On the transatlantic economy. He will start with opening remarks and switch over to a moderated conversation with former National Security adviser and executivadvisorand executive Atlantic Council, steve hadley. I would like to extend a few thanks to some of our partners who are here with us today. Thank you very much. And now without further ado, i will turn over to you. Thank you, julia and to steve hadley for moderating the discussion. Congratulations on the opening of the center for geoeconomics. Having spent time looking at your goals, the center is an extremely timely and worthwhile undertaking. More broadly, now more than ever, the Atlantic Councils mission of fostering a strong transatlantic relationship is important. Covid19 has disrupted the economy and our way of life. As the world looks to the future, its important that we not just restart Economic Growth, but that the right values guide us in a post covid world. Thats why the relationship is so important. It represents over 40 of the worlds gdp and nearly half of the global personal consumption. But it is about much more than the economy. Its a community of values that we cherish and live by and are prepared to defend. Our common belief and liberty and democracy makes the partnership a cornerstone of world stability. I believe the pandemic has only highlighted how important our shared values are. I would like to focus the first part of my remarks today on the response to the pandemic in the United States and europe. Then turn to several transatlantic policy areas where collaboration and shared values are essential. Specifically, investment security, crypto currency, sanctions and Economic Growth. Beginning with the pandemic response, the United States and europe each mounted unprecedented economic programs. We move quickly and boldly to the macroeconomic shock and laying the groundwork to support the recovery that is occurring today. Though there is of course much work to do. Our experience so far demonstrates that we need not operate from the playbooks to work towards our shared goals of full employment and robust inclusive growth. Both in the u. S. And europe, fiscal policies provided support for households with declines in the hours worked. This was achieved through a mix of Unemployment Insurance and Job Retention programs, but with varying weights. The United States relied on direct households including stimulus checks and Unemployment Insurance while also promoting Job Retention through the paycheck protection program. European policymakers focused on subsidizing Company Payroll through a variety of short time Work Programs which had been used during the financial crisis so we are ready to be relaunched. Ultimately, both the u. S. And european fiscal policies have produced similar results. First, maintaining a base level of consumption through the worst of the pandemic and subsequently by unleashing pentup consumer demands. Retail sales rebounded to the pre pandemic levels with both the u. S. And europe at 104 from 2019 averages. Monetary policy tools have also played an instrumental role in the response. With shortterm Interest Rates from below, the purchased programs and lending facilities remain the primary workforce for the fed and ecb. The Central Banks increased Bond Holdings at a record pace as well as expanded the books. However, implementation of these programs differs. The targeted longerterm operations offer longduration loans to banks with built in incentives to encourage lending. The fed stood up a wide array of direct lending facilities, several of which receive u. S. Treasury backing. While the specifics vary, the relative scale of operation is strikingly similar. From mid march through august the Balance Sheet has grown by 15 Percentage Points of gdp, over the same time the Balance Sheet swelled by 19 Percentage Points of gdp. Our strong responses have been reinforcing and as the economies recover, there are four areas where the transatlantic cooperation will be vital. The first is investment security. Prior to the pandemic, the United States and many were already collaborating on investment security. The pandemic has increased the sense of urgency. The vulnerability of the companies to take over has increased the crisis and other countries are sensitive to this. There has been a recent groundswell of action by the transatlantic to either establish or update to the investment regimes. Many have reached out to us to benefit from the expertise given the work. France, germany, italy, finland and spain already had investment regimes but had taken further steps to protect themselves. Other European Countries such as norway and poland established new regimes but others like ireland and the Czech Republic are considering legislation. Our competitors and adversaries will be relentless in their pursuit of cutting edge technologies. U. S. And europe are unified on this issue we can protect our values and enhance National Security while embracing the global growth. A second area where collaboration is critical is crypto currency. Cryptocurrencies are a fascinating topic because they are the implications not only for private business but a number of activities the government is responsible for. Consider for instance, National Security. One of the issues at the top of the treasurys mind is that Digital Currencies can potentially be used to invade existing legal frameworks