inflation did not come back as expected. now we are in a little bit of a new situation where low levels of inflation, low interest rates , maybe some further instruments are necessary. this is the big does a --the big debate. martin: central bank governance. courtpowell, how do you in taking monetary decisions? chairman powell: in the u.s., we are blessed with a fairly large committee. as many of you will know, at full strength, there are seven governors on the federal open market committee. those are all nominated by the president, confirmed by the present -- senate, and we serve 14-your terms. we also have 12 reserve banks around the country, and those on a rotating basis, share five additional votes. when we have our meetings, everyone has a voice at the table. what that means is, i talked to

every other participant on the fomc at least once per cycle. i think this arrangement i reserve banks around the country and seven governors guarantees that we will have a diverse view of perspectives around the table. the reserve bank presidents are chosen by their boards of directors who are largely private-sector people but with the approval of the board. i think this system guarantees a diversity of opinions. there is that risk of groupthink. if everyone went to the same schools, took the same professors -- we don't have that. we have people coming in every eight weeks with a different views, and i would not have it any other way. i spent a lot of years in the investment business. what you really want before you make an investment is to have the smartest person in the room try to explain why this is a bad idea. not after you make the

investment, but before. i place huge value on that. i have terrific colleagues on the fomc and i really do welcome all of that. it is a lot of consulting, but i would not have it any other way. martin: and the policy of convincing. chairman powell: sometimes. to a large extent, it's a policy of putting together a consensus. my nature is to want to incorporate people's thinking and develop a consensus. sometimes it is me convincing, sometimes it is me trying to move people into a group. collective decision-making, i think, can work. in our case, it has worked well. martin: would you like this, thomas, too? thomas: every country has a little bit different history and different institutions. we are blessed in switzerland to have a small board. [laughter] but a well functioning board.

the situation is a little bit different. we have a lot of discussions also with our economists, so a variety of views within banking. , not onlyd has also at the swiss national bank, but also at the federal and capital level, that the college takes to get the responsibility and also tries to find consensus and defend this view vis-a-vis the public. at thes worked very well swiss national bank. it also forces you to find a solution even in difficult times. we are a small country exposed to these international shocks, so the governance we have for our case, for our country, worked well so far. it is really to find a consensus vis-a-vis this view the public together, and that worked well. i am personally convinced -- and

i don't speak for other countries, this is specific, should not be changed -- and it has helped switzerland at the central bank man at the canton levels as well. unless you see that you have better options, but this is also risky. chairman powell: it is the same in the united states. failed central banks at the very beginning of the republic. if you saw the musical "hamilton," that was the first one. the second one died in 1836. the difference was, they were very much east coast-based, and the rest of the country was sort of suspicious in those times about having power over money and banking concentrated there. the beauty of our system is what i mentioned, we have reserve banks all over the country, and this turns out to be a much more balanced and sustainable

structure. we are 106 years old now. i think this federated structure we have has served the country well, and is also rooted in our history, as you say. some have suggested that the fed consider the impact of of decisions on the outcome the 2020 presidential elections. do you consider election politics to be a new part of your mandate? chairman powell: absolutely not. factors play absolutely no role in our process. my colleagues and i would not tolerate any attempt to include them in our decision-making or discussions. that is not our dna. our dna is what i mentioned earlier, strongly committed to nonpolitical decision-making, we serve all americans regardless

of their political party. it is just simply wrong, the idea that we would deviate from that is simply wrong. the answer would be a hard no. martin: like in switzerland. we could not agree more. digital currencies. our central banks missing out on the challenges but also the opportunities represented by digital currency? i don't thinkl: so. of course, we are following very carefully the whole question of digital currencies. it is not something that we are actively considering. other central banks more than we are. for us, it raises significant issues that we would want to see carefully resolved. aboutample, if you think , multinational currency, it would really need

