WEBVTT - 'Mixed Signals' Coming from Russia on Ukraine Situation 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Karl Masser and I'm 0:00:04.480 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovik. We're here every day bringing 0:00:07.320 --> 0:00:09.799 you the latest news from the world to business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all purtnising the power of Business 0:00:13.680 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:20.000 analysts in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.239 Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.200 You can also listen to our radio show at two 0:00:25.200 --> 0:00:27.760 pm Eastern Time on the Bloomberg Radio or watch us 0:00:27.760 --> 0:00:32.280 on YouTube. Search Bloomberg Clovel News, back and forth geo 0:00:32.280 --> 0:00:35.960 political concerns and warnings about Russia's intentions when it comes 0:00:36.000 --> 0:00:38.839 to Ukraine. Investors in financial markets, though, do seem to 0:00:38.920 --> 0:00:42.200 be calming down today over those concerns and tensions between 0:00:42.280 --> 0:00:43.640 Russia and the rest of the world. We saw the 0:00:43.680 --> 0:00:46.879 German Chancellor meeting with President Vladimir Putin in Moscow as 0:00:46.960 --> 0:00:50.519 Western allies expressed reservations over a Russian statement that it 0:00:50.600 --> 0:00:53.640 was beginning to pull back troops from the Ukrainian border. Well, 0:00:53.680 --> 0:00:55.800 let's get into it with our next guest, Angela Stent, 0:00:55.880 --> 0:00:58.520 Senior Advisor at the Center for Eurasian at Russian and 0:00:58.560 --> 0:01:01.240 East European Studies. You join just on the phone from Washington, 0:01:01.400 --> 0:01:05.119 D C. Angela. You were also a National Intelligence Officer 0:01:05.200 --> 0:01:08.360 for Russian and Eurasia at the National Intelligence Council. You 0:01:08.400 --> 0:01:10.360 are also in the Office of Policy Planning at the U. 0:01:10.440 --> 0:01:12.800 S Department of State. Give us an idea of the 0:01:12.840 --> 0:01:15.839 conversations that are happening right now at the highest levels 0:01:16.120 --> 0:01:18.199 as the United States and the rest of the world 0:01:18.480 --> 0:01:21.120 really try to understand and prepare for what Putin could 0:01:21.120 --> 0:01:24.400 be doing. So on the one hand, you know, if 0:01:24.440 --> 0:01:27.640 you look at the actual military deployments, there are still 0:01:27.720 --> 0:01:30.639 what about a hundred and thirty thousand troops, Russian troops 0:01:30.680 --> 0:01:33.920 surrounding Ukraine on three sides, even though the Russians have 0:01:33.959 --> 0:01:37.280 now said that they are pulling back some of those troops. 0:01:37.560 --> 0:01:39.960 On the other hand, you have President Putin coming out 0:01:40.000 --> 0:01:43.440 with the German Chancellor today saying, you know, there's room 0:01:43.520 --> 0:01:46.720 for dialogue as room for diplomacy. You have the Russian 0:01:46.720 --> 0:01:49.840 Foreign Minister saying that yesterday he wouldn't be saying that 0:01:49.920 --> 0:01:52.120 if he wasn't told that it was okay to say it. 0:01:52.200 --> 0:01:54.880 So we have mixed signals, and it's always the issue. 0:01:55.080 --> 0:01:58.400 Do you only look at the military capabilities, which would 0:01:58.400 --> 0:02:00.920 really lead you to believe there'll be some kind of invasion, 0:02:01.280 --> 0:02:02.920 or do you look at the broader picture and the 0:02:02.960 --> 0:02:06.120 politics and think that this is all part of Putin's plan, 0:02:06.960 --> 0:02:09.720 that we've been responding to all of his demands, and 0:02:09.800 --> 0:02:11.920 he's more or less got us where we are, which 0:02:12.000 --> 0:02:15.200 is we keep floundering and not knowing what's going to happen. 