Transcript of a Press Conference on the Spring 2009 Global Financial Stability Report, IMF

April 22, 2009

By José Viñals, Counsellor and Director of the International Monetary Fund's Monetary and Capital Markets Department
With Jan Brockmeijer, Deputy Director, Peter Dattels, Chief, Global Markets Monitoring and Analysis Division, and Laura Kodres, Chief, Global Financial Stability Division
Washington DC, April 21, 2009

Webcast of the press briefing Webcast

MR. MURRAY: Good day. I am William Murray, Chief of Media Relations at the IMF. This is the April 2009 Global Financial Stability Report Press Conference. We are now live and no longer embargoed.

Joining me today is José Viñals, Financial Counsellor and Director of the Monetary and Capital Markets Department, Peter Dattels, Jan Brockmeijer, and Laura Kodres of the Monetary and Capital Markets Department, and among the principal authors of the latest Global Financial Stability Report.

José will have some brief opening remarks, and then we will take your questions.

MR. VIÑALS: Thank you very much, Bill.

Good morning to you all, and thank you for attending the release of our latest Global Financial Stability Report.

I would like to go over three areas in my remarks today. First, I will provide our overall assessment of the state of the global financial system. Then I will highlight some of the analytical work that forms the basis of our policy recommendations, and finally, I will conclude with some of these recommendations.

Let me start by emphasizing the key message of the report. The unprecedented policy response in both the financial and macroeconomic domains is gradually beginning to restore market confidence, but continued decisive and effective action is needed to preserve and strengthen these first signs of improvement and to help provide a more stable and resilient platform for sustained global growth.

In the first chapter of the report, we examine the deleveraging currently underway and its implications for financial institutions and the economy. Simulations, including the report, suggest that the deleveraging pressures could ultimately lead to a credit contraction in the United States and Europe of up to 4 percent at its most negative point.

This scenario reflects the challenges of banks as they cope with weaker asset quality, failing business models, and market demands to hold more capital.

Based on the broadening credit deterioration, we have increased our estimated writedowns, actual and potential writedowns, on U.S.-originated assets from $2.2 trillion in our interim update in January to about $2.7 trillion in the current report.

We have also extended our top-down analysis to incorporate the credit deterioration occurring in a broader range of assets in other regions. This analysis suggests that global writedowns, actual and potential, could be as large as $4 trillion, of which about two-thirds could be borne by banks.

I should emphasize, nevertheless, that considerable uncertainty surrounds this exercise in our estimates. That said, the overall point stands, namely that the deleveraging process is ongoing, and the key take-away is that higher writedowns, together with market demands both for lower leverage and more stringent capital ratios, will require financial institutions to hold more capital, whether raised in markets or provided by governments.

Some of these capital needs could be satisfied directly with a conversion of preferred shares to common shares or indirectly with governmental guarantees to cover losses on selected pools of assets of some banks, and as well, the amounts would be reduced if our assumptions turn out to be too negative and banks' earnings pick up or economic activity recovers faster than projected.

Turning to emerging markets, the deleveraging is curtailing international capital flows, moving the burden of financing to domestic markets and raising the cost of credit. In particular, the retrenchment of capital flows is straining economies that have relied on foreign financed credit growth, while the deteriorating economic environment has increased expected bank writedowns, and raised the need for fresh capital in emerging market banks.

Of the emerging markets, those in Europe have generally been hit the hardest, owing to their higher reliance on cross-border and wholesale funding, weaker balance-of-payment positions, and higher degree of credit risk.

Experience suggests that early forceful and effective intervention by the authorities is necessary to contain the costs of a crisis. I would stress that healing the financial system is indispensable to restore confidence and, thus, set the stage for a durable economic recovery.

To do this effectively, we have promoted three basic approaches to facilitate an orderly deleveraging: supply liquidity to the banking system to validate loanable funds, cleanse banks' balance sheets of impaired assets, and recapitalize viable but undercapitalized banks while resolving non-viable institutions promptly.

It is especially important that there be credible loss recognition. This can be done in several ways, but an important element is to promptly decide how to identify and address these impaired assets effectively, provide adequate funding, and implement the approach in a transparent manner.

Banking supervisors will need to determine which of the banks are viable going forward, and in some cases, a temporary period of public ownership for viable banks may be necessary to bring capital ratios to a level sufficient to regain market confidence in the bank.

