 Okay, we will begin, and if you note, and notice that we will be beginning a few minutes early, hopefully it just gives us an opportunity to make sure that we can address any kind of questions and have great dialogue with an esteemed panel here on this very, very important topic. To give you a little bit of a understanding of how we're going to be conducting the panel. We will be having the Prime Minister speak first about some of the recent developments and give their perspectives on it, open it up to the rest of the panel, have some questions, and then about halfway through we will be opening it up to all of you to ask questions to anyone on the panel, and then of course we will be closing it with some summary comments. This topic is immensely, immensely important, so feel free to ask our esteemed panel any kind of questions you would like. With us today is Prime Minister Dombrovosky from Latvia, Prime Minister Thorning Schmidt from Denmark, Dr. Ernesto Zadillo, Director of Yale Center for Study for Globalization, and of course past President of Mexico, and Director Zhu, Director of Managing, Deputy Managing Director of the IMF. So a tremendous panel that is absolutely able to really discuss this in great depth. When I think about this topic and the company that I'm associated with, we have about 70% of our business in Europe, so it is an immensely important topic inside Europe, but also the effects of it outside of Europe. You can't speak about the global economy without this topic coming up, whether it be a social context, economic context, or political context. And Europe is becoming and appropriately really consuming the conversation regarding what is going to be happening with global debt and global growth. The Eurozone is absolutely a large and open trading block that has benefited from world trade. For example, the Eurozone trade area alone with China increased over 300% in just the last 10 years. So it has truly been brought together as an absolutely large economic trading zone. So with that, all of this tremendous amount of information that can be read in the papers we'd like to distill it a little. So Prime Minister Dombrovsky, if you could please give us your sense of some of the most recent developments, how it's going, and put a little perspective on that, we would appreciate it. Well, thank you. So as regards recent developments in Eurozone on some decisions taking, I think there are some issues and some directions which are fundamentally right and which I think will help to overcome the crisis, will deal with the origins and reasons of the crisis, and also will help to solve the short-term problems. So first of all, as regards reasons of the crisis. I think one of the main reasons of this crisis was that within Eurozone basically there were no sanctions and control mechanisms. There are master criteria which are supposedly to be followed by Eurozone countries, but unfortunately the lack of sanctions and control mechanisms meant that most of the Eurozone countries were just ignoring master criteria and most of them were not meeting master criteria. So what has done over the recent months or a year or so that those sanctions and control mechanisms had been re-established, making sure that Eurozone countries help to stick with their own rules. And also another important decision which has been taken is so-called fiscal compact or treaty on fiscal discipline side by all Eurozone countries and many countries outside Eurozone including Latvia, which basically limits structural budget deficit to 0.5 percent of GDP. So fundamentally showing that Europe is committed to fiscal discipline. But then there are short-term aspects of the crisis. Often it's discussed, okay, that's all nice, but we have a problem now. We have a problem in Greece, we have a problem in Ireland, in Portugal. Probably we will have a problem in Spain, in Cyprus, maybe in Italy. So what to do about this? And what the problem was basically is that market was questioning the size of the firewall or the size of the money there to combat the crisis or to provide bailout programs to affected Eurozone countries. And as long as it was just Greece, Ireland and Portugal one could say those are relatively small countries so you can manage with EFSF and ESM, European Stability Mechanism. But once the question started about Spain and even about Italy, those countries are probably too big to be bailed out by those traditional mechanisms given the situation that the full-scale bailout would be needed. And I think most recent decisions which has been taken by ECB on providing unlimited bond purchases for countries which have a vested formal bailout program could help to deal with this problem. Of course there are critics which are saying it's basically printing money, which it basically is. So it's very important that ECB is cautious with this instrument and that fiscal discipline is not forgotten and that really it's strict conditionality which is applied to the country's bailout programs as it is now. It's being applied also to the future programs. But then having ECB in the background would remove these questions of the markets, is there enough money in the firewall and will it be enough and will EU leaders be willing to do enough, this ECB action actually helps to deal with this question. And I think the very fact that there is a credible firewall now will reduce market pressure on those countries. So I think there are decisions which have been taken both in some medium and longer-term perspective and decisions which are being taken in short-term perspective which should lead Eurozone out of the crisis and we know we are also entering much broader political debate on more economic union, on banking union and so on but that's I think the debate which will be continuing but which is not right now to resolve the current crisis but that's more for a future. Thank you. Thank you. Prime Minister Thorning-Schmidt. Thank you very much and good