At Jackson Hole, the Kansas City Fed's annual gathering for economists and central bankers, there's a lot of focus on the short-term path of monetary policy. But, of course, the Economic Symposium is supposed to be about long-term policy frameworks. And central bankers aren't just responsible for changing benchmark interest rates — they are also financial regulators. On this episode, we speak with Hyun Song Shin, economic advisor and head of research at the Bank for International Settlements, about where he sees risks lurking in the financial system now. We discuss the shift from bank lending to bond-based borrowing, and what it means for inflation now. We talk about how even safe assets like US Treasuries can become sources of stress, such as in March 2020, the gilt crisis of last year, and most recently, the collapse of Silicon Valley Bank. We also talk about how higher interest rates are supposed to bring down inflation, but might not be doing that much currently, as well as the limits of central banking.

Further listening: Big Take: Carry Trades, Explained