 Welcome everybody to this second day of the ECB Conference on Monetary Policy. It is my pleasure to introduce today Professor Carmen Reinhardt as our first keynote speaker, who will deliver a speech on the challenges faced by central banks in normalizing the policy and the related international dimension. So Carmen Reinhardt is the Minos Thumbanakis Professor of the International Financial System at Harvard Kennedy School. She is the former Senior Vice President and Chief Economist of the World Bank Group and she was also Senior Policy Advisor and Deputy Director of the International Monetary Fund. These are just some of the very many senior positions held by Carmen both in the public and private institutions along her long and very prolific career. In terms of her intellectual influence, let me just mention that based on publications and citations, Carmen is regularly ranked among the very top economies worldwide according to all rankings including, of course, RIPEC. Beyond that, she has been listed among Bloomberg market's most influential 50 in finance, foreign policies top 100 global thinkers and Thompson Reuters, the world's most influential scientific minds. Carmen has also been awarded with many recognitions including the Kim Juan Carlos Primero Prize in Economics and the National Association of Business Economist Adam Smith Award among other many recognitions. So thank you very much, Carmen, for being with us today without further delay. The floor is yours. Thank you for wonderful introduction and good morning, good afternoon, good evening. It's a real pleasure to be here. And what I'd like to do is please call out the PowerPoint just to see. Thank you, and we can turn the page. As was discussed, I will be focusing as many of you have yesterday and will continue to do so through the remainder of today's session. Very much focused on the very unsettling global economic conditions. I will focus in particular since my task is really to also bring in the global dimension, what is a very uneven recovery between advanced economies, emerging markets, and developing countries post COVID. Well premature to say post COVID but since COVID. The unwelcome return of global inflation Asia has been comparatively doing better. But as I will discuss, it is indeed a global phenomenon. And then I'm going to break up the talk really into central bank policies in the advanced economies and the challenges face there, given the levels of debt, given what initial conditions were at the outset of the pandemic. And then turn to the global implications implications for the global economy of the policy challenges, based by the major central banks as the spillovers of the global financial markets, as is well known, both in reality and in the economic literature is, is, can be very, and has been historically very substantive those those billovers from policy changes. So I'll focus on risk, but let me turn to the next slide and really start with just we all know this. So I'm speaking to an audience that perhaps I'm, you know, this is a redundant slide, but I'd like to start reminding everyone that 2020 was such an exceptional year that if you were to look at the incidents, the share of countries globally that had a decline in per capita GDP in 2020, that share is about 90%. And if you put this in historic context, we hadn't seen a phenomenon. Not even during World War One, during World War Two, or during the economic depression of the 1930s where the amount the share of countries that that had simultaneous synchronous output declines didn't quite reach the 90% that we hit during COVID. So this is the beginning of the global setting. Let me ask to turn the page. And having just returned to Harvard from the World Bank, where I was chief economist there for, for from the onset of the pandemic. One of the most striking features of the COVID-19 shock is that it is an exceptionally regressive shock. And this, you know, I followed like so many of you very, very, very closely. The developments during and after the global financial crisis and the global financial crisis was called global, but it really was heavily concentrated on the advanced economies. And in particular, about a dozen or so economies that had built up excesses, especially in the housing market, not exclusively. But as a group, as a group, emerging markets and developing countries had a rough, you know, during the height of the crisis in late 2008, early 2009, had a rough time, but we covered very quickly, very vigorously. A big engine of growth, as we will discuss later when we look towards the risks, was that at that time, in the height of the global financial crisis recession that swept through the United States and much of Europe, China was growing double digits. This was a big engine of growth for emerging markets. And the pandemic is a completely different phenomenon. What this table shows is that, well, first of all, a point that I've been making since the onset of the pandemic. A short piece that Vincent Reinhard, my husband and I did for Foreign Affairs highlighted that be very careful in confusing rebound with recovery. You know, I noted, of course, the spectacular output collapses on a per capita basis of 2020. When you say output went down 10% in 2020 and it came back up 10% in 2021. Well, as we all know, the math of that is that on a per capita basis, you're still below where you were in the pandemic. So recovery has been incomplete and it has been particularly incomplete in emerging markets and low income countries. According to the wheel, not the wheel that's just being released. I have, of course, no time given its release date to bring these slides up to date, but this is based on 2021 numbers. 