Disaster. Monetary policy works through emulating aggregate demand and that is important now. Ultimately, there is a job to replace lost income. Our congress stepped in and there has not been a faster or stronger response from congress to an economic emergency since the great depression. The cares act and other laws have been passed to more than offset lost income in the aggregate. There will be people for whom that is not true. You see high levels of savings on the Balance Sheets of households. Not experienced the downward cases we were worried about of mass insolvencies of businesses so far. So far, so good, i would say. There are no full recoveries without confidence. Do, which ipart to think we have done. The path forward will be challenging for a number of reasons, and i am sure we will get into some of them. Congresso do more and might need to do more with fiscal policy. The particulars of that are up to congress and not up to us. It is likely more will need to be done in time. Our response has been quite strong. Lagarde, i want to talk to you about coordination and cooperation. During the financial crisis, there was coordination on Monetary Policy. How would you describe the coordination and response to the pandemic . Lagarde if you are talking about the coordination between the National Central banks, i would say it has been spectacular. Both jay and andrew would remember vividly the days and nights when we had to respond and put in place the Global Financial safety net we can offer, which has to do with the swap of currencies. That was particularly the case in the early days of the crisis, in midmarch, when there was andrly a dash for cash shortterm dollar needs on the part of many participants in the markets. The three of us and three other large Central Banks reactivated we have between us to make sure there would be plenty of supply of currency that was most in demand. We did that. As far as the ecb is concerned, we reached out to other National Central banks in eastern europe, Central Europe and various places, and reactivated previous linesines, reopened repo with other banks and a new instrument that is a european repo. Amongst us, we have been extremely engaged, active. Faced theated, we storm together and we really closed ranks. If what you are talking about is coordination between monetary authorities and fiscal thereities, certainly was, contrary to what i saw myself during the great financial crisis when i was on the others in the fiscal front, we saw a much more prompt response on part of the fiscal authorities, and we were very quick and big in order to respond to the situation. On both accounts, amongst theral banks and here in area between the central bank in the national and european authorities, much improved coordination and cooperation. We asked the audience before hand questions and several of them have raised the issue of cooperation. One question is whether Central Banks should be coordinating their actions during more normal times, rather than during crises . What would you say to that . Say theree i would is a lot of cooperation, exchange of views, where we try to coordinate as much as possible and deliver on our respective mandates. We have different mandates. We have a lot in common. Within the Financial Stability , we dowithin the bis talk to each other a lot and we compared notes and try to cooperate as is appropriate in accordance to our respective mandate. That is the way i see it. To there i turn longerterm consequences, let me ask you, governor bailey, but also chair powell, to comment on this. There is quite a bit of criticism that policies are creating unhealthy asset bubbles and there is a question about whether they need to be accompanied by tougher financial regulations. Governor . Bailey it is important to understand the channels. I do not think we should be surprised at the general movement of asset prices in response. It is part of the transmission effect. What we have to watch is the Financial Stability consequences. There has been an enormous amount of work over the last under themore stability board to tackle these issues. When you look at the questions, what have we learned from the last eight or nine months . I would divide it into two parts. This will sound complacent, it is not intended, what i will say is on the banking side, this is the first major test of the post financial crisis reforms and i think so far, the Banking System has stood up to the task. Although it sounds cliche, i will say it what we wanted is we have seen that. Placeforms we have put in , the policy approach has stood up. In the nonbanking world, if you go back to march, it was referred to as a dash for cash, we saw things that caused us concern. Required major interventions domestically, internationally. Areas whereed to there are concerns. The fsb is leading the very important work on nonbanking financial institutions. They are asking two big questions. What did we learn about systemic fragilitys given the nonbank world is so much bigger . Given that Central Banks had to intervene so substantially back in march, in the context of the stresses in financial markets, what do we conclude from that in terms of the improvements we can make, both in the regulations and also in terms of the way in which Central Banks operate . It took us into new areas and gave us new challenges in terms of the nonbank financial world. Chair powell . Powell i would like to say that if you look back over the last 30 years, what you have seen is since inflation cam more instead, the, buildup of financial imbalances and financial instability. We finally internalized that lesson as a result of the Global Financial crisis and went to work to dramatically strengthen it and make more resilient the Banking System and more aspects of the Financial System. You asked about low rates, we are now in an era of low