 I think we're gonna get started good welcome everybody let's let's get started the faster we can assemble everybody the faster we get into the questions I want to welcome everybody here and hopefully everybody is not too exhausted from the these wonderful days and meetings we've had let me introduce everybody I think everybody knows everybody we're in a different order than I had but to my immediate left is Yakem Levy who is the Minister of Finance from the country of Brazil to Yakem's left is Kuroda-san here you go Kuroda who is the governor of the Bank of Japan and we have Benoit Coray from the member of the Executive Board of the ECB and I'm sure he'll have a lot to talk about today Mark Carney the governor of Bank of England and the chair of the Financial Stability Board and to Mark far left is Minzou who is the deputy managing director of the IMF who's making sure we are doing what we say we all do and making sure we have an organized world so I wanted to set the tone and and and talk about the world and as I was reflecting on it I was reflecting on this exact meeting last year so last year as smart as we all were we never talked about oil was going to go down from a hundred to below fifty I don't think we ever heard of the word ISIS we didn't certainly talk about the Ukraine and Crimea we were confident the Federal Reserve is beginning to tighten and I would say the overall tone of the committee of the group and also the mood at Davos was that Europe was healing very rapidly and and so everyone I hope we're gonna be a little better this time and I would say coming into this session is my observation there's quite a bit more pessimism throughout the whole session this time from last year so as I said last year we came away very positive I think in some cases that was probably true but in many cases obviously it wasn't so so with that set up and we're gonna go talk about the world today but I also want to bring up the world with technology and how we navigate that as finance ministers as as governors essential banks and as IMF thinks about it but before we do that let's go talk about the most some of the most pressing issues of the world today and the events of this week so Benoit let me start with you you had a busy week I think the marketplace is approving of your actions but more importantly tell can you tell me in the audience what were your views of Europe going into the meeting and importantly the consideration of quantitative easing what do you what do you think that will do for Europe and Europe's future well thank you thank you Larry and good afternoon well that was certainly a momentous week and it had become pretty clear that we had to do something given the weakening inflation prospects and and you know what our life is simple we have a pretty clear mandate that inflation going back to 2% close to 2% below 2% as we put it and we had to do something so that became pretty clear and in the last days the the only discussions were on how to do it and that was a discussion we learned from what Mark did we learn from what Corolla Sun did we learn from what the Fed did but none of it is directly applicable to Europe because it's totally different we have different markets market structures we have a different institutional setup and we are absolutely unique in one dimension which is that we have one single monetary policy for 19 governments 19 treasuries so anything we did had to be fit to our purpose it had to be fit to our unique situation and that was really what the discussion had to focus on in the last days then on the question what can we do for Europe well we can do everything for Europe we all have a job to do we've done our part on Thursday others have to do their part and there is nothing we can do as ECB as central bank that can lift the growth rate of Europe in a in a lasting way that's about productivity that's about having the right business environment that's about having people want to invest we can make it cheaper to invest but people have to to want to invest and that is really the role of finance minister that is a role of government so we all have a job to do was currency component of the deliberation and whether a view where currency would ultimately go then the currency yeah it's it's part of the channels it's not it's probably not the most important channel we don't have targets as you know very well we don't have numbers the currency adjusts on markets it floats it's really floating it adjusts as a result of monetary policy decisions so it's part of the transmission it's not the main consideration so mark I want to go to you first and I may come back to Benoit as the chairman of the financial stability board quantitative easing creates in some markets some distortions you see you see very low-interest rates as a result of these purchases large-scale purchase by central banks you have depending on the maturities of these purchases you have a flattening of the old curve and you have behavior changes in the marketplace and I'm sure those behavior changes are anticipated but those behavior changes will probably lead to more movement towards higher yielding less liquid instruments and what we witness in the United States and we've seen now in Japan it moves huge volumes of money into the equity markets there are some governors in the world have talked about bubbles or things and then you know and I don't know if these are unanticipated but you spend a great deal of time focusing on macro potential risk and so how do you navigate the issue of making sure that the economies meet their targets meet their inflation targets and yet these methods QE creates true market distortions well let me begin by welcoming the steps that the ECB has taken in the way they have taken them but your questions vary on point because in order for this to be effective a number of things have to be in place including a framework to ensure that we maintain financial stability not just in Europe but globally and we're well aware the ECB the Bank of Japan the Fed the IMF Bank of England certainly that in an environment of low-interest rates and low-interest rates for a period of time and also quantitative easing there can be excessive risk-taking but let's let's break this down because what those monetary policies are looking to do is to move from an environment of reticence to take risk to responsible risk-taking ultimately responsible risk-taking in the real economy and we're trying to avoid reckless risk-taking now reckless risk-taking is built on false assumptions let's there's a few fault potential false assumptions the first false assumption is that there's a central bank put that the central bank will always and everywhere be there to protect against downside moves in asset prices of any type first point second point and the second false assumption we're particularly concerned about is an illusion of liquidity that has existed in a number of financial markets now I would say that illusion of liquidity is gradually being disabused we've seen over the recent months a series of jump to illiquidity if you will including in the most historically liquid markets such as the US Treasury market October