2021, about 37% of the advanced economies were at a new peak. Indeed, it wasn't just rebound, it was recovery. However, when you went lower down in the income scale, only 20% of the emerging markets and less than 20% of the low income countries had fully recovered their pre-crisis per capita income. Level. Now, what's worse is that, you know, what this means is that for the majority between 70 and 80% of the emerging markets and developing countries per capita income entering this year, entering 2022. Which has been a difficult year by any measure has been below prior peaks. Next slide please. So, this has meant that, you know, the global genie coefficient has skyrocketed since the pandemic. And the point of bringing this up at this conjunction is that as we are all aware where we are facing a very difficult combination of the very high probability of recession in the advanced economies, coupled with exceptionally high inflation, as I will talk about imminently, the highest in 40 years, if you think that it has been bad for advanced economies, initial conditions are even weaker in much of the developing world. I am throwing a lot of countries, very diverse set of countries into one basket. There are commodity producers that are currently benefiting from the, the renewed strength in commodity markets, particularly oil. But as a group, emerging markets are certainly, and developing countries that certainly recovered less fully, more of the gap that had closed down in the aftermath of the global financial crisis. Global financial crisis between advanced and emerging has widened again. Next slide please. So, adding to this and even recovery. What we have is really what preoccupies central banks pretty much everywhere in the current discourse is the return of global inflation, which had been for a long time, presumed dead. But what this chart shows, again, before I turn to actual inflation rates, is the share of emerging markets and developing countries and the share of advanced economies that currently, as of September, for those of many haven't reported September, so it's really through the 12 months ending in August of this year, for about 90% of the countries, whether they're developing, emerging or advanced, have inflation rates above 5%, which for many of the major central banks is of course more than twice the targeted range. Could we turn to the next page please. Median inflation rates have also spiked dramatically. Let me also say that that chart, the previous chart that you saw with the share of countries. If you extend that share of countries above 5% inflation. What percentage and it's about 90% in the latest reading for the advanced economy group, which is defined along the lines of the world economic outlook. You have to go back to June of 1982 to get such a high incidence of countries having an inflation inflation issue. And similarly, the median inflation rates tell a very similar story. And sadly, if one were to point where gaps have narrowed between advanced economies and emerging market, sadly has been an inflation, not because emerging markets are doing well, but because advanced economies are doing quite poorly on the score. Next slide please. At the risk of being very, you know, saying what we all know, I'll just briefly list some of the drivers that are frequently emphasized for the inflation surge. But what I'd like to do next is talk about an issue that I've been talking about that has to do with a less known or a less emphasized dimension of the drivers of inflation, but I'll get to that in a minute. But let me just recap here. We have a perfect storm. You know, in the US discourse in particular in the US during 2021 and this year, much of the, the discourse has, has focused on overheating that after pumping in massive fiscal stimulus. Massive monetary stimulus during the height of the pandemic. You had an overheating problem. But, but this, this story as I will argue doesn't really add up at the global level. Okay, let me, but I will get to that. Of course, there has been every imaginable form of supply chain disruption. Since the pandemic and continuing to the present. We had what, you know, I referred to this series of children's books, a series of unfortunate events. That's exactly what we have when we thought we were coming out of the pandemic. Russia's invasion of the Ukraine. Once again, created a new wave of global disruptions, which not only impacted once again, supply chains transport costs and and and offered a new supply shock. It also came as a supply shock like the 1970s through commodity prices. And for many emerging markets, this has meant a large currency depreciation. I would like to flag one more factor, which is was a major concern. And it remains a major concern at both the IMF and the World Bank, which next page please, which is that during this inflation surge, food price inflation has dramatically spiked. This is not an advanced economy story, but it is a powerful one for many emerging markets and low income countries, which were exporting importing their food supplies are weak from either