimate of the equilibrium real rate is that they are forward-looking and available on a daily
basis (Bomfim, 2001). That being said, this measure is also subject to significant shortcomings. First,
removing premia rests on a model and results are usually very sensitive to model specifications.
Second, whereas the focus is on the expected real rate in the distant future, this is the part of the
model exercise that may be particularly uncertain.[11] Third, market expectations cannot measure the
equilibrium real rate per se, but only the market perception of it, which can be exposed to bouts of
excessive optimism or pessimism.
Estimates of the real equilibrium interest rate
Beyond what can be observed in the markets, it is thus important for monetary policy to estimate a
long-term real equilibrium rate. This real rate should reflect an economy at full employment, with
stable inflation close to the monetary authority's target. As I mentioned before, that rate should be the
one used as the intercept in a traditional Taylor rule.
One way of thinking about the equilibrium rate that has inspired some of the methods used, is to
connect it with the growth rate of potential output. Current estimates are clearly affected by the fact
that potential growth has been decelerating markedly in the advanced economies.
The determinants of the real interest rate in the long run are parsimoniously summarised by the
Solow growth model. Within this framework, the long-term real interest rate boils down to productivity
and population growth as well as savings behaviour. The intuition is that these forces determine
investment and therefore the demand for loanable funds, which have to be matched by savings.
Studies show that total factor productivity and population growth have been slowing in the euro area
as well as in other advanced economies for decades (Gordon, 2016, Goodhart, Pardeshi and
Pradhan, 2015).
4
Growth models with a richer demographic structure, while supporting this basic insight, allow for
more elaborated predictions. In particular, according to overlapping generations (OLG) models which
allow for life-cycle effects of consumption and savings decisions, variations in the real rate in the long
run can be linked to additional fundamental forces, like an increase in the longevity of agents.
Moreover, in comparison with the Solow model, a number of additional general equilibrium effects
matter, in such settings. For example, income inequality and the distribution of private sector debt
can matter because of deviations from the assumption of a single representative agent. Likewise, the
design of pension systems and, more broadly, fiscal developments can matter in view of nonRicardian model features.[12] Virtually all of these factors shaping the real rate in the long run have
been steadily exerting a drag on the real rate.
This type of OLG models open a possible response to the risks of secular stagnation of growth that
has been mentioned by Ben Bernanke, Narayana Kocherlakota and many others: in such low interest
rate environment, if the private sector does not increase investment, the public sector could do it by
increasing expenditures in infrastructure. In a non-Ricardian model more public debt issuance would
also contribute to increase interest rates.[13] There are also additional factors of a secular nature
which have altered the balance between savings and investment and as a result, weighed on the real
interest rate. This relates, for example, to the shift towards human capital-intensive industries, such
as software and finance, and away from physical capital-intensive industries, such as manufacturing
(Bean, Broda, Ito and Kroszner, 2015). In addition, the fall in the relative price of capital goods is
another factor limiting investment and deteriorating the balance with savings, and thereby the real
interest rate. And since capital markets operate on a global scale, downward pressure on returns
propagates globally.
The decline in the real interest rate in the long run is also consistent with the repeated downward
revisions in the long run growth potential of the economy that we have witnessed. Indeed, potential
growth shares some of the drivers of the real interest rate in the long run, such as productivity and
population growth. For instance, in the early part of 2003, the Consensus estimate for U.S. long run
real potential output growth was 3.1%, with recent estimates revised down to 2.2%. In the euro area,
survey expectations for long-term economic growth have moved down from 2.2% in April 2003 to
1.4% in the latest estimates (see chart below on Growth expectations).
This decline in economic growth in advanced economies has led some scholars to bring back the
concept of secular stagnation which was first introduced by Alvin Hansen in 1938 to portray the
decline in U.S. economic growth he envisaged on account of the decline in innovation, population
growth and investment opportunities. More recently, Robert Gordon (2016) and Larry Summers
(2016) have reignited the debate on secular stagnation, with the former emphasising the role of
supply-side factors and the latter on the chronic weakness of demand. Both frameworks are not
mutually exclusive as both supply and demand factors can interact and reinforce each other. For
example, weak demand leads to unemployment and if this becomes prolonged, workers' human
capital can diminish, which in turn reduces the potential output of the economy (Blanchard and
Summers, 1986 and Blanchard, Cerrutti and Summers, 2015).
The connection between the long-term real equilibrium rate and the potential growth rate of the
economy is therefore widely used in methodologies to estimate the real equilibrium rate, such as the
one developed by Williams and Laubach (2003). This connection is even accentuated in a normative
sense as in a simple OLG growth model with growing productivity, the so-calledgolden rule that
ensures the dynamic efficiency of the economy, (i.e. that the economy does not over-invest or underinvest and maximizes consumption equally across generations), implies that the real rate of interest
has to be equal to the economy's growth rate.
Let me now turn to the description of some available model-based methods to estimate the real
equilibrium rate.
One approach to conduct the estimate, placing emphasis on the medium- to long-term, is to use a
time series approach based on a Bayesian vector auto regression (BVAR) with minimal restrictions.
For instance, a 5-year ahead forecast of the short-term real interest rate could provide a proxy for the
equilibrium real rate. This is based on the assumption that at such a horizon, the effect of most
shocks should have dissipated and as a result the forecast mainly reflects persistent developments in
the real interest rate.[14]
5
A more elaborated approach is to use a semi-structural model, emphasising a medium-run concept
of the equilibrium rate. In this approach, initiated by Williams and Laubach (2003) that I just
mentioned, the equilibrium rate depends on the trend growth of the potential output and on a timevarying unobserved component that represents all the other drivers of the equilibrium rate. This latent
component and the trend growth rate are unobserved in a model with an IS and an inverted Philips
curve. In this approach, a statistical technique known as Kalman filtering is used to estimate several
unobserved variables including a time-varying equilibrium real rate. This algorithm partially adjusts
the estimates of the unobserved components based on the distance between the model's forecasts
of inflation and real GDP and the actual values of these variables until these statistically converge. [15]
Still, an alternative approach to operationalise the equilibrium real rate - taking directly into account
the mandate of central banks to stabilise inflation over a not-too-distant horizon - is to compute the
real interest rate that, if maintained for some time, would stabilise inflation. For the euro area, this
corresponds to a level below but close to 2% over the medium-term and, for this approach, the model
by Christiano, Motto, Rostagno (2014) can be used.[16]
When applying these approaches to the euro area, it emerges that, in comparison to the years prior
to the crisis, estimates of the equilibrium real rate have sharply declined during the crisis and have
kept declining or remain in deep negative territory over the recent periods (see chart above
on Estimates of the equilibrium real rate). The estimates also show the degree of model uncertainty
surrounding the measurement of the equilibrium real rate, which of course compound to the
parameter uncertainty.[17] For comparison, the observed market real rate discussed in the previous
section is depicted in the green bar. It is apparent that the sharp decline of the equilibrium real rate
and the recent negative value is not unique to the euro area, but it is also found by in the U.S.
