nuclear weapons hopefully during his lifetime, the yardstick he put out, then these investments make no sense. why spend all this money to produce weapons that will then dismantle? if you don't actually think that goal is likely to be realized, that's the category i'm in, of course you to spend the money because we are going to be in this business for a long time to come. weapons systems, b-52's built in the 1950s. they are not going to last forever and you need to be replaced and replacement is going to cost money. i do get exasperated at this trillion dollar figure. that's the 30 year cost estimate. i don't know what the 30 or cost estimate was for obamacare that we never heard it during the debate because a lease from the proposed of obamacare because i would've been such an enormous number in would've scared people

off. when you start quoting thirty-year numbers with the intention of scaring people off, the right number to look at is the annual cost. you don't look at how much you'll pay over the lifetime of a mortgage. if you do that you would never sign a mortgage. so what is the annual cost of making these investments and how does that compare to the sons we spent and the past on the nuclear enterprise? it's a lot less money that was spent going to cold war on nuclear weapons. we got through, we managed to fund national defense throughout the cold war. the numbers are not quite asas daunting as the critics wouldd have us believe. >> we've been a green too much to let me push back on two points. i actually disagree. i think president obama in prague put out this notion about nuclear weapons but i disagree, i don't think it has been operationalized. if you look at the strategic

modernization program that the obama ministers approved they are talking about 12 ballistic missile submarines, 640 intercontinental ballistic missiles, they're basically come ihis going along with everything the pentagon would've wanted. i'm not sure i see in that program at a don't think i see an absence of some unilateral things the obama administration had asked for that he is widely pushing towards that vision. here again i said i agree with the vision. i think he did put down qualifiers in prague when he said as long as there are nuclear weapons your breath have a reliable deterrent to the other thing, pushback on the cost question. want to talk about thirty-year numbers that's difficult if you look at the current budget environment and if you look at projections for the growth in social security, medicare, interest rates, i think it would be unwise for the pentagon to make an assumption that 10 years from now a part -- pocket money

will appear for them to avoid hard choices between building intercontinental bless the missiles and f-35s and things like that.and if we my guess is that will do is start spending a lot of money on programs and then curtail those programs after we're done the development effort brought the first 20 units of this cost of before you get down to where the cost becomes cheaper and we will end up with i think a less effective defense establishment over all. >> we will have to reconvene in of years to see whether that's true. please join in thank our panelists for a very informative panel. thank you. [applause] [inaudible conversations]

[inaudible conversations] >> the heads of several international investment banks have gathered for a panel discussion at the annual meeting of the institute of international finance taking place in washington. should be a few more moments before this all gets underway but we will have live coverage when it starts you on c-span2.

♪ ♪ ♪ >> should be a couple moments before this gets started. right now bush remarks from attorney general loretta lynch pictures go to howard university students about committee partnerships and policing. she said the police forces need to know the community in order to serve the community. [applause] >> so good day unwelcome. as many of you may recall the last time the attorney general,

the working with secret service officers on our cameras as on a campus fix user the same day we celebrated our commencement. the 44th president of united states, the honorable barack obama was here as well. i had the distinct pleasure of being able to sit in on her commencement address. and while we paid obviously a lot of attention to our main ceremony, that law school commencement address that the attorney general gave was one that we will long remember on this campus. her presence to do is more important now more than ever, that's something that i want us to make sure that we stop and take cause. what she's doing here today and what she has been doing in her role is something that has just that been done in this country, and cannot be more timely than it is today. on that issue something i would

like to recall, and she said i chose the path of public service and became a prosecutor and along the way i've found my calling in protecting the most vulnerable among us and working to ensure the integrity of the criminal justice system. it is one thing to state those words but it's another thing to put that into action. and she certainly divided more of an account of her life at any for biography ever could as twice got into public service. but a couple things to note is that the attorney general received her degree from harvard college and harvard law school in a before. in 1990 after period in private practice, she joined the united states attorney office for the eastern district of new york located in brooklyn, new york. 99 president clinton appointed her to united states attorney. she was a partner, and a 2010

president obama asked her to resume her leadership in the state's attorney office in brooklyn. she was working as the 83rd attorney general of the united states by vice president joe biden on april 27, 2015. president barack obama announced his intention to nominate her an a from eighth, 2014. and eloquent words of charles hamilton houston, a lawyer is either a social engineer or a parasite on society. a social engineer is a highly skilled perceptive, scented lawyer who understands the constitution of the united states and knows how to explore its uses in solving the problems of local communities and in bettering conditions of underprivileged citizens. so attorney general lynch, we are grateful for your service and commitment to local and global communities, and it is my heartfelt appreciation that we welcome you back to campus here at howard university. so let's welcome the attorney general. [applause]

>> thank you, president frederick, for that war introduction and your remarks and your commitment to this university to this issue of the day what i think is the issue of the day, energy policing of the relationship between law enforcement and committees which have been opening up this institution, this great institution of learning to continue advancing that goal. and also dr. scott, my sister from new york also good thank you so much wrapping to organize today's event. many of you know my colleague ron davis who's your with me also. is the director of doj's office of committee oriented policing services, or cops office in to the office we connect with law enforcement across the country in ways that we are hoping will advance these issues and actual help come up with real

solutions. ron and his team have worked so hard to make this whole week community policing week a success, and i want to thank them and commend them for the efforts also because we would not a been able to pull all this together. but they also thank all of you, all of the law enforcement leaders, community leaders to all of the students who are here today for bringing your ideas and your perspective but most important for bringing your commitment to this meeting today and to these issues. we need your voices. there's just really no other way to say it than that. we are clearly having a moment in this country of great challenge and great concern but i've always felt that out of the moments of our darkest of times, our greatest challenges and concerned can come our greatest advances. and they're often spurred him if we go back through history, particularly the civil rights movement and on, they are often spurred and led by our young people.

we usually energy, we need your talents. you all have ideas. you will try all the things that so many people, old people will say i'm not quite sure i can do that, i'm not quite sure i can pull it off. but you all will get it done. so we need you in this effort as well. so now we know the cops office and our hosting this meeting as part of -- energy policing week. this whole week we've been focused on discussing and highlighting this issue, focusing on the situations where community organizations and leaders and youth groups are coming together with law enforcement to tackle these issues as well as to focus on the questions and concerns that are still remaining. we were talking before this event, and one of the panelists who is been so active today said communication is the key. all the issues and concerns we're talking about the ball onto how we communicate with each other. at heart how do we know each other?

do we know each other? what do we know about each other? do we truly see each other as neighbors, as friends, as all part of the same community? once we see each other in that light how do we then bring safe and effective unconstitutional policing to everyone? how do we make sure that everyone is safe? so heard a little bit about the work you've done today. i had an excellent conversation with director davis and dr. scott come and president franklin. they would tell me about the discussions you that in the issues you've raised. and i think you for being honest with each other as well. because if we can't talk policy about these problems, we are just going to keep talking at each other about these problems. if we take it down to the real issues and concerns that we have, how it literally makes people feel and how we act on those feelings, whether you are

a student, whether you're a number of the kennedy, was he a law enforcement officer. if we can't talk about that and have someone else understand us, we're just doomed to repeat the cycle over and over again. that's i'm so glad you all here at howard are addressing this issue and tackling it head-on. obviously, it's going to take more than one day. we know that. but the conversations you have had are a crucial start. and hope that by taking the time as you have to truly listen to each other and to express the hard truths that need to be said between cops, law enforcement, he would be leaders, academics and students alike, i hope it has helped deepen your understanding of one another. and increase your level of respect for one another. spend a few minutes thinking about what it's like to walk in someone else's shoes. what it's like to be on the receiving end of the fuse that you may hold or happen. have.