0:02:15.440 --> 0:02:18.440 I feel like to understand the situation that's happening right now, 0:02:18.480 --> 0:02:21.280 you need to understand Vladimir Putin. What do we need 0:02:21.320 --> 0:02:26.639 to understand about the individual? Uh? Mr Putin? Well, I 0:02:26.720 --> 0:02:29.520 think Putin now feels that his time has come. He 0:02:29.600 --> 0:02:33.480 looks out at the West and he sees us all polarized, divided, 0:02:33.600 --> 0:02:36.880 unable to get our own agendas through, and he is 0:02:36.960 --> 0:02:39.120 really you know. Fifteen years ago, he made a speech 0:02:39.120 --> 0:02:42.520 at the Munich Security Conference where he criticized the United 0:02:42.560 --> 0:02:45.080 States for imposing its will on the rest of the 0:02:45.080 --> 0:02:48.079 world and said that Russia had been really excluded from 0:02:48.120 --> 0:02:51.480 decision making after the collapse of the Soviet Union. So 0:02:51.760 --> 0:02:54.360 he sees this as his moment to sort of sees 0:02:54.480 --> 0:02:57.880 upon Western weakness as he sees it and try and 0:02:58.160 --> 0:03:01.760 force us to re say the way we organized security 0:03:01.800 --> 0:03:04.919 in Europe and what Russia's role is in that structure. 0:03:05.120 --> 0:03:07.760 Are we rethinking the way we organized security in Western Europe? 0:03:07.760 --> 0:03:09.919 And are we doing that as a result of the 0:03:09.960 --> 0:03:15.200 European unions reliance on Russia for oil? So we've actually 0:03:15.240 --> 0:03:18.120 made proposals in response to the Russian demands that we 0:03:18.160 --> 0:03:21.160 want to sit down with them and discuss a host 0:03:21.240 --> 0:03:24.600 of issues with them. Um. In fact, yes, the European 0:03:24.720 --> 0:03:29.960 Union gets about of its gas supplies from Russia, although 0:03:30.040 --> 0:03:32.280 the US has been exporting a lot of l n 0:03:32.320 --> 0:03:35.840 G recently to Europe. So the dependence on gas is 0:03:35.880 --> 0:03:39.000 clearly a factor here. But I think more in more 0:03:39.080 --> 0:03:42.080 general terms, we realize that the Russians are one thing 0:03:42.120 --> 0:03:44.920 that they can use it. Foreign policy is sort of 0:03:44.960 --> 0:03:47.320 military force and the thread of it, and we are 0:03:47.400 --> 0:03:50.120 responding to that by saying, maybe we have to take 0:03:50.200 --> 0:03:54.080 some of their demands at least into consideration. Ala, how 0:03:54.120 --> 0:03:56.200 did we get here? And I ask you you understand 0:03:56.200 --> 0:03:58.720 the inner workings and meetings that must go on in 0:03:58.800 --> 0:04:01.200 terms of stuff that wouldn't be in the headlines that 0:04:01.240 --> 0:04:03.640 most Americans would see on a daily basis. Our most 0:04:03.640 --> 0:04:06.080 global citizens wouldn't write the conversations that you guys are 0:04:06.120 --> 0:04:09.160 having behind the scenes, the subjects and countries that you're 0:04:09.240 --> 0:04:11.640 keeping an eye and I would assume Russia and Vladimir 0:04:11.720 --> 0:04:14.280 Putin are there. So how did we get there? Did 0:04:14.280 --> 0:04:17.719 this catch us off guard that we didn't maybe understand 0:04:18.160 --> 0:04:22.240 truly Putin's intentions? Yeah, I mean Putin has been signaling 0:04:22.320 --> 0:04:25.160 this for a long time, as I say, fifteen years 0:04:25.200 --> 0:04:29.200 at least since the annexation of krom and we listened 0:04:29.240 --> 0:04:32.280 to him, but we maybe didn't take it seriously enough. Uh. 0:04:32.320 --> 0:04:35.120 And I think also the bign administration coming in and 0:04:35.160 --> 0:04:38.479 saying we want to focus on China as our major threat, 0:04:38.720 --> 0:04:41.240 and we want to have to stable a predictable relationship 0:04:41.279 --> 0:04:43.240 with Russia so that we can sort of put Russia 0:04:43.279 --> 0:04:46.440 to one side and really focus on China, and Russia 0:04:46.480 --> 0:04:48.599 were saying, oh, no, you can't do that. You have 0:04:48.680 --> 0:04:50.839 to pay attention to us. So I think this is 0:04:50.920 --> 0:04:53.920 part of that re orientation. And then I think the 0:04:54.000 --> 0:04:56.760 Russians have looked at what happened the way we got 0:04:56.760 --> 0:04:59.480 out of Afghanistan, and also since you know, this is 0:04:59.520 --> 0:05:02.120 a time to sort of be tougher with the United States, 0:05:02.160 --> 0:05:04.760 I think probably we should all have