WASHINGTON, Sept 20, 2019 (BSS/AFP) – Accustomed to being the first woman
in influential leadership positions and speaking frankly to men in power,
Christine Lagarde says manmade threats to the global economy can be “man-
fixed.”
Lagarde only last week left her post as head of the International Monetary
Fund after eight years, the first woman to serve in that role, and she is
expected to put another “first” on her resume by the end of the year: first
woman to serve as president of the European Central Bank.
She sees a world economy where growth is “fragile” and “under threat” from
trade frictions and Brexit, and perhaps an over-reliance on the efforts of
central banks like the ECB.
But while she tried to urge action during her time at the IMF — she took
over in 2011 in the aftermath of the global financial crisis — she said a
central bank should “stick to its mandate,” which perhaps is a clue to how
she will run the ECB.
Or perhaps not.
She carefully avoided a commitment about how she would use her influence in
the new post.
– Manmade problems can be ‘man-fixed’ –
In perfect English and always engaging and crisply professional, Lagarde
sat down with AFP on Thursday to review her legacy at the Washington-based
crisis lender, where she arrived after being the first woman finance minister
of France.
In bare numbers, her record is impressive: the IMF helped to avoid a global
depression, 90 countries — nearly half of its members — benefitted from
some form of lending or credit line during the crisis, and the lending
capacity was doubled to $1 trillion.
One of her main regrets is that she ran out of time to convince the member
governments to increase those resources further, since the IMF, which sits
“right at the core, at the center of the global financial safety net,” may
not have enough cash to address the next inevitable crisis.
Still, the IMF remains influential over economic and financial policy
matters.
“I think we have spoken truth to power, not always to the power’s
pleasure,” Lagarde said.
But as she leaves Britain is poised to crash out of the European Union,
with no deal to cushion the blow in place as yet, while “America First”
President Donald Trump has waged a multi-front trade war primarily targeted
at China.
Those threats have undercut confidences and business investment as well as
exports, and global growth could by some estimates fall to the slowest pace
since 2008 at the start of the financial crisis.
But Brexit and trade frictions “are manmade and can be man-fixed,” and
Lagarde quipped, “A bit of woman wouldn’t hurt.”
– Where are the roof fixers? –
She has often urged governments to “fix the roof while the sun is shining,”
borrowing from former US President John F Kennedy, pushing for spending while
times are good to fix long-term problems and help people left behind by
globalization and technological change.
Yet even amid a worldwide wave of anger against trade and globalization,
officials who control the purse strings of governments have not done enough,
Lagarde said.
Instead central banks have done much of the heavy lifting in preventing the
financial crisis from becoming a depression.
“I think central bankers have done an awful lot and were for many years
regarded as the only game in town,” she said.
If confirmed, Lagarde will step into her new post as one of those central
bankers in an environment where Trump has maintained a relentless campaign
against the US Federal Reserve for not cutting interest rates aggressively to
stimulate growth, while others in Europe have criticized outgoing ECB
President Mario Draghi for cutting rates further into negative territory to
juice a sluggish EU economy.
Experience shows that when politicians meddle with central bank
independence it “doesn’t pan out very well,” she cautioned, but at the same
time “a central bank has to do the job that it is assigned to do… they
should stick to facts and data so that they could be predictable.”
In her new post leading the ECB, she pledged to focus on job creation and
stability, but stability alone may not be enough in the lives of real people.