like those governing antiMoney Laundering and terrorist financing. The treasury has made it clear the obligation to comply is the same regardless of whether a transaction had been nominated in the currency or Digital Currency. Existing law applies to the Digital Assets in no uncertain terms. However even if we could be assured the private sector is complying with the letter and spirit of the law, there is important remaining concerns the government must consider. Such as additional currencies potential effects on monetary basis and financial stability. These are linked to a broad concern about what i will call governance. For instance a decade from now there were desire for a stable claim to go from fully reserved to partially reserved or to shift its underlining mix of the reserve currencies this could alter the money supply or cause financial disruption with such a decision to be made by private governing association or a majority of coin holders what if the foreign actors acquired a majority of the coin. In any case, would in importantt decisions about the Economic System have been taken out of the hands of government to be accountable to the people. Stable claims are clear and of course we value the innovation and efficiency. However, Digital Currencies are not simply a means of payment, but depending on the structure can shift some functions traditionally to the private sector and therefore policymakers on both sides of the atlantic must continue to Work Together to take a hard look at these issues. A third area we must work closely together is holding bad actors accountable. We have an obligation to ensure the Financial System isnt used to undermine the freedoms we value. Today our efforts have made it difficult for terrorists, criminals and regimes to move money around the world and from the u. S. And europe are in touch to identify illicit activities. Through the hard work of both the u. S. And europe as they Financial Task force virtually all countries are subject to a rigorous peer review that examines their ability to prevent Money Laundering and terrorist financing. Another example of excellent cooperation is on the serious sanctions. In june of this year, treasury designated 24 individuals and entities in syria. These designations reinforce actions taken by the European Union to hold the Syrian Regime accountable for their mistreatment of the syrian people. We will continue to work with our eu counterparts on the potential targets. And even more, the sanctions the European Union, the united kingdom, canada and the u. S. Imposed last week on bell belars officials for rigging the president ial election. These officials can no longer easily access the international Financial System. We hope these actions result in a change in behavior and lead to free and Fair Elections soon as well as make clear to others the costs of interfering in democratic processes. We also understand and share our European Partners concerns about the impact of sanctions on humanitarian systems. Treasury has made it a top priority to ensure that our sanctions do not [inaudible] we have a long history of authorization and exemptions across the sanctions programs to ensure the flow of humanitarianism isnt interrupted. On april 9th, we have reiterated the commitment in a statement that emphasized support for covid19 related aid but we made sure to reinforce that it should occur through legitimate and transparent channels. The pandemic has tested the Global Financial environment, creating conditions right for monefromMoney Laundering, corrud fraud. We are committed to ensuring bad actors do not take advantage of this pandemic to enrich themselves. A final topic i would like to discuss is the importance of course we value strong and broadly distributed growth because of the opportunities and hope it creates. Liberty and selfdetermination are best realigned in an environment with diverse widely available Economic Opportunities that enable people to pursue their dreams. Weve been very focused on this at the treasury treasury, and if the progress we were able to make before the worlds attention shifted to the coronavirus. Poverty hit an alltime low and Median Household Income went to an alltime high at a record pace of almost 7 or more than 4,000 in a single year. The Unemployment Rate had a five decade low for various minority groups including africanamericans and latinos and hispanics. Particularly notable was wage growth at the bottom of the distribution and hit an alltime high and exceeded wage growth to the top of the income distribution. But growth isnt only valuable because it increases the living standards. Its also a vitally important safeguard of our shared values. This is a case for several reasons. First, a larger economy allows an increase to invest in a Security Program which does so much to safeguard our way of life. This includes military personnel and equipment, Intelligence Services and cuttingedge research. While this benefit of growth is easy to see, its too often not part of the conversation. Second, as countries around the world make relative choices about who their partners will be, the more attractive we are as partners. Growth means more purchasing power and influence in International Standard settings. This is especially important such as the 5g and quantum computing. The larger the markets are, the more likely we will be able to set