[Music] [Music] good afternoon everybody it is lovely to be back my name is Mabel fauna vanya and as you might know I'm a former co-chair of ecfr and I am currently a chair emeritus and I'm really really excited to facilitate this conversation with George Soros who as you all know is the man who played an absolutely crucial role in the creation of ecfr and before I hand the floor to him I wanted to just maybe draw attention to one or two of the features that I find so amazing of George because George is somebody who is always ahead of the curve he often sees things long before the general public actually realizes that they're happening and I am thinking for example about the fact that he recognized the economic crisis of 2008 he saw it coming before it even hit um but also I'm thinking about an issue that has really been close to his heart for more than 20 years now I think which is criminal justice reform in the United States and he's been working on 20 for more than 20 years on this and it is really good to see that that is finally getting much more attention as it really deserves huh it is closer to home let us get us to Europe and one of these things that I've seen George do time and time again in Europe is something that was really correct and that is standing up for the underdog and I saw him first do that in the early 90s when we were working on the war in the Balkans but I've seen him do that also for example in the case of de Roma and other minorities all over your refugees etc um so with a man who was always willing to pick a good fight to stand up for what is right and to see ahead ahead far sooner than many of us can see I'm really really keen to hear from him what is always on his mind and where he thinks we should all be going George let me give you the floor thank you being with us thank you good afternoon everybody we live in a revolution of mystery at times like these the range of possibilities is far greater there in normal times events that are inconceivable in normal times not only become possible but actually happen I have developed an entire conceptual framework based on the thin pillars of malleability and effectivity to deal with situations like the present that's what has allowed me to make a fortune in the financial markets in the very first days of January of this year I realized that we had entered a global crisis that would change the direction of history that's when you really in general Soleimani was assassinated in the rot that told me that countries were more interested in fighting each other than in fighting climate change as you know climate change is a global problem and it requires global cooperation to village under control then came the novel coronavirus that thoroughly disrupted people's lives and they did yet another global problem what direction will history take that's a question nobody can answer because the future depends on decisions that have not yet been taken nevertheless I believe my Open Society Foundations are well situated to develop strategies to make the world a better place I personally focused on areas where I have experience and a historical background that led me to two particular issues that are of global significance one is the plan for the International Monetary Fund to issue a new round of Special Drawing rights and to perceive these countries to learn to donate their allocations which they don't need to poor countries that are desperate for them to explain the idea better Special Drawing rights are synthetic money created by the IMF SD ours are allocated in accordance with the member countries shareholding in the IMF rich countries don't need them because they can raise issue money in their own name in the international markets the capacity of four countries to do so is extremely limited that's why it's so important for rich countries to donate their allocations to poor ones as a gas historically you you you you you you you you you you I am not sure if we have a technical difficulty whether we have lost George the connection with George you you you um I'm afraid we have lost the connection with George so hopefully he will he will soon come back in and reconnect so please be patient you you you and I'm sorry as I'm using different technology I might have directions there you are George you're George you're back we are reconnected very good so nevertheless enthusiastic endorse the idea and argued that the best and perhaps only way to raise two trillion euros is by issuing perpetual bonds the distinguishing feature of professional bonds is that the principle never has to be repaid only the annual interest is due this makes them very efficient they have a cost-benefit ratio that is almost 10 times greater than that of the long-term bonds that the Commission is proposing to use this sounds almost unbelievable but it's true assuming 0.5% interest which is quite generous in the current if low interest rate environment one trillion euros would cost only 5 billion annually the interest would have to be forever be paid forever but the present value of future payments diminishes progressively until approaches but doesn't quite reach zero most importantly professional bonds could be issued as soon as member states authorize sufficient own resources to maintain the Triple A rating of the European Union own resources would come from newly authorized taxes such as a tax on carbon emissions the taxes would only have to be authorized they wouldn't need to be imposed because that would take too long and speed is the speed is of paramount importance the