morning to you all. I want to make three observations this morning. First of all, make no mistake, Europe and the Euro is still in a crisis and we have a situation which is far from satisfactory. My second observation is this, when you travel in the world and the states are in China, people always, when you say you come from Europe people always look at you in a sad face and say what is Europe going to do and my message today and my second observation is Europe has already done a lot and we should not talk the efforts of the European leaders down in our discussions about the Euro and my third observation is that we all in this together but let me take it from the top. First observation, the outlook for the European economy is bleak. We will see that in 2012, only in 2013 where we perhaps see the European economies picking up a little bit. In terms of politics we still have difficult decisions to make in some European countries where they have to undergo structural reforms which of course is very difficult. We still have unemployment levels which are very high, 11% on an average very high for Europe and even though there are great variations in the European economy, my own country Denmark is doing pretty well and it's a very stable economy but there's great variations within the European economy but it is true to say that Europe is very challenged these years and it will take sometimes and a lot of hard decisions in terms of structural reforms to regain our form. I am in no doubt however that at some point in 2013 we will pick up a little bit of speed again. But economic prospects for Europe are dim at the moment. That's my first observation. Second observation is this, we have actually done a tremendous lot in Europe to try to overcome this crisis. Sometimes when you look at Europe from the outside you can't see this decision making power that we have had in Europe but I would argue that we have taken unprecedented decisions and also decisions that if you had looked at Europe just a year ago you wouldn't have been able, you wouldn't have predicted the amount of decisions that we have taken at a European level to protect the Europe and also the European economy. Let me give you a few examples. We are right now carrying on work to establish a banking union. This includes discussions of a common banking supervision system and we have also established a rescue fund for Europe, the so-called ESM. We have taken bold steps to integrate our economic policies and our policies in general and we have also allowed for new discussions, we are having this autumn new discussing of creating new building blocks of further integrating the European Union both politically and also economically and only last week we had new decisions which was taken to strengthen the Euro, we had the European central banks decision to purchase short-term government bonds which is of course a strengthening of the Europe and also a completely unprecedented move which will help the countries with the highest debt to recover. Of course this has to go hand-in-hand with bold political decisions to tighten up economies and create and take through structural reforms but just these examples to carry through the argument that even though from the outside it might look like Europe has not done enough I will say that we have taken historic decisions over the last year to try to recover the European economy and of course the Euro and we have also shown that we are willing to go that extra mile to save the Euro. My last observation is the following we aim this together a lot of people are looking at Europe and looking at Europe as if we can solve our problems together. As I was arguing before we have done a lot to try to solve our problem together we are basically a strong economy in Europe but I want to be absolutely clear that when Europe is showing its first signs of recovery which we perhaps will do next year it is my intense hope that the rest of the world will help push this movement. This is not only for the benefit of Europe it will be for the benefit of the whole world and the global economy so my advice would be this when you see the first signs of a recovery or perhaps a little bit before get into Europe invest in Europe trade more with Europe believe that Europe will recover and I think that will be for the mutual benefit of Europe and the rest of the world and you are warmly welcome to be to engage yourself in Europe now and also in the future. Thank you and in fact that leads to an interesting next question when we talk about we are in this together it's not only a European crisis it's a global crisis because of the impact that Europe has across the rest of the world so clearly on the the theme of we're in this together Dr. Zoo how does this really affect the international role of the Euro the inception of that Euro bringing it together as a trading zone as basically that additional currency that could be traded or or pegged to where are we right now in the effects of that and and and the effects of how it's really hitting the rest of the global markets. A lot of concerns about that you're obviously for the market but I really don't think that's a serious issue on Euro has been played very important role in international monetary system on in the past actually Euro increased roughly more than 10% of your point in global reserve system as well also you will continuously to play very important role in international reserve system as well so I think this is very important point I understand the people in this room have a lot of Euro in their packet and Euro is safe and this is absolutely important but as the Prime Minister mentioned this is still a long way to go I think that when we talk about the European situation we try to avoid from the one extreme point so this is it's a huge disaster issues of crisis and then to another end to say everything should be okay I think this is very important I very much agree with you we say the European has done