{
  "title": "Cooperation and Connectedness-an Address to the Associated Press By Christine Lagarde, Managing Director, International Monetary Fund",
  "publication": "IMF News, April 3, 2012",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/sp040312",
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  "summary": "Recovery is \"still very fragile\" with \"financial system in Europe ... still under heavy strain\" and \"Debt is still too high, public and private.\"",
  "authors": [
    "Christine Lagarde"
  ],
  "publishDate": "2012-04-03",
  "sections": [
    {
      "heading": "Global economy — current assessment and priorities",
      "content": "- Recovery is \"still very fragile\" with \"financial system in Europe ... still under heavy strain\" and \"Debt is still too high, public and private.\"\n- Key near-term risks: stubbornly high unemployment and rising oil prices.\n- Three broad policy dimensions to keep recovery on course:\n  - Stability\n    - Welcome European decision to \"strengthen their firewall\" to help stop contagion.\n    - Need to increase the IMF’s resources to support a \"stronger global firewall.\"\n    - Call for stronger, safer financial sector with coordinated regulation, effective implementation of Basel III, and more agreement on regulation of derivatives, the shadow banking system, and effective resolution of cross-border banks.\n  - Growth\n    - Short-run focus: support demand; use monetary policy to support activity given \"no real signs of inflation among the advanced economies.\"\n    - Use fiscal policy to support activity \"wherever possible\"; avoid a \"global undifferentiated rush to austerity.\"\n    - Specific U.S. fiscal reality: \"total U.S public debt already exceeds 100 percent of GDP.\"\n    - Need to curb entitlement spending growth and raise more revenue over time.\n    - Household debt constraints in the United States: \"about 1.5 million mortgages are seriously delinquent.\"\n    - Policy suggestions: encourage mortgage writedowns, ease refinancing, and aggressively implement administration proposals to avoid foreclosures, improve household finances, and boost consumption.\n    - Principle: \"Banks were helped so they could lend more; homeowners should be helped so they can spend more.\"\n  - Jobs\n    - Global unemployment and inclusiveness:\n      - \"Over 200 million people across the world today can’t find work.\"\n      - \"Nearly 13 million people right here in the United States\" are unemployed.\n    - Priority: make growth more inclusive and address youth unemployment."
    },
    {
      "heading": "A world of interconnections — evidence and implications",
      "content": "- Long-term changes in global integration:\n  - \"Since 1980, the volume of world trade has increased fivefold.\"\n  - \"By the time of the crisis, global capital flows were more than triple the level of 1995.\"\n- Trade and production linkages:\n  - Example: modern car production requires \"up to 40,000 different parts\" — single-part disruption can halt supply chains.\n  - U.S. share of global trade: \"11 percent of global trade.\"\n  - U.S.–Europe linkages:\n    - \"About a fifth of U.S. exports go to Europe.\"\n    - \"Two-thirds of EU trade is internal to the union, exports to the United States account for almost a fifth of the remainder.\"\n    - Pre-crisis corporate ties: \"U.S. S&P500 companies were earning 20 percent of their profits in Europe.\"\n    - \"Five of the top ten overseas markets for U.S. investment are in Europe.\"\n    - \"European-owned companies in the United States employ about 3.5 million people.\"\n- Financial interconnectedness:\n  - Foreign banks hold \"about $5½ trillion of U.S. assets.\"\n  - American banks have \"$2½ trillion of foreign assets.\"\n  - Implication: banking problems transmit rapidly across borders with large, immediate effects."
    },
    {
      "heading": "Cooperation and the IMF — role, resources, and governance",
      "content": "- Role of the IMF:\n  - Described as \"an economic club and a giant credit union\" with 187 member countries and a single mandate: \"global financial stability.\"\n  - Functions: pool resources, provide lifelines to members, and help members adjust with minimal disruption.\n- Historical engagement:\n  - IMF involvement cited across multiple episodes: postwar Europe, newly independent African and Asian countries, Latin American debt crises in the 1980s, post–Berlin Wall transitions, and the response to the global crisis three years prior.\n- Resources and reform:\n  - Current funding gap concern: \"The ratio of Fund quotas to world GDP is significantly lower today than in the past.\"\n  - Historical reference: \"Sixty years ago, it was as much as 3-4 times higher.\"\n  - Urgent call: increase IMF \"firepower\" now that Europeans have acted on their firewall.\n  - Governance reforms: members approved quota-share increases for dynamic emerging markets (Brazil, Russia, India, China); implementation urged \"by the time of our Annual Meetings later this year.\"\n  - Assurance on U.S. role: \"Even with these reforms, the United States will retain its leadership role as our largest shareholder.\"\n- Value proposition to contributors:\n  - \"Your money is not drawn upon until needed. Your money earns interest. Your money is used prudently—our programs always carry rigorous conditions.\"\n  - Claim: \"No member country has ever lost money by contributing to IMF resources—and I assure you that will not change on my watch.\""
    },
    {
      "heading": "Conclusion — three closing thoughts",
      "content": "- First: \"Cooperation can deliver.\" Historical record shows accomplishments when the global community pulls together and the United States leads.\n- Second: In a world of dense interconnections, cooperation is urgent; citing John F. Kennedy: \"Geography has made us neighbors, history has made us friends, economics has made us partners, and necessity has made us allies.\"\n- Third: The IMF exists to serve members, including the United States: \"Support us. Use us. Work with us.\"\n\nSource: \"Cooperation and Connectedness-an Address to the Associated Press By Christine Lagarde, Managing Director, International Monetary Fund\", April 3, 2012.\n\n---\n\n Content in this bundle\n\n- 040312apdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- 040312cpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- 040312jpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- 040312rpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- United States and the IMF\n- Speeches\n- Christine Lagarde\n- Press Release: IMF Managing Director Christine Lagarde Emphasizes U.S. Role in Global Economy\n- PRESS CENTER\n- Webcast\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp040312"
    }
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    "Authors: Christine Lagarde",
    "Published: April 3, 2012",
    "Recovery is \"still very fragile\" with \"financial system in Europe ... still under heavy strain\" and \"Debt is still too high, public and private.\"",
    "Key near-term risks: stubbornly high unemployment and rising oil prices.",
    "Three broad policy dimensions to keep recovery on course:",
    "Long-term changes in global integration:",
    "Trade and production linkages:",
    "Financial interconnectedness:",
    "Role of the IMF:",
    "Historical engagement:",
    "Resources and reform:",
    "Value proposition to contributors:",
    "First: \"Cooperation can deliver.\" Historical record shows accomplishments when the global community pulls together and the United States leads.",
    "Second: In a world of dense interconnections, cooperation is urgent; citing John F. Kennedy: \"Geography has made us neighbors, history has made us friends, economics has made us partners, and necessity has made us allies.\"",
    "Third: The IMF exists to serve members, including the United States: \"Support us. Use us. Work with us.\"",
    "[040312apdf (PDF)](/-/media/websites/imf/imported/external/arabic/np/speeches/2012/040312apdf.pdf){rel=\"external\" type=\"application/pdf\"}",
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    "[United States and the IMF](http://www.imf.org/external/country/USA/index.htm)",
    "[Speeches](https://www.imf.org/en/news/searchnews)",
    "[Christine Lagarde](https://www.imf.org/external/np/omd/bios/cl.htm)",
    "[Press Release: IMF Managing Director Christine Lagarde Emphasizes U.S. Role in Global Economy](https://www.imf.org/external/np/sec/pr/2012/pr12118.htm)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[Webcast](https://www.imf.org/external/mmedia/view.aspx?vid=1547738354001)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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