World Trade and Exchange Rates From the Pax Americana to a Multilateral New Order LORD MERVYN KING Former Governor of the Bank of England

SEVENTEENTH ANNUAL STAVROS NIARCHOS FOUNDATION LECTURE AND DINNER

TUESDAY, MAY 16, 2017 About the Stavros Niarchos Foundation Lecture Series

The annual Stavros Niarchos Foundation Lecture Series at the Peterson Institute for International Economics was established in 2001 through the generous support of the Stavros Niarchos Foundation. The Series enables the Institute to present a leader of world economic policy and thinking for a major address each year on a topic of central concern to the US and international policy communities. The Series’ inaugural lecture was delivered by Alan Greenspan, former chairman of the Federal Reserve Board, in 2001. The list of subsequent speakers includes Ernesto Zedillo, former President of Mexico, in 2003; Lawrence H. Summers, former Secretary of the Treasury and Chair of the National Economic Council, in 2004; Long Yongtu, former Vice Minister of China’s Ministry of Foreign Trade and Economic Cooperation, in 2005; Mario Monti, former Prime Minister of Italy, in 2006; Heizō Takenaka, former Minister for Economic Policy of Japan, in 2007; Petr Aven, former President of Alfa Bank, in 2008; Nandan M. Nilekani, former Co- Chairman of the Board of Directors, Infosys Technologies, LTD, in 2009; Niall Ferguson, Laurence A. Tisch Professor of History, Harvard University, in 2010; John Lipsky, former First Deputy Managing Director of the International Monetary Fund, in 2011; Jean-Claude Trichet, former President of the European Central Bank, in 2012; C. Fred Bergsten, Senior Fellow and Director Emeritus, Peterson Institute for International Economics, in May 2013; Antonis Samaras, former Prime Minister of , in October 2013; Mari Elka Pangestu, former Minister of Tourism and Creative Economy of Indonesia, in 2014; Agustín Carstens, Governor of the Bank of Mexico, in April 2015; David Lipton, First Deputy Managing Director of the International Monetary Fund, in May 2016; and Lord Mervyn King, British Economist and former Governor of the Bank of England, May 2017.

2 Stavros Niarchos Foundation Lecture Series | Seventeenth Annual LORD MERVYN KING | World Trade and Exchange Rates 3 The Stavros Niarchos Foundation [(SNF) (www.SNF.org)] is one of the world’s leading private, international philanthropic organizations, making grants in the areas of arts and culture, education, health and sports, and social welfare. Since 1996, SNF has committed $1.9 billion, through 3,801 grants to nonprofit organizations in 112 nations around the world. The Foundation funds organizations and projects that are expected to achieve a broad, lasting and positive impact for society at large, and exhibit strong leadership and sound management. The Foundation also supports projects that facilitate the formation of public-private partnerships as an e¨ective means for serving public welfare.

In addition to its standard grants, the SNF has continued to respond to the urgent needs of Greek society, by providing relief against the severe e¨ects of the socioeconomic crisis through three major grant initiatives of $378 million.

The Foundation’s largest single gift is the Stavros Niarchos Foundation Cultural Center (SNFCC), in . The project’s total cost is $861 million. The SNFCC is designed by the renowned architectural firm Renzo Piano Building Workshop, and includes the new facilities of the National Library of Greece, and , as well as the Stavros Niarchos Park. The Center was delivered to the Greek Society on February 23rd, 2017. Following the handover, the SNF announced its commitment to continue supporting the SNFCC for the next five years, through grants totaling up to $53 million. The grants support the implementation of public programming and help cover part of SNFCC’s operational costs. All events funded with SNF support are free to the public.

The SNF does not engage in any “for profit” activities in Greece or abroad, and it is audited by Deloitte.

