1 00:00:03,266 --> 00:00:05,165 Welcome to this blue event. My 2 00:00:05,165 --> 00:00:07,066 Welcome to this blue event. My name is con Tombo and I’m the 3 00:00:07,066 --> 00:00:09,266 name is con Tombo and I’m the director of Booga and I’m 4 00:00:09,266 --> 00:00:10,599 director of Booga and I’m pleased to host today a 5 00:00:10,599 --> 00:00:13,033 pleased to host today a discussion with the governor of 6 00:00:13,033 --> 00:00:14,700 discussion with the governor of the Central Bank of Ireland, 7 00:00:14,700 --> 00:00:17,867 the Central Bank of Ireland, Gabriel Macro Governor Gabriel 8 00:00:17,867 --> 00:00:21,867 Gabriel Macro Governor Gabriel Welcome to our event. Thank you 9 00:00:21,867 --> 00:00:24,067 Welcome to our event. Thank you for being here. we want to 10 00:00:24,067 --> 00:00:28,033 for being here. we want to discuss today about macro 11 00:00:28,033 --> 00:00:29,000 discuss today about macro Prudential tools for 12 00:00:29,000 --> 00:00:33,100 Prudential tools for Market-based finance and 13 00:00:33,100 --> 00:00:35,800 Market-based finance and Finance sector and what kind of 14 00:00:35,800 --> 00:00:37,533 Finance sector and what kind of lessons from 19, So I think a 15 00:00:37,533 --> 00:00:39,500 lessons from 19, So I think a lot of discussion of course has 16 00:00:39,500 --> 00:00:43,533 lot of discussion of course has been on the banks recently but 17 00:00:43,533 --> 00:00:45,300 been on the banks recently but perhaps less discussion has 18 00:00:45,300 --> 00:00:49,600 perhaps less discussion has been on non non-bank based 19 00:00:49,600 --> 00:00:51,567 been on non non-bank based finance or market based 20 00:00:51,567 --> 00:00:53,666 finance or market based finances essentially and we are 21 00:00:53,666 --> 00:00:54,767 finances essentially and we are delighted that you could make 22 00:00:54,767 --> 00:00:56,333 delighted that you could make it and join us for this 23 00:00:56,333 --> 00:01:00,100 it and join us for this discussion today on this on 24 00:01:00,100 --> 00:01:04,768 discussion today on this on this online event now. For 25 00:01:04,768 --> 00:01:07,568 this online event now. For completeness, let me of course, 26 00:01:07,568 --> 00:01:10,601 completeness, let me of course, say that if you would like to 27 00:01:10,601 --> 00:01:12,335 say that if you would like to ask questions in the audience, 28 00:01:12,335 --> 00:01:14,834 ask questions in the audience, those of us of you who watched 29 00:01:14,834 --> 00:01:17,535 those of us of you who watched this online conference please 30 00:01:17,535 --> 00:01:21,135 this online conference please go on slidell and type in 31 00:01:21,135 --> 00:01:22,601 go on slidell and type in markets markets is the password 32 00:01:22,601 --> 00:01:23,934 markets markets is the password or the code for the conference 33 00:01:23,934 --> 00:01:27,201 or the code for the conference and you are free to enter your 34 00:01:27,201 --> 00:01:28,535 and you are free to enter your questions and remarks on slider 35 00:01:28,535 --> 00:01:31,268 questions and remarks on slider and we will look at them in a 36 00:01:31,268 --> 00:01:34,335 and we will look at them in a bit 37 00:02:37,235 --> 00:02:40,935 Than we expected, but you gotta 38 00:02:40,935 --> 00:02:45,902 Than we expected, but you gotta let me just in responding to a 39 00:02:45,902 --> 00:02:55,568 let me just in responding to a question just remind everybody 40 00:02:56,502 --> 00:02:58,234 something which I’m sure 41 00:02:58,234 --> 00:03:02,000 something which I’m sure they’re all aware but we are in 42 00:03:02,000 --> 00:03:06,933 they’re all aware but we are in the Middle of an unprecedented 43 00:03:06,933 --> 00:03:14,866 the Middle of an unprecedented shock which. in many ways is 44 00:03:14,866 --> 00:03:16,200 shock which. in many ways is what is certainly the greatest 45 00:03:16,200 --> 00:03:17,567 what is certainly the greatest challenge of the financial 46 00:03:17,567 --> 00:03:24,700 challenge of the financial system since the Great to the 47 00:03:24,700 --> 00:03:26,100 system since the Great to the global financial crisis but. So 48 00:03:26,100 --> 00:03:26,900 global financial crisis but. So I think the challenge to 49 00:03:26,900 --> 00:03:27,533 I think the challenge to economies and communities 50 00:03:27,533 --> 00:03:28,100 economies and communities throughout Europe and 51 00:03:28,100 --> 00:03:28,866 throughout Europe and throughout the world and we 52 00:03:28,866 --> 00:03:29,666 throughout the world and we are. slowly emerging from the 53 00:03:29,666 --> 00:03:30,400 are. slowly emerging from the depths of the economic impact, 54 00:03:30,400 --> 00:03:31,266 depths of the economic impact, but I’d hesitate to say that we 55 00:03:31,266 --> 00:03:32,167 but I’d hesitate to say that we can see the end of this crisis 56 00:03:32,167 --> 00:03:32,666 can see the end of this crisis right now but suddenly we 57 00:03:32,666 --> 00:03:33,700 right now but suddenly we started to learn. some lessons 58 00:03:33,700 --> 00:03:36,066 started to learn. some lessons already in my view and one of 59 00:03:36,066 --> 00:03:39,300 already in my view and one of the. So I think. we have 60 00:03:39,300 --> 00:03:40,900 the. So I think. we have learned is I’ll probably be 61 00:03:40,900 --> 00:03:42,233 learned is I’ll probably be coming back to this during the 62 00:03:42,233 --> 00:03:44,500 coming back to this during the course of the seminar is that 63 00:03:44,500 --> 00:03:48,100 course of the seminar is that the efforts that we made. over 64 00:03:48,100 --> 00:03:50,133 the efforts that we made. over the last decade to strengthen 65 00:03:50,133 --> 00:03:52,166 the last decade to strengthen the financial system, 66 00:03:52,166 --> 00:03:53,700 the financial system, particularly in respect to 67 00:03:53,700 --> 00:03:56,233 particularly in respect to banks have actually paid off 68 00:03:56,233 --> 00:03:59,134 banks have actually paid off all those efforts have worked 69 00:03:59,134 --> 00:04:01,766 all those efforts have worked the resilience of the system to 70 00:04:01,766 --> 00:04:05,533 the resilience of the system to the to what has been as I said 71 00:04:05,533 --> 00:04:06,733 the to what has been as I said unprecedented in a very severe 72 00:04:06,733 --> 00:04:09,767 unprecedented in a very severe shock 73 00:04:10,066 --> 00:04:11,967 Has showed resilience that this 74 00:04:11,967 --> 00:04:15,900 Has showed resilience that this early stage. so I think that’s 75 00:04:15,900 --> 00:04:17,333 early stage. so I think that’s an important piece of context 76 00:04:17,333 --> 00:04:22,066 an important piece of context to. to bear in mind which 77 00:04:22,066 --> 00:04:25,200 to. to bear in mind which brings us to. your question and 78 00:04:25,200 --> 00:04:27,567 brings us to. your question and specifically around 79 00:04:27,567 --> 00:04:29,233 specifically around market-based finance. I mean 80 00:04:29,233 --> 00:04:30,167 market-based finance. I mean one of the other 81 00:04:30,167 --> 00:04:31,766 one of the other characteristics of the last 10 82 00:04:31,766 --> 00:04:34,966 characteristics of the last 10 years is as our focus was put 83 00:04:34,966 --> 00:04:37,166 years is as our focus was put on the banking sector and 84 00:04:37,166 --> 00:04:40,100 on the banking sector and strengthening banks. what we. 85 00:04:40,100 --> 00:04:43,633 strengthening banks. what we. Was a growth in market based 86 00:04:43,633 --> 00:04:48,200 Was a growth in market based finance. and we know. that 87 00:04:48,200 --> 00:04:49,500 finance. and we know. that suddenly since the global 88 00:04:49,500 --> 00:04:52,133 suddenly since the global financial crisis, the world’s 89 00:04:52,133 --> 00:04:53,400 financial crisis, the world’s market-based finance sectors 90 00:04:53,400 --> 00:04:55,700 market-based finance sectors more than doubled in size, it 91 00:04:55,700 --> 00:05:00,167 more than doubled in size, it was around 43 trillion euro in 92 00:05:00,167 --> 00:05:05,068 was around 43 trillion euro in 2009 it had got to about 57 93 00:05:05,068 --> 00:05:08,002 2009 it had got to about 57 trillion in 2012 and over 94 00:05:08,002 --> 00:05:11,135 trillion in 2012 and over a hundred trillion in 2018 and 95 00:05:11,135 --> 00:05:14,335 a hundred trillion in 2018 and certainly in Ireland. Non-bank 96 00:05:14,335 --> 00:05:16,169 certainly in Ireland. Non-bank financial institutions now 97 00:05:16,169 --> 00:05:18,002 financial institutions now account for approximately 40 98 00:05:18,002 --> 00:05:20,869 account for approximately 40 percent of total assets of the 99 00:05:20,869 --> 00:05:24,268 percent of total assets of the overall. I’m sorry that’s 100 00:05:24,268 --> 00:05:26,334 overall. I’m sorry that’s that’s a Euro area level of a 101 00:05:26,334 --> 00:05:30,134 that’s a Euro area level of a Euro area level non-bank 102 00:05:30,134 --> 00:05:32,734 Euro area level non-bank financial institutions account 103 00:05:32,734 --> 00:05:36,068 financial institutions account for 40 percent of total assets 104 00:05:36,068 --> 00:05:38,067 for 40 percent of total assets of the overall Euro area of 105 00:05:38,067 --> 00:05:41,201 of the overall Euro area of financial sector growth being 106 00:05:41,201 --> 00:05:44,868 financial sector growth being slower than Elsewhere that in 107 00:05:44,868 --> 00:05:47,101 slower than Elsewhere that in the United States by large but 108 00:05:47,101 --> 00:05:49,468 the United States by large but it’s still be significant. so 109 00:05:49,468 --> 00:05:53,102 it’s still be significant. so there the amount of to around 110 00:05:53,102 --> 00:05:55,501 there the amount of to around 35 trillion Europe at the end 111 00:05:55,501 --> 00:05:59,035 35 trillion Europe at the end of 2019, have been about 20 112 00:05:59,035 --> 00:06:03,635 of 2019, have been about 20 trillion. at the end of 2009 113 00:06:03,635 --> 00:06:05,468 trillion. at the end of 2009 and an island to the point of I 114 00:06:05,468 --> 00:06:08,834 and an island to the point of I was gonna make just now the 115 00:06:08,834 --> 00:06:11,268 was gonna make just now the more than doubled Market-based 116 00:06:11,268 --> 00:06:14,668 more than doubled Market-based finance sector 117 00:06:17,635 --> 00:06:20,002 And doubled from one point 118 00:06:20,002 --> 00:06:22,669 And doubled from one point eight trillion euro at the end 119 00:06:22,669 --> 00:06:29,402 eight trillion euro at the end of 2009. to over four point, 120 00:06:29,402 --> 00:06:35,267 of 2009. to over four point, five trillion at the 121 00:06:35,467 --> 00:06:37,902 in the first quarter of this 122 00:06:37,902 --> 00:06:41,002 in the first quarter of this year. 123 00:06:43,035 --> 00:06:48,401 and particularly for Ireland, 124 00:06:48,401 --> 00:06:53,567 and particularly for Ireland, the Center is around 13 times 125 00:06:53,567 --> 00:06:59,369 the Center is around 13 times the value of the economy that 126 00:06:59,369 --> 00:07:03,600 the value of the economy that measured by GNI staff 127 00:07:05,867 --> 00:07:06,967 it’s 20 - two. Gdp it’s 13 128 00:07:06,967 --> 00:07:07,901 it’s 20 - two. Gdp it’s 13 times and that’s compared with 129 00:07:07,901 --> 00:07:08,468 times and that’s compared with two point eight times in your 130 00:07:08,468 --> 00:07:09,368 two point eight times in your area and about one and a half 131 00:07:09,368 --> 00:07:10,335 area and about one and a half times in the US. so it is a 132 00:07:10,335 --> 00:07:11,135 times in the US. so it is a very significant part of our 133 00:07:11,135 --> 00:07:12,069 very significant part of our economy and we find ourselves 134 00:07:12,069 --> 00:07:12,802 economy and we find ourselves the sixth largest jurisdiction 135 00:07:12,802 --> 00:07:13,434 the sixth largest jurisdiction in the world for Non-bank 136 00:07:13,434 --> 00:07:14,100 in the world for Non-bank financial intermediation 137 00:07:14,100 --> 00:07:14,603 financial intermediation activities and the third 138 00:07:14,603 --> 00:07:15,500 activities and the third largest. in the euro area for 139 00:07:15,500 --> 00:07:18,169 largest. in the euro area for market. Is behind. lots of 140 00:07:18,169 --> 00:07:21,468 market. Is behind. lots of Netherlands. so the second is 141 00:07:21,468 --> 00:07:26,168 Netherlands. so the second is grown in recent years and it’s 142 00:07:26,168 --> 00:07:30,035 grown in recent years and it’s now very important part. of 143 00:07:30,035 --> 00:07:34,634 now very important part. of financial intermediation and 144 00:07:34,634 --> 00:07:36,335 financial intermediation and the fact that it’s so important 145 00:07:36,335 --> 00:07:38,736 the fact that it’s so important means that the potential 146 00:07:38,736 --> 00:07:42,167 means that the potential disruptions in the sector we’ll 147 00:07:42,167 --> 00:07:44,867 disruptions in the sector we’ll have a more material impact 148 00:07:44,867 --> 00:07:47,835 have a more material impact than. Would have had a decade 149 00:07:47,835 --> 00:07:52,501 than. Would have had a decade ago. if I may, I mean you talk 150 00:07:52,501 --> 00:07:54,268 ago. if I may, I mean you talk to Gabrielle about the 151 00:07:54,268 --> 00:07:55,669 to Gabrielle about the resilience of the system after 152 00:07:55,669 --> 00:07:57,534 resilience of the system after all the efforts made in the 153 00:07:57,534 --> 00:08:01,501 all the efforts made in the past 10 years. to reform the 154 00:08:01,501 --> 00:08:02,735 past 10 years. to reform the banking system to arrive at the 155 00:08:02,735 --> 00:08:03,802 banking system to arrive at the result that I’m much more 156 00:08:03,802 --> 00:08:06,134 result that I’m much more resilient system, but actually 157 00:08:06,134 --> 00:08:06,735 resilient system, but actually some of the numbers you quote 158 00:08:06,735 --> 00:08:08,836 some of the numbers you quote are actually really quite big. 159 00:08:08,836 --> 00:08:10,201 are actually really quite big. Have we just shifted the risks 160 00:08:10,201 --> 00:08:11,935 Have we just shifted the risks Maybe from the banking system 161 00:08:11,935 --> 00:08:15,736 Maybe from the banking system to the non market not non-bank 162 00:08:15,736 --> 00:08:16,668 to the non market not non-bank finance system to the 163 00:08:16,668 --> 00:08:18,603 finance system to the marketplace system, but to an 164 00:08:18,603 --> 00:08:20,168 marketplace system, but to an extent. That is what’s 165 00:08:20,168 --> 00:08:22,902 extent. That is what’s happened. to a certain extent. 