and we shouldn't be shy about helping families to have children because of the reasons you said. we need people paying taxes and supporting the programs that are going eventually bankrupt. i haven't heard you talk about the positive way that we should be supporting child rearing not for religious reason, but because the country needs population to support itself. >> i certainly would agree that family formation marriage and having children is not an activity we ought to be discouraging. but the idea behind this is not to encourage it, not the to subsidize it. it is simply to get rid of a penalty, to level the playing field. the playing field is not level right now with regard to american moms and dads. and that's what this is doing. i'm personally not comfortable with describing that as an encouragement, as a promotion or subsidy because it's not that.

we're just taking away a penalty. >> and i'd add i've done high part i have four kids. but let me add this, if a business entity were to invest in capital, or were to invest in machines, in expansion they receive tax benefit for doing so. but if an individual family decides to make an investment in people, in our future and human beings, all we're asking is that the tax code recognize that as well as an investment in the future. in individuals that will be the corner stone of america's future. that doesn't mean that -- look, we're not approaching this with a thought process someone will sit down with their accountant and said what you really need to do is have two more kids. but it's a reality that izraising children is expensive. we just want our tax code to

recognize that and create parity for families that decided to take on the important work of raising america's future. >> we have time for one more question. this gentleman and then the senators have to go. >> you mentioned conservatives with flathter tax plans. why reform the existing system instead of a monumental flat tax that effectively abolishes the irs? >> first of all, love the idea of abolishing the irs. whenever we talk about that we're referring to the complexity of the tax code and the the the corresponding discretion we give the irs. a sex

today the tax code stands about 12 feet high. and that's a big problem. i sit on the joint economic committee. we had a hearing not too long ago and a gentleman was a witness testifying, he had a ph.d. in the u.s. tax code. i feel really bad for that guy. that's high school dis that's his dissertation. i asked him do you do your own taxes. he said no. because there is absolutely no way i could know with certainty that i was getting it right. so complexity is a big problem. that's part of what we're trying to achieve here. i love the idea the sim police i that would go along with a single rate taxation system. if we were starting from scratch, i think that would make an enormous amount of sense. we do, however, have to start with the system that we have rather than the system that might have been had we followed a different course in in decades past. and as i've looked at it, as

i've examined it, i can't find an effective way to move to us a single rate system that protects america's middle class, that doesn't involve raising taxes on a whole bunch of middle class americans. there is a way of coming that with two rates. we achieve an key leveling of the praying field without imposing a middle class tax hike. >> power of the iirs is directly related to the complexity of the tax code.>> power of the iirs is directly related to the complexity of the tax code.middle class tax hike. >> power of the iirs is directly related to the complexity of the tax code. more powerful all bureaucratic agencies become. earlier in in the conversation someone brought up obamacare. obamacare has forced the irs to add additional employees just to enforce that law. so we're trying to get a point that is flatter and simpler and thereby easier to administer and

reducing the size and scope of the impt rsr scht and its power and also other regulartory agencies. >> please join me in thanking senator lee and senator rubio.

join us live later today when samantha power will testify about the 2016 state foreign operations budget. she may be questioned about the obama's administration to remove cuba from the state sponsored terrorism list. that gets you said way ss under way at 2:00 p.m. eastern. ahead of this --

>> this weekend in ladies and gentlemen is the annual "los angeles times" festival of books. and book tv will be live both april 18 and 19 from the university of southern california campus. deputy publisher of the "l.a. times" joining us. when and how and why did the "l.a. times" start sponsoring this book fair? >> the "los angeles times" started this book fair about 20 years ago. it's the 20th anniversary of the festival of books. just an important way that the newspaper could engage with the community to provide a space for all kinds of people from publishers author, thinkers, but also chefs an artists and actors and actresses to come together to celebrate los angeles as one of the creative capitals of the world. >> and what can we expect next

