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Will we do whatever it takes[br]to tackle climate change?

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I come at this question[br]not as a green campaigner,

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in fact, I confess to be rather[br]hopeless at recycling.

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I come at it as a professional observer[br]of financial policy making

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and someone that wonders[br]how history will judge us.

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One day,

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this ring that belonged to my grandfather

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will pass to my son, Charlie.

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And I wonder what his generation

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and perhaps the one that follows

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will make of the two lives[br]this ring has worked.

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My grandfather was a coal miner.

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In his time,

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burning fossil fuels for energy[br]and for allowing economies to develop

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was accepted.

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We know now that that is not the case

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because of the greenhouse[br]gases that coal produces.

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But today,

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I fear it's the industry in which I work[br]that will be judged more harshly

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because of its impact on the climate --

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more harshly than[br]my grandfather's industry, even.

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I work, of course,[br]in the banking industry,

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which will be remembered[br]for its crisis in 2008 --

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a crisis that diverted the attention[br]and finances of governments

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away from some really, really[br]important promises,

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like promises made at the Copenhagen[br]Climate Summit in 2009

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to mobilize 100 billion dollars a year

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to help developing countries[br]move away from burning fossil fuels

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and transition to using cleaner energy.

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That promise is already in jeopardy.

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And that's a real problem,

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because that transition[br]to cleaner energy needs to happen

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sooner rather than later.

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Firstly,

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because greenhouse gases, once released,

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stay in the atmosphere for decades.

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And secondly,

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if a developing economy builds[br]its power grid around fossil fuels today,

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it's going to be way more costly[br]to change later on.

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So for the climate,

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history may judge[br]that the banking crisis happened

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at just the wrong time.

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The story need not be this gloomy, though.

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Three years ago,

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I argued that governments[br]could use the tools

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deployed to save the financial system

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to meet other global challenges.

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And these arguments are getting[br]stronger, not weaker, with time.

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Let's take a brief reminder[br]of what those tools looked like.

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When the financial crisis hit in 2008,

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the central banks of the US and UK

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began buying bonds issued[br]by their own governments

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in a policy known[br]as "quantitative easing."

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Depending on what happens[br]to those bonds when they mature,

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this is money printing by another name.

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And boy, did they print.

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The US alone created four trillion[br]dollars' worth of its own currency.

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This was not done in isolation.

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In a remarkable act of cooperation,

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the 188 countries that make up[br]the International Monetary Fund, the IMF,

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agreed to issue 250 billion[br]dollars' worth of their own currency --

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the Special Drawing Right --

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to boost reserves around the world.

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When the financial crisis moved to Europe,

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the European Central Bank[br]President, Mario Draghi,

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promised "to do whatever it takes."

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And they did.

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The Bank of Japan repeated those words --[br]that exact same commitment --

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to do "whatever it takes"[br]to reflate their economy.

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In both cases,

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"whatever it takes" meant[br]trillions of dollars more

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in money-printing policies[br]that continue today.

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What this shows

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is that when faced[br]with some global challenges,

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policy makers are able to act[br]collectively, with urgency,

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and run the risks of unconventional[br]policies like money printing.

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So, let's go back[br]to that original question:

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Can we print money for climate finance?

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Three years ago,

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the idea of using money in this way[br]was something of a taboo.

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Once you break down and dismantle the idea

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that money is a finite resource,

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governments can quickly get overwhelmed[br]by demands from their people

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to print more and more[br]money for other causes:

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education, health care, welfare --

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even defense.

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And there are some truly terrible[br]historical examples of money printing --

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uncontrolled money printing --

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leading to hyperinflation.

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Think: Weimar Republic in 1930;

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Zimbabwe more recently, in 2008,

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when the prices of basic goods[br]like bread are doubling every day.

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But all of this is moving[br]the public debate forward,

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so much so, that money printing[br]for the people is now discussed openly

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in the financial media, and even[br]in some political manifestos.

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But it's important the debate[br]doesn't stop here,

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with printing national currencies.

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Because climate change[br]is a shared global problem,

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there are some really compelling reasons

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why we should be printing[br]that international currency

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that's issued by the IMF,

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to fund it.

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The Special Drawing Right, or SDR,

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is the IMF's electronic unit of account

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that governments use to transfer[br]funds amongst each other.

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Think of it as a peer-to-peer[br]payment network,

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like Bitcoin, but for governments.

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And it's truly global.

