WEBVTT - ECB President Christine Lagarde Talks Global Economy 0:00:02.440 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio news. 0:00:07.480 --> 0:00:10.320 Right now, let's sit down to Bloomberg's Washington, DC Bureau. 0:00:10.320 --> 0:00:14.800 European Center Bank President Christine Leguard speaks exclusively with Bloomberg 0:00:14.800 --> 0:00:16.040 TV's Francine LACOI. 0:00:16.120 --> 0:00:16.720 Let's listen in. 0:00:17.160 --> 0:00:20.239 So your focus is on inflation, on data, is on Europe. 0:00:20.280 --> 0:00:23.959 Is there anything to be alarmed about what's happening in 0:00:24.000 --> 0:00:25.320 Europe economically? 0:00:27.040 --> 0:00:29.400 Well, first of all, very nice to be here with you, Fasin, 0:00:30.000 --> 0:00:34.159 and with all of you here. So what in my 0:00:34.240 --> 0:00:36.800 position as head of the European Central Bank, what I 0:00:36.880 --> 0:00:43.840 focus primarily on is prices, price stability, inflation and how 0:00:43.840 --> 0:00:46.520 it's evolving over the course of time. 0:00:47.760 --> 0:00:51.080 At the moment, we are not totally unhappy. 0:00:50.720 --> 0:00:53.840 With what we see because it looks very much that 0:00:54.480 --> 0:01:00.560 inflation is on the right track. Of these inflation you know, 0:01:00.760 --> 0:01:04.720 we come from very high numbers, as high on average 0:01:04.760 --> 0:01:06.520 for the whole of the UR area as ten point 0:01:06.760 --> 0:01:10.200 six percent, and the latest reading we had for the 0:01:10.240 --> 0:01:14.760 inflation in September was one point seven So you know, 0:01:14.840 --> 0:01:20.120 those those numbers are relatively reassuring. They are only a number, 0:01:20.319 --> 0:01:23.160 and we are not looking at one data point, as 0:01:23.200 --> 0:01:26.240 I have said repeatedly. We're looking at a lot of 0:01:26.319 --> 0:01:31.000 data to make sure that this disinflationary process continues to 0:01:30.640 --> 0:01:34.200 be to be well on track. But you know, we 0:01:34.319 --> 0:01:39.080 also have to be cautious, and you know, we cannot 0:01:39.240 --> 0:01:43.920 jump to conclusion that, Okay, done deal, we've broken the 0:01:43.959 --> 0:01:44.760 neck of inflation. 0:01:45.080 --> 0:01:47.800 No, And I think caution. 0:01:47.720 --> 0:01:50.560 Leads us to look at all the data that are 0:01:50.600 --> 0:01:55.680 coming in whichever form it takes, whether it's survey indicators 0:01:55.720 --> 0:01:58.320 as we had a lot of that in September, or 0:01:58.360 --> 0:02:04.520 whether they are more model derivated, as when we have 0:02:04.600 --> 0:02:07.040 projection exercises, and we will be looking at that and 0:02:07.080 --> 0:02:10.280 continue to be data dependent. But of course courses are 0:02:10.360 --> 0:02:11.639 not jumping to conclusions. 0:02:11.800 --> 0:02:13.919 So when you look at inflation, could it actually could 0:02:13.919 --> 0:02:16.160 you achieve your target a little bit earlier than expected? 0:02:16.480 --> 0:02:18.880 That would be my hope. You know, if. 0:02:20.320 --> 0:02:25.840 Our target is two percent medium term, and I'm absolutely 0:02:25.840 --> 0:02:30.000 confident that we will reach that target sustainably in the 0:02:30.000 --> 0:02:32.520 course of twenty twenty five, is it going to be 0:02:32.560 --> 0:02:34.600 early in twenty twenty five, is it going to be 0:02:34.760 --> 0:02:37.360 very late in twenty ten to twenty five. I think 0:02:37.960 --> 0:02:42.240 really will be determined by data, by the state of 0:02:42.280 --> 0:02:45.680 the economy, by energy prices, by the transmission. You know, 0:02:45.720 --> 0:02:48.959 we look at three components. We look essentially at inflation outlook, 0:02:49.000 --> 0:02:52.120 we look at underlying inflation, we look at transmission of. 0:02:52.120 --> 0:02:53.240 Our monetary policy. 