IMF Chief Christine Lagarde at Stanford's Freeman Spogli Institute for International Studies

Stanford University good afternoon everybody and welcome to the Freeman spogli Institute my name is Mariano Florentine Okoye I'm the director of the Institute and it's nice to see such a very enthusiastic and large crowd our mission is emphasized to engage Stanford an understanding and addressing in urgent international challenges around the world today as part of that mission we welcome to Stanford the International Monetary Fund's Managing Director Christine Lagarde and we credit ourselves for sparing her from yet another blizzard in Washington we're also delighted to be partnering with the Stanford Institute for Economic Policy Research and I'm delighted that see pers director John Chauvin who's here is joining us and hosting Christine Lagarde today we're working the deepen our relationship here on campus and to address crucial issues like economic development in sub-saharan Africa today we come together to continue Stanford's history of examining the evolving concerns of the 21st century as we hear from the leader who is at the forefront of global economic policy Christine Lagarde is now the 11th managing director of the IMF the first woman to head the hundred and eighty-eight country financial organization no doubt the meetings are little more unruly than typical faculty meetings but probably not by much since she took over the IMF in 2011 she has been immersed in a series of challenges that have faced the world a sluggish global economy the debt crises in Europe and Greece she's also focused on making the IMF more culturally diverse and has placed a premium on increasing women's participation in the labor force she has been crucial in rounding up European support for Greece's economic bailout and of course what confirms any judgment about Managing Director Lagarde is good sense is that she is a lawyer in fact prior to her work in government Christine Lagarde was the first female chairman of the world's second largest law firm Baker & McKenzie ascending to this role in 1999 1999 was also when a Stanford graduate student myself was right a doctoral dissertation with a chapter about the IMF I confess I've been wanting to meet someone in director Lagarde's position since I wrote that chapter 14 years ago and did my best to get to a position where we could make this happen so thank you for being here I know from that experience and time in government since then that it's not uncommon for observers to describe jobs like managing director Lagarde's as nearly impossible but if anything the position entails at least three jobs each with its own degrees of near impossibility financial decision maker global diplomat and CEO of a vast public organization full of acronyms at the intersection of all these three jobs is a lot of stress no doubt but also an opportunity to help the world manage transnational problems affecting vast segments of the global population as an observer of Managing Director Lagarde and the organization she leads I will add that she's carried out her role with aplomb intelligence and what some might describe as a loan today we'll hear her insights on innovation and global interconnections these are two areas that play a pivotal role right here in Silicon Valley and at Stanford and that have huge implications for the global economy after Managing Director Lagarde speaks my colleague John Shelburne will moderate the question and answer session please join me in welcoming managing director well thank you very much do you know if I may call you that way and I think you're going to have to kidnap us if you want to really spare us the blizzard in Washington because it's announced for tomorrow and we're only scheduled to stay with you for today so good luck with that but it's a great honor to be addressing you group this afternoon here in Stanford so to all of you good afternoon I hope you don't miss too much of a lunch but we'll try to give you some food for thought and I'm sure your questions will will certainly allow this achievement thank you very much to both of you to you John to you to know for organizing this event and for having our team participate in this and and and be with you on this occasion what I thought I would do and I hope it it it's okay I thought I would give you a little bit of our view on the world economic scene I would also try to give you a bit of feedback on the g20 that just took place in Sydney which is where I was yesterday I don't know what's going on here but I suppose it's something that is okay and then I will address the point that you made the relationship between innovation interconnectedness how it impacts on the economies and what solutions there are to what are clearly big challenges so let me say first of all tell you a little bit of what we think about the current economic situation the world economic outlook as we call it and as we publish it on a regular basis and update it regularly as as lately as January while unemployment is still too high while public and private debts are still too high while growth is still too low on a global basis you might not feel it here in the valley but that's you know it's perceived on a global basis we certainly see some economic momentum in the works our forecasts for the global economy in 2014 is 3.75 coming from 3% in 2013 and the forecast for 2015 is 4% so there is an uptick in this global growth most of which is attributable to the advanced economies and it is certainly the case here in the United States it is the case as well in Japan for reasons that some of you might know of and it is finally the case in the eurozone as well and I'm using those countries in that descending order because those are the numbers that they are showing ironically the emerging markets that really kept the global