166 00:08:22,902 --> 00:08:26,802 happened. to a certain extent. I think the the focus on that 167 00:08:26,802 --> 00:08:28,767 I think the the focus on that and the absolutely justified 168 00:08:28,767 --> 00:08:36,167 and the absolutely justified focus on banks has led to the 169 00:08:36,167 --> 00:08:39,402 focus on banks has led to the growth in non banks and to 170 00:08:39,402 --> 00:08:42,534 growth in non banks and to market-based finance I think of 171 00:08:42,534 --> 00:08:44,602 market-based finance I think of the other hand, I also think 172 00:08:44,602 --> 00:08:51,869 the other hand, I also think that if you look at just the 173 00:09:19,269 --> 00:09:23,768 But it also helps in 174 00:09:24,035 --> 00:09:25,068 facilitating risk sharing so I 175 00:09:25,068 --> 00:09:28,735 facilitating risk sharing so I think some of these trends. 176 00:09:28,735 --> 00:09:32,135 think some of these trends. would likely have happened. 177 00:09:32,135 --> 00:09:34,735 would likely have happened. over the last decade I suspect 178 00:09:34,735 --> 00:09:38,668 over the last decade I suspect the very big focus on banks and 179 00:09:38,668 --> 00:09:40,534 the very big focus on banks and banks loan may helped to 180 00:09:40,534 --> 00:09:44,735 banks loan may helped to accelerate that shift to to non 181 00:09:44,735 --> 00:09:48,601 accelerate that shift to to non banks. but the the substantial. 182 00:09:48,601 --> 00:09:52,735 banks. but the the substantial. Your question is that. we now 183 00:09:52,735 --> 00:09:57,603 Your question is that. we now need to focus on the non-bank 184 00:09:57,603 --> 00:09:59,069 need to focus on the non-bank sector Non-bank financial 185 00:09:59,069 --> 00:10:00,402 sector Non-bank financial intermediation and market-based 186 00:10:00,402 --> 00:10:02,201 intermediation and market-based finance and look really hard at 187 00:10:02,201 --> 00:10:05,602 finance and look really hard at what risks we may have. we we 188 00:10:05,602 --> 00:10:09,701 what risks we may have. we we may see Ari there whether they 189 00:10:09,701 --> 00:10:11,102 may see Ari there whether they were caused by the whether it 190 00:10:11,102 --> 00:10:12,668 were caused by the whether it was simply a sudden risk 191 00:10:12,668 --> 00:10:14,201 was simply a sudden risk shifted or whether just a new 192 00:10:14,201 --> 00:10:17,602 shifted or whether just a new set of risks. 193 00:10:19,535 --> 00:10:20,803 I was wondering if you could 194 00:10:20,803 --> 00:10:22,335 I was wondering if you could perhaps tell us a little bit 195 00:10:22,335 --> 00:10:23,734 perhaps tell us a little bit more. What do you mean by 196 00:10:23,734 --> 00:10:25,268 more. What do you mean by Market-based finance? Are we 197 00:10:25,268 --> 00:10:27,101 Market-based finance? Are we really talking about then the 198 00:10:27,101 --> 00:10:28,968 really talking about then the shadow banking system, or are 199 00:10:28,968 --> 00:10:30,102 shadow banking system, or are we talking about you know few 200 00:10:30,102 --> 00:10:31,403 we talking about you know few capital markets if you could 201 00:10:31,403 --> 00:10:32,535 capital markets if you could give us a little bit of a sense 202 00:10:32,535 --> 00:10:36,768 give us a little bit of a sense of what we mean by marketplace, 203 00:10:36,768 --> 00:10:37,667 of what we mean by marketplace, it’s also it will be an 204 00:10:37,667 --> 00:10:39,169 it’s also it will be an important ingredient. first 205 00:10:39,169 --> 00:10:40,868 important ingredient. first understanding the risks how 206 00:10:40,868 --> 00:10:42,069 understanding the risks how they might becoming or what 207 00:10:42,069 --> 00:10:43,634 they might becoming or what type of regulation we might 208 00:10:43,634 --> 00:10:46,035 type of regulation we might want to sort of think about 209 00:10:46,035 --> 00:10:47,535 want to sort of think about putting in place in the future. 210 00:10:47,535 --> 00:10:52,035 putting in place in the future. Sure I mean investment funds. 211 00:10:52,035 --> 00:10:55,868 Sure I mean investment funds. Money market funds 212 00:10:56,068 --> 00:10:58,635 we’ve those are probably the 213 00:10:58,635 --> 00:11:00,100 we’ve those are probably the most immediate ones that that 214 00:11:00,100 --> 00:11:01,900 most immediate ones that that come to mind because there’s 215 00:11:01,900 --> 00:11:04,768 come to mind because there’s also particularly important for 216 00:11:04,768 --> 00:11:11,435 also particularly important for for Ireland so it includes. a 217 00:11:11,435 --> 00:11:15,301 for Ireland so it includes. a shadow banking but essentially 218 00:11:15,301 --> 00:11:20,135 shadow banking but essentially for me that it is almost 219 00:11:20,135 --> 00:11:21,936 for me that it is almost anything that involves Non-bank 220 00:11:21,936 --> 00:11:23,435 anything that involves Non-bank financial intermediation and 221 00:11:23,435 --> 00:11:26,201 financial intermediation and the scale. What we see in 222 00:11:26,201 --> 00:11:28,035 the scale. What we see in investment funds, for example 223 00:11:28,035 --> 00:11:32,635 investment funds, for example in in Ireland and money market 224 00:11:32,635 --> 00:11:34,201 in in Ireland and money market funds, I mean that that’s 225 00:11:34,201 --> 00:11:36,168 funds, I mean that that’s particularly significant for 226 00:11:36,168 --> 00:11:37,735 particularly significant for us. It’ll be different. I 227 00:11:37,735 --> 00:11:39,100 us. It’ll be different. I suspect in some other 228 00:11:39,100 --> 00:11:45,168 suspect in some other jurisdictions but 229 00:11:45,168 --> 00:11:45,268 jurisdictions but What’s 230 00:11:45,268 --> 00:11:49,167 What’s in many ways the the 231 00:11:49,167 --> 00:11:54,069 What’s in many ways the the important? thing for me is. the 232 00:11:54,069 --> 00:11:57,235 important? thing for me is. the extent to which. this is 233 00:11:57,235 --> 00:12:01,101 extent to which. this is financial. inter mediation 234 00:12:01,101 --> 00:12:05,802 financial. inter mediation that’s not covered 235 00:12:06,002 --> 00:12:08,168 by the and we’ll get I mean I’m 236 00:12:08,168 --> 00:12:09,668 by the and we’ll get I mean I’m coming out to the main theme of 237 00:12:09,668 --> 00:12:12,069 coming out to the main theme of what I’ve been talking about. I 238 00:12:12,069 --> 00:12:13,901 what I’ve been talking about. I will be talking about which. Is 239 00:12:13,901 --> 00:12:16,101 will be talking about which. Is the need for a macro Prudential 240 00:12:16,101 --> 00:12:18,468 the need for a macro Prudential framework that covers that 241 00:12:18,468 --> 00:12:25,634 framework that covers that sector? so it’s It’s big, I 242 00:12:25,634 --> 00:12:28,269 sector? so it’s It’s big, I think it’s the bottom line here 243 00:12:28,269 --> 00:12:31,601 think it’s the bottom line here but it can be it can be I mean 244 00:12:31,601 --> 00:12:33,168 but it can be it can be I mean perhaps before before talking 245 00:12:33,168 --> 00:12:35,567 perhaps before before talking about the policy side, just 246 00:12:35,567 --> 00:12:38,802 about the policy side, just sort of finish sort of 247 00:12:38,802 --> 00:12:41,036 sort of finish sort of assessing the sector and you 248 00:12:41,036 --> 00:12:42,635 assessing the sector and you know we have the sector is at 249 00:12:42,635 --> 00:12:44,168 know we have the sector is at the stage. I mean so you you 250 00:12:44,168 --> 00:12:45,668 the stage. I mean so you you describe the resilience of the 251 00:12:45,668 --> 00:12:47,568 describe the resilience of the banking system and how the 252 00:12:47,568 --> 00:12:48,968 banking system and how the banking system is really kept 253 00:12:48,968 --> 00:12:52,168 banking system is really kept up So far, I think we might 254 00:12:52,168 --> 00:12:53,468 up So far, I think we might still see some trouble in the 255 00:12:53,468 --> 00:12:54,936 still see some trouble in the banking system later on in 256 00:12:54,936 --> 00:12:59,402 banking system later on in year, NPS feed through. The 257 00:12:59,402 --> 00:13:00,735 year, NPS feed through. The non-performing loans through to 258 00:13:00,735 --> 00:13:02,401 non-performing loans through to the balance sheets of banks, 259 00:13:02,401 --> 00:13:06,335 the balance sheets of banks, but but what about the the the 260 00:13:06,335 --> 00:13:08,935 but but what about the the the Market-based finance or stock 261 00:13:08,935 --> 00:13:11,935 Market-based finance or stock markets the bond markets you 262 00:13:11,935 --> 00:13:16,003 markets the bond markets you know you define it 263 00:13:16,301 --> 00:13:16,803 Find it very much from the 264 00:13:16,803 --> 00:13:17,335 Find it very much from the players side, but I mean you 265 00:13:17,335 --> 00:13:17,801 players side, but I mean you can also define it from the 266 00:13:17,801 --> 00:13:18,201 can also define it from the product side right. I mean, 267 00:13:18,201 --> 00:13:20,135 product side right. I mean, stocks and bonds and and and 268 00:13:20,135 --> 00:13:22,035 stocks and bonds and and and and other market-based 269 00:13:22,035 --> 00:13:24,035 and other market-based solutions for financial 270 00:13:24,035 --> 00:13:25,802 solutions for financial intermediation and how have 271 00:13:25,802 --> 00:13:28,900 intermediation and how have they really. dealt with the 272 00:13:28,900 --> 00:13:31,035 they really. dealt with the shock of 19. So far, I mean 273 00:13:31,035 --> 00:13:32,735 shock of 19. So far, I mean what’s what’s what’s your 274 00:13:32,735 --> 00:13:36,102 what’s what’s what’s your assessment of this part of 275 00:13:36,102 --> 00:13:38,335 assessment of this part of financial intermediation in the 276 00:13:38,335 --> 00:13:39,635 financial intermediation in the way they have done with the 277 00:13:39,635 --> 00:13:45,469 way they have done with the shock We saw 278 00:13:45,568 --> 00:13:47,402 in March and March is the sort 279 00:13:47,402 --> 00:13:54,501 in March and March is the sort of three months for for this 280 00:13:55,202 --> 00:13:56,735 we financial market turbulence 281 00:13:56,735 --> 00:13:59,102 we financial market turbulence and I’ve you know flight to 282 00:13:59,102 --> 00:14:03,735 and I’ve you know flight to safety with a heightened demand 283 00:14:03,735 --> 00:14:07,002 safety with a heightened demand for cash sweeping through 284 00:14:07,002 --> 00:14:07,868 for cash sweeping through markets at the start of the 285 00:14:07,868 --> 00:14:11,102 markets at the start of the shop. the fun sector 286 00:14:11,102 --> 00:14:12,935 shop. the fun sector experiencing a sharp increase 287 00:14:12,935 --> 00:14:15,935 experiencing a sharp increase in 288 00:14:17,001 --> 00:14:21,202 outflows. were particularly 289 00:14:21,202 --> 00:14:24,068 outflows. were particularly acute in funds invested in 290 00:14:24,068 --> 00:14:27,635 acute in funds invested in corporate bonds in the case of 291 00:14:27,635 --> 00:14:30,668 corporate bonds in the case of higher bond funds, for example, 292 00:14:30,668 --> 00:14:32,068 higher bond funds, for example, outflows as a percentage of 293 00:14:32,068 --> 00:14:34,168 outflows as a percentage of total assets and the management 294 00:14:34,168 --> 00:14:35,834 total assets and the management with the highest since the 295 00:14:35,834 --> 00:14:38,201 with the highest since the financial crisis and we saw 296 00:14:38,201 --> 00:14:42,701 financial crisis and we saw quite a deterioration in 297 00:14:43,435 --> 00:14:44,869 Corporate bond market. 298 00:14:44,869 --> 00:14:49,403 Corporate bond market. liquidity I mean in Ireland we 299 00:14:49,403 --> 00:14:50,335 liquidity I mean in Ireland we published our financial 300 00:14:50,335 --> 00:14:51,869 published our financial stability review two weeks ago 301 00:14:51,869 --> 00:14:54,201 stability review two weeks ago and I in our Irish resident 302 00:14:54,201 --> 00:14:59,134 and I in our Irish resident funds. in March. so around 72 303 00:14:59,134 --> 00:15:01,334 funds. in March. so around 72 billion euro of net 304 00:15:01,334 --> 00:15:04,501 billion euro of net redemptions. 305 00:15:04,501 --> 00:15:04,535 redemptions. so 306 00:15:04,535 --> 00:15:06,168 so what we saw in March 307 00:15:06,168 --> 00:15:10,534 so what we saw in March essentially was that funds. 308 00:15:10,534 --> 00:15:13,602 essentially was that funds. Exposures to less liquid assets 309 00:15:13,602 --> 00:15:16,101 Exposures to less liquid assets we’re particularly susceptible 310 00:15:16,101 --> 00:15:20,001 we’re particularly susceptible to outflows and as a share 311 00:15:20,001 --> 00:15:21,869 to outflows and as a share share of assets and redemptions 312 00:15:21,869 --> 00:15:24,734 share of assets and redemptions are highest among corporate 313 00:15:24,734 --> 00:15:28,100 are highest among corporate bond yields. 