professional bonds don't need to be issued in one go they could be sold in tranches the first scientist would be snatched up by insurance companies and other long-term investors who was stout of essence to match their liabilities as the market familiarize themselves with a new instrument other investors would be attracted to it as as the bond market as the bonds became actively to actively traded the European Central Bank would also be allowed to invest in them there is an important distinction between funds raised from the EU s own resources and those that are contributed by member states the letter have to be distributed to member states according to their shareholding in in the European Central Bank the former can be given by the Commission to those who most in need that makes all the difference to the effectiveness of the aid that the European Union can provide for instance it would assist those who have lost their livelihood because of the virus currently they have to depend on their own governments whose capacities vary it will be much more equitable if the support came from the European Union finally the Member States ignore so studiously an instrument that is ideally suited to the current situation they were aware of professional bonds because Spain championed them at a virtual summit of the European Council on April 23rd and they were listed as one of the ideas that deserved further consideration my guess is that the professional bonds were dismissed out of hand because the Train were confused with corona bonds the letter were decisively rejected by Member States because some of them were unwilling to go that far in reality perpetual bonds are the exact opposite of corona bonds perpetual bonds reduce the debt burden Corona bonds increase it to avoid confusion and now try to avoid using that perpetual bombers I prefer to use the word consoles that's the name the UK and the u.s. used for centuries to deserve perpetual to describe perpetual bonds the UK started in 1752 and the u.s. in 18 in the 1870s interestingly the Netherlands predated the other two countries attached Water Board issued perpetual bonds in 1648 to repair a dike the ones are still outstanding but the annual interest has become so small that the general public is not even aware of their continued existence as far as I know that that actually invented the idea yet today they are the most ardent opponent they are the leaders of the so-called frugal for in 1648 the Netherlands faced a serious threat from flooding today the combination of the virus and climate change poses an even greater danger to the European Union it would be tragic if the European general and The Frugal for in particular failed to give consoles the consideration they deserve I recognize that there are bound to be legal objections based on the TF EU that contains all the rule that govern the European Union I believe their objections could be overcome by arguing that the authors of the TFE you were not aware of the existence of consoles therefore its regulations doesn't apply to them I all say that anticipate moral objections from german-speaking people the German world shirred has a double meaning debt and guilt it follows that that debt should be that debtors should be punished that makes perpetual bonds that never have to be repaid morally inadmissible there is one legitimate legitimate objection that maybe me raised once you start using consoles you may end up abusing them but the fact that the large-scale use of Europe's triple-a credit is already designated as a temporary measure that should be there that should ensure that they would not be used in normal times they offer a financial tool ideally suited to current circumstances and they would not be abused in normal circumstances so why all this hostility I believe the answer is to be found in the sequence of events the commission was not aware of professional bonds when it proposed a recovery plan it was relying on the only instrument over which it had some control namely the budget that focused the attention of member states and interest groups on how the funds are distributed not on how they were generated interested parties are now haggling with each other for instance The Frugal for want to protect their discounts from their contributions to the budget it will take time for the authorities to realize that the budget can generate the amount of money the European Union needs that's when the council's will will be recognized as an indispensable financial instrument but by that time it may be too late we must therefore accelerate the process the money is needed now the German presidency starting on July 1st is the idea of occasion for a break so Chancellor Merkel is focused on making it a great success and she has fully recovered her political influence she also has capable supporters in the Minister of Finance who understand the merits of consoles in addition to deal with dealing with the virus concerts should also be used to address grammar change recently a strong movement has developed to raise the 2013 climate target from 40% to 55% a number of mainly East European countries are objecting that they didn't have enough money to reach the higher a target that could be readily remedied with additional trillion euros of consoles of course the commission would have to carefully monitor that the funds are not misdirected and missions in this way the European Union could meet the two great challenges of our time and fulfilled the expectations of its citizens that will be a truly great accomplishment thank you