Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz. Daily we bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, sun Cloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg terminal. Joining us from day,
Speaker 1: say on what is shaping up today? And it started? Wait, Tomkine,
Speaker 1: You've got a special guest for us. Well, John's gonna
Speaker 1: be very interesting if you remember yesterday afternoon, and here's
Speaker 1: the headline buried in the news flow the Bank of
Speaker 1: England Governor Andrew Bailey. This is at the i F
Speaker 1: Annual Membership meeting yesterday in conversation with Tim Adams, the
Speaker 1: President and Chief Executive Officer of the Institute of International Finance.
Speaker 1: And we begin today's coverage in Washington with Mr Adams
Speaker 1: with his deep experience with the Bush administration and with
Speaker 1: international economics, certainly Tim in time of crisis. So thank
Speaker 1: you so much for starting our day, uh strong, We've
Speaker 1: got axel Weber coming up as well. Much more on
Speaker 1: year from that. What was it like yesterday when Governor
Speaker 1: Bailey set reset the global debate. Thanks Tom, it's always
Speaker 1: a pleasure to be with you. Thanks for having me.
Speaker 1: You know, look, I think we're hearing from from Governor
Speaker 1: Bailey and others will have Krota and christ Legard today.
Speaker 1: They're serious, they're serious about taking the punch bowl the way.
Speaker 1: It's time to reverse the policies we've seen over the
Speaker 1: past seven to eight years. It's time to move on
Speaker 1: to the new normal. And I think Andrew said he's
Speaker 1: ready to get on with it. Uh Stanley Fisher five
Speaker 1: years ago, six years ago talked of ultra accommodative. We've
Speaker 1: clearly moved through accommodative. We're trying to search for neutrality
Speaker 1: and even some of these bankers desire a restrictive state.
Speaker 1: Does that put out the zombie companies? Is the final
Speaker 1: result of all of this movement that we eliminate the
Speaker 1: zombie companies? And indeed, I say the zombie banks of
Speaker 1: which you represent, Yeah, well I don't represent zombie banks.
Speaker 1: Banks are in good shape, but yes, the zombie company
Speaker 1: is gonna go, and they should. This is creative destruction.
Speaker 1: This is the way cycles work, and for far too
Speaker 1: long we've had cheap liquidity, an abundant amount of liquidity,
Speaker 1: and we fund a lot of firms, a lot of
Speaker 1: sectors that probably shouldn't be in business. We need to
Speaker 1: redeploy those resources, those assets in more productive ways. You
Speaker 1: sit on the political side of this debate, serving the
Speaker 1: younger president Bush, would you suggest that politicians have power
Speaker 1: here or renewed power? With British shields out at five
Speaker 1: with yen at one six? What's the power of politicians
Speaker 1: this morning? Well, the politicians wanted both ways. They want
Speaker 1: to get rid of inflation as quickly as falsile because
Speaker 1: they see it every day gasoline prices, for example. But
Speaker 1: they want to do it in a painless way. They
Speaker 1: want to do it in a way that doesn't create disruption.
Speaker 1: That's very difficult to do. Central bankers haven't probably the
Speaker 1: toughest job they've ever had right now, Okay, I'll go
Speaker 1: with that. But Secretary Guy in your fifteen years ago
Speaker 1: seventeen years ago would say the salute is to extend
Speaker 1: the timeline. Why are we in such a hurry to
Speaker 1: bury the economy into a global recession? What's the race here? Yeah,
Speaker 1: I think there's a sense of catch up that they're
Speaker 1: waiting too loranded and so they want to make up.
Speaker 1: I think some of it is just bringing back to
Speaker 1: reputation of the institutions. There's a concern that maybe some
Speaker 1: the ft or other institutions have lost some of the
Speaker 1: reputation as being tough. I think Jay wants to prove
Speaker 1: a point, and I think you heard from Andrew yesterday
Speaker 1: he wants to prove a point too. Can they stop
Speaker 1: and pause? We can. I don't know that they will.