to be cybersecurity. it is one thing to be able to counterfeit paper currency, it is another thing to hack into a cyber currency and create as much as you want. the cyber issues are quite daunting. it is also not clear if there is demand for this. consumers have 20 of options, they are not clamoring for this. i don't want to sound like i am rolling this out. but there is another question. if people are holding their money into a cyber currency, they are not holding it in a bank. what happens to the banks? what will happen to intermediation? what will happen if everyone is just investing in this cyber currency? are in favor of financial innovation, following these things carefully, but we don't see cyber, digital currencies from a central bank as something happening in the near term. martin: thomas, how do you see it? weirman powell: -- thomas:

have a similar view, probably. we don't believe it is a good idea to have the central bank looking at digital currency for the public at large. we also have a very efficient payment structure in switzerland, so there is almost no advantage to making a payment with digital currency for the public at large. maybe a little bit different situation, but if we have new financial market infrastructure, banks among them traded securities, and you also need to create some new money that comes from central banks that makes each system more efficient. so we are looking at that carefully. this is not yet sure. it is not sure whether new forms of securities are more efficient than older ones, and whether new infrastructure actually needs digital central bank currency. it is possible the link to the central bank may be sufficient

today. but it is a very important and interesting question, also happy to be a part of this innovation hub that looks at those issues carefully. i think it's very important that central banks are aware of all of these innovations, about all the possibilities. martin: absolutely. libra, ther take on facebook currency, headquartered in geneva? chairman powell: i want to start again by saying we want to see responsible financial innovation. we think that is key, will enable people to be better served, drive cost out of the system. it's important we be open to that. as i have said before about , with facebook buzz very large network of more than a couple billion people, a stable

coin could be systemically important quickly. if it were to have wide adoption, and that is not a foregone conclusion. because of that, we would think that libra would need to be held to the highest standards. it could be systemically important right away. potentially, it would have to be held to the highest regulatory and supervisory expectations. hows not obvious to see that would happen under our current regulatory system. it is the kind of thing where we have said this month not be a sprint to implementation, this will be a careful, thoughtful conversation about how we can do our job of protecting the public from cyber risk and all the other risks that come with something this systemically important. i take your answers all in all, you are quite optimistic. is that true? chairman powell: about things in general, yes. [laughter]

you always want to be an optimist. i would say libra has a burden of proof to carry. we don't want to just be an obstacle about this, but it's appropriate for us to say what we think our expectations will be. appropriately so, they will be very high for something that could have such broad adoption. that is the way to think about libra, i believe. martin: thank you very much. i think we should open the discussion to a few questions. i see some ladies and gentlemen who would like to ask one. behind there. far behind the second row. >> hello, mr. powell, welcome to

switzerland. i would like to know what you think -- the market is widely expecting some accommodation. do you feel like meeting that accommodation will be enough to support the economy, do you feel like you might need to do more to provide that accommodation? i will just go: back to what i said earlier, which is we are watching all of these developments. the geopolitical risks, we mentioned brexit, events in hong kong, watching those carefully, watching incoming data, looking at financial conditions broadly. we will be assessing those as me go into our next meeting, future meetings. what we have said is we are going to act as appropriate to sustain the expansion. i don't have anything other than that to say tonight.

>> mr. powell, you spoke about the diversity of views on the fomc. we have seen in the past couple of weeks exactly what the diversity of views means. eric rosenkranz at the boston fed says he does not see a need for further accommodation, yet we see james bullard from st. louis looking for an immediate 50 basis point cut in rates. how do you square that circle, how do you consider these diametrically opposed views? chairman powell: sometimes, it is easy to get unanimity on something when the path is clear. there will always be questions about how much to do and how fast to move, but sometimes things are relatively clear. other times it is murky out there. there is a range of views. i think this is one of those times. trade policy uncertainty is not something that central banks have a lot of practice in dealing with. , we are trying to

look through short run developments, trying to assess what the implications for the outlook in the medium and longer-term will be of those developments. it is challenging and we are clearly at a time where there is a range of views. i do think that is a very healthy thing. we will of course reach a decision, i suspect we will have strong support for the decisions we made, as we did in july. i expect that will continue. but this process of having disparate views is not something that i feel concerned about. in fact, i feel it's appropriate, given the situation we are in now. >> thank you very much. for both of you. kind of a delicate question, i'm sorry, but that is why we are here. what is the relationship with

the chinese central bank these days? we have these political questions but you are technocrats and you are trying to exclude political tensions, but how is the relationship with china? how independent is the sign -- chinese central bank really? is it enough to talk to the central bank governor, are you talking to the finance ministry all the time? it is very hard to imagine how this cooperation is really working. chairman powell: well -- we are not part of the government, so we don't talk about trade. trade is not an issue for us. natural --ese national central bank attends, we may have discussions that we are not an advisor to the government in any way. that is not the case for the chinese central bank.

