Ex-President of the Swiss National Bank Provides Financial Insights
Geneva, May 3, 2018: The American International Club (AIC) hosted a presentation by Jean-Pierre Roth, the ex-President of the Swiss National Bank and former Chairman of Banque Cantonale de Genève, at the Swissôtel Metropole on May 3rd.
Dr. Roth analyzed the global financial crisis of 2007-2009. Due to risky investment bank behavior and benign neglect by financial authorities, the sub-prime crisis slammed global financial markets in 2007. Central banks responded by injecting massive amounts of liquidity to prop-up the global interbank system, and to keep financial markets functioning.
While aggressive quantitative easing successfully rescued the markets from collapsing, Dr. Roth pointed out that these unconventional policies were never meant to become permanent. Central banks and federal governments have become complacent, and the collateral damage is building. He pointed out that penalizing savings with negative interest rates does not foster confidence. High public debt and asset price inflation are an increasing burden for central banks, and a rising danger for the global economy.
Dr. Roth views 2018 as the beginning of a normalization process. US interest rates already started to correct, and Europe is starting to reverse its monetary easing policies. However, the magnitude of change required to syphon off this huge amount of excess liquidity is enormous. Central bankers face a daunting task.
Dr. Roth concluded that we are entering a new phase of monetary correction that can last for years. Economic growth will remain weak and financial markets fragile.
AIC President, Ron Banks, closed-out the event by thanking Dr. Roth and presenting him a gift and lifetime AIC membership.
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