These measures of the equilibrium real rate contrast with the shorter-term notion of the equilibrium
real rate typically adopted in the DSGE literature, namely, the short-term real interest rate which at
each point in time would stabilise the economy to its equilibrium level in the absence of nominal
rigidities. Evidently, this approach has the advantage that it is directly linked to the nature of frictions
in the economy. However, this measure turns out to be highly model-dependent and volatile, limiting
its practical relevance for monetary policy setting (Barsky, Justiniano and Melosi (2014).
Overall, available measures indicate that the euro area's equilibrium real rate appears to have turned
negative and is significantly lower than it was in the past, irrespective of the specific notion and
approach used to measure it, even if its precise level is uncertain.
The use that the central bank should make of the equilibrium real interest rate is straightforward if
one follows the textbook prescription: the central bank takes the equilibrium interest rate as being
driven by structural factors which are largely beyond its control, and steers the policy rate relative to
the level of the equilibrium rate. By doing this, the central bank alters the relative attractiveness of
saving versus spending, which facilitates aggregate demand to match aggregate supply so that the
output gap is closed and price stability is ensured.
In practice, however, there are many challenges, and not only limited to the conceptual and
measurement issues I have just described. One challenge is that, in reality, there is not just one
interest rate affecting saving and investment in the economy, but there is an array of market and
bank lending rates which apply to different contracts and are linked by spreads that vary over time.
This makes the use of the concept of the equilibrium rate less straightforward. Another challenge is
the presence of the zero lower bound on nominal interest rates. In the event of being confronted by
large adverse shocks, the zero lower bound can prevent the central bank from bringing the policy
rate to the sufficiently low level that it is called for by the declining equilibrium interest rate.
But recent experience has shown that we can look at these challenges in a less negative manner.
First, the presence of an array of interest rates can actually provide a way for the central bank to
inject additional accommodation by lowering such rates even when the policy rate is at the zero lower
bound; and, second, the lower bound may not be actually at zero but in negative territory.
Negative interest rates and central bank's asset purchases
In effect, this has been the ECB's response to being confronted with a weak economy, malfunctioning
banks' credit intermediation and severe and persistent disinflationary forces.
6
Since mid-2014, our monetary measures can be categorised into three elements: first, we have
reduced the policy rates and brought the deposit facility rate into negative territory - currently it stands
at minus 40 basis points; second, we have fostered an overall easing of euro area financial
conditions via central bank's asset purchases - we have progressively expanded the scope and size
of our purchases as well as the horizon, which is intended to run until the end of March 2017, or
beyond, if necessary, and in any case until there is a sustained adjustment in the path of inflation;
third, we have re-habilitated the bank lending channel via providing targeted long-term lending to
banks at favourable conditions to support lending to the real economy. And these policy measures
have been flanked by our reinforced forward guidance which we have provided pertaining to our
future policy actions so as to clarify our policy reaction function and reduce uncertainty and volatility
and thereby, strengthen the control over the yield curve.
Moreover, these measures are designed to work in combination, positively interacting with each other
through different channels so that the overall easing effect on financing conditions is greater than the
sum of the individual effects. In doing so, the cost of capital is reduced and this provides the incentive
for firms to undertake investment in the euro area, which is a crucial element for absorbing the
considerable amount of economic slack which exists, reducing the high level of unemployment and
boosting potential output.
Let me briefly provide some salient features of each of these policy measures.
The adoption of negative policy rates has allowed money market interest rates and the longer end of
the yield curve to decline further. While this shares some of the mechanisms of a standard reduction
of policy rates when they remain in positive territory, the adoption of negative rates provides
additional accommodation by effectively relaxing the non-negative constraint on expectations of
future short-term interest rates, thus helping to reduce long-term yields. In the absence of negative
rates, when central banks bring short-term interest rates to zero, forward-looking investors start to
think that the long-term interest they can earn by investing in a long-term security is too low to
compensate for a potential backup in yields. Therefore, they start fearing a reversal of the low
interest rate policy and prefer to invest and lend for a very short term. In sum, a zero lower bound
suggests to investors that short-term rates can only rise and cannot fall further. This scenario was
described by John Hicks in his 1937 Econometrica paper: "In an extreme case, the shortest shortterm rate may perhaps be nearly zero. But if so, the long-term rate must lie above it, for the long rate
has to allow for the risk that the short rate may rise during the currency of the loan, and it should be
observed that the short rate can only rise, it cannot fall."[18] To this end, we have reiterated in our last
Governing Council communication on 2 June that policy rates would remain at current levels or lower
for an extended period of time.
With our asset purchase programme (APP) - launched in January 2015 and successively recalibrated
in December 2015 and March 2016 - we have been able to provide substantial additional
accommodation over and above the easing via policy rates. And the fact that the scope of our
purchase programmes has been calibrated to include a variety of investment-grade financial assets
has meant that our purchases have allowed the compression of several premia across a wide range
of markets in which we intervene. Via portfolio rebalancing effects, these effects propagate across
the whole array of rates, delivering broad-based accommodation.
Asset purchases interact with the negative deposit facility rate (DFR), which acts through what
amounts to an effective tax on liquidity held by banks. Indeed, the portfolio rebalancing effect is
empowered by the negative DFR, as banks with high amounts of excess liquidity holdings have a
strong incentive to reduce these holdings and put their reserves to work.
Another effect of negative rates is to increase the velocity of circulation of excess reserves in the
interbank market towards the banks that need liquidity to sustain or expand their credit portfolio. The
banks with excess liquidity have an incentive to pass it on to other institutions to reduce the cost of
paying for the excess reserves. This is directly related with another effect which results from the
banks having also the incentive to expand their portfolio of credit or to buy securities with longer
maturities, thus increasing revenues and reducing their amount of excess reserves. This turns out to
be an additional element of portfolio rebalancing that that is pursued by our policy. We have had
some success on both scores and the stimulus to demand has benefited the European and global
economies.
