A provocative way to finance the fight against climate change | Michael Metcalfe

63,632 views ・ 2016-05-23

TED


Please double-click on the English subtitles below to play the video.

00:13
Will we do whatever it takes to tackle climate change?
0
13270
4658
00:19
I come at this question not as a green campaigner,
1
19393
2973
00:22
in fact, I confess to be rather hopeless at recycling.
2
22390
2595
00:25
I come at it as a professional observer of financial policy making
3
25404
5265
00:30
and someone that wonders how history will judge us.
4
30693
4757
00:36
One day,
5
36353
1256
00:37
this ring that belonged to my grandfather
6
37633
3865
00:41
will pass to my son, Charlie.
7
41522
2007
00:44
And I wonder what his generation
8
44021
2808
00:46
and perhaps the one that follows
9
46853
2306
00:49
will make of the two lives this ring has worked.
10
49183
4838
00:54
My grandfather was a coal miner.
11
54995
2523
00:58
In his time,
12
58500
1177
01:00
burning fossil fuels for energy and for allowing economies to develop
13
60616
4969
01:05
was accepted.
14
65609
1157
01:07
We know now that that is not the case
15
67198
3379
01:10
because of the greenhouse gases that coal produces.
16
70601
3382
01:15
But today,
17
75315
1217
01:16
I fear it's the industry in which I work that will be judged more harshly
18
76556
4046
01:20
because of its impact on the climate --
19
80626
2036
01:23
more harshly than my grandfather's industry, even.
20
83498
2347
01:26
I work, of course, in the banking industry,
21
86202
2686
01:28
which will be remembered for its crisis in 2008 --
22
88912
3792
01:33
a crisis that diverted the attention and finances of governments
23
93831
4891
01:38
away from some really, really important promises,
24
98746
5381
01:44
like promises made at the Copenhagen Climate Summit in 2009
25
104151
5140
01:49
to mobilize 100 billion dollars a year
26
109315
2832
01:52
to help developing countries move away from burning fossil fuels
27
112171
4514
01:56
and transition to using cleaner energy.
28
116709
2979
02:00
That promise is already in jeopardy.
29
120396
2995
02:03
And that's a real problem,
30
123904
1865
02:05
because that transition to cleaner energy needs to happen
31
125793
2741
02:08
sooner rather than later.
32
128558
1912
02:11
Firstly,
33
131184
1156
02:12
because greenhouse gases, once released,
34
132364
1978
02:14
stay in the atmosphere for decades.
35
134366
2693
02:17
And secondly,
36
137083
1188
02:18
if a developing economy builds its power grid around fossil fuels today,
37
138295
5827
02:24
it's going to be way more costly to change later on.
38
144146
3153
02:28
So for the climate,
39
148316
2146
02:30
history may judge that the banking crisis happened
40
150486
3826
02:34
at just the wrong time.
41
154336
1979
02:36
The story need not be this gloomy, though.
42
156920
3688
02:41
Three years ago,
43
161669
1908
02:43
I argued that governments could use the tools
44
163601
2896
02:46
deployed to save the financial system
45
166521
2685
02:49
to meet other global challenges.
46
169230
1888
02:51
And these arguments are getting stronger, not weaker, with time.
47
171918
5123
02:58
Let's take a brief reminder of what those tools looked like.
48
178334
4412
03:03
When the financial crisis hit in 2008,
49
183578
2987
03:06
the central banks of the US and UK
50
186589
2577
03:09
began buying bonds issued by their own governments
51
189190
3435
03:12
in a policy known as "quantitative easing."
52
192649
2299
03:15
Depending on what happens to those bonds when they mature,
53
195385
3710
03:19
this is money printing by another name.
54
199119
2410
03:22
And boy, did they print.
55
202350
1904
03:24
The US alone created four trillion dollars' worth of its own currency.
56
204784
4568
03:29
This was not done in isolation.
57
209376
2089
03:31
In a remarkable act of cooperation,
58
211489
2674
03:34
the 188 countries that make up the International Monetary Fund, the IMF,
59
214187
4573
03:38
agreed to issue 250 billion dollars' worth of their own currency --
60
218784
4169
03:42
the Special Drawing Right --
61
222977
2072
03:45
to boost reserves around the world.
62
225073
1973
03:47
When the financial crisis moved to Europe,
63
227712
2551
03:51
the European Central Bank President, Mario Draghi,
64
231626
3441
03:55
promised "to do whatever it takes."
65
235091
2764
03:59
And they did.
66
239516
1252
04:01
The Bank of Japan repeated those words -- that exact same commitment --
67
241696
4354
04:06
to do "whatever it takes" to reflate their economy.
68
246074
4111
04:11
In both cases,
69
251484
1892
04:13
"whatever it takes" meant trillions of dollars more
70
253400
4239
04:17
in money-printing policies that continue today.
71
257663
3228
04:21
What this shows
72
261334
1788
04:23
is that when faced with some global challenges,
73
263146
