 to the global economic outlook session, which I'm delighted to moderate, at a very, very interesting juncture in the world economy. Before I set out the issues, let me introduce briefly this very distinguished panel, since I'm sure you know all the speakers. Immediately to my left is Christine Lagarde, the managing director of the IMF, and it appears very likely to continue to be the managing director of the IMF. For several more years, partly because of the enthusiasm of people like her neighbour to her left, George Osborne, the Chancellor of the Exchequer of the United Kingdom, who of course has nominated her for another term. To his left is Aaron Jaitley, Finance Minister of India. Certainly the fastest growing large economy in the world. To his left is Haruiko Koroda, Governor of the Bank of Japan, and a man engaged in one of the most important and interesting monetary experiments of all time. And finally, to his left is Jahn Tiang, who is Chief Executive Officer of Credit Suisse AG. So just to introduce it, our discussion, where we are now, as you have all surely noticed in the last month, we've had an immense amount of market turbulence in the strange markets and in stock markets. The S&P is down to 1900, but as I recently pointed out, on many measures still pretty highly valued. Oil is, I just looked up in my paper this morning, West Texas International is at 3160, still incredibly low. That's a very significant price adjustment. Worth remembering, however, that we are also in an environment still of unbelievably low. Bond yields, US 10 years at 2.06, German 10 years at 0.49, and the Japanese 10 year at 0.24, which is really staggering. The IMF, looking at the economy, has produced its recent forecast, and it's perhaps worth mentioning in view of all this turbulence, and I'm sure Christine Lagarde will say more about this, that they expect this year's growth to be higher than last year, 3.4% against 3.1%. If we look at the big issues in the world economy, there's the immense adjustment in commodity prices, which is very, very damaging for quite a number of companies and, of course, countries. Brazil and Russia are notable big victims, but it's important to stress there are very important gainers. China, India represented here are big gainers, and so, of course, is most of Europe. But it, of course, creates huge challenges. Another economic issue of some importance does appear very recently that the US is slowing at the same time as the Fed has decided to tighten rates. There's a big concern about a number of financial risks, corporate debt in emerging markets, and of course, debt overhangs in developed market economies remain very large in many countries, private and, of course, public. It's perhaps worth stressing that we do solve some problems. This year, nobody is obsessed with the possibility, rightly I believe, that the Eurozone is about to fall apart, and not much discussion of Grexit. Instead, we now talk about Brexit. So we will have that discussion and Brexit is just one of a number of examples of major political risks or politically driven risks which have economic consequences. The migration crisis, quote, unquote, in Europe. The fascinating, in terms of some people, certainly including me, terrifying possibilities in the US presidential election. The rise of populism everywhere and international relations issues in the Middle East between Russia and Europe remain very, very significant. So these are very turbulent and fascinating times. So in view of this, I've decided we're going to start with a view of what is going on in the markets and how significant it is for the economy, how worried we should be. So I'm going to start with Tijan Tiam and ask him for his brief reactions of what on earth is going on from the perspective of someone who's actually having to manage it and survive it day by day. Thank you. Thank you, Martin. What on earth is going on? Simply the worst start of any year on the record in financial markets ever. Simple. So if you've got the numbers, it's the worst start we've had three weeks in the year ever. So what's driving that? Maybe I can tell a few words about what I think the market believes and then say what we believe. The market is very worried about China, of course. Growth in China, we've seen the 6.9 coming out. The two issues there, the market doesn't necessarily believe the 6.9 and also believes that there may be a hard landing in China or a very significant decrease in growth. And that has direct implications on food commodities and oil on growth in other parts of the world. So the fear that we're walking into a global recession and also a lot of fears around the oil sector itself, which for the Shell Gas operators is highly leveraged and we've seen the high yield debt reprised very brutally at the beginning of the year at the end of 2015 also triggering losses in portfolios. And you will have in the background of that, that's really important. So a technical factor, which is massive redemptions, massive outflows from asset managers, some of them driven by sovereign wealth funds, liquidating positions to generate cash. So you have a lot of distressed sales in the market, which is also weighing on market level. Now, quickly, what we believe, we actually believe that China will have a soft landing. We are not concerned fundamentally about Chinese growth. And I'm sure we'll come back to that. I'm sure Kuroda-san can comment on that more precisely. And the oil argument is all about, is this a demand issue or a supply issue? And a lot of people in the market believe that demand in China is decreasing. And that's really announcing a more pronounced slowdown of growth in China. We actually don't agree. There is very good evidence that the net demand for oil has increased in 2015, something like 1.2 million barrels per day. And we think that half of that is China. So actually the demand for China has increased. So it's a supply problem, not a demand problem, which is good news for the world economy. And we also believe that the low oil prices are good for the world economy, good for the US consumer, good for Europe, and good for over 5 billion people on the planet who