so so what are we doing to reduce financial stability risks in this environment of appropriately loose or appropriately accommodated monetary policy first and foremost it's about shoring up the core of the financial system in other words the major banks that are at the core of the financial system it's why we increased capital ten times capital requirements ten times it's why the European authorities went through the aqr and inch and the stress test and ensured that the 125 largest banks at the core of the European system are appropriately capitalized it's a much better transmission mechanism but they're also better protected in these bouts of illiquidity and I will I will say in my roles as governor of the Bank of England and chair of the financial stability board I can get daily position mark to mark position all the global banks and in these bouts of illiquidity the losses when there have been losses have been very small so the core of the system hasn't amplified this illiquidity the second thing we're looking to do is to reduce the amplification channels from the core of the system out two points and I'll end with this the traditional channel the channel we all lived through in 2007 2008 2009 was through securities lending markets repo markets and and straight securities lending bouts of extreme illiquidity haircuts go to the moon at the same time that bar goes up so to be technical but that's that's the dynamic at the core so we put in place through the financial stability board the major central banks major authorities minimum haircut requirements which will dampen those ups and downs the big question for us now and includes you know your institution number institutions are here and and watching is what about liquidity cycles that come from those fund managers that actually don't have leverage they do maturity transformation it's 35 trillion plus of daily liquidity mutual funds although simplified you mutual funds or usets those types of firms that have daily liquidity but actually invest in relatively illiquid securities how did they manage their liquidity and to what extent can the system as a whole get liquidity to them so that in these bouts that we expect to happen we expect to happen increasingly by design because we're pushing liquidity risk into the private sector how can they how can they dampen them make them work so it's it is your questions on point because it's it's front of mind we've taken the first major steps which is why it is appropriate not just for monetary policy reasons but for broader financial stability reasons that the ECB is acted as they have this week and I could ask this to Benoit or you mark in some chance is there are some people who believe that QE it creates more issues social issues in society because they're big winners and big losers those who have capital in financial assets are generally big winners and those who don't and so it creates even more a greater fragmentation in society do you have a view on that either one of you think that's a that's a very deep question we know that large-scale asset purchases until risks as a mark said it entails financial stability risks and on that front I can say that we feel safer now that we have single supervision and it's not me doing supervision by the way it separates within the ECB it is Daniel Nui and Sabine a lot of slager and they are great and they're great because they are tough and they will be tougher that their predecessors and if we have tough supervision we feel safer to have loose monetary policy and it also entails risk as you said the risk to widen inequalities we have to be extremely mindful of it my answer would be that the best way not to increase inequalities is to have good policies to support the poorest and to create jobs at the at the lower end of the wage ladder at the lower end of the skills ladder because these are the one who are unemployed and in the case of Europe that is mostly structural that is mostly about making labor markets work better so if we make labor markets work better in complement to large scale asset purchases then you could have you could have the best of both world you have expansion and you don't increase inequalities so Benoit should we expect to see a more vocal ECB related to those items and been and importantly talking to the finance ministers of the various countries on those mechanistic ways of improving inequalities within those countries more reforms no we'll certainly we'll certainly speak our voice we'll start on Monday actually Monday where we have the Europe meeting and this will certainly will be the discussion but that said it's not a it's not a bargaining it's not a quick pro quo obviously and as I said we all have a job to do we do our job they do our job their jobs just let me make a very basic point all monetary policy has distributional consequences we lower interest rates it benefits those benefits debtors people owe money at the expense of the people who save money and I can assure you I hear from savers and understand that I do absolutely the the point here and it was a point in the US point in the UK that one of the biggest distributional issues is the risk that people are unemployed for too long they they become detached from the labour market they lose their skills so-called hysteresis so there has been a race against hysteresis in the UK where we've created over 600,000 jobs in the last year where the unemployment rates drop down below 6% where wages are starting to pick up we're winning that race to the extent you can from a monetary policy perspective but there are profound other policy issues that are necessary and they interact with your I think your last topic on technology to make a real difference so just to just to summarize monetary policy always has distributional consequences there are broader policies that have to address them and they can be redistributive or structural more broadly and we need to recognize that but if we don't get the basics right we're not even in the conversation let's hear from men related to these issues because these have big consequential issues for the IMF and and so how do you how do you think about these issues yeah the first issues I would like to say we welcome ECB's decisions when we talk about ECB's policy we talk all these consequences right but the key objective is create a space for structural form and for investments for growth as Sabin once mentioned I would like to re-enhance that point I think it is absolutely important I think a European in a good position today because we have more monetary space we'll have a little bit of fiscal space because all your prices are so low but it's absolutely important leverages of opportunity to move forward the structure reform and so much talk about structure reform I don't want to repeat anything but I want to mention one thing as is investments if you compare today with 2007 the investment share in GDP in Europe lost five percentage of GDP this is a big gap if you lost the five percent of GDP investments in seven years how can you have a strong growth this is not including infrastructure investments it's more today it's investments in knowledge economy investments