 Good afternoon and welcome to this, the IIEA's first public event since the coronavirus took hold and changed so much. Our team has been working incredibly hard, as yours has no doubt, to adapt so that we can bring you, our members, the best analysis and insights possible into the pandemic and its many consequences. But this event has more attendees than any we have run in our pre-decade history, is testament to the scale of the change to our world and the challenges that now exist and indeed be appetite for insights and analysis on what's going on. We thought for this first public event that it would be appropriate to bring together a group of people who know all about managing crisis to share their experiences past difficult times and to share their insights into how the current global crisis, perhaps even global emergency, can be addressed. We'd like to thank them very much for taking the time to join us for this event. Each of our speakers will speak for seven or eight minutes and then we'll open it up to our questions. This questions will be on the record in this instance before introducing them some housekeeping. On that Q&A audience members will be able to participate using the Q&A function here on Zoom. You'll see it on the screen. Please don't use the chat function. I'll only be looking at the Q&A function for questions, so please use that if you have a question and identify yourself in the organisation as we would normally do if we were meeting at the institute. We aim to get as many questions as possible in the time that we have available. We'll also be live tweeting the events so feel free to join that discussion. They're using the handle at i.ua. So again this is a new experience for us so please bear with us if there are any technical challenges. So we'll be going in order, in alphabetical order, so let me introduce the speakers in reverse alphabetical order so that we come to the first speaker last, so to speak. So Mario Di has been Chief Executive of the Institute of Banking since April 20th. Prior to that she was Director of Securities and Market Seek positions at the Central Bank of Ireland. She was previously Ireland's representative of the World Bank and prior to that held her over the terms of Executive Director representing Ireland at the IMF in 2011-2014. She has also served as Acting Director of Ireland's Financial Regulation in 1929 and prior to that held a series of senior positions at the Central Bank. Mary's going to speak about the impact of the pandemic on the banking and financial systems. John Moran, our second speaker, he served as Secretary-General of the Department of Finance from 2011-2014 helping guide Ireland's post-crisis economic recovery. He previously served as Head of Wholesale Bank's supervision for Central Bank of Ireland from 2010-2011. Before entering public service he served as CEO of Zurich Bank from 1997 to 2005. He was recently appointed Chair of Ireland's Land Development Agency. John's going to speak about the role of finance ministries in the current crisis. Patrick Honahann was Governor of the Central Bank of Ireland and a member of the Government Council of the UNCB from 2009 to 2015. He's an honorary Professor of Economics at Trinity College Dublin and a non-resident and Senior Fellow of Peterson Institute for International Economics. His most recent book, Currency, Credit and Crisis provides an account of the financial crisis in Ireland. He's going to speak about the role of policy makers in Central Bankers in particular. A.J. Chopra worked at the International Monetary Fund from 1984 to 2014. His final position at the IMF was Deputy Director of its European Department for News Among Other Things, responsible for the design and implementation of Ireland's Monetary Rescue Program in 2010-2013. He's currently an independent consultant placed in Washington, D.C. and he served as a visiting fellow at the Peterson Institute for International Economics in 2014 to 2016. He is going to speak about the international challenges and global policy responses. So, A.J., over to you. Thank you very much, Dan. It's good to be back talking to people in Ireland and I presume elsewhere as well. I am going to be talking about the importance of international cooperation to deal with this crisis and I'll be highlighting the role of the G20 and the IMF. But before talking about international cooperation, I need to sort of set the stage as to why international cooperation is essential. This is first and foremost a public health crisis and a human crisis and of course it's also an economic crisis. And it's going to be impossible to protect the economy unless public health is also protected. So tackling the public health crisis is therefore paramount. And this combination of public health and economic crises makes this radically different from the crises that we've faced in the past. It's hit much harder, it's hit much faster than anything before and it's certainly very different and much deeper than the 2008-2010 crisis. So this time it really is different contrary to the classic book by Carmen Reinhart and Ken Rogoff. And by that I mean this is not a crisis that is caused by financial folly. Rather the best metaphor that I've come across to describe the situation is that dealing with the public health crisis requires a large swath of the global economy to be put into an induced coma while maintaining vital organs. So it's this induced coma that is causing supply disruption and job losses and the cause again is not financial folly as it was in the past. And we're still at the early stage of this disruption and the situation is likely to get quite a bit worse. At some point when the immediate peril is past the economy will need to be reawakened from this coma and how that reawakening process will go is very very difficult to answer. So with that as the backdrop I'm going to focus on the international dimension of the public health and economic crisis. Why the international dimension? Well because microbes don't recognize national borders and the health consequences will affect the entire globe. Much of the developing world can't afford to quarantine. Informal labor is the backbone of many of these economies and they don't have access to unemployment insurance and are being pushed into desperation. But furthermore from the economic side these economies are facing a sudden stop or a huge terms of trade shock as commodity prices fall because of the decline in economic activity and many of these countries also reliant on tourism which has collapsed. According to the Institute of International Finance foreign investors have withdrawn about 95 billion from emerging markets, stocks and bond markets since they woke up to the crisis in the second half of January. And this is four times the outflow in the same period after the start of the 2008 global financial crisis. So there's a risk of disorderly defaults in emerging markets. International cooperation is paramount. Sadly the international response so far has been weak. Rich countries have become more inward looking as they fight the pandemic themselves. There's been a lack of leadership especially from the US. Recently the G7 couldn't agree on issuing a communique because one country insisted on calling the coronavirus the Wuhan virus. The G20 came out with an anodine statement on March 26th that was long and intention but short on actions. So given this I'm going to focus on three things. What should the G20 and more generally the international community be doing? Second I'll talk about the importance of augmenting the IMF's resources. And third I just want to highlight something that the Fed has done recently to provide dollar liquidity to emerging market economies and here I apologize in advance if I'm treading on Patrick's bailiwick. Okay on the G20 and the international community. I told Dan that I wanted to talk about this and then coincidentally just a couple of days ago Maurice Obstfeld who is a non-resident professor at Berkeley and now a non-resident fellow at the Peterson Institute put out a terrific blog on what the G20 should do and I would very much commend you to read that but at the key points for the G20 are the WHO coordinates the international fight against this pandemic and the WHO's budget is just about five billion for the coming year. So the G20 should call for an immediate increase in the contributions by member governments and lead by example by committing specific sums. Another thing that the G20 could do is it should it should call for an end to trade barriers. Export restrictions on medical equipment by some countries is is going to be counterproductive and the US perversely still maintains tariff non-tariff barriers for imports of critical products to fight the pandemic. So this is not the time for trade wars. It's also in the interest of the richer countries to channel resources to help the poor countries. The IMF and the World Bank have called for a suspension of debt of the poorest countries debt repayments to official creditors and the G20 should endorse this. Now forbearance on official loans will need to be matched by some sort of a mechanism for a standstill on private debt repayments to freeze the situation until the longer term effects of the crisis can be better assessed. I think of this as as the international equivalent of a temporary moratorium on mortgage foreclosures. Now the second point on augmenting IMF resources. The demand for the IMF for IMF financing has skyrocketed. The IMF managing director last week said and I quote, never in the 75 years history of our institution have so many countries found themselves in need for emerging emergency financing. 