taken what who 0:05:04.920 --> 0:05:08.080 we're saying more seriously earlier on. Well, we obviously can't 0:05:08.080 --> 0:05:09.840 go back in time and do that. But what the 0:05:09.920 --> 0:05:13.320 United States do now going forward, well, I think it's 0:05:13.360 --> 0:05:17.080 doing the right thing, which is offering diplomacy and talks 0:05:17.080 --> 0:05:21.320 with Russia, threatening massive sanctions if Russia invades, although I 0:05:21.360 --> 0:05:23.479 have to say I do not know how far the 0:05:23.520 --> 0:05:27.520 Europeans would go along with these very very tough financial 0:05:27.520 --> 0:05:30.760 and energy sanctions. Is that because they need Russian oil. 0:05:32.440 --> 0:05:35.440 It's because they have a much closer economic relationship with 0:05:35.520 --> 0:05:38.080 Russia than the US does, and they'll be much more 0:05:38.120 --> 0:05:41.239 adversely affected by it. Yes, it's energy, but it's also 0:05:41.520 --> 0:05:43.880 you know, their trade that they have with Russia would 0:05:43.880 --> 0:05:46.599 be adversely affected if they cut off from these you know, 0:05:46.680 --> 0:05:49.200 from the banks and things like that. So um, I 0:05:49.240 --> 0:05:52.159 think we could expect some cooperation from them, but not 0:05:52.200 --> 0:05:54.600 maybe as much as we wish. We're speaking with Angelus 0:05:54.600 --> 0:05:58.080 stant senior advisor for Center of Eurasian, Russian and Eastern 0:05:58.160 --> 0:06:02.039 European Studies. Her most recent Putin's world Russia against the 0:06:02.040 --> 0:06:06.640 West and with the rest. Also was in the Office 0:06:06.640 --> 0:06:08.680 of Policy Planning at the U s Department of State, 0:06:08.680 --> 0:06:11.640 among many other rules. Angela, I want to talk to 0:06:11.720 --> 0:06:14.520 you about what tools the United States has at its 0:06:14.520 --> 0:06:19.800 disposal in order to curb potential Russian aggression. Apart from sanctions, 0:06:19.960 --> 0:06:23.320 What can the US do, Well, there's a little bit 0:06:23.360 --> 0:06:25.599 an amount to what it can do. Obviously, we've been 0:06:25.680 --> 0:06:29.720 arming the Ukrainians, trying to give them more resilience, supporting them. 0:06:29.760 --> 0:06:32.400 But at President Biden the Senate, as there's obvious US 0:06:32.440 --> 0:06:34.920 troops are not going to go and fight Russian troops 0:06:35.360 --> 0:06:37.920 if there were to be an invasion of Ukraine. We're 0:06:37.920 --> 0:06:41.080 both nuclear superpowers. We've actually never afford each other before, 0:06:41.320 --> 0:06:43.760 so that is off the table. Uh. The other thing 0:06:43.800 --> 0:06:47.400 we're doing is strengthening our NATO allies in the region Poland, 0:06:47.480 --> 0:06:51.280 the Baltic States, Roumania. We've deployed extra troops, both NATO 0:06:51.400 --> 0:06:53.960 and US troops there because, of course, if there were 0:06:53.960 --> 0:06:57.240 an invasion, Uh, it's not necessarily true that it would 0:06:57.240 --> 0:07:00.240 just stop with Russia and Ukraine. You know, Poland shares 0:07:00.480 --> 0:07:04.200 a border with Ukraine at those Romania, so we you'd 0:07:04.200 --> 0:07:06.479 have to be very careful that this didn't spill over 0:07:06.880 --> 0:07:09.840 UM into our NATO allies. So I think those are 0:07:09.840 --> 0:07:12.920 the tools that we have UM and they so far 0:07:13.000 --> 0:07:16.400 they have probably been effective in staving off an invasion. 0:07:16.600 --> 0:07:18.400 That is, if you assume that Putin did want to 0:07:18.760 --> 0:07:20.960 invade in the first place, and not that he's just 0:07:21.040 --> 0:07:24.240 been using this to get to gain other goals. Okay, 0:07:24.240 --> 0:07:27.679 So I'm thinking about if you were, you know, putting 0:07:27.720 --> 0:07:33.520 together some documents for a presidential security team and advising them, 0:07:33.600 --> 0:07:36.840 what's the worst case scenario of what we are dealing 0:07:36.880 --> 0:07:39.280 with right now? What's the best case scenario? The best 0:07:39.280 --> 0:07:41.160 I can kind of get an idea of Russian backs 0:07:41.200 --> 0:07:43.880 down essentially, what's the worst case scenario you talk about 0:07:43.880 --> 0:07:47.400 that spillover UH into other NATO allies and that makes 0:07:47.400 --> 0:07:50.560 me a little nervous. Yeah, I mean, once you have 0:07:50.640 --> 0:07:53.400 a real war breakout, you can't predict what's going to happen. 