in long-term R&D investments in innovative SME I think this is all European needed so I would emphasize when we think about the monetary policy and we think about the QE I think that we need carry out firmly on the structure reform and investment projects now and fully understand it's not easy because it's not easy go through the political process to the structure form but the great challenge you call on the great leaders right I think this is the moments either the history choose the leader or leader change the history well we first have to educate the population in voting in the right leader to do that then right that's exactly but also depends on the proposal yeah let me turn to Corotas on you've been very bold in your actions and you've been consistently bold does I'm still looking for the third arrow so if anybody in the audience has it sometimes I feel like you are one of the most lonely men in the world because when you when you started this ambition plan I assume you we were gonna have more support like what men was talking about in terms of policy so a where is Japan versus where you thought Japan would have been after to this two-year program and what how do you believe where do you believe this third arrow will begin and how successful this become yes thank you but before going to Japan's situation maybe let me say one thing about the global economy as you indicated at the outset some pessimism prevailing in the boss this year I think it's a bit exaggerated because I think two good factors which could boost the global economy outlook in the next couple of years we have to carefully assess one is of course substantial decline of oil prices I mean 50% oil price decline could accelerate the global economic growth in coming years the next factor positive factor is of course a big decision by ECB this QE is is certainly quite significant with somewhat open-ended nature and that would greatly improve the world economic outlook because after all the eurozone is the biggest economic unit in the world bigger than the US so these two factors lower oil prices and big decision by ECB could further improve world I think yes euro has depreciated somewhat but as Benoit emphasized ECB does not target the exchange rate like Bank of Japan and it's only one little small part of of transmission mechanism and and by making this big decision the eurozone could recover strongly and and the deflationary pressures could be eradicated then that would be great for the global economy now coming to Japan the so-called Abenomics was started two years ago with three allows namely aggressive monetary easing fiscal stimulus in the short term but coupled with a medium term fiscal consolidation and thirdly substantial structural reforms to raise potential growth rate toward 2% aggressive monetary easing certainly Bank of Japan has been doing implementing and the so-called quantitative and qualitative monetary easing QQE started April 2014 was further expanded last October and the inflation rate has been steadily improving although in the last couple of months because of sharp decline of oil prices headline inflation slow down but we think that that eventually inflation rate would accelerate because of strong positive impact on the economic growth in Japan of substantial oil price decline now how about the third allow as you said actually there are many things done although there are few which have been very noticeable one of them is substantially increased female level participation ratio in the last two years female women's level participation ratio increased by 3 percentage point reaching the historic high level although the level is still somewhat below somewhat lower than the OECD average so that there is still room for increasing female participation ratio or women's greater activities in the society but this is somewhat neglected by foreign investors but this is really important and many Japanese companies now have women female senior staff and foreign workers foreign talents the government last year decided to relax visa policy for construction workers and now the government is likely to further relax visa policies for talent foreign talents experts in other sectors where labor shortage is quite acute labor market reform also is a big issue TPP could ignite Japanese agriculture sector and also the service sector recently the government decided to significantly reduce corporate tax burden in the next two years and also they are determined to further reduce corporate tax burden so as to not just encourage Japanese companies to invest more in Japan but foreign companies to come to Japan and invest in Japan so I think structural reforms deregulations they are very important in the long run and they would have significant impact on gross potential but by nature it takes time they take time so I hope people are slightly more patient crotus on you know the markets are never patient so can I jump on Japan issue because I think we should not be that patient because to see Japan has a pretty good chance to pick strong growth this year yeah but the basic was very rape last year almost a zero and then you Mr. Krita created a money space exchange rates are very low the government have a fiscal stimulus package right and the lower oil create a huge fiscal space and for you so I think you have a lot of money space physical space exchange rates and facilitating all the world so I think it's a good win the opportunity for Japan to firmly carry out the structure reform and move the whole thing forward I think this is a very important period so we should not be I'm not also we I mean from our map I would say that answer from job just found a few maybe Japanese should not be that patient don't wash up either but there's a one downside but this is one issues when I expect to see Japan pick up with pretty good growth but the one things I will see your carry on structure form but one things when you have a good growth we have to put physical consolidation back on table because when you have a 250% GDP that is without a strong inflation as strong growth is a very difficult to bring them down you pay interest rates ten years ago you have a roughly 150 base point of 150% GDP it's a 1.9% of your GDP today you almost double how much you pay 2% so you are very sensitive to interest rates yeah and the interest rates is really on upside so I think we should Japan should not be patient on fiscal consolidation side man I hope you're this strong also for Europe too then why that that's exactly that exactly what I wanted to say good I've been listening extremely carefully to that discussion and I will I will stand on main side that in the case of Europe being patient is just a risk a risk that we don't want to take we need growth in Europe and we need sustainable growth in Europe and that also has to be with the politics of the European project with low growth entrenched unemployment people being dragged out of the labor market we are seeing the whole political foundation of the European project being being weakened and this cannot last for too long two points to respond to mean you first on patience or of course I I I don't want to say that we