economy going together with the developing countries because let's not forget that in the last five years they produced about 75% of global growth ironically those emerging markets are weakening with the economic cycles turning and growth slowing for some of them the rising tide came with choppy waves strong growth opened up some vulnerabilities identified some bottlenecks that came into focus as growth began to slow now there's a bit of a chicken and the egg situation here because at the same time because the US domestic economy was faring a lot better the Fed started the process of dialing back this unconventional monetary policy that it had started back three years ago and this mix of conditions the tapering on the one hand and those vulnerabilities and bottlenecks arising out of this slower growth produced the conditions for some capital to flow out of a number of emerging markets thereby generating market volatility and currency variations that's the situation as we see it at the moment and in these circumstances what we are the IMF have recommended is monetary policies should remain accommodative in many advanced economies with gradual tapering occurring as the economies fare better that countries should continue to bring their houses in order by taking appropriate policy actions adopting credible policy frameworks and implementing structural reforms and that structural reform point applies very much across the board and that communication among policymakers should improve those are pretty much the key recommendations the three key recommendations that we're making and having just returned from Sydney arrived yesterday morning from that g20 meeting I'm rather reassured that policymakers from those g20 countries understand the issues and understand what is needed now I am assuming that all of you know what the g20 is but for those who might have forgotten the g20 is this grouping of the 20 largest economies of the world that represents roughly 85 percent of of the global economy so they're far from being the entire global world so to speak but they represent a very very sizeable chunk of the global economy now what have they what have they been doing well they have been instrumental in trying to resolve the financial crisis because they were elevated to leaders level from I am not moving so it's not me so what they've done it they've tried to fight the financial crisis being you know moved to leaders level in I think November 2008 is when they first had a leaders summit of the g20 and it has remained ever since a key forum at which to address economic and financial issues for example the g20 members and I'm borrowing here a little bit from the Australian agenda because Australia nearby place is the chair of the g20 this year they've agreed to complete core financial sector reforms in response to the crisis of 2008 and they've agreed to complete that before the end of 2014 so the Brisbane summit that you will hear about which will take place in November should actually seal completion of the financial reform cycle that has been decided back at the London summit in 2009 hopefully making the financial sector safer and and less likely to cause crisis the g20 governments and central banks have also agreed and that's important in the current context they have agreed to clearly and consistently communicate their policy actions and to continue cooperating in monitoring the spillover effects spillover effects are the consequences of domestic monetary policy decisions taken in a particular place that have ripple effects in other places of the world the discussions under Australian presidency also rightly focused on countries specific as well as collective effort to restore medium-term economic growth that if they were fully implemented and that's a big if could raise the level of GDP by an extra two percent over the next five years which would clearly create significant additional jobs that's a new mission that was assigned to the 20 by the Australian presidency if you look at the other ones the financial sector reform better communication amongst policymakers and also the tax reform that is underway at the moment on a global basis to allow the automatic exchange of information for instance to make sure that tax havens are coming through not as tax havens but as allowing a level of transparency that allows scrutiny scrutiny those were existing reforms this one which has the purpose at the domestic level as well as on a collective basis to raise the level of GDP is a new project of the Australian presidency and it was endorsed strongly by all members so I come back from Sydney having the impression that policy makers really want to be on the right track now you'll say the right track to where and the right track to what growth is it going to be the right track to solid sustainable and balanced growth or is it going to be the right track to growth that is fragile and even erratic well of course everybody would like the former over the latter and I will add later on in my remarks an additional attribute of that growth which is inclusive but I'll explain that in a minute so to answer that question I think we need to look at the patterns of economic activity in the years ahead and especially the role of technology and innovation in driving forward now typically economists will tend to look at what has happened and they will extrapolate in their models they will try to work from that basis to anticipate what will happen well I'd like to quote at this moment he's like Asimov with a master of science fiction literature who said and I think it applies very well to those who do economics here no sensible decision can be made any longer without taking into account not only the world as it is but the world as it will be now that's a tough call so what I would like to do in that context is