85 countries have approached us so far all at one time. The IMF has estimated that the financing need for developing countries in emerging markets is going to be about two and a half trillion dollars. The IMF has a lending capacity of about 800 billion and its continued availability is uncertain because members must renew certain lending arrangements by the end of this year. So it's going to be important for rich countries to increase their bilateral lending arrangements to the IMF and there should also be consideration of a one-time allocation of special drawing rights say half a billion and then off that emerging and developing countries would receive a sizable sum. The last point I want to talk about is dollar liquidity in emerging markets. The US dollar is the world's unchallenged reserve currency. Banks all over the world rely on dollar funding for their operations and this makes the US Fed the world's de facto central bank. Fortunately with this crisis the Fed seems to be getting increasingly comfortable with this global role. On March 19th the Fed reactivated the temporary swap lines that had been established with nine other central banks during the last global financial crisis and these nine central banks include Brazil, Korea, Mexico and Singapore. So a very small group of emerging market economies there but then on March 31 the Fed went further. It launched a repo facility for foreign central banks. So what this repo facility does it lets central banks that have a large stock of treasuries use those treasuries to get cash from the Fed and thus better serve as a dollar lender of last resort in their jurisdiction. Let me wrap up and I want to say that the reason I highlighted this new Fed repo facility is that it's a great example of innovation with an international reach. We're going to need a whole lot more innovation like this to deal with this crisis. International cooperation is going to be critical. The leadership of the IMF, the World Bank, the WHO, they can make exhortations and appeals but it's the membership that has to be willing and generous with its resources and to end on a bit of a down note sadly there's a void when it comes to global leadership from those countries that do have the resources to help. Thank you. Many thanks for that. Sobering I think international picture you mentioned to just a quick follow-up you mentioned the finish on a gloomier note could I just ask a question that may be slightly more positive. Do the poorest countries in the world, the least developed countries, they tend to be more rural more agrarian often less open could that offer them some insulation against the impact at least on the economic side to deal with the health side and let maybe the pandemic, the disease spread more slowly giving them more rural. Look on the spread of virus I have no particular insights about how that might go but the poorest countries do tend to be commodity exporters and I think the economies are bound to be hit by a global slowdown so if they're protected on the health side they're going to be hurt in the economic side so I think it all sort of comes together and you know the thing is they have very weak health systems and we saw what happened with the Ebola crisis in Africa and I think there was good international cooperation to deal with Ebola and new facilities were set up and that's a good example of what might be done in the current situation but obviously at a much larger scale. Many thanks and look forward to further questions. Patrick over to you. Thank you. Thank you. Well picking up from what Jay has been talking about which is the broad international situation I want to ask whether in this crisis which is like the last one there's a macro financial development dimension but there's also the public health dimension which is new but can we learn something can policymakers learn something from patterns that emerged in policymaking in the past crisis and maybe have a look at the slides if you could put the first one up there so like in the next one then as Jay said everybody says this time is different and it is different but not in a good way and that's usually the problem but I think we can learn something about patterns of response we have a global system and I don't call it an economic system a global system which is optimized and has been developed and refined but for a narrow range of risks and we're not we're not really prepared for large disturbances we weren't prepared the last time and we're not prepared this time that's not to say that people weren't aware that there could be the risk of a global pandemic it was in the government's risk assessment reports in Ireland every year so in in general terms we knew and we know that this is a risk but being prepared for it is a different pattern I would mention three traps a sort of generic traps which I think were made or fallen into to an extent last time round and and I'm not sure we're out of it this time either the first trap is a tendency and it's this there may be some psychology behind this a tendency for policymakers to underestimate the scope of the problem as it begins to emerge and its likely scale so I think both this time and last time there was a it was we were very slow to see a crystallization of the of the problem we had in the last time we had the kind of phony war situation from the middle of 2007 until the autumn of 2008 where generally policymakers thought that the disturbances in financial markets were confined to a narrow segment of the US mortgage market with some spillovers and then they realized then over a year after this problem had started that it was going to test the size right out into the into the system as a whole the second trap and so the result of that is that the application of tools that you've got tools but they're too slow and at first too I'm unambitious in using those tools the second trap I think is a vagueness on the end game where are we going to go things have changed we didn't understand exactly where we were and now we need to get somewhere else where is that end game and do we know what the best plan the best goal is and if we can't reach that goal do we have fallback positions which are not quite as good but that we can achieve and that was very important for us in Ireland in relation to debt sustainability where we went for some time saying maybe we can manage this without being shut out of the markets but when we are shut out of the markets we were very ready to fall back on the IMF and we were very ready to fall back if necessary on other you know definitely structuring possibilities where there in the background we were ready to do that if it was needed which was not needed and it was healthier for the economy to stay to stay away from those and the third point and this touches a little bit on what Jay was saying there we're in an internationally interdependent world and these interdependencies are not fully exploited by policymakers we're not geared up for it is a political dimension there's an economics dimension there's a financial dimension to these interdependencies and now there's a healthcare dimension and all of these are potential hazards and potential opportunities that are sometimes not exploited I'm an economist economic economists deal with trade-offs and trade-offs are important in dealing with an unexpected situation a crisis like this let me move to the next slide and just give a few hints so the big I suppose the