tv The David Rubenstein Show Peer to Peer Conversations Bloomberg September 19, 2021 10:00am-10:30am EDT
♪ david: this is my kitchen table, and also my filing system. over much of the past three decades i have been an investor. the highest calling of mankind, i have often thought of as private equity. [laughter] david: then i started interviewing. i have learned how leaders make it to the top. >> i did no due diligence. david: and how they stay there. you do not feel inadequate now
that you are only the second wealthiest man in the world, right? when angela merkel was looking for someone to head the european central bank, she found christine lagarde. i had a conversation with her about how europe is recovering from the pandemic and the global slowdown in the economy. as we look at the post-covid environment, what would you say is the situation in europe? is europe recovering rapidly? or not as rapidly as you thought? christine: europe is recovering more rapidly than we had anticipated. as a result of that we have significantly upgraded our projections. our projections for this year have been significantly upgraded.
4.6% next year! pre-covid type of growth. this year is going faster than we thought to the point where we will have recovered yo pre-covid -- to pre-covid-19 levels. we had expected it would be early '22 at best. david: are you worried about the delta variant impacting what you have said? christine: it is very closely related. we used to say that the best policy was an accelerated vaccination rollout. vaccination matters in norma sleep -- enormously. europe has done well.
the adult population is completely vaccinated in night euro-area. that has been a significant boost for growth, and it has helped governments not go back to the stringent continued -- containment measures we saw previously. david: during covid were you running the european central bank from one of your homes or were you going into the office? christine: i spent quite a few weeks stuck in my frankfurt apartment during the first wave of covid. the very sizable package we put together for monetary policy purposes was engineered around my kitchen table. when traveling was more flexible, i went to the office a bit, but the by default solution
is remote working still today, and probably until the end of january. then we will see. david: you should take that kitchen table and move it to your office! obviously it was very productive. [laughter] david: do you expect europeans will go back to work five days a week? or four days a week of work? christine: we should all acknowledge that there are people who do not have the luxury of choice that have to go to work because their physical presence is required. you think about hospital staff, construction workers, some people working in shops. they have to be on site. offices, i think we are heading towards a hybrid movement where part of the week will be spent
in the office so that people can meet, see each other, can hold regular meetings, face-to-face contact. the rest of the week will be working from home. whether it is ready percent 60% -- 40%, 60% that has to be dealt with that company levels. people have learned during the pandemic. it has been bottled and will be used for future ways of working. david: around the kitchen table you were talking about you put together a package that was designed to make europe solve its economic problems as a dealt with covid. would you say the package worked as well as he thought or better than you thought?
christine: we were hopeful it would work. the truth of the pudding is in the eating. we really appreciateed that the message was received. organizations began working in tandem. the next generation eu, all europeans decided to go and borrow jointly. this entire package responded well and fast to the unbelievable crisis situation we faced. all in all, i think it worked well, and certainly we responded better than we had in 2008 and 2011. in the united states, we have
had some challenges during covid that people who are minorities, often women, they could not get access to broadband. they had childcare problems. it is thought that they fill further and further -- fell further and further behind. christine: this has been the case in europe as well. inequalities in terms of opportunities have been aggravated by covid-19 for the reasons that you mentioned. those people were hit by the pandemic. women, young people, people on temp contracts -- if you look at those who lost their jobs, it is predominantly women and young people in particular in
covid-19 has aggravated inequality. the third one is climate change. we will have to transition faster than we think, which will am five transition costs, which will imply a change in the overall structure of our economy. those three -- implementation, inequality, and climate change. david: how about brexit? hasn't been better -- has it been better than people thought? christine: the conclusion depends on which side of the channel you are on. we have lost the benefit of cooperation with the bank of england. we try to maintain a good relationship because we have lots of links between us. in terms of trade, it has been a
loss for the u.k. more so than for europe. we will see how it goes. that is all i can say. europe is coming out of the crisis, not with flying colors yet, but strongly. the u.k. is having a more difficult time at the moment. david: part of the way you help to deal with the situation during covid was that you had the package you referred to, a very large package, financial stability package, but that involves countries borrowing money against their own abilities to pay it back. you are making certain that they won't default, but are you worried about too much debt among european countries? or is that not a problem right now? christine: all countries around
the world had to increase their debt. when you have this high debt increase and a big fold in gdp, you end up with those ratios that look higher and are hire, but there was no -- are higher, but there was no option. now it is a question of directing the financing to the right investment, making sure the economies will bounce back in the right shape with the right structural reforms that will improve the productivity of those economies as we position them to be more digital and to be greener. i believe the next generation
eu, which was voted a year ago now is going to help with making countries better converge and reduce the gap that existed between some of this arbery in your -- southern european countries and northern european countries. david: you said you would like a target of getting 2% inflation. why has it been so difficult to get to that level in europe and how confident are you that you can get to 2%? christine: there are reasons for that, david, but we decided to do was have a target which was simple, easy to understand, symmetric, and focused on the medium turns -- terms.