weekend in los angeles? >> we'll have over 500 authors celebrity, musicians, artists as well as hundreds of book sellers, publishers and culture al organizations across nine stages. there is something for everyone. bring your kids, your grandparents. a huge amount of stuff going on. some of the notable names, we have candace bergen billy idol, joyce carol oates, pauly peretti, tavis smiley octavia spencer. it is something for everyone. families foodie hipster, student, spanish language programming. more than 100 conversations on everything from california to digital privacy rights to the future of the american identity. >> what kind of reaction do you

get from the community to a book fest? >> it's been an immediate success. when it was started 20 years ago, right away became a corner stone event in los angeles culture. it's been a way the "los angeles times" invites all kinds of folks to celebrate this great city. it's grown to one of the lamgest festivals of its kind. there is nothing like it anywhere in the united states. it started very simply as bringing together people who create books and people who love to read them but it's grown into this much broader celebration. among other things, we have a big book award we give out every year. this year we're having something called an ideas exchange where malcolm gladwell will be in conversation with a film critic.

if you listen to npr, you're probably familiar with his voice as the npr film critic. >> as regular viewers know book tv will also be there and we have partnered with the "l.a. times" festival of books to create a book bag. and we will be handing those out from the c-span bus and if you're familiar with the area just off the usc campus, we're just about half a block from tommy trojan. and is there a cost to attending the festival? >> bulk of the events are free. some are ticketed due to limited space. but this is really a chance to invite the country in to invite los angeles in and in partnership with chlt sc to look at california. california as the gateway to both latin america and to pacific rim, to look at some of the future -- some of the challenges the country faces in this its future that are quite acute in los angeles from

drought and climate change to immigration and the multicultural diverseity of this nation. across the board, all kinds of exciting opportunities. >> you can go to latimes.com and also follow the book fest @lafob los angeles festival of books. thank you for being on book tv. >> looking forward to seeing folks next weekend. >> and again, book tv will be live on c-span2 all weekend next weekend from the "los angeles times" festival of books. saturday and sunday, april 18 and 19. go to booktv.org to get the full schedule. a lot of call-in opportunities, a lot of panels. a lot of nonfiction authors that you'll be hearing from all weekend lock onng on book tv. ahead of the world bank spring meetings christine that guard spoke to the atlantic

council about the state of global economy. frederick kemp joined lagarde after her prepared remarks for a discussion and moderated q&a. this is about an hour. >> i'm fred kemp. and it's my pleasure to welcome this impressively large audience. we have no more seats available and some people in the hallway. let me particularly welcome our atlantic council board members. atlantic council member members of the diplomatic core and public officials. as well as online intelligent audience. if i had known how popular your

appearance would be, madame lagarde, i might have tried to scalp the tickets. it's an even greater pleasure to introduce our speaker, a remarkable leader navigating difficult times. wregs link with challenges every day with grace, courage and clarity, ranging from ukraine survival to the european union's future to broader underlying issues we'll discuss today regarding where the global economy will draw its future strength and sustainability. after madame lagarde's opening comments, a curtain raiser as we used to call it in the wall street journal ahead of next week's imf world bank am spring meeting, i'll engage her in a conversation also drawing upon audience questions here and online. so i encourage you to continue to submit your comments and questions using #ac global econ.

i first ran across christine lagarde when the wall street journal europe was putting together its 2002 top european women this business rankings. i was then editor there. to celebrate women who were pushing through the mostly male ranks of corporate europe. the jury of experts ranked her mopping our top ten final lists. but then highway had a dilemma. as a french lawyer at a partnership organization, was she really a business leader. and as she chaired a chicago based company, though it was global, did she count as a european executive. but the editor intervened and the judges were taken by her accomplishments and the certainty that she would only chief more. it was revolutionary that baker

and mckenzie, the world's third largest law firm, elected her as the youngest partner and second november american to ever run the firm. her consensus building skills such an underestimated and historically crucial talent that she demonstrates at the imf. our jury placed her at that time number five on our list which i at the time referred to as a result of the chicago penalty. but if i named the other four for you today, you wouldn't know them. nine years later in 2011, another jury this time at the the atlantic council got it more right. we gave her highest recognition in new york alongside the u.n. general assembly atlantic down i will's global zipt award. by then she had been finance minister in france atop the baker mckenzie experience of steering 500 lawyer egos at 60 officers around the world.

