John Micklethwait, Bloomberg
I tend to be more positive and optimistic than negative and downbeat.
With so many financial markets driven by the utterings of central bankers, the words of the woman who is in effect the central banker’s central banker matter enormously. Christine Lagarde, 60, who is about to begin her second five-year term as head of the International Monetary Fund, has a remarkable résumé. She had already run Baker & McKenzie, one of the world’s biggest law firms, and served as France’s finance minister before joining the IMF in 2011. In this interview—conducted at the fund’s headquarters in Washington—the managing director of the world’s lender of last resort discusses the global economy, negative interest rates, banking regulation, her legal problems in France, and even populists such as Donald Trump. While she defends her record, Lagarde admits mistakes, including the overly tough treatment of Greece, and also reflects that politicians start embracing reforms only when the crisis those reforms could have prevented is already upon them. Above all else, she hopes her second term will involve more work on financial architecture and less firefighting, with the IMF focusing more “on preventive measures than on curative actions.” With the euro zone still smoldering and many emerging markets facing difficulties, that may prove a vain hope—but wherever the next fire starts, she’ll soon be at the center of it.
JOHN MICKLETHWAIT Should we start on the world economy? You had some gloomy projections at the G-20 in Shanghai, including higher risks of a derailed economic recovery. How much of that deterioration is due to bad luck, or is it just politicians making the wrong choices?
CHRISTINE LAGARDE I tend to be more positive and optimistic than negative and downbeat.