the Ukraine, Russia, or a combination of the two. So the combination of oil shock food price shock is yet another layer, adding to the very, very regressive shock. What this little hyperbole chart highlights is that the share. If you look at CPI data or whether you look at income expenditure that you know household expenditure data, the picture remains the same. The lower you are in the income strata across countries to hire the share of food in the consumption basket and the biggest, the bigger the impact. Excuse me of this jump in commodity prices and food prices in particular, the bigger the impact they have on on household expenditures. Next slide please. I'll conclude here on the global inflation surge by just highlighting the point that I made that for middle high income countries for emerging markets and for developing countries, the low income. The food price story is the most troubling since the food crisis of 2008. Next slide please. So I've talked about a less than full recovery for most countries so that per capita incomes in most countries remain below their prior peak. I've talked about the resurgence of inflation and this brings us to the old, you know, once dusty and forgotten in the back shelf word of stagnation. So to that is to this end the next slide I'm going to show you divides the world into quadrants, ranging from those that are in the stagnation mode or stagnation risk. Those are shown in yellow to those that the higher levels of inflation are also fortuitously accompanied by a full recovery. Those are in red. And of course, countries, China being a notable exception where inflation isn't higher than it was at the outset of COVID. And yet per capita incomes are still above what they were prior to COVID that's shown in green are the fewer numbers. Let me say that the real risk going forward is that most of the countries or many of the countries that are still in red at the moment that is higher inflation but also full recovery. Maybe there are significant risks that they may slip into recession as 2023 unfolds. So why is this needless to say if we're talking about stagnation and central banks have a dual mandate to to support full employment while providing price stability that when these are the initial conditions, it becomes a more difficult, challenging task. Adding to that task. Next slide please. Adding to that task to the difficulty of that task is that advanced economies have very by any historic metric, very high levels of public debt and public debt client significantly during COVID. This chart shows public debt as a percent of GDP for for the advanced group and and it flags the U.S. And this complicates matters as I will see I will talk about a debt loop. Monetary policy as of course tightening financial conditions higher interest rates in increase the debt servicing burden of the public sector and in some cases the more fringe cases may increase also the odds of that distress. Next slide please. If the situation is is evident looking at debt to GDP debt to general revenue is is the increase is even more dramatic than when considering debt to GDP for particularly the United States. So you when you ask yourself how how are advanced economies going to stabilize debt ratios. The usual menu is fiscal tightening inflation financial repression outright debt restructuring that restructuring is of course much more common in the context of emerging markets than it is in advanced economies but certainly before World War II is it's hardly unheard of in advanced economy. And of course we had the Greek example of privately held debt restructuring after the global financial prices and in the case of Portugal and Ireland we also had that restructuring officially held it. So bottom line here is to say if we're considering the challenge pace faced by tightening monetary policy. Those challenges also are there the strains are there on the fiscal side for many advanced economies and for most overwhelmingly most emerging markets fiscal positions are also strange so we are looking at a situation where a fiscal stimulus is or the ability to do fiscal stimulus to offset tightening monetary policy is is unlikely. Let us turn to the to the next slide please. Recapping very quickly many if not most of the countries are in the stack inflation quadrant lower per capita income than the prior peak higher inflation rates that not only 2019 but in the case of advanced economies higher than in four decades. What about initial conditions on the monetary front and here I'm going to focus and turn my attention to a driver of inflation and a driver of inflation inertia that often is I think underappreciated in the current discourse of inflation. Where much of the blame as we saw earlier on this inflation spike is connected to a supply shock story which is certainly their global supply chains and to commodity markets and commodity and particular oil shocks. However, the setting of the spike in oil prices and continuation of supply shocks was one in which it's important to to revisit initial conditions. Since monetary since the global financial crisis monetary policy has had two salient features in the advanced economies. One dimension of that feature is characterized by a significant ballooning there is no other term all the central banks holdings of government security so a very big expansion in the footprint of the central bank in holding