314 00:15:30,435 --> 00:15:32,069 Especially less liquid and high 315 00:15:32,069 --> 00:15:35,268 Especially less liquid and high yield corporate bonds and one 316 00:15:35,268 --> 00:15:37,168 yield corporate bonds and one of the things that was it’s 317 00:15:37,168 --> 00:15:41,167 of the things that was it’s also interesting is that 318 00:15:41,167 --> 00:15:42,568 also interesting is that redemptions from funds were not 319 00:15:42,568 --> 00:15:44,201 redemptions from funds were not sort of necessarily correlated 320 00:15:44,201 --> 00:15:49,235 sort of necessarily correlated with acid returns so equity 321 00:15:49,235 --> 00:15:50,534 with acid returns so equity price forces are much larger 322 00:15:50,534 --> 00:15:55,068 price forces are much larger than fours and corporate bond. 323 00:15:55,068 --> 00:15:58,168 than fours and corporate bond. prices 324 00:16:12,502 --> 00:16:15,535 So 325 00:16:15,735 --> 00:16:19,068 I mean that’s the. 326 00:16:23,602 --> 00:16:26,301 That is the nature of the 327 00:16:26,301 --> 00:16:29,102 That is the nature of the equity. that right I mean, by 328 00:16:29,102 --> 00:16:30,201 equity. that right I mean, by definition, almost that should 329 00:16:30,201 --> 00:16:32,501 definition, almost that should happen is a less the redemption 330 00:16:32,501 --> 00:16:34,968 happen is a less the redemption rates are less volatile. right. 331 00:16:34,968 --> 00:16:36,134 rates are less volatile. right. I mean there’s a I don’t wanna 332 00:16:36,134 --> 00:16:37,468 I mean there’s a I don’t wanna use the word commitment, but 333 00:16:37,468 --> 00:16:39,735 use the word commitment, but there is there is no dedication 334 00:16:39,735 --> 00:16:42,335 there is there is no dedication to to equity once you hold that 335 00:16:42,335 --> 00:16:43,734 to to equity once you hold that you hold corporate bonds. so 336 00:16:43,734 --> 00:16:45,034 you hold corporate bonds. so that’s perhaps not surprising 337 00:16:45,034 --> 00:16:49,367 that’s perhaps not surprising right. but I think that’s 338 00:16:49,367 --> 00:16:52,135 right. but I think that’s that’s actually the the the 339 00:16:52,135 --> 00:16:54,169 that’s actually the the the interesting part. Conversation 340 00:16:54,169 --> 00:16:55,769 interesting part. Conversation is you know the future of of 341 00:16:55,769 --> 00:16:58,168 is you know the future of of equity in Europe. I mean I’m a 342 00:16:58,168 --> 00:16:59,568 equity in Europe. I mean I’m a link is a little bit to the to 343 00:16:59,568 --> 00:17:02,202 link is a little bit to the to the CMU agenda. I mean we have 344 00:17:02,202 --> 00:17:05,101 the CMU agenda. I mean we have had many years of talk in the 345 00:17:05,101 --> 00:17:06,802 had many years of talk in the Eur about CMU and about 346 00:17:06,802 --> 00:17:07,934 Eur about CMU and about developing much more of the 347 00:17:07,934 --> 00:17:10,767 developing much more of the capital market side of of this 348 00:17:10,767 --> 00:17:13,401 capital market side of of this and and well then I say we have 349 00:17:13,401 --> 00:17:15,002 and and well then I say we have a really made much progress and 350 00:17:15,002 --> 00:17:16,069 a really made much progress and yet some of the numbers that 351 00:17:16,069 --> 00:17:17,102 yet some of the numbers that you’re coaching are actually 352 00:17:17,102 --> 00:17:18,867 you’re coaching are actually quite big. I thought there we 353 00:17:18,867 --> 00:17:20,601 quite big. I thought there we have actually made progress in 354 00:17:20,601 --> 00:17:21,768 have actually made progress in development of Non-bank 355 00:17:21,768 --> 00:17:23,635 development of Non-bank finance. Even if it’s not 356 00:17:23,635 --> 00:17:26,034 finance. Even if it’s not entirely of the of the capital 357 00:17:26,034 --> 00:17:28,468 entirely of the of the capital of the of the equity side so 358 00:17:28,468 --> 00:17:31,501 of the of the equity side so the question is is this is 19 359 00:17:31,501 --> 00:17:33,034 the question is is this is 19 now an opportunity to give new 360 00:17:33,034 --> 00:17:34,668 now an opportunity to give new life into this and try to move 361 00:17:34,668 --> 00:17:36,201 life into this and try to move a little bit more away from the 362 00:17:36,201 --> 00:17:38,568 a little bit more away from the Bank. the dependent on Bank 363 00:17:38,568 --> 00:17:39,901 Bank. the dependent on Bank financing. So do you think that 364 00:17:39,901 --> 00:17:41,401 financing. So do you think that this is perhaps a natural 365 00:17:41,401 --> 00:17:42,569 this is perhaps a natural process that was gonna happen 366 00:17:42,569 --> 00:17:45,102 process that was gonna happen anyway or what well? I 367 00:17:45,102 --> 00:17:47,902 anyway or what well? I certainly think as I said a few 368 00:17:47,902 --> 00:17:50,134 certainly think as I said a few minutes ago, I certainly think 369 00:17:50,134 --> 00:17:56,002 minutes ago, I certainly think that Europe is very. 370 00:18:24,301 --> 00:18:25,767 Going to continue the said in 371 00:18:25,767 --> 00:18:28,034 Going to continue the said in Europe, it’s been slower than 372 00:18:28,034 --> 00:18:33,001 Europe, it’s been slower than the than the world but I think 373 00:18:33,001 --> 00:18:36,268 the than the world but I think it was a trend. What what what 374 00:18:36,268 --> 00:18:39,502 it was a trend. What what what covet 19 has done is given us 375 00:18:39,502 --> 00:18:42,567 covet 19 has done is given us A. 376 00:18:43,035 --> 00:18:46,468 It’s given us I mean it’s a big 377 00:18:46,468 --> 00:18:47,402 It’s given us I mean it’s a big shock, but it’s also a big 378 00:18:47,402 --> 00:18:51,034 shock, but it’s also a big test. and I think it’s it’s 379 00:18:51,034 --> 00:18:53,502 test. and I think it’s it’s accelerated and crystallized so 380 00:18:53,502 --> 00:18:56,335 accelerated and crystallized so the questions. that some of us 381 00:18:56,335 --> 00:18:59,135 the questions. that some of us have been talking about or 382 00:18:59,135 --> 00:19:02,435 have been talking about or opposing in recent years. so if 383 00:19:02,435 --> 00:19:06,002 opposing in recent years. so if you if you so to some extent 384 00:19:06,002 --> 00:19:08,701 you if you so to some extent it’s an opportunity. I don’t 385 00:19:08,701 --> 00:19:15,935 it’s an opportunity. I don’t think. it’s it’s not it’s it. 386 00:19:46,235 --> 00:19:48,935 I hope we do you know I welcome 387 00:19:48,935 --> 00:19:51,568 I hope we do you know I welcome the high-level forms report and 388 00:19:51,568 --> 00:19:54,034 the high-level forms report and hope the Commission sort of 389 00:19:54,034 --> 00:19:56,568 hope the Commission sort of come up with. constructive 390 00:19:56,568 --> 00:19:58,135 come up with. constructive proposals to implement it all 391 00:19:58,135 --> 00:19:59,735 proposals to implement it all but we have traveled for a long 392 00:19:59,735 --> 00:20:00,935 but we have traveled for a long time down this road. I just 393 00:20:00,935 --> 00:20:03,802 time down this road. I just hope that we can just push 394 00:20:03,802 --> 00:20:08,668 hope that we can just push along and 395 00:20:08,801 --> 00:20:10,335 make some progress in that 396 00:20:10,335 --> 00:20:12,835 make some progress in that direction. at perhaps we can 397 00:20:12,835 --> 00:20:15,435 direction. at perhaps we can talk a bit about the macro 398 00:20:15,435 --> 00:20:17,934 talk a bit about the macro Prudential. Because it’s in the 399 00:20:17,934 --> 00:20:19,834 Prudential. Because it’s in the not only because it’s the title 400 00:20:19,834 --> 00:20:22,735 not only because it’s the title of this this webinar but but 401 00:20:22,735 --> 00:20:24,201 of this this webinar but but also because we talked about 402 00:20:24,201 --> 00:20:27,502 also because we talked about the risks and and we evoke the 403 00:20:27,502 --> 00:20:28,968 the risks and and we evoke the possibility that some of the 404 00:20:28,968 --> 00:20:31,669 possibility that some of the risks might have. migrated from 405 00:20:31,669 --> 00:20:35,435 risks might have. migrated from the banking system. to 406 00:20:35,435 --> 00:20:37,168 the banking system. to essentially capital markets and 407 00:20:37,168 --> 00:20:38,968 essentially capital markets and you know whether or not be sure 408 00:20:38,968 --> 00:20:41,635 you know whether or not be sure to be sure and what kind of 409 00:20:41,635 --> 00:20:43,735 to be sure and what kind of regulation and macro Prudential 410 00:20:43,735 --> 00:20:44,801 regulation and macro Prudential foods I really needed it. I 411 00:20:44,801 --> 00:20:48,335 foods I really needed it. I mean. Obviously when you 412 00:20:48,335 --> 00:20:49,700 mean. Obviously when you compare banking with captain 413 00:20:49,700 --> 00:20:51,069 compare banking with captain markets, there’s huge 414 00:20:51,069 --> 00:20:52,100 markets, there’s huge differences right, I mean 415 00:20:52,100 --> 00:20:53,769 differences right, I mean banking is characterized by 416 00:20:53,769 --> 00:20:56,136 banking is characterized by leverage. It’s characterized by 417 00:20:56,136 --> 00:20:58,669 leverage. It’s characterized by maturity transformation It’s 418 00:20:58,669 --> 00:21:01,835 maturity transformation It’s characterized by deposits so 419 00:21:01,835 --> 00:21:04,201 characterized by deposits so it’s a very the banking system 420 00:21:04,201 --> 00:21:05,734 it’s a very the banking system is a very different animal to 421 00:21:05,734 --> 00:21:09,668 is a very different animal to to capital markets which 422 00:21:09,668 --> 00:21:12,068 to capital markets which explains why it requires a very 423 00:21:12,068 --> 00:21:13,301 explains why it requires a very different form of regulation 424 00:21:13,301 --> 00:21:16,201 different form of regulation but but still The risks are too 425 00:21:16,201 --> 00:21:17,935 but but still The risks are too big in the capital markets it 426 00:21:17,935 --> 00:21:20,335 big in the capital markets it spills over and may endanger 427 00:21:20,335 --> 00:21:21,735 spills over and may endanger the entire stability of the 428 00:21:21,735 --> 00:21:23,301 the entire stability of the financial system. So now you 429 00:21:23,301 --> 00:21:24,668 financial system. So now you wanted to in the time that you 430 00:21:24,668 --> 00:21:27,334 wanted to in the time that you really wanted to to bring 431 00:21:27,334 --> 00:21:28,667 really wanted to to bring forward this aspect of macro 432 00:21:28,667 --> 00:21:32,235 forward this aspect of macro credential regulation and micro 433 00:21:32,235 --> 00:21:34,435 credential regulation and micro credentials you can just 434 00:21:34,435 --> 00:21:36,534 credentials you can just enlarge what is your key point 435 00:21:36,534 --> 00:21:40,702 enlarge what is your key point you want to make here sure if I 436 00:21:40,702 --> 00:21:46,068 you want to make here sure if I could just go back to the One 437 00:21:46,068 --> 00:21:47,735 could just go back to the One of the impacts that we saw back 438 00:21:47,735 --> 00:21:50,035 of the impacts that we saw back in March was that we did see 439 00:21:50,035 --> 00:21:54,735 in March was that we did see some spill over effects in 440 00:21:54,735 --> 00:21:57,100 some spill over effects in impacting on government bonds 441 00:21:57,100 --> 00:22:00,902 impacting on government bonds we saw impacts on US Treasury 442 00:22:00,902 --> 00:22:02,668 we saw impacts on US Treasury bones right, so it’s not as you 443 00:22:02,668 --> 00:22:06,735 bones right, so it’s not as you know these challenges that we 444 00:22:06,735 --> 00:22:08,934 know these challenges that we saw in March did not simply 445 00:22:08,934 --> 00:22:13,269 saw in March did not simply stay very contained in in you 446 00:22:13,269 --> 00:22:15,634 stay very contained in in you know in money, market funds or 447 00:22:15,634 --> 00:22:16,568 know in money, market funds or corporate bond funds they 448 00:22:16,568 --> 00:22:17,201 corporate bond funds they actually there were some 449 00:22:17,201 --> 00:22:20,268 actually there were some spillover effects. I took it. A 450 00:22:20,268 --> 00:22:22,736 spillover effects. I took it. A different perspective to you in 451 00:22:22,736 --> 00:22:24,969 different perspective to you in the comparisons between banking 452 00:22:24,969 --> 00:22:26,667 the comparisons between banking market based finance because I 453 00:22:26,667 --> 00:22:29,234 market based finance because I think some of the fundamental. 