The Implications of Ultra-Low and Negative Interest Rates for Asia ADBI Annual Conference 2016 Asian Development Bank Institute 1–2 December 2016 ASIAN DEVELOPMENT BANK INSTITUTE Asian Development Bank Institute 19th Annual Conference Implications of Ultra-Low and Negative Interest Rates for Asia 1-2 December 2016, Asian Development Bank Institute, Tokyo, Japan 1 December, Thursday 9:00 – 9:30 Registration 9:30 – 9:40 Opening Remarks Naoyuki Yoshino Dean, Asian Development Bank Institute 9:40 – 10:10 Keynote Speech 1 Takehiko Nakao President, Asian Development Bank Open Floor Discussion 10:10 – 10:40 Keynote Speech 2 Narayana R. Kocherlakota Professor, University of Rochester; Former President and CEO, Minneapolis Fed (2009-2015) Open Floor Discussion 10:40 – 11:00 Photograph and Coffee Break 11:00 – 12:30 Distinguished Speaker Session I: Negative Interest Rates in Advanced Economies Moderator: Naoyuki Yoshino Dean, Asian Development Bank Institute Panelists: Jean-Pierre Danthine President of the Board, Paris School of Economics; Member of the Board of Trustees, Center for Economic Policy Research; Former Member of the Governing Board of the Swiss National Bank (2010-2012) Cecilia Skingsley Deputy Governor, Sveriges Riksbank Sayuri Shirai Professor, Keio University; Visiting Fellow, Asian Development Bank Institute; Former Policy Board Member, Bank of Japan (2011–2016) Luc Laeven Director General Research, European Central Bank Open Floor Discussion 12:30 – 13:20 Lunch 13:20 – 14:50 Distinguished Speaker Session II: Implications of Ultra-Low and Negative Interest Rates For Monetary Policy and Macro-prudential Policy in Asia Moderator: Juzhong Zhuang Deputy Chief Economist, Asian Development Bank Panelists: Veerathai Santiprabhob Governor, Bank of Thailand Joon-Ho Hahm Monetary Policy Board Member, Bank of Korea Hans Genberg Executive Director, SEACEN Centre Dong He Deputy Director, International Monetary Fund Open Floor Discussion 14:50 – 16:20 Distinguished Speaker Session III: The Implications of Ultra-Low and Negative Interest Rates for Financial Markets in Asia Moderator: Guanghua Wan Director of Research, Asian Development Bank Institute Panelists: Michael M. Hutchison Professor, University of California, Santa Cruz Robert McCauley Senior Adviser at Monetary and Economic Department, Bank for International Settlements Tamim Bayoumi Senior Fellow, Peterson Institute for International Economics Alicia Garcia Herrero Chief Economist, Asia Pacific, Natixis Open Floor Discussion 16:20 – 16:30 Coffee Break 1 December, Thursday Academic Session I Moderator: Michael M. Hutchison Professor, University of California, Santa Cruz 16:30 – 17:00 The Interest Rate Effect on Private Saving: Alternative Perspectives Joshua Aizenman Professor, University of Southern California, Yin-Wong Cheung Professor, City University of Hong Kong, and Hiroyuki Ito (presenter) Professor, Portland State University Discussant: Hans Genberg Executive Director, SEACEN Centre 17:00 – 17:30 Exchange Rate Behavior with Negative Interest Rates: Some Early Negative Observations Allaudeen Hameed Professor, National University of Singapore, and Andrew K. Rose (presenter) Professor, University of California, Berkeley-Haas Discussant: Masao Ogaki Professor of Economics, Keio University 17:30 – 18:00 Japanese Monetary Shocks Under Low and Negative Interest Rates: Evidence from a FAVAR Model Mark M. Spiegel (presenter) Vice President and Director for Center for Pacific Basin Studies International Research, Federal Reserve Bank of San Francisco, and Andrew A. Tai Research Associate, Federal Reserve Bank of San Francisco Discussant: Toshitaka Sekine Director-General of Research and Statistics Department, Bank of Japan Open Floor Discussion 18:30 – 20:30 Dinner Reception (By invitation only) 2 December 2016, Friday Academic Session II Moderator: Jennifer Corbett Distinguished Professor, Australian National University 9:30 – 10:00 Unconventional Monetary Policy in the Asian Financial Crisis Tamim Bayoumi Deputy Director of Strategy, Policy, and Review Department, International Monetary Fund, and Joseph E. Gagnon (presenter) Senior Fellow, Peterson Institute for International Economics Discussant: James McAndrews Fellow, Wharton Financial Institutions Center; Former Executive Vice President and Director of Research, Federal Reserve Bank of New York (2010-2016) 10:00 – 10:30 The Case for Cash James McAndrews Fellow, Wharton Financial Institutions Center; Former Executive Vice President and Director of Research, Federal Reserve Bank of New York (2010-2016) Discussant: Gudrun Monika Moede Head, Deutsche Bundesbank Representative Office Tokyo Open Floor Discussion 10:50 – 11:10 Photograph and Coffee Break Academic Session III Moderator: Shinichi Nakabayashi