The Bank for International Settlements (BIS) has tapped the head of Australia’s central bank as its new chief as well as issued its new annual report, which highlighted the need for reforms to sustain global economic growth on Monday.
The announcement from the BIS, a group of global financial sector policy-makers, followed its annual meeting in Basel during the weekend. Specifically, Philip Lowe, governor of the Reserve Bank of Australia, has been appointed chairman of the Committee on the Global Financial System (CGFS), which serves as a forum for the world’s major central banks to monitor and assess issues in the global financial system.
Lowe takes over the post for a three-year term, effective immediately. He replaces the previous chairman, William Dudley, who retired from his position as president and CEO of the Federal Reserve Bank of New York on June 17. Dudley had headed the CGFS since 2012.
The BIS also issued its annual report on Monday, stressing that policy-makers must undertake critical structural reforms if they hope to sustain the global economy’s positive momentum. The BIS’s report states that the recent economic strength is unusual and that the path to sustained expansion is narrow, but that the right approach to policy could enable it.
In particular, the report notes that “Consolidating public finances is a priority”; and that policymakers must continue to cautiously tighten monetary policy. “It is important to deploy macroprudential measures where financial vulnerabilities are building up. Making labour and product markets more flexible and implementing post-crisis financial regulatory reforms are also key to securing long-term growth.”
“We must seize the day. Addressing vulnerabilities is key to keeping the growth momentum on track,” said Agustín Carstens, general manager of the BIS, in a statement. “The stronger performance gives us a window to pursue necessary reforms and recalibrate policies. Let’s not miss this opportunity.”
The BIS report also warns that escalating protectionism could trigger a downturn: “Political upheavals or disappointing profits could dent investors’ appetite for risk, shaking overstretched financial markets.”