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.

The views expressed here are my own and not necessarily those of the BIS or its member institutions.