Presentation to the Convention of the Committee on International Business of the Association of German Public Sector Banks

Speech by William R White to the Convention of the Committee on International Business of the Association of German Public Sector Banks, 22 November 2000

I. Introduction

I would like to begin with the consensus forecast which is pretty optimistic. Behind it all is the idea of structural reforms and a "New Era", starting in the US and spreading out. The "bottle is more than half full" according to this view.

But then I would like to go on to talk about the risks to the outlook, first in industrial countries but then the emerging markets as well. If there are chances of a "hard landing" in the United Stares, or if the "global business cycle" is at a turning point, then it is all the more important that the financial system be healthy. Typically, the biggest problems emerge when macroeconomic disturbances interact with financial weakness, e.g.:

- Germany/Austria early 1920s

- US 1920s

- Japan late 1980s

- Mexico mid-1990s

- East Asia late 1990s

My presentation then complements those of Andrew Crockett's, Karl Cordewener's and Knut Hohlfeld's. I will finish by looking at some of the possible implicationsshould some of these risks materialise.