For george w. Bush Steven Hadley now with the atlantic counsel. Well have opening remarks and then switch over to the executive vice chair. I would like to extend a few thanks to some of our partners here with us today, penny, michael margolis, thank you very much. Without further ado, ill turn it over to you. Well, thank you, julia, and my thanks, also to steve hadley for moderating the discussion. Congratulations to the Atlantic Council for the opening of the center for geoeconomics. After having looked at your goals, its an extremely timely undertaking. More broadly now more than ever, the Atlantic Councils mission of a strange transatlantic relationship. Covid19 has affected our way of life. As a look to the future, that the right values guide us in a postcovid world. Thats why the transatlantic relationship so important. It represents over 40 of the worlds gdp and nearly half of global personal consumption. But it is about much more than the economy. It is a community of values that we cherish and live by and are prepared to defend. Our common belief in liberty and democracy makes this partnership a cornerstone of world stability. I believe that the pandemic has only highlighted how important our shared values are. I would like to focus the first part of my remarks today on the response to the pandemic in the United States and europe. And then turn to several transatlantic policy areas where cooperation, based on shared values is essential. Specifically investment security, cryptocurrency, sanctions and Economic Growth. Beginning with the pandemic response, the United States and europe, each mounted unprecedented economic programs. We moved quickly and moldly, dampening the microeconomic shock and the recovery thats occurring today. Though theres much work to do. Our experience so far demonstrates that we need not operate from identical play books to work toward our shared goals of full employment and robust and inclusive growth. Both in the u. S. And europe, fiscal policies provided support for households amid sharp declines in employment and hours worked. This was achieved through a mix of Unemployment Insurance and Job Retention programs, but with varying weights. The United States relied more heavily on direct payments to households, including stimulus checks and Unemployment Insurance, while also promoting Job Retention through the paycheck protection program. European policy makers subsidizing company payrolls to retain workers through a short variety of programs used during the Global Financial crisis so were ready to be relaunched. Ultimately both u. S. And european fiscal policies have produced similar results. First, finding and maintaining base Level Household consumption through the worst of the pandemic and subsequently unleashing pent up consumer demand. Retails were above prepandemic lefts at u. S. Averages. With shortterm Interest Rates constrained from below asset purchase programs and lending facilities remained the primary work horses for the fed and ecb. Both Central Banks have increased their Bond Holdings at a record pace as well as expanded their loan books, however, implementation of these programs differs. The ecbs targeted longer term lending operations offered low rate, Long Duration loans to banks with built in incentives to encourage lending. The fed has stood up a wide array, several of which have u. S. Treasury banking. While the specifics vary, the operation of scales are similar. From mid march through august, the fed as Balance Sheet has grown by 15 Percentage Points of gdp. Over the same time the ecb Balance Sheet swelled by 19 Percentage Points of ecb. Our strong responses have been mutually reinforcing, as our economies recover, there are four areas where transatlantic cooperation will be vital. The first is investment security. Prior to the pandemic, the United States and many of our European Partners were already collaborating on investment security. The pandemic has only increased the sense of urgency. The vulnerability of companies to take over increases in a crisis and other countries are sensitive to this. There has been a recent groundswell of action by our transatlantic partners to establish or update their investment review regime. Many have reached out to us to benefit from our expertise given our work through sifius. France, germany, italy, england and spain already had investment review regimes, but have taken further steps to protect themselves. Other European Countries such as norway and poland established new regimes. Still others like ireland and the Czech Republic are considering legislation. Our competitors and at ver sar adversaries will be relentless and we can protect values and enhance National Security while embracing global growth. A second area where cooperation is critical is cryptocurrencies. Cryptocurrencies are a fascinating topic, implications not only for private business, but for a number of activities the government is responsible for. Consider, for instance, National Security. One of the issues at the top of treasurys mind is that Digital Currencies can eventually be used to evade existing frameworks, like those with antiMoney Laundering and Counter Terrorist financing. Treasury has made it clear to the obligation to comply with u. S. Laws is the same regardless of whether a