cancel but that's the way people have been talking about it. there is this fear, what will my colleagues think and what we'll might ask think and they are real fears. so what should people do as individuals and that is kind of my focus in the book. spent good morning i'm director of the center at the brookings institution. i am pleased to welcome mark carney to our virtual stage today. extraordinary is an overused word but his career qualifies for sure. if you look at his resume you think he is 96 years old. born in fort smith north the northwest territory in canada just because the official motto is perseverance and as an undergraduate degree in harvard and then oxford had

decade in the canadian government including five in the central bank of canada with the global financial crisis and then because that wasn't challenging enough became governor of the bank of england and is advisor to the british prime minister the us special envoy and vice chair of brookdale asset management men mentioned as a potential candidate prime minister of canada and is only 56. mark must have decided he would only write one book in his life so the new one is called values is several books in one. it is a history of money and a discussion of what markets can and cannot do well or what to do about it i'm probably one

of the few people that read all that came out over the weekend i think his book has a background briefing on all of those chapters. if you want a question then type it into the question box. >> and then that with value in the market determined something or other and values with the moral being in can you talk more about what were you trying to do to put things together and how they should

run in society that is market-driven but not market controlled? >> first of all thank you for having me and thanks to brookings for putting on this event and all the great work you do i've been a huge consumer and beneficiary over the coming decades. we are the g7 communiqué many people would be affected with those decisions but yes thank you for going straight to the title because with that causality in both directions so in the one hand which i and simplifying in a run-up to the financial crisis some of the underlying values that goes back to adam smith and in the

end most participants would recognize there is a role for other institutions with those customs and rules with good market functioning and their other mistakes and that is one of the contributing factors to the financial crisis. the values the marketization of aspects through society so the effort to bring in certain elements whether charitable volunteering so in that process there could be a

corrosion of those incentives so that is not the core element but that third aspect is when societal values. and in terms of climate change so to move out of that trade-off mentality as a policymakers but to the hierarchy there is certain objectives that become a focal point and that we are moving to that then the market informed with the right tools would be the driver to deliver those societal values. there is a lot in the book but it tries to capture those elements to use the experience

of the

kill the market only to listen to those divine lessons of the market so there was the approach in central banking and other light touch approach is regulation and other aspects but a lot of reassurance that market must have it right so that it wasn't going to happen are much less of what happens if it does what do we wish we had done in an event?

so in that case we deafly have the pendulum wrong. in the case of sustainability the issues with climate change that is market failure that is something we are more comfortable with i tried to argue over the years there is a tragedy on the horizon that we are discounting the future quite heavily by the time it is a clear and present danger it's too late to take into account so how do we change that? but in the end, that's a question of the political question until we get to that moment the market will not be

in service and with the regulators was take the opportunity to say this. but we very clearly did spur that g 20 process. >> that was a standard for companies actually not a standard but a voluntary recommendation for companies to disclose the risks going forward what they might do about it. and then to make a market in transition because some people thought it was an issue others didn't see you can have market some who thought it was an issue that the governments word act so this wouldn't end

up in the horizon so that shift to today not to the same degree in every country but in many countries and a lot of mention around this that they say no, we are going to move to the legislative objective $170 by 2030 even though it is canadian dollars, that's a lot of money and brings forward the future. has a long way to answer your question but that is determined by society but if you do those that are focused on the environment attend to

far too heavily discount the market. >> will get back to climate change. the first talking about money and cryptocurrency in the potential and the risk. i know the g7 says they are warming up to the idea digital bank central currency and they seem to be down on any rush like facebook libra until we have a regulatory bank so that this in perspective what you hardly have more positive than negative?

