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In Conversation with European Central Bank President Christine Lagarde at BWC's 2026 Spring Summit — Transcript

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0:01So, welcome.
0:02Thank you, Bill. Lovely to be here.
0:04>> so And lovely to see so many friends
0:06here. Yeah, it's like it's like you're
0:08coming home, right? Here.
0:09>> [laughter]
0:11[applause]
0:12>> So, I'm going to jump right in. World
0:14Economic Outlook came out today and as
0:16you might expect, growth down, inflation
0:19up. Uh reflecting obviously what's going
0:21on in terms of the war and the impact on
0:24energy prices.
0:25So, when you look at it from the
0:27European Union perspective, ECB
0:29perspective, what what what's your view
0:31in terms of how this going to affect the
0:33the European outlook? Base case,
0:36you know, adverse case, severe case.
0:39Where where where are you in terms of
0:41your forecast? How's that evolving? Are
0:43you are you are you sort of moving from
0:45one case to the other?
0:50Well, it's you know, it's what the the
0:53head of the
0:54International Energy Agency has called
0:56the worst shock on a global basis that
1:00we could have. So, if you start from
1:02that basis, um wherever you're located
1:05in your region and as a central banker,
1:09uh you look at the impact it can have on
1:11your economy. You look at the impact it
1:13has on inflation, which is clearly, you
1:15know, mission critical for us as central
1:18bankers. You look at the impact it has
1:19on growth and you try to navigate to see
1:23on the basis of the best possible
1:25information and I can come back to that
1:27in a second if you if you want, uh what
1:29is the likely baseline and given the
1:32level of uncertainty that we are facing,
1:35uh we work with uh scenarios. We um have
1:38a variety of them. We select the ones
1:41that are most relevant for the purpose
1:43of publication and communication uh with
1:46markets and with whoever is interested
1:47in the work that we are doing and we
1:49also uh pay great attention to risks
1:52around the baseline. And you know, it's
1:55all of that is terribly unfortunate,
1:57okay? And when I look at the the death,
1:59the casualties, the destruction, it's
2:01highly unfortunate.
2:03Where we are fortunate
2:05uh in in Europe and particularly at the
2:08ECB
2:09is that we had developed a strategy
2:12uh back in
2:152021 because it took a little bit of
2:17time because of COVID to complete the
2:19exercise, but as soon as I took the job,
2:21I decided that we should conduct this
2:23strategy review and we have just
2:24recently updated the strategy. So,
2:28two findings from that strategy review.
2:30One is
2:32we need to incorporate risk analysis
2:35into our thinking much more so and
2:37second, we need to use scenario
2:39analysis. Surprise, surprise, it's
2:41extremely helpful now and I'm delighted
2:44>> the outcomes are very wide, right?
2:46>> Yeah. Yeah, when you have a a very high
2:48level of uncertainty and you are
2:51uncertain about some of the numbers and
2:53the facts that we are observing, it's
2:56really good to be able to do that. The
2:58second aspect
2:59that makes us a little bit more
3:00fortunate in this unfortunate situation
3:03is that we were nicely positioned.
3:06>> You were on your inflation target.
3:08>> We were
3:09I mean, we had
3:10>> Un- unlike some other unnamed
3:12>> no, no. I I won't go there. Won't go
3:13there. But no, but look at it, we were
3:16um I mean, growth was on on its way up.
3:20We were in a recovery process. We were
3:22just about to uh upgrade our
3:24projections. Inflation was at our target
3:28and had been for almost a year. So, we
3:30were really confident that we had tamed
3:33inflation as it was and the unemployment
3:35level was at rock bottom bottom. We
3:38never had an unemployment level so low.
3:40So,
3:41that
3:42That gives you credibility, right? That
3:43gives you credibility in terms of going
3:45forward.
3:46>> I hope so. I I hope so.
3:47>> I I think it does. And uh but it it put
3:49it, you know, we are in a good position
3:51to now respond to the situation and and
3:54be able to demonstrate the level of uh
3:57agility
3:58uh to calibrate the response depending
4:01on the facts and on the data that we are
4:04trying to collect, ascertain, correlate,
4:07verify because that's an area where we
4:10need to constantly do some work. So, you
4:12asked me about whether we are constantly
4:15um updating
4:16>> updating and yes, we are. So, we are
4:18not, you know, publishing on a weekly
4:20basis.
