Apr 21, 2022
US Secretary of Treasury Janet Yellen holds Press Conference at IMF World Bank 4/21/22 Transcript
US Secretary of Treasury Janet Yellen holds Press Conference at IMF World Bank 4/21/22. Read the transcript here.
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Janet Yellen: (00:00)
… and our allies coming together on what more we can do to support the Ukrainian government and people as they fight for their Homeland. This morning, I met with prime minister of Ukraine, Denys Shmyhal. And I shared with him our continued firm stance alongside Ukraine is they defend their lives and their country. I’m committed to working with our partners and allies to support Ukraine’s economic needs in the short term and the long term.
Janet Yellen: (00:37)
In the meeting, I shared the United States’ commitment to another $500 million of immediate funding to help Ukraine continue critical government operations, such as salaries, pensions, and other social assistance programs necessary to avoid worsening of the humanitarian situation in Ukraine. This builds on the 500 million that President Biden committed to President Zelenskyy in March. The needs of Ukraine are urgent, and we plan to deploy this direct aid to Ukraine as soon as possible to be used on the most urgent needs.
Janet Yellen: (01:24)
We know this is only the beginning of what Ukraine will need to rebuild, and I’m committed to working with Congress and with our international allies and partners to build on this support in the medium and long term. The power of working together with our partners has been essential in supporting Ukraine and in confronting Russia. In fact, Russia’s war brought about the kind of swift and multi lateral response not seen for decades. The coalition includes more than 30 countries from around the globe who represent more than 50% of the global economy, issue the world’s most widely used convertible currencies and produce the world’s cutting edge technologies.
Janet Yellen: (02:20)
The tremendous blow in the Russian economy resulting from our sanctions is only possible because of the breadth of our coalition. This week, our partners and allies agreed to continue united efforts to maximize economic pressure on Russia. Yesterday, we continued to tighten the vice of our economic pressure campaign against Russia by targeting financial and operational support networks used in attempts to evade US sanctions. Treasury sanctioned a Russian bank at the heart of such efforts, as well as a network of cutouts, proxies and facilitators used by the oligarch Konstantin Malofeyev.
Janet Yellen: (03:10)
I want to mention before taking your questions the rising threat of food insecurity. I’m deeply concerned about this risk to emerging and developing countries, particularly those still recovering from the pandemic. There’s a very real risk that soaring global market prices of food and fertilizer will result in more people going hungry, further exacerbate inflation, and harm government fiscal and external positions. We are doing everything we can both bilaterally and through the international financial institutions to address the food security risks.
Janet Yellen: (03:55)
I convened a productive meeting this week with counterparts, where we discussed developing and putting into action ways to address the growing crisis of 275 million people around the world facing acute food insecurity, and over 800 million people facing chronic food insecurity. We will share more action items resulting from that meeting in the coming weeks.
Janet Yellen: (04:26)
Lastly, we also discussed the global need to end the pandemic and prevent future ones. Global health emergencies are no longer a once in a generation threat, and we must act now so that the tragic impacts of COVID do not recur. Our top priority is to end the COVID-19 pandemic, and we must press forward to overcome the hurdles to vaccinating at least 70% of the population in all countries. But we also need to learn the lessons of this pandemic and advance plans to reform the global health security architecture. With increasing pandemic threats, climate change and conflict, experts agree COVID-19 will not be our last major global health emergency. With that, I’m happy to take your questions.
Speaker 1: (05:27)
Hey, James, we’ll start with you from [British 00:05:31] Times.
Thank you, Secretary. Do you believe that the European allies need to move faster and join the US in imposing a full ban on Russian energy imports to maintain the financial pressure on Russia and cut off what is an enduring source of funding for the war? Or are you concerned that such a step would be too drastic in damaging European economies with possible spillover effects on the US?
Janet Yellen: (05:55)
I’m sorry. Did you say to ban …
Energy imports from Russia.
Janet Yellen: (06:02)
So our objective from the outset has been to impose maximum pain on Russia while attempting to mitigate damage to the United States, to Europe and throughout the global economy. In the case of oil and natural gas, clearly Europe’s situation is different than that of the United States. So we did ban Russian energy imports of all types, but we imported very little from Russia to start with. That isn’t true for Europe. Medium term, Europe clearly needs to reduce its dependence on Russia with respect to energy.
Janet Yellen: (06:55)
But we need to be careful when we think about a complete European ban on, say, oil imports. We want to harm Russia. That would clearly raise global oil prices. It would have a damaging impact on Europe and on other parts of the world. And counterintuitively, it could actually have very little negative impact on Russia, because although Russia might export less, its price it gets for its exports would go up. So I think it is important.