The notable degree to which spillovers and interconnectedness of cross-financial institutions and markets have caused turmoil in the global financial system has encouraged us to take a careful look at how to measure, monitor, and hopefully mitigate systemic risk; that is, the risk that is larger than the sum of its parts.

In Chapter 2 of the report, we focus on a traditional view of systemic risk, the risk that one institution's failure or distress is related to others.

In Chapter 3, we try to detect when we are in a systemic crisis, helping to determine which types of policy tools might be most effective.

Both chapters highlight the need to develop a more macro-prudential approach to financial regulation, whereby system-wide effects of macroeconomic policies are taken into account.

Moreover, they provide methods to determine which institutions are systemically important, so as to more carefully define the parameter of regulation as the G20 has recently mandated.

Let me conclude by noting that policy-makers have had to operate in an extraordinarily uncertain environment; indeed, probably the largest risk to the success of policies is political--whether sufficient public resources can be marshaled in the near term and allocated in an effective manner to bolster confidence and arrest the unfavorable spiral between the real economy and the financial sector.

Extraordinary measures have been taken, and yet more will be needed, but as the size of these measures increases, so does the need for well-designed plans for eventual exit of the public sector. The necessity to successfully fight the crisis in the short term must be reconciled with the restoration of sound monetary, fiscal, and financial conditions of the medium term. Otherwise, future sustained growth will be compromised, rather than enhanced.

Thus, policy-makers need to inspire confidence by being transparent about the policies being undertaken and the reasons behind difficult decisions. Such leadership will also be required to achieve cross-border consistency of national measures, so as to avoid distortions and unintended consequences between countries.

We find ourselves at a critical juncture. Not only can decisive and effective action in the short term preserve and strengthen the first signs of improvement that we are witnessing, but going forward, it can also help provide a more stable and resilient platform for sustained global growth. We should not let this opportunity slip through our fingers.

This ends my formal remarks. My colleagues and I would be happy to answer any questions that you may have.

QUESTIONER: You mentioned those huge sums, about writedowns, and recapitalization money, and I am not quite sure how much of this money was already written down and what kind of amount will be written down because people want to know how long and how much--how long will it go, and how much will it cost. So can you give me some more details about that?

MR. VIÑALS: Of the writedowns which are pending for the banking system, about one-third has already been incurred in 2007 and 2008, and two-thirds are potential writedowns for the period of 2009 and 2010.

Let me just emphasize these are estimates, conditional on assumptions, so that if the economic recovery sort of gets better than we forecast or if some of the actions that will be taken at an early stage by the authorities to address the problems of the banking system and which are being taken help in restoring confidence, then, of course, the chances would be that these writedowns would be smaller because the market value of assets would be higher.

So all of this is conditional. This is why I emphasize that early, forceful, well-targeted, and effective action is something which is very important. And our hope would be that these numbers I have just mentioned in terms of the total amount of writedowns and what is coming forward, that one year from now or six months from now when we come here, or two years from now, these numbers look too high. That would be the indication that things had been done in order to reduce the amount of writedowns coming forward.

But the answer to your question is that in our estimate one-third has been done on the bank writedowns. Up to two-thirds could be coming forward.

QUESTIONER: My question would be on China. The Chinese government has put a lot of efforts to stimulate the domestic market, and I was wondering what is your valuation on the efforts over there to help to stabilize the global market. Also, what kind of role do you think China will play in the upcoming Spring Meetings?

MR. VIÑALS: Tomorrow you are going to have the WEO press conference. So a lot of these questions will be addressed by my colleague, Olivier Blanchard. I will defer the details to that.

But certainly, China is a major player in the global economy, and it is fundamental that those domestic actions continue to be taken in order to sustain economic growth in such an important country, not only for the rest of Asia but also for the rest of the world.

QUESTIONER: A question on emerging markets. The picture that you paint is quite bleak for emerging markets. You mentioned in the report that the financing needs are very large. I think the number was like US$1.8 trillion for this year and the report suggests that governments could step in and provide financing for corporates, but, you know, in some countries, the governments don't have the resources. So I wonder if you could address that and especially Latin America, how grave, how difficult the situation is there.

MR. VIÑALS: The global financial needs for emerging markets are important, and, of course, there, one needs to differentiate areas.