LORD MERVYN KING | World Trade and Exchange Rates 3 Program

5:30 pm WELCOME DR. ADAM S. POSEN President, Peterson Institute for International Economics

MR. ANDREAS DRACOPOULOS Co-President and Director, Stavros Niarchos Foundation

THE HONORABLE PETER G. PETERSON Chairman, Peterson Institute for International Economics

THE HONORABLE LAWRENCE H. SUMMERS Charles W. Eliot University Professor and President Emeritus, Harvard University

LECTURE, Q & A LORD MERVYN KING Former Governor of the Bank of England

6:45 pm RECEPTION In the Anthony M. Solomon Sculpture Garden

7:15 pm DINNER By invitation only

8:30 pm CLOSING DR. ADAM S. POSEN President, Peterson Institute for International Economics

4 Stavros Niarchos Foundation Lecture Series | Seventeenth Annual LORD MERVYN KING | World Trade and Exchange Rates 5 About Lord Mervyn King

LORD KING OF LOTHBURY, KG, GBE, FBA

Mervyn King served as Governor of the Bank of England and Chairman of the Monetary Policy Committee and Financial Policy Committee from 2003–June 2013. He was previously Deputy Governor from 1998 to 2003, Chief Economist and Executive Director from 1991, and non- executive director of the Bank from 1990 to 1991. He was knighted (GBE) in 2011, made a life peer in 2013, and appointed by The Queen to be a Knight of the Garter in 2014.

Lord King took up a position as Professor of Economics and Law at New York University in September 2014, and a position as School Professor of Economics at the London School of Economics in 2015.

Born in 1948, Mervyn King studied at King’s College, Cambridge, and Harvard (as a Kennedy Scholar) and taught at Cambridge and Birmingham Universities before spells as Visiting Professor at both Harvard University and MIT. From October 1984 he was Professor of Economics at the London School of Economics where he founded the Financial Markets Group.

Mervyn King is a Fellow of the British Academy, an Honorary Fellow of King’s and St John’s Colleges, Cambridge and holds honorary degrees from Birmingham, Cambridge, City of London, Edinburgh, London Guildhall, London School of Economics, Wolverhampton, Worcester, Helsinki, Abertay, Dundee and Kent Universities. He is a Foreign Honorary Member of the American Academy of Arts and Sciences, is on the Advisory Council of the London Symphony Orchestra, is President of Worcestershire County Cricket Club and a Trustee of the National Gallery.

6 Stavros Niarchos Foundation Lecture Series | Seventeenth Annual LORD MERVYN KING | World Trade and Exchange Rates 7 About Lord Mervyn King

LORD MERVYN KING | World Trade and Exchange Rates 7 About the Peterson Institute for International Economics

The Peterson Institute for International Economics is a private nonpartisan, nonprofit institution for rigorous, intellectually open, and indepth study and discussion of international economic policy. Its purpose is to identify and analyze important issues to make globalization beneficial and sustainable for the people of the United States and the world, and then to develop and communicate practical new approaches for dealing with those issues.

The Institute attempts to anticipate emerging issues and to be ready with practical ideas, presented in useful and accessible formats, to inform and shape public debate. Its audience includes government o°cials and legislators, business and labor leaders, management and sta¨ at international organizations, university-based scholars and their students, experts at other research institutions and nongovernmental organizations, the media, and the public at large. It addresses these groups globally from its home in Washington, DC.

The Institute’s sta¨ of about 70 includes 20 senior researchers, as well as 15 nonresident fellows, all distinguished for their combination of research expertise and policy experience. The Institute’s agenda emphasizes international trade and investment, international finance and exchange rates, macroeconomic policy and crisis response, globalization and human welfare, and studies of key economic regions. Institute sta¨ have unique expertise on the major economies with special reference to China, the European Union, India, Japan, Korea, Russia, and the Middle East, as well as the United States itself and its NAFTA partners.