Speaker 1: It depends on what they might see. Obviously, there's a
Speaker 1: lot of turmoil around the World War and the continent
Speaker 1: of Europe. Gasoline prices as we see from OPEC. I
Speaker 1: think they're pretty adamant about moving ahead. I must turned
Speaker 1: to banking, of course, a great mystery, and this goes
Speaker 1: back to Fortis of Belgium years ago, which is where
Speaker 1: in Europe there were transactions and combinations across borders. That's
Speaker 1: always a challenging thing with the challenges in a selected
Speaker 1: Swiss bank. Do you look for transactions and combinations within
Speaker 1: the members of the Institute of International Finance. We do,
Speaker 1: and you know, risk assessments and an important part of
Speaker 1: what we do here. That's why we have a board
Speaker 1: of fifty institutions that comes to the world, so we
Speaker 1: constantly talk about risk. Our board meeting tomorrow will be
Speaker 1: a conversation about where do we see weaknesses in the
Speaker 1: system and how do our institutions communicate with each other? Okay,
Speaker 1: I'll go with that, But the reality is selected regions,
Speaker 1: book values of banking, or to use the American phrase,
Speaker 1: flat on their back. What is the urgency right now
Speaker 1: to pick a region within European banking? Well, we know
Speaker 1: book to value of ratios and Europe are pretty soft.
Speaker 1: But Europe needs something different than just monetary policy. They
Speaker 1: need consolidation and four thousand institutions across exactly, and so
Speaker 1: we need consolidation, and well, you need Brussels and capitals
Speaker 1: to act. We need a consolidate capital market, which benefits
Speaker 1: US firms. Here we have the largest capital market in
Speaker 1: the US, which helps the JP Morgans and Americas, which
Speaker 1: we'll hear from today and tomorrow here. But you're at
Speaker 1: needs banking consolidation in the capital market Union. You were
Speaker 1: steeped in Washington and in the politics of a traditional
Speaker 1: Republican party, which some people would say has gone the
Speaker 1: way of the fossil UH and that what does the
Speaker 1: Biden administration need to do to solidify American leadership other
Speaker 1: than to generate a strong dollar. Well, we need to
Speaker 1: deal with energy, and I think they've tried it both ways.
Speaker 1: And what is to talk about a climate transition, which
Speaker 1: we should. But in the near term, we've got to
Speaker 1: find ways to produce more oil and get it to
Speaker 1: pipe to the place it needs to be. We need
Speaker 1: to address the near term security and affordability concerns. Are
Speaker 1: you gonna make headlines today like you did with Governor
Speaker 1: Bailey yesterdays that are reduct here with Legard? Come on,
Speaker 1: we are indeed stut a very big day to Madams.
Speaker 1: Thank you so much with the Institute of International Finance, John,
Speaker 1: and I'll tell you if he can do back to back,
Speaker 1: uh John with Christine Lagard what he did with Andrew
Speaker 1: Bailey yesterday. John, our jobs are a threat. T K.
Speaker 1: Thank you a great word. Dan in Washington. Don't my
Speaker 1: favorite guest this someone who used to be a central
Speaker 1: bank it but isn't any more because they cannot tell
Speaker 1: you what they think. And all of them come out
Speaker 1: really harshly and say you're all making a terrible mistake.
Speaker 1: Why are they going more aggressively. They're just so much
Speaker 1: more open about their feelings about the situation. Tom Keane,
Speaker 1: I think you've got the perfect guests to do just that. Oh,
Speaker 1: I'm my interview of this meetings of the International Monetary Fund,
Speaker 1: and it's here at the Institute of International Finance. Axel
Speaker 1: Webber is the force of the ii F, the chairman,
Speaker 1: but I must say, far more importantly, the former president
Speaker 1: of the Bundesbank. His service to u b S is
Speaker 1: noted as well. We begin on one hour conversation. We're
Speaker 1: gonna have to cram one hour axcel into the moment.
Speaker 1: And you taught a course at Boost School Chicago central
Speaker 1: bank theories. In fact, what is the fact right now?
Speaker 1: For J. Powell? I think the fact is that central
Speaker 1: banks are in a really bad situation. They have started
Speaker 1: late in raising rates. You could see already some break
Speaker 1: into some trend break in the price level. In late
Speaker 1: two thousand. They focused on the inflation rate very early.
Speaker 1: Also X some elements that have been going up strongly,
Speaker 1: and now the central banks are doing big steps to
Speaker 1: catch up with reality, and there is some risk in that.