have to be patient about the way the government implement those structural form we should not we should request the demand the government to make necessary structural reforms the regulation as quickly as possible but impact on the economy takes time because if you improve the environment for investment by the corporate sector yes the corporate sector would respond because now they have much lower corporate tax burden but that could take time and then the final impact on the potential growth rate again would take time so that we should be patient as far as the final impact effect on the economy is concerned but action should be taken as quickly as possible in that sense I agree second point fiscal consolidation again I agree with Minjoo the government set the so-called the medium-term fiscal consolidation plan under which the government is is required to have the primary deficit by fiscal 2015 and that government actually implemented under the current budget for fiscal 2015 but more difficult challenging goal is to completely eradicate primary deficit by fiscal 2020 that requires much more effort by the government but the government has already made it quite clear that by summer this year they would come up with more concrete plan to achieve that primary surplus by fiscal 2015 meaning that some revenue enhancement measures as well as expenditure cut measures would be specified and that is quite necessary because as you said the government has accumulated so much debt already and the appropriate and reliable fiscal consolidation plan is absolutely necessary for Japan I'm gonna move on to the emerging world and but also talk about how I believe the emerging world is going to become much more of a world of divergence the emerging world is going to see many more success stories and we've seen in the past and many failures as you and you just look at the oil markets and how we've created some big winners and big losers and also the marketplace talking about patients is starting to lose its patients related to the emerging world from my perspective I think the actions from the ECB and lower oil prices overall I look at it as a great opportunity to be in the emerging world and I actually believe where interest rates are now in Brazil it's a great investment opportunity too so with that framework Joaquim give us your perspective of from Brazil of Brazil's position but also of the entire emerging world and how that's going to play out well thank you good afternoon Brazil in some ways comes up from a very different direction we have had a lot of job creation in the last few years several million positions we have now one of the lowest unemployment rates in our history actually the lowest incomes I have been rising in the last year there's been a lot of inclusion so our experience is somewhat different but to some extent this process starts to slow down in the last couple of years in part because of the changes in commodity prices that changes in the whole emerging markets and we decide to to change actually you had an election last year change was one of the most talked about words and we we decide the government the president decides that the beginning of this year to take some actions and these actions basically aim at reinforcing investment we we for some time our growth was much based on consumption but we are shifting a little bit of the demand towards investment now to get investment go going as we heard you need confidence you need less uncertainty so we're taking some measures to ensure that confidence in the economy increases because last year we had a decline a quite important decline in investment in part because there was election there was some uncertainty so now we're trying to take this out the main biggest factor for the slowdown of the economy last year was decline in investment now what it takes to to get investment coming back like I said you have to build confidence now the the tools that you are planning to use that you have already start to use are very traditional tools we are strengthening our fiscal so our primary surplus we decide to have a primary surplus of 1.2 percent of GDP this year is a significant increase more than 1 percent of GDP increase and next year we raise a little bit more we are also getting prices realigned this could be called a sort of structural reform so in areas like energy and other areas you get price signals that are very important for investment decisions we are working on that too even the regulatory framework in some cases we are attentive why because we we need not only investment saved by companies and machinery but also infrastructure and with the private sector and we know that for that to happen and to have quickly we need to have really a framework that provides full confidence now Brazil has a good track record on concessions PPP and so on so we we are confident that you can get this moving and this is very important because this is what we allow us to continue the path of improving education skills like I said we created several million jobs we have population that's relatively young and they are now getting more skilled more people in college doubling the population college so we can have demand but perhaps with a different composition the composition that helps us to increase our potential growth of course this has a component of structural reform and it basically ensuring that it's easier to do business in Brazil that is easier even to pay taxes in Brazil there are lots to be done in these areas and we believe that if you act fast enough we're going to have the response in Brazil Lawrence often when you have these shifts the the economy the enterprise the company the workers they react very quickly is a perhaps we're not as flexible as the United States maybe you are in between Europe and the United States but it's an economy that is very agile that that responds and I would say that a number of emerging markets are also like this some of our neighbors in Latin America also are nimble and they are moving and I think that the benefit of lower energy prices will make this transition probably easier for many of us for Brazil although you are a large producer of oil on balance I think that the decline in oil price you not hurt us that much it will actually be positive so I think this is the kind of action that countries like like us have to take to ensure that in this world that continues to change we we move ahead on the productivity ladder on the on the technology and for that private sector is fundamental and to get the private sector you have to have the right environment so I let me just ask one question before you go there minute okay I hear what you're saying is you're gonna you expect better GDP from your country and other emerging countries because of the oil situation I think for several them yes in some countries of course I mean like you said emerging markets is a very different bag okay there are some that are producers but even in some of them I take our let's call it neighbors Mexico okay they are producers these will reduce some of their revenues but because they are also doing a structural reforms well it may hurt a little bit but you