0:07:53.600 --> 0:07:56.680 So the worst case scenario would be a full fledged invasion. 0:07:57.040 --> 0:07:59.040 You know, where the Russians go and they take here 0:07:59.160 --> 0:08:01.760 for capital, which they could do pretty quickly, and then 0:08:01.800 --> 0:08:05.240 what happens um. You know, the Ukrainian army is obviously 0:08:05.240 --> 0:08:08.280 weaker than the Russian one, but people will be fighting back. 0:08:08.440 --> 0:08:10.720 You just don't know in the fog of war what 0:08:10.840 --> 0:08:12.680 would happen, So you would have to try and make 0:08:13.040 --> 0:08:16.840 very sure that this didn't spread to some of Ukraine's 0:08:16.840 --> 0:08:20.600 neighbors who are NATO members. Um. But but but that 0:08:20.760 --> 0:08:23.480 I think would be would be the very worst scenario. 0:08:24.360 --> 0:08:27.960 The best scenario is if there is no invasion, um, 0:08:28.240 --> 0:08:31.680 and there are diplomatic talks. But even in the best scenario, 0:08:32.000 --> 0:08:34.559 this isn't gonna go away. There is no quick solution 0:08:34.640 --> 0:08:37.280 to this. Uh. The you know Russians want to reorder 0:08:37.280 --> 0:08:40.440 the European security for this, So um, you could have 0:08:40.760 --> 0:08:44.000 this pressure going on. You could have Russian troops withdraw 0:08:44.120 --> 0:08:47.240 then some bad um and the pressure would still be 0:08:47.280 --> 0:08:51.000 on Ukraine. How long does put And stay in power? Well, 0:08:51.000 --> 0:08:55.360 technically he can stay until six he had to constitution change. 0:08:55.400 --> 0:08:58.760 In reality, I think he can stay as long as 0:08:58.760 --> 0:09:02.200 he likes. He's turning seventy this year. Um. You know 0:09:02.320 --> 0:09:05.760 he runs for re election again in two but we 0:09:05.800 --> 0:09:08.480 could see him in office certainly until he's in his eighties. 0:09:09.000 --> 0:09:11.120 You talked about best kiss scenario, you talked about worst 0:09:11.160 --> 0:09:15.360 case scenario. What about likely scenario here? So I think 0:09:15.360 --> 0:09:19.640 the likely scenario is there isn't a full invasion UM 0:09:19.720 --> 0:09:23.000 or there isn't an invasion at all. There is constant 0:09:23.040 --> 0:09:26.840 pressure on Ukraine to make concessions, including saying that it 0:09:26.880 --> 0:09:30.360 doesn't want to join NATO UH, and then there will 0:09:30.400 --> 0:09:33.880 be constant pressure on the United States and Europe to 0:09:33.960 --> 0:09:38.040 renegotiate with the Russians UM to UH to in you know, 0:09:38.120 --> 0:09:42.719 to to exceed to some of Russia's security concerns, UH 0:09:42.800 --> 0:09:46.560 to discuss so called indivisible security with Russia. This could 0:09:46.679 --> 0:09:48.440 go on for a very long time, and I think 0:09:48.480 --> 0:09:51.120 that's the most likely scenario. We're not going to get 0:09:51.120 --> 0:09:54.640 back to the situation we were really before ten, where 0:09:54.640 --> 0:09:56.840 we still thought we could work with Russia on a 0:09:56.840 --> 0:09:59.680 lot of issues. We are working with them still on 0:09:59.800 --> 0:10:01.559 some with them, but I think we're going to get 0:10:01.559 --> 0:10:04.000 back more to a Cold war type system where we 0:10:04.080 --> 0:10:06.920 have to rethink, we have to dust off George Kennon's 0:10:07.200 --> 0:10:11.440 writings from and we have to think about how we 0:10:11.520 --> 0:10:15.480 can contain Russia UM more effectively. WHOLDA think that this 0:10:15.559 --> 0:10:18.559 is the kind of conversation we'd be having in Angela 0:10:18.679 --> 0:10:21.000 UM thank you so much for your insight, UH and 0:10:21.040 --> 0:10:24.200 your knowledge sharing. Angela Stent, Senior advisor at the Center 0:10:24.200 --> 0:10:27.480 for Eurasian Russian UH and East European Studies, during us 0:10:27.520 --> 0:10:30.800 on the phone from DC. Her book Putin's World, Russia 0:10:30.800 --> 0:10:33.440 against the West and with the Rest. She has served 0:10:33.440 --> 0:10:36.280 at the U. S State Department and the National Intelligence Council, 0:10:36.400 --> 0:10:40.000 So really some smart insight when it comes to the situation. 