0:02:53.240 --> 0:02:59.160 And on the basis of that sort of three pillar analysis, 0:02:59.200 --> 0:03:04.200 we can assess whether we are definitely on track. And 0:03:04.600 --> 0:03:06.640 when do you think it's a little bit sooner? 0:03:06.639 --> 0:03:08.720 I mean, so we of course have Bloomberg look at 0:03:08.720 --> 0:03:09.560 every single word. 0:03:09.880 --> 0:03:13.240 No, I know, so I'll be quite not. 0:03:15.360 --> 0:03:17.679 First quarter or second quarter? Or is it just too soon? 0:03:18.360 --> 0:03:21.000 I think it's too soon to say, because I wouldn't 0:03:21.040 --> 0:03:24.720 be loyal to our principle of data dependency if I 0:03:24.840 --> 0:03:26.640 was to tell you it's going to be on such 0:03:26.760 --> 0:03:30.760 time in the course of twenty five. I think we 0:03:30.880 --> 0:03:33.960 all governors of the Governing Council, and I'm sure you 0:03:34.000 --> 0:03:36.440 will be hearing lots of them in the next few 0:03:36.520 --> 0:03:40.040 days because they will be on air very much. I 0:03:40.040 --> 0:03:43.520 think we are all confident that twenty five is the 0:03:43.600 --> 0:03:47.080 year when we reach our target on a sustainable basis 0:03:47.360 --> 0:03:49.600 and with the medium term caveat that I have mentioned. 0:03:50.440 --> 0:03:54.000 But we have to be attentive to everything. We have 0:03:54.240 --> 0:03:58.680 energy prices that are low at the moment relative to 0:03:58.880 --> 0:04:05.560 where they could be. We have services going slightly down, 0:04:05.640 --> 0:04:08.280 but not much. We are still at three point nine 0:04:08.320 --> 0:04:11.520 percent in the last reading. And we have to pay 0:04:11.560 --> 0:04:16.080 attention to domestic inflation. That is the segment of inflation 0:04:16.200 --> 0:04:17.720 that is proving resistant. 0:04:18.080 --> 0:04:21.360 And domestic inflation is largely based on services. 0:04:21.839 --> 0:04:26.680 Services, It itself largely labor intensive, and we have to, 0:04:27.160 --> 0:04:30.960 as I said several times, we have to be very 0:04:31.000 --> 0:04:36.479 sharp in our analysis of the nexus between wages, profit 0:04:36.720 --> 0:04:42.000 and productivity. That three pillar platform will be very indicative 0:04:42.040 --> 0:04:45.320 of where services prices, which will inform domestic inflation. 0:04:45.800 --> 0:04:48.280 You can have a situation where not all inflation indicators 0:04:48.279 --> 0:04:50.760 fall at the same time in the next couple of months. 0:04:50.800 --> 0:04:53.480 Would you still feel comfortable if only some of them 0:04:53.720 --> 0:04:56.599 reach two percent with the trend going that way? 0:04:56.720 --> 0:04:59.120 You know, if you want to have an average of 0:04:59.160 --> 0:05:04.520 two percent, and you know that, for instance, the inflation 0:05:04.680 --> 0:05:07.200 of goods at the moment, at least based on the 0:05:07.240 --> 0:05:12.159 information we have is point four. By necessity, you will 0:05:12.160 --> 0:05:16.520 have other components of your inflation measurements which are higher 0:05:16.560 --> 0:05:20.279 than two percent. Because we think in terms of you know, 0:05:20.320 --> 0:05:24.880 average number based on the proportion of products services in 0:05:25.040 --> 0:05:27.280 the in the inflation basket, if you want to call 0:05:27.320 --> 0:05:30.919 it that way. So not all elements will have to 0:05:30.920 --> 0:05:33.960 be at two percent. We will need to have headline 0:05:34.000 --> 0:05:36.640 inflation at two percent. That's the target that we have 0:05:36.680 --> 0:05:40.120 set for ourselves. But when you have a point, I 0:05:40.160 --> 0:05:44.280 think is we need to be as granular as we 0:05:44.320 --> 0:05:48.760 can in the analysis of inflation of services because that 0:05:48.880 --> 0:05:53.560 is the one that is tricky and resistant, and we 0:05:53.640 --> 0:05:56.919 have to pay attention to what is sort of structural, 0:05:57.560 --> 0:06:04.039 what results from latest developments, What those latest developments indicate. 