so many things and in the past you mentioned that discussion is very positive and constructive the discussion for those three areas the first areas try to bring great spectrum on track this is very important and the great government made a huge commitment and determined to bring the whole economy back on track and international community is very much to support that I think that's very constructive the second issue is to provide a further liquidity to support the market which particularly with the ECB's decision which is also very important we strongly support that decision I think it's absolutely important to ease the liquidity tensions in the market and the third issue is obviously it's a long-term discussion on the fiscal pack on banking uni on the single market building as Prime Minister mentioned so it is a very positive issues so I will say over the crisis not over European still Euro crisis still in the in the middle of that is still a long way to go but it's moving the right direction is very important we should have a confidence and we should have confidence on euro I think it's also absolutely important point as well to follow that up when you look at some of the decisions you have to make at the IMF how does this what's happening in the euro zone affects some of your investments in some of the real growth areas in the emerging markets well we don't use the term investments okay we do program yeah we lend the money to the members if they are there in in in crisis situations we do we have a lot of programs in Europe country we have programs in Greece in Portugal in islands in Iceland and we have a lot of programs we have all the programs in Africa nothing Americans all other countries as well on we're working very hard in those days in the past working with European colleagues try to make sure the whole issue will move forward I as I said really the past a few weeks to discussion is a very constructive and positive moving the right direction but still not with I think that's very important we have to keep Lincoln keep that in mind Dr. Zidio a lot of your work done on the global and emerging and growth markets similar to that question how badly is the is the crisis really affecting those markets and the ability for those growth markets to to invest in trade and and really how they look at their investments that will go to further trade well and more generally we have to say very clearly that the crisis in the European Monetary Union has affected the global economy I don't think any region in the world any country any major economy it can be absent from the effects of this crisis if we look at the prospects of growth that we have early last year and what has happened we will see that there has been a significant revision downwards of what we thought the global economy could grow looking forward and I would say that a main explanatory a variable of these what what is becoming really a double deep is the situation in Europe so that has affected the United States that has affected economies like China that has affected Latin America and the reason is very simple we are interdependent and there are trade financial linkages that cannot and should not be avoided and this is having a real impact on our economies and that is why I am in agreement with the Prime Minister we are in this boat together is in nobody's interest to see the euro fail I think it will be a disaster for Europe but it will be an equally severe disaster for the global economy at large now having said that I dare to to say something which really comes from my own Latin American experience we went through a terrible debt crisis back in the 1980s that really translated into what is known as a lost decade and you forced me to say why did we pay such a high price I would say well we pay such a high price because we didn't do what it took to overcome the crisis right away and I know that politically it was very difficult to do it but if you wanted to avoid the huge social cost that we pay then we should have been more forecoming more decisive and I think that is now part of the problem in Europe I do not diminish the political cost and the courage that leaders in Europe have applied to take what was very well said here have been unprecedented decisions and that is true but probably that is not enough if you are going to preserve the European Monetary Union then you have to put on the table all the ingredients that are necessary to have a solid sustainable dynamic monetary union and with all the respect the way in which this hesitant way to go about this crisis you know trying whether something for Greece and Portugal works trying to see whether guaranteeing or providing direct support to banks from a European fund announce a fiscal pact announce the idea that you will have some European supervision system I agree individually all of those things are very important but they are not sufficient in fact I would say that the most significant element that has been put on the table to save the euro only happened a few days ago when the ECB announced that they will become de facto a lender of last resort but that's elementary if you want to have a currency you need to have a lender of last resort and for too long this has been ignored and only last week that decision was taken but you need more than that because if you only have the lender of last resort but you don't do what it takes to have a banking union and to have the necessary steps for a fiscal union to take the necessary steps to consolidate the single market then I think it will be harder more painful more costly and by the way you will impose a higher cost in the rest of the world so again I insist I know the political difficulties but I think what it's at the stake not only in economic terms for Europe but in economic terms for the world and I will say for international stability and I dare to say international peace and security the euro is a great project the new the euro must be