 So, I now have the great pleasure of welcoming back to CSAS, two old friends and actually there are four of my former bosses up here because I've actually, these two guests have been my boss twice each, so it's a little intimidating for me. Have a little empathy as I sit up here. But everything I know, I learn from them. We'll be doing your performance appraisal right now. That's right, I've already done that. So, everybody knows these two people but I'm going to go ahead and do the formalities. Caroline Atkinson is the special assistant of the president and deputy national security advisor for international economics and in that capacity among many other things she does, she is the G20 Sherpa and since we actually, I don't think defined Sherpa before just for the record, the Sherpa is the person, the president's or the head of government's personal representative to the G20 who helps get the leader to and up the summit. Ha-ha. With a yak. With a yak, which I was at another time. So, Caroline, and then on my right, your left is David Lipton who is the first deputy managing director at the IMF. He was just telling me he's been there three years which I can't believe because time flies. Also previously served like Caroline at the U.S. Treasury and the White House in a number of senior roles and it's just a terrific pair to have here to talk about how one gets ready for these summits and what the substantive agenda is and we're trying to give the real flesh of why this G20 actually matters. So we're going to have a little conversation then I will open it up for questions from all of you. Let me start with David. You this week, the IMF released its semi-annual World Economic Outlook or WIO as it's known in the trade and you talk at the beginning about an uneven recovery in the world's economy continuing. Your boss, Madame Lagarde talked the other day about a new mediocre for growth and there have been people talking about secular stagnation. There are a lot of sort of buzz phrases out there. What is the outlook? Why is it not quite as happy an outlook as one would hope or expect? Is the problem on the supply side, is on the demand side, is it both and what can the G20 contribute to making it better? Sure. First let me say thanks for having me here today. It's a pleasure to be back. I think that the new mediocre phrase while simple captures a lot of what we think about the present situation. This year's growth has been somewhat disappointing and below our forecasts. We're projecting that next year in 2015 growth will be 3.8 percent. To put it in perspective growth in the 25 years before the global financial crisis was 3.8 percent. We know that towards the end of that period there were several years where growth was we believe unsustainably high in some advanced economies and that was part of the build up to crisis. So at one level we're talking about recovery but we're concerned about the situation because we believe that growth could be higher and we're worried that growth may be worse. Let me say what I mean by that that we've seen advanced economies slowing down and under but the US is doing well the UK has been now recovering strongly but we see parts of the advanced world especially in Europe but also in Japan growing too slowly and we see in the emerging market world countries growing more slowly than they were and we also believe not living up to their potential. We see potential growth falling and believe that steps will have to be taken for countries to raise their their potential growth. We also worry that things could be worse. There are quite a number of risks out there in the global economy and more generally there's a risk that Europe is not on the baseline. We have our baseline is for recovery to above to 1.3 percent to growth next year in Europe but there's a risk that the low flation and lack of investment leads to very slow growth in Europe. There's a risk that EM countries continue to slow down. There are a number of geopolitical risks which I'm sure you're all aware the Russia-Ukraine conflict various conflicts in the Middle East in Africa the Ebola epidemic which we calculate that if it were to spread it would be very significant and we've identified in our the other paper we published this week and it was just unveiled today the global financial stability report a range of financial risks that come from the two processes that there's unconventional monetary policy very forceful lowering interest rates lowering financial volatility and a new very large non-bank financial sector emerging where bets are being placed and financial investments are taking place and it may be that there is a reach for yield and some risk taking that could be problematic. So we see this situation as a decent baseline but one where an effort should be made to strengthen growth because it will lower all of these vulnerabilities and I think that's where the G20 comes in the G20 this year is attempting to among other things emphasize growth and together pledge to take measures that would raise global GDP by 2% over five-year period when this was announced as an initiative I think it was treated with a certain dismissiveness but the G20 countries have now put forward quite a large number of measures we in the OECD have looked at them we believe that these measures are significant enough that if they were taken they would have this kind of effect on GDP of course these are just pledges and so the next phase the next step will be for all of these measures to be implemented and that's something that G20 countries have to endeavor to be accountable for will help in the monitoring of that we in our work with the G20 have stressed that support for growth really has to have three components strengthening demand where there's slack in the economy and there are important parts of the globe where there is slack taking structural measures to boost potential GDP over time and rebalancing where that can play a role where current account surpluses need to be reduced in order to facilitate current account deficits being reduced without