China – A Different Central Bank Altogether


QUESTION: Mr. Armstrong; I believe you once said at your conference that you were surprised when you were asked to fly to Beijing to meet with the central bank because you were not an academic, but a trader. I think you said when you got there they were traders working in the bank, not academics. Did I recall that story correctly?

ANSWER: Yes. The central bank had sent staff to work on trading desks around the world in Tokyo, New York, and London. They then returned to run the bank. When the 1997 Asian Currency Crisis hit, I was very surprised that they asked me to come and not some academic. When I got there, I discovered that they were traders and we spoke the same language.

When I returned to the States, people I knew in the Fed and in Treasury called to ask me my opinion after these meetings with the Chinese government. I responded: It was great. They only hired people with experience!

I understand so many people think China does whatever I say. I think the real story is they may take what I say, but they see it through the eyes of a trader rather than an academic. Hence, they adopt it quickly but never blindly. They have a good nose for trends themselves.

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