The IMF provides loans to countries with payment problems and oversees the global financial system. For director Kristalina Georgieva, the end of Credit Suisse was a significant event. In an exclusive interview with SRF, she regrets not having warned more clearly in advance about risks from Swiss supervision.
SRF: The state-backed takeover of Credit Suisse by UBS was almost a year ago. How significant was the event globally?
Kristalina Georgiewa: It was significant – also how quickly the Swiss authorities acted. And also how thoroughly they are now processing the events.
In 2019, the IMF conducted an extensive review of the Swiss financial sector. We were concerned at the time and felt that more needed to be done in the area of supervision. We should have been more forceful. This is a lesson for us as we examine the financial sector. When we see something, we need to say it loud and clear.
About a month ago, the Swiss government outlined proposals for stricter banking regulation. There is resistance from UBS when it comes to higher capital requirements. Above all because UBS sees its international competitiveness at risk. Is she right?
The financial sector is very important for the economy; it plays a crucial role, especially in the Swiss economy. So it is right to pay more attention to it. But I would like to say one thing to the Swiss: the report will not only stay in Switzerland, this report has global significance. Although the event took place in Switzerland, the reasons for it cannot only be found in Switzerland. That’s why UBS shouldn’t worry too much. It is unlikely that only Switzerland will make such demands and enforce them within its borders.
Switzerland is part of Europe, and there is currently intensive discussion in the media and politics about whether Europe will be economically dependent on the USA and China. Is Europe at a crossroads?
Definitely, Europe has huge potential. But there are reasons why Europe is falling behind. One of these is less well-developed capital markets. If you compare the US and Europe, the size of financial assets is quite similar. But in the United States money is invested, it works hard, so to speak, but not in Europe. The money is “lazy” because the capital markets are not well developed – because there is no capital markets union.
Europe is a lifestyle superpower.
It’s a critical time for European leaders and for European citizens to say: Hey, we can’t fall behind. We can actually be much stronger if we are more integrated.
They say money is lazy in Europe. The current discussion raises the question: Are people in Europe lazy? For example, Nicolai Tangen, manager of the Norwegian oil fund, said in a widely quoted interview that it was disturbing how much more hard-working, ambitious and less regulated U.S. companies and workers were compared to those in Europe. You are European yourself and have spent a large part of your career in the United States. Do you share this view?
Well, unfortunately I have to agree. In Europe there is definitely room to increase performance. On the one hand, it’s about lifestyle: Europe is a lifestyle superpower. But that also has its price. And the price for Europeans enjoying more vacations than in the USA, for example, is competitiveness.
I’m conflicted about this because I actually think it’s important that people have a high quality of life. And when I lived in Europe, I enjoyed it myself. But small adjustments towards higher productivity and more attention to how we spend our working time wouldn’t be a bad thing.
Stefanie Knoll conducted the interview.