protected but the Europeans and the rest of the world must take the decisions that are needed to to validate it Dr. Xu follow up yeah and I think this is an excellent point when we say the previous few weeks discussion moving the right direction we should not underestimate the negative impact from euro crisis to the whole world I think this is also very important because so it's not just contained right in Europe because the European obviously is still the the largest economic entity in the world and the through few channels number one the financial market of volatility is the confidence and particularly the weaker growth because we forecast your era will have a minor recession which is negative growth which you have a profound impact for the a lot of regions for example in Asia in this region and the European market roughly account one third of the net exports I mean value added exports so when the the growth in the European area dropped to zero and you will see export growth from this region dropped to zero too so I think this is this is also very important we further did the simulations if the European crisis really deteriorating further become a disastrous it will be huge a negative impact for the world for example the negative impact on growth for European area can as big as to five to six percent of GDP for US and the Japan and other areas can be one point five percent to two percent of GDP and also can have around the one percent an active impact on the growth on China obviously for China good news is China still have a lot of policy space can mitigate its impact but the negative impact is so quite big so in that sense I absolutely agree with you when we say the European is working hard moving into the right direction they have to do more number one and I will with you the whole world should support is also equally important Prime Minister throwing Schmidt yeah I just got a little bit inspired and perhaps a little bit provoked as well by what was said that Europe needs to do more we need to do it faster and we need to have more decision-making power because everyone is agreeing that what we have done is right but we have done it too slowly and to a certain extent that is true but I think it is extremely important to understand what Europe is Europe is not a country Europe is many countries trying to work our way together and in my ears it sounds a little bit like you are asking a horse to fly when you are asking Europe to take all these kind of decisions in a very rapid way so my hope for this discussion and the general discussion in the in the world is that the steps that we have actually taken even though slow even though it's not always pretty the way we take decisions which it certainly isn't that it will still be recognized that we have come very far and that the results that we have now produced would be unthinkable just a year ago and my the reason why I'm saying that is that we we must avoid being lost in slagging off Europe saying we should be done done more faster and actually try to appreciate what we have done and take that as a starting point and say the Europeans have shown real determination to exit the crisis. Prime Minister, when you look at how this could stall growth and we we look at 2012 looking as though some of the countries will fall into recession in in Europe having a chance of maybe seeing some growth out of 2013 and then using this discussion about if I could use the terms how bold should you be versus how you have to watch out for all of the the real the realities of it not being one country is there enough or should we do more to try to get Europe as an economy not falling into that recession that that is almost seeming a distinct possibility and how much does the ECB and their role play in that? Well we seem to be discussing here just one part of the issue so we have a debt crisis what can we do we can print more money everybody wants it we can pay from ESM directly to the banks everybody wants this as well we can do this and we can do that and but I think there are a couple of fundamental questions so first of all why do we have a debt crisis we probably have a debt crisis because we have too much debt and we know that master criteria is 60% of GDP of public debt and Eurozone is moving somewhere from 80 to 90% on average so and therefore I think where we need more action and where we need to act more boldly is to reduce the budget deficits and actually to get the fiscal position of Eurozone countries in order and of course there are many quarter arguments to this saying yeah if we do more austerity then we have even less growth if or even recession if we have recession we need more austerity so we are lost so there is no way out of it well but what probably Europe and Eurozone really needs something we tried to term a coin a term for this together with my Finnish colleague Yrki Katainen the spring which could be called growth austerity and if you remember some three four years ago nobody was discussing Eurozone crisis but everybody was discussing Latvia's crisis so what I can say in a case of Latvia so far we have done most fiscal adjustment in EU 27 and yet we are currently fastest growing EU economy last year we had 5.5% growth this year first half we had 5.9% growth which is quite good by nowadays European standards and so probably which this also means that there is not so much contradiction between growth and austerity and I may give some reasoning behind it because if you are in a position where financial markets do not trust you it's better to act quickly to restore the trust of financial markets and it's not only to finance the sovereign debt but it's also to finance basically if you don't have this trust of the financial system what's happened banks are not lending to your citizens or businesses businesses are worried they are not investing citizens are worried they are not spending and you are just getting deeper into recession despite having large budget deficit