move forward and that's the important thing and Larry I disagree with you although I understand it's very risky to disagree with the moderator and when you say the market disappointing about emerging market you can disagree yes emerging market growth is on downside in the past a few years we observe 92% almost all the emerging market growth has been down continuously in the past few years my point may continue to a little bit of a lower in the next few years but that's because technical reason because they have a different building cycle they are in the maturing cycle they have a very high strong growth in the 2009 2010 and they are gradually coming down some country have a missing investments some country have overheated credit bubble they have to adjust so I think that they are gradually slowed down adjust themselves this is the process but in the past 20 years emerging market really built a very strong fundamentals that's built a base for them to move forward now the key issue is there's a big structure change within the emerging market and between emerging market and advanced economy globally it's very interesting between 1990 to 2010 in 20 years advanced economy consuming into the share of GDP increased from 75 to 80 percent now it's the economy where you have a C increased 5% what do you do your investment drop 5% right you have to have a number add up that's okay the really thing happened in the emerging market where advanced economy consumes increased 5 percentage point emerging market reduce their consumers in 6% of point increase that investment 7% of point we're living such interconnected the world everything have to mirror to each other now that's the point the point is we start to see the advanced economy consuming gradually slowed down a little bit of investment they have to pick up and emerging market is the read adjust themselves reduced investments increase in the the consumption there will be bigger big global read adjustments right I'm not sure what level they will be able to go back but I'm pretty much sure those of them will go back I think that's very important global reshuffling reshifting restructuring I think the policy maker have to pay attention on this issue the second point before I finish to give you another 30 seconds is the emerging market is a very big chunk of a global economy now the account of 50 percent more global GDP 60 percent of global investments contribute more than 60 and 70 percent global growth now but they're still have a very low per capita GDP they're only in average have a 22 percent of for us per capita GDP that means long way to catch up as it means a great gross potential I will say after 100 years when we come back to this podium to have this meeting again I'm sure we'll be able to lift 150 colossus here maybe you're older than us but I'm sure you will be there I think we probably will not remember this financial crisis because this is just the one financial crisis we experienced in the past few hundred years but people will remember this is the year emerging market take half of the global GDP so I was just going to say Crota son it sounds like you're right everybody's bullish everybody's bullish just a comment like I mentioned emerging markets really brought the nomination so among of our countries there are some that have a say the investment to GDP ratio above 30 percent and others have below 20 percent so some of the things that are absolutely necessary for some perhaps reducing investment you may even have the contrary to in others I sometimes joke that for instance compare with China we have done some of these yin and yang and you have now to turn it around so it's important for Brazil to increase investment and I see that China maybe others are in the direction of really getting the fruits of the of growth and development more to the consumer and that's also healthy Mark extremely very important point the last point there about the transition that's going on in China unless we forget the scale of the readjustment there and and make a broader point there's a series of transitions that are underway and and some of them will may come to a point this year so I think it's it's valuable to sit back within an overall posture of being cautiously optimistic about the outlook is where I would put myself three and a half percent that's it that if the IMF's right about global growth that's a good outcome the these transitions in emerging markets towards more domestic demand I mean Brazil's there but China that this is hugely important secondly the potential transition of some advanced economy monetary policy in the divergence greater divergence in advanced economy monetary policy will bring likely if it happens likely a benign in other words a benign increase in volatility and will test capital flows across the global economy including to emerging markets as well and will test the new financial system and the resilience of that new financial system so we should be we should be conscious of that because it's it starts with a positive but has a potential feedback and we have to be aware of that on top of that I think the energy market adjustment we've all observed the the dividend from oil it's realistic to expect it doesn't mean it will happen that oil is lower for longer given where cash costs actually are in a series you know across the globe and given where demand is likely to be so that creates an opportunity that is considerable and perhaps undervalued in terms of the outlook for the global economy and lastly if I can bring it back towards Europe for a second there's a transition from everything being about monetary policy to be everything being about structural policy and I would include in structural policy completing the project of a sustainable monetary union just parenthetically in the UK transition from household driven growth towards more investment driven growth as well in the context of a rising global economy two point one on China I really think that the Chinese economy is making huge structural change people may be more interested in gradual slowdown of economic growth but still China is growing by seven and a half percent and even if slightly slow down slowing down this year next year but still around seven percent growth that is very respectable rate of growth but more important is Chinese economic structures changing it is not any more export dependent economy it's more domestic demand oriented economy and not just investment but also consumption is increasing and even in China consumption basket consists of not only goods but large part of services and services do not need so many so much input of materials or those kind of things so that Chinese are going to gradually slowing down but China's import of materials commodities as well as intermediate goods is declining quite significantly that makes the supply chain matrix in China centering China I think it's changing this is a big structural change and it is it is good for China it is good for Asia and supposedly good for the world I need to move the discussion because we've been doing this like yeah 50 minutes I don't know if I heard the word us yet you know a minor colony so with