government securities you really have to go back to World War two to see anything similar to that so big expansion in the balance sheet. The second feature I'd like to highlight is exceptionally sustained and negative real interest rates and in the case of Europe also of course there was not only negative real exposed interest rates with nominal interest rates. So, what I have referred to as the current initial conditions for monetary policy tightening that we are living through is a two step ratchet effect. Next slide please. What this bar chart shows is it shows central bank holdings of government debt as a percent of GDP. It looks the little white bar, which you can barely see shows the average share of pre pre global financial crisis. And obviously pre covid the ray shading shows the share from 2008 to 2019 post financial global financial crisis but pre covid and the black line uses the most recent available. Complete data that I have for for all the advanced economies again this is the wheel. I've highlighted a subset of the countries but this is an exercise done for all the advanced economies and the salient feature here is that. However measured whether we actually look at this as a share of GDP or whether we look at it as a share of the amount of government debt outstanding which I'm not showing but I can guarantee you shows a similar pattern. There's been a ratchet effect that even though there was 10 years between the global financial crisis of 2009 and the covid pandemic. In that in those years. The correction to the to the prior expansion was was very very modest and left the level that the size of the balance sheet already expanded. Enter covid and there is another major expansion in the balance sheet. I, you know, I, I kept the figure at 50% you know Japan's ratio of course it's much higher than that but I, I kept the figure at 50% turn to next next slide please. And and putting this in historic context for the US. This goes back to the point that I made earlier the expansion in bank balance sheets. Is not entirely novel but of course the periods in which we see a similar expansion. In the central bank balance sheet was, of course, the high inflation, high chronic high inflation period of the 1970s. And before that this data from the flow of funds is quarterly it starts in 1946, but we had seen a significant expansion of central bank balance sheets during the major wars during world war one. So, you know, the point I'm making here is we often get very exogenous explanations of why nominal and real interest rates were so low for so long. And these have to do with demographics, secular stagnation, lower productivity growth, and so on, very much in the realm of real factors. But I will make the point, which I've been making for years that in that low, low rates, low for long era. A critical feature that kept red rates low for long was nothing other than the actions, the collective actions of the major central banks. And this is relevance, of course, from where we are our future path, as we perhaps have to win ourselves out for the of the low for long era that we lived in since the global financial crisis is obviously given the current inflation rate. And this is improbable, at a minimum, I'm being very subdued in my remarks here that we will see anything resembling the kind of expansion in bank balance sheets that we saw in the past, and quite possibly some reversal. Next slide please. I said there were two salient features of monetary policy since the global financial crisis and one was the big blowing up of central bank balance sheets, which I have argued kept real interest rates, very low for very long. To make the second point that the second salient feature is that short term real interest rates in the global financial centers. Sell them sell them very seldom in history here. This is from work with Christoph Trevish and Vincent Reinhard both past and ongoing work on long cycles of commodities and capital flows. But if you were to go back to 1815 instead of 1870, you would see the story remains intact. There are only four episodes during this period that spans centuries. During this period that span centuries. We only see four episodes of sustained, significantly negative real interest rates. One, World War two, the 1970s, and the longest period of sustained negative real interest rate is since the global financial crisis to the present, notwithstanding the rise in short term rates that central banks have recently delivered. However, it is not worthy. Please turn to next page. The period that I mentioned World War one, World War two, the 1970s, were all periods characterized by higher, much higher inflation rates during the negative interest rates now than during normal. And I would note that exits from previous negative interest rates. This is called often for fairly draconian policy actions, and a, and this is, I think, the most memorable perhaps of these is October of 1979 when Paul Volcker raised short term interest rates in the US to levels that had not been seen. Historically, since the since the creation of the Federal Reserve exits from high inflation, the idea that we can cook the idea that we can deliver a painless exit and engineer a soft landing. I think the probability of a soft landing and, and a smooth exit from these exceptionally low real interest rates and high inflation. Historically, the odds of that, that