which should supposedly be fiscal stimulus and if you return this trust of financial markets if you do the necessary adjustment all the opposite things start to happen banks start lending companies start investing citizens start spending it's possible to attract foreign investment and economy starts growing that's exactly what we experienced in Latvia and I can say that we so far have done most austerity in EU 27 we have done between 2008 and 2012 indeed we have done 17% of GDP fiscal adjustment and yet as I said we are fastest growing EU economy so really there's not so much contradiction so it's important really for the countries which are affected by the debt crisis to act quickly to act boldly and to get their financial position on track because otherwise it will just continue because then if the country says we don't like austerity that's fine but then you need to answer another question who is going to finance this lack of austerity financial markets are clearly not in the mood so you can print money but this can be a short-term solution but so far I must say euro as a currency has stayed remarkably well it has maintained its share as a reserve as a global reserve currency it has stayed relatively stable with the we use a US dollar well it's now gradually going down down but very gradually so there's no basically market is not questioning euro as a currency so while dealing with a debt crisis I think we should not use too much instruments which would make markets to question euro as a currency and that's why we are back to the very same issue of the need of real adjustment of the need of structural reforms to boost the competitiveness because high levels of wealth cannot be maintained without high levels of competitiveness as by the way EU 2020 competitive report clearly states so I think those are the things we need to really concentrate on Dr. Zudio comment on it well I wish no I don't wish that that southern European countries had wage flexibility and exchange rate flexibility at Latvia has and then the problem will be much easier to solve but that is not the case we are where we are and I wish also that the problem were simply one of a debt crisis it isn't I mean there is a debt problem which is a manifestation of a brother crisis but fundamentally what it's at a stake here is whether or not you keep together or you keep the European Monetary Union and therefore you need more than the fiscal discipline which I agree I am a fiscal hawkish person but I think you need much more than that and you need things that don't depend only on the capacity of each country to execute their policies I mentioned before you need to put on the table the necessary ingredients to validate the European Monetary Union one component very important was this question of lender of last resort why is it important you know what has been bleeding the Spanish economy for example there is of course fiscal austerity that they needed and they have been applying but what has really bleeding the Spanish economy this year is capital flight and it's capital flight because people believe that one euro deposited in Madrid is not the same as a euro deposited in Frankfurt therefore they have capital flight that has dry up credit and that has had a dramatic impact on the real sectors of the economy so if you don't under address the lender of last resort the solvency of the banks and the solvency of the sovereign debt then you are in deep trouble and by the way you also need to address very clearly the structural problems of the Spanish economy that are to be addressed to enhance the competitiveness and the productivity of the Spanish economy so the recipe is very complex and I am afraid that we have here a sequential problem if you try to do one thing after the other you know very cautiously you may find at the end that the cost that you have to pay is considerably much higher I think at the end Germany will end up paying a much higher price to keep the euro alive than if they had taken the necessary decisions more upfront I always agree with my good friends mr. president but not today and a slice a little more optimistic than than you are lot of year provide a wonderful case through the fiscal devaluation you will be able to cut the wage in more than 30% you will be able to bring the deficits down and bring the growth back to positive only in roughly three less than three years so that's the means there's a lot of policy instruments a lot of policy space a lot of things the government can do and the promote the growth obviously in there we agree with you obviously this is the top priority for the European countries as well as well I think there's no doubt about that but we had a study which has released the report a few weeks ago we studied the European growth we realized if a European can do the structural reform through the labor market reform legal system reform and further more single market formations allow the the the tradeable retail business to go within the areas we'll be able to create a 4.4 percent GDP in four years of horizon which is not a trivial it's not a trivial so a lot of efforts also need to put it into the structural reform to promote the growth and there's a living example things can be done along those lines we want to make sure that yep this is a definite issue with inside the euro zone I'd like your comment specifically on back to that stalling in the euro zone how much effect will it have on the US economy how much effect will it have on Latin America the uncertainty of not being able to come up with a plan that is articulated whether it be one or another in some meetings I've been in some are saying it doesn't matter pick one so that we can we can plan on it and start our own growth in other parts of the region give us some view on on how the rest of the world is waiting for Europe to come up with at least a plan to start implementing it well this is exactly as my girlfriend's Mr. President and the Prime