that mark we'll have it back yeah so from all of your perspective when you think about your monetary policy your your your actions in in in Brazil the ECB's monetary policy in the bank of the bank of England and from the IMF what are your predictions of the US I mean you had to make these decisions based on that fundamental I believe I missed the second point second point just I say that the Japanese economy is likely to grow around 2% in fiscal 2015 it's not calendar year so IMFWO is based on calendar year which is a bit too pessimistic but the the difference is not so bad not so big but anyway in fiscal 2015 we expect the Japanese economy will grow around 2% now the US economy I am extremely optimistic because the the the growth is so robust not only in consumption but also investment and and also export so I think the US economy is currently of course leading the global economic growth and the the economic growth in US is much more broad broad we base than before so I have full confidence in the US economic growth well I don't have a prediction for the US it's difficult difficult enough to predict for oneself so I'm not doing that but for sure the US economy will be strong for sure it will be stronger than the eurozone economy and our priority in that environment is that we want to be sure that the financial environment will remain fit in Europe to the European economy in the US to the US economy and for that disconnect to happen we need well functioning international capital markets which brings me back to Mark's remark that the system is untested to some extent we had a wave of new financial regulation which by and large has focused mostly on banks so we're pretty sure that now banks are much safer as in as financial institutions we're less sure that financial markets capital markets are safer so that will be the priority of the of the regulatory community we want to be sure that international capital markets work and for that we need a inadequate degree of coordination so we need to fight the temptation of ring fencing financial protectionism and that temptation is very often at home it's in our heads yeah I agree with these observations as Mark mentioned we we may see some dislocations as a consequence of the the current trends the US growing it's good it's good for Brazil it's good I'm sure for several countries because of demand it creates and so on so forth but especially a country open like Brazil to capital flows we will be very watchful and I think coordination will be very important we are also strengthening our own situation and when we strain fiscal and so on so forth it give us an additional layer of protection if there is any dislocation and capital markets but it's something that you have to to watch very carefully and coordinate if something happens and not the least because the lower level of liquidity in so many markets bond markets and so on Mark let me just I'll reinforce what my colleagues just said on that point I'll make two others first is as I think many are aware there's there's a big difference between the the path of monetary policy implied by the Fed through the the famous dot plots and that implied in the market and that gap will have that gap will close somewhat this year and the question is in what direction will it close and what impact that will have on on volatility if that reinforces the importance of investors and more importantly people in the real economy businesses households understanding the objectives of a central bank and how will react to certain circumstances and I think the clarity of the feds mandate the clarity the ECBs and very much the clarity of the Bank of England's mandate if I just say one word on the UK which is that we have a very low inflation environment right now largely caused by commodity prices we have an ability to look through that and we have a responsibility we have the means and the will and the response and we will do it we will return inflation back to target within the two-year horizon so people can rely on that now the second point I wanted to make on the US and I'll hand back to you which is around the labor market and the question which is there is yet unresolved about the impact of technology on wages and potential dynamics that has for the Phillips curve and therefore directly for monetary policy and this is this is a fluid situation and if in any labor market this is most relevant would be most relevant would be in the most flexible labor markets which would include very much the US but also potentially the UK just again parenthetically on the UK it is not lost on us that wages are picking up now in the most recent data consistent with our expectations US side may also have two points I follow my I think I agree yes we have a strong growth this year and 3.4 with forecast it's a very strong question but if you're looking for if we decompose the growth if you're looking for the growth is very much driven by private consumption right and also a little bit of government expenditure as well investments are still weak you compare today with 2007 in terms of a percent of GDP US lost 2% of GDP of investments so putting us on a long-term sustainable growth I think US also need investment when copper shading sit on the big part of that the second issue is the risk in financial market as Mark mentioned really start to accumulate now I mean the illusion of liquidity Mark just referred to I think and moving from banking to the shadow banking sector Larry you may disagree with me but the if you're looking for the number the credit from banking sector to the copper sector in the past seven years drop really 300 billion dollars from on the the shadow banking sector increase of 1.4 trillion dollars so you will see the the credit intermediation really moving away from traditional commercial banking to the shadow banking sectors but that's not bad yeah exactly okay I'm not saying good or bad okay I know you would disagree but I'm glad you know I didn't I'm not disagree I'm not defending myself I'm going to move on for a second because I don't want to talk about no it's not a bit I agree but I think that's a potential risk we need in hands of regulatory efforts and supervision as well as Mark mentioned so let me move on I want to take up a point that Mark brought up and I think it has great implications for the development the developing world and Mark brought up technology and obviously technology is a major component in the future of technology for the world economic forum and when we frame out 2014 and how that's translating into 15 in my mind it was technology that transformed the energy market it was technology that created the 1.6 million X's barrels at a time when global demand was was growing much lower than it was a few years back and so we had this structural imbalance of supply and demand and now in a period of equilibrium and the smartest brains in the world and everybody know no one predicted what technology was doing we witnessed it but we didn't understand the implications but technology is beginning to change most industries we live in you know the digital world is changing so many things the sharing economy we're accustomed to