adverse effects on the global economy we put emphasis on all three of these we're not saying to just do one or another we are however put spending a special effort on one area that the G20 is paying attention to which is infrastructure there's been work in the last two presidencies of the G20 to emphasize the role that infrastructure can play to look at whether the lack of infrastructure investment comes from a lack of finance a lack of projects other factors we've looked at this subject in the third chapter of the world economic outlook which I recommend to you it makes the important point that infrastructure investments can have a very significant and prolonged effect on output especially when countries have slack when the spending the demand side infrastructure investments have two effects they they raise demand but they also by creating public capital raise supply but where the there's slack the demand effect may be particularly substantial and protracted and this we find will have the tendency in in many circumstances actually to lower debt to GDP ratios because the help for GDP growth more than offsets the debt that's incurred in order to undertake the infrastructure I think this is an important subject one that feeds very much into the G20's work and is supportive of that great excellent I want to follow up on on that point in particular but let me turn to Caroline first and ask you some essentially the same question what's your view of the world in the global economic outlook and what do you what are your hopes and expectations for Brisbane and the G20's contribution to global growth well first of all thank you for for having me here and also thank you to David for extremely good analysis even if it is a bit concerning that is being published this week and and last week on the first and foremost discussion at the G20 this year as as is typical but I think with a little bit more of an edge than there has been recently will be around growth and jobs because it's clear that we have been disappointed globally over a number of years by a failure quite to meet expectations David talked about downside risks and those have mostly materialized over the past not in not most recently and I'm glad to say not in the United States but we see that the effects of the global financial crisis have still not been fully worked through in some areas we in the United States did move quickly and that was when David was at the White House and I was not to put in place programs to build infrastructure and help to support jobs growth and at the same time to review the financial system and make very important reforms there and I think that is partly why we've now had you know more than 10 million jobs created in the private sector over the last four or five years and we are on a path to recovery although we still have work to do but if we look around the world especially I'm sorry to say in Europe there is still a big problem of of slow growth and we believe that whilst it's important to take measures to boost productivity and supply and address longer-term issues the most immediate issue is the shortfall in global demand and I think that the timing of the G20 summit as David said earlier this year people may not quite have taken seriously the Australian push for identification of measures to add to growth and there was maybe a little bit more optimism about the underlying path earlier this year but I just came back from a meeting in Australia of Sherpas and there's clearly concern even before we saw the IMF forecasts about how we can make sure that the whole world is able to lift up and move forward on growth so the big first push has to be about the further work that needs to be done must be done to support growth I completely support David's points on infrastructure the President has talked about the infrastructure deficit here in the United States that's something that has resonance in in many other G20 countries and there are a lot of elements that need to come right where we've been working on this providing the financing there's finding the appropriate projects there's bringing those two together and and there is also the role for public as well as private and private as well as public finance in infrastructure building and I think this new paper that shows what a good investment it is for countries to make by rebuilding and improving and modernizing infrastructure carries a very important lesson because it's a way that you can actually move forward and marry the debate about demand and supply as it implicates both sides of of that balance and David also pointed to to rebalance that was one of the issues that we talked about a lot of global imbalances a few years ago and the sort of some of those global imbalances have been reduced but there is a growing imbalance again with Europe as it has moved into current accounts surplus as an area partly because the deficit countries in the periphery have constricted their economies and the surplus countries in the core have maintained their surpluses so that's Germany the Netherlands and so on where there is certainly scope for more investment and which we think will help more even and balanced growth going forward now apart from that part of the agenda there are some other specific areas that we are where we're hoping to make progress one is and I've talked about this before but it's about labor force participation and the G20 also has meetings of employment ministers and one thing we've been pushing in that we the United States have worked on with a number of other countries is on female labor force participation which is and again the IMF did some great work earlier about the loss to everybody in terms of lost GDP when women don't work out of the inability to find childcare or the lack of opportunities for paid employment and for formal sector employment which is an important issue in some countries so we've been working on on that area and hope to make some progress another important area huge area which connects to the infrastructure is on climate and energy because obviously