good preparation for running the imf and its impressive staff of more than 160 nationalities in 182 countries on which in unstable and corrupt settings. in presenting the award to you, madame lagarde world economic founder said, quote, i would define a leader with four characteristics. to have a soul, to have a heart to have brains, and to vhave good nerves. leaders by and large don't get to choose the challenges they only get to choose how they address though challenges.

we look forward to hearing your opening comments today, madam lagarde, on the state of the global economy, and how we might best address its most pressing challenges. we at the atlantic council often speak of how we together as the atlantic community, alongside our like-minded global friends, confront a defining moment in history, perhaps as pivotal as 1919, 1945 or 1989 when the decisions of leaders like yourself, and that of the member countries you represent, have outsized importance. so as i turn the podium to you, let me paraphrase clause schwab in thanking you for making all the personal sacrifices that public service requires at such challenging times and using his words, salute your soul, your brain, your heart, and your nerves. madam lagarde. >> well, thank you so much, fred. and i know you're a true friend because you're one of the very few who introduced me without referring to my muscles. because people typically refer to my belonging to the synchronized swimming national team in france. so thank you for that.

and don't believe that fred and i always coordinate our colors. but it so happens that we are black and white together. the council, fred, board members and members in the audience, is renowned for its capacity to actually bring together top international policymakers from both sides of the atlantic, and from further afar. and this is clearly something that is in common between our two organizations. the atlantic council and the international monetary fund. next week we will be hosting the spring meetings of the world bank and the imf and we will be welcoming to washington, d.c. representatives of our 188 member countries. finance ministers, governors of central banks, and they will focus their discussion on the state of the global economy.

since our last annual meeting in october, there have been a lot of developments on the global scene. i would say that it has, first of all, inherited from a big shot in the arm as a result of the decline of oil prices. in addition to that, it has had the benefit of a strong economic performance by the largest economy in the world, the united states of america. and overall we would say that macro economic risks have decreased. so the global recovery continues, but it is moderate and uneven. global recovery continues, but it is moderate and uneven. in too many parts of the world, it is not strong enough, and in too many parts of the world, people don't just feel it.

in addition to that, if macro economic risks have declined, financial and geopolitical risks have increased. it is not that overall growth is bad. 3.4 in 2014? it is not bad. it is actually in line with the average growth that we have had in the last three decades. so what's not so good about it? what makes it moderate and uneven. well, it is rather that given the lingering impact of the great recession on people, it is actually generating hardship for many people around the world, including those countries where more than 50% of the youth population goes unemployed. so growth is not good enough.

six months ago i warned about the risk of a new mediocre. new mediocre, low growth for a long time. now today what we must do is avoid that new mediocre becomes the new reality. we can do better, and we must do better. that great atlanticist, john fitzgerald kennedy, once said, and i quote, "there are risks and costs to action, but they are far less than the long-range risks of comfortable inaction. so comfortable inaction is what must be avoided. and that's what i would like to focus on. how to lift growth today by using all available tools and

policy space available. how to lift tomorrow's growth and prevent that new mediocre from becoming the new reality. and how do we work together to strengthen the international financial system, foster development, and make growth more inclusive and actually sustainable. let me begin with a quick health check of the global economy. now those who follow the imf know that the world economic outlook will be publish next week so i'm not going to focus on numbers. they become to the world economic outlook. i'm going to talk about the broader trends and policy recommendations. as i indicated earlier, growth remains and we forecast it to remain moderate. roughly, roughly the same as last year. advanced economies are doing slightly better than last year.