454 00:22:29,234 --> 00:22:32,935 think some of the fundamental. challenges that we see. 455 00:22:33,035 --> 00:22:34,602 faced by banks in times of 456 00:22:34,602 --> 00:22:36,201 faced by banks in times of crisis, are precisely the ones 457 00:22:36,201 --> 00:22:38,635 crisis, are precisely the ones that we worry about, We’ve 458 00:22:38,635 --> 00:22:40,302 that we worry about, We’ve market-based finance we worry 459 00:22:40,302 --> 00:22:43,335 market-based finance we worry about 460 00:22:43,602 --> 00:22:45,202 excessive leverage we worry 461 00:22:45,202 --> 00:22:49,669 excessive leverage we worry about liquidity mismatches 462 00:22:51,268 --> 00:22:53,703 I think they’re very similar 463 00:22:53,703 --> 00:22:55,269 I think they’re very similar and I think the challenges are 464 00:22:55,269 --> 00:22:59,735 and I think the challenges are very similar. so for me I 465 00:22:59,735 --> 00:23:03,168 very similar. so for me I think. in terms of what we do I 466 00:23:03,168 --> 00:23:04,402 think. in terms of what we do I think there are three things 467 00:23:04,402 --> 00:23:05,602 think there are three things that we need to be doing. I 468 00:23:05,602 --> 00:23:07,602 that we need to be doing. I mean we absolutely firstly need 469 00:23:07,602 --> 00:23:09,034 mean we absolutely firstly need to learn the lessons of what 470 00:23:09,034 --> 00:23:12,169 to learn the lessons of what happened in March Secondly well 471 00:23:12,169 --> 00:23:14,802 happened in March Secondly well we do need to develop and 472 00:23:14,802 --> 00:23:15,469 we do need to develop and operationalize a micro 473 00:23:15,469 --> 00:23:17,335 operationalize a micro apprehension framework for 474 00:23:17,335 --> 00:23:18,335 apprehension framework for Market-based are coming to talk 475 00:23:18,335 --> 00:23:22,201 Market-based are coming to talk about that in a minute And 476 00:23:22,201 --> 00:23:24,035 about that in a minute And thirdly, we do need to think 477 00:23:24,035 --> 00:23:26,268 thirdly, we do need to think about the costs and benefits 478 00:23:26,268 --> 00:23:28,869 about the costs and benefits of. the sort of additional 479 00:23:28,869 --> 00:23:33,202 of. the sort of additional resilience that I’m proposing 480 00:23:33,835 --> 00:23:35,234 the what I mean. Firstly, 481 00:23:35,234 --> 00:23:36,869 the what I mean. Firstly, what’s micro credential about 482 00:23:36,869 --> 00:23:39,203 what’s micro credential about macro Prudential is about 483 00:23:39,203 --> 00:23:42,168 macro Prudential is about putting particular emphasis. on 484 00:23:42,168 --> 00:23:44,567 putting particular emphasis. on the likely impact of correlated 485 00:23:44,567 --> 00:23:47,135 the likely impact of correlated behavior on the part of 486 00:23:47,135 --> 00:23:48,402 behavior on the part of individual financial 487 00:23:48,402 --> 00:23:51,969 individual financial institutions. So. You know back 488 00:23:51,969 --> 00:23:54,168 institutions. So. You know back in the day individual banks 489 00:23:54,168 --> 00:23:56,469 in the day individual banks were making. very rational 490 00:23:56,469 --> 00:24:02,101 were making. very rational decisions. for them but the 491 00:24:02,101 --> 00:24:04,135 decisions. for them but the collective of those rational 492 00:24:04,135 --> 00:24:06,134 collective of those rational decisions by all the banks 493 00:24:06,134 --> 00:24:08,135 decisions by all the banks cause problems. so that is 494 00:24:08,135 --> 00:24:10,201 cause problems. so that is essentially that behavior that 495 00:24:10,201 --> 00:24:14,201 essentially that behavior that I think we need to be concerned 496 00:24:14,201 --> 00:24:17,135 I think we need to be concerned about in the case of 497 00:24:17,135 --> 00:24:18,201 about in the case of Market-based finance whether 498 00:24:18,201 --> 00:24:19,535 Market-based finance whether it’s money market funds 499 00:24:19,535 --> 00:24:21,834 it’s money market funds corporate bond funds, whatever. 500 00:24:21,834 --> 00:24:25,003 corporate bond funds, whatever. whatever. 501 00:24:53,701 --> 00:24:58,269 and whether it’s the ESRB or 502 00:24:58,269 --> 00:25:00,068 and whether it’s the ESRB or asthma or iOS or the financial 503 00:25:00,068 --> 00:25:04,634 asthma or iOS or the financial stability Board there has been 504 00:25:04,634 --> 00:25:07,168 stability Board there has been work over the years, but in 505 00:25:07,168 --> 00:25:10,468 work over the years, but in particular. recently in 506 00:25:10,468 --> 00:25:15,202 particular. recently in response to the shock and 507 00:25:15,202 --> 00:25:16,735 response to the shock and what’s what’s important about 508 00:25:16,735 --> 00:25:20,001 what’s what’s important about that is that if you’re going to 509 00:25:20,001 --> 00:25:21,967 that is that if you’re going to have a micro credential 510 00:25:21,967 --> 00:25:23,035 have a micro credential framework with Marcs 511 00:25:23,035 --> 00:25:24,968 framework with Marcs Market-based finance. you do 512 00:25:24,968 --> 00:25:27,203 Market-based finance. you do need. International 513 00:25:27,203 --> 00:25:30,700 need. International coordination to make it work 514 00:25:30,700 --> 00:25:32,035 coordination to make it work you know we have seen some 515 00:25:32,035 --> 00:25:35,268 you know we have seen some progress. in recent years, but 516 00:25:35,268 --> 00:25:37,067 progress. in recent years, but actually we need all those 517 00:25:37,067 --> 00:25:40,001 actually we need all those players that I just mentioned 518 00:25:40,001 --> 00:25:45,136 players that I just mentioned to increase their efforts to 519 00:25:45,136 --> 00:25:46,868 to increase their efforts to develop a framework that you 520 00:25:46,868 --> 00:25:52,102 develop a framework that you know to do together there are. 521 00:25:52,102 --> 00:25:53,635 know to do together there are. there’s probably three big 522 00:25:53,635 --> 00:25:57,168 there’s probably three big questions that I think. Ask 523 00:25:57,168 --> 00:25:59,802 questions that I think. Ask ourselves as we develop the 524 00:25:59,802 --> 00:26:01,034 ourselves as we develop the framework, one what is the 525 00:26:01,034 --> 00:26:06,603 framework, one what is the right tool kit? to target 526 00:26:06,603 --> 00:26:08,167 right tool kit? to target excessive liquidity, mismatches 527 00:26:08,167 --> 00:26:11,735 excessive liquidity, mismatches and excessive leverage. in the 528 00:26:11,735 --> 00:26:14,502 and excessive leverage. in the sector and work has started at 529 00:26:14,502 --> 00:26:16,968 sector and work has started at the EU will not secondly what’s 530 00:26:16,968 --> 00:26:18,468 the EU will not secondly what’s the appropriate balance 531 00:26:18,468 --> 00:26:22,535 the appropriate balance between? time, Ving and 532 00:26:22,535 --> 00:26:26,500 between? time, Ving and structural interventions and 533 00:26:26,500 --> 00:26:29,635 structural interventions and third. 534 00:27:29,900 --> 00:27:31,568 The FSB and the Basel Committee 535 00:27:31,568 --> 00:27:34,169 The FSB and the Basel Committee I think. we need to do 536 00:27:34,169 --> 00:27:34,835 I think. we need to do something similar, but I think 537 00:27:34,835 --> 00:27:38,167 something similar, but I think it’s also important. that we 538 00:27:38,167 --> 00:27:41,269 it’s also important. that we actually think very hard about 539 00:27:41,269 --> 00:27:42,869 actually think very hard about the economy and the citizens 540 00:27:42,869 --> 00:27:44,335 the economy and the citizens that live in the economy and 541 00:27:44,335 --> 00:27:48,169 that live in the economy and what the benefits. and costs of 542 00:27:48,169 --> 00:27:52,135 what the benefits. and costs of a new roles would have, but so 543 00:27:52,135 --> 00:27:54,335 a new roles would have, but so that’s what my thinking is at 544 00:27:54,335 --> 00:27:55,968 that’s what my thinking is at the moment. I’d like to say 545 00:27:55,968 --> 00:27:58,601 the moment. I’d like to say Mike my overview right now is 546 00:27:58,601 --> 00:27:59,868 Mike my overview right now is that I’ve been I know there are 547 00:27:59,868 --> 00:28:04,168 that I’ve been I know there are some people who have Who say 548 00:28:04,168 --> 00:28:06,101 some people who have Who say that we don’t need you know 549 00:28:06,101 --> 00:28:09,602 that we don’t need you know because the 550 00:28:10,735 --> 00:28:13,367 because they you know funds and 551 00:28:13,367 --> 00:28:17,768 because they you know funds and the sector basically survived 552 00:28:17,934 --> 00:28:19,569 the crisis in March, we 553 00:28:19,569 --> 00:28:21,134 the crisis in March, we therefore don’t need any new 554 00:28:21,134 --> 00:28:25,035 therefore don’t need any new micro credential framework I 555 00:28:25,035 --> 00:28:26,869 micro credential framework I completely disagree with this 556 00:28:26,869 --> 00:28:31,669 completely disagree with this view and in many ways what’s my 557 00:28:31,669 --> 00:28:33,134 view and in many ways what’s my experience of March is being 558 00:28:33,134 --> 00:28:34,803 experience of March is being that’s not to take away from a 559 00:28:34,803 --> 00:28:37,367 that’s not to take away from a need to study it very carefully 560 00:28:37,367 --> 00:28:40,435 need to study it very carefully my. Of Mars persuaded me that 561 00:28:40,435 --> 00:28:43,068 my. Of Mars persuaded me that actually we should be 562 00:28:43,068 --> 00:28:43,736 actually we should be accelerating our efforts to 563 00:28:43,736 --> 00:28:46,101 accelerating our efforts to develop this framework and get 564 00:28:46,101 --> 00:28:48,601 develop this framework and get ahead of the curve. we don’t 565 00:28:48,601 --> 00:28:50,535 ahead of the curve. we don’t need to wait for something to 566 00:28:50,535 --> 00:28:53,802 need to wait for something to go wrong before we persuade 567 00:28:53,802 --> 00:28:55,335 go wrong before we persuade ourselves and we need to do 568 00:28:55,335 --> 00:28:58,003 ourselves and we need to do something it can I can I just 569 00:28:58,003 --> 00:28:59,268 something it can I can I just push you on this last point 570 00:28:59,268 --> 00:29:00,869 push you on this last point because I was actually thinking 571 00:29:00,869 --> 00:29:02,267 because I was actually thinking to challenge you exactly along 572 00:29:02,267 --> 00:29:05,601 to challenge you exactly along those lines. I’ve been so so I 573 00:29:05,601 --> 00:29:10,035 those lines. I’ve been so so I mean the fact that we’ve had. 574 00:29:10,035 --> 00:29:15,603 mean the fact that we’ve had. Chalk since World War two and 575 00:29:15,835 --> 00:29:17,134 we are getting out of this now 576 00:29:17,134 --> 00:29:18,335 we are getting out of this now but okay, I mean we’ve had the 577 00:29:18,335 --> 00:29:19,702 but okay, I mean we’ve had the biggest really economy shocks 578 00:29:19,702 --> 00:29:22,169 biggest really economy shocks since World War two and our 579 00:29:22,169 --> 00:29:23,835 since World War two and our stock markets are now basically 580 00:29:23,835 --> 00:29:26,168 stock markets are now basically back to where they were based 581 00:29:26,168 --> 00:29:29,168 back to where they were based back in the last year doesn’t 582 00:29:29,168 --> 00:29:32,668 back in the last year doesn’t that suggest that the Central 583 00:29:32,668 --> 00:29:34,667 that suggest that the Central banks are there and have done 584 00:29:34,667 --> 00:29:37,135 banks are there and have done enough to stabilize the the the 585 00:29:37,135 --> 00:29:41,235 enough to stabilize the the the system or I mean what what? Is 586 00:29:41,235 --> 00:29:43,135 system or I mean what what? Is is your worry? It’s you worried 587 00:29:43,135 --> 00:29:45,100 is your worry? It’s you worried that Central Bank action has 588 00:29:45,100 --> 00:29:47,802 that Central Bank action has been too big just to sort of in 589 00:29:47,802 --> 00:29:49,968 been too big just to sort of in a in a Greenspan put on the 590 00:29:49,968 --> 00:29:51,668 a in a Greenspan put on the right, the stock markets and 591 00:29:51,668 --> 00:29:52,734 right, the stock markets and therefore there’s too much 592 00:29:52,734 --> 00:29:54,002 therefore there’s too much liquidity out there and 593 00:29:54,002 --> 00:29:55,735 liquidity out there and ultimately be a building up for 594 00:29:55,735 --> 00:29:59,203 ultimately be a building up for the next crisis and is that 595 00:29:59,203 --> 00:30:00,035 the next crisis and is that your real worry and that’s why 596 00:30:00,035 --> 00:30:02,068 your real worry and that’s why we should sort of have bigger 597 00:30:02,068 --> 00:30:04,535 we should sort of have bigger buffers in the in the market so 598 00:30:04,535 --> 00:30:06,269 buffers in the in the market so that the next time we have a 599 00:30:06,269 --> 00:30:07,635 that the next time we have a one and a hundred years years 600 00:30:07,635 --> 00:30:10,135 one and a hundred years years so the market’s called Pta was 601 00:30:10,135 --> 00:30:11,701 so the market’s called Pta was less Central Bank intervention 602 00:30:11,701 --> 00:30:12,900 less Central Bank intervention or I mean, can you just 603 00:30:12,900 --> 00:30:16,101 or I mean, can you just elaborate? Why why you March 604 00:30:16,101 --> 00:30:18,668 elaborate? Why why you March experience suggest we need 605 00:30:18,668 --> 00:30:21,169 experience suggest we need macro Prudential action on top 606 00:30:21,169 --> 00:30:22,868 macro Prudential action on top of the Central Bank action that 607 00:30:22,868 --> 00:30:25,701 of the Central Bank action that has actually happened. Yeah. I 608 00:30:25,701 --> 00:30:28,269 has actually happened. Yeah. I got three. I think responses to 609 00:30:28,269 --> 00:30:30,735 got three. I think responses to your point in the first one is 610 00:30:30,735 --> 00:30:32,668 your point in the first one is that this is a personal view. I 611 00:30:32,668 --> 00:30:34,868 that this is a personal view. I don’t pay a lot of attention to 612 00:30:34,868 --> 00:30:39,268 don’t pay a lot of attention to what the stock market thinks 613 00:30:40,302 --> 00:30:42,668 I will I know I’m interested in 614 00:30:42,668 --> 00:30:45,500 I will I know I’m interested in the movements but I hesitate to 615 00:30:45,500 --> 00:30:48,834 the movements but I hesitate to say that. The stock market, the 616 00:30:48,834 --> 00:30:50,700 say that. The stock market, the fact that the stock market is 617 00:30:50,700 --> 00:30:52,635 fact that the stock market is back at levels that it was 618 00:30:52,635 --> 00:30:56,035 back at levels that it was means that they’re much better 619 00:30:56,035 --> 00:30:58,602 means that they’re much better informed than I am more than 620 00:30:58,602 --> 00:31:00,268 informed than I am more than anyone else is in terms of 621 00:31:00,268 --> 00:31:00,834 anyone else is in terms of where the world’s going by the 622 00:31:00,834 --> 00:31:04,201 where the world’s going by the way that’s a side issue. I do I 623 00:31:04,201 --> 00:31:05,534 way that’s a side issue. I do I have two substantial points. 624 00:31:05,534 --> 00:31:08,068 have two substantial points. one we’ve talked about which is 625 00:31:08,068 --> 00:31:12,136 one we’ve talked about which is that the sheer scale and size 626 00:31:12,136 --> 00:31:14,569 that the sheer scale and size of market-based finance. 