smooth the transition are low probability then. In the late 1990s, of course, we had an episode in the, which the Federal Reserve Titan, you had a, you know, successful reduction in inflation and, and without an accompanying recession. But I would highlight that the inflation rate in the 19 late 1990s 9798 episode. In mid 1990s to late 1990s. Sorry, I misspoke and it's 9495 in that episode. The, the inflation picture was very benign with inflation below 4% relative to where it is today. So, bottom line of what I'm saying is, apart from all the shocks listed earlier supply shocks commodity shocks and the like. The setting for this inflation surge has important roots on a very sustained prolonged aggressive monetary expansion that produced exceptionally negative and sustained real interest rates exports real interest rates and in many cases nominal as well. And exiting from that, without significant economic disruptions is going to be a tall order. So I let me move on to that. And, and I would go to the next page please. And this, and with this, I will conclude the discussion of the advanced economies and quickly turn to what this implies for emerging markets. Portracted negative or very exceptionally low real interest rates have encouraged overborrowing by both the government and the private sector. It has also often often often fueled risk taking in the search for yield. And, you know, while other things equal these negative or very low exceptionally low nominal and real interest rates seemingly improved the government balance sheet by keeping debt servicing costs very low. So, let me say that off balance sheet negative real interest rates have also had raised greater challenges for things like pension fund solvency. Negative interest rates have not been a substitute for, you know, are not a substitute for fiscal discipline. And I think have facilitated a delay in restoring fiscal discipline for many advanced economies. And, you know, their negative real interest rates I think have acted importantly to delay some of the pressures on the need to tackle debt issues in more fragile cases such as Italy and Greece next slide please. So, you know, I think central banks in the advanced economies, and I will stop here with the advanced economies have, you know, the issue of how do you exit this debt loop in which we've had low for long, leading to higher leverage, more risky positions, more risk on positions, the concern of asset price bubbles, US equity market, many renewed signs of bubbly real estate markets. And how do you exit from that without breaking eggs. And I think what I'd like to leave you with in this section is that exit from this environment may be protracted. In other words, central banks may falter as they did in the 1970s that as tightening takes its toll on the economy. Central banks worried about either financial fragility because of asset price bubble burst or because of high leverage, or because more importantly, contraction and economic activity get cold feet, and don't fully sustain the course to reduce inflation. This cold feet problem was an issue in the 1970s. I did a short piece on the Federal Reserve history with Ken Rogoff that addresses the policy inertia. I think we may be vulnerable to that again. Now this setting and I will spend some time now, but hopefully allow also for about 10 minutes of questions please next slide. This tightening in monetary conditions that is required to bring inflation down as historically post significant risk for emerging markets. And through various channels first off. Next slide please. The debt challenge for emerging markets is as big and in some cases, in particularly in middle to low and low income countries, much greater for developing countries and for advanced economies. Even before the recent increases in interest rates, there has been a surge in debt servicing costs and in debt in emerging markets. I would note that among the 73 middle to low income countries that were eligible for the debt service suspension initiative during COVID. More than half of them at the moment either are either deemed by the IMF and World Bank as it being in either debt distress or near debt distress. So, the round of tightening of international financial conditions also has very important consequences for sovereign risk. And this is, and I'm not being melodramatic here, I'm not talking about, we're back to the early 1980s and the Voker era and Mexican default of August of 1982. I'm not talking about something that gloom and doom, but the risks that more marginal cases, given the very high debt levels. Because as you see debt looks like a U shape for emerging and low income countries. There are many sovereign debt challenges that I think lie ahead. Next slide please. And I would note that, and I will go quickly so we have time for questions. The increase in what this shows is debt servicing as a percent of exports. And, you know, we talk about low for long, but we also have to ask low for whom, even in the low interest rate era that we are exiting from at the moment. Emerging markets as a group as this chart shows already faced rising debt servicing costs. It is true one good positive note is that as a group emerging markets and and and low income countries and developing countries have a lower share of short term debt. That they did in the past, which makes them better poised to deal with rising