big if we ask for what was the big trade-off last time in Ireland for example the big trade-off was to try to maintain a recover investor confidence which was going to be essential to have a medium term economic recovery trade that off against the need for fiscal expansion to pay for unemployment to maintain public services so you had a pressure on public services on public sector wages unemployment going up but more fiscal expansion would lose investor confidence even more so that was a very difficult trade-off which had to be managed the way through the big trade-off now if we look for one big trade-off that's economically relevant is the the trade-off if you like between the public health issues and virus containment versus the economic shutdown which also will of course spill back into public in other ways now I I should say right away you can make this calculation it's quite clear from all the calculations that I've seen even though as I will say in a minute we're very very uncertain about all the parameters it is quite clear that the choice to shut down is a correct choice on any kind of cost-benefit calculation using a conventional approaches to that let me unpack this a little more let's look at the next slide and give a few examples because we have to not only decide which side of the trade-off we are favouring but what tools to use how much how much we should exploit those tools what types of tools and when should they be used so for example for the last time in the european context well ECB policy there's a risk that I would spend a lot of time talking about that I will not talk spend a lot of time talking about that but it's clear that there were mistakes made in in deciding what particular policy tools there was no quantitative easing for five six years interest rates were wholesale interest rates were brought down but insufficient attention to the fact that the financial market in europe was fragmenting so there were a lot of policy choices that were being made too late and without sufficient understanding of the economic structures and the way the economy was reacting to the policy are not reacting to the policy and the financial system outside the ECB's sphere the fiscal stance also that was a decision decision was made initially by the larger countries to allow a great fiscal expansion but it was rained in too quickly in Ireland we had a slightly different issue but again there was a scale of the fiscal cutbacks and I think we the decisions made about that needed a good understanding of the economic responses and what the costs of various fiscal measures were going to be in terms of the economy and I think by and large we were lucky our managed to to maneuver that in a way that probably we did it more or less as well in the economic recovery as we could given what was on offer the handling of the bank recapitalization was also raised a lot of difficult questions you could recapitalize the banks to a very very safe position but only at the cost of putting the the public finances in a perilous situation so there was a need to understand the economic interactions and the financial now only saying that to to lead to this question now now we have questions about for example the shutdowns and the question of reopening and how would that reopening happen what sectors should one promote to be the first ones to reopen or in addition from the collection that are at present closed what categories of person could be released from from them the constraints what places schools so on in order to decide on those things to make those choices and we need to understand things that haven't been studied very much supply chains and input output tables people dredging up from the past haven't been used for years but we need also to be very much aware of side effects and side effects on on on inequality we need to the measures that are being adopted for example to compensate for the shutdown in terms of providing income support and two persons financed to firms as jay said this is happening also on the global scale the ecb have expanded lending the federal reserve of expanding what they what the central banks are doing though is they are stabilizing wholesale wholesale interest rates and wholesale markets with their huge asset purchases that that doesn't solve it doesn't resolve solvency problems congress has and fiscal authorities are trying to deal with solvency problems so there are there's a question of understanding and economy which has shut down in a way that's not previously has never previously been done so trying to understand that and modeling it and getting it right they're comparable issues in the medical side of things because there's modeling in the medical dimension as well the need for more tests better tests about infectious system about antibodies so here again there's a need for for understanding detailed understanding of the process which is an unfamiliar process but I'd mentioned as well and on the in the old time for example to give you another example of understanding the economy and the macro prudential tools that that were introduced to stabilize the recovering housing finance market and this required a lot of analysis of a type that hadn't been done before in understanding the financial system in Ireland and the and the impact on the housing market and on prices that's constantly under review I'm sure to be reviewed again it'll need to be tweaked and then we need to understand the economy to get those kinds of policies right let me move because I'm running away away from time to oh yes let me show you these slides though just when I was talking about understanding the process I think it's very interesting to track what data we have in the public sphere and I just like these charts I thought I would show them to our friends at the IIEA and this is the way to show I think the trends in this first of all they should be on on a log scale so that a straight line means constant proportional growth then they should be shown as a percentage of the population of countries which most people don't do it's very easy thing to do because otherwise your the carbs are all over the place and you don't realize that they're all over the place simply because one country is bigger than another and then you have to start them at the right place I've started these charts at the on the day that the number of cases reached one per million of the population and that green line is Ireland and you can see it's lying exactly on the German line it's three days behind the German line it's 12 or 13 days behind the Italy and a little bit lower it's four or five days behind Spain a good deal lower it's actually higher in terms of measured cases if you believe it then you came out the same level next slide shows you deaths and can we see the next slide and anyway it's a similar can we see the next slide please yeah and we see a similar slide here here Ireland's trend a little bit above those other countries except for Spain but carving down rather rather encouragingly and in this case about 25 days behind Italy and I'm only saying that to remind you that analysis needs to be done it's a lot more analysis is being done on much more refined models of the epidemic but we know extraordinarily little about those relevant parameters final point and I think I brought up time so I don't think I'd say very much about it is the question of communication and cooperation cooperation with international partners partly that's a question of finding the common ground partly it's a question of using the collective strength we're not using the collective strength in Europe yet there are some some encouraging signs that as a political move towards using the financial muscle of Europe as a whole to address the complex problems of financial problems and macroeconomic problems which are emerging as this crisis matures and and the final point about communication communication we all favor transparency but it's never absolute it's never fully transparent for example when we were moving towards the intervention and the liquidation of the old Anglo IBRC bank we couldn't we couldn't say oh by the way we might liquidate this bank in a week's time or in three days time or in one day's time so there are there are limits to transparency and I think we're also seeing that at present and it's a delicate issue for governments to decide exactly how much they are communicating on what they're planning to do in in in addressing this crisis on the medical side and the the economic shutdown side as it evolves and it's very very