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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Welcome to our TV audience and ready audience worldwide here

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Speaker 2: in the Treasure Department with Secretary Jenna Yellen. Great to

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Speaker 2: be with you, and there's a lot I hope to cover,

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Speaker 2: and I wonder if we could begin first with your

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Speaker 2: work on the world stage. We can start with Ukraine,

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Speaker 2: and something that Bloomberg reported overnight is that you and

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Speaker 2: the administration are considering new sanctions on Russian oil, perhaps

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Speaker 2: looking at Russian oil exports, at these shadow tankers that

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Speaker 2: the Russian government has. I guess, first of all, I

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Speaker 2: wonder if you can confirm that those conversations, those discussions

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Speaker 2: are underway.

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Speaker 3: Well, let me say we never preview sanctions, and we've

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Speaker 3: constantly been tightening our sanctions on Russia. Our overall aim

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Speaker 3: is to impair Russia's ability to continue conducting this brutal war,

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Speaker 3: to try to deny it the military equipment it needs

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Speaker 3: to be able to do that, and taken a variety

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Speaker 3: of steps to do it. But we have been focused

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Speaker 3: since the outset on Russian oil revenue. It's a critical

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Speaker 3: component of the Russian budget, and we've been looking for

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Speaker 3: creative ways to try to reduce Russia's revenue. One of

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Speaker 3: the most creative policy making things that I've been involved

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Speaker 3: at during my career occurred here in Treasury when we

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Speaker 3: were able to devise away and convince our allies to

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Speaker 3: join us in this imposing a price cap on Russian oil,

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Speaker 3: which was a way of avoiding price spikes when the

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Speaker 3: war started for oil and actually succeeded in keeping Russian

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Speaker 3: oil flowing into the market. So we continue to look.

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Speaker 3: Of course, over time, while these sanctions have been effective,

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Speaker 3: Russia has invested a lot its own fleet of ships

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Speaker 3: to carry its own oil.

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Speaker 1: We cut it off.

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Speaker 3: From allied ships new insurance that have been costly to

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Speaker 3: Russia to have to make those investments. Now, what's unusual

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Speaker 3: about this moment is that the oil market seems to

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Speaker 3: be well supplied.

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Speaker 1: Prices are relatively cheap.

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Speaker 3: Prices are relatively low. Global demand is down, and there

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Speaker 3: really has been an increase in supply. American firms have

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Speaker 3: stepped up, we have vastly expanded oil production. OPEC countries

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Speaker 3: like Saudi Arabia have excess capacity at this time. So

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Speaker 3: the global oil market is softer, and that create it's

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Speaker 3: possibly an opportunity to take some further action.

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Speaker 1: We're talking at it.

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Speaker 2: You talk about creative policy making, and so visa the Ukraine.

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Speaker 2: There was a moment this week when you dispersed twenty

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Speaker 2: billion dollars to Ukraine a loan and they'll be paid

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Speaker 2: for with interest on frozen Russian assets. So another creative

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Speaker 2: piece of policy making that you've been involved with. We're

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Speaker 2: at this moment where I think there are a lot

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Speaker 2: of questions about what policies can remain in place, and

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Speaker 2: I wonder when you look at that in particular, are

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Speaker 2: you confident that under a new administration that program can

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Speaker 2: continue in perpetuity.

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Speaker 3: Well, we have worked with if you're talking about the

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Speaker 3: so called ER loans, Extraordinary Acceleration loans, We've now transferred

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Speaker 3: twenty billion dollars, which is the United States contribution to

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Speaker 3: this loan package, to the World Bank, to a financial

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Speaker 3: intermediary phone, and that was set up to channel these

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Speaker 3: moneies over time in coordination with our allies to Ukraine

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Speaker 3: as as it's needed. So and as you mentioned importantly,

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Speaker 3: this is not using US taxpayer resources. These loans will

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Speaker 3: be paid off over time by the extraordinary or windfall

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Speaker 3: revenues that are being earned in Europe at Euroclear on

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Speaker 3: the Russian assets that are being frozen there. So Russia

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Speaker 3: is really helping with this to pay Ukraine to you know,

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Speaker 3: help it, help it fight the war. So I feel

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Speaker 3: confident that this is something that can stay in place.

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Speaker 3: And what what we're really trying to do is to

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Speaker 3: strengthen Ukraine's situation, its ability to defend itself and hopefully

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Speaker 3: at some point to come to the table to bargain

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Speaker 3: with Russia for a just piece. We want to strengthen

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Speaker 3: its ability to have the equipment it needs, to have

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Speaker 3: the money it needs to continue to finance schooling and

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Speaker 3: emergency services to its people, and to put it in

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Speaker 3: the best possible situation to support a lasting and just peace.