are basically net importers or net consumers of oil. It's increased consumer purchasing power, and that's good for growth. But that's a short answer. So just to summarize very briefly, your view, in a way, is that the markets have been overshooting rather significantly, and we shouldn't get too hysterical about it. I would say overreacting. And this is compounded by the structural decrease in liquidity, which we have observed in the markets. We know that the ticket size in many markets is lower because we banks as market makers adapting to a new regulatory environment basically reduce our inventories and our ability to make markets. So for all of the things being equal, the same news flow will trigger a bigger reaction in a low liquidity environment. Thank you very much for that very clear statement of where you think we are. So, Christine Lagarde, in that light of that, how do you see the global economic outlook over the next year, and how do you react to the judgments here of the major driving forces? Thank you, Martin, and good morning to everyone. We see global growth in 2016 as being modest and even, and with four downside risks. But it's up. I mean, we tend to forget that, as you said, Martin, from 3.1 in 2015, we see that 3.4 in 2016 and 3.6 in 2017. So there are factors that will actually increase the global value of our economies. Now, let me focus on the four risks that we see on the horizon. One is what I call the triple transition of the Chinese economy. And by triple transition, I mean moving from industry to service, from export to domestic market, and from, I always tend to forget the third one. So industry to service, export to domestic, and investment to consumption. That's the triple transition that it's going through. It's a massive undertaking, and it's one where we forecast China to be at 6.8 in 2015, at 6.9. So for those who pretend that they're very surprised about it, well, certainly it was expected. And we hope that the Chinese authorities will recognize the efforts that it takes to conduct those three transitions that they are determined to conduct, and that it will have an impact on the growth rate, and it will slow it down, which would be a good way to actually facilitate the transition and lower that first downside risk. The second downside risk is commodity prices, which have trended lower for the last five years, but where the lowering of prices have been accelerated, and certainly the perception of it has been accelerated in the last year and a half as a result of the oil prices, which is probably slightly going to improve as demand seems to improve a bit over the course of the last few months, to be seen, but still regarded as a downside risk. The third one is the asynchronous monetary policies conducted around the world, which entail quite a lot of flow of capitals from emerging and low-income countries to advanced economies, particularly the United States, and which entail, combined with the lower commodity prices, a significant exchange rate impact by way of depreciation on some of the emerging market economies. Just a quick word on those emerging market economies, if I may, Martin. They are different. We used to talk of the BRICS. I think it's not a fallacy, but the economic performance is vastly different, whether you look at India, which is cruising at 7.5%, and seems to be thriving, which is conducting some difficult reforms. China, which is gradually slowing down in, hopefully, a controlled way, with financial markets, by the way, which are extremely minute relative to the size of the overall Chinese economy. Russia and Brazil, which for different reasons are going to be in negative territory yet again this year. So, complete different picture from the emerging market economies, which I remind you, were the big drivers of growth and had been for the last five years or so. So, the picture is changing. But, you know, to be positive, the things that we feared a year ago would never happen, which have happened. Financing for development was agreed in Addis Ababa about six months ago. The sustainable development goals were agreed in New York, which will entail significant change in the economies and, hopefully, in the policy decision-making, particularly in the low-income and emerging market economies, and COP 21, which will also entail changes in our economies. So, modest optimism, but significant risks. It's interesting you didn't emphasise at all what you think might be happening in Europe. Are you reasonably confident about the upswing there? Europe's own problems all resolved as it were. Greek problem all resolved. And we can just put that one to one side? Well, I felt that I was talking too much from your body language, so I stopped on Europe. No, no, no. I was happy to have more. Okay. On Europe, the economy is certainly in a better shape. Our forecast for the eurozone is 1.5, slightly lower than the euro players themselves. We have two big concerns. One is better discussed, I think, by George, and that has to do with Brexit and whether there is a deal to be had between the United Kingdom and other members of the European Union, which we hope very much, because it would really be conducive to more stability and a more cohesive economic zone. And the second is of a geopolitical nature. It's not directly economic, but it's economically related somehow. It's the refugee crisis, which is a bit of a make or break from my personal perspective, not the perspective of the IMF, because our IMF perspective on the refugee crisis is that if it is well handled, if the integration process is conducted in a cohesive and organized way, in the short, medium term, it's going to be an upside, and we figured that for the eurozone on average, it would be a plus 0.2% growth with uptick of up to 0.5% for countries like Germany or Sweden, which are the most likely to integrate refugees. Do you actually think, I can't resist it, that the refugee crisis, because we had a very similar view from Mark Rutte here just a few days ago, sort of make or break for the survival of the whole Schengen area? Again, I speak personally, not as MD of the IMF, but yes, I think so. So George Osborne, if I might turn