Minister mentions we're living in such interconnected world so the European crisis obviously has a big impact on the global economic as well as I said for this region it's kind of one third of net exports so when the growth in the Europe dropped to zero the export growth in this region I mean the Asia region not only in China dropped to zero and as I said we did the simulation and the net impact can be quite a bit if we cannot contain the risk it's further the things the deteriorating for example it can roughly around 1.5 to 2% of net GDP growth on the US and also 1 to 1.5% negative growth on China as well so this is a quite a big issues so in that sense the whole world need to help and support Europe and make sure they will go back to the growth pack so these are the two issues the one shows the financial crisis the euro crisis on the liquidity issues on the financial sections but also more important for the whole world on the growth side I think that when we talk about Europe would always talk about the financial side for the euro crisis talk about collapse of the system which I don't believe it will happen but we don't talk more on the growth side which in fact is the growth side has a much more profound impact on the global economies if you're good but this is not only risk for the whole world let me point out also we're facing full major risk for the global economic situation today the first obviously European euro crisis still the top as I mentioned the second issues is US fiscal cleaves because the total budgetary packages roughly 4.3% of GDP it's a huge if it's a 4.3% the budgetary tax package and move after table right after election the USA run into recession the whole world will run into recession currently obviously a lot of discussions I don't think it's a 4.3 where one time move after table they compromise same thing but it's not all clear what will be the consequence of results which create a huge uncertainty I will say this is also important risk of the war because the US remaining the largest economy in the world is absolutely also important the third reason we're also facing is the emerging market hot landing the growth of jobs jobs actually much more than people thought for example Chinese economic growth from 10.4 roughly from 9.4% last year and roughly this year around 8% in 10.8% in in year 10 dropped last year and the roughly 7.8 this year 5.5 and the Brazil from 6.7% to 2.7% and and this year probably will be 2% so whether the emerging market will be able to soften and hold on growth I think it is also become issue because emerging market and end of this year and low-income country will account 50% the global GDP PPP measure so it's absolutely important for the global stabilisation the fourth reason we're facing today is a full price full price increase dramatically because the draw in the middle west of US and also in the Black Sea areas and the Masoong in India is not particularly strong this year so we saw soybean price increase of 47% we saw wheat price increase 29% we saw corn price increase 28% already this year and we saw rice price increase 8% so if you're looking for the corn price and the soybean price there in the 2008 the peak the crisis times already although the wheat and the rice price is still too sad but obviously the full price has a huge impact on the whole world that particularly on the low-income countries in Wales so we need the policy to prohibit the trade war we carefully monitor financial market to make sure there's no financial market manipulations in the speculative activities as well so the whole world facing a quite a few risks I would say this year so the growth is really on downsides and the growth is slowing down and the risk is still on downside let me go back the euro crisis is still the top but it's not the only crisis or risk as well I think we should see the whole picture I think that's also important I appreciate that I wish it was more energizing because if we could if we solve one there's still three more large ones coming is what you're saying so we also need to give you a European credit thank you that you've been having working so hard that's very true right I'm the horse cannot fly but the horse want to fly but we'll at least try to push the horse to run very fast it can gallop if the horse can gallop is maybe what it is so what we're gonna do now is open up questions if we maybe turn the house lights up a little and I believe there are some people with some microphones so we'll start here on the and in the in the front and then we'll move around to the back and if you could just make sure that you address the who you'd like the question to be answered by thank you thank you mr. chairman that's almost a from Nagoya University in business Japan I have a question to mr. Minzu in meeting any crisis is what what is important for policymakers is to margin imagine what is the worst case scenario and if worst case scenarios shared about fellow leaders then there will be a concrete steps to avoid from that happening in the case of Fukushima nuclear disaster the government failed to imagine the worst case scenario so measures they have taken has been sort of patchwork measures which deteriorated the situation so from a point of view standing in the middle in the panel what is your worst case scenario if things go wrong in Europe and elsewhere and that was case scenario really be shared among top leaders in Europe thank you thank you you really pushed me hard in fact I told the audio ready the war situation if the European crisis further deteriorated as I mentioned we had a simulation will say it created a negative 6% GDP drops for a European area roughly 1.5 to 2% for us and the 1 to 1.5% for China and the Japan's between since you come from Japan roughly a little bit of less than 2% the negative GDP impact but obviously this is a tail risk I agree with you it's absolutely important to see the tail risk so you can prepare to avoid the tail risk and also