interest rates. But at the same time, I would note that variable rate debt is also, of course, a source of concern, and that is approaching its previous highs. Next slide please. These countries, so in addition to the challenges faced by the advanced economies that you have to have an inflation fighting tighter monetary stands that increases the risk of not a soft landing recession. Emerging markets in addition to all of those combinations also face very real concerns that the decline in poverty reduction, which had already stalled before the pandemic is now being reversed. So that, and this is also, by the way, fueled by the impact of the Russia, Ukraine war and its impact on food prices as I noted earlier. So emerging markets face the past usual risk of rising risk premium reduced capital flows. Many emerging markets right now being bolstered by high commodity prices because they're commodity producers. But I think we are also entering a very risky period. As this combination of high inflation, dimmer growth, higher debt is also coupled with signs of rising poverty and the handmaiden of that which is civil unrest. On that upbeat note, let me end my remarks. Thank you very much Carmen for this very rich and comprehensive speech. I mean you touched upon many, many issues including the many complexities that central banks are facing today when normalizing their monetary policy. So we have some minutes for collecting some questions from the floor. Here I see one. Please use the Q&A facility in the Webex app. So one question here is from Klaus Machuk from the ECB. So the question is the following Carmen. What are your considerations on the sequencing of the exit from low real rates and large central banks balance sheets in advanced economies? Should balance sheets shrink swiftly now or should this wait until policy rates have been normalized? And a second related question is how should the ECB deal with increasing risk premium in sovereign deals in some member states of the EU area? So Carmen. So this is really a critical question. One has to do with me is not just sequencing, it's timing. One is the right moment. I have been arguing for a long time that a stitch in time saves nine. And I have been arguing this for a long time. So I think the idea that at this stage, let's wait for better circumstances only allows the accumulated problem to worsen. And there is a fiscal analog to that as well. Let's wait. You don't want to tighten fiscal policy during a recession, but it would seem that during recovery, compelling reasons of why you wouldn't tighten fiscal policy in recoveries either. What I'm saying is making the policy action state contingent, one can always make an argument that the current state is not the appropriate one for action. So I think I'm pretty unambiguous when it's say, you know, when I say that delay in the 70s made the inflation problem more chronic, more built in. Well, the second part of the question, which is where Lee on what do you do about rising risk premium. That's a tough pill. And that's when I talked about the debt. And I mentioned, you know, that during the period of exceptionally low for long interest rates. This kept at bay. A lot of the concerns for, for the more vulnerable countries. You know, large ECB purchases, large central bank purchases in general facilitated. Roll over risk, facilitated issuing you debt. Look, I would put it to you that it is, I know easier said than done. But the mandate of the central bank is inflation or stabilization of the output gap or a combination of these two, however you wait them. You know, targeting risk, risk spreads cannot be among them any more than, and of course, having said this, we know there's a fed put. You know, it used to be the Greenspan put it used to be the Bernanke put and now it's just a fed put. Similarly, you know, there are risks with bursting and equity price bubble in terms of big wealth effects and so on. But those are my concern is that those very factors, fears of these risks, fears of a wobble fear, fears of triggering a debt problem in the context of Europe, or an equity market crash in the case of the US or corporate. You know, high yield corporate debt default stress, in the case of the US as well, that those would be deterrence to tightening, and that they may indeed give central banks whole feet. But remember, we do have experience with whole feet, and it was not a good one in the 1970s. Our second question from other NCB colleague, in this case, Carlo Altamila, is the following. Would you have any consideration to offer on the distributional consequences of the protected period of low policy rates before the pandemic? For instance, across income, gender, educational levels, etc. And if so, how this then would relate to the current conditions? So, so look, let me, through my talk, I, you know, leaned heavily on making the point that many of the shocks have been regressive in nature. And I emphasize deliberately, because of the international dimension, the regressive dimension across countries. But the very same arguments, and I will talk about real interest rates in a moment, but let me start with inflation and food prices in particular, the very same patterns that I alluded to, the regressive nature of inflation, the regressive nature of spiking food prices, that we see across countries, we see across income groups. So if you do expenditure