627 00:31:14,569 --> 00:31:16,168 of market-based finance. compared to what it was 10 628 00:31:16,168 --> 00:31:17,967 compared to what it was 10 years ago, means it would 629 00:31:17,967 --> 00:31:21,802 years ago, means it would almost be. For us to conclude 630 00:31:21,802 --> 00:31:23,300 almost be. For us to conclude that actually we don’t need to 631 00:31:23,300 --> 00:31:25,003 that actually we don’t need to do anything and that we should 632 00:31:25,003 --> 00:31:28,035 do anything and that we should wait for something to go wrong 633 00:31:28,035 --> 00:31:29,601 wait for something to go wrong before we take action, we have 634 00:31:29,601 --> 00:31:32,035 before we take action, we have learned a lot of lessons over 635 00:31:32,035 --> 00:31:34,635 learned a lot of lessons over the last 10 years of the value 636 00:31:34,635 --> 00:31:37,868 the last 10 years of the value of our micro credential 637 00:31:37,868 --> 00:31:40,201 of our micro credential framework. necessarily perfect, 638 00:31:40,201 --> 00:31:42,569 framework. necessarily perfect, but it’s certainly made a 639 00:31:42,569 --> 00:31:46,968 but it’s certainly made a difference and I think those 640 00:31:46,968 --> 00:31:48,134 difference and I think those that having learned those 641 00:31:48,134 --> 00:31:49,501 that having learned those lessons we should be asking 642 00:31:49,501 --> 00:31:53,135 lessons we should be asking ourselves. all day. Their 643 00:31:53,135 --> 00:31:54,668 ourselves. all day. Their application and should they be 644 00:31:54,668 --> 00:31:58,868 application and should they be and for me the answer to that 645 00:31:58,868 --> 00:32:00,335 and for me the answer to that is yes, they are a wider 646 00:32:00,335 --> 00:32:03,534 is yes, they are a wider application we’ve learned what 647 00:32:03,534 --> 00:32:08,002 application we’ve learned what can happen. with 648 00:32:08,002 --> 00:32:08,036 can happen. with financ 649 00:32:08,036 --> 00:32:13,736 financial markets that very big 650 00:32:13,736 --> 00:32:15,802 financial markets that very big where rational decisions are 651 00:32:15,802 --> 00:32:17,668 where rational decisions are made in individual financial 652 00:32:17,668 --> 00:32:20,301 made in individual financial institutions, but where the the 653 00:32:20,301 --> 00:32:21,603 institutions, but where the the collective effect of those 654 00:32:21,603 --> 00:32:28,701 collective effect of those decisions can be negative so 655 00:32:28,701 --> 00:32:31,635 decisions can be negative so we’ve learned those lessons the 656 00:32:31,635 --> 00:32:33,202 we’ve learned those lessons the scale of the sector is such 657 00:32:33,202 --> 00:32:35,569 scale of the sector is such that it warrants marketplace. 658 00:32:35,569 --> 00:32:37,135 that it warrants marketplace. that it warrants looking at but 659 00:32:37,135 --> 00:32:41,035 that it warrants looking at but my second substantive point is. 660 00:32:41,035 --> 00:32:42,700 my second substantive point is. we should not be relying on 661 00:32:42,700 --> 00:32:48,735 we should not be relying on Central Bank action. to save. 662 00:32:48,735 --> 00:32:51,768 Central Bank action. to save. The 663 00:32:52,468 --> 00:32:54,034 the way the financial system 664 00:32:54,034 --> 00:32:59,635 the way the financial system works right. simply 665 00:33:00,502 --> 00:33:02,301 saying that we’re gonna carry 666 00:33:02,301 --> 00:33:04,934 saying that we’re gonna carry on a lot in our obviously I’m 667 00:33:04,934 --> 00:33:06,134 on a lot in our obviously I’m I’m I’m presenting this in a 668 00:33:06,134 --> 00:33:07,234 I’m I’m presenting this in a rather frivolous way, but we’re 669 00:33:07,234 --> 00:33:11,500 rather frivolous way, but we’re gonna carry on and taking the 670 00:33:11,500 --> 00:33:13,100 gonna carry on and taking the maximum amount of risk that we 671 00:33:13,100 --> 00:33:14,268 maximum amount of risk that we can because we know that at the 672 00:33:14,268 --> 00:33:16,868 can because we know that at the end of the day Central banks 673 00:33:16,868 --> 00:33:18,134 end of the day Central banks will turn up and save us. 674 00:33:18,134 --> 00:33:21,167 will turn up and save us. That’s not the way to run an. 675 00:33:21,167 --> 00:33:23,802 That’s not the way to run an. And effective financial system 676 00:33:23,802 --> 00:33:26,869 And effective financial system that produces ultimately. a 677 00:33:26,869 --> 00:33:28,868 that produces ultimately. a real economic benefits to the 678 00:33:28,868 --> 00:33:31,769 real economic benefits to the community at large. so. yeah, 679 00:33:31,769 --> 00:33:35,102 community at large. so. yeah, that’s more response. but can I 680 00:33:35,102 --> 00:33:37,168 that’s more response. but can I can I just take on this point 681 00:33:37,168 --> 00:33:38,235 can I just take on this point because you use it as a 682 00:33:38,235 --> 00:33:39,635 because you use it as a criteria the criteria of 683 00:33:39,635 --> 00:33:41,402 criteria the criteria of designing a regulation should 684 00:33:41,402 --> 00:33:42,935 designing a regulation should be one that produces economic 685 00:33:42,935 --> 00:33:44,768 be one that produces economic cost for the societal at large 686 00:33:44,768 --> 00:33:46,602 cost for the societal at large right but I want to if we’re 687 00:33:46,602 --> 00:33:48,301 right but I want to if we’re still on a catch up on a 688 00:33:48,301 --> 00:33:49,335 still on a catch up on a catch-up by a-game in the sense 689 00:33:49,335 --> 00:33:51,701 catch-up by a-game in the sense that some of Developments 690 00:33:51,701 --> 00:33:53,102 that some of Developments probably the non-bank financial 691 00:33:53,102 --> 00:33:54,668 probably the non-bank financial markets is is very much the 692 00:33:54,668 --> 00:33:56,201 markets is is very much the result of regulation of banks 693 00:33:56,201 --> 00:33:58,201 result of regulation of banks right so as you over regulate 694 00:33:58,201 --> 00:33:59,700 right so as you over regulate regulator of regulated banks, 695 00:33:59,700 --> 00:34:02,701 regulator of regulated banks, money shifts and it goes 696 00:34:02,701 --> 00:34:04,001 money shifts and it goes elsewhere and I mean to the 697 00:34:04,001 --> 00:34:06,102 elsewhere and I mean to the extent that you worry about the 698 00:34:06,102 --> 00:34:06,968 extent that you worry about the the implications the risk 699 00:34:06,968 --> 00:34:08,167 the implications the risk implications of that you wanna 700 00:34:08,167 --> 00:34:10,602 implications of that you wanna design the system that is going 701 00:34:10,602 --> 00:34:13,168 design the system that is going to diminish those risks can you 702 00:34:13,168 --> 00:34:14,735 to diminish those risks can you at the same time? Think about 703 00:34:14,735 --> 00:34:16,201 at the same time? Think about optimal design methods in the 704 00:34:16,201 --> 00:34:17,302 optimal design methods in the sense of like what kind of 705 00:34:17,302 --> 00:34:19,068 sense of like what kind of system would you like to put in 706 00:34:19,068 --> 00:34:21,768 system would you like to put in place? For financing in Europe 707 00:34:21,768 --> 00:34:22,700 place? For financing in Europe to be a amenable, let’s say to 708 00:34:22,700 --> 00:34:25,269 to be a amenable, let’s say to the digital economy or to some 709 00:34:25,269 --> 00:34:26,735 the digital economy or to some of the new trends that we see 710 00:34:26,735 --> 00:34:28,269 of the new trends that we see that we hadn’t seen before, for 711 00:34:28,269 --> 00:34:29,869 that we hadn’t seen before, for example, low interest rates for 712 00:34:29,869 --> 00:34:32,468 example, low interest rates for very long. you know what kind 713 00:34:32,468 --> 00:34:35,668 very long. you know what kind of finance regulatory financial 714 00:34:35,668 --> 00:34:37,668 of finance regulatory financial system would you like to put in 715 00:34:37,668 --> 00:34:40,201 system would you like to put in place through your mott? my 716 00:34:40,201 --> 00:34:41,768 place through your mott? my incentivising through the micro 717 00:34:41,768 --> 00:34:43,501 incentivising through the micro credential system to try and 718 00:34:43,501 --> 00:34:44,201 credential system to try and you know, meet some of the 719 00:34:44,201 --> 00:34:45,534 you know, meet some of the challenges of the future in 720 00:34:45,534 --> 00:34:48,735 challenges of the future in terms of providing adequate in 721 00:34:48,735 --> 00:34:53,568 terms of providing adequate in Europe. And these are excellent 722 00:34:53,568 --> 00:34:57,735 Europe. And these are excellent questions and if I had if I had 723 00:34:57,735 --> 00:35:01,568 questions and if I had if I had my menu of options I presented 724 00:35:01,568 --> 00:35:03,469 my menu of options I presented to you at the moment, I don’t 725 00:35:03,469 --> 00:35:05,668 to you at the moment, I don’t have a menu. I have a series of 726 00:35:05,668 --> 00:35:08,136 have a menu. I have a series of questions some of them, which I 727 00:35:08,136 --> 00:35:11,300 questions some of them, which I I mentioned earlier but I do 728 00:35:11,300 --> 00:35:14,668 I mentioned earlier but I do think that some of the things 729 00:35:14,668 --> 00:35:16,035 think that some of the things you touched on are absolutely 730 00:35:16,035 --> 00:35:19,968 you touched on are absolutely right we should be designing a 731 00:35:19,968 --> 00:35:22,501 right we should be designing a was suddenly. Design and 732 00:35:22,501 --> 00:35:26,869 was suddenly. Design and regulatory system. that 733 00:35:26,869 --> 00:35:32,802 regulatory system. that promotes stability. that make 734 00:35:32,802 --> 00:35:34,201 promotes stability. that make sure that the financial system 735 00:35:34,201 --> 00:35:35,568 sure that the financial system and a time of crisis doesn’t 736 00:35:35,568 --> 00:35:39,735 and a time of crisis doesn’t amplify any shock but I’m also 737 00:35:39,735 --> 00:35:42,035 amplify any shock but I’m also a very big believer that 738 00:35:42,035 --> 00:35:45,135 a very big believer that financial systems are there to 739 00:35:45,135 --> 00:35:47,601 financial systems are there to support the real economy. That 740 00:35:47,601 --> 00:35:51,668 support the real economy. That is why they exist and So if we 741 00:35:51,668 --> 00:35:57,203 is why they exist and So if we can design a. micro credential 742 00:35:57,203 --> 00:35:59,635 can design a. micro credential framework in a way that 743 00:35:59,635 --> 00:36:01,235 framework in a way that supports the development of the 744 00:36:01,235 --> 00:36:04,269 supports the development of the economy. to deal with some of 745 00:36:04,269 --> 00:36:06,601 economy. to deal with some of the challenges we’re aware of 746 00:36:06,601 --> 00:36:08,201 the challenges we’re aware of and the challenges we can see 747 00:36:08,201 --> 00:36:11,536 and the challenges we can see ahead You know we we all talk 748 00:36:11,536 --> 00:36:14,167 ahead You know we we all talk about all the time climate 749 00:36:14,167 --> 00:36:20,069 about all the time climate change. technology. digital. in 750 00:36:20,069 --> 00:36:22,635 change. technology. digital. in all of these. Challenges I mean 751 00:36:22,635 --> 00:36:26,668 all of these. Challenges I mean I think to the extent that you 752 00:36:26,668 --> 00:36:28,168 I think to the extent that you can design a framework to take 753 00:36:28,168 --> 00:36:31,367 can design a framework to take account of those then great 754 00:36:31,367 --> 00:36:34,701 account of those then great sometimes it’s too hard and 755 00:36:34,701 --> 00:36:36,034 sometimes it’s too hard and sometimes what you need to aim 756 00:36:36,034 --> 00:36:37,901 sometimes what you need to aim to do is the minimum amount of 757 00:36:37,901 --> 00:36:40,168 to do is the minimum amount of harm you can to allow the 758 00:36:40,168 --> 00:36:44,035 harm you can to allow the development of of the market to 759 00:36:44,035 --> 00:36:45,568 development of of the market to the development of the real 760 00:36:45,568 --> 00:36:49,501 the development of the real economy. to proceed as as 761 00:36:49,501 --> 00:36:53,203 economy. to proceed as as efficiently as possible. 762 00:36:53,668 --> 00:36:54,368 So that the focus on the 763 00:36:54,368 --> 00:36:56,568 So that the focus on the financial sector is just to 764 00:36:56,568 --> 00:36:59,268 financial sector is just to maintain stability. to allow 765 00:36:59,268 --> 00:37:03,068 maintain stability. to allow the financial. system to work 766 00:37:03,068 --> 00:37:06,169 the financial. system to work in support of. the real 767 00:37:06,169 --> 00:37:13,501 in support of. the real economy. but I I you know I I 768 00:37:13,501 --> 00:37:15,268 economy. but I I you know I I mean I’m all in favor of making 769 00:37:15,268 --> 00:37:23,202 mean I’m all in favor of making sure that we have. a. a system. 