I am very disappointed, however, that for some reason, they forgot provide the band. [ applause ] which i think we would have enjoyed very much. The previous speaker said three things with which i think we can all agree and growth is very important and that jobs are very important. And trade needs to be free. And perceived, and i agree with this, to be fair. I think those three points, growth, jobs and nature of the trade willing system are pretty important for our discussions now. Willing system are pretty important for our discussions now. Willing system are pretty important for our discussions now. Illing system are pretty important for our discussions now. Lling system are pretty important for our discussions now. Ing system are pretty important for our discussions now. Ing system are pretty important for our discussions now. We are meeting for i think pretty much the First Time Since january 2008, it tends to be behind the times, so i didnt realize how bad it would be, but since ten years of extraordinary Global Economic optimism and about a widely shared and synchronized recovery. We will talk about the longer opportunities and challenges it creates. And to do so, if i may introduce the panel very, very quickly, because you know i think everybody here, i have christine la guard to my left. I think she has been a member of this panel for quite a long tile. To her left, obviously the managing director of International Monetary fund. To her left is mark carnie. Who is to me, the governor. But of course, to others really the governor of the bank of england. And the central bank has so many governors, after all. And to his left is kari lamb, chief executive of hong kong. And to her left, is mr. Korodo, governor of bank of japan, who has been a friend of mine for 40 years. We met at oxford. To his left, is mary cullen, chief executive officer of jpmorgans asset and wealth management. Whom ive met and shared panels with now quite a few occasions. Im looking forward very much to this one. So lets start with a short Term Economic outlook and youve just recently, may i produce your update, which is cheerful with 3. 9 growth for this year and next. So what could go wrong . Lets celebrate what could go right for the moment. Because we are in a sweet spot, as ive said. 3. 9, 3. 9, 2018, 2019. Not bad. What i think is even more interesting is that about 120 sk countries have actually seen growth increase last year. We only have about onefifth of emerging countries seeing gdp on per capita basis decline. So it is well spread out and shared between advanced economies, merging market economies and part of the world that i would certainly worry most about is sub Saharan Africa where there are lead to that lure income per capital. I think we should celebrate, we dont do that so often, and at the imf identify negative down side risks, but we should celebrate the policy implemented by policy bankers. I think one of the reasons we are in the sweetspot this morning its a cycle up spring, lets face it but largely attributable to policies implemented. Policies that we had no idea about ten years ago. Reasonably good policy. Its debatable what was on exactly eight years ago. But in the main its the result of good policies. What could go wrong, ill mention three vulnerabilities as i see them. First of all, financial vulnerabilities, and while the u. S. Tax reform will have positive effects in the shortterm, for the u. S. And for other countries around, it might also lead to serious risks, and we can discuss that later if you want. And that has an impact on the financials and their abilities, particularly given the high asset bricprices we see around world. I would say the second risk which is short term, is the excessive inequalities in many places are growing and creating those fractures that he has identified as one of the themes of the World Economy forum this year. And i would say that the third down side or risks that i see is the lack of International Cooperation and geo political results that could be created as a result. Ill be happy to stop there but talk on all three. Thats great. Thank you. Lets turn to the bankers that has produced these outcomes. Central bank certainly become controversial. They have been described by a wellknown authority as the only game in town. And i think many of us feel thats probably truer of japan than anywhere else so there were three arrows and ursz yours is certainly the arrow has gone furthest. So haruhiko tell us about your remarkable success and how youll get out of it. Thank you. Let me first explain the current status of the japanese committee. The economy is going moderately going in a well balanced manner. Real gdp has continued to grow for seven consecutive quarters and the average growth rate during that period is close to 2 . Since japans potential growth rate at this moment is slightly less than 1 , 2 growth in the last seven quarters is really substantial improvement. And the improvement rate has declined to less than 3 , actually 2. 7 , which is even in the japanese context is really full employment. And the current economic recovery has lasted for over 60 months. And this is the second longest boom in the post war era. Going forward, japans committee is it likely to continue its moderate expansion, cycle from income to spending is expected to be maintained in both the corporate as well as household sector, on the back of highly great conditions. On the price from annuals excluding fresh food, has been approaching 1 . But has remained slightly positive, excluding the effect of energy prices. In japan a contrast between strong economic recovery and relatively weak prices stand out as much as or even more than in the u. S. And europe. However, we think that with the output gap further improving labor Market Conditions steadily tightening promise prices to be expected gradually bullish and longterm projections are expected to rise. So our consumer pricing is likely to increase to the stability target of 2 . The mindset entrenched among people in the proliferation has been more tenacious than expected. Therefore, the bank of japan will continue to support japans economy and prices by pursuing powerful monetary easing with persistence under the socalled quantitative easing with the control. There are various, of course, risks in the short to medium term, but from my perspective they are mostly including some geopolitical risks. Can i just follow up on one question . Because it was one more generally discussed and an issue you face in a way that they dont. Here you have an economy that is growing significantly above trend for a quite extended period. You have unemployment at 2. 