I'm very very happy to report to you and the we share this tail risk with all the political leaders around the world the people understand the situation so that's the reason the whole world is working together to support Europe to avoid the tail risk and also I'm very happy to say today the whole Europe is moving to the right direction to avoid that's tail risk situation which is very positive thanks next question let's get some in the back and then we'll work more towards the front right here gentlemen Hello I have a question for Mr. Zhu Ming the deputy managing director of the IMF a question goes to Mr. Zhu Ming several Chinese economists believe that the origin of the eurozone crisis lies with Europe that is to say the EU has only a consistent or integrated economic policy without the coordination of its fiscal policy and monetary policy so it's very challenging for the EU to meet its overall economic development goals so it is very likely that the eurozone will collapse since I'm Chinese I'll answer your question in Chinese the first part of your question is correct part of the reason for the euro crisis is that the crisis is partially caused by the euro but it is not entirely because of the euro the eurozone is moving toward we have raised the concept of the fiscal pack and banking union all these solutions are moving towards integration and consistent and coordinated fiscal policy the EU is moving in the right direction so I don't believe the euro will collapse or disappear so and I encourage all of you to have confidence in the euro like I do back up here towards the front please question for Dr. Zhu oh come on Daniel you should not ask me question please spread them around maybe for you and Ernesto I think who would be the two ones to take these questions you've described obviously the numbers the downturn that will be for Asia US with the problems in Europe you listed along that there are a set of other problems let me ask you two experts particularly of course the others may want to join too what are the two or three four things that the United States and China ought to be doing both to protect their own economies and to contribute to bolstering global growth thank you so well then let me try to figure out a good sequence of events and then try to see what is the role that those players have to play I mean for things to work out in Europe I think our European friends have to be more aggressively on the question of banking union on the question of fiscal federalism I'm not saying that tomorrow they will have it but they have to move faster in that direction and of course more urgently to address these problems that are causing capital flight in countries like Spain like in Greece and eventually could happen or rather soon in Italy now they also have to do their homework internally part of that is this internal devaluation or fiscal devaluation that Schumann was talking about because they need to be more competitive because from now on and for many years those countries will not have the excess of foreign savings that they had in previous years Spain had a current account deficit of 10% of GDP now is down to 3% but even that is hardly financial now assuming that the euro doesn't collapse and I think it will not collapse then Germany will have to have a more expansive fiscal policy and actually the European Central Bank that now is saying is a lender of blood resort in my view will have to have an even more accommodative monetary policy in order to help these countries that have very low negative growth in Europe to move a little bit faster and avoid political and social condition that will not make them viable so let's say at the end of that process I think we will see a weaker euro and we will see a euro that needs to have a current account surplus and at that moment I think we will need our Chinese friends and our American friends not to stand up and say wait a minute this is a beggar that enabled policy and we need to do something to counterbalance your own policy and I think at some point the United States and China will have to recognize that there is in their own interest to allow Europe and by the way Germany to have a current account surplus that is substantially larger than the present one because otherwise those countries will have that are now suffering in Europe will be suffering something that may be unbearable and would make it political and be unbiable to sustain the situation then you to the directly answer your questions I think that the top issue for us is to solve this fiscal cleft on also provide the transparency to the whole world as I said I don't think it will happen all 4.3 percent of a US GDP will move off the table once but it's not all clear what will happen so US really need working hard to avoid this fiscal cleft and also provide transparency to the world I think that's very important for China will see the stabilized the growth the top of priority it will be greatly help the whole world so that's the reason we support the Chinese government it's a little funny I'm a Chinese but when I say wait that's mean the font and I have to distinguish this slide different we support the Chinese government the policy further easing and the policy to support the growth because the stabilized Chinese growth today play very important role for the whole world so our speed over studies China has a very important speed over impact for not only for the region but for many country in Latin American Brazil, Chile, Argentina as well and also on US and on the European countries as well stabilize the growth but also don't forget the structural reform the current structural reform I think is the top priority for the Chinese economy and to contribute a global economic stabilization and the growth okay thank you I recognize there's a lot more questions and hopefully the panelists will have some time after but we wanted to just finish with some key thoughts from each of the panelists really