770 00:37:23,202 --> 00:37:27,002 sure that we have. a. a system. That is effective and efficient 771 00:37:27,002 --> 00:37:31,602 That is effective and efficient and economic terms I you know I 772 00:37:31,602 --> 00:37:33,936 and economic terms I you know I do think actually I mean I do 773 00:37:33,936 --> 00:37:38,168 do think actually I mean I do think that one of the questions 774 00:37:38,168 --> 00:37:39,268 think that one of the questions that we should be asking 775 00:37:39,268 --> 00:37:42,235 that we should be asking ourselves as we design. these 776 00:37:42,235 --> 00:37:46,168 ourselves as we design. these systems This is to simply ask 777 00:37:46,168 --> 00:37:50,002 systems This is to simply ask is the market itself. working 778 00:37:50,002 --> 00:37:52,101 is the market itself. working as efficiently as we would 779 00:37:52,101 --> 00:37:55,135 as efficiently as we would like. 780 00:38:29,734 --> 00:38:32,168 I mean we have already a few 781 00:38:32,168 --> 00:38:34,501 I mean we have already a few questions on slide, but but I 782 00:38:34,501 --> 00:38:36,000 questions on slide, but but I definitely still have two which 783 00:38:36,000 --> 00:38:39,634 definitely still have two which I would like to throw at you. 784 00:38:39,634 --> 00:38:41,201 I would like to throw at you. you’re you’re in control so you 785 00:38:41,201 --> 00:38:43,668 you’re you’re in control so you could you got a privilege of a 786 00:38:43,668 --> 00:38:45,402 could you got a privilege of a slider. wonderful. it’s so so 787 00:38:45,402 --> 00:38:49,068 slider. wonderful. it’s so so look I think 111 question is 788 00:38:49,068 --> 00:38:52,069 look I think 111 question is and I think you mentioned sort 789 00:38:52,069 --> 00:38:53,601 and I think you mentioned sort of design questions of Arond 790 00:38:53,601 --> 00:38:55,335 of design questions of Arond Danial policies that you 791 00:38:55,335 --> 00:38:58,500 Danial policies that you mentioned 792 00:39:33,735 --> 00:39:35,434 Measures that that apply to 793 00:39:35,434 --> 00:39:37,802 Measures that that apply to also the marketplace finance 794 00:39:37,802 --> 00:39:41,001 also the marketplace finance and unpack a little bit more, 795 00:39:41,001 --> 00:39:42,668 and unpack a little bit more, you’re thinking on those I mean 796 00:39:42,668 --> 00:39:45,034 you’re thinking on those I mean where would you put more 797 00:39:45,034 --> 00:39:48,035 where would you put more emphasis at this stage? what 798 00:39:48,035 --> 00:39:49,402 emphasis at this stage? what what have you? what have you 799 00:39:49,402 --> 00:39:50,669 what have you? what have you really learned from the shock? 800 00:39:50,669 --> 00:39:53,668 really learned from the shock? I mean, is it is it much more 801 00:39:53,668 --> 00:39:56,034 I mean, is it is it much more is sort of hurting problem so 802 00:39:56,034 --> 00:39:57,701 is sort of hurting problem so everybody is sort of just 803 00:39:57,701 --> 00:39:59,134 everybody is sort of just follow sentiments and therefore 804 00:39:59,134 --> 00:40:01,067 follow sentiments and therefore we need sort of a macro 805 00:40:01,067 --> 00:40:03,700 we need sort of a macro credential measure or is it 806 00:40:03,700 --> 00:40:05,734 credential measure or is it really something. Can be 807 00:40:05,734 --> 00:40:07,202 really something. Can be addressed much better with 808 00:40:07,202 --> 00:40:10,201 addressed much better with individual from specific I mean 809 00:40:10,201 --> 00:40:12,168 individual from specific I mean firm regulation that that sort 810 00:40:12,168 --> 00:40:15,169 firm regulation that that sort of starts with a specific firm 811 00:40:15,169 --> 00:40:16,768 of starts with a specific firm liquid ratios and so on and so 812 00:40:16,768 --> 00:40:18,335 liquid ratios and so on and so forth so if you can just unpack 813 00:40:18,335 --> 00:40:20,201 forth so if you can just unpack that that point because I was 814 00:40:20,201 --> 00:40:21,868 that that point because I was intrigued by your remark on the 815 00:40:21,868 --> 00:40:25,568 intrigued by your remark on the no-I, I mean I think I think it 816 00:40:25,568 --> 00:40:27,168 no-I, I mean I think I think it is one of the questions that 817 00:40:27,168 --> 00:40:29,769 is one of the questions that needs to be addressed for me in 818 00:40:29,769 --> 00:40:34,135 needs to be addressed for me in terms of the shock what’s one 819 00:40:34,135 --> 00:40:35,402 terms of the shock what’s one of the things I learned was 820 00:40:35,402 --> 00:40:40,735 of the things I learned was certainly that it’s it’s 821 00:41:11,668 --> 00:41:14,001 And structural interventions I 822 00:41:14,001 --> 00:41:17,101 And structural interventions I mean a closer alignment between 823 00:41:17,101 --> 00:41:18,701 mean a closer alignment between funds redemption profiles with 824 00:41:18,701 --> 00:41:21,601 funds redemption profiles with the liquidity of their 825 00:41:21,601 --> 00:41:25,635 the liquidity of their underlying assets. Would 826 00:41:25,635 --> 00:41:29,134 underlying assets. Would probably address structural 827 00:41:29,134 --> 00:41:30,668 probably address structural liquidity mismatches, but we 828 00:41:30,668 --> 00:41:33,568 liquidity mismatches, but we know that the pricing of market 829 00:41:33,568 --> 00:41:36,102 know that the pricing of market liquidity risk by the 830 00:41:36,102 --> 00:41:41,236 liquidity risk by the participants is Tomy. so so it 831 00:41:41,236 --> 00:41:42,167 participants is Tomy. so so it speaks to that. you know the 832 00:41:42,167 --> 00:41:44,168 speaks to that. you know the need to explore what’s of time 833 00:41:44,168 --> 00:41:46,034 need to explore what’s of time Ving interventions, but I think 834 00:41:46,034 --> 00:41:48,100 Ving interventions, but I think that’s that’s one of the big 835 00:41:48,100 --> 00:41:49,168 that’s that’s one of the big questions in terms of the work 836 00:41:49,168 --> 00:41:50,702 questions in terms of the work that’s needed to actually to 837 00:41:50,702 --> 00:41:52,100 that’s needed to actually to strike that balance. I don’t 838 00:41:52,100 --> 00:41:55,602 strike that balance. I don’t have a particular. View other 839 00:41:55,602 --> 00:41:59,568 have a particular. View other than well, I just said, I don’t 840 00:41:59,568 --> 00:42:02,169 than well, I just said, I don’t think it’s it’s a question of 841 00:42:02,169 --> 00:42:06,603 think it’s it’s a question of of either or between the macro 842 00:42:06,603 --> 00:42:10,035 of either or between the macro and the micro. And perhaps my 843 00:42:10,035 --> 00:42:12,668 and the micro. And perhaps my my my before we go to slide on 844 00:42:12,668 --> 00:42:13,868 my my before we go to slide on Maria, you might also still 845 00:42:13,868 --> 00:42:15,102 Maria, you might also still have another question, but but 846 00:42:15,102 --> 00:42:16,602 have another question, but but of course, one question which 847 00:42:16,602 --> 00:42:17,502 of course, one question which we haven’t touched, which I 848 00:42:17,502 --> 00:42:19,302 we haven’t touched, which I think one has to ask is is 849 00:42:19,302 --> 00:42:21,900 think one has to ask is is about taxation you mentioned 850 00:42:21,900 --> 00:42:26,168 about taxation you mentioned that Ireland as a non market 851 00:42:26,168 --> 00:42:28,167 that Ireland as a non market based financial system or four 852 00:42:28,167 --> 00:42:30,001 based financial system or four point, five trillion If that is 853 00:42:30,001 --> 00:42:32,967 point, five trillion If that is the number I heard we have a 854 00:42:32,967 --> 00:42:36,735 the number I heard we have a huge that’s that’s like a third 855 00:42:36,735 --> 00:42:39,301 huge that’s that’s like a third of of eurozone GDP, something 856 00:42:39,301 --> 00:42:42,603 of of eurozone GDP, something like this in terms of assets in 857 00:42:42,603 --> 00:42:45,501 like this in terms of assets in Ireland in Ireland. Is a small 858 00:42:45,501 --> 00:42:46,335 Ireland in Ireland. Is a small country it’s small part of the 859 00:42:46,335 --> 00:42:48,569 country it’s small part of the euro zone. obviously, so I 860 00:42:48,569 --> 00:42:50,402 euro zone. obviously, so I think the suspicion is that 861 00:42:50,402 --> 00:42:53,502 think the suspicion is that taxation and tax treatment 862 00:42:53,502 --> 00:42:54,469 taxation and tax treatment drives up the sector and makes 863 00:42:54,469 --> 00:42:56,534 drives up the sector and makes the sector so big also an 864 00:42:56,534 --> 00:43:00,502 the sector so big also an island any on whether that is 865 00:43:00,502 --> 00:43:01,900 island any on whether that is an issue and how to deal with 866 00:43:01,900 --> 00:43:07,335 an issue and how to deal with that and I think I think 867 00:43:07,335 --> 00:43:08,534 that and I think I think taxation does play this is 868 00:43:08,534 --> 00:43:10,168 taxation does play this is absolutely play a part in the 869 00:43:10,168 --> 00:43:11,068 absolutely play a part in the size of the Center, but it’s 870 00:43:11,068 --> 00:43:14,869 size of the Center, but it’s not the only factor 871 00:43:44,302 --> 00:43:49,134 United States firms to base 872 00:43:49,134 --> 00:43:51,935 United States firms to base themselves in Ireland and some 873 00:43:51,935 --> 00:43:53,902 themselves in Ireland and some of that is is is the language 874 00:43:53,902 --> 00:43:56,168 of that is is is the language of it is just historical 875 00:43:56,168 --> 00:43:59,235 of it is just historical culture. 876 00:44:00,134 --> 00:44:01,069 connections between Ireland and 877 00:44:01,069 --> 00:44:04,068 connections between Ireland and the United States it’s also to 878 00:44:04,068 --> 00:44:09,201 the United States it’s also to do with you know the the legal 879 00:44:09,201 --> 00:44:10,000 do with you know the the legal framework is to do with the 880 00:44:10,000 --> 00:44:12,201 framework is to do with the quality of people that the 881 00:44:12,201 --> 00:44:13,669 quality of people that the education system provides in 882 00:44:13,669 --> 00:44:15,800 education system provides in the country, but yeah taxes. I 883 00:44:15,800 --> 00:44:18,435 the country, but yeah taxes. I mean it’s absolutely a feature 884 00:44:18,435 --> 00:44:21,035 mean it’s absolutely a feature on this, but I mean I’d suggest 885 00:44:21,035 --> 00:44:23,534 on this, but I mean I’d suggest that if we try and fix the tax 886 00:44:23,534 --> 00:44:25,602 that if we try and fix the tax issue, that’s really beside the 887 00:44:25,602 --> 00:44:27,801 issue, that’s really beside the point of putting in place a 888 00:44:27,801 --> 00:44:30,169 point of putting in place a micro credential framework for 889 00:44:30,169 --> 00:44:31,634 micro credential framework for operates ultimately across the 890 00:44:31,634 --> 00:44:36,100 operates ultimately across the global financial system. 891 00:44:37,035 --> 00:44:38,667 If you allow me one last 892 00:44:38,667 --> 00:44:40,468 If you allow me one last question before we go to the 893 00:44:40,468 --> 00:44:41,669 question before we go to the slide or a little bit of a 894 00:44:41,669 --> 00:44:44,469 slide or a little bit of a general question starting with 895 00:44:44,469 --> 00:44:45,869 general question starting with the full forecast for the 896 00:44:45,869 --> 00:44:47,835 the full forecast for the economy coming from all these 897 00:44:47,835 --> 00:44:49,067 economy coming from all these institutions, the IMF be 898 00:44:49,067 --> 00:44:50,802 institutions, the IMF be everybody one thing. I think 899 00:44:50,802 --> 00:44:52,201 everybody one thing. I think that we all agree on is that 900 00:44:52,201 --> 00:44:54,735 that we all agree on is that the the the uncertainty around 901 00:44:54,735 --> 00:44:57,167 the the the uncertainty around end of the focus is enormous to 902 00:44:57,167 --> 00:44:59,635 end of the focus is enormous to the point to the point of not 903 00:44:59,635 --> 00:45:01,203 the point to the point of not being able to rely actually on 904 00:45:01,203 --> 00:45:04,134 being able to rely actually on baseline scenario. and you know 905 00:45:04,134 --> 00:45:05,902 baseline scenario. and you know even if that’s true if you and 906 00:45:05,902 --> 00:45:07,468 even if that’s true if you and I and I don’t know that you 907 00:45:07,468 --> 00:45:08,335 I and I don’t know that you agree. but if you agree that 908 00:45:08,335 --> 00:45:10,002 agree. but if you agree that there is an enormous amount of 909 00:45:10,002 --> 00:45:13,067 there is an enormous amount of uncertainty, some of which. By 910 00:45:13,067 --> 00:45:13,900 uncertainty, some of which. By trends that were happening 911 00:45:13,900 --> 00:45:15,534 trends that were happening before, but we don’t know what 912 00:45:15,534 --> 00:45:16,201 before, but we don’t know what they’re leading us. We don’t 913 00:45:16,201 --> 00:45:17,502 they’re leading us. We don’t know what the new study state 914 00:45:17,502 --> 00:45:19,668 know what the new study state is gonna be in some of it 915 00:45:19,668 --> 00:45:22,601 is gonna be in some of it change as a result of 19, you 916 00:45:22,601 --> 00:45:24,034 change as a result of 19, you know how would you design a 917 00:45:24,034 --> 00:45:27,002 know how would you design a micro prot a framework when you 918 00:45:27,002 --> 00:45:28,469 micro prot a framework when you know, it’s not obvious where 919 00:45:28,469 --> 00:45:31,702 know, it’s not obvious where we’re heading. you know what 920 00:45:31,702 --> 00:45:32,434 we’re heading. you know what kind of principles would you 921 00:45:32,434 --> 00:45:34,135 kind of principles would you have to to follow in order to 922 00:45:34,135 --> 00:45:35,701 have to to follow in order to for a framework to be 923 00:45:35,701 --> 00:45:37,269 for a framework to be operational in an environment 924 00:45:37,269 --> 00:45:38,635 operational in an environment of what can only be thought of 925 00:45:38,635 --> 00:45:40,168 of what can only be thought of as as you know a fundamental 926 00:45:40,168 --> 00:45:43,336 as as you know a fundamental uncertainty. 