0:06:04.760 --> 0:06:08.120 Are those elements sort of what we call late commerce. 0:06:09.800 --> 0:06:14.680 For instance, if you think in terms of insurance, insurance 0:06:14.960 --> 0:06:19.000 generally is the premiums are renewed on an annual basis. 0:06:20.080 --> 0:06:22.560 Those are the ones that we call late commers, because 0:06:22.839 --> 0:06:27.000 they will increase their prices at the end of the year. 0:06:27.400 --> 0:06:30.919 We need to do the same analysis with wages. The 0:06:30.920 --> 0:06:33.480 beauty of Europe is that it is diverse, right, Okay. 0:06:35.240 --> 0:06:38.520 In some countries they renew the collective bargaining agreement on 0:06:38.520 --> 0:06:42.160 an annual basis, so there is a relative regularity in 0:06:42.560 --> 0:06:43.320 the increases. 0:06:43.680 --> 0:06:45.600 In other countries they. 0:06:45.520 --> 0:06:48.360 Will renew the collective bargaining agreement every. 0:06:48.120 --> 0:06:51.240 Two or three years, and there is a catch up element. 0:06:51.360 --> 0:06:54.440 So we have to really we have to do that 0:06:54.560 --> 0:06:59.400 granular analysis which will inform where it's coming from, how 0:06:59.440 --> 0:07:01.840 long it's been in the making, what is the catch 0:07:01.880 --> 0:07:05.599 up element about it, and how lasting it is. 0:07:05.560 --> 0:07:06.239 For the future. 0:07:06.400 --> 0:07:09.520 So we need to look at information from the past 0:07:09.560 --> 0:07:12.680 which is relatively stable, to see how it informs our 0:07:12.800 --> 0:07:13.920 assessment of the future. 0:07:14.040 --> 0:07:14.720 We do all that. 0:07:15.560 --> 0:07:17.360 So if you look at the economic blueprint that we're 0:07:17.360 --> 0:07:21.480 seeing for the moment in Europe, so inflation is coming down, 0:07:21.880 --> 0:07:24.920 wages are arising, the economy seems to be holding up, 0:07:24.920 --> 0:07:26.560 but what's happening with consumers? 0:07:27.000 --> 0:07:28.240 I would qualify one. 0:07:29.080 --> 0:07:31.720 I agree with you, maybe except on wages, because I 0:07:31.800 --> 0:07:35.360 think that wages is at a bit of a pivotal 0:07:35.400 --> 0:07:39.560 moment where and it goes back to my granular assessment. 0:07:40.520 --> 0:07:43.760 If you look at compensation per employee, it is beginning 0:07:43.840 --> 0:07:48.080 to go down a bit. If you look at negotiated wages, 0:07:48.560 --> 0:07:51.720 depending on whether you include the one off payment catching 0:07:51.760 --> 0:07:57.480 up or not. It's also moving in the direction of 0:07:57.880 --> 0:08:00.760 lower growth than what we have seen. So that leads 0:08:00.840 --> 0:08:05.400 us to think that this wage increase that could have 0:08:05.520 --> 0:08:09.520 led to second round inflation is probably beginning to abate now. 0:08:10.600 --> 0:08:15.280 But coming back to you, you consumer point that that's 0:08:15.480 --> 0:08:16.960 a really interesting. 0:08:18.240 --> 0:08:20.400 European phenomenon. I think our. 0:08:20.320 --> 0:08:26.920 Narrative, the narrative that we gave in September, which is 0:08:26.960 --> 0:08:32.360 the fact that recovery will be driven by consumption because 0:08:32.880 --> 0:08:37.520 the real income that households have or that corporates have 0:08:37.640 --> 0:08:41.160 to invest has improved over the course of time. 0:08:41.240 --> 0:08:42.520 That still holds. 0:08:44.080 --> 0:08:49.320 The timing of that is being extended. And the European 0:08:49.400 --> 0:08:53.680 consumers certainly in general, do not have the same propensity 0:08:53.960 --> 0:08:55.000 to consume. 0:08:55.040 --> 0:08:56.360 Than the US consumers. 