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Recognized names in swiss banking. He is now vicechairman of blackrock, the worlds biggest money manager, which handles more than 5 trillion in assets. After 10 years from the financial crisis, what have we learned . Philipp we had too much leverage in the system without any doubt. And that when you have leverage, bad things happen. Not only do they happen, but when they happen, the effects tend to be amplified. I think that is the key takeaway roommate all. We have also learned that this notion of kind of letting the market be totally free, that governments really should get out of the way, that wasnt a very good idea. What stands out is banks needed much, 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 some case ways i wish we had focused more on the capital issue and less on all of the many other things that have kind of made it to the Regulatory Reform realm. Francine is there a concern now we are over regulating the now we are beginning to see the end of the last financial crisis and we may miss the next one . Philipp 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 i dont think we are over regulating. I mean i think its sensible to , sort of say lets take stock , and pause. That is very much happening certainly when you look at what is happening in the u. S. , that is part of the story. That is not a bad thing. See how the system settles, as i have said, unfortunately in many ways we have too many regulatory initiatives. It is the multitude of these and how they dynamically interact that is very complicated to to predict. So i think that a sense of a sort of pause, a deliberate pause is not a bad thing, but i wouldnt say that the system is today overregulated. Francine you love history. How does that taint your view of the world . Philipp for one thing the , unexpected will always happen, sooner or later. I think that history tells you that. And we are not very good at predicting it. And 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 do you see the biggest disruption coming from in the next five to ten years . Is it industries, or is it actually china . Philipp i think it is technology on the whole. Certainly in our industry, but even if you ask 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 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 part of it. That is certainly part of it. That kind of innovation around central banking i think 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 has certainly made it very difficult 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, of 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 . I cant, you know is it broken, or is it dead . Philipp i think maybe thats the wrong question to ask when you kind of ask it bluntly like that. It is more about how do we think , these forces will evolve over time . And 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 inflationary pressures or even risks for that matter. Having said that, you know it , still remains true that Monetary Policy has to be there as the kind of guarantor. So i would very much hope that even if we dont get inflation for the next years or perhaps decades, Central Banks could continue to play the role that 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, you know 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, very 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 in very 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 difficult , challenge that i think most of our societies today face. And frankly, in most countries, you know, governments policy hasnt really responded, hasnt even, in many cases, openly acknowledged this challenge that we have a major retirement problem facing us. And 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. This is what is called the precautionary savings effect, is something that is potentially very destabilizing. And the longer we have very low Interest Rates, coupled with this demographic challenge, the more i would 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 that we dont get into a situation where this becomes a crisis. Francine what is it like working with larry fink . Philipp theres a good question. [laughter] i should francine as a hedge rose francine as a Hedge Fund Manager, Philipp Hildebrand made his mark amongst the swiss elite, but his ambitions ran higher. By the age of 46, he joined the ranks of the Central Bankers Club the youngest president of , the snb. His term ended two years later when a trading scandal involving his then wife led to his resignation. The bank of englands mervyn king said, we all know he is a man of total integrity, extra extraordinary ability, and most part of all, courage. Such people are rare. His country will miss him. Hildebrand leaves strong leadership is having the courage to act in the face of adversity. When you were ahead of the snb, what was your decisive vote . Philipp in my time we had two. One was 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. And of course, it has turned out that way at a global level. And 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. Was iton ubs, what was a very difficult day. Do you remember the conversations where you realized something had to be done that 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 actually buy the assets or take them over, so we were well prepared, but the actual moment i remember very well was at breakfast at my apartment at the time in zurich, with the ceo and the 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 very clear, decisive moment. From then on, the plan went into action. And that was a tough moment, because we knew that we had to do it. But we also knew that it would be the gravest thing to do in many ways. Francine talk to me about the capping of the franc to the euro. Again were there other possible , scenarios . Why did you go for that one in the end . Philipp we knew this had been building up for weeks if not months, so we had time to look at many different scenarios. We also had a history. The snb of course and the country have faced similar circumstances in the past. And we also had a great team. We brought in not just a board, but i also brought in quite a few of the experts, economists, to work out every possible angle we worked through every possible scenario. So 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 a quite a big risk. Are you a risk taker by nature . Because of your also previous life as a Hedge Fund Manager . Philipp i dont think it comes from there. One of my mentors told me early on and taught me early on that 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 behind us, there was nothing reckless about this. 