to you, how do you view Britain in the context of Europe and Europe against this background, and could you talk a little bit more about this Brexit risk, which is certainly concerning people here very much? So when we meet here a year from now, what are the chances that Britain will actually be in some sort of limbo and nobody knows where it's going to go? Well, I mean, Britain has been one of the bright spots in quite a gloomy global economic situation, and the IMF have us as one of the fastest growing of the advanced economies. Just had unemployment numbers a couple of days ago that show a record labour participation, the highest employment rate in our history, and low unemployment, and our sustained effort to reduce the deficit has brought it down to close to a third of the 11% deficit that I inherited in the job. So I think by following a clear economic plan, by taking some pretty difficult supply side decisions, by reducing government budgets, we've given the UK a pretty secure footing going forward, but we're not people who have tried to duck the big issues facing our country's future. We put to the ballot the future of the United Kingdom, and as a result, I think, checked a move towards the break-up of our country, and as a result, and I'm very grateful for this, and was pleased with the results, Scotland is part of the UK. Now we've got another challenge, which is our membership of the European Union. Britain is the second largest economy in the EU, the second largest contributor to the EU budget. On many forecasts, by the 2030s will be the largest economy in the European Union, but we are not in the Eurozone and we're not in the Schengen area. So Britain has, in that sense, a different relationship with the European Union to other member states. And what we're seeking, I think, are improvements for all of Europe, not just for the UK. We're seeking a much more competitive European Union. I mean, I have sat on panels like this for the last five years, where people have talked about free trade deals and completing the single market and so on. We need to put that into action. We need to, as the Chinese proverb goes, talk does not cook rice. We need to actually get the thing done, and we are pushing our partners to agree to a much more competitive European Union, so we provide jobs and rising living standards for people. Second, we want to address these concerns about migration. You mentioned Martin the rise of populist pressures around the world. I think mainstream governments need to not ignore those pressures, but actually address the legitimate concerns that can fuel them. And people in the United Kingdom, and not just in the United Kingdom, have concerns about the levels of migration. And our approach here, which is to say, by all means travel to the UK to work and contribute to our economy, but not to claim our welfare entitlements, I think is a reasonable approach, and I hope my colleagues in the European Union agree. And then finally, we have to resolve the fact that the eurozone and the non-euros need a better working relationship. The European treaties did not envisage a situation where large economies like the UK were not going to be part of this eurozone. The eurozone, in my view, although it's contested within the eurozone, has got to follow this remorseless logic that is going to drive it towards ever closer political, economic, financial and fiscal union. And this was the lesson that Alexander Hamilton taught us a couple of hundred years ago. And as they do that, Britain does not want to be part of that ever closer union. And we are therefore, and for me as a finance minister, this is the most significant part of our discussions with our colleagues, I think are going to find a much better resting place with proper protections and lasting arrangements so that a large non-euro member can coexist with the eurozone. And those changes, I think, may resolve this uncomfortable relationship that Britain has had with its European Union partners, where it's endlessly being asked to take part in further integration it doesn't want to be part of. And if we get that deal and we get that reform, we can put it to the British people and we can recommend that we remain in that reformed European Union. Do you think there's, I mean, in all seriousness, the slightest chance that you will get agreement on these huge issues in the next month or two that might also satisfy the immensely powerful, and we have to recognise, sceptical forces, both in your party and in the country. Is this really in any way a realistic project? Well, of course, there are going to be people who definitely want to leave the European Union come what may. They were originally, and when we had our first referendum about our membership in the 1970s. And there are some people who have resolved come what may that we should stay in the EU. I think the key group of people, and I think this is where the majority of British public opinion is, are people who, to use an old campaigning slogan, want to be in Europe but not run by Europe. And these reforms are very significant for that. The Prime Minister, myself and the government, if we can come back with a credible reform package, I think that will help make the case for staying in a reformed EU. And that's what we're working on. And look, there is goodwill out there with the other member states and the institutions of the European Union. We've got to now make it happen. And, you know, I think the challenge for Europe, if I can put it like this, is, you know, in the end, Europe, you know, sort of makes a decision sometimes at the 11th hour in a crisis because the Greek banks have to open on the Monday morning or the bond has to be, you know, repaid. Now, we, as a government, the British government, you know, we're not behaving like the Greek government. You know, we have taken a much more, I think, measured approach. You know, we've approached our colleagues as friends, partners and allies. And we've said this is what we require. And I think in a mature and measured way, we can get that agreement potentially at the February Economic, the February European Council. If not, if it's not a good deal, we