0:08:56.800 --> 0:08:58.640 And it's often said that, oh, as long as the 0:08:58.720 --> 0:09:03.680 US consumers consume, the economy will do fine. The European 0:09:03.720 --> 0:09:08.000 consumers are not on the same page of active consumption, 0:09:08.160 --> 0:09:10.679 I would say, And if I look at Q two, 0:09:11.200 --> 0:09:15.320 consumption has actually gone down a bit, although real income 0:09:15.360 --> 0:09:20.480 disposable income had increased, and saving in Q two again 0:09:21.240 --> 0:09:25.120 had increased. So it's as if, on average, the European 0:09:25.160 --> 0:09:30.280 consumer was sitting there looking at his real income increasing, 0:09:30.880 --> 0:09:34.520 looking at the world out there, looking at the war 0:09:34.960 --> 0:09:39.280 at the doorstep of Europe, looking at developments in the 0:09:39.320 --> 0:09:44.360 Middle East, looking at the political uncertainty around and thinking well, 0:09:45.080 --> 0:09:48.160 I might be better off saving a bit more, and 0:09:48.200 --> 0:09:51.120 who knows, I might cut a good deal with my 0:09:51.240 --> 0:09:55.240 bank because the banks are still offering not generous, but 0:09:57.080 --> 0:10:02.800 possibly attractive rates for time deposits. Rather than consume, consume, consume. 0:10:03.520 --> 0:10:05.080 Do interest rate cuts help with that? 0:10:05.400 --> 0:10:05.719 Do they? 0:10:06.080 --> 0:10:10.080 Should they actually? Or is it transmission mechanism taking longer 0:10:10.120 --> 0:10:10.800 than expected? 0:10:11.760 --> 0:10:15.520 I don't think so. I think. I think gradually. 0:10:16.600 --> 0:10:21.560 Reduced interest rates are being transmitted, and our monetary policy 0:10:21.760 --> 0:10:27.680 is traveling to financing, to the activity, and ultimately to inflation. 0:10:28.280 --> 0:10:32.160 So it should It should the encourage spending, whether by 0:10:32.160 --> 0:10:34.680 we have consumption or investment. But on investment we're not 0:10:34.720 --> 0:10:36.160 seeing much at the moment. 0:10:36.240 --> 0:10:36.520 Either. 0:10:37.160 --> 0:10:38.920 Are you expecting it to pick up or are there 0:10:38.920 --> 0:10:41.280 are particularly weak countries that give you worries. 0:10:42.280 --> 0:10:46.599 There are countries that currently are not performing spectacularly. 0:10:47.160 --> 0:10:49.040 When are you expecting them to pick up again? 0:10:50.240 --> 0:10:52.480 Well, I think a revision of the business model and 0:10:52.960 --> 0:10:57.240 a collective endeavor to to to support the economy would 0:10:57.240 --> 0:10:59.960 be helpful, including you know, public spending. 0:11:00.440 --> 0:11:03.120 But there's no real sign of that coming in some 0:11:03.200 --> 0:11:03.920 of these countries. 0:11:04.440 --> 0:11:07.840 Well, Necessity Floire, I don't know how you translate. 0:11:07.480 --> 0:11:12.840 That necessity usually leads to something. The overarching point let 0:11:12.920 --> 0:11:15.480 me madame aguein when you look at monetary policy. So 0:11:15.520 --> 0:11:20.079 the markets really expect quite a lot of incremental interest 0:11:20.160 --> 0:11:22.480 rate cuts until April? Are they right? 0:11:23.400 --> 0:11:28.319 It's you know, it's their analysis. As I said, inflation 0:11:28.800 --> 0:11:32.680 dese inflation well on track? Have we broken the neck 0:11:32.720 --> 0:11:33.320 of inflation? 0:11:34.040 --> 0:11:34.600 Not yet? 0:11:35.800 --> 0:11:39.320 Should we jump to conclusion or should we not be 0:11:39.400 --> 0:11:43.280 a bit cautious and as data dependent as we have 0:11:43.320 --> 0:11:43.960 committed to be? 0:11:44.120 --> 0:11:46.319 I think is our determination. 0:11:47.120 --> 0:11:49.240 Markets have their own way of looking at things, and 0:11:49.240 --> 0:11:52.600 they you know they have They're playing with other people's money, 0:11:52.960 --> 0:11:56.000 and the more they make, the better, I guess. 0:11:56.240 --> 0:12:00.640 So my objective is price stability markets. 