Speaker 1: When Angela Merkel wanted somebody to lead the European Central Bank,
Speaker 1: she decided to try to recruit the head of the
Speaker 1: i m F, the International Monetary Fund, and she successfully
Speaker 1: recruited Christine Leguard, who is now the head of the
Speaker 1: European Central Bank, the first woman that had the Central Bank,
Speaker 1: but also one of the most influential people in the
Speaker 1: global world of finance. I had a conversation with her
Speaker 1: about how Europe is recovering from COVID and also how
Speaker 1: Europe is recovering from its economic slowdown. So as we
Speaker 1: now look at the post COVID environment, what would you
Speaker 1: say is the situation in Europe. Is Europe recovering more
Speaker 1: rapidly or not quite as rapidly as you thought from
Speaker 1: the COVID uh pandemic. Actually, David, Europe is recovering more
Speaker 1: rapidly than we had anticipated, and we have as a
Speaker 1: result of that, significantly upgraded our projections. So our projection
Speaker 1: fall this year is plus five so it's a significant
Speaker 1: upgrade plus four puscent four point six percent next year
Speaker 1: and back to sort of pre COVID type of growth subsequently.
Speaker 1: But this year is certainly going faster than we had thought,
Speaker 1: to the point where we will have recovered two pre
Speaker 1: COVID nineteen levels before the end of the year one.
Speaker 1: We had anticipated it would be early twenty two at best.
Speaker 1: It's not going to be in twenty one. Well, are
Speaker 1: you worried about the delta variant impacting what you've just
Speaker 1: said or the show called move variant, which is now
Speaker 1: something that's on the horizon. It's it's very closely related.
Speaker 1: We used to say that the best economic policy was
Speaker 1: an accelerated vaccination rollout. Well, we are still in that
Speaker 1: situation where vaccination matters enormously, but on that front, Europe
Speaker 1: has done quite well. We have more than seventy of
Speaker 1: the adult population that is completely vaccinated in the your area,
Speaker 1: and some countries are doing actually better than that. In
Speaker 1: excess of that, that has been a significant boost for
Speaker 1: growth and it has helped governments not go back to
Speaker 1: the stringent containment measures that we had seen previously. So
Speaker 1: during COVID, were you working remotely? I mean, were you
Speaker 1: running the European Central Bank from one of your homes
Speaker 1: or from a home somewhere, or were you really going
Speaker 1: into the office. I spent quite a few weeks stuck
Speaker 1: in my Frankfurt apartment during the first wave of COVID,
Speaker 1: and actually the very sizeable package that we put together
Speaker 1: for monetary policy purposes was engineered around my kitchen table. Subsequently,
Speaker 1: when traveling was more flexible and we could move out,
Speaker 1: then I went to the office a bit. But in
Speaker 1: the main, you know, the the by default solution is
Speaker 1: remote working still today and probably until the end of January,
Speaker 1: and then we will see, well you should take that
Speaker 1: kitchen table move at your office obviously was very productive, right,
Speaker 1: So let me ask you post COVID, do you expect
Speaker 1: Europeans will go back to work at the same levels
Speaker 1: before in terms of coin to work five days a
Speaker 1: week or where people work four days a week, one
Speaker 1: day remotely or just four days a week of work.
Speaker 1: You know, first of all, we should all acknowledge that
Speaker 1: there are people who do not have the luxury of
Speaker 1: choice that have to go to work because their physical
Speaker 1: presence is required. You know, you think about hospital staff,
Speaker 1: you think about construction workers, you think about some people
Speaker 1: working in shops. They don't have the choice. They have
Speaker 1: to be on site and at work and showing up
Speaker 1: in you know, offices. I think we are heading towards
Speaker 1: a hybrid movement where part of the week will be
Speaker 1: spent in the office so that people can meet, can
Speaker 1: see each other, can hold regular meetings, and and have
Speaker 1: face to face contact, but the rest of the week
Speaker 1: will likely be working from home. So whether it's fifty,
Speaker 1: whether it's is up for debate, and it's going to
Speaker 1: be handled at company levels, I suppose, because most of
Speaker 1: the legal constraints have been lifted at this point in time.