won't sign up then. But, you know, there's an opportunity to do the deal then and frankly, with lots of other things going on for the European Union, like the challenges in the Schengen area, I would say it's in their interest as well to give us the agreement that I, as I say, I think works for everyone in the European Union. It's not a special, you know, it's not special pleading by Britain. This, I think, works for all EU member states. It's final because it's such a big issue. And here's this whole of people involved in business, many Europeans, too, and many who have invested in Britain within Europe. Can you, from the base of what you know about what the negotiations are, the politics in which you are really an expert, could you tell them that you expect Britain still to be part of a reformed European Union a year from now? Well, I'm optimistic we're going to get a good deal for Britain and a good deal for the EU. And I think if, therefore, we can put that to the British people, then the British people want to stay in a reformed EU. But, you know, there is a sequence to this. And we've got to address totally legitimate British public concerns about migration pressures, about Britain being a part of an ever-closer union, about our relationship with the Eurozone, and above all, as a finance minister here at the World Economic Forum, about our continent being a source of innovation and growth and jobs. You know, look at the history of our continent. It has been the place that was the great source of scientific discovery, innovation, brilliant business, and so on. I wanted to be that in the future, and I don't want my continent to be priced out of the world economy. And if the British people see that we are delivering that change across Europe, I think they will want to stay in that reformed EU. Well, let's turn, if I may, to India, which is very much a bright spot from the world's point of view, expected to grow 7.5%. The oil price fall would look like a tremendous boon to India, a huge country on the going well with reforms underway. It all sounds a really wonderful picture. Many people with the door to have it. Do you have any problems? Quite a lot. So how do you say, see, I think our basic problem will have to be visualized, that we still have a very large section of population living in poverty, and therefore, we need a high growth rate sustained over a long period of time. It's only then that we can get this segment out of poverty. Now, fortunately, in the last 13, 14 years, we've had a reasonable levels of growth rate barring two years, and the bottom that we touched was around 5%. We haven't gone ever below that. And there is an increasing realization in India that, given some favorable circumstances, our actual potential could be somewhat slightly higher than this. For instance, this 7.5% is in the face of two continuous bad monsoons. And bad monsoons adversely impact on growth because not only the share of agriculture goes down, but the purchasing power of 55% of people in India gets adversely affected. So at the moment, even when urban demand is high, rural demand is somewhat adversely impacted. So that's impacted slightly on the growth rate. Of course, the global situation, in one sense, the oil prices have been very helpful, but the shrinkage of exports itself is an adversity. And I think there is a set of structural reforms which is in progress. And there are a large number of steps which we've taken over the last year and a half. There are some in the pipeline. And some of them are legislative and therefore, in a very active and somewhat noisy democracy like India, to negotiate those through parliament itself is a challenge. And therefore, if we are able to do all this and given the rain gods being slightly kinder this year, I think we can, in the coming year, improve upon this year's growth rate slightly. Can you tell us a little bit about, because there's been a long big debate in India about whether you're reforming fast enough, or some people, journalists are always disappointed, I understand this. It's easy for us. You have to pass it. But what do you think are the really high priority reforms that you must do, and how much progress do you like to make? I know you have parliamentary problems. Or is actually India's growth sort of guaranteed and solid at this rate, even if further reforms don't happen? I think what's extremely important is that all steps that the government has taken have been significantly steps in one direction. We haven't made a mistake. We haven't reversed a direction. I think the second good news is that earlier it was the central government which used to push reforms. Today, the regional governments, the states have become extremely active. And irrespective of the political complexion of the party in power in those states, I think India's cooperative federalism has transformed into competitive federalism. So the states are competing with each other. And I think that's a very good news for India. Thirdly, most reforms are either through executive action or through budget announcements, the nature of expenditure, etc. I don't think parliament in any way is able to obstruct that because the government has a comfortable majority to push them through. It's only one or two legislation, one in particular, which has been held up, which is the indirect tax reform. And that's very high on our priority. So I have immediately three very important reforms in the pipeline. A direct tax reform where I am proposed to start bringing down direct taxation, corporate tax rates, I think which should not be very difficult. The indirect tax reform, which is the uniform nature of the tax across the country, the goods and services tax, the lower houses passed it. I'm reasonably optimistic in the next session of being able to push it through. And then we have the bankruptcy law, the insolvency law, which India didn't have an effective law, which is easier because it only requires a simple majority in parliament to pass it. And therefore, besides this, most others are really through executive actions. There are, and I think what's one main reform, which is still work in progress, which governments