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Each of the 188 members[br]of the IMF hold SDR quotas

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as part of their foreign[br]exchange reserves.

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These are national stores of wealth

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that countries keep to protect[br]themselves against currency crises.

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And that global nature is why,

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at the height of the financial[br]crisis in 2009,

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the IMF issued those extra[br]250 billion dollars --

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because it served[br]as a collective global action

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that safeguarded countries[br]large and small in one fell swoop.

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But here --

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here's the intriguing part.

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More than half of those extra SDRs[br]that were printed in 2009 --

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150 billion dollars' worth --

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went to developed market countries[br]who, for the most part,

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have a modest need[br]for these foreign exchange reserves,

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because they have flexible exchange rates.

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So those extra reserves[br]that were printed in 2009,

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in the end, for developed[br]market countries at least,

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weren't really needed.

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And they remain unused today.

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So here's an idea.

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As a first step,

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why don't we start[br]spending those unused,

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those extra SDRs[br]that were printed in 2009,

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to combat climate change?

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They could, for example,

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be used to buy bonds issued[br]by the UN's Green Climate Fund.

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This was a fund created in 2009,

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following that climate[br]agreement in Copenhagen.

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And it was designed to channel funds[br]towards developing countries

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to meet their climate projects.

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It's been one of the most[br]successful funds of its type,

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raising almost 10 billion dollars.

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But if we use those extra[br]SDRs that were issued,

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it helps governments get back on track,

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to meet that promise[br]of 100 billion dollars a year

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that was derailed by the financial crisis.

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It could also --

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it could also serve as a test case.

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If the inflationary consequences[br]of using SDRs in this way are benign,

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it could be used to justify

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the additional, extra issuance[br]of SDRs, say, every five years,

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again, with the commitment

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that developed-market countries[br]would direct their share

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of the new reserves

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to the Green Climate Fund.

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Printing international money[br]in this way has several advantages

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over printing national currencies.

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The first is it's really easy to argue

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that spending money to mitigate[br]climate change benefits everyone.

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No one section of society benefits[br]from the printing press over another.

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That problem of competing[br]claims is mitigated.

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It's also fair to say

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that because it takes so many countries[br]to agree to issue these extra SDRs,

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it's highly unlikely that money printing[br]would get out of control.

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What you end up with[br]is a collective, global action

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aimed -- and it's controlled[br]global action --

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aimed at a global good.

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And,

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as we've learned[br]with the money-printing schemes,

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whatever concerns we have[br]can be allayed by rules.

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So, for example,

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the issuance of these extra SDRs[br]every five years could be capped,

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such that this international currency[br]is never more than five percent

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of global foreign exchange reserves.

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That's important because it would allay

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well, let's say, the ridiculous[br]concerns that the US might have

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that the SDR could ever challenge[br]the dollar's dominant role

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in international finance.

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And in fact,

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I think the only thing that the SDR[br]would likely steal from the dollar

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under this scheme

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is its nickname, the "greenback."

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Because even with that cap in place,

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the IMF could have[br]followed up its issuance --

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its massive issuance of SDRs in 2009 --

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with a further 200 billion[br]dollars of SDRs in 2014.

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So hypothetically,

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that would mean that developed countries[br]could have contributed

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up to 300 billion dollars' worth of SDRs

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to the Green Climate Fund.

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That's 30 times what it has today.

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And you know,

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as spectacular as that sounds,

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it's only just beginning to look[br]like "whatever it takes."

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And just to think what amazing things[br]could be done with that money,

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consider this:

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in 2009,

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Norway promised one billion dollars[br]of its reserves to Brazil

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if they followed through[br]on their goals on deforestation.

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That program has since delivered[br]a 70 percent reduction in deforestation

0:11:32.916,0:11:34.327
in the past decade.

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That's saving 3.2 billion tons[br]of carbon dioxide emissions,

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which is the equivalent of taking[br]all American cars off the roads

0:11:43.843,0:11:46.129
for three whole years.

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So what could we do

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with 300 other pay-for-performance[br]climate projects like that,

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organized on a global scale?

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We could take cars off the roads[br]for a generation.

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So,

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let's not quibble about whether we can[br]afford to fund climate change.

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The real question is:

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Do we care enough about future generations

0:12:14.570,0:12:19.611
to take the very same policy risks[br]we took to save the financial system?

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After all,

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we could do it,

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we did do it

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and we are doing it today.

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We must, must, must do[br]"whatever it takes."

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Thank you.

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(Applause)