4:21>> But but yes, we are constantly updating
4:23and as I was saying earlier today, it
4:26it it makes our job particularly
4:28difficult at the moment and it gives us
4:30that level of schizophrenia as I
4:32mentioned because we need to be focused
4:35on
4:36you know, our time horizon, which is the
4:38medium term. That's where we want to be.
4:40>> Because monetary policy takes time to
4:41work.
4:42>> policy is medium term target uh
4:45But at the same time, we have to be
4:47constantly aware of almost a daily
4:49evolution uh of of
4:53the overall situation
4:55and the market situation as well. So,
4:57where are you today in terms of thinking
4:58about the outlook for
5:01uh ECB monetary policy? Is it are we
5:03still are we in a
5:04wait to see which of these scenarios
5:07sort of materializes or you how far how
5:09long can you wait?
5:11We have three. We have
5:13you know, we have one baseline, which is
5:15the the the the one that
5:17we believe is is reasonable and sensible
5:20to anticipate, which has helped us give
5:22our revised production projection with,
5:24you know, growth down, inflation up. Um
5:27and and that over the course of 26, 27,
5:3128 because we conducted a three-year
5:32exercise. And in addition to that, we
5:34have constructed and published with all
5:37the hypotheticals and with all the
5:38assumptions and you know, with zero
5:40monetary or fiscal reaction incorporated
5:42in the in the in the scenarios, we have
5:45what we call an adverse scenario and a
5:49severe scenario. And the the two factors
5:52that change between the adverse and the
5:55severe is the peak at which oil and gas
5:59go
6:00and the length of time that it takes for
6:03both oil and gas and every derivative
6:06products to go back to normal. So,
6:08presumably right now we're sort of in
6:09the baseline or a little bit beyond the
6:10baseline. We're sort of marching towards
6:12the adverse. Yeah. Yeah. Yeah. Yeah. No
6:14no question. And and you know, we don't
6:17update on a daily basis, but uh it
6:20it changes on a daily basis. So, we have
6:22to update regularly and and um be
6:25mindful of potential changes. How do you
6:28think about the shock of, you know, in
6:29terms of inflation, you know,
6:31a lot central bankers like to talk about
6:32transitory shock. We can look through
6:34transitory price changes. Yeah, I've
6:36heard that story.
6:36>> How how yes.
6:38>> [laughter]
6:38>> How do you how do you think about how
6:39how long how how how strongly can you
6:42hold to that belief and at what point
6:45does inflation become high enough for
6:46long enough that it's no longer uh
6:48tenable to look through that transitory
6:50shock? You know, when obviously
6:53the teams look at it very carefully and
6:57historically, energy shocks in Europe
7:00have been rather transitory and in in
7:03the past,
7:05monetary policies in those days could
7:07just look through it, wait until it
7:09comes back because we cannot as a
7:11central banker, as you know very well,
7:13we cannot, you know, reduce the energy
7:15prices. This is something that is
7:17external. It has
7:19predominantly a supply dimension until
7:21it, you know, something happens, but
7:23this is not something that we can
7:25affect.
7:26I think what we need to do on the basis
7:29of current circumstances is
7:33assess the data,
7:35determine the actual nature of the
7:37shock,
7:38the possible variation of that nature,
7:41the magnitude, the potential duration,
7:45and then
7:47we have to be open
7:49and we cannot I think it it would be a a
7:51serious mistake today to say this is a
7:55case of look through.
7:58We simply don't know.
7:59>> Too soon to tell. Too soon to tell. So,
8:02where we will move and demonstrate our
8:05agility is once we have enough data,
8:08enough information and once that is the
8:11case, then we will not be hesitant.
8:13But if you I mean, for those of of you
8:16who are
8:17really look at the ECB position, we have
8:20laid it out very clearly in a speech
8:22that I gave recently to the ECB watchers
8:25um which, you know, divides
8:28our approaches and our potential stance
8:31into three categories. One where it's
8:34transitory, we look through it and it's
8:37relatively short-lived and it comes back
8:40to previous or more or less previous
8:42situation.