927 00:45:43,803 --> 00:45:45,869 there’s a lot packed a lot 928 00:45:45,869 --> 00:45:47,869 there’s a lot packed a lot packed in that question let me 929 00:45:47,869 --> 00:45:51,869 packed in that question let me just start by. by addressing 930 00:45:51,869 --> 00:45:53,735 just start by. by addressing your point about forecast, I 931 00:45:53,735 --> 00:45:57,703 your point about forecast, I mean because. there is such 932 00:45:57,703 --> 00:46:01,803 mean because. there is such uncertainty that that’s why all 933 00:46:01,803 --> 00:46:05,669 uncertainty that that’s why all forecast is including ourselves 934 00:46:05,669 --> 00:46:07,403 forecast is including ourselves I haven’t really bothered to 935 00:46:07,403 --> 00:46:10,167 I haven’t really bothered to try and make a forecast What 936 00:46:10,167 --> 00:46:12,603 try and make a forecast What we’ve done is develop scenarios 937 00:46:12,603 --> 00:46:15,034 we’ve done is develop scenarios and say. This scenario actually 938 00:46:15,034 --> 00:46:16,201 and say. This scenario actually turns out this is what we think 939 00:46:16,201 --> 00:46:20,469 turns out this is what we think will happen so. you’re right. 940 00:46:20,469 --> 00:46:22,002 will happen so. you’re right. There is a lot of uncertainty, 941 00:46:22,002 --> 00:46:25,035 There is a lot of uncertainty, but I think all the forecasts 942 00:46:25,035 --> 00:46:29,169 but I think all the forecasts all the forecasts. all the 943 00:46:29,169 --> 00:46:30,435 all the forecasts. all the projections to be accurate 944 00:46:30,435 --> 00:46:34,736 projections to be accurate based on the scenarios do as 945 00:46:34,736 --> 00:46:38,668 based on the scenarios do as you that at some point a 946 00:46:38,668 --> 00:46:42,802 you that at some point a vaccine will be discovered and 947 00:46:42,802 --> 00:46:44,735 vaccine will be discovered and some sort of recovery will come 948 00:46:44,735 --> 00:46:47,869 some sort of recovery will come right so we are. Assuming the 949 00:46:47,869 --> 00:46:51,234 right so we are. Assuming the world is not assuming that. 950 00:46:51,234 --> 00:46:53,002 world is not assuming that. we’re on some sort sort of 951 00:46:53,002 --> 00:46:56,003 we’re on some sort sort of trajectory to catastrophe and 952 00:46:56,003 --> 00:47:00,935 trajectory to catastrophe and the end of time so the debate 953 00:47:00,935 --> 00:47:04,601 the end of time so the debate is really what is the depth of 954 00:47:04,601 --> 00:47:07,269 is really what is the depth of the shock and what is the how 955 00:47:07,269 --> 00:47:11,501 the shock and what is the how long will this shop? last for 956 00:47:11,501 --> 00:47:12,869 long will this shop? last for how long will it enjoy and so 957 00:47:12,869 --> 00:47:14,002 how long will it enjoy and so we’ve had all these debates 958 00:47:14,002 --> 00:47:18,335 we’ve had all these debates about reshaped and 959 00:47:46,868 --> 00:47:49,735 The the the growth of the 960 00:47:49,735 --> 00:47:52,201 The the the growth of the market based finance sector is 961 00:47:52,201 --> 00:47:56,201 market based finance sector is not gonna suddenly reverse so 962 00:47:56,201 --> 00:47:58,801 not gonna suddenly reverse so it does absolutely put 963 00:47:58,801 --> 00:48:01,534 it does absolutely put challenges in how you design. 964 00:48:01,534 --> 00:48:03,603 challenges in how you design. any rules and regulations and 965 00:48:03,603 --> 00:48:05,568 any rules and regulations and uncertainty, but it doesn’t 966 00:48:05,568 --> 00:48:09,136 uncertainty, but it doesn’t mean that you don’t maybe the 967 00:48:09,136 --> 00:48:10,701 mean that you don’t maybe the effort to design those rules 968 00:48:10,701 --> 00:48:13,767 effort to design those rules and regulations and in many 969 00:48:13,767 --> 00:48:16,501 and regulations and in many ways. You know at the beginning 970 00:48:16,501 --> 00:48:20,402 ways. You know at the beginning back in 2009 you could say that 971 00:48:20,402 --> 00:48:22,568 back in 2009 you could say that with a financial system sort of 972 00:48:22,568 --> 00:48:26,502 with a financial system sort of falling around us that was 973 00:48:26,502 --> 00:48:28,335 falling around us that was probably the hardest moment in 974 00:48:28,335 --> 00:48:32,135 probably the hardest moment in time to start developing rules 975 00:48:32,135 --> 00:48:34,868 time to start developing rules and regulations for to repair 976 00:48:34,868 --> 00:48:36,668 and regulations for to repair the financial system. but the 977 00:48:36,668 --> 00:48:40,868 the financial system. but the world did it and it took us a 978 00:48:40,868 --> 00:48:43,003 world did it and it took us a while, but we did it and right 979 00:48:43,003 --> 00:48:46,635 while, but we did it and right now. the reality. Is that the 980 00:48:46,635 --> 00:48:49,300 now. the reality. Is that the financial system itself? unlike 981 00:48:49,300 --> 00:48:51,002 financial system itself? unlike 10 years ago, the financial 982 00:48:51,002 --> 00:48:51,802 10 years ago, the financial system itself is still 983 00:48:51,802 --> 00:48:54,768 system itself is still standing. it is not the cause 984 00:48:54,768 --> 00:48:55,968 standing. it is not the cause of the current crisis the the 985 00:48:55,968 --> 00:48:57,268 of the current crisis the the cause of the current crisis is 986 00:48:57,268 --> 00:49:02,168 cause of the current crisis is is a health pandemic so I think 987 00:49:02,168 --> 00:49:04,168 is a health pandemic so I think the job of people like me and 988 00:49:04,168 --> 00:49:06,268 the job of people like me and others are the Central back is 989 00:49:06,268 --> 00:49:08,635 others are the Central back is actually in a in a relatively 990 00:49:08,635 --> 00:49:10,067 actually in a in a relatively good position because we bring 991 00:49:10,067 --> 00:49:10,868 good position because we bring together both of them. you know 992 00:49:10,868 --> 00:49:12,735 together both of them. you know we are the back of Prudential 993 00:49:12,735 --> 00:49:14,169 we are the back of Prudential Authority. We’re also the 994 00:49:14,169 --> 00:49:15,634 Authority. We’re also the responsible for conduct you 995 00:49:15,634 --> 00:49:17,203 responsible for conduct you know we bring everything 996 00:49:17,203 --> 00:49:20,735 know we bring everything together. I think the world. In 997 00:49:20,735 --> 00:49:22,635 together. I think the world. In a position to make sure the 998 00:49:22,635 --> 00:49:26,535 a position to make sure the financial system as it develops 999 00:49:26,535 --> 00:49:28,735 financial system as it develops is in the most resilient 1000 00:49:28,735 --> 00:49:30,869 is in the most resilient condition, it can be so sure 1001 00:49:30,869 --> 00:49:32,168 condition, it can be so sure there’s a lot of uncertainty 1002 00:49:32,168 --> 00:49:34,068 there’s a lot of uncertainty around us, but I think there’s 1003 00:49:34,068 --> 00:49:37,802 around us, but I think there’s enough. certainty for us to get 1004 00:49:37,802 --> 00:49:44,635 enough. certainty for us to get on and complete the the 1005 00:49:44,635 --> 00:49:46,735 on and complete the the operational of a macro pre 1006 00:49:46,735 --> 00:49:50,534 operational of a macro pre framework for a market-based. 1007 00:49:50,534 --> 00:49:54,168 framework for a market-based. So since you mentioned I 1008 00:49:54,168 --> 00:49:55,868 So since you mentioned I mentioned the competences for 1009 00:49:55,868 --> 00:49:58,803 mentioned the competences for micro credential policies one 1010 00:49:58,803 --> 00:50:00,268 micro credential policies one of our colleagues here on slide 1011 00:50:00,268 --> 00:50:02,168 of our colleagues here on slide or Alex Lehman actually ask the 1012 00:50:02,168 --> 00:50:05,101 or Alex Lehman actually ask the question. as you call for more 1013 00:50:05,101 --> 00:50:10,167 question. as you call for more coordination. of of macro 1014 00:50:10,167 --> 00:50:12,068 coordination. of of macro credential action Do you also 1015 00:50:12,068 --> 00:50:14,802 credential action Do you also support the greater pool of 1016 00:50:14,802 --> 00:50:16,167 support the greater pool of competence for macro Prudential 1017 00:50:16,167 --> 00:50:18,834 competence for macro Prudential policy at the level of the ECB, 1018 00:50:18,834 --> 00:50:23,534 policy at the level of the ECB, The European systemic I am I 1019 00:50:23,534 --> 00:50:26,168 The European systemic I am I don’t have a problem with the 1020 00:50:26,168 --> 00:50:29,268 don’t have a problem with the greater. 1021 00:50:30,136 --> 00:50:34,403 cooling of competencies 1022 00:50:35,068 --> 00:50:36,735 Or centralization as some 1023 00:50:36,735 --> 00:50:38,101 Or centralization as some others would call it. I don’t 1024 00:50:38,101 --> 00:50:39,402 others would call it. I don’t have a problem with it, but I 1025 00:50:39,402 --> 00:50:42,001 have a problem with it, but I do think that my own view is 1026 00:50:42,001 --> 00:50:43,802 do think that my own view is that it is it is more 1027 00:50:43,802 --> 00:50:47,134 that it is it is more important. to focus on the 1028 00:50:47,134 --> 00:50:50,169 important. to focus on the substance of the problem. 1029 00:50:50,169 --> 00:50:53,568 substance of the problem. you’re trying to fix and the 1030 00:50:53,568 --> 00:50:57,634 you’re trying to fix and the policy options that you have to 1031 00:50:57,634 --> 00:50:59,802 policy options that you have to fix them and before you start 1032 00:50:59,802 --> 00:51:01,468 fix them and before you start thinking about how you will 1033 00:51:01,468 --> 00:51:05,268 thinking about how you will administer and structure and. 1034 00:51:05,268 --> 00:51:09,735 administer and structure and. that that raging but I don’t, I 1035 00:51:09,735 --> 00:51:11,535 that that raging but I don’t, I don’t have a particular problem 1036 00:51:11,535 --> 00:51:14,235 don’t have a particular problem with it, but I do think that if 1037 00:51:14,235 --> 00:51:16,602 with it, but I do think that if you think about the MicroPro 1038 00:51:16,602 --> 00:51:21,167 you think about the MicroPro framework for banks. 1039 00:51:22,602 --> 00:51:25,101 you know that. there’s a 1040 00:51:25,101 --> 00:51:29,101 you know that. there’s a combination of both of. of 1041 00:51:29,101 --> 00:51:31,269 combination of both of. of international coordination in 1042 00:51:31,269 --> 00:51:34,734 international coordination in the design of these but local 1043 00:51:34,734 --> 00:51:36,567 the design of these but local implementation of these cuz 1044 00:51:36,567 --> 00:51:40,501 implementation of these cuz you. Need so in case of banks 1045 00:51:40,501 --> 00:51:42,502 you. Need so in case of banks we absolutely need local, you 1046 00:51:42,502 --> 00:51:45,134 we absolutely need local, you know accountability for the 1047 00:51:45,134 --> 00:51:46,435 know accountability for the implementation of such 1048 00:51:46,435 --> 00:51:49,335 implementation of such frameworks and one of the 1049 00:51:49,335 --> 00:51:52,635 frameworks and one of the challenges with pooling 1050 00:51:52,635 --> 00:51:54,802 challenges with pooling competencies at the EU level is 1051 00:51:54,802 --> 00:51:57,034 competencies at the EU level is to make sure that that local 1052 00:51:57,034 --> 00:51:59,701 to make sure that that local accountability it can be 1053 00:51:59,701 --> 00:52:02,168 accountability it can be directly but I this is all 1054 00:52:02,168 --> 00:52:03,768 directly but I this is all about design. I don’t have a 1055 00:52:03,768 --> 00:52:06,169 about design. I don’t have a philosophical. position 1056 00:52:06,169 --> 00:52:11,267 philosophical. position against. Against that. 1057 00:52:11,267 --> 00:52:12,701 against. Against that. Actually, I would I would 1058 00:52:12,701 --> 00:52:14,101 Actually, I would I would interpret this question to be 1059 00:52:14,101 --> 00:52:15,368 interpret this question to be there is there a need for 1060 00:52:15,368 --> 00:52:16,601 there is there a need for greater realization. I mean, 1061 00:52:16,601 --> 00:52:17,902 greater realization. I mean, it’s not so much whether there 1062 00:52:17,902 --> 00:52:20,934 it’s not so much whether there is you know whether you know 1063 00:52:20,934 --> 00:52:23,068 is you know whether you know one would agree to greater 1064 00:52:23,068 --> 00:52:24,335 one would agree to greater centralization from country to 1065 00:52:24,335 --> 00:52:26,735 centralization from country to the European level. But do you 1066 00:52:26,735 --> 00:52:27,335 the European level. But do you think that the risks are now 1067 00:52:27,335 --> 00:52:29,701 think that the risks are now such at least that’s the way I 1068 00:52:29,701 --> 00:52:30,869 such at least that’s the way I would understand that Alex’s 1069 00:52:30,869 --> 00:52:33,668 would understand that Alex’s question other needs now such 1070 00:52:33,668 --> 00:52:35,068 question other needs now such that it would pay out to 1071 00:52:35,068 --> 00:52:36,335 that it would pay out to centralize some of the power 1072 00:52:36,335 --> 00:52:38,002 centralize some of the power rather than keep it at at at 1073 00:52:38,002 --> 00:52:39,203 rather than keep it at at at the centralized level, and 1074 00:52:39,203 --> 00:52:40,468 the centralized level, and that’s what the way I would no, 1075 00:52:40,468 --> 00:52:45,802 that’s what the way I would no, I think. I think it’s I think 1076 00:52:45,802 --> 00:52:48,136 I think. I think it’s I think it would be too early to to 1077 00:52:48,136 --> 00:52:50,802 it would be too early to to that conclusion I I do think 1078 00:52:50,802 --> 00:52:52,168 that conclusion I I do think that the discussions that are 1079 00:52:52,168 --> 00:52:54,568 that the discussions that are happening as I’ve mentioned 1080 00:52:54,568 --> 00:52:57,768 happening as I’ve mentioned earlier, asthma and so the FSB 1081 00:52:57,768 --> 00:52:59,469 earlier, asthma and so the FSB and I ask all these various 1082 00:52:59,469 --> 00:53:01,801 and I ask all these various places they need to continue to 1083 00:53:01,801 --> 00:53:05,202 places they need to continue to happen. but I think the focus 1084 00:53:05,202 --> 00:53:07,335 happen. but I think the focus needs to be on. what’s the best 1085 00:53:07,335 --> 00:53:09,668 needs to be on. what’s the best way of fixing the problem 1086 00:53:09,668 --> 00:53:12,169 way of fixing the problem before you. You get to you 1087 00:53:12,169 --> 00:53:13,669 before you. You get to you know, identify the problem. 