3766
04:28
policy makers are able to act collectively, with urgency,
74
268062
4645
04:32
and run the risks of unconventional policies like money printing.
75
272731
6130
04:39
So, let's go back to that original question:
76
279509
4051
04:45
Can we print money for climate finance?
77
285511
2844
04:49
Three years ago,
78
289201
1730
04:50
the idea of using money in this way was something of a taboo.
79
290955
3735
04:54
Once you break down and dismantle the idea
80
294714
3176
04:57
that money is a finite resource,
81
297914
2039
05:00
governments can quickly get overwhelmed by demands from their people
82
300580
4483
05:05
to print more and more money for other causes:
83
305087
3226
05:08
education, health care, welfare --
84
308337
2000
05:10
even defense.
85
310361
1230
05:12
And there are some truly terrible historical examples of money printing --
86
312384
5438
05:17
uncontrolled money printing --
87
317846
2323
05:20
leading to hyperinflation.
88
320193
1745
05:22
Think: Weimar Republic in 1930;
89
322764
3586
05:26
Zimbabwe more recently, in 2008,
90
326374
3073
05:29
when the prices of basic goods like bread are doubling every day.
91
329471
4064
05:34
But all of this is moving the public debate forward,
92
334892
5004
05:39
so much so, that money printing for the people is now discussed openly
93
339920
5328
05:45
in the financial media, and even in some political manifestos.
94
345272
4214
05:50
But it's important the debate doesn't stop here,
95
350203
2539
05:52
with printing national currencies.
96
352766
2183
05:57
Because climate change is a shared global problem,
97
357912
3939
06:01
there are some really compelling reasons
98
361875
3070
06:04
why we should be printing that international currency
99
364969
3429
06:08
that's issued by the IMF,
100
368422
1858
06:10
to fund it.
101
370304
1231
06:11
The Special Drawing Right, or SDR,
102
371944
3205
06:15
is the IMF's electronic unit of account
103
375173
3356
06:18
that governments use to transfer funds amongst each other.
104
378553
4552
06:23
Think of it as a peer-to-peer payment network,
105
383933
2741
06:26
like Bitcoin, but for governments.
106
386698
2776
06:30
And it's truly global.
107
390572
1648
06:33
Each of the 188 members of the IMF hold SDR quotas
108
393005
5272
06:38
as part of their foreign exchange reserves.
109
398301
2742
06:41
These are national stores of wealth
110
401935
2288
06:44
that countries keep to protect themselves against currency crises.
111
404247
3431
06:48
And that global nature is why,
112
408764
2295
06:51
at the height of the financial crisis in 2009,
113
411083
2928
06:55
the IMF issued those extra 250 billion dollars --
114
415410
3718
06:59
because it served as a collective global action
115
419152
3571
07:02
that safeguarded countries large and small in one fell swoop.
116
422747
4807
07:09
But here --
117
429043
1296
07:10
here's the intriguing part.
118
430363
1666
07:13
More than half of those extra SDRs that were printed in 2009 --
119
433083
5202
07:18
150 billion dollars' worth --
120
438309
1986
07:20
went to developed market countries who, for the most part,
121
440319
4315
07:24
have a modest need for these foreign exchange reserves,
122
444658
2837
07:27
because they have flexible exchange rates.
123
447519
2431
07:30
So those extra reserves that were printed in 2009,
124
450427
4381
07:34
in the end, for developed market countries at least,
125
454832
3471
07:38
weren't really needed.
126
458327
1626
07:40
And they remain unused today.
127
460508
2273
07:43
So here's an idea.
128
463642
1360
07:45
As a first step,
129
465026
1372
07:47
why don't we start spending those unused,
130
467046
3066
07:50
those extra SDRs that were printed in 2009,
131
470136
3467
07:53
to combat climate change?
132
473627
1547
07:55
They could, for example,
133
475948
1513
07:57
be used to buy bonds issued by the UN's Green Climate Fund.
134
477485
4700
08:02
This was a fund created in 2009,
135
482901
2896
08:05
following that climate agreement in Copenhagen.
136
485821
3274
08:09
And it was designed to channel funds towards developing countries
137
489906
4356
08:14
to meet their climate projects.
138
494286
2067
08:16
It's been one of the most successful funds of its type,
139
496377
2859
08:19
raising almost 10 billion dollars.
140
499260
2304
08:21
But if we use those extra SDRs that were issued,
141
501588
3438
08:25
it helps governments get back on track,
142
505050
3312
08:28
to meet that promise of 100 billion dollars a year
143
508386
2823
08:31
that was derailed by the financial crisis.
144
511233
2590
08:35
It could also --
145
515766
1908
08:37
it could also serve as a test case.
146
517698
2646
08:42
If the inflationary consequences of using SDRs in this way are benign,
147
522096
5359
08:48
it could be used to justify
148
528474
1955
08:50