as you'll note, the recovery is firming up in the united states and the united kingdom and the eurozone is doing slightly better, as well, and is promising. but if we look at the emerging and developing economies, they're doing slightly worse than last year with lower commodities being the driver. and while they still represent and probably will continue to represent about 70% of global growth this year, there's tremendous diversity within that group. do you remember the talk about the brics? well, picture has changed. and if india is a growth bright spot in that group, china is slowing, although its growth is certainly more sustainable. sub-saharan africa continues to

perform strongly, but russia is experiencing economic difficulties. brazil is stagnating, at best. and many parts of the middle east are beset by political and economic turmoil. so we should not think of emerging economies as just one single group. each country faces very specific circumstances, some of them easier, some of them more difficult. so what does it imply in terms of policies? with overall growth moderate, the global economy continues to face a number of significant challenges. there is, for instance, what i have called last year the low-low/high-high risk. low uninflation, low growth, high unemployment, and that

exists for a number of economies. clearly all policy space and levers must be utilized and it begins with demand support. how's that implemented. well, first of all, continued monetary policy accommodation is needed especially in the euro area and in japan. fiscal policy needs to be calibrated to the strength of the recovery without ever losing sight of debt sustainability. but the effectiveness of those support measures can be significantly improved because they've been at work, for some of them, for a little while. they can be improved. for example, unclogging the channels through which monetary easing and fiscal policy work in the euro area. how? well, effective insolvency frame works to deal with the total stock of no less than 900

billion euros of non-performing loans that is blocking credit channels. in japan, the authorities need to sustain momentum of the second and the third arrows -- one is fiscal consolidation, the other is structural reform -- in that country is going to take the full benefit of the first arrow which was indeed monetary easing in order to lift both growth and inflation. third way of being more efficient, by leveraging lower oil prices to reduce energy subsidies, emerging and developing oil importers could save, on average, a full 1% of gdp in 2015 alone, and those

resources could be put to better use in order to invest in infrastructure, in education, in health. so those are some of the macro economic dimensions. as i've said, macro economic risks are decreased. what has increased, on the other hand, is the risks posed by the financial dimension. financial stability is more at risk now than it was six months ago. the new mediocre that i talked about, that new mediocre growth is not a comfortable place with respect to financial stability. financial risks have migrated. for example, they have migrated from banks which are far more regulated and better supervised and heavily tested, to non-banks. they have migrated from advanced

economies towards emerging markets. let's go through a few of those risks. for one, there are adverse side effects of the very low or even negative, as we clearly saw, including on the primary market today, very low, if not negative interest rates caused by otherwise necessary accommodative monetary policies. these foster a higher risk tolerance on the part of investors which can lead to overpricing. and if the low interest environment persists, it can create solvency challenges for life insurers and defined benefit pension fund. so the purpose of these policies is to actually kick-start growth. but if it was to last longer, then it puts some of those business models at risk.

or think of another one, the wide movement of exchange rates that we have observed recently. for the past six months, the u.s. dollar has appreciated against a basket of major currencies by 12% in real terms. now some countries with more difficult macro economic conditions and less policy space have of course benefited from the relative depreciation of their currencies. in others, large amounts of dollar denominated or foreign currency denominated debt. these dramatic swings can be destabilizing and this is particularly the case for corporates in the emerging market economies that are wedged between a strong u.s. dollar on one hand, lower commodity prices on the other hand, and with my third hand, higher borrowing rates. on the top of which they might not have hedged.

and that is a bit of an uncertainty where we have little information. now these risks taken individually -- the ones that i've just mentioned -- could be manageable, but we also have to contend with a structural decline in market liquidity. it is a risk that we had flagged about six months ago. and this is due primarily to recent changes in the structure of the asset management industry in advanced economies which have created a mismatch between the maturity of assets and of liabilities, which means that liquidity could evaporate quite quickly if everyone rushes to the exit at the same time, which could make for a bumpy road when the federal reserve begins to raise short-term rates. so this new configuration of financial risks underscore the

importance of strengthening financial policies. at the global level, it means ensuring market liquidity during times of stress, improving macro and micro-prudential policies for non-banks in particular, and following through on the regulatory reform agenda, particularly the too big to fail institutions. at the country level, it means curtailing excessive risk taking and managing existing vulnerabilities. and again, while the appropriate menu of measures must be specific, the overall set of policies can help us to lift growth today. so much so for growth today. as i said, moderate, uneven, but recovery under way. but what about growth tomorrow.