at 20 thank you for having the courage to do that. because it really is an incredibly brave thing you are doing and it is so important. we are holding you up as a model. we are holding up as a model. i have talked about this event and what i know that you all are going to be a couple should today. it's so important because of course we're talking about the issue of the day in light of the events of the past several days and weeks and months. in particular we've had a very difficult summer. 2016 was a hard year. it was a challenging year. we were already focus and really still reeling from so many deaths of individuals involved with law enforcement and we had to add names to that list. alton sterling, philando castile, event in the midst of that we saw officers ambushed in dallas, in baton rouge. and, of course, even recently we still have other individuals who have tragically lost their

lives, mr. crutcher, mr. scott, added to this list of people who have not survived these incidents. what we know, and i talk with some of the failed us, it's not just the thin pain that comes wh family or a community, but what we've seen is the pain it brings to all of us. the pain it brings to all our entire nation. all of us are feeling the feelings of loss, but also uncertainty, frustration, helplessness, anger even. all understandable whether you're connected to the individual or not. they are very similar. went on talking to the family members of those who have been lost, that pain runs deep and everyone can relate to that. but what has it also is we're not let those feelings divide us. this is a moment in time, and this is our moment in time, and i had to tell you that not all is the country watching, but the world is watching how we deal

with this issue. do we let it divide us? to we let it keep us apart or do we use these tragic incidents as a bridge to discussion and understanding and confront these difficult issues? we are at a point, and unlike every much to the .50 years ago in the civil rights movement when finally the television cameras can do so many cities and showed the reality of what was happening in so many communities of color. the country finally saw what people have been speaking out for generations. and the world saw. that's where we are today. and as painful as difficult as it is to see these incidents, ma it has allowed us to move beyond the point of having to prove that there is a problem or that there are issues and whether there are concerns to where we can talk about it and we can engage in we can make a difference. i will tell you people are making a difference in this issue across this country. it can be done. i know what can be done because

i have seen it happen. i've traveled the country on a community policing to her at a talk to members who have said we are not going to let this to our community a partner where going to sit down with law enforcement and how these tough conversations, and they are hard. they are difficult that we will make some changes whether it's in police policies, police procedure to whether it's just in just understand what goes on in the community for everybody. just yesterday i was in dallas. doubtless we know is a city that has come to a simple five a great deal of pain since this past july. obviously, we saw one of the strengths of our great system. to peaceful protest movement where people come and raise their voices when they have concerns. they hold up a mirror to the rest of us in society about the issues that are important in the things we need to work on. in the midst of that we saw five officers cut down, and these are

officers that were protecting that peaceful protest. enabling the discussion that has to go on. and that tragic irony is that dallas is a city that's been at the forefront of community policing for some time. so dallas had a choice. today let the tragedy undo the work they have been doing? today let the tragedy and loss rate the connection between the community and law enforcement? or do they come together? and they have chosen to stay together. and after that tragedy the chief issued a statement literally inviting people, come join us. come serve your community. because that's how they characterized policing in the tragic aftermath of that loss. be part of the solution. and that's what we saw. after the events of july, applications to the gospels department have tripled. it doesn't happen in so many other cities.

but there we saw a tripling of applications and i was actually able to spend some time talking to some young people who are in the police academy. they all either joined or stated after july. and it was an incredibly diverse group of young people. ron was with me. i think we're both struck not just by the diversity in terms of young men, young women, african-american, hispanic individuals, people from dallas in different areas. when i talk to them and asked them why do they still want to be police officers, particularly in light of what they were seeing. and all of them talked about wanting to serve their communities. being very aware of the problems of the day but wanting to be part of a solution. wanting to show that police can be responsive. wanting to show that police can be from a community and serve a community. and i thought what a tremendous response to a painful, tragic event. what a way to honor all the lives we've lost and to dedicate

yourself to making your community better. and what a chance to add one to say, how can we be part of the solution in our own communities. everyone is not going to sign up for the police department, but you can be part of the discussion. you can get involved in community groups that are working with young people. you can get involved in community groups are looking at ways to protect our youth from gang violence. you can get involved in groups that are connecting with police and talking about how they serve the communities in which we all live. everyone has a role to play. at the department of justice we are committed to being part of the solution in a number of ways. we have joined here with the walter center at howard and our cops office to engage more young people especially young people of color in law enforcement. because when that your voice is in this. we have to have your views in this, and we need you to join us. our civil rights division is also working with a number of police departments around the

country as we work on making sure that every department has access to the tools they need to implement constitutional policing. to ensure that every citizens of basic rights are protected. oblongs with allies and the property. and in times of tension and conflict, as we've seen most recently, we send members of our community relations service to serve as on the grand mediators, 12 people have those discussions that can forge a more peaceful and productive resolution. our office of justice programs we promote and implement the latest evidence-based strategies for community policing. what has worked in the past? what people found to be effective, and how can we support that? earlier today as part of all these efforts i was so proud to announce more than $3 million in grant money going out from the department to local law enforcement to prevent gender bias and law enforcement response to sexual assault and

domestic violence because community policing is more than just the interaction that on a daily basis. it's how do we protect the most vulnerable among us? how do we make sure that at the most difficult part of a sexual assault victim's life, they are encountering a police force that is responsive and understanding and committed to helping with their needs? these awards are going to officers serve the survivors of sexual assault crimes with a sensitivity and with respect. that will lead that only two deeper trust and more effective investigations but to a safer community. we have to look at this from all perspectives. also this month our civil rights division working with the equal employment opportunity commission released a report on promoting diversity in law enforcement. this report talks about innovative and promising practices for recruitment, for hiring, retaining a diverse

workforce. i know you focus on the to do as well. you have touched on the issue as one of the important keys to building strong bonds of trust between the police and the communities that we serve, especially communities of color. because you have to know the community to serve the committee. these are just a few of the things we're working on to build a stronger, safer and more united communities that all of us deserve. i really believe that this is the issue of our time. and one of my hopes is that we can do this divide between law enforcement and the community as artificial and recognize that all of us are part of one community. all of us want the same thing. we want safe streets. we want productive schools for our children. we want our children to grow up to the fullest the -- the fullest extent of the potential want to be protected. in every endeavor that we have. and that's what i want to thank all of you for being here today.