across the country at all layers, the central government, the state government, the municipal bodies, I think it's the ease of doing business in India. We didn't have a great track record on that. And I think over the last few years, our rankings have improved, but it's still work in progress. So if I may turn to you now, Mr. Koroda, in addition to addressing what actually is going on in Japan and what follows QQE squared, or what are the next stage in your monetary policy, which I think you've increased the bank's balance sheet, your bank's balance sheet relative to GDP by about 40 percentage points, which is quite impressive, which is more, after all, than the level for the ECB, the Bank of England or the Bank of Japan, sorry, the Fed. So this is, puts you in a class of your own, but you still suffer from low inflation. Amazingly stubborn, of course, and I don't just mean headline, also core, but I'd also be very interested if you could have it to the end. How far you agree with Tijan's assessment that we should not get too worried about the market turbulence, because inevitably many people are wondering, is the market, you know, Paul Samuelson famously said the market forecast nine of the last five recessions, but maybe this is one of the five. Yeah, thank you. Since the turn of the year, as you know, global financial markets have continued to be volatile against the backdrop of heightened uncertainty, such as over China's exchange rate policy and continued slide of oil prices. However, I do not share the pessimistic view about the global economy suggested by these developments in financial markets. For example, I don't think the Chinese economy will sharply slow down or will be faced with hard landing risk in the future. Rather, what we are observing in the Chinese economy can be regarded as the process of transforming itself from a investment-led and manufacturing centered economy into a consumption-led and services-focused economy. And turning to Japan, the economy is likely to grow by 1 to 1.5 percent in the current fiscal year, as well as in the next fiscal year. The corporate sector enjoys a historic high-level profit. The labor market is becoming tighter and tighter, an employment rate being around 3 percent, which is basically a full employment situation. However, the headline inflation rate has been around 0, largely because of substantially declined oil prices. But if you look at the inflation rate excluding fresh food and energy items, then this underlying inflation rate has been positive for 26 consecutive months and has recently reached positive 1.2 percent. So the economy has been making a moderate recovery, and we will expect this kind of growth will continue for some time. And inflation rate, even headline inflation rate, which is currently around 0, could improve substantially once oil prices start to bottom out. Of course, the Bank of Japan is fully committed to achieving the price stability target of 2 percent, and we will do whatever it takes to achieve that target at the earliest stage. And we do not think there's any limitation for our policy tools to do so. As you indicated, the balance sheet of the Bank of Japan has significantly increased. But as I said, I don't think there's any technical or otherwise limitation to further strengthen our quantitative and quantitative monetary easing, if necessary, to achieve that 2 percent inflation target. But you're not saying that right at the moment that you feel it's necessary? We have been carefully watching the market development, as well as the real economic development in Japan and also in Asia. As I said, at the outset, the financial market time will this month have been, has been somewhat more than anticipated. And so we have been and we will continue to carefully monitor those market developments and also continue to assess the potential impact of those market development on the real economy, including growth rate and unemployment rate, as well as inflation rate. Now, one of the issues in the monetary sphere, which I think Christine Lagarde mentioned, I'm pretty sure, is monetary policy divergence. So we've got a situation you're easing, ECB seems pretty clearly is easing, Mark Carney's recent speech suggests the Bank of England is neutral and the Fed is tightening. And into this mix is a very uncertain situation. We have even the Chinese officials admit very badly communicated about Chinese monetary policy and Chinese exchange rates. This seems to be, this seems to be part of what markets are worrying about. Does this combination of events worry you or is it just a perfectly reasonable consequence of divergent situations among major economies? Quick answer is, I think divergence of monetary policies among major economies, I think is just reflecting divergent economic and financial situations in those economies. As you mentioned, federal reserve has already started normalization of monetary conditions, while the ECB and the Bank of Japan are likely to maintain extremely accommodative monetary stance for some time to come. These, I think, are quite natural and reasonable. By the way, this synchronized kind of monetary policy among major economies could mitigate the impact of normalization of monetary policies by those central banks, because if not only federal reserve but also Bank of England, ECB, as well as the Bank of Japan, all of them started to exit from the current expansion of monetary policy at the same time in a synchronized way. The impact on the global financial situation, particularly on emerging economies and developing countries, could be worse than the current staggered or synchronized sort of monetary policy making. Second question is a bit different. Chinese monetary policy, I think, has been quite appropriate, being accommodative, because inflation rate has been fairly low and the economy is still growing but slightly decelerating and so accommodative monetary stance is quite correct in China. The issue is exchange rate and monetary conditions and I think the Chinese authorities have been struggling in some sense to avoid on the one hand excessive depreciation or appreciation of its currency, but on the other hand they