 Good morning, everyone. My name is Prasad Padmanaban and I assure you I'm wearing trousers. Welcome to this joint webcast between AICB and the Asia School of Business on Helicopter Money, Stimulus Packages and a Time of Crisis. We're indeed excited to commence our first webcast collaboration with ASV today under the AICB's Empowering Bankers webinar series, which is part of AICB's efforts to bring greater online sharing and knowledge to our members during these unprecedented times. Before we do start, a few housekeeping details. The microphones of all participants are automatically muted to minimize disruption to the session. This is also an interactive session. So if you have any questions, please submit your questions online by clicking the Q&A tab. Please introduce yourselves by stating your name and the organization that you represent. We will do our best to try and answer as many as we can, and please understand that we may not get to all of them during the session. You also have a chat function to provide comments and feedback during the session. Kindly know that the session is recorded and a speaker's presentation will be emailed to you and recording will be available on the AICB member portal. If you wish to leave the webinar session, please select Meet Meeting on the bottom right of your screen. Do so. You can still read on the webinar session if it's still in progress. And, you know, please bear with us. There will be glitches as we all get used to this new reality, basically. Our speaker today is Professor Genberg. He's the Professor of Finance, Associate Program Director of Central Banking at the Asia School of Business. As some may be aware, Hans previously worked for the Southeast Asian Central Bank Research and Training Center as an advisor on macroeconomics and monetary policy management. Prior to that, he was the Assistant Director at the Independent Evaluation Office of the International Monetary Fund. And he has extensive academic experience, having been Professor of International Economics at the Graduate Institute of International Studies in Geneva. As the impact of the coronavirus pandemic has felt across the world, governments and banks have had to consider the extreme measures to try and address its devastating impact on the global economy and communities, especially as consumer spending takes a big hit. This is where drastic measures like helicopter money as a stimulus package is fast-gaining traction and has been seriously considered and even implemented in some countries. So, without further ado, can I turn you over to Professor Hans Genberg. Thank you for that very nice introduction. And thank you to the ASCB for hosting this webinar. It's a real pleasure to speaking to you about helicopter money and more generally about stimulus packages in this time of economic crisis. And I want to talk about how they should be designed and how you pay for them, and also a little bit about how what the consequences are of these stimulus packages and economic lockdown. So let me delve right into the subject and give a little bit of a history of this mysterious term helicopter money. Where did it come from and what does it really refer to? Well, it started by this fellow, Milton Friedman, who actually was a professor of mine a number of years ago. I won't tell you how many years ago, but he thought of helicopter money as a thought experiment to explain how monetary policy works. He said, well, it's supposed to be drop money on from helicopters on the society and people pick it up and spend it. How will that affect employment and prices over time? That's what he, how he used the term. But then others have used it subsequently more sort of in a perhaps more direct way. Ben Bernanke also, they were famous economists and he became called helicopter Ben. Here he is. And here is in his helicopter. He asked, he was the head of the Federal Reserve in the US, and he asked, how can we stimulate the economy on monetary monetary policy when the interest rates are almost zero. So we can't lower them to any further. So he said, suggested maybe we need to resort to some form of helicopter money. And this term has been used now more recently to ask, how can we transfer money to unemployed workers and firms which are in going bankrupt as a result of the coronavirus pandemic and the economic consequences thereof. So this is helicopter money. But as somebody once said, the rose by any other name is still a rose. Helicopter money, the way it originally thought of was the central bank here in this picture, giving cash to the population. But more recently, one can think of it as cash transfers from the government, from the Treasury, the finance ministry to individuals. But how do they get the cash? If the central bank is the one who prints the money, the Treasury gets the cash from the Treasury by giving them something like t-bills or some similar instrument. Now if you consolidate the central bank and the Treasury into one public sector, then of course what you get is essentially the original picture. The public sector transfer cash to the population, and then there's some internal balance sheet arrangement between the Treasury and the central bank. So this is one way of stimulating the economy in times of crisis. But there are many other types of stimulus packages that have been proposed and actually implemented as we will see. Here is a list, a partial list of instruments who is in charge and who will receive the fruit of these instruments. So on top you have the cash transfers or helicopter money can be done as we just saw by the Treasury or the central bank and it can go to individuals or firms. There could be tax policies done by the Treasury, firms can get tax holidays, individual income taxes can be reduced and there could be various other changes in taxes. There could be concessional loans. Commercial banks can be directed by the Treasury or the central bank to land on concessional terms