difficult and complex question people must the communication must engender sufficient trust in the population that the population knows well we won't be told everything but we'll be told the things that are safe for us to be told it's difficult choice thank you thank you Patrick very frank many thanks for that John we'll go up to you without any further ado thank you you're still new to John you need to unmute okay great all right um I've tried to send us a couple of slides up there which hopefully everyone has um and first of all thank you John for for the invitation and for pulling everything together I think in some respects this is all going to fit for pretty much with what has been said before so I'll try not to to go through all ground again um but in order to sort of help think about this I I decided to try and come up with kind of 10 individual pointers that I might be thinking about in terms of how we go at this in terms of the recovery so it's not to say that these are the only ones but they at least should help people to to think about about some of the issues that have been raised um and I suppose the first and really important point is is in many ways a lot of people have been assuming oh my god here we go again another big crisis that we're getting into and it'll be the same it as Patrick and in particular said this is not the same as the last time round but the important thing about it which is what I have on these two slides really is to point out that because it's not the same and it's obviously a very different genesis of a crisis but a health crisis but more importantly we start in a very different place so we start with a much lower cost of borrowing and indeed we started going into the situation with an employment number that was actually higher than last time round um and we are not look we look at a very generous generous so to speak um but slow recovery of unemployment the last time whereas this time of course the the drop has been cataclysmic and therefore it requires a number of different tools but the important thing to remember is this first point which feeding through means that unlike the last time where we were effectively shut out of the markets this time we can borrow in order to get ourselves out of this and I think that is as has been said with an economy in in sort of you know put into a coma as AJ has said this is a really important tool for us to kind of keep that economy alive during the the period of hiatus and more importantly to work out how to get out of it um somebody asked me in the last couple of days about this question of well if we add more how are we going to not end up with the debt sustainability issues that we had the last time and again it comes back to this really key relationship between what the average interest rate might be and they and the growth rate in the past the problem was is that our interest rate was much higher than the growth rate where around our nominal growth rate should be in excess of the rates and that's where the ECB's response is so important it is absolutely critical only the ECB has the fire power to deal with this across the entire European Union it needs to continue to continue with its it's basically policy decision to allow governments to borrow at low rates of interest that are essentially below the the rate of growth that they might expect to to have once they they get through the crisis and so that's a really important thing that is what will allow us to to not have the same sort of you know problems about austerity that we had the last time and I think this is a really important message for the government to get to fairly quickly um because in so far as economies are all of our confidence we run the risk of rupturing the economy very seriously if people are afraid of thoughts coming down the track so I think going back to Patrick's point about actually doing stuff fairly quickly and in scale I think that that's really important not just because that's what should be done but it's really important to get the right level of confidence back in the economy about the future another really important point is ensuring solidarity we're all very kind of familiar that at the moment a lot of what we're doing is not just to save the economy it's for the very important sort of you know social purpose of protecting vulnerable people in our community but we have to sort of you know work our way through the choices and come back to that later in a way that makes sure that we don't build in inequality of recovery in the in the way that may have happened sort of the last time where people won't house a so large recovery in the things but because we weren't able to deal with the supply of housing etc other people suffer we know very well that lots of the more vulnerable people in our community over 65 at the moment are still on pensions whereas the younger people are probably the ones suffering the majority of job losses so how we unwind that is is really important going forward but I think it's just as important that we deal with some of the inequality the solidarity issues that Bob Patrick and AJ have raised these issues of north and south europe rich countries versus poor countries and most importantly what do we do with the developing world countries and how do we manage those because we can all remember that ultimately our economy is very much an open economy and therefore we need to make sure that we don't just solve our own problems but that we have solved the problems for other countries in the last while a lot of people have talked about this idea of let's throw a lot of cash at this and we'll borrow I think the important thing to remember is any cash to be borrowed is essentially going to have to be repaid by people in the future so this isn't in a sense it might sound like free money if the interest rate is zero it is not free and they are the tradeoffs all the time we know where we put the tradeoffs the last time some people acknowledge those in terms of the compromises Patrick mentioned other people were unhappy and felt that we should have borrowed more money and had more money to be paid off into the future but what is really important is recognizing that borrowing money albeit at the low interest rate is not free the important thing is to use it very carefully and so I think the ideas around that we should just throw cash around to every citizen is not the answer we have to do things in big scale and I think we're probably not seeing enough scale up to now in terms of the answers that we're doing and we need that quickly but it shouldn't be indiscriminately drawn around everywhere it needs to be very targeted to the type of issues that Patrick as well mentioned about sort of making sure that businesses survive through the crisis and that we can reignite people's confidence when when we get back to it the next point I wanted to raise is this issue that not all heroes wear cakes I think we will see an inevitable reaction going forward about the desire to rebuild maybe the wrong word but to enhance our public health system and indeed reward all the people that have been to the forefront at the moment we need to remember that in the context of doing that I think we're going to see a seminal shift towards people wanting protection maybe localization of the production of a lot of of that kind of equipment within the European Union perhaps and a run to nationalization on that but we also need to be very careful to protect the other elements that may not be as politically easy to to defend particularly businesses Mary I know we'll talk about the banks ultimately providing liquidity supply and income support for households which was inevitably the first thing to do means that if you are cutting off their their bills you're creating a contagion impact through the system and I think again it's really important that we make a very big distinction between providing just liquidity support for businesses and ultimately dealing with the solvency issues that they are going to face if we actually get into this and come out of the crisis because I think we will actually find ourselves needing to not just borrow and lend to companies but actually giving them some solvency help over the future which can has been done in other countries be tied to objectives that we want to to achieve like employment and keeping people on the on the payroll the sixth point I wanted to make is for anybody who might be thinking that this is a bit like Italian 90 where we just shut down our economy for a couple of weeks and we restarted