instead of below 2%, which included somehow and implied bias, we decided we would go for something straightforward, simple, 2%. 2% is the symmetric. we are on this medium-term, which matters most. that decision plus the forward guidance that we decided a few weeks after the strategy review was released was convincing enough so that markets and analysts and observers have appreciated but we we are serious.
that leads us to having a more forceful response in some instances, but we mean 2% for sure. david: for hundreds of years governments have issued currency and currency is used for things -- now some people have come along and invented cryptocurrencies. central banks are trying to adjust to what that means for them. do you think cryptocurrencies are a plus for the global economy or is it too soon to tell? christine: cryptos are not currency. they claim they are currency, but they are not. we have to distinguish between cryptos, which are highly speculative, and high intensity
in terms of energy consumption, but they are not a currency. on the other hand, you have stable coins that are beginning to proliferate, which some big techs are trying to push along the way, which are a different animal and need to be regulated. they require oversight irrespective of how they named themselves. you have the central banks who are prompted by demand of customers to produce something that will make the central bank fit for the century we are in, which is why we are looking at central bank digital currencies so that instead of having make note and cash in our wallets --
banknotes and cash in our wallets, we can have it in a digital form. i believe that we have to stand ready for that. david: if the ecb were to have a digital currency, would that be to the exclusion of paper currencies? or would it be side-by-side? christine: side-by-side. david: at this point in your life, do you feel discrimination against you in your life as a professional? christine: i am aware of discrimination against many young women in all parts of the world.
david: in recent years central banks have been worried about something called climate change. why should central bankers be worried about climate change? is that something in your purview? christine: to me it is a no-brainer consideration. climate change is part and parcel of our mandate. think about it -- drugs, famine, pandemic, flood, massive fires, all of that is going to have an impact on prices, inflation, price stability. not only do we talk about assets, but we have to talk about transition costs that many
companies are going to face in order to move from the business they conduct today to how they should conduct their business tomorrow, let alone the new products they will have to come up with. david: historically ceos have only cared about their shareholders. should ceos be talking about climate change or gender discrimination or should they stick to worrying about stockholder returns? christine: corporates are not bodies. they do not have a soul. they are acting in people's lives and they are acting in the environment. more and more of them do, which is good. ♪ david: you served two terms at
the head of the imf. how do you compare the pleasure of running the imf with running the european central bank? is one more enjoyable than the other or basically they are both great jobs? christine: i am extremely privileged to have had the role i had as the head of im thef. we saw -- head of the imf. i put my whole energy into the job and enjoyed it tremendously. i am doing the same thing with the ecb. in times when you see geopolitical positions, in times when you see some energy withdrawn behind borders, it is important to have this desire to unite, bring consensus to the
table, and convince people to what we are doing together united is going to be stronger than what we were doing individually. it is hard, let's face it, but i am enjoying it. david: when you wear the head of the imf, -- were the head of the imf, you are the first woman to hold that position. you were also the first woman to head your law firm. do you feel discrimination against you and your professional life as a woman or do you think discrimination generally has receded against women in the workplace? christine: i do not think discrimination has receded. i do not want to talk about my personal situation. when you travel the journey i have traveled, it is difficult
to hold open discrimination against me, let's face it,, but i am aware of discrimination against many young women, women in all parts of the world. i am particularly thinking of afghan women at the moment who clearly are suffering the worst possible nightmare and setback in their life. it is a constant struggle. it should be a constant fight of all of us to make sure everybody has a chance to accomplish their talents and develop their activity in the way they want. this is certainly not the case yet. when i sit at my governing council table and i look around, i see 23 men and one woman in addition to me. 2 out of 23 is not a good ratio.
in the finance world, there is disparity between men and women. when you look at the venture-capital world, it is the same. when you look at the ceos of large national banks, it is the same. something is not working. david: central bankers are famous for not talking in language that the average person can understand generally. you talk in a language that everyone seems to understand. is that a conscious policy that you have to make what you are doing understandable to the average person? christine: yes, david. it is extremely important people understand what we are doing. how are you going to trust that
person? it is critically important to agree with the governing council members that we communicate in a clearer and simpler way. after each governing council monetary policy statement, we committed to keeping sentences short. to have one idea per sentence, to make sure the words we use our understandable by you of course but by the normal person as well. we measure that and we try to stick to that. david: do you think your ability to do that -- u.n. jay powell are trained as lawyers -- you and jay powell are trained as lawyers. do you think the --
christine: i think -- i strongly believe in diversity, david. -- diversity, david. diversity does not only have to do with sexuality,, race, gender. to bring it all together around the table improves the quality of the decisions that we make. i have learned a lot from my colleagues. david: 2 final questions -- one, i would like to know what is the pleasure of being the head of the central bank? you have to work seven days a week. what is the pleasure you get out of heading the european central bank? christine: it is the same kind
of pleasure i take in meeting other organized -- leading other organizations, making sure those around me are delivering on their mission and we form a team heading in the same direction. that to me means an awful lot. david: in your youth you were a synchronized swimmer where you have to work closely with teammates. is it the case that when you are doing the central banking role, you need the same skill set? do you think your central -- synchronized swimming skills help? christine: what you learn in synchronized swimming is each
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