Hyun Song Shin on the New Financial Stability Risks

Odd Lots

Bloomberg

News, Investing, Business, News Commentary, Business News

4.4 • 1.6K Ratings

🗓️ 31 August 2023

⏱️ 43 minutes

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Summary

At Jackson Hole, the Kansas City Fed's annual gathering for economists and central bankers, there's a lot of focus on the short-term path of monetary policy. But, of course, the Economic Symposium is supposed to be about long-term policy frameworks. And central bankers aren't just responsible for changing benchmark interest rates — they are also financial regulators. On this episode, we speak with Hyun Song Shin, economic advisor and head of research at the Bank for International Settlements, about where he sees risks lurking in the financial system now. We discuss the shift from bank lending to bond-based borrowing, and what it means for inflation now. We talk about how even safe assets like US Treasuries can become sources of stress, such as in March 2020, the gilt crisis of last year, and most recently, the collapse of Silicon Valley Bank. We also talk about how higher interest rates are supposed to bring down inflation, but might not be doing that much currently, as well as the limits of central banking.

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0:00.0	This is Karen Moscow, and I'm Nathan Hager here to tell you about another podcast.
0:04.8	You should be listening to Bloomberg Daybreak US Edition.
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0:35.0	Hello, and welcome to another episode of The All-Bots Podcast.
0:43.4	I'm Tracy Alloy.
0:44.4	And I'm Joe Wyzenthal.
0:46.0	Joe, we are still here in Jackson Hole.
0:49.0	We are coming to the end of our sort of discussion series, however.
0:53.8	And I think one of the themes that has emerged from a lot of the people that we've been talking
0:58.4	to at this event is this idea of living with high levels of public debt and high inflation
1:06.7	all while having basically a global financial system that is built on bonds, things that
1:12.2	are supposed to be boring.
1:13.6	They're not supposed to see there are yields kind of swing wildly, and yet that's been
1:18.4	what's happening.
1:19.4	Two things.
1:20.4	One is to your point on yields.
1:22.6	I mean, it's the story of the last year, but it's really also like the story of the
	...

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