7
Many market commentators link negative DFR with exchange rate policy. However, recent
experience clearly demonstrates that it does not work in a simple or reliable way. The recent ECB
and Bank of Japan's decision to implement negative DFRs, resulted in the euro and the yen
appreciation against the U.S. dollar. There is no inexorable link between the levels of deposit facility
rates and exchange rates, as even the possibility of some form of carry trades depends on the
general situation of risk aversion. Therefore, negative policy rates are not a reliable policy to make
the exchange rate more favourable to domestic exporters. In addition, negative DFRs should not be
seen as a zero sum game as the boost to growth which they provide benefits all jurisdictions via
trade spill-overs.
ECB staff finds supportive empirical evidence for the empowering complementarities of our
measures. For instance, banks in less-vulnerable euro area countries have been granting more loans
to the real economy than would have been the case without a negative DFR. In addition, banks with
large holdings of excess liquidity, in particular in less-vulnerable member States, were found to have
rebalanced significantly more towards non-domestic euro area government bonds than they would
have done in the absence of a negative DFR. Overall, the portfolio rebalancing effects, triggered by
large-scale asset purchases have been strengthened in the euro area by the negative DFR.
Furthermore, in March 2016 we decided that banks could borrow from the ECB in the context of the
new targeted long-term refinancing operations (TLTROs II) ex-post at rates as low as the negative
DFR which strengthens the transmission of our conventional policy to the real economy. Moreover,
this builds on the successful targeted long-term refinancing operations (TLTROs) which were
introduced in September 2014 and have greatly helped in bolstering the bank lending channel.
The expectations which we held when we first designed the measures introduced in summer 2014
are being validated by the incoming data. Borrowing costs for NFCs and households have
significantly declined and cross-country heterogeneity continues to recede (see chart below on Cost
of borrowing). Loan growth to the euro area non-financial private sector has been recovering and
according to the latest Bank Lending Survey (BLS), there has been a continued net easing of banks'
overall terms and conditions for loans to enterprises and increases in loan demand across all
categories.
Notwithstanding the impact in improving financial conditions faced by the real economy, the
instrument of negative DFR has clear limits and we need to monitor the possible occurrence of
undesirable side-effects. The first limitation is the risk that, after a certain point, the policy could
trigger an increase of preference for cash which would be disturbing. Nevertheless, at present levels,
the risk is not in the horizon as negative rates are not being passed on by the banks to depositors.
Negative interest rates can also be a source of concern for their impact on banks' profitability. In
examining this issue, it is important that our measures are viewed in their entirety. Therefore, the
impact of the overall effects of our purchase programmes and our credit easing measures on bank
profitability go far beyond the negative DFR. Our policy stance leads to capital gains on the securities
held by banks and to lower funding costs. Furthermore, the positive macroeconomic effects support
the demand for credit. This in turn increases intermediation volumes, contributes to increase credit
quality and decreased banks' costs associated with loan losses. As a result, these effects can offset
the negative impact on banks' net interest margin brought about by lower interest rates on banks'
assets. In 2015, the first full year of negative DFRs, net interest income increased and we estimated
that, on average, the cumulative effect of our policies until 2017 will continue to be overall positive for
banks' profitability. Nevertheless, there are limits to the use of negative rates, if maintained over a
protracted period of time. For example, at some stage, banks may be passing on the cost of the
negative rates by increasing lending rates to boost their margins which would be detrimental to our
final objectives.
Another potential cost of the policy instrument, concerns financial stability if signs of overvaluation
emerge in asset markets as a result of the low credit rates and the search for yield. Financial stability
considerations are taken very seriously at the ECB and a considerable amount of resources are
devoted to closely monitor this issue. At present, no broad signs of instability or excesses in asset
price developments have been detected in euro area countries. Moreover, together with national
authorities, we are prepared to intervene with supervisory and regulatory tools should this be needed.
Nonetheless, the proposition that the ECB should pre-emptively resolve financial stability issues with
8
monetary policy tools at the expense of delivering on the mandate of price stability is both wrong and
very hazardous.
More generally, two prominent arguments against the low policy rate environment have been raised
from several quarters. The first is that it is hurting savers and in particular retirees who rely heavily on
their savings as well as citizens building up their savings for retirement. The second is that it is selfdefeating because it distorts incentives to clean-up the private and public sectors' balance sheets as
well as inhibiting the exit of unproductive firms and thereby, the creative destruction process which
drives economic growth. In doing so - it is argued - the expansionary policies perpetuate financial
instability from one cycle to the next.
While I understand why the first argument is made, it fails to recognise that today's low interest rates
are greatly assisting the economy to recover and inflation to move to levels below, but close to 2%
and with this, a return to a normalisation of interest rates in the future. Furthermore, the flow-of-funds
statistics show that the earnings of households with interest revenues are higher than their total
interest payments.
The second argument, which can be characterised as the "liquidationist view" deserves assessment
as well. It should be noted however, that in recent years, monetary policy has actually been very
effective in improving overall financial conditions, which has been an instrumental factor in the
balance sheet repair of households and firms and consequently, the improving health of the financial
sector. Furthermore, debt reduction is facilitated by a growing economy, with the latter benefiting
directly from our policy response. The alternative policy that the "liquidationist view" seems to
suggest is that we should ignore the recessionary forces that are driving down inflation and allow for
more recession, destruction of capital and higher unemployment.
Naturally, what ultimately matters in determining the need to maintain policy accommodation is our
price stability objective. According to the latest Eurosystem projections, euro area real GDP growth is
expected to grow by 1.6%, 1.7% and 1.7% in 2016-18, respectively, and annual HICP inflation is
projected to be 0.2%, 1.3% and 1.6% in 2016-18. Personally, I believe that without upheavals in the
world economy we can reach a slightly higher level of inflation in 2018. The full implementation of our
policy package adopted last March is still going to produce effects in the forthcoming months and will
contribute to achieve our mandate of delivering inflation below but close to 2%, over the mediumterm.
Conclusion
Let me conclude. What I have outlined today is that the low interest rates, which currently prevail, are
a reflection of adverse long-term forces which have combined with the adverse implications of the
global financial crisis and the sovereign debt crisis. The consequence of this has been a decline in
the equilibrium real interest rate. I have also tried to portray the uncertainty around the concept and
measurement of the equilibrium interest rate. Indeed, the decline in market interest rates at the global
level in a context of low inflation and low - or at most moderate - economic growth with no signs of
overheating, suggests that the equilibrium real rate has significantly declined and turned negative.