8 Stavros Niarchos Foundation Lecture Series | Seventeenth Annual LORD MERVYN KING | World Trade and Exchange Rates 9 Current priorities include: > adoption of international banking standards and broader financial regulatory reforms; > improving macroeconomic policy after the global financial crisis; > countercyclical fiscal policy and increased female labor force > truth telling about the benefits of globalization and the costs of closed participation in Japan; economies; > the restoration of trade promotion authority in the United States; and > the rebalancing of China’s growth model and its impact on the world economy; > linking fiscal stimulus and structural reform in the euro area. > globalization, inequality, and labor market adjustment; Other influential analyses have addressed: > exchange rate interventions and reform of the international monetary > economic reform in the European Union, the former communist system; countries, and Latin America (including what became known as the > regional trade agreements and multinational investment, notably the Washington Consensus); Trans-Pacific Partnership (TPP); > foreign direct investment into and out of the United States; > practical growth models for Europe, Japan, and the United States; and > the sources, benefits, and growth of services trade; > financial stability, including cost-benefit analysis of global regulation. > the impact on wages of trade liberalization; Institute studies have helped provide the intellectual foundation for many > reconsidering the “Resource Curse” and the “Middle Income Trap;” of the major international policy initiatives of the past three decades: > the links between gender and diversity and corporate profitability; and

> reforms of the International Monetary Fund (IMF), initiated by the G-20 > measures of currency manipulation and of equilibrium exchange rates. in 2009–10; The Institute celebrated its 25th anniversary in 2006 and adopted its new > reform of US sanctions policy; name at that time, having previously been the Institute for International > quantitative easing and adapting monetary policy to a low interest rate Economics. In 2001 it moved into its own building, which received an world; Award of Excellence for Extraordinary Achievement in Architecture by the > creation of the Asia Pacific Economic Cooperation (APEC) forum and the TPP initiative; American Institute of Architects. > initiation and implementation of the Strategic and Economic Dialogue Please learn more about our programs and research at www.piie.com. between the United States and China; > the North American Free Trade Agreement (NAFTA) and other US free trade agreements (notably with Korea);

LORD MERVYN KING | World Trade and Exchange Rates 9 Praise for the Peterson Institute for International Economics

“There is no institute anywhere in the world…that comes close to having the breadth and depth that the [Peterson] Institute for International Economics has in its devotion to international economic studies all over the world.” STUART EIZENSTAT, Former Deputy Secretary of the Treasury and Undersecretary of State

“No one has led analysis and discussion of international economics like the Peterson Institute.” TOM KEENE, Host of Bloomberg Television’s Surveillance

“…research institutes vary widely in both quality and honesty. Among the best on both counts is the [Peterson] Institute for International Economics.” PAUL R. KRUGMAN, Distinguished Professor of Economics, Graduate Center of the City University of New York

“The Peterson Institute does the single best job of think tanks in this town, hands down, of having the best audience. The discussions that go on here are tremendous.” MAYA MACGUINEAS, President of the Committee for a Responsible Federal Budget

“I have continued to follow with interest the important and meaningful work of PIIE. You and your colleagues continue to be a strong, serious, and thoughtful voice on the important economic and geopolitical issues of the day. In my view, the Peterson Institute is singular and distinct in that regard.” THOMAS (MACK) MCLARTY, President of McLarty Associates and Special Envoy for the Americas during the Clinton Administration

“In terms of [the Peterson Institute for International Economics’] ability to shape policy discussion and influence the outcome, there isn’t an organization outside government that can touch it.” STEVEN PEARLSTEIN, Washington Post

10 Stavros Niarchos Foundation Lecture Series | Seventeenth Annual LORD MERVYN KING | World Trade and Exchange Rates 11 “I don’t think there have been many institutions outside the government, if any, that have had the same kind of impact on global economic thinking as the [Peterson] Institute for International Economics.” LAWRENCE H. SUMMERS, Charles W. Eliot University Professor and President Emeritus at Harvard University, former Secretary of Treasury and Chair of the National Economic Council