Speaker 1: But people have learned during the pandemic and those learnings
Speaker 1: will be bottled in and used for future, for future
Speaker 1: way of working. So around the kitchen table that we
Speaker 1: just made famous, you were talking about you put together
Speaker 1: a package that was designed to make Europe solve their
Speaker 1: economic problems as it dealt with COVID. The United States
Speaker 1: had a similar package. Um in hindsight, would you say
Speaker 1: the package worked as well as you thought, not as
Speaker 1: well or better than you thought. Yeah, you know, when
Speaker 1: we put it together, we we were hopeful that it
Speaker 1: would work. But you you know, the truth of the
Speaker 1: pudding is in the eating, and it was a matter
Speaker 1: of days before we really appreciated that message was received.
Speaker 1: Fiscal authorities began to act in tandem and in good
Speaker 1: coordination as well. And I think the impact of Next
Speaker 1: Generation EU when all Europeans decided to go and borrow
Speaker 1: together jointly, this this, this entire package actually responded well
Speaker 1: and fast and big to the unbelievable crisis situation that
Speaker 1: we faced. So all in all, I think it worked well,
Speaker 1: and it's certainly we responded I think faster and better
Speaker 1: than we had in two thousand and eight and then
Speaker 1: in two thousand eleven in the European sovereign debt crisis.
Speaker 1: In the United States, not just AIG the United States
Speaker 1: all the time, but it's the country I'm most familiar with.
Speaker 1: We've had some challenges during COVID that people who were minorities,
Speaker 1: often women, people of lower income strata, they couldn't get
Speaker 1: access to broadband, they didn't have that, and they had
Speaker 1: childcare problems and so forth, and it's thought that they
Speaker 1: fell further and further behind. Did you find the same
Speaker 1: phenomenon in Europe. Yeah, this has been the case in
Speaker 1: Europe as well, where inequalities in terms of opportunities, in
Speaker 1: terms of facilities have been aggravated and probably exacerbated by
Speaker 1: COVID ninety for the reasons that you've mentioned, those people
Speaker 1: who was hit by pandemic, where women, where young people,
Speaker 1: where people on fixed uman temper contracts, and and those
Speaker 1: you know, we're more remote from work than than the others.
Speaker 1: And if you look at those who lost their jobs,
Speaker 1: it's predominantly those, those women and young people in particular,
Speaker 1: in disproportionate amount relative to the others. So as you
Speaker 1: look at the European economy today, what would you say
Speaker 1: it's single biggest challenges and what would you say it's
Speaker 1: single biggest opportunity is I think the single biggest challenge
Speaker 1: always is to deliver, is to implement. There lots of
Speaker 1: good intentions, but implementation sometimes is hard. I think the
Speaker 1: second difficult area that will need to be tackled is
Speaker 1: this issue of inequality, because COVID nineteen has aggravated inequalities.
Speaker 1: The third one is climate change, where we will have
Speaker 1: to transition probably faster than we think, which will imply
Speaker 1: transition cost, which will imply a change in the overall
Speaker 1: structure of our economies. I would say those three implementation,
Speaker 1: inequality and and climate change. And what has been the
Speaker 1: impact on the European Central Bank or the European economy
Speaker 1: if any on Brexit, has it been as bad as
Speaker 1: some people predicted, or have been better than people thought?
Speaker 1: What would you say? I think the conclusion varies depending
Speaker 1: on which side of the channel you're on. You know,
Speaker 1: from our perspective it it's a sad development and we
Speaker 1: certainly have lost the benefits of excellent cooperation with the
Speaker 1: Bank of England. We try to continue to maintain a
Speaker 1: good relationship because because you know, we have lots of
Speaker 1: links between us. But in terms of trade it has
Speaker 1: been certainly a loss for the UK more so than
Speaker 1: for Europe, and and we'll see how it goes. All
Speaker 1: I can say is at this point in time, Europe
Speaker 1: is coming out of the crisis. Were not with flying
Speaker 1: colors yet because a lot of work needs to be done,
Speaker 1: but strongly than we had expected. I think the UK
Speaker 1: is having a more difficult time at the moment. Part
Speaker 1: of the you help deal with the situation in Europe
Speaker 1: post during COVID was that you had the package that
Speaker 1: you referred to a very large package of financial stability package.
