We meet one of the most recognized names in swiss banking, the vicechairman of blackrock, the worlds biggest money manager, which handles more than 5 trillion in assets. After the financial crisis, what have we learned . Philipp we learned that we had too much leverage in the system without any doubt. When you have too much leverage, bad things happen. Not only do they happen, but when they happen, things tend to be amplified. So that is the key take away from it all. We have also learned that this notion of letting the market be totally free, that governments really should get out of the way, that wasnt a good idea. I think what stands out is banks needed much more capital than they had at the time. We had capital levels that were excessively low. I mean in some cases, these banks were leveraged nearly 100 times. And that, to me, has always been the key takeaway. In some ways, i wish we had focused more on the capital issue, and less on all of the other things that have made it into the Regulatory Reform realm. Francine but is there concern now that we are over regulating because of the the financial crisis, and we may miss the next one . There is always a bit of that. We shouldnt have any illusions. Financial crises should not disappear from the pages of future history books. So we have to be realistic. I dont think we are over regulating. I think its sensible to say lets take stock and pause. That is very much happening, survey when you look at what is happening in the u. S. That is part of the story, not a bad thing. See how the system settles, as i have said, we have too many regulatory initiatives. And it is the multitude of these and how they dynamically interact that is very complicated to predict. So i think that a sense of pause, deliberate pause is not a bad thing, but i wouldnt say that this system is overregulated. Francine you love history. How did that taint your view of the world . For one thing, the unexpected will always happen, sooner or later. History tells you that. And we are not very good at predicting it. So what we have to think about is how do we build the system, how do we ensure that the system is resilient when bad things happen, rather than getting into this control mindset that you can somehow eliminate all risks. Francine where you see the biggest disruption coming from in the next 510 years . Is it industry, or china . Philipp i think it is technology on the whole. Even if you asked me more broadly, technology, the way it will impact peoples behavior, the way it will impact democracies, frankly, the way it is impacting media right now you are in the midst of this, so you know this better than anybody. I think that technology is all pervasive in many ways. Francine is it impacting inflation . Is that why inflation is so tricky to find . Philipp first of all, central banking has something to do with this. There is a framework around central banking that basically emerged firmly in the mid1990s, lets say. That price stability can be maintained, can be guaranteed. That has impacted expectations of economic agents. So that is certainly part of it. That kind of innovation around central banking is important. Secondly, globalization has dampened kind of wage pressure. Theres no question about that, that you constantly have new pools of labor that are entering the global labor market, the Global Supply chains. And so that have certainly made it difficult certainly to have a wage spiral going on. And then technology certainly is another piece where the combination of technology, competition, and integration of new economies, new spaces, new pools of labor, has made it difficult indeed for inflation to behave the way it would have behaved in the 1960s or 1970s. Francine so should we still look at the phillips curve . Is it broken or is it dead . Philipp i think maybe thats the wrong question to ask when you ask it bluntly like that. It is more about, how do we think these forces will evolve over time . I think its true that prices behave differently today than they did some decades ago. And probably that will not change, so i think we do have the good news here is we have an environment where we probably dont face imminent inflation pressures, or risks for that matter. Having said that, it still remains true that Monetary Policy has to be there as a guarantor. So i would very much hope that even if we dont get inflation for the next years, or decades, that Central Banks can continue to play the role they play in terms of maintaining that stability. Because it is a very precious thing to have price stability. Francine should we worry more about deflation, or is it just a lack of inflation . Philipp my sense is that we have managed to sort of kill the deflationary psychology in a sense, for the time being. And thats one of the reasons why, as we speak today, the Global Outlook looks pretty positive. Because in a sense we have managed to reverse that fear about deflation, and that is largely frankly due to again very aggressive, courageous central banking, which has had some negative side effects, but on the whole, has been the right policy. Francine what do you see being the side effects of this ultraloose Monetary Policy . Philipp it is essentially low, very low Interest