0:12:00.679 --> 0:12:03.120 I mean, markets could derail a bit of of of 0:12:03.160 --> 0:12:05.840 that if they mispriced things. Do you just ignore markets 0:12:05.920 --> 0:12:06.400 or do you try? 0:12:06.440 --> 0:12:08.720 And no no, I don't no, no, no, no, no, We 0:12:08.760 --> 0:12:13.080 don't ignore anyone. We look at what colleagues do around 0:12:13.120 --> 0:12:17.400 the world, what impact it has on us. By necessity, 0:12:17.440 --> 0:12:23.920 we have to factor in our models what markets anticipate 0:12:23.960 --> 0:12:28.600 in terms of rate curve and and but it's not 0:12:28.679 --> 0:12:31.040 to say that we are market dependent, far from it. 0:12:31.880 --> 0:12:33.959 But it's it's it's a component that we have to 0:12:34.160 --> 0:12:35.240 that we take into account. 0:12:36.040 --> 0:12:38.600 What would it take you to do fifty bases point cuts? 0:12:39.520 --> 0:12:40.679 I don't want to speculate. 0:12:41.000 --> 0:12:43.840 I think the I think for me, the direction of 0:12:43.880 --> 0:12:49.280 travel is clear and what what we have done, you know, 0:12:49.440 --> 0:12:53.960 starting in June is I think the sensible approach and 0:12:55.040 --> 0:12:59.400 one that we that should be continued with that caution 0:12:59.600 --> 0:13:03.520 element about it. Not jumping to the conclusion that, oh, 0:13:03.520 --> 0:13:05.560 because we've done twenty five, will do twenty five in 0:13:05.720 --> 0:13:09.680 each and every time. No, or because we think that 0:13:09.720 --> 0:13:11.840 it is going to be done or up this will 0:13:11.840 --> 0:13:16.600 do fifty. I think that's you know, that's not called 0:13:16.760 --> 0:13:21.600 for given how we are trying to really be solid 0:13:21.600 --> 0:13:27.160 in our analysis and be both data dependent but also 0:13:27.280 --> 0:13:32.560 applying judgment and trying to look forward. 0:13:33.080 --> 0:13:34.240 And we need. 0:13:34.120 --> 0:13:38.600 To scrutinize and be as granular as we can because 0:13:38.600 --> 0:13:42.480 we are getting closer to the point where hopefully the 0:13:42.600 --> 0:13:46.160 economic situation will be in the right equilibrium. 0:13:47.120 --> 0:13:50.640 But to jump to conclusions and to you know, you will. 0:13:50.480 --> 0:13:52.640 Have people the whole week saying, oh, it should be fifty, 0:13:52.640 --> 0:13:56.640 it should be twenty five inches. No direction of travel 0:13:56.760 --> 0:14:01.400 clear pace to be determined on the bays of backward 0:14:01.520 --> 0:14:05.520 and forward looking element, using the three criterias and applying judgment. 0:14:05.679 --> 0:14:08.560 I think that's how I see it. But it's a 0:14:08.559 --> 0:14:10.280 collective endeavor in Europe. 0:14:10.320 --> 0:14:10.520 You know. 0:14:10.880 --> 0:14:16.559 I'm lucky to have plenty of very smart governors around 0:14:16.600 --> 0:14:18.360 the table and my executive board members. 0:14:18.400 --> 0:14:21.640 Everybody has a few everybody does have a view. When 0:14:21.840 --> 0:14:25.080 is the right time to start thinking about being less accompositive. 0:14:25.080 --> 0:14:26.480 I don't know how often you can ask about the 0:14:26.520 --> 0:14:27.040 neutral rate. 0:14:27.560 --> 0:14:30.960 It just gets very often and invariably. I don't know, 0:14:32.480 --> 0:14:35.800 because it's that it's not an elusive concept, but it's 0:14:35.800 --> 0:14:38.480 one that is first of all, pretty complicated to articulate, 0:14:38.560 --> 0:14:43.960 and that there is based on multiple factors including productivity, aging, the. 0:14:43.920 --> 0:14:46.200 Impact of climate change, and all the rest of it. 0:14:46.280 --> 0:14:48.440 So if you were to ask me today, where is it, 0:14:48.840 --> 0:14:52.200 the honest an sways, I don't know. I think fair 0:14:52.240 --> 0:14:55.040 to say and credit to the research of the CB, 0:14:55.200 --> 0:14:58.280 which is not the line adopted by either myself, the 0:14:58.320 --> 0:15:01.320 Executive Board or the Governing Council. But I think their 0:15:01.360 --> 0:15:05.080 conclusion is that it's going to be lower than where 0:15:05.120 --> 0:15:08.120 it is today, and it's probably going to be higher 0:15:08.160 --> 0:15:11.680 than where it was anticipated to have been prior to COVID, 0:15:11.760 --> 0:15:13.440 So anywhere in between. 