8:43We don't do anything.
8:44>> Right.
8:45And we we we, you know, we see how the
8:48situation evolves.
8:49The second at the other opposite is it's
8:52a long um
8:55long-lived um
8:57quite
8:59And then you worry about getting into
9:00getting into wages and getting into
9:02expectations.
9:03>> then yeah, it's I mean, it's a it's a
9:05it's a long-lived sustainable um energy
9:08shock, which has the direct effect,
9:10which has the indirect effect, which has
9:12eventually the risk of second round um
9:14effect and then we have to be so
9:16attentive to
9:18inflation expectations that it requires
9:21for us to take
9:23decisive measure
9:25um and then you have anything in between
9:28these two, which may or may not require
9:31that we act upon uh the situation. But
9:35the key certainty that I have is that
9:36number one, we will not let inflation
9:38expectations be de-anchored and we will
9:41deliver and continue to deliver on our
9:42mission to keep prices stable, which
9:45means 2% medium term. That is
9:47>> Absolutely. Absolutely.
9:47>> what I'm certain of.
9:49Let me switch gears and you've talked
9:50talked about the erosion of trust in
9:52multilateral institutions. Um how how
9:56serious do you think the damage is? Uh,
9:58and
9:59what should be done to sort of bolster
10:02uh, their their their their
10:04reputation and effectiveness?
10:07I don't think that their their
10:09reputation is at stake. I think that
10:11institutions of the Bretton Woods system
10:14have proven their worth. I think they
10:17are being challenged uh, because of the
10:20fragmentation of the world as we see it
10:22at the moment. And um,
10:26you know, it's it's almost conventional
10:28wisdom now to argue that the the system
10:30is broken and that it needs to be
10:32rebuilt.
10:33I don't share that view.
10:35And I think that there has been so much
10:38um,
10:39accumulation of knowledge, of expertise,
10:41of talent, of goodwill with a mission
10:45associated with that that a lot of it is
10:47actually solid and valid and should be
10:49kept.
10:51Which doesn't mean that it shouldn't be
10:53changed. And there are lots of things
10:56that can be improved. Uh, and I think
10:59the institutions themselves together
11:01with the help of the membership that is
11:04willing to move it forward has to find
11:06ways to reform it in depth so that it
11:09becomes effective, efficient, and fit
11:11for the challenges that we have. But I
11:14I'm not one of those who believe that
11:16international institutions such as the
11:18IMF, such as the World Bank, such as uh,
11:21WTO, WHO, and and you name it, uh, are
11:24irrelevant. I think that the challenges
11:26that we are facing is not what you're
11:27saying. I know that. I think they're I
11:28think they're essential myself.
11:29Absolutely. And I think that, you know,
11:31they're even more so essential because
11:33we are facing
11:34uh, issues and challenges of a global
11:37nature. And you might decide as much as
11:39you want that you will be fragmented,
11:40that you will go alone. That doesn't
11:42work. Doesn't work when you have
11:44pandemic. Doesn't work when you have
11:45major security challenges. It doesn't
11:48work when you need to have an
11:49international payment system that works.
11:51So we have all these global public goods
11:53and this is why we need these
11:54institutions. One of the models of the
11:56Bretton Woods Committee is international
11:58policy cooperation coordination leads to
12:00better outcomes than countries going on
12:02their own.
12:03Uh, so how do we get people to
12:06understand that and lean in as opposed
12:09to pull back?
12:11I think these institutions have to
12:12deliver. Mhm. And you know, you you you
12:16pick and choose the the hill that you
12:17want to die on. I think you have to pick
12:19and choose the deliverables that you are
12:21confident you will offer to demonstrate
12:23uh, the the the the value and the
12:25worthiness of of the institutions. So
12:27presumably you have to make sure you
12:28have
12:29>> or a good moment to talk about well
12:31define the mission, you know, clearly
12:33and and not not too expansively. I think
12:35the mandates are pretty clear for these
12:38institutions. And I'm not talking about
12:39the the UN uh, because I think that's
12:42that's a a you know, a whole kettle of
12:44fish.
12:46There's there's some there's some
12:48serious structural issues, right? Yeah.