Janet Yellen: (07:37)
Of course, proceeds from sales of oil and gas are an important source of income for Russia. It would be very useful to try to devise a way to reduce Russia’s proceeds from those sales. That really is the proper objective, I think of a ban. But if we could figure out a way to do that without harming the entire globe through higher energy prices, that would be ideal. That’s a matter that we’re all trying to think through together.
Speaker 1: (08:18)
[inaudible 00:08:18], New York Times.
Speaker 2: (08:24)
Thanks very much, Secretary Yellen. Could you describe some of the specific measures that you and your counterparts have been talking about to ease food price inflation that’s been amplified by sanctions on Russia? Are you concerned that greater fragmentation of global economy where front countries concentrate trade amongst each other could lead to permanently higher prices?
Janet Yellen: (08:47)
So with respect to specific measures, we will have a little bit more for you with specific detail in the coming weeks. There were technical discussions among experts, but certain-
Janet Yellen: (09:03)
Discussions among experts, but certainly taking every measure that we can to bolster food supplies, which means we make sure that plantings continue after all the price of fertilizer has gone up. Making sure that yields are preserved so small farmers can afford fertilizer. So taking all the steps we can to bolster the supply of food while taking steps as well, to make sure or that the social safety nets are working in countries with food insecurity because often when there’s a shortage of food and prices are high, you can see export controls or hoarding where things that, even when hypothetically there’s enough food to supply the needs of a population, it doesn’t get to the poorest people who need it. So measures on both the supply and demand side, I think are appropriate. And we’re thinking through concrete steps that we’ll get back to you on. Sir, you asked a second-
Speaker 3: (10:26)
About whether or not greater fragmentation of the global economy, where friendly countries [inaudible 00:10:31] of each other could lead to permanently higher prices.
Janet Yellen: (10:36)
You know, we have developed supply chains that are extremely efficient and serve to lower costs, but as we discovered during the pandemic, and more recently now with the Russian invasion of Ukraine, our supply chains are not secure and they’re not resilient. I think that’s something in terms of long term risk to the US and to other countries, that’s a threat that needs to be addressed. I think if countries go in a fully protectionist direction saying we need to do everything ourself at home, that could be a lot more expensive in terms of costs that producers face, which is why in the talk I gave last week at the Atlantic council, I mentioned this idea of networks or [inaudible 00:11:47] trusted networks.
Janet Yellen: (11:50)
Ideally we would have a large group of trusted partners so that we could maintain the efficiencies that come from the global division of labor, but also feel more secure about the supplies that we have. And so there may be some cost that we do bear. I don’t think it would be permanently higher inflation, but just a somewhat higher level of costs, a somewhat less efficient system, but one that’s more resilient. I think this approach of [inaudible 00:12:30] is a way to manage that trade off.
Speaker 5: (12:37)
Thank you, Secretary Yellen. So there have been a number of suggestions that the US should use some of the frozen central bank reserves from Russia to help support Ukraine as it rebuilds from the war. Do you think the US has the authority to do that or would it require some legislative change by Congress and would the treasury support such legislation?
Janet Yellen: (13:00)
It’s clear that the rebuilding costs ultimately in Ukraine are going to be enormous and certainly looking to Russia one way or another to help provide some of what’s necessary for Ukraine to build is something I think we ought to be pursuing. In the United States, I’m unclear whether or not it would be possible without legislation authorizing the use of those assets. More generally, I’d say that is a very significant step. It’s one that we would carefully need to think through the consequences of before undertaking it. I wouldn’t want to do so lightly and it’s something that I think our coalition and partners would need to feel comfortable with and be supportive of. I think we would need to have all those discussions and think through those issues before I would want to say what our position would be on that.
Speaker 4: (14:18)
Sorry, Chris. Sorry, Dave, you go ahead.
Speaker 6: (14:29)
Hi. Secretary Yellen, thanks. Yesterday, you and a number of US allies walked out of the G20 meeting when the Russian officials started to speak. I’m just wondering sort of how you see this forum going forward. Do you expect this kind of thing to continue to happen and how does the G20 sort of accomplish what it needs to on debt relief, on climate change and the things that it’s charged with agreeing on. If you can’t sort of agree on communicatives and statements. Also, just wondering if you can provide us a little more detail about your views on the revamping of the international financial architecture, like you discussed the other day at the Atlantic council, what does that look like? Thank you.
Janet Yellen: (15:19)
Sure. I think it simply cannot be business as usual for Russia in terms of its participation in our global forums, whether it’s the G20 or other forums where we meet to address common challenges. I think participation in those forums really requires a commitment on the part of countries to obey the fundamental norms and values underlying international cooperation. And my decision along with that of others to leave when the Russian finance minister began to speak was intended to make clear that Russia’s behavior so violates, is so offensive to international norms, that we are not willing to allow Russia to participate or to listen to what the Russians have to say. Now it does, to remove a country from any participation, really requires a very high level of agreement in many, including the G20. And there wasn’t that level of agreement.