0:15:14.560 --> 0:15:15.360 That's a big rains. 0:15:16.040 --> 0:15:20.640 I know it's a big range, but it's it's it's 0:15:20.640 --> 0:15:24.320 not like a mirage, but it's something that you can see, 0:15:24.360 --> 0:15:28.160 perceive and identify the closer you are to that element 0:15:28.360 --> 0:15:30.640 because it's you know, it's it's an equilibrium where you 0:15:30.680 --> 0:15:35.520 have the perfect economic conditions. Employment at at potential, growth 0:15:35.520 --> 0:15:38.720 at potential. We have to but we are not there 0:15:39.120 --> 0:15:42.880 for sure, and we are still restrictive and will continue 0:15:42.880 --> 0:15:44.760 to be for as long as it's needed to get 0:15:44.800 --> 0:15:45.520 to that point. 0:15:46.360 --> 0:15:48.480 I know that your mandate is on inflation, but we 0:15:48.560 --> 0:15:52.240 had the drug Ey Report of Competitiveness. It was pretty old. 0:15:52.280 --> 0:15:53.640 Drug is former presidency. 0:15:54.120 --> 0:15:56.880 So he comes into your ear, your fault. I mean 0:15:56.880 --> 0:15:59.720 he was pretty alarming actually in what Europe needs. 0:16:01.320 --> 0:16:06.040 No, I think that he was alarming in his diagnosis 0:16:06.520 --> 0:16:09.880 of where Europe is at, and I think I said 0:16:09.880 --> 0:16:14.400 he was. It was alarming and fail or just I 0:16:14.440 --> 0:16:16.680 forgot what I used, because I think that he has 0:16:16.720 --> 0:16:20.720 conducted in his position as retired President of the CB, 0:16:21.000 --> 0:16:24.760 retired governor of the Banca Italia, retired Prime Minister of Italy. 0:16:25.360 --> 0:16:30.400 He had this sort of paramount vision, holistic vision, if 0:16:30.400 --> 0:16:34.440 you will, of how Europe functions, what's missing, where are 0:16:34.440 --> 0:16:37.720 the gaps? And he had, you know, a great team 0:16:37.760 --> 0:16:42.480 of economists and other experts who helped him and fielded 0:16:42.600 --> 0:16:46.000 his considerations and thinking, which is why I think his 0:16:46.560 --> 0:16:51.320 diagnosis is severe, but just is suggestions for the future 0:16:51.320 --> 0:16:53.760 in terms of what needs to change, what needs to 0:16:53.800 --> 0:16:56.600 be done, what reforms must take place. This is not 0:16:56.720 --> 0:17:00.240 alarming or unless you say alarming, because he set the 0:17:00.280 --> 0:17:03.320 alarm bell saying now is the time to get on 0:17:03.400 --> 0:17:06.520 with it, please, And he's better equipped than anybody else 0:17:06.560 --> 0:17:08.159 to do that because he's been there, has done it, 0:17:08.200 --> 0:17:12.360 He's seen the procrastination in play in those European Leaders 0:17:12.880 --> 0:17:18.280 Council meetings, and I think he's I really like his report. 0:17:18.480 --> 0:17:21.399 I don't agree with everything that he says, and I 0:17:21.440 --> 0:17:23.879 think that our job now, and the job of the 0:17:23.880 --> 0:17:26.560 Commission and the job of the European leaders is to 0:17:26.640 --> 0:17:31.199 filter out what can be done expeditiously without bumping into 0:17:31.680 --> 0:17:38.119 resistance and obstacles and territorial wars and turf discussions, to 0:17:38.240 --> 0:17:41.360 move the needle and to make sure that both on productivity, 0:17:41.800 --> 0:17:45.639 whether there's a huge big lag on a better energy sovereignty, 0:17:46.600 --> 0:17:52.080 on the fluidity of a labor factor and capital there 0:17:52.119 --> 0:17:56.040 is real progress for my money. You know, in my position, 0:17:56.560 --> 0:17:59.960 I would want those three components to really be addressed 0:18:00.160 --> 0:18:02.239 because it would make a difference for the fact that 0:18:02.280 --> 0:18:03.360 we have against inflation. 