0:10:40.400 --> 0:10:44.479 This is Bloomberg Business Week with Carol Messer and Bloomberg 0:10:44.520 --> 0:10:48.560 Quick Takes Tim Stenovic on Bloomberg Radio. Well, the upcoming 0:10:48.559 --> 0:10:53.080 issue of Bloomberg Business Week. We're talking digital currencies, Carol, UH, 0:10:53.120 --> 0:10:55.880 and what China is doing specifically at the Olympics to 0:10:55.920 --> 0:10:58.720 show off that it has this digital version of its currency. 0:10:58.800 --> 0:11:00.320 And I gotta say I love the opening lot into 0:11:00.320 --> 0:11:02.880 this story. China is competing for more than just medals 0:11:02.960 --> 0:11:05.720 at those games in Beijing. It's also quietly trying to 0:11:05.760 --> 0:11:07.720 define the future of money. So let's get more on 0:11:07.760 --> 0:11:10.280 this story. Bloomberg News reporter Joe Light with us on 0:11:10.280 --> 0:11:12.839 the phone in our Washington, d C. Bureau, along with 0:11:12.840 --> 0:11:15.600 Bloomberg Business Week editor Joe Webber on the remote access 0:11:15.640 --> 0:11:18.760 line in Brooklyn. You know, Joe, I feel like the 0:11:18.840 --> 0:11:21.840 U s and China are dueling on so many different fronts, 0:11:21.840 --> 0:11:24.440 but China really being aggressive when it comes to a 0:11:24.480 --> 0:11:28.160 digital currency. Yeah, this is one where if any of 0:11:28.240 --> 0:11:32.240 us were in Beijing right now and we're attempting to 0:11:32.880 --> 0:11:35.559 interact with commerce and I actually, you know, I have 0:11:35.640 --> 0:11:38.880 been to Beijing and the before times and it is 0:11:38.920 --> 0:11:43.680 actually incredibly difficult to to pay for a meal by 0:11:43.720 --> 0:11:48.480 a souvenir because you're really not part of their ecosystem. 0:11:48.760 --> 0:11:52.240 UM and China kind of cracked that for the games 0:11:52.280 --> 0:11:54.880 and you basically can just pay with a digital u 0:11:55.040 --> 0:11:59.880 on and that has led uh a lot of watcher 0:12:00.080 --> 0:12:03.000 is of this space to look closely at it and say, 0:12:03.200 --> 0:12:05.600 could the US ever get there? Joe? And what's the 0:12:05.600 --> 0:12:09.240 answer so far? Uh? Well, I guess the answers maybe 0:12:09.480 --> 0:12:11.760 it is the first question is whether the US UM 0:12:11.840 --> 0:12:16.120 wants to get there. UM. The Federal Reserve just UM 0:12:16.280 --> 0:12:19.199 earlier this year put out a discussion paper which is 0:12:19.240 --> 0:12:22.360 really supposed to be the start of a multi year 0:12:23.120 --> 0:12:26.600 process of evaluating whether or not the US will issue 0:12:27.360 --> 0:12:30.560 its own for its own form of a central bank 0:12:30.679 --> 0:12:35.440 digital currency. And you know, even they're they're tepting feedback 0:12:35.480 --> 0:12:39.320 into may. Um. Lawmakers are supposed to get involved and 0:12:39.440 --> 0:12:41.680 help kind of define the contours what do you have 0:12:41.720 --> 0:12:45.560 CEBDC would look like. But so far central bankers, you know, 0:12:45.600 --> 0:12:48.480 are a little skeptical that it's necessary in the US, 0:12:48.559 --> 0:12:50.120 and they see a lot of see a lot of 0:12:50.160 --> 0:12:54.200 risk cooping before. Hey, Joe, you read about this in 0:12:54.240 --> 0:12:55.839 the piece, but I still need to get my head 0:12:55.840 --> 0:12:59.080 around this. The difference between this a central bank digital 0:12:59.080 --> 0:13:02.520 currency in just using your phone to pay for something, 0:13:02.640 --> 0:13:06.280 whether that is through a Chinese super app or you 0:13:06.400 --> 0:13:09.400 through Apple Pay here in the United States. Yeah, totally. 