and that's a big issue. because growth tomorrow, as we analyze the potential for growth, is also moderate. in both advanced and emerging economies, potential growth is being pared down. and this largely reflects several factors. one is lasting scars from the financial crisis that the world experienced few years back now. and probably scars that we had underestimated. but also the undercurrents of changing demographics and lower productivity. so to prevent the new mediocre from becoming that new reality, structural reforms need to go hand in hand with macro economic and financial policies to raise confidence an generate investment. and frankly, whether you look around, there are too many countries that talk about structure reforms but don't

actually do structural reforms at the depth, at the speed where they should be done. and structural reforms really span a wide range of policies. some reforms have immediate effect. most reforms have more medium-term effect and take a bit longer to bear fruit. i'll give you an example of one -- i wouldn't call it a reform, but it is a set of measures which requires often reforms and a bit of creativity around ppps, for instance. but some reforms are right at the intersection of what can actually have an effect in the short term and will certainly improve productivity in the medium to long term. our own research shows that boosting efficient infrastructure investment can be a powerful impetus for growth both in the short term -- you stimulate activity, construction sites starts, employing people.

and in the long run, you improve infrastructure, you make sure people and goods can actually travel properly. other reforms, such as that affect the labor, product and services market are likely to unfold positive result over a longer-term horizon. yet they are essential to enhance productivity and innovation which, in turn, can be powerful antidotes. to the impact of something that we cannot do anything about and that is affecting all of us -- aging. we've done a bit of research, not so much on aging. other people can do that a little better than us. but we've done some research on structural reforms and we've tried to flesh out priorities and payoffs in labor force participation and trade. let me take them very quickly

one after the other. let's look at productivity growth. reversing that decline in advanced economies requires lowering barriers to entry in product and services market. our research shows, for instance, that improving the allocation of labor and capital across sectors can significantly increase total factor productivity, tfp, as it's called. another example is the potential benefit from improving access to finance for smaller businesses. you know, everybody talks about smes. we have to encourage smes. well, of course. of course. because they generally -- most countries, certainly the advanced economies, but also now to a much larger extent in emerging market economies -- they represent most of the employment and they represent the largest number of companies. well, unfortunately, if we look

at europe, for instance, they also hold a share of non-performing loans that is 50% higher, on average, than larger corporations. so clearly putting the small business sector on firmer footer would yield a big payoff. this is same story in china. where small businesses play critical role in the economy in terms of output, employment, tax revenue and innovations. and where access to financing is extremely difficult. i discuss that matter with the prime minister of china and it is one of the angles that they want to use in order to stimulate activity by the corporate world. if we look at emerging market economies such as indonesia, and russia, they can read productivity by easing investment limits and improving the business climate. countries like brazil, india, south africa, they should certainly focus on reforming the

education, labor and product markets. and in low-income countries, as well as in the middle east and central asia, improving governance, eradicating corruption, or trying to, as well as financial inclusion will help lay the foundation of a thriving private sector. so that's for the productivity improvement as far as capital and investment is concerned. if we look at labor now. there is an important set of measures that is needed to remove barriers to labor force participation, and that is key to tackle inequality and ensuring a broad-based growth. i'll give you a few for instances. in japan and in the euro area, too many tax disincentives exist. and where a change of tax