as extreme weather events have have become more frequent as the next key date in the international negotiations on climate which is December 2015 comes closer there is more of a focus amongst leaders certainly our leader but with UN summit on climate last week or whenever it was in New York and part of the issue about climate is capitalizing on investment opportunities to put in place the kind of low-carbon green economy that we need so this is very importantly linked with infrastructure and with spreading energy efficiency clean energy and we expect leaders will have a discussion about that another important issue of course is trade where we in the United States continue to work on a number of trade agreements which are aimed at raising standards around the world but there are also can be problems in or there's a question about how we can make progress in the multilateral system and there is then there's a whole sort of international do have which institutions do we use we believe that the G20 is exactly the right group to be getting around the table we need to have emerging market economies the big economies around the table talking about all of these issues together we also know that the IMF is a very important institution and as I believe Jack Lou said yesterday at another event it is critical we know in the United States to get IMF reform legislation passed this is something that that has almost made it through Congress where the US was leading a few years ago and has not David was polite enough not to mention it but it is an important okay I'm gonna ask him about it okay it is very important we're working very hard but it's important the Congress should should move on this okay well you've anticipated a lot of the things I wanted to talk about I mean first of all just looking back at the communiques over the last several summits it really is striking how there was a real discussion when I was doing this about fiscal consolidation and and that was the main I think there's a big debate about austerity versus stimulus and it seems now that the clear focus is on on on growth and and and and you know working both on demand and supply conditions to to keep growth strong so I think that is a very interesting sort of transition that you both touched on on the on the on the infrastructure question so just who's gonna pay for this or who should pay for all this because you know the numbers that that are out there for infrastructure gaps it doesn't matter which number a site but it's in the trillions and once you get up in the trillions it's it's it's large numbers and and that's not trivial amounts of money and the private sector in theory has you know tens of trillions to invest but is that the is that who's gonna end up paying for most of this should they pay for it do governments still have an important role here in infrastructure well it's I mean start when starting with the macro investment in the world is low it's low by historic standards public capital stocks have been coming down in advanced economies relative to GDP this is all discussed and laid out in the paper that I referred to obviously there's enough savings in the world to be funding more investment and that would be all the more the case if an infrastructure push raised global growth and created a sustaining basis for that investment I do think we there is a tendency to speak about this it's become very popular to speak about this subject in terms of the growing role of the private sector to talk about public-private partnerships and in a sense to blend together the subject of infrastructure and the subject of privatization but I do think we should step back take a look at infrastructure generally if you look at the pie of all infrastructure spending 35 40% of it is what you think of as bill as highways and ports and physical infrastructure and the rest is social infrastructure schools and hospitals defense and other things now clearly there is a public role there there are things that the public sector public goods theory tells us there are things the public sector has to do and then it doesn't make sense to charge for but there is clearly a room for a lot more a lot bigger role for the private sector but I think it's important to look across the entire spectrum of infrastructure see what the needs are see where public capital has eroded or depreciated where more would be valuable where there's slack and in essence the physical resources to build it where the financing cost would be very low because of the availability of funding and the low interest rates that governments face I think there's ample room for this in some countries we're not suggesting that it's going to work going to have a place everywhere but we think that there's a lot of room for it okay two things that you touched on that are contributors to growth are trade and and womenomics we did a big event on womenomics a couple weeks ago in Japan and focus very much on the economic imperative there of closing that participation gap the numbers for which are very powerful and numbers additional workforce participants women and the productivity gains that you get from that and I just know I won't ask you to follow up because you've already made the point but the employment ministers in the G20 did set a kind of semi target for closing that participation gap by 25% by 2025 which is ambitious but would have a very powerful impact on on trade what what what can the G20 and the G20 to date has really done two things one is to is to agree and extend the standstill on protectionism which is you know much maligned or it's it's been violated in the in the in the specific measures that people have taken but in the broad sense it's actually been helpful in in holding back a tide of protectionism and then it sort of tried to support the multilateral trading regime directly by supporting Doha and specific Doha initiatives but that doesn't seem to be working I mean it doesn't seem to be really advancing the agenda what can the G20 do on that subject to really move the ball forward I think the G20 