sharing music very few people buy music today they they use you buy me too but we're old just to be marked we don't count let's my kids really make fun of me that I still buy CDs so let's move on on that point and then we now we are migrating towards cloud and everyone's talking about the cloud we're reducing the need to buy these big hard drives by having that we have uber now the sharing economy of automobiles you know patterns are changing behaviors are changing most of these patterns and behaviors have shown to be disinflationary I'm not saying they will always be there but it's also changing the job creation and so as bankers as finance ministers a IMF how do you think about technology when you think about policy because technology in my mind is underappreciated by at least by politicians as to how that's transforming their societies and I do believe technology is going to be very disruptive in the developing world because technology you're seeing technology transformations in China right now they're using more robotics we're seeing technology transformation in agriculture because of the combines and we don't need that many humans now to pick so many agricultural products this is going to be disruptive in so many places and it's it's it's going to be those countries that adapt to technology are going to be the winners and those who can't adapt are in my mind are going to fall farther so big winners big losers how do you think about that in monetary policy first in a lot of governmental policies since we have three governors in the center mark well I think there's three ways first in terms of financial stability policy and the change in banking that is imminent we have to get the balance of regulation right not come down too hard and prevent this this type of disruptive technology but also not be in a position where we're filling in prudential regulation after the fact and then have a difficulty in other words facing an uber type situation in financial services which you know many jurisdictions are struggling with secondly on monetary policy we have the classic thing of adjusting cpi for for true you know true value but this goes to the labor market i'll finish with this and it's an imperfect analogy but you think about the sharing economy and the classic thing of the the vehicle in i think of the states is only used about five percent of the time and so this is tremendous opportunity to share vehicles and it's an efficiency and it lowers actual investment and purchases but it's it's more efficient for the economy think about labor we have a very high share in the uk is similarly high share in the us of involuntary part-time workers and you also have a phenomena and it's hard to measure this precisely of disaggregating services you know it so outside having contractors outside of the company contractors that work to specific tasks aren't necessarily working full-time and so there is a sharing element there that's not being and so we as as monetary authorities we have to take an assessment of how much extra slack is in the labor market because of this phenomena and that's trying to make a judgment in terms of shorter term cyclical monetary policy in the face of a broader secular trend so these are very difficult judgments to make no i fully i fully agree with mark and i uh thinking about trying to reflect on your question but you don't buy cd's so you don't buy cd's i do buy cd's i do buy cd's i don't buy venal but i do buy cd's yes um there are certainly many ways in which in which technology will will reshape monetary policy as it reshapes our daily lives and these whole question is uh how how can it be reshaped in a way uh that it's not disrupted uh because we uh we we need monetary policy to to provide confidence um and apart from what uh mark said uh it's pretty obvious that the that technology uh is reshaping the financial industry i mean you've been discussing that uh here uh since uh since the uh the forum started uh it reshapes payment systems uh which are uh essential for monetary policy which are really the nuts and bolts of what we what we're doing uh so we're following very closely uh virtual currencies for instance we're following very closely uh the cyber resilience of financial infrastructures this is essential uh for the the smooth uh transmission of what we're doing um it it certainly reshapes the economy and mark has uh uh commented it uh simple issues such as uh where is the philips curve in the eurozone well i don't even know and it may it might become even even uh even less clear uh as uh depending on the assumptions you make on productivity and on the impact of technology uh and this is crucial also to our monetary policy uh making it may change our instruments um if you think of an issue such as negative rates we've been experimenting with negative rates and uh people outside such as well ken rogoff and others have suggested that negative rates might become less of an issue if money migrates to uh to electronic money because the uh the effect but if we if we have more consistent longer negative rates should we all go into linen business and buy pillows and you know is that the next new business you know what i would like to see is uh is the uh the natural rate of interest going up and that's also about technology and then we uh we don't have to face that question and finally and that's maybe the most uh intriguing intriguing question for me uh technology can reshape politics and we're not doing politics but a stable currency uh requires a community of interest a commonality of interest especially in such a diverse region such as the such as the eurozone and social networks uh technology have the potential to to reshape uh interest groups to reshape politics uh in a way that kind of an impact on my type policy yes i i think we have to differentiate uh uh digital technology or uh information and communication technology from uh larger area of new technologies as far as the financial sector is concerned and also central bank as the the host of uh payment and settlement system digital technology is quite vital and quite uh important and decisive factor i agree but as far as the the real economy as a whole uh is concerned i think uh uh robotics or or biotechnology and so and so forth those new technologies various new technologies could affect the entire economy in a very uh significant way and so as a central banker we tend to focus primarily on digital technology payment and settlement system financial sector financial market but i think we should uh broaden our uh our uh view our way of thinking towards uh greater areas of new technology okay well i think that uh for emerging markets uh technology may have at least in the the short period in the medium term a different impact than in developed countries uh sometimes it's good to be a late commerce uh Claudio Sanchez mentioned uh payment system the brazil did an overhaul of the payment system in the the late 90s early 2000 we've got a very robust modern uh nimble system um technology for instance uh in brazil now is playing roles such as uh i mentioned we we have grown quite a lot the number of uh students in colleges now the