Abstract

Before I hand over to the Chairman of the Per Jacobsson Foundation, I would just like to say that it is a great privilege to be here at Zurich University in this splendid auditorium. This room has been the venue for many renowned speakers in the past. There is a plaque here which explains that on the 19th of September, 1946, Sir Winston Churchill spoke in this room. In March, in Fulton, Missouri, he had given his famous Iron Curtain speech. Here, in September, he spoke on the theme “Let Europe Arise.” Much has happened since then, although that sort of theme has maybe come back a little bit in terms of relevance to the current economic conjuncture.

MALCOLM KNIGHT

Before I hand over to the Chairman of the Per Jacobsson Foundation, I would just like to say that it is a great privilege to be here at Zurich University in this splendid auditorium. This room has been the venue for many renowned speakers in the past. There is a plaque here which explains that on the 19th of September, 1946, Sir Winston Churchill spoke in this room. In March, in Fulton, Missouri, he had given his famous Iron Curtain speech. Here, in September, he spoke on the theme “Let Europe Arise.” Much has happened since then, although that sort of theme has maybe come back a little bit in terms of relevance to the current economic conjuncture.

Let me also very quickly draw your attention to the painting that is behind me. It was begun at the beginning of the last century by Ferdinand Hodler and finished by Paul Bodmer, two very famous Swiss artists. As you can see, the painting depicts a circle of women joined in obvious harmony while the men are around the periphery. I think that this picture might remind us, particularly in our community of economists, of the strength and importance of what are sometimes seen as the feminine qualities of intuitive awareness and understanding. If I can apply that analogy to our world of central banking, I think we should always recall that our successful collaboration depends not only on careful analysis and logical thinking but also on effective intuitive communication and informal contact. These are very important elements that our informal meetings at the BIS attempt to foster and of which our Annual General Meeting is an important part. So, without further ado, then, let me hand over the chairmanship of this session to Jacques de Larosière.

Jacques De LarosiÈre

Thank you very much, Malcolm. First of all, I would like to express the deep gratitude of the Per Jacobsson Foundation to you and the BIS because once more you have been willing to host this lecture, and this is a great pleasure and a great honor for the Foundation. Actually, without the BIS, there would not be this session today. And when I see the audience, where I recognize many—I wouldn’t say old friends, but young friends of some time—I am particularly happy, and I know I am speaking on behalf of Leo Van Houtven, our president, to tell you how happy we are.

Now it is a very easy task for me this time to introduce our speaker. It is an easy task because I would say that Charles Goodhart is the ideal speaker. I know I shouldn’t say that before the speech because it puts the speaker under some pressure, but when you think of his work, of his career, you have to wonder why we didn’t think of Mr. Goodhart before to deliver a Per Jacobsson Foundation lecture.

He has, indeed, two characteristics that together are rather unique in the field of financial matters. On the one side, he is an academic, and he is an academic of high prestige. He has taught at the University of Cambridge, where he was a fellow of Trinity College, and he has taught at the London School of Economics. We know what Cambridge and the LSE represent in terms of academic excellence, and not only has he taught at these institutions but, perhaps as importantly, he has reflected and written, and his publications, including his books, are well known. I will not go through the list, but I will just say that Money, Information, and Uncertainty captures in a way the essence of what we are all together trying to do in our daily lives, in our institutions, and you also know Monetary Theory and Practice: The UK Experience and The Central Bank and the Financial System—all these are on themes that we are familiar with.

So that’s the academic part. But what is more original, as we would say in French, is that Professor Goodhart has combined this academic life and career with practical experience in monetary policy making. Indeed, he has worked at the Bank of England for some 17 years, I think, in total, as monetary adviser, Chief Adviser actually in 1980, and in 1997 he was appointed—and this says a lot, in terms of the openness, intelligence, and farsightedness of the Governor of the Bank of England, whom I salute this morning—as an outside, independent member of the newly formed Bank of England Monetary Policy Committee until 2000.

So you have got this rare combination of policymaking and academic thinking, and after having read Mr. Goodhart’s speech, which I was immensely and intensely interested in, I think we are going to have one of our great Per Jacobsson sessions today, and thank you again, all of you, for coming to listen to this exposition.

Professor Goodhart, now you have the floor.

Charles Goodhart

Thank you so much, Jacques. One thing that my CV, however, does not say is that I am also a distant relative of the erstwhile U.S. Secretary of the Treasury, Henry Morgenthau, Jr., who, among other things, as you probably know, advocated closing down the BIS at the end of World War II.

Now, the suggestion that today I am intending to fulfill that longstanding obligation by boring you all to death is, I trust, a canard. More seriously, though, Per Jacobsson had the responsibility of guiding the BIS through some very difficult times then, and pace my relative, I am very glad that he succeeded so that I can have the opportunity of addressing you this morning.