And, as we say in our report, in terms of emerging markets, or European emerging economies, those which have been hit most severely by the current economic and financial crisis, although differentiation exists, some countries are very different from others. That is very clear. So I think that even within areas, we have to be careful to distinguish different countries because the situations may be very different.

Latin America in that respect is much better placed in this case, as compared to past historical episodes of crisis. It is also relatively well positioned vis-à-vis other emerging market areas; for example, emerging Europe.

Why? Because the work that has been done in these economies in the past in terms of improving their financial system, reducing financial vulnerabilities, going from current account deficits to current account surpluses, and building-up reserves, all indicators of strength, reduced their financing gaps, as compared to other areas. So I think Latin America in this situation is relatively better positioned.

Now, your general point is that in a number of emerging markets and particularly in emerging Europe, there may be cases where there is a lot of corporate debt. A lot of this debt may be in foreign currency denomination. The amounts may be large for the sort of financial capabilities of national governments, and, therefore, something should be done.

And I think that in this respect, the augmentation of resources of the IMF and the development by the IMF of the new lending facilities, including the Flexible Credit Line, is an element that can help these countries undertake the processes which are needed in order to regain financial and economic health.

So I think that in some cases, it is important to have external help, and as I mentioned, the IMF is now better positioned than ever to play a part in this important process.

QUESTIONER: You alluded several times to emerging Europe. I was wondering if you see there an ongoing crisis or if part of the problems have been stemmed recently. Also, if you expect parent banks, which in most cases are western banks, to provide most of the capital for the banks in the region.

MR. VIÑALS: It is very important to differentiate the situation of countries in emerging Europe. And I think that the outlook there is certainly better after the augmentation of resources of the IMF and the creation of the Flexible Credit Line. So I think that certainly makes a difference going forward.

As you referred to the role of parent banks, if one looks at the situation of Western European banks and Eastern Europe, certainly after the Lehman Brothers crisis, there were some important pressures that were put on the western parent banks, and this was noticed also in the branches and subsidiaries in Eastern Europe.

But as Western European governments undertook forceful and decisive action in order to support their banking systems, these parent banks have honored their commitments to the branches and subsidiaries, and we have not seen any retreat or any significant reduction of the amount of cross-border support that these branches and subsidiaries have had.

So I think that this support on the parent banks by the Western European governments has been very important, and now the situation is certainly better than it was in the months following the Lehman failure.

QUESTIONER: So, as you said, the financial institutions will need to write down $4.1 trillion worldwide. I am just wondering if this number will be revised in the future. And you said that there was a sign of improvement in terms of financial stability in the world. Are out of the woods in terms of the financial crisis?

MR. VIÑALS: Jan, would you like to?

MR. BROCKMEIJER: Yes, I will be happy to respond to that.

As Mr. Viñals said in his earlier remarks, these are our best estimates of the state of affairs as we see it now. Obviously, the future can turn out differently. It can turn out worse, but it could also turn out better.

To some extent, we have the destiny in our own hands. If we do, indeed, take decisive and effective measures, the chances of an improving environment, and some further recovery in prices will help limit the losses, in which case the amount would decline from US$4.1 trillion. But as I said, there is a great degree of uncertainty surrounding that.

It is hopefulthat there are certain signs of stabilization and improvement in some markets, and if you mark-to-market the portfolios, then recently, you have seen some decline in the overall writedown estimate. So there has been some positive news, but we still have a long way to go to be out of the woods, as you say.

QUESTIONER: I would like to have your assessment on the results of the big banks in the U.S. recently. Some critics say there are a lot of gymnastics to improve the results. I would like to know if you agree on that or if you are optimistic with those results.

MR. VIÑALS: Well, I would have to see the results before I can make a judgment on the stress tests that will be conducted.

QUESTIONER: My question is about the banks reporting results last week, Citibank, Bank of America, Wells Fargo. They just published the results from the first quarter.

MR. VIÑALS: Yes. Well, one thing are the results or the profits that these banks are putting out, and I think that so far we have good news on that. And I think that this is encouraging, although as you saw today, Bank of America, which reported very good numbers for the first quarter, also made a number of comments concerning the uncertainties and the difficulties lying ahead. I think it is important to take this into account.

And if you were referring to the sort of results of the stress tests that the U.S. authorities are conducting, these are going to be due in a couple of weeks. We will wait until we have them in order to make an assessment.

