Managing Director of the IMF Christine Lagarde sat down for an interview with Chrystia Freeland yesterday, January 17th, following the IMF’s New Year Press Briefing.
Thank you for joining me, Madame Lagarde.
One of your themes as we enter 2013 is that financial reform must continue. And you have just said that you’re concerned, you see a waning commitment to financial reform. What do you see going on?
I see a lot of pressure coming out of the industry. Which is clearly part of their job. They will naturally lobby to support more flexible, more accommodating regulations. I think, you know, the financial sector is so particular and so special because of the confidence factor associated with it and the role played by the authorities sometimes in order to support that sector, that it warrants stronger regulations.
And, you know, stronger buffers against potential risks and regular tests of their capacity to resist shocks. So my– our take is that the financial regulation has to proceed, has to be completed. And that the appropriate buffers, whether it’s by way of liquidity ratio, whether it’s by way of capital ratio for banks, or whether it’s by way of appropriate scope of regulations, for instance the shadow banking, has to proceed.
Something that we are hearing a lot from the banks is that actually now is the wrong time to be tightening finan–