Page 1  What did the monetarists ever do for us? − speech by Huw Pill Given at Walter Eucken Institut / Stifung Geld und Währung Conference – Inflation and Debt: Challenges for Monetary Policy after Covid-19  Page 2  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.
On this, I see substantial scope for the pace of financial integration in East Asia to be gaining more momentum going forward as the constraints that used to limit the pace of integration begin to unwind. First, the external positions of the economies in East Asia have now become much stronger, with current account surpluses, substantially lower external debt, and larger international reserves. Second, Asian savers themselves increasingly want to diversify their savings abroad in search for better yields while Asian firms also look for better opportunities to lower their costs of fund by tapping funds from external sources. Reflecting these two factors, we are seeing a reorientation of policy in the region to make cross-border capital outflows more liberal without compromising the risk on macroeconomic stability. And the third factor is that Asian financial institutions are now back in good health after a period of restructuring and consolidation. So, we are likely to see Asian financial institutions becoming more active in intermediating cross-border capital flows within the region, as they explore new business opportunities based on their expertise and knowledge of the region. All these factors, I think, will set in train a stronger momentum of cross-border capital flows within the region in the period ahead. And under such circumstances, what then should be the role of policy? Government policies, in my view, have played an important role in the development of East Asian financial markets.