Glimmers of hope for the future — along with a heaping side order of caution — were served up by financial leaders on May 17th at the Wall Street Journal’s Future of Everything Festival.
The first day of the three-day New York City event was decidedly finance-focused, but also featured speakers and vendors offering a look at what’s next in seven theme areas: Health/Science, Technology, Money, Work, Arts/Style, Power, and Leisure. Speakers and guests included Sir Jon Cunliffe, Bank of England Deputy Governor for Financial Stability; Jerome Powell, Federal Reserve Chairman; and David Miliband, President and CEO of the International Rescue Committee.
Wall Street Journal (WSJ) Editor-in-Chief Matt Murray kicked off the conference with a sobering look back, saying that the pandemic has changed the world “more dramatically in the past two years than at any comparable time in recent memory.”
As Murray touched on cryptocurrency crashes and the anticipated fallout from inflation — and as financial experts took the stage — it was clear they saw some dark corners ahead on the way to a bright future. Still, many participants showed optimism about underlying economic resilience, better technology, and improved work culture. Check out some of the highlights below:
Tough times ahead for crypto, warns Bank of England Deputy Governor
Thorold Barker (Editor, Europe, Middle East and Africa, WSJ) sat down virtually with Sir Jon Cunliffe (Deputy Governor for Financial Stability, The Bank of England) to discuss crypto, the shifts in financial systems over the past year, and the impact of political instability in Europe on the global economy.
Issuing a warning to crypto investors after last week’s crash, Cunliffe explained that as the Federal Reserve and central banks around the world tighten financial conditions, there will likely be a “move out of risky assets.”
“There’s a long tail of retail investors who have invested in crypto assets…Do they all understand what they’ve invested in? I think not. For that long tail of retail investors, I’m not sure they do understand. They don’t really see this as a financial investment,“ Cunliffe said to a packed room.
He also added, “There’s no intrinsic value around crypto assets. They move with sentiment. They’re being moved mainly as a risky asset and prices have been going down pretty consistently.“
These remarks echo a speech he gave in October of 2021 regarding the impact of crypto on the stability of the UK’s financial system. “When something in the financial system is growing very fast, and growing in largely unregulated space, financial stability authorities have to sit up and take notice. They have to think very carefully about what could happen and whether they, or other regulatory authorities, need to act,” Cunliffe said.
Cunliffe also cited the conflict in Ukraine as another reason investors remain hesitant. “When there’s a move out of risky assets, you would expect the most speculative assets to be the ones most affected.”
When asked by Barker if the Bank of England would launch its own digital currency, Cunliffe indicated that it’s an “active consideration,” noting that his team will issue a consultation paper later this year on potential next steps. Playfully dubbed “Britcoin,” it would be similar to Bitcoin and other cryptocurrencies — except it would run alongside cash and bank deposits rather than replace them.
Cunliffe concluded his remarks with future challenges faced by the crypto world, “There’s an awful lot of portfolio expertise that needs to go into thinking, ‘How will I manage the risk around it and the volatility?’ That’s an issue that investment managers need to make, along with the separate issue of, ‘Can the plumbing be developed to bring these assets into the system?’”
Buckle up for a “softish” landing according to Federal Reserve Chairman
With inflation at a 40-year high, it was no surprise that it was standing room only for Nick Timiraos’ interview with Jerome Powell, Chairman of the Federal Reserve. Powell appeared virtually for his exchange with the WSJ chief economics correspondent. Pulling no punches and wasting no time, Timiraos launched into the dialogue with immediate criticism of the Fed seemingly not reacting with the same economic urgency displayed at the beginning of the pandemic.
“We know that this is a time for us to be tightly focused on the path ahead and getting inflation down to two percent,” Powell responded. “No one should doubt our resolve in doing that and if you look at how quickly we’ve moved in the last few months, you’ll see that financial conditions have tightened quite a bit. What we need to see is inflation coming down in a clear and convincing way.”
To get there, interest rates will have to rise further, even if that means going beyond the level that is understood as “neutral,” commonly thought to be around 2.5 percent.
“It would’ve been good to raise rates earlier,” Powell admitted when asked what went wrong in 2021 from a policy perspective. “Inflation is way too high, we need to bring it down, and we’re going to use our tools to do that.
When Timiraos indicated skepticism within the general population as to whether the two percent inflation target was attainable, Powell remarked, “There are a number of plausible paths to having a soft or ‘softish’ landing and our job is to handicap the odds to achieve that.”
“If the pilot tells me, ‘Don’t worry, we’re going to have a softish landing,’ I don’t know, I start to wonder what he’s talking about,” Timiraos quipped over audience laughter.
Powell continued the flight analogy: “Sometimes the landing is just perfect. And sometimes it’s just a little bumpy. So, it’s still a good landing — you don’t even notice it, right?”
The humanitarian aid response in Ukraine is multi-front, says International Rescue Committee CEO
Shifting to a more solemn topic, the Russian invasion of Ukraine has left millions of Ukrainians in urgent need of help. Darren Everson (Deputy Chief News Editor, WSJ, shown below at left) was joined onstage by David Miliband, President and CEO of the International Rescue Committee, to discuss humanitarian aid efforts on the ground.
More than 4.5 million people — mostly women and children — have left to seek safety in neighboring Moldova, Poland, and other European states amid the growing crisis. Over seven million people are displaced inside the country as the conflict continues.
“It’s important to understand there are three parts to the crisis. There are people in besieged cities — with Mariupol being the most terrible example. Then, you have about 6-to-8 million who fled from the south and the east — who are called ‘internally displaced people’ — most of whom are women and kids living with relatives and friends. The third front of the humanitarian effort is for refugees — the people who have crossed the border,” Miliband explained.
Recounting his last visit to Ukraine, Miliband noted the geographic dichotomy that resulted from the invasion launched on February 24, 2022.
“I saw a lot of terrible trauma, separation and fear when I was there. I also saw — and this is what’s disconcerting and in some ways bifocal — in large parts of the country, there’s an economy functioning, with buses and shops running,” said Miliband.
The International Rescue Committee has responded to some of the world’s worst humanitarian crises and works in more than 40 countries to help people survive, recover, and rebuild their lives.
“We’re prioritizing cash support for people. Secondly, we’re offering support for the healthcare system — an area we have specialism in. Thirdly, an important focus for us is vulnerable groups…because there are people trying to exploit the crisis with human trafficking and other misdeeds,” Miliband explained.
During the audience Q&A portion of the interview, we made mention of Cutover’s Ukrainian hiring initiative — asking about other ways the collective tech community can help.
“When donating, choose an organization that you know and trust. Make sure they’re transparent about what they’re doing, that they’re clear about where the money goes to show an impact,” Miliband responded.
To learn more about the International Rescue Committee, visit their website and take a look at their latest blog to read what you can do to help.
Learn more about Cutover’s Ukrainian support program here.