ability to have uh courses uh through uh media instead just 19 centers or 18th century technology of classrooms and so on is a major factor and not the least because you take a generation to train teachers to have to double triple the number of people in college so if you can use in a smart way this means you have a tremendous impact on the life of many people you you make so many things affordable that were not affordable uh before also i think that in some ways um because uh actually even because of income inequality you have a larger grouper at the bottom let's call it a pyramid from that in middle and the middle is the one that is now filling the brunt of the change in technology information so they may lose a little bit but the gain uh at the base is so big that overall for the country is fantastic i mean you can use uh cellular phones i mean for very little price uh you mentioned for instance in the field but the guy in the fields now can know about the weather he can know about the prices can know about everything even fix the the tractor if if necessary just with a small small thing so you get access to so many things and that for the majority of the population that it really has an impact that you're expanding your uh production frontier and the the thing we have to do and again the role of the private sector together with the good regulation is fundamental so that you have a rapid dissemination of this technology and make them accessible uh to to as many people as possible yeah i uh i think technology i agree with you will have a destructive impact on the emerging market as well i think it's a huge challenge but it's a huge opportunity net to net it's good news let me see why it's good news the asian traditional development model is the japan take of learn things from america us you know us and europe and takeover then transfer them into the sauce career sauce career transfer to the we call the four asian tigers then china take over now with technology today i don't think india want to take things from china vietnam takes something from china but i will see they will jump into the front directly so all the emerging market china india vietnam and all the other countries would jump to take the technology to jump to the frontier the whole thing is all the advanced economy more or less within the production frontier right if you go back to economy one one again so the other frontiers you need to push forward and the emerging market is within the area want to go to the frontier today with the technology they can jump to the frontier and even they can move further if you look about alibaba that's the real case 500 million people have a smartphone in china i think that's a huge opportunity for them but technology chart actually imposes a huge question on global global governance issues it's not all clear whether it's the enhanced the global governance or it's on the other way around it's not all clear yet we may put them into the more suitable multi functions non-state fracture will play more roles and how do we work together with modern technologies i think that's a big challenger we have to seriously to face it well i want to apologize to the audience we're not going to have time for questions so i'm going to ask anybody would anybody want to wrap up anything any final comments uh mark it looks like you have one well let me just take the last thing min said um there's been a lot of discussion of over the past year of secular stagnation and their and and negative real interest rates the natural rate is negative and there's a variety of reasons why that has been the case in some major jurisdictions it was the case in the u.s arguably was the case in the uk that's why qe made sense arguably is the case in japan and uh europe which is why qe makes sense because it's bringing monetary policy to that natural rate so it is appropriately accommodated there are a variety of reasons for that savings investments in balance etc one of the reasons that's advanced for that is a is technology pessimism now i would reject that for two reasons i actually more of a technology optimist it's hard to be at the forum and listen to all the advances that are out we're on the cusp on and not be a technology optimist but more fundamentally for min's point is that the vast majority of the world the uk included is not at the frontier they are less productive than the frontier so even if nothing else is invented for the next 20 years just catching up is a huge growth in in in it's a huge opportunity to do you think it can lead to more disinflation it depends it depends on the stance of policy and it depends also a monetary policy but also yes yes it has a disinflationary impact first point it depends on the stance of monetary policy and relatedly structural policies so that people can adjust because in this new technology world particularly in labor markets you're going to need more creativity you're going to need mass creativity and that's and this is a truism but it is true uh you need lifelong learning you need training you need all these elements that are going to allow people to take full advantage and that will take time sorry benoit benoit for you got 30 seconds and corona sun and then we gotta wrap it i would just i would just urge all all those in europe who worry about the impact of monetary policy on savers and they are they are some um to listen to mark uh the answer is about the rate of return on capital the answer is about the innovative capacity of europe and the answer is about the ability of our capital markets to reallocate resources uh to increase the rate of return of capital and might i policy is just the canary in the coal mine for the sun i i don't say that uh inflation is any and any time a monetary phenomenon i don't think so because inflation rate could be could be affected by many factors i mean technology uh emerging market uh uh participating in the global uh transactions uh anything i mean at this moment 50 percent uh reduction of oil prices affecting uh inflation rate globally but central bank uh monetary policy can counteract this this this inflationary or inflationary pressures through appropriate monetary policy thank you very much for giving me 25 seconds because i will feel very uncomfortable this is this podium without talking anything about low income country because the low income country has a very strong growth in the past 20 years this year they are facing a lot of headwinds because the weak external growth weak trade growth oil price drops it's very important for them and the monetary policy divergence costs interest rates and uh and and exchange exchange rates and and the current market volatility but we believe with 20 years hard work they build a good macro foundation to work further but the whole world needs support to help them this year it's particularly important for development because we'll have post the 2015 uh mdg to sdg we'll have for financing development in sobia in july we'll have a climate change so i will say we request all the policy makers put development policy on the top of their agenda thank you very much ladies and gentlemen thank you very much panel thank you