it once we had gotten over the party this is not the same situation I probably am of the group the things that we are hitting heading for a much deeper shock in the short term then perhaps some of the studies that have been done beforehand there will be a recovery but it could be as early as 2021 I would say or the end of that or maybe 2022 before we are back to where we were bring into this crisis and recognize that that means we actually have then had a shock to the system I don't think the world would be the same either I think people would be a lot more cautious I don't think we'll see these kinds of celebrations in the short term because one of the important learnings from previous pandemics particularly the Spanish flu is that you do not want to have another outbreak on this so I think we'll have to get back to this very gently I think one learning from the last crisis was the need for very robust governance it doesn't have to be my former department but what's very clear is I would be certainly of the view that we should as Patrick said work out where our end game is what are the alternatives I have a very clear path to that so everybody from investors and companies from people across the system understand where we're going and that will require a very robust governance but actually at the same time I I think looking forward to what that might look like I think we have probably undergone an acceleration of a number of changes in the way we live our lives and life will not be the same again and I think if we can embrace those and think about those in a positive way we may come up with a very different Ireland to rebuild in that process I think our relationship in terms of spatial questions will change where we live how we live it's not just a question of big density it's a question of the structure of our homes and our housing I think the use of tech and homeworking will change the way in which we've looked at things in the past and perhaps allow us to get into some of these earlier questions about regional balanced development that we've struggled with and I guess we have to remember that we have had a lot of pre-priced issues that are still there particularly in the housing area and we need to think about that what that means is that our priorities have probably changed in the last couple of weeks across a whole range of things I think we will come out of this with a greater desire to have a greater system of protection of our citizens I think we will want greater investment in our health and therefore the protection against the virus will seem the same as protection against time and change and I think the political system for which we need a strong government will probably conclude that we need a bit more government than we've in the past and our priorities have changed in terms of how we think about that okay I'm going to put my hand up in a positive way which is I think that if we embrace an awful lot of that if we do this well we can actually recreate a future to look forward to I think we have gone into this with a large deficit in housing infrastructure was reinvented the meaning of community in our country and valuing the simple things and I think if we carefully use this money that we need to protect companies and stimulate the economy so that it goes into capital investment rather than just simply into recurring current expenditure then I think we can in the words of the of the Visic and the Irish examiner we can prevail again and so I remain optimistic but there will be a rough couple of years to to ride our way through this next minute okay thank you John before giving the floor to Mary can I just say we've got a lot of questions coming in if you're to have any chance of getting your question to the panelists I'd urge you to get them in now we'll probably go on to 215 a little longer than we would as people love to commute in and out to the Institute you may have more time to to devote to the Q&A session so as I say we'll go on to 1215 with the Q&A you do get your questions in as we have a great many questions already in Mary over to you thanks very much Dan and just before I say anything I want to emphasize that anything I say here today of course are my personal views not those of the Institute or indeed of UCD but the Institute is a recognized college of and I also want to pause especially having seen Patrick's graphs there to say that we know that this crisis has so badly affected lives right across the world already and those who have already died and those who are working hard on the front line and it's just important to to contextualize that as we're having the discussion today so when Dan asked me to talk about the financial sector I was thinking about the broadness of it and I decided in the interests of time to focus very much on the banking side I'll give a fleeting reference to some other areas but also I want to focus on where I think lessons can be learned from the previous crisis so yes I agree with everybody who has said this time it really is different and it's especially different I think for banks heading into this crisis the source of the crisis of course is a very different one as Jay has said we're talking about a public health crisis not something that is a banking crisis and the strength of the capital and liquidity position of the banks the overall financial strength heading into it is so much better than last time around learning from the lessons of the past but also the composition of that financial strength is greatly enhanced there's been a rigorous assessment of the balance sheet strength of our banks both here and globally and the data even that is available in order to assess the level of capital is vastly superior to what was their pre-crisis also it's tested by the SSM and others apart from domestic domestic regulator and banks have now already been able to release their counter cyclical buffers which exactly doing what says on the 10 being there for the times when the cycle changes within banks I think as well the organizational structure is much more resilient in June 2009 you have to remember we had three banks who were seeking CEOs two banks who were seeking chairs and two who were without risk officers so the level of governance as we worked through the crisis was very very different and of course there was no expertise in managing delinquent loans or in working through any level of forbearance and banks were very much caught up in scrambling to value assets as we moved towards what ultimately was a NAMA solution so I think the capital resilience right across the banking sector and this is true in other sectors because other regulators have learned from looking at the banking side securities regulators have followed suit investment funds there's been greater emphasis on things like circuit breakers redemption gates so all of those things are in place to prepare us better for this crisis and indeed in insurance companies there's also been an increase in the solvency requirements there but I do think there that regulators and particularly from a financial stability perspective must be looking very closely at the insurance sector and the reinsurance sector globally and because it's no doubt that there will be payouts way beyond stress tests that may have already been completed and regulators are quite rightly now saying to insurance companies please look and give the benefit of the doubt as you deal with insure with both businesses and individuals in claims and I think this will actually be a real test of culture within the insurance world as we work our way through this so then one of the lessons from the last time round well one of them I think has been mentioned by a couple of others already which is that speed really does matter now last time banks were actually the problem that we were trying to fix whereas now banks have a crucial role to pay play in being part of the solution forbearance now is a good thing and if we use the induced coma solution we have to make sure that the patient stays alive all the way through the nature of banks of course gives them a very special place in the recovery and they need to adjust very quickly to this new role they have been carrying on post-crisis in a business as usual way and now they're immediately thrown and as as Jay said harder sharper faster and deeper into a completely different world that again requires a very different operating model and it requires them to draw on the full ecosystem of regulators and policymakers to support them as they work their way through this and