Speaker 1: So I now look at monetary policy as an independent
Speaker 1: risk factor. Uh, And I think monetary policy has a
Speaker 1: way to go. I don't believe that the current inflation
Speaker 1: rates will come down as easily as is predicted still
Speaker 1: by most of the central bank models. So the tough
Speaker 1: work is ahead. I got so many ways to go
Speaker 1: here and just squeeze us in the time. Do we
Speaker 1: need to abandon a two percent level? Something Bundesbank is
Speaker 1: comfortable with, something I'm gonna say traditional economics is comfortable with.
Speaker 1: But as part of the solution to move away from
Speaker 1: a two percent level of inflation towards a three percent
Speaker 1: level as appropriate, I think that would completely blow the
Speaker 1: credibility of all central banks. If they were to do that, Uh,
Speaker 1: they would be dead on arrival because if you what
Speaker 1: you need to do is to re establish the credibility
Speaker 1: of the two percent target at a rage running just
Speaker 1: below ten percent, that's a very difficult task. So central
Speaker 1: banks would, in my view, be completely misguided if they
Speaker 1: were to question the target. Now, the point is, let's
Speaker 1: get back to target and that will take them, you know,
Speaker 1: at least two years. What we're gonna do now, folks,
Speaker 1: is divingto some theory. And we can do this with
Speaker 1: Professor Weber. I'm going to work off of a wonderful
Speaker 1: piece Byambo's Evans Pritchard and the Telegraph. You can look
Speaker 1: at a theoretical construct like the Phillips curve London School
Speaker 1: of Economics the fifties, or the beverage curve. Wage cruitment
Speaker 1: talks about from even farther back as well. Central banking
Speaker 1: is hinging on a linkage between inflation an employment. Should
Speaker 1: they do that or do they need to squeeze right
Speaker 1: down to a more Germanic focus on inflation? Well, I
Speaker 1: think they're They're long term. What really matters is the
Speaker 1: amount of debt in the in the economy and how
Speaker 1: it's accommodated by central banks. So I'm still a firm
Speaker 1: believer that in the long run the balance sheet of
Speaker 1: the Fed and monetary policy matter, and in the long
Speaker 1: run inflation is largely driven by factors like how accommodative
Speaker 1: our central banks for government debt. Of course, in conducting
Speaker 1: monetary policies through the business idea, they need to look
Speaker 1: at the link between output growth, employment and inflation. It's
Speaker 1: a natural because their setting is within the economic in
Speaker 1: the economy. But long run, I think they haven't looked
Speaker 1: at the impact of this ultra easy monetary policy on
Speaker 1: inflation that was about to come. How naive are we
Speaker 1: about qt? Original? Unfounded? Rubini among others make jokes about it,
Speaker 1: q E QT How original is it in that we
Speaker 1: don't know really what's going to happen. I think the
Speaker 1: central banks have amassed a massive balance sheet, all center
Speaker 1: banks in the world, and if you look at the
Speaker 1: last ten years, the fiscal expansion of roughly to the
Speaker 1: tune of g d P globally has been accommodated by
Speaker 1: an expansion of central banks balance sheet roughly of the
Speaker 1: same amount. So this additional government debt didn't have to
Speaker 1: be held in the market. It ended up in another
Speaker 1: government balance sheet by the central bank. And we haven't
Speaker 1: seen the interest impact and the long term inflation impact
Speaker 1: of that liquidity having to come from the market as
Speaker 1: opposed to come from another source of government funding. And
Speaker 1: I think long run central banks need to bring their
Speaker 1: balance sheet down. That will put pressure on debt and
Speaker 1: governments to consolidate. And I think long run we cannot
Speaker 1: continue to run deficits that are you know, mid single
Speaker 1: digits and debt that is around under present Your history
Speaker 1: is you are death. I'm sure term a medium turn,
Speaker 1: long term analysis, there's a responsibility a character out of
Speaker 1: bundes Bank that speaks for itself is the short term
Speaker 1: path here to just extend things out, to ease up
Speaker 1: on the raising of interest rates at an appropriate point
Speaker 1: and use time to heal the wounds of the pandemic.