focusing in two areas just very succinct one or two key insights maybe what you've already talked about or take away from some of the things we've had today and then one of my own which is do you think that this will create more unity or more division within the Eurozone as we work through some of these challenges well two observations in that regard first of all I think we have established because it's also been part of the discussion here today that we are wearing this together and I think it is important to take with us that Europe is acting we have shown that we are we want to save the euro but you should never expect that Europe moves extremely fast we will always model through this is what we have done since the European Union work was together we will model model through and there will be incremental steps to to take the right decisions and that's how Europe will has always worked and that's how Europe will work in the future that's my first point second point is don't give up on Europe because Europe as we have also heard today talking about the Latvian example that's my own country Denmark we have taking through massive structural reforms we have a good economy we have almost negative interest rate these days so don't give up on on Europe there are being our structural reforms are carried through and there's also a difference in the European economies so that's that's my second point the last point is and connected to this don't give up on Europe it is important to understand that when Europe is recovering which we will be I think we will have slight slight growth rates next year come to Europe trade with Europe invest in Europe again this is what we need and and don't forget that Europe is still the strongest as seen together Europe is still the strongest economy in the world we still have a lot to offer the world and I hope that that new eyes will be set on Europe we can recover and I think we will with your very strong voice I'm sure a lot of investments and the money will go to Denmark yeah so you should have a run to for Tianjin government you have an absolutely important point I will say all the policy today working together move into the unity banking unit fiscal pack a single market everything moving the director but there's a one concerns the if you're looking for the real economy the diverging about the productivity between the North and the source remain and the wider because Denmark is a very good case you're part of the northern you'll be doing very well because at the end of the day if you want to bring the economy together you want to see the productivity more or less the same so when all the policy move into the unity we will be paying more attention and promote the growth and increase productivity in the thorn area I think that's a very important challenge for the area and the world also got to help as you mentioned Prime Minister Dronbovsky well as I already mentioned in the beginning I think there are two aspects in this crisis which both are being dealt with one is more medium term aspect on ensuring that Eurozone is EU in general is sticking with a fiscal discipline and getting its finances in order another is immediate efforts to deal with those countries affected by current crisis where I think now there are enough instruments with the FSF with ESM and just recently ECB pulling out a big bazooka so but then another aspect which we need to think of is to sustain growth we need to sustain competitiveness and couple of aspects have been mentioned here already on flexibility of labor markets on using full potential of EU internal market of creating digital truly digital single market of concentrating more on even innovations and research and interestingly just some half a year ago or so together with Prime Minister turning Schmidt and 10 other heads of state and government we submitted a paper to our European colleagues outlining exactly those issues as a priorities to get Europe's economy back to sustainable growth once again so there are many things to be done and I think we are well on track to do those things and if I may some give some personal forecast I would expect still some bumpy couple of months or probably half a year ahead especially to sort out the situation in Greece but from then on you can already start to see this turning point coming with growth starting to recover and that's I think a real good moment for us to work all together with Europe with US with China with other emerging economies to make sure that we support each other we sustain each other and return the world back to the sustainable growth thank you Dr. Zedil well first of my not only my wish by but my conviction that the euro will stay will survive that eventually the economic situation in Europe will get better but I think that the sooner the European leaders stop being behind the curve and try to move ahead of the curve the less painful the adjustment will be and I think it will happen they have to recognize that markets actually don't have a heart and have very strong and very fast legs because you know it's important to tell people listen what we are doing look how politically difficult this was look what a big effort we are doing that was our Latin American experience I spent very a substantial part of my professional life doing that doing row shows and trying to convince but you know at the end of the day only decisive significant profound policy decisions is what counts again I don't diminish what has been done in Europe but they will have to do more and I am afraid that my friend Schumann as part of the Troika of the European Central Bank the European Commission and the IMF will have to do a lot of work in Europe in some countries these and coming years that's my forecast that Schumann will work a lot in Europe we should take your order properly I'd like to thank the panel for all of their insight on this important topic and they may be available after for some questions so thank you very much