Speaker 1: But that package really involves countries borrowing money against against
Speaker 1: their their own abilities to pay it back. You are
Speaker 1: in effect not a guaranteur, but you are making certain
Speaker 1: that that they probably won't default. But are you worried
Speaker 1: about too much debt among European countries, too much debt
Speaker 1: in France or Germany or Italy or is that not
Speaker 1: a big problem right now? You know? I think all
Speaker 1: countries around the world increase and had to increase the
Speaker 1: debt relative to GDP. And when you had this high
Speaker 1: debt increase and and a big fall in GDP, for
Speaker 1: of course, you end up with those ratios that look
Speaker 1: that look um higher and are higher than what they
Speaker 1: experienced before. But there was no option and no choice
Speaker 1: but to do that. Um how did it not happened?
Speaker 1: I think the story of the pandemic could have been
Speaker 1: a lot worse than what we've seen. So now it's
Speaker 1: a question of directing the the financing to the right investment,
Speaker 1: making sure that the economies are going to bounce back
Speaker 1: in the right shape with the right structural reforms that
Speaker 1: will improve the productivity of those economies, that would position
Speaker 1: them to be more digital and to to be to
Speaker 1: be greener. And I believe that this next Generation EU,
Speaker 1: which was voted a year ago now is going to
Speaker 1: help with making countries better converge and reduce the gap
Speaker 1: that existed between some of the southern European countries and
Speaker 1: the Northern European countries. That is certainly the intention. Recently,
Speaker 1: you said that you would like to have a goal,
Speaker 1: a target of getting two percent inflation. Why has it
Speaker 1: been so difficult to get to that level for the
Speaker 1: last five, six or seven years or so in Europe?
Speaker 1: And how confident are you that you can get to
Speaker 1: two I think there multiple reasons for that, David, But
Speaker 1: certainly what we decided to do was to have a
Speaker 1: target which was simple, which was easy to understand, that
Speaker 1: was a symmetric, and that also was focused on the
Speaker 1: medium terms. So those were the three attributes. So instead
Speaker 1: of having that complicated close to but below two percent,
Speaker 1: which was a bit uncertain and fuzzy, and which included
Speaker 1: somehow an implied biased, we decided that we would go
Speaker 1: for something straightforward simple two percent, two percent symmetric, so
Speaker 1: deviation up or down from two percent are equally undesirable.
Speaker 1: That's the definition that we have agreed upon. And we
Speaker 1: are also on on this medium term, which matters more
Speaker 1: us because we are particularly concerned about inflation expectations. I
Speaker 1: think that's that decision plus the forward guidance that we
Speaker 1: also decided a few weeks after the strategy review of
Speaker 1: the European Central Bank was released, was convincing enough so
Speaker 1: that markets and and analysts and observers have appreciated that
Speaker 1: we are serious women in business. We want two percent.
Speaker 1: Uh And you know, I mean there are lots of
Speaker 1: subtilties around the two percent and the lower band, which
Speaker 1: which leads us to having a more forceful response in
Speaker 1: some instances. But yes, women in business, and we mean
Speaker 1: two percent for sure. So for hundreds of years, governments
Speaker 1: and central banks have issued currency, and the currency is
Speaker 1: used for things to buy things, sell things, and so forth,
Speaker 1: enter price assets. Now some people have come along and
Speaker 1: invented various things called cryptocurrencies. Central banks are trying to
Speaker 1: adjust to what that means for am So do you
Speaker 1: think that cryptocurrencies are a plush for the global economy
Speaker 1: or is it too early to tell? Cryptos are not
Speaker 1: currencies full stop. Cryptos are highly speculative assets that claim
Speaker 1: their fame as currency. Possibly, but they're not. They are not.
Speaker 1: I think we have to distinguish between cryptos that are
Speaker 1: those highly speculatives um suspicious occasionally and high intensity in
Speaker 1: terms of energy consumption assets, but they're not a currency.
Speaker 1: On the other hand, you have those stable coins that
Speaker 1: are beginning to proliferate, which some big texts are trying
Speaker 1: to promote and push along the way, which are a
Speaker 1: different animal and need to be regulated where there has
Speaker 1: to be oversight that corresponds to the business that they
Speaker 1: are actually conduct irrespective of how they um name themselves.