Speaker 1: And this that expansion, well, I think you need to
Speaker 1: start doing the U turn. You know this is a
Speaker 1: change in times. Are we near the U turn? I
Speaker 1: think central banks have started to raise rates late, but
Speaker 1: in my view they started. And now what is important
Speaker 1: is what j Pal said at the Jackson All speech.
Speaker 1: You've got to keep at it to the job's done.
Speaker 1: And the job is not done. And so central banks
Speaker 1: have to raise interest rates and at the same time
Speaker 1: they have to produce a balance sheet. How constrained is
Speaker 1: e c B. How how many degrees of freedom is
Speaker 1: Madame Leguard lost here with the war plus the overlay
Speaker 1: we've been talking quite If you of the e c
Speaker 1: d s in a worse position than to fit, their
Speaker 1: economy is likely to take a much bigger hit. Their
Speaker 1: monetary policy has weakened the euro and that is increased
Speaker 1: price pressures for European citizens were much closer to the war,
Speaker 1: and we're much more dependent on China in our exports,
Speaker 1: and China is not doing well at the moment. Is
Speaker 1: it true when you were in booth school teaching that
Speaker 1: you gave out no ways and no bees. Were you
Speaker 1: that tougher greater? No, I wasn't. I did have some
Speaker 1: azing bees, but they were clustered around people that understood
Speaker 1: the long term. Let me remind you that was in
Speaker 1: two thousand eleven. There wasn't a textbook from which you
Speaker 1: could teach the financial crisis because those textbooks was still
Speaker 1: to be written seconds. Is there a textbook? Now we're
Speaker 1: a good textbooks? Now they are good textbooks now excellent Ember.
Speaker 1: There was some insurance here, of course. The chairman of
Speaker 1: the Institute of International and Financia, former leader of the
Speaker 1: Bund despect John. You and I would have gotten quality
Speaker 1: ds in that course. I'm not sure how would've done
Speaker 1: that wild song. Hey, Tom, do you think Tim Adams
Speaker 1: who wants to be an anchor on Pluybock surveillance when
Speaker 1: you're out, he's He's smooth, There's no question about it.
Speaker 1: The gentleman from Kentucky can absolutely get it done. And
Speaker 1: for that matter, John, I thought axel Weber was smooth
Speaker 1: as well. Your thoughts, John Farrell on what we heard
Speaker 1: from the leader of the bund spank him. I think
Speaker 1: a lot of what we're experiencing right now is some
Speaker 1: of the stuff he want about more than ten years ago.
Speaker 1: That once you go down this path, it's very difficult
Speaker 1: to get back out of it. From the ultra accommodative
Speaker 1: to where we are right now, it is indeed his historic.
Speaker 1: What I've heard this morning, folks is this is a
Speaker 1: once in forty even fifty year moment for all within
Speaker 1: finance and Global Wall Street. If you're part of Global
Speaker 1: Wall Street, this is must listen. It is rare that
Speaker 1: you speak to anyone in economics who actually read chapter
Speaker 1: twenty three of a textbook which is on finance and bonds.
Speaker 1: Klaus Canoe is a governor of the Dutch Central Bank
Speaker 1: and is truly expert linking in economics to the fixed
Speaker 1: income space, including British yields at five percent. Governor, thank
Speaker 1: you so much for joining Bloomberg today. I've got to
Speaker 1: first go to the ECB questions, can you explain to
Speaker 1: me how the e c B can become more restrictive
Speaker 1: rate rate seventy five basis points with the nominal g
Speaker 1: dB construction of the continent. Where do they have the
Speaker 1: animal spirit to withstand ever higher interest rates? Well, I
Speaker 1: think to answer that question, you first have to sort
Speaker 1: of look at where we are in terms of the
Speaker 1: starting point. We're still way below neutral, so policy is
Speaker 1: still accommodative. So I think it is no regret that
Speaker 1: we have to end this accommodative phase of policy. And
Speaker 1: I mean your question of how deep should we go
Speaker 1: into a restrictive territory once we get there, well, the
Speaker 1: course that bridge when we get there, it is original
Speaker 1: right now you're in accommodated or auto accommodative. However you
Speaker 1: want to phrase it as well, what happens next after
Speaker 1: the presumed rate increase of the next meeting, Well, I
Speaker 1: mean our president has stated very clearly that we are
Speaker 1: currently in the phase of normalizing interest rates. That means
Speaker 1: taking them to neutral. Unfortunately nobody knows with any level
Speaker 1: of precision, but neutral is But I've been saying that
Speaker 1: we need at least two more significant hikes before we
Speaker 1: sort of enter the range of plausible estimates for for
Speaker 1: neutral that will take us into next year. And I
Speaker 1: hope that with the current uncertainty in the markets and
Speaker 1: the bolt market fragility, I hope you don't mind that
Speaker 1: I don't have my calendar cut out for three already.
