Dear Rector Stoffel, dear vice-rectors, dear deans, dear professors and, last but not least, dear assembled students of l’Université de Neuchâtel.
First, I would like to thank Deans Bhsary, Défago, Fiechter and Petris for the kind words.
It gives me great pleasure to stand here, along with Jacques Bujard, John Doherty and Pierre Tercier, to accept the award of Doctor Honoris Causa from l’Université de Neuchâtel, a very prestigious institution of higher education. On behalf of all recipients, I would like to thank the nomination committee for the great honour. We stand here humbled and proud to receive this great distinction. Especially so as the Doctor Honoris Causa title is conferred on us on the occasion of the Dies Academicus, a day of celebration and reflection. Hence, it is a special pleasure to be able to thank you, and we do so wholeheartedly!
Two doctorates – building bridges
Receiving this honorary doctorate has caused me to reflect not only on my own career but on the importance of building bridges between the academic world and the world of public service. Let me explain.
This is the second time in my life that I have received a doctorate. The first recognises my academic contributions; the second, my professional career, in particular my contributions as a policymaker. Today, I will argue that the two doctorates – one in research, one in policy – build on each other. Together, they add up to more than the sum of their individual parts.
What do I mean?
Today’s distinction means that I have fulfilled a dream: the dream of using what I acquired through my first doctorate, not as an end in itself, but rather as a stepping stone to build further bridges, to contribute new pieces to the puzzle of knowledge and to public policy, and thereby, to give back to the broader community.
The role of policymakers is to design policies that improve the lives of all members of our community. In this, academic research, as the cornerstone to understanding the world, plays a leading role. But research cannot take place in a vacuum. It must meet the real world. In economics, this means accounting for the multitude of factors influencing economic activity, such as the design of institutions, people’s expectations, the evolution of risks, the behaviour of financial markets and the impact of new technologies and innovation.
To navigate this complexity, policymakers need to learn from academics, and academics need to learn from policymakers. Indeed, academic research and economic policy are two sides of the same coin. We cannot make sound policy without good research, and good research reaches its full potential when it can shed light on policymaking. In other words, we need to build bridges between these two worlds.
This brings me to today’s overarching theme: the university as part of the canton’s heritage. From the moment it was established, l’Université de Neuchâtel has been in the service of its residents and the global community of knowledge. Today’s universities cannot exist as ivory towers, isolated from the real world. Just like economic policy is closely intertwined with economic research, this university cannot truly contribute to its cantonal heritage if it does not reach outside its walls. Cooperation and building bridges with the broader community is part of the institution’s DNA, and I’m sure, part of the DNA of each of today’s recipients.
Let me develop this point using an area I know well: central banking.
Cooperation in central banking
Cooperation and building bridges are part of the DNA of central banks and international financial organisations like the Bank for International Settlements (better known by its acronym, BIS). The BIS is the bank for central banks and draws on its unique position at the intersection of research and policy to facilitate quality dialogue between central banks, while serving as an innovation hub for them.
Central banks are policymakers with a clear mandate. They are entrusted with conducting monetary policy, which they do by setting interest rates and, when needed, deploying additional instruments to fulfil their mandates of price stability. Their decisions have far-reaching implications for the economy. Academic research plays a lead role in enabling good economic policy. That is why policy institutions regularly invite academic experts to engage in joint conferences and discussions. And, I would add, academic researchers seek out policy institutions to strengthen their understanding of the workings of the economy and the financial system. Together, we achieve a more informed understanding of the economy, and ultimately better policies.
This bridge-building between academic research and economic policy is all the more crucial in today’s world, which is filled with increasingly multidimensional and interconnected challenges. Think, for example, of the risks associated with stubbornly high inflation, the emergence of new technologies, climate change or rising geopolitical tensions. Today, more than ever, cooperation is required not only within a particular field of expertise, but also across fields of expertise. Let me offer you an example: digital innovation.
Digital innovation as an example of interdisciplinary collaboration
Digital innovation allowed a new form of “money”, cryptocurrencies, to emerge a few years ago. Crypto had the ambition to change fundamentally the structure of the existing financial system by bypassing regulation and central banks, effectively seeking to replace what we call “fiat” money. That is money backed by a central bank, whose mandate to ensure price stability is enshrined in law. This was a potentially dangerous situation, because crypto could not deliver what it promised. It could not replace fiat money reliably, because it lacked one critical ingredient: trust. Only a central bank can provide a public good like money with the public interest in mind.
A hypothetical crypto universe risks creating a fragmented monetary system, dominated by a few large actors and yielding big profits for insiders in anonymous networks. These are inherent structural flaws of crypto, which make it unsuitable to play a constructive role in the monetary system.
Nevertheless, the new technologies that brought us the crypto experiment could also offer new opportunities worth exploring. This is exactly what central banks, together with researchers and policy experts across many fields – lawyers, scientists, financial experts, innovators and so on – have done. Thanks to its long-standing tradition of interdisciplinary collaboration, Switzerland has become one of the first countries to offer a solid legal and regulatory framework for cryptocurrencies and digital assets, and, under the leadership of the Swiss National Bank and the Swiss Centre of the BIS Innovation Hub, to test a live wholesale central bank digital currency. Such pioneering initiatives reflect close cross-agency and interdisciplinary collaboration. They also demonstrate the value of national and international public institutions working with private sector innovators to create a more efficient financial system.
To conclude, I am particularly proud – also in the name of my co-recipients Jacques Bujard, John Doherty and Pierre Tercier – to receive the title Doctor Honoris Causa from l’Université de Neuchâtel. Today we recognise four people in four very different areas, underlining the importance of each contribution: a cantonal conservator and archaeologist, a Professor Emeritus hydro-geologist, a Professor Emeritus in civil, commercial and contract law and an economist. To be part of this esteemed interdisciplinary group of recipients pleases me greatly.
My next dream?
To continue to add more pieces to the complex puzzle of the real world and thereby help to create a new legacy for future generations. This requires us all to work together, to collaborate and cooperate, to build bridges between disciplines and between universities and our policy institutions, and to do so beyond our cantonal or national borders.
Thank you very much.