tv The David Rubenstein Show Peer to Peer Conversations Bloomberg November 28, 2021 10:00am-10:30am EST
♪ david: this is my kitchen table, and also my filing system. over much of the past three decades i have been an investor. the highest calling of mankind, i have often thought of as private equity. [laughter] david: then i started interviewing. >> by watching your interviews i know how to do -- david: by doing my interviews i have learned how leaders make it to the top. >> i did no due diligence.
david: and how they stay there. you do not feel inadequate now that you are only the second wealthiest, man in the world right? when angela merkel was looking for someone new to head the european central bank, she found christine lagarde. as head of the bank, chris taylor guard has had immense impact -- christine lagarde has had a tremendous impact. i had a conversation with her about how europe is recovering from the pandemic and the global slowdown in the economy. as we look at the post-covid environment, what would you say is the situation in europe? is europe recovering rapidly? or not as rapidly as you thought from the covid pandemic? christine: europe is recovering more rapidly than we had anticipated. we have as a result of that significantly upgraded our projections. our projections for this year is plus 5%. it is a significant upgrade.
plus 4.6% next year! pre-covid type of growth. this year is going faster than we thought to the point where we will have recovered to pre-covid-19 levels before the end of the year 2021. we had expected it would be early '22 at best. david: are you worried about the delta variant impacting what you have said or the so-called mu variant that is on the horizon? christine: it is very closely related. we used to say that the best policy was an accelerated vaccination rollout. we are still in a situation where vaccination matters enormously. europe has done well. we have more than 70% of the
adult population completely vaccinated in the euro-area. that has been a significant boost for growth, and it has helped governments not go back to the stringent containment measures that we had seen previously. david: during covid were you running the european central bank from one of your homes or from a home somewhere or were you going into the office? christine: i spent quite a few weeks stuck in my frankfurt apartment during the first wave of covid. actually the very sizable package we put together for monetary policy purposes was engineered around my kitchen table. when traveling was more flexible and we could go out i went to the office a bit, but
the by default solution is remote working still today, and and probably will be until the end of january. then we will see. david: you should take that kitchen table and move it to your office! obviously it was very productive. [laughter] david: post-covid do you expect europeans will go back to work five days a week? or will people work four days a week? christine: we should all acknowledge that there are people who do not have the luxury of choice that have to go to work because their physical presence is required. you think about hospital staff, you think about construction workers, some people working in shops. they do not have the choice. they have to be on site. offices, i think we are heading towards a hybrid movement where part of the week will be spent
in the office so that people can meet, see each other, can hold regular meetings, face-to-face contact. but the rest of the week will be working from home. whether it is 50%, 40%, 60% that has to be dealt with at company levels. most of the legal constraints have been lifted at this point in time. people have learned during the pandemic. those learnings have been bottled in and will be used for future ways of working. david: around the kitchen table you were talking about you put together a package that was designed to make europe solve its economic problems as a dealt with covid. would you say the package worked as well as you thought or better than you thought?