7 ,which is clearly very low, and falling. And you announced when you became governor, not you, the government and bank of japan together would hit inflation target of 2 , which most people would say if the economy was like this, you would have got there. So why is there no inflation . What do you think is going on . And how does that fit with what we are seeing in many other areas like euro zone and the United States as well . I think there are two factors behind rather slow response of prices and the wages to strong Economic Growth. One is sort of universal common factor like globalization, new technologies, even Amazon Effect and so forth, of course all of them may, inflation, rather subdued. This is universal factor. But second, japan specific factor is, as i just said, in my initial remark, that is to say, after 15year long differentiation from 1998 through 2013, differentiation and mindset, people expect prices and raises to not rise. And this kind of mindset is not as strong, and its not so easy to err rad ka to eradicate this kind of mindset from japanese household as well as companies. But there are some indication that wages are actually rising. And some prices have already started to rise. And even medium to longterm inflation expectations, which have been so weak in the last couple years are now slightly picking up. So there are many factors which made achieving target so difficult and time consuming, but i think we are finally close to the target. Okay. We hope so since you promised the government you would deliver it. Mark carney, you dont have the problem of low inflation at the moment. You have the problem that british people talked in june 2016, one which probably those who read me will realize i wasnt wildly enthusiastic about. You have started a tiny increase in interest rates. So a step towards normalization. How do you perceive the Monetary Policy challenges for you and other central bank in similar situations ahead in this strange environment of strong growth but contained inflation. And where among the other things people are concerned about is that this normalization process might reveal more financial frig illty that is now evident. What is the path forward . In the last 15 mibnutes shoud i answer that . You can do it in two minutes. Let me generalize and talk about the over all normalization challenge, if i could. Okay. And if i could pick up of what we heard. The nature of the expansion, the recovery as the imf has indicated, stronger, getting up to 4 , its broader, its 90 of economy is growing faster so slack used up. And also healthier. Ill give you one example. In terms of the acceleration of g7 growth in the last year, 80 plus of that has been investment picking up, and net trade picking up. So this is not a consumer boom led recovery or acceleration. And all of those have consequences for normalization, as you can anticipate. So the first slack being used up is the philips curve coming back. Thats the question. In the face of bigger secular pressures, globalization, technology as he just mentioned and all of us has been discussing over the course of this week and at other times. I think the Crucial Point is as you get towards full employment, as the output gap shifts, they call it a philips curve for a reason. And you start to see the convection element of the slope. So the pick up should again, maybe not to historic degrees, so we have to be cautious, but should come. And if you look at wage behavior in the u. S. In the u. K. , some of the others, well maybe i shouldnt speak for other economies, but you see that firming of wages which ones you adjust for poor productivity growth, and up until recent low level of churn in the labor market, starts to fit together at least directionally. So there is that aspect which is pushing up. The second element pushing towards normalization i should say of policy. The second element is that healthier bit, more investment, as part of the recovery, so investment picking up relative to savings. And we have seen as you know big shift in fiscal policy on advanced economy is 2, or 2. 5 drag from 2010, 2014, now adding, depending how you use multipliers particularly for the u. S. But adding to growth, maybe half a percent or so on average across that. Somewhere in that zone. But thats a big, big swing. So investment up. Savings down. Pushing up on the equilibrium rate of interest. The third element of that id highlight is just the stance of policy as a whole of, if i could use the term for these purposes, the g 4. So the members of the g7 who were practicing quantitative easing, and if you look at the flow of net fiscal issuance, minus what the bonds being taken out of the market by asset purchases, who it was, we shifted from collectively, 2013 to 2017, basically no net flow, or even bonds being taken out on net, to this year on the order of magnitude of about a trillion dollars of net issuance based on announced plans, and potentially that going up to 1. 