But let me just say that I think the PPIPs, the Public-Private Investment Partnerships that the U.S. authorities are sponsoring, are something useful in order to make private capital come back into the banking system, and that this process of stress testing in the PPIPs can be very helpful to help the crisis recovery process and to help cleanse the situation of the 19 banks which are under the scheme. But to comment on the numbers, we will wait and see.

QUESTIONER: My question is about the recognition of losses. You say that only one-third of these losses have been recognized by global banks. Would you say that this process is more advanced in Europe or in the U.S., and would you say that it kind of resembles the process which had just taken place in Japan in the '90s which was very slow?

MR. VIÑALS: Maybe I will let my colleagues chip in. Pete?

MR. DATTELS: In terms of the progress of loss recognition, let me make a couple of points. First, of course, is that the economic downturn in the U.S. hit first and is spreading globally, and so the pace of loss recognition has begun in the U.S.

If you look at Table 1.4, it highlights that, basically, U.S. banks are about halfway through the period of loss recognition, with the euro area and other mature Europe quite a bit behind. But, again, that reflects the fact that Europe has recognized its losses to the toxic assets--its exposure to U.S. subprime--but what is still in the pipe is the economic deterioration that is taking place in Europe through the loan book and also its exposure to emerging Europe, which, as mentioned earlier, is now in decline. So I think that's the answer.

QUESTIONER: You mentioned in your report that restructuring required temporary government ownership. I would like to know what will be the role of the IMF if a government decides to take this step, and how to assess the measures taken by the United States to rescue banks and regulation?

MR. BROCKMEIJER: The important point here is that we are not recommending government ownership as such, but there can be circumstances when that is the most effective way to stabilize institutions and buy time, as it were, for a recovery.

Clearly, and this applies not only to the United States or intervention in banks, but more in general, we see a large increase in government involvement in many markets, and it is important that clear exit strategies are formulated.

The entry into these policies is necessitated by the circumstances, and one has to do it in order to address the risks that are there. But at the same time, there have to be clear conditions stated as to when withdrawal will take place.

And preferably, those conditions should be coordinated internationally because there is a risk of distortion applying the measures in the first instance. But, equally, there can be a risk of distortion if the length with which one stays involved in private markets differs between countries, and some stay longer with heavy government involvement than others. And that in itself, again, would affect the level playing field.

And I think that at those general levels of coordination and cooperation between countries, the Fund can certainly play an important role in the exchange of that information and furthering cooperation.

MR. VIÑALS: Let me just add one thing to what Jan said, to make it very, very, very clear, which is that when we say that more capital is needed, ideally we would like this capital to come from the marketplace.

There are some cases where that is impossible, and then you have to have public capital coming, and that may be even more limited substantive cases where you may have to have some sort of public ownership for a limited period of time.

As Jan said, enough time should pass to stabilize the situation, but you should not prolong it beyond what is necessary.

I think that it is very important also to understand that public capital sometimes can act as a catalyzer for private capital to come in. This is something which is very, very important.

So you should not come away with the idea that we advocate putting public resources just without qualifying it. It may be necessary, and if so, they should be there but subject to the sort of nuances that I have just expressed.

QUESTIONER: Just to follow up on that point regarding the U.S. There are reports that the U.S. is considering converting its stakes into common equity in the banks. I am just wondering if that is something that you think might be necessary and a good idea.

MR. VIÑALS: Certainly, that's a possibility, and I think that each national authority should consider what is most appropriate, given their own situation. That it is a matter for them to decide.

In the report, we explicitly addressed this question when we mentioned that out of the additional capital that would be required to bring capital ratios to safe and reasonable levels, some of this additional capital may come from the conversion of some of the preferred stock that banks have already--and which is in the hands of the government--into common equity.

That would go, in part, to meet this need for higher quality capital that is tangible common equity that we identified. That would be a way to use what already is in place and to convert it into better quality capital in order to improve the situation of the banks.

So, yes, that is certainly a possibility, and as I said, we don't see why this should not be used in those cases where it is appropriate to do so.

MS. KODRES: Let me add that there is another way in which capital can be restored, and that is the implicit guarantees that some governments have already put in place that cover the losses of specific sets of assets that are already sitting on banks. It can also be a buffer that will prevent losses from showing up and depleting capital further. So that is another area that we haven't calculated into these capital requirements or these recapitalization numbers that could be used.