0:13:09.480 --> 0:13:12.520 That that's a great question, and I think for um, 0:13:12.640 --> 0:13:16.640 you know, most consumer transactions, it wouldn't look that much 0:13:16.640 --> 0:13:18.360 different at all. I mean, the way I think of 0:13:18.400 --> 0:13:22.240 a central bank divisual currency is basically a replacement for 0:13:22.280 --> 0:13:25.760 the cash in your pocket. It's a liability of the 0:13:25.800 --> 0:13:28.400 central bank, and if you went to use it, I 0:13:28.400 --> 0:13:31.839 mean basically just use it, probably just opened an app, 0:13:31.920 --> 0:13:35.480 hold up a QR code, and the money would transfer 0:13:35.600 --> 0:13:39.760 instantaneously to whoever you're You're dying from the big differences 0:13:39.880 --> 0:13:42.400 what's happening on the back end when you're using like 0:13:42.440 --> 0:13:46.920 Apple pay or sell, there are intermediaries involved. UM. If 0:13:46.960 --> 0:13:50.520 you're making an international payment, you know, you might have 0:13:50.600 --> 0:13:53.560 like your bank might have to talk to a correspondent bank, 0:13:53.600 --> 0:13:56.760 which talks to a correspondent bank in another country. That 0:13:56.760 --> 0:14:00.000 that whole process UM, you know, for an international transfer 0:14:00.280 --> 0:14:04.400 can take days, and all those inter mediaries are kind 0:14:04.400 --> 0:14:07.360 of taking their cut the central bank digital currency, that 0:14:07.400 --> 0:14:12.000 transfer would be happening, you know, instantaneously over government trolled 0:14:12.040 --> 0:14:16.000 servers UM without those cuts being taken UM. So it's 0:14:16.000 --> 0:14:19.160 really it's really more about, you know, what's happening on 0:14:19.200 --> 0:14:23.120 the back end when those payments are made, rather than UM. 0:14:23.160 --> 0:14:25.320 You know, the consumer experience if we look you know, 0:14:25.360 --> 0:14:27.120 pretty much the same, and you know, as it should 0:14:27.160 --> 0:14:30.800 because it's pretty easy already right your phone to the 0:14:30.800 --> 0:14:32.680 paper stuff. So it's safe to say that we're still 0:14:32.720 --> 0:14:35.880 figuring it out, and you definitely feel kind of hesitation 0:14:35.920 --> 0:14:39.280 amongst some central bankers, even though they're moving steps or 0:14:39.320 --> 0:14:43.240 taking steps to embrace UM a digital currency at the 0:14:43.240 --> 0:14:46.360 central bank level. Having said that, what is the advantage, 0:14:46.360 --> 0:14:49.160 What is the first mover advantage? If China is much 0:14:49.160 --> 0:14:52.040 more aggressive and moves faster than the US. What is 0:14:52.080 --> 0:14:56.640 the advantage to a country in Central Bank that does that. Yeah, 0:14:56.760 --> 0:14:59.080 So the key thing to remember that it's not just 0:14:59.320 --> 0:15:03.080 China who's developing UM CBDC s now UM. There are 0:15:03.160 --> 0:15:07.440 eight seven countries that are in the process of exploring 0:15:07.480 --> 0:15:11.320 a CBDC UM and and China is probably China, even 0:15:11.320 --> 0:15:14.520 though it's a pilot project still in China, UM, it's 0:15:14.600 --> 0:15:18.360 probably the largest economy that actually has something out there 0:15:18.400 --> 0:15:22.400 that's being experimented with. And that's an advantage because since 0:15:22.400 --> 0:15:25.040 you have all these other countries developing at once, they're 0:15:25.040 --> 0:15:30.560 gonna start UM tailoring their own CBDCs to UH to 0:15:30.760 --> 0:15:34.320 what's going what the largest economies are working working on. 0:15:34.440 --> 0:15:36.880 So if you have if you're a smaller country and 0:15:36.960 --> 0:15:41.160 you want your CBDC to interact as China CBBC, you're 0:15:41.200 --> 0:15:45.960 going to put in the privacy protections, you know, the protocols, 0:15:46.560 --> 0:15:49.360 the sorts of things that larger economy is kind of 0:15:49.400 --> 0:15:52.760 dictating to you. So China gets too far ahead of 0:15:52.840 --> 0:15:55.560 the US on setting these standards and the US kind 0:15:55.600 --> 0:15:59.160 of remains relatively silent, they could end up dictating you 0:15:59.200 --> 0:16:02.320 know what cb DC looks