i want to thank you for bringing your ideas, bringing your concerns, bringing your complaints. thank you for sharing, thank you for listening to opinions other than yours, and working together to take all of that and come up with the solutions that we need to work on this issue. you were the ones we are going to be relying on. we will be calling on you. and because of the efforts we are making progress. it's happening all across this country and right here in this room because of you. you didn't have to come today. you could have sat down and thought about it. you could have done something else. you could've worked on something else but i so appreciate your recognizing that in this issue of the day, everyone's voice has to be heard. so let me stop and thank you so very much. not just for having me, but thank you for coming together and working on this issue as a group. and i promise you, the department of justice will be

your partner working on this in all that is going forward because this is the most important thing that we do. thank you so very, very much. >> thanthank you, ma'am. wwe will now open the floor fora quick q&a. we have time for only two questions. i will open the floor. >> how are you? >> good. >> i am a second year student at howard. i'm studying black politics in american government and also from milwaukee, wisconsin. all of these issues are particularly important to me. i stand in front of you, one, as a student i stand in front of you as a former educator. i stand in front of you as a committed activist and most important as a black woman. >> all of those voices are important every single one of them has to be part of the discussion, so thank you for including every single one of those roles. >> the doj has been present in milwaukee, but the community

hasn't necessarily felt the presence. my question today is, what will influence in the doj have actually changing local policies and procedures as they relate to racial does commission in cases of police brutality? >> what we got the department, what i will start by saying is one of the things frankly most honest as attorney general is tremendous safety plan in the work we at the department of justice do in this area and the trust they place in us. and all of us work very hard every day to live up to that. we confront this every day as to how can we, in fact, have the biggest influence in the most pervasive influence in these issues. so what we look at is a situation. we have 18,000 police departments across the country. how do we make sure that we can take as many of them, to all of them hopefully, the best practices and the things that we found will ensure constitutional policing, safe streets and respectful relationships? one of the ways we did it is

with the grants similar to what i announced today. i announced the grants we're doing to talk about gender bias in law enforcement. that's one way. we have a great program that helps officers, health departments hire police officers but we also provide training in very specific areas. some of the of the things we try and do is use the cops office, for example, to not only spread best practice is but provide that training, that direct hands-on training. departments will come to us and they will say, for example, i don't know if my use of force policy is really reflective of where it should be. or they may say we are looking around the country and we are concerned that departments eyes with policies similar to my are not whether ring these events very well. can you give us some guidance? and we do that as well. we have a number of ways to do that. and then, of course, to our civil rights division we work on constitutional policing. there are times when will do an

investigation or also do what's called collaborative reform. a lot of these are not seem visibly but when we are involved with a department we always involve the community. whether it's collaborative reform for an investigation, community groups are important part of the body we have to listen to. so we do that at the specific municipal level, and nationally we try and use our grant monies to influence better behavior. we also got used the cops office to provide the direct hands-on training. >> thank you. >> good afternoon, ms. attorney general. i'm a senior public relations major from west palm beach, florida. my question for you is as attorney general as at an african-american woman why do you think they're such poor relationships with law enforcement in the black community and what can we do as a black community due to improved? >> i'm glad you raised the issue

of what can you do because it is a community issue and i thank you for the. i think we're in challenging times in large par part becausee incidents that characterize these kinds of gun so more exposure than in the past. but as we know they've only just revealed a problem that has been there for sometime, if not generations. we are at a point where we are talking openly about issues that are almost recently been confined to the minority community but now it is part of everyone's pumped it has become a national problem and after that that make people think it's worse than this. people than work on this issue for a long time will tell you they see similarities in this. but that isn't just to minimize it at all. it's just as it gives us an opportunity to seize this moment and to seize the national attention that we have on this and make real change. community members are leading that change. some of the things i mentioned

our community members getting involved in structuring police policies or police practices. i've seen some very, very positive things happen on a community policing to work that i've on for the last 18 months. i was in fayetteville north telling in my home state. it's not a big city. the police force is, what is a, under 100 may be? most police forces are that size. when they were ruling out body cameras, which we support to our grants, we are trying to influence the use and consistent use of body cameras throughout law enforcement. fayetteville sat down and said we could write a policy of how we're going to use the film. we do we turn it on, how do we store it, when you release it? a we know if the community doesn't accept that policy or understand or see that policy, they are never going to accept these results. what they did which i thought was actually simple yet brilliant, the small things make such a huge difference, they

basically said we are going to call some community needs and tell the community are going to write this policy. please come in and tell us what are your concerns. so they can be baked into this policy. that's not something that everyone thinks to do but it is something that people can raise with their departments but even if a policy is already written, find out what it is. we have citizens academies. gives you an opportunity to go in and see what police training is like. you don't want to spend nine weeks in police academy but it's good for the community, the students, journalists, be it the clergy who are leaders in the community, to understand the police perspective. block has a certain culture developed? how does the training impact that? when you do that you have the connections and you have real impact into policy and making change. it doesn't mean there's going to be a perfect city. we are all human when things

happen, you have a bridge to communication and way to talk about it and you also have a way to guarantee the transparency and accountability that has to be the key to a strong police community relationship. so thank you for raising that. >> and live to the annual meeting of the institute of international finance here in washington, d.c. speaking is tim adams, president, chief executive officer of the iif. >> appreciate you coming today but you also -- into 2017. i would like to just spend a few minutes before bring out our first panel to talk about regulation, which is what of the most important issue addressed at the iif. i'm going to come back later and talk about broader themes. it's been seven years as the crisis and into anything time we've seen sweeping changes in financial regulation. globally we've seen an increase

of almost $4 trillion worth up to one equity capital, a massive increase in equity. tier one capital ratios that jump several full. more liquidity. we've dealt with interlinked which is too large exposure limits to what resolution regimes. marty greenberg is fed said in april he had no doubt its message to resolve a large u.s. institution. if reboulet patricia we've seen a drop in leverage 22 times, 16 times. bone crushing stress test, small about she's and de- risking occurring as many banks are pulling back from paris market. i was at the imf yesterday with christine lagarde delving into this issue of de- risking where the institutional been forced to pull out of markets and leaving many merging markets confronted markets treated access to the

global financial system. there is, however, one remains the issues in the pipeline that also committee is addressing. something referred to as also format and it upsets my friends and officials what is a facility called basel iii version to pornographers number of factors in calibration. we've been working closely with the committee. i want to brag, but it's routine. they work night and day for weeks to put this out but afford to wait that report showed the programmer, the agenda as they existed far exceed the mandate of those who did increase in capital pics it's been the committee has come back at the technicians are recalibrating and were hopeful that by looking at and making changes to some of the factors that are part of this basel iii version 2.0, by

the way there is a real mess and i got to take on, internal models, internal cut and mouse cause crisis. at a senior u.s. reduce her official tell me that in august. he said those models caused the crisis. unfortunately, they were not in place. precrisis basel i was in place. we had less risk, were presented to visit capital charge irrespective of the riskiness of that mortgage. also to did not come until later in the models that were looking at recalibrating are constraining acted in commonplace until 2008-2000 in europe and the first one in the u.s. was 2014. all of those were improve the there were issues about floors, final calibration of leverage risk and then off risk. we look forward to seeing the final calibration. we appreciate the committee's effort to ensure that it doesn't

exceed its mandate which is no significant increase in capital and we stand ready to work over the coming weeks and months to ensure that we come up with the right outcome. we understand what they're trying to do. we don't disagree with the objective but we just want to ensure they do it in a way which does not damage firms, doesn't damage job creation or capital formation. it's not just about banks. we're engaged in insurance and asset management. we agree with the focus on activities of days rather than entities based. we've got a good job of helping to educate the official sector that insurance companies and asset manager for are not banks. get to that balance sheets, different risk profiles and they need a different regular framework. i think we're making progress and we look forward to working with the ssb and other authorities the rest of this year and into 2017. finally, let me close that will we bring on a really wonderful panel this morning, just make a note about financial stability.