actually did make a difference last year on the on the standstill one of the dogs that didn't bark during the financial crisis was an advance of protectionism and I think that the G20 meeting together leaders looking each other in the eye and agreeing that they would not adopt Begavine neighbor policies despite the pressures on on their economies was very important more specifically on the WTO there was an important move in the past couple of G20s which really crystallized last year to narrow down on a fresh credible approach was the way it was worded are focusing on trade facilitation as a way that as a sort of win-win in the in the multilateral trading space and an import after the G20 met in September last year that those sort of links and agreements were amongst the leaders were helpful in supporting the Bali agreement in December last year now there are some rockiness in terms of the implementation most recently of that agreement but the if you look at the glass half full side of it what has become clear is that countries from you know some in sub-Saharan Africa to many in Asia and elsewhere have really bought into the idea of trade facilitation which sounds kind of dull maybe but it's extremely important to make it easier to trade goods across borders to simplify and IT of course helps now to simplify regulations to get rid of the system where a situation where you might have goods that perish whilst they're waiting to cross borders and the the work that's analytical work suggests that there is a big GDP impact that can come from trade facilitation and the G20 really has pushed that work forward and I think that will continue even if you know even as we work through the other parts of the Bali agreement which include financing for that but we in the United States for example it was announced at the Africa leaders summit are going to doing some work which which we're leading in the White House to focus our our aid money also on facilitating these sorts of this sort of integration which is really important in many African countries the other things that I think can happen on on trade is as you know my colleague and predecessor in my job Michael Froman has been working very hard to develop trade agreements that that look at the best part of the trading system so that you know as he likes to put it we can work to raise standards in the global marketplace and to have a freer and fairer exchange of goods with the protections for labor for the environment and and other important areas amongst important although different countries of different sizes and that is something that that began in APEC rather than as you know rather than in the G20 but it's of interest also in the G20 as leaders talk about how they can support faster exports as you know are very important for jobs here and how they can support faster growth of which trade is an important part so it's that level of discussion that in a way there's a similar discussion on climate the leaders don't get into the climate negotiations they're not going to start negotiating about mitigation adaptation that's all done properly in the UN and the UN FCCC but what the G20 leaders who account for whose economies generate 80% of carbon emissions as well as 80% of GDP can agree on specific steps that they take whether it's around hydrofluorocarbons which is HFC is one issue last year or raising the standards emission standards in particular for particular vehicles or whether it's about giving a political push to the notion that their negotiators should remember that we have a goal that where we can all reach agreement that is mutually helpful so when I want to ask you about move on to another topic of financial regulation but first on climate I can't resist so the leaders are going to discuss climate in Brisbane despite the fact that the host is not enthusiastic about the subject not to I'm sure there will be many people around the table and you know you can talk about the climate and energy energy efficiency clean energy there they're really all related and I'm glad you're going to talk about financial regulation because that that is an area where there was a big effort and I think that important progress has been made well that's exactly perfect segue into what I was going to ask David because we've heard that from Mark Sobel from others this morning that there's been this great progress on financial regulation it sort of felt like we're going to do a victory lap in in Brisbane and that sounds appropriate on one level because there has been tremendous progress clearly and yet your most recent the IMS global financial stability review has highlighted some of these and you mentioned them just now sort of a continuing risks in the financial system and shadow banking and and other things and so you know is have we is it a little too early is the world's safe for capitalism is it safe for capitalism should we be doing more what should we be doing okay G28 contribute again I think a very important round of financial and regulatory reform has been accomplished and it makes sense in Brisbane to highlight that to celebrate that when one looks at the steps that have been taken and implemented in terms of the capital standards and the various other standards liquidity and leverage the recapitalization of banks all kinds of cooperative efforts across borders the first round of work on creating an approach to resolution that countries have signed on to and there there's a whole host of things a whole list of things they they should be celebrated in in Brisbane of course what we're seeing in the world is that once financial and regulatory reforms are in place financial part to market participants react accordingly and so banks are behaving in a way that is safer and more cautious which means that there are some things that they don't do anymore because they don't it doesn't make business sense given the capital that they would have to hold against those so some activities are migrating they're migrating into the non-bank sector and we now have to look at the question of whether