Sushil Wadhwani's picture
Affiliation: 
Wadhwani Asset Management
Credentials: 
Chief executive officer of Wadhwani Asset Management

Voting history

Deal or no deal: The Greece standoff

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Question 2: Do you agree that Greece would be better off defaulting right now rather than signing to the agreement under consideration?

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Answer:
Disagree
Confidence level:
Confident
Comment:
if defaulting right now had led to capital controls followed by an uncertain period during which Grexit might have occurred,then i believe that it was better to sign the agreement. Moreover, i think that signing an agreement now makes it possible to have fruitful discussions about debt relief in the coming months.

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Question 1:  

Do you agree that, on balance, the implementation of the agreement as outlined in media reports will have a non-trivial negative effect on Greek GDP?

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Answer:
Agree
Confidence level:
Confident

Monetary policy and the zero lower bound (ZLB)

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Question 2: Do you agree that the benefits of reforming the monetary system to allow materially negative policy interest rates outweigh the possible costs?

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Answer:
Agree
Confidence level:
Confident
Comment:
The easy changes to make now are to make the maximum denomination of a note to be no higher than £10.I would also set a maximum cap of the degree to which insurance companies were allowed to provide cover for the theft of cash. I do, though, think that the government should go further,as having an extra tool could be helpful.However, as we know so little about the feasibility of these alternative options, i suggest that Royal Commission to investigate this issue be set up in the very near future. Recessions are difficult to predict and policymakers need potential ammunition.

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Question 1: Do you agree that it is feasible for the UK authorities to change the monetary system so that materially negative policy interest rates could be safely implemented? (In answering, you may wish to explain your reasons and define your view of 'material')

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Answer:
Agree
Confidence level:
Confident
Comment:
Obviously, we have a "live" ,ongoing experiment in Switzerland. The central policy rate is -0.75% and has not caused any stampede into cash as yet despite Switzerland having retained large denomination notes. It would be relatively easy to abolish such notes,and the government could also easily consider capping the degree to which insurance companies are allowed to insure cash.In that situation, it might be possible to take rates down to -125bp.At that level,one suspects that behavioural effects on individuals would be rather larger than what we have seen so far(it is possible that there is a non-linear,behavioural response once individuals have to pay something meaningful to hold bank deposits).Relative to a policy rate of 50bp in the UK, being able to cut rates by 175 bp is material. Clearly, to go beyond this, more radical options would need to be contemplated(including some of those that you mention).However, I think that we would need a full-blown economic crisis to secure the political backing for such more far-reaching changes.

Transparency and the Effectiveness of Monetary Policy following the Warsh Review at the Bank of England

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Question 2: Do you agree that the Bank's proposal to release the policy decision, MPC minutes and (once a quarter) the Inflation Report all at the same time justifies a change in the structure of MPC meetings from two consecutive days to a process in which in the MPC meetings are spread out over seven days?
 
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Answer:
Agree
Confidence level:
Confident
Comment:
Once you decide that you want to release the information simultaneously, you have no choice but to elongate the period over which the meetings are held. However, the risk of leaks should not be underestimated. A pretty large number of people will know the likely decision for seven days,something which is pretty dangerous. Remember that the set of people who will know the probable decision will include the Prime MInister and Chancellor(and their special advisers).

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