Rates, potentially for a long time to come. The question is, how will that impact savers . Retirement is a big, big issue. When i look at blackrock, two thirds of our assets are basically tied to retirement. The question of how you finance your retirement in a world of potentially protracted low Interest Rates is a big, big problem, a difficult challenge that i think most of our societies today face. And frankly, in most countries, government policy hasnt really responded, hasnt even in many cases sort of openly acknowledged this challenge, that we have a major retirement problem facing us. And low Interest Rates dont help in the sense that if you start to think that im not going to be able to live on my Retirement Savings because Interest Rates are low, that might just lead you to save even more. So this is what is called precautionary savings effect, and it is something that is potentially very destabilizing. The longer we have low Interest Rates, coupled with this demographic challenge, the more i will be worried about that. I certainly sense, as we talk to our clients worldwide, that retirement is probably one of the biggest issues we face. And we have to make sure we dont get into a situation where this becomes a crisis. Francine what is it like working with larry fink . Philipp oh, theres a good question. [laughter] francine as a hedge fund manager, Philip Hildebrandt made his mark amongst the swiss elite. His ambitions ran higher. He joined the banks central club, at age 46, the youngest president of the snb. His term ended two years later for a trading scandal involving his then wife, leading to his resignation. Mervyn king of the bank of england said, we all know he is a man of total integrity, extraordinary ability, and most part of all, courage. Such people are rare. His country will miss him. Hildebrand believes having courage to act in the face of adversity. Philipp the rescue of ubs, which was a very difficult moment. In many ways it went against everything we believed in, yet we knew we needed to do it. We also knew it would create tremendous anger in the population. That was clear. Of course it has turned out that way at a global level. That it would take a long time for banking to redeem itself. So we knew the consequences were in many ways very significant, and yet we had deep conviction that at that moment we had no choice but to proceed. The other one, obviously, was the introduction of the minimum rate. Philipp it was a difficult day. Do you remember the conversations . That something would have to be done there would be unpopular . Philipp we had done conversations about what it would look like. We had engaged with the bank to study some swap operations. We never told them we were prepared to buy the assets or take them over, so we were well prepared. But the actual moment i remember very well was breakfast at my apartment at the time in zurich, when the ceo and chairman came by, and basically told Thomas Jordan was there at the time, myself, and the head regulator, and they told us that they now needed help. That was a clear, decisive moment. From then on, the plane went into action. And that was a tough moment, because knew we had to do it. But we also knew it would be a grave thing to do in many ways. Francine talk to me about the capping of the franc to the euro. Were there other possible scenarios . And why did you go for that one in the end . Philipp this has been building up for weeks if not months, so we have time to look at many different scenarios. We also had a history. The snb and the country have faced similar circumstances in the past. We also had a great team. We brought in that just a board, but i brought in quite a few experts, economists, to work out every possible angle, through every possible scenario. By the time we triggered it, i felt that we had done all the possible preparation we could have done as an institution. Francine that at the time was quite a big risk. Are you a risk taker by nature . You are also a hedge fund manager. Philipp one of my mentors told me early on sometimes not acting is the greatest risk. With the markets being what they are, we had to come in very suddenly and very aggressively, which we did, but the reality is that behind this there was nothing aggressive. There was due consideration and extensive studying and scenario analysis. Francine it was bold. Right . Philipp it was reasonably bold. It was also very important that it had the credibility of the community of Central Banks and even governments, to some extent. That in many ways was my biggest worry, that we would be seen by some of our Principal Partners worldwide as doing something that wasnt quite right. And one of the things that i spend an enormous amount of time on is really to, to make sure that the analytics behind it were robust, that it would not be seen as a beggar thy neighbor policy, to make sure it wasnt something we would have to explain. So all of these dimensions were incredibly important. Francine did you confide in any other central bankers . Philipp thats a delicate question. What i would say is that one of the unique things about central banking, and it is certainly one of my greatest privileges that ive experienced professionally to have