1088 00:53:13,669 --> 00:53:15,668 know, identify the problem. Learn the lessons decide what’s 1089 00:53:15,668 --> 00:53:16,834 Learn the lessons decide what’s the best way of fixing it 1090 00:53:16,834 --> 00:53:18,735 the best way of fixing it before you decide and therefore 1091 00:53:18,735 --> 00:53:20,469 before you decide and therefore we need some Central control of 1092 00:53:20,469 --> 00:53:23,001 we need some Central control of it. I thought I think you know 1093 00:53:23,001 --> 00:53:27,134 it. I thought I think you know history of in the history tells 1094 00:53:27,134 --> 00:53:30,603 history of in the history tells me that we could probably spend 1095 00:53:30,603 --> 00:53:33,900 me that we could probably spend 10 years designing some new 1096 00:53:33,900 --> 00:53:36,568 10 years designing some new Central sort of system. and 1097 00:53:36,568 --> 00:53:40,800 Central sort of system. and leave the substantive 1098 00:53:41,635 --> 00:53:44,168 Challenges alone and I think 1099 00:53:44,168 --> 00:53:46,335 Challenges alone and I think the balance. is the other way 1100 00:53:46,335 --> 00:53:48,635 the balance. is the other way around. well. I mean I think 1101 00:53:48,635 --> 00:53:50,168 around. well. I mean I think that’s a debate we can have for 1102 00:53:50,168 --> 00:53:51,335 that’s a debate we can have for a long time. I mean I 1103 00:53:51,335 --> 00:53:52,769 a long time. I mean I personally take the other the 1104 00:53:52,769 --> 00:53:55,335 personally take the other the other viewer side of the view I 1105 00:53:55,335 --> 00:53:56,935 other viewer side of the view I think actually institutions 1106 00:53:56,935 --> 00:53:58,102 think actually institutions really matter and you know the 1107 00:53:58,102 --> 00:54:00,201 really matter and you know the way something is institutional 1108 00:54:00,201 --> 00:54:04,001 way something is institutional design has a huge impact on the 1109 00:54:04,001 --> 00:54:05,701 design has a huge impact on the actual outcome of the policies 1110 00:54:05,701 --> 00:54:08,668 actual outcome of the policies and one of the reasons why we 1111 00:54:08,668 --> 00:54:10,468 and one of the reasons why we we probably have made so little 1112 00:54:10,468 --> 00:54:12,201 we probably have made so little progress in really integrating 1113 00:54:12,201 --> 00:54:13,901 progress in really integrating our capital markets in my view 1114 00:54:13,901 --> 00:54:15,934 our capital markets in my view is also related to the 1115 00:54:15,934 --> 00:54:19,168 is also related to the relatively. Week position that 1116 00:54:19,168 --> 00:54:21,501 relatively. Week position that asthma has I mean asthma is a 1117 00:54:21,501 --> 00:54:23,201 asthma has I mean asthma is a very limited supervisory 1118 00:54:23,201 --> 00:54:25,734 very limited supervisory powers. it is therefore 1119 00:54:25,734 --> 00:54:28,102 powers. it is therefore relatively limited European 1120 00:54:28,102 --> 00:54:28,936 relatively limited European Pais. I mean we’ve made that 1121 00:54:28,936 --> 00:54:30,302 Pais. I mean we’ve made that point it was my colleague of 1122 00:54:30,302 --> 00:54:33,069 point it was my colleague of the whole it’s an informal 1123 00:54:33,069 --> 00:54:34,334 the whole it’s an informal ECoin and you know I do think 1124 00:54:34,334 --> 00:54:36,568 ECoin and you know I do think sort of the the value of 1125 00:54:36,568 --> 00:54:38,135 sort of the the value of creating an institution and let 1126 00:54:38,135 --> 00:54:39,969 creating an institution and let that gift the institution 1127 00:54:39,969 --> 00:54:41,869 that gift the institution mandate to actually think about 1128 00:54:41,869 --> 00:54:43,168 mandate to actually think about this from European point of 1129 00:54:43,168 --> 00:54:45,603 this from European point of view. I think there there is 1130 00:54:45,603 --> 00:54:47,336 view. I think there there is really a lot of benefit but if 1131 00:54:47,336 --> 00:54:50,034 really a lot of benefit but if I made that. More question that 1132 00:54:50,034 --> 00:54:51,535 I made that. More question that I definitely from the audience 1133 00:54:51,535 --> 00:54:52,803 I definitely from the audience want to I want to ask you and 1134 00:54:52,803 --> 00:54:56,467 want to I want to ask you and that’s from David’s Henry Doyle 1135 00:54:56,467 --> 00:54:58,234 that’s from David’s Henry Doyle from Stanton poors he’s asking 1136 00:54:58,234 --> 00:55:00,301 from Stanton poors he’s asking given the growing and it’s 1137 00:55:00,301 --> 00:55:01,068 given the growing and it’s related to what you just 1138 00:55:01,068 --> 00:55:02,235 related to what you just discussed so giving the growing 1139 00:55:02,235 --> 00:55:06,102 discussed so giving the growing role of Ireland in markets 1140 00:55:06,102 --> 00:55:08,701 role of Ireland in markets financial intermediation should 1141 00:55:08,701 --> 00:55:11,201 financial intermediation should Dublin now have a seat at the 1142 00:55:11,201 --> 00:55:13,901 Dublin now have a seat at the FSB table along with Hong Kong 1143 00:55:13,901 --> 00:55:15,235 FSB table along with Hong Kong and Singapore. Perhaps you can 1144 00:55:15,235 --> 00:55:16,603 and Singapore. Perhaps you can say a word about also the 1145 00:55:16,603 --> 00:55:19,835 say a word about also the global dimension of. FSB at the 1146 00:55:19,835 --> 00:55:24,802 global dimension of. FSB at the FSC well we do participate in 1147 00:55:24,802 --> 00:55:27,835 FSC well we do participate in the FSB working groups but if 1148 00:55:27,835 --> 00:55:32,068 the FSB working groups but if we were invited. to be at the 1149 00:55:32,068 --> 00:55:36,002 we were invited. to be at the table I’d be I’d be delighted 1150 00:55:36,002 --> 00:55:39,168 table I’d be I’d be delighted to accept. 1151 00:55:39,434 --> 00:55:42,268 it so you have favor. I’m 1152 00:55:42,268 --> 00:55:46,569 it so you have favor. I’m sorry. wonderful. so Maria I 1153 00:55:46,569 --> 00:55:48,601 sorry. wonderful. so Maria I mean I think there’s of course 1154 00:55:48,601 --> 00:55:51,469 mean I think there’s of course two other questions. One 1155 00:55:51,469 --> 00:55:52,868 two other questions. One recovered by mister Anonymous 1156 00:55:52,868 --> 00:55:55,803 recovered by mister Anonymous on the size. is there a limit 1157 00:55:55,803 --> 00:55:56,969 on the size. is there a limit to the size of the Central Bank 1158 00:55:56,969 --> 00:55:59,067 to the size of the Central Bank intervention and as purchases 1159 00:55:59,067 --> 00:56:01,203 intervention and as purchases before inflation worries 1160 00:56:01,203 --> 00:56:02,001 before inflation worries kicking in I mean that’s the 1161 00:56:02,001 --> 00:56:02,468 kicking in I mean that’s the nice ones still, which we 1162 00:56:02,468 --> 00:56:04,034 nice ones still, which we haven’t covered so we have a 1163 00:56:04,034 --> 00:56:06,136 haven’t covered so we have a two more minutes but perhaps 1164 00:56:06,136 --> 00:56:07,500 two more minutes but perhaps you wanna say something are you 1165 00:56:07,500 --> 00:56:10,801 you wanna say something are you are you getting worried about 1166 00:56:10,801 --> 00:56:12,201 are you getting worried about ECB Central Bank intervention? 1167 00:56:12,201 --> 00:56:14,469 ECB Central Bank intervention? I’ll be doing too matches the 1168 00:56:14,469 --> 00:56:17,701 I’ll be doing too matches the inflation risks coming up or is 1169 00:56:17,701 --> 00:56:20,969 inflation risks coming up or is that all sort of a very. Manche 1170 00:56:20,969 --> 00:56:24,069 that all sort of a very. Manche view of the world that’s you 1171 00:56:24,069 --> 00:56:29,068 view of the world that’s you know really is not appropriate. 1172 00:56:29,068 --> 00:56:30,668 know really is not appropriate. there’s nothing wrong with 1173 00:56:30,668 --> 00:56:34,502 there’s nothing wrong with dramatic views. 1174 00:56:36,134 --> 00:56:40,201 for complementary Donald Trump. 1175 00:56:40,700 --> 00:56:44,001 No, I think that we are we are 1176 00:56:44,001 --> 00:56:46,668 No, I think that we are we are in absolutely exceptional times 1177 00:56:46,668 --> 00:56:51,900 in absolutely exceptional times right now and And the governing 1178 00:56:51,900 --> 00:56:56,401 right now and And the governing Council we’re having I’ve had 1179 00:56:56,401 --> 00:57:01,801 Council we’re having I’ve had a. very careful considered and 1180 00:57:01,801 --> 00:57:04,403 a. very careful considered and long discussions as to what is 1181 00:57:04,403 --> 00:57:07,635 long discussions as to what is happening in the economy of the 1182 00:57:07,635 --> 00:57:10,401 happening in the economy of the euro area and what actions 1183 00:57:10,401 --> 00:57:13,401 euro area and what actions should we be taking and I think 1184 00:57:13,401 --> 00:57:15,001 should we be taking and I think that they are. I think where we 1185 00:57:15,001 --> 00:57:18,802 that they are. I think where we are is a proportionate to the 1186 00:57:18,802 --> 00:57:22,736 are is a proportionate to the challenges that we face and you 1187 00:57:22,736 --> 00:57:24,268 challenges that we face and you know one of the things that 1188 00:57:24,268 --> 00:57:29,002 know one of the things that Christine my God. 1189 00:57:29,102 --> 00:57:30,735 our colleagues have said, is 1190 00:57:30,735 --> 00:57:32,201 our colleagues have said, is that we’re ready to do whatever 1191 00:57:32,201 --> 00:57:34,335 that we’re ready to do whatever it is that we need to do to 1192 00:57:34,335 --> 00:57:38,201 it is that we need to do to deliver on our mandate which 1193 00:57:38,201 --> 00:57:40,003 deliver on our mandate which actually reminds me that we 1194 00:57:40,003 --> 00:57:42,936 actually reminds me that we started the year. launching a 1195 00:57:42,936 --> 00:57:46,335 started the year. launching a review of our strategy. and I’m 1196 00:57:46,335 --> 00:57:47,969 review of our strategy. and I’m looking forward to when we come 1197 00:57:47,969 --> 00:57:51,869 looking forward to when we come back to it’s but we haven’t had 1198 00:57:51,869 --> 00:57:54,402 back to it’s but we haven’t had a chance to really focus on on 1199 00:57:54,402 --> 00:58:02,168 a chance to really focus on on that But I’m not. 1200 00:58:03,034 --> 00:58:04,635 I think the actions we’ve taken 1201 00:58:04,635 --> 00:58:06,469 I think the actions we’ve taken of being appropriate and 1202 00:58:06,469 --> 00:58:09,735 of being appropriate and timely. So no risk that 1203 00:58:09,735 --> 00:58:13,368 timely. So no risk that actually we just see there was 1204 00:58:13,368 --> 00:58:16,335 actually we just see there was no risks the person that asked 1205 00:58:16,335 --> 00:58:19,768 no risks the person that asked me, none of us is actually 1206 00:58:19,768 --> 00:58:21,168 me, none of us is actually vanna from the Swedish from Rep 1207 00:58:21,168 --> 00:58:23,735 vanna from the Swedish from Rep to the EU. I mean so so when 1208 00:58:23,735 --> 00:58:26,667 to the EU. I mean so so when really no risk of of financial 1209 00:58:26,667 --> 00:58:28,168 really no risk of of financial dominance, right-I mean so so 1210 00:58:28,168 --> 00:58:31,902 dominance, right-I mean so so we are not not in a world where 1211 00:58:31,902 --> 00:58:33,601 we are not not in a world where Central banks really have to 1212 00:58:33,601 --> 00:58:36,201 Central banks really have to underwrite the the the the 1213 00:58:36,201 --> 00:58:37,768 underwrite the the the the market based financial system 1214 00:58:37,768 --> 00:58:40,767 market based financial system all the time even if the risks 1215 00:58:40,767 --> 00:58:44,035 all the time even if the risks to financial. To to inflation, 1216 00:58:44,035 --> 00:58:46,702 to financial. To to inflation, well, there are risks to use 1217 00:58:46,702 --> 00:58:48,201 well, there are risks to use they’re all risks. Atm and I 1218 00:58:48,201 --> 00:58:49,735 they’re all risks. Atm and I think we’re managing them in 1219 00:58:49,735 --> 00:58:54,634 think we’re managing them in the right way. Okay, right? 1220 00:58:54,634 --> 00:58:57,068 the right way. Okay, right? yeah Governor Thank you. I 1221 00:58:57,068 --> 00:58:59,268 yeah Governor Thank you. I thank you so much for for your 1222 00:58:59,268 --> 00:59:01,736 thank you so much for for your time today. I think our hours 1223 00:59:01,736 --> 00:59:04,669 time today. I think our hours is over it’s been a fascinating 1224 00:59:04,669 --> 00:59:05,935 is over it’s been a fascinating discussion about perhaps Thank 1225 00:59:05,935 --> 00:59:08,168 discussion about perhaps Thank you also from on behalf of 1226 00:59:08,168 --> 00:59:10,168 you also from on behalf of Maria Demas and myself it was 1227 00:59:10,168 --> 00:59:12,869 Maria Demas and myself it was great to have that. To discuss 1228 00:59:12,869 --> 00:59:15,168 great to have that. To discuss with you this very important 1229 00:59:15,168 --> 00:59:17,134 with you this very important issue of market based financial 1230 00:59:17,134 --> 00:59:18,167 issue of market based financial intermediation and how to make 1231 00:59:18,167 --> 00:59:20,169 intermediation and how to make sure that it’s actually stable 1232 00:59:20,169 --> 00:59:21,102 sure that it’s actually stable and whether macro Prudential 1233 00:59:21,102 --> 00:59:23,136 and whether macro Prudential policy is the right thing to 1234 00:59:23,136 --> 00:59:24,935 policy is the right thing to do. Thank you so much Governor