Our monetary policy has provided significant accommodation to limit the negative effects of the
global and euro-area-specific shocks on the economy and forestall their deflationary impact. To put it
simply, we have shadowed a declining equilibrium interest rate; and we will continue to do so with the
full implementation of our measures. Absent of this, would have the dire consequences that the
saving-invest imbalance would find the solution via a fall in nominal income levels as a means to
compress savings.
By mitigating a prolongation of the recession, monetary policy can help prevent hysteresis from
gaining a foothold in the labour market, which in itself weighs on an economy's economic potential.
And by boosting the productive capacity of the economy by supporting investment and capital
formation, a link is established between the supply-side and the long-term.
Other policy actors, however, need to actively pursue structural policies which will ensure both a
sustainable recovery and an increase in the potential economic growth of the euro area. These, in
turn, will make investment more attractive, raise the equilibrium interest rate and expedite the
normalisation of interest rates. Only then can we envisage a stronger recovery and can the European
policy-makers deliver on their hopes of an improved prosperity for the citizens of Europe.
9
Thank you for your attention
References:
Abrahams, M., T. Adrian, R. K. Cump and E. Moench (2015), "Decomposing Real and Nominal Yield
Curves", Federal Reserve Bank of New York Staff Reports, No. 570.
Barsky, R., A. Justiniano and L. Melosi (2014), "The Natural Rate of Interest and Its Usefulness for
Monetary Policy," American Economic Review: Papers & Proceedings, 104(5): 37-43.
Bean, C., C. Broda, T. Ito and R. Kroszner (2015), "Low for long? Causes and consequences of
persistently low interest rates",Geneva Reports on the World Economy 17, Geneva, ICMB and
London, CEPR Press.
Bernanke, B. (2005), "The Global Saving Glut and the U.S. Current Account Deficit", Sandridge
Lecture, Virginia Association of Economics, Richmond, Virginia, Federal Reserve Board, March.
Blanchard, O. and L. Summers (1986), "Hysteresis and the European Unemployment
Problem", NBER Macroeconomics Annual, Vol. 1.
Blanchard, O., E. Cerutti and L. Summers (2015), "Inflation and Activity: Two Explorations, and Their
Monetary Policy Implications", presented at the 2015 ECB Forum on Central Banking.
Bomfim, A. (2001), "Measuring Equilibrium Real Interest Rates: What can we learn from yields on
indexed bonds?", Finance and Economics Discussion Series, 20013, Board of Governors of the
Federal Reserve System.
Caballero, R. J. and E. Farhi (2014), "The Safety Trap," NBER Working Paper No. 19927.
Christiano, L. J., R. Motto, and M. Rostagno (2014), "Risk shocks", American Economic
Review, 104(1):27-65.
Eggertsson, G. and N. Mehrotra (2015), "A model of secular stagnation", NBER Working Paper No.
20574.
Friedman, M. (1968) "The role of monetary policy ", American Eonomic Review, volume 58, number
1.
Goodhart C., P. Pardeshi and M. Pradhan (2015), "Workers vs pensioners: the battle of our
time", Prospect Magazine,December.
Gordon, R.J. (2016), "The Rise and Fall of American Growth: The U.S. Standard of Living since the
Civil War", Princeton U.P.
Gürkaynak, S., P.B. Sack and J. H. Wright (2006), "The U.S. Treasury yield curve: 1961 to the
present," Finance and Economics Discussion Series 2006-28, Board of Governors of the Federal
Reserve System.
Harcourt, G, (1972) "Some Cambridge controversies in the theory of capital", Cambridge U. P.
Joslin, J., Scott, K. Singleton and H. Zhu (2011), "A New Perspective on Gaussian Dynamic Term
Structure Models", The Review of Financial Studies, Vol 24 No.3.
Kara, E. and L. von Thadden (2016), "Interest Rate Effects of Demographic Changes in a New
Keynesian Life-Cycle Framework," Macroeconomic Dynamics, Cambridge University Press, Vol.
20(01), pp. 120-164, January.
Kim, D, and J. Wright (2005), "An Arbitrage-Free Three-Factor Term Structure Model and the Recent
Behavior of Long-Term Yields and Distant-Horizon Forward Rates", Finance and Economics
Discussion Series 2005-33, Board of Governors of the Federal Reserve System.
Kocherlakota, N. (2015) "Public Debt and the Long-Run Neutral Real Interest Rate" speech at South
Korea Central Bank, inhttps://www.minneapolisfed.org/news-and-events/presidents-speeches/publicdebt-and-the-long-run-neutral-real-interest-rate-20150908.
Laubach, T. and J. Williams (2003), "Measuring the Natural Rate of Interest", Review of Economics
and Statistics 85, No. 4, pp. 1063-70, November.
Laubach, T. and J. Williams, (2015), "Measuring the real natural interest rate redux" Federal Reserve
Bank of San Francisco Working Paper No. 2015-16, October.
Mésonnier, J.S. and J.P. Renne (2007), "A time-varying "natural" rate of interest for the euro
area," European Economic Review, Elsevier, Vol. 51(7), pp. 1768-1784, October.
Pilkington, P. (2014) " Endogenous money and the natural rate of interest: the re-emergence of
liquidity preference and animal spirits in the post-Kenesian theory of capital" markets", Levy
Economics Institute Working Paper No. 817.
10
Reinhart, C. and K. Rogoff (2009), "This Time Is Different: Eight Centuries of Financial Folly",
Princeton University Press.
Summers, L. (2016), "The age of secular stagnation: what it is and what to do about it", in Foreign
Affairs March/April 2016.
Taylor, J.B, and V. Wieland (2016), "Finding the Equilibrium Real Interest Rate in a Fog of Policy
Deviations", Economics Working Papers 16109, Hoover Institution, Stanford University.
Wicksell, K. (1936), "Interest and Prices", translation of 1898 edition by R.F. Kahn, London:
Macmillan.
Woodford, M. (2003), "Interest and prices", Princeton University Press, Princeton.
Wright, J. (2011), "Term Premia and Inflation Uncertainty: Empirical Evidence from an International
Panel Dataset", American Economic Review, Vol 101 No.4.