0:18:03.800 --> 0:18:05.680 I mean, there are a couple of I guess concrete points. 0:18:05.720 --> 0:18:05.800 Right. 0:18:05.840 --> 0:18:09.840 There's a huge cross border possible banking merger that could 0:18:10.080 --> 0:18:13.200 or couldn't happen. He mentioned, you know, the joint issuance 0:18:13.200 --> 0:18:14.639 of view bonds. 0:18:14.720 --> 0:18:16.920 What would make you know what he said on the 0:18:17.040 --> 0:18:19.720 latter point, because it's a controversial one. Yes, basically the 0:18:19.760 --> 0:18:23.040 issuance of European bonds. We did it once with COVID, 0:18:23.119 --> 0:18:26.000 and you have a whole bunch of European leaders who say, 0:18:26.040 --> 0:18:28.560 oh it was one shot deal with not never again. 0:18:29.359 --> 0:18:33.440 So it's a highly controversial element of his report, which 0:18:33.480 --> 0:18:36.399 is why it's being picked up by media and others. 0:18:36.960 --> 0:18:40.960 He himself said at the Brugal Institute, which is pretty 0:18:41.000 --> 0:18:44.760 thorough and deep into these matters, he said, you can 0:18:44.840 --> 0:18:47.960 read my report, take my report, move on with it 0:18:48.560 --> 0:18:52.960 and take ownership without that chapter, forget about the debt issue. 0:18:52.960 --> 0:18:54.840 And so if it's going to be a battle between 0:18:54.880 --> 0:18:59.199 the Nordic and the Southeast, and forget about that, but 0:18:59.320 --> 0:18:59.840 do the rest. 0:19:00.080 --> 0:19:00.760 I think he's right. 0:19:01.359 --> 0:19:04.119 Would you be in favor of bank consolidation to almost 0:19:04.240 --> 0:19:07.919 you know, signal that actually Europe means that two. 0:19:07.080 --> 0:19:11.200 Particular I think productivity is the key, the key battle, 0:19:12.720 --> 0:19:14.920 but it's not directly related to what we do. That 0:19:14.960 --> 0:19:17.879 what is directly related to what we do because of 0:19:17.960 --> 0:19:22.119 monetary policy transmission notably, and because of the financial stability, 0:19:22.119 --> 0:19:25.399 without which price stabilities will be an illusion is number 0:19:25.440 --> 0:19:29.760 one capital market union and banking union. Banking union. You 0:19:29.760 --> 0:19:33.280 can think of three pillars. Two have been built and 0:19:33.320 --> 0:19:36.600 the third one is missing. So that's what you know. 0:19:36.680 --> 0:19:42.840 The edis, which is the European Deposit Insurance Scheme does 0:19:42.880 --> 0:19:45.359 not exist yet, so every country is on its own 0:19:45.560 --> 0:19:48.960 and that needs to be addressed. My colleague archaem Nagel 0:19:49.000 --> 0:19:52.439 actually this morning committed a nice OpEd on that, and 0:19:52.480 --> 0:19:58.000 I'm delighted that he did. And capital market union, you 0:19:58.040 --> 0:20:02.200 know we have in some areas, you know, post market infrastructure, 0:20:02.200 --> 0:20:07.120 we have twenty seven different backbone that doesn't work or it. 0:20:07.080 --> 0:20:08.320 Does no, no, I shouldn't say it. 0:20:08.960 --> 0:20:12.320 Works, but it works. It is suboptimal by long by 0:20:12.359 --> 0:20:14.639 a long way. And one of the strength of the 0:20:14.760 --> 0:20:18.480 US market has to do with the capital market that 0:20:18.640 --> 0:20:23.520 is vibrant, deep, liquid, and I think much more easily 0:20:23.560 --> 0:20:25.560 accessible than it is in Europe. 0:20:26.000 --> 0:20:28.760 It is the I guess, the window for Europe to 0:20:28.800 --> 0:20:32.080 get its act together narrowing. I mean we also sit 0:20:32.240 --> 0:20:36.080 if you're a European between the US and China the IMF. Also, 0:20:36.240 --> 0:20:36.920 you could argue. 