up the Technology Standards that protect our shared values. Third, maintaining the worlds leading economies allows us to shape the Global Financial market access. Increased Economic Growth makes the sanctions regime is more effective and raises the opportunity costs of the maligned activity helping us to deter bad actors and achieve our share of the policy goals. Finally, a Strong Economy is a testament to the benefits of the liberal democratic system and a counterpoint to topdown state led approaches. Our sustained growth and prosperity has been unmatched by competing Economic Systems. As other countries seek to achieve their vision of world order, its as important as ever to demonstrate that we can continue to provide unparalleled and broadly distributed opportunities. To conclude, let me return to what is at front today, the covid19 crisis. Ive always regarded Public Service as a privilege, and its been a particular honor to be able to serve in this moment of national reckoning. The crisis can bring into focus what is most important and in the case of the transatlantic relationship, i hope that it will do just that. Our shared values have guided our response to the crisis and we must focus on these as we look to create a prosperous, free and secure world. At times, europe and the u. S. Will view individual policies differently, but on the scale of world affairs, these differences are small compared to the values we share. Let us remind you what binds us together as we work sidebyside to shape a world of which future generations will be proud. Thank you. Mr. Deputy secretary, thank you so much for being with us today here at the Atlantic Council. We thank you so much for your remarks, and i want if i can to follow up on some of the things that you have mentioned. Let me begin on the issue of sanctions, if i might. The United States has imposed financial sanctions on a long list of countries. You mentioned syria and belarus, iran, north korea, russia, venezuela. Its a pretty long list. Do you have a fear the u. S. Is overusing sanctions at this point particularly unilateral, and will this eventually affect and threaten the role of the u. S. Dollar as the global reserve currency . Sure and thank you again for moderating the question section of this. Its an excellent question, and one that we face a lot about. Let me first step back because not everyone will be familiar with our sanctions process. Let me just talk a little bit about our sanctions process and then come more specifically to your question about the sort of unilateral use. Our sanctions process is an extremely thorough one. It starts with a policy decision. We have a policy group within treasury that along with the nationaNational Security councid the state department comes a Foreign Policy vieforeignpolice sanctions might accept. He theit then goes from the poly decision to the group in treasury that we call the office of intelligence and analysis which was a member of the Intelligence Community setting foot in treasury that goes on a Factfinding Mission to make sure we understand where that money is flowing and who is flowing between. Once we have all the facts we can go through a legal analysis to make sure all legal thresholds are met, and finally a group within treasury that imposes and administers sanctions that is a lot of acronyms especially for those that are not in government, but the point is that the process is deeply researchbased and highly professionalized and highly attuned to rule of law issues. Along those lines, compared to their may have been several hundred people focused on his work in treasury and there are now 900 people focused on it. Its the Largest Group within treasury so we are really staffed up to do a thorough job when we look at the sanction. More specifically to the question about unilateral use that is a narrative that is out there but i dont think it captures the vast majority of the work that goes on from daytoday. If you look across the sanctions programs and take north korea where we were very closely coordinated with the un, venezuela, closely coordinated with europe and america, the Russian Sanctions Program is closely coordinated with europe and the Human Rights Program is also closely coordinated and in fact europe is adopting a similar regime that can be more aligned with pursuing human rights violators. While there are of course times we will need to act alone based on our Foreign Policy interest, the vast majority of time these programs are coordinated with our partners and i think that our partners really understand and appreciate what we can to do to stop and the partnerships are very strong on the sanctions side. And threaten ultimately the role of the u. S. Dollar as the global reserve currency. Are you worried about that . Partially because these are closely coordinated with our partners and if they do see the value in it, im not worried about that. I think everybody understands the value it brings to the world. Thank you so much. Let me go to an issue you raised in your comments of the Digital Currencies. China ichina is field testing a government sponsored Digital Currency. Facebook of force has proposed to develop a Digital Currency as a private sector initiative. Id like to hear a little bit more from you on treasuries positions on these efforts and particularly whether the treasury as a plan for the u. S. Government developing