edgiest sr without a few days ago, christine lagarde has been talk about financial stability integral part of issue. the best way to financial stability is ensure we have profitable banks. we have banks are earning the cost of capital. that's a foreign concept for some people. if you're forced to raise capital and paying 14% for angel earning 3% on your equity, you are underwater. forcing institutions to raise capital they can afford to buy back doesn't make sense. so we need profitable institutions that can earn their capital and a thriving and supportive, enabling mac are invited to the best thing is to find which increase growth be on a fairly sluggish pace we've seen in which the imf noted. so let me again thank you to all your member firms or today, our guests to our sponsors and i will be back shortly with what i

think will be a very interesting conversation. until then went to great panels and i want you to please a great a change because everyone on the stage is coming up and pick the i calle called and asked them t. the average difference of my. i like him a lot. there are some of the sports people i know. thank you very much and i will see you later this morning. [applause] ♪ ♪ >> do a little dance for you while the music is on. thank you for that. i'm also very much looking forward to this bill. a lot of people i like a lot, very smart as well as stan fischer and the rest. is a jampacked day.

first look at the global outlook probably. the discussion will provide opportunity for leading global industry executives to provide their perspectives on what is holding economies of back and prospects for improvement, what policy responses could be most productive. we will be moderated by martin wolf, please join me in welcoming to the stage a truly stellar cast, mary callahan erdoes as chief executive officer at jpmorgan asset management. gary cohn, president of goldman sachs your sergio ermotti, group chief executive officer at ubs. and trafficking is pressured and group chief executive officer at mitsubishi ufj financial. i will turn over to my colleague, martin spent it's a great honor and pleasure to be here to moderate this session on the global output, outlook. fortunately, you all have been introduced already. i don't think i need to repeat

that. it's and public obligated world. we don't have much time so i will start very quickly. i suppose if i were think about the world now from the developed country point of view, it's inflation meets political risk. we have been living in this sort of post crisis limping growth and low inflation desperate central banks trying to do everything they can and still doing it sort of world, and the finally, it really has hit politics in a very, very big way. i think the combination has made the world just simply wildly unpredictable with events happening which i think nobody would've imagined a year or two ago. notably brexit and pretty obviously donald trump emerge as a presidential candidate for the republicans. in addition, growth is limping as a civic the imf is yet again downgrading its forecast.

it has been doing the idea for the last six. it's a completely consistent pattern of embarrassing i would've thought that there we are. the emerging countries are still growing much faster on average than the developed world due to -- that is based we all. that'that's not all, asia. if not treated what else. age as half the world. that part of the word looks pretty good and it's very, very important to remember that. so this is the background as i see. so let me start if i may with you, mary. when you look at the world now from your perspective, glass half-full, half-empty or much worse? >> good morning, everybody, and it's pretty much consensus view as to what you said which is there is no excitement in terms of our global growth is going. there's a lot of hand wringing in terms of what has happened from the extreme views and the

more nationalistic approach that people seem to have. and so the real question is how do you get growth back? i think everybody is worried and working on that. i would just remind you that when it is consensus view it's often the times things begin to open up and have opportunities. when you think about the fact that the consumer globally is in pretty good shape, helped by oil prices across the world being lower, and that the actual employment rates around the world are also increasing their what you have visited burdens on the other side which is that that x. and corporate spending or not there. why? because we have very high debt levels cut and we also have two other headwinds. we have china slowing down, that will find its own level at some point. then we have a very heavy commodity over and. that commodity over and it's good to take a great deal of time to settle in.

i would tell you that if you wanted to look at just one statistic you think about what might break out, if you look at the correlation of business fixed investment and employment, and you look at that back to the 1970s, it is a very, very tight correlation and it has just broken. and it has broken in employment sunday show good signs of growth and business fixed investment has not been so it really just a question as to why that's not happening, and could employment be a leading indicator as to we are headed? if so, 2% will be a good global growth number and you have upside from there. >> a bit of optimism which is very encouraging. gary, could you talk particularly obvious that anything here or perhaps where you disagree but focus a bit on how you see the u.s. leave aside the politics. we'll come to that in a minute but where the city is going?

it's been growing about 2% a year pretty steadily since the crisis. never broke out. never gone down. employment is pretty good. lots of controversy on the part of participation rates. but how do you see the u.s.? >> to look, i think between your opening points and mary's points, i the great with exactly where you were saying we are. i think the u.s. just continues to model. we've got to muddle through the world with corporate ceos and corporate boardrooms today in a position of not wanting to take risk. wanting to be very conservative. when you don't want to take risk and you want to be very conservative, your cap ex budget goes down. your investment goes down. in fact, what's really happening in corporate america today is we're seeing very little top line revenue growth. we don't have pricing power. yes the consumer is in good shape but the landscape is still

very difficult. so instead of being able to go topline revenues, the way corporate today with shareholder needs is giddy with, through the balancing. the that bring out and borrow money today at very, very relates or even negative rates in certain parts of the world, you can borrow money, you can buy back shares and you can reduce your share count which means your same amount of revenue when you get your income line when you divide it by less shares your -- is going up. ..

we are getting closer to the end, we are getting closer. i suppose we must be getting closer but it may be so far away that it doesn't make any difference. >> technically you are always getting closer to the end. it does feel, what seems to me, it seems to be very consistent of what i thought in 2009 where we were all going to look like japan for a very long time. we will come to that in a second. let's go to europe. particularly though you could also comment on the wider things the europeans face some pretty big challenges at the moment. the eu is still slowly evolving eurozone situation and it seems

to be getting better, but lots of unemployment in italy, russia is not a political risk but the migration issues with migration, my country has decided to go in sign. completely, utterly, senile dementia. what do you make of europe's prospects? can you sell me this region? >> looks like you have summarize the issues pretty well. first of all, more generally speaking, the state of the economy and the global economy is quite challenging. if you look at it between the policymakers, academics and the market itself, there is almost no consent on why we are and

that would be my first observation. this lack of growth that we are experiencing for the past six years, i fully agree we are starting to see the ability to forecast and dissipate. this has been reduced to an approximation at best. we know we can't count any longer on the pace of china and asia so going into europe, i would say the construct is now being challenged by the british exit vote and there's one currency that has no fiscal support and i would argue political support. it's the start of the problem. we discussed environment and

negativity rates and i do find this is a further problem for europe. as we no, the demography is working against the system. it's not just the banking system that is challenged. we should talk more about that. the system that is getting challenge though the confidence of people to invest is undermined by high unemployment rate and the fact that their savings is not moving other than for a bit in the stock market. the medicine seems to be. [inaudible] people do understand. the fear of people right now is not just the macro picture. it's a geopolitical problem that we are facing and in addition to

that, people understand that the next step of change is going to come through technology and innovation and so the unemployment that was already there is likely to become more acute in the future. we have to address both kind of issues. if we just focus on macro consideration without considering human sentiment, fear and as i mentioned before, challenges that are coming, for the vast majority of people out there, they are very scared about it. >> i think these are incredibly important points. i have been notified that you have a magic way of sending questions to me which you know about. if you send questions to me they

will appear on the magic ipad. if there very good questions, i will ask them. i will ignore them. it's a privilege of the moderator. it actually turns out to be very appropriate that i turn to you so tell us a bit about how this looks in japan and asia and i would like to lead into the next round by thinking about your response. one of my favorite charts whenever i talk about the world, i point out that japan has had very close to zero rates for 21 years. it has not exactly led to a lot of inflation. so much so that the bank of japan has now moved into completely novel space in terms

of the scale of their quantitive , and it's quite extraordinary, it looks really scary that you have to do this after 21 years so how do we discuss what's going on in japan and comment briefly on china in your perspective. >> first, japan at this point of time is moving very smoothly and slowly. we recorded about 1% gdp growth rate for two consecutive quarters and the ratio difference from europe space around 3% and as for politics, that is also different from u.s. and europe. it's very stable. there are three consecutive elections.