address three questions one is what does new technology mean for the economy especially for jobs second how does it relate to one of the scourges of our age rising inequality and third what about some solutions that would encompass education through what I call the new multilateralism okay stay with me question one how does what does technology mean for the economy what are the impacts let's just focus on inter-linkages in the first place between technology and the economy now you are ideally situated to assume that innovation is pushing ahead at warp speed you know this you live it you drive it well you have to drive innovation because you don't drive cars anymore that's because you bike we certainly living through one of the most exciting period in human history at the moment that's how it feels I can feel the air hum with virtual activity reality transform under our very eyes pace of change is so fast that even technology of five years ago little in 10 years ago seems like prehistorical those of you who are students probably do not even remember a time when phones were not smart when cameras actually contained filming when Kodak was a giant when texts meant schoolbooks and when wireless referred to an old-fashioned radio well this advance is centered on the rise of global digital network the hyper connected world combined with the rise of genuine machine intelligence and if the previous revolutions that took place essentially back in Europe in those days we're about using machines for brawn this is about using machines for brain and since technology is powering a giant leap in global interconnectivity these are connected brains just look at some of the trends today's smartphones are much more powerful than yesterday's supercomputers we see cars not here cars driving themselves printers making complicated three-dimensional parts and robots doing the most complex tasks I referred to science fiction but it's rapidly becoming science fact not fiction and indeed we may just even get started when it comes to the power and reach of machine intelligence so we are facing a massive transformation of our economies not just in the advanced economies because I could have mentioned a few examples from what's happening in the developing world as well through the use of mobile telephones for instance in order to better harvest in order to better plan massive transformation at very very fast speed so what does this all mean for our life livelihood for our common economic future it is easy to control up a bright future of dramatically higher living standards technology will contribute to growth we will all benefit routine tasks will be out sourced to uncomplaining machines but you know what back in the 30s an economist by the name of John Maynard Keynes actually was thinking about a future of leisure and abundance centered on a 15 hours week but it's also feasible to imagine a future that is much more grim more in line with the dystopian picture favored by so many science fiction writers certainly we can see some worrying trends of that for a start the effects of new machine technology are not showing up in productivity statistics at least not yet and productivity is by far the most important driver of long-term economic growth now some say productivity from this kind of advanced technology is virtually impossible to track and measure some others say don't worry it's coming we will see it in the numbers we certainly need to keep an eye on this and we are the IMF are keeping our eye on that and we hope very much that at Princeton in this particular Institute you will also be looking at that very carefully to understand what productivity is coming out what productivity gains ought to be hard from investing in innovation and producing breakthrough techno but one of the biggest worries however is how technological innovations are going to affect jobs put simply will machines leave workers behind or not you know despite his optimistic vision Keynes actually worried about the transitional problem of what he called technological unemployment what happens when we economy economize on labour faster then we can find new jobs for labourers it's always a risk during rapid changes we saw that work with agricultural workers we saw that work with industrial workers we are now seeing it with seasoned workers who can't find themselves in this unfamiliar ocean in terms of job creation this means that we might need to sprint faster in the years ahead and maybe a lot faster if only because of the legacy of the crisis the crisis has caused roughly 96 million jobs to be eliminated just the crisis I'm quoting ILO numbers here as it is at the moment they are according to ILO numbers 202 million people unemployed and satisfying the ILO definitions of unemployed somebody who is actively looking for a job 202 million if it was a country ranking if all the unemployed people currently were to set up a country it would be the fifth largest non economy of the world of which 75 are young people now we cannot allow a lost generation of that magnitude around the world so clearly Jobs has to be a preeminent priority in the years ahead and the major test of the new technological era is simple can it actually provide decent livelihood for all people this feeds into a broader concern technological advance generally creates a small cohort of big winners leaving many others behind and that brings me to my second topic my second question the relationship with rising inequality do I need to say it here in this institution yes because numbers are quite staggering actually income inequality is on the rise across the world in all economies according to Oxfam almost half the world's wealth is owned by 1% of the population and stunningly the bottom half of the world's population owns the same amount as the richest 85 persons in the