Live on Bloomberg TV

00:00This is my kitchen table and also my filing systemover much of the past three decades. I've been an investor the highest quality of mankind. I've often thought as privateequity. And then I started interviewing people. I watch your interview. I know how to do.I've learned in doing my interviews how leaders make it to the top. I asked him how much you want wanted. He said 250. I saidfine I didn't negotiate with him. I did no due diligence. I have something I'd like to sell and how they stay there. You don'tfeel inadequate now because the only the second wealthiest man to rise right.When Angela Merkel was looking for somebody new to head the European Central Bank she successfully recruited ChristineLagarde who was then the head of the International Monetary Fund as the head of the European Central Bank Christine Lagarde hashad enormous impact on the way the European and the global economy moves forward. And I had a conversation with her abouthow Europe is now recovering from the pandemic and also from the global slowdown in the economy.So as we now look at the post covered environment what would you say is the situation in Europe. Is Europe recovering morerapidly or not quite as rapidly as you thought. From the covered pandemicactually David. Europe is recovering more rapidly than we had anticipated. And we have as a result of that significantlyupgraded projections. So our projection for this year is plus 5 percent. So it's a significant upgrade plus full percent fourpoint six percent next year. And back to sort of. Freak of it type of growth subsequently but this year iscertainly going faster than we thought to the point where we will have recovered to pre covet 19 levels before the end of theyear 2021. We had anticipated it would be early 22 at best. It's not going to be in 21.Well are you worried about the Delta variant impacting what you've just said or the so-called move variant which is nowsomething that's on the horizon. It's very closely related. We used to say that the best economicpolicy was an accelerated vaccination rolled out while we are still in that situation where vaccination matters enormously.But on that front Europe has done quite well. We have more than 70 percent of the all the adult population that is completelyvaccinated in the euro area. And some countries are doing actually better than that. In excess of 80 percent.That has been a significant boost for growth. And it does help governments not go back to the stringent containment measuresthat we had seen previously. So during covered were you working remotely. I mean were you running the European Central Bank fromone of your homes or from a home somewhere or were you really going into the office.I spent quite a few weeks stuck in my Frankfurt apartments during the first wave of coffee. And actually the very sizablepackage that we put together for monetary policy purposes was engineered around my kitchen table.Subsequently when troubling was more flexible and we could move out. Then I went to the office a bit. But in the main you knowthe the by default solution is remote working still today and probably until the end of January. And then we will see.Well you should take that kitchen table move at your office. Obviously was very productive right now.So let me ask you post Kovic do you expect Europeans will go back to work at the same level as before in terms of going towork five days a week or will people work four days a week one day remotely or just four days a week of work.You know David first of all we should all acknowledge that there are people who do not have the luxury of choice that have to goto work because their physical presence is required. If you think about hospital staff you think about construction workersyou think about some people working in shops. They they don't have the choice. They have to be onsite and at work and showingup in you know offices. I think we are heading towards a hybrid movement where parts of the week will be spent in the office sothat people can meet and see each other again hold a regular meetings and and have face to face contact. But the rest of theweek will likely be working from home. So whether it's 50 percent 50 percent whether it's 40 percent 60 percent is up fordebate and it's going to be handled at company level as I suppose because most of the legal constraints have been liftedat this point in time. But people have learned during the pandemic and those earnings will be bottled in and used forfuture for future way of working. So around the kitchen table that we just made famous you weretalking about how you put together a package that was designed to make Europe not solve their economic problems. Has it dealtwith Kolbert. I'd say it's had a similar package. In hindsight would you say the package worked as well as youthought. Not as well or better than you thought. You know when we put it together we we were hopeful that itwould work. But you know. Truth of the pudding is in the eating and it was a matter ofdays before we really appreciated that message was received. Fiscal authorities begun to act in tandem and in goodcoordination as well. And I think the impacts of next generation EU when all Europeans decided to go and borrow together jointlythese this this entire package actually responded well and fast and big to the unbelievable crisis situation that we faced. Soall in all I think it worked well. And it certainly we responded I think faster and better than we had in 2008. And then in 2011in the European sovereign debt crisis in the United States not just to cite the United States all the time but it's a countryour most familiar with. We've had some challenges during covet that people who were minorities often women people of lowerincome strata they couldn't get access to broadband. They didn't have that and they had childcare problems and so forth. And it'sthought that they fell further and further behind. Did you find the same phenomenon in Europe. Yeah. This this has been the casein Europe as well where inequalities in terms of opportunities in terms of facilities have been aggravated and probablyexacerbated by copying 90. For the reasons that you've mentioned those people who was hit by a pandemic where women were youngpeople were people on fixed term and 10th contracts and those were more remote from work than than the others. And if you lookat those who lost their jobs it's predominantly those those women and young people in particular in disproportionate amountrelative to the others. So as you look at the European economy today what would you sayits single biggest challenge is and what would you say its single biggest opportunity is. I think the single biggestchallenge always is is to deliver is to implement lots of good intentions. But implementation sometimes is is hard.I think the