Wu, J.C. and F. D. Xia (2016), ""Measuring the Macroeconomic Impact of Monetary Policy at the
Zero Lower Bound", Journal of Money, Credit, and Banking, 2016, 48(2-3), 253-291.
[1]
Wicksell, K. (1898) "Interest and Prices", edition of 1936 in English published by Macmillan,
London, p 102.
[2]
See a characteristic post-Keynesian view in Pilkington, P. (2014) "Endogenous money and the
natural rate of interest: the re-emergence of liquidity preference and animal spirits in the postKeynesian theory of capital markets", Levy Economics Institute Working Paper No. 817.
[3]
See Harcourt, G, (1972) "Some Cambridge controversies in the theory of capital", Cambridge U. P.
[4]
See Friedman, M. (1968) "The role of monetary policy ", American Economic Review, volume 58,
number 1.
[5]
Woodford, M. (2003) "Interest and Prices: foundations of a theory of monetary policy", Princeton
U.P.
[6]
An alternative taxonomy would separate out also additional premia, such as the safety premium
and the liquidity premium. Furthermore, while the focus of the speech is predominantly on risk-free
rates, many assets bear credit risk. In addition, in the context of the euro area sovereign debt crisis in
2012 there was a surge in certain euro area countries' re-denomination risk.
[7]
See Box 2 "Why are interest rates so low?" in the ECB's 2015 Annual Report.
[8]
Jonathan Wright (2011), using a cross-country study, shows that a likely explanation for the decline
in the nominal term premium is the reduction in inflation uncertainty associated with increased
credibility of monetary policy.
[9]
It should be noted that this approach does not take into account the zero lower bound, for
approaches that do, see Wu and Xia (2016).
[10]
See speech by V. Constâncio, "International headwinds and the effectiveness of Monetary
Policy" delivered at the 25th Annual Hyman P. Minsky Conference on the State of the U.S. and World
Economies at the Levy Economics Institute of Bard College, Blithewood, Annandale-on-Hudson, New
York, 13 April 2016.
[11]
As interest rate processes are usually showing very high persistence, it is difficult to
econometrically pin down far-ahead expectations. Either the interest rate process is taken as
stationary, in which case the unconditional mean parameter (that becomes more and more relevant
for computing conditional expectations the longer the desired horizon) can usually be estimated with
high uncertainty only. Or the rate process is assumed to have a unit root, in which the far-ahead
expectations are driven to a large extent by current conditions, which may be unreasonable.
[12]
For examples see Kara, E.and L. von Thadden (2016), "Interest rate effects of demographic
changes in a New-Keynesian life-cycle framework", Macroeconomic Dynamics Vol. 20, No. 1;
Eggertsson, G. and Mehrotra, N. (2015), "A model of secular stagnation", NBER Working Paper N.
20574
[13]
See Kocherlakota, N. (2015) "Public Debt and the Long-Run Neutral Real Interest Rate", speech
at South Korea Central Bank, in https://www.minneapolisfed.org/news-and-events/presidentsspeeches/public-debt-and-the-long-run-neutral-real-interest-rate-20150908.
[14]
As an illustration, this approach is applied to the euro area using a VAR containing real GDP
growth, the GDP deflator growth, the Eonia rate and a suite of other interest rates, and measuring the
short-term real rate as the difference between the Eonia and inflation over the subsequent year.
11
[15]
The estimates in the chart follow a slightly different approach aligned with that of Mésonnier and
Renne (2007), which extended the seminal work of Laubach and Williams (2003).
[16]
In the exercise the real interest rate that stabilises inflation (defined in the model in terms of the
GDP deflator) at the target over the medium term - which for illustrative purposes is set between two
and two-and-half years - is computed with the additional requirement to limit volatility. The chart
displays the average rate over the two -and-half period. The exercise is carried out with the CMR
model, see Christiano, L. J., R. Motto, and M. Rostagno (2014).
[17]
For a recent discussion on uncertainty surrounding the estimation of the equilibrium rate, see for
example Taylor and Wieland (2016).
[18]
See Hicks, J. R. "Mr. Keynes and the "Classics"; A Suggested Interpretation." Econometrica 5,
No. 2 (1937): 147-59.
12
Discurso de Ilan Goldfajn na cerimônia de transmissão do cargo de
Presidente do Banco Central do Brasil
***
Exmo. Ministro Henrique Meirelles, aqui representando o Exmo. Senhor Presidente da República,
Michel Temer, e na pessoa de quem cumprimento os Ministros de Estado e as autoridades do Poder
Executivo.
Prezado Alexandre Tombini, na figura de quem cumprimento os expresidentes, ex-diretores,
diretores e servidores do Banco Central.
Ilustres representantes das instituições e das entidades representativas do Sistema Financeiro
Nacional.
Senhoras e senhores representantes da imprensa e demais convidados.
Quero começar expressando minha satisfação e honra em poder servir ao país no cargo de
presidente do Banco Central do Brasil. Agradeço ao Ministro Henrique Meirelles pela confiança em
mim depositada e ao Presidente Michel Temer pela indicação, que me proporciona essa
oportunidade ímpar.
Sinto-me especialmente gratificado por poder retornar a esta Casa treze anos após o fim de meu
mandato como Diretor de Política Econômica.
Quero começar deixando claro qual é o nosso compromisso principal. Nessa nova e desafiadora
jornada, perseguirei um único e claro objetivo: cumprir a missão do Banco Central do Brasil. A
clareza e a concisão dessa missão aumenta o poder de sua mensagem – “assegurar a estabilidade
do poder de compra da moeda e um sistema financeiro sólido e eficiente”.
Nesse sentido, entendemos o mandato de assegurar a estabilidade do poder de compra da moeda
como perseguir uma inflação baixa e estável. Dessa forma, mantendo inflação baixa e estável,
contribuiremos para a recuperação do crescimento econômico sustentável, tão necessária no
momento, e para o progresso social do país.
Essa é a primeira grande contribuição que o Banco Central pode dar para toda a sociedade
brasileira, especialmente para as camadas sociais menos favorecidas, que sofrem mais com a perda
do poder de compra da moeda.
Quero destacar que a importância de se manter um nível baixo de inflação reside no fato que se
trata de um bem público da maior relevância, conquistado pela sociedade há mais de vinte anos,
após um longo período inflacionário ao qual ninguém quer ou admitiria retornar.