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Speaker 2: Let me pivot to China, and this has been a relationship.

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Speaker 2: I think you've invested a lot of time and energy

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Speaker 2: and kind of rebuilding a conduitive communication between Washington and Beijing.

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Speaker 2: You have deputies right now heading to China for meetings

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Speaker 2: with their counterparts, meetings taking place in South Africa as well. Reportedly,

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Speaker 2: there is concern about what would happen if that relationship,

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Speaker 2: the US China relationship were to return to the place

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Speaker 2: it was in when you took office now four years ago.

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Speaker 1: How much does that concern you?

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Speaker 2: What would the consequences of that be if the efforts

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Speaker 2: that you've put in to rehabilitate that relationship go to

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Speaker 2: the wayside.

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Speaker 3: So I do think it's important to have ongoing communications

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Speaker 3: at all levels, from the President and she talking to

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Speaker 3: senior US officials to staff that need to communicate. Just

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Speaker 3: having open channels of communication is valuable and I believe

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Speaker 3: it will be seen as continuing to offer value. These

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Speaker 3: are channels by which we can make clear what we're

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Speaker 3: unhappy about, where our concerns are, and why we have them. Well,

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Speaker 3: we have significant concerns about Russia's economic policies that we

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Speaker 3: discuss in these channels. It's also the case that we

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Speaker 3: have shared global interests, whether it's in climate change, combating pandemics,

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Speaker 3: dealing with potential financial disruptions that could affect global financial markets.

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Speaker 3: We're also using these channels to build trust, in channels

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Speaker 3: for cooperation so that we can work together where our

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Speaker 3: interests coincide. So there's no question that we have serious concerns,

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Speaker 3: both from a national security point of view and a

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Speaker 3: broader economic view with China's behavior, but nevertheless is the

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Speaker 3: two largest economies in the world. It's critical to have

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Speaker 3: open channels of communication. It helps avoid misunderstandings. We've used

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Speaker 3: these channels when we've taken action like export controls or

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Speaker 3: our recent outbound investment restrictions to explain what we're trying

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Speaker 3: to accomplish, to avoid misunderstandings that can worsen the relationship needlessly.

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Speaker 2: You have a particular insight into what makes your counterparts tick.

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Speaker 2: I imagine through those conversations that you've had and so

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Speaker 2: we've seen the present left talk about large universal punitive tariffs.

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Speaker 2: Do you have any insight into how they might respond

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Speaker 2: if they are threatened with something like that.

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Speaker 3: Well, I really don't want to make a forecast. Many countries,

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Speaker 3: when they're faced withlateral actions of that sort look for

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Speaker 3: ways to retaliate, and my guess would be that they

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Speaker 3: would do that. We have in areas of concern where

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Speaker 3: I've expressed repeatedly concerns with over capacity that is developed

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Speaker 3: in Chinese advanced manufacturing industries and clean energy semiconductors in

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Speaker 3: the like. We think it reflects active large subsidies that

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Speaker 3: are flooding the world with exports and threatened to drive

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Speaker 3: our firms out of business and areas that we think

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Speaker 3: are critical to our own future. We've put in place tariffs.

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Speaker 3: Now it's their strategic They affected eighteen billion dollars worth

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Speaker 3: of trade, certainly not all of our trade with China,

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Speaker 3: and we did it to make sure that China's actions

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Speaker 3: don't undermine our own plans to support these sectors. But

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Speaker 3: broad based tariffs, almost all economists agree that what they

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Speaker 3: will do is hurt us by raising prices, possibly substantially,

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Speaker 3: and making it more expensive for firms that need puts

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Speaker 3: from China to be able to acquire them, and harm

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Speaker 3: more competitiveness of firms that rely on those imports. So

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Speaker 3: we've taken this strategic approach, focusing narrowly and a broad

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Speaker 3: based approach. I have serious concerns with as most economists do.

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Speaker 2: There's been a lot of talk about the dollar, the

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Speaker 2: safety of the dollar as a global reserve currency, and

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Speaker 2: I wonder if that's something that you think American should

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Speaker 2: be preoccupied with. It's something that we hear about from

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Speaker 2: the President elect and his team. Something else they've floated

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Speaker 2: is perhaps the opportunity for a successor of the Plaza

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Speaker 2: Cords there could be, as it's been put a mar Lago,

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Speaker 2: a cord where you could get the US together with

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Speaker 2: Europe and China and Japan maybe talk about domestic production, how.

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Speaker 1: Narrow trade deficits.

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Speaker 2: Is there an appetite or an opportunity for that, and

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Speaker 2: is this something that you think most Americans should.

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Speaker 1: Be worried about.