QUESTIONER: I was wondering if you could give us an explanation of the situation in Nigeria because years ago they had a banking consolidation. When this crisis started, a lot of the policy-makers and regulators were saying the banks would go through this crisis without any struggle. I was wondering if that is the true picture in Nigeria, or we need public sector intervention as well. Thank you.

MR. VIÑALS: We have a table in the report--this is Table 1.1 on page 10--where we look at macro and financial indicators in selected emerging market countries. In there, we compare countries in Europe, in the Gulf States, in Africa, in Asia, and in Latin America. In there, you have Nigeria. We don't make a specific assessment of countries in the report. This is not our business. This is something that will come up tomorrow in the WEO press conference because there you look at sort of the economic prospects of the different regions and with different countries in mind.

There we just have some summary indicators, and as you can see, if you look at that, Nigeria has--in terms of our indicators of potential concern, it has a current account balance which is relatively high. The growth of credit has been relatively fast for the past few years, and you have some lending which is not fully covered by the deposit base.

But I think these are the stylized facts on Nigeria. We don't pass judgment on Nigerian economic or financial policies. We just say that it is a country in Africa which has some areas of potential concern that can be addressed, and these are the three areas which we highlight in our report. Thank you.

QUESTION: After the government has converted some of the preferred stocks into common shares and partially only in the banks, how do you recommend the government should be involved in the management on the banks? Because there are some internal, say, conflicts of interest with the AIG.

Also, do you have any recommendation about banks, about the government's exit from the banks? And, you said it would be sooner. Sooner is better than later.

And also for the--sorry--the guarantee program, how do the governments minimize the risks? I mean for taxpayers. Thank you.

MR. VIÑALS: Jan, do you want to take that?

MR. BROCKMEIJER: Yes. The question about the extent to which government should get involved in the day-to-day running of a financial institution is a very sensitive one, and I appreciate you posing it.

Our position is that the role of the government here is primarily to restore confidence and to stabilize the institution. Now, clearly, they can set some general rules that they feel should be applied to the financial institution, but on the whole, the bank that is being intervenedshould start operating commercially in a healthy way and contribute to a proper functioning of the financial markets.

The important role also of supervisors, even though the institution is owned partly by the government, will be to ensure that it is run in a sound manner and that risk management is appropriate, and that risks are priced appropriately in order to avoid distortions on the basis of public ownership.

As to your question when the exit should take place, that depends on the environment in which the institution finds itself and the degree to which the intervention has helped to stabilize the confidence in the bank.

The more general the return in confidence and the improvement in markets, the sooner also institutions that have been supported by government interventions will benefit from that, and the sooner there will be an exit. But I don't think one can give a general rule on that. The point is that as soon as the possibility of an exit occurs, it should be taken, and it shouldn't be prolonged.

MR. VIÑALS: Let me add one thing to what Jan said. We are very conscious that when there is public intervention in the banking system, in the financial system, taxpayers' money is being used, and we are very conscious that when there are interventions in the financial system, there are costs, either actual or potential, in terms public debt and deficits and so on.

So this is why we think it is very important that these considerations are taken into account, particularly in those cases where countries have a more delicate fiscal position. And that everything necessary is done in order to provide a credible medium-term exit strategy, so as to do whatever is required in the short term but, at the same time, reassure markets and the public that you have a way to come back to regain or to preserve the medium-term sustainability of public finances because it is very important to preserve confidence and not to have negative confidence effects when you want to have positive confidence effects.

This is something that we are very much alert to. And, of course, all these sort of interventions have to be designed in a very careful way in order to take into account these considerations.

QUESTIONER: Just two very brief questions. One, you mentioned financial difficulties for emerging Europe. I wonder whether you thought that any of these post-bubble economies within the euro zone, Ireland, Spain, Greece, may also face financing problems.

And the IMF is a public institution, you are public servants. I wondered, given the fact that in the U.S., a substantial body of opinion amongst economists, several of whom are actually former chief economists of the IMF--Simon Johnson, Ragu Rajan, Ken Rogoff--say that it would be much less costly for the U.S. taxpayer, for the federal government to take to basically nationalize the banks rather than this public-private legacy asset purchase program that you actually seem to support there.

From a layman's perspective, it seems to be a strange contradiction between public servants not coming out clearly in support of the nationalization of banks when there seems to be a growing consensus that would be the most benign solution for U.S. taxpayers.

MR. VIÑALS: Well, let me just mention a few things on the points you raised.