find impediments to what they're doing in terms of keeping the patient alive it needs to be a whole system approach for this so I would suggest that a forum needs to be set up to remove any blockers there are to keeping these businesses alive and to include all the relevant actors in that trashing out the issues that may need others to be involved so those that we may need to draw on the EU etc and working up those plans very quickly I think there will be a future reward for those banks that really are there for their customers at this time and in this time of need and of course the other reward will be that the economy will recover quickly if they work through this correctly the second best and I draw on and somebody has mentioned the topic John's mentioned the topic of governance that is sort of the national level I would also mention governance and strategy at a banking sector and financial sector level I think last time around there was insufficient attention to the strategic matters that banks would have to deal with so for example their their early plans and their profitability they weren't sufficiently credible for operating in that new environment quickly enough it's very understandable that the immediate attention is of course on firefighting it's on business continuity call centres are now flooded with calls and banks are adapting to that risk and actually doing it very well this time round however I think that the boards have a special role to play now in examining whether or not the strategy that they're currently following needs to be re-engineered in some way for the future so last time round again remember that people were looking at strategies without the benefits in the early days at least of having the whatever it takes backstop or without having the NAMA solution in place but similarly now the role of the board is while providing erection and support in terms of the short term measures it must be critically looking at strategy at operating models what needs to be adjusted and while we're all hoping for that shorter term fix they must be preparing for longer term implications at least until a vaccine is found so in short I suppose it's the time for leaders at both chair level and at CEO levels to strongly lead and to lead out with their values and culture clearly on display as they do so I think they also need to bear in mind the changes in customer behaviour so last time round remember it was very hard to get people to start spending again despite a period of long of low interest rates the impact on sentiment this time could be similar remember people in their lifetimes will have had two very severe significant economic shocks I also think there'll be an additional sort of mood of the nation which will be exacerbated because it'll be a mood of the world with the fallout that comes from this in terms of personal tragedy others have mentioned other things that will change so for example huge acceleration digital we're seeing that already and financial sector can take advantage of this and use this as an opportunity for the future and of course an acceleration I would imagine in the trend towards sustainable finance as that other existential threat now becomes very sharply focused as we see this one moving along third area then where I would draw lessons from past is around uncertainty emerging data which Patrick touched on a little bit and big ideas which I think you you also mentioned Patrick so if you remember the last time as we worked on solutions the outcomes at the time would have been utterly unthinkable there would have been issues that wouldn't have entered people's minds we watched Lehman Brothers collapse we saw the scale of losses in the banking system rising we had this prolonged period of VLA that people would have said could never have happened and we ended up being the third biggest borrower in the IMF so all of those things were unthinkable at the time and whatever solutions we work towards now and as events unfold are things that we have to know are probably unthinkable right now the financial markets of course we know don't like certainty but financial market players need to come together to be part of the solution now and to use their brightest and their best to to feed in those proposals last time around we had a significant lack of data and for example when we started tracking liquidity we got a much richer sense of what the data was by talking directly to the treasury departments and understanding what the picture looked like so there's the numbers but there's also the story around what is it telling us and this time around I would suggest that we need to consult with the financial sector that is the public sector consult with the financial sector early and often to set up reporting systems specifically around the impact on sectors what are good solutions what are working because there will be different solutions for different sectors and what supports are needed what's missing and keep all of this information together in one place so that all decision makers can access it in terms of working towards solutions finally then the lesson that I would the final lesson that I would draw on is avoiding groupthink so we spoke quite a bit about how groupthink in the lead up to the crisis last time around and things like people buying into soft landing but we haven't said too much about groupthink during the crisis for me it's absolutely crucial during a crisis to allow for the role of a contrarian and that is preferably somebody who actually has a contrarian view rather than somebody who's playing devil's advocate it's really important for us to consider what might be termed outlandish ideas and to make sure that we have very inclusive decision-making most effective cultures have really effective inclusion in decision-making and including those different points of view not being all sucked into a groupthink attitude I think is really important and then finally I think I would say that all crises hurt people and we have to remember that people are still hurting from the last crisis people will hurt and are hurting very significantly from this crisis and I mentioned values in the context of the financial sector and culture and I think as a nation it's important to remember our own values and our own culture so our values are very much people focused and we have as John suggested we discovered I think a strong community focused culture and I think tapping into those as we guide as we use them as guiding lights for our decisions will be very important throughout this particular crisis thanks thanks Mary some really nice points there to round up we've got a load of questions I'm going to pick out four one each for you so Dermot Halyria good body this is to you Jay do you think IMF members the wealthier ones actually going to pay up at this time uh Fergal McNamara one for you Mary Fergal McNamara at ECB asks about deglobalization he wonders is this going to bring about deglobalization so maybe Mary if you had any thoughts on that in general and in particular from from the from the sector you know best you think this will lead to a pullback in a deglobalization process uh for you Patrick Sarah Carey columnist asks about disaster economics is that is is the literature on disaster economics where we need to be looking now and John Declan Harman asks about universal basic income is it an idea whose time has come so maybe we'll start off with you Jay on whether IMF members will pay up thank you Dan look the short answer is I don't know but I can tell you what what is being sought as I said you know a part of the IMF funding comes from bilateral lending arrangements and these lending arrangements do require renewals and if they were not renewed by the end of this year they will decline by about 200 billion dollars a little bit less than that so a first step would be to renew those uh those bilateral lending arrangements uh and increase them and I think I think you know uh there's there's some positive signs on that uh including on uh the US share of the new arrangements to borrow which was included in the uh in the legislation that was passed on on March 27th in the US but the other important aspect over here as I said and and as the IMF's managing director has requested has sought is is a large one-time allocation of of special drawing rights again the the special drawing rights are an asset and a liability of the of the IMF uh uh and and I to be honest I cannot remember when when when the last uh SDR allocation was done uh but this is uh but this is this would