the additional, extra issuance of SDRs, say, every five years,
149
530453
4734
08:55
again, with the commitment
150
535211
2395
08:57
that developed-market countries would direct their share
151
537630
4430
09:02
of the new reserves
152
542084
1461
09:03
to the Green Climate Fund.
153
543569
1793
09:07
Printing international money in this way has several advantages
154
547076
3724
09:10
over printing national currencies.
155
550824
2061
09:13
The first is it's really easy to argue
156
553500
2815
09:16
that spending money to mitigate climate change benefits everyone.
157
556339
4417
09:21
No one section of society benefits from the printing press over another.
158
561366
3859
09:25
That problem of competing claims is mitigated.
159
565249
3784
09:29
It's also fair to say
160
569463
1340
09:30
that because it takes so many countries to agree to issue these extra SDRs,
161
570827
5127
09:35
it's highly unlikely that money printing would get out of control.
162
575978
4203
09:40
What you end up with is a collective, global action
163
580998
5027
09:46
aimed -- and it's controlled global action --
164
586881
3331
09:50
aimed at a global good.
165
590236
2589
09:53
And,
166
593637
1208
09:54
as we've learned with the money-printing schemes,
167
594869
2567
09:57
whatever concerns we have can be allayed by rules.
168
597460
2832
10:00
So, for example,
169
600757
1882
10:02
the issuance of these extra SDRs every five years could be capped,
170
602663
4973
10:07
such that this international currency is never more than five percent
171
607660
5595
10:13
of global foreign exchange reserves.
172
613279
1962
10:15
That's important because it would allay
173
615781
2025
10:17
well, let's say, the ridiculous concerns that the US might have
174
617830
3896
10:21
that the SDR could ever challenge the dollar's dominant role
175
621750
4522
10:26
in international finance.
176
626296
1596
10:28
And in fact,
177
628214
1783
10:30
I think the only thing that the SDR would likely steal from the dollar
178
630021
3394
10:33
under this scheme
179
633439
1469
10:34
is its nickname, the "greenback."
180
634932
3471
10:38
Because even with that cap in place,
181
638427
3916
10:42
the IMF could have followed up its issuance --
182
642367
3464
10:45
its massive issuance of SDRs in 2009 --
183
645855
3048
10:48
with a further 200 billion dollars of SDRs in 2014.
184
648927
4992
10:54
So hypothetically,
185
654716
2334
10:58
that would mean that developed countries could have contributed
186
658052
3118
11:01
up to 300 billion dollars' worth of SDRs
187
661194
4521
11:05
to the Green Climate Fund.
188
665739
1650
11:08
That's 30 times what it has today.
189
668186
3460
11:11
And you know,
190
671670
1156
11:12
as spectacular as that sounds,
191
672850
1841
11:15
it's only just beginning to look like "whatever it takes."
192
675580
4190
11:21
And just to think what amazing things could be done with that money,
193
681129
3318
11:24
consider this:
194
684471
1211
11:26
in 2009,
195
686618
1628
11:28
Norway promised one billion dollars of its reserves to Brazil
196
688270
4738
11:33
if they followed through on their goals on deforestation.
197
693032
4663
11:38
That program has since delivered a 70 percent reduction in deforestation
198
698593
6299
11:44
in the past decade.
199
704916
1411
11:46
That's saving 3.2 billion tons of carbon dioxide emissions,
200
706926
4338
11:51
which is the equivalent of taking all American cars off the roads
201
711288
4531
11:55
for three whole years.
202
715843
2286
11:59
So what could we do
203
719704
1302
12:01
with 300 other pay-for-performance climate projects like that,
204
721030
5044
12:06
organized on a global scale?
205
726098
2879
12:09
We could take cars off the roads for a generation.
206
729937
2867
12:13
So,
207
733384
1150
12:15
let's not quibble about whether we can afford to fund climate change.
208
735000
5283
12:20
The real question is:
209
740877
2248
12:23
Do we care enough about future generations
210
743149
3397
12:26
to take the very same policy risks we took to save the financial system?
211
746570
5041
12:32
After all,
212
752223
1198
12:34
we could do it,
213
754249
1219
12:36
we did do it
214
756284
1151
12:37
and we are doing it today.
215
757459
1731
12:39
We must, must, must do "whatever it takes."
216
759808
4318
12:45
Thank you.
217
765426
1151
12:46
(Applause)
218
766601
4366
About this website

This site will introduce you to YouTube videos that are useful for learning English. You will see English lessons taught by top-notch teachers from around the world. Double-click on the English subtitles displayed on each video page to play the video from there. The subtitles scroll in sync with the video playback. If you have any comments or requests, please contact us using this contact form.

https://forms.gle/WvT1wiN1qDtmnspy7