Christine Lagarde

English labor law and social law. After a successful career at the Chicago based law firm Baker and Mackenzie, Legard held several ministerial positions in the French government, including Minister of Agriculture and Minister of Finance, becoming the first woman to hold that role in any G eight economy. In June of twenty eleven, Lagard was elected to succeed Dominic Strauss Khan as the Managing director of the I m F, a role she holds to this day. She recently sat

down with Carlisle Group co founder David Rubinstein. They spoke on David reuben Stein's Bloomberg television program Peer to Peer Conversations. Many people don't know what the IMF actually is. The International Monetary Fund was set up seventy five years ago by forty four men who decided that women. There was

no woman in those days. So forty four men in on the eve of the end of the Second World War with a view to avoiding major economic crisis, major instability in the world, which in the view, led to the war. So that's the intention. Where do you get your money from? All the membership, every member dred and eighty nine members. Every member contributes to the financing of

this common pot. It seemed to be an informal understanding that the World Bank would be headed by an American, the IMF by a European, and that has been the case ever since then. So am I correct? You know, I want to believe that it's going to be headed by somebody who has the competence to do the job. Also fair observation that it has been a European at the Fund and it has been an American at the Bank.

I think that's how they cut those arrangements in the early days at a time when the world looked a lot different, Well, the world looked different today. For example, Asia's much more significant so did the people from China or Japan say what about ask the emerging market economies are very interested in the institution, and China is certainly extremely interested as well. China has a representative on my management team. There is a managing director, that's how I'm

called m d Um. There is a first deputy managing director who's an American, and I have three deputy managing directors. One is Chinese, one is Brazilian, and one is Japanese. So there is a lot of diversity on the on the management team. Let's go back to how you actually came to this position. So you grew up in France, I assume, and what did you What did your parents do? Were they educators or they in government? They were both professors.

My father as a professor of English literature at university and my mother was teaching um French Grammar, Latin and Ancient Greek. So that that's the universe that populated my childhood and a lot of literature. So when you're growing up with parents like that, I guess you're really good in languages. They make sure that you know all those languages.

I was hopeless. I was really bad. Actively they doubt that so you were, I assume a very good student and uh where you're also interested in synchronized swimming at that time, and can you explain what synchronized swimming really is and how you came to be on the national team of France. The athletic activities had to do with the riots that we had in France in nineteen um,

you know, students were taking the streets. My parents were terrified that I would do that too, so they allowed me to go to the swimming pool of the club, so I could skip school and spend all my time by the pool. And I enjoyed swimming at the time, and gradually, you know, one day after the other, I became really interested in that synchronized swimming, which brought together girls.

So it's teamwork that required music and a liking of music, and I'd always liked music and uh and and and discipline and methods, so I joined the team at the time. So with synchronized swimming you came you became a member of the national team of France, where you won the Olympic team as well, because it wasn't an Olympic sports at that time, but I did European Championship and many international events. You still do swimming or synchronized including this morning. Wow,

how do you have time for that? I get about five o'clock. Oh, that probably helps, so it doesn't open it until six, so I have to do a bit of gym before that. What did you study in college? I had a very classic education. I studied, um, you know, the basic basic subjects that I suppose everybody studies, which is French mouth, English, geography, history, chemistry, and physics, plus some sports which were not so important in those days

in France, but very often leaders in France. How go to certain schools and they go to these very prestigious schools. Did you go to one of those schools? Now? I failed miserably so. First well, because the first time I was I was in love with somebody who was going to become my husband, and I did not study very hard. And the second year I did study really hard with a group of others who studied equally hard, and I totally missed the date of registration to actually take the

various examples. You became a lawyer, though, and what propelled you to want to be a lawyer? The death penalty. I wanted to participate in abolishing the death penalty. When I started law school, the death penalty was one of the the tools of criminal law and or personal religious and other reasons. I wanted to participate in eradicating this

penalty in in the legal arsenal of France. And unfortunately, when I finished my my my law school, and when I graduated and could have joined that group, the death penalty had been abolished, right but nonetheless state as a lawyer, and if you practice in France, yes, I practiced in France for a few years, and I was doing like so many young lawyers in those days. You had to do tags, you had to do corporate, you had to

do antitrust, you had to do labor. Not luckily, the French president to be elected was a socialist, and that government came out with lots of very very hard label or rules to benefit the unions and the workers and all of that. Becker Mackenzie. Most of our clients were international corporates or American companies that had invested in France. And and I was really busy. So were there many

women lawyers in France in those days. No, no, no, no, no. One of the reasons actually I joined Becka Mackenzie was because the managing partner of the Paris office was a woman, and she was then a role model for me. Now, for those who don't know, Baker Mackenzie was for many years one of the largest law firms in the world. Because the largest, yes, and it was based in Chicago. So at some point, how did you get to be the head of the entire firm? You're a woman, it's

a male firm, more or less, you're from France. It's a Chicago based American firm. So how did you get elected to be the managing director of the entire firm and moved to Chicago again. I'd love to think that it's pure merits and and and quality of the work I was doing. I think it's you know, it's interesting actually. Um. So I became managing partner of the Paris office, and

gradually I was I was doing a decent job. I was picked up by the nominating committee who was still did me to join the executive committee, and I was the first woman to be on that on that executive committee. And then I went back to practice happily, but they came back to get me. Um. By that time, it was a mess. Um the i T budget was completely out of out of order. The knowledge management system was a complete disaster, and management was not really trusted. So

the nominating committee had a tough time selecting somebody. And it's often in those situations that a woman arises. So I was selected as chairman of the phone. Okay, so you're the head of Baker Mackenzie. You're living in Chicago. Was it like a foreign situation because you really were living in the midwest of the United States. You're really from France. Chicago is a fantastic city. Um. I had lots of friends and I still have many of them today, and I truly enjoyed my uh six years in Chicago.