Dizer que um nível baixo e estável de inflação é um bem público não é uma figura retórica, pois se
trata de fato de um bem não-rival e não-exclusivo, que significa que o bem-estar social
proporcionado pela manutenção do poder de compra da moeda beneficia igualmente a todos os
cidadãos brasileiros, sem que o benefício de um reduza o do restante da população.
Não há crescimento sustentável e bem-estar social duradouro sem inflação baixa e estável. Pelo
contrário, a literatura econômica já refutou por diversas vezes o falacioso dilema entre a manutenção
de inflação baixa e crescimento econômico.
Nossa história recente bem demonstra que níveis mais altos de inflação não fomentam o
crescimento econômico, pelo contrário, desorganizam a economia, inibem o investimento, a
produção e o consumo e impactam negativamente a renda, o nível de emprego e, por fim, o bemestar social.
A manutenção de um nível baixo e estável de inflação reduz incertezas, eleva a capacidade de
crescimento da economia e torna a sociedade mais justa, por meio de um menor imposto
inflacionário, um dos mais regressivos.
O regime de metas para a inflação é um robusto arcabouço de política monetária que já provou sua
confiabilidade e eficácia nos mais diferentes cenários, mesmo em situações de estresse, no Brasil e
no resto do mundo.
Participei ativamente da implantação desse regime no Brasil, quando fui Diretor de Política
Econômica, de 2000 a 2003, de modo que conheço não apenas seus princípios, mas a prática do
seu funcionamento em nosso ambiente econômico.
13
Nesse regime, o objetivo é cumprir plenamente a meta de inflação estabelecida pelo Conselho
Monetário Nacional, mirando o seu ponto central. Os limites de tolerância estabelecidos servem para
acomodar choques inesperados na inflação, que não permitam a volta ao centro da meta em tempo
hábil.
Enquanto a inflação retorna ao centro da meta após eventuais choques, é fundamental o
gerenciamento das expectativas no sistema de metas, fator-chave de sucesso para esse regime. É
importante que as expectativas indiquem no presente uma trajetória que preveja a convergência
para o centro da meta em futuro não muito distante.
Tendo em conta que o único alvo a ser perseguido pela autoridade monetária é o centro do intervalo
definido pelo Conselho Monetário Nacional e a importância do adequado gerenciamento de
expectativas, quando ocorrerem raros, fortes e infrequentes choques que levem a inflação para fora
do intervalo de confiança da meta, é relevante que a trajetória de convergência ao centro da meta
seja ao mesmo tempo desafiadora e crível.
Um elemento essencial da política monetária, e do regime de metas de inflação em particular, é a
comunicação contínua com a sociedade por meio dos canais formais do Banco Central. Essa
comunicação precisa ser simples, direta e concisa de modo a transmitir da melhor forma a visão do
Banco Central, inclusive as incertezas quanto à perspectiva de diferentes trajetórias para a
conjuntura econômica. A comunicação do Banco Central precisa também deixar claras as condições
necessárias para as perspectivas apresentadas.
A outra importante contribuição do Banco Central à sociedade é a manutenção de um sistema
financeiro sólido e eficiente, capaz de prestar serviços adequados à população, de permitir o
gerenciamento de riscos financeiros de consumidores e de empresas, e de intermediar recursos
com eficácia entre poupadores e tomadores, entre outras funções.
Visto de modo mais amplo, trata-se de outro bem público inestimável para a nação, que pode ser
traduzido na manutenção da estabilidade financeira do país.
Para proteger esse bem, o Banco Central conta com uma regulação prudente e com uma supervisão
abrangente e profunda, reconhecidas por sua eficácia e sucesso, conforme foi demonstrado no
passado e o tem sido no presente.
Nesse sentido, há duas dimensões na manutenção e aprimoramento do sistema financeiro no curto,
médio e longo prazo.
A primeira dimensão é a resiliência do sistema. O sistema financeiro se encontra sólido, líquido e
bem capitalizado. Nossa tarefa, mesmo frente a cenários por vezes desafiadores, será manter a
solidez e a resiliência desse importante setor da economia.
Tenho a consciência da importância das áreas de regulação, de autorização e de supervisão para a
preservação dos atuais níveis de solidez e de resiliência do Sistema Financeiro Nacional. À frente do
Banco Central, trabalharemos para aprimorar continuamente a atuação dessas áreas, de forma
equivalente para bancos públicos e privados.
A segunda dimensão é o trabalho contínuo do Banco Central – em conjunto com outras instituições
– de aprimorar o sistema financeiro, corrigindo distorções que reduzem sua eficiência e simplificando
as regras. Os objetivos são melhorar e reduzir o custo da intermediação dos recursos da sociedade,
elevar a poupança na economia, principalmente de longo prazo, e aumentar a eficiência da política
monetária, reduzindo os custos das ações do Banco Central.
Para o desempenho dessas funções, considero ser fundamental manter e aprimorar a autonomia do
Banco Central. Não se trata de ambição ou desejo pessoal, mas de medida que beneficia a
sociedade mediante a redução das expectativas de inflação, da queda do risco país e da melhora da
confiança, essenciais para a retomada do crescimento de forma sustentada.
Ciente da importância do funcionamento harmônico e complementar das instituições brasileiras, o
Presidente Michel Temer, na recente reforma da estrutura administrativa do Governo Federal,
estabeleceu como requisito para a retirada da condição de ministro do presidente do Banco Central
a aprovação de uma emenda constitucional que sedimente, na Carta Magna, a autonomia
operacional (ou técnica) desta Autarquia para perseguir os objetivos estabelecidos pelo governo e
que façam parte do seu mandato, como as políticas monetária e cambial e a estabilidade do sistema
financeiro. Para esse fim, será relevante também discutir, com o restante da equipe econômica, a
autonomia orçamentária do Banco Central.
14
O Ministro Meirelles, conforme mencionou há pouco, tem liderado esse esforço para aprovação
desse novo marco constitucional da autonomia da Autoridade Monetária.
Senhoras e senhores,
Como destacou o presidente Tombini em seu pronunciamento, o cenário atual é desafiador, com
níveis de instabilidade econômica e política superiores às médias históricas.
De fato, a situação econômica exige grande atenção. Atravessamos a pior recessão da nossa
história, com desemprego em alta e relevante desafio fiscal. Há problemas conjunturais e
dificuldades estruturais. A incerteza econômica paralisou o investimento e sequestrou a esperança
de muitos.