12:50We're not going to fix the UN today.
12:51>> But the ones that
12:53But the ones we know well and the ones
12:55that are hosting us at the moment, I
12:57think that uh,
12:59they they know where the deliverables
13:00can be can be identified and can be can
13:03be offered. Mhm.
13:05Central bank independence has certainly
13:07come back into focus. I think people in
13:09the US are probably quite jealous of the
13:11ECB setup where your independence is
13:13established by uh, treaty.
13:16Uh, you've been a strong proponent of
13:17the importance of independence. What do
13:18you think's at risk if independence is
13:20compromised?
13:22Well, the decision-making process and
13:24and ultimately
13:25the the the the quality, validity, and
13:27credibility of the decisions that are
13:29made.
13:30If if investors or markets are under the
13:33impression that decisions are made
13:35because of uh, political pressure to go
13:38in that direction or the other, I think
13:40that undermines clearly the credibility
13:42of the institutions. I think that you
13:44know, the independence is not a given.
13:46It it might be in the treaty, it can
13:48also be in in in a law, um, but it has
13:51to be earned. Yep.
13:53And it has to be earned through um,
13:56transparency. You know, how do you how
13:58do you how do you decide? How do you
14:01communicate the decisions that you have
14:03made? And I think it it it is also
14:05earned as a result of the accountability
14:07that you have when you go to parliament.
14:09I go to parliament on a regular basis. I
14:11take the questions. I answer all the
14:13members of parliament and and and you
14:16know, we are fairly transparent in how
14:19we do it and and why we do it. So you
14:21you would argue that the central bank
14:22has a role to play in in sort of
14:24securing their independence by
14:26accountability, credibility, trust.
14:28>> you can never take it for granted. You
14:30have you you really have to earn it all
14:31the time because it it's it's a give and
14:33take. You are independent, but to earn
14:36that independence, you have to deliver
14:37on your mandate, but you also have to be
14:39transparent in how you do it and you are
14:41accountable to those who ultimately have
14:44the all own the sovereignty of the
14:46territory within which you operate.
14:47Where where do you think the ECB is
14:49today in terms of its acceptance? You
14:50know, when the ECB was established,
14:52there there was a lot of anxiety about
14:54the Bundesbank
14:55>> was going to give up its, you know,
14:56inflation The Financial Times had all
14:59these things up for all.
15:01So what where do you think it is today?
15:02>> I'm sorry. [clears throat]
15:03We've celebrated our 25th anniversary
15:05not long ago.
15:06>> credible at this point.
15:08Well, when I look at the the the
15:09popularity, if you will, of the euro,
15:1382% of the European citizens value and
15:16trust the euro.
15:18Um,
15:19the numbers are lower for the ECB itself
15:22because quite a few a few people
15:23actually don't know what the ECB
15:25[laughter] is. Um, Everybody in this
15:27room does though.
15:29But I you know, to the extent that the
15:31euro is is the currency that we are the
15:34custodian of, I think that to have that
15:3682% is quite a quite a tribute to the
15:39work that has been done by my
15:40predecessors, by the staff, and that I
15:42try to continue to emulate. And then
15:44maybe even expand. I mean, people are
15:45talking about Hungary potentially
15:47eventually.
15:47>> Yes. Yes, that's
15:49that's that's a
15:51yeah, that's a piece of good news
15:52because I
15:53I heard the uh,
15:55just newly elected prime minister of
15:56Hungary actually indicate that he will
15:58be looking forward to to joining uh, the
16:01euro area and and having the euro
16:03instead of the foreign. So this is the
16:05beginning of a journey. Yeah. There will
16:07be work. There will be uh, hard reforms,
16:10I'm sure, but to have this indication,
16:12which is not it's not a you know, a
16:14political major decision. It's it's
16:17joining the family as was predicated at
16:19the time when the euro was set up. Every
16:22member of Europe except Denmark. Denmark
16:25took a step out and carved out their
16:27right to stay out with their crown, but
16:29everybody else is expected to join. So
16:32we are 21. If we are 22,
16:35We're we're making progress. Yes.
16:37[laughter]
16:38We have four more to go.