christine: when we put it together we were hopeful it would work. the truth of the pudding is in the eating. it was a matter of days before we really appreciateed that the message was received. fiscal properties began working in tandem. the next generation eu, all europeans decided to go and borrow together jointly. this entire package responded well and fast to the unbelievable crisis situation we faced. all in all, i think it worked well, and certainly we responded faster and better than we had in 2008 and 2011. david: in the united states, we
have had some challenges during covid that people who are minorities, often women, they could not get access to broadband. they had childcare problems. it is thought that they fell further and further behind. did you find the same phenomenon in europe? christine: this has been the case in europe as well. inequalities in terms of opportunities have been aggravated and exacerbated by covid-19 for the reasons that you mentioned. those people worst hit by the pandemic were women, young people, people on temp contracts . they were more remote from work than the others. if you look at those who lost their jobs, it is predominantly women and young people in particular in disproportionate
hard. the second difficult area that will need to be tackled is the issue of inequality. covid-19 has aggravated inequality. the third one is climate change. we will have to transition faster than we think, which will am five transition costs, which -- will imply transition costs, which will imply a change in the overall structure of our economies. those three -- implementation, inequality, and climate change. david: what has been the impact on the european economy on brexit? has it been better than people thought? what would you say? christine: the answer depends on
which side of the channel you are on. we have lost the benefit of cooperation with the bank of england. we try to maintain a good relationship because we have lots of links between us. in terms of trade, it has been a loss for the u.k. more so than for europe. we will see how it goes. that is all i can say. europe is coming out of the crisis, not with flying colors yet, but strongly. the u.k. is having a more difficult time at the moment. david: part of the way you help to deal with the situation during covid was that you had the package you referred to, a very large package, financial stability package, but that package involves countries borrowing money against their own abilities to pay it back. you are in effect not a guarantor but you are making certain that they won't default, . are you worried about too much debt among european countries? or is that not a problem right
now? christine: all countries around the world had to increase their debt relative to gdp. when you have this high debt increase and a big fold in gdp, you end up with those ratios that look higher and are higher, then what they experienced before but there was no option. had it not happen worse than what we have seen. now it is a question of directing the financing to the right investment, making sure the economies are going to bounce back in the right shape with the right structural reforms that will improve the productivity of those economies as we position them to be more digital and to be greener. i believe the next generation eu, which was voted a year ago
now is going to help with making countries better converge and reduce the gap that existed between some of the southern european countries and northern european countries. that is certainly the intention. david: recently you said you would like a target of getting 2% inflation. why has it been so difficult to get to that level for the last five or six years in europe and how confident are you that you can get to 2%? christine: there are reasons for that, david, but we decided to -- what we decided to do was have a target which was simple, easy to understand, symmetric, and that also was focused on the medium terms. instead of having that closed
complicated below 2%, which was fuzzy and included somehow an implied bias, we decided we would go for something straightforward, simple, 2%. 2% is symmetric. we are on this medium-term, which matters most. we are particularly concerned about inflation expectations. that decision plus the forward guidance that we decided a few weeks after the strategy review of the european central bank was released was convincing enough so that markets and analysts and observers have appreciated but -- that we are serious. we want to percent. the lower bound which leads us
to having a more forceful response in some instances, but we mean 2% for sure. david: for hundreds of years governments and central banks have issued currency and currency is used for things. to buy things, sell things and price assets. now some people have come along and invented cryptocurrencies. central banks are trying to adjust to what that means for them. do you think cryptocurrencies are a plus for the global economy or is it too early to tell? christine: cryptos are not currencies full stop. they claim they are currency, but they are not. i think we have to distinguish between cryptos, which are highly speculative, suspicious
occasionally and high intensity in terms of energy consumption, assets but they are not a currency. on the other hand, you have the stable coins that are beginning to proliferate, which some big techs are trying to promote and push along the way, which are a different animal and need to be regulated. there has to be oversight that corresponds to the business they are doing irrespective of how they named themselves. you have the central banks who are prompted by demand of customers to produce something that will make the central bank and central bank currencies fit for the century we are in, which is why we are looking at central bank digital currencies so that instead of having banknotes and cash in our wallets, we can have
exactly the same thing but in a digital form. i was keen to push the cbdc on our agenda. i believe that we have to stand ready for that. david: if the ecb were to have a digital currency, would that be to the exclusion of paper currencies? or would it be side-by-side? christine: side-by-side. we want customers to have their preference. it should continue to be available and around. david: at this point in your life, do you feel discrimination against you in your life as a professional? christine: it is difficult to hold open discrimination against me, let's face it. i am aware of discrimination against many young women in all parts of the world. ♪