policies that would be more growth friendly, more labor supportive would be very welcome. and there could be budget neutral. in too many countries, legal inequities still exist. and what do they do? they create barriers to greater participation by women in the economy. we've done a very interesting study, and from all the countries that we've studied, 90% -- 90% still had legal inequities in the books that prevent access of women to the labor market. and as we know, closing the gender gap -- which is one of the goals of g-20 -- only by 25%! a little 25%. over the next decade could actually result in the creation of 100 million jobs. now that means something for both growth and poverty reduction. and finally, on trade, there are potentially huge global gains to be had from further trade reform

and integration. as we know, trade has been a major driver of economic progress over the past three decades, and yet again in 2015, and for the fourth year now, trade will be below average trade in terms of growth. recent efforts have been welcome. the bali agreement which was a subset of the doha long expected non-agreement could actually generate a lot by way of trade facilitation. estimated to actually develop an economic boost of $1 trillion u.s. annually. not only should this bali agreement be implemented, but we need to be more ambitious because trade remains a very major engine of the global economy.

to lift growth, create jobs, and dispel this new mediocre that is lurking on the horizon. of course, it's difficult. those are political reforms, and anything that is structural reform or that requires international consensus is difficult. they involve tough choices, tradeoffs. and there are winners and losers in the short run. but in the long run, everybody can win. so how do we win. well, our view, my view, is that we can only win by working together. and i'm struck by how action to lift growth is becoming increasingly country-specific. you know, gone are the days when you could see the advanced economies, the emerging markets, the low-income countries. no. it's far more complicated which probably includes something like

128 boxes depending on what criterias you use. yet, all those issues that i have referred to, macro economic, financial risks, productivity increases, all of that is also very strongly interconnected and multi-layered. so the challenge for policymakers around the world is to combine the policies needed to boost today's growth with those that will fortify tomorrow's prospects. how can you actually use your short game to make sure that the long game is going to work. and to leverage those national initiatives that are needed to the benefit of the global community. if you think of it, what is good for a country is going to end up being good for the whole community. if countries strengthen their banks -- domestic banks -- it will not only serve them well,

and their clients, but it will reinforce the global financial system. if countries anticipate and hedge against currency variations and volatility, it will not only serve them and their own financial sector, but it will support global financial stability. and if countries implement climate-friendly policies, it will benefit their population and also contribute to reducing global emissions. so to all those who will say, oh, we have to wait until the others come on board and reach an international treaty or agreement, or something that is intergovernmental -- no. national policies will actually take the global issue further. but we also need a multi-lateral system that can actually

leverage these national benefits and help avoid inconsistencies, risk of arbitrage that could actually generate negative spillovers. in a highly interconnected world with new and dynamic centers of political and economic gravity, generally east, there is simply no alternative to what i have called new multi-lateralism. say what is that and what needs to be done to reach that new multi-lateralism platform. well, first of all, everybody must find its suitable seat. emerging market and developing countries must have greater weight and voice in global economic institutions to reflect the actual new reality and that of the contribution and responsibilities in the global economy. i have a clear example in mind. the imf 2010 quote on governance reform. which is intended to precisely

meet that objective. listen to that. virtually our entire membership agrees, and we now only await one ratification by the u.s. congress. it is overdue. so if you meet any of them, tell them. and we're not going to give up. i'm going to continue asking them to please do it. if only to assert u.s. leadership in a key institution for global financial stability. but, you know, we can't wait forever either. so our membership is currently considering interim steps. i'm not saying substitute. interim steps that can take us a bit closer to the ultimate objective.