Janet Yellen: (16:44)
I think we looked for a way to make our disapproval known while still recognizing we have a lot of work to accomplish. And a key piece of that work is needing to discuss the impact of Russia’s horrible war of choice against Ukraine on the global economy to talk about food insecurity, rising energy prices and the like, and we are continuing to get that work done in all the four that I’m participating in this week, while making clear that we thoroughly disapprove of Russia’s involvement. So you know, President Biden has made clear his view with which I agree that Russia should be removed from participation in the G20, but we’ll see where we go moving forward. Then you also asked about my comments on redesigning the Britain Woods Institutions. I think after World War II, we set up the WTO where its predecessor the gat, the IM-
Janet Yellen: (18:03)
… WTO where it’s predecessor, the GAT, the IMF, the World Bank. I think they’ve played very constructive role in managing the challenges of integrating global economy in the entire post war period. So we need those institutions and they continue to do very important work. But there are challenges they face in this day and age. They weren’t really designed to deal with in the case of the IMF, just to give an example, the IMF was intended to help individual countries facing shocks or internal macro problems they had that faced balance of payments crises to lend to enable individual countries to continue to meet their needs for external financing while undertaking structural reforms.
Janet Yellen: (19:07)
It wasn’t designed to address a global challenge like the pandemic that created broad problems for the largest number of countries and especially all low income countries participating in the global economy, or the challenges that the entire global economy faced after the global financial crisis in 2008, or today when we have a Russia induced crisis that’s causing, especially when coupled with the pandemic, a host of low income countries with already high debt now facing really unmanageable debt in many countries. And not due to any failings of their own macroeconomic policies, but really do to huge external shocks.
Janet Yellen: (20:09)
I can’t tell you what the answer is as to what the appropriate reforms are but we do look to the IMF to be a kind of global lender of last resort. I think that’s an important function for them to play. In the case of the World Bank, I think the original idea was a large number of countries don’t have access to capital in global markets and we created an institution that could provide project financing. Well, times have changed, and now many of those countries do have access to financial markets. We face challenges that require investment on a scale that an international institution can’t manage on its own like climate change. The investments needed for climate change will add up to just trillions and trillions of dollars.
Janet Yellen: (21:12)
We have pools of private capital that are clearly ready, willing, and able to make investments throughout the world in emerging markets, in infrastructure, in renewable energy to address climate change, but maybe the conditions need to be right that the World Bank and other multi-lateral development banks need to figure out how to pull that capital and make the investments that are required a bit safer. I think that’s a new function. The other aspect of it is that there are global public goods, and we’ve been discussing this in connection with preparing for future pandemics.
Janet Yellen: (22:02)
We need countries around the world to have basic public health infrastructure that will let us rapidly respond to the next pandemic and many low income countries don’t have that place. That’s not something that’s just to the benefit of the individual country. It’s to our benefit because as we know, when you have a pandemic, if you don’t treat it, address it throughout the entire world, no one around the world is really safe from the development of new variants. So we hope to create… The G20 set up a finance and health minister’s task force. We’re discussing the creation of a special fund at the World Bank called the Financial Intermediary Fund to which members might make contributions that could be used to meet this need, but just the provision of global public goods in general.
Janet Yellen: (23:13)
It seems like a logical mission for the World Bank and the multi-lateral development banks, but perhaps requires some slightly altered mandate and governance of the multi-lateral development banks to succeed. So those are the kinds of things I was referring to.
Morning, Secretary Yellen.
Janet Yellen: (23:41)
I also would like to refer back to the speech that you gave last week at the Atlantic Council, in which you said, “The world’s attitude towards China and its willingness to embrace further economic integration may well be affected by China’s reaction to our call for resolute action on Russia.” I’m wondering, if China is judged to not be contributing to this resolute action on Russia, can you be clearer or more specific about what exactly you’re proposing the US and its allies would or should do with respect to China?
Janet Yellen: (24:19)
I don’t mean to be making any specific proposal. I didn’t have anything specific in mind, but this is a time when those who were in favor of the core institutions in the global system and core set of values are standing together to address threats to that system. And China has been a part of it. And China has benefited from that system, and over a decade aids wanted to participate in the system. I simply think that not only the United States, but many countries want to see China show that it understands the threats that the global system faces because of China’s behavior. And to show their own adherence and appreciation of the values of that system.
Janet Yellen: (25:29)
And be on the side of being helpful to all the countries that are trying to protect core functioning of our global system. And that going forward, we’d be less trustful of China if China fails to show that adherence to core values. It could play out in a whole variety of ways, but when you think about trusted insecure trading supply chain networks, it could play a role there and probably many other ways as well.