First of all, the number of options which are open, that not just each country but each institution requires a different treatment. There is no one-size-fits-all.

You really need to tailor the solution that is best for an individual institution, also taking into account, if it is a systemic institution, what the system-wide repercussions of the solution that you provide for that institution are.

Now, on the PPIP, we think it is another option that is there. It is one more option, and rather than prejudging what the outcome is going to be and how effective it is going to be, we would rather wait to see the results. So we would like to make a judgment after we have the information, rather than before the facts.

We also said that in some cases there may be good reasons to have public ownership of an institution. We have already seen some cases of nationalization in Europe, for example, in Germany, with its bank and so on. So there may be cases where this is the most efficient and effective solution, but this is something that needs to be decided on a case-by-case basis.

And, of course, even if we are public servants, you would understand that we would not propose that solution on a general basis because we don't believe that. But if there is a case which requires it for a limited period of time as the most effective solution to restore the health of the institution, that is something that can be considered. But on those grounds.

Now, on whether some European economies outside of emerging Europe may run into financing problems? In a way, insofar as capital markets are not properly performing the role and are not functioning correctly and, therefore, are not intermediating in the securitized markets and so on, resources from those who are in surplus to those who are in deficit, I think we have a financing problem for the world.

And it's very important that steps are taken in order to restore confidence in the key players in the international financial system, and that these markets come back to life and go back into intermediating properly. So I think that is important.

At the same time, if you look at countries in the European Union, the steps taken by governments in the not-distant past, in order to guarantee bank debt has been an important step in order to reduce the funding concerns of the banks. And in all the cases that you have mentioned, there have been significant steps taken in order to provide public guarantees on bank debt, so that banks can have a more comfortable funding position going forward. I think that this is the situation nowadays, so I would not envisage any of the financing problems that you have outlined for any of those countries. I would just go back to the point of the importance of restarting international capital markets and markets for securitized assets because those are very important for the process of financial intermediation. And wholesale financing was important before the crisis, and it should come back to being important after the crisis.

MR. MURRAY: Thank you, José.

We have a number of questions on the Medial Briefing Center that are relevant to emerging Europe, but they are also more apropos to be posed tomorrow at the World Economic Outlook press conference that will be here at 9 a.m., Washington time. So I am going to recommend those people on line post those questions tomorrow.

However, this one, which I think Peter Dattels could address, is a mark-to-market question. The question is: U.S. Congressman Kucinich and others have suggested that the recent spate of good news for major U.S. banks may be a result of the FASB ruling to change the mark-to-market rule. Can you comment on this?

MR. DATTELS: In terms of our work, we have done everything on a mark-to-market basis. So that is how we have approached the exercise.

In terms of the recent results, there is still not yet full clarity as to what extent the recent changes have affected the earnings outcome. So we will have to take a look at that.

However, under those rules, they have clarified that they would need to be presented transparently: particularly, in terms of what elements would be treated as liquidity risk versus credit risk.

So I think the marketplace would have the opportunity to make whatever adjustments that banking analysts feel are necessary in view of that treatment. Thanks.

MS. KODRES: Let me add that we have done some work on accounting and procyclicality in our last report in October, and one of the points that we made there that I think it still relevant is the importance of maintaining solid and transparent communication about the rules of the game and, in particular, about the accounting systems which are being used.

And we promote an idea that more information about how things are being valued specifically when there are illiquid markets for certain securities is an important element to providing clarity about the potential losses and about the potential writedowns that might be forthcoming for some of these banking institutions.

And before we, perhaps, close the press conference, let me encourage you to look at Chapters 2 and 3. You have been provided a summary version which includes our Executive Summary and Chapter 1, but Chapters 2 and 3 are posted on our website, along with some press points that might help you in understanding some of the technical issues involved in those chapters.

But I think those chapters are an important part of where we are going to be moving forward. Both the Fund and the FSF have been tasked by the G20 to examine how to evaluate when institutions are systematically important, and we have some very good information and some very good methods that we can start with in order to address exactly which institutions are systemically important and where exactly we might want to draw the perimeter of regulation.

And so, although these are more long-term issues, they will be upcoming in the fall as the G20 have asked us to come to some conclusion about how to move forward with regulatory reforms.

MR. MURRAY: Great. We are going to wrap up there, and if you have any follow-up questions, send an e-mail to Again, thank you all for joining us today.

MR. VIÑALS: Thank you.


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