CF40 Luncheon with Tharman Shanmugaratnam

On March 26, China Finance 40 Forum (CF40) organized a luncheon in honor of Tharman Shanmugaratnam, Senior Minister, Singapore, Chairman of the Monetary Authority of Singapore, and Chairman of the Board, Group of Thirty, during his visit to Beijing. The discussion revolved around the global economy and international cooperation in the post-pandemic era.

SM Tharman first delivered a keynote speech and then joined a discussion with local experts from regulatory authorities, financial institutions and academia.

Tharman Shanmugaratnam

Zhang Tao

In his keynote, SM Tharman pointed out that for the past several decades, policymakers around the world have been focusing on macroeconomic cycles and demand management, and not paying adequate attention to preventing and preparing for shocks and disruptions, such as pandemics and extreme environmental events which were not random but driven by underlying shifts, or adjusting to other long term developments especially changing demographics, and geoeconomics and geopolitical shifts. “We must recognize that the longer-term shifts are the most important challenges that we face. If we do not pay attention to them, we will continue to face shocks which set back economic well-being globally, and most severely in the developing world,” said Tharman. He stressed that policy objectives should focus on mitigation and resilience building.

Looking ahead, Tharman suggested that the main focus of economic policy should focus on resilience, innovation, and productivity. First, spur innovation and private investment in the green economy. Second, reorient fiscal policy towards providing public goods such as infrastructure, education throughout life, and healthcare. Third, adopt policies that keep the global economy open and interconnected, even as countries focus on industrial policy.

Guo Kai

His views were echoed by CF40 senior fellow Guo Kai. “The reason why crises are becoming more frequent and intense has to do with the long term factors.” He emphasized that the key is to alter our understanding of how the world operates. For example, there are many arguments about whether central banks should raise the inflation target. A higher level of inflation is likely to be caused by demographics, climate change, and other long-term factors, which decision-makers should take into consideration. He also commented on the recent crisis of the banking system that had been considered the safest aspect of the financial system. “With the advancement and use of digital technologies, we might need to adopt a new perspective on systematic risks," said Guo Kai. “The banking industry should also adapt its practices to the new environment."

Zhang Tao, CF40 Advisor and Chief Representative for Asia and the Pacific of the Bank for International Settlements, moderated the event.