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 spent an enormous amount of time on is really to, to make sure that the analytics behind it robust, that this would not be seen as some sort of bigger policy that we would have to explain to our colleagues. The peculiarities of switzerland being very open with a kind of safe haven problem in the middle of europe, would that be part of europe, so all of these dimensions were incredibly important. Francine did you confide in any other central bankers . Philipp that is 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 the 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. There is a way you can 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 you know 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 the Monetary Policy regime. So the fact that it would be at some point, that it would come to an end, was always obvious, and was 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 we have in this world of globalization, the only way for europe to be influential today is to be is to have a strong common voice. Francine so when you decided to resign, how difficult a decision was that . That was january 9, 2012. Philipp it was tough. I was a you know i loved , being a central banker. 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 that credibility was of the utmost important importance, and the best way to preserve the full range of action for the central bank in a difficult environment remember this was not this was more or less the tail end of the crisis, things were still very 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. His reputation precedes him. The founder and chief executives of blackrock have High Expectations that is largerthanlife. His company manages more than 5 trillion in assets, making him one of the most influential figures in the financial world. Philipp, what is it like working with larry fink . Philipp oh, theres a good question. [laughter] philipp larry is a bit older than me. You know 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. You know he has coined this , phrase that we all have to be students of the market. There 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 continue 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, to kind of live that motto. If people cant do that or dont want to do that, then they are at 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 the other question is, how do we operate in this low Interest Rate environment, particularly if you if you extend it for a long time . What we believe is that 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 real rate environment and a lower growth environment Going Forward for quite some time. Francine so 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 our Blackrock Investment institute, providing insights to our 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 on a permanent basis. And then of course, we have to just be innovative around using technology, around new products, about product innovation. Francine are you a fintech company, or are you an asset manager . Philipp it is a good question. We are certainly an asset manager, but i think we are more than an asset manager. I believe we are a platform. In fact we have said publicly that our ambition would be five years from now, we would have a third of our earnings derived from kind of technology empowered, or Technology Driven products and services. Francine talk to me in any kind of real terms, whats a robot advisor . And who is going to 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 as a client. We dont go directly to clients at the moment, but through our distributors, they will have Tools 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. So i think this whole distinction of sort of saying we have technology and then we have people, i suspect thats not going to be the world we live in 10, 15 years from now. 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 powered, 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 that theres going to be a lot of m a. Some of these companies simply may 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 kind of 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 its easy for a client to change his or her asset manager. Francine outside of work, there is a passion for sports. In his youth, hildebrand was a swimmer and narrowly missed qualifying for the 1984 olympics. This days he is a cyclist skier , and rock climber. It offers an escape from the demands of his day job. He says drawing parallels between sports and business can also help you develop skills as a leader. Philipp i think what it teaches you hopefully is discipline, stamina, and sort of staying on top of things. And you know 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 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 own culture at blackrock. At the top, larry himself talked about it. So in that sense, there is an analogy. But there are certainly many great leaders francine do you swim . You swim and you rock climb . Spentp i climb, i ski, i a lot of time in the mountains. I like to bike. Francine is that when you think about the world . Philipp mmm, it is more that i kind of dont do anything else but climbing. The beauty about climbing is you dont have a lot of time, it is almost a form of meditation. It is in a sense you dont think , about anything other than the next step. And i find that to be a very refreshing exercise in a world where you are constantly being bombarded normally and 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 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 all our kids to auschwitz as a way to kind of make sure that this historical sense of how things can go wrong in europe, its important to pass on. Francine is there a shortcoming in human nature that frustrates you when you do business . Philipp i struggle when people dont have a framework on how they think. I find it very 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. And were used always be the youngest in the room. I now notice i told larry recently about the last year or so when im standing in the elevator on the way up here in london, or in new york, our offices, i am beginning to realize i am kind of amongst the oldest. 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, you have to 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 five years. Thank you so much. David what would you say are the greatest pleasures you have received . Thank you. This is good. [laughter] i watch your interview shows. I know how to do some interviews. I was really busy. I was busy into building this company. All the diseases have been taken. I will take a tax. Hello, general powell. This is ronald reagan. Yes, sir. [laughter] actually i think it was my husband who set the interview up, to be honest with you. I am still paying that finders fee. No one plays a song when you walk into the r

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