to firms that are in trouble. And the Treasury itself can land also directly to firms in this sort of way. Finally, there is a general interest rate policy. The central bank can lower the policy interest rates in order to stimulate spending and investment and that affects everyone in principle. The whole economy is not either firms or individuals, it's everybody. So these are the types of support measures we could have. And then the question is how do we determine which instrument to use and who should be the recipient. And to answer that question we have to ask what problem are we trying to address. Are we trying to address supply shock, which is a decrease in production because of various degrees of lockdown in the economy, mandated shutdowns on firms, forbidding for workers to go to work because they have to stay home in their apartments and houses. There could also be a supply shock due to global production chains, whereby assembly and wine factory is impossible because it needs the inputs from another factory and that other factor has been shut down so the assembly firm can't work. So that is a possible problem that we need to address. Another possible problem is a demand shock, a decrease in demand in the economy because of loss of employment, loss of income. There could also be a decrease in investment demand because of uncertainty. So we do not want to undertake investment projects because of the uncertain nature of the post pandemic world. So they hold back on demand. So what is it? Do we have a supply shock or demand shock or both? Well, in order to think about that, let's think about two recessions in the US. I call them slow motion versus a fast forward recession. On the left-hand side, you see the path of unemployment insurance claims in the United States during the great financial crisis in the 2008, 2009 and 10. And you see it took about a year and a half for unemployment claims to reach their peak. On the right-hand side, you see what's going on now. And what took two and a half years or one and a half years, sorry, in 2008 and 2009 has happened in two weeks this time. And this is just the first two weeks and of course since then the unemployment insurance claims have gone way, way, way up again. So this is not a typical slow motion recession due to a fall in demand. It's really what might be sort of likened to a medically induced coma for the economy. The firms have been forced to stop producing, workers cannot go to work, no matter how much demand there is for restaurant meals. We can't get them because we can't get to the restaurants to take just one example. So what we need to deal with is not the demand problem, it's a supply problem initially. So let me pause here and see if there are any questions because next I want to talk a little bit about how deep the recession might be in various countries and in Malaysia in particular. In order to talk about that question, I'm going to ask you to fill out a poll that I believe will be circulated or posted to you. If you could fill that out, then we'll get the result back in almost real time and we can talk about those as we, when we return to the session. Now, perhaps there are questions that have been typed in on the chat. Prasad, do you have any? Yes, Prof. So this is the first question comes and you might want to keep this in your pocket while you go through your slides, but the question that someone's asked is that there is no free lunch who ultimately pays for helicopter money. And to go on from that, is this modern monetary theory that's gone from fringe to mainstream and therefore do deficits really matter? Right. I mean, you could keep that in your pocket if you like. Those are really excellent questions. I will get to them a little bit later on when I asked exactly the same question, how do we pay for all these stimulus packages and helicopter money in particular? And I will also touch on the modern monetary theory in that context. So bear with me a little bit. I will certainly get there. The other question to bear in mind as well is that someone's asked if the COVID crisis is both a demand and supply shock. What is the closest example in history to this phenomenon? Because as we all know, helicopter bin is basically a student of the Great Depression, which recalls his view of the world. And we've been looking at the GFC Great Recession in 2008, 2009. And perhaps we might have to start looking back to, you know, 1929 to 1933, where I guess, you know, we never really saw growth until we had a world war, but also something to bear in mind. Right. That's a very, very uproarable question as well. And here I think, if you think of the Great Depression, at least Milton Friedman claimed that was due to essentially a financial crisis which led to a lot of bank failures and led to, therefore, unemployment firms couldn't get financing, unemployment, fall in demand and the usual multiplier effect with greater and greater shortfall in demand which led to a fall in GDP and so on and so forth. And it only, as you mentioned, we only came out of that once that we had a huge increase in demand. Unfortunately, that was in the form of a war, but that's how we came out of it. That's how we came out of it. In the great financial recession in 2008, 2009 and 2010, similarly, there was a problem in the financial sector, which led to a fall in demand in the United States and New York first, but that had that fall in demand spread throughout the rest of the world, in particular here in Southeast Asia and Asia more generally, through a reduction in import demand from the Europe and North America. So these were demand recessions that took some time to build up. I cannot think of a, well, no, a supply recession. Think of the oil price increases back in the, there was so long ago that I keep forgetting exactly when they were. There were late 70s, early 80s, where we have massive increases in the price of oil, which led to contraction in supply in