Andrew Bailey, Governor of the Bank of England, at the recent G30 bankers’ meeting, May 14, 2025 He highlighted the critical need to transform global trade rules to tackle long-standing imbalances. We’ve heard from Ambassador Tai about the importance of the international trading system to respond effectively to address what she called these “persistent, unsustainable imbalances.” Bailey’s comments illustrate a new awareness in European monetary authorities. They understand that now, more than ever, the public demand reforms to ensure our trade governance frameworks keep pace with our rapidly changing and more state driven global economy.
Bailey pointed to longstanding need for a system that can detect chronic trade deficits. This new system will need to address unsustainable trade practices. He laid out a very clear argument stating that reforms need to be aimed at rectifying macroeconomic imbalances as well as weaknesses in enforcement at the micro level. This one-two punch is designed to foster a stronger overall framework – the trade rules – that is better equipped to tackle the complexities of 21st century trade.
In his speech, Bailey welcomed U.S. concerns about trade distortions, admitting that such concerns might have merit. There is no denying, it seems, that the U.S. administration would have liked to show that it’s had to use tariffs to truly drive this point home. I think we all on the panel share deep commitment to free trade, to multilateralism. So what we can say is, enough—okay, we get it.
The Role of Central Banks in Trade Dynamics
Over the past five years, Bailey noted that central bankers have had to confront an increasingly unpredictable supply side in the global economy. This unpredictability has all contributed to much greater scrutiny and criticism of central banks during periods of great volatility. He distinguished in his remarks that the Bank of England’s recent interventions were limited to targeted bond-buying. These measures were aimed primarily at market functioning and financial stability considerations, rather than an intention to provide a monetary stimulus.
That was enormously important and still is to say, ‘No, we’re not doing QE.’ This was a very limited financial stability intervention. And we sold them the moment we could,” Bailey said, tackling some misperceptions about the Bank’s actions.
Bailey stressed the independence of central banks to weather the storms that are always going to come. Most provocatively, he asserted that geoeconomic strains cannot undermine their sovereignty. “I don’t believe [geoeconomics] invalidates independence. It underlines why it was so important to have independent central banks,” he stated.
Addressing Persistent Economic Imbalances
Bailey’s remarks do an excellent job of elevating a common concern. Persistent economic imbalances have provoked an increasingly bitter dispute at the heart of global trade. Those imbalances aren’t just the product of state policy,” he noted, adding that basic economic factors drive these fundamental imbalances. He called for an honest examination of what drives these deep-seeded problems.
We can’t simply continue the status quo and expect a different result. We cannot have them relegated to the backburner where they will be neglected and forgotten. To address these longstanding and chronic challenges, he pushed mightily for the federal government to act wisely and in advance.
The Governor’s statement comes in light of the concerns expressed by Klaas Knot, a influential figure in the banking sphere. He expressed worries about the implementation and monitoring regimen of our existing trade agreements. Knot stated, “We’ve got problems in the trade agreements and monitoring of trade agreements.” In turn, he showed optimism for more productive multilateral cooperation to address these urgent issues.
The Future of Global Trade Governance
Bailey stressed that they are not looking to blow the World Trade Organization (WTO) to smithereens. Rather, they’re interested in working alongside it, keeping it competitive and top-of-the-line in our ever-evolving economy. He stressed again the importance of modernizing international trade systems to better respond to current demands and challenges.
Even as he acknowledged the difficulties in understanding what’s going on with trade balances, Knot reminded members that not all imbalances need to be fixed. He cautioned that too big of imbalances would be dangerous to economic prosperity. Not every trade balance should be in balance; in fact, no trade balance should be in balance — there’s zero economic justification for it. He acknowledged, sometimes those imbalances can get too big. This makes for a compelling and reasonable counterargument that is well worth considering.
Bailey and Knot equally argue that addressing trade imbalances requires a collective approach. That takes concerted effort from all types of players across the global economic landscape. Their insights suggest a pathway towards reforming trade governance frameworks that can better accommodate the realities of today’s economic environment.
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