like UM worldwide. No, not 0:16:02.400 --> 0:16:06.680 just its own country and so bring it back to 0:16:06.720 --> 0:16:10.520 the US here, UM, who are the naysayers who don't 0:16:10.560 --> 0:16:13.200 want to see the US you know, be be at 0:16:13.480 --> 0:16:17.160 the tip of the speer here. Yeah. So some of 0:16:17.160 --> 0:16:20.040 the central bankers of themselves, you know, some members of 0:16:20.160 --> 0:16:24.400 the UM Board of Governors of the Federal Reserve have 0:16:24.400 --> 0:16:28.480 have expressed skepticism that it's necessary. UM banks are against it, 0:16:28.680 --> 0:16:30.960 and and one of the reason banks, you know, both 0:16:31.120 --> 0:16:34.360 both banks and central bankers are against it, is that 0:16:34.480 --> 0:16:39.440 having a CBDC could less than the amount of UM 0:16:39.760 --> 0:16:43.120 deposits that Americans keeping their banks. UM. So you know, 0:16:43.160 --> 0:16:46.640 if you're if you're if you're keeping a bank deposit, 0:16:46.680 --> 0:16:49.120 I mean basically that's a loan to your bank, and 0:16:49.160 --> 0:16:52.160 the bank will take that deposit and end up you know, 0:16:52.280 --> 0:16:54.440 using it to fund mortgages, using it to fund small 0:16:54.440 --> 0:16:57.080 business loans. That whole you know, web of credit in 0:16:57.120 --> 0:17:00.280 the US is very important and a lot of who 0:17:00.280 --> 0:17:03.440 have studied tvdcs think that if people could, you know, 0:17:03.840 --> 0:17:07.120 keep more electronic cash in little wallet instead of at 0:17:07.119 --> 0:17:09.000 a bank, they choose to do that, And if you 0:17:09.080 --> 0:17:11.520 reduced deposits in the US, you know by ten percent, 0:17:12.520 --> 0:17:15.840 even something that sounds relatively small like that, I could 0:17:15.880 --> 0:17:19.760 potentially have big ramifications for you know, the cost of 0:17:19.800 --> 0:17:23.240 credit and the amount of credit that's available. Interesting world 0:17:23.240 --> 0:17:25.280 that we're living in. It's a great deep dive into 0:17:25.359 --> 0:17:27.600 in terms of what China already doing. Um, thank you 0:17:27.640 --> 0:17:30.480 so much. Bloomberg News reporter Joe Lighte from our Washington 0:17:30.560 --> 0:17:33.399 d C. Bureau along with Bloomberg Business Week editor Joe Weber. 0:17:33.680 --> 0:17:37.280 You're listening to Bloomberg Business Week with Carol Messer and 0:17:37.359 --> 0:17:41.800 Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. It is 0:17:41.880 --> 0:17:44.040 today's Bloomberg Big Take. It's also among the most right 0:17:44.040 --> 0:17:46.359 on the Bloomberg terminal about the unknown hedge fund manager 0:17:46.400 --> 0:17:48.399 that you may want to know about. Why? How about 0:17:48.400 --> 0:17:52.040 two billion reasons? Why? Yeah, we're talking about Karthick Sarma 0:17:52.320 --> 0:17:56.200 out earning the likes of Steve Cohen last year. Yeah. 0:17:56.280 --> 0:17:58.520 I know, seriously, Well, I you know that's why we 0:17:58.560 --> 0:18:00.639 have him. A parmer in here, who's hedge fund reporter 0:18:00.640 --> 0:18:03.120 for Bloomberg News. She's with us in the Bloomberg Interactive 0:18:03.160 --> 0:18:05.720 Broker Studio. Check out him a story and more from 0:18:05.760 --> 0:18:07.920 the Bloomberg Big Take. It's on the Bloomberg Terminal and 0:18:07.960 --> 0:18:11.240 of course at Bloomberg dot com as well. Hammaum. Who 0:18:11.320 --> 0:18:14.520 is Karthik Sarma So Karthik Summer As you mentioned, Uh, 0:18:14.680 --> 0:18:16.840 he is a very little known hedge fund manager of 0:18:16.920 --> 0:18:20.320 people hadn't really heard about him much until the past year. UM, 0:18:20.400 --> 0:18:24.080 But he runs SRS Investment Management, which is a hedge 0:18:24.080 --> 0:18:26.640 fund that manages about eight billion dollars. And he used 0:18:26.640 --> 0:18:28.720 to work at Tiger Global, which is one of the 0:18:28.760 --> 0:18:31.000 pre eminent funds has had long term So is he 0:18:31.000 --> 0:18:33.560 considered a Tiger cub. He is considered a Tiger Grand 0:18:33.600 --> 0:18:37.080 cub actually because Tiger