Media Home
UN Web TV
UN PhotoUnifeed
IMF / LAGARDE
STORY: IMF / LAGARDE
TRT: 2.16
SOURCE: IMF
RESTRCITIONS: NONE
LANGUAGE: ENGLISH / NATS
DATELINE: 3 OCTOBER 2013, WASHINGTON DC.
1. Wide shot, IMF Managing Director Christine Lagarde walks onstage
2. SOUNDBITE (English) Christine Lagarde, IMF Managing Director:
“In each of the two major transitions that I have discussed—economic and financial—the international community faces a common challenge: to make sure that all can gain from globalization and prosper in our increasingly interconnected world.”
3. Cutaway, cameras
4. SOUNDBITE (English) Christine Lagarde, IMF Managing Director:
“The ongoing political uncertainty over the budget and the debt ceiling does not help. The government shutdown is bad enough, but failure to raise the debt ceiling would be far worse, and could very seriously damage—not only the US economy, but also the entire global economy.”
4. Cutaway, Lagarde onstage
5. SOUNDBITE (English) Christine Lagarde, IMF Managing Director:
“Because the transition of monetary policy into a more traditional role affects not only the U.S. market, but also other markets around the globe, in our view, it has to be done gradually it has to be done with good communication and hopefully in a dialog with other central bankers and policymakers.”
6. Cutaway, audience
7. SOUNDBITE (English) Christine Lagarde, IMF Managing Director:
“Japan has gone through 15 years of recession, of deflation and Japan is turning around because of a completely new set of policies adopted by Prime Minister Abe.”
8. Cutaway, journalist
9. SOUNDBITE (English) Christine Lagarde, IMF Managing Director:
“Some countries also need to knock down some of the barriers to the flow of products to the flow of financials by having better infrastructure, by removing some of the red tape, by welcoming foreign direct investment. This is certainly the case in countries like India and Brazil, where the deepening of financial markets and the opening up trade regimes would go a long way.”
10. Wide shot, audience
Countries will need to adopt strong national policies and work together even more closely to manage new transitions under way in the global economy, IMF Managing Director Christine Lagarde said in a speech at George Washington University ahead of the 2013 World Bank-IMF Annual Meetings.
Lagarde highlighted two new transitions: one in the pattern of economic growth, and another toward a different kind of financial sector.
“In each of the two major transitions that I have discussed—economic and financial—the international community faces a common challenge: to make sure that all can gain from globalization and prosper in our increasingly interconnected world,” Lagarde told the audience.
Lagarde noted that although the global outlook remained subdued, there were “signs of hope” from advanced economies—the United States, the Euro Area, and Japan.
In the midst of U.S. fiscal challenges, Lagarde said, the ongoing political uncertainty over the budget and the debt ceiling does not help.
“The ongoing political uncertainty over the budget and the debt ceiling does not help. The government shutdown is bad enough, but failure to raise the debt ceiling would be far worse, and could very seriously damage—not only the US economy, but also the entire global economy,” she warned.
The Managing Director stressed the important role played by monetary policy. Any pending normalization of monetary policy in the United States needs to be managed carefully, Lagarde cautioned, noting that the U.S. has a special responsibility to the world.
“Because the transition of monetary policy into a more traditional role affects not only the U.S. market, but also other markets around the globe, in our view, it has to be done gradually, it has to be done with good communication and hopefully in a dialog with other central bankers and policymakers,” Lagarde said.
Monetary policy has bought some time and space, she said. The key is to use the time wisely and take advantage of this space, highlighting the need for all advanced economies to move on a broad policy front, but with different emphases. This means financial effort in the Euro Area, restoring banks to health; fiscal effort in the United States and Japan, making debt more sustainable; and structural effort in the Euro Area and Japan, where policies to boost supply can pay off in terms of growth and jobs.
Lagarde noted recent positive developments in Japan.
“Japan has gone through 15 years of recession, of deflation and Japan is turning around because of a completely new set of policies adopted by Prime Minister Abe,” Lagarde said.
While the emerging markets drove the recovery for the past five years, growth momentum is slowing and the external environment is becoming more challenging—partly due to the anticipated exit from easy monetary policies in the United States.
The immediate priority for emerging markets is to ride out the turbulence as smoothly as possible, Lagarde said, spelling out some of the needed policy responses to prevent these economies getting stuck in low gear—including currency depreciation, liquidity provision, and structural reforms.
“Some countries also need to knock down some of the barriers to the flow of products to the flow of financials by having better infrastructure, by removing some of the red tape, by welcoming foreign direct investment. This is certainly the case in countries like India and Brazil, where the deepening of financial markets, and the opening up trade regimes would go a long way,” Lagarde said.
Lagarde pointed to a second fundamental transition—one taking place in the global financial sector. This transition, however, remains a case of “mission not yet accomplished,” she said.
While there has been some progress—for example, in improving capital and liquidity standards, and identifying systemically-important financial institutions—the sector still needs to shift from the “old model”, where the sector “took on outsized risk in pursuit of outsized rewards, causing outsized ruin”.
Building something new is not easy, Lagarde said, acknowledging the complexity, but also the delay and divergence across countries. She urged faster progress on outstanding areas, including derivatives and shadow banking.
Download
There is no media available to download.