Speaker 1: I don't know I don't have my calendar cut out
Speaker 1: for two, even even with some of my staff would
Speaker 1: say that I don't know where the calendars for this
Speaker 1: year as well. I stood at the ECB mowning with
Speaker 1: atmar Issing long ago and far away, and it was
Speaker 1: a core let's call it, Germanic Netherlands constituency wrapped around
Speaker 1: another ECB in this crisis. Right now? Is the e
Speaker 1: c be more unified than it was in two thousand
Speaker 1: and eight? We are unified, so I think if you
Speaker 1: look back over the last few years since the pandemic,
Speaker 1: all decisions have been taken with a high degree of unanimity.
Speaker 1: So we are very clear about our mandate. Inflation is
Speaker 1: way too high scent in the Netherlands, ten percent in
Speaker 1: the Euro Area, and even more important, underlying inflation trends
Speaker 1: are pointing in the wrong direction. Core inflation almost five percent,
Speaker 1: so we are determined to bring inflation back to target,
Speaker 1: and we do understand that this will require some further
Speaker 1: efforts from our site. This problem is not going to
Speaker 1: go away with a little bit of slowdown of the economy.
Speaker 1: It will require continued effort from our side, and the
Speaker 1: Council is unanimous on that entire I have to go
Speaker 1: with you to your bond expertise, linking it into a
Speaker 1: greater economic system and the idea of yields coming up,
Speaker 1: prices coming down. With the United Kingdom being in the
Speaker 1: headlines this morning, it'll be another country next. These are
Speaker 1: nonlinear functions. How close are we to a second derivative,
Speaker 1: to a convexity and acceleration where people like you lose control. Well,
Speaker 1: I think that need not be the case because that
Speaker 1: is dependent I think on responsible policy. As long as
Speaker 1: policy makers keep on doing the responsible things, then I
Speaker 1: do think bond markets can be in control. But it
Speaker 1: does put a premium on responsible behavior. Bond markets have
Speaker 1: become much much more sensitive to death sustainability issues, so
Speaker 1: that puts a burden on our fiscal authorities to also
Speaker 1: continue to pursue responsible fiscal policies. With the medium term
Speaker 1: orientation and with death sustainability being front and center of
Speaker 1: their concerns. Is there a textbook and qut when you're
Speaker 1: growing again? Was there anything about QUEI and QT? No,
Speaker 1: you're making it up as we go, right, Well, we're
Speaker 1: making out of as we go. Yes, of course we
Speaker 1: learned from the experiences of all the central banks. I
Speaker 1: think the way the FAT is dealing with QT, that's
Speaker 1: clearly also going to be an example for us. They
Speaker 1: managed to move it into the background very quickly. I
Speaker 1: think a process like QT, it should be predictable, it
Speaker 1: should be gradual, it should be even a little bit boring,
Speaker 1: right I mean Janet Yellen once quipped it's like watching
Speaker 1: paint dry, and that's a little bit. I think how
Speaker 1: you want to shape such a program. I think the
Speaker 1: FAT has been fairly successful in that and if we
Speaker 1: can take that queue as well, I would be more
Speaker 1: than happy to do so. It has not been boring
Speaker 1: for Governor Bailey. He's making it up as he goes.
Speaker 1: Literally in the last twenty four hours, What are the
Speaker 1: lessons you've learned from the the nexus of Bank of
Speaker 1: England and politics in England? What have you learned about
Speaker 1: when the first of all that monitoring and fiscal policy
Speaker 1: being at crossroads with at cross purposes with each other.