surveys, and you look at household expenditures, the same nonlinearity is there. And what I'm getting at their distributional effects of negative real interest rates, I will mention those in a second, but do not forget by any means, that the inflation tax, which, you know, had been thought dead and buried for a long time. The inflation is a very regressive tax, relative price changes that have accompanied the inflation spike food and energy, a very regressive so dealing with that has important consequences for, for distributional effects. And they say, you know, the era of low negative expose real interest rates was an era and I, in all my work on financial repression was started in 2010. I've alluded to this financial repression and sustained negative real interest rates are a transfer from savers to borrowers. I cannot speak to the gender dimension but I can speak to the intergenerational or the across income category so, you know, negative real interest rates did make it easier for households that have more difficulty typically accessing credit to access credit, certainly made it easier for governments to borrow, and governments also have, you know, can affect redistributive effects. And made it more difficult, however, for one type of fixed income, you know, retiree so it had it on the whole favor, the younger real interest high real interest rates of course will have generational transfers going the other way. Right, it is not the old who need to borrow for housing. And so, you know, it, you know, I, I, there are troubling issues with the redistributive effects of moving from exceptionally low to normal interest rates, but let us not forget the big elephant in the room, which is inflation is a very regressive. Thank you, Carmen. Let me, let me pause the last question to do. I mean, I'm sure you are aware of a recent contribution by Maurice Osfield, who was calling for a higher degree of coordination by the major central banks around the world when tightening their monetary policy. The idea, of course, is that they should internalize to a larger degree than seen so far their own actions on the rest of the of the big players in order as the argument goes in order to reduce the probability of ending up in a situation in which the degree of tightness of monetary policy at a global level is is too high is too restrictive. So I would like to know your opinion on this on this argument and in particular, are you worried about the possibility of ending up in a kind of situation in which monetary policy at the global level is too tight precisely because major central banks do not internalize that most of them or all of them are tightening at the same time. So it is an excellent point. Both on the internalizing the risks that they create for the rest of the world is an important point. It connects actually beautifully also to the first question. And let me put it to you. Why do we delay, and this goes back to the first question on timing and sequencing. As I showed in one of the charts that looked at central bank balance sheets, you saw that advanced economies since the global financial crisis have moved as a herd. They've moved in unison. You know, you had a wave of easing, not exactly perfectly coordinated, but that there has been significant co movement. And it once again in during COVID. I think that one question related to Maury's point is, if we collectively see them move in the other direction. Will the pendulum swing so much that they create another emerging market debt crisis like the infamous one of the lost decade of the 1980s. Okay. And I alluded to that when I talked about the Paul Volcker tightening, the fact that there had been it had been delayed, that there had been repeated milder attempts to tighten, but that the longer it delayed the more cumulative inflation challenge became inflation was close to 14% in the US. When Volcker slammed the break in October of 79. And when he slammed the break because inflation was so high, it also meant a much bigger spike in interest rates how does this relate to Maury's point. It cannot be said that in terms of inflation reduction. The Volcker policy was extremely successful in the US. It ushered in a very sharp and fruit and rapid decline in inflation in terms of what it did to global capital markets. Well, it ushered in the last decade for emerging markets, you know. So, I think the points being made about internalizing global effects is something that should be discussed. However, if you ask me what the historic experience has been and what central banks and governments are prone to do. They're worried about the local phenomenon rather than the global one. So, it's hard for me at this moment at this conjunction to oversee a situation in which the global consequences are internalized to an extent that they dominate global conditions which may mean that if there are delays to tightening, if tightening has to be more draconian their real risk, which I worry about all the time. The real risk that it can engender very substantive crises across emerging markets is a very real scenario. Thank you, thank you very much Carmen. So, this brings us to the end of this excellent keynote speech and subsequent discussion. So, let me just thank you once more time for your availability Carmen. It was really a pleasure to have you here today. Thank you very much. Thank you. Thank you for having me. Thank you.