Speaker 5: (26:17)
Thank you, Secretary Yellen. The IMF chief has said that Russia, excuse me, that Ukraine needs five billion dollars a month in order to sustain its economy and rebuild and that number could go up. Where exactly is this money going to be coming from? And secondly, yesterday there was this new set of sanctions that were imposed, including on a cryptocurrency firm and the administration and treasury have said that cryptocurrency is not a major way of evading sanctions. We’re curious if this new set of sanctions on a crypto firm indicates rethinking of that line of thought.
Speaker 5: (27:03)
… indicates rethinking of that line of thought.
Janet Yellen: (27:03)
I’m sorry, remind me the first thing that you asked, you asked about crypto when, before that you…
Speaker 5: (27:11)
Where the money is coming from.
Janet Yellen: (27:12)
Oh, where the money is coming from. Well, we’re having discussions this week in the G7 and with the international financial institutions, and in fact, we have a meeting this afternoon that I’ll be attending that the heads of the IMF and World Bank, the Ukrainian president will be speaking to the group and we will discuss financing needs and how to raise that money.
Janet Yellen: (27:44)
But we’ve, as I mentioned, doubled our contribution today, we’ve given a billion dollars that will be immediately available to Ukraine. There have been other contributions. I think we stand united in recognizing we’ve got to find ways to meet Ukraine’s needs.
Janet Yellen: (28:09)
And on our part it will involve going back to Congress with a supplemental request. I’m not in a position to give you any details, but I’m certainly committed to working with Congress to ask for their help to meet Ukraine’s needs. I think all of us are, we’ve met with the G20, met with the finance minister, the Ukrainian finance minister; I met just before this with Ukraine’s prime minister and finance minister. And we’re inspired by their courage and stand with them. And we’ll do everything we can to pull our resources to support the needs that are identified.
Janet Yellen: (28:56)
Oh, I’m sorry, what? On cryptocurrency. So I don’t think we have seen widespread evasion of sanctions yet, but certainly there are attempts in Russia to evade the sanctions. And crypto is one of the ways in which, along with others, in which sanctions evasion can occur. And we’ve said that, although we haven’t seen broad evasion, and it’s hard to imagine that occurring using crypto, we intend to make sure that our sanctions stick, and when we discover routes that are being used to evade them, we intend to crack down on them, and that’s what we’ve done.
Thank you, Secretary Yellen. The World Bank president has talked of a humanitarian catastrophe from this combination of food crisis and sovereign debt crisis. These countries were told, advised to increase borrowing during the pandemic, and now they face rising interest rates, partly because of the actions of the US Federal Reserve and impossible borrowing costs.
Do you think the Federal Reserve should take into account the impact on potential developing country crises when it sets interest rates? And more generally, is it time for a widespread systemic series of debt relief for these developing countries that can’t afford their pandemic debts?
Janet Yellen: (30:42)
Well, let me say that even before Russia’s invasion of Ukraine, we have been quite concerned and it’s been a regular matter we’ve discussed in G20, IMF, and other fora, that many low- income countries have unsustainable debt burdens. And first we had the DSSI, Debt Suspension and Sustainability Initiative, and then designed a process called The Common Framework that was tended to manage debt restructuring for countries with unsustainable debt.
Janet Yellen: (31:26)
And we’ve been very disappointed, at least I will say I have been very disappointed by the failure of that framework to deliver relief for more countries. And I’ve explicitly called out China; China is a very significant lender to many of these low income countries, and China needs to participate along with The Paris Club and private creditors. And I’ve called on China to specifically, for example, participate right away in a meeting for Zambia that wishes to undergo debt restructuring. And I’m hopeful that China will agree to play a more constructive role, but there are quite a number of countries who will what to be candidates for that. And of course the humanitarian and global economic disaster due to the war in Ukraine only exacerbates this process problem. But I think that’s the root we need to go
Speaker 7: (32:38)
Take the last one, Amy?
Speaker 6: (32:42)
Janet Yellen: (32:44)
Speaker 6: (32:44)
Thanks Secretary Yellen. I wanted to ask about, in reference to your remarks last week at The Atlantic Council of the countries who you said are sitting on the fence that are not China. I’m curious if your message to them is the same as it is to China in terms of, if you don’t side with us, you may be left out of supply chain networks or the new kind of friend shoring system. What are you saying to some of these other [inaudible 00:33:07] countries? Who do you have in mind when you refer to those countries? And [crosstalk 00:33:11]-
Janet Yellen: (33:10)
Well, there are a number of countries that have maintained into neutrality or not come out as opposed to Russia’s actions. And to all of them I think the message is the same, that what we’re seeing here violates the basic norms of behavior that’s embedded in the UN Charter and expected of all countries that participate in the global economy and our governance institutions. And we really urge them to take actions to condemn Russia’s behavior. But beyond that, that we certainly want to make sure that they do not evade our sanctions or provide any active support to Russia.
Speaker 5: (34:07)
Thank you so much Janet.
Janet Yellen: (34:07)
Janet Yellen: (34:07)