Interest Rates and Monetary Policy

Abstract

Two centuries ago, a distinguished son of Scotland made his “Inquiry into the Nature and Cause of the Wealth of Nations”, there bringing together important business interests of actuaries and economists, and so providing justification for addressing you this evening. “The only trades”, wrote Adam Smith, “which it seems possible for a joint stock company to carry on successfully, without an exclusive privilege, are those of which all operations are capable of being reduced to … a routine. … Of this kind is, first, the banking trade; secondly, the trade of insurance.” As we all know, actuaries are a mainstay of insurance undertakings and economists are to be found in the employ of the banks; both, that is, are engaged with companies that are closely involved in movements in the level of interest rates, an involvement where, despite the views of Scotland's revered father of economists, few operations can be “reduced to a routine”!