Ao mesmo tempo, nos encontramos em ambiente internacional desafiador. O período de ventos
favoráveis na economia global ficou no passado – ora há dúvidas sobre o crescimento global, ora
teme-se o fim da era de juros nulos ou negativos, pelo menos nos Estados Unidos.
Mas tenho absoluta confiança na reversão do atual quadro interno.
Há que se buscar uma economia mais produtiva, competitiva e justa. Uma economia que volte a
crescer e a criar empregos. Uma economia que o Brasil precisa e merece.
Para recuperar a economia, ela precisa ser gerida de forma competente, responsável e previsível.
Só assim poderemos estimular o investimento e o crescimento.
Os esforços atuais e as políticas recém-anunciadas têm a direção correta, o que já tem permitido o
início da recuperação da confiança, essencial para a retomada do crescimento.
A credibilidade das políticas e dos gestores é essencial, em especial neste momento.
O governo está claramente imbuído do esforço de levar à frente reformas estruturais que, a partir de
amplas negociações na sociedade, terão a capacidade de alterar definitivamente o ambiente no
país, com profundos e duradouros benefícios para a população.
Mais especificamente, no que tange à política fiscal, a equipe econômica está consciente e
mobilizada para devolver ao país a credibilidade fiscal perdida nos últimos anos.
A atuação harmônica e autônoma entre o Ministério da Fazenda e o Banco Central será um fatorchave de sucesso para a recuperação econômica sustentável que todos queremos ver à frente.
Senhoras e senhores,
É importante destacar que a eficiência da política monetária do Banco Central será tanto maior
quanto mais bem-sucedidos forem os esforços na implantação de reformas e na recuperação da
responsabilidade fiscal.
Considero haver praticamente consenso de que é preciso substituir os efeitos ainda presentes da
chamada Nova Matriz Econômica pelo velho e bom tripé macroeconômico formado por
responsabilidade fiscal, controle da inflação e regime de câmbio flutuante, que permitiu ao Brasil
ascender econômica e socialmente em passado não muito distante.
Do lado do Banco Central, apoiaremos esse esforço pela via do controle da inflação, que ajudará na
redução do risco país, na recuperação da confiança e na retomada do crescimento, e pelo respeito
ao regime de câmbio flutuante vigente, que tantas vezes mostrou seu valor para o enfrentamento de
crises externas no passado e para o equilíbrio interno e externo da economia brasileira.
Sem ferir o regime de câmbio flutuante, o Banco Central poderá utilizar com parcimônia as
ferramentas cambiais de que dispõe. Nesse sentido, poderá reduzir sua exposição cambial em
determinado instrumento em ritmo compatível com o normal funcionamento do mercado, quando e
se estiverem presentes as adequadas condições.
Minha maior confiança para enfrentar esses desafios reside na competência e na dedicação dos
servidores do Banco Central. Afirmo isso com tranquilidade e confiança, pois quando aqui estive,
como Diretor, testemunhei reiteradamente a eficiência e o comprometimento dos quadros dessa
Autarquia.
Agradeço a todos os servidores do Banco Central pelo apoio que tive àquela época e pelo que
certamente terei nessa nova posição.
Quero também agradecer aos presidentes durante minha última passagem por essa Casa, Armínio
Fraga e Henrique Meirelles, pelos ensinamentos profundos.
Agradeço também aos colegas diretores que me acompanharam à época, pela rica convivência até
hoje.
15
Quero ainda agradecer ao meu antecessor, Alexandre Tombini, pela dedicação e espírito público
demonstrados à frente do Banco Central nos últimos anos.
Agradeço à minha família por aceitar embarcar comigo nesse desafio e, de antemão, pela paciência
e compreensão no futuro próximo.
Obrigado.
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Ignazio Visco: "Doing Business in a Fragmented World"
Keynote speech by Mr Ignazio Visco, Governor of the Bank of Italy, at the Launch of the OECD
Business and Finance Outlook and High-Level Roundtable "Doing Business in a Fragmented World",
Paris, 9 June 2016.
***
I first wish to thank the Secretary General for his kind invitation to me to be here today.
As a general comment, let me say that this second issue of the Business and Finance Outlook
confirms its character compared with other long-standing reports. It provides valuable in-depth
analysis of many topical themes that are critical for a better understanding of the current dismal
outlook of the world economy. I find particularly interesting the relationship between corporate
finance and productivity, the role of R&D expenditure, the issue of stock market fragmentation, and
the implications of heterogeneity of life expectancy across socioeconomic groups. The multifaceted
dimensions of the cross-cutting theme of fragmentation are investigated thoroughly. The analyses
are backed by rich and original information. For all of these reasons, I wish to congratulate the OECD
for this very interesting document.
I would like to offer some remarks on a few topics that caught my attention most greatly. Admittedly,
this selection was not easy, given the abundance of issues and findings.
The report singles out two headwinds to global growth: the reversal of the commodity supercycle,
against a backdrop of excess supply capacity and high corporate debt in some emerging market
economies (EMEs); and the still modest recovery in advanced economies, associated with two key
legacies of the crisis, deleveraging and high non-performing loans.
On the policy front, the main challenge identified by the report remains - unsurprisingly - the same as
one year ago: how to revive firms' appetite for economic risk-taking - the entrepreneurs' "animal
spirits" that drive long-term investment projects - so as to fill the gap with financial risk- taking,
stimulated by strongly expansionary monetary policies.
According to the report, what is needed is a phase of "creative destruction", characterised by a
reallocation of resources towards productivity-enhancing investment and a reduction of excess
capacity in sectors such as energy and materials. Structural reforms are seen as the key policy
measures with which to accompany this process in both advanced and EMEs. As a result, global
growth would accelerate and monetary policy would normalise "safely". Absent sizeable structural
reforms, the main risk would be what the report calls an "inflation-first" scenario, where a rise in
inflation would eventually force central banks to increase monetary policy interest rates, which in turn
would prevent an acceleration of economic activity.
I fully support the report's emphasis on the importance of structural reforms to place the global
economy on a sound footing and to make markets work better. In fact, the crisis has clearly shown
the limits of the self-regulatory capabilities of markets, particularly financial markets, and their
consequences on financial and, ultimately, macroeconomic stability. I also agree with the report's
main policy advice, centred inter alia on investments in R&D and incentives for equity financing over
debt.
However, in order to ensure an orderly adjustment of the global economy and to allow structural
reforms to rapidly kick-start the real economy, appropriate macroeconomic policies are also needed.