the activities that are migrating are being done safely or not safely we have to look at whether the financial and regulatory perimeter needs to be extended we have to look at the question of whether the that I mentioned earlier whether the very loose financial conditions that are necessary to try to stave off disinflation may be leading to risk-taking in some parts of the of the financial system either in the non-bank institutions or in capital markets where corporations sell bonds for example we're looking at that I think there are some risks I think that there's probably room for in some ways for the regulatory perimeter to widen for macroprudential tools that are presently used in banks to be extended to include some of try to affect the risk-taking in more generally and to make sure that governments have the legal authority to do that I think in the United States they do in some countries they don't so there's more work to be done and we're you know we are trying to use our publications to you know map out what the path ahead will look like okay we're I want to give the audience some time but I want to ask you one question and then you a sort of a series of questions which is the rest of the agenda tax and then the geopolitical issues and sort of how you're gonna handle that and anything else that we didn't talk about that you might want to talk about but first on the IMF quota reform question so I'm reminded when this you know you both said it Mark Sobel said it earlier that this has to happen and one should you know maybe you didn't say it yet but that we've hear a lot that the Senate really needs to do this to move forward and and and pass this this relatively minor change to help support the IMF and the global economic infrastructure and it reminds me of Mark Twain talking about the weather that everybody talks about the weather but nobody does anything about it so what you know what are you is there a risk here that you're just saying the same thing that this has to be done there's sort of a complacency setting in I mean is this a really important issue that you're working actively on should they are they working actively on it should they is there anything else that can be done to move this issue forward because it seems so critical to the credibility of your institution of the G20 of the broader global economic system and it seems to be incentivizing countries that are unhappy with this understandably to do workarounds I mean I think of the bricks bank and even the Asian infrastructure bank in some sense as a consequence of are not having moved forward on this so first after my speech somebody is doing something about it Caroline's doing something about it and we're expecting that she will succeed and hoping first let's talk about why this is important you know the IMF was set up after World War two and with a with a governance structure which is a good governance structure unlike the United Nations where Antigua has the same vote in the General Assembly as the United States and the IMF there's a formula that tries to encapsulate the economic importance size and importance of countries and have the governance structure reflect that and it's a it's a sensible approach it's now it's now outmoded in that the formula I haven't been capturing properly the growing size and importance of some of the emerging market countries those countries need to feel as though they have the right say in our institution for them to feel that this is the institution through which they can exert influence over the management of the global economy and the protection of a global financial stability so this is important and let me say that Christine Lagarde and I spend a lot of time and energy trying to get the last round of quota and governance reforms passed and dealing with the US government and talking to people in Congress to explain to them our systems so that they have a good basis for voting I want to make the case too that this the IMF is good for its members good for the United States as much as its other members and you know if you think back the IMF is has been asked to deal with crisis after crisis the Latin debt crisis the transition country the transition challenge in Eastern Europe the Asian financial crisis the global financial crisis the IMF is asked to go and be in a sense first boots on the ground when there's a big mess such as the case of Ukraine we let Ukraine we have a program with Ukraine that could be up to 17 billion dollars of support for Ukraine when financial support is really not available for Ukraine anywhere else we've been working with the Arab countries in transition we've been pushing the Europeans to deal with their problems the very first speech that Christine Lagarde made when she came laid bare what what the IMF thought were the unintended issues in Europe and I think as time has gone on while they were reluctant at first the Europeans have admitted that those in fact are problems and have begun to deal with them so we are we are trying to make the world safe for trade and investment that's good for America so I think there's every good reason for Congress if it understands the role we play it sees what we do to act and to stand and to be supportive it is genuinely a problem for our institution I my own view is that it's a problem for the United States if the United States doesn't act in terms of the United States ability to exert economic leadership in the world you know we understand and Caroline can speak to this that the administration has mapped out how it will go forward with Congress this fall after the elect the midterm elections and we hope that we really hope that that will be successful okay thanks you can come in on that if you want but tax why is it so important and is this agenda something that the US we were asked earlier both my cow hand and Mark Sobel highlighted the importance of this tax agenda which is a kind of an addition to the sort of core issues that the G20 has been working on and somebody made the comment that the US Congress may not be so enthusiastic at least