cubs come from Tiger managements. But yes, 0:18:37.119 --> 0:18:40.720 from this lineage of like very successful managers UM and 0:18:40.800 --> 0:18:43.840 he has a very strong reputation. And so what's interesting 0:18:44.000 --> 0:18:46.560 is that he made this very big bet on Avis 0:18:47.040 --> 0:18:51.199 UM the budget car rental company and UM and that 0:18:51.240 --> 0:18:54.240 earned him two billion dollars that he made personally. Last 0:18:54.280 --> 0:18:57.679 year alone, his hedge fund was up about thirty five percent, 0:18:58.280 --> 0:19:01.520 so investors did well as well. And this wasn't an 0:19:01.520 --> 0:19:05.119 eleven year old bet on Avis that he UM had held. 0:19:05.160 --> 0:19:09.040 And when the stock grew like four percents um, it 0:19:09.080 --> 0:19:11.080 paid off very well for him. You write in the 0:19:11.119 --> 0:19:14.040 story that this was this wager was an unusual one 0:19:14.080 --> 0:19:16.879 for him. It was UM So he's not sort of 0:19:16.920 --> 0:19:20.280 the typical hedge fund manager UM, and he doesn't take 0:19:20.320 --> 0:19:22.560 a lot of leverage on like like many funds too, 0:19:22.640 --> 0:19:24.919 and who actually runs the best short book. But he 0:19:24.960 --> 0:19:28.639 took UM a pretty sizeable position in AVIS, which is 0:19:28.680 --> 0:19:30.879 a typical for him. And he took a seat on 0:19:30.880 --> 0:19:32.520 the board, which you don't see a lot of funds 0:19:32.560 --> 0:19:35.680 like wanting to do UM. So this was unique for him. 0:19:35.720 --> 0:19:40.000 But UM, it's based on this belief that UM any 0:19:40.040 --> 0:19:42.600 company that owns a fleet of cars is going to 0:19:42.720 --> 0:19:45.960 do well in the like uber of the future environment 0:19:46.200 --> 0:19:49.399 where people are relying on these modes of transportation. How 0:19:49.440 --> 0:19:51.640 lucky was it When did he first get into because 0:19:51.680 --> 0:19:53.960 was it? It was a fight years ago. So it 0:19:54.040 --> 0:19:57.200 was a great pandemic play right where people renting, and 0:19:57.240 --> 0:19:58.879 then it became a meme stock like there was a 0:19:58.920 --> 0:20:02.280 lot of stuff there was the yes exactly, so he 0:20:02.400 --> 0:20:04.760 helped us for a long time. But then that there 0:20:04.800 --> 0:20:06.960 was that big meme stock bump that helped to meet 0:20:06.960 --> 0:20:08.360 cash out a little bit. And I think you took 0:20:08.400 --> 0:20:11.719 five percent profits um. And but it's it's still in 0:20:11.840 --> 0:20:14.560 the position and um it has since then grown a 0:20:14.560 --> 0:20:17.840 great deal. Well, speaking of the pandemic, where was where 0:20:17.920 --> 0:20:20.240 was Karthick riding out the pandemic? Was it the Hampton's? 0:20:20.520 --> 0:20:26.280 Was it Aspen? Maybe outside of the United States somewhere. 0:20:28.119 --> 0:20:30.240 So that's a very good question. A lot of the 0:20:30.240 --> 0:20:33.359 Hedgeman managers fled to places like Florida and Aspen or 0:20:33.400 --> 0:20:37.800 someplace beautiful, um and and luxurious. He actually moved to 0:20:38.480 --> 0:20:40.600 New Jersey and he spent some time with this family there. 0:20:40.760 --> 0:20:44.199 Carol's raising her hands. She's basically saying, Okay, the New 0:20:44.480 --> 0:20:49.400 Jersey is the Hamptons of New Jersey. It's a new specialty. UM. 0:20:49.440 --> 0:20:50.960 And he spent time with his family in a more 0:20:50.960 --> 0:20:53.879 modest home. UM. And so you know, it's a bit 0:20:53.880 --> 0:20:57.080 of a unique um, which is completely fine, um, but 0:20:57.200 --> 0:20:59.120 definitely a bit of a unique frend. Yeah, I think 0:20:59.480 --> 0:21:03.080 like a you know, billionaires earn a couple of billion dollars. UM. 0:21:03.119 --> 0:21:06.560 What's he like? Well, UM, these hedgement managers are in 0:21:06.840 --> 0:21:10.439 quite private and UM don't always want to comment and 0:21:10.520 --> 0:21:13.480 don't want to necessarily engage. So UM, everything we've heard 0:21:13.480 --> 0:21:16.320 about him is that he um is well respected that 0:21:16.359 --> 0:21:19.320