0:20:36.760 --> 0:20:38.200 That it's a strategic place. 0:20:38.000 --> 0:20:41.439 To be in as long as as long as it 0:20:41.520 --> 0:20:44.480 is solid and strong enough to stand with its own 0:20:44.480 --> 0:20:48.480 sovereignty and its ability to keep. 0:20:48.320 --> 0:20:50.320 The savings at home. That's one example. 0:20:51.119 --> 0:20:55.639 There is so much European savings that travel the world 0:20:55.880 --> 0:20:59.720 because they don't have an instrument or a market in 0:20:59.760 --> 0:21:00.919 which to invest. 0:21:01.640 --> 0:21:04.080 But what are you optimistic about going forward? I know 0:21:04.119 --> 0:21:06.080 there's you know, we talk a lot about terroriffs, we 0:21:06.119 --> 0:21:10.399 talk a lot about trade also being rebuilt now because 0:21:10.400 --> 0:21:13.879 of geopolitics instead of economic advantage. That must make it 0:21:13.960 --> 0:21:16.080 harder for Europe. 0:21:16.480 --> 0:21:18.119 Well, first of all, there is a lot of trade 0:21:18.200 --> 0:21:22.399 that takes place within Europe. It's not necessarily well accounted for, 0:21:22.520 --> 0:21:27.000 but there's a lot of good services movement within Europe 0:21:27.240 --> 0:21:31.000 that can be improved significantly. And you need to look 0:21:31.000 --> 0:21:33.399 at the LITA report in addition to the Drug Report 0:21:33.880 --> 0:21:36.400 and recall it a from a Prime minister as well 0:21:37.440 --> 0:21:41.199 makes the case for better European integration. Remove some of 0:21:41.240 --> 0:21:45.640 the obstacles, do away with some of these multiple licenses 0:21:46.040 --> 0:21:50.520 to operate, the prior authorization here, prior authorization there, and 0:21:51.000 --> 0:21:54.920 have a real integrated deep market one of the largest 0:21:54.920 --> 0:21:58.080 in the world. But we just we keep procrastinating about 0:21:58.119 --> 0:22:04.720 little boundaries everywhere. So that integration will increase, in my view, 0:22:05.240 --> 0:22:08.320 the trade that is within Europe, and I think it 0:22:08.320 --> 0:22:11.560 will also encourage investment in Europe because investors look at 0:22:12.800 --> 0:22:16.000 the general terms the tax regime, but they look first 0:22:16.160 --> 0:22:19.040 and foremost what is the market where will I sell? 0:22:19.240 --> 0:22:20.720 Is there? Deep? Is there? 0:22:20.840 --> 0:22:24.159 Deep and wide market? What scale can I get as 0:22:24.160 --> 0:22:26.199 a result of my investment. So I think that a 0:22:26.240 --> 0:22:30.960 lot is in our hands. I don't like restrictions to trade. 0:22:31.200 --> 0:22:33.520 I'm a former trade secretary for my country in France, 0:22:33.600 --> 0:22:37.879 and I just know how much trade can bring in 0:22:38.000 --> 0:22:42.480 terms of competition, in terms of added innovation, in terms 0:22:42.480 --> 0:22:47.679 of elasticity. I think trade is helpful, but the trade 0:22:47.680 --> 0:22:52.480 conditions have to be fair. They cannot be constantly subsidized 0:22:52.600 --> 0:22:54.040 in a very or pack and. 0:22:56.359 --> 0:22:58.080 Unfair way. I was going to. 0:22:58.000 --> 0:23:00.399 Ask you as so. We recently had in view with 0:23:00.440 --> 0:23:03.640 a US presidential candidate who said tariffs was his favorite word. 0:23:04.200 --> 0:23:07.920 I imagine because of also your background, former IMF, former 0:23:07.960 --> 0:23:10.199 trade minister, this is not your favorite word. What is 0:23:10.240 --> 0:23:11.040 your favorite word? 0:23:11.119 --> 0:23:16.080 I think fair trade is a key boost for growth, 0:23:16.160 --> 0:23:20.280 for employment, for innovation, for productivity, and I would say 0:23:20.320 --> 0:23:24.919 that it's something that we should not throw away because 0:23:25.320 --> 0:23:28.360