some sense. And that was a recession, which one can probably describe as a, the initial cost was a supply shock. And that led to then demand problems and so on and so forth. So that are some answers or attempts to answer those kinds of questions. Prof, there's also, you know, there is a question on, you know, just simply printing money, increase money supply. You know, what then happens to inflation and inflation expectations at this point, I mean, it doesn't seem to be anywhere. I believe you'll be, you'll be answering that a little later through your slides as well. That's right. We do have, you know, I think a personal question by, by a millennial who's basically, you know, been hit by the GFC and going through another one, are we looking at retirement savings being, you know, hit by all of this quite badly. You know, which I presume it will be the case bearing in mind places like Japan have been, have had loose stimulus for over 25 years and it seems to have taken them nowhere. I think this is a big concern. Of course, retirement savings, I'm closer to that than most of you. But, and there you have to, I think one has to think sort of long term. I shouldn't panic. Stock markets have tumbled. They shouldn't say, okay, my retirement saving has gone down by whatever 20%. I need to take it out to make sure I don't lose anything more. You know, I think we should at least hope for some recovery in two, three, four years in which case this asset markets, stock markets and other other asset prices will regain some of their losses, hopefully all in which case we're okay. I think one should remain calm in these times and think of long term, the long term rather than, you know, what is happening to my savings right now. Let's move on and we can everybody see the poll results. In any case, so the question was what's your prediction for economic growth in Malaysia and 220 and otherwise the growth from 19 to 20 and we had various ranges minus four to minus six is roughly 30% of you thought that minus two to minus four about 50% zero to minus two is 1617 and zero to plus two is roughly 10. So most people there's sort of a majority on minus two to four but there's a skewed distribution towards even worse outcome. The prediction for growth in 2021 relative to 20. There was minus. Hang on. The majority 35% is between zero and two. And then there are a few few people who say 2% say greater than six. And there are people about 40 50% think it's going to be negative either up to zero to two or minus two to two four. So these are very interesting for two reasons. One is that in terms of the projections for 220. This group of people are more pessimistic than the bank Nagara forecast bank Nagara forecast in their annual report which was published a couple of weeks ago, said, plus 0.5 to minus two. Most of you think it's going to be worse than that. Now, hopefully bank Nagara is right. But at least this is an interesting indication of the mood in the financial industry as represented by the CB. In terms of recovery. That is even more stark at least a comparison with the IMF the IMF thought is going to be a 9% growth. In terms of you, a majority over 50% is think it's going to be negative into 2021. Prof, were you meaning to move your slides. We're still stuck at the questions page. Well, do you see the poll results. Not yet. Ah, sorry, I've been talking about the poll results. I'm terribly sorry because I have it on my screen. Do we have it on your screen now. Sorry about that. I thought it showed up in mine. I thought it showed up with everybody. So here is so here's what I've been talking about the majority is is 47% or minus two to minus four, and quite a significant number worse than that in terms of 2021. 2020 terms of 2021. We see the majority is sort of at zero to two plus, but a lot of people think it's going to be worse. Right. Okay. So sorry about Hans. I think participants say they can't see the screen of the poll result. I am afraid I am incapable of technical aspect of that to show the results. It's on the screen. I think I'm just looking at chat box. Thank you. Thank you. Okay. Okay. Well, I'm sure we can, you can, you can share those results with the participants after in some form or other. Anyway, I think they're very interesting. I think I think the crux of it is that most people are far more pessimistic than the central bank in the world and the IMF results as well basically. Right. Exactly. So how can we remove the poll poll results? Yes, we can. Let me let me. So we have talked about the poll results. Here is the what I what we had for the for the IMF. And with a very optimistic result for the for Malaysia which you haven't really believed. Let me say something about recoveries. Economists are fond of using letters to describe recoveries V shaped U shaped W shaped L shapes. What does all that mean? The V shaped is the one where you have a recession and a very quick recovery right thereafter. Within a year or so. That's a little bit what the IMF suggests. The U shape is a more drawn out. It's a little bit like the great financial crisis where the crisis and it took several years before we got back to some semblance of normalcy. The W shape is an interesting one in the current context. What that means is that there is a recession start of a recovery fall back into slow down and then before the economy takes up picks up again. This could come come about hopefully not but it could. If we have a situation where after the lockdown the economy starts picking up, but number of cases of infected individuals also increased. So the authorities say well we need to have some partial lockdown again then the economy slows again and then afterwards takes takes off. The L shaped one is a disturbing one in the sense that then we have a recession and we start growing but we'll never catch up to where we would have been. That's a little bit of what happened in the United States after the great financial recession