5 trillion or higher next year. And that push up in rates. In the context of normalization you have real economy providing support for t you have technical factors that play into it, you have a very tough judgment to be made around where is the equilibrium rate of interest, which has been very, very low, and arguably should be raising a bit. You can make a judgment about direction, but probably not, certainly not with any precision about degree. And so thats going to require one has a sense of direction, i would say, as a whole for the Central Banks, regime shift, in terms of towards normalization. But a requirement for each of us to be quite prudent and patient as appropriate in making those judgments. Last thing ill say, and im not going to expand on it unless you want, u. K. Is in a relatively unique situation in that over the course of the next year, as the negotiations with that pro re progress, well find out more, in thener time what the Exchange Rate should be, whether other cost, and how all of this effects demand. And of course it is all of those factors together which determine the stance of Monetary Policy. Let me ask one follow up question, because we go i was trying to run out the clock. Ill come back to that in a moment. You have had a central role in the financial board in strengthening the Financial System. I get, and every time i write on this hundreds of comments below these crazy Central Banks created the most upperable asset price bubble, the omni bubble, it will burst, when you raise rates you collectively, and the crash will lead to total melt down. This sort of thing. On a scale of 1 to 10, how likely is that . Which . You can choose, 1, 0, risk essentially, and not worry at all, and 10, run away and get a big umbrella because the house is going to fall down. Two points. Its a composite probability. That probability has gone up. If you look at Corporate Bond spreads near alltime lows. Last seen just before ltcm, just before the Global Financial crisis in rising rate environment if that is stance of policy, some would expect adjustment there. I think the big question is not the market will find the right level for assets. The question is whether the core of the Financial System is in a position its going to amplify those movements in an adverse way and effect on the economy. I would put that as quite low. Because its not just the regulators. Its the Financial Institutions represented here and krools the world that have really transformed the liquidity and capital of the institutions. Ill give you quick numbers. Precrisis, plus access to central Bank Facilities was 10 . Now its 110 . So fully covered both their own liquidity and access to our liquidity on all short liabilities. That is huge move. Second figure, you can debate on that, but the over all level of capital standards have gone up 10 but the actual levels of capital have gone up about 5 times for banks. Thats a huge shift. And its the type of shift in the judgment of the bank of england, and ill be around if this judgment is tested, that would allow that system to with stand a shock of a disorderly brexit, which is a big call, but confident in terms of the orders of magnitude because weve tested it. And the last point we are not all the way there ending too big to fail, but we have made a huge amount of progress in terms of reshaping the institutions reshape their business lines, being able to do the retail component of the banking, and adding on all of that capital big layers of debt for the u. K. , and ill stop for this, the major banks have 25 capacity. So even if they go through that capital, there is another layer of securities that are held by institutional investors, some of whom represented in this room, who would find out that they are no longer debt holders but equity holders. So all of that provides real shock absorbing capacity for the core of the system. That is not to say that asset prices couldnt change but provide a measure of kfd if and when they do, the system isnt going to amplify that impact. I think this is incredibly important. So the conclusion i would draw, too, one is that all those comments and possibly one or two in the audience who are worried that the whole world will fall apart in the next couple of years because policy normalization and asset price collapses should calm down and feel completely and utterly relaxed. And the second conclusion, which is completely personal, that if there are any politicians in the world who are telling us that the continually rising stock market is indication of how successful they are, they might find the Central Banks again getting in the way. Let me turn to you, carry lam. Tell us how the world looks from your perspective, both in hong kong, core part of the asian economy, financial center, and if you can, about the rather large place with which you are closely connected and to your north. Yes. Well, as small and externally or entded economy, but at the same time one of the free es and most competitive economies in the world, hong kong certainly benefits from the Global Economic recovery. So we are doing very well. Last year we are projecting full year growth for 2017 at no less than 3. 7 percent in real terms which is considerably higher than the 2 in the preceding year, that is 2016. Christine kept on reminding us while it is fixed, im pleased to tell you that i have not discovered a leaking roof in hong kong yet. But similarly while the sun is out its always good to strength enthe foundation. Strengthening the foundation when hong kong seized many opportunities from us China Economic policy and also asia. Because asia growth now accounts for 60 of the gdp growth worldwide. And china alone is 30 contribution. So this session is about Global Economic situation. Ill not be doing justice if i just talk about the small economy of hong kong. So if one looks at the China Economic policy which will be very relevant for hong kong, because president said in his report that he will support the Central Government will support hong kong being integrated in the National Development strategy. Last year, president xi delivered two important speeches international, one of course was in this forum davos and in germany last year, but at that time i suspect that the Global Economic recovery was not very certain. So president xi was talking about leaders in various economies showed joint responsibility to propel the