about the avoidance side the evasion side not so much probably a problem but the question of some of these efforts to go after corporate tax avoidance measures and is that is that going to be a challenge in getting some progress in this area okay let me just say briefly on IMF reform that that as I mentioned earlier we do believe that it's in the interests of the United States the economic and national security interests of the United States to have a strong malfunctioning IMF and we are certainly working hard to persuade others of that and to succeed in getting this measure passed in Congress and which is just converting a loan to the IMF into equity shares in the IMF so that's why the money involved is rather small on tax the tax agenda I think this is an important one for first of all the tax evasion element has been a huge success including for the United States because what we've essentially done through the G20 first the G7 and then the G20 is multilateralize a system that we began of automatic sharing of financial information so more and more countries have signed up for that bilaterally and then with a similar system being agreed multilaterally and that is very important because it helps to reduce corruption and to identify misused funds that are flowing through the financial system and I think a couple of years ago nobody imagined that we would that we would have that success there were different measures being considered in Europe and so on so that it on the evasion side I think that's been very important work on the avoidance side I don't see it so much as going after companies we want to go after the kind of race to the bottom in tax incentives when countries offer special deals to companies if they if they headquarter in those jurisdictions and we also we have a high statutory corporate tax rate in the United States but we have a much lower effective rate of corporate tax because and corporations can keep income overseas and that doesn't really make much sense what we want to do and we believe it's in our interests and United States interests ultimately in corporations interests is to focus to have corporate executives and others working to locate their production and their workforce where it makes economic sense and not where it makes tax sense so it's a kind of diversion of effort to be trying to exploit know about an exploit obscure tax regulations rather than figure out what is the best place with a skilled workforce you know strong rule of law proximity to natural resources whatever it may be for different companies they should really be taking those location decisions on the basis of what makes sense for their production and sales and everything and bringing this work into the G20 and with the OECD giving strong backing has been an important way to to progress the debate where there was a bit of a debate about well you know companies go to a poor country in sub-Saharan Africa and then they do a bargain that the country there maybe to may not have the resources to the human resources to address and the other side of that is that maybe in some countries the governance structure for allowing companies to be there or the tax incentives may not be as clean as they might be and if we're all working together to have clearer cleaner more transparent rules that don't offer inappropriate incentives I think that's good for both sides of the equation okay I have taken a lot of the time I will forego asking about the geopolitical issues except to say that you know there are as David went through a laundry list of some really challenging issues in the world from you know Ukraine to the Middle East to Ebola to possibly Hong Kong and at a minimum these things are distractions but the leaders are going to want to talk about these things and whether they're going to want to say anything about them in a in an economic forum is a question but but they are they are there and Sherpas have to deal with them so I just make that comment and they can comment on that in in the Q&A with the audience if they would like but I would like to get people on the floor a chance to ask questions if you do have a question raise your hand wait for the microphone identify yourself and please try to ask a question there was a lady in the back there hello Verity linear hand from the Australian Department of Foreign Affairs and trade my question is to you miss Atkinson so you discussed the G20 stands still agreement to fight protectionism do you see this agreement as a success given that since October 2008 over two or over 1000 new trade measures have been introduced by the G20 only about 250 of those have been removed and that of these import restrictive measures are estimated to account for around four percent of world merchandise imports and are about five percent of G20 country member imports however obviously the alternative is if it hadn't been in place it could be much worse following on from this do you think the G20 will put further emphasis on removing these trade measures in the future thank you there I suspect that some of the measures are ones that are WTO compliant but so that maybe that maybe would affect the numbers but I think I would go to the second part of your of your question that the commitment amongst the G20 to avoid protectionism I think has been an important signal and an important sort of guide of policy most analysts will agree that as I said it with the dog that didn't bark there has not been you know the trading system has remained largely open there's even been progress since the global financial crisis in opening up some markets more whether on a bilateral bilateral regional basis and I think that's been an important part of the debate and the discussion in the G20 okay yes sir also in the back there thank you Brad Smith with the American Council of Life insurers can I ask do you as the in your opinion especially Miss Atkinson is there a recognition of the correlation between financial regulation and the standards being set on specifically pension and insurance companies that disincentivizes them