transaction is denominated in fiat currency or Digital Currency. Existing laws apply to Digital Assets in no uncertain terms. However, even if we could be assured that the private sector a complying with the letter and spirit of a and l laws, there are important remaining concerns that government must consider. Such as the Digital Currencies potential effects on the Monetary Base and financial stability. These are linked to a broader concern about what i will call governance. For instance, if the decade from now, there were desire for a stable coin to go from fully reserved to partially reserved or to shift the underlying mix of reserve currencies, this could alter money supply or cause financial disruption. With would such a decision be made by a private governing association or point holders. What if foreign actors had acquired a majority of the coins. Would important decisions about our economic decision been taken out of the hands of the government account aable to the people . The speed and advantages of stable coins are clear and we of course, value innovation and efficiency, however, Digital Currencies are not simply a means of payment, but depending on their structure, can shift some functions traditionally performed by government to the private sector. Therefore, policy makers on both sides of the atlantic must continue to Work Together to take a very hard look at these issues. A third area where the u. S. And europe must look closely together is holding bad actors accountable. We have a joint obligation to ensure that the Financial System is not used to undermine the freedoms we valued so deeply. To date, our efforts have made it nor difficult for terrorists, criminals and rogue regimes to move money around the world and teams from the u. S. And europe are in frequent touch to identify illicit activities. Through the hard work of both the u. S. And europe at the Financial Action task force, virtually all countries are subject to a rigorous peer review, that examines their ability to prevent Money Laundering and terrorist financing. Another example of excellent cooperation is on syria sanctions. In june of this year, treasury designated 24 individuals and entities in syria, these designate actions to hold the Syrian Regime accountable for the mistreatment of the syrian people. We will continue to work with our eu counterparts on potential targets. And even more recent example is the sanctions that the european union, the united kingdom, canada and u. S. Imposed last week on belarus officials for rigging their election. These individuals can no longer easily interact the Financial Systems and we hope there will be a change in behavior and lead to free and Fair Elections soon, as well as make clear to others, the costs of interfering in democratic processes. We also understand and share our European Partners concern about impact of sanctions on humanitarian assistance. Treasury has made it a top priority to ensure that our sanctions do not impede covid19 relief. We have a long history of authorizations and exemptions across our sanctions program, to ensure the flow of humanitarian assistance is disrupted. On april 9 we reiterated emphasized reports for covid related aid. We reinforced that it was through legitimate and transparent channels. The pandemic has tested the Global Environment creating conditions ripe for Money Laundering and corruption and fraud. We are committed to ensuring that bad actors do not take advantage of this pandemic to enrich themselves. A final topic i would like to discuss is the importance of growth. We, of course, value strong and broadly distributed growth because of the opportunities and hope it creates for our citizens. Liberty and selfdetermination are best realized in environment with diverse and widely available Economic Opportunities that enable people to pursue their dreams. We have been very focused on this at treasury and i was proud of the progress we were able to make before the world attention shifted to the coronavirus. In 2019, poverty rates hit an alltime low and real Median Household Income grew to an alltime high at a record pace of almost 7 or more than 4,000 in a single year. The Unemployment Rate hit a five decade low and alltime lows in unemployment were achieved for various minority groups including africanamericans and latinos and hispanics. Particularly notable was that wage growth at the bomb tomorrow of Income Distribution hit an alltime high and exceeded wage growth for the top of the Income Distribution. But growth is not only valuable because it increases living standards. It is also a vitally important safeguard of our shared values. This is a case for several reasons. First, a larger economy allows an increased ability to invest in the security programs which do so much to safeguard our way of life. This includes military personnel and equipment, intelligence services, and cuttingedge research. While this benefit of growth is easy to see, it is too often not part of the conversation. Second, as countries around the world make relative choices about who their partners will be, the faster we grow, the more attractive we are as partners. Growth means more purchasing power and more influence in International Standard setting. This is especially important as the world adopts frontier technology, 