world that's staggering join me to repeat it okay the bottom half of the world's population to be talking three billion people here owns the same as the richest 85 persons in the world now here in the US and you know the IMF is not a radical activist okay but I'll try to explain to you why it's important to actually worry about these things here in the US the share of income taken home by the top 1% more than doubled since the 80s returning to where it was on the eve of the Great Depression since 2009 the richest 1% captured 95 percent of all income gains with the bottom 90% wildin bottom 90% got poorer now while this is happening the International Labor Organization also tells us that Labor's share of income has fallen over the past two decades in 26 out of 30 advanced economies that they measure and all of that despite the fact that labor productivity has actually risen so what is causing such convulsion in the distribution on on of of in common there is probably not a single factor although it seems quite clear that technology is one of the major factors it can create huge rewards for the extraordinary visionaries at the top and huge anxieties for the ordinary workers at the bottom at the bottom oversimplification probably but certainly those and that will take me to my third topic certainly those with the lowest skills are having the toughest time in today's economy and that's where John I agree with you in the u.s. the unemployment rate for people without a high school diploma is three times greater than for those with the bachelor degrees or higher indeed over the past two decades only those with college degrees have seen rising real wages others are simply giving up or dropping out of the labor forces altogether and that's probably what explains one of the reasons that explains the participation rate at the lowest in a generation at the moment now I know that this concern resonates in this university which was founded to use the words of Jane Stanford with a spirit of equality and I would like to quote at this point because I think it applies quite well one of the goals of this university as it was set up by them was and I quote to resist the tendency to the stratification of society by keeping open an avenue whereby the deserving and exceptional may rise through their own efforts from the lowest to the highest stations in life and this noble ethos has always served Stanford well and it will continue to do so and that spirit will certainly be needed now why why because if not managed carefully rising inequality an economic exclusion can have pernicious effects it can undermine economic social and perhaps even political stability it can tear the fabrics of society apart we now have firm evidence based partly on IMF research that a severely skewed income distribution harms the pace and sustainability of growth over the long term so that's why we need to worry about it independently from all the basic fundamental human reasons why one one would want to focus on that because it's not good for solid sustainable growth we also know from our work at the IMF that careful design of tax and spending policies can help reduce inequality I know there is a lot of controversies about whether redistribution is actually the appropriate tool or one of the appropriate tools to actually combat this issue but improving access to health and education putting in place effective and targeted social programs for instance and maybe making taxation a bit more progressive are smart devices to actually deal with this issue those policies are not easy to implement they're not easy to decide they're not easy to communicate because they throw up winners and losers the potential for conflict and discord requires courage and determination but not doing it and pursuing on that same path inadvertently it's probably a much bigger stake than trying to deal with it so in the years ahead it will no longer be enough to look simply at economic growth remember the right path to economic growth what kind of growth solid sustainable and balanced outlays and add inclusive as well and this story about the boats rising with the tide well we have to make sure that the small boats rise with the big boats instead of risking being capsized by them and that brings me to my third major point today taking a step back how can we make the economic this new economic age and haunts rather than diminish our humanity how can we make this amazing innovation advance the prospects of all people are we going to use the same model are we going to look at the past are we going to try to forecast trend on that basis or do we have to read ink the system in the model and think it through question it I'd like to quote Abraham Lincoln at this point he said the dogmas of the quiet past are inadequate to the stormy present the occasion is piled high with difficulty and we must rise with the occasion as our case is new so we must think anew and act anew what would this new thinking a new acting look like I'm trying to I have a son who is in another university who is studying architecture and he always tells me whenever you don't know mom think about a drawing so when I do a speech I always try to think of an arrow which takes me into a direction but for that new thinking and that new acting I'm thinking of a bridge that takes us to a platform and the bridge I have in mind is education not any education education that is attuned to the requirements of the advanced machine age putting it simply we need education systems that are keeping pace with changing technology and the ever-evolving world at work and I'm not sure I'm sure that there is a lot of thinking here in this university and in many other top-notch universities but on a global basis I don't think that there are enough policymakers enough governments who think strategically along those