experienced this is the collegiality and trust that develops in the central banking community. Being part of the club of governors is a, is a great privilege. You really have a community of colleagues that you can trust. Theres a way you can learn from each other. You can discuss complex issues. That is quite unique, and to me, was one of the greatest privileges really of being part of that club. Francine what was it like the day that the franc capping was announced, not being beholden to the euro anymore . What did it feel like . Philipp this was never premised to be forever. It was not a permanent change of Monetary Policy regime. So the fact that it would be at some point, that it would come to an end, was always obvious, and as it was obvious that it had to be premised on europe somehow not falling apart. Francine will europe Stay Together . Philipp yes. Yes, i think francine you are a Firm European believer. Philipp look, we have in this world of globalization, the only way for europe to be influential today is to have a strong common voice. Francine so when you decided to resign, how difficult of a decision was that . That was january 9, 2012. Philipp it was tough. I loved being a central banker. Resign, how difficult of a decision was that . Serving the central bank, my country, is certainly the greatest privilege ive ever had professionally. But ultimately, Public Service is not about yourself. It is about the institution you serve, the people you serve, or the country you serve. And in that context, it was the right decision. Because it needed, the circumstances were such where credibility was of the utmost importance, and the best way to preserve the full range of actions for the central bank in a difficult environment, remember, this was still more or less the tail end of the crisis, things were uncertain. The euro crisis was still in full bloom. It was very, very important that there were no questions around the leadership, so it was the right thing to do for the institution. It was the right thing to do for the country. It was a painful thing to do for, for me. Francine talk to me in real terms. What is a robot advisor . You know, am i going to have a robot as a boss at any point if i work for blackrock . Francine after leaving the Swiss National bank, Philipp Hildebrand went to work for larry fink, whose repetition precedes him. His job at blackrock has high expectations, and his largerthanlife. His company manages more than 5 trillion in assets, making him one of the most influential figures in the financial world. Francine philip, what is it like working with larry fink . Philipp oh, theres a good question. [laughter] philipp larry is a bit older than me. I try to keep fit, but traveling with him is a workout. Francine is he demanding . Philipp he is demanding, yes, he is demanding, but no more than he is on himself. He has coined this phrase that we all have to be students of the market. That there is no excuse for anybody at blackrock not to be a daily student of the market. And i think that shapes the culture very much at blackrock. This relentless kind of never be satisfied, always remember that the world moves on, you have to learn every single day. So we have a lot of initiatives around internal programs and academy, where we really force everybody and encourage everybody to kind of live that motto. If people cant do that or dont want to do that, then they are in the wrong place at blackrock. So the culture that he carries very much runs throughout the firm. Francine whats the question you get asked most internally, and by your clients . Philipp well, you often get asked, whats it like to work with larry . [laughter] philipp but i think on substance for a long time since the crisis, it was about the future of europe. And then i would say other question is how do we operate in this low Interest Rate environment, particularly if you extend it for a long time . What we believe is we are in a sustained recovery at the moment, but we also think we will see a kind of cap on Interest Rates and probably growth rates, that we are structurally in a lower growth environment Going Forward for quite some time. Francine how does blackrock deal with it . Philipp first of all, we have to be relentless students of the market. We invest a lot of resources and time into building out our investment institute, providing insights to clients. We have done a lot of work around the implications of lower Interest Rates for longer. We have found new ways to share our analysis with our clients on a permanent basis. Then of course we just have to be innovative around using technology, new products, product innovation. Francine are you a Fintech Company or an asset manager . Philipp certainly, but i think we are more than an asset manager. I believe we are a platform in many ways. We have said publicly that our ambition would be five years from now, we would have a third of their earnings derived from kind of technology empowered, or Technology Driven products and services. Francine talk to me in real terms, whats a robot advisor . And am i going to have a robot as a boss at any point if i work for blackrock . Philipp no. I think the answer is, you will have lots of interface, or if you are maybe not