16:41I'm going to ask switch switch gears
16:42again and ask you about uh,
16:45crypto and
16:47decentralized finance. So the genius act
16:49was passed in the United States last
16:51year. Now you are the expert. I'm not.
16:52And as but established a framework for a
16:54dollar payment stable coins. Um, and you
16:58know,
16:59dollar denominated stable coins are
17:00represented about 98% of all stable
17:02coins outstanding.
17:04Uh,
17:05do do you think of dollar stable coins
17:07as a threat to Europe in the sense of if
17:09if people decide that they want to use
17:11dollar stable coins for cross-border
17:12payments, then
17:14that'll make the euro less attractive.
17:16The European economy could be
17:18potentially dollarized. Is this
17:19something that you worry about? And and
17:21two, uh, how should the euro your your
17:23Europe respond? How is the ECB thinking
17:25about what the appropriate response is?
17:28You know, point number one, uh,
17:30we at the ECB and within the euro
17:32system, we are
17:34300% in favor of innovation,
17:37breakthrough, use of new technologies.
17:39And and DLT, by the way, is not a new
17:41technology, but it's one that that can
17:43certainly be
17:44exploited for the purpose of all sorts
17:46of payment representation of assets.
17:50But honestly,
17:52I don't understand the business case for
17:54a stable coins.
17:56Honestly. Yes.
17:57That's true. Yes. I don't.
18:01So
18:02you know, you you can do uh, tokenized
18:05deposit
18:07for for much better and more efficient
18:10uh, purpose than these stable coins.
18:13But you know, having said that, if
18:15people really want to uh, use these
18:18these, you know, non-business case
18:20devices and and talk about it as if it
18:22was of huge value,
18:25let's let's see.
18:27But having said that,
18:30I think that it should be number if it
18:31is done, it should be in compliance with
18:33the rules. So you are the expert on the
18:35genius act, I'm the expert on me car. So
18:37between the two of us, we can probably
18:39cover the regulatory environment except
18:43that they're not exactly the same. No,
18:44they're not. Right? So and and and
18:48you're not yet done and I'm not yet done
18:50because you will have clarity act as
18:52well in the background. You'll have to
18:53make up to your mind as to whether or
18:55not cusps uh,
18:57will be entitled to pay some interest to
19:01the stable coins.
19:03>> controversial.
19:03>> Yeah. Yeah. Yeah. Yeah. Big battle
19:05between the banks and Yeah. And I have
19:07my bet on that, but I'm not going to
19:09we'll share it later.
19:10>> [laughter]
19:11>> So we're we're not completely done on
19:13the regulatory environment because me
19:15car is going to be under review as well.
19:17But if these instruments, the US stable
19:20coins, euro stable coins eventually,
19:23uh, are, you know, to be considered as
19:25fungible
19:26and therefore eligible to redemption in
19:29one place or the other, especially if
19:30they are multi-currencies,
19:32then it has to be exactly some you know,
19:35subject to the same kind of regulations.
19:38And I don't think that we can tolerate
19:39that for instance, redemption of these
19:42multi-currency stable coins
19:44uh, be had in Europe um,
19:49which could be siphoned very nicely uh,
19:53because the outcome for the holder of
19:55the stablecoin is going to be more
19:58beneficial. Now, you need a level
20:00playing field.
20:00>> level playing field and you need to have
20:02a definition of fungibility between the
20:04two that is commonly accepted and that
20:07is as you said a level playing field.
20:09Cuz otherwise it's it's just
20:11as a matter of principle just not
20:12acceptable. You cannot transfer the
20:14risks to a redemption fund that is
20:17not operating under the same principle
20:18and with less supervision. So, Europe
20:20has laid down set of regulations in MiCA
20:23you know in terms of how this should go.
20:26Do you think that
20:27we're we're going to be able to get
20:28convergence between the European vision
20:30and the the regulations that have yet to
20:32be written elsewhere? Cuz obviously if
20:34you don't have convergence here, it's
20:36going to be very hard to get to that
20:37sort of harmonized world. Well, I think
20:39the business case has to be demonstrated
20:40first of all. As you said for the
20:41moment, 90% of the stablecoins are US
20:44dollar denominated. You have essentially
20:46two key players on the scene. One very
20:49largely dominant and the other one a
20:50little bit
20:51less so. And one is definitely trying to
20:55comply with the rules. The other one
20:57couldn't care less about the rules.