Speaker 1: And in all that, you have the central banks who
Speaker 1: are prompted by demand of customers to produce something that
Speaker 1: will make these the central bank and central bank currencies
Speaker 1: fit for the sanctuary we're in, which is why we're
Speaker 1: not all looking at CBDC central bank digital currencies, so
Speaker 1: that instead of having banknotes and cash in our pockets
Speaker 1: are in our wallet, we can have exactly the same
Speaker 1: thing but in a digital form. So all of us
Speaker 1: are working on this, and certainly I was keen to
Speaker 1: push the CBDC issue on our agenda because I believe
Speaker 1: that we have to stand ready for that. So if
Speaker 1: the ECB, like the Federal Reserve, also looking at it,
Speaker 1: If the ECB were to have a digital currency, would
Speaker 1: that be to the exclusion of paper currencies, or it
Speaker 1: would be up side by side, side by side, because
Speaker 1: we want customers to have their preference. If they still
Speaker 1: want to hold those banknotes and cash, fine, and it
Speaker 1: should continue to be available and a run. You serve
Speaker 1: two terms at the head of the IMF, and you
Speaker 1: could have shared another term if you'd wanted to do so.
Speaker 1: How do you compare the pleasure of running the i
Speaker 1: m F with the pleasure of running a European the
Speaker 1: European Central Bank. Is one more enjoyable than the other,
Speaker 1: or one's less enjoyable than the other, or basically they're
Speaker 1: both great jobs and you're happy you have had both
Speaker 1: of them. Maybe I'm extremely privileged to have had the
Speaker 1: role that I had as head of the IMF, and
Speaker 1: we saw each other quite often in those days, and
Speaker 1: you know how much I put my heart, my brain
Speaker 1: and and my my whole energy into the job, and
Speaker 1: and I've enjoyed it tremendously. I'm doing the same thing
Speaker 1: with the CB, and I'm doing the same thing on
Speaker 1: the European scene. And you know, it's in times when
Speaker 1: you see geo political opposition, in times when you see
Speaker 1: some some energy withdrawn behind im borders. It's important to
Speaker 1: have this this desire to unite and to bring consensus
Speaker 1: to the table and to um you know, convince people
Speaker 1: that what we're doing together united is going to be
Speaker 1: stronger than what we will do individually in our little corner.
Speaker 1: So I'm enjoying what I'm doing as well. It's hard.
Speaker 1: It's hard, let's face it, but but I'm enjoying it well.
Speaker 1: When you were the head of the i m F,
Speaker 1: you were the first woman to hold that position. Now
Speaker 1: you're the first woman to hold the position of the
Speaker 1: head of the European Central Bank, so you've obviously broken
Speaker 1: through in many cases. You also the head of your
Speaker 1: law firm and your first woman that had your law firm,
Speaker 1: a large international law firm. At this point in your life,
Speaker 1: do you feel discrimination against you in your professional life
Speaker 1: as a woman or do you think discrimination generally is
Speaker 1: received against women in the professional workplace. I think discrimination
Speaker 1: has not receded, David, and I'm not I don't want
Speaker 1: to take my personal situation because when you have traveled
Speaker 1: the journey I have traveled, it's difficult to hold open
Speaker 1: discrimination against me. Let's face it, but I'm very very
Speaker 1: much aware of discriminations against many women, many young women,
Speaker 1: many women in all parts of the world. And I'm
Speaker 1: particularly I'm sorry to say, I'm particularly thinking of the
Speaker 1: Afghan woman at the moment, who clearly are suffering the
Speaker 1: worst possible nightmare and sent back in in in the
Speaker 1: in their history and in their life. So it's a
Speaker 1: constant struggle. It should be a constant fight of all
Speaker 1: of us to make sure that everybody has a chance
Speaker 1: to accomplish their talent and to develop they they the
Speaker 1: activity in the way they want. And this is certainly
Speaker 1: not the case yet. And look when I sit at
Speaker 1: my governing council table and I look around, I see
Speaker 1: twenty three men and one woman in add and to me,
Speaker 1: so two to twenty three is not a very good ratio.
