Hyun Song Shin delivers 37th Barcelona GSE Lecture

Barcelona GSE Lecture

Hyun Song Shin, Economic Adviser and Head of Research for the Bank for International Settlements, discussed "Global Liquidity and Procyclicality" at Banc Sabadell on April 27, 2017.

The lecture was introduced by Mr. Cirus Andreu, Assistant General Manager of Banc Sabadell, and Prof. Xavier Freixas (UPF and Barcelona GSE).

"The topic of today's lecture is particularly relevant in today's global context," Mr. Andreu said. "Doctor Shin is a key choice in the discussion about the role of the US dollar in the global financial system and the fundamental changes that are taking place in forex markets due to issues such as the increased demands for hedges or constraints to arbitrage opportunities."

Professor Freixas noted that Dr. Shin "has a way to think outside the box that is particularly attractive and provocative" and that "he combines what we share as academics with a hands-on [perspective] of institutions and empirical facts. He is someone who knows that God is not in the theory, but the Devil is in the details," Prof. Freixas said.

Video: Lecture recap

A global analysis, rather than an international analysis

In his lecture, Dr. Shin showed how the dollar has evolved to occupy the special role it has in the modern financial system, often serving as the currency for trade invoices, inventment funds, and liabilities of global banks who provide hedging for investors. Because these players do not exist within the boundaries of a single country, it is difficult to use GDP as the unit of analysis for global liquidity.

"If you want to get to the bottom of global liquidity, you have to have a global analysis, rather than an international analysis," Dr. Shin said. "The international model doesn't map very well to the balance sheet dimension."

Previous Barcelona GSE Lectures

Michael Greenstone
University of Chicago

"The Global Energy Challenge"

Robert E. Lucas, Jr.
University of Chicago

"What was the Industrial Revolution?"