Speaker 1: That's a very dangerous cocktail for for bond markets. That's
Speaker 1: the first lesson that I would say. And secondly, the
Speaker 1: UK is a little bit in a special position because
Speaker 1: the bonds they bought are extremely long dated, so they
Speaker 1: actively have to sell. We in the Euro Area like
Speaker 1: in the US, and we have bonds over the full maturity,
Speaker 1: and we think we can do qut by just rolling
Speaker 1: off existing bonds by less than full reinvestment, which is
Speaker 1: naturally a smoother process than having to actively sell. By
Speaker 1: colleague John Faroll Adores Vermier, you're having the mother of
Speaker 1: all lifetime Vermier shows in the Netherlands next year. Can
Speaker 1: you see our show in Amsterdam and support of the
Speaker 1: vermir show? Yes, of course, I mean if you want
Speaker 1: to support it by all means. I think it's a
Speaker 1: unique opportunity to see all the Vermier's that are everywhere
Speaker 1: in the world in a different museum, in the reichs
Speaker 1: Museum in Amsterdam. Absolutely, we would love to have you
Speaker 1: and Mr Ruder show you and enjoy Claud to the
Speaker 1: Dutch Central Bank suggesting we need to be an Amsterdam
Speaker 1: next year. It was his suggestion some I'm buying that.
Speaker 1: Let's head back down to Washington, d C. Tom Keane
Speaker 1: with another fantastic interview. A nice update there, Lisa. And
Speaker 1: it's really important, folks. Off pp I is how important
Speaker 1: tomorrow's United States CPI numbers will be for these meetings
Speaker 1: of the World Bank, the i F and the International
Speaker 1: Monetary Fund. Tomorrow will come from from the offices of
Speaker 1: the International Monetary Fund with some important interviews. Right now
Speaker 1: we go all American and we can do that if
Speaker 1: you go to the Art Institute of Chicago and go
Speaker 1: to the very back of the Art Institute, pass to
Speaker 1: Chical there is the old trading room of the Chicago
Speaker 1: Commodity Exchange. It's really something to see from another time
Speaker 1: and place. That is the CFTC associated where our Midwest,
Speaker 1: but much more with what to do with derivative instruments.
Speaker 1: Kristen Johnson is c f TC Commissioner. Have you wonderful
Speaker 1: to have you here with us today. Have you ever
Speaker 1: visited that ritual room in the back of the Art Institute.
Speaker 1: I have not, and I look forward to this newly
Speaker 1: minted commissioner. You must go to the Art Institute and
Speaker 1: go to the back and there is part of my
Speaker 1: family's past. Wow, I've headed to Chicago November. Have to
Speaker 1: see it. Let's add to your list. Now the discussion
Speaker 1: everybody wants to have, which is bitcoin? And I refuse
Speaker 1: to believe this is a soft more turf war between
Speaker 1: Kristin Johnson and my good friend Gary Gainsler. How can
Speaker 1: you two get along on what to do with bitcoin
Speaker 1: and not make it as silly turf four? Oh, this
Speaker 1: is a great question, and not just a great one,
Speaker 1: a necessary one to be honest. In the current crypto
Speaker 1: onset of the current crypto winner, uh two trillion dollar
Speaker 1: assets sell off, what comes sharply into focus from my
Speaker 1: perspective is institutional investors and retail investors starting with the ladder.
Speaker 1: In fact, what we could think carefully about is the
Speaker 1: reality that retail investors have suffered significant losses in light
Speaker 1: of the onset of the crypto winner. Something else ide
Speaker 1: share is um If we coupled this thinking with the
Speaker 1: Bank of New York's announcement yesterday, this is Alexander Hamilton's bank,
Speaker 1: founded as one of the oldest in the history of
Speaker 1: our nation, now acknowledging that it will on its platform
Speaker 1: service not only conventional financial products but cryptocurrencies, suggesting and
Speaker 1: signaling that in the near and not so distant future,
Speaker 1: institutional investors will be investing in this space as well.
