Shifting Market Structure Beneath the Calm - IMF’s Tobias Adrian on a Decade of Global Financial Stability

[on-hold music] Hello, everyone, and welcome to J.P. Morgan Chase's All Into Account research podcast. I'm Joyce Chang, Chair of Global Research. It's truly a pleasure for me to welcome today's special guest speaker, who's been a frequent speaker at our J.P. Morgan investor seminars and roundtables around the world. It's wonderful to have Tobias Adrian with us today to share his lessons learned during his 10-year tenure as Financial Counselor and Director of the Monetary and Capital Markets Department of the International Monetary Fund, a position that he f- assumed in 2017 through August of this year. Now, Tobias, for many of you who, you are at our events, um, we view the IMF's Global Financial Stability Report as a key go-to research resource for gaining a better understanding of systemic issues that could pose a risk across macro and global, the macro markets and the, and the global economy. We also, um, want to highlight the research that the IMF has done on capital markets, financial sector surveillance, monetary and macro-prudential policies, and more recently on digital money, um, and, uh, the development of, um, um, stable coins. So these risks include, um, discussion of the supervision and regulation of financial systems, debt management, bank resolution, and tokenized money and finance. Um, Tobias, prior to joining the IMF, was Senior Vice President of the Federal Reserve Bank of New York. He's taught at Princeton, at New York University, and at Seoul National University. Tobias, welcome to the podcast. It's so wonderful to have you with us. Well, Tobias, you stepped into this role as Financial Counselor for the IMF's Monetary and Capital Markets Department in 2017. Now, this was a period when the global economy was experiencing low rates, low volatility, and now you're leaving a decade later at a point where we have three different wars and conflicts that seem to, uh, not have, um, an end in sight, greater geopolitical risk, geoeconomic fragmentation, higher term premium, and growing concerns about stretched valuations. Markets, though, continue to rally. What are your key lessons learned? And as you look at the current landscape, do you feel that investors are systematically underpricing the geopolitical risk? How has your definition of financial stability changed over the past decade?

Yeah. Thanks so much, uh, Joyce, for having me in this podcast today. Uh, it has been, um, a, a, a great pleasure for me to work with you and, and your team over the past decade. I'm, I'm really f- looking forward to our discussion here today. Um, so this has been a very eventful decade. Um, as you allude to, uh, back in the 2010s, we were looking at, uh, a low for long, subdued growth, uh, a lack of, uh, lackluster demand and, um, you know, deflationary pressures or, or at least disinflationary pressures. Now, uh, we're in a totally different world. We have been through so many shocks, um, starting with the pandemic, the wars, inflation resurging, um, the tariffs, uh, and broader, uh, geopolitical fragmentation issues. Um, so, uh, I think the very good news from that te- decade is that both markets and economics, economies have been broadly