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Speaker 3: Well, you started by asking me about I think the

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Speaker 3: reserves take that served role of the dollar, and the

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Speaker 3: use of the dollar in global transactions and financial markets

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Speaker 3: and in trade is underpinned by a very strong US

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Speaker 3: economy with deep and liquid capital markets, the role of

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Speaker 3: treasuries as the safest asset in the world, the role

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Speaker 3: of law, a well managed economy with low inflation and

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Speaker 3: solid macroeconomic policy. And when you think about what other

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Speaker 3: currencies could possibly replace the dollar, the list is short.

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Speaker 3: Possibly there is no currency that at this point could

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Speaker 3: possibly rival the dollar. So I do think it's advantageous

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Speaker 3: to the United States that the dollar is used as

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Speaker 3: the reserve currency. But I don't see the dollar under threat,

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Speaker 3: and so an agreement that could affect the value of

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Speaker 3: the dollar. You know, the policy that our administration has

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Speaker 3: articulated is that major countries should have the value of

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Speaker 3: their currencies determined in world markets. So intervention might be

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Speaker 3: appropriate on occasion to counter extreme volatility, but we believe

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Speaker 3: that it's best for markets.

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Speaker 1: To determine the value of the dollar, and.

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Speaker 3: There hasn't been any intervention in foreign exchange markets. I

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Speaker 3: think it should stay that way now. We do issue

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Speaker 3: a foreign exchange report twice a year. We are not

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Speaker 3: approving of countries that attempt to manipulate their own currencies

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Speaker 3: to try to gain a competitive advantage. And we're very

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Speaker 3: attentive and reacts strongly when we see countries manipulating their

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Speaker 3: currency to try to retain an advantage. And of course

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Speaker 3: we work with our other countries routinely to discuss coordination

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Speaker 3: of macroeconomic policies to make sure what we all do

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Speaker 3: translates into success for as many countries as possible in

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Speaker 3: the global economy.

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Speaker 2: Ask your last question just about the fiscal outlook. The

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Speaker 2: person that Donald Trump is named as your presumpted successor,

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Speaker 2: Scott doesn't to suggested that he wants to cut the

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Speaker 2: deficit in half by twenty twenty eight. Is that necessary?

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Speaker 2: Is that even possible? I guess what I'm asking more

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Speaker 2: broadly is how worried are you about the fiscal outlook

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Speaker 2: at this point in time.

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Speaker 3: Well, I am concerned about the fiscal outlook, and I

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Speaker 3: believe the deficit reduction is necessary to keep us on

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Speaker 3: a sustainable fiscal core. Now. President Biden signed into law

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Speaker 3: a trillion dollars of deficit reduction over the next ten years.

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Speaker 3: He did that in the agreement to raise the debt ceiling.

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Speaker 3: And our budget proposes an additional three trillion dollars of

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Speaker 3: deficit reduction over ten years, and I think that's necessary

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Speaker 3: to make sure that our fiscal path is sustainable. Now,

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Speaker 3: Congress hasn't really done anything to, you know, beyond what

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Speaker 3: I've mentioned, to improve the fiscal outlook, and I think

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Speaker 3: that's a shame. I'm disappointed in that, and I think

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Speaker 3: Congress needs to work hard on that. There is a

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Speaker 3: threat going forward that many of the provisions on the

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Speaker 3: individual tax side of the Job's Job Cuts and Tech

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Speaker 3: JCTA enacted by the Trump administration in Congress in twenty seventeen,

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Speaker 3: they will sunset at the end of next year, and

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Speaker 3: many Republicans have expressed a desire to keep all those

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Speaker 3: provisions in place. Cbo said, that will cost five trillion

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Speaker 3: dollars over ten years. So that really is and so

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Speaker 3: that would be a blow in a situation where I

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Speaker 3: believe an additional three trillion, that not doing the five

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Speaker 3: trillion and three trillion more is necessary, and if the

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Speaker 3: provisions are just extended, this will be a serious blow

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Speaker 3: without finding ways to.

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Speaker 1: Pay for them.

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Speaker 3: We proposed a lot of pay for us that we

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Speaker 3: think would fairly ask corporations, wealthy individuals to pay their

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Speaker 3: fair share. We've negotiated an international tax agreement that would

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Speaker 3: create a level playing field worldwide for multinationals. The United

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Speaker 3: States has not yet joined, although many other countries have,

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Speaker 3: and that would be a revenue raising measure that I

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Speaker 3: think would be very valuable, and there is certainly more

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Speaker 3: so I do hope that the new administration and Congress will,

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Speaker 3: if they extend features of JCTA, find ways to pay

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Speaker 3: for what they do, and also make sure that the

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Speaker 3: benefits go not to the wealthiest individuals but to middle

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Speaker 3: class families.

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Speaker 1: Then Secretary, thank you very much. Thank you