you have the super majority so he can do everything he wants. socially speaking, it's also very stable. we don't have any extremists or anti- globalists or whatever. what's wrong? the program we have suggest there is a sort of birth persistent environment and it's a combat,. [inaudible] the loans are on precedented and the interest rate policy this year. i think the governors of the

central banks, what they're they're doing is appreciated, of course. they do whatever they can because there is little room for the government to make the fiscal package because they have too much public debt is growing, there is very limited room for them to act on. however, i do believe that we should be independent and careful about too much dependence on monetary policy when trying to achieve sustainable growth. i understand that natural interest rates and the policy has an effect only when the interest rate is lower than

natural interest rate therefore if the natural interest rate gets closer to zero, as you commented, the real interest rate should be below zero either by raising inflation expectations or by having a negative interest which is exactly what some european and japanese central blanks are doing now. i think this raises two questions. one is whether monetary policy can really help improve the environment or sentiment, and number two is, i think, think, how big the effect of current real estate rate is on. [inaudible]

from japanese institutions it seems that there has been no significant of demand of foreign business. in europe companies because of the aging populations and the saturation. as prices like real estate rise in japan, that does not necessarily the truest investment demand. if you look at bank statistics in our country, the the average growth rate of lending to japanese corporations was up 2.8% year on year during the 12 months prior to the implementation of negative interest rate policy. while the growth rate since then has been to .3 year over year, year, it has declined so far. we have seen no consideration.

they even confirmed that half of this 2.3% is eliminated by that sector which is sensitive to interest rate. on the other hand, we need to keep in mind the effects of an easy metric policy. the decline or flattening of policy undermines possibility of financial institutions. maybe to an increase of uncertainty over the functions. [inaudible] in other words, it appears that advance will deter the fit financial major system in the long time but we have yet to seal the effect on the real economy. [inaudible]

we have all different views. however, it is likely that we will not give this a true historical assessments of these for a while. that's where we are right now. >> okay, that seems an interesting assessment of where we are. i'll skip china for a moment and come back to it. a number of you have raised this issue so i want to push you a bit on this and i'll see where some of us come out. are the central bank policies of today, were thinking here of the four major central banks and knock out the uk and we will obviously have to raise rates like any emerging country.

let's focus on the other three. is this the making of fundamental mistake by not keeping rates going up and normalizing the economy. they talk about raising rates, they've only done it once. are they actually really supporting war really screwing it up by being so cautious. >> you and i have agreed on this for a long time. you can't just talk about the fed. that's the problem. it's no longer the fed. what the issue is and i'll try to be very quick is, we have gone to a globalized world. we no longer how independent countries with independent central banks that can drive economic growth or contract economic growth within their own country. we now have a globalized world with a globalized workforce and

therefore we have globalized monetary policy. when the bank of japan decide they are going to have negative interest rates and they are going to fix their yield curve, they are now forcing the hand of every other central bank in the world. there forcing the hand to say look, how far can i deviate from the leader as the follower and how strong am i willing to have my currency. therefore when the fed gets together, they may say look, we want higher interest rates and we think higher interest rates are good for our economy, but why are they good for our economy if were just going to force jobs offshore. the jobs are going to be crated domestically. the only jobs we create our service sector jobs. that's good. we create construction jobs and service sector jobs so when people start talking about infrastructure, it's really, really important because you can't export into the united states.

but we do import is foreign sourced earnings. if you look at the u.s. companies today, a lot of u.s. companies earn a lot of their money outside the united states and then you get to this whole discussion on the strength of the dollar. the way i look at it in many respects is central banks are trying to solve a global problem with domestic policy. it doesn't work. we need a global policy. >> if you were in the g7 meeting tomorrow, i presume, you would tell them to act like an effective cartel and all raise rates together. >> they are an ineffective cartel now. >> i know and they will remain an ineffective cartel. we understand that because they have to max mandate put if they could behave as one, you think they should collectively tighten monetary policy. >> i would do that but they would all have to do it together and no one could deviate because the first one that deviated, they all have to follow. >> my worry about that is if

they did that i worry would be we still haven't immense debt overhang in many places. were going to start being back to crisis. italy is on its own. you're right. but in 2011, it 11, it was close to meltdown the following year in europe. you can understand why they're all doing what they're doing. >> but were not there. were in a totally different spot it's not about tightening interest rates, it's about normalizing interest rates. we don't need to tighten the way that we used to use that word. i had a very smart client of j.p. morgan last week asked me the following question, how do you have capitalism without a cost of capital. therein lies the problem.

we have to get back to figuring out how to invest. if your ceo of the company anywhere in the world, this equation is broken. we are pushing on a string. there is no longer a multiplier effect for what we are trying. it broke down once we hit the bottom of the line. we have got to get back to physical and realist that has to be smart fiscal stimulus. it has have a multiplier fact and it has to have it than one year and everyone has to do that together in their own country. until you get that, you are are not going to have a ceo sitting there saying yes, i absolutely want to develop that new plants and higher thousand people and start that project. it's not quite happen. they are waiting for the central banks around the world to signal that it's okay to do that and at this point that's not the signal there receiving. >> how do you have a banking system with a disincentive to

lend money. >> i will get to that in a second too. >> i would clearly agree on that, but if we see all center of banks moving up, you would be left with the region. [inaudible] you would need to do both at the same time because otherwise you would clearly leave europe as uncompetitive. they cannot afford ira without having a retooling of the entire economy. i would echo the comments, but for europe, there's no way they can raise infrastructure and reform. >> are we talking fiscal policies, letting the central bankers take a backseat. that seems to be the consensus.

they've landed with the responsibility of basically everything. to my response to mary's., we have a zero across the capital and zero return on risk-free saving because that's the market price. savings aren't worth having in our economy. why do assume they're worthwhile. that depends if there's investment opportunities and as you've all pointed out in the beginning, the weight firms seems to be looking at investment opportunities, they don't see the opportunities. they're buying back shares again. people who would would use the savings aren't interested. that's the market. >> i really think the fiscal stimulus package or extraordinarily easy monetary policy doesn't really help to

boost the economy. what we have noticed in our history and the burst of the economy in 1990, the japanese government pumps the money into capital spending, public spending and creates infrastructure in japan, but it didn't really help the japanese industry. what really need is social structure so you can emulate the moods. [inaudible] in japan right now, negative

interest rates gives us a sense of exertion of policy. there is little the government can do. therefore, that's the reason why our governments try to push very strongly on growth strategy which includes the investment into the future, growing the operation and job strategy and transformer industry into the future industry so therefore that's what we really need including social security reform, but that's that's what we need to do. i think europe is getting closer to that situation. >> one of the problems for europe and japan is aging really

rapidly at fairly high cost. this is not an environment in the european economy, a few places have high unemployment in the western european. it's not an environment that's very attractive for huge and investment boom. >> the real issue, i have to go back to my opening comment, it's a sense of fear about parents are thinking for the first time for many, many years, that maybe their children will be better off. that fear needs to be taken out of the equation. we need to educate people about the advantages and the problems