david: in recent years central banks have been worried about something called climate change. why should central bankers be worried about climate change? is that something in your purview? christine: to me it is a no-brainer consideration. climate change is part and parcel of our mandate. think about it -- drugs, famine, pandemic, flood, massive fires, all of that is going to have an impact on prices, inflation, hence on price stability. women comes to risk not only do
we talk about stranded assets, but we have to talk about transition costs that many companies are going to face in order to move from the business they conduct today to how they should conduct their business tomorrow, let alone the new products they will have to come up with. david: historically ceos have just worried about their shareholders. are those things you think ceos should be doing? should they be talking about climate change or gender discrimination or should they stick to worrying about stockholder returns? christine: they should worry about all of the matters you discussed. corporates are not bodies. they do not have a soul. but they are acting in people's lives and they are acting in the environment. more and more of them do, which is good. ♪
david: you served two terms at the head of the imf. you could have served another term if you wanted to do so. how do you compare the pleasure of running the imf with running the european central bank? is one more enjoyable than the other or basically they are both great jobs and you are happy you have had both of them? christine: i am extremely privileged to have had the role i had as the head of the imf. we saw each other quite often in those days and you know how much i put my whole energy into the job and enjoyed it tremendously! i am doing the same thing with the ecb. in times when you see geopolitical opposition, in times when you see some energy withdrawn behind borders, it is important to have this desire to unite and to bring consensus to
the table, and convince people what we are doing together united is going to be stronger than what we were doing individually in our little corners. i am enjoying what i do. it is hard, let's face it, but i am enjoying it. david: when you were the head of the imf you were the first woman to hold that position. you are also the first woman to head your law firm. at this point in your life do you feel discrimination against you in your professional life as a woman or do you think discrimination generally has receded against women in the workplace? christine: i do not think -- i think discrimination has not receded. i do not want to talk about my personal situation. when you travel the journey i have traveled, it is difficult to hold open discrimination against me, let's face it, but i
am aware of discrimination against many young women, women in all parts of the world. i am particularly thinking of the afghan women at the moment who clearly are suffering the worst possible nightmare and setback in their life. it is a constant struggle. it should be a constant fight of all of us to make sure everybody has a chance to accomplish their talents and develop their activity in the way they want. this is certainly not the case yet. when i sit at my governing council table and i look around, i see 23 men and one woman in addition to me. 2 to 23 is not a good ratio.
in the finance world, there is certainly disparity between men and women. when you look at the venture-capital world, it is the same. if you look at the ceos of large national banks, it is the same. if you look at parliament, you have a much lower representation of women then there are women in society. something is not working. david: central bankers are famous for not talking in language that the average person can understand generally. sometimes they do that on purpose. you talk in a language that everyone seems to understand. is that a conscious policy that you have to make what you are doing understandable to the average person? christine: yes, david. it is extremely important people understand what we are doing. a lot has to do with trust. if somebody talks to you in a completely obscure and jargon these language, -- jargonese
language, how are you going to trust that person? it is critically important to agree with the governing council members that we communicate in a clearer and simpler way. after each governing council monetary policy statement, we committed to keep sentences short, to have one idea per sentence, to make sure the words we use our understandable by you of course but by the normal person as well. we measure that and we try to stick to those principles and will be held accountable. david: do you think your ability to do that -- you and jay powell -- and jay powell is interested in that as well, you and jay powell are trained as lawyers. do you think there is a future
for the central bank to be headed by lawyers? [laughter] christine: i strongly believe in diversity, david. diversity has not all to do with gender, sexuality, it has to do with the culture you bring around you. to bring it all together around the table improves the quality of the decisions that we make. i have learned a lot from my colleagues. i hope they can be patient with us poor lawyers. david: 2 final questions -- one, i would like to know what is the pleasure of being the head of the central bank? you obviously have to work seven days a week. what is the pleasure you get out of heading the european central bank? christine: it is the same kind
of pleasure i take in leading other organizations, making sure that people around me are doing the best they can for the organization, delivering on their mission and we form a team heading in the same direction. that to me means an awful lot. david: my final question is this -- you in your youth were a synchronized swimmer where you have to work closely with teammates. is it the case that when you are doing the central banking role, you have to have the same skill set? you have the central bankers of each country working together. do you think your synchronized swimming skills help? christine: yes they do actually. what you learn in synchronized
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