Managing Director’s Opening Remarks: 2022 Michel Camdessus Central Banking Lecture
IMF News, September 14, 2022
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- Published: September 14, 2022
1. Introduction
- Event: ninth Michel Camdessus Lecture — signature lecture series on the role of central banks.
- Location and date: Washington, DC; September 14, 2022.
- Speaker introduced: Governor of the Banque de France, François Villeroy de Galhau.
- Acknowledgments:
- Presence of Michel Camdessus’s family, including his granddaughter, Camille.
- Former First Deputy Managing Directors Anne Kruger and John Lipsky.
- IMF staff and senior leaders recognized for service to the membership.
- Personal note: Managing Director highlights two reasons for welcoming the speaker:
- François’s “remarkable policy integrity and vision.”
- Shared engagement on the shock that climate change imposes on humanity and its future.
2. Global Outlook
- Core observation: “In a short three years, we have experienced a shock, upon a shock, upon a shock.”
- Major shocks identified:
- The pandemic.
- Russia’s invasion of Ukraine.
- Climate shocks affecting agricultural productivity during the summer.
- Consequences:
- Surge in prices and stubborn inflation translating into a cost-of-living crisis.
- Higher-than-forecast inflation reading for August reported the morning of the lecture; markets sharply down.
- Recent historical reference:
- At the IMF Annual Meetings last October, global growth was “relatively strong—we ended the year with 6.1 percent growth.”
- Expectations that the pandemic was over were proven wrong by Omicron, the invasion of Ukraine, and climate shocks.
- Policy implication: Inflation is “stubborn and more broad-based than we thought,” requiring resolute central bank action.
3. Policy Actions
- Shift in policy stance since 2020:
- 2020 response: monetary policy accommodation combined with fiscal policy accommodation to address pandemic as a major supply-side shock with demand-side implications.
- Current response: monetary policy needs to tighten; fiscal policy must continue supporting the most vulnerable while avoiding fueling inflation.
- Interaction risk:
- If fiscal policy is not sufficiently targeted, “it may become the enemy of monetary policy, fueling inflation and making the job of central banks tougher.”
- Debt situation and risks:
- “More than 25 percent of emerging market economies have either defaulted or had bonds trading at distressed levels, including countries that we did not expect to see in this category.”
- “Over 60 percent of low-income-countries are in, or at high risk of, debt distress.”
- Responsibilities called out:
- Large creditors such as China and private-sector creditors have a responsibility to act to reduce the risk of debt crises.
- Debt is also an issue for advanced economies and is “very relevant for the credibility of monetary and fiscal policies.”
- IMF role: Provide analytics to help steer through this time of uncertainty.
4. Personal Credibility and Experience of the Speaker
- Attributes emphasized:
- Credibility and public trust are decisive in policy effectiveness.
- François described as an example of integrity and backbone who “never mince[s] [his] words.”
- Biographical and professional details:
- From the Alsace region; speaks French, English, and German.
- Favorite book: Stefan Zweig’s autobiography “The World of Yesterday: Memories of a European,” which includes depiction of inflation in the early 1920s.
- Career path:
- 12 years in the private sector.
- Many years in the French Ministry of Finance.
- Since 2015, Governor of the Banque de France and member of the Governing Council of the European Central Bank.
- Chair of the Bank for International Settlements (“the ‘central banker of the central bankers’”).
- Policy leadership noted:
- Work on macroprudential policy in France: “building buffers ahead of the pandemic,” which supported the economy through the COVID-induced shock.
- Leadership on the Network for Greening the Financial System.
- Personal connection: Michel Camdessus contributed to thinking behind the lecture; speaker and Camdessus are close friends.
Managing Director’s Opening Remarks: 2022 Michel Camdessus Central Banking Lecture