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5/12/2020 Opening Remarks by Under Secretary Lael Brainard to the Carnegie Endowment for International Peace U.S. DEPARTMENT OF THE TREASURY Press Center Opening Remarks by Under Secretary Lael Brainard to the Carnegie Endowment for International Peace 11/9/2011 As Prepared for Delivery We saw a quiet but profound shift at the Cannes G-20 Summit back to a unified focus on safeguarding the global recovery as the central priority today. We can see this shift articulated in the action plan that was released, and we expect to see it in policy steps taken by individual countries in the coming weeks and months. Leaders recognized that we are again facing serious risks to global growth, but the situation is in many respects fundamentally different than the one we tackled during the height of the financial crisis a few years ago. With members of the G-20 now having different degrees of policy space – both monetary and fiscal—and facing differentiated challenges, we are seeking complementarity among differentiated national responses as opposed to a unified response. So the Cannes Summit was not, and could not have been, like the London Summit of 2009, where the discussion was centered on the necessity for immediate and across-the-board global stimulus. But the focal point of Cannes—like London—was squarely on growth and job creation with the attendant underpinnings of a return to financial stability. There are no “one size fits all” solutions but we made essential progress on a set of steps and tools that will strengthen the recovery and fuel growth over time. The financial crisis in Europe remains the central challenge to the global economy, which is why the central focus at the summit was on Europe’s comprehensive plan. The world knows that an effective solution for Europe is key to maintaining global growth, and over the past month, European leaders have announced an ambitious plan to deal with the crisis. They have announced their plan to build a firewall to ensure that euro area countries with basically sound policies continue to have access to market financing. They have also declared their determination to reinforce the capitalization of their banks and ensure access to abundant funding, even as they work to enhance Europe’s economic governance. In Cannes, President Obama and Secretary Geithner engaged their counterparts in an effort to help them deliver on these commitments as rapidly and convincingly as possible. The task ahead now for Europe is to accelerate elaboration and implementation of the firewall and other elements of the comprehensive plan in ways that are grounded in the political and institutional realities of the Euro area. Euro area commitment and euro area resources will be central to the credibility and effectiveness of this endeavor to work. The United States and our international partners will want to stand behind European leaders as they move to put in place a decisive solution. Here at home, we continue to remain intensely focused on creating new jobs and growing the economy, and we recognize that our growth will also help amplify and lift global growth overall. Our recovery remains fragile and still too vulnerable to events beyond our shores. Pro-growth policies in the near term and meaningful deficit-reduction in the medium term provide the best insurance policy to protect the U.S. recovery from further risks from global markets. To promote near-term growth and job creation, the Obama Administration has put forward a series of American Jobs Act proposals that would put veterans, teachers, and construction workers back on the job, invest in our infrastructure while creating good jobs, and put more money in the pockets of every American worker by cutting their payroll taxes in half. With demand in the advanced economies expected to remain weak, the emerging markets have a vital role to play in strengthening global growth as they pivot to more domestic-led demand, and this was recognized in Cannes. China and other countries with large surpluses and export-oriented economies agreed to take additional steps to support growth and strengthen demand in their own countries. And for the first time since the G-20 Summit in Toronto, countries, including Germany and Canada, agreed to allow automatic stabilizers to support their economic recovery and introduce additional discretionary measures. Again, while these were understated statements at Cannes, they are vital to the resolving the central growth challenge. China played a constructive role at the Summit. China memorialized their determination to increase the flexibility of the RMB. This is something we’ve sought for some time, and it will be critical to boosting growth. They also recognized the critical role of the exchange rate to promote more domestic-led growth, and they signaled their commitment to a slower pace of foreign reserve accumulation and to avoid persistent exchange rate misalignment. We also saw some important outcomes on financial reform. As the United States enacts financial reform at home with the Dodd-Frank Act, we are moving in lockstep on key conforming reform commitments in the FSB and G-20. The G-20 endorsed new global capital and liquidity standards in November 2010 and a year later in Cannes it adopted higher capital buffers for large banks so that they can withstand future shocks, alongside a new international standard for resolution regimes, so that large cross-border firms can be resolved without the risk of severe disruption or taxpayer exposure to loss. In addition, we secured agreement in Cannes on two important new initiatives. First, to establish global standards for margins on uncleared derivatives. And second, to establish one global system to uniquely identify parties to financial transactions. These two initiatives will address risks in the system and heighten transparency. Importantly, there was also a strong recognition and support for the need for sustained development funding and support for the poorest around the world, particularly in the Horn of Africa. We discussed the need to strengthen food security, address climate change, implement critical infrastructure projects, and maintain our focus on the need to foster growth in the developing world. I’ll conclude by noting the importance of these issues—at the G-20, at APEC, which the U.S. begins hosting today, and via our bilateral channels—for the future economic growth of the United States. President Obama said that the G-20 agenda mirrors our efforts back home – meaning how do we boost growth, how do we shrink our deficits in a way that doesn’t slow our recovery, and how we do ensure that our workers are getting jobs, skills and training? The answer goes back to the central imperative of growth. By working with our international partners we can strengthen our growth and we can accomplish more – at home and around the world. Thank you. https://www.treasury.gov/press-center/press-releases/Pages/tg1359.aspx 1/2 5/12/2020 Opening Remarks by Under Secretary Lael Brainard to the Carnegie Endowment for International Peace https://www.treasury.gov/press-center/press-releases/Pages/tg1359.aspx 2/2
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