>> yes i thought that was eye-catching as well so take a step back we're in a time of competing currencies now they don't call it libra anymore it is a stable going what is a cryptoinstrument that is backed 121 by the underlying assets by the way ideally not just treasuries but liabilities in us dollars that matches the maturity of money which is instantaneous. i can think of one place that provides that called the federal reserve but nowhere else of by definition while i'm on that topic it shows the

bank of amsterdam in the book where the temptation to run a bigger mismatch over time was basically what the bank of amsterdam was. ultimately is not just a mismatch but what the amsterdam builds when previously they were back. so there is a lot of concerns with those queens but in the and a new cfo with a money for nothing type of approach.

and in the and why wouldn't you just have as a central bank why wouldn't you have your own stable claim that is tokenized? which is where i suspect this will go. but we have currency competition so a series of cryptoassets of varying degrees some of the most interesting ones are those that are solely specific some are for wholesale finance and to get the efficiencies in there and doing it in a way that serves our role so they were legitimate possibilities.

some try to play that on cross-border payments in the end the central bank saw that issue but we will see. and it has to be said we have seen that that going there is a gap in the payment system it is called ransomware. that is not a gaffe that you gas at the gap that you want to close so then so these are questions of the values we need something that is reasonably and and transparent and also needs key point and adjustment mechanism so talking about the gold standard in the book it was

ultimately too much maybe that's been one of the risks in euros as well. word i think it is headed they are more likely to be account based. i should say hopefully that those currencies will be efficiencies with those cross-border payments will come down most people don't see the cbd see that will be there insight with those private financial institutions which is private that probably will be in parallel with those native currencies for specific applications that are

legitimate gaps in the payment system by a subset of users the interoperability has to be established spirit the account based central bank currency currently have a current account with the bank but they have a digital account with the fed. >> yes. just as they do today it just won't be the banks that have those accounts. by the way i am a confident this will happen in the uk and other places maybe i shouldn't speak for the fed but it could be instagram or consumer facing and they need to have that account up top as well so the settlement is across the account in this case it is the bank of england.

>> and that is efficiency? >> it is as i understand it also potentially programmable for small contracts and other applications that are potentially very attractive and contingent to that that efficiency to the system although like much in this area is pretty brazen. >> and the currency lesson the society? >> if you think of the people that you know you are younger than im. i am 56 but i know a lot of people who will always carry cash. i wish that when i was governor in the uk we will continue to produce banknotes

i think we have a couple decades there will be residual. >> turning to climate, your basic argument is if we are serious about resisting climate change and you think we are increasingly serious about it and there is a consensus of doing nothing or as little as we have done in the basic argument is you want to bring resilience into the heart of financial decision-making had you get companies and banks and insurance companies and consumers to fully internalize the cost of our behavior with

the greenhouse gases? >> one of the key organizing principles is that zero so what has happened with climate change, this has always been understood for a long time that we can stabilize the temperature we cannot stabilize it intel we get to net zero two greenhouse gas emissions. >> can you define what net zero means? >> so that any omissions that exist because it's not just human activity but those are removed from the atmosphere so there is a process and the two obvious while they are growing

and carbon capture storage these are the two most obvious ways and the point is that the physics of it is the carbon in the atmosphere. so that organizing principles said that was the objective is a net zero cost the us has joined this commitment to get a few other emerging economies so then that boils down to accompany her financial

institution that question is can you operate in these jurisdictions and what is your plan for that zero? you can have a plan which is there are three options. i don't have a plan because i don't think it is credible or will actually happen may be some issues with stakeholders and you may be surprised. the second is i don't think i can get to net zero and i will run off my business and these over 15 or 20 years and the third option is most major companies is i am committed in putting in place a plan now a

financial system to get that information is not the same as the net zero plan but you are judging companies do they have a plan are they likely to succeed with their plan? so they be competitive in the world moving to net zero with tighter environmental regulation from low carbon technologies? that is a decision point on company values. and not just in the extremes of coal and heavy oil but moving into the core of the system. and that the president biden

summit in april there was an announcement of a new alliance 160 of them $70 trillion of assets that is a huge amount of money so committing to have those plans for their own assets now the last point what are the ways to build those out as a stress test? but what is critical to build the system is the incentives are there to finance the transition they are they are so if i invest in a company whose omissions might even go up but those omissions will

come down over time and on the surface the binary approach of green assets and brown assets. but that is not the transition that doesn't get us to where we need to go we need the automakers so the system gets the omissions down. >> let me pick up on that i noted on twitter i would be talking to you you heard from people yourself suggesting a company like brookfield is also investing in pipelines.