be a a how to put it you know this this should be feasible I think uh and and if it was done uh you know it would it would boost the IMF's lending capacity let's say they managed to increase it by half a trillion in in dollar terms uh that that would mean uh you know just just less than half of that would actually then be available uh for lending to the poorer countries because these get allocated based on on quota shares uh so I think I think I think work is being done I think uh uh this is something that the G20 uh uh ought to stand behind there's the the spring meetings are going to be done in the virtual format this year in in another week or so and so we might have had more more news uh after that good um Mary on the de-globalization piece yeah I think yeah I mean that's a very much it depends answer we had already seen a move towards increased protectionism I think in the lead up to the crisis so that's that wasn't that trend was there already um but I think you have to draw a distinction between perhaps uh political cycles and political trends that may have been heading in that direction uh and how markets are actually working and operating so I think that the counter to that is the massive acceleration and digitalization and the world becomes very small then as we can for example at these meetings with people all over the world and an increased globalization in that way and I think we're also seeing from a science point of view uh the speed at which scientific information is being spread right across the globe as it puts looks for a solution to this particular problem is increasing globalization so I think there are some very practical trends that are increasing globalization that both crucial will be how the politics will play out and here the EU really does have a strong role to play as a leader at this particular moment in time uh to to make sure it intervenes in areas where protectionism might be raising its head after disaster economics yeah well I said for about disaster economics I think there are things that we we can learn from big events in the past and the current event resilience is probably going to be a catch word for the recovery phase and long into the future that would be resilience and so obviously public health resilience will be a major issue my guess is that that the these public health problems solutions will be found viable solutions that change behavior may be changed permanently but not in a way that we can't can't cope with but I think that we'll also be looking and people will will be more sensitive and aware to other resilience issues climate change issues inequality issues these are all issues of of social and physical resilience so this is a disaster of one of one sort or another but but the solution the long-term solution to it is to build greater resilience around our systems and with a wartime analogy maybe not disaster comes to the wartime analogy has been made by many people and let's remember that in world war one countries came out of world war one heavily indebted and these debt problems were not properly resolved in world war one and we got world war two and after world war two the debt issues were resolved there was the marshal plan and there were other IMF was created and so on so the debt issues and resolving that quickly and that's a lesson from from the emergence from wartime economics and wartime economics is administered of a control economics which we have now as well so a lot of lessons will be people are drilling into those experiences from the earlier I think this this experience will change politics in a lot of countries and I think that if you want to know what's going to happen now talk to an expert in politics because politics is going to govern what what countries and governments decide how they decide to steer our societies and our economies out there are several different routes and they will choose between those routes there are also some bad routes let's hope politics doesn't collapse in in a way in a bad way I don't think it needs need to thank you uh john universal basic income yeah I mean this is a difficult one and I don't think I can answer it in two or three minutes here but I think echoing what Patrick said and I said earlier I think we are going into or are going to come out of this with a very good perspective on society and one of the things I can't really get my head around is even the assumptions we make about people's desire to work to earn money etc relatives to desire to spend time with family perhaps other priorities I think we may see a fundamental shift with that and I think therefore issues like you know basic income should be looked at or should be studied on the complex and I said in some ways we should look at Italy what I do think will happen is there'll be a much greater cost particularly in other countries where there's not going to be a presence in the map for universal basic services so I think the idea of of health services the you know protection for people against what it costs to their own lives I think will become much more prevalent across across this place called the limit that Patrick just raised in terms of pounds because he's a man because one of the things that I'm surprised I haven't seen a bit more of at the european level which relates to this this protection is back in 2013 we were looking for the possibility of our working-wide climate thing that would actually provide the automatic stabilizers for countries when they were running the shop I'm very nervous about where we're going at the moment because we seem to be providing different supports for different people in different countries because there are better use for businesses whether it's for individuals and so rather than a corona bond issuance that's just been made up of the money I think I would have a preference for something like a large fund raise at the european level that actually takes over the unemployment obligations of individual countries but in a harmonized way so you don't actually have a better result if you happen to be meddling in a rich country rather than the first country and I think equally the looking at businesses in the same sort of way I think this needs your reaction from the for the richer countries to protect their past and their people it's understandable but very dangerous and we can't let it go back to the claim of north south and the debates that we had before in the last crisis so I think moving towards that is definitely a way of going if that's the thing that you basically can make you tell us I think that's the future for Europe. Okay thank you look we've got a lot of questions coming in on health and perhaps I should have said this at the beginning that clearly this is not this session isn't focused on health we are working really hard to get global health experts to speak and hopefully we'll get appropriate people in the coming weeks but as you can understand they are very difficult to get they're extremely focused on on the emergency at the moment so I'm not going to throw any of the health questions as our as our panel I'm sure would would say as one already has that that's not their area of expertise could I'm going to throw a whole bunch of questions at people if I could just ask you 60 seconds because we've gone over time and where we risk going over even the extended deadline so maybe I know it may be a bit superficial but if I could just ask you very quickly to give responses so Jay your former and maybe don't even you don't even need to answer them all your former colleague Donald Donovan from the Fund asked your opinion on Corona bonds and Robert Schwartz from the National Broadcaster asked how about how would a debt stand still work Mary to you David Kelly managing partner to Amrop asked about the partial hibernation bankruptcies how does that affect companies in the banking system three John to you David chance of the Irish independence asking about proposals to let the young go back to work earlier and Patrick Michael Tutte asking about the ECB position on supporting the financial system and sovereigns and helicopter money was also questioned by Gibbons so maybe again just if I could ask you to keep it really short I know maybe superficial Jay those questions on debt stands for Corona bonds if you have any thoughts yes thank you Dan firstly on on Euro bonds or Corona bonds this has been on the agenda for at least the last decade but it hasn't moved forward I think you know if this isn't this is the time for Europe to show some solidarity and move in this direction