lines fundamentally we need to change what people learn how people learn when people learn and why they learn we need to get beyond the traditional model of students sitting in classrooms following instructions memorizing material computers can do that 21st century educational system must focus on areas where humans can outclass computers I'm taking a huge risk here in you sort of you know prescribing what education should be about this is your call not mine but I'm just mentoring a few ideas here and there and I really think that cognitive cognitive skills interpersonal skills fine motor skills sophisticated coding skills you know are areas that need focus development and educational support we can think of creative jobs caring jobs jobs that entail great craftsmanship imagination and given the rate and pace of change we need the ability to constantly adapt and change through lifelong learning we had a debate earlier on this morning as to whether somebody who had not graduated from high school was just a lost cause for life I contend that this life long learning that we must participate in that we have to incur it and activate can actually be not a hundred percent but is at least the beginning of a response to that challenge and what it means is that public and private sectors must work together more closely it means that institutions of education must think even hard about how to equip today's generation for tomorrow's world now top tier schools like Stanford have an especially important role to play here and as you know well Stanford's model of Education was innovative from the very first day co-educational although a little bit separate right this is the mans dining room non-denominational always practical focusing on the formation of liz annette um to use a bit of one of my old compatriot prescription to form and train cultured and useful citizens and non-atomic stanford was ahead of its time back then and i know that it will continue to be ahead of its time as we venture into the exciting periods ahead on that at that juncture I would like to actually sang Stanford for being part of that wonderful platform that you've allowed us to borrow with the IMF to actually convey through II teaching and we re learning some of our basic management courses in public finance management for instance this is a very recent initiative that that we are partnering with so yes machines have replaced muscles and yes computers can maybe replace our intelligence but there are things that in my view cannot be replaced the capacity to be truly human our creativity our innovation our passion so education must be that bridge between the present and the future the old and the new but that bridge must be not to nowhere as was the case in Arkansas so I think it was right but we must also build that platform that enduring platform and by that I mean a new way of thinking about the global economy what I call the new multilateralism where all stakeholders take joint responsibility not just for what they do at home not just for the domestic policies but also for the global common good breaking down the borders and barriers that are really relics of a age and this is really the only safe way to bend the New Age to our will to manage the complex channels of a hyper-connected world to get to grips with global problems that are no longer amenable to only national solutions simply because those problems are not national problems they couldn't care about borders they couldn't care about frontiers they couldn't care about the national regulatory environment the cross border and they need cross border solutions now the good news is that there are already a few institutions that are institution of militarism think about the IMF think about the World Bank think about the WTO and a few others think about the UN of course but I know the IMF a bit better so I'll talk about it for a second the fund is essentially what it's it's like an Economic Club of 188 members who all put in a little stake in the club that's called their quota and they commit to communicate data and information share statistics apply same principles and standards they commit to open their books that's the article for surveillance and they commit to help each other in case any of the members is in trouble and to those who think that hmm the IMF should be for the developing world they should be operating in Africa what are they doing in Europe well you have to know that the first program that was ever put in place at the IMF was for my own country in France shortly after the Second World War which was when the IMF was put in place first program was France and then you had Italy and a few others and it's gone around the world and it will continue to do so because crisis do not spare certain economies to only focus on others so of all the programs we have in place at the moment a majority of them are in Africa or in some of the developed countries less so but if you look at the amount that is committed the largest amount at the moment is committed to some of the European countries which have gone through a lot of trouble so the club is for all it's not a club of the rich that gives to the poor it's a club where each country has a stake and can draw in order to remedy the short-term financial struggle that it is under in consideration for new policies new remedies sorting out of the economy and of course in consideration for reimbursing the amount that has been borrowed so going forward this new multilateralism that I'm calling for has to build from the old one and adapt to a world that is more interconnected more networked but also more diffuse and more dispersed in terms of power and decision making the IMF was set up in 1944 in Bretton Woods kooky economists John Maynard Keynes treasurer treasurer white and 42 of their colleagues got together