All right, So you were doing that and all of a sudden, Nicholas Sarkozy gets elected president of France. Did you know him? It was just it was the year. It was two years before that. It was Chirack was still the president and Villepin, the Prime Minister was the prime was was in charge, and he's the one who

called me. He called you to be Minister of trade. Yeah, okay, so he called you to be Minister of Trade, and you went back and you served as Minister of Trade for a couple of years and how did you like that job? I loved it. I really loved it. Um. It was a massive change in my life geographically, socially, financially as well. I assume the income was not the same as you had. It was like divided by ten,

That's what it was. Um. But I loved it because it was I think it was a job that I most enjoyed in government, actually because I was selling France around the world. And I think President Shirack he knew that I was this strange animal coming out of private sector and private life and corporate life. But I think he had a lot of respect for me, and I had huge respect for him. And then Sir Sarkozy does

get elected president of France. He asked me to be Minister of Agricultulture, which I had no clue about, but I was prepared to learn. But you did that for just a few months. I did that for two months, because then he asked me to become Minister of Finance.

I think he asked me to be Minister of agriculture because he knew that it was going to be a hot w T O potato and he wanted somebody who was acquainted with difficult international Either did such a great job your promoted for two months, or such a bad job and for two months they said give her another job. One of those two. Probably you did such a good job, they gave you that and there was reshuffling caused by elections. Well, you're the first woman to be a finance minister of

a major country in Western Europe. Yes, yes, I was. I was the I was the first fundance minister for G seven country and of you know, of many countries actually, So you were a lawyer by training, um, and all of a sudden you're in charge of the finances for France. Um. Did you have any background or you're worried about not having that kind of background or did your job before as a minister of trade help you. I think the

whole background helped me. But I recognized right from the get go that I was going to have to learn enormously and and learn from the team from the Treasury Department. I had to work very hard. Okay, So you did a very good job there by all accounts, and then I m F managing director position opens up. Did you really want the job or did you have to be

persuaded to move back to the United States. It's you know, so many things in my life happened sort of out of the right timing, the right people, um, and my sense of all right, let's try it, let's do it. Um. You know, when I returned back to France as as a as a minister, I had not thought for a second about my pension, my compennsation, the reporting lines, how would work out. I just I just wanted to do it.

I wanted to help the country as finance minister. I don't think that I anticipated at all that two months into the job the beginning of the financial crisis would loom as a result of the closure of the two BNP accounts. But you just rule your sleeves and and and work and and and team up with people who know what they're doing and who have a good moral compass. I think it's combinational for that. Now you've done a

very good job at the imp by all accounts. One of the things that you have to worry about is not just countries that are not doing that way I need some money, but the economy of the entire world. Because your job is to help promote stability and development and also employment how do you think we are better prepared around the world for another financial collapse of the type we had ten years ago. No, I think we're a bit better prepared. We're better prepared because at least

in certain areas we've learned the lessons. When you look at the bankings term, when you look at the ring of supervisors, when you look at the set of regulations that apply, I think that in that particular sector we are much better prepared. You know, the banks around the world are most solid capital ratio's, liquidity, ratio's leverage in on all those fronts, I think we've made significant progress. UM. There are areas though, because risks tend to to sort

of travel to the fringe. UM and if you look at other areas, you know, asset management, pension funds, UM, fintech developments, those are areas where I'm not sure that we have the same the same added security that we've developed in relation to the banking sector. Now, there are other numbers that are much more worrying. When you look at debt. The weight of debt on corporate, sovereign and household has has gone up by virtue of the stimulus and the indebtedness that had to develop as a response

the crisis. Now, when the Euro was created, it was started by some at the time that it might become a reserve currency. Why do you think it really has not. I think because the job is largely unfinished. It's very advanced, and I think the Great Financial crisis as has moved the Euro and it's in its institutions in the direction of consolidating, you know, with a stronger backstop, with a stronger set of institutions, and with more unity amongst the nineteen members of the EU Area. But the job is

not finished yet. Banking union is not yet completed, and and there is still too much uncertainty in the fiscal policies that should be common to all, or at least to share the same objective. So let's talk about Brexit for a moment. When do you think that will be resolved? Um? I think we will know on on on March, because

that's the cutoff date. When either there is a brutal exit which would be extremely costly and and detrimental to both the UK particularly and the EU too to a lesser degree, or there is an arrangement that deals with the period of transition into this new regime which can be a variation of free trade agreement between the UK and the European Union, which can go from the Norwegian model to the Swiss model to the Canadian model, and which will have to respect one thing which is a

big redline for many, and that's the Irish border, which was agreed in this Good Friday agreement. But if Great Britain does get out of the EU, do you think that will deteriorate the European economy in a significant way. I think it will be um net negative in all cases. The variability of net will depend on the brutality of the exit. The more brutal, the more negativities, and I think it will be in any circumstances most severe for the UK, then it will be for the rest of

the European Union. And within the European Union you have a few countries that will be more exposed than others, those that deal frequently with the UK, such as Ireland, probably Belgium, probably the Netherlands. So have you noticed that when there's a very difficult problem, sometimes the men don't want to do, which they give it a woman to do.