and the shortcomings and it needs to be addressed, because the population that is coming right now is really driven by those kind of things and, i mentioned before, there's more security about the future and invest and more training and our workforce and our people and educate people to what will be a constant learning journey that they need to go through because things are going to change. my point of view, the need for investment, those investments are clearly no longer in infrastructure. this is good but in order to avoid throw away money to assure you are doing something, we need to focus on investing our skills

and educating people and retooling people for the next 20 years. that's where people understand and get a positive message that, man companies, as a private sector we need to do that and we are thinking about myself and my future. >> there are so many issues but one of the implications of that is education universally is a very significant measure, not solely a government measure. that has budgetary implications that are quite important. >> sorry to interrupt you, education is not just universities. the issues is educating at every level and educating people about the flexibility and the agility

that you need to have in the future. that's a completely different system. a system in which even the university and act academics may change their business model. i do believe for example, educating people at a younger age about their skills and promoting skills through jobs is much more important than just focusing on academics at this point. >> getting back to infrastructure issues, i agree with you that in our vast economies, education and skills in those kind of things to change the human textile into new generations, but look at asia.

[inaudible] but still we are financing the arrangement down there. how we can fill this gap, demand and supply. that is one of the challenges. investment in countries will give us a big chance to become the driving force of global economy. we are talking about the how to make the bankable infrastructure in the age of reason region and even in singapore to create secondary markets of infrastructure finance. that's something we need to keep in mind. >> let me go to the financial sector itself. if you were to raise the issues and a different place. start with you gary.

is the financial sector in developed countries represented basically in good shape? are the regulators killing it? are the central banks killing it, why are there still these worries about major banks, not having to name names, particularly in europe, and whose fault is it anyway? where are we on the financial sector. >> good luck with that. >> hold my hand, mary. [laughter] >> nearly all the questions that you would expect from this audience are what's going on in the financial banking sector, are the governments messing them up completely in the central banks even worse and from the sweet seat, what does it look like. >> that start at the highest level. the banking sector today is

completely different than the banking sector of eight years ago. it does very region by region around the world. if i start here in the u.s., the u.s. banking sector is in the best shape it has ever ever been in. hands down, no debate whatsoever you can go back to how we got there and debate it, living through those moments were horrible but they were brilliant the parks came with hugely punitive capital and we had to raise capital to get rid of the tarp, repair and raise additional capital to buy back our warrants.

we ended up with so much excess capital that we just figure out how to destroy capital. how do you destroy capital? you write down everything in the world on your balance sheet and you come out with the most pristine balance sheet you have ever had in your entire life and you move forward. that was a phenomenal outcome. other parts of the world have taken a different approach. they have taken the approach that we are not going to force capital on the banks, we are going to provide cheap funding for banks and allow banks to earn their way out of the situation with the thought that quality would improve over time. i think what we are learning, eight years later is that approach is not been as effective of forcing banks to recapitalize early and move on. so when i look around the world today, you have banks with a variety of different situations in capital. that is one observation that i would make. on the regulatory side, there

clearly is a view that more capital is better, less leverage is better, more liquidity is better and i don't disagree with any of that. it's virtually impossible to argue that any of those premises are incorrect. you can argue that at the extreme it gets crazy, you could argue pretty effectively that at some point, it has a huge dramatic effect on economic growth because you could go to the extreme where the most secure bank in the world is a bank that takes in nothing but deposits and never makes a loan, can never get in trouble. the economy could never grow if you didn't lend the dollars. you have to figure out how to modulate and you could argue which area are we closer to,

were probably closer to the bank that takes in a lot of deposits and doesn't take risks. i believe you have to modulate the risk-taking of the banks because banks are here to provide risk capital and growth capital for the market. so, i think the regulators are trying to deal with that and again, there's a difference of opinion in different parts of the world on how to figure out how much capital banks need and how to interpret it, how to interpret stress test, what resolution recovery should look like and, i'll be honest, the american the american regulators are clearly out front. they are clearly leading and putting the u.s. banks through the toughest set of scenarios possible and therefore i think they are in the best shape of everyone. the asian banks and the japanese banks are very close in the capital as well and i think the european banks are at the weaker end of the scale.

>> i would leave this swiss bank out of that. >> i would just add quickly, we are sitting here in the iis it when you listen to tim speak about the issues that are facing the global asset management firms in the global banks, he is doing a fantastic job of trying to say what we all think without it sounding self-serving serving. he is trying to take a global perspective and figure out how to we not continue to ask for more capital, bog down the system with extra, not that you don't need this but we don't just have legal compliance, risk, audit and we have people who check the checkers. there is this endless quest to make sure that what you have is the right thing and i think were

getting toward the end of being able to add layers on and were getting to a point where banks can go back to deploying that capital. that will be a very good mechanism to move us forward. yes there are some banks that are behind because they started with a different trajectory of how they were going to get there without market to market and rapid response to the situation. by the way, some of those banks, if you look back in history, they have always had low relative to their competitors. it's not a standout in a historical perspective. i think all of us are getting to the point where we are in a spot where we are very safe and sound before we have been in the past but banks are public entities with shareholders and i make economic choices for their shareholders and that's our job. our job is to make that trade-off every day to think about how to do the best thing for the shareholders within the regulatory environment and get

the economy moving forward and we need banks to stimulate economies around the world to do that properly. >> i've been told that europe is way behind so it's catching up. >> thank you. we are not in europe. mary correctly help me out there >> geography is destiny. you are in the middle of europe but you have a beautiful vantage point on what's going on in europe. there's been particularly strong concerns recently, obviously about germany and italy in the banking sector. it's a very interesting combination if you think about, in some ways, some think it's the strongest peak in the weakest peak in europe and how worried should we be about whether european banks are because we been told there's

been a stress test and is movement through the european banking union, there's your pen regulation, these are very big and important changes. of course it remains without a fiscally union. without looking at what happened at the u.s. bank over the past century, they created a genuinely american banking system they didn't used to have. that's part of the strength. that hasn't happened in europe. isn't that the logic to have someone start getting really european banks which are operating across the borders in scale the way the american banks are instead of being national banks. >> absolutely. that's part of the problem. i'll yield back to a point in which, if you look at, some european banks have been slow to

realize the change. not understanding the shape of the european banking system today is much better than we were a few years ago, and actually, what happened in the last few weeks, in my point of view is a testament to what i just set. simply because the same kind of dynamics, seven or eight years ago had created a major fallout in the european system. the problem is not about the security or the soundness of the system in terms of stability. first of all, in the new paradigm with old banks who have shrunk in the economy not growing and rates being negative , why do you expect banks to be profitable? they would be very profitable in that environment, you would would have to ask yourself why

there is no ability to make any money out of those transformations. in the meantime, deposits are basically through transformation and a lot of services were subsidizing given for free. now they tried to go back and it's quite hard. the balance sheet is not going growing because there's not an argument. structurally speaking you're not allowed to do it now. now you have one currency, one banking system that is absolutely not able to transfer and is not able to create critical so europe is in huge overcapacity situation but it's a combination between public-private and effective banks that have been allowed to continue to compete in doing business as a single.