they are part of that conversation in china. we don't see that part of the world. part of the reason of having these international four runs, even when there are difficulties, we can sit down and hear what's happening in each other's economies. we don't cross the line into -- there are issues consigned to elected governments and we don't comment on those. we stick to the things we are responsible for, which is stable prices, maximum employment. that is how i think about it. i fully agree but let's add one thing, all central banks among each other have good relationships. tohave a good relationship the fed but also to the chinese central bank. this is important. you haveeet in basel, to get a good view of the global economy. this is maybe the most important element of monetary cooperation. you never coordinate decisions

or the same decision, but knowing the economic situation in china or the u.s. else everyone to understand the situation, and this is much better. it limits spillovers, spell backs. we have a relatively open exchange of views. so we have a good grip on the situation in asia, europe, america. this is something that develops extremely well during the last couple of years. we are exactly because not part of the government. we are technocrats and we can have this open dialogue. chairman powell, you mentioned you are working on a new monetary framework in the united states. i wonder if there is also an international dimension, if you have been thinking about an international monetary framework? any thoughts about contributing to something new?

does thomas have any ideas on the international monetary side? the second question concerns the phillips curve. that things are very good in the labor market, wages are going up, and we are just hoping inflation goes up. thinkingust wishful about the return of the phillips curve, or is there some deeper reasoning? chairman powell: so the first question was -- our review was not about returning to a different international monetary framework or even having a global currency . it is really about our domestic tools in our domestic context. for example, we are looking at strategies where there would be a make up for inflation below target. the idea is if inflation is

meaningfully below target for a sustained period, the central bank would communicate so the people understand there will be a make up period, meaning a move of inflation above target. if the public understands and ask him on that, it will limit the damage from the recession. it is a great idea. the reasons no central bank has done it, it is hard to find a way to implement it practically. so we are looking carefully at those ideas. we need some of those ideas to work at the zero lower bound. i will talk about the phillips curve briefly. there was, 50 years ago, a close relationship between the level unemployment in the economy, and inflation. that has gone away. it is still there but it is a faint heartbeat. it is not what it was. there are a number of possible reasons for that. one of them is that central

banks have kept inflation under control so much, so well, for so long now, really the last 25 years, that inflation expectations are truly angered, and therefore inflation does not go down much when inflation is weak, does not go up much when inflation is tight. there is always the question of if there is a steep portion of the phillips curve. is the problem not the slope of the phillips curve, but that we have got the wrong estimate of the natural rate of unemployment? for example, maybe the labor market is not as tight as we think, it will get tighter, and then we get this state tilts curve. have not seen any evidence of that. that is why i think we have to use a huge dose of common sense and risk management in our policies. in terms of the international monetary system, i would say that i think the system of --

the system of floating rates along with the commitment from central banks not to target their domestic economies and the exchange rate itself as such, is working broadly. i'm not sure, but probably you are alluding to the fact that we also have the dollar dominance in the international monetary system. there is sometimes a discussion about that, but this is the result of the economic dominance of the united states in financial markets. , ifcan only change that other regions gain in economic importance, otherwise you cannot order that. this is something that has to evolve. that we have a banking system globally where dollar funding remains one of the dominant funding sources. as long as this is the case, the dollar will be, by far, the most

dominant currency. this even increased over the last couple of years in the financial crisis. the will only change once economic importance of europe becomes bigger again, and then the other currencies may also gain importance. otherwise, i think it is very difficult. for brings me to a point -- emergency situations, the liquidity distributions among central banks is something that is key. agreements -- the swap agreements that exist between the central banks is one major part of the safety net of this international monetary system. we have to cut soon but maybe two or three questions. >> governor powell, if i