have to maintain accommodative monetary stance. So this is my personal view, may not be shared by the Chinese authorities, but in this kind of somewhat contradictory situation capital control could be useful to manage exchange rate as well as domestic monetary policy in a consistent and appropriate way. That's actually a question I wanted to ask Christine Lagarde, so you've got there. So the Chinese authorities are losing reserves at a very remarkably rapid rate. There's a large capital outflow. They move to a new exchange rate system and you've just put them in the SDR. How would you feel about if they said well the only alternative to letting the exchange rate go just downwards is to use up all our reserves we don't want to do and the other alternative is capital controls on tighter capital flows on the outflows on a temporary basis. How would the IMF react to these alternatives? Well I think that the massive use of reserves would not be a particularly good idea. Absolutely right and some of it was used, which leads me to another point which is I believe that now that the quota and governance reform of the IMF has been ratified by the US. The size of the IMF is bigger, which I think is the beginning of a trend that should continue. The IMF should continue to be large in order to be seen as an international safety net that can be used and that can protect against such shocks, but that's an aside. Objective for the next term. That's an objective for the IMF, you're absolutely right. On the other issue, I think that some of the macroprudential measures that have been adopted in the last couple of weeks were justified and are probably useful in the context of the current monetary policy questions that the authorities have to ask themselves. That's point number one. Point number two, and I've gone public to say that three days ago, you said they have changed their exchange rate mechanism and yes they have, but I think that what is necessary for markets is clarity, certainty, one message, and on that front clarifying precisely how the exchange rate mechanism works and against which basket of currencies as opposed to the dollar, which is always the reference that is still made as far as the variation of the reminbi would be a right move in the direction of setting expectations so that everybody knows that actually the pegging system that the Chinese authorities have used for the last 12 months or so has actually been the pegging against that basket of currency and in effective terms the reminbi has has been quite stable. So whatever the policy might be, it really would help if we knew what it was. Yes, clarity of message. Okay, I think actually that seems to be shared by Chinese policy makers again. I'd like to return now to Jijian, we're very soon going to go to the audience. So we've heard about the environment as seen by the authorities and there are two sorts of criticisms that I hear in my market participants and commentators. You've already mentioned one, the regulatory effects on on liquidity. The other is this immensely long period of ultra-easy monetary policy, which we've now had since 2008-9 is generating very significant financial sector risks cumulatively. And we should be concerned this year, that's one of the things, that some of these chickens might come home to roost. Perhaps in emerging economies because so much capital flowed into them in response, so much money flowed into them, and now it's being pulled back. So the sort of monetary authorities are actually creating financial risk and the other concern is indeed what I just talked about with Mr. Karoda, the divergence between authorities is also creating great financial stresses. How far would you share this both as either an observation or as a criticism of what the monetary authorities have been doing since the crisis began? Yes, thank you, Martin. I mean that. The world has changed a lot since 2008 and banks have changed a lot. If you throw yourself back then, we had huge balance sheets. We were highly leveraged and after a long period of asset price growth, there was a kind of excessive animal spirit, if I can describe it that way, and excessive risk-taking. If you look at where we are today and that's the good news. I want to start with the good news really. I think and I, I was teasing Mark Carney this morning and I said I complimented him live on television, but I did. So for a bank CEO, that's a bit unusual, but I think that the FSB has actually done a very good job. I'm presidented, I think. Sorry? I'm presidented. Well, there you go. It's been done now. But I think the FSB actually has done a very good job in terms of, in a way, forcing us to strengthen our capital base. It was the one thing I haven't said in my introductory statement when you asked me about markets, there is absolutely no worry, no contagion risk about banks. That has not come up in the debate. And that's a huge tick for the regulatory system, the central banking system. Some of the numbers are really staggering. If you look at the total loss of absorbing capital that we're being asked to raise, I think the figure at the end of 19, ex-China will be four trillion dollars. So we collectively, the banks will be holding four trillion dollars of capital. That means that we can go through a stress event. We can go through a UBS. And this is not a dig at the competition. It's just a reminder of the past. We can go through a UBS, a city and a burial, assuming we cannot raise capital and markets are closed and we could continue to operate and fund the economy. So that's a big achievement, I think, for the economy. I should take that now. On the less positive side, yes, you have to deal with the divergence that Christine referred to, the asynchronicity of monetary policies across the big monetary zones. But I'm with Kuro Dasan on that. I think it's a bit unavoidable. QE was an effective answer. I'm not saying the right, but only an effective answer to a major financial shock. And the exit of that is, I mean, there's already many articles written about it. The exit of that is quite a delicate phenomenon. And frankly, it can't come too early. So personally, personal view, I think that