and set up the club 44 in those days a hundred and eighty eight two days today that says a lot about the dispersion about the size that it's gone to but it means that the institution of the IMF must be brought fully up to date and must be made fully representative of the changing dynamics so from 44 we moved to 188 but everything has to change by the same token so the number of chairs the allocation of chairs the size of quota the allocation amongst the players must adjust regularly to the changing environment and it is clear that it should not be skewed to the benefit of one group versus others we're working hard on that and we will continue to do so now more than this the new multilateralism is not just about 188 new members it also encompasses a dense web of networks and coalition's that are not deeply embedded in the fabrics of fabrics of global society think about the rise of cities the size of certain cities relative to the size of certain states think about the power and the size and the leverage of multinational corporations think about the strengths of civil society organizations and that's where you circle back to technology because if it it is it is on the basis of those networks that some of these new players are actually getting a voice and have to be heard and have to be listened to and have to be paid attention to and that's what I call multilateralism as well they have a global reach we need to respond to that so there will be many different types or factors on this new global stage and the challenge is for them to work cohesively together to just write the great next act of this global destiny of house and let me conclude on this word of destiny by agreeing with futurist Eric brinjals I always have trouble with his name so if he hears me he should forgive me Brynjolfsson and Andrew McAfee you may have read the book they wrote the second Machine Age if you haven't read it I highly recommend it I've got no authorship nor sharing of anything but it's really worth it and they say in that book technology is not destiny we shape our destiny so how do we shape this destiny I will borrow now from Star Trek how can we make the future look more like the harmonious United Federation of Planets and less like thus oldest Borg collective that will be a great great test of our time and I know that the Stanford community is intricately interestingly linked to those developments that will shape our future you will be doing it thank you so I'm John chauvelin I'm what Madame Lagarde referred to as a seasoned worker so my but we have about twenty minutes and I'm going to ask you to make to give her some questions but each of you one question a short question and no many speeches please but rather than use my prerogative as moderator and ask the first question you get the first question so let's go and I see a hand up and let's wait for the microphone I'd also encourage students don't be intimidated to ask your questions my first apologize my staff tells me that I have referred to Princeton and you know I was I was drawn to the blizzard yet again so Stanford that merger has not been announced yet thank you so much for your wonderful comments today my name is Natalie fields I'm the executive director of accountability Council and a Sears fellow here at FSI my question is about accountability and governance and how it relates to the new multilateralism given that there's a real inequality growing not only among individuals but among governance then more nation states you have the fewer votes from the impoverished country based on quota into the IMF this problem is exacerbated at the individual level as well given the fact that the IMF is one of the last remaining multilaterals that has no accountability structure short question now what's the question so the question is what is the proposal to bring the IMF in line with the rest of the multilaterals in terms of individual accountability offices so that individuals harmed by IMF policies or procedures can demand justice you know I I would like to dissent on in relation to accountability and and I know that together with other UN institutions by the way we have a special legal framework that operates in to individual accountability we're not single in that respect but the IMF is accountable and probably more so than many other institutions simply because we are accountable to a board of twenty-four representatives of 188 member states you know I was I was in in Kenya four weeks ago and Kenya is going through a reorganization putting in place a degree of devolution that will create 37 if I recall different regions and I went to the Nairobi Parliament and I was asked by members of parliament you know how can we access funding from the IMF I thought well wait a minute funding from the IMF this is a government you know governments can access funding because they are the members of the club and we don't have you know subsets of the various countries likely to apply so I explained that I said you know we we the board we the staff are accountable to 188 members but not to each and every region or each and every state if you take the United States for instance this is not in the Articles of the IMF and the articles are very very solid rules of law because we have to operate by the rule of law in order to protect the small states from the bigger states so the next question I got was from that same person how do we change the Articles so that we can access funding but that's just to you know address your point about accountability decisions that we make are made by the board of the IMF and the board of the IMF represents the hundred and eighty-eight member states and you know staff proposes are intermediate between staff and the board but the decisions are made by the board so it's the community international communities that decide to go and