understood right, you are very happy the inflation in the u.s. is around 2%. learned that japan was trying to get inflation up to a certain degree, unsuccessfully. on the other hand, i hear from the national bank that price stability is prime, but some europe is notng able to get inflation up to a certain point, and many other countries are also looking at that. would you have a recommendation how to get the inflation to this 2%, which would be healthy for balance sheets, for the future, for credit, lending? chairman powell: a recommendation for europe? no, i would not presume -- i would just say we have inflation itt is just below 2%, and

seems to be bouncing around between 1.5% and 2%. 10 point fivek years into an expansion with historically low unemployment and strong growth, you would think inflation would have been more symmetric around 2%. that is not the case. avoid thisy is to problem of having inflation expectations slipped down. once you are on that road, it seems to be hard to get off. i would not presume to offer any advice to thomas or to our ecb colleagues. martin: maybe somebody from the student group? that? wanted to do shirt.r. black every don't you give

citizen 500 swiss francs and print news was bills? it could help the conception and could lower the swiss franc. thomas: that is a very good idea. we would do it, immediately. but it is against the constitution, the law. it is not foreseen that we give gifts to the population, not something that makes sense. also to say, in the situation we are at the moment, ideas like helicopter money, etc., doesn't make any sense. we are in a situation where the unemployment rate is 2.3%. growth is between 1% and 2% on average over the last couple of years, so this is relatively a good situation. francsive you 500 swiss and somebody says we will like

1000, we have a good project for this and that, and at the end, these are not decision that should be taken by the central bank. this is something that is political, has to be in the parliament, worked by the government, and not by a technocratic central bank. giving away money for free, giving it as a gift, this is really a political decision and not a decision that should be taken by the central bank. martin: last question. we give it to the lady. excuse me. ladies first. >> thank you very much. good evening, mr. powell. i would like to ask a follow-up about the libra project and the fed's working group tracking the project. when you mentioned the burden of proof that falls on the project, can you speak at all how the association has been meeting this burden of proof?

what further input you have received in the past months? and how should it fall within the regulatory scheme? to yourlly, speaking coordination efforts with other central banks, is this something that you and mr. jordan have been discussing on this visit? chairman powell: on her libra, not a lot i can add. we have a working group among the financial agencies in washington. i assume there are lots of things going on around the edges where we are discussing, but honestly, i would not speculate on that. in terms of coordination, i would just echo, we come to bank tot is central central bank, it is not about the political issues. sometimes it's about monetary policy. in basel toair question each other's approach to monetary policy, so it is a great forum.

dollar swapght, the lines that we have with many central banks were absolutely essential in the financial crisis. those other kinds of things we can do in collaboration. by the facty aided that we know each other, are comfortable working with each other, in regular contact. by the way, the same is true with the elected governments. there is the g20, g7. with finance ministers in the room, there's a lot of international coordination that goes on, so people know each other and are just talking, which i think is a healthy thing. martin: ok, last question. >> governor powell, this morning, again, you were mocked again by president trump in a tweet. the you find the constant criticism from the president, does that make your job easier or more difficult? [laughter] how do you manage to tune this

out? chairman powell: we are completely and totally focused on our jobs. just to understand -- i feel like the fed is a very important american institution. the things that we do affect people's lives. we will focus on using our tools to do the best job we can, to achieve the goals got chris -- congress has given us under the law. we don't get involved in other things like that. that is our entire and total focus. martin: wonderful. in you we trust. [laughter] [applause] chairman powell: thank you. thank you, martin. [applause] >> we want to welcome our bloomberg and bnn bloomberg audiences. i am vonnie quinn in new york.

>> i am amanda lang in toronto. we are watching jerome powell speaking in zurich with thomas jordan of the swiss national bank. for more insight on what we have seen, we have a deputy chief ,conomist at cornerstone macro as well as michael mckee. in terms of the broad range of comments here, anything particularly surprising? talking about the neutral rate being lower. he said we would act as appropriately to maintain economic expansion. that could have been interpreted as bullish for the markets, but they didn't budge much. what do you take away from the remarks here? jay powell was disciplined and stuck to his talking points,