from investing in long-term assets such as infrastructure and the disconnect with the objective of the G20 to increase private financing for infrastructure thank you that's an interesting question and I think David kind of referred a little bit to it we know that I haven't heard about it so much in the context we interested to hear from you and maybe we can discuss afterwards about the long-term investors pensions and life insurers certainly as as one is considering how to strengthen the financial system and wanting financial institutions to hold more capital to make them stronger and less likely to need taxpayer support going forward that's going to have some impact on risk judgments and lending behavior I think that looking at that will be another sort of phase in the future in the meantime what we've been doing very much in the work on infrastructure and investment more generally is seeing where are the places that governments can help either with some you know we have the overseas private investment corporation OPIC there are similar development finance institutions in other countries their multilateral development banks often have a way of co-financing and guaranteeing as the IFC so there are ways that the public sector can take some portion of risk to support the provision of longer-term funding by institutions that have long-term capital law that have long-term assets that such as looking for long-term assets such as pensions and life insurers David you want to talk about that just to say I presume that what you're referring to is solvency to which is in essence you also think about as the it's like the Basel 3 agreement for banks it's a it's an agreement on how regulations will be applied in the cases of insurance the insurance industry I think it is important that financial large financial institutions especially those that could be systemically significant how they are regulated so we don't have a repeat crisis we whether it's banks pension funds and insurance companies or the shadow the shadow banks we do have to ask ourselves how the regulations that we're putting in place affect financial intermediation are there things that will no longer be done are there things that will migrate someplace else and be done safely be done unsafely I think that's the bigger question clearly in the area of infrastructure we do we don't want to see a repeat of what we saw before the crisis where banks create structures that get seven day to 28 day money from money market funds and turn it into 10-year loans in structures that if they collapse end up being the taxpayers problem we want to see long-term funds like the kind of funding that insurance companies and pension funds have supporting long-term projects that require long-term lending there should be a way to do that I think that's in a sense the post-Brisman agenda is to figure out how to make sure that financial intermediation really safely serves the real economy okay Mike right here thank you Mike monitor former US Treasury and XG7 group could you both answer please the we'll try to answer the comment by professor Mancubh Harvard that the IMF and presumably the G20 by extension seems to have a free lunch view of infrastructure spending that's sort of akin to a Republican view of tax cuts and secondly page one of the we owe says that advanced economies are will be required to maintain monetary policy and fiscal adjustments that are in tune with supporting both the recovery and long-term growth could you perhaps give some substance to those words okay David I would note that everybody did get a free lunch today so there is such a free lunch so free because they could have had lunch down the street I have to do the opportunity cost look Mike you know Larry Summers wrote in the FT yesterday that it is a free lunch so maybe we'll let Larry and Greg who are colleagues duke this out at a theoretical level but I think it's there's basic very basic proposition here that when the basic there's basically two propositions here one not that it's a free lunch that it's a good investment if infrastructure actually leads to a social return whether it's the school in which your child learns or the highway on which you drive or the port through which your goods come it has a return there is the and that's there all the time and so if if our infrastructure you know full well if our infrastructure crumbles we have a negative rate of return there's there's a bridge up here on route 95 on the way to Philadelphia that they're gonna take a year to fix it and so now you have to drive through Wilmington so not having done the maintenance has a cost imagine if the if the bay bridge had to be closed for a year the costs for people going around so you know maintaining the public capital stock is an important thing then there's the second part which is what you might call the Keynesian part just a lot of people are unemployed and doing nothing or even worse requiring support from the budget for their period of unemployment it is there is the Keynesian free lunch that if you put them to work the the economy will be larger now I say all that I don't want to minimize that it is possible that people pick projects poorly and so there is no rate of return it's possible that people in some places money is stolen it's you know it's not to suggest that infrastructure is always good but take a look at our study we look at the actual experience of countries taking into account that there are inefficiencies we point out where the where the efficiencies are greater and less but that as a general matter over 30 years the infrastructure has brought a return and when it's done in a situation where there's slack the the effect on output is larger and more sustained and you know without characterizing it as a free lunch which I wouldn't do I think that the case for looking situation by situation country by country to see whether there's an infrastructure need whether your countries could benefit I think that makes sense okay Jeff thanks hi I'm Jeff Hardy with the International Chamber of Commerce quick