[inaudible] you can imagine right now what's going on. so in my point of view for regulators and policymakers to accept that big banks are problem for europe has to be reviewed. the reason for critical mass and there is a need for the banking system, but what out critical mass you will not be able to create sustainability. >> there should be major consolidation. >> some consolidation. again, consolidation that is not driven by size because size is not everything. actually it's a focus based on geographic consideration. clients segmentation and so each bank should really try to find out what is my dna, what is my relevance to clients and what should i do.

then figure out how to get economies in that fence. of course today, that is almost impossible to do across the borders in europe. >> we have very little time and of course it's inevitable that were running behind a little bit can i ask you, unless unless you want to add something on japanese banks, i'd be very interested, briefly about how worried we should be, if at all, about china. >> china. okay. my view over china is modestly or cautiously optimistic. at this point in time, china is in the stage of transition. there economy was investment oriented and now economy oriented. the problem they may face in the

private sector and that's associated with a huge. [inaudible] to save the global economy. how they can adjust down to appropriate level, we spent almost 15 years after we recognize too much debt, according to imf, almost 40% is excess debt at china corporations. if they start to address issues

and if this goes to the balance sheet of the government, then in turn the government will become equation. those dynamics need to be carefully. [inaudible] for the short term,, but in the longer-term perhaps it will take longer time than you might expect. also the aging and declining population is similar to what happened in japan. >> we've only got five minutes left so i will ask the inevitable question that we couldn't possibly avoid it.

the presidential election. just describe what you think people here should be thinking about what difference it would make or might make if they're worried about either hillary clinton or donald trump emerges as the next president of the united states. >> i'm not taking the bait and i'm going to tell you from an economic standpoint, and most importantly from a market standpoint, if you look at all of the past major gop political shifts in the world, starting with the british exit but everything before that including massive problems with soviet invasions, u.s. invasions and occupations of countries, the korean war, everything, when you look at that, except for the october 1972 events that

happened with the arab israelis problems that led to an oil crisis in hyperinflation and a recession globally, none of the other major shifts of the world. aside from that you don't have major effects on global capital markets. there's a lot of discussion about what it will mean for the world and we can't forget that the u.s. is set up so that there's a balance of power in the system and we rely on that as the reason that the u.s. continues to be a place of safety and security for global capital markets and that's a very important part of what were talking about today. >> you want to add anything on this? we should relax and keep calm

and carry on as they say during the second world war in britain. >> well done. >> i have about three minutes left. i can make up for my disgraceful omissions in any of you can comment on this. which parts of the emerging world, we all know about, which are exciting opportunities given where we are now? some of the countries are coming out of it. the emerging world is really the future. were talking mostly about, where the really exciting potentials. >> from our point of view,

outside china, i think it's still china fortunately or unfortunately. i think china may go through some bumpy times but the likely effect is going to be more to the rest of the world than to china itself. actually you would argue that china needs to go through a little bit of adjustment. if china grows 245% in the next 15 years, from our business point of view there is still a low penetration, to say the least in terms of foreign investments, the ability to help and diversify their wealth so it's really difficult to see an opportunity like china. i think if you look at latin america or brazil one day may come back and mexico is also important, but you should really look at one country that can

really change the dynamics of a business, it's china - on the asset management side, how do you see it? >> by the way, i want to make a quick comment on china. i have the good fortune of sitting on the u.s. china business panel and when you look at what they have gone through in terms of a country that has taken a half a billion people out of poverty with the 50% currency appreciation with relative calm and stability versus what we see in the rest of the world, we should all be applauding the way they continue to force long-term thinking and planning in our country and we should not have pandering over

short-term issues. therefore there are tremendous opportunities there for investments. i would also add places like brazil, just about when it looks like it's at its worst, it generally when you enter into a stage of great chance for fantastic investment if you can handle the long-term. >> i have to stop. we've had a very rich discussion in different ways i think i asked a lot of the questions that were here. the message i take away from this is sort of keep calm and carry on. nothing is going to transform in the central bank is going to come go on doing what they're doing. they're not going to form a cartel and fiscal policy will be loosened, i think that's possible in many places. whether that makes difference depends on whether they spend the money wisely. we've got populist pressures which are obvious, but we will muddle through. i very much hope that this

perspective is the most and a comforting one for you all. i think it's been a wonderful discussion. think it very much. [applause] ♪ local

♪ ♪ let's get it started ♪ let's get it started in here ♪ let's get it started ♪ let's get it started in here ♪ let's get it started ♪ let's get it started in here. lose control ♪

♪ get started ♪ >> all right everyone if we could get folks who are coming in to come in and take your seat that i have an appeal to make two people if they are middle seats near you, we have people coming in and have to stand because they can't get to the middle. if you are willing to move toward the middle seat, that would be helpful to us so we can make sure to get everybody seated who wants to get seated for our next excellent panel. this was really enlightening to me, this last panel, i would've pressed must harder to say something about the implications

of a donald trump presidency. he got off too easily on that and just got to congratulate mary on her roundabout way of saying we would survive under that scenario. it was very artfully done by her and gary got off too easy so i'll find a backstage and pressed him harder on that. he's probably run out the door already. political uncertainty for exit, negative interest rate and competition from technology-based challenges. it's a very complex world. nowhere more complex than in europe, isn't that true. here to provide us with their perspective, please welcome our moderator chairman of hsbc holdings and chairman of the iis he will be our moderator.

we have our panelists here with us and we are pleased to have all of them put i will turn it over to douglas, our moderator. >> thank you very much indeed. i'm delighted to have the opportunity to join this panel. i am joined by an enormously talented pool of my peers. in the last panel we had challenges around global growth and the moderator said it's more interesting than the moment then europe and if i start with you, everyone agrees that europe, within the global economy, particularly needs to find a way to build more sustainable growth. from your perspective, are the necessary implementation blocks in place from a policy perspective for banks to play their traditional role in terms of creating and if not, what would you propose is to mark what would you say to policymakers?

a good broad question. i will give you a few pieces of the broad picture. i think the european economy, i don't know exactly, is the british economy part of it? >> of course, were talking about your upcoming yacht not the european union. >> the european economy today is quite on track. growth is back but is not great but it's reasonably good. a more positive about the european economy that i could have a few months or years ago. we know why.

we know the price of oil and commodities and the policy which is definitively handful. we know the level of innovation. now when i look at the european economies, there are still highly sundered by the balance sheets of banks. we have been talking a lot about market union and we may come back to that question later, but banks are crucial in the way that continental economies and we need to continue to pay a lot of attention to this. is the banking sector saved saver today? yes. it's been roughly doubled in banks in europe and there are things i need to be fixed but the banking system is sounder

and more efficient. in a time in which we begin to have some more growth, with a lot of challenges in the refugee question, there are challenges we come to you to have a flow of credit to the economy in a clever, system system enabled way and banks must be ready to finance its growth. we have the whole debate of what we call buzzer for which is a serious question. i would not belong on this but regulators have to be very careful about the impact of what they do. and what they do has eminent impact on banks. we cannot wait for years even if implementation would be delayed.

we need the capacity to provide credit to the economy. when i see and hear the views coming from the committee, i have a question, the key question is i understand buzzard for will shift from a risk-based approach of allocation of capital to a less, i don't want to open to debate, but a less risk-based approach. that will have an impact. why? because the economy is still funded by banks. we don't have government-sponsored entities to buy mortgages or the market to but also to we have to be very careful. i will mention quickly a second point which is more positive. banking unions is making

progress. really. we feel it. we have a common supervisor and do a great job. it's safer and creates a level playing field. at the same time. one of them is a better allocation of equity across the u.s. own. the second question which is obvious to us is why is there penalization from vesting.