In this vein, I do not share the report's negative assessment of the current monetary policy stance
that would be "harming the prospects of a sustainable recovery". This view - which appears not in
line with the one expressed in other recent OECD assessments and policy suggestions - seems to
me to overlook the reasons behind the current monetary stance, while focusing too much on the
possible unintended consequences.
In a context of very low commodity prices and long-lasting weakness of both global and domestic
demand, in advanced countries disinflationary pressures and slack in the economy are still high,
although with differences among the main economies. Under these circumstances, a wait-and- see
approach to monetary policy would be unwarranted: rather, central banks observe economic
developments, ponder risks and may need to act forcefully. The current low level of policy rates is the
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appropriate reaction to current cyclical conditions, not an arbitrary choice of central banks; a less
accommodative stance, particularly given the high debt levels as a consequence of the crisis, could
lead to a deflationary spiral with severe consequences both for the real economy and the financial
sector.
This holds true in particular for the euro area, where unused productive capacity and labour are
greater than in other advanced economies. Estimates by Banca d'Italia staff (which do not consider
further possible non-linear effects) show that in the absence of the measures adopted by the ECB
Governing Council between June 2014 and December 2015, both annual inflation and GDP growth in
the area would be lower by about half a percentage point in 2015-17.
Of course, a very accommodative monetary policy for a protracted period involves risks that need to
be monitored carefully. The report considers the impact of low interest rates on investors' portfolio
choices, noting the rising importance of private equity, hedge funds and real estate investment funds.
This analysis highlights that too-low-for-too-long interest rates may spur asset price bubbles and may
also stimulate short-termism among investors, i.e. by favouring companies that offer cash-like returns
at the expenses of companies that focus on longer-term investment projects. In this respect, let me
just observe that portfolio rebalancing that would encourage a higher degree of risk taking is one of
the intended channels of transmission of non-standard monetary policies and that currently there are
no indications of a generalised overvaluation of financial or real assets in advanced countries. Should
excessive risks emerge, targeted macroprudential policies can be used as appropriate.
Clearly, monetary policy is not the solution to structural problems (and, as we often say, cannot be
the "only game in town"). But I do believe that an expansionary monetary stance creates more
favourable conditions to implementing structural reforms: it stimulates aggregate demand and may
reduce the possible short-term macroeconomic costs of reforms while helping maintain the
necessary political drive and foster consensus regarding their adoption. In the same vein, monetary
policy cannot be left alone in the effort to support the economic recovery; it must be complemented
by an appropriate use of available fiscal space, with appropriately targeted, growth-enhancing
measures, such as investment in infrastructure.
On structural reforms, let me also point out that, while increased competition in product markets and
more flexibility in labour markets remain important for the enhancing of an economy's ability to
withstand shocks and recover quickly, when designing reforms, it becomes critical to take into
account issues such as those raised in the debate about secular stagnation, as well as the structural
trends triggered by innovation. For example, it is essential to consider the impact of the digital
revolution on both labour demand, which has raised fears of a re-emergence of Keynes'
technological unemployment, and income distribution, as highlighted by James Meade already in
1964. This puts a premium on measures to favour investment in education, life-long learning, training
and active labour market policies.
Moving on to the fundamental issue of productivity, the report carries out a very detailed analysis of
the somewhat puzzling fall in aggregate productivity growth in the aftermath of the crisis. This holds
true for non-financial companies in both advanced countries and, above all, EMEs. The firm-level
analysis highlights a structural change in the evolution of productivity across companies and sectors:
from a single cutting-edge group of "incumbent" companies displaying high levels - but low or
negative growth rates - of productivity to the emergence of a second group of "high-growth"
companies characterised by faster productivity growth. This finding suggests that it is critical to
understand the drivers that underlie these changes.
The report rightly emphasises the impact that corporate finance decisions may exert on productivity.
Four financial strategies are identified that make a difference between high and low productivity
growth at a company level: higher spending on R&D; lower debt-to-equity ratio; higher free cash flow;
and more M&A deals. The analysis sheds lights on critical macro-financial linkages. What I find very
instructive is that these strategies are all part and parcel of the structural policies that are called upon
to trigger economic risk-taking, investment and ultimately growth.
As far as financial markets are concerned, two fundamental drivers of change are technology and
regulation. This is well documented in the chapter of the report on stock markets, which I find
particularly insightful. Here, there seems to be an issue of finding the right balance between the
advantage of having more numerous and more specialised trading venues and the disadvantage of
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fragmenting trading liquidity. The possibility to trade a listed share in various markets promotes
competition among providers of financial services. The availability of "dark" trading venues (i.e. with
little transparency in pre-trade information) seems to allow institutional investors and other large
players to place sizeable orders without giving rise to adverse price changes. On the other hand, it is
important that such "dark" trading pools do not undermine a level playing field and a correct handling
of conflicts of interest. Putting the various types of trading venues on a more even footing is the
objective of some recent regulatory initiatives in advanced countries. The availability of consolidated
real-time price and volume data to market participants is another important factor.
The report also considers under the notion of fragmentation issues related to the fundamental
heterogeneity of economic agents and conditions. A case in point is life expectancy, which varies
greatly (both in levels and trends) across individuals depending on socio-economic factors such as
education, income and occupation. The report argues that, in regulating retirement, such
heterogeneity should be taken into account. The suggested policy implications - namely, improving
the measurement and management of longevity risks, broadening the range of annuity products, and
tailoring pension arrangements to the various segments of society - have actually long been
advocated by the OECD and in other policy fora. What I think should also be underlined is that the
development of targeted payout products such as enhanced annuities would also alleviate the
pension adequacy problem recently highlighted by the OECD Pensions at a Glance report.
Let me conclude with a few thoughts on some broader trends that are of major interest for
economists and policy-makers alike. Current demographic developments are widely seen to act as a
negative labour supply shock that would reduce future global growth via lower investment and
productivity; this could also result in further downward pressure on real interest rates. On the other
side, growth is expected to benefit from technological innovation and its positive impact on
productivity, although this view is itself disputed by the advocates of the supply-side version of the
secular stagnation hypothesis. All these dynamics will also affect income distribution and may fuel
already rising inequality. The interrelations among the above key variables may not be fully
understood at this time, much less predicted; for sure, they are set to raise critical real and financial
implications that require in-depth analysis in future reports.
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