second. Difficult area that will need to be tackled is this issue ofinequality because corporate 19 has aggravated inequalities. The third one is climate change where we will have to transitionprobably faster than we think which will imply transition costs which will imply a change in the overall structure of oureconomies. I would say those three implementation inequality and climate change. And what has been the impact on the EuropeanCentral Bank or the European economy if any on Brexit hasn't been as bad as some people predicted or been better than peoplethought. What would you say. I think the conclusion varies depending on which side of thechannel you're on. You know from our perspective it's a sad development and wecertainly have lost the benefits of excellent cooperation with the Bank of England. We tried to continue to maintain a goodrelationship because because we have lots of links between us. But in terms of trade it hasbeen certainly a loss for the UK. More so than for Europe. And we'll see how it goes. All I can say that at this point in timeEurope is is coming out of the crisis with not with flying colors yet because a lot of work needs to be done but sostrongly than we had expected. I think the UK is having a more difficult time at the moment. I'm part of the way you help dealwith the situation in Europe. Post during Cove. It was that you had the package that you referred to a very large packagefinancial stability package. But that package really involves countries borrowing money against against their their ownabilities to pay it back. You are in effect not a guarantor but you are making certain that they probably won't default. But areyou worried about too much debt among European countries. Too much debt in France or Germany or Italy. Or is that not a bigproblem right now. I think all countries around the world increase and had toincrease their debt relative to GDP. And when you had this high debt increase and a big fall in GDP of course you end up withthose ratios that took brunt of that look higher and are higher than what they experienced before. Butthere was no option and no choice but to do that. How did not happened. I think the story of the pandemic wouldhave been a lot worse than what we've seen. So now it's a question of directing the the financing to the right investmentmaking sure that the economy is to bounce back in the right shape with the rightstructural reforms that will improve the productivity of those economies. That's good. Position them to be more digital and tobe to be greener. And I believe that this next generation EU which was voted a year ago nowis going to help with making countries better converge and reduce the gap that existed between some of the southernEuropean countries and the northern European countries. That is certainly the intention. Recently you said that you would liketo have a a goal a target of getting 2 percent inflation. Why has it been so difficult to get to that level for the last fivesix or seven years or so in Europe. And how confident are you that you can get to 2 percent.I think there are multiple reasons for that David. But suddenly what we decided to do was to have a target which was simplewhich was easy to understand. That was a symmetric. And that also wasfocused on the medium term. So those were the three attributes. Instead of having that complicated close to but below 2 percentwhich was a bit uncertain and fuzzy and which included somehow an implied biased we decided that we would go for somethingstraightforward simple 2 percent 2 percent symmetric. So deviation up on down from 2 percent are equally undesirable.That's the definition that we have agreed upon. And we are also on on this medium term which matters most because we areparticularly concerned about inflation expectations. I think that's done decision plus the forward guidance that we alsodecide the few weeks after the strategy review of the European Central Bank was released was convincing enough so that marketsand and analysts and observers have appreciated that we are serious. We mean business. We want 2 percent. And you know Imean there are lots of subcommittees around the 2 percent and the lower bound which which leads us to having a more forcefulresponse in some instances. But yes we mean business and we mean 2 percent. Well sure. So for hundreds of years governments andcentral banks have issued currency and the currency is used for things to buy things sell things and so forth and the priceassets. Now some people have come along and invented various things called crypto currencies. Our central banks are trying toadjust to what that means for them. So do you think that crypto currencies are a plus for the global economy or is it too earlyto tell cryptos are not currencies full stop. Cryptos are highlyspeculative assets that claim their fame as currency. Possibly but they're not. They are not.I think we have to distinguish between cryptos that are those highly speculative.Suspicious occasionally and high intensity in terms of energy consumption assets but they're not a currency. On the other handyou have those stable coins that are beginning to proliferate which some big DAX are trying to promote and push along the waywhich are a different animal and need to be regulated where there has to be oversight that corresponds to the business thatthey are actually conducting irrespective of how they name themselves. And in all that you have the central banks who areprompted by. Demand of customers to produce something that will make thesethe central bank and central bank currencies fit for the century. We are in. Which is why we're not all looking at CVCCentral Bank. Digital currencies. So that instead of having banknotes and cash in our pockets or in our wallets we can haveexactly the same thing. But in a digital form. So all of us are working on this. And certainly I was keen to push the CBC issueon our agenda because I believe that we we have to stand ready for that. So if the ECB like the Federal Reserve also looking atit. If the ECB were to have a digital currency would that be to the exclusion of paper currencies or would be side by side sideby side because we want customers to have their preference. If they still want to hold those bank notes and cash fine. And itshould continue to be available and around at this point in your life. Do you feel discrimination against you in yourprofessional life as a woman. It's difficult to hold open discrimination against me. Let's face it. But I'm very very muchaware of discriminations against many women. Many young women. Many women in all parts of the world. You serve two terms as the head of the IMF and you could haveserved another term if you'd wanted to do so. How do you compare the pleasure of running the IMF with the pleasure of running aEuropean. The European Central Bank