so what is the role of the day against institutional it doesn't give the resources to make the transition. >> with those 70 trillions. and with that manage alliance of that investment of asset manager. but we map the curb in footprint with a decarbonization plan we have a specific strategy to help accelerate the transition but

also the overall footprint of the $600 billion in assets but it's one of the biggest renewable power generators in the world 20 gigawatts of power and another 23 in production and london and paris or chicago and new york in terms of scale of the generation and here is the key thing so when we own pipeline infrastructure bad judgment is the pipelines how likely is there to be natural gas going through these pipelines is there an option value to be converted to a hydrogen blend and then the value judgment but with that sort of thinking

hasn't been mainstream in the capital market that moving to mainstream quite quickly which will enhance the value of certain infrastructure investments because they have value it is in jurisdictions or the lowest carbon solution for a it of time or it can be extended further reasons but that thinking of the transition so the simplistic thing is what we tried to avoid to say that is hypocritical but now it is not it is an energy transition others make different judgments we could be wrong the transition could happen

sooner but we are grown up we get more right than wrong. >> you are speaking to us today from ottawa and candidate has put a price on carbon it doesn't seem to be imminent but will that create some issues and be difficult for canadians to say this is great we do our part in the us gets a free ride? >> yes the issue with carbon leakages a growing one and trade policy and as your question suggests and politics it could be canada and us or canada and us and china but maybe i can answer it in terms

of how we think trade policy might go around this issue. the first is it is a smaller group of tradable products where dc is a big issue but there are pretty a motive ones like a classic example second what is openly talked about the europeans are launching and to be wto compliant the easiest way to do that is based on a carbon price. i have a price and you have the price top line when us

doesn't have a carbon price then you get to a world of shadow pricing. so is the equivalent to my omissions standard for the price of carbon? you get the point. so there is that and the other is around product standard. if you have the carbon component, steel has to be a certain quality. my personal view is that over the next several years it's more likely to land on the product standard side but because the us doesn't have a carbon price and doesn't seem like they are likely to have one in the foreseeable future despite all of those economic benefits. >> that this deal was made in

a way of carbon emissions. >> it's the ability to measure this is the ability to map that and in this dealmaking process and the carbon to deliver the steel to the ports. >> what about china and india? you can't fix this problem without them they say you used up all this carbon capacity and now you want to restrain our growth they talk a good game but still building coldplay so when you talk to them how do you explain to them or how do you read them? are they serious?

>> it's easier to answer the second. it's incredibly important and then 195 countries and that the chinese that they are explicitly taking the view low carbon and those carbon industries and there is a day economic motivation toward net zero.

and with those other major economic powers. and this is we are forcing the market but the second thing is that the chinese have shifted their stance. and in 2025 and then begin to manage it is that impression on coal in the latter half of the decade. the objective is an advanced economies by 2030 and 2040 and emerging economies to the extent the global carbon budget can work there is that element of growth.

the chinese are they again solar and electric vehicles and other things. we collectively have a strategic issue for what it is essential for the climate applications including canada that is part of the solution but the extended part of the solution so we need to think that through. but on balance i think china is a force in this and the largest emitter but one who increasingly is central to the solution. it is more straightforward and a federal structure but it is quite clear fed is formalized with a net zero commitment and remains to be seen that on a

scale of ambition the power side is enormous one of the most attractive opportunities. and i think, im pretty upbeat on india in terms of what will actually happen on the ground while these have shifted. so we have left this issue and we left it very late. so the scale of what needs to be done is enormous. you can pick canada. we have huge changes that have to happen here. and that is true for virtually every country. >> and with the role of central banks, you pointed out in the uk if anyone has broad

supervisory responsibility including for insurance companies. >> which the federal reserve doesn't have so the european central bank suggested maybe they should have their portfolio like quantitative easing to get people at the federal reserve the shivers. so the role of the central bank and the financial supervisor in this area is pretty straightforward that institutions are taking risks they don't fully understand it is the role of the supervisor to point that out. but if you get to green bond portfolios is that a step too far or every tool that we have quick. >> yes. you have summarized it well. maybe don't fill it on - -