5g, ai, and quantum computing. Larger our markets are well protect our shared values. Third maintaining the worlds leading economies allows us to shape Global Financial market access. Increased Economic Growth makes our sanctions regimes more effective and raises the opportunity costs of malign activities, helping us deter bad actors and achieve our shared Foreign Policy goals. Finally, a Strong Economy is a testament to the benefits of our liberal democratic system and a Counter Point to top down, stateled approaches. And its unmatched by competing economic systems as other countries seek to achieve their vision of world order, it is as important as ever to demonstrate that we can continue to provide unparalleled and broadly distributed opportunity. To conclude, let me return to what is front of mind today. The covid19 crisis. I have always regarded Public Service as a privilege and it has been a particular honor to be able to serve in this moment of national reckoning. Crises can bring into focus what is most important. And in the case of the transatlantic relationship, i hope it will do just that. Our shared values have guided our response to the crisis and we must focus on these as we look to create a prosperous, free and secure world. At times, europe and the u. S. Will view individual policies differently. But on the scale of world affairs, these differences are small compared to the values we share. Let us remember what binds us together as we work side by side to shape a world of which future generations will be proud. Thank you. Mr. Deputy secretary, thank you so much for being with us today here at the Atlantic Council. We thank you for your remarks and i want, if i can, to follow up on some of the things that you have mentioned. Let me begin with the issue of sanctions, if i might. The United States has imposed financial sanctions on a long list of countries, you mentioned syria and belarus, iran, north korea, china, russia, venezuela. A pretty long list. Do you have a fear that the u. S. Is overusing sanctions at this point, particularly unilateral sanctions . And will this eventually affect and threaten the role of the u. S. Dollar as the global reserve currency . Sure. Thanks, steven. Thank you, again, for moderating the question section of this. Its an excellent question and one we think a lot about. Let me thirst just step back because not everyone will be familiar with our sanctions process. Let me just talk a little bit about our sanctions process and then come more specifically to your question, especially about sort of unilateral use. You know, our sanctions process is an extremely thorough one. It really starts with a policy decision. We have a policy group within treasury that, along with the National Security council and the state department, comes to a Foreign Policy view as, you know, where sanctions might make sense. It then goes from that policy decision to a group in treasury, what we call oia, office of intelligence and analysis, and that goes on a Fact Finding Mission to make sure that we really understand where money is flowing, who its flowing between. Once we have all the facts, we go through a very thorough legal review and analysis to make sure that all legal thresholds are met and finally, a group within treasury, the office of foreign assets control imposes and ministers sanctions. Thats a lot of acronyms, especially for those who arent in government, but the point is that the process is deeply Research Based highly professionalized, and highly attuned to a rule of law issues. And along those lines, compared to to when you were in government. There may have been several hundred people focused on, would of treasury, there are now 900 people focused on it, and its the Largest Group within named treasury so were really staffed up to do a very thorough job when we look at the sanctions. More specifically to your question about sort of unilateral use. That is a narrative which is out there. But i actually dont think it captures the vast, vast majority of the work that goes on daytoday. If you look across the sanctions programs and for instance, take north korea, north korea, were very closely coordinated with the u. N. , very closely with latin america, russia, the Russian Sanctions Program closely coordinated with europe, and our global program, which is our Human Rights Program closely coordinated with europe, as we do a lot under a glow mag, and europe adopting a similar regime for human rights violators. While there are times well need to act alone based on our Foreign Policy interest, the vast majority of times, these are coordinated with our partners and i think our partners really understand and appreciate what we can do to stop illicit flows and, you know, the partnerships are really, really very strong on the sanction side. And threaten ultimately of the role of the u. S. Dollar as the global reserve currency, are you worried about that . Yeah, i mean, for partially because these are its so closely coordinateed with our partners and that they do see the value in it, im not worried about that. I think that everyone understands, you know, the value that our program, you know, brings to the world. Thank you so much. Let me go to an issue you raised in your comments. The issue of Digital Currencies. China is field