20:58Okay? [laughter]
20:59And you know
21:03that's an issue. No, I think I think I
21:04think that is a legitimate issue.
21:06>> mention any name by the way, huh?
21:09I I think I think most of the people can
21:11draw the inference.
21:12>> [laughter]
21:14>> Um so so
21:16how do we get to that sort of harmonized
21:18you know regime?
21:20I mean who's who's going to who's that
21:21who's going to lead that? Is that a
21:22Financial Stability Board? Is it the
21:24Committee on Payments and
21:25>> the FSB has issued quite a lot of
21:27recommendations and guidelines in
21:29relation to stablecoins.
21:30>> of the countries to Yes, absolutely. You
21:32know, you need to have
21:34you know, I can speak for Europe. You
21:36you need to have the sponsorship of the
21:37Commission and the sponsorship on the
21:39other side of whoever is going to come
21:40up. I guess it's Congress for from your
21:43perspective, wouldn't it? It's Congress
21:45and whoever is
21:47implementing and enforcing and that
21:48matters as well because you are in the
21:50sort of second layer of regulation.
21:52Yeah, and the central bank plays a role.
21:53I mean especially the Federal Reserve
21:54they've always been very very important
21:55in this in the payment space.
21:57>> Yeah.
21:57Um Yeah, but you have the Fed, you have
21:58the FDIC, you have the SEC.
22:01>> it's more complicated here than it
22:02probably should be.
22:03Okay, well you keep saying that we are
22:04complicated. So, I can tell you that you
22:06are this complicated. [laughter]
22:07>> No, absolutely.
22:09Absolutely. Let me switch gears once
22:11again. So, financial stability risk
22:12non-bank private credit we've been
22:14reading more and more about non-bank
22:16private credit.
22:17Uh how worried are you about the
22:19financial stability risks there?
22:21And what should we do about it? What how
22:22should how can we mitigate those risks?
22:25I think we should have more
22:26transparency, more data, more
22:28information
22:30than than we have at the moment. So, you
22:32you you hear one thing on the contrary.
22:33You have some who argue that you know,
22:35it's it's the canary in the coal mine
22:38and we are heading towards disaster.
22:40Others who seem to be well informed are
22:42saying well, this is not systemically
22:43important and it's only 2. something
22:45trillion. So, it's okay. 2. something
22:47trillion not not trillion.
22:49>> [laughter]
22:50>> Maybe a little less.
22:51Well, you have but that's the point.
22:53That's exactly what I'm saying. Some
22:55will tell you that it's 1.8 and other
22:56will tell you that it's 2.5. Well, the
23:00you know, the gap between the two is not
23:01totally insignificant but relative to
23:03the entire lending that is
23:05being given around the world, it is not
23:07that
23:09big a number. So, first thing you first
23:11thing you before is a lot more
23:12transparency. So, we need more
23:13information like who who who owes what
23:15to whom. Exactly. And what what is the
23:17what are the points of
23:18interconnectedness with the banking
23:20system as well? Mhm.
23:22And what is the level of information
23:23that is given to the retail investors in
23:25particular because I hear that you know,
23:27there is a tendency to attract retail
23:30investment into those those particular
23:33risk because they can be more reward.
23:35You know, I think if people know exactly
23:37what risk they're buying into that's
23:38fine. But retail investors are not
23:39necessarily the most informed investors
23:42to actually get into those businesses
23:43where liquidity is not necessarily as
23:45abundant as it would otherwise be in the
23:47banking system. No, absolutely. I mean
23:49there
23:49there should be some sort of suitability
23:51for sure for sure. I'm going to talk
23:53about probably the most popular subject
23:55of the last 6 months
23:57artificial intelligence.
23:59So
24:00central banks around the world are
24:02wrestling with what's what's the impact
24:04going to be on productivity
24:07employment inflation both in the short
24:10term and the medium term. How how are
24:11you thinking about it? Uh in ECB.