help Island that decides to put in place a special program for Tunisia that decides to do immediate and from technical assistance in such an search other country that's how it works that's the accountability that we have a question here the guy with the red sweater please you have a mic ma'am my name is Paula sir I'm a student at the Graduate School of Business across the street you might have some French Connection yes I I come I come to this point right now so most g20 policy makers are elected so as you said in France for instance for French president implement necessary measures or often means this is very unpopular and it can't explain why many democracies over the last 40 years public deficits have steadily increased so my question is simple do you think that democracy is one of the roots of the current economic issues in the world and do you think that in these democracies you need serious crises in order to change you asking me what is the what is the correlation between democracy and fiscal deficit I mean to really cut it really shortly and probably yeah no okay I'm with you I'm with you yeah yeah yeah I I don't think that there is a correlation actually because if you look at there are countries including with very stable governments and even governments that were reelected in spite of those policies that have driven reform programs that have driven sound fiscal policies without having anything to do other than the usual annual article for review with the IMF you know if you look at some of the Nordic countries of Europe if you look at Germany lately those reforms the heart reforms in Germany for instance have been conducted without the IMF having anything to do with it it's there's one I would I would agree with you that it requires courage whether it's with or without the IMF because to conduct fiscal consolidation policies to implement structural reforms requires determination and courage and sometimes enough of a sense of risk that people are actually prepared to lose once they've made the decisions and implemented the hard measures that's true here the front row they look over and get a student next hi my name is Roman I'm just wondering do you think the my name is Roman and I'm a student here in public policy okay my policy okay yeah do you think the failure of the US Congress to approve the quota reforms merits a reduction in the authority or power of the United States in the IMF particularly by maybe eliminating the veto power that the u.s. essentially has short on that you know my short answer is no but my longer answer is let us implement what has been agreed so you know if what has been agreed what has been actually championed by the United States is implemented there will be a better reallocation amongst the membership emerging countries will be better represented though the whole quota of the IMF will be increased and will make it more crisis resistant and yet under that change the United States still has more than 15% and therefore still has its veto right so I'm just saying you know let's go by the rules the IMF is a rule-based institution should be so to protect the small ones from the bigger ones there are rules let's play by the rules over here where the shirt sleeves rolled up there you go thank you Madame Lagarde my name is mariano Otero I'm a business school student from Argentina in countries such as mine the IMF lost a little bit of credibility through being linked to some policies that were not very good for the economy particularly in the 90s and early 2000s so my question to you is what do you think is the role of the IMF in terms of engaging with the people in this countries where they are promoting policies to make sure that they got their support and they that they gain legitimacy with these people who are so far away so far removed from the decisions that the IMF makes yes that's a very good point one is you have to know that we have two Argentinians on the board of the IMF one who is the alternate of Brazil and the other one who is representing a group of the Latin American countries so the Argentinian voices are well heard at the board number two we are we engaging and you know I've made that point very clear ever since the beginning we are we engaging on CPI calculations we are engaging on technical assistance in the financial markets we have conducted a financial sector assessment a few months ago so it's not as if the relationship is broken with Argentina far from it but there is a lot more work to do and and I hope we can continue doing it and we can pursue in that direction to better engage I think we need to explain what we do by way of prevention by we have technical assistance by way of services support to the economy we're not coming you know with the nasty finger of the teachers as you haven't done the job right saying you know there are many countries around the table and they've all gone by you know difficult situations we we have a repository of all that we have expertise and we can lend that you know to to improve the situation we were also determined to he'll help Argentina in front of the Supreme Court of the United States in in a very difficult case having to do with as you know the left out the opt-out of the collective action clauses in the debt restructuring project so we want that relationship to to you know to flourish but you know it's it's it's a given type process and you know we have to start with the right numbers yes right here in the fourth row my name is Alex Mandel and I'm a doctor and specialize in sleep and I'm not making fun of your accent I'm also French and my question is I'm very interested in you being the next president of France are you are you I thought I thought you cared for my sleep let the record show there was no comment yes over here hi Jason Bennett with KL IV news radio I was wondering