now there are further measures as well to strengthen the resilience of the international financial system, and that would include enhancing cooperation with regional facilities and institutions, including the new asian infrastructure investment bank as i have said three weeks ago in china. there are many institutions that have burgeoned in the last few years in europe, in asia and in various places. and we need to work together. we need to to cooperate to coordinate. second option, increasing the role of the special drawing rights. facilitating integration of dynamic emerging markets into the global economy. of course, firming up the imf resources which again relates to the quota reform that was intended to in 2010. as a result of that, the international monetary system

would be reinforced and become more stable. so that's for the international monetary system. what about the international development system. well, 2015 is really a very special moment for development. and an opportunity to make a tangible difference in the lives of a very large number of people, particularly the poorest. there are three critical issues on the 2015 agenda. one is financing for development which will be discussed in july. the second is the new sustainable development goals that will be discussed at the united nations in september. and the third one is the climate change that will be discussed in paris in december. and they all interlink in many ways. now the imf will be a committed partner in this effort and i intend to discuss with our membership next week how we can

contribute through not nice words, not good intentions, but actual deliverables in the three core areas of our business. because we cannot suddenly invent ourselves as the new development experts or the climate gurus. but we have areas of business which are our core businesses where we can certainly contribute. let's look at financing first. actually, we've already made a down payment by recently contributing $390 million to the ebola affected countries, including -- which is very unusual for the imf -- $100 million of debt relief. the imf doesn't do that. but on that particular occasion, the board very strongly endorsed that proposal. what we have done as well is that we have set up a catastrophe and containment relief trust.

because we realized on the occasion of this drama that affected sierra leone, liberia and guinea that we did not have the adequate instrument and we had to repurpose resources. we will, in addition to that, explore the potential to increase access to imf resources for our poorest members. second core area, policy advice and analysis. we will continue to help our members with essential support for what very often the low-income countries need badly. domestic resource mobilization. capital market development, and where it exists, deepening. in addition, we will push further on macro critical issues, some that people have considered a little bit on the side of our core business. but which are becoming core

business and matter enormously. i'm here thinking about the role of inequality and excessive inequality. the role of women in the economy and their contribution to the labor market. the energy subsidy reforms where we have extensively now published and given some very practical set of recommendations using a range of countries that have actually either succeeded or failed. and carbon taxation. which is a very interesting proposition. and we all know that the time is right to price it right. and if we do that, it can help us get it right on climate change. third, and last, core business area is capacity building and technical assistance. and here we are expanding services, including through nine regional technical assistance centers and seven regional training centers located in africa, asia and the middle east. and what's more, we have embarked on massive online open courses, moocs, which already

have 10,000 active participants and already 4,500 graduates in courses as complicated as, for instance, debt sustainability analysis. sustainability analysis. removing energy subsidies. as i said we can only get it right if we work together. and this applies to all the areas that i have touched on from stronger growth today to better growth tomorrow. from a more resilient international monetary system to a more robust international development system. from the world we live in today to maybe a better world that we will help build. successful will require a recommitment to the principles of international corporation that have served us well for the last 70 years. and particularly in moments of

crisis. but this new -- is urgently needed to boost growth and generate confidence in our common future. wouldn't it be nice if a year from now i might come back, if a year from now instead of rejoicing in the aiib and the silk road and this new belt out there, we could also celebrate the tpp, the ttip, the imf reform, a strong green fund with good governance. paris 21 with actual deliverables. these are the challenges we have ahead of us. so i began this morning with a great at -- president kennedy. i'm going to use another from the other side of the pond, winston churchill who once said, i never worry about

action. only inaction. well we can and we must lift better growth today and tomorrow. thank you. [ applause ] >> thank you so much madame lagarde for that very important speech. and also that not entirely convincing british accent. and you're right that i failed to mention the synchronized swimming. but i also read as i was doing my research that you were a french tour guide at alcatraz prison. >> correct. >> but there is so much meat in that to follow up on. and we have a brief 15 minutes here to follow-up. so let me try to go through some of it where i think we really need to drill down just a little

bit further. first of all, did the greeks repay their loan? >> yes. i've got my money back. >> good. so we can get that out of the way for all the press that is now confirmed from the imf. you met with the greek finance minister last weekend. this week he was in moscow. i'd like to ask you two questions. what do the next steps look like? and perhaps you can put that in the overall context of how resilient you believe the eurozone is both economically and structurely. you see the low oil prices, quantitative easing, the reduction in the euro's value all helping. but on the other hand you also point to reforms that haven't been done, et cetera. so is there a light at the end of the tunnel, or is it an oncoming train to quote a country western tune? >> let me take the second part of your question first and i'll