“…the emblematic think tank of our time.” JEAN-CLAUDE TRICHET, Chairman of the Group of Thirty; former President, European Central Bank

“One of the things that has always astounded me about [the Institute] is they always have a book coming out about the subject that you just realized was important.” DAVID WESSEL, Wall Street Journal and Brookings Institution

“…without any doubt the preeminent organization in the world operating outside government and outside universities… in analysis of international economic problems. Its publications over the years have been an invaluable reference source for all journalists working the field…” MARTIN WOLF, Chief economics commentator, Financial Times

“One of the reasons I’ve enjoyed being at the Peterson Institute [for International Economics] is that you find places that will now and then have policy proposals and some that do scholarship. It is very rare to find one that really combines the two in a very e›ective way.” ROBERT B. ZOELLICK, Chairman, International Country Advisors, Goldman Sachs & Company

LORD MERVYN KING | World Trade and Exchange Rates 11 Senior Research Sta‘

ADAM S. POSEN JOSÉ DE GREGORIO PATRICK HONOHAN JEFFREY J. SCHOTT President Nonresident Senior Fellow Nonresident Senior Fellow Senior Fellow

MARCUS NOLAND SIMEON DJANKOV GARY CLYDE HUFBAUER NATHAN SHEETS Executive Vice President and Nonresident Senior Fellow Reginald Jones Senior Fellow Visiting Fellow Director of Studies KAREN DYNAN OLIVIER JEANNE DAVID J. STOCKTON STEVEN R. WEISMAN Nonresident Senior Fellow Senior Fellow Senior Fellow Vice President for Publications and Communications CAROLINE FREUND J. BRADFORD JENSEN ARVIND SUBRAMANIAN Senior Fellow Nonresident Senior Fellow Dennis Weatherstone Senior Fellow (on leave for public service) C. FRED BERGSTEN JASON FURMAN SIMON JOHNSON Senior Fellow and Director Emeritus Senior Fellow Senior Fellow EDWIN M. TRUMAN Nonresident Senior Fellow OLIVIER BLANCHARD JOSEPH E. GAGNON JACOB FUNK KIRKEGAARD C. Fred Bergsten Senior Fellow Senior Fellow Senior Fellow NICOLAS VÉRON Visiting Fellow CHAD P. BOWN ANNA GELPERN NICHOLAS R. LARDY Senior Fellow Nonresident Senior Fellow Anthony M. Solomon Senior Fellow JUSTIN WOLFERS Nonresident Senior Fellow LEE G. BRANSTETTER MORRIS GOLDSTEIN ROBERT Z. LAWRENCE Nonresident Senior Fellow Nonresident Senior Fellow Nonresident Senior Fellow JEROMIN ZETTELMEYER Senior Fellow WILLIAM R. CLINE EGOR GORNOSTAY THEODORE H. MORAN Senior Fellow Research Statistician and Quality Nonresident Senior Fellow Control Coordinator JÉRÉMIE COHEN-SETTON LINDSAY OLDENSKI Research Fellow CULLEN S. HENDRIX Nonresident Senior Fellow Nonresident Senior Fellow MONICA DE BOLLE SHERMAN ROBINSON Senior Fellow Nonresident Senior Fellow

12 Stavros Niarchos Foundation Lecture Series | Seventeenth Annual LORD MERVYN KING | World Trade and Exchange Rates 13 Senior Research Sta‘ Board of Directors

The Board of Directors’ principal goal is to protect and strengthen PIIE’s excellence as an independent, nonpartisan, and intellectually rigorous policy research organization that contributes to the public’s understanding of the challenges and opportunities posed by the global interdependent economy. The Board of Directors is comprised of a diverse group of business leaders, former high-level government o°cials, and international civil servants, and distinguished scholars. The Executive Committee (indicated by *) of our Board of Directors bears legal responsibility for PIIE’s direction, while regularly evaluating PIIE’s performance in pursuit of our mission. Senior Management is responsible for setting PIIE’s agenda in consultation with the Board of Directors, the research sta¨, and other stakeholders.