if you could give us your analysis of the economic situation in the Ukraine and if you think it might pose a danger to its European neighbors economies okay given that it's a question asked by a journalist and that there might be a few others in the room interested in the same topic I'm going to be very success your question because I don't you know I'm not in the I don't have the habit of of trying to evade the economic situation of the country is a difficult one it's one that has evolved in the last few weeks a lot we have constantly and consistently had wrap of the IMF on the ground he will be very active in assessing the situation in the next few days and we will probably shortly send some technical assistance support to the country because this is our duty to a member if that member asks for that that is clearly what is likely to happen now to go further to support better this economy we need to engage in a dialogue in which the Ukrainian authorities once designated will seek out the help and support of the IMF that's the you know in sequences that's how it it can work but we are ready to engage we have worked consistently over the years not always successfully but we have worked consistently with the various Ukrainian authorities and Ukraine is a full-fledged member of the institution right here in the center yep you sir hi I'm a student here in computational and mathematical engineering you mentioned that with the g20 in Sydney we're coming to the end of a cycle of financial reforms starting back in London but there seems to be a lot of skepticism around that the Financial Times on Friday was saying that dodd-frank in the US will not prevent another crisis so do you think we're coming to the end of a cycle or the cycle we wish we had I think it's a it's a it's a great question I think we are you know I'm a firm believer in setting objective checking whether we've achieved something completed and moving on and the objectives that were set out in 2009 in London included you know financial reform by reinforcing the banks and particularly the system systemically important institutions that was going to deal with the derivative markets that was going to deal with the too-big-to-fail issues that we faced at the time and that was going to also address the shadow banking so I think on those four fronts a lot has been done whether it's through the Basel Committee whether it's with the support of the the FSB or whether it's through our support as well the various big domestic markets have moved whether its dodd-frank whether its Vickers in the UK whether it's leakin and in in Europe a lot of changes have taken place and that data gender that was set be completed in 2014 is good but it's not the end of the road because as we know financial institutions financial markets keep evolving as well they move faster they invent new circuits they discover new channels and they one of the objectives is to identify the rewards and to protect against risks equally the objective and the purpose of policymakers around the world is to protect taxpayers to use a sort of a generic word from the risks that these various institutions or non disclosed institutions or alternative systems can actually present today to their base so ongoing mission but that part I hope is completed by the end of 2014 one more question over here maybe on the far edge thank you for being here my name is Mahesh and I'm an undergraduate studying economics you spoke extensively about the impact of technology on the global economy I would love to hear your thoughts on what you think some of the emerging crypto currencies such as Bitcoin if any the role that they would have to play in this hyper-connected global modern economy and especially keeping in mind the fact that they defy conventional monetary policy altogether you know I sort of feared that question and I'll tell you why because it's a it it's it's a big challenge at the moment and I think many people have difficulties putting their arms around it and it's it's a really sort of glamorous sexy attractive new system there's that virtuality about it great but you know a monetary system is invested with public good it is public good a financial stable monetary system is is public good and to be protected as public good in our view and you know we might be all wrong but in in our view it has to be supervised and sufficiently regulated so that it is accountable to those that are the owners the individual owners of public good and at this point in time I think bitcoins is pretty much outside that parameter of both supervision and regulation and to that extent it lends itself to funny transactions which have led to not all but at least you know some members to currently be behind bars for having done some money laundering through the system and I think that the the clearing platform that was supposed to be open a couple of days ago it's not opened and and the page has been deleted so it's all quite shaky and wobbly at the moment I'm not ruling it out I'm not saying you know this is this is bad but I really think that because monetary system where the actual virtual or otherwise are the guardians of a public good that is the monetary system there has to be a degree of supervision accountability and therefore regulation applying to them I think we need to call this to a close I want to thank you and you honored us with by being here I noticed the organizers appropriately had us distinguished but thank you very much Stanford University

Channel: Stanford

Views: 24,660

Rating: 4.2481203 out of 5

Keywords: Christine Lagarde (Lawyer), Stanford University (College/University), Lawyer (Occupation), International Monetary Fund (Organization), Student, Graduation, School, global, economy, optimism

Id: 1Lbgyx055Xc

Length: 63min 19sec (3799 seconds)

Published: Fri Feb 28 2014