Speaker 1: What's good about this, folks, is they kept from Commissioner
Speaker 1: Johnson my thoughts on bitcoin and we're not going there
Speaker 1: right now. There's a guy used to work at JP
Speaker 1: Morgan and there's this guy up on the one floor
Speaker 1: named Diamond who's going both ways on bitcoin. He's saying,
Speaker 1: this is a fraud and excuse me, Jamie, but something
Speaker 1: like that. And the other thing is we need to
Speaker 1: learn about this and do about it. How can see
Speaker 1: if TC do better than SEC at helping banks on
Speaker 1: this is a fraud versus This is what we need
Speaker 1: to do to move forward. Let me explain what the
Speaker 1: CFTC is already doing in our remit. We are enforcing
Speaker 1: to the fullest extent of our authority to ensure against fraud,
Speaker 1: market manipulation, any types of abuse to retail customers who
Speaker 1: are heavily engaged as I mentioned in this market. So
Speaker 1: that includes first of their kind lawsuits for pump and
Speaker 1: dump schemes. Over the last several months, first of their
Speaker 1: kind uh UM bitcoin or cryptocurrency Asset management fund uh
Speaker 1: scams against retail investors, and very very recently a first
Speaker 1: of its kind that suit against a deep precentralized autonomus
Speaker 1: going to be so important. Yeah, the bitcoin sixty down
Speaker 1: to twenty thousand is well the little guy, and I've
Speaker 1: seen this. Folks generational. They fervently believe in bitcoin. Are
Speaker 1: they believing in a derivative instrument the province of the CFTC?
Speaker 1: Are they believing maybe in a financial asset under SEC
Speaker 1: thirty four and thirty six? I think is that an
Speaker 1: SEC province thing or is it a derivative thing of CFTC.
Speaker 1: Your question about whether or not the Securities Act section
Speaker 1: to a one definition of a security can drop Let's
Speaker 1: continue a section. So essentially, what we're asking is what
Speaker 1: qualifies as a security? And in fact, there are two
Speaker 1: bipartisan bills currently pending in Congress that are working diligently.
Speaker 1: Senate Staffer is working diligently to capture an answer to
Speaker 1: this question. It's a wonderful question that's rich and reflective
Speaker 1: of the history of financial markets regulation in our nation.
Speaker 1: Why can't you two get interrupt? Why can't you two
Speaker 1: get along? Why can't the SEC and the CFTC both
Speaker 1: work on this which I dubious thing sixty. I'm going
Speaker 1: to say we better get along for the sake of
Speaker 1: those investors that I referenced earlier. There is a path,
Speaker 1: and we've walked that path before. We recently, I I
Speaker 1: have had the great opportunity to engage with his office,
Speaker 1: with him, with other commissioners at the SEC. I think
Speaker 1: we are all in agreement and on one accord that
Speaker 1: we want to protect market integrity and protect the customers
Speaker 1: who are engaged in invest twenty people so typical as CFTC.
Speaker 1: And someone your Honora said, don't ask her about the politicians,
Speaker 1: So let's talk about the policies they in the back
Speaker 1: seat of all the rich guys doing bitcoin, these gazillions.
Speaker 1: They used to have forty gazillion dollars and now they
Speaker 1: have eight gazillion dollars. The eight gazillionaires that are doing bitcoin,
Speaker 1: are they buying off the American politicians? I can only
Speaker 1: tell you what I know, which is Chairwoman of the
Speaker 1: Senate Ad Committee, Debbie samin Ow. I'm a native Michigander,
Speaker 1: so we are neighbors. In many respects. I believe that
Speaker 1: she is deeply engaged in expanding the remit of the
Speaker 1: CFTC over spot market transactions for the purpose of ensuring
Speaker 1: that a regulatory gap that exists right now is closed.
Speaker 1: I got thirty seconds. What happens to the retail investors
Speaker 1: at bitcoin breaks support nineteen thousand and goes down to
Speaker 1: sixteen or fifteen or twelve? What's the ramifications of that?
Speaker 1: The ramifications are significant because those investors are the most critical,
Speaker 1: in my humble opinion, in our markets, and our most
Speaker 1: sacred task is to ensure the protection of those investors
Speaker 1: and the integrity of our markets. So I am diligently
Speaker 1: committed whatever we have to do. Commissioner think I'm exhausted, Lisa, Commissioner,
Speaker 1: Thank you so much. Kristen Johnson of the CCC. There
Speaker 1: on section twelve, item to A one one Lisa Tom
Speaker 1: wonderful interview, Thank you so much, and great recitation there
Speaker 1: of the different provisions and the different subsets. This is
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Speaker 1: the terminal. I'm Tom Keene, and this is Bloomberg