Director, Asian Development Bank Institute 11:10 – 11:40 Ultra-Low Interest Rates and Growth in Emerging East Asia from a Hayekian Perspective Gunther Schnabl Professor, Leipzig University Discussant: Naoyuki Yoshino Dean, Asian Development Bank Institute 11:40 – 12:10 The impacts of Japan’s negative interest rate policy on Asian financial markets Shinichi Fukuda Professor, University of Tokyo Discussant: Ippei Fujiwara Professor, Keio University 12:10 – 12:40 Negative Interest Rate Policies: Sources and Implications Carlos Arteta Lead Economist of Development Prospects Group, World Bank, M. Ayhan Kose Director of Development Prospects Group, World Bank Group, Marc Stocker Senior Economist, Development Prospects Group, World Bank, Temel Taskin Economist, Development Prospects Group, World Bank, and Naotaka Sugawara (presenter) Economist, Development Prospects Group, World Bank Discussant: Koji Nakamura Head of Economics Research Division, Research and Statistics Department, Bank of Japan Open Floor Discussion 2 December 2016, Friday 13:10 – 14:00 Lunch Break Academic Session IV Moderator: Peter Morgan, Senior Consultant for Research, Asian Development Bank Institute 14:00 – 14:30 Divergent Monetary Policies and International Dollar Credit—Evidence from Bank-level Data Dong He Deputy Director, International Monetary Fund, Eric Wong (presenter) Senior Manager, Hong Kong Monetary Authority, Kelvin Ho Manager, Hong Kong Monetary Authority, and Andrew Tsang Economist, Hong Kong Institute for Monetary Research Discussant: Ying Xu Lecturer, Australian National University 14:30 – 15:00 Long-term Interest Rates Spillovers from Major Advanced Economies to Emerging Asia by Ansgar Belke (presenter) University of Duisburg-Essen and Centre for European Policy Studies, Irina Dubova (presenter) University of Duisburg-Essen and Ruhr Graduate School, and Ulrich Volz SOAS University of London and German Development Institute Discussant: Masazumi Hattori Professor at the Institute of Economic Research, Hitotsubashi University 15:00 – 15:30 Carry Trades in Asia and the Pacific: Evidence on Unconventional Monetary Policies of Advanced Economies Pornpinun Chantapacdepong (presenter) Research Fellow, Asian Development Bank Institute, Hiroyuki Ito (presenter) Professor, Portland State University, and Kieran Hull Research Associate, Asian Development Bank Institute Discussant: Michael T. Chng Professor, International Business School Suzhou, Xi’an Jiaotong- Liverpool University Open Floor Discussion 16:00 – 16:20 Coffee Break Academic Session V Moderator: Takashi Matsuo Representative, Asian Development Bank Japan Representative Office 16:20 – 16:50 The Implementation and Transmission of Negative Interest Rate Policies in Europe and Japan: The Bank Lending Channel Stefan Angrick (presenter) Research Associate, Asian Development Bank Institute, and Naoko Nemoto Financial Economist, Asian Development Bank Institute Discussant: Gunther Schnabl Professor, Leipzig University 16:50 – 17:20 Implications of negative interest rates for Asia: FAVAR approach Martin Feldkircher Researcher, Oesterreichische Nationalbank, Florian Huber, Professor, Vienna University of Economics and Business, Pornpinun Chantapacdepong, Research Fellow, Asian Development Bank Institute, and Maria Teresa Punzi (presenter) Professor, Vienna University of Economics and Business Discussant: Yuqing Xing Professor and Director of Asian Economic Policy, National Graduate Institute for Policy Studies 17:20 – 17:50 The Impact of US Monetary Policy and other external shocks on the Hong Kong Economy: A Factor augmented VAR Approach Hongyi Chen (presenter) Senior Manager, Hong Kong Institute for Monetary Research, and Andrew Tsang Economist, Hong Kong Institute for Monetary Research Discussant: Nao Sudo Economist, Bank of Japan Open Floor Discussion 18:20 – 18:30 Concluding Remarks Naoyuki Yoshino Dean, Asian Development Bank Institute PRESENTERS Joshua Aizenman serves as the Dockson Chair in Economics and International Relations and chair of the Economics Department, University of Southern California. His research covers a range of issues in open economy, including commercial and financial policies, crises in emerging markets, foreign direct investment, capital controls, and exchange rate regimes. Joshua also serves as a research associate for the National Bureau of Economic Research, and co-editor of the Journal of International Money and Finance. Other affiliations have included teaching and research positions at University of California, Santa Cruz, Dartmouth, Hebrew University of Jerusalem, University of Chicago Graduate School of Business, and University of Pennsylvania. Stefan Angrick is a research associate at the Asian Development Bank Institute, where he specializes in the analysis