of creating a safe asset for you know across the euro area again if not now when again I don't think it's an immediate necessity to to handle the the crisis but I think it will be very valuable to have for the resilience of the euro area on this I just want to make to commend the ECB on one step that they took fairly recently this is the pep I can't remember exactly what pep stands for but it's it's it's there it's it's the new mechanism by which they can buy you know sovereign bonds and and and also if I'm not mistaken corporate bonds without essentially without restriction and I think you know this is a major move and I was very happy to see the ECB do it I would imagine somebody like Philip Lane would have had a big role in its design so so that that was that was excellent to see the ECB taking that step and I think that that certainly helps in in reducing pressures right now and and sort of obviates the need for some of these other other steps at least in the short term on debt stands still the complicated legal issues over here and and you know these are not these are not something that I'm I'm I'm very you know that's that that I'm very familiar with but I for whoever asked that question I would suggest that you look at a a piece that was done by Lee Buchheit and Sean Hagen that appeared in FT Alphaville just about a week 10 days ago and I think those two are the experts on this issue on sovereign on sovereign debt issues and they lay out you know how the legal impediments to a two-putting place such as stands still might be overcome again it's going to require some impetus from the G20 the IMF to push to push this forward and as I said when I when I first mentioned it think of this in terms of you know like having a temporary moratorium on mortgage foreclosures thank you thank you so much Mary can a wave of corporate bankruptcies be avoided well I think all the measures that are being put in place are precisely to do that I think this is precisely what what the the measures that are there are to do to do that I'm not an expert on how pausing a bankruptcy during hibernation would work I don't know about that but I think that's precisely why we would need a forum where these issues get surfaced and really quickly tackled and by the relevant policy makers so for example if additional emergency legislation is needed in certain cases that's where it gets dealt with or if it can be put under some other structure regulation that's where it gets dealt with but I think the whole point is to avoid a raft of corporate bankruptcies and and my idea in terms of the data and monitoring the data sector by sector is to see what are the early warning signs in terms of you know keeping in contact with the employees this the the strategy of the business still being fit for purpose as as we begin to emerge from the crisis etc and and building up that strong resilience I suppose that Patrick talked about thank you Patrick maybe the most controversial of the issues that have been discussed helicopter money the idea that people would be issued cash that wouldn't be repaid do you have any thoughts on on that issue I do and so and the other half of that question was about the ECB's position and Jay has already mentioned this and I don't know what it stands for pandemic emergency purchase program so the ECB now is is buying into the from the market the bonds of all of the governments including Greece and we continue to do so without any limit they don't say oh well we only have a certain percentage they will do this without them and what does this do this does ensure that the governments of Italy and Greece can continue their viable fiscal programs without being derailed by a a a strike or an attack from bond vigilantes so this is a short-term measure in the sense that it will it will work for this crisis it doesn't solve the debt sustainability problems long term of obviously our Greece and it doesn't really obviate the need for a stronger cooperative European measure using the full financial strength of Europe with with the bomb but it's also very like what you're aiming for in helicopter money but helicopter money is such an attractive term that people tend to use it for anything that comes into their minds they say oh that involves money and it's it's you know it's progressive and it's uh liberal so it must be helicopter money now the idea that that central banks would send out mail out a check to everybody in in Europe the same check and it's not going to happen now that doesn't mean it couldn't happen but it's not going to happen or why is it not going to happen because the politicians will not want it to happen like that actually politicians do like giving out money from time to time to everybody and the US government has decided to mail a check to everybody but I think it's only one check for a thousand dollars or twelve hundred dollars or something like that a gesture of that type but it's for governments to make those decisions and because of the european structure with many different countries it's not going to happen in Europe but what is happening is this kind of a measure which allows and enables the government to make that kind of spending it could be very progressive spending it could be redistributing indeed we see our own government and all the other governments making large redistributive measures at the moment in the crisis which involve sending out checks to two people under different circumstances it's a political decision it's a policy decision it's something that can be facilitated and is being facilitated by the ECB it's not something that the ECB should make its mind about do you think the people in Spavakia should get the same amount as the people in Luxembourg are not are how about citizens and non-citizens permanent presidents people no this is not a matter for for a central bank it would be absorbing powers that that politicians need to use and should use wisely thank you and finally John any thoughts on exiting um particularly that notion David Chance raises of the younger going back to work sooner yeah look i think Patrick kind of raised this issue i mean it's very much this one i can pass to the politicians just as well as Patrick did earlier on the on the helicopter money i mean i think it would be incredibly difficult to imagine this online taking place generationally or even in different places i think we know that a lot of the young people that got hit got hit in certain sectors particularly hospitality and retail and those a lot of those would be expected to rebound quickly um when we when we kind of get back at this well i think it's really important that in the short term that those people are actually protected and that's why i think the idea that applied you know payments that were related to salaries and things like that for people that generally are lowering from earnings anyway it was an incredibly smart move in terms of moving it forward in the short term as we all know there's plenty of work to be done helping communities that we've kind of set up you know lots of frameworks and things and i think in the month or two that's coming down i think it would be a lot more you know useful for people that are in that category and you know you're required to be rolling up that stage and helping locally but i think one of the things i point out recently is remember this is not everybody out of work i mean there are not a lot of people earning an awful lot of money that they would have been doing before whether it's as pensions or as in the public sector and others and so the real problem we have here is not just this group getting it back to work it's actually going to be connecting up all that money to businesses and others to connection you provide services as quickly as we can once we've been it's really been the opportunity for them good well thank you um i'd like to thank all of our members everyone who tuned in today my colleagues behind the scenes have done enormous work and most of all the speakers who took time to to join us today i'd like to flag to you that in about 47 hours we'll have our next event tom right from the brookings institution we'll talk about the situation of the united states the effect of all of this on the politics the united states in the role of the united states in the global system and finally i'd like to offer best wishes to to everyone to all of any well all our members and their families and friends coming through this very difficult period very best wishes from all of us at the institute a very good afternoon too thank you