has one more enjoyable than the other ones less enjoyable than the other. Or basicallythey're both great jobs. And you're happy. You have had both of them. You some extremely privileged to have the rule that I hadas head of the IMF. And we saw each other quite often in those days. And you know how much I put my heart my brain and mind mywhole energy into the job. And I've enjoyed it tremendously. I'm doing the same thing with the ECB and I'm doing the same thingon the European scene. And you know it's in times when you see geopolitical position intimes when you see some some energy withdrawn behind borders. It's important to have this this desire to unite and to bringconsensus to the table and to you know convince people that what we are doing together Unitedis going to be stronger than what we will do individually in our little corner. So I'm enjoying what I'm doing as well. It'shard. It's hard. Let's face it. But but I'm enjoying it. Well when you were the head of the IMF you were the first woman tohold that position. Now you're the first woman to hold the position of the head of the European Central Bank. So you'veobviously broken through in many cases. You are also the head of your law firm and your first woman the head your law firm alarge international law firm. At this point in your life do you feel discrimination against you in your professional life as awoman or do you think discrimination generally is receded against women in the professional workplace.I think discrimination has not receded David. And I'm not I don't want to take my personal situation becausewhen you you've traveled the journey. I have traveled. It's difficult to hold open discrimination against me. Let's face it.But I'm very very much aware of discriminations against many women. Many young women many women in all parts of the world.And I'm particularly I'm sorry to say I'm particularly thinking of the Afghan women at the moment who clearly are suffering theworst possible nightmare and sent back in in a name in the history and in their life. Soit's a constant struggle. It should be a constant fight of all of us to make sure that everybody has a chance to accomplishtheir talent and to develop they they they activity in the way they want. And this is certainly not the case yet. And look whenI sit at my governing council table and I look around I see twenty three men and one woman.In addition to me so too 223 is not a very good ratio in the finance world.I don't know whether you would call it discrimination but there is certainly disparity between men and women. If you look at theventure capital world it's the same. If you look at CEOs of large international banks it's the same. If you look atparliament you have a much lower representation of women than they all women in society. So something is not working now.Central bankers are famous for not talking in language that the average person can understand generally. Sometimes they've donethat on purpose. You talk in a language that everybody seems to understand. It's very simple and so forth. It's not a consciouspolicy that you have that kind of make what you're doing. Understandable to the average person.Yes. Yes. David I think. I think it's extremely important that people understand what we're doing.A lot has to do with trust. If somebody talks to you in a completely obscure and giganticlanguage how are you going to trust that person. So it to me it was critically important to agree with the Governing Councilmembers that we would communicate in a more understandable in a clearer and simpler way. So just to give you an example aftereach governing council to me your monetary policy statement. Well we committed to keep sentences short to have one idea of asentence to make sure that the U. The words that we use are understandable by you of course but a normal person as well. Andand and we measure that and we try to stick to those principles and and we'll be held accountable. So do you think your abilityto do that and the Federal Reserve chairman Jay Powell is interested in that as well. Both of you are trained as lawyers.So do you think that lawyers I'm trained as a lawyer too. Do you think there's a greater future for central bankers to be headedby or to be lawyers. And there's some hope for me to be a central banker someday or not. Really.I'm sure you will thrive. And I think I think I strongly believe in diversity. Maybethat's you know and the diversity has not all to do with gender. With minority with thesexual orientation or whatever. It also has to do with the background with the training with the culture that you carrywith you and to bring it all together around a table with diversity. My view improves the quality of the decisions that wemake. And I learn a lot from my colleagues. Brilliant economists. And I hope they can be patient with us for lawyers.Two final questions. One I would like to know what is the pleasure of being the head of the central bank. You're obviouslyup to work seven days a week. You did that for many years in your career at the IMF as well. What is the pleasure you get outof heading the European Central Bank. It is the same kind of pressure that I take in leading otherorganizations is making sure that people around me are doing the best they can for the organization are delivering on theirmission and that we form a team heading in the same direction. So does that to me means an awful lot. So my final question isreally this. You as in your youth were a synchronized swimmer where you have to I guess work very closely with teammates andget everything working together quite nicely. Is it the case that when you're you're doing the central bankingrole you have to have the same kind of skill set. You've got all these central bankers that are of each country. You have to getthem to work together. So do you think you're synchronized swimming skills actually come to help you as the head of theEuropean Central Bank. Yes they do actually because what you learn in synchronized swimming is thatif each individual is brilliant it's great. But if they don't work together you will not get the gold medal. So we worktogether as a team actually matters enormously. And I I've tried and I will try to continue doing.

No schedule data available.

The David Rubenstein Show: ECB President Christine Lagarde

European Central Bank President Christine Lagarde talks about the EU's recovery from Covid-19, Bitcoin, Brexit, getting back to the office and discrimination against women. She appears on "The David Rubenstein Show: Peer-to-Peer Conversations." This was recorded Sept. 13. (Source: Bloomberg)

More From TV Shows
All episodes and clips

Bloomberg Technology
The only daily news program focused exclusively on technology, innovation and the future of business from San Francisco. Hosted by Emily Chang.
More episodes and clips