ewers beaking about thinking, not about structural reform. i would say that have all these moving too quickly and too harshly and they're asking for more capital and let's continue to work defragmentation and fully implementing the eurozone. >> i agree. one of the challenges banks across europe are having is generating income meant increments of capital to generate growth. you said quite fairly and accurately that we are quite safer than we were seven or eight years ago. we have a situation where banks are treating substantially in many cases, but as a former regulator, what do you attribute this to and do you think the

problem is solvable. >> yes i hope so. i would like to build on what they said, i agree with all of it and was rather suspicious when the frenchmen agree, but i think probably we do on this occasion. i think that what we are suffering for, bear in mind, as john said, the banking system is overruled, much better capitalized and safer than before, but, the fact is that i think they're weighing down on us in no particular order, one the continued regulatory uncertainty that john has talked about and it's not very satisfactory but that is taking so long to agree. while there is considerable

uncertainty about what it will mean for risk wage or asset, i think that weighs on the banking system. the second thing we should soon that's been obvious in the week or two, there are a question about how big they will be and whether they will become related in any rational fashion. that's the second thing weighing on the market. a third is that people worry about the sustainability of banks business model and a zero interest environment. banks borrow and it's flat as far as the eye can see in that looks a little tricky, that kind of maturity transformation. if you link into that, you worry about new competitors and just what the sustainable models, we

don't like to make more progress with her not always straightforward. i think there was a yes, lower the capital but what is the sustainable business model look like in this difficult low interest rate environment. i guess when i asked myself why our banks trading where they are, i think the answer is somewhere, some, some combination of those things, perhaps with another factor that people still worry about whether these banks are too complicated to manage in that general worry about complexity and unpredictability. i think that's where we are. the solution to it, doesn't lie entirely in our hands. obviously a more stable growth environment and a normalized interest rate environment would help a lot and maybe we will get

there one of these days but not tomorrow. a predictable environment would help. i think if the uncertainties over what might come out could be resolved in the next three weeks, that would be very helpful, but i think there's also an awful lot for banks to do themselves on their own digital offerings and i think quite a lot of the nervousness is about people saying how will these big banks position themselves in this environment of digital content competitors. i think that something we should not ignore even though i agree that it's developing the sustainable policy in the market >> as you said that, we had some input from the committee that

decided if they are able to achieve their deadline of finishing by the end of this year and with a two-year implementation. , that would mean it would come into effect sometime 2019 and it just struck me coming from a uk -based perspective, you should book your places for the conference in 2019 because the uk banks at that point will be able to tell you how they manage the retail products, implement basil three-point to and leave europe on the senior. as well as everything else. i encourage the same question and i'm encouraged that the first question coming from the floor is when i was going to ask anyway. so many people say the solution in europe is for consolidation. you're not shy of consolidation yourself. you see this is something that is likely to happen?

what with the benefits bequest mark. >> let me say i agree with everything they have said and very importantly, they are not interested in consolidation so i'm just going to make some general, spread the first one is i don't think europe is ready for across-the-board consolidation. one of the important factors for example, i think politically right now i don't see that is something that could happen. in terms of the european banking system, i do think you can see the glass half empty or half full. i tend to see it half-full. i think we made a lot of progress over the past two years. we have not just the supervisor, but we have the rulebook and a resolution regime and i think

the next step, which is already being discussed is the insurance team. i think that is a very important systemic prerequisite. i think the political will has to be there, but the another important factor which is you also need to have in market consolidation. certain countries have had very significant consolidations. spain is probably the most important one. as you know the system had 50% savings bank and today we have a much more consolidated system. efficiency ratios in the spanish banking system are among the best in the big european countries. that is a very important prerequisite, probably before you get across the border. having said this, i think it would be a very welcome step. we need to be there if we decide to invest in digital and were facing competitors that do not have the strength that we have

sometimes in terms of investing for the future and i think if we could take the right steps, maybe in one or two years we could be ready. >> think of the challenge facing policymakers, political uncertainty, negative interest rates, failed claims, technology competition competition challenges, complexity, we've mostly got 14 elections in the next 12 months in its difficult to a difficult to imagine but against that act drop, coupled with the overriding british exit consideration, do you expect this environment to stimulate new ideas to promote growth? how do you see it? >> that's a very funny question.

first welcome i would like to say i agree with most of what all of you said but not with all. i am slightly more negative, although we actually had a good event not too long ago. i think this is the first time in a long time that a party won against the populist party in croatia. if you look at what's going happen in france and germany and other countries, to actually believe that the political environment could change such that we could be more hopeful for grip. it's good to ask the question but it's impossible. the elections in germany will be bad no matter what the outcome is, maybe there could be a good

event in france, i don't no, i'm not really hopeful. we are struggling in spain with no real solution and in the rather unimportant countries like the one i come from in austria or the other regions that we have, you have a clear tendency away from democracy to some form of some funny type of anarchy with a little bit of dictatorship. it's a really nice mixture. it seems to be working rather well. if the politicians are absent, we have some country where there's a completely inactive government. the government doesn't know what to do with the central bank

anymore in the parliament is run by three crazy guys who, one is liberal, one is communist and the other is conservative and they do what ever they want in the country's growing by 5% a year. i think we should support the nonexistent governments in our countries. >> will that's a refreshing, do you think that will work in france? >> i do not. >> you made the remark in your opening comments that the european financial system is very heavily dependent on financing contrast to the u.s. and they been put forward as one

of the critical elements. by reducing that benefit on the bank, we now have the unexpected challenge of the british exit. do see that changing the priorities or the timing of delivery or will we go on as we have done for some time? >> it is a priority. whatever we see the situation, my guess here is that policymakers and regulators will wish, at the end of the day, a smaller banking sector. what does it mean, they will wish a growing portion of the

economy growth by the market, by investors, not by the balance sheet of banks. right or wrong, we can have a long debate about this, but this is the trend. when you have that view, you need to. [inaudible] the danger is to put the car in front of the horse which is to say we want smaller banks and then we shall see. what if first we create a market there is the initiative of the commission and the market union and there are many questions behind this word i'm not sure we have gone very far and i would say we haven't gone far enough today. i will take a few examples. we need a much better capacity. we need a different way of mobilizing the savings of europe

they could be used in a different way. allocating resources to bonds and real estate investments is not the best way to support the economy. i've always supported this in a massive way otherwise we stop the debate about banking regulation. we do the job, if they want to change, it's not my decision but first they should do much more. when you look at the u.s., it has taken 70 or 80 years, it takes a long time and it's difficult and we need to do it. your question about british exit is a difficult question. on one hand, i have some hopes that the city could help be part

of this and maybe lead the process and open, but we don't know where were going to be on the goshen's there. even in this scenario in which the city will have a much lower role it's crucial to do the job and quickly. probably think in a new way and if i may mention simply to the audience, you're very knowledgeable. if you remember the process who created the euro, why don't have some kind of process to creative capital market which is to put people together and step-by-step look at all the challenges, there are many challenges, but we can do it step-by-step and it's urgent to start. douglas, i hope british banks

would take part in the city and that effort but if we can do the job immediately and move forward. we need it. >> absolutely. : >> absent britain's involvement because it will be part of the european union. how do you see that progress developing? >> first of all following up on some of the comments, with such