a client. We dont go directly to clients at the moment but throughout distributors, they will have Technology Tools that will make it easier for them to deal with their clients, work with their clients, and bring value to their clients, and we want to be that platform for our distributors. You will also see that in your products a combination of technologydriven investments and sort of humandriven investments, will increasingly be visible. This whole distinction of saying we have technology and then we have people, i suspect thats not going to be the world we live in 1015 years from now. That the reality is there will still be important roles to play by people, analysis, judgment, learning about the markets, experience, history, all of these things will continue to be important, but our people will be empowered by technology in many ways, hopefully to the benefit of our clients. Francine you definitely have an advantage because of size and scope. Do you believe there will be more consolidation amongst your competitors . Philipp look, i think there will be a lot of companies that will disappear. That doesnt necessarily mean theres going to be a lot of m a. Some of these Companies May simply not be worth buying. So the clients will simply migrate away from these companies and buy other products from a different company. So it doesnt necessarily mean consolidation, in the sense of the corporate idea, but i do think we are going to see a lot of change in the Asset Management industry. And those companies that cannot respond to the need to change will simply disappear. You have to remember that it is a very easy for a client to change his or her asset manager. Francine outside of work, there is a passion for sport. In his youth, hillebrand was a swimmer and narrowly qualified for the 1984 olympics. Days hes a skier and rock climber. It offers the escape from the day job. He says drawing parallels between sports and business can also help you develop skills as a leader. Philipp what it teaches you, hopefully, is discipline and stamina, and hopefully staying on top of things. Every day, it is not just about a great effort today and then i slack off. And it never ends. It is sort of this ability, this mindset, of saying you never really win, you just kind of go to the next challenge. I think that is so heavily embodied in our culture of blackrock. At the very top, through larry himself as we talked about it. In that sense, there is an analogy. I climb, ski, spend time in the mountains. I like to bike. Francine is that when you think about the world . Philipp mmm, it is more when i dont do anything else other than climbing. The beauty about climbing is you dont have time for it is almost a form of meditation. You dont think about anything other than the next step. I find that to be a refreshing exercise in a world where you are constantly being bombarded everyday, another email, another message, another call. Francine what part of history fascinates you the most . Are there parallels, i dont know if it is with tudor england, or anything you see with parallels that move through today . Philipp we can learn a tremendous amount from history, from the mistakes that have been made in european history. There were europe has terrible, terrible incidents, and i think repeatedly to learn about that, to teach our children. We recently took our kids to auschwitz as a way to make sure this historical sense of how things can go wrong in europe, it is very important to pass on. Francine is there a shortcoming in human nature that frustrates you when you do business . Philipp i struggle when people who dont have a framework on how they think. I find it important for people to develop an ability to think about a problem, no matter what the problem is, in a reasonably disciplined way. I think sort of erratic thinking tends to lead to erratic outcomes. Francine so, final question, where do you see yourself in five years . Philipp i used to be with a couple others, mark carney. We always used to be the youngest in the room. I noticed recently that in the last year or so when im standing in the elevator on the way up come in new york in our offices, i am realizing i am amongst the oldest. So i am beginning to think about that. I can certainly imagine being at blackrock. I think we, we have a tremendous five years ahead of us, in terms of change, challenges, and other than that, i have learned in life, you have to be prepared for surprises, and then react accordingly. But i can certainly imagine still being at blackrock talking to you about how things have changed five years from now in Asset Management. Francine hopefully more than in five years. Thank you so much. Philipp thank you. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Emily im emily chang and this is the best of bloomberg technology, where we bring you all our top interviews from this week in tech. Coming up, big tech and the tax overhaul. How will washington plan for the sectors offshore profits impact Silicon Valley . We will discuss potential scenarios if the bill becomes law. Plus, a bloomberg exclusive, coinbase Ceo Brian Armstrong offers his take on bitcoin, which continued its spike this week. 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