rates but that trend was in place before hand. We have been at that for a decade. I would agree with everything andrew said. Our banks have done well in this crisis so far. Would emphasize so far. It is not the time for complacency. As andrew said, what we do now nonbankacross the Financial Sector where there were some issues. We are looking carefully at what we might learn from that. I do think we took away from the last crisis a very strong focus on Financial Stability. We have a division, a public framework for assessing Financial Stability, we published a Financial Stability report earlier this week. Complete change from the way we approached these from before the crisis. President lagarde, how vulnerable are companies Balance Sheets and bank Balance Sheets to a prolonged downturn . A lot of bankers i speak to are relieved the first wave was not as dramatic. We have yet to see a lot of bankruptcies, a lot of job losses. Do you think they might be complacent . Things i two think it is critically important that we can maintain the financing conditions that have been operating well in order to sustain the economy so far, and to stabilize it and make sure companies can borrow and benefit from almost the lowest Interest Rates ever at the moment, that households can get mortgages at the lowest ever Interest Rates at the moment. Continuing to provide the financing terms at that level over a sufficiently long period of time. The level is important, but the majority of which the terms will be available is also of critical importance. As this crisis is continuing from one wave to another, as lockdown measures are hammering the economy from one set of lockdowns to the other, it is really, really important that the maturity be sufficiently long so the refinancing by the corporate beat with terms that can be expected and that will support the economy. As far as the banks are concerned, i would completely subscribe to what andrew and jay have said. Through the last 13 years, the great efforts undertaken by the Financial Stability board, the regulatory authorities around the world, the banks are much more solid, capitalized, the leverage is much more under control, Liquidity Ratios are supposing sufficient caution on the banks. They havet of that, operated as facilitators, as solution finders as opposed to being at the core of the problem, as was the case 12, 13 years ago. Under the current circumstances, and i would completely second what jay said, i think it is also necessary banks be very attentive to their current Balance Sheets and particularly the health of the Corporate Accounts they finance. It is clear that in some sectors in particular, there will be difficulties, bankruptcies, there will be exit from certain sectors and it will take time for those who exit to reenter in a different area of business. In the meantime, some impairments will have to be nonperformingsome loans will have to be provisions. It is in the interest of the Banking Sector and the Financial Stability at large to do that in a reasonable transitional way so npl shock thato we would fear if it was to happen all of the sudden. I have to say the measures that were taken from a fiscal point of view to provide moratorium, to provide those particular the hardship of the crisis have been a great shield, but that shield will eventually be lifted at some stage and i hope that happens gradually as the provisioning takes place gradually, as well. Governor bailey, i wonder if you could answer the same question but put it more in word brexit. How comfortable are you that the financial world is ready for brexit . How worried are you about a no deal brexit . Bailey we have done a substantial amount of work with the Financial Sector over the years. We have published an assessment of the data regularly. It is being taken very seriously, an enormous amount of preparation has gone on. Calibrate our view on that, i would think the Financial Sector has been able to do a lot more preparation. There are further decisions on equivalents or not, i think the Financial Sector is ready for what will come. I think it has been harder for a large part of the nonfinancial there is the uncertainty about the question of the trade agreements, and that uncertainty remains outstanding. That is much more of a material issue in terms of preparation. It is quite binary for many firms in that sense. We do a lot of work. Our ability to assess preparedness. Obviously, a lot of work has gone on, notwithstanding the uncertainty. We said in a report we published last week, this is a broad 70 hadation, around done a lot of preparations. When you ask them, they have a tendency to say the following we are as ready as we can be. [laughter] i have heard that one. Bailey that leaves you wondering, what do they mean by can be . The best outcome is there is a trade agreement. Outcome all around is a trade agreement and i really hope there will be one. I am encouraged those discussions are going on. That would of course help. Any trade agreement now is a change from what we have had up until now because the u. K. Is leaving the customs union. There will be an adjustment process. I would hope that if there is a trade agreement, there will be some goodwill around some of the inevitable changes that will disrupt things in terms of adjustments and they can be managed more smoothly. I would be more concerned if there is not a trade agreement, we default on terms because the goodwill might not be there, frankly. I think there is every reason to hope and encourage the trade agreement to happen, but it is obviously not for us to determine. Expeld you use the word ct . Are you expecting it . Gov. Bailey i am not going to prejudge where it is going. I will stick to hope. Powell, the fed will now treat the employment mandate is a broadbased and inclusive goal that recognizes macro policy has to work for the margins of the labor market. Could you tell us what led to this change and what the likely impact will be . Powell a couple of things. The longstanding disparities in income within groups and between groups in our economy inequality between groups and within groups has been increasing. We have noted that is something that holds that the u. S. Economy as a general matter. We have focused more on those than we have in the past and called those things out as ways for the u. S. Economy to grow. Everyone can contribute and benefit from that prosperity. Observe very low unemployment by historical standards for extended period of time. Unemployment was between 3. 