the normalization is necessary because I don't like periods where the price of risk is distorted for a long period of time. Because based on that, if you wish, distorted price of risk for a risk-free rate, people take positions, make decisions to invest or not to invest, etc. You risk developing asset bubbles in various places. And really the exit of all that is delicate. But that's why I started the capital. The good news is, even if there is a degree of, I said trauma a few months ago on commotion at the exit, the system can withstand it. And that's the fundamental message so that we can come out of this period and then look to a normalized environment with more serenity. I'm going to take about three or four questions together. Say who you are. Be very brief, so we can give people a chance to respond. And whether I will ask the question of the panellists depends on whether I think it's a good question. So, I'll start with the gentleman in the front there. Yes, you. Please stand up. Say who you are. And very brief. It should work. This is Lee Wei from Taishing. Question for Mr Lagarde and Chancellor Osborne. Many will say you too made great bats on China. Given these market terminal inside China and around the world recently, do you believe in your terms your bat will come into fruition into good results? The great, the great, what was the? Bat. A great bet on China. Splendid. Okay. Next question. Immediately behind him. Paul Schitt standing in Paul's McGraw Hall Financial. The theme of this Davos of course is the fourth industrial revolution. But when we think about policy frameworks, since the financial crisis, there's not been incredible revolution. Certainly, some lessons have been made with macroprudential and microprudential policy. But I'd like to ask the panel if they think there is scope to revisit the major policy frameworks that we have in the world. Monetary and fiscal policy, the relationship between those two in particular, but more generally in the context of the fourth industrial revolution, do we need to revisit economic policy frameworks? That sounds like a whole new session. Anybody right at the back? I'd like there's somebody, a lady behind, behind you. Yes, that's right. Please. Good morning. My name is Maria Mxiao. I'm a young global leader from Senegal. I would like to take this opportunity to say thank you, but also ask just one very specification. Can we make sure in 2016 we put a fund together where we could invest into young girls and women across Africa through technology, please. I didn't quite get that because of the echoes. Could you, did you get? Investment in technology. I'm a young global leader from Senegal. I would like to ask Mrs Lagarde and Mr Tijian Cham and Mr George Osborne. I live in London. I would want you to know if we can put a fund together to invest into young women and girls across the world. I get that. Okay, and final question. The lady there. Hi, I'm Summer from Tencent, the Chinese media. This forum is focused on the industrial 4.0. Do you think in this transformation developing countries and developed countries the gap between them will be narrowing or it's a new chance for the developing countries to catch up? I'm going to actually start on the last and I'll start with Mr Jakeley. Do you think that the new technological opportunities being created by what's called the fourth industrial revolution, particularly it's relevant to India where it has a strong IT sector provides an opportunity to accelerate the catch up for say an enormous and important country like India? Indeed it would be. And it would be for several reasons. One of the reasons you've mentioned that Indians over the last two and a half decades took naturally to IT. This was one sector which in India never got regulated. Unfortunately, because of that a lot of our energies have been unleashed both within the country and outside. We saw the impact of this. The government didn't know it existed. And recently I think the startups in India and the new policy of the government also is intended to encourage that giving them tax break organizing funding from that for them and at the same time the government maintains a distance a no interference policy a a large amount of relaxation from normal laws etc have been given and we can actually see literally hundreds and thousands of them experimenting all over the country for innovations coming out with easier solutions. And I think in years to come this is going to be a very powerful segment of Indian economy. Who would like to respond on this question of the technology fund and particularly in relationship to Africa? Would you like to talk about that or George Osborne? We have a very large aid program. We are very interested in our role in development. I know it's a what is your perception on what can the developed countries do? And I think there's actually a very particular issue which might be touched upon in this since we've just had COP 21 this whole climate change technologies not just IT sort of thing the role that developed in other countries and private institutions can play in getting these technologies into the developing world. Well I mean the United Kingdom is one of the few countries and the only large country that contributes 0.7% of its national income on international development. That's a decision we've taken even in a period of very tight public budgets. And it was a challenge bringing the British public with us but a combination of the Ebola crisis in West Africa and the migration crisis across North Africa and the Middle East. I think actually is starting to make people aware in my country that if you try and tackle some of these problems at source if you develop these economies then people don't feel they need to move for economic opportunity and you have longer life expectancy and rising living standards. Africa's an enormous economic opportunity one of the I would say bright spots in the world economy and investment there in infrastructure and technology and the like I think pays huge dividends not huge dividends not just economic returns but massive political returns. Does anyone? Yes please of course. Very quickly particularly