Former Central Banker on China, Global Discord, and Financial Stability | Sir Paul Tucker

Sir Paul Tucker, research fellow at The Harvard Kennedy School and former deputy governor of The Bank of England, joins Forward Guidance to discuss ideas from his latest book, “Global Discord: Values And Power In A Fractured World Order.” 

Tucker tells Jack Farley that China’s growing economic might and rejection of liberal values poses a challenge to the U.S.’ role as global hegemon, and he details ways to reinvigorate international cooperation during the current period of geopolitical strife. Tucker shares his views on the recent turmoil in the banking system, weighing on Silicon Valley Bank, Credit Suisse, and the acute need for bank resolution that can maintain financial stability while winding down ailing banks. Tucker and Farley also discuss concepts such as the Triffin Dilemma, the offshore (“Eurodollar”) dollar system, and central banks’ role as lenders of last resort. 

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“Global Discord” from Princeton Press: https://press.princeton.edu/books/hardcover/9780691229317/global-discord

Global Discord on Amazon: https://www.amazon.com/Global-Discord-Values-Power-Fractured/dp/0691229317

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About Paul Tucker: http://paultucker.me/resources/

About Tucker’s work at The Harvard Kennedy School: https://www.hks.harvard.edu/centers/mrcbg/about/fellows/research-fellows#sir_paul_tucker

More about today’s guest:

For over thirty years, Sir Paul Tucker was a central banker, and a member of the Bank of England’s Monetary Policy Committee from 2002. He was Deputy Governor from 2009 to late 2013, including serving on the Financial Policy Committee (vice chair) and Prudential Regulatory Authority Board (vice chair). He was knighted by Britain in 2014 for his services to central banking. Internationally, he was a member of the steering committee of the G20 Financial Stability Board, and chaired its Committee on the Resolution of Cross-Border Banks to solve “too big to fail”. Tucker was a member of the board of directors of the Bank for International Settlements, and was chair of the Basel Committee for Payment and Settlement Systems from April 2012. After leaving central banking, Tucker was chair of the Systemic Risk Council from December 2015 to August 2021. He now writes at the intersection of political economy and political philosophy as research fellow at Harvard Kennedy School's Mossavar-Rahmani Center for Business and Government. In addition to “Global Discord,” Tucker is also the author of “ Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State” (2018).

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Timestamps:

(00:00) Intro

(00:55) The Rise Of China Will Have Immense Consequences On A Global Scale

(04:44) Shortcomings of Trade Policy and Enforcement

(10:41) Downsides of U.S.' Trade Deficit

(20:18) The Bretton Woods Regime

(21:59) The Triffin Dilemma

(26:32) The Eurodollar System

(27:31) The Fed's Swap Lines In 2008

(28:49) Importance of Multi-Disciplinary Understanding For Policymakers

(31:17) The Debt Ceiling

(21:27) Thucydides' Trap

(25:57) The Contest Between China and The U.S. Is "Everywhere"

(39:26) Document 9 of The Chinese Communist Party

(45:29) Inflation

(49:37) Regional Bank Failure In The U.S.

(55:43) The Takeover Of Credit Suisse By UBS

(01:02:49) Defining A "Bailout" As A Use Of Taxpayer Money

(01:07:09) Bagehot's Dictum

(01:15:31) Credit Suisse Contingent Convertible ("CoCo") Bonds

(01:17:55) Tying Geopolitical And Banking Together

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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.