5 and 4 for two full years. We did not see high Wage Inflation or high price inflation. We did not see any notable problems of market allocation and things like that. Was, in thesee ninth year of the very long expansion, the benefits float more to people at the lower end of the income spectrum. Betweenecord low gaps white and black unemployment. Saw labor force rise. We saw great benefits. That was one of the things that motivated us. In thented to one change Monetary Policy review. We would react to shortfalls in employment rate. Meant to pull both of those thoughts and. Aspects of ourey framework. President lagarde, you have a different mandate but i want you to come in here, because one of the things we have noticed in this crisis is that the burden has not been evenly shared and there has been a disproportionate impact on minorities, women, and that is something you have talked about before. And a widening of the divide in wealth and economic mobility. Aboutrried are you lasting damage . Can Monetary Policy play a role . Lagarde you are completely correct in referring to the uneven consequences. It is becoming very clear as we are collecting numbers. It is the women who have been affected quite significantly more than men. It is young people affected significantly more than the average worker. In those two categories in particular, it is likely to actually leave longlasting scars. Why do i say that . Particularly for the young people, there has been research to show that when young people are not given access to the job market, or lose access because internship, it stays with them for another 10 or 15 years in the jobs they have 10 or 15 years later are lower paid, they are less qualified. Effect isng demonstrated. In this particular crisis, young people are more affected. For women, it has a different consequence in a way, because it is largely attributable when you look at sectors most affected, youre talking about transportation, the retail sector, sectors that employ largely more women than men and generally at the lower end of the wage scale. Those households are typically those that have a propensity to consume that is higher. If you take that out of the market, clearly the consumption will not be pushed up by those wage earners that have essentially are they employed or unemployed . They are discouraged. They know it will not pay back to go back into the labor market. I am concerned about that. Although it is not our mandate are made it is price stability. Our mandate is price stability. That fiscal can be an active agent to address the situation and maintained income for those losing their job or a period of time and provide for the training for the skill sets to help them get to the other side of the river and the ability to get a job in a different sector. Governor bailey, you have talked about the economy of the future. What are the changes that you see . Bailey i think the effects have been uneven. In a way, that is not surprising. We have seen an uneven recovery so far. That reflects the fact that those parts of the economy and those sectors evolve closely with Human Interaction are much more heavily affected. Greater a much concentration of lowpaid workers and distributions of gender and ethnicity and that is very troubling. In order to come back where we started this discussion, i think the sustained recovery from this, the less the longterm scarring will be because more firms will be able to come through, more activity will revise. That is a good thing. We tend to take the view that it will not necessarily be as large as some forecasters think it is. Some of them i suspect rely too much on history. If you go back to the 1990s, where you some much larger scarring and more sustained scarring, that was because it was very much a structural move out of heavy industry, heavy manufacturing, into Services Like coal mining where you had far more longterm unemployment. I am more optimistic on that front. These will probably be movements within sectors. It is still very seriously. I do not want to play it down at all. Clear, it is not something we can do alone or be the primary focus on. I do think the very large amount of work we all do to understand Economic Analysis and understand our economy has benefits in terms of framing thinking about how to address these issues. Know, chair pal, this crisis has accelerated certain trends. Powell, this crisis has accelerated certain trends. There are firms that will never recover from the crisis, there might be sectors that might ever recover. We will not be traveling as much. What worries you most about the longterm impact . Powell i would agree what this crisis is in the process of doing is accelerating a lot of preexisting technological change. Technological change raises productivity and over long periods of time in the short term, that may or may not be the case. Other kinds of technology, i would say it. In this particular situation, i would worry that the changes we are not going back to the same economy. We are recovering but to a different economy. One that is more leveraged to technology and i worried that will make it even more difficult than it was for many workers, as andrew just mentioned