of 2009 10 they've never really caught up to where they would have been without that recession. So what which one of these we get depends on how we manage the downturn. If we manage not to have too many many firms go bankrupt or distressed individuals staying unemployed for too long so they lose all their skills. Then maybe we'll get something V shaped or small you and also depends of course on the how the pandemic evolves as I just suggested. All right. So what should policies focus on remember. So we should think of this session as a as a kumato's economy where it's been induced we cannot produce because we're not allowed to keep factories open firms employers are not allowed to go to work. So what should we do we need to be targeted. First of all of course on the health sector, because we need to make sure that the health sector has enough resources to do his work. And then we need to support unemployed workers to relieve the immediate hardships to allow them to pay rent to buy essential foods to pay their phone bills and electricity bills and so on and so forth. And this will help once they are once the economy starts up because they won't these individuals will not have fallen into deep debt so they can continue spending once they start having an income. So support viable small and medium term enterprises in Malaysia. These enterprises are a big big portion of the economy we need to get them to make sure that they continue working properly or continue in business until the economy picks up and therefore need to prevent unnecessary bankruptcies. And then that will also help once the lockdown is lifted because then the firm can start start their work again. Once the economy has woken up from the coma, then we can think about general stimulus policies government spending on goods and services infrastructure investment monetary policies to make sure that there is demand in the economy to that allows the economy to grow. So here's a little bit of a summary of what I just said. We need to have the heads health sector get the resources by direct budget support. The general government should should do this and I just note in passing is here in the United States if you followed what's going on there. There's a big tug of war between the president and the states, and which has led to kind of a standstill because the states do not have enough money. We've done that supported the health sector. We need to worry about the workers the firms. And again, not everyone. There's no point. Well, of course, giving me money of course anybody likes money but I have my salary. I can do webinars like this. I can teach our MBA students. So I should certainly not receive cash transfers, but people who are not allowed to go to work, and therefore are in great hardship should get transfers I should perhaps get tax cuts they should get transfers in kind and so on and so forth, and the government should should do that. Let me just step in about these cash transfers. How do you think we should stop it from being stuffed into mattresses like has happened in Japan over countless couple of decades. Well, if you think of these cash transfers right now as transfers enabling people to basically afford to buy food and pay their electricity bills and and rent and so on. Then it won't be stuffed into mattresses because these are essential expenditure people don't want to default on their credit card payments or electricity bills. If you give people more than the basic needs that will probably be stuffed into mattresses mattresses because there's nothing to spend on. We can't go out shopping malls and so on. And that in some sense that's maybe fine because once once the economy picks up again or when firms can can start producing stuff we want to buy them and shopping malls open then people have this money in their in their mattresses can go out and spend. In that sense it's okay I don't think we need to worry too much about that. The, the transfers to to firms. Again, it's it's basically to prevent them from going bankrupt. The firms have debts they have to pay off and they have to pay rent on their on their premises. And we want to them to maintain the possibility of paying those those bills. They also might also think of conditional to cash transfers to firms conditional on on them keeping their workers and paying their workers. That would be a instead of paying the unemployed. We pay workers to keep firms to keep the workers in the firm doing essentially doing nothing because they, they can't go to work but they're still getting paid, and we get money to the workers that way, or we can think of loans. And then of course there's the, the, the third aspect here of supporting firms is a mandated reduction in loan servicing obligations that that's where commercial banks, based on instructions from the central bank will be involved in the, in the implementation policies and that's important when we start talking about the where we get the money from. And later on there will be more general spending stimulus, expansionary monetary policy and expansionary fiscal policy of various kinds. So those are, those are the kinds of measures we should take again they should be targeted health sector targeted on an unemployed people targeted on firms that might need help to be be viable once we open up. But now we have to worry as the question suggested how are we going to pay for this, because as we're going to see. This is costly in many countries, we can we can do it in various ways we can issue debt. Government can borrow from the public. Local public international loans if those are available, you can raise taxes of course that would be kind of silly in the present circumstances to raise taxes on people when we are worried about people not having enough money. We can also print money which is essentially borrowing from the central bank and that was a question related to the modern monetary theory, which says, we can issue debt, the