Speaker 1: And in the finance world, I don't know whether you
Speaker 1: would call it discrimination, but there is certainly disparity between
Speaker 1: men and women. If you look at the venture capital world,
Speaker 1: it's the same. If you look at CEOs of large
Speaker 1: international banks, it's the same. If you look at Parliament,
Speaker 1: you have a much lower representation of women than they
Speaker 1: all women in society. So something is not working. Now.
Speaker 1: Central bankers are famous for not talking in language that
Speaker 1: the average person can understand generally, and sometimes they've done
Speaker 1: that on purpose. You talk in a language that everybody
Speaker 1: seems to understand. It's very simple and so forth. Is
Speaker 1: that a conscious policy that you have that kind of
Speaker 1: makes what you're doing understandable to the average person. Yes, yes, David,
Speaker 1: I think I think it's it's extremely important that people
Speaker 1: understand what we're doing. A lot has to do with trust.
Speaker 1: If some but it talks to you in a completely
Speaker 1: obscure and jargonic language, how are you going to trust
Speaker 1: that person? So it's it's to me it was critically
Speaker 1: important to agree with the Governing Council members that we
Speaker 1: would communicate in a more understandable, in a clearer and
Speaker 1: simpler way. So, just to give you an example, after
Speaker 1: each Governing Council we issue a monetary policy statement, well,
Speaker 1: we committed to keep sentences short, to have one idea
Speaker 1: of a sentence, to make sure that the you, the
Speaker 1: words that we use are understandable by you, of course,
Speaker 1: but a normal person as well, and uh and and
Speaker 1: we measure that and we try to stick to those
Speaker 1: principles and and will be held accountable. So do you
Speaker 1: think your ability to do that, and the Federal Reserve
Speaker 1: Chairman j pal is interested in that as well. Both
Speaker 1: of you are trained as lawyers, um, so do you
Speaker 1: think that lawyers. I'm trained as a lawyer too. Do
Speaker 1: you think there's a greater future for central bankers to
Speaker 1: be headed by are to be lawyers and there's some
Speaker 1: hope for me to be a central banker someday or not? Really,
Speaker 1: I'm sure you would thrive. And I think I think
Speaker 1: I strongly believe in diversity, David, as you know, and
Speaker 1: the diversity has not all to do with gender, with minority,
Speaker 1: with the sexual orientation or whatever. It also has to
Speaker 1: do with the background, with the training, with the culture
Speaker 1: that you carry with you, and to bring it all
Speaker 1: together around the table with diversity, in my view, improves
Speaker 1: the quality of the decisions that we make. And I
Speaker 1: learned a lot from my colleagues, brilliant economists, and I
Speaker 1: hope they can be patient with us poor lawyers. Two
Speaker 1: final questions. One, I would like to know what is
Speaker 1: the pleasure of being the head of the Central Bank.
Speaker 1: You obviously have to work seven days a week. You
Speaker 1: did that for many years in your career. The map
Speaker 1: as well what is the pleasure you get out of
Speaker 1: heading the European Central Bank? And it's the same kind
Speaker 1: of pleasure that I take in leading other organizations. Is
Speaker 1: making sure that people around me are doing the best
Speaker 1: they can for the organization, are delivering on their mission,
Speaker 1: and that reform a team heading in the same direction,
Speaker 1: so that that to me means an awful lot. So
Speaker 1: my final question is really this, You, as in your youth,
Speaker 1: were a synchronized swimmer where you have to I guess,
Speaker 1: work very closely with teammates and get everything working together
Speaker 1: quite nicely. Um, is it the case that when you're
Speaker 1: you're doing the central banking role you have to have
Speaker 1: the same kind of skill set. You've got all these
Speaker 1: central bankers that are of each country, you have to
Speaker 1: get them to work together. So do you think you're
Speaker 1: synchronized swimming skills actually come to help you as the
Speaker 1: head of the European Central Bank? Yes, they do, actually,
Speaker 1: because what you learn in synchronized swimming is that, uh,
Speaker 1: if each individual is brilliant, it's great, but if they
Speaker 1: don't work together, you will not get the gold medal.
Speaker 1: So working together as a team actually matters enormously. And
Speaker 1: I've tried, and I will try to continue doing so.
Speaker 1: Thanks for listening to hear more of my interviews. You
Speaker 1: can subscribe and download my podcast on Spotify, Apple, or
Speaker 1: wherever you listen