*PETER G. PETERSON, Chairman | *JAMES W. OWENS, Chairman, Executive Committee Honorary Directors CAROLINE ATKINSON *STEPHEN FREIDHEIM *MICHAEL A. PETERSON GEORGE DAVID AJAY BANGA JACOB A. FRENKEL JONATHAN PRUZAN ALAN GREENSPAN *C. FRED BERGSTEN MAURICE R. GREENBERG JOHN G. RICE CARLA A. HILLS MARK T. BERTOLINI HERBJORN HANSSON GINNI M. ROMETTY FRANK E. LOY BEN VAN BEURDEN STEPHEN HOWE, JR. *LYNN FORESTER DE ROTHSCHILD GEORGE P. SHULTZ NANCY BIRDSALL HUGH F. JOHNSTON *RICHARD E. SALOMON JEAN-CLAUDE TRICHET FRANK BROSENS MICHAEL KLEIN SHEIKH HAMAD SAUD PAUL A. VOLCKER RONNIE C. CHAN NOBUYORI KODAIRA AL-SAYARI ERNESTO ZEDILLO SUSAN M. COLLINS CHARLES D. LAKE II *LAWRENCE H. SUMMERS RICHARD N. COOPER ANDREW N. LIVERIS MOSTAFA TERRAB *ANDREAS C. DRACOPOULOS SERGIO MARCHIONNE RONALD A. WILLIAMS BARRY EICHENGREEN PIP MCCROSTIE MIN ZHU *JESSICA EINHORN *HUTHAM S. OLAYAN *ROBERT B. ZOELLICK PETER FISHER PETER R. ORSZAG DOUGLAS FLINT LORD MERVYN KING | World Trade and Exchange Rates 13 Previous Stavros Niarchos Foundation Lecturers

May 24, 2016 DAVID LIPTION, First Deputy Managing Director of May 7, 2009 NANDAN M. NILEKANI, former Co-Chairman of the International Monetary Fund the Board of Directors, Infosys Technologies, LTD

April 20, 2015 AGUSTÍN CARSTENS, Governor of the Bank of May 8, 2008 PETR AVEN, former President of Alfa Bank Mexico May 9, 2007 HEIZŌ TAKENAKA, former Minister for Economic April 29, 2014 MARI ELKA PANGESTU, former Minister of Policy of Japan Tourism and Creative Economy of Indonesia May 8, 2006 MARIO MONTI, former Commissioner of the October 1, 2013 ANTONIS C. SAMARAS, former Prime Minister of European Union for Competition Policy Greece May 23, 2005 LONG YONGTU, former Vice Minister of China’s May 16, 2013 C. FRED BERGSTEN, Senior Fellow and Director Ministry of Foreign Trade and Economic Cooperation Emeritus, Peterson Institute for International Economics March 23, 2004 LAWRENCE H. SUMMERS, former Secretary of the Treasury and Chair of the National Economic Council May 17, 2012 JEAN-CLAUDE TRICHET, former President of the European Central Bank May 19, 2003 ERNESTO ZEDILLO, former President of Mexico

May 19, 2011 JOHN LIPSKY, former Acting Managing Director of the International Monetary Fund October 24, 2001 ALAN GREENSPAN, former Chairman of the Federal Reserve Board

May 13, 2010 NIALL FERGUSON, Laurence A. Tisch Professor of History at Harvard University

14 Stavros Niarchos Foundation Lecture Series | Seventeenth Annual LORD MERVYN KING | World Trade and Exchange Rates 15 Previous Stavros Niarchos Foundation Lecturers

LORD MERVYN KING | World Trade and Exchange Rates 15 Peterson Institute for International Economics 1750 Massachusetts Avenue, NW Washington, DC 20036-1903 Phone 202.328.9000 | Fax 202.328.5432 Photography by Jeremey Tripp