its own Digital Currency. Why, why not and what would be the pros and cons of the digital sponsored currency . Its something we are studying. This is a decision that is as much with the fed as it is treasury. The fed has a working group that is looking at this and studying it very quickly. They are also part of the internationainternational workip looking at this question. And theyve even partnered with mit to do some research. There is a lot of work going on behind the scenes. Short answer, theres been no decision yet. I think the pros are the benefits and cost benefits to using the ledger and more broadly its important for the government to embrace innovation and not be scared by it. That said, there are a number of concerns and things that have to be studied so if it is done is done in a responsible way. I mentioned a few of these in my remarks. You want to make sure you are not making it easier for Illicit Activity to occur and make sure you are not threatening financial stability, implications for the Banking System that have to be sought through and there is also privacy implications, you know, how much of the daily transactions should the government see in an additional world for instance. There is a variety of factors that we are thinking through. Thank you so much. I want to ask about something that wasnt in the remarks but is the subject of what you spent a lot of time. Concerns have been raised about the International Tax system, that it doesnt properly calculate taxes for digital companies. As a result, theyve been conducting multilateral talks on the new International Tax system. A number of European Countries announced plans for the unilateral Digital Service packs and i know the treasury expressed concerns about that. This negotiation seems to be a serious point of contention between the transatlantic partners. Would you please discuss the current u. S. Position on the subject and particularly the prospects for the talks which i understand are going to resume next week on the subject. Sure. Let me just step back and talk about the problem and then the proposed solution and where we are in the talks. We do think theres an issue that has to be addressed and that is why we are actively addressed at the oecd. I think the easiest way to understand the issue is the Current International system has for many decades debated on the concept of the physical presence. You can be taxed in a country if you have a physical presence there. The issue arises because of the shift towards intangible value that has occurred so to unpack that a little bit, if you looked at the s p 500 for instance, the 1970s, about 17 of the value would have been in what was called intangible value, intellectual property, other types of intangible values. If you look today, that number is closer to the 80s and so when you combine that with the physical presence you can see that while in the 70s it might have been difficult to move one to another to benefit from lower tax rates, today its easier to do business in this country and move to the country where there is a lower tax rate. So the intuition the tax system has to be updated to reflect the changing world is something we understand and thats why we are actively engaged in. Whats difficult is finding a solution. For those who follow it closely, there have been working level talks. I would say theres progress, thats sort of the minimum tax regime and theres been progress on implementing that consistent with u. S. Tax law. Pillar number one is theres been progress on technical issues but there is no agreement on pillar number one. Some of the key issues which is what the u. S. Is advocating. I should add that there is very strong bipartisan support for the proposed u. S. Solution and in ensuring that they receive a fair deal. Ive spent a lot of time on the hill and the u. S. Is really united on this issue. We are running a little short on time. You mentioned in your remarks the progress that was made particularly by those in the lower income and that of course has been dramatically set back. Reports of growing inequality has gotten a lot of attention in europe. How does the u. S. Government see the issue and what tools are available in the economic aspects to address this issue of inequality . Thanks, steve, for the very insightful question. Listen, we broadly agree on the goal. Theres no question that broadly distributed growth and opportunity is critically important to the country. All parts of the country had to benefit economically as the country grows. Near term as a part of the response, we took a number of steps to try to soften the blow for those that might have been most affected whether it was through unemployment checks, direct checks in the mail, but as we emerge from covid, i think one of the most important things we can do to ensure that its distributed is to ensure that we have wage growth and not just growth in asset values. Lower income americans especially on the wages so as we are thinking about the structure of the economy we have to make sure that its dynamic enough to lead to wage growth. That was a driving focus of hours and we were delighted to see the results. We are regrettably out of time. I want to thank you for being with us at the Atlantic Council today, and particularly thank all of you in the audience who joined us. Youve given us a lot to think about. [inaudible conversations]