24:15Are are you thinking of it like this is
24:17really a benign it's going to raise
24:18productivity, hold down inflation you
24:20know, thousands flowers are going to
24:21bloom or are you more concerned about
24:24this disruptive impact?
24:26Well, I think
24:27I think along
24:29two lines. First line of thinking which
24:32is
24:33recent development really is
24:36what risks are we opening ourselves to
24:39with the artificial intelligence that is
24:42currently being developed and which is
24:44at the forefront of
24:47innovation, invention, creativity and
24:50and and potential risk. What what
24:52exactly
24:55are we opening ourselves to? And you
24:57know, I know it's I shouldn't be doing
24:59that but there is clearly
25:01an artificial intelligence company that
25:03has currently alerted
25:05all of us about the software. about the
25:07latest software development and the the
25:10the the
25:11the risk that can be identified for good
25:15are the risk that can be identified for
25:16bad.
25:17And I certainly think that all of us in
25:19the financial sector should be cognizant
25:22of that, be able to test it without risk
25:26and and certainly
25:28take the remedies and the precaution
25:30in order to mitigate those risks. So,
25:33that's one line of thinking which is
25:35which is recent development really
25:36because that company has had the courage
25:39to say whoops. We may have a problem
25:41here.
25:41>> We may have a problem. Yes.
25:44I think the other line of thinking has
25:45been fed by you know, much better
25:46thinkers than me. I'm thinking of
25:48Acemoglu, Simon Johnson,
25:51Krugman and and many others who are
25:53thinking about the consequences of
25:57artificial intelligence in terms of both
25:59productivity improvement, alternative
26:03between job
26:05displacement and job enhancement.
26:08Segregation of tasks and how it is going
26:11to affect the jobs.
26:14Um
26:16and how we going to deal with that.
26:19And I'm not sure that the jury is
26:20actually out as you know, I said
26:22recently I think you have a group of
26:25economists who are working hard on this
26:26concept and you you find
26:29There's a pretty wide range of views
26:30here.
26:30>> Yes. Yes. Yes. Yes. In both in terms of
26:32productivity but in terms of
26:34consequences on on on the fabrics of our
26:36society. And you know, the employment
26:39versus unemployment, the skilling, the
26:41reskilling. Who is going to finance all
26:42that?
26:44And on the other hand you have
26:46the large tech the the the the big
26:48hyperscalers and and and the the you
26:50know, new developers um
26:53who rely on them or or are partnering
26:55with them who are saying that it's going
26:57to be nirvana.
27:00So, of course they have an incentive to
27:01say that.
27:02Absolutely. Absolutely. But I would say
27:04one thing.
27:05I would say that
27:07those developments are predicated on a
27:09world that is not too fragmented. Mhm.
27:12Because if it if there is too much
27:14fragmentation, if data has have to stay
27:17in particular corners behind certain
27:19walls
27:20if money doesn't move too much
27:24because of
27:25you know, further segregation,
27:28fragmentation
27:29then this movement of artificial
27:31intelligence will find its limit.
27:33How how do you think think about AI in
27:36terms of Europe's position? So, it's
27:38really a US story and a
27:40China story competing with each other
27:43and Europe is sort of not that
27:45competitive in this space.
27:46>> Sometimes there is value in being a
27:48second. So, you so
27:50being being a fast follower is that sort
27:51of the model?
27:52>> [laughter]
27:53>> Yeah, well you may you may save a lot of
27:55money on the long run.
27:56>> in time if the first line of thinking
27:57that I was referring to
28:00materializes and if we face those risks
28:02of suddenly some of our you know, health
28:05data management system or our
28:07international payment system or you
28:10know, everything that is actually
28:12managed by
28:14by by software system that have been
28:17thought through in the last 20 years if
28:19that is at risk.
28:21We are going to ask ourselves and we
28:23will have to answer the question of the
28:25governance.
28:27Who who is going to determine the use,
28:29the non-use, the barriers, the
28:31liabilities? Yeah. You know, I was
28:33reading recently that Illinois is
28:35thinking of exempting all AI companies
28:38of any liability.
28:40I am sorry.
28:42I'm a lawyer by background. This is not
28:44possible.
28:45You know? So.
28:47Well, thank you very much. It's been a
28:48great conversation.

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