government can issue debt but the central bank should should buy up that that that was my initial initial initial slide on consolidating the government and central bank. And this notion has become, as I think was suggested by the question, the person who asked the question, kind of a fringe theory to something which is, I wouldn't say mainstream but at least talked about fair amount. And it's more than mainstream because I'm in the chief economist of the IMF herself said that, you know, we should spend even after the lockdowns and Well, that's maybe that's in order to justify their forecast of such high, high growth forecast the jokes aside, you know that that may be, maybe necessary because there will be an increase in public debt. And if we don't, if we don't monetize that by having the central bank step in and buy up some of this that you know some countries may countries don't default but they may have a sovereign debt crisis in various countries. We do have a question in terms of investment. I mean, I think it's it's poignant here because if you're looking at debasement of the currency is gold the best alternative at this stage, you know, something that just mull over basic. Yeah, that of course has the notion of having some outside money that is Hope to be more stable. I haven't followed to be quite honest, I haven't followed the gold price recently. What has happened has it gone up down. Oh yes it has. Okay. It's not super, superly high up but you know, I think this is a trade that has gone up and down over the last 10 years basically even after the crisis. Yeah, the problem with the commodity standard like that is that prices of assets like gold or whatever other Bitcoin you can think of as an outside money right is that they tend to be very variable. And of course that means that the price of goods in terms of the money is going to be similarly variable, because that's just a flip side of the price of the gold in terms of goods. So, I think we need to be wary of notions that we could have a monetary standard based on on these types of assets now it's a different question of course what should one invest in. I am not going to venture any recommendations because that's beyond my my beyond my remit first of all and beyond what I want to try to get into at the risk of being being wrong. Anyway, so but quite true if you print money. And you do get inflation, you could also bet as as you mentioned we haven't seen that much inflation when people talked about the QE and the quantitative easing during the great financial recession. And lots of people said oh this is going to lead to hyperinflation very high inflation didn't happen. So maybe there is something about the inflation process, which is not as closely linked to the quantity of money as it used to be. And some many years ago when Milton Friedman and others talked about the link between inflation and money that that inflation inflation is always and everywhere a monetary phenomenon maybe there's something else going on. And that's why we haven't seen inflation but in countries like you know in emerging markets, highly open economies. And if we have a lot of monetization of debt, we may get we will get currency depreciations currency depreciation, or debasement as some was referred to has two effects one is is it might lead to some important inflation. You get inflation that way, even if it's not through some other means, but it also, if there are currency mismatches in portfolios if corporates have borrowed in international currencies and then the local currency depreciates there's going to be a huge pressure on these banks that's what happened during the Asian crisis in Thailand and other countries where there were lots of foreign borrowing, and the Thai bot, type out depreciated and led to a banking crisis and a financial crisis. One should be very wary of these monetization arguments, because examples from Latin America in particular where that has been kind of the standard of responses to fiscal deficits monetization suggests that it will create inflation or currency and the financial problems down the line. So I wouldn't want to suggest that on as a general response, however, now desperate times calls for desperate measures and maybe this is what, what has to happen but in that case, some sort of coordinated monetary expansion internationally to prevent this currency war type of situations from breaking out might be necessary but of course international coordination of these things are very difficult. Let me just say one more thing about about this how to pay suppose banks are urged on by the Treasury or the central bank to forgive some loans, or, you know, make loan loan repayments easier that could possibly lead to non performing loans on the books of the banks, and then who pays for that well presumably the bank shareholders, or if there's a there might have to be a bailout of banks who have been instructed to land the government by the banks might say well you told us to land now we're in trouble you have to bail us out. That's another aspect of this who pays argument I think that is important that we need to think about. All right, let me let me move on. Unless there are questions I want to talk about what has been what kind of policies have authorities used in in combating and stimulating their economies in various countries. Maybe keep going because we've we've done some of the questions along the way anyway. All right, so let me move on to that. So what what I show in this picture is a from the IMF fiscal monitor is a publication twice a year in April and over typically on the fiscal outlook for the world economy in every single country and of course you might expect that the April edition that just came out contains a lot of information about fiscal measures. So the COVID-19 problem and you see on the left hand side, the share of proportion of countries which have used various types of a measures and what you see