Seventh Annual Central Banking Roundtable: Challenges and Responses to the Raising Inflation and Geopolitical Risks

This conference follows the IMF/World Bank meetings each year to continue discussions started there. The conference was divided into two sections, the first focusing on inflation and the second talking about geopolitical risks. These sessions were led, respectively, by Patricia Mosser, Director of MPA-EPM and Central Banking and Financial Policy at Columbia SIPA, and Jan Svejnar, Director of the CGEG and professor at Columbia SIPA.

Before the discussions, Guillermo Calvo, Professor Emeritus of Economics and International and Public Affairs, delivered a short speech on current economic conditions. He mentioned that with inflation creeping globally, it is important for Central Banks and national governments to deliver effective monetary and fiscal policies. He raised the questions of whether new theories are needed to help solve the issue of increasing inflation, and he invited governors from Central Banks to share their countries’ cases for open discussion.

During the first part of the discussion, Governors from Central Banks and Columbia’s professors discussed the biggest pain points from inflation and tighter monetary policy for their countries' economy, the impact on their real economy and financial conditions, as well as how and what risks these Central Banks and governments are facing and responding to.

Many governors talked about their countries’ exchange rate challenges, credit in the real economy, minimal fiscal space, and potential debt sustainability as their biggest pain points. While increasing interest rates would help leverage the impacts from inflation, it also led to markets and companies to cut their spending. This would mean a decrease in earnings and potential threat of cutting labor. As the issue of inflation continues globally, Central Banks would need to deliver even tighter policies to cool the economy, which might lead to rising unemployment. However, governors specified the importance of monetary and fiscal policies to restore stable inflation. The discussion ended with the potential concern for geopolitical risks, which led to the second half of the conference.

During the second part of the discussion, Governors from Central Banks and Columbia’s professors discussed the effect of the current geopolitical risks on their economy. They spoke about the potential challenges of a deglobalized world, and how it has affected their trading partners and patterns. Governors and professors also talked about risk management after the COVID pandemic, and how their markets are doing.

While there are raising concerns about a deglobalized world, governors and professors do not consider it a huge threat. They do, however, emphasize the potential risks of a change of trade patterns in the next few years, as countries experienced the potential supply chain shocks during the COVID pandemic. Countries are all learning from each other and from the pandemic to apply better and more effective management tools for their economies.

This conference also welcomed student observers to listen in on the conversation as governors from Central Banks and professors discuss these challenges and responses to inflation and geopolitical risks.

Written by Beverly (Yunan) Yang, Trevor Graney