given the fact that the young leader from Senegal has raised the issue of women and girls. You write Martin COP21 was a big boost but in countries like Senegal and very many other African countries actually it starts with power and there are multiple ways now and improved ways to obtain power but it starts with power in Africa and it takes me back to another point which has to do with stimulating demand which everybody is crying for investing in infrastructure is actually a critical step towards setting more power sources in African countries on the funds for girls mean power as in electricity yes oh yeah yeah yeah yeah yeah I'm sorry energy sources such as power and on specific funds for girls and women they exist I don't want to mention any name because they're generally privately owned and driven and governed but I've heard a lot about the IOT, IOV which is Internet of Things Internet of Values I would hope that there is an IOW Internet of Women which can actually help with moving women in the direction of those funds that exist Tijan Yes mostly I wanted to to salute you because I was a global leader for tomorrow class of 97 so from one to another hello so in a few years you will be up here on the platform your elder and also just reinforce Christine's point that there are funds that exist I won't mention name either but there are funds that exist absolutely backer on infrastructure and I led the G20 panel on infrastructure she was very supportive absolutely vital for those countries and make a final point something I very much care about which is the mobilization of domestic savings the big hole in the strategies of development in emerging countries and that's where maybe I'll differ with a young lady I don't think the answer should come from London there is a capital in Africa it's an aberration that we don't have pension funds young countries should have pension funds when you have a positive demography it's the right time to put in place pension funds and those should provide patient long-term capital in local currency that can do all of those things and Mr. Corota but comment incredibly briefly on this and then perhaps respond to the question why haven't we changed our monetary and fiscal frameworks when we think everything else should change I have intended to respond to the question related to policy framework yes as you may know 2013 the government and the Bank of Japan agreed to a package of policies or policy framework under which monetary policy would pursue to achieve 2% price stability target at the earliest possible time fiscal policy should provide necessarily stimulus in the short term but must try to consolidate the fiscal position in the medium to long run and the third part is of course various structural reforms including growth strategies deregulation free trade agreements and so on and so forth so this kind of policy framework has been established and government and central bank have been cooperating to achieve those policy targets macro prudential measures the government has now sufficient tools although at this stage the Japanese financial system is one of the soundest among developed countries and we don't see any financial excess in the financial sector so at this stage we have not utilized any of macro prudential measures but we have lot of measures to be mobilized if necessary Christian guide so you've got 30 seconds on the great also the great bet on China all right on the on the policy framework I want to address the whole thing but one thing I take away from this world economic forum from the fourth industrial revolution is that there are lots of things that we don't measure that we don't measure well and I think we have to go back to GDP calculation of productivity value of things in order to actually assess and probably change the way we actually look at the at the economy and we will be working on that on China I've heard for the last 10 years that we are just about to see a hard lending everybody here on this panel tells you that we're not seeing a hard lending we're seeing an evolution a big transition which is going to be bumpy which will offer some turbulences we have to get used to it and it's a very normal and proper way to actually move towards a more sustainable and more quality growth we all hope George Osborne No I'm China I mean China's been a big theme of this whole week at Davos and I would say this in my lifetime the biggest single instrument for ending poverty and making poverty history has been the growth of the Chinese and Indian economies even China growing at this rate is going to add an economy the size of Germany to the world's economy by the end of this decade and I think if I can end on a geopolitical point the world has not been very good over previous centuries at accommodating rising powers and it's often led to unhappy outcomes I think it is massively in our interests that we bring China into the multilateral institutions of the world we reform the IMF as Christine has done we bring their currency into the global markets we support the Asia Infrastructure Investment Bank and the like it is hugely in our interest that China feels part of the global system and that system works for them and so we must be in it for the long haul as this extraordinary society grows and transforms so I'm afraid I'm going to have to cut it short now there's so many more issues I want to talk about Greece and Ukraine and Russia and Nigeria and Brazil and the form of the monetary system but I think the basic lesson is you shouldn't get too worried about what's going on in the markets I tend to feel that almost always true except when it isn't and it's very difficult to know at the time which it is but I'm inclined to agree with the panelists we've got some big issues out there and big divergences out there the commodity collapse has hit a number of very important economies very hard think of Brazil think of Russia but we are reminded that basically right at the moment the US, Europe China, India even you know increasingly Japan look okay and these are the core of the whole world economic system and unless we're wrong about that it should be all right so cheer up thank you for