So you said it not me well that the Prime Minister of Great Britain as a woman, and none of the men seem to want to take that job because they know it's a very difficult, no wind, no win situation. Now they're probably prepared to come and take the job afterwards. So yeah, probably the case. Okay, let's talk about another part of the world, China. Do you worry about Chinese growth going down? You have worried about Chinese debt or not? Chinese growth has been going down regularly for the last

ten years or so. Remember the days when it was a double digit So it's gradually come down. And every time it was moving from a ten to a nine, to an eight to and seven, there was always trepidation. And I've heard so many times that China was going

to collapse. It hasn't collapsed. It has certainly held a great deal at the global world economy at the time of the financial crisis, because it was certainly one of the first, if not the first, country to come out with a huge package of stimulus in order to kick start the economy. So, yes, it is heavily indebted. Um, yes,

they're trying to bring that in. But at the same time, it's a country that has a huge population which has massive transition issues to deal with, and we're um the necessary reduction of growth that we're seeing by virtue of the size of this economy now has to be monitored, has to be under control in order to tame any any risk of conflict. That that's how I see it. What about the tariffs. President Trump has been talking about imposing terroriffs and has imposed tariffs against and some other

parts of the world. Do you think that's a plus for the global economy or you think it's not. I think that tariffs are not a good idea in general if they impact trade to the point that trade no longer plays the key role as an engine for growth. What do we see in the last third years. We see trade growing faster than growth, so it's been a driving engine for growth. We see lots of people taken

out of poverty. We see the cost of living in advanced economies, including in the United States, lower by virtue of cheaper refrigerator, cheaper television sets, cheaper telephones, and so on and so forth, because they are made in countries were cost so much lower. So there has been huge benefits, not only benefits, but there have been huge benefits and I don't think we can dispense of those benefits going forward. So my take on that is fix it, don't break it.

Because trade needs fixing, there's no question about it. And I think that President Trump has put the finger right where it hurts. There are issues about the trade rules and organizations that need to be addressed and dealt with. Let me ask you this, Um, you have spoken about the fact that women should be in corporate boards more than they have been, core board boardrooms and CEOs, and perhaps you think you've made a lot of progress, And why do you think women should be more represented in

these positions. I think there's a very clear economic case now that more moment on the board, more women on the executive committees and management teams, actually generate better returns, better results, and better profits. So if even if you have a very very um cold heart, no moral imperatives, and no sympathy for women and for the principle of in inclusion, even if you were that person, you have to consider including women and bringing them to the table

and to all the tables. Have we made progress? Some? Yes? And when I look at numbers, it tells me that we have made progress altogether. Do we still have a long way to go. Yes, as well. Now, did you experience a lot of discrimination because you were a woman as you were rising up in your career and you

feel you're still experiencing it today. I did experience discrimination from from the you know, the first day when I interviewed with with law firms, where I was told back in those days that I would never make partnership because I was a woman, Or when I was regarded by Japanese clients, for instance, in those days as as a woman who can serve coffee, when I was actually a

practicing attorney, drafting contracts and negotiating for them. And and they are still instances when you know, I walk in a room full of men and I can just tell that there is this little smile about their face, which is either here she goes again, she's going to talk about women, or I wonder what she has to say. It's less so the case, for sure, But when you're

in a minority, that's what you experiment. What is the greatest pleasure of being the head of the I m F working with the teams, and what's the worst part of it? Having to sit through meetings which endlessly repeat the same things and end up nowhere. Okay, well, least she didn't say interviews that asked the same questions. You're nice enough not to say that. I'm sure you've been asked these questions before. But just before we wrap up,

you've said you're going to finish your term here. When you do finish, you'll still be relatively young by most standards. So have you thought what you might do when you finish your term at the I m F. No, I'll come and talk to you, David. Okay, you'll give me

some good advice. Now, when you're in the head of the I m F and you go to have let's say, lunch or breakfast and a restaurant in Washington or other famous cities, do people come up for selfies they bother you, or you can kind of go where you want to go without being bothered. No, No, I'm recognized you. They

recognized me. They ask for selfies. They are very most of the time, they are very very nice and flattering and complimenting and and some and and it's very nice, and it's it's a lot of ego food which I take and store for the hot days. Any regrets about your career, No, No, regrets like Poff would say, Okay, well, thank you very much for taking the time with us, and thank you for the great job you're doing at the I m F. Thank you, David