follow on a daily basis but the bank of england received three letters a couple of months ago which said the policy committee and the stability committee and it is consistent within the legal framework so as a secondary or supplementary objective you have to take that into account what the bank of england is doing and i would recommend if people are interested, they has come out with a discussion in consultation power on - - paper for the purchase program to take climate change into account. 6 percent of the uk corporate bond market could set a

standard as a de facto standard. but they also receive a letter because it's not just like the current government's policy but it is so integral to policy that you have to take into account now go to the us where it's the current government policy not legislative not just the mechanic of regular letter on - - letters from the treasury secretary to the fed chair. and in general when i was a central banker is one of market neutrality so that you are not disturbing and have price discovery to get that effect on quantitative easing or you land collateral with a credit standard but once you

me that you can tie collateral in so my personal view is you need that grounding with the bank of england the ecb has with the requirement for them to take into account the core policies. it is pretty well-rounded legally and if they get along the german constitution court will be looking at it. [laughter] so my read is that it doesn't exist for the fed so we and up with different central banks doing different things they are all correct and what they

are doing but it's the nature of the institution. >> by the way i do think that some people around this is fully informed and the bank of england are the ecb is opposite actually the bank of england it could not be clearer. >> and then to operationalize your recommendation and with that economic decision-making so when the society decides to do something then you are just in a way to make this happen but it is predicated if the values are important enough. and the question is asking how

do we make sure that policymakers do that? >> and actually if you go chapter 16 it goes to policy and the focus driven company that these are examples of how you do it. so we will do three quick lines. so what are the values important for market functioning is an important for senior managers not just for themselves but for their institution and the system. how do you embed that? and with that compensation of holding back bonuses and letting those being clawed back. it's like the senior managers regime where i am not

responsible for everything that the people that work under me do but i am responsible to train them so they know the rules and have the tools. if i don't do that in the uk i am on the hook for that so then to take that responsibility in terms of sustainability the way we do it apart from countries setting up objectives of climate stress testing and those supervisory requirements it's you thinking is a senior manager and a board member what does my portfolio look like if the country does what it says it wants to doing get to net zero? i might want to take that risk. nobody knew the answer to that question a few years ago. and then with resilience and i will stop here which is another value in the book and

to be honest that is something i said earlier which is maybe a little more for public officials that getting into the habit of planning for failure. don't spend the whole time telling yourself a cyberattack won't get through but what do you do in the event a large systemic bank is frozen for a period of time because of a successful cyberattack? what do you do in that case but that's part of the role of building resilience. so these are examples basically of how you embedded and then it's more than just a hold hands and say let's be better people the book is anything but that. but just to be clear in the end these are values about

longer-term economic prosperity. i am an economist after all. >> as an economist in the central banker had for a moment there is some concern particularly here that we have the very physical response to the pandemic which works out extraordinarily well. in march 2020 and where we are today that now there is a growing angst of doing too much beyond our objectives and i look at the world of inflation with monetary

policy? >> i think the prospect of the last month and a very short-term here where it has been well telegraphed of those factories pushing things up and then focused on the development horizon for policy. i think there are signs that inflation will be above target above the horizon from here so if it runs the fomc next week looking forward there are signs in the labor market in terms of supply shortages it's a little more than short term but is a reasonable reason to

expect sustained momentum all subjected to it's right in front of our face but also the uncertainties of covid variance and all of that but the prospect of inflation being above target and i think the balance of this is headed in that direction. >> and lapsing into a central bank we will speak there. if you decide to add to the federal reserve i will put you on the opposite or the hawkish side of the spectrum. one of the things that struck me as i read the book was it is very comforting because you describe ways we could embed

values and economic decision-making that don't require us to give up electricity. you describe how we get from here to there and you made the point earlier it will be hard because we waited too long but when you look at the political system in the united states and the polarization and what the uk has been through and the rise populist in france and germany, the israeli democracy, i wonder how you reconcile your relatively upbeat feel without full policymakers can get us to a better place with the political system determined to

