Klaus Schwab & Christine Lagarde on how to address COVID-19, climate change and inequality

- WORLD ECONOMIC FORUM - SEP 2, 2021 - Klaus Schwab, founder and executive chairman of the World Economic Forum & Christine Lagarde, the president of the European Central Bank -

  • Klaus Schwab, founder and executive chairman of the World Economic Forum, spoke with Christine Lagarde, the president of the European Central Bank, as part of the TIME 100 Talks program on 1 September.

  • They discussed COVID-19 recovery, climate change, inequality and more.

  • Read the full transcript below.

The following is a discussion between Klaus Schwab, founder and executive chairman of the World Economic Forum, and Christine Lagarde, president of the European Central Bank. It was featured by TIME on 1 September as part of the TIME 100 Talks programs.

I'm Klaus Schwab, founder and executive chairman of the World Economic Forum. And I have the great pleasure to have a discussion today with the president of the European Central Bank, Christine Lagarde. President Lagarde, I think we met for the first time just about 20 years ago, and you were a very prominent lawyer at the time. In the meantime, you have developed also a career as a politician, as an economist, as a statesman, and as a banker.

Knowing and admiring your global perspectives and, I would say, your global responsibilities, I would like to concentrate our discussion on what I consider the four foremost challenges we are faced with at this present time: COVID-19 of course, climate change, inclusion and especially gender parity, and finally, the fourth industrial revolution — how well we can harness new technologies in order so they can serve and not harm humanity.

If I may turn to the first subject, COVID, which, of course has determined our lives, and has had tragic consequences for many people. We are now in some way, at a crossroads because while there is so much vaccination, there are still many question marks. So my question would be: how do you see the road back to normal, if any new normal exists?

And also, if I could raise one issue related to your function in the fight against COVID, what is the role of the central banks? We have heard about the IMF and the special drawing rights which may be used to mobilize $50 billion, but what is your view of the road back to normal?

Christine Lagarde: Thank you so much, Klaus. Yes, it's been 20 years of happy journeys together, where we have crossed paths many times, and looked at the world as it goes, and tried to work out ways to improve it if we could. And I'd like to salute your efforts in that journey.

To turn to your question about COVID, and your use of the term “return to normal.” Let me take us back to what we have gone through in the past two years, because I think that is actually going to determine how we transition towards a new way of conducting ourselves, in all respects. We have gone through a massive shock to the global economy, that hit us in the face and actually made us realize that health mattered actually a lot more than the economy and finance, at least in the short term.

And there was clearly, as opposed to back during the great financial crisis in 2008, a determination to focus on restoring health, securing income for people whenever that was possible, and trying to cure the pandemic that had just fallen on the world.

Of course, there were a few hiccups to begin with. But overall, policymakers did a good job of addressing the issues by reacting very promptly, and very forcefully. And certainly — because you asked about the European Central Bank and what central banks can do — with a massive response in terms of liquidity, in terms of availability of currencies that were sought by all economic players, and in terms of sustainability of those plans to help with the financing of the economy.

So one thing which I take some confidence in, is that we learned from the previous crisis. We learned that we could not procrastinate, we learned that we could not go slow, we learned that we could not face inwards. We learned the hard way at the time. You know that saying in the stock market, that you either go big or you go home? Well, we certainly all went big, in order to fight what was happening. By the same token, we adopted very strange measures, you know — locking down, and shutting down our economies, these almost mediaeval ways of dealing with this pandemic.

And then, thanks in many ways to globalization — and I'll be happy to expand on that — we came up in next to no time with vaccines, which is something that was unheard of. From a pandemic that started in February, we had vaccines available in December. Typically, it takes more than five years to experiment and create a successful vaccine. This time, it was nine months, as opposed to five years. And this is largely a story of globalization.

So, number one we learned from past mistakes, and that we needed to go big and go fast. Number two, we benefited from globalization and came up with vaccines very quickly.



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