touch on the first part as well. you're right. i think that the eurozone has the benefit of three shots in the arm actually the ones that you've just mentioned. and that moment, which is actually rare in economic history for a particular economic zone especially one as large as the eurozone is really a moment a window of opportunities when countries that have not yet conducted the reforms that have started conducting the reforms have to actually get on with it. because they have the benefit of low oil prices, very low cost of financing. i mean, we've seen on the secondary markets negative rates even for reasonably medium term bonds. and the quantitative easing that is intended to really support and kick start the economy. so with these three factors, if they don't do economic reforms now, it's to despair. so i very much hope that they're going to really continue the

process. some of them have started. and others i hope will continue. now, one thing that i would like to add as well is that since our some three years ago when we were both talking about those issues and the risks on the ho rison -- in doud with over 500 billion euros. it has reinforced its fiscal union. it has certainly built a banking union. and of course it can do more and better. but it is a lot stronger than it was three year ago. which takes me to the first part of your question. what is now badly needed is not to you know talk but is to actually get on with the work. and greece authorities together with the representatives of the three institutions as we call them now have to really sit

down, go through the work, focus on the objective of what is intended for the better for greece. which is restoring the economy stabilizing it. and by so doing re-establishing and reinforcing the sovereignty of the country. so we are for our part completely committed including on the weekends, wherever in athens brussels washington, to actually help the authorities navigate through the measures that will actually deliver on the objectives of the program while respecting some of the commitments that have been made in the course of the political cycle. it's a difficult path, but it's

one that has to be walked and which will just improve the situation. >> thank you for that. let's talk a little bit about your new mediocre. you've coined this term i think it's a great term we must prevent the new mediocre from being the reality, you said. you then talk about the bottom line is risk to global financial stability are rising. and again the new mediocre growth environment is not a comfortable place with respect to financial stability. is the new mediocre another term for secular stagnation? is this what you're worried about? and is that what we're facing or the world economy face a prolonged period of low growth and what impact might that then have on security and stability? how great is your worry about that? >> i think it is distinct from the secular stagnation which has been borrowed by larry somers to identify the current economic

situation. i think it's different because my concept of the low mediocre, the new mediocre is that we can get out of it. it's not something that's intended or that we risk seeing for a long period of time. if the measures i have identified earlier are taken, all tools used on the macro economic front, all space made available utilized. and if financial stability is strengthened, and if structural reforms can be implemented each very specific based on countries' characteristics and needs, then we will not be in that new mediocre. but it's a risk that is there which is i believe accentkccentuated now that potential for growth has been affected by the three factors that i've mentioned. the scars of the crisis, the

aging of population and particularly in the advanced economies but also some emerge market economies. and the fact that productivity is not where it should be. >> the -- so i think that's a very good differentiation where secular stagnation may be a description of a case that's unchangeable. a new mediocre is a warning you're trying to avoid. >> yep. >> let me get to the issues. and let me put together the issues of the asian infrastructure investment bank and the 2010 quota and governance reform. you described the establishment of china's asian infrastructure investment bank as a massive opportunity. that said, larry somers, a member of our international advisory board, you already mentioned him this week in an op-ed called the u.s. approach to the aiib a failure of strategy and tactics and said

"this past month may be remembered as the moment the united states lost its role as the underwriter of the global economic system." number one -- >> if he was right i think the best response to that is to ratify the reform of the imf. >> you finished my sentence. usually i just steal your ideas, this time you finished my sentence. so that is really what i was getting at. number one, does the formation of aiib in some way form a new economic reality? in that context do talk even more in depth of this reform. is the u.s. undermining its role as the leading country to contribute to financial order? >> you know, i think that the asia infrastructure bank was part of a broader project by the chinese authorities