prevent that from happening. >> yes. a few suggestions on this issue which is first it does put a premium on measures i will say green measures but have immediate payback in terms of jobs and economic growth so it's an obvious point but it does bear repeating so one of the simplest things to do certainly in the uk you go to the houses with all due respect but the room that you are in here in washington so that desire and all the need for them in the material to

their reductions and then you employ a massive amount of people that covers the whole country there is a series of industries in the uk on the renewable side which has very high multipliers in the less advantaged so then you do those thoroughly that has tangible benefits and say that's what this is about and then as you say your writing round on bicycle the rest of their life but in parallel what you want to do i agree it's hard but because of the political dynamics you need enough consensus for this to be credible, you want to lay out a path for tougher regulation down the road the advantage in the uk there is no new internal combustion engine sold it is credible and

is the investment in the uk one of the big decisions for the biden administration what is the equivalent of that? 2030? are not died explicit as a fuel standard? it seems like gm and now ford got the message so you do things farther out but then what you spur investment if it is predictable but it's something i worked on with janet yellen to have something better to do. [laughter] and you have to rely on and it sounds risky but there is a tangible bailout to these measures in the last point is

it would be interesting let's assume for the purposes of this discussion a change of administration with a more skeptical and at the republican party running the two houses and the presidency if fax on the ground is geared to this but then that's what would be in my hand on - - my head to have some paybacks of the benefit is continuing that this is one of the competition.the china no question and i would suggest it would be as big as digital as an attack generally from an

economic opportunity but a geostrategic influence perspective. >> i think i'm asking a different question. you are governor of the bank of england during the brexit vote. you were very outspoken and talk about why in the book of the economic risk britain was running to the european union and as you say be ready and you were. and you got some grief for speaking out. but yet despite people saying not a great idea they voted to do and the british government currently has upheld that part of the bargain. do you have no doubts about our democracy to do this? >> i definitely do i'm sorry i was trying to that i start

from the position the premise of your question is exactly right. there is our risk of the shift it depends on the jurisdiction for example in canada 70 percent to be more precise of the votes the last several elections were four parties that were aggressive on climate or more aggressive than the current government that's a pretty being consensus and they are likely legislated rather than policy so that's what i did and cannot even more so the uk and europe but if you are a politician that giving people what they really want is jobs and that progress the us you know better than i is not in that position to stop and

start australia has been in that position so it does matter i guess the way i would put it to bring it back to the book is that there is a value of dynamism in the book which is market returns so unless you are delivering that alongside sustainability, you will not get to what you want and if i can bring us back to central banking one thing we always cautioned as the bank of england is in the financial stability role they will end up with the stability of the graveyard they will pay capital so high in the bank so that there is no lending and it's good we had that to take it seriously so to have the sustainability that is

sustainable in all sense. that's not sustainable politically. and with the chapter in leadership and with those aspiring leaders who what are the most important lessons you have learned in your time in these roles? >> i mentioned this earlier and one is humility and that's the nature of the role as a central banker look at class half empty a lot. with brexit i had to think about what could go wrong in prepare for it. that aspect of humility and a more positive aspect which is i certainly had a lot of good

fortune and that the gartmore a good fortune so don't take yourself that seriously and remember your responsibility when you are there and then the basic point which is increasingly understood as a leader you set goals that part of the way to get people to follow is to get them to be fully engaged and how to solve the issue and then it's not about just diverse voices at the table but they really are a part of making decisions and they feel they have been heard even if i decision does not go their way they understanding get behind it and that is a learned skill it may be

inherent for some people that i have learned that over time that it is important to do that and it does take more time than a top-down leadership that is far more effective over time and far more satisfying for everybody. >> . think it has been a fascinating hour i appreciate your time. we were meeting in person i would hold up your book but as i said there are individual chapters will go back and read as a very valuable resource. thank you for your time. >> thank you very much.

>> welcome to the beckett kirk show i have a very special guest jack phillips you may remember him or know him as the owner of the masterpiece king shop in colorado is just read in an amazi