question near the end Matt Goodman CSIS in his own column has you know questioned the relevancy of the G20 as it moves away from climate or from crisis mode and in your remarks Caroline earlier I would agree with you that this decision on the standstill agreement and the one or two little lines that you had in the last communique on the commitment to the TFA were massively significant collective decisions by the G20 that really just materialize themselves in a line or two so my question since this needs to be a question is can we expect to see the G20 to take those types of leadership steps in the future communiques and for example you talked about engaging on climate continuing to gauge you know to show leadership at WTO so hold on one second let me let me take two more questions because we don't have a lot of time there was a lady there from the Heinrich Bull Foundation I remember and that lady there yeah and yet see Alexander from Heinrich Bull just pushing the question on infrastructure a bit further there were a lot of attachments to the communique from Karen's a couple of weeks ago and they were endorsing the whole idea of taking a pooled funds approach to portfolios of PPPs in countries and regions and is this a is this a policy position that you as US government representatives or that the G20 as a whole is pursuing as a way as you said Mr. Lipton to solve this question of financial intermediation if I understood you correctly you all you said earlier that you thought we should step back from what I understood to be an excessive enthusiasm for PPPs and certainly given the demonstrated high failure rates especially in the area of public goods water and electricity those are pronounced failures and so it's important to understand whether in fact this pooled fund approach to portfolios of PPPs will go forward and if so what kinds of guidelines would be applied okay and one more question over there lady yeah thank you Jen Ricardi from the Embassy of Luxembourg Ms. Atkinson since you mentioned Ambassador Fromans efforts to negotiate these gold standard trade agreements I was hoping you could update us on the White House's view the status of those negotiations I thought you understood the question I'd okay good you want to do the trade well I'll do an overall thing so on the trade negotiations the you know we continue to make progress and there are usually fairly and the White House view is that that's important to continue to work to make sure that we are going to have trade agreements that are in the interests of of the American workers and businesses and farmers and that promote growth and jobs in our economy and that is what Ambassador Fromans is traveling around the world to try to make happen and then of course we would have important discussions with with Congress and that's critical and these things just take time so I don't want to you know there's no there's there's a rhythm and a timing to these negotiations and this clearly they're still continuing on the issue of the thanks for your nice comments about the communique of course we try and I'm sure leaders will want to seek agreement on some particular things and you're right that sometimes there can be a small line and particular people will notice particular lines I mean another line that that was important in one context last year was about support for countries meeting their WHO international health regulations IHR and we gave a push to that which was a forerunner of the global health security agenda which of course has got much more attention right now with the Ebola outbreak but even before that last year Margaret Chan remarked to a colleague of mine that having that sentence in the G20 was very important for her as she was encouraging countries to join and last year we also had a sentence about worker safety in the workplace so there are different areas where we certainly tried to get the collective weight of G20 leaders on Nancy's question maybe David can answer about infrastructure funds I think that as David said there are infrastructure investment can be a very good investment a good social investment and a good private investment and it's important to you know pick the right projects and have an appropriate kind of financing for those projects yeah I didn't mean to say more than that there are going to be some there's going to be a set of projects that make sense to do some should probably be done by the public sector some can be done through public-private partnerships some can be done privately and it it's worth being clear about the objectives the nature of the good whether it's public good or not and whether and how it's best to finance and charge I don't have a view about the particular financial engineering of the pools but to say quality control is very important it can become very political the there used to be a lot of cost benefit analysis done at the World Bank to help countries developing countries assess whether projects made sense or not and that's a bit of a lost art you know that in this country the selection of infrastructure can be very political every country will have to figure out it's in its own way how to have a process social and political process where people are comfortable with the selection because a lot of money is being dedicated to to these projects that have very long-term long-term consequences great well look we need a lot more time but these two time is precious and I really appreciate they definitely paid for their lunch today so so they didn't get a free lunch but please join me in thanking David and Caroline for their contributions today and I I I do commend to you some of the written product that has been alluded to in this session including the communicates which we really do need to read because they're actually some of it gets a little dense and wordy but but it's actually got important stuff and what the IMF is putting out the the the we owe that chapter on infrastructure the the financial stability review really rich stuff and I recommend reading it in your spare time thank you all for for coming