there is that targeted liquidity support to firms and households and weight subsidies are the most common forms of support. These are the ones I talked about about earlier on the on the spending side on the revenue measures what is most important is a tax deferrals for firms and tax deferrals for how also they don't have to pay your taxes. And in the first part of the year you can pay them later on. So that's that's the on the what the IMF calls above the line that actual expenditures and revenues measures. And you see in this graph on the left hand side these these are big, these support measures are big in the aggregate this is for the G20 countries as a share of GDP, the support so far in 2020 is 33.5% of GDP that's very big compared to 2009 was 2.1%. And of course we've just started that these support measure will will continue, but equally interesting is on the right hand side where you show these below the line and revenue and tax measures are in the orange bars here. But the gray bars are what the IMF calls below the line actual not not actual expenditures for guarantees. So there are potential expenditures in the future should these guarantees be need be used. And you see for Germany, Italy, the UK, these are very large proportion of the total support and it could be quite huge fiscal burden on the government should these guarantees be actually used by those who receive receive them. So these are very big measures is going to lead to presumably large increases in government debt throughout the world economy. And the question that was raised earlier on about who pays is going to be an important question going forward. What about Malaysia. So as you, I'm sure you know, better than I am my I do that have been three stimulus packages in February, March and the latest one in in April. If you're interested in reading about these, let me suggest two, two papers you can find on the internet. One is by my colleagues at ASP Sam Flanders Melati and he in who did a survey of households in Malaysia to see to what extent the stimulus package helped them tide over the difficult times ahead. The other one is from refsa which is research for social advancement think tank, which they compared in the paper the the responses in Singapore, UK and Malaysia, and they both these papers contain very interesting data on what has actually happened. So here is from from the rest of paper. The stimulus package is number one and two. And in the red square, a rectangle rather, you see that the majority in terms of ring it amounts is amounts to about 200 billion is in terms of loan moratoriums loan guarantees. This EPF build withdrawal possibility and some loan support to SMEs. The remainder, that's about 4040 billion so roughly a quarter of the total is in terms of cash payment payouts tax deferments. Some company supports and so on in terms of rent payments and so on. So a majority is this non cash payments and we see the details here. Again from the same publication three quarters of the support in Malaysia is in terms of non cash support. The quarter is cash handouts, similar to the UK. In Singapore, they have a different different approach, and I'm not going to comment on which one is better every economy has its own particular particularities. So the authorities have to make a judgment call what kind of support is most needed. Okay. And comments on the on the actual measures in the world as a whole in Malaysia. Prof, I think they have a couple of questions on where we sit in what we've done in terms of transfers compared to say the US, Europe so on and so forth. But bringing back specifically to Malaysia, there has been a lot of concern by the questions on how we might fare, given that I guess 38% of our exports are electronics and electrical products. 20% is OMG and palm oil, 7% of thereabouts is tourism. You know, how do you see, or have you done any research on how you think Malaysia might weather this or not basically, because I mean, to remember the last time we properly saw any crisis was 97. GFC did not particularly hit the east and we had a functioning China at the time as well. So for economies like Malaysia's which is very, very heavily dependent on exports, be it tourism, be it, you know, intermediate inputs into car industry or other industries which are then sent off to be assembled elsewhere, or be it, you know, the oil palm oil sector which is also an intermediate good to some extent. Clearly, Malaysia will have the outlook for Malaysia is going to depend very much on the outlook for China for the world as a whole. So, if there are advanced countries in Europe US, if there is a recovery and economic terms in these export main export markets I think Malaysia can recover reasonably well provided again of course that the lockdown can be lifted, and that depends on what the evolution of the infections evolution of the pandemic here in this country. So, you know, it's obvious that the price the reduction in the price of oil, generally, which I presume will then hit the palm palm oil industry as well is a big factor for Malaysia. Tourism is not likely to pick up anytime soon because the airports are closed, you know, people aren't going to want to travel, because people are scared. And so I don't, the 9% growth projected by the IMF sounds to me extremely optimistic, and it must be sort of conditioned on the premise must be that the world is returning to more or less what it was like before the pandemic hit. I don't think that's going to happen. I think we're seeing in various countries where they started opening up. Infections are coming back. So I think the opening up is going to be very slow, hopefully will be measured, and, you know, certain sectors can open up in slowly so we can get back to some growth in the economy otherwise, otherwise, you know, the recession will just linger on and on and on. But I do think that the optimism for a, you know, quick return to growth is not justified. And by, you know, the poll that we just saw, most people think it's going to be negative for next year as well. So it suggests that, you know, I'm not alone in worrying about longer recession. But for that, there isn't a whole lot unfortunate that the government here, Central Bank or the Treasury can do, because for export oriented economies, you know, it's the export demand that has to be there in order for us to grow properly. So of course, there is some internal demand as well, which is needs to be supported, but that's a smaller part of the economy. So, but I mean, at least in Malaysia, Bangladesh has room to cut rates, which most of the West does not. That is true. And of course, they did use that room a little bit already in the beginning of the year with the rate cuts. Now, again, how much will the economy react to rate cuts? Is there going to be more investment? Because financing is more readily available at lower cost. I think that depends a lot on the prospects for growth. If export firms are pessimistic about sales in foreign markets, they're not going to necessarily invest. If consumers are worried about retirement savings and so on, they aren't necessarily going to go out and spend even if borrowing costs are lower. Of course, the flip side of that is that deposit interest rates on bank deposits are going down as well together with the policy rate. They are less on their deposits. So yes, there's more room for monetary policy and that might help somewhat. I would be happier or more optimistic if I thought there was also a lot more room on the fiscal side, a fiscal space, so to speak. But I sense that that fiscal space isn't really there in Malaysia as much as one would hope. That is not excessively large, but it's not something that one can be too complacent about. Because if there was fiscal space, then you could imagine thinking about infrastructure investment and generating demand and employment through that means. And that would then help the economy grow even if foreign demand is a little bit on the slow side to pick up. Right. All right. Any other burning questions? Otherwise, I'd like to talk a little bit about this lockdown versus no lockdown. As we know very well, all of us, we're sitting at home. We're not wandering around. And the question is, is there a trade-off between sort of lockdown or less strict lockdown in some countries? And this subsidiary question to that is when should it be lifted, of course. So here I want to take you to a place far up in northern Europe, up here on the map, Sweden and Norway. You may not know that I'm Swedish, so I have a little bit of interest in this country here. And Norway is right next. Both countries are far away from the epicenter of the virus explosion down here in Italy, France, Spain, et cetera. So you would expect there to be less problems in these countries, which is a bit there has been. But the two countries have used very different methods to deal with it. Norway introduced a quite strict lockdown on March 12. I'm sorry. Sweden has taken a more relaxed approach, not relaxed in the sense of not caring. But say schools remain open, people can go to restaurants, but there should be some social distancing. Gatherings of large events have been halted, et cetera, et cetera. So there are restrictions, but not as strong as in Norway. So what are the differences between these two countries? Partly my argument here is partly stimulated by the article by Martin Wolf and AFD on April 7. So here is one consequence or consequence, something that has happened after the lockdown in the two economies. I start here in the beginning, for about two weeks, the curves of new confirmed cases as I'm moving averages. I look about the same, and then all of a sudden Norway bends down. Now very relatively few confirmed cases on a daily basis. Okay, in Sweden that's going up and still going up if you continue it goes up in this direction. More troubling in some sense is the next one. Here you have deaths per million inhabitants. You need to adjust for the population because Sweden is about twice as populous as Norway. So here's per million inhabitants. And again, in the beginning there weren't many deaths, as you might expect. And then it's grown relatively slowly. Of course it goes up because these are cumulative. So in Norway there are now 35-ish, 30-35 per million inhabitants. Sweden that's going way up, 140. It's now in April 17, so it's a bit more, it's up close to 200. Now, so here this looks like a cost to not locking down. I'm not, you know, there are many other factors involved. So one shouldn't put too much sort of causality into this picture, but it's an interesting thing to contemplate. So what are the costs of locking down? So this is from the FT article by Martin Wolf. You see, unemployment has been moving up in both countries throughout this period. Sweden has gone from the lockdown in March 12th from about three years to five. Norway has gone from two to 14. So here it looks like we're trading off better health outcomes in Norway for a worse economy in Norway or a better economy in Sweden in terms of unemployment. What do we do? Is that something we should worry about? How do we decide? Prof, just to, I just thought I was going to button on Norway for a second. Maybe their calculus was quite literally there were an oil producer who swirled money away, which many, many oil companies have not. It's possible that they have, you know, I don't know the details haven't dug into the details. It's very possible that Norway has is able to deal with this increase in unemployment because they have this oil fund and they can give cash transfers to those who become unemployed and so on where Sweden does not. So, you know, there are ways. Maybe the calculus is therefore different in Sweden versus Norway. And obviously this is something one has to keep in mind. The same as in here in Malaysia. We have been in the lockdown. And if you look at the numbers, they look very similar to in terms of infections to Norway. I do not know. I haven't seen high frequency numbers of unemployment in Malaysia. So, but I presume unemployment is quite high because people can't go to work. And coming back to the issue of sort of the small and medium term and medium size enterprises and the enterprises that produce inputs to to other factories. And when you think about partially unlocking the economy here, maybe one should think in terms of what are the essential businesses in terms of these value chains or production chains. So, we must make sure that we don't unlock something at the end of the chain, if we have something in the earlier stages of the chain, which is essential for the final producer, then it doesn't serve any purpose. So we must think very strategically about how we how we unlock these the economy and that is of course extremely difficult. You need to have a very, very detailed knowledge of the functioning of the economy. And I presume our authorities are thinking very hard about that. Thank you. Well, this is actually the end of my talk. Unless there are questions. Prof basically our most of our audience are bankers work in the financial industry, etc, etc. Do you have any thoughts on where you see the Malaysian financial industry, and given all the government backing to, you know, all sorts of enterprises sort of so forth. I'm kind of looking at risk at this, you know, at this point is risk now totally mispriced as it was after the GSC again. Do you see potentially see a bigger chance of a financial crisis so on so forth. And, you know, given the fact that the European domicile banks and the UK ones have been told not to pay dibs for at least this year. Do you see a knock on effect, etc, etc. I mean there's a million things but right that's, you know, it's especially to our audience basically. I think they're they're, you know, thinking more or less on top of my head here is there are a number of issues. One is, how does the financing of these stimulus measures. How does that impact the banking sector. If there's a lot of issuing of debt, does that lead to some sort of increasing in sovereign spreads for Malaysia, which could have impact, could impact the financial sector depending on how they have structured their balance sheets. If there are if the currency will depreciate because there may be some sort of monetary financing. And also risk, sort of risk off in international financial market to see a lot of capital outflows from from emerging markets in general maybe that will if that continues that could put pressure on local financial institutions. Again, depending on how they have placed themselves in terms of their their balance sheets sheet structure before the event, sort of longer term. I wonder whether the fact that we are now using virtual means of communication. And that also presumably means that it's going to be more virtual banking and the banks and the financial institutions. And for that matter non financial institutions in that space, who is going to come out ahead. You know, there are the grabs of this world start some financial. They have already some financial aspects in their in their offerings. They become more and more sort of prevalent, therefore impinging on or taking some of the business away from from banks as they start also lending I think in China, various sort of big, those big tech companies are moving into a lending space, taking some of the banks away from banks. I don't think that is happening to anywhere closely as much here in Malaysia, but it might happen, because we are going to be less. We will be more used to dealing with things virtually right and therefore we may not need to be to go to bank have face to face meetings with the friendly banker and the loan advisor and so on so we can, and companies that have already set up their operations to do this on online virtual lending banking will probably prosper relative to other so I think that is something to think about and I'm sure it's going to be in banks here are doing that. But that's about as far as I can sort of think right now the risk might be. Prof, can I ask you to go down to the next page so people can take the qr code basically for the survey. You'd like to use that. Yeah, I'd like to. In closing here I'd like to thank the CB for for hosting this webinar I think it was for me certainly interesting to put together the my thoughts and my slides and I hope all the participants thought it was was interesting and useful. I believe the QR code. You explain what should be done with the QR code please. Yes, if you could just use your cameras. It should pop up to a screen that gives you the survey. And if you could if everyone could actually take the survey I'll be it will be a very grateful basically. So, you know, I just like to bring this to a close by thanking prof. Gennberg here for his thought provoking discussion. And there's a lot to ponder upon. Frankly, I don't think anyone in the world knows precisely what to do, but at least I hope this is clarified some of, you know, your doubts, etc, etc. But we really want to thank all who attended and engage with us. You've added value to his webinar. I really do apologize for not being able to accommodate everyone and all the questions. You know, there will always be plenty more food for thought here. Do visit our website for updates on our next webinar sessions. We do complete the survey as I mentioned again. And once again, thank you to prof. Gennberg who I should mention is one of the top five economic researchers in Malaysia. And everyone, thank you to our speaker and participants. We wish you a